PERAC Memo #17 - 2002: Local Experience Study Analysis

Local Experience Study Analysis

Summary

PERAC's memo transmits the Local Experience Study Analysis, prepared by Actuary Jim Lamenzo, which reviewed actual local retirement system experience against actuarial assumptions—finding disability, mortality, and salary increase rates lower than assumed and withdrawal rates higher, resulting in slightly lower overall costs under the revised assumptions. No immediate action is required of boards beyond reviewing the enclosed copies, as the topic will be further discussed at PERAC's summer educational seminar at UMass; additional copies can be requested from Lindsay Deaver.

Full Text

Memorandum # 17/2002

M E M O R A N D U M TO: Retirement Board Administrators FROM: Joseph E. Connarton, Executive Director RE: Local Experience Study Analysis

DATE: March 20, 2002

The Public Employee Retirement Administration Commission (PERAC) is pleased to provide you with the enclosed two copies of the Local Experience Study Analysis. PERAC’s Actuary, Jim Lamenzo, and his staff are to be commended for a job well done.

The Study provides an analysis of actual plan experience for local systems. Revised actuarial assumptions were developed based on this analysis. Actual rates of disability, mortality and salary increase were found to be lower than assumed while withdrawal rates were found to be higher than assumed. Overall, the changes in assumptions recommended in the Study will result in costs slightly lower than the previous assumptions. However, an actuarial valuation assesses a number of factors including investment performance, benefit changes and plan experience. The status of liabilities is a product of all of these factors as well as changes in assumptions.

This topic will be discussed at the PERAC Educational Seminar at UMass this summer. If you need additional copies of this report please contact Ms. Lindsay Deaver at (617) 666-4446 ext. 937.

If you have any questions or comments, please contact me.