ACERA’s actuary is the analytical backbone of our financial security. Our actuarial firm, Segal Co., uses data to place a value on ACERA’s financial commitments to its members as well as a value on the current holdings.
Our Actuary “Valuates” ACERA’s Fund
Each year, our actuary determines the value of ACERA’s pension assets and expenses and publishes an actuarial valuation report. These “actuarial values” are used to set the contribution rates (by % of payroll) that ACERA’s participating employers are required to pay so ACERA can meet its pension obligations, i.e., paying retirees their retirement benefits. The actuarial values from the past few years are summarized in the table.
Actuarial Values and Funded Ratio
Dollars in millions
Valuation as of
|Plain English:||(How much we have now)||(How much we owe in benefits, now and in the future)||(How much more we’ll need to pay all the benefits we owe)||(% of how much we owe that we have now. The ultimate goal is 100%.)|
The actuarial value of assets differs from the market value of assets because we “smooth” annual investment gains and/or losses over 5 years into the future to dampen market fluctuations. Smoothing helps our participating employers absorb changes in the cost of funding the pension system, giving them longer periods to make necessary changes in their budgets.
ACERA’s most recent annual actuarial valuation report is attached to this page. For past reports, see the Financial Reports Archive.
How “Net Pension Liability” Differs From “Unfunded Actuarial Accrued Liability”
For our 2014 reporting, ACERA implemented the provisions of Governmental Accounting Standards Board (GASB) Statement No. 67, which sets new guidelines on the reporting of pension liability. ACERA now reports a figure in our Comprehensive Annual Financial Report (CAFR) called Net Pension Liability or NPL. NPL is similar to Unfunded Actuarial Accrued Liability (UAAL) in that they are both projections of how much ACERA owes to its members in benefits (now and in the future) but doesn’t yet have in the pension fund. The primary difference between the two is that UAAL is calculated using Actuarial Value of Assets and NPL is calculated using Market Value of Assets. Each is calculated by our actuary in a separate valuation. The valuation that uses UAAL is also the valuation that is used to set our contribution rates. The valuation that uses NPL is used for reporting purposes to comply with GASB Statement No. 67 financial reporting requirements. Both valuations are attached to this page.
Below is a summary of ACERA’s NPL as calculated by our actuary:
Net Pension Liability (NPL)
Dollars in Millions
Valuation as of
|Plan Fiduciary Net Position||Total Pension Liability (TPL)||Net Pension Liability||Plan Fiduciary Net Position as a Percentage of TPL|
|Plain English:||(Market value of how much we have now)||(How much we owe in benefits, now and in the future)||(How much more we’ll need to pay all the benefits we owe)||(% of how much we owe that we have now. The ultimate goal is 100%.)|
Refer to ACERA’s CAFR, Section 2, Note 5, for more detailed information on NPL.