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UMASS/AMHERST State 312066 0367 7383 9 Teachers' Retirement GOVERMENT DOCUMENTS COLLECTION System LJ: t 6 2003 University of Massachusetts Depository Copy ACTUARIAL VALUATION REPORT \l JANUARY 2002 I, PUBLIC EMPLOYEE RETIREMENT ADMINISTRATION COMMISSION COMMONWEALTH OF MASSACHUSETTS Digitized by the Internet Archive 2014 in https://archive.org/details/peracactuarialva2002mass PERAC ACTUARIAL VALUATION REPORT State Teachers' Retirement System January 2002 I, 270 TABLE OF CONTENTS Section Page 1. Introduction & Certification I 2. Executive Summary A. Principal Valuation Results 2 B. Comparison with Prior Valuation and Experience Analysis 3 C. Funding Progress 6 3. Summary of Valuation Results 8 4. Development of the Actuarial Gain or Loss 9 5. Plan Assets A. Asset Allocation 1 B. Development of Actuarial Value of Assets I I 6. System Membership A. Active Members 1 B. Retirees and Survivors 5 I 7. Valuation Cost Methods A. Actuarial Cost Method 1 B. Asset Valuation Method 17 8. Actuarial Assumptions 18 9. Summary of Plan Provisions 21 0. Glossary of Terms 27 1 INTRODUCTION & CERTIFICATION I. This report presents the results ofthe actuarial valuation of the State Teachers' Retirement System. The valuation was performed as ofJanuary I, 2002 pursuant to Chapter 32 ofthe General Laws of the Commonwealth of Massachusetts and based on the plan provisions at that time. The actuarial assumptions used to calculate the accrued liability and the normal cost are the same as those used in ourJanuary I, 2001 actuarial valuation and reflect the experience analysis we conducted in 2000. This valuation was based on member data as of December 31, 2001, which was supplied We by the State Teachers' Retirement Board. performed a number oftests on the data to ensure reasonableness and made specific assumptions for a number of data items. Asset information as of December 3 I, 2001 was provided by the Pension Reserves Investment Management Board. Both the membership data and financial information were reviewed for reasonableness but not audited by us. We believe this report represents an accurate appraisal ofthe actuarial status ofthe State Teachers' Retirement System performed in accordance with generally accepted actuarial principles and practices relating to pension plans. In our opinion the actuarial assumptions used in this report are reasonable, are related to plan experience and expectations, and represent our best estimate of anticipated experience. Respectfully submitted, Public Employee Retirement Administration Commission JamesMy LarrVej7ZSj Member ofthe American Academy ofActuaries Associate ofthe Society ofActuaries Enrolled Actuary Number 02-4709 JosephE. Connarton Executive Director Dated: October 4, 2002 STATE TEACHERS' ACTUARIAL VALUATION REPORT JANUARY I. 2002 | EXECUTIVE SUMMARY 2. PART A PRINCIPAL VALUATION RESULTS | Section 22C of G.L., c. 32 mandates the establishment of a funding schedule for the Commonwealth of Massachusetts pension obligation. The State Teachers' Retirement System reflects one component of the Commonwealth schedule. The other components are the State Retirement System, liabilities for Boston teachers, and State reimbursements to local systems to reflect COLAs granted from 1982 through 1996. The schedule, as mandated by law, calls for payment of the Normal Cost plus an amortization payment on the Unfunded Actuarial Liability. The law requires amortization payments such that the Unfunded Actuarial Liability is reduced to 0 byJune 30, 2023. Under the current schedule, the amortization payments to eliminate the initial unfunded liability increase 4. 5% per year. 1 The results of the January 2002 actuarial valuation are as follows (000s omitted): 1, Total Normal Cost $485,549 Expected Employee Contributions 408.940 Net Normal Cost $76,609 Total Actuarial Liability $20,619,960 Assets $15,712,183 Unfunded Actuarial Liability $4,907,777 STATE TEACHERS' ACTUARIAL VALUATION REPORT JANUARY I. 2002 |