Montana Teachers Retirement System Valuation Results July 1, 2016 - - PowerPoint PPT Presentation

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Oct 11, 2023 301 likes •451 views

Montana Teachers Retirement System Valuation Results July 1, 2016 Shawn Graham Executive Director www.trs.mt.gov Benefit Financing Basic Retirement Funding Equation C + I = B + E C = Contributions I = Investment Income

SLIDE 1

Montana Teachers’ Retirement System Valuation Results July 1, 2016

Shawn Graham
Executive Director
www.trs.mt.gov

SLIDE 2

Benefit Financing

C + I = B + E

Contributions Investment Income Benefits Paid Expenses (administration) = = = = C I B E

Basic Retirement Funding Equation

SLIDE 3

Participation in TRS

Teachers, administrators, specialists and others employed in a teaching or educational services capacity by a public school district, state agency, county, community college, Montana University System or educational cooperative are covered by TRS.

– Active members 19,048 – Inactive members 14,592 – Retirees and Beneficiaries 15,164 – Employers 372

SLIDE 4

Actuarial Assumptions

Experience Study: conducted every four years to compare the system’s actual experience from the previous five years to what was expected to

happen. Most recent experience study was adopted July 1, 2014.

Economic Assumptions:

General Wage Increases 4.00% Investment Return 7.75% Price Inflation 3.25% Growth in Membership 0.00% Interest on Member Accounts 5.00% Administrative Expenses 0.31%

Demographic Assumptions:

Individual Salary Increases Retirement Rates Disablement Rates Mortality Rates for Healthy and Disabled Other Terminations of Employment Probability of Retaining Membership in System

Next Experience Study is scheduled for the period 7/1/2012 – 7/1/2017

SLIDE 5

Comments on Valuation

Asset returns

– Market asset return 2.08% vs. 7.75% expected (5.67% less than expected). – Actuarial asset return 8.79% vs. 7.75% expected (1.04% greater than expected).

Funded Ratio

– Funding increased from 67.46% to 69.28%

Amortization Period

– Amortization period decreased from 26 to 24 years

SLIDE 6

Active and Retired Membership

6 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Actives 18,099 18,176 18,292 18,456 18,953 18,484 18,372 18,249 18,272 18,316 19,048 Retirees 11,019 11,356 11,788 12,036 12,440 12,899 13,363 13,868 14,349 14,839 15,164

5,000 10,000 15,000 20,000 25,000

0.5% annual increase for active members since 2006; 4.0% increase for 2016. 3.3% annual increase for retired members since 2006; 2.2% increase for 2016. 0.6 retirees per active 10 years ago; 0.8 retirees per active now.

SLIDE 7

Average Salary and Benefits

7 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Full-Time Salary 43,198 44,986 46,677 48,377 49,598 50,616 50,987 51,421 51,967 52,551 52,776 Retirees Benefits 16,436 17,192 17,729 18,218 18,814 19,420 20,044 20,503 21,153 21,667 22,118

10,000 20,000 30,000 40,000 50,000 60,000

2.0% annual increase for average salary since 2006; 0.4% increase for 2016. 3.0% annual increase for average benefits since 2006; 2.1% increase for 2016.

SLIDE 8

Payroll & Benefits (in Millions)

8 549.3 568.4 592.5 613.1 630.4 633.0 622.1 628.8 638.5 655.2 673.9 181.1 195.2 209.0 219.3 234.0 250.5 267.9 284.3 303.5 321.5 336.5

$0 $100 $200 $300 $400 $500 $600 $700 $800 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Full-time Payroll Benefits

SLIDE 9

Assets ($ Millions)

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Market Value $2,746 $3,209 $2,993 $2,302 $2,521 $2,972 $2,932 $3,185 $3,652 $3,708 $3,657 Actuarial Value $2,746 $3,006 $3,159 $2,762 $2,957 $2,867 $2,852 $3,068 $3,397 $3,610 $3,799 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Market Return 8.9% 17.6% (4.9)% (20.8)% 12.9% 21.7% 2.2% 12.9% 17.1% 4.6% 2.1% Actuarial Return 8.5% 10.2% 7.2% (10.3)% 9.8% (0.1)% 3.2% 12.0% 13.2% 9.6% 8.8%

SLIDE 10

Actuarial Assets vs. UAAL

$- $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Millions

Actuarial Value of Assets Unfunded Actuarial Liabilities (surplus)

SLIDE 11

TRS Funded Ratio

11 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Funded Ratio 76% 80% 80% 66% 65% 62% 59% 62% 65% 67% 69% 55% 65% 75% 85% 95%

SLIDE 12

Historical Cash Flow (in Millions)

$800
$600
$400
$200

$0 $200 $400 $600 $800 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Contributions Benefits and Adm. Expenses Investment Income Net Cash Flow

SLIDE 13

July 1, 2016 Valuation July 1, 2015 Valuation Total Normal Cost Rate 9.87% 9.21% Less Member Rate 8.15% 8.15% Employer Normal Cost Rate 1.72% 1.06% Administrative Expense Load 0.31% 0.28% Rate to Amortize UAL 9.23% 9.82% Total Employer Statutory Rate 11.26% 11.16% Actuarial Accrued Liability $5,483.7 million $5,351.4 million Actuarial Value of Assets $3,798.9 million $3,609.8 million Unfunded Accrued Liability $1,684.8 million $1,741.6 million Funded Ratio 69.28% 67.46% Amortization Period* 24 Years 26 Years

Funding Results

* Reflects anticipated increase in employer supplemental contribution rate

SLIDE 14

Progress Toward 100% Funding

$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000

2016 2021 2026 2031 2036

Millions

Projected UAAL - Level % of Pay