I’m not personally obsessed with numbers, but every now and then, they are fun to look at. Clearly, they are very important and represent a critical component of the life we all lead.

Buying a house? You need to check the interest rate. Looking for a new car? You’ll want to check the MPG rating (note to self: they typically stretch that number to their advantage). Those young kids begging for swimming lessons or about to get braces? You’ll probably need to work that into the monthly budget.

When it comes to retirement and pensions, the numbers can get real quite fast. Back sometime around 2000, Senate Bill 400 kicked in with legislation allowing retirement for some law enforcement officers to commence at the age of 50, with 3% compensation for each year of service. There was a cap set at 90% maximum. It might have been just a bit too sweet.

California woke up and smelled the coffee back in 2013. They passed Senate Bill 354, which dictated that the Public Employees’ Pension Reform Act (PEPRA) was in and 3% at 50 was out. They locked the door on that very lucrative retirement system. Why? Well, the numbers, of course. It just wasn’t going to pencil out for CalPERS and all of their contracted government municipalities. They took a deep dive into the future to determine the viability of that legacy retirement option. They crunched the numbers. Turns out it was likely going to break the bank. Hit the brakes — full stop. They tapped out. It was necessary to maintain the overall health of the entire pension program (my opinion, but shared by many).

So, numbers are indeed very important. The Board of Trustees for the PORAC Retiree Medical Trust is keenly sensitive to that reality.

In order to make the RMT work properly and into the long future, we contract with a variety of service providers. One of those is Cheiron (cheiron.us), an actuarial consulting firm that was established in 2002. Their actuaries have myriad experience testing both pension and health plans.

Here is something interesting for you: Cheiron, pronounced KY-ron, was the magnificent Greek centaur who broke away from the pack to become an advisor to the gods. Sometimes, you have to get in front in order to lead (again, my opinion).

We specifically work with Graham Schmidt. He has been with us since our inception in 2008. His job is to help us make sure that the RMT plan is stable and secure from an economic standpoint. We want to know that we have a good prospect for extended longevity. Our actuarial analysis assumes that every participant will receive the maximum benefit available to them. Graham looks beyond the light at the end of the tunnel.

Generally speaking, every three or four years, we ask Graham to crunch the numbers. He researches our demographics along with the performance of our investment portfolio. The trustees oftentimes tweak the plan, and Graham gives consideration to those changes.

The RMT uses what is known as a multiplier to calculate the anticipated lifetime monthly benefit for participants. We ask Graham to establish a corridor with both a low and high parameter. The trustees will consider all of the information and then make a determination as to where to set the multiplier.

At our January Board of Trustees meeting, we raised the multiplier to $0.80. That change will become effective on April 1. The increase is equivalent to about a 4% raise. This marks the fifth setting of the multiplier, with each change representing a raise from the one before it.

Number crunching can be boring, for sure. I hope that hasn’t been the case as you’ve read through this article.

As RMT trustees, we don’t have anything to sell you. Rather, we would love to share with you what we think is a real decent way to bank some bucks to help defray the high costs of health care once you retire. You can do this by taking advantage of the triple tax-free benefit we can offer.

Just looking at some current rates for health insurance in Northern California, I found an example of premium costs (see opposite page). These 2025 premiums are for an early retiree, under 65 and without Medicare. 

Needless to say, it’s expensive. Not planning for it doesn’t make it go away; it just makes it cost more.

We can help you with that. Stay safe and remain healthy.