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Challenges In Achieving Higher
a better state/teacher COLA.
In its most recent (January 1, 2017) report, PERAC details the pension benefits that are the state’s obliga- tions, including state employees, all municipal teachers and certain local COLA costs. Even more impor- tantly, it best identifies the Com- monwealth’s overall total pension
obligations.
Using both employee and retiree
demographic and financial data along with various actuarial
to look closely into the report to understand why or how this hap- pened.
“While it showed overall actuarial gains for the state and teachers’ systems to be $1.1B over last year’s report, in part due to investment gains of 8.6% in 2016, mortality assumption changes and plan benefit adjustments negated these gains and as a result, we remained at the same funding level.
“We’ve included a chart (p.13) that shows the funding progress since 1990. While our assets have grown some $8B over the past 5 years, only minor changes in the unfunded actuarial liability have taken place. Consequently, the funding progress has somewhat leveled off since 2012.”
The flattening out of this funding progress has been due to a number of assumption changes, primarily the mortality and investment rate of return assumption changes since 2012. These two changes, along with several funding plan adjust- ments (ERI, COLA base to $13,000, Higher Ed transfers from their Optional Retirement Plan and corrections in Job Group classifi- cations) have accounted for 63% of the increase in our unfunded actu- arial liabilities during this period.
Valeri continued his comments and observations on the report, emphasizing that less than 3% of
Please See Page 13 ☞
Amounts
It’s been five and a half years – July 2012 to be exact – since state and teacher retirees saw a perma- nent increase in their COLA Base from $12,000 to $13,000. Naturally our state and teacher members are wondering when will the COLA
Base be increased.
“Members can be assured that
while we’re working with the 102 local retirement systems to enhance their COLAs, our efforts to do the same for state and teacher retirees continue unabated,” states Associ- ation President Frank Valeri. “And a comprehensive report, known as the Commonwealth’s Actuarial Val- uation Report and released annually by PERAC (Public Employees Retirement Administration Com- mission), helps to clearly lay out the challenges that we face to enact
assumptions, the report formulates the total pension liabilities of the Commonwealth. Comparing these liabilities with the pension fund assets on hand in the PRIT fund, PERAC determines the funded level of the state’s pension liability.
Readers of the report might be surprised by some of its important findings highlighted below, includ- ing that the Commonwealth’s funding level as of this past January 1 is identical to last year’s (2016) valuation report, at a 56.7% funding level. According to Valeri, “One has
FUtUre state & teaCHers’
COla base HUrDles
JANUARY 2018
‘I am hopeful that we can get some balance in future decisions, so that the short term needs of retirees can be better addressed with a higher COLA Base.’
- PRESIDENT FRANK VALERI
Friday, January 12, 2018 11:00 A.M.,
LAWRENCE, MA Lawrence Elks
652 Andover Street
UPCOMING AREA MEETINGS
Northeastern Mass.
Florida Gold Coast
Wednesday, January 31, 2018 11:00 A.M.,
POMPANO BEACH, FL Pompano Beach Civic Center, 1801 NE 6th Street
Junction of NE 18th Ave. and NE 6th Street.
Wednesday, February 28, 2018 11:00 A.M.,
LARGO, FL
Elks Lodge #2159 810 - 16th Ave. S.E.
Florida Gulf Coast
Thursday, March 1, 2018 11:00 A.M.,
FT. MYERS BEACH, FL American Legion Post 274 899 Buttonwood Dr.
(at San Carlos Blvd.)
NEW LOCATION
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