The fiscal year 1990 pension benefit obligation was determined as a part of an actuarial valuation at June 30,
1990. Significant actuarial assumptions used include (a) a rate of return on the investment of present and future
assets of 7.5 percent per year compounded annually, (b) projected salary increases from 5 percent to 6 percent per
year compounded annually, attributable to inflation, (c) additional projected salary increases ranging from .94
percent to 6.82 percent per year, attributable to seniority/merit, and (d) post-retirement benefit increases ranging
from 3 percent to 6 percent per year depending on the system.
At June 30,1990, the unfunded pension benefit obligation (i.e., pension obligation less net assets available for
benefits) of the System was as follows (amounts expressed in thousands):
Pension benefit obligation:
|
|
Retirees and beneficiaries currently receiving benefits and terminated employees not yet
|
|
receiving benefits ..........................................................
|
$6,801,799
|
Current employees:
|
|
Accumulated employee contributions including allocated investment income ..........
|
1,385,195
|
Employer— financed vested ..................................................
|
8,317,128
|
Employer— financed nonvested ...............................................
|
168,232
|
Total pension benefit obligation .............................................
|
16,672,354
|
Net assets available for benefits, at cost (market value is $11,577,031) ..................
|
10,251,637
|
Unfunded pension benefit obligation ...........................................
|
$6,420,717
|
There were no changes in actuarial assumptions or benefit provisions which significantly affected the
valuation of the pension benefit obligation during fiscal year 1990.
Contributions Required and Made:
The State's retirement contributions are appropriated annually, based upon actuarial valuations. In this
regard, the System has engaged an independent firm of consulting actuaries to prepare annual actuarial
valuations and perform various actuarial consulting services. Effective July 1, 1980, in accordance with the law
governing the Systems, all benefits of the System are funded in advance. The entry age normal cost method is the
actuarial cost method used to determine the employers' normal and accrued liability contribution rates and the
unfunded actuarial accrued liability. Using this method the actuarial present value of the projected benefits of
each individual included in an actuarial valuation is allocated on a level basis over the earnings or service of the
individual between entry age and assumed exit age(s). The portion of this actuarial present value allocated to a
valuation year is called the normal cost. The portion of this actuarial present value not provided for at a valuation
date by the actuarial present value of future normal costs is called the actuarial accrued liability.
Employer contributions to the System totalling $593,004,000 (12.7% of covered payroll) for fiscal year 1990
were made in accordance with actuarially determined contribution requirements based on an actuarial valuation
performed as of June 30,1988. This amount consisted of $325,236,000 normal cost and $267,768,000 amortization
of the unfunded actuarial accrued liability. Employee contributions to the System for fiscal year 1990 were
$112,621,000 (2.4% of covered payroll).
The liquidation period for the unfunded actuarial accrued liabilities (as provided by law) is 30 years from
June 30,1990. Significant actuarial assumptions used to compute contribution requirements are the same as those
used to compute the pension benefit obligation.
The computation of the pension contribution requirements for fiscal year 1990 was based on the same
actuarial assumptions, benefit provisions, actuarial funding method, and other significant factors used to
determine pension contribution requirements in the previous year.
Retirement expenditures applicable to governmental fund types for the year ended June 30,1990, aggregated
approximately $494,020,000. The excess of retirement expenditures over retirement costs of approximately
$34,962,000 is included in the general long-term debt account group.
57
|
![clear space](../../../images/clear.gif) |