a complete copy of the 2012 CAFR Report! - PSERs

Valuation as
of June 30
FINANCIAL SECTION
Required Supplementary Schedule 1
Schedules of Funding Progress*
(Unaudited – See Accompanying Auditor’s Report)
(Dollar Amounts in Millions)
Pension
(1) (2) (3) (4) (5) (6)
Actuarial
accrued
liabilities
(AAL)
Actuarial
value of
assets
Unfunded
actuarial
accrued
liabilities
UAAL (1) - (2)
Ratio of assets to
AAL (2) / (1)
Covered
payroll
UAAL as a
percentage of covered
payroll (3) / (5)
2011 $ 85,640.4 $ 59,141.1 $ 26,499.3 69.1% $ 12,910.0 205.3%
2010 79,005.4 59,306.8 19,698.6 75.1% 12,788.8 154.0%
2009 75,520.7 59,781.6 15,739.1 79.2% 12,524.6 125.7%
2008 70,845.6 60,922.1 9,923.5 86.0% 11,921.5 83.2%
2007 66,495.8 57,057.8 9,438.0 85.8% 11,410.3 82.7%
2006 64,627.3 52,464.7 12,162.6 81.2% 11,419.0 106.5%
Valuation as
of June 30
Premium Assistance
(1) (2) (3) (4) (5) (6)
Actuarial
accrued
liabilities
(AAL)
Actuarial
value of
assets
Unfunded
actuarial
accrued
liabilities
UAAL (1) - (2)
Ratio of assets to
AAL (2) / (1)
Covered
payroll
UAAL as a
percentage of covered
payroll (3) / (5)
2011 $ 1,339.4 $ 111.3 $ 1,228.2 8.3% $ 12,910.0 9.5%
2010 1,162.2 116.8 1,045.4 10.1% 12,788.8 8.2%
2009 1,159.0 105.1 1,053.9 9.1% 12,524.6 8.4%
* The amounts reported above in the Schedule of Funding Progress do not include assets or liabilities for the HOP.
Each time a new benefit is added which applies to service
already rendered, an “unfunded accrued liability” is
created. The laws governing PSERS require that these
additional liabilities be financed systematically over a
period of future years. Also, if actual financial experiences
are less favorable than assumed financial experiences, the
difference is added to unfunded accrued liabilities.
In an inflationary economy, the value of the dollar is
decreasing. In this environment, employees pay in greater
dollar amounts, resulting in a dollar increase in unfunded
accrued liabilities. This occurs at a time when the actual
substance of these items may be decreasing. Looking at
just the dollar amounts of unfunded accrued liabilities can
be misleading. Unfunded accrued liabilities divided by
active employee payroll provides an index which clarifies
understanding. The smaller the ratio of unfunded liabilities
to covered payroll, the stronger the system. Observation
of this relative index over a period of years will give an
indication of whether the system is becoming financially
stronger or weaker.
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