Actuarial Valuations

Overview

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

Actuarial
Valuation as of
December 31
Actuarial
Value of
Assets
Actuarial
Accrued
Liability
Unfunded
Actuarial
Accrued
Liability
Funded Ratio
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%.)
2019 $7,599.9 $9,795.0 $2.195.0 77.6%
2018 $7,239.3 $9,376.4 $2,137.1 77.2%
2017 $6,830.4 $8,987.1 $2,156.7 76.0%*
2016 $6,436.1 $8,237.7 $1,801.6 78.1%
2015 $6,083.5 $7,875.0 $1,791.5 77.3%
2014 $5,681.1 $7,592.1 $1,911.0 74.8%**
2013 $5,210.9 $6,861.7 $1,650.7 75.9%
2012 $4,883.9 $6,612.9 $1,729.1 73.9%
2011 $4,868.7 $6,359.5 $1,490.8 76.6%
2010 $4,776.1 $6,162.7 $1,386.6 77.5%
2009 $4,789.0 $5,899.3 $1,110.3 81.2%
2008 $4,644.0 $5,537.9 $893.9 83.9%
2007 $4,560.2 $5,112.4 $552.2 89.2%


*The reduction in the funded ratio from 2016 to 2017 was primarily caused by the change in the actuarial assumptions in the December 31, 2017 valuation, when the assumed annual rate of investment returns was lowered to 7.25% from 7.60% in the previous valuation.

**The reduction in the funded ratio from 2013 to 2014 was primarily caused by the change in the actuarial assumptions in the December 31, 2014 valuation, when the assumed annual rate of investment returns was lowered to 7.60% from 7.80% in the previous valuation.

 

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.

In 2015, ACERA implemented the provisions of Governmental Accounting Standards Board (GASB) Statement No. 67, which sets new guidelines on the reporting of pension liability. For more information on that, see our GASB Actuarial Valuations page.