Funding Status

The funding status (or “funded ratio”) of a retirement system is one measure of its financial health. The funded ratio compares a pension plan’s actuarial value of assets to its actuarial accrued liabilities. These numbers constantly change based on numerous economic and demographic variables.

Each year, KCERA’s actuary (The Segal Company) analyzes these variables and calculates a funded ratio based on KCERA’s experience at a single point in time. The last actuarial valuation was performed as of June 30, 2012 and can be found here.

The Segal Company follows industry and professional actuarial standards when calculating KCERA’s funding status. However, there are different approaches to performing this calculation based on other standards, assumptions and methodologies. For example, the Stanford Institute for Economic Policy Research (SIEPR) published a report on February 21, 2012 entitled "More Pension Math" that reflects a lower funded ratio than was calculated by The Segal Company. Responses to the assumptions used in the SEIPR report are available here and here. Another paper on public plan funding, published by the Harvard Kennedy School, can be accessed here.

The Board of Retirement discussed its funding policy with the actuary on May 16, 2012. You can click here to read about the actions taken at that board meeting.

Please return to this webpage for future updates on KCERA’s funding status.