Comprehensive Annual Financial Report - Minnesota State ...
Comprehensive Annual Financial Report - Minnesota State ... Comprehensive Annual Financial Report - Minnesota State ...
2012 Comprehensive Financial Report This page left blank intentionally.
Actuary’s Certification Letter December 6, 2012 Board of Trustees Public Employees Retirement Association of Minnesota 60 Empire Drive, Suite 200 St. Paul, MN 55103-2088 Members of the Board: We have prepared and presented to you our annual actuarial valuation of the General Employees Retirement Fund (GERF), the Public Employees Police and Fire Fund (PEPFF), the Public Employees Correctional Fund (PECF), and the Minneapolis Employees Retirement Fund (MERF) as of June 30, 2012. In this Comprehensive Annual Financial Report (CAFR), all supporting schedules in the Actuarial Section and the Schedule of Funding Progress and the Schedule of Employer Contributions in the Financial Section have been prepared by PERA based on the information included in reports on the annual actuarial valuation prepared by Gabriel Roeder Smith & Company (GRS). The annual actuarial valuation reports are available on the PERA website. Valuation Results The results of the valuations are summarized in the following table. For all plans except MERF, because the valuation smooths asset returns over five years, the actuarial value of assets is slightly higher than the fair value of assets, and the funding ratios on that basis are slightly higher and the deficiencies are lower than the market value of assets results. The valuation for MERF is based on the market value of assets. Accrued Liability Contribution Sufficiency/ Funding Ratio Deficiency (% of Pay) Actuarial Market Actuarial Market Statutory Value Value Value Value Amortization Plan of Assets of Assets of Assets of Assets Date GERF 73.45% 73.00% -0.96% -1.08% 2031 PEPFF 78.31% 77.97% -7.94% -8.14% 2039 PECF 89.29% 88.99% 0.13% 0.08% 2031 MERF 69.10% 69.10% 288.20% 288.20% 2031 A ctuarial Section A contribution deficiency means that over the long run, without further changes or favorable actuarial experience, the contributions scheduled to be made to the fund will not meet the goal of full funding by the statutory amortization date. For the PEPFF, there is a very significant contribution deficiency. Without changes, the funded status of PEPFF will deteriorate in the future and assets will be depleted. Changes in Actuarial Assumptions and Methods The following changes were recognized this year for all plans: • The investment return assumption was changed from 8.5% to a 5-year select and ultimate approach with rates of 8.0% for the period July 1, 2012 to June 30, 2017 and 8.5% thereafter. • Decrement timing was changed from beginning of year to midyear decrement timing. For the GERF, the following changes in actuarial assumptions were recognized: • The future salary growth rates were updated to be approximately 25 basis points lower on average than the previous table. • Augmentation for privatizations occurring after 2010 was reduced. Public Employees Retirement Association of Minnesota 53
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2012 <strong>Comprehensive</strong> <strong>Financial</strong> <strong>Report</strong><br />
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