San Antonio Water System

RETIREMENT PLAN INVESTMENT CONSULTING SERVICES

 The San Antonio Water System (SAWS) is seeking a General Retirement Plan Consultant to provide expert advice and assistance relating to SAWS retirement plan investments and the administration of those plans.

SAWS’ retirement plans include the San Antonio Water System Retirement Plan, the District Special Project Retirement Income Plan, the San Antonio Water System Retiree Health Trust and a  deferred compensation plan (collectively “the Plans”). SAWS also participates in the Texas Municipal Retirement System (TMRS).

San Antonio Water System Retirement Plan – This is a single-employer pension plan, tax-qualified under Section 401 (a) of the Internal Revenue Code. The plan contains both a defined benefit and a defined contribution component. SAWS has delegated to Principal Financial Group the authority to manage plan assets and administer the payment of benefits under the plan.

Defined Benefit Component: Eligible employees hired prior to June 1, 2014 participate in the defined benefit component of the plan. As of December 31, 2021, the market value of plan investments related to the defined benefit component of the plan was $307.1 million and plan liabilities were approximately 107% funded. Due to the recent decline in market valuations, as of June 30, 2022, the market value of plan assets was $259.4 million. The assumed rate of return on investment for this plan is 6.25%. Please see Exhibit I for the current target allocation as provided in the Investment Policy Statement.

Defined Contribution Component: Eligible employees hired on or after June 1, 2014 participate in the defined contribution component of the plan. SAWS contributes 4% of participant’s compensation into an individual retirement account, while the participant contributes 3%. Employees direct the investment of their individual retirement account. SAWS has no liability for the losses under the defined contribution component, however it does have the usual fiduciary responsibilities of a plan sponsor. As of December 31, 2021, the market value of plan investments related to the defined contribution component of the plan were $17.6 million.  Reflecting the recent decline in market valuations, the market value of the defined contribution component has declined to $14.9 million as of June 30, 2022.

District Special Project Retirement Income Plan – The Retirement Income Plan is a single-employer defined benefit pension plan that covers employers of the former Bexar Metropolitan Water District (BexarMet). This plan was frozen effective September 30, 2008. SAWS has delegated the authority to manage plan assets and administer the payment of benefits to Standard Insurance Company (Standard). As of December 31, 2021, the market value of plan investments was $8.5 million and plan liabilities were approximately 122% funded. As of June 30, 2022, the market value of plan assets was $7.3 million. The assumed rate of return on investment for this plan is 6.25%. Please see Exhibit I for the current target allocation as provided in the Investment Policy Statement.

San Antonio Water System Retiree Health Trust – SAWS has established an Internal Revenue Code Section 115 Trust to fund the liabilities associated with post-retirement health and life benefits provided to retirees. The plan was frozen to new entrants on December 31, 2013. Employees hired after that date may qualify for health benefits upon retirement; however, SAWS will not subsidize the cost of those benefits. Currently, SAWS makes no distributions from the trust to pay benefits. Instead, those benefits are directly funded by SAWS on a pay-as-you-go basis. The trust assets are currently administered and managed by The Principal. As of December 31, 2021, the market value of plan investments was $121.5 million and plan liabilities were approximately 99% funded. As of June 30, 2022, the market value of plan assets was $103.6 million. The assumed rate of return on investment for this plan is 6.25%. Please see Exhibit I for the current target allocation as provided in the Investment Policy Statement.

San Antonio Water System Deferred Compensation Plan – SAWS sponsors a deferred compensation plans for its employees, created in accordance with Internal Revenue Code Section 457. These plans allow current employees to defer a portion of their salary until future years. The compensation deferred under this plan is not available to employees until termination, retirement, death, or qualifying unforeseeable emergency. Participation in the plan is voluntary, and SAWS does not make any contributions. SAWS has no liability for losses under this plan but does have the usual fiduciary responsibilities of a plan sponsor. The Deferred Compensation Plan is administered by Empower Retirement. As of December 31, 2021, plan assets totals $70.1 million, while as of June 30, 2022, total plan assets were $56.5 million.

Texas Municipal Retirement System – SAWS provides pension benefits for all of its eligible employees through a non-traditional, joint contributory, hybrid defined benefit plan in the state-wide Texas Municipal Retirement System, an agent multiple-employer public employee retirement system. The TMRS plan is managed and administered by the state appointed Board of Trustees.