Acturarial Valuations of the ERS retirement funds and the Texas Employees Group Benefits Program for fiscal year 2008, were delivered at the November 14, 2008 meeting of the ERS Board of Trustees.
Retirement Funds:
ERS' funded ratio decreased in Fiscal Year '08
ERS' funded status as of August 31, 2008 is 92.6%, a decrease from 95.6% on August 31, 2007. While the ERS plans have been impacted by the ongoing economic and financial turbulence, their standing remains strong. The principles of the state’s defined benefit retirement plan has proven to be in the best interest of state workers and retirees during this time.
The FY 2008 retirement actuarial valuation reflect the results of a recently concluded five-year experience study by recognizing the policies that encourage state workers to retire at first eligibility or earlier and increase plan liabilities, as well as the FY 2008 investment performance of negative 4.58 percent. During the same five-year period, the combined employer and employee contribution rates were not sufficient to keep pace with the growth in liabilities.
Members should not expect a post retirement bonus
The retirement system was not designed or funded to provide post retirement bonuses. ERS was designed to pay retirees a guaranteed lifetime annuity based on a formula that combines age and years of state service. The most important responsibility of ERS is to make sure that the system is properly funded to pay earned benefits to ERS Members. While the ERS Trust remains in good financial shape, the 92.6% funded ratio is not sufficient to meet the definition of being actuarially sound under Texas law; therefore, there can be no benefit enhancements, including post retirement bonuses at this funding status.
