Stewarding Member Investments: A Look at Special Apportionment Credits and Good Experience Credits

This article was originally published in the Spring 2025 issue of Bridge Magazine.

Pension Fund products are rather unique and much different from most other investment products. Our products are composed of two parts which both serve an important purpose for our members: the base rate, which is the minimum amount of return the account receives as Pension Fund bears the burden of market risk, and the SAC/GEC which is the way that good long-term performance of the investments is passed on to participants over extended periods of time.

Pension Fund assumes the market risk on behalf of account holders so that they can be comforted in the fact that their account value will not be lower than it was the day before, even during difficult times in the financial markets. This is an extremely valuable attribute of our products that is too often not appreciated until the time comes when protection is most needed.

Special Apportionment Credits (SAC)

SACs are associated with the defined benefit (DB) Pension Plan. As a member pays dues to the plan, they accumulate pension credits which are the basis for determining their annual pension at retirement. At the end of each calendar year, actuaries review the DB plan and determine the total liabilities, or the liability value.

The actuaries also look at the current year-end asset value of all the investments that back the DB product. This asset value is compared to the liability value and, to the extent that there is an excess in assets, the plan has a surplus that translates into our funding status.

The board of directors reviews the funded status of the plan in determining if there will be a SAC. SACs are fully funded, permanent increases in members’ pension credits, meaning the pension amount increases by that same amount whether they are currently receiving a pension or still working.

Good Experience Credits (GEC)

GECs are similar to our SACs but are associated with our defined contribution (DC) products. During the fall board meeting, the board considers a GEC for each product based on the liability of each product compared to the total value of the assets backing that product.

GEC calculations are as of Sept. 30 of that year. GECs are awarded in the form of a one-time interest credit based on the members’ average daily account value for the previous year ending Sept. 30.

Our unique approach to product management is what allows Pension Fund to offer our members a strong, smart, and secure retirement for years to come.