ERS
GMPF
GJRS
ERSGA
LRS
PSR
GDCP
PSERS
Employees' Retirement System of Georgia
Comprehensive Annual Financial Report
Fiscal Year Ended June 30, 2017
A component unit of the State of Georgia
2017
Our Mission
Our mission is to be the guardian of the State of Georgia's retirement plans and promote a dignified retirement for the members, retirees, and their beneficiaries.
Our vision is to demonstrate an unwavering commitment to delivering accurate and timely retirement benefits utilizing a knowledgeable staff and state-of-the-art technology to best serve the retirement needs of current and future members.
Our Values
Our Core Values are:
Integrity Customer Service Operational Excellence Continuous Improvement and Innovation
E RSGA
Serving those who serve Georgia
Employees' Retirement System of Georgia
Introductory Section Employees' Retirement System of Georgia
Comprehensive Annual Financial Report
Fiscal Year Ended June 30, 2017
Prepared by the Financial Services Division
James A. Potvin Executive Director
ERS
GMPF
GJRS
ERSGA
LRS
PSR
GDCP
PSERS
A component unit of the State of Georgia
Table of Contents
Introductory Section
Investment Section
Boards of Trustees
4
Investment Overview
79
Letter of Transmittal
5
Pooled Investment Fund/Rates of Return
80
Certificate of Achievement for Excellence in Financial
8
Asset Allocation at Fair Value/Investment Summary
81
Reporting
Schedule of Fees and Commissions
82
PPCC Recognition Award for Funding
9
Twenty Largest Equity Holdings
83
Administrative Staff and Organization
10
Fixed Income Holdings
84
Organizational Chart
11
Financial Section
Independent Auditors' Report
13
Management's Discussion and Analysis (Unaudited)
15
Basic Financial Statements:
Combining Statement of Fiduciary Net Position
23
as of June 30, 2017
Defined Benefit Plans-Combining Statement of
24
Fiduciary Net Position as of June 30, 2017
Combining Statement of Changes in Fiduciary Net
25
Position for the Year Ended June 30, 2017
Defined Benefit Plans-Combining Statement of
26
Changes in Fiduciary Net Position for the Year Ended
June 30, 2017
Statement of Net Position-State Employees' Assurance 27
Department Active Members Fund
Statement of Revenues, Expenses, and Changes in 28
Net Position-State Employees' Assurance
Department Active Members Fund
Statement of Cash Flows-State Employees' Assurance 29
Department Active Members Fund
Notes to Financial Statements
30
Required Supplementary Information (Unaudited):
Defined Benefit Plans:
Schedules of Employers' and Nonemployers'
62
Contributions
Schedules of Employers' and Nonemployers' Net
64
Pension/OPEB Liability and Related Ratios
Schedules of Changes in Employers' and
66
Nonemployers' Net Pension/OPEB Liability
Schedule of Investment Returns
72
Notes to Required Supplementary Information (Unaudited) 73
Additional Information:
Statement of Changes in Assets and Liabilities-
75
Survivors Benefit Fund
Schedule of Administrative Expenses-Contributions
76
and Expenses
Schedule of Investment Expenses
77
Actuarial Section
Actuary's Certification Letters
86
Summary of Plan Provisions
97
Summary of Actuarial Assumptions
99
Active Members
110
Member and Employer Contribution Rates
112
Defined Benefit Plans-Schedules of Funding Progress
114
Schedule of Retirees Added to and Removed from Rolls 116
Analysis of Change in Unfunded Accrued Liability (UAL) 118
Solvency Test Results
121
Statistical Section
Introduction
124
Additions by Source-Contribution/Investment Income
125
Deductions by Type
128
Changes in Fiduciary Net Position
131
Number of Retirees
133
Average Monthly Payments to Retirees
134
Annual Benefit
135
Withdrawal Statistics
136
Average Monthly Benefit Payment for New Retirees
137
Retired Members by Retirement Type
142
Retired Members by Optional Form of Benefit
144
Top Participatory Employers
147
Schedule of Revenue and Expenses-State Employees' 149
Assurance Department Active Members Fund
Schedule of Membership-State Employees'
150
Assurance Department Active Members Fund
Statistical Data at June 30, 2017
151
Introductory Section
ERS
GMPF
GJRS
ERSGA
LRS
PSR
GDCP
PSERS
E RSGA
Serving those who serve Georgia
Employees' Retirement System of Georgia
Boards of Trustees
Introductory Section
Employees' Retirement System, Legislative Retirement System, Georgia Defined Contribution Plan, and Georgia Military Pension Fund
Lonice Barrett Chair
Eli P. Niepoky Vice-Chair
Harold Reheis
Frank F. Thach, Jr.
Steven N. McCoy
Greg S. Griffin
Shawn Ryan
Public School Employees Retirement System* State Employees' Assurance Department**
Michael Lowe
Richard Taylor
Mark Butler
Georgia Judicial Retirement System*
Vacant
Ellen S. Golden
Ron Mullins
E. Trenton Brown III
*The PSERS and GJRS boards are comprised of the members of the ERS board and additional members shown under each plan.
**SEAD -- ERS Board Members Greg S. Griffin, Steven N. McCoy, Lonice Barrett, and Shawn Ryan serve in addition to the two members shown above. 4
Introductory Section
Letter of Transmittal
E RSGA
Serving those who serve Georgia
Employees' Retirement System of Georgia
Two Northside 75 Atlanta, GA 30318
December 21, 2017
I am pleased to present the Comprehensive Annual Financial Report for the fiscal year ended June 30, 2017 of the retirement systems and programs administered by the Employees' Retirement System of Georgia (the System). The management of the System is responsible for the accuracy, completeness and fairness of the presentation, including all disclosures. It is to the best of our knowledge and belief that the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of the System.
Profile of the System
The System was established in 1949 by an Act of the Georgia General Assembly to provide benefits for all State employees. Plans administered by the System include the Employees' Retirement System (ERS), the Legislative Retirement System (LRS) established in 1979, the Public School Employees Retirement System (PSERS) established in 1969, the Georgia Defined Contribution Plan (GDCP) established in 1992, the Georgia Judicial Retirement System (GJRS) established in 1998, and the Georgia Military Pension Fund (GMPF) established in 2002. In addition, the System is responsible for administering a Group Term Life Insurance Plan (SEAD), the 457 Plan established in 1974 and the 401(k) Plan established in 1994. A summary of each plan can be found on pages 30 through 39 of this report. The investments of all plans are pooled together into one fund except for the three defined contribution (DC) plans, which are maintained individually.
The ERS, LRS, GDCP, GMPF, 401(k) and 457 plans are governed by a 7-member Board of Trustees (Board) made up of 3 ex-officio members, 1 governor-appointed member, and 3 Board-appointed members. PSERS has the same Board as ERS with 2 additional governor-appointed members. GJRS has the same Board as ERS with 3 additional governorappointed members.
As of June 30, 2017, the System's defined benefit (DB) plans served a total of 111,036 active members and 69,351 retirees/ beneficiaries from 707 employers around the state. There
were 61,407 participants in the 401(k) plan with a total investment balance of $837 million. The 457 plan had 12,899 participants with a total investment balance of $597 million. There are 475 participating employers from around the state in the 457 and 401(k) plans.
Legislation
In the 2017 session, only one Act was passed by the General Assembly and signed by the Governor, which impacts the System:
Act 253 adds a Roth contribution option to both the state's 401(k) and 457 plans, collectively known as Peach State Reserves (PSR). PSR members will be able to contribute after-tax dollars to the PSR plans, and upon meeting certain requirements be later able to withdraw their contributions with no income tax due on any earnings they receive on those contributions. The new provision will be available to PSR members beginning January 1, 2018.
Summary of Financial Information
The management of the System is charged with the responsibility of maintaining a sound system of internal accounting controls. The objectives of such a system are to provide management with reasonable assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorizations, and that they are recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles. The concept of reasonable assurance recognizes that first, the cost of a control should not exceed the benefits likely to be derived, and second, the evaluation of the cost and benefits requires estimates and judgments by management.
Even though there are inherent limitations in any system of internal control, the management of the System makes every effort to ensure that through systematic reporting and internal reviews, errors or fraud would be quickly detected and corrected.
5
(continued)
Introductory Section
Letter of Transmittal
Please refer to the Management's Discussion and Analysis starting on page 15 of this report for an overview of the financial status of the System, including a summary of the System's Fiduciary Net Position, Changes in Fiduciary Net Position, and Asset Allocations.
For fiscal year 2017, the pooled investment fund generated a return of 12.4%. The fund continues to invest in a mix of highquality bonds and stocks which allows the System to participate in rising markets while controlling the downside risks. This has proven to be a successful strategy for other markets and for the System. For further information on investments of the pooled fund, please refer to the Investment Section on pages 79 through 84 of this report.
The objective of the System's pension trust funds is to meet long-term benefit promises through contributions that remain approximately level as a percent of member payroll over time while maintaining an actuarially sound system. Historical information relating to the progress in meeting this objective is presented on pages 114 and 115. The latest actuarial valuations as of June 30, 2016 showed the funded ratio of four of the five defined benefit plans increasing. The following table shows the change in funding percentage for each of the pension systems:
ERS PSERS LRS GJRS GMPF
FY2015 74.1% 83.2%
123.1% 113.2% 46.7%
FY2016 74.7% 84.4%
126.0% 111.1% 48.2%
Further information regarding the funding condition of the pension plans can be found in the Actuarial Section of this report, beginning on page 86.
Excellence in Financial Reporting
For the seventh consecutive year, the Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Employees' Retirement System of Georgia for its comprehensive annual financial report for the fiscal year ended June 30, 2016. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive
annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate.
Initiatives
Information Technology Cyber security was a significant factor this year, and several major initiatives in the IT group were focused on this area, as well as implementation of new infrastructure components. ERS implemented email SSN filtering, helping guard against data leakage of sensitive information. We also enabled email anti-fraud and anti-phishing link protection technology on our mail services. Additionally, ERS performed multiple vendorled penetration tests and remediated all technical findings. ERS implemented multiple end-user training and education initiatives, including a monthly cyber-security newsletter and training from the SANS Institute, Securing the Human.
On the technical/infrastructure side, ERS accomplished several significant projects, most notably the installation of a new Storage Area Network, increasing total available storage to 128 terabytes (TB). The new SAN has 21 TB of solid-state flash technologies and increased fiber throughput, substantially improving overall performance. ERS also deployed nextgeneration server technology to support the virtual server farm environment at our disaster recovery (DR) facility, improving our overall DR capabilities.
Retirement Readiness In 2017, ERS distributed our second annual integrated benefit statement. The statement is designed to provide customized comprehensive (to the extent supported by the data ERS possesses) retirement readiness information to our members, letting them know whether or not they appear to be on track financially for a secure retirement. We have set a basic income replacement target of 80% of their pre-retirement income in their first year of retirement, assuming retirement at age 65 and using their pension plan, Peach State Reserves plans, and Social Security as their sources of income. We found that approximately 75% of our current benefit tier (GSEPS) population is on track to meet the income replacement goal.
6
(continued)
Introductory Section
Letter of Transmittal
While we have focused on our members' savings and asset accumulation habits, we realize that we must also provide them with options for receiving income from the plans in retirement. The pension plans, of course, are designed to provide monthly income for life. However, the members must also be prepared to utilize the savings they have accumulated in the Peach State Reserves plans. To that end, we have added several "managed income" tools for them to use, including a robust retirement income modeling tool and a service which will provide customized advice from a financial advisor to help them manage their investments and withdrawals in retirement. In addition, we have begun to explore options that may be included in our plan design that will allow members to convert some or all of their Peach State Reserves balances into a monthly lifetime income stream, similar to their pension benefits.
Operations In July and August of 2016, ERS distributed cost-of-living adjustments to most retirees and payees of the Judicial Retirement System and the Public School Employees Retirement System, as well as one-time "13th check" payments to retirees and payees of the Employees' Retirement System and the Legislative Retirement System. These payments and benefit increases represent the first post-retirement adjustments of any kind granted to any of our retirees since the fall of 2009.
In the summer and fall of 2016, we partnered with the Department of Community Health (DCH) on a retiree health benefit initiative. ERS has for many years worked with DCH to deduct retiree health premiums from the pension checks and remit the premiums back to DCH. Starting in early 2017, the method used by DCH to determine premium subsidies
changed significantly, and ERS is now regularly providing service data to DCH to assist them in that effort.
Finally, ERS completed a number of system enhancements to add functionality and / or improve the user (member) experience. Among the most significant were the implementation of the calculation of new optional forms of benefit for JRS members, and the implementation of Single Sign-On with our Peach State Reserves administrator, allowing members to access ERS and PSR web sites using only a single authentication process. Acknowledgements This report reflects the combined effort of our staff under the Board's leadership. Copies of this report, along with other valuable plan information, can be downloaded from the System's website.
I would like to express my sincere thanks to the Boards of Trustees for their leadership and support. Many thanks are also extended to the offices of the Governor, Lieutenant Governor, members of the House and Senate Retirement Committees and their staff, members of the House and Senate, and the department officials whose support and assistance have helped ERS accomplish its mission over the years.
Respectfully submitted,
James A. Potvin, Executive Director Employees' Retirement System of Georgia
7
Introductory Section
8
Introductory Section
P P CC
Public Pension Coordinating Council Recognition Award for Funding
2017
Presented to
Employees' Retirement System of Georgia
In recognition of meeting professional standards for plan funding as
set forth in the Public Pension Standards.
Presented by the Public Pension Coordinating Council, a confederation of National Association of State Retirement Administrators (NASRA)
National Conference on Public Employee Retirement Systems (NCPERS) National Council on Teacher Retirement (NCTR)
Alan H. Winkle Program Administrator
9
Introductory Section
Administrative Staff and Organization
James A. Potvin Executive Director
Angie Surface Deputy Director
Charles W. Cary, Jr. CIO - Investment Services
Laura L. Lanier Controller
Chris Hackett Director
Information Technology
Nicole Paisant Director
Human Resources
Susan Anderson Chief Operating
Officer
Carolyn Kaplan Director
Financial Management Quality Assurance
Kelly Moody Director
Legislative Affairs
Consulting Services
Cavanaugh Macdonald Consulting, LLC - Actuary KPMG LLP - Auditor JPMorgan Chase Bank, N. A. - Defined Contribution
Custodian Alight Solutions (formerly Aon Hewitt) - Defined
Contribution Consultant and Administrator
Investment Advisors*
Albritton Capital Management Baillie Gifford Overseas Limited Barrow, Hanley, Mewhinney & Strauss Cooke & Bieler Fisher Investments Mondrian Investment Partners Limited Sands Capital Management
Medical Advisors
Harold E. Sours, M.D., Atlanta, GA G. Lee Cross, M.D., Atlanta, GA Douglas Smith, M.D., Smyrna, GA William H. Biggers, M.D., Atlanta, GA Pedro F. Garcia, M.D., Atlanta, GA H. Rudolph Warren, M.D., Dunwoody, GA Quinton Pirkle, M.D., Atlanta, GA Marvin Bittinger, M.D., Gainesville, GA Joseph S. Wilkes, M.D., Sandy Springs, GA
*See page 82 in the Investment Section for a summary of fees paid to Investment Advisors.
10
Organizational Chart
Introductory Section
Board of Trustees
Executive Director
Executive Support
Human Resources
Deputy Director
Investment Services Division
Financial Services Division
Information Technology
Division
Chief Operating
Officer
Legislative Affairs
Financial Management
Division
Quality Assurance
Division
Peach State Reserves
Office
Administration
Member Services Division
11
Financial Section
Independent Auditors' Report
KPMG LLP Suite 2000 303 Peachtree Street, NE Atlanta, GA 30308-3210
The Board of Trustees Employees' Retirement System of Georgia:
Report on the Financial Statements We have audited the accompanying financial statements of the fiduciary activities and proprietary activities of the Employees' Retirement System of Georgia (the System), a component unit of the State of Georgia, as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the System's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the fiduciary activities and proprietary activities of the System as of June 30, 2017, and the respective changes in financial position and where applicable, cash flows thereof, for the year then ended in accordance with U.S. generally accepted accounting principles.
Emphasis of Matter As discussed in note 3(h) to the basic financial statements, the System adopted, in 2017, Governmental Accounting Standards Board Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans (OPEB). Our opinion is not modified with respect to this matter.
Report on Summarized Comparative Information We have previously audited the System's 2016 financial statements, and we expressed an unmodified audit opinion on those audited financial statements in our report dated September 30, 2016. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2016 is consistent, in all material respects, with the audited financial statements from which it has been derived.
Other Matters Required Supplementary Information U.S. generally accepted accounting principles require that the management's discussion and analysis, schedules of employers' and nonemployers' contributions, schedules of employers' and nonemployers' net pension/OPEB liability and related ratios, schedules of changes in employers' and nonemployers' net pension/OPEB liability, and schedule of investment returns, on pages 1522 and 6272 be presented to supplement the basic
(continued) 13
Financial Section
financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the System's basic financial statements. The Survivors Benefit Fund statement of changes in assets and liabilities, and schedules of administrative expenses - contributions and expenses and investment expenses, and introductory, investment, actuarial, and statistical sections are presented for purposes of additional analysis and are not a required part of the basic financial statements.
expenses contributions and expenses and investment expenses are fairly stated in all material respects in relation to the basic financial statements as a whole.
The introductory, investment, actuarial, and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide an assurance on them.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 4, 2017 on our consideration of the System's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the System's internal control over financial reporting and compliance.
The Survivors Benefit Fund statement of changes in assets and liabilities, and schedules of administrative expenses contributions and expenses and investment expenses are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Survivors Benefit Fund statement of changes in assets and liabilities, and schedules of administrative
October 4, 2017, except for the introductory, investment, actuarial and statistical sections and the schedule of investment expenses which are as of December 21, 2017
14
Financial Section
ERS
GMPF
GJRS
ERSGA
LRS
PSR
GDCP
PSERS
E RSGA
Serving those who serve Georgia
Employees' Retirement System of Georgia
12
Financial Section
Management's Discussion and Analysis (Unaudited) June 30, 2017
This section provides a discussion and analysis of the financial performance of the Employees' Retirement System of Georgia (the System) for the year ended June 30, 2017. The discussion and analysis of the System's financial performance is within the context of the accompanying basic financial statements, notes to the financial statements, required supplementary schedules, and additional information following this section.
The System is responsible for administering a cost-sharing, multiple-employer defined benefit pension plan for various employer agencies of Georgia, along with six other defined benefit pension plans, a defined benefit OPEB plan, three defined contribution plans, and an agency fund, which comprise the fiduciary funds. The System is also responsible for administering an enterprise fund, which comprises the proprietary fund.
The defined benefit pension plans include: Employees' Retirement System (ERS) Public School Employees Retirement System (PSERS) Legislative Retirement System (LRS) Georgia Judicial Retirement System (GJRS) Georgia Military Pension Fund (GMPF) Superior Court Judges Retirement Fund (SCJRF) District Attorneys Retirement Fund (DARF)
The defined benefit OPEB plan consists of the State Employees' Assurance Department Retired and Vested Inactive Members Trust Fund (SEAD-OPEB).
The defined contribution retirement plans include: Georgia Defined Contribution Plan (GDCP) State of Georgia Employees' Qualified Trust Deferred Compensation Plan (401(k) Plan) State of Georgia Employees' Deferred Compensation Plan (457 Plan)
The agency fund consists of the Survivors Benefit Fund (SBF).
The enterprise fund consists of the State Employees' Assurance Department Active Members Fund (SEAD-Active).
Overview of Financial Statements
In fiscal year 2017, the System adopted the provisions of Governmental Accounting Standards Board (GASB) Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans (OPEB), and revised its accounting methodology with regard to the presentation of its group term life insurance plan for active members, SEAD-Active, and its custodial fund for maintaining group term life insurance coverage for members of SEAD-Active and SEAD-OPEB, the SBF. Prior year comparative totals have been restated to reflect this change. Additional discussion of the GASB Statement No. 74 implementation and the restatement of previously reported amounts can be found in note (3)(h) in the notes to the financial statements.
A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The System administers two categories of funds: fiduciary funds and a proprietary fund. Information related to the financial statements of the funds is presented in the notes to the financial statements.
Fiduciary funds are used to account for resources held for the benefit of parties outside of the System. The primary focus of the System's fiduciary funds is the accumulation of resources for and the payment of pension and OPEB benefits. The System maintains four types of fiduciary funds: (1) defined benefit pension trust funds which are used to report resources held in trust for pensions for retirees and beneficiaries covered by ERS, PSERS, LRS, GJRS, GMPF, SCJRF, and DARF, (2) a defined benefit OPEB trust fund which is used to report resources held in trust for other postemployment benefits of retirees and beneficiaries of SEAD-OPEB, (3) defined contribution pension trust funds which are used to accumulate contributions and earnings in the accounts of participants
(continued) 15
Financial Section
Management's Discussion and Analysis (Unaudited)
covered by GDCP, the 401(k) Plan, and the 457 Plan, and (4) an agency fund which is used to report resources held by the SBF in a custodial capacity for other plans.
Proprietary funds, which include enterprise and internal services funds, are used to account for the System's activities that are similar to private sector businesses. The System maintains one proprietary fund, an enterprise fund. The primary focus of the System's enterprise fund is the accumulation of resources for, and payment of, group term life insurance benefits for active members of ERS, LRS, and GJRS covered by SEAD-Active.
The basic financial statements comprise statements for both fiduciary and proprietary funds. The fiduciary fund financial statements include (1) Combining Statement of Fiduciary Net Position, (2) Defined Benefit Plans Combining Statement of Fiduciary Net Position, (3) Combining Statement of Changes in Fiduciary Net Position, and (4) Defined Benefit Plans Combining Statement of Changes in Fiduciary Net Position. The proprietary fund financial statements include (1) Statement of Net Position, (2) Statement of Revenues, Expenses, and Changes in Net Position, and (3) Statement of Cash Flows.
In addition, the System presents four types of required supplementary schedules, which provide historical trend information about the plan. The four schedules are (1) Schedules of Employers' and Nonemployers' Contributions, (2) Schedules of Employers' and Nonemployers' Net Pension/OPEB Liability and Related Ratios, (3) Schedules of Changes in Employers' and Nonemployers' Net Pension/OPEB Liability, and (4) Schedule of Investment Returns. The System also includes in this report additional information to supplement the financial statements.
The System prepares its financial statements on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles as promulgated by the GASB. These statements provide information about the System's overall financial status.
Financial Highlights
The highlights of the fiduciary funds of the System are as follows: The net position of the fiduciary funds increased by $1.1 billion, or 7.0%, from $16.0 billion at June 30, 2016 to $17.1 billion at June 30, 2017. The increase in net position from 2016 to 2017 was primarily due to the increase in equity markets.
For the year ended June 30, 2017, the total additions to net position were $2.8 billion compared to $1.0 billion for the year ended June 30, 2016. For the year ended June 30, 2017, the additions consisted of employer, nonemployer contributing entities (nonemployer), and member contributions totaling $868.8 million, insurance premiums of $3.8 million, net investment income of $1.9 billion, and participant fees of $1.6 million.
Net investment income of $1.9 billion in 2017 (comprising interest and dividend income, the change in fair value of investments, and other, reduced by investment expenses) represents a $1.7 billion increase, compared to the net investment income of $188.0 million for the year ended June 30, 2016. The net investment income was higher in 2017 compared to 2016 due primarily to higher returns in equity markets.
The total deductions from net position were $1.6 billion for the years ended June 30, 2017 and 2016. For the year ended June 30, 2017, the deductions consisted of benefit payments of $1.6 billion, refunds of $21.8 million, death benefits related to OPEB of $36.0 million, and administrative expenses of $16.5 million.
Benefit payments paid to retirees and beneficiaries had an increase of $55.8 million, or 3.7%, from $1.5 billion in 2016 to $1.6 billion in 2017, resulting primarily from an increase in the number of retirees and beneficiaries receiving benefits in 2017.
(continued) 16
Financial Section
Management's Discussion and Analysis (Unaudited)
The highlights of the proprietary fund of the System are as follows: The net position of the proprietary fund increased by $26.3 million to $267.3 million at June 30, 2017 compared to $241.0 million at June 30, 2016. The increase in net position from 2016 to 2017 was primarily due to the increase in equity markets.
For the year ended June 30, 2017, total operating loss was $3.5 million compared to $2.8 million for the year ended June 30, 2016. The increase relates primarily to the increase in the number of active members who received death benefits during the year.
Investment income allocated from the pooled investment fund of $29.8 million in 2017 represents a $26.7 million increase, compared to investment income allocated from the pooled investment fund of $3.1 million for the year ended June 30, 2016. The investment income allocated from the pooled investment fund was higher in 2017 compared to 2016 due primarily to higher returns in equity markets.
Description of the Financial Statements
Fiduciary Funds
The Combining Statement of Fiduciary Net Position is the statement of financial position presenting information that includes the fiduciary funds' assets and liabilities, with the balance representing the Net Position Restricted for Pensions and OPEB. The investments of the funds in this statement are presented at fair value. This statement is presented on page 23.
The Combining Statement of Changes in Fiduciary Net Position reports how the fiduciary funds' net position changed during the fiscal year. The additions include contributions to the retirement plans from employers, nonemployers, and members; group term life insurance premiums; participant fees; and net investment income, which includes interest and dividends and the net increase in the fair value of investments, net of investment expenses. The deductions include benefit payments, life insurance death benefit payments, refunds of member contributions and interest, and administrative expenses. This statement is presented on page 25.
The Defined Benefit Plans' Combining Statement of Fiduciary Net Position and the Combining Statement of Changes in Fiduciary Net Position present the financial position and changes in financial position for each of the defined benefit plans administered by the System. These statements are on pages 24 and 26, respectively.
Proprietary Funds
The Statement of Net Position is the statement of financial position presenting information that includes the assets and liabilities, with the balance representing the net position. This statement is presented on page 27.
The Statement of Revenues, Expenses, and Changes in Net Position distinguishes operating revenues and expenses from nonoperating items. Principal operating revenues result from insurance premiums from members, while operating expenses result from death benefit payments and administrative expenses. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. This statement is presented on page 28.
The Statement of Cash Flows provides relevant information about cash receipts and cash payments during the year. When used in conjunction with related disclosures and information in the other financial statements, the statement provides relevant information about the plan's ability to generate future net cash flows, the plan's ability to meet its obligations as they come due, and presents the reasons for differences between operating income and associated cash receipts and payments. This statement is presented on page 29.
Notes to Financial Statements are presented to provide the information necessary for a full understanding of the financial statements. The notes to the financial statements begin on page 30.
(continued) 17
Financial Section
Management's Discussion and Analysis (Unaudited)
Required Supplementary Information begins on page 62. The required schedules are discussed as follows: The Schedules of Employers' and Nonemployers' Contributions presents the required contributions and the percent of required contributions actually contributed. The Schedules of Employers' and Nonemployers' Net Pension/OPEB Liability and Related Ratios presents the components of the net pension/OPEB liability as of the fiscal year end and the fiduciary net position as a percentage of the total pension/OPEB liability as of that date. This trend information will be accumulated to display a 10-year presentation. The Schedules of Changes in Employers' and Nonemployers' Net Pension/OPEB Liability presents total net pension/OPEB liability and is measured as total pension/OPEB liability less the amount of the fiduciary net position. This trend information will be accumulated to display a 10-year presentation. The Schedule of Investment Returns presents historical trend information about the annual money-weighted rate of return on plan investments, net of plan investment expense. This trend information will be accumulated to display a 10-year presentation.
Three of the required schedules above, the Schedules of Employers' and Nonemployers' Contributions, the Schedules of Employers' and Nonemployers' Net Pension/OPEB Liability and Related Ratios, and the Schedules of Changes in Employers' and Nonemployers' Net Pension/OPEB Liability are applicable to five of the defined benefit pension plans (ERS, PSERS, LRS, GJRS, and GMPF) and the defined benefit OPEB plan (SEAD-OPEB). Notes to Required Supplementary Information are presented to provide the information necessary for a full understanding of the supplementary schedules. The notes to required supplementary information begin on page 73. Additional information is presented, beginning on page 75, and includes the Statement of Changes in Assets and Liabilities for the Survivors Benefit Fund which presents additions to and deductions from the fund, and the Schedule of Administrative Expenses Contributions and Expenses which presents the expenses incurred in the administration of the plans and funds, and the contributions from each plan and fund to provide for these expenses.
(continued) 18
Financial Section
Management's Discussion and Analysis (Unaudited) Financial Analysis of the System
A summary of the System's net position of the fiduciary funds at June 30, 2017 is as follows (dollars in thousands):
Assets: Cash, cash equivalents, and receivables Investments Capital assets, net Total assets
Net Position
2016, as
2017
restated
$
330,585
17,253,626
6,904
17,591,115
360,283 16,057,818
6,943 16,425,044
Liabilities:
Due to brokers and accounts payable
41,428
Due to other funds/plans and participating systems
403,237
Total liabilities
444,665
Net position
$ 17,146,450
43,729 361,912 405,641 16,019,403
Amount change
(29,698) 1,195,808)
(39) 1,166,071)
(2,301) 41,325) 39,024) 1,127,047)
Percentage change
(8.2) % 7.4) (0.6) 7.1)
(5.3) 11.4) 9.6) 7.0) )
A summary of the System's net position of the proprietary fund at June 30, 2017 is as follows (dollars in thousands):
Assets: Cash, cash equivalents, and receivables Investments Total assets
Liabilities: Accounts payable and other Net position
Net position
2017
2016
Amount change
Percentage change
$
127
267,194
267,321
94 240,948 241,042
33) 26,246) 26,279)
35.1) % 10.9) 10.9)
35
$
267,286
57 240,985
(22) 26,301)
(38.6) 10.9) )
(continued) 19
Financial Section
Management's Discussion and Analysis (Unaudited)
The following table presents the investment allocation at June 30, 2017 and 2016:
Asset allocation at June 30 (in percentages): Equities: Domestic International Private equity Domestic obligations: U.S. Treasuries Corporate and other bonds International obligations: Governments Corporates Mutual funds Commingled funds
Asset allocation at June 30 (in thousands): Equities: Domestic International Private equity Domestic obligations: U.S. Treasuries Corporate and other bonds International obligations: Governments Corporates Mutual funds Commingled funds
2017
47.8 % 16.1
0.8
14.6 10.9
0.5 1.1 -- 8.2
2016
47.8 % 14.5
0.6
13.8 14.1
0.5 1.1 -- 7.6
$ 8,249,643 2,780,668 134,213
$ 7,673,204 2,332,236 93,885
2,516,114 1,882,175
2,223,199 2,257,447
76,935 192,589
5,601 1,415,688 $ 17,253,626
77,266 174,512
5,084 1,220,985 $ 16,057,818
The total investment portfolio increased by $1.2 billion from 2016, which is primarily due to the increase in equity markets.
Investment performance is calculated using a time-weighted rate of return using the Daily Valuation Method. The time-weighted rate of return for the fiscal year ended June 30, 2017 was 12.4% with a 19.2% return for equities, a 7.5% return for private equity (inception date of October 3, 2013), and a (1.0)% return for fixed income. The five-year annualized rate of return at June 30, 2017 was 9.5%, with a 12.8% return for equities and a 1.8% return for fixed income.
(continued) 20
Financial Section
Management's Discussion and Analysis (Unaudited)
A money-weighted return is weighted by the amount of dollars in the fund at the beginning and end of the performance period. A moneyweighted return is highly influenced by the timing of cash flows into and out of the fund and is a better measure of an entity or person who controls the cash flows into or out of the fund. The nondiscretionary cash flows for the plan, primarily contributions and benefit payments, have a considerable impact on the money-weighted returns of the portfolio. The money-weighted rate of return for the fiscal year ended June 30, 2017 was 2.9%, compared to (7.2)% for the fiscal year ended June 30, 2016.
A summary of the changes in the System's net position of the fiduciary funds for the year ended June 30, 2017 is as follows (dollars in thousands):
Additions: Employer contributions Nonemployer contributions Member contributions Participant fees Insurance premiums Net investment income Other Total additions
Deductions: Benefit payments Refunds Death benefits Administrative expenses Total deductions Net increase (decrease) in net position
Changes in Net Position
2016,
2017
as restated
Amount change
Percentage change
$ 657,190 40,960
170,608 1,584 3,793
1,901,409 15
2,775,559
621,060 43,933
151,264 1,429 3,931
188,045 15
1,009,677
36,130 (2,973) 19,344
155 (138) 1,713,364
-- 1,765,882
5.8 % (6.8) 12.8 10.8 (3.5) 911.1 -- 174.9
1,574,118 21,849 36,058 16,487
1,648,512 $ 1,127,047
1,518,314 19,762 33,911 16,178
1,588,165 (578,488)
55,804 2,087 2,147 309
60,347 1,705,535
3.7 10.6
6.3 1.9 3.8 294.8
Additions The System accumulates resources needed to fund benefit payments through contributions and returns on invested funds. In fiscal year 2017, total contributions increased $52.5 million, or 6.4%, primarily because of an increase in the number of active members coupled with modest overall salary increases. Net investment income increased by $1.7 billion, or 911.1%, due primarily to positive returns in equity markets.
Deductions For fiscal year 2017, total deductions increased 3.8%, primarily because of a 3.7% increase in benefit payments. Pension benefit payments increased due to an increase in the number of retirees and beneficiaries receiving benefits in 2017 and one-time payments for cost-of-living adjustments. Refunds increased by 10.6%, which was primarily due to an increase in the number of refunds processed during 2017. Death benefits increased by 6.3%, which was primarily due to an increase in the number of death claims processed during 2017. Administrative expenses increased by 1.9% over the prior year, primarily due to increases in personal services and contractual services.
(continued) 21
Financial Section
Management's Discussion and Analysis (Unaudited)
A summary of the changes in the System's net position of the proprietary fund for the year ended June 30, 2017 is as follows (dollars in thousands):
Operating revenue: Insurance premiums Total operating revenue
Operating expenses: Death benefits Administrative expenses Total operating expenses Total operating loss
Nonoperating revenue: Allocation of investment income from pooled investment fund, net Change in net position
Changes in Net Position
2017
2016
Amount change
Percentage change
$
599
611
(12)
(2.0) %
599
611
(12)
(2.0)
4,019 64
4,083 (3,484)
3,345 67
3,412 (2,801)
674 (3)
671 (683)
20.1 (4.5) 19.7 24.4
29,785
$
26,301
3,109 308
26,676 25,993
858.0 8,439.3
Operating and nonoperating revenue The proprietary fund accumulates resources needed to fund death benefit payments through premiums earned and returns on invested funds. In fiscal year 2017, total premiums earned decreased $12.0 thousand, or 2%, primarily due to a decrease in the number of participating members. Allocation of investment income from the pooled investment fund, net of related expenses, increased by $26.7 million, or 858.0%, due primarily to positive returns in equity markets.
Operating expenses For fiscal year 2017, death benefits increased by 20.1%, which was primarily due to an increase in the number of death claims processed during 2017. Administrative expenses decreased by 4.5% over the prior year primarily due to improved administrative efficiency.
Requests for Information
This financial report is designed to provide a general overview of the System's finances for all those with interest in the System's finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to Employees' Retirement System of Georgia, Two Northside 75, Suite 300, Atlanta, GA 30318.
22
Combining Statement of Fiduciary Net Position
June 30, 2017 (with comparative totals as of June 30, 2016) (In thousands)
Assets Cash and cash equivalents
Receivables: Contributions Interest and dividends Due from brokers for securities sold Other Unremitted insurance premiums
Total receivables
Investments - at fair value: Domestic obligations: U.S. Treasuries Corporate and other bonds International obligations: Governments Corporates Equities: Domestic International Private equity Mutual funds Commingled funds Equity in pooled investment fund
Total investments
Capital assets, net
Total assets
Liabilities
Accounts payable and other Due to brokers for securities purchased Insurance premiums payable Due to other funds/plans Due to participating systems
Total liabilities
Net position restricted for pensions and OPEB
Defined Benefit Plans
$
31,827
Defined Contribution Plans
Agency Fund
Pooled Investment
Fund
160,096
Georgia Defined Contribution
Plan
24,971
401(k) Plan
16,882
457 Plan
1,196
Survivors Benefit Fund
92
Eliminations
35,084 -- --
1,973 555
-- 43,440 10,241
-- --
934
2,550
339
--
359
--
--
--
--
--
--
--
--
519
82
--
--
--
--
--
37,612
53,681
1,293
3,069
421
--
(555)
(555)
Total
2017 235,064
2016, as restated
222,327
38,907 43,799 10,241
2,574 --
95,521
39,882 42,486 53,612
1,976 --
137,956
-- --
-- --
-- -- -- -- -- 15,531,378
15,531,378 6,904
15,607,721
2,476,243 1,836,572
76,935 192,589
8,237,632 2,779,518
134,213 -- -- --
15,773,702
15,947,479
24,528 --
627 -- --
25,155
$
15,582,566
1,833 11,123
-- -- 15,934,523
15,947,479
39,871 45,603
-- --
-- -- -- -- -- --
85,474
111,738
6,336 498 --
2,801 827,810
837,445
857,396
5,675 652
2,800 587,878
597,005
598,622
-- --
-- --
-- -- -- -- -- 135,951
135,951 --
136,043
-- (15,667,329)
(15,667,329)
(15,667,884)
2,516,114 1,882,175
76,935 192,589
8,249,643 2,780,668
134,213 5,601
1,415,688 --
17,253,626 6,904
17,591,115
2,223,199 2,257,447
77,266 174,512
7,673,204 2,332,236
93,885 5,084
1,220,985 --
16,057,818 6,943
16,425,044
464 -- -- -- --
464
111,274
2,399
2,399
854,997
1,009
1,009
597,613
136,043
136,043
(555) (15,667,329)
(15,667,884)
30,233 11,123
72 136,043 267,194
444,665
17,146,450
29,648 14,001
80 120,964 240,948
405,641
16,019,403
23
Financial Section
See accompanying notes to financial statements.
Financial Section
Defined Benefit Plans Combining Statement of Fiduciary Net Position
June 30, 2017 (In thousands)
24
Assets
Cash and cash equivalents
Receivables: Contributions Interest and dividends Due from brokers for securities sold Other Unremitted insurance premiums
Total receivables
Investments - at fair value: Domestic obligations: U.S. Treasuries Corporate and other bonds International obligations: Governments Corporates Equities: Domestic International Private equity Mutual funds Commingled funds Equity in pooled investment fund
Total investments
Capital assets, net
Total assets
Liabilities
Accounts payable and other Due to brokers for securities purchased Insurance premiums payable Due to other funds/plans Due to participating systems
Total liabilities
Net position restricted for pensions and OPEB
Employees' Retirement
System
Public School Employees Retirement System
$
30,951
3
Defined Benefit Pension Plans
Legislative Retirement
System
14
Georgia Judicial Retirement System
579
Georgia Military Pension Fund
94
Superior Court Judges
Retirement Fund
23
Defined Benefit OPEB Plan
District Attorneys Retirement
Fund
3
State Employees' Assurance Department
OPEB
160
Defined Benefit Plans Total
31,827
34,256
--
28
800
--
--
--
--
--
--
--
--
1,815
156
1
1
--
--
--
--
36,071
156
29
801
--
35,084
--
--
--
--
--
1,973
555
555
555
37,612
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
13,047,409
868,952
33,039
440,443
20,682
1,120,853
15,531,378
13,047,409
868,952
33,039
440,443
20,682
1,120,853
15,531,378
6,904
6,904
13,121,335
869,111
33,082
441,823
20,776
23
3
1,121,568
15,607,721
22,421
977
100
630
65
17
1
--
--
--
--
615
--
1
11
--
--
--
--
--
--
--
--
--
--
--
23,036
977
101
641
65
17
1
317
24,528
--
--
627
--
--
317
25,155
$ 13,098,299
868,134
32,981
441,182
20,711
6
2
1,121,251
15,582,566
See accompanying notes to financial statements.
Combining Statement of Changes in Fiduciary Net Position
Year ended June 30, 2017 (with comparative totals for the year ended June 30, 2016) (In thousands)
Additions: Contributions: Employer Nonemployer Member Participant fees Insurance premiums Administrative expense allotment
Defined Benefit Plans
Pooled Investment
Fund
Defined Contribution Plans
Georgia
Defined
Contribution
401(k)
457
Plan
Plan
Plan
$
620,429
40,960
43,180
--
3,793
15
36,761
--
14,921
93,608
18,899
1,584
--
--
Investment income: Net increase (decrease) in fair value of investments Interest and dividends Other Less investment expenses Allocation of investment income
Net investment income (loss)
Total additions
-- -- -- (9,278) 1,763,431
1,754,153
2,462,530
1,475,241 339,807 -- (6,690)
(1,808,358)
(2,871) 1,871
(56)
(1,056)
13,865
90,838 16
537 (2,620)
--
88,771
220,724
59,625
610 (694)
59,541
78,440
Deductions: Benefit payments Refunds of member contributions and interest Death benefits Administrative expenses Total deductions
Net increase (decrease) in net position
Net position restricted for pensions and OPEB:
Beginning of year, as restated
End of year
1,479,380 10,305 36,058 11,817
1,537,560 924,970
14,657,596 $ 15,582,566
55,866
38,872
11,544
--
--
785
3,096
789
12,329
58,962
39,661
1,536
161,762
38,779
109,738
693,235
558,834
111,274
854,997
597,613
Total
2016, as
2017
restated
657,190 40,960
170,608 1,584 3,793 15
621,060 43,933
151,264 1,429 3,931 15
1,622,833 341,694 1,147 (19,338) (44,927)
1,901,409
2,775,559
(128,775) 340,308
1,107 (19,815)
(4,780)
188,045
1,009,677
1,574,118 21,849 36,058 16,487
1,648,512
1,127,047
1,518,314 19,762 33,911 16,178
1,588,165
(578,488)
16,019,403 17,146,450
16,597,891 16,019,403
25
Financial Section
See accompanying notes to financial statements.
Financial Section
Defined Benefit Plans Combining Statement of Changes in Fiduciary Net Position
Year ended June 30, 2017 (In thousands)
26
Additions: Contributions: Employer Nonemployer Member Participant fees Insurance premiums Administrative expense allotment
Investment income: Net increase (decrease) in fair value of investments Interest and dividends Other Less investment expenses Allocation of investment income Net investment income Total additions
Deductions: Benefit payments Refunds of member contributions and interest Death benefits Administrative expenses
Total deductions
Net increase (decrease) in net position
Net position restricted for pensions and OPEB:
Beginning of year, as restated
End of year
See accompanying notes to financial statements.
Employees' Retirement
System
Defined Benefit Pension Plans
Public School Employees Retirement System
Legislative Retirement
System
Georgia Judicial Retirement System
Georgia Military Pension Fund
Superior Court Judges
Retirement Fund
District Attorneys Retirement
Fund
Defined Benefit OPEB Plan
State Employees' Assurance Department
OPEB
Defined Benefit Plans Total
$ 613,201
12,080 35,863
-- -- 10
26,277
2,084
-- -- -- (8,157) 1,483,783
1,475,626
2,136,780
(371) 98,086
97,715
126,076
327
(10) 3,751
3,741
4,068
4,081 2,603 4,906
(179) 49,438
49,259
60,849
2,018
(6) 2,268
2,262
4,280
1,077 -- -- -- -- 1
-- -- -- -- --
1,078
51
1
620,429
40,960
43,180
3,793
3,793
4
15
(555)
(9,278)
126,105
1,763,431
125,550
1,754,153
55
129,344
2,462,530
1,394,283 9,033 -- 8,732
1,412,048
724,732
59,378 1,031 1,308
61,717
64,359
1,763 75
224
2,062
2,006
21,784 166 728
22,678
38,171
1,042
244
1,286
2,994
1,079 -- -- 1
1,080
(2)
51
1,479,380
10,305
36,058
36,058
4
576
11,817
55
36,634
1,537,560
92,710
924,970
12,373,567
803,775
30,975
403,011
17,717
8
2
1,028,541
14,657,596
$ 13,098,299
868,134
32,981
441,182
20,711
6
2
1,121,251
15,582,566
Statement of Net Position State Employees' Assurance Department Active Members Fund
June 30, 2017 (with comparative totals for the year ended June 30, 2016) (In thousands)
Financial Section
Assets Cash and cash equivalents Receivables: Unremitted insurance premiums Investments - at fair value: Equity share of pooled investment fund Total assets
Liabilities Accounts payable and other Total liabilities Total net position
See accompanying notes to financial statements.
2017
$
55
72
267,194 267,321
2016
14 80 240,948 241,042
35 35 $ 267,286
57 57 240,985
27
Statement of Revenues, Expenses, and Changes in Net Position State Employees' Assurance Department Active Members Fund
Year ended June 30, 2017 (with comparative totals for the year ended June 30, 2016) (In thousands)
Operating revenue: Insurance premiums Total operating revenue
Operating expenses: Death benefits Administrative expenses Total operating expenses Total operating loss
Nonoperating revenues (expenses): Allocation of investment income from pooled investment fund Investment expenses Total nonoperating revenues Change in net position
Total net position: Beginning of year End of year
2017
$
599
599
4,019 64
4,083 (3,484)
29,847 (62)
29,785 26,301
240,985 $ 267,286
Financial Section
2016 611 611
3,345 67
3,412 (2,801)
3,169 (60)
3,109 308
240,677 240,985
See accompanying notes to financial statements.
28
Financial Section
Statement of Cash Flows State Employees' Assurance Department Active Members Fund
Year ended June 30, 2017 (with comparative totals for the year ended June 30, 2016) (In thousands)
Cash flows from operating activities: Insurance premiums received Death benefits paid Administrative fees paid Net cash used in operating activities
2017
$
607
(4,019)
(85)
(3,497)
Cash flows from investing activities: Withdrawals from pooled investment fund Investment expenses paid Net cash provided by investing activities Net increase (decrease) in cash and cash equivalents
3,600 (62)
3,538 41
Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year
14
$
55
Reconciliation of operating loss to net cash used in operating activities:
Operating loss
$
Changes in assets and liabilities:
Unremitted insurance premiums
Accounts payable and other
Net cash used in operating activities
$
(3,484)
8 (21) (3,497)
2016
614 (3,345)
(53) (2,784)
2,800 (60)
2,740 (44) 58 14
(2,801)
4 13 (2,784)
See accompanying notes to financial statements.
29
Notes to Financial Statements
June 30, 2017
Financial Section
(1) General
The accompanying basic financial statements of the Employees' Retirement System of Georgia, including all plans and funds administered by the Employees' Retirement System of Georgia (collectively, the System), comprises the Employees' Retirement System of Georgia (ERS), Public School Employees Retirement System (PSERS), Legislative Retirement System (LRS), Georgia Judicial Retirement System (GJRS), Georgia Military Pension Fund (GMPF), Superior Court Judges Retirement Fund (SCJRF), District Attorneys Retirement Fund (DARF), State Employees' Assurance Department Retired and Vested Inactive Members Trust Fund (SEAD-OPEB), Georgia Defined Contribution Plan (GDCP), State of Georgia Employees' Qualified Trust Deferred Compensation Plan (401(k) Plan), State of Georgia Employees' Deferred Compensation Plan (457 Plan), Survivors Benefit Fund (SBF), and State Employees' Assurance Department Active Members Fund (SEAD-Active). All significant transactions among the various systems, departments, and funds have been eliminated. The Boards of Trustees, comprising active and retired members, ex-officio state employees, and appointees by the Governor, are ultimately responsible for the administration of the System.
(2) Authorizing Legislation and Plan Descriptions
Each plan and fund, including benefit and contribution provisions, was established and can be amended by state law. The following summarizes authorizing legislation and the plan description of each retirement fund:
(a) ERS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly during the 1949 Legislative Session for the purpose of providing retirement allowances for employees of the State of Georgia and its political subdivisions. ERS is directed by a Board of Trustees and has the powers and privileges of a corporation. There were 427 employers and 1 nonemployer contributing entity participating in the plan during 2017.
Membership As of June 30, 2017, participation in ERS is as follows:
Inactive members and beneficiaries currently receiving benefits Inactive members entitled to benefits but not yet receiving benefits Active plan members
Total
49,632 57,329 60,983
167,944
Benefits The ERS Plan supports three benefit tiers: Old Plan, New Plan, and Georgia State Employees' Pension and Savings Plan (GSEPS). Employees under the Old Plan started membership prior to July 1, 1982 and are subject to plan provisions in effect prior to July 1, 1982. Members hired on or after July 1, 1982 but prior to January 1, 2009 are New Plan members subject to modified plan provisions. Effective January 1, 2009, new state employees and rehired state employees who did not retain membership rights under the Old or New Plans are members of GSEPS. ERS members hired prior to January 1, 2009 also have the option to irrevocably change their membership to GSEPS.
Under the Old Plan, the New Plan, and GSEPS, a member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment of age 60 or after 30 years of creditable service, regardless of age. Additionally, there are some provisions allowing for early retirement after 25 years of creditable service for members under age 60.
Retirement benefits paid to members are based upon the monthly average of the member's highest 24 consecutive calendar months, multiplied by the number of years of creditable service, multiplied by the applicable benefit factor.
(continued) 30
Financial Section
Notes to Financial Statements
June 30, 2017
Annually, postretirement cost-of-living adjustments may also be made to members' benefits, provided the members were hired prior to July 1, 2009. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension, at reduced rates, to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.
Contributions and Vesting Member contributions under the Old Plan are 4% of annual compensation, up to $4,200, plus 6% of annual compensation in excess of $4,200. Under the Old Plan, the state pays member contributions in excess of 1.25% of annual compensation. Under the Old Plan, these state contributions are included in the members' accounts for refund purposes and are used in the computation of the members' earnable compensation for the purpose of computing retirement benefits. Member contributions under the New Plan and GSEPS are 1.25% of annual compensation. The state is required to contribute at a specified percentage of active member payrolls, determined annually by actuarial valuation. The state contributions are not at any time refundable to the member or his/her beneficiary.
Pursuant to The Official Code of Georgia Annotated (O.C.G.A.) 47-2-292, the employer contributions for local tax commissioners and their employees who took office or were employed prior to July 1, 2012 are funded by the State of Georgia on behalf of the local county employer. Pursuant to O.C.G.A. 47-2-290, the employer contribution for certain State Court employees is funded by the state on behalf of the local county employer.
Employer and nonemployer contributions as a percentage of covered payroll required for fiscal year 2017 were based on the June 30, 2014 actuarial valuation for the Old Plan, New Plan, and GSEPS, as follows:
Employer and nonemployer: Normal Employer paid for member Accrued liability
Total
Old Plan
1.38 % 4.75 18.56 24.69 %
New Plan
6.13 %
18.56 24.69 %
GSEPS
3.13 % --
18.56 21.69 %
Members become vested after 10 years of membership service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contributions, the member forfeits all rights to retirement benefits.
(b) PSERS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly in 1969 for the purpose of providing retirement allowances for public school employees who are not eligible for membership in the Teachers Retirement System of Georgia. The ERS Board of Trustees, plus two additional trustees, administers PSERS. There were 184 employers and 1 nonemployer contributing entity participating in the plan during 2017.
Membership As of June 30, 2017, participation in PSERS is as follows:
Inactive members and beneficiaries currently receiving benefits Inactive members entitled to benefits but not yet receiving benefits Active plan members
Total
18,104 48,189 35,510
101,803
(continued) 31
Notes to Financial Statements
June 30, 2017
Financial Section
Benefits A member may retire and elect to receive normal monthly retirement benefits after completion of 10 years of creditable service and attainment of age 65. A member may choose to receive reduced benefits after age 60 and upon completion of 10 years of creditable service.
Upon retirement, the member will receive a monthly benefit of $14.75, multiplied by the number of years of creditable service. Death and disability benefits are also available through PSERS. Additionally, PSERS may make periodic cost-ofliving adjustments to the monthly benefits.
Contributions and Vesting Individuals who became members prior to July 1, 2012 contribute $4 per month for nine months each fiscal year. Individuals who became members on or after July 1, 2012 contribute $10 per month for nine months each fiscal year. The State of Georgia, although not the employer of PSERS members, is required by statute to make employer contributions actuarially determined and approved and certified by the PSERS Board of Trustees.
Employer contributions required for the year ended June 30, 2017 were $727.97 per active member and were based on the June 30, 2014 actuarial valuation.
Members become vested after 10 years of creditable service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contributions, the member forfeits all rights to retirement benefits.
(c) LRS is a single-employer defined benefit pension plan established by the Georgia General Assembly from 1967-1971, and later reestablished in 1979, for the purpose of providing retirement allowances for all members of the Georgia General Assembly. LRS is administered by the ERS Board of Trustees. There was one employer in the plan for 2017.
Membership As of June 30, 2017, participation in LRS is as follows:
Inactive members and beneficiaries currently receiving benefits
263
Inactive members entitled to benefits but not yet receiving benefits
164
Active plan members
222
Total
649
Benefits A member's normal retirement is after eight years of creditable service and attainment of age 65, or eight years of membership service (four legislative terms) and attainment of age 62. A member may retire early and elect to receive a monthly retirement benefit after completion of eight years of membership service and attainment of age 60; however, the retirement benefit is reduced by 5% for each year the member is under age 62.
Upon retirement, the member will receive a monthly service retirement allowance of $36, multiplied by the number of years of creditable service. Death benefits are also available through the plan.
Contributions and Vesting Member contributions are 8.5% of annual salary. The state pays member contributions in excess of 4.75% of annual compensation. Employer contributions are actuarially determined and approved and certified by the ERS Board of Trustees.
There were no employer contributions required for the year ended June 30, 2017 based on the June 30, 2014 actuarial valuation.
(continued) 32
Financial Section
Notes to Financial Statements
June 30, 2017
Members become vested after eight years of creditable service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contributions, the member forfeits all rights to retirement benefits.
(d) GJRS is a cost-sharing multiple-employer defined benefit pension plan established by the Georgia General Assembly in 1998 for the purpose of providing retirement allowances for judges and solicitors general of the state courts, and juvenile court judges in Georgia and their survivors and other beneficiaries, superior court judges of the State of Georgia, and district attorneys of the State of Georgia.
The GJRS was also created to serve the members and beneficiaries of the Trial Judges and Solicitors Retirement Fund, the Superior Court Judges Retirement System, and the District Attorneys Retirement System (collectively, the Predecessor Retirement Systems). As of June 30, 1998, any person who was an active, inactive, or retired member or beneficiary of the Predecessor Retirement Systems was transferred to GJRS in the same status effective July 1, 1998. All assets of the Predecessor Retirement Systems were transferred to GJRS as of July 1, 1998. The ERS Board of Trustees and three additional trustees administer GJRS. There were 94 employers and 1 nonemployer contributing entity participating in the plan during 2017.
Membership As of June 30, 2017, participation in GJRS is as follows:
Inactive members and beneficiaries currently receiving benefits
346
Inactive members entitled to benefits but not yet receiving benefits
60
Active plan members
527
Total
933
Benefits The normal retirement for GJRS is age 60, with 16 years of creditable service; however, a member may retire at age 60 with a minimum of 10 years of creditable service.
Annual retirement benefits paid to members are computed as 66% of state-paid salary at retirement for district attorneys and superior court judges and 66% of the average over 24 consecutive months for trial judges, juvenile court judges, and solicitors, plus 1% for each year of credited service over 16 years, not to exceed 24 years. Early retirement benefits paid to members are computed as the pro rata portion of the normal retirement benefit, based on service not to exceed 16 years. Death, disability, and spousal benefits are also available.
Contributions and Vesting Members are required to contribute 7.5% of their annual salary. Those who became members prior to July 1, 2012 must also contribute an additional 2.5% of their annual salary if spousal benefit is elected. Employer contributions are actuarially determined and approved and certified by the GJRS Board of Trustees.
Pursuant to O.C.G.A. 47-23-81, the employer contributions for state court judges and solicitors are funded by the State of Georgia on behalf of the local county employers and pursuant to O.C.G.A. 47-23-82, the employer contributions for juvenile court judges are funded by the state on behalf of local county employers.
(continued) 33
Notes to Financial Statements
June 30, 2017
Financial Section
Employer and nonemployer contributions required for fiscal year 2017 were based on the June 30, 2014 actuarial valuation, as follows:
Employer and nonemployer: Normal Accrued liability
Total
14.55 % (4.07)
10.48 %
Members become vested after 10 years of creditable service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contributions, the member forfeits all rights to retirement benefits.
(e) The GMPF is a single-employer defined benefit pension plan established on July 1, 2002 by the Georgia General Assembly for the purpose of providing retirement allowances and other benefits for members of the Georgia National Guard (the National Guard). The ERS Board of Trustees administers the GMPF.
Membership As of June 30, 2017, the GMPF had 985 retirees and beneficiaries currently receiving benefits. Active and inactive plan member information is maintained by one employer, the Georgia Department of Defense.
Benefits A member becomes eligible for benefits upon attainment of age 60, with 20 or more years of creditable service (including at least 15 years of service as a member of the National Guard), having served at least 10 consecutive years as a member of the National Guard immediately prior to discharge, and having received an honorable discharge from the National Guard.
The retirement allowance is payable for life in the amount of $50 per month, plus $5 per month for each year of creditable service in excess of 20 years. The maximum benefit is $100 per month.
Contributions and Vesting Employer contributions are actuarially determined and approved and certified by the ERS Board of Trustees. There are no member contributions required.
Employer contributions required for the year ended June 30, 2017 were $149.82 per active member and were based on the June 30, 2014 actuarial valuation.
A member becomes vested after 20 years of creditable service (including at least 15 years of service as a member of the National Guard), having served at least 10 consecutive years as a member of the National Guard immediately prior to discharge, and having received an honorable discharge from the National Guard.
(f) SCJRF is a single-employer defined benefit pension plan established by the Georgia General Assembly in 1945 for the purpose of providing retirement benefits to the superior court judges of the State of Georgia. SCJRF is directed by its own Board of Trustees. The Boards of Trustees for ERS and SCJRF entered into a contract for ERS to administer the plan effective July 1, 1995.
Membership As of June 30, 2017, SCJRF had 16 retirees and beneficiaries currently receiving benefits and no active members. No new members are allowed into SCJRF.
(continued) 34
Financial Section
Notes to Financial Statements
June 30, 2017
Benefits The normal retirement for SCJRF is age 68, with 19 years of creditable service, with a benefit of two-thirds the salary paid to superior court judges. A member may also retire at age 65, with a minimum of 10 years of creditable service, with a benefit of one-half the salary paid to superior court judges. Death, disability, and spousal benefits are also available.
Contributions and Vesting Employer contributions are not actuarially determined, but are provided on an as-needed basis to fund current benefits.
(g) DARF is a multiple-employer defined benefit pension plan established by the Georgia General Assembly in 1949 for the purpose of providing retirement benefits to the district attorneys of the State of Georgia. DARF is directed by its own Board of Trustees. The Boards of Trustees for ERS and DARF entered into a contract for ERS to administer the plan effective July 1, 1995.
Membership As of June 30, 2017, DARF had five retirees and beneficiaries currently receiving benefits and no active members. No new members are allowed into DARF.
Benefits Persons appointed as district attorney emeritus shall receive an annual benefit of $15,000, or one-half of the state salary received by such person as a district attorney for the calendar year immediately prior to the person's retirement, whichever is greater.
Contributions and Vesting Employer contributions are not actuarially determined, but are provided on an as-needed basis to fund current benefits.
(h) SEAD-OPEB is a cost-sharing multiple-employer defined benefit other postemployment benefit plan created in 2007 by the Georgia General Assembly to amend Title 47 of the O.C.G.A., relating to retirement, so as to establish a fund for the provision of term life insurance to retired and vested inactive members of ERS, LRS, and GJRS. Effective July 1, 2009, no newly hired members of any Georgia public retirement system are eligible for term life insurance under SEAD. The SEAD-OPEB trust fund accumulates the premiums received from the aforementioned retirement systems, including interest earned on deposits and investments of such payments from retired and vested inactive members. There were 455 employers and 1 nonemployer contributing entity participating in the plan during 2017.
As of June 30, 2017, participation in SEAD-OPEB is as follows:
Retirees and beneficiaries Terminated employees Active plan members
Total
41,717 1,054
28,873
71,644
Employee contribution rates as a percentage of members' salaries were appropriated for the fiscal year ended June 30, 2017 as follows: ERS Old Plan 0.45% and ERS New Plan, LRS, and GJRS 0.23%. ERS Old Plan members were hired prior to July 1, 1982 and New Plan members were hired on or after July 1, 1982, but prior to January 1, 2009.
Georgia law provides that employee contributions to the plan shall be in an amount established by the Board of Trustees not to exceed one-half of 1% of the member's earnable compensation. There were no employer contributions required for the fiscal year ended June 30, 2017.
(continued) 35
Notes to Financial Statements
June 30, 2017
Financial Section
According to the policy terms covering the lives of members, insurance coverage is provided on a monthly, renewable term basis, and no return premiums or cash value are earned. The net position represents the excess accumulation of investment income and premiums over benefit payments and expenses, and is held as a reserve for payment of death benefits under existing policies.
The amount of insurance for a retiree with creditable service prior to April 1, 1964 is the full amount of insurance under SEAD-Active in effect on the date of retirement. The amount of insurance for a service retiree with no creditable service prior to April 1, 1964 is 70% of the amount of insurance under SEAD-Active at age 60 or at termination, if earlier. Life insurance proceeds are paid in a lump sum to the beneficiary upon death of the retiree.
Administrative costs for the plan are determined based on the plan's share of overhead costs to accumulate and invest funds, actuarial services, and to process benefit payments to beneficiaries. Administrative fees are financed from the assets of the plan.
(i) GDCP is a defined contribution plan established by the Georgia General Assembly in July 1992 for the purpose of providing retirement allowances for state employees who are not members of a public retirement or pension system and do not participate in Social Security. GDCP is administered by the ERS Board of Trustees. There were 71 employers participating in the plan during 2017. There were 117,509 members as of June 30, 2017.
Benefits A member may retire and elect to receive periodic payments after attainment of age 65. The payments will be based upon mortality tables and interest assumptions adopted by the ERS Board of Trustees. If a terminated member has less than $5,000 credited to his/her account, the ERS Board of Trustees has the option of requiring a lump-sum distribution to the member. Upon the death of a member, a lump-sum distribution equaling the amount credited to his/her account will be paid to the member's designated beneficiary.
Contributions and Vesting Members are required to contribute 7.5% of their annual salary and vest immediately in the plan upon contribution. There are no employer contributions. Earnings will be credited to each member's account as adopted by the ERS Board of Trustees. Upon termination of employment, the amount of the member's account is refundable upon request by the member.
(j) The 401(k) Plan was established by the State of Georgia Employee Benefit Plan Council in accordance with Georgia Law 1985, as amended, O.C.G.A, Sections 45-18-50 through 45-18-58, and Section 401(k) of the Internal Revenue Code (IRC). On October 1, 1994, activity commenced when the 401(k) Plan became available to employees of the State of Georgia Community Service Boards (CSBs). On December 1, 1998, the 401(k) Plan became available to employees of the Georgia Lottery Corporation (GLC). On July 1, 2005, the Plan became available to employees of Fayette County Board of Education; on July 1, 2006, the Plan became available to employees of Walton County Board of Education; on January 1, 2010, the Plan became available to employees of Henry County Board of Education; and on July 1, 2017, the Plan will become available to employees of the Baldwin County Board of Education.
Effective July 1, 1998, the State of Georgia Employee's Deferred Compensation Group Trust (the Master Trust) was formed for the State of Georgia Deferred Compensation Program to serve as the funding medium for the 401(k) Plan. At that time, the 401(k) Plan began operating on an employee elective deferral basis for all state employees working at least 1,000 hours in a 12-month period. All assets of the 401(k) Plan are held in trust for the exclusive benefit of the participants and their beneficiaries. The assets of the 401(k) Plan and the 457 Plan are commingled in the Master Trust with the respective trusts owning units of the Master Trust. Participant contributions are invested according to the participant's investment election. If the participant does not make an election, investments are automatically defaulted to a Lifecycle Fund based on the participant's date of birth.
(continued) 36
Financial Section
Notes to Financial Statements
June 30, 2017
Effective July 1, 2005 (HB275), ERS became the trustee of the 401(k) Plan. Aon Hewitt, which became Alight Solutions in June 2017, and JPMorgan Chase hold, administer, and invest the assets of the Master Trust.
Contributions and Vesting Participating CSBs, the GLC, and Walton and Henry County Boards of Education offer employer contributions, some matching, some automatic, and some a combination of both, to eligible employees at various rates (limited to a maximum of $265,000 base salary in calendar year 2016 and $270,000 in calendar year 2017). As of January 1, 2009, individual participants may defer up to 80% of eligible compensation, or up to limits prescribed by the IRC (whichever is less).
Effective January 1, 2009, in accordance with O.C.G.A. 47-2-350 through 47-2-360, newly hired state employees, as well as rehired state employees who did not maintain eligibility for the ERS Old Plan or New Plan, are members of GSEPS. From January 1, 2009 to June 30, 2014, the GSEPS tier included automatic enrollment in the 401(k) Plan at a contribution rate of 1% of salary. Effective July 1, 2014, in accordance with HB764, the employee contribution rate for automatic enrollment increased from 1% to 5%. The state matches 100% of the employee's initial 1% contribution and 50% of contributions above 1% and up to 5%. Therefore, the state will match 3% of salary when an employee contributes at least 5% to the 401(k) Plan. Employee contributions greater than 5% of salary do not receive any additional matching funds. Plan participants who are not employees of the GLC, a CSB, Walton and Henry County Boards of Education, or who are not GSEPS eligible do not receive any employer contributions in their 401(k) Plan.
All employer contributions are subject to a vesting schedule, which determines eligibility to receive all or a portion of the employer contribution balance at the time of any distribution from the account after separation from all state service. Vesting is determined based on the following schedule:
Less than 1 year 1 2 3 4 5 or more years
--% 20 40 60 80 100
For CSB/GLC participants whose services terminated prior to January 1, 2010 but after December 31, 2001, the following vesting schedule applies:
Less than 2 years 2 3 4 5 6 or more years
--% 20 40 60 80 100
For CSB/GLC participants whose services terminated prior to January 1, 2002, the following vesting schedule applies:
Less than 3 years 3 4 5 6 7 or more years
--% 20 40 60 80 100
(continued) 37
Notes to Financial Statements
June 30, 2017
Financial Section
Employee contributions and earnings thereon are 100% vested at all times. The 401(k) Plan also allows participants to roll over amounts from other qualified plans to their respective account in the 401(k) Plan on approval by the 401(k) plan administrator. Such rollovers are 100% vested at the time of transfer.
Participation As of June 30, 2017, the 401(k) Plan had 61,407 participants with a balance. A total of 471 employers transmitted contributions to the plan during 2017.
Distributions The participant may receive the value of his or her vested accounts upon attaining age 59.5, qualifying financial hardship, or 30 days after retirement or other termination of service (employer contribution balances are only eligible for distribution upon separation from service). Upon the death of a participant, his or her beneficiary shall be entitled to the vested value of his or her accounts. Employees who die while actively employed and eligible for 401(k) Plan employer matching contributions become fully vested in employer contributions upon death. Distributions are made in installments or in a lump sum.
(k) The 457 Plan was established by the State Personnel Board in accordance with Georgia Law 1974, page 198 as amended, O.C.G.A., Sections 45-18-30 through 45-18-36, and Section 457 of the IRC. The 457 Plan is available to employees of the State of Georgia and county health departments and permits such employees to defer a portion of their annual salary until future years. Employee contributions and earnings thereon are 100% vested at all times.
Effective July 1, 1998, the Master Trust was formed for the State of Georgia Deferred Compensation Program to serve as the funding medium for the 457 Plan. All assets of the 457 Plan are held in trust for the exclusive benefit of the participants and their beneficiaries. The assets of the 457 Plan and the 401(k) Plan are commingled in the Master Trust with the respective trusts owning units of the Master Trust. Participant contributions are invested according to the participant's investment election. If the participant does not make an election, investments are automatically defaulted to a Lifecycle Fund based on the participant's date of birth.
Effective July 1, 2005 (HB275), ERS became the trustee of the 457 Plan. Aon Hewitt, which became Alight Solutions in June 2017, and JPMorgan Chase hold, administer, and invest the assets of the Master Trust.
Participation As of June 30, 2017, the 457 Plan had 12,899 participants with a balance. A total of 307 employers transmitted contributions to the plan during 2017.
Distributions The balance in the employee's account in the 457 Plan is not available to the employee until age 70.5, termination, retirement, death, or unforeseeable emergency, as defined in the 457 Plan. Upon the death of a participant, his or her beneficiary shall be entitled to the vested value of his or her accounts. Distributions are made in installments or in a lump sum.
(l) The SBF was established under O.C.G.A. 47-2-128(c)(3) within the ERS trust solely for maintaining group term life insurance coverage for members of the plan. All assets of the SBF are therefore limited to the payment of benefits and expenses for such coverage and cannot be used to pay pension benefits of ERS. The SBF is shown on the financial statements separately as an agency fund to reflect ERS's custodial responsibility and to account for assets held for distribution to SEAD-Active and SEAD-OPEB. The SBF may only be used to pay benefits or expenses of SEAD-OPEB or SEAD-Active with authorization by the ERS Board of Trustees. An actuarial valuation is not prepared, as there are no funding requirements.
(continued) 38
Financial Section
Notes to Financial Statements
June 30, 2017
(m) SEAD-Active is a cost-sharing multiple-employer life insurance plan created in 2007 by the Georgia General Assembly to amend Title 47 of the Official Code of Georgia Annotated, relating to retirement, so as to establish a fund for the provision of term life insurance to active members of ERS, LRS, and GJRS. Effective July 1, 2009, no newly hired members of any Georgia public retirement system are eligible for term life insurance under SEAD. The SEAD-Active fund accumulates the premiums received from the aforementioned retirement systems, including interest earned on deposits and investments of such payments from active members. There were 455 employers and 1 nonemployer contributing entity participating in the plan during 2017. As of June 30, 2017, there were 28,873 active plan members in SEAD-Active.
Employee contribution rates as a percentage of members' salaries were appropriated for the fiscal year ended June 30, 2017 as follows: ERS Old Plan 0.05% and ERS New Plan, LRS, and GJRS 0.02%. ERS Old Plan members were hired prior to July 1, 1982 and New Plan members were hired on or after July 1, 1982, but prior to January 1, 2009.
Georgia law provides that employee contributions to the plan shall be in an amount established by the Board of Trustees not to exceed one-half of 1% of the member's earnable compensation. There were no employer contributions required for the fiscal year ended June 30, 2017.
According to the policy terms covering the lives of members, insurance coverage is provided on a monthly, renewable term basis, and no return premiums or cash value are earned. The net position represents the excess accumulation of investment income and premiums over benefit payments and expenses, and is held as a reserve for payment of death benefits under existing policies.
The amount of insurance coverage is equal to 18 times monthly earnable compensation frozen at age 60. For members with no creditable service prior to April 1, 1964, the amount decreases from age 60 by one-half of 1% per month until age 65, at which point the member will be covered for 70% of the age 60 coverage. Life insurance proceeds are paid in lump sum to the beneficiary upon death of the member.
Administrative costs for the plan are determined based on the plan's share of overhead costs to accumulate and invest funds, actuarial services, and to process benefit payments to beneficiaries. Administrative fees are financed from the assets of the plan.
(3) Significant Accounting Policies and System Asset Matters
(a) Basis of Accounting The System's financial statements are prepared in accordance with U.S. generally accepted accounting principles as applicable to governmental organizations. The System follows the reporting requirements established by GASB.
Fiduciary funds include the defined benefit plans and defined contribution plans, which are accounted for on the flow of economic resources measurement focus and the accrual basis of accounting. Contributions to the defined benefit pension plans and OPEB plan are recognized in the period in which the contributions are due. Benefits and refunds are recognized when due and payable in accordance with the terms of each plan. Contributions to the deferred compensation plans are recognized as received. The SBF is an agency fund and is custodial in nature and does not measure the results of operations. Assets and liabilities are recorded using the accrual basis of accounting. The proprietary fund comprises the SEAD-Active plan. This fund is accounted for on the flow of economic resources measurement focus and uses the accrual basis of accounting. The principal operating revenues are derived from insurance premiums. Operating expenses include the cost of claims and related expenses.
(continued) 39
Notes to Financial Statements
June 30, 2017
Financial Section
(b) Reporting Entity
The System is a component unit of the State of Georgia; however, it is accountable for its own fiscal matters and presentation
of its separate financial statements. The System has considered potential component units under GASB Statements No. 80, Blending Requirements for Certain Component Units, No. 61, The Financial Reporting Entity's Omnibus An Amendment of GASB Statement No. 14 and No. 34, and No. 39, Determining Whether Certain Organizations are Component Units,
and determined there were no component units of the System.
(c) Cash and Cash Equivalents Cash and cash equivalents, reported at cost, include cash on deposit at banks and cash on deposit with the investment custodian.
(d) Investments Investments are reported at fair value, and in some cases, net asset value (NAV) as a practical expedient to fair value. Equity securities traded on a national or international exchange are valued at the last reported sales price. Investments in private investment companies are valued utilizing the NAVs provided by the underlying private investment companies as a practical expedient. The Pooled Investment Fund (the Fund) applies the practical expedient to its investments in private investment companies on an investment by investment basis, and consistent with the Fund's entire position in a particular investment, unless it is probable that the Fund will sell a portion of an investment at an amount different from the NAV of the investment. Private equity fair value is measured using the valuation of the underlying companies as reported by the general partner. These investments, in the form of limited partnerships, reflect values and related performance on a quarter-lag basis due to the nature of the investments and the time it takes to value them. The estimated fair value of investments without readily ascertainable market values could differ significantly if a ready market for these assets existed. Fixed income securities are valued based primarily on quoted market prices provided by independent pricing sources. Global foreign exchange holdings are translated using a third party vendor. Investment income is recognized as earned by the System. There are no investments in, loans to, or leases with parties related to the System.
The System utilizes various investment instruments. Investment securities, in general, are exposed to various risks, such as interest rate, credit, foreign currency, and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the financial statements.
The System's policy with regard to the allocation of invested assets is established on a cost basis in compliance with Georgia statute. Plan assets are managed on a total return basis with a long-term objective of achieving and maintaining a fully funded status for the benefits provided through the pension and OPEB plans. The following was the System's adopted asset allocation policy as of June 30, 2017:
Asset class
Fixed income Equities Alternative investments Cash and cash equivalents
Total
Target allocation
25%-45% 55%-75%
0%-5%
100%
Approximately 14.6% of the investments held in trust for pension and OPEB benefits are invested in debt securities of the U.S. government. The System has no investments in any one organization, other than those issued by the U.S. government and its instrumentalities that represent 5% or more of the System's net position restricted for pensions and OPEB.
(continued) 40
Financial Section
Notes to Financial Statements
June 30, 2017
For the year ended June 30, 2017, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 2.9%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested.
(e) Capital Assets Capital assets, including software development costs, are stated at cost less accumulated depreciation and reside in ERS. The capitalization thresholds are $100,000 for buildings and building improvements and $5,000 for equipment and vehicles. Depreciation on capital assets is computed using the straight-line method over estimated useful lives of 5 to 40 years. Depreciation expense is included in administrative expenses. Maintenance and repairs are charged to administrative expenses when incurred. When assets are retired or otherwise disposed of, the costs and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in the combining statement of changes in fiduciary net position in the period of disposal.
(f) Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of net position and changes therein. Actual results could differ from those estimates.
(g) New Accounting Pronouncements
Pronouncements effective for the 2017 financial statements:
In June 2015, the GASB issued Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans. This Statement improves the usefulness of other postemployment benefits (OPEB) information included in the general purpose external financial reports of state and local governmental OPEB plans for making decisions and assessing accountability. This pronouncement resulted in expanded footnote disclosures and required supplementary information (RSI) related to the measurement of the OPEB liabilities. See footnote (3)(h) for more information regarding the implementation of this Statement.
In August 2015, the GASB issued Statement No. 77, Tax Abatement Disclosures. This Statement defines tax abatement and provides disclosure guidance for governments that have granted tax abatements. There are no applicable reporting requirements for the System related to this Statement.
In December 2015, the GASB issued Statement No. 78, Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans. The objective of this Statement is to amend the scope and applicability of Statement No. 68, Accounting and Financial Reporting for Pensions, to exclude pensions provided to employees of state or local governmental employers through certain multiple-employer defined benefit pension plans and to establish accounting and reporting requirements for those pensions. There are no applicable reporting requirements for the System related to this Statement.
In January 2016, the GASB issued Statement No. 80, Blending Requirements for Certain Component Units. The objective of this Statement is to improve financial reporting by clarifying the financial statement presentation requirements for certain component units and to amend the blending requirements established in paragraph 53 of Statement No. 14, The Financial Reporting Entity, as amended. There are no applicable reporting requirements for the System related to this Statement.
In March 2016, the GASB issued Statement No. 82, Pension Issues an Amendment of GASB Statements No. 67, 68, and No. 73. The objective of this Statement is to address issues regarding (1) the presentation of payroll-related measures in the required supplementary information, (2) the selection of assumptions and the treatment of deviations from the guidance in an Actuarial Standard of Practice for financial reporting purposes, and (3) the classification of payments
(continued) 41
Notes to Financial Statements
June 30, 2017
Financial Section
made by employers to satisfy employee (plan member) contribution requirements. The implementation of GASB Statement No. 82 did not impact the amounts recorded or disclosures presented in the System's financial statements.
Pronouncements issued, but not yet effective:
In June 2015, the GASB issued Statement No. 75, Accounting and Financial Reporting for Postemployment Benefit Plans Other Than Pensions, effective for fiscal years beginning after June 15, 2017. This Statement addresses accounting and financial reporting for OPEB that is provided to the employees of state and local governmental employers. This Statement establishes standards for recognizing and measuring liabilities, deferred outflows of resources, deferred inflows of resources, and expenses. This Statement also establishes requirements for note disclosures and required supplementary information for defined benefit OPEB plans. The System is in the process of evaluating the impact of this pronouncement on its financial statements.
In March 2016, the GASB issued Statement No. 81, Irrevocable Split-Interest Agreements, effective for fiscal years beginning after December 15, 2016. The objective of this Statement is to improve accounting and financial reporting for irrevocable split-interest agreements by providing recognition and measurement guidance for situations in which a government is a beneficiary of the agreement. There will be no applicable reporting requirements for the System related to this Statement.
In November 2016, the GASB issued Statement No. 83, Certain Asset Retirement Obligations, effective for fiscal years beginning after June 15, 2018. This Statement addresses accounting and financial reporting for certain asset retirement obligations (AROs). An ARO is a legally enforceable liability associated with the retirement of a tangible capital asset. The System does not anticipate this statement to impact its financial statements and related reporting.
In January 2017, the GASB issued Statement No. 84, Fiduciary Activities, effective for fiscal years beginning after December 15, 2018. The objective of this Statement is to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. The System is in the process of evaluating the impact of this pronouncement on its financial statements.
In March 2017, the GASB issued Statement No. 85, Omnibus 2017, effective for fiscal years beginning after June 15, 2017. This Statement addresses practice issues that have been identified during implementation and application of certain GASB Statements. A variety of topics are addressed including issues related to blending component units, goodwill, fair value measurement and application, and OPEB. The System is in the process of evaluating the impact of this pronouncement on its financial statements.
In May 2017, the GASB issued Statement No. 86, Certain Debt Extinguishment Issues, effective for fiscal years beginning after June 15, 2017. The primary objective of this Statement is to improve consistency in accounting and financial reporting for in substance defeasance of debt. There will be no applicable reporting requirements for the System related to this Statement.
(continued) 42
Financial Section
Notes to Financial Statements
June 30, 2017
(h) Change in Accounting Principle During fiscal year 2017, the System adopted the provisions of GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans (OPEB). GASB Statement No. 74 requires the disclosure of
the net OPEB liability and expanded footnote disclosure and RSI for OPEB plans and clarifies what constitutes an OPEB
plan. As a result, SEAD-Active and SBF, both previously reported as defined benefit OPEB plans, are now reported as an
enterprise fund and an agency fund, respectively, based on the nature of their activities. Comparative financial information
presented for 2016 has been restated to reflect this change as follows (amounts in thousands):
Combining Statement of Fiduciary Net Position: Total assets as of 6/30/16, as previously reported Adoption of GASB Statement No. 74 Total assets as of 6/30/16, as restated Total liabilities as of 6/30/16, as previously reported Adoption of GASB Statement No. 74 Total liabilities as of 6/30/16, as restated
Combining Statement of Changes of Fiduciary Net Position: Total additions as of 6/30/16, as previously reported Adoption of GASB Statement No. 74 Total additions as of 6/30/16, as restated Total deductions as of 6/30/16, as previously reported Adoption of GASB Statement No. 74 Total deductions as of 6/30/16, as restated Net Position as of 7/1/15, as previously reported Adoption of GASB Statement No. 74 Net position as of 7/1/15, as restated Net Position as of 6/30/16, as previously reported Adoption of GASB Statement No. 74 Net Position as of 6/30/16, as restated
System Total
$ 16,425,058
(14)
$ 16,425,044
$
43,706
361,935
$ 405,641
$ 1,015,006 (5,329)
$ 1,009,677 $ 1,591,577
(3,412) $ 1,588,165 $ 16,957,923
(360,032) $ 16,597,891 $ 16,381,352
(361,949) $ 16,019,403
(continued) 43
Notes to Financial Statements
June 30, 2017
Financial Section
(4) Investment Program
The System maintains sufficient cash to meet its immediate liquidity needs. Cash not immediately needed is invested as directed by the Board of Trustees. All investments are held by agent custodial banks in the name of the System. State statutes and the System's investment policy authorize the System to invest in a variety of short-term and long-term securities as follows:
(a) Cash and Cash Equivalents Custodial credit risk is the risk that in the event a depository institution or counterparty fails, the System would not be able to recover the value of its deposits or investments. The System does not have a formal policy relating to custodial credit risk. The carrying amount of the System's deposits totaled $235.1 million at June 30, 2017 with actual bank balances of $238.7 million. The System's bank balances of $223.6 million are fully insured through the Federal Deposit Insurance Corporation, an independent agency of the U.S. government. The remaining bank deposits of $15.1 million are uninsured and uncollateralized. The System's noncash investments are held in the System's name and are not exposed to custodial credit risk.
Short-term securities authorized but not currently used are as follows: Repurchase and reverse repurchase agreements, whereby the System and a broker exchange cash for direct
obligations of the U.S. government or obligations unconditionally guaranteed by agencies of the U.S. government or U.S. corporations. The System or broker promises to repay the cash received, plus interest, at a specific date in the future in exchange for the same securities.
U.S. Treasury obligations.
Commercial paper, with a maturity of 180 days or less. Commercial paper is an unsecured promissory note issued primarily by corporations for a specific amount and maturing on a specific day. The System considers for investment only commercial paper of the highest quality, rated P-1 and/or A-1 by national credit rating agencies.
Master notes, an overnight security administered by a custodian bank and an obligation of a corporation whose commercial paper is rated P-1 and/or A-1 by national credit rating agencies.
Investments in commercial paper or master notes are limited to no more than $500 million in any one name.
(b) Investments Fixed income investments, managed by the Division of Investment Services (the Division), are authorized in the following instruments: U.S. and foreign government obligations. At June 30, 2017, the System held U.S. Treasury bonds of approximately $2.5 billion and international government bonds of approximately $76.9 million.
Obligations unconditionally guaranteed by agencies of the U.S. government. At June 30, 2017, the System did not hold agency bonds.
U.S. and foreign corporate obligations. At June 30, 2017, the System held U.S. corporate bonds of approximately $1.9 billion and international corporate bonds of approximately $192.6 million.
Private placements are authorized under the same general restrictions applicable to corporate bonds. At June 30, 2017, the System did not hold private placements.
(continued) 44
Financial Section
Notes to Financial Statements
June 30, 2017
Mortgage investments are authorized to the extent that they are secured by first mortgages on improved real property located in the State of Georgia.
Equity securities are also authorized (in statutes) for investment as a complement to the System's fixed-income portfolio and as a long-term inflation hedge. By statute, no more than 75% of the total invested assets on a historical cost basis may be placed in equities. Equity holdings in any one corporation may not exceed 5% of the outstanding equity of the issuing corporation. The equity portfolio is managed by the Division, in conjunction with independent advisers. Buy/sell decisions are based on securities meeting rating criteria established by the Board of Trustees, in-house research considering such matters as yield, growth, and sales statistics, and analysis of independent market research. Equity trades are approved and executed by the Division's staff. Common stocks eligible for investment are approved by the Investment Committee of the Board of Trustees before being placed on an approved list.
Equity investments are authorized in the following instruments: Domestic equities are those securities considered by O.C.G.A. to be domiciled in the United States. At June 30, 2017,
the System held domestic equities of approximately $8.2 billion.
International equities, including American Depository Receipts (ADR), are not considered by the O.C.G.A. to be domiciled in the United States. At June 30, 2017, the System held international equities of approximately $762.1 million and ADRs of approximately $2.0 billion, excluding the 401(k) and 457 plans.
Alternative investments are authorized (in statutes) to provide portfolio diversification and to enhance the risk-adjusted rate of return for the retirement fund that benefits the members of the System. By statute, the allocation to alternative investments shall not, in the aggregate, exceed 5% of the System's plan assets at any time. Further, in any calendar year, new commitments to alternative investments shall not, in the aggregate exceed 1.0% of the System's plan assets until the first occurrence that 4.5% of the assets have been invested, at which time there shall be no limit on the percentage of commitments that may be made in any calendar year, subject to compliance with other provisions of the statute. At June 30, 2017, the System held private equity investments of approximately $134.2 million.
The Master Trust invests in various mutual funds, common collective trust funds, and separate accounts, as selected by participants. Each participant is allowed to select and invest contributions into investment options that own one or more commingled funds, as authorized by the Board of Trustees. Participants may also contribute to a self-directed brokerage account that offers investments in various mutual funds and equities. At June 30, 2017, the deferred compensation plans held commingled funds of approximately $1.4 billion, mutual funds of approximately $5.6 million, domestic equities of approximately $12.0 million, and international equities of approximately $1.2 million.
Substantially all of the investments of ERS, PSERS, LRS, GJRS, GMPF, SEAD-OPEB, SBF, and SEAD-Active are pooled into one common investment fund. Units in the pooled common investment fund are allocated to the respective plans, based upon the cost of assets contributed, and additional units are allocated to the participating plans, based on the market value of the pooled common investment fund at the date of contribution. Net income of the pooled common investment fund is allocated monthly to the participating plans, based upon the number of units outstanding during the month.
(continued) 45
Notes to Financial Statements
June 30, 2017
Financial Section
The units and fair value of each plan's equity in the pooled common investment fund at June 30, 2017 were as follows (dollars in thousands):
Employees' Retirement System Public School Employees Retirement System Legislative Retirement System Georgia Judicial Retirement System Georgia Military Pension Fund State Employees' Assurance Department - OPEB Survivors Benefit Fund
Total defined benefit plans
State Employees' Assurance Department - Active
Total in pooled investment funds
Fair value $ 13,047,409
868,952 33,039
440,443 20,682
1,120,853 135,951
15,667,329
267,194
$ 15,934,523
Units
2,879,843 191,796 7,292 97,215 4,565 247,396 30,007
3,458,114
58,976
3,517,090
Fair Value Measurements. The System categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the inputs used in valuation and gives the highest priority to unadjusted quoted prices in active markets and requires that observable inputs be used in the valuations when available. The disclosure of fair value estimates in the hierarchy is based on whether the significant inputs into the valuations are observable. In determining the level of the hierarchy in which the estimate is disclosed, the highest level, Level 1, is given to unadjusted quoted prices in active markets and the lowest level, Level 3, to unobservable inputs.
The three levels of the fair value hierarchy are as follows:
Level 1 Valuations based on unadjusted quoted prices for identical instruments in active markets that the System has the ability to access
Level 2 Valuations based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs are observable
Level 3 Valuations based on inputs that are unobservable and significant to the overall fair value measurement
The System also has investments held through limited partnerships for which fair value is estimated using the NAV reported by the general partner as a practical expedient to fair value. Such investments have not been categorized within the fair value hierarchy.
In instances where inputs used to measure fair value fall into different levels in the fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The System's assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each investment. The table on the following page shows the fair value leveling of the System's investments (in thousands).
(continued) 46
Notes to Financial Statements
June 30, 2017
Financial Section
Investments by fair value level
Equities: Domestic International
Obligations: Domestic: U.S. Treasuries Corporate bonds International: Governments Corporate bonds
Mutual funds Commingled funds
Fair value measures using
Quoted prices in active
markets for identical assets
(Level 1)
Significant other
observable inputs (Level 2)
Significant unobservable
inputs (Level 3)
$
8,249,568
--
75
2,761,392
19,276
--
2,516,114
--
--
--
1,882,175
--
--
76,935
--
--
192,589
--
5,601
--
--
81,919
1,333,769
--
Total investments by
fair value level
$
Investments measured at NAV* Private equity funds
Total investments
13,614,594
3,504,744
75 $
Total
8,249,643 2,780,668
2,516,114 1,882,175
76,935 192,589
5,601 1,415,688
17,119,413
134,213 17,253,626
*Certain investments that are measured at fair value using the NAV per share (or its equivalent) as a practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the combining statement of fiduciary net position.
Equity securities classified in Level 1 are valued using prices quoted in active markets for those securities. Equity securities in Level 2 are valued using prices quoted for similar instruments in active markets. Equity securities classified in Level 3 are valued using third-party valuations not currently observable in the market.
Debt securities classified in Level 1 are valued using prices quoted in active markets. Debt securities classified in Level 2 are valued using either a bid evaluation or a matrix pricing technique. Bid evaluations may include market quotations, yields, maturities, call features, and ratings. Matrix pricing is used to value securities based on the securities' relationship to benchmark quoted prices. These securities have nonproprietary information that was readily available to market participants, from multiple independent sources, which are known to be actively involved in the market.
Mutual funds and commingled funds classified in Level 1 are valued using prices quoted in active markets for those investment types. Commingled funds classified in Level 2 are valued using observable underlying inputs that are market corroborated.
(continued) 47
Notes to Financial Statements
June 30, 2017
Financial Section
Unfunded commitments, redemption frequency, and redemption notice period relative to the System's alternative investments for which the System utilized NAV or its equivalent relative to the determination of fair value at June 30, 2017 are as follows (in thousands):
Private equity funds
Investments measured at
NAV
$ 134,213
Unfunded commitments
261,146
Redemption frequency (if currently eligible)
Not eligible
Redemption notice period
N/A
Investments in privately held limited partnerships are valued using the NAV provided by the general partner as of March 31 of each fiscal year, adjusted by the System for cash flows through June 30. The quarterly values of the partnership investments provided from the general partner are reviewed by the System to determine if any adjustments are necessary. The types of partnership strategies held include growth equity, leveraged buyouts, and mezzanine debt. Two of the 15 partnerships held are secondary investments and are in or nearing the wind-up phase of the fund. The remaining investments typically have an approximate life of 810 years. These investments are considered illiquid since the nature of these private investments prohibits redemption with the fund; instead, distributions are received from the general partner through liquidation of the underlying assets of the fund. The System currently has no plans to sell any of the investments prior to their liquidation resulting in these assets being carried at the NAV estimated by the general partner and adjusted for second quarter cash flows by the System.
Credit Risk: Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations to the System. O.C.G.A. 47-20-84 limits investments to investment grade securities.
It is the System's investment policy to require that the bond portfolio be of high quality and chosen with respect to maturity ranges, coupon levels, refunding characteristics, and marketability. The System's policy is to require that new purchases of bonds be restricted to high-grade bonds rated no lower than "A" by any nationally recognized statistical rating organization. If a bond is subsequently downgraded to a rating below "A," it is placed on a watch list. The System holds one bond which was downgraded to a rating below "A." Obligations of the U.S. government or obligations explicitly guaranteed by the U.S. government are not considered to have credit risk and do not require disclosure of credit quality. The quality ratings of investments in fixed income securities as described by Standard & Poor's and by Moody's Investors Service, which are nationally recognized statistical rating organizations, at June 30, 2017 are shown in the chart on the following page (in thousands):
(continued) 48
Notes to Financial Statements
June 30, 2017
Financial Section
Quality Ratings of Fixed Income Investments Held at June 30, 2017
Investment type Domestic obligations:
U.S. Treasuries Corporates
Total corporates International obligations:
Governments Corporates
Total corporates Total fixed income investments
Standard & Poor's/ Moody's
quality rating
June 30, 2017 fair value
AAA/Aaa AA/Aaa AA/Aa AA/A
A/A BBB/Baa
$
2,516,114
192,343
192,005
251,366
458,391
711,134
76,936
1,882,175
A/Aa
76,935
A/Aa
96,266
A/A
96,323
192,589
$
4,667,813
Mutual funds, commingled funds, and various equities of the deferred compensation plans are not considered to have credit risk and do not require disclosure of credit risk rating.
Concentration of Credit Risk: Concentration of credit risk is the risk of loss that may be attributed to the magnitude of a government's investment in a single issue. At June 30, 2017, the System did not have debt or equity investments in any one organization, other than those issued or guaranteed by the U.S. government or its agencies, which represented greater than 5% of plan net position.
Interest Rate Risk: Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. While the System has no formal interest rate risk policy, active management of the bond portfolio incorporates interest rate risk to generate improved returns. This risk is managed within the portfolio using the effective duration method. This method is widely used in the management of fixed income portfolios and quantifies to a much greater degree the sensitivity to interest rate changes when analyzing a bond portfolio with call options, prepayment provisions, and any other cash flows. Effective duration makes assumptions regarding the most likely timing and amounts of variable cash flows and is best utilized to gauge the effect of a change in interest rates on the fair value of a portfolio. It is believed that the reporting of effective duration found in the table on the following page quantifies to the fullest extent possible the interest rate risk of the System's fixed income assets (in thousands).
(continued) 49
Notes to Financial Statements
June 30, 2017
Financial Section
Effective Duration of Fixed Income Assets
Fixed income type
Domestic obligations: U.S. Treasuries Corporates
International obligations: Governments Corporates
Total
Fair value June 30, 2017
Percent of all fixed income assets
$ 2,516,114 1,882,175
76,935 192,589 $ 4,667,813
53.9 % 40.3
1.7 4.1 100.0 %
Effective duration (years)
5.7 4.0
0.3 1.8 4.7
Foreign Currency Risk: Foreign currency risk is the risk that changes in exchange rates will adversely impact the fair value of an investment. The System's currency risk exposures, or exchange rate risks, primarily reside within the System's international equity investment holdings. The System's foreign exchange risk management policy is to minimize risk and protect the investments from negative impact by hedging foreign currency exposures with foreign exchange instruments when market conditions and circumstances are deemed appropriate. As of June 30, 2017, the System's exposure to foreign currency risk in U.S. dollars, excluding the 401(k) and 457 plans, is highlighted in the table on the following page (in thousands):
50
(continued)
Notes to Financial Statements
June 30, 2017
Financial Section
International Investment Securities at Fair Value as of June 30, 2017
Currency
Australian dollar Brazilian real British pound Canadian dollar Czech krone Danish krone Euro Hong Kong dollar Indian rupee Indonesian rupiah Japanese yen Malaysian ringgit Mexican peso New Taiwan dollar Philippine peso Polish zloty Singapore dollar South African rand South Korean won Swedish krona Swiss franc Thailand baht
Total holdings subject to foreign currency risk
Equities
$
33,088
18,200
72,752
9,989
456
18,472
114,340
39,625
43,935
6,128
113,116
9,874
7,258
48,498
5,483
3,839
20,872
37,877
82,203
35,036
17,249
19,276
757,566
Fixed income
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
--
Investment securities payable in U.S. dollars
2,021,952
269,524
Total international investment securities - at fair value
$
2,779,518
269,524
Total
33,088 18,200 72,752
9,989 456
18,472 114,340 39,625 43,935
6,128 113,116
9,874 7,258 48,498 5,483 3,839 20,872 37,877 82,203 35,036 17,249 19,276
757,566
2,291,476
3,049,042
(5) Securities Lending Program
State statutes and Board of Trustees policies permit the System to lend its securities to broker-dealers with a simultaneous agreement to return the collateral for the same securities in the future. The System is presently involved in a securities lending program with major brokerage firms. The System lends equity and fixed income securities for varying terms and receives a fee based on the loaned securities' value. The System reports the gross loan fee income earned as investment income on the combining statement of changes in fiduciary net position. During a loan, the System continues to receive dividends and interest as the owner of the loaned securities. The brokerage firms pledge collateral securities consisting of U.S. government and agency securities, mortgage-backed securities issued by a U.S. government agency, corporate bonds, and equities. The collateral value must be equal to at least 102% to 109% of the loaned securities' value, depending on the type of collateral security.
Securities loaned totaled approximately $3.7 billion at fair value at June 30, 2017. The collateral value was equal to 103.8% of the loaned securities' value at June 30, 2017. The System's lending collateral was held in the System's name by the tri-party custodian.
(continued) 51
Notes to Financial Statements
June 30, 2017
Financial Section
Loaned securities are included in the accompanying combining statement of fiduciary net position since the System maintains ownership. The related collateral securities are not recorded as assets on the System's combining statement of fiduciary net position, and a corresponding liability is not recorded, since the System is deemed not to have the ability to pledge or trade the collateral securities. The System is deemed not to have the ability to pledge or sell the collateral securities, since the System's lending contracts do not address whether the lender can pledge or sell the collateral securities without a borrower default, the System has not previously demonstrated that ability, and there are no indications of the System's ability to pledge or sell the collateral securities.
(6) Capital Assets
The following is a summary of capital assets and depreciation information as of and for the year ended June 30, 2017:
Capital assets: Land Building Equipment Vehicles Computer software
Balance at June 30, 2016
Additions
Balance at Disposals June 30, 2017
$ 4,341,787 2,800,000 3,006,423 13,382
14,344,609
24,506,201
265,789
265,789
4,341,787
2,800,000
3,272,212
13,382
14,344,609
24,771,990
Accumulated depreciation for: Building Equipment Vehicles Computer software
Capital assets, net
(840,000) (2,365,228)
(13,382) (14,344,609)
(17,563,219)
$ 6,942,982
(70,000) (234,384)
-- --
(304,384)
(38,595)
(910,000)
(2,599,612)
(13,382)
(14,344,609)
(17,867,603)
6,904,387
(7) Commitments
As of June 30, 2017, the System had committed to fund certain private equity partnerships for a total capital commitment of approximately $397.8 million. Of this amount, approximately $261.1 million remained unfunded and is not recorded on the System's combining statement of fiduciary net position.
(8) Net Pension Liability of Employers and Nonemployers - ERS
The components of the net pension liability of the participating employers and nonemployers at June 30, 2017 were as follows (dollars in thousands):
Total pension liability Plan fiduciary net position
Employers' and nonemployers' net pension liability
Plan fiduciary net position as a percentage of the total pension liability
$ 17,159,634 13,098,299
$
4,061,335
76.33%
(continued) 52
Financial Section
Notes to Financial Statements
June 30, 2017
Actuarial assumptions: The total pension liability was determined by an actuarial valuation as of June 30, 2016, using the following actuarial assumptions, applied to all periods included in the measurement:
Inflation Salary increases Investment rate of return
2.75% 3.25 - 7.00%, including inflation 7.50%, net of pension plan investment expense, including inflation
Postretirement mortality rates were based on the RP-2000 Combined Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries projection scale BB and set forward two years for both males and females for service retirements and dependent beneficiaries. The RP-2000 Disabled Mortality Table with future mortality improvement projected to 2025 with Society of Actuaries projection scale BB and set back seven years for males and set forward three years for females was used for death after disability retirement. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB. There is a margin for future mortality improvement in the tables used by the plan.
The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014.
The long-term expected rate of return on pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:
Asset class
Fixed income Domestic large equities Domestic mid equities Domestic small equities International developed market equities International emerging market equities Alternatives
Total
Target allocation
30.00 % 37.20
3.40 1.40 17.80 5.20 5.00
100.00 %
Long-term expected real rate of return*
(0.50) % 9.00 12.00 13.50 8.00 12.00 10.50
* Rates shown are net of inflation
Discount rate: The discount rate used to measure the total pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
(continued) 53
Financial Section
Notes to Financial Statements
June 30, 2017
Sensitivity of the net pension liability to changes in the discount rate: The following presents the net pension liability, calculated using the discount rate of 7.50%, as well as what the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate (dollars in thousands):
Employers' and nonemployers' net pension liability
1% Decrease (6.50%)
$ 5,732,372
Current discount
rate (7.50%)
4,061,335
1% Increase (8.50%)
2,635,889
Actuarial valuation date: June 30, 2016 is the actuarial valuation date upon which the total pension liability is based. An expected total pension liability is determined as of June 30, 2017 using standard roll-forward techniques. The roll-forward calculation adds the annual normal cost (also called service cost), subtracts the actual benefit payments and refunds for the plan year, and then applies the expected investment rate of return for the year.
(9) Net Pension Liability of Employers and Nonemployers PSERS
The components of the net pension liability of the participating employers and nonemployers at June 30, 2017 were as follows (dollars in thousands):
Total pension liability
$
Plan fiduciary net position
Employers' and nonemployers' net pension liability
$
Plan fiduciary net position as a percentage of the total pension liability
1,013,163 868,134
145,029
85.69%
Actuarial assumptions: The total pension liability was determined by an actuarial valuation as of June 30, 2016, using the following actuarial assumptions, applied to all periods included in the measurement:
Inflation Salary increases Investment rate of return
2.75% n/a 7.50%, net of pension plan investment expense, including inflation
Postretirement mortality rates were based on the RP-2000 Blue-Collar Mortality Table projected to 2025 with projection scale BB (set forward three years for males and two years for females) for the period after service retirement and for dependent beneficiaries. The RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB (set forward five years for both males and females) was used for death after disability retirement. Rates of mortality in active service were based on the RP2000 Employee Mortality Table projected to 2025 with projection scale BB. There is a margin for future mortality improvement in the tables used by the plan.
The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014.
The long-term expected rate of return on pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in table on the following page:
(continued) 54
Notes to Financial Statements
June 30, 2017
Financial Section
Asset class
Fixed income Domestic large equities Domestic mid equities Domestic small equities International developed market equities International emerging market equities Alternatives
Total
Target allocation
30.00 % 37.20
3.40 1.40 17.80 5.20 5.00
100.00 %
Long-term expected real rate of return*
(0.50) % 9.00 12.00 13.50 8.00 12.00 10.50
* Rates shown are net of inflation.
Discount rate: The discount rate used to measure the total pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
Sensitivity of the net pension liability to changes in the discount rate: The following presents the net pension liability, calculated using the discount rate of 7.50%, as well as what the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate (dollars in thousands):
Employers' and nonemployers' net pension liability
1% Decrease (6.50%)
$ 256,593
Current discount
rate (7.50%)
145,029
1% Increase (8.50%)
51,139
Actuarial valuation date: June 30, 2016 is the actuarial valuation date upon which the total pension liability is based. An expected total pension liability is determined as of June 30, 2017 using standard roll-forward techniques. The roll-forward calculation adds the annual normal cost (also called service cost), subtracts the actual benefit payments and refunds for the plan year, and then applies the expected investment rate of return for the year.
(10) Net Pension Liability of Employer LRS
The components of the net pension liability of the participating employer at June 30, 2017 were as follows (dollars in thousands):
Total pension liability
$
Plan fiduciary net position
Employer's net pension asset
$
Plan fiduciary net position as a percentage of the total pension liability
25,898 32,981
(7,083)
127.35%
Actuarial assumptions: The total pension liability was determined by an actuarial valuation as of June 30, 2016, using the following actuarial assumptions, applied to all periods included in the measurement:
(continued) 55
Notes to Financial Statements
June 30, 2017
Financial Section
Inflation Salary increases Investment rate of return
2.75% n/a 7.50%, net of pension plan investment expense, including inflation
Postretirement mortality rates were based on the RP-2000 Combined Mortality Table projected to 2025 with projection scale BB (set forward two years for both males and females) for the period after service retirement. The RP-2000 Employee Mortality Table projected to 2025 using projection scale BB was used for deaths in active service. There is a margin for future mortality improvement in the tables used by the plan.
The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014.
The long-term expected rate of return on pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:
Asset class
Fixed income Domestic large equities Domestic mid equities Domestic small equities International developed market equities International emerging market equities Alternatives
Total
Target allocation
30.00 % 37.20
3.40 1.40 17.80 5.20 5.00
100.00 %
Long-term expected real rate of return*
(0.50) % 9.00 12.00 13.50 8.00 12.00 10.50
* Rates shown are net of inflation.
Discount rate: The discount rate used to measure the total pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
Sensitivity of the net pension liability to changes in the discount rate: The following table presents the net pension liability, calculated using the discount rate of 7.50%, as well as what the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate (dollars in thousands):
Employers' net pension asset
1% Decrease (6.50%)
$ (4,654)
Current discount
rate (7.50%)
(7,083)
1% Increase (8.50%)
(9,138)
(continued) 56
Financial Section
Notes to Financial Statements
June 30, 2017
Actuarial valuation date: June 30, 2016 is the actuarial valuation date upon which the total pension liability is based. An expected total pension liability is determined as of June 30, 2017 using standard roll-forward techniques. The roll-forward calculation adds the annual normal cost (also called service cost), subtracts the actual benefit payments and refunds for the plan year, and then applies the expected investment rate of return for the year.
(11) Net Pension Liability of Employers and Nonemployers GJRS
The components of the net pension liability of the participating employers and nonemployers at June 30, 2017 were as follows (dollars in thousands):
Total pension liability
$
Plan fiduciary net position
Employers' and nonemployers' net pension asset
$
Plan fiduciary net position as a percentage of the total pension liability
394,736 441,182
(46,446)
111.77%
Actuarial assumptions: The total pension liability was determined by an actuarial valuation as of June 30, 2016, using the following actuarial assumptions, applied to all periods included in the measurement:
Inflation Salary increases Investment rate of return
2.75% 4.50%, including inflation 7.50%, net of pension plan investment expense, including inflation
Mortality rates were based on the RP-2000 Combined Mortality Table projected to 2025 with projection scale BB and set forward two years for both males and females for the period after retirement and for dependent beneficiaries. For the period after disability retirement, the RP-2000 Disabled Mortality Table projected to 2025 with projection scale BB and set back seven years for males and set forward three years for females is used. Rates of mortality in active service were based on the RP-2000 Employee Mortality Table projected to 2025 with projection scale BB. There is a margin for future mortality improvement in the tables used by the plan.
The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014.
The long-term expected rate of return on pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:
Asset Class
Fixed income Domestic large equities Domestic mid equities Domestic small equities International developed market equities International emerging market equities Alternatives
Total
Target allocation
30.00 % 37.20
3.40 1.40 17.80 5.20 5.00
100.00 %
Long-term expected real rate of return*
(0.50) % 9.00 12.00 13.50 8.00 12.00 10.50
* Rates shown are net of inflation. 57
(continued)
Financial Section
Notes to Financial Statements
June 30, 2017
Discount rate: The discount rate used to measure the total pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
Sensitivity of the net pension liability to changes in the discount rate: The following table presents the net pension liability, calculated using the discount rate of 7.50%, as well as what the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate (dollars in thousands):
Employers' and nonemployers' net pension asset
1% Decrease (6.50%)
$ (8,873)
Current discount
rate (7.50%)
(46,446)
1% Increase (8.50%)
(79,122)
Actuarial valuation date: June 30, 2016 is the actuarial valuation date upon which the total pension liability is based. An expected total pension liability is determined as of June 30, 2017 using standard roll-forward techniques. The roll-forward calculation adds the annual normal cost (also called service cost), subtracts the actual benefit payments and refunds for the plan year, and then applies the expected investment rate of return for the year.
(12) Net Pension Liability of Employer GMPF
The components of the net pension liability of the participating employer at June 30, 2017 were as follows (dollars in thousands):
Total pension liability
$
Plan fiduciary net position
Employer's net pension liability
$
Plan fiduciary net position as a percentage of the total pension liability
40,085 20,711
19,374
51.67%
Actuarial assumptions: The total pension liability was determined by an actuarial valuation as of June 30, 2016, using the following actuarial assumptions, applied to all periods included in the measurement:
Inflation Salary increases Investment rate of return
2.75% n/a 7.50%, net of pension plan investment expense, including inflation
Postretirement mortality rates were based on the RP-2000 Combined Mortality Table projected to 2025 with projection scale BB (set forward two years for both males and females) for the period after service retirement. The RP-2000 Employee Mortality Table projected to 2025 using projection scale BB was used for deaths in active service. There is a margin for future mortality improvement in the tables used by the plan.
The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014.
(continued) 58
Financial Section
Notes to Financial Statements
June 30, 2017
The long-term expected rate of return on pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:
Asset class
Fixed income Domestic large equities Domestic mid equities Domestic small equities International developed market equities International emerging market equities Alternatives
Total
Target allocation
30.00 % 37.20
3.40 1.40 17.80 5.20 5.00
100.00 %
Long-term expected real rate of return*
(0.50) % 9.00 12.00 13.50 8.00 12.00 10.50
* Rates shown are net of inflation.
Discount rate: The discount rate used to measure the total pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
Sensitivity of the net pension liability to changes in the discount rate: The following table presents the net pension liability, calculated using the discount rate of 7.50%, as well as what the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate (dollars in thousands):
Employers' net pension liability
1% Decrease (6.50%)
$ 25,182
Current discount
rate (7.50%)
19,374
1% Increase (8.50%)
14,656
Actuarial valuation date: June 30, 2016 is the actuarial valuation date upon which the total pension liability is based. An expected total pension liability is determined as of June 30, 2017 using standard roll-forward techniques. The roll-forward calculation adds the annual normal cost (also called service cost), subtracts the actual benefit payments and refunds for the plan year, and then applies the expected investment rate of return for the year.
(continued) 59
Notes to Financial Statements
June 30, 2017
Financial Section
(13) Net OPEB Liability of Employers - SEAD-OPEB
The components of the net OPEB liability of the participating employers at June 30, 2017 were as follows (dollars in thousands):
Total OPEB liability Plan fiduciary net position
$
861,346
1,121,251
Employers' net OPEB asset
$
(259,905)
Plan fiduciary net position as a percentage of the total OPEB liability
130.17%
Actuarial assumptions: The total pension liability was determined by an actuarial valuation as of June 30, 2016, using the following actuarial assumptions, applied to all periods included in the measurement:
Inflation Salary increases:
ERS GJRS LRS Investment rate of return Healthcare cost trend rate
2.75%
3.25% - 7.00% 4.50% n/a 7.50%, net of pension plan investment expense, including inflation n/a
Postretirement mortality rates were based on the RP-2000 Combined Mortality Table with future mortality improvement projected to 2025 with the Society of Actuaries projection scale BB and set forward two years for both males and females for service retirements and dependent beneficiaries. There is a margin for future mortality improvement in the tables used by the plan.
The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the period July 1, 2009 June 30, 2014.
The long-term expected rate of return on OPEB plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of OPEB plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:
Asset class
Fixed income Domestic large equities Domestic mid equities Domestic small equities International developed market equities International emerging market equities Alternatives
Total
Target allocation
30.00 % 37.20
3.40 1.40 17.80 5.20 5.00
100.00 %
Long-term expected real rate of return*
(0.50) % 9.00 12.00 13.50 8.00 12.00 10.50
* Rates shown are net of inflation.
(continued) 60
Financial Section
Notes to Financial Statements
June 30, 2017
Discount rate: The discount rate used to measure the total OPEB liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that employer and nonemployer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the OPEB plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability.
Sensitivity of the net OPEB liability to changes in the discount rate: The following table presents the net OPEB asset, calculated using the discount rate of 7.50%, as well as what the net OPEB asset would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (8.50%) than the current rate (dollars in thousands):
Employers' net OPEB asset
1% Decrease (6.50%)
$ (142,257)
Current discount
rate (7.50%)
(259,905)
1% Increase (8.50%)
(356,322)
Actuarial valuation date: June 30, 2016 is the actuarial valuation date upon which the total OPEB liability is based. An expected total OPEB liability is determined as of June 30, 2017 using standard roll-forward techniques. The roll-forward calculation adds the annual normal cost (also called service cost), subtracts the actual benefit payments and refunds for the plan year, and then applies the expected investment rate of return for the year.
61
Financial Section
Required Supplementary Information (UNAUDITED) Schedules of Employers' and Nonemployers' Contributions - Defined Benefit Plans
For year ended June 30, 2017 (In thousands)
(continued) 62
Employees' Retirement System1
Public School Employees Retirement System2
Legislative Retirement System3
Year ended
6/30/2008 6/30/2009 6/30/2010 6/30/2011 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017
6/30/2008 6/30/2009 6/30/2010 6/30/2011 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017
6/30/2008 6/30/2009 6/30/2010 6/30/2011 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017
Actuarially Determined Contribution
(a)
$ 286,256 282,103 263,064 261,132 273,623 358,376 428,982 517,220 595,124 624,623
2,869 5,529 5,530 7,509 15,884 24,829 27,160 28,461 28,580 26,277
-- -- -- -- -- -- -- -- -- --
Contributions in relation to the actuarially determined contribution
(b)
286,256 281,206 263,064 261,132 274,034 358,992 429,752 518,163 595,566 625,281
2,869 5,529 5,530 7,509 15,884 24,829 27,160 28,461 28,580 26,277
73 71 75 75 76 128 45 -- -- --
Contribution deficiency (excess)
(a-b)
-- 897
-- -- (411) (616) (770) (943) (442) (658)
-- -- -- -- -- -- -- -- -- --
(73) (71) (75) (75) (76) (128) (45)
-- -- --
Covered employee
payroll (c)
2,809,199 2,674,155 2,571,042 2,486,780 2,414,884 2,335,773 2,335,773 2,353,225 2,390,457 2,565,918
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Contributions as a percentage
of covered employee
payroll (b/c)
10.2 % 10.5 10.2 10.5 11.3 15.4 18.4 22.0 24.9 24.4
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Financial Section
Required Supplementary Information (UNAUDITED) Schedules of Employers' and Nonemployers' Contributions - Defined Benefit Plans
For year ended June 30, 2017 (In thousands)
63
Georgia Judicial Retirement System
Georgia Military Pension Fund4
State Employees' Assurance Department Retired and Vested Inactive Members Trust Fund
Year Ended
6/30/2008 6/30/2009 6/30/2010 6/30/2011 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017
6/30/2008 6/30/2009 6/30/2010 6/30/2011 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017
6/30/2008 6/30/2009 6/30/2010 6/30/2011 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016 6/30/2017
Actuarially Determined Contribution
(a)
$ 2,395 1,703 2,600 1,932 2,083 2,279 2,375 4,261 7,623 6,684
1,103 1,323 1,434 1,282 1,521 1,703 1,892 1,893 1,990 2,018
-- -- -- -- 12,724 5,009 -- -- -- --
Contributions in relation to the actuarially determined contribution
(b)
2,395 1,703 2,600 1,932 2,083 2,279 2,375 4,261 7,623 6,684
1,103 1,323 1,434 1,282 1,521 1,703 1,892 1,893 1,990 2,018
-- -- -- -- 12,724 5,009 -- -- -- --
Contribution deficiency (excess)
(a-b)
-- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- --
Covered employee
payroll (c)
51,102 52,803 51,293 52,331 51,898 52,807 54,787 54,272 57,401 59,695
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A 2,085,902 1,855,185 N/A N/A N/A N/A
Contributions as a percentage
of covered employee
payroll (b/c)
4.7 % 3.2 5.1 3.7 4.0 4.3 4.3 7.9 13.3 11.2
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A 1.0
-- N/A N/A N/A N/A
This data, except for annual covered payroll, was provided by the System's actuary.
1 In 2009, an employer group within ERS did not contribute the full actuarially determined contribution. This employer is making additional contributions to repay this shortfall. 2 No statistics regarding covered payroll are available. Contributions are not based upon members' salaries but are simply $4.00 per member, per month, for nine months, each fiscal year if hired prior to July 1, 2012 and $10 per month, per member, for nine months, if hired after July 1, 2012. 3 The Georgia General Assembly made contributions in some years that were not required. 4 No statistics regarding covered payroll are available. Active and inactive plan member information is maintained by the Georgia Department of Defense.
See accompanying notes to required supplementary schedules and accompanying independent auditors' report.
Financial Section
Required Supplementary Information (UNAUDITED)
Schedules of Employers' and Nonemployers' Net Pension/OPEB Liability and Related Ratios Defined Benefit Plans (In thousands)
June 30, 2017
June 30, 2016 June 30, 2015 June 30, 2014
Employees' Retirement System: Total pension liability Plan fiduciary net position
Employers' and nonemployers' net pension liability
Plan fiduciary net position as a percentage of the total pension liability Covered-employee payroll Employers' and nonemployers' net pension liability as a percentage of
covered-employee payroll
$
17,159,634
13,098,299
17,103,937 12,373,567
$
4,061,335
4,730,420
76.33 %
72.34 %
$
2,565,918
2,390,457
158.28 %
197.89 %
17,019,362 12,967,964
4,051,398
76.20 % 2,353,225
172.16 %
17,042,149 13,291,531
3,750,618
77.99 % 2,335,773
160.57 %
Public School Employees Retirement System: Total pension liability Plan fiduciary net position
$
1,013,163
868,134
Employers' and nonemployers' net pension liability
$
145,029
Plan fiduciary net position as a percentage of the total pension liability Covered-employee payroll Employers' and nonemployers' net pension liability as a percentage of
covered-employee payroll
85.69 % n/a
n/a
992,292 803,775
188,517
81.00 % n/a
n/a
946,200 823,150
123,050
87.00 % n/a
n/a
930,745 821,733
109,012
88.29 % n/a
n/a
Legislative Retirement System:
Total pension liability
$
Plan fiduciary net position
Employer's net pension asset
$
Plan fiduciary net position as a percentage of the total pension liability Covered-employee payroll Employer's net pension asset as a percentage of
covered-employee payroll
Georgia Judicial Retirement System:
Total pension liability
$
Plan fiduciary net position
Employers' and nonemployers' net pension asset
$
Plan fiduciary net position as a percentage of the total pension liability
Covered-employee payroll
$
Employers' and nonemployers' net pension asset as a
percentage of covered-employee payroll
25,898 32,981 (7,083) 127.35 %
n/a n/a
394,736 441,182 (46,446)
111.77 % 59,695 (77.81) %
26,142 30,975 (4,833) 118.49 %
n/a n/a
368,669 403,011 (34,342) 109.32 % 57,401
(59.83) %
25,271 32,359 (7,088) 128.05 %
n/a n/a
357,081 404,852 (47,771)
113.38 % 54,272 (88.02) %
25,216 32,794 (7,578) 130.05 %
n/a n/a
350,443 400,790 (50,347)
114.37 % 54,787 (91.90) %
(continued) 64
Financial Section
Required Supplementary Information (UNAUDITED)
Schedules of Employers' and Nonemployers' Net Pension/OPEB Liability and Related Ratios Defined Benefit Plans (In thousands)
June 30, 2017
June 30, 2016 June 30, 2015 June 30, 2014
Georgia Military Pension Fund:
Total pension liability
$
Plan fiduciary net position
Employer's net pension liability
$
Plan fiduciary net position as a percentage of the total pension liability Covered-employee payroll Employer's net pension liability as a percentage of
covered-employee payroll
40,085 20,711
19,374
51.67 % n/a
n/a
36,950 17,717
19,233
47.95 % n/a
n/a
33,343 16,712
16,631
50.12 % n/a
n/a
31,511 15,251
16,260
48.40 % n/a
n/a
State Employees' Assurance Department - Retired and Vested Inactive
Members Trust Fund:
Total OPEB liability
$
Plan fiduciary net position
Employer's net OPEB asset
$
Plan fiduciary net position as a percentage of the total OPEB liability
Covered-employee payroll
$
Employer's net OPEB asset as a percentage of
covered-employee payroll
861,346 1,121,251
(259,905)
130.17 % 1,383,860
(18.78) %
-- --
--
--% --
--%
-- --
--
--% --
--%
-- --
--
--% --
--%
Schedules above are intended to show information for 10 years. Additional years will be displayed as they become available. See accompanying notes to required supplementary schedule and accompanying independent auditors' report.
65
Financial Section
Required Supplementary Information (UNAUDITED)
Schedules of Changes in Employers' and Nonemployers' Net Pension/OPEB Liability Defined Benefit Plans (In thousands)
Employees' Retirement System: Total pension liability: Service cost Interest Benefit changes Differences between expected and actual experience Changes of assumptions Benefit payments Refunds of contributions
Net change in total pension liability
Total pension liability-beginning
Total pension liability-ending (a)
Plan fiduciary net position: Contributions-employer Contributions-nonemployer Contributions-member Administrative expense allotment Net investment income Benefit payments Administrative expense Refunds of contributions Other
Net change in plan fiduciary net position
Plan fiduciary net position-beginning
Plan fiduciary net position-ending (b)
Net pension liability-ending (a)-(b)
June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014
$
125,910
1,230,175
30,563
72,315
--
(1,394,283)
(9,033)
55,647
17,103,987
17,159,634
613,201 12,080 35,863 10
1,475,626 (1,394,283)
(8,732) (9,033)
--
724,732
12,373,567
13,098,299
$
4,061,335
143,043 1,225,650
-- (238) 70,890 (1,347,633) (7,087)
84,625
17,019,362
17,103,987
583,082 12,484 31,961 10
141,292 (1,347,633)
(8,506) (7,087)
--
(594,397)
12,967,964
12,373,567
4,730,420
145,045 1,227,846
-- (53,950)
-- (1,334,278)
(7,450)
(22,787)
17,042,149
17,019,362
505,668 12,495 33,713 10
474,147 (1,334,278)
(7,872) (7,450)
--
(323,657)
13,291,531
12,967,964
4,051,398
150,075 1,224,380
-- -- -- (1,305,998) (8,757)
59,700
16,982,449
17,042,149
418,807 10,945 32,423 --
2,021,748 (1,305,998)
(7,440) (8,757)
--
1,161,728
12,129,803
13,291,531
3,750,618
(continued) 66
Financial Section
Required Supplementary Information (UNAUDITED)
Schedules of Changes in Employers' and Nonemployers' Net Pension/OPEB Liability Defined Benefit Plans (In thousands)
Public School Employees Retirement System: Total pension liability: Service cost Interest Benefit changes Differences between expected and actual experience Changes of assumptions Benefit payments Refunds of contributions
Net change in total pension liability
Total pension liability-beginning
Total pension liability-ending (a)
Plan fiduciary net position: Contributions-nonemployer Contributions-member Net investment income Benefit payments Administrative expense Refunds of contributions Other
Net change in plan fiduciary net position
Plan fiduciary net position-beginning
Plan fiduciary net position-ending (b)
Net pension liability-ending (a)-(b)
June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014
$
12,788
72,157
--
(3,665)
--
(59,378)
(1,031)
20,871
992,292
1,013,163
26,277 2,084
97,715 (59,378)
(1,308) (1,031)
--
64,359
803,775
868,134
$
145,029
11,952 68,776
-- (9,483) 33,215 (57,903)
(465)
46,092
946,200
992,292
28,580 1,925 9,809
(57,903) (1,321) (465) --
(19,375)
823,150
803,775
188,517
12,088 67,652
-- (6,858)
-- (56,972)
(455)
15,455
930,745
946,200
28,461 1,800
30,129 (56,972)
(1,545) (456) --
1,417
821,733
823,150
123,050
11,049 66,143
-- -- -- (56,189) (514)
20,489
910,256
930,745
27,160 1,659
123,799 (56,189)
(1,450) (514) --
94,465
727,268
821,733
109,012
(continued) 67
Financial Section
Required Supplementary Information (UNAUDITED)
Schedules of Changes in Employers' and Nonemployers' Net Pension/OPEB Liability Defined Benefit Plans (In thousands)
Legislative Retirement System: Total pension liability: Service cost Interest Benefit changes Differences between expected and actual experience Changes of assumptions Benefit payments Refunds of contributions
Net change in total pension liability
Total pension liability-beginning
Total pension liability-ending (a)
Plan fiduciary net position: Contributions-employer Contributions-member Net investment income Benefit payments Administrative expense Refunds of contributions Other
Net change in plan fiduciary net position
Plan fiduciary net position-beginning
Plan fiduciary net position-ending (b)
Net pension asset-ending (a)-(b)
June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014
$
357
1,892
--
(655)
--
(1,763)
(75)
(244)
26,142
25,898
-- 327 3,741 (1,763) (224) (75)
--
2,006
30,975
32,981
$
(7,083)
331 1,829
-- (465) 938 (1,724)
(38)
871
25,271
26,142
-- 328 363 (1,724) (313) (38) --
(1,384)
32,359
30,975
(4,833)
338 1,824
-- (325)
-- (1,756)
(26)
55
25,216
25,271
-- 327 1,189 (1,756) (169) (26) --
(435)
32,794
32,359
(7,088)
344 1,799
-- -- -- (1,801) (30)
312
24,904
25,216
45 282 4,969 (1,801) (152) (30) --
3,313
29,481
32,794
(7,578)
(continued) 68
Financial Section
Required Supplementary Information (UNAUDITED)
Schedules of Changes in Employers' and Nonemployers' Net Pension/OPEB Liability Defined Benefit Plans (In thousands)
Georgia Judicial Retirement System: Total pension liability: Service cost Interest Benefit changes Differences between expected and actual experience Changes of assumptions Benefit payments Refunds of contributions
Net change in total pension liability
Total pension liability-beginning
Total pension liability-ending (a)
Plan fiduciary net position: Contributions-employer Contributions-nonemployer Contributions-member Net investment income Benefit payments Administrative expense Refunds of contributions Other
Net change in plan fiduciary net position
Plan fiduciary net position-beginning
Plan fiduciary net position-ending (b)
Net pension asset-ending (a)-(b)
June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014
$
12,514
26,826
3,419
5,258
--
(21,784)
(166)
26,067
368,669
394,736
4,081 2,603 4,906 49,259 (21,784)
(728) (166)
--
38,171
403,011
441,182
$
(46,446)
12,713 26,058
-- (3,603) (4,308) (19,011)
(261)
11,588
357,081
368,669
4,754 2,869 5,507 5,055 (19,011)
(754) (261)
--
(1,841)
404,852
403,011
(34,342)
7,751 25,566
-- (7,542)
-- (18,365)
(772)
6,638
350,443
357,081
2,696 1,564 5,061 14,697 (18,365)
(819) (772)
--
4,062
400,790
404,852
(47,771)
7,584 24,530
-- -- -- (17,441) (22)
14,651
335,792
350,443
1,373 1,002 4,731 60,012 (17,441)
(754) (22) --
48,901
351,889
400,790
(50,347)
(continued) 69
Financial Section
Required Supplementary Information (UNAUDITED)
Schedules of Changes in Employers' and Nonemployers' Net Pension/OPEB Liability Defined Benefit Plans (In thousands)
Georgia Military Pension Fund: Total pension liability: Service cost Interest Benefit changes Differences between expected and actual experience Changes of assumptions Benefit payments Refunds of contributions
Net change in total pension liability
Total pension liability-beginning
Total pension liability-ending (a)
Plan fiduciary net position: Contributions-employer Contributions-member Net investment income Benefit payments Administrative expense Refunds of contributions Other
Net change in plan fiduciary net position
Plan fiduciary net position-beginning
Plan fiduciary net position-ending (b)
Net pension liability-ending (a)-(b)
June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014
$
89
2,732
--
1,356
--
(1,042)
--
3,135
36,950
40,085
2,018 --
2,262 (1,042)
(244) -- --
2,994
17,717
20,711
$
19,374
73 2,465
-- 950 1,082 (963)
--
3,607
33,343
36,950
1,990 -- 240
(963) (262)
-- --
1,005
16,712
17,717
19,233
73 2,330
-- 326
-- (897)
--
1,832
31,511
33,343
1,893 --
585 (896) (121)
-- --
1,461
15,251
16,712
16,631
73 2,223
-- -- -- (841) --
1,455
30,056
31,511
1,892 --
2,179 (841) (110) -- --
3,120
12,131
15,251
16,260
(continued) 70
Financial Section
Required Supplementary Information (UNAUDITED)
Schedules of Changes in Employers' and Nonemployers' Net Pension/OPEB Liability Defined Benefit Plans (In thousands)
State Employees' Assurance Department Retired and Vested Inactive Members Trust Fund:
Total OPEB liability: Service cost Interest Benefit changes Differences between expected and actual experience Changes of assumptions Benefit payments Refunds of contributions
Net change in total OPEB liability
Total OPEB liability-beginning
Total OPEB liability-ending (a)
Plan fiduciary net position: Contributions employer Insurance premiums member Net investment income Benefit payments Administrative expense Refunds of contributions Other
Net change in plan fiduciary net position
Plan fiduciary net position-beginning
Plan fiduciary net position-ending (b)
Net OPEB asset-ending (a)-(b)
June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014
$
3,959
--
--
--
61,076
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
(36,058)
--
--
--
--
--
--
--
28,977
--
--
--
832,369
--
--
--
861,346
--
--
--
1
--
--
--
3,793
--
--
--
125,550
--
--
--
(36,058)
--
--
--
(576)
--
--
--
--
--
--
--
--
--
--
--
92,710
--
--
--
1,028,541
--
--
--
1,121,251
--
--
--
$
(259,905)
--
--
--
Schedules above are intended to show information for 10 years. Additional years will be displayed as they become available. See accompanying notes to required supplementary schedules and accompanying independent auditors' report.
71
Required Supplementary Information (UNAUDITED)
Schedule of Investment Returns For the year ended June 30, 2017
Financial Section
2017
2016
Pooled Investment Fund: Annual money-weighted rate of return, net of investment expense
2.9 %
(7.2) %
Schedule is intended to show information for 10 years. Additional years will be displayed as they become available. See accompanying notes to required supplementary schedule and accompanying independent auditors' report.
2015
(5.3) %
2014
6.0 %
72
Financial Section
Notes to Required Supplementary Information (UNAUDITED)
June 30, 2017
(1)
Schedule of Employers' and Nonemployers' Contributions Defined Benefit Plans
This schedule presents the required contributions and the percent of required contributions actually contributed.
(2)
Schedule of Employers' and Nonemployers' Net Pension/OPEB Liability and Related Ratios Defined Benefit Plans
The components of the net pension/OPEB liability as of the fiscal year end and the fiduciary net position as a percentage of
the total pension/OPEB liability as of that date are presented in this schedule. This trend information will be accumulated to
display a 10-year presentation.
(3)
Schedule of Changes in Employers' and Nonemployers' Net Pension/OPEB Liability Defined Benefit Plans
Net pension/OPEB liability, which is measured as total pension/OPEB liability less the amount of the fiduciary net position, is
presented in this schedule. This trend information will be accumulated to display a 10-year presentation.
(4)
Schedule of Investment Returns
This schedule presents historical trend information about the annual money-weighted rate of return on plan investments, net
of plan investment expense. This trend information will be accumulated to display a 10-year presentation.
(5)
Individual Plan Information
This note provides information about changes of benefit terms, changes of assumptions, and methods and assumptions used
in calculations of actuarially determined contributions.
(a) Employees' Retirement System Changes of benefit terms A new benefit tier was added for members joining the System on and after July 1, 2009. A onetime 3% payment was granted to certain retirees and beneficiaries effective July 2016.
Changes of assumptions On December 17, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, withdrawal, and salary increases.
(b) Public School Employees Retirement System Changes of benefit terms The member contribution rate was increased from $4 to $10 per month for members joining the
System on or after July 1, 2012.
Changes of assumptions On December 17, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, and withdrawal.
(c) Legislative Retirement System Changes of benefit terms none
Changes of assumptions On December 17, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, and withdrawal.
(d) Georgia Judicial Retirement System Changes of benefit terms - Spouses' benefits were changed for members joining the System on and after July 1, 2012. A 2%
cost-of-living adjustment was granted to certain retired members and beneficiaries effective July 1, 2016.
Changes of assumptions - On December 17, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, withdrawal, and salary increases.
(continued) 73
Financial Section
Notes to Required Supplementary Information (UNAUDITED)
June 30, 2017
(e) Georgia Military Pension Fund Changes of benefit terms none
Changes of assumptions On December 17, 2015, the Board adopted recommended changes to the economic and demographic assumptions utilized by the System. Primary among the changes were the updates to rates of mortality, retirement, and withdrawal.
The following actuarial methods and assumptions were used to determine the most recent contribution rates reported in those schedules:
Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation Salary increases Investment rate of return
ERS
Entry age Level dollar, closed 22.6 years 5-year smoothed market 3.00% 5.45-9.25%, including inflation 7.50% net of pension plan investment expense, including inflation
PSERS
Entry age Level dollar, closed 23.9 years 5-year smoothed market 3.00% n/a 7.50% net of pension plan investment expense, including inflation
LRS
Entry age Level dollar, closed n/a 5-year smoothed market 3.00% n/a 7.50% net of pension plan investment expense, including inflation
Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation Salary increases Investment rate of return
GJRS
Entry age Level percent of pay, closed 19.5 years 5-year smoothed market 3.00% 6.00%, including inflation 7.50% net of pension plan investment expense, including inflation
GMPF
Entry age Level dollar, closed 19 years 5-year smoothed market 3.00% n/a 7.50% net of pension plan investment expense, including inflation
Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation Salary increases:
ERS GJRS LRS Investment rate of return
SEAD - OPEB
Projected unit credit Level dollar, open n/a Market value of assets 3.00%
5.45-9.25%, including inflation 6.00%, including inflation n/a 7.50% net of pension plan investment expense, including inflation
74
Additional Information
Statement of Changes in Assets and Liabilities - Survivors Benefit Fund Year ended June 30, 2017 (In thousands)
Financial Section
Balance at June 30, 2016
Assets:
Cash and cash equivalents
$
Equity in pooled investment fund
93 120,871
Total assets
120,964
Additions Deductions
--
1
15,080
--
15,080
1
Balance at June 30, 2017
92 135,951 136,043
Liablities: Due to other funds/plans
Total liabilities
120,964
$
120,964
15,080 15,080
1
136,043
1
136,043
See accompanying independent auditors' report.
(continued) 75
Financial Section
Additional Information
Schedule of Administrative Expenses - Contributions and Expenses Year ended June 30, 2017 (with comparative amounts for the year ended June 30, 2016) (In thousands)
Contributions from fiduciary funds: Employees' Retirement System Public School Employees Retirement System Legislative Retirement System Georgia Judicial Retirement System Georgia Military Pension Fund Superior Court Judges Retirement Fund District Attorneys Retirement Fund Georgia Defined Contribution Plan 401(k) Plan 457 Plan State Employees' Assurance Department - OPEB
Total fiduciary funds
Contributions from proprietary fund: State Employees' Assurance Department Active Members Fund
Total contributions
Expenses: Personal services: Salaries and fringes Retirement contributions FICA Health insurance Miscellaneous
Communications: Postage Publications and printing Telecommunications Travel
Professional services: Accounting services Computer services Contracts Actuarial services Medical services Professional fees Legal services
Management fees: Building maintenance
Other services and charges: Temporary services Supplies and materials Repairs and maintenance Courier services Depreciation Miscellaneous Office equipment
Total expenses
Net income
2017
2016
$
8,732 $
8,506
1,308
1,321
224
313
728
754
244
262
1
4
4
1
785
766
3,096
2,832
789
820
576
599
16,487
16,178
64 16,551
67 16,245
5,256 1,251
376 1,603
57
8,543
279 16 60 14
369
730 1,034 3,298
277 133 291
40
5,803
617
745 78 21 3
304 65 3
1,219
16,551
$
5,074 1,211
360 1,546
73
8,264
245 14 64 14
337
709 792 3,175 428 180 260
39
5,583
617
966 77 20 3
320 55 3
1,444 16,245
See accompanying independent auditors' report.
76
Financial Section
Additional Information
Schedule of Investment Expenses Year ended June 30, 2017 (with comparative amounts for the year ended June 30, 2016)
Investment advisory and custodial fees Miscellaneous
Total investment expenses
2017
2016
$
6,753,247 $
6,070,210
12,584,983
13,805,757
$
19,338,630 $
19,875,967
See accompanying independent auditors' report.
77
Investment Section
Investment Section
ERS
GMPF
GJRS
ERSGA
LRS
PSR
GDCP
PSERS
E RSGA
Serving those who serve Georgia
Employees' Retirement System of Georgia
8
78
Investment Section
Investment Overview
There has certainly been a lot of news and noise during the past year. Throughout it all, economic growth as measured by real GDP improved modestly to a 2.2% pace. Global growth broadened out with Europe and Japan showing additional signs of improving health. A combination of improving economic growth, low inflation and low interest rates combined to boost U.S. equity returns to over 18% for the fiscal year.
We continually emphasize that the pension plan has a long-term investment horizon, and that short-term concerns should not drive the investment decisions. The System continues to invest in a mix of liquid, high-quality bonds and stocks. In addition, the System continues to build its private markets program in a disciplined manner. These types of investments allow the System to participate in rising markets while moderating the risks on the downside. A high-quality balanced fund has proven to be a successful strategy in a variety of markets over long periods of time.
As in previous years, the bias to quality was a primary goal and was successfully met. "Conservation of Capital" and "Conservatism" remain the guiding principles for investment decisions. The Board of Trustees continues to use a diversified portfolio to accomplish these objectives.
The domestic economy continued to grow during the fiscal year. Employment growth averaged a healthy 185,000 new jobs per month. Industrial production rebounded, inflation was contained and housing prices improved. Although one can find exceptions, foreign economies continued to improve, in large part due to easy central bank policies in Japan and Europe. In contrast, the Federal Reserve has begun to raise interest rates.
Studies undertaken to evaluate the investment returns of pension funds over very long time horizons indicate that the asset allocation decision has the largest impact on the fund's returns. Although the returns for the various asset categories vary from year to year, over the long term equities typically outperform fixed income and cash by a very wide margin. For that reason, the System has generally maintained a significant equity exposure with the remainder of the fund invested in fixed-income securities designed to generate income and preserve capital.
Returns for one-, three-, five-, ten-, and twenty-year periods are presented in this section. Longer time periods, such as the twenty-year period, allow for more valid evaluation of returns, both in absolute terms and relative to an asset class index, by reducing emphasis on the short-term volatility of markets. The Daily Valuation Method, a time-weighted rate of return, was used to calculate returns in a manner consistent with the CFA Institute's objectives as stated in its publication "Global Investment Performance Standards Handbook," third edition.
The return for the S&P 500 was 17.9%. U.S. small-cap and midcap stocks outperformed large-cap stocks last year. The S&P MidCap 400 and the S&P SmallCap 600 indexes had returns of 18.6% and 22.5%, respectively. The Financial and Technology sectors had the highest returns for the 12-month period posting returns of over 28%, while Energy and Telecom Services were flat.
International markets also had strong returns. The MSCI EAFE Index returned 20.3% and the MSCI Emerging Market Index had a return of 23.7%. The dollar was down fractionally for the fiscal year.
Interest rates increased across the board during the first six months of the fiscal year and then flattened out resulting in negative bond returns. The total return on the 10-year Treasury Note was (5.6%) and the 30-year Treasury Bond had a (9.1%) return. The return on short-term Treasury bills was 0.4%.
We look at two fixed-income indexes to measure the bond market's performance. The Barclays Government / Credit Index had a return of (0.4%). It is a broad index containing corporate and government sponsored bonds as well as Treasuries. The Citigroup Treasury / Sponsored / AAA/AA had a return of (1.9%) and is a broad index containing higher-rated corporate bonds as well as Treasuries and Government securities. The spread between corporate bonds and Treasury bonds tightened during the year leading to relatively better performance in corporate bonds.
In summary, the investment status of the System is excellent. The high quality of the System's investments is in keeping with the continued policy of "Conservatism" and "Conservation of Capital."
Prepared by the Division of Investment Services
79
Pooled Investment Fund
As of June 30, 2017 (dollar amounts in thousands)
Employees' Retirement System (ERS) Public School Employees Retirement System (PSERS) Legislative Retirement System (LRS) Georgia Judicial Retirement System (GJRS) State Employees' Assurance Department (SEAD) - Active State Employees' Assurance Department (SEAD) - OPEB Survivors Benefit Fund (SBF) Georgia Military Pension Fund (GMPF)
Total
Rates of Return
Investment Section
$
13,047,409
868,952
33,039
440,443
267,194
1,120,853
135,951
20,682
$
15,934,523
1 year 3 year 5 year 10 year 20 year
Equities
19.2 % 7.4 %
12.8 % 6.0 % 6.5 %
S&P 1500
18.1 % 9.5 %
14.7 % 7.3 % 7.5 %
MSCI ACWI ex US
Fixed Income
20.5 %
(1.0)%
0.8 %
2.2 %
7.2 %
1.8 %
1.1 %
4.4 %
--
5.6 %
Barclay's Govt/Credit
(0.4)% 2.6 % 2.3 % 4.6 % 5.3 %
1 Month T-Bills
Total Portfolio
0.4 %
12.4 %
0.2 %
5.8 %
0.1 %
9.5 %
0.4 %
6.2 %
1.9 %
6.6 %
Note: Time-weighted rates of return are calculated using the Daily Valuation Method based on market rates of return. 80
CPI
1.6 % 0.9 % 1.3 % 1.6 % 2.1 %
Asset Allocation at Fair Value
Investment Section
Investment Summary
Asset Allocation as of June 30 (in percentages)
Equities Fixed Income Mutual and Commingled Funds Private Equity Total
2017
63.9% 27.1
8.2 0.8
100%
2016
62.3 29.5
7.6 0.6
2015
65.3 27.2
7.2 0.3
2014
67.2 25.6
7.1 0.1
2013
68.1 25.0
6.9 --
2012
65.9 27.3
6.8 --
100
100
100
100
100
Asset Allocation as of June 30 (in millions)
Equities Fixed Income Mutual and Commingled Funds Private Equity Total
2017
$ 11,030 4,668 1,421 134
2016
10,005 4,733 1,226 94
2015
10,915 4,543 1,204 52
2014
11,372 4,314 1,209
22
2013
10,374 3,811 1,057 --
2012
9,600 3,972
995 --
$ 17,253 16,058 16,714 16,917 15,242 14,567
81
Schedule of Fees and Commissions
For the Year Ended June 30, 2017
Investment Advisors' Fees:* U.S. Equity International Equity Fixed Income
Investment Commissions: U.S. Equity International Equity
Transaction Fees: Miscellaneous:*
Total Fees and Commissions
*Amount included in total investment expenses shown on page 77.
Investment Section
$
2,966,717
3,317,678
--
1,468,298 1,620,017
464,919 17,594,551
$
27,432,180
82
Investment Section
Twenty Largest Equity Holdings
As of June 30, 2017
Shares
1,373,526 192,541
2,340,894 130,201 823,500 874,660
1,351,113 1,128,388
532,890 1,488,843
835,300 3,024,473 2,137,694
821,688 472,500 343,119 2,339,970 1,414,592 604,119 1,633,794
Company
Apple Inc. Alphabet Inc. Microsoft Corp. Amazon.Com Inc. Facebook, Inc. Johnson & Johnson Exxon Mobil Corp. JPMorgan Chase & Co. Berkshire Hathaway Inc. Wells Fargo & Co. Visa Inc. Bank of America Corp. Pfizer Inc. Procter & Gamble Co. Alibaba Group Holding Ltd. UnitedHealth Group General Electric Co. Verizon Communications Inc. Chevron Corp. AT&T Inc.
Top 20 Equities Remaining Equities
Total Equities
A complete listing is available upon written request, subject to restrictions of O.C.G.A. Section 47-1-14.
Fair Value $ 197,815,215
177,127,728 161,357,823 126,034,568 124,332,030 115,708,771 109,075,352 103,134,663
90,255,579 82,496,791 78,334,434 73,373,715 71,805,141 71,610,109 66,575,250 63,621,125 63,202,590 63,175,679 63,027,735 61,643,049
$ 1,963,707,347 9,066,603,653
$ 11,030,311,000
83
Investment Section
Fixed Income Holdings*
As of June 30, 2017
Issuer
Year of Maturity
US TREAS. NOTE US TREAS. NOTE US TREAS. NOTE US TREAS. NOTE GENERAL ELECTRIC CO US TREAS. NOTE US TREAS. BOND US TREAS. BOND US TREAS. NOTE INTEL CORP GENERAL ELECTRIC CAP CORP US TREAS. NOTE US TREAS. NOTE US TREAS. NOTE US TREAS. NOTE US TREAS. NOTE US TREAS. NOTE US TREAS. NOTE EXXON MOBIL CORP BP CAPITAL MARKETS SHELL INTERNATIONAL FIN COMCAST-NBC PRAXAIR INC EXXON MOBIL CORP PROCTER & GAMBLE CO PRAXAIR INC MICROSOFT CORP UNITED TECHNOLOGIES CORP CISCO SYSTEMS INC US TREAS. NOTE UNITED PARCEL SERVICE AT&T INC ONTARIO (PROVINCE OF) US TREAS. NOTE INTEL CORP SCHLUMBERGER INVESTMENT MICROSOFT CORP APPLE INC COCA COLA CO PFIZER INC ILLINOIS TOOL WORKS INC US TREAS. BOND US TREAS. BOND COCA COLA CO US TREAS. NOTE US TREAS. BOND US TREAS. NOTE US TREAS. NOTE MICROSOFT CORP
2024 2017 2023 2021 2022 2024 2028 2039 2019 2024 2026 2019 2019 2024 2022 2020 2024 2019 2021 2020 2018 2018 2018 2019 2018 2019 2025 2026 2026 2021 2021 2017 2017 2022 2021 2021 2035 2021 2018 2018 2019 2046 2046 2020 2019 2045 2022 2022 2017
ERS Fixed Income Securities Defined Contribution Fixed Income Securities
Interest Rate
2.2500% 1.8750 1.5000 2.1250 2.7000 2.3750 5.2500 3.5000 1.1250 2.7000 5.5500 1.6250 1.6250 2.1250 1.8750 1.3750 2.0000 1.6250 2.2220 2.5210 1.9000 1.6620 1.2000 1.8190 1.6000 1.9000 2.7000 2.6500 2.5000 3.1250 3.1250 1.4000 1.1000 1.6250 3.3000 3.3000 3.5000 2.2500 1.6500 1.5000 1.9500 2.5000 2.2500 2.4500 1.0000 2.8750 1.7500 1.7500 0.8750
Par Value
$
303,000,000
251,000,000
195,000,000
153,000,000
141,000,000
133,000,000
102,000,000
113,000,000
125,000,000
120,000,000
90,000,000
102,000,000
102,000,000
100,000,000
100,000,000
100,000,000
100,000,000
97,000,000
96,000,000
95,000,000
96,000,000
96,000,000
96,000,000
95,000,000
95,000,000
95,000,000
94,000,000
94,000,000
95,000,000
77,000,000
76,000,000
77,000,000
77,000,000
64,000,000
58,000,000
58,000,000
58,000,000
58,000,000
58,000,000
58,000,000
48,000,000
48,000,000
49,000,000
39,000,000
34,000,000
30,000,000
30,000,000
30,000,000
20,000,000
$ 4,521,000,000 85,000,000
Total ERS and Defined Contribution Fixed Income Securities
$ 4,606,000,000
*A complete listing is available upon written request, subject to restrictions of O.C.G.A. Section 47-1-14. 84
Fair Value
$
304,669,530
251,481,920
189,653,100
155,151,180
143,415,330
135,025,590
131,308,680
127,668,530
124,546,250
119,668,800
105,904,800
102,453,900
102,442,680
100,121,000
99,805,000
99,684,000
99,254,000
97,443,290
96,629,760
96,323,350
96,265,920
96,167,040
95,731,200
95,375,250
95,172,900
95,170,050
93,366,440
91,397,140
91,097,400
81,012,470
78,923,720
76,936,090
76,934,550
63,137,280
60,647,700
59,934,300
58,478,500
58,384,540
58,142,680
58,038,860
48,351,840
44,656,800
43,139,110
39,665,730
33,703,860
30,167,700
29,872,200
29,845,200
19,972,400
$ 4,582,339,560 85,473,600
$ 4,667,813,160
AFicntaunacriiaall SSeeccttiioonn
Actuarial Section
ERS
GMPF
GJRS
ERSGA
LRS
PSR
GDCP
PSERS
E RSGA
Serving those who serve Georgia
Employees' Retirement System of Georgia
85
Actuarial Section
ERS April 20, 2017
3550 Busbee Pkwy, Suite 250 Kennesaw, GA 30144 Phone (678) 388-1700 Fax (678) 388-1730 www.CavMacConsulting.com
Board of Trustees Employees' Retirement System of Georgia Two Northside 75, Suite 300 Atlanta, GA 30318-7701
Attn: Mr. James Potvin, Executive Director
Members of the Board:
Section 47-2-26 of the law governing the operation of the Employees' Retirement System of Georgia provides that the actuary shall make annual valuations of the contingent assets and liabilities of the Retirement System on the basis of regular interest and the tables last adopted by the Board of Trustees. We have submitted the report giving the results of the actuarial valuation of the System prepared as of June 30, 2016. The report indicates that annual employer contributions at the rate of 19.91% of compensation for Old Plan Members, 24.66% of compensation for New Plan Members, and 21.66% of compensation for GSEPS Members for the fiscal year ending June 30, 2019 are sufficient to support the benefits of the System.
In preparing the valuation, the actuary relied on data provided by the System. While not verifying data at the source, the actuary performed tests for consistency and reasonableness. Our firm, as actuary, is responsible for all of the actuarial trend data in the financial section of the annual report and the supporting schedules in the actuarial section of the annual report.
In our opinion, the valuation is complete and accurate, and the methodology and assumptions are reasonable as a basis for the valuation. The valuation takes into account the effect of all amendments to the System enacted through the 2016 session of the General Assembly. The valuation also reflects the one-time 3% payment to certain retirees and beneficiaries effective July 2016.
The System is funded on an actuarial reserve basis. The actuarial assumptions recommended by the actuary and adopted by the Board are in the aggregate reasonably related to the experience under the System and to reasonable expectations of anticipated experience under the System. The assumptions and methods used for financial reporting purposes meet the parameters set by Actuarial Standards of Practice (ASOPs). The funding objective of the plan is that contribution rates over time will remain level as
a percent of payroll. The valuation method used is the entry age normal cost method. The normal contribution rate to cover current cost has been determined as a level percent of payroll. Gains and losses are reflected in the total unfunded accrued liability which is being amortized on a level dollar basis in accordance with the funding policy adopted by the Board.
The Plan and the employers are required to comply with the financial reporting requirements of GASB Statements No. 67 and 68. The necessary disclosure information is provided in separate supplemental reports.
We have provided the following information and supporting schedules for the Actuarial Section of the Comprehensive Annual Financial Report:
Summary of Actuarial Assumptions Schedule of Active Members Schedule of Funding Progress Schedule of Retirees Added to and Removed from Rolls Analysis of Change in Unfunded Accrued Liability Solvency Test Results
The System is being funded in conformity with the minimum funding standard set forth in code section 47-20-10 of the Public Retirement Systems Standards Law and the funding policy adopted by the Board. In our opinion the System is operating on an actuarially sound basis. Assuming that contributions to the System are made by the employer from year to year in the future at the rates recommended on the basis of the successive valuations, the continued sufficiency of the retirement fund to provide the benefits called for under the System may be safely anticipated.
This is to certify that the independent consulting actuary is a member of the American Academy of Actuaries and has
(continued) 86
Actuarial Section
experience in performing valuations for public retirement systems, that the valuation was prepared in accordance with principles of practice prescribed by the Actuarial Standards Board, and that the actuarial calculations were performed by qualified actuaries in accordance with accepted actuarial procedures, based on the current provisions of the System and on actuarial assumptions that are internally consistent and reasonably based on the actual experience of the System.
demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period or additional cost or contribution requirements based on the plan's funded status); and changes in plan provisions or applicable law. Since the potential impact of such factors is outside the scope of a normal annual actuarial valuation, an analysis of the range of results is not presented herein.
Future actuarial results may differ significantly from the current results presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or
The actuarial computations presented in this report are for purposes of determining the recommended funding amounts for the System. Use of these computations for purposes other than meeting these requirements may not be appropriate.
Sincerely yours,
Edward A. Macdonald, ASA, FCA MAAA President
Edward J. Koebel, EA, FCA, MAAA Principal and Consulting Actuary
Cathy Turcot Principal and Managing Director
87
Actuarial Section
PSERS April 20, 2017
3550 Busbee Pkwy, Suite 250 Kennesaw, GA 30144 Phone (678) 388-1700 Fax (678) 388-1730 www.CavMacConsulting.com
Board of Trustees Georgia Public School Employees Retirement System Two Northside 75, Suite 300 Atlanta, GA 30318-7701
Attn: Mr. James Potvin, Executive Director
Members of the Board:
Section 47-4-60 of the law governing the operation of the Georgia Public School Employees Retirement System provides that the employer contribution shall be actuarially determined and approved by the Board of Trustees. We have submitted the report giving the results of the actuarial valuation of the System prepared as of June 30, 2016. Based on a monthly benefit accrual rate of $14.75, the valuation indicates that annual employer contributions of $27,092,000 or $777.04 per active member for the fiscal year ending June 30, 2019 are sufficient to support the benefits of the System.
The results of the valuation reflect that the Board granted a 2% cost-of-living adjustment (COLA) on July 1, 2016 to certain retired members and beneficiaries rather than the 1.50% anticipated cost-of-living adjustments to retired members on July 1, 2016 and on January 1, 2017.
In preparing the valuation, the actuary relied on data provided by the System. While not verifying data at the source, the actuary performed tests for consistency and reasonableness. Our firm, as actuary, is responsible for all of the actuarial trend data in the financial section of the annual report and the supporting schedules in the actuarial section of the annual report.
In our opinion, the valuation is complete and accurate, and the methodology and assumptions are reasonable as a basis for the valuation. The valuation takes into account the effect of all amendments to the System enacted through the 2016 session of the General Assembly.
The System is funded on an actuarial reserve basis. The actuarial assumptions recommended by the actuary and adopted by the Board are in the aggregate reasonably related to the experience under the System and to reasonable expectations of anticipated experience under the System. The assumptions and methods used for financial reporting purposes meet the parameters set by
Actuarial Standards of Practice (ASOPs). The funding objective of the plan is that contribution rates over time will remain level as a dollar per active member. The valuation method used is the entry age normal cost method. The normal contribution rate to cover current cost has been determined as a dollar per active member. Gains and losses are reflected in the total unfunded accrued liability which is being amortized as a level dollar per active member in accordance with the funding policy adopted by the Board.
The Plan and the employers are required to comply with the financial reporting requirements of GASB Statements No. 67 and 68. The necessary disclosure information is provided in separate supplemental reports.
We have provided the following information and supporting schedules for the Actuarial Section of the Comprehensive Annual Financial Report:
Summary of Actuarial Assumptions Schedule of Active Members Schedule of Funding Progress Schedule of Retirees Added to and Removed from Rolls Analysis of Change in Unfunded Accrued Liability Solvency Test Results
The System is currently being funded in conformity with the minimum funding standard set forth in Code Section 47-2010 of the Public Retirement Systems Standards Law and the funding policy adopted by the Board. In our opinion the System is currently operating on an actuarially sound basis. Assuming that contributions to the System are made by the employer from year to year in the future at the rates recommended on the basis of the successive actuarial valuations, the continued sufficiency of the retirement fund to provide the benefits called for under the System may be safely anticipated.
(continued) 88
Actuarial Section
This is to certify that the independent consulting actuary is a member of the American Academy of Actuaries and has experience in performing valuations for public retirement systems, that the valuation was prepared in accordance with principles of practice prescribed by the Actuarial Standards Board, and that the actuarial calculations were performed by qualified actuaries in accordance with accepted actuarial procedures, based on the current provisions of the System and on actuarial assumptions that are internally consistent and reasonably based on the actual experience of the System.
Future actuarial results may differ significantly from the current results presented in this report due to such factors as the following: plan experience differing from that anticipated by the
economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period or additional cost or contribution requirements based on the plan's funded status); and changes in plan provisions or applicable law. Since the potential impact of such factors is outside the scope of a normal annual actuarial valuation, an analysis of the range of results is not presented herein.
The actuarial computations presented in this report are for purposes of determining the recommended funding amounts for the System. Use of these computations for purposes other than meeting these requirements may not be appropriate.
Sincerely yours,
Edward A. Macdonald, ASA, FCA MAAA President
Edward J. Koebel, EA, FCA, MAAA Principal and Consulting Actuary
Cathy Turcot Principal and Managing Director
89
Actuarial Section
GJRS April 20, 2017
3550 Busbee Pkwy, Suite 250 Kennesaw, GA 30144 Phone (678) 388-1700 Fax (678) 388-1730 www.CavMacConsulting.com
Board of Trustees Georgia Judicial Retirement System Two Northside 75, Suite 300 Atlanta, GA 30318-7701
Attn: Mr. James Potvin, Executive Director
Members of the Board:
Section 47-23-21 of the law governing the operation of the Georgia Judicial Retirement System provides that the actuary shall make annual valuations of the contingent assets and liabilities of the Retirement System on the basis of regular interest and the tables last adopted by the Board of Trustees. We have submitted the report giving the results of the actuarial valuation of the System prepared as of June 30, 2016. The report indicates that annual employer contributions at the rate of 7.83% of compensation for the fiscal year ending June 30, 2019 are sufficient to support the benefits of the System.
The results of the valuation reflect the 2% cost-of-living adjustment (COLA) granted to certain retirees and beneficiaries effective July 1, 2016.
In preparing the valuation, the actuary relied on data provided by the System. While not verifying data at the source, the actuary performed tests for consistency and reasonableness. Our firm, as actuary, is responsible for all of the actuarial trend data in the financial section of the annual report and the supporting schedules in the actuarial section of the annual report.
In our opinion, the valuation is complete and accurate, and the methodology and assumptions are reasonable as a basis for the valuation. The valuation takes into account the effect of all amendments to the System enacted through the 2016 session of the General Assembly.
The System is funded on an actuarial reserve basis. The actuarial assumptions recommended by the actuary and adopted by the Board are in the aggregate reasonably related to the experience under the System and to reasonable expectations of anticipated experience under the System. The assumptions and methods used for financial reporting purposes meet the parameters set by Actuarial Standards of Practice (ASOPs). The funding objective of the plan is that contribution rates over time will remain level
as a percent of payroll. The valuation method used is the entry age normal cost method. The normal contribution rate to cover current cost has been determined as a level percent of payroll. Gains and losses are reflected in the total unfunded accrued liability which is negative and being amortized as a level percent of payroll in accordance with the funding policy adopted by the Board.
The Plan and the employers are required to comply with the financial reporting requirements of GASB Statements No. 67 and 68. The necessary disclosure information is provided in separate supplemental reports.
We have provided the following information and supporting schedules for the Actuarial Section of the Comprehensive Annual Financial Report:
Summary of Actuarial Assumptions Schedule of Active Members Schedule of Funding Progress Schedule of Retirees Added to and Removed from Rolls Analysis of Change in Unfunded Accrued Liability Solvency Test Results
The System is being funded in conformity with the minimum funding standard set forth in Code Section 47-20-10 of the Public Retirement Systems Standards Law and the funding policy adopted by the Board. In our opinion the System is operating on an actuarially sound basis. Assuming that contributions to the System are made by the employer from year to year in the future at the rates recommended on the basis of the successive actuarial valuations, the continued sufficiency of the retirement fund to provide the benefits called for under the System may be safely anticipated.
This is to certify that the independent consulting actuary is a
(continued) 90
Actuarial Section
member of the American Academy of Actuaries and has experience in performing valuations for public retirement systems, that the valuation was prepared in accordance with principles of practice prescribed by the Actuarial Standards Board, and that the actuarial calculations were performed by qualified actuaries in accordance with accepted actuarial procedures, based on the current provisions of the System and on actuarial assumptions that are internally consistent and reasonably based on the actual experience of the System.
Future actuarial results may differ significantly from the current results presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or
demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period or additional cost or contribution requirements based on the plan's funded status); and changes in plan provisions or applicable law. Since the potential impact of such factors is outside the scope of a normal annual actuarial valuation, an analysis of the range of results is not presented herein.
The actuarial computations presented in this report are for purposes of determining the recommended funding amounts for the System. Use of these computations for purposes other than meeting these requirements may not be appropriate.
Sincerely yours,
Edward A. Macdonald, ASA, FCA MAAA President
Edward J. Koebel, EA, FCA, MAAA Principal and Consulting Actuary
Cathy Turcot Principal and Managing Director
91
Actuarial Section
LRS April 20, 2017
3550 Busbee Pkwy, Suite 250 Kennesaw, GA 30144 Phone (678) 388-1700 Fax (678) 388-1730 www.CavMacConsulting.com
Board of Trustees Legislative Retirement System of Georgia Two Northside 75, Suite 300 Atlanta, GA 30318-7701
Attn: Mr. James Potvin, Executive Director
Members of the Board:
Section 47-6-22 of the law governing the operation of the Georgia Legislative Retirement System provides that the actuary shall make periodic valuations of the contingent assets and liabilities of the Retirement System on the basis of regular interest and the tables last adopted by the Board of Trustees. We have submitted the report giving the results of the actuarial valuation of the System prepared as of June 30, 2016. The report indicates that no annual employer contributions for the fiscal year ending June 30, 2019 are required to support the benefits of the System.
Actuarial Standards of Practice (ASOPs). The funding objective of the plan is that contribution rates over time will remain level as a dollar per active member. The valuation method used is the entry age normal cost method. The normal contribution rate to cover current cost has been determined as a level dollar per active member. Gains and losses are reflected in the total unfunded accrued liability which is negative and being amortized as a level dollar per active member in accordance with the funding policy adopted by the Board.
The results of the valuation reflect that the Board did not grant the anticipated cost-of-living increases (COLAs) to retired members on July 1, 2016 and on January 1, 2017. In addition, the results of the valuation reflect the one-time payment to certain retirees and beneficiaries effective July 2016.
In preparing the valuation, the actuary relied on data provided by the System. While not verifying data at the source, the actuary performed tests for consistency and reasonableness. Our firm, as actuary, is responsible for all of the actuarial trend data in the financial section of the annual report and the supporting schedules in the actuarial section of the annual report.
In our opinion, the valuation is complete and accurate, and the methodology and assumptions are reasonable as a basis for the valuation. The valuation takes into account the effect of all amendments to the System enacted through the 2016 session of the General Assembly.
The System is funded on an actuarial reserve basis. The actuarial assumptions recommended by the actuary and adopted by the Board are in the aggregate reasonably related to the experience under the System and to reasonable expectations of anticipated experience under the System. The assumptions and methods used for financial reporting purposes meet the parameters set by
The Plan and the employers are required to comply with the financial reporting requirements of GASB Statements No. 67 and 68. The necessary disclosure information is provided in separate supplemental reports.
We have provided the following information and supporting schedules for the Actuarial Section of the Comprehensive Annual Financial Report:
Summary of Actuarial Assumptions Schedule of Active Members Schedule of Funding Progress Schedule of Retirees Added to and Removed from Rolls Analysis of Change in Unfunded Accrued Liability Solvency Test Results
The System is being funded in conformity with the minimum funding standard set forth in Code Section 47-20-10 of the Public Retirement Systems Standards Law and the funding policy adopted by the Board. In our opinion the System is operating on an actuarially sound basis. Assuming that contributions to the System are made by the employer from year to year in the future at the rates recommended on the basis of the successive actuarial valuations, the continued sufficiency of the retirement fund to provide the benefits called for under the System may be
(continued) 92
Actuarial Section
safely anticipated.
This is to certify that the independent consulting actuary is a member of the American Academy of Actuaries and has experience in performing valuations for public retirement systems, that the valuation was prepared in accordance with principles of practice prescribed by the Actuarial Standards Board, and that the actuarial calculations were performed by qualified actuaries in accordance with accepted actuarial procedures, based on the current provisions of the retirement system and on actuarial assumptions that are internally consistent and reasonably based on the actual experience of the System.
Future actuarial results may differ significantly from the current results presented in this report due to such factors as the
following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period or additional cost or contribution requirements based on the plan's funded status); and changes in plan provisions or applicable law. Since the potential impact of such factors is outside the scope of a normal annual actuarial valuation, an analysis of the range of results is not presented herein.
The actuarial computations presented in this report are for purposes of determining the recommended funding amounts for the System. Use of these computations for purposes other than meeting these requirements may not be appropriate.
Sincerely yours,
Edward A. Macdonald, ASA, FCA MAAA President
Edward J. Koebel, EA, FCA, MAAA Principal and Consulting Actuary
Cathy Turcot Principal and Managing Director
93
Actuarial Section
GMPF April 20, 2017
3550 Busbee Pkwy, Suite 250 Kennesaw, GA 30144 Phone (678) 388-1700 Fax (678) 388-1730 www.CavMacConsulting.com
Board of Trustees Georgia Military Pension Fund Two Northside 75, Suite 300 Atlanta, GA 30318-7701
Attn: Mr. James Potvin, Executive Director
Members of the Board:
Section 47-24-22 of the law governing the operation of the accrued liability which is being amortized as a level dollar per
Georgia Military Pension Fund provides that the actuary shall active member in accordance with the funding policy adopted by
make periodic valuations of the contingent assets and liabilities the Board.
of the Pension Fund on the basis of regular interest and the
tables last adopted by the Board of Trustees. We have submitted The Plan and the employers are required to comply with the
the report giving the results of the actuarial valuation of the Fund financial reporting requirements of GASB Statements No. 67 and
prepared as of June 30, 2016. The report indicates that annual 68. The necessary disclosure information is provided in separate
employer contributions of $2,537,272 or $183.20 per active supplemental reports.
member for the fiscal year ending June 30, 2019 are sufficient to
support the benefits of the Fund.
We have provided the following information and supporting
schedules for the Actuarial Section of the Comprehensive Annual
In preparing the valuation, the actuary relied on data provided Financial Report:
by the Fund. While not verifying data at the source, the actuary
performed tests for consistency and reasonableness. Our firm, Summary of Actuarial Assumptions
as actuary, is responsible for all of the actuarial trend data in Schedule of Active Members
the financial section of the annual report and the supporting Schedule of Funding Progress
schedules in the actuarial section of the annual report.
Schedule of Retirees Added to and Removed from Rolls
Analysis of Change in Unfunded Accrued Liability
In our opinion, the valuation is complete and accurate, and the Solvency Test Results
methodology and assumptions are reasonable as a basis for
the valuation. The valuation takes into account the effect of all The Fund is being funded in conformity with the minimum
amendments to the Fund enacted through the 2016 session of funding standard set forth in Code Section Section 47-20-10 of
the General Assembly.
the Public Retirement Systems Standards Law and the funding
policy adopted by the Board. In our opinion the Fund is operating
The Fund is funded on an actuarial reserve basis. The actuarial on an actuarially sound basis. Assuming that contributions to
assumptions recommended by the actuary and adopted by the the Fund are made by the employer from year to year in the
Board are in the aggregate reasonably related to the experience future at the rates recommended on the basis of the successive
under the Fund and to reasonable expectations of anticipated actuarial valuations, the continued sufficiency of the retirement
experience under the Fund. The assumptions and methods used fund to provide the benefits called for under the Fund may be
for financial reporting purposes meet the parameters set by safely anticipated.
Actuarial Standards of Practice (ASOPs). The funding objective
of the plan is that contribution rates over time will remain level This is to certify that the independent consulting actuary is
as a dollar per active member. The valuation method used is the a member of the American Academy of Actuaries and has
entry age normal cost method. The normal contribution rate to experience is performing valuations for public retirement systems,
cover current cost has been determined as a dollar per active that the valuation was prepared in accordance with principles of member. Gains and losses are reflected in the total unfunded practice prescribed by the Actuarial Standards Board, and that
the actuarial calculations were performed by qualified actuaries
(continued) 94
Actuarial Section
in accordance with accepted actuarial procedures, based on the current provisions of the retirement system and on actuarial assumptions that are internally consistent and reasonably based on the actual experience of the Fund.
Future actuarial results may differ significantly from the current results presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these
measurements (such as the end of an amortization period or additional cost or contribution requirements based on the plan's funded status); and changes in plan provisions or applicable law. Since the potential impact of such factors is outside the scope of a normal annual actuarial valuation, an analysis of the range of results is not presented herein.
The actuarial computations presented in this report are for purposes of determining the recommended funding amounts for the System. Use of these computations for purposes other than meeting these requirements may not be appropriate.
Sincerely yours,
Edward A. Macdonald, ASA, FCA MAAA President
Edward J. Koebel, EA, FCA, MAAA Principal and Consulting Actuary
Cathy Turcot Principal and Managing Director
95
Actuarial Section
SEAD Post-Retirement (SEAD-OPEB)
3550 Busbee Pkwy, Suite 250 Kennesaw, GA 30144 Phone (678) 388-1700 Fax (678) 388-1730 www.CavMacConsulting.com
April 20, 2017 Board of Trustees Employees' Retirement System of Georgia Two Northside 75, Suite 300 Atlanta, GA 30318-7701
Attn: Mr. James Potvin, Executive Director
Members of the Board:
Chapters 47-2 and 47-19 of the Code of Georgia which govern the operation of the Georgia Employees' Group Term Life Insurance Plan provide that the actuary shall make periodic valuations of the contingent assets and liabilities of the Insurance Plan on the basis of regular interest and the tables last adopted by the Board of Trustees. In this report, we have determined liabilities for life insurance benefits payable upon death after retirement (PostRetirement).
In accordance with GASB 43 and 45, we have determined the liabilities for life insurance benefits payable upon death after retirement. We have submitted the report giving the results of the valuation of the Plan prepared as of June 30, 2016. The report indicates, for post-retirement benefits, there is no employer annual required contribution for the fiscal year ending June 30, 2019.
Since the previous valuation, the funding method used for this valuation has been changed from the unit credit actuarial cost method with projected benefits to the entry age normal cost method. Gains and losses are reflected in the unfunded accrued liability. The actuarial assumptions used are in the aggregate reasonably related to the experience under the Plan and to reasonable expectations of anticipated experience under the Plan. In our opinion, the Plan is operating on an actuarially sound basis and the sufficiency of the funds to provide the benefits called for by the Plan may be safely anticipated assuming future annual required contributions (ARC) are contributed when due.
This is to certify that the independent consulting actuary is a member of the American Academy of Actuaries and has experience in performing valuations for public retirement systems, that the valuation was prepared in accordance with principles of practice prescribed by the Actuarial Standards Board, and that the actuarial calculations were performed by qualified actuaries in accordance with accepted actuarial procedures, based on the current provisions of the retirement system and on actuarial assumptions that are internally consistent and reasonably based on the actual experience of the Plan.
Future actuarial results may differ significantly from the current results presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period or additional cost or contribution requirements based on the plan's funded status); and changes in plan provisions or applicable law. Since the potential impact of such factors is outside the scope of a normal annual actuarial valuation, an analysis of the range of results is not presented herein.
The actuarial computations presented in this report are for purposes of determining the recommended funding amounts for the System. Use of these computations for purposes other than meeting these requirements may not be appropriate.
Sincerely yours,
Edward A. Macdonald, ASA, FCA MAAA President
Edward J. Koebel, EA, FCA, MAAA Principal and Consulting Actuary
96
Cathy Turcot Principal and Managing Director
Actuarial Section
Summary of Plan Provisions
ERS Please see Notes to Financial Statements, (2)(a), pages 30-31. PSERS Please see Notes to Financial Statements, (2)(b), page 31-32. LRS Please see Notes to Financial Statements, (2)(c), pages 32-33. GJRS Please see Notes to Financial Statements, (2)(d), pages 33-34. GMPF Please see Notes to Financial Statements, (2)(e), page 34. SEAD-OPEB Please see Notes to Financial Statements, (2)(h), pages 35-36.
The following Boards are responsible for establishing and maintaining the funding policies of the various defined benefit pension plans administered by ERSGA:
Board of Trustees of the Employees' Retirement System: ERS, LRS, and GMPF Board of Trustees of the Public School Employees Retirement System: PSERS Board of Trustees of the Georgia Judicial Retirement System: GJRS
The following Board is responsible for establishing and maintaining the funding policy of the defined benefit post-employment life insurance plan administered by ERSGA:
Board of Directors of the State Employees' Assurance Department: SEAD-OPEB
ERS, PSERS, LRS, GJRS, and GMPF are all subject to the provisions of GASB Statement No. 67 (GASB 67). All of the plans covered under GASB 67 use the Entry Age Normal actuarial cost method for both funding and financial reporting purposes. This continues a long-standing practice for all of those plans and provides a point of consistency between the funding provisions and the GASB 67 requirements.
SEAD-OPEB is subject to the provisions of GASB Statement No. 74 (GASB 74). SEAD-OPEB uses the Entry Age Normal actuarial cost method for both funding and financial reporting purposes.
For all of the plans covered under GASB 67, the GASB 67 reports prepared as of June 30, 2017 were largely based on the data, assumptions, and results of the annual funding valuations as of June 30, 2016. The Total Pension Liability (TPL) for each plan, determined using the Entry Age Normal method, was then rolled forward to the June 30, 2017 measurement date. The Net Pension Liability for each plan is equal to the rolled forward TPL less the plan's net position as of June 30, 2017.
For the plan covered under GASB 74, the GASB 74 report prepared as of June 30, 2017 was largely based on the data, assumptions, and results of the annual funding valuation as of June 30, 2016. The total OPEB Liability (TOL) for the plan, determined using the Entry Age Normal method, was then rolled forward to the June 30, 2017 measurement date. The Net OPEB Liability for the plan is equal to the rolled forward TOL less the plan's net position as of June 30, 2017.
For the funding valuations as of June 30, 2016, the Actuarial Value of Assets is calculated using a five-year smoothing methodology, whereby excesses and shortfalls of actual investment income over or under the expected investment return will be recognized over the succeeding five-year periods.
For the life insurance plan's funding valuation as of June 30, 2016, the Actuarial Value of Assets is equal to the Fair Value of Assets as of June 30, 2016.
(continued) 97
Actuarial Section
Summary of Plan Provisions
For the funding valuations, each plan covered under GASB 67 utilizes a 7.5% assumed rate of return and a 7.5% discount rate for the calculation of the respective plans' liabilities. The Single Equivalent Interest Rate required under GASB 67 has also been determined to be 7.5% by the plans' actuaries. The plan covered under GASB 74 utilizes a 7.5% assumed rate of return and a 7.5% discount rate for the calculation of the plan's liabilities. The Single Equivalent Interest Rate required under GASB 74 has also been determined to be 7.5% by the plan's actuaries.
98
Actuarial Section
Summary of Actuarial Assumptions
The laws governing the Employees' Retirement System and the plans it administers require an actuary to perform an annual valuation of the soundness of the plans. In addition, the actuary must perform at least once every five years an actuarial investigation of the mortality, service, and compensation experience of the members and beneficiaries of the System. The latest valuation was performed as of June 30, 2016 based on actuarial assumptions approved by the Board during the last experience study on December 17, 2015.
The more pertinent facts and significant assumptions underlying the computations included in the June 30, 2016 reports are as follows:
Valuation Date Actuarial Cost Method Amortization Method
Amortization Period
ERS June 30, 2016
Entry age Level dollar, closed
18.2 years
PSERS June 30, 2016
Entry age Level dollar, closed
21.9 years
GJRS
June 30, 2016 Entry age
Level percent of pay, closed
17.8 years
LRS June 30, 2016
Entry age Level dollar, closed
Infinite
GMPF June 30, 2016
Entry age Level dollar, closed
17.3 years
Actuarial Asset Valuation Method
Investment Rate of Return Inflation Rate Projected Salary Increases COLA
The actuarial value of assets was based on the total fair value income of investments, with the excess or shortfall of actual investment income over or under the expected investment return smoothed over five years. One-fifth of the excess or shortfall is recognized each year for five years.
7.50% 2.75% 3.25-7.00% None
7.50% 2.75%
n/a 1.50% Semi-annually
7.50% 2.75% 4.50% None
7.50% 2.75%
n/a 3.0% Annually
7.50% 2.75%
n/a None
Valuation Date Actuarial Cost Method Amortization Method
Amortization Period
SEAD-OPEB June 30, 2016
Entry age Level dollar, closed
Infinite
Actuarial Asset Valuation Method
Investment Rate of Return Inflation Rate Projected Salary Increases
ERS GJRS LRS COLA
Market Value of Assets
7.50% 2.75%
3.25-7.00% 4.50% 0.00% n/a
(continued) 99
Actuarial Section
Summary of Actuarial Assumptions
Rates of Withdrawal Prior to Retirement (Withdrawal, Death, Disability) ERS Representative values of the assumed annual rates of separation other than retirement for non-law enforcement officers are as follows. Special rates of separation apply to law enforcement officers.
Annual Rates of Death Annual Rates of Disability
Age
Men
Women
Men
Women
20
.0320 % .0177 % .05 %
.02 %
25
.0349
.0192
.05
.02
30
.0412
.0245
.05
.02
35
.0717
.0441
.05
.02
40
.1001
.0655
.25
.10
45
.1399
.1043
.48
.25
50
.1983
.1555
.70
.45
55
.2810
.2228
1.05
.73
60
.4092
.3058
--
--
65
.5600
.4304
--
--
Annual Rates of Withdrawal Years of Service
0-4
5-9
10 & over
Age
Men
Women
Men
Women
Men
Women
20
35.00 % 30.00 %
--%
--%
--%
--%
25
27.50
25.00
15.00
17.50
--
--
30
23.00
21.50
11.50
12.50
7.50
8.25
35
21.50
19.50
10.00
10.50
6.00
6.00
40
19.50
18.25
9.50
9.50
4.75
5.00
45
18.60
16.50
9.00
8.00
4.00
4.00
50
16.60
15.00
7.25
7.25
4.25
4.25
55
14.50
14.00
7.00
7.00
4.75
4.50
60
14.00
14.50
6.00
6.25
--
--
65
15.00
17.00
10.00
11.00
--
--
(continued) 100
Actuarial Section
Summary of Actuarial Assumptions Rates of Withdrawal Prior to Retirement (Withdrawal, Death, Disability)
PSERS
Annual Rates of Death
Annual Rates of Disability
Age
Men
Women
Both
20
.0320 % .0177 %
--%
25
.0349
.0192
--
30
.0412
.0245
--
35
.0717
.0441
.0025
40
.1001
.0655
.0110
45
.1399
.1043
.0370
50
.1983
.1555
.0865
55
.2810
.2228
.2250
60
.4092
.3058
.3500
65
.5600
.4304
--
Annual Rates of Withdrawal Years of Service
0-4
5-9
10 & over
Age
Men
Women
Men
Women
Men
Women
20
37.00 % 32.00 %
--%
--%
--%
--%
25
28.00
28.00
17.00
18.00
--
--
30
25.00
23.00
15.00
15.00
12.00
10.00
35
23.00
19.00
13.00
13.00
9.00
10.00
40
21.00
17.00
12.00
12.00
7.50
8.00
45
19.00
15.50
11.00
10.00
6.50
7.00
50
17.00
14.00
9.00
8.50
6.50
6.00
55
15.00
12.00
9.00
8.00
6.00
5.50
60
12.00
11.00
7.50
7.50
--
--
(continued) 101
Actuarial Section
Summary of Actuarial Assumptions
Rates of Withdrawal Prior to Retirement (Withdrawal, Death, Disability) GJRS
Annual Rates of
Withdrawal
Death
Disability
Age
Both
Men
Women
Both
20
4.0 %
.032 %
.018 %
.03 %
25
4.0
.035
.019
.03
30
4.0
.041
.025
.05
35
4.0
.072
.044
.08
40
6.0
.100
.066
.10
45
4.0
.140
.104
.18
50
3.0
.198
.156
.25
55
2.5
.281
.223
.45
60
2.5
.409
.306
.73
65
2.5
.560
.430
1.18
LRS
Annual Rates of
Withdrawal
Death
Age
Both
Men
Women
20
8.0 %
.032 %
.018 %
25
8.0
.035
.019
30
8.0
.041
.025
35
8.0
.072
.044
40
8.0
.100
.066
45
8.5
.140
.104
50
8.5
.198
.156
55
9.0
.281
.223
60
9.0
.409
.306
65
9.0
.560
.430
GMPF
Rates of Withdrawal from Active Service
Service
Rates
2 or less 3-7 8-9 10-14 15-19 20 or more
13.0 % 17.5 14.0 13.5 8.5 14.5
Age
Rates of Death
Men
Women
25
.0349%
.0192%
30
.0412
.0245
35
.0717
.0441
40
.1001
.0655
45
.1339
.1043
50
.1983
.1555
55
.2810
.2228
60
.4092
.3058
(continued) 102
Actuarial Section
Summary of Actuarial Assumptions
Rates of Withdrawal Prior to Retirement (Withdrawal, Death, Disability) SEAD-OPEB
All Groups Annual Rates of Death
Age
Men
Women
ERS
Annual Rates of Disability
Men
Women
GJRS
Annual Rates of Disability
Both
20
.0320 % .0177 %
.05 %
.02 %
.03 %
25
.0349
.0192
.05
.02
.03
30
.0412
.0245
.05
.02
.05
35
.0717
.0441
.05
.02
.08
40
.1001
.0655
.25
.10
.10
45
.1399
.1043
.48
.25
.18
50
.1983
.1555
.70
.45
.25
55
.2810
.2228
1.05
.73
.45
60
.4092
.3058
--
--
.73
65
.5600
.4304
--
--
1.18
ERS
LRS
GJRS
Annual Rates of Withdrawal Years of Service
Annual Rates of Annual Rates of
Withdrawal
Withdrawal
0-4
5-9
10 & over
Age
Men
Women
Men
Women
Men
Women
20
35.00 % 30.00 %
--%
--%
--%
--%
25
27.50
25.00
15.00
17.50
--
--
30
23.00
21.50
11.50
12.50
7.50
8.25
35
21.50
19.50
10.00
10.50
6.00
6.00
40
19.50
18.25
9.50
9.50
4.75
5.00
45
18.60
16.50
9.00
8.00
4.00
4.00
50
16.60
15.00
7.25
7.25
4.25
4.25
55
14.50
14.00
7.00
7.00
4.75
4.50
60
14.00
14.50
6.00
6.25
--
--
65
15.00
17.00
10.00
11.00
--
--
Both
8.00 % 8.00 8.00 8.00 8.00 8.50 8.50 9.00 9.00 9.00
Both
4.00 % 4.00 4.00 4.00 6.00 4.00 3.00 2.50 2.50 2.50
103
Summary of Actuarial Assumptions
Annual Rates of Retirement ERS
Actuarial Section
Old Plan
Early Retirement
Age 60 or 30 years
34 years
More than 34 years
Age
Men
Women
Men
Women
Men
Women
Men
Women
50
2.0 %
2.0 %
7.5 %
6.0 % 100.0 %
100.0 %
90.0 %
100.0 %
52
2.0
2.0
7.5
6.0
100.0
100.0
90.0
100.0
55
3.0
3.5
7.5
10.0
100.0
100.0
75.0
90.0
57
3.5
60
--
--
62
--
65
--
67
--
--
70
--
75
--
5.0
10.5
10.0
100.0
--
15.0
20.0
97.5
--
--
32.0
40.0
97.5
--
35.0
40.0
35.0
--
35.0
35.0
35.0
--
--
35.0
35.0
35.0
--
100.0
100.0
100.0
100.0 95.0 95.0 40.0 35.0 35.0
100.0
70.0 40.0 40.0 35.0 35.0 35.0 100.0
70.0 55.0 65.0 40.0 35.0 35.0 100.0
New Plan and GSEPS
Early Retirement
Normal Retirement
Age
Men
50
7.0 %
52
7.0
55
7.0
57
8.0
60
--
62
--
65
--
67
--
70
--
75
--
Women
4.5 % 4.5 6.5 8.0 -- -- -- -- -- --
Men*
70.0 % 70.0 60.0 50.0 25.0 40.0 32.0 32.0 30.0 100.0
Women**
50.0 % 45.0 50.0 40.0 30.0 40.0 35.0 32.0 30.0 100.0
*An additional 10% of active male New Plan and GSEPS members less than age 55 and 20% between ages 55-59, inclusive, are expected to retire in the year in which they attain 30 years of service.
**An additional 20% of active female New Plan and GSEPS members less than age 60 are expected to retire in the year in which they attain 30 years of service.
(continued) 104
Summary of Actuarial Assumptions
Annual Rates of Retirement PSERS
Age
Annual Rate of Retirement
60
13.0 %
61
13.0
62
22.0
63
17.5
64
17.0
65
28.0
66
27.0
67
23.0
Age
68 69 70 71 72 73 74 75 & over
Actuarial Section
Annual Rate of Retirement 23.0 % 26.0 27.0 27.0 27.0 27.0 27.0
100.0
GJRS
Age
60 61 62 63-64 65-69 70-74 75
Annual Rate of Retirement
15.0 % 10.0 12.0 10.0 15.0 25.0 100.0
LRS
Age
60 61 62 63 64 65
Annual Rate of Retirment
10.0 % 10.0 15.0 10.0 10.0 12.0
Age
66 67 68 69 70-74 75
Annual Rate of Retirement
12.0 % 15.0 12.0 12.0 20.0 100.0
GMPF
Age
60 61 62 63 64 65 & over
Annual Rate of Retirement
75.0 % 60.0 70.0 60.0 60.0 100.0
(continued) 105
Actuarial Section
Summary of Actuarial Assumptions
Annual Rates of Retirement SEAD-OPEB ERS Members
Old Plan
Early Retirement
Age 60 or 30 years
34 years
More than 34 years
Age
Men
Women
Men
Women
Men
Women
Men
Women
50
2.0 %
2.0 %
7.5 %
6.0 % 100.0 %
100.0 %
90.0 %
100.0 %
52
2.0
2.0
7.5
6.0
100.0
100.0
90.0
100.0
55
3.0
3.5
7.5
10.0
100.0
100.0
75.0
90.0
57
3.5
60
--
--
62
--
65
--
67
-- --
70
--
75
--
5.0
10.5
10.0
100.0
--
15.0
20.0
97.5
--
--
32.0
40.0
97.5
--
35.0
40.0
35.0
-- --
35.0
35.0
35.0
--
35.0
35.0
35.0
--
100.0
100.0
100.0
100.0 95.0 95.0 40.0 35.0 35.0
100.0
70.0 40.0 40.0 35.0 35.0 35.0 100.0
70.0 55.0 65.0 40.0 35.0 35.0 100.0
New Plan and GSEPS
Early Retirement
Normal Retirement
Age
Men
Women
Men*
Women**
50
7.0 %
4.5 %
70.0 %
50.0 %
52
7.0
4.5
70.0
45.0
55
7.0
6.5
60.0
50.0
57
8.0
60
--
--
62
--
65
--
67
--
--
70
--
75
--
8.0
50.0
--
25.0
--
--
40.0
--
32.0
--
32.0
--
--
30.0
--
100.0
40.0 30.0 40.0 35.0 32.0 30.0 100.0
*An additional 10% of active male New Plan and GSEPS members less than age 55 and 20% between ages 55-59, inclusive, are expected to retire in the year in which they attain 30 years of service.
**An additional 20% of active female New Plan and GSEPS members less than age 60 are expected to retire in the year in which they attain 30 years of service.
LRS Members
Age 60 61 62 63-64 65-66
Annual Rate of Retirement
10.0 % 10.0 15.0 10.0 12.0
Age 67 68-69 70-74 75
Annual Rate of Retirement
15.0 % 12.0 20.0 100.0
(continued) 106
Summary of Actuarial Assumptions
Annual Rates of Retirement SEAD-OPEB GJRS Members
Age
60 61 62 63-64 65-66 67 68-69 70-74 75
Annual Rates of Retirement
15.0 % 10.0 12.0 10.0 15.0 15.0 15.0 25.0 100.0
Actuarial Section
107
Actuarial Section
Summary of Actuarial Assumptions
Annual Rates of Death After Retirement For all plans except PSERS, the RP-2000 Combined Mortality Table (projected to 2025 with projection scale BB and set forward two years for both males and females) is used for the period after retirement and for dependent beneficiaries. The RP-2000 Disabled Mortality Table (projected to 2025 with projection scale BB and and set back seven years for males and set forward three years for females) is used for the period after disability retirement. For PSERS, the RP-2000 Blue-Collar Mortality Table (projected to 2025 with projection scale BB and set forward three years for males and two years for females) is used for the period after service retirement and for beneficiaries of deceased members. The RP-2000 Disabled Mortality Table (projected to 2025 with projection scale BB and set forward five years for both males and females) is used for the period after disability retirement. For all plans, there is a margin for future mortality improvement in the tables.
ERS
Age
Men
Women
40
0.1127 %
0.0790 %
45
0.1609
0.1230
50
0.2474
0.1872
55
0.4246
0.2918
60
0.6985
0.4923
Age
Men
Women
65
1.1300 % 0.8994 %
70
1.8697
1.5281
75
3.2147
2.5220
80
5.5160
4.1628
85
9.5631
7.1239
PSERS
Age
Men
Women
40
0.1476 %
0.0995 %
45
0.1974
0.1484
50
0.3057
0.2084
55
0.5644
0.2844
60
0.9575
0.5014
Age
Men
Women
65
1.4859 % 0.9774 %
70
2.4262
1.7054
75
3.9830
2.7288
80
6.5238
4.4542
85
10.9551
7.5727
GJRS
Age
Men
Women
40
0.1127 %
0.0790 %
45
0.1609
0.1230
50
0.2474
0.1872
55
0.4246
0.2918
60
0.6985
0.4923
Age
Men
Women
65
1.1300 % 0.8994 %
70
1.8697
1.5281
75
3.2147
2.5220
80
5.5160
4.1628
85
9.5631
7.1239
(continued) 108
Summary of Actuarial Assumptions
Annual Rates of Death After Retirement LRS
Age
Men
Women
40
0.1127 %
0.0790 %
45
0.1609
0.1230
50
0.2474
0.1872
55
0.4246
0.2918
60
0.6985
0.4923
Actuarial Section
Age
Men
Women
65
1.1300 % 0.8994 %
70
1.8697
1.5281
75
3.2147
2.5220
80
5.5160
4.1628
85
9.5631
7.1239
GMPF
Age
Men
Women
40
0.1127 %
0.0790 %
45
0.1609
0.1230
50
0.2474
0.1872
55
0.4246
0.2918
60
0.6985
0.4923
Age
Men
Women
65
1.1300 % 0.8994 %
70
1.8697
1.5281
75
3.2147
2.5220
80
5.5160
4.1628
85
9.5631
7.1239
SEAD-OPEB
Age
Men
Women
40
0.1127 %
0.0790 %
45
0.1609
0.1230
50
0.2474
0.1872
55
0.4246
0.2918
60
0.6985
0.4923
Age
Men
Women
65
1.1300 % 0.8994 %
70
1.8697
1.5281
75
3.2147
2.5220
80
5.5160
4.1628
85
9.5631
7.1239
109
Active Members
ERS
Actuarial Section
Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Active Members 73,985 75,293 71,272 68,566 66,081 63,942 61,550 60,486 60,416 59,766
Annual Payroll (in thousands) $ 2,680,972
2,809,199 2,674,155 2,571,042 2,486,780 2,414,884 2,335,773 2,315,625 2,352,920 2,384,358
Average Pay $ 36,237
37,310 37,520 37,497 37,632 37,767 37,949 38,284 38,945 39,895
Change 2.1 % 3.0 0.6 (0.1) 0.4 0.4 0.5 0.9 1.7 2.4
PSERS PSERS is not a compensation based plan.
Year
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Active Members
39,086 40,121 40,581 39,962 39,249 38,654 37,361 36,096 35,477 34,866
GJRS
Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Active Members 480 482 502 495 507 503 506 513 516 526
Annual Payroll (in thousands) $ 48,621
51,102 52,083 51,293 52,331 51,898 52,807 53,628 54,272 57,401
Average Pay $ 101,294
106,021 103,751 103,622 103,216 103,177 104,362 104,539 105,178 109,128
Change 6.9 % 4.7 (2.1) (0.1) (0.4) (0.0) 1.1 0.2 0.6 3.8
(continued) 110
Active Members
LRS LRS is not a compensation based plan.
GMPF GMPF is not a compensation based plan.
SEAD-OPEB
SEAD-OPEB began in 2007.
Actuarial Section
Year
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Active Members
218 218 218 216 218 220 223 222 218 224
Year
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Active Members
12,017 11,623 12,019 13,032 13,776 13,526 13,573 13,469 13,754 13,850
Year
2008 2009 2010 2011 2012 2013 2014 2015 2016
Active Members
75,859 69,745 62,305 55,516 49,261 43,512 39,101 35,189 32,076
Note: Payroll data on page 110 for fiscal year 2016 will not equal that which is presented in the Financial section in the Schedules of Employers' and Nonemployers' Contributions on pages 62-63. Valuation data at that time was a snapshot of the valuation date, annualized for new hires, but does not include those who terminated during the year.
111
Actuarial Section
Member and Employer Contribution Rates
ERS
Year
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Member
1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25%
Employer Rates
Old Plan*
New Plan
10.41% 10.41% 10.41% 10.41% 11.63% 14.90% 18.46% 21.96% 24.72% 24.69%
10.41% 10.41% 10.41% 10.41% 11.63% 14.90% 18.46% 21.96% 24.72% 24.69%
GSEPS**
n/a 6.54% 6.54% 6.54% 7.42% 11.54% 15.18% 18.87% 21.69% 21.69%
* Old Plan rate includes an employer pick-up of employee contributions. ** GSEPS Plan began on January 1, 2009.
PSERS
Year
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Pre 7/1/12 Member
$ 36 per year $ 36 per year $ 36 per year $ 36 per year $ 36 per year $ 36 per year $ 36 per year $ 36 per year $ 36 per year $ 36 per year
Post 7/1/12 Member
$ 90 per year $ 90 per year $ 90 per year $ 90 per year
Employer
$
2,866,000
5,680,000
5,529,000
7,509,000
15,884,000
24,829,000
27,160,000
28,461,000
28,580,000
26,277,000
GJRS
Year
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Member
7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 7.50% 7.50%
Employer
3.85% 3.85% 3.85% 3.85% 3.90% 3.90% 4.23% 6.98% 12.19%I) 10.48%I)
(continued) 112
Member and Employer Contribution Rates
LRS
Year
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Member
8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50% 8.50%
Actuarial Section
Employer
$
73,000
71,000
75,000
75,000
75,000
128,000
45,000
0
0
0
GMPF
Year
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Member
n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Employer
$ 1,103,000 1,323,000 1,434,000 1,282,000 1,521,000 1,703,000 1,892,000 1,893,369 1,989,530 2,017,875
SEAD-OPEB*
Year
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
*SEAD-OPEB began in 2007.
Member - Old Plan
0.45% 0.45% 0.45% 0.45% 0.45% 0.45% 0.45% 0.45% 0.45% 0.45%
Member - New Plan, LRS, GJRS
0.23% 0.23% 0.23% 0.23% 0.23% 0.23% 0.23% 0.23% 0.23% 0.23%
Employer
0% 0% 0% 0% 0.61% 0.27% 0% 0% 0% 0%
(continued) 113
(continued) 114
Employees' Retirement System Public School Employees Retirement System Legislative Retirement System Georgia Judicial Retirement System
Actuarial valuation
date
6/30/2007 6/30/2008 6/30/2009 6/30/2010 6/30/2011 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016
6/30/2007 6/30/2008 6/30/2009 6/30/2010 6/30/2011 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016
6/30/2007 6/30/2008 6/30/2009 6/30/2010 6/30/2011 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016
6/30/2007 6/30/2008 6/30/2009 6/30/2010 6/30/2011 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016
Actuarial value of plan assets
(a)
$ 13,843,689 14,017,346 13,613,606 13,046,193 12,667,557 12,260,595 12,129,804 12,376,120 12,675,649 12,854,518
785,460 791,855 769,618 737,406 719,601 710,915 727,268 765,450 805,277 834,554
30,049 30,706 30,303 29,581 29,278 28,990 29,481 30,538 31,635 32,171
297,090 313,315 317,624 320,050 327,483 335,225 351,889 373,560 396,399 418,412
Actuarial accrued liablility (AAL) entry age (b)
14,885,179 15,680,857 15,878,022 16,295,352 16,656,905 16,777,922 16,982,449 16,991,963 17,099,527 17,199,688
746,078 770,950 823,232 875,396 885,927 895,324 910,256 924,365 967,409 988,883
24,357 24,454 23,523 25,003 25,245 24,966 24,904 24,913 25,690 25,533
249,278 268,516 282,474 281,496 290,486 308,862 335,792 343,428 350,298 376,740
Unfunded AAL/ (funded excess)
(b-a)
1,041,490 1,663,511 2,264,416 3,249,159 3,989,348 4,517,327 4,852,645 4,615,843 4,423,878 4,345,170
(39,382) (20,905)
53,614 137,990 166,326 184,409 182,988 158,915 162,132 154,329
(5,692) (6,252) (6,780) (4,578) (4,033) (4,024) (4,577) (5,624) (5,945) (6,638)
(47,812) (44,799) (35,150) (38,554) (36,997) (26,363) (16,097) (30,132) (46,101) (41,672)
Funded ratio (a/b)
93.0 % 89.4 85.7 80.1 76.0 73.1 71.4 72.8 74.1 74.7
105.3 102.7
93.5 84.2 81.2 79.4 79.9 82.8 83.2 84.4
123.4 125.6 128.8 118.3 116.0 116.1 118.4 122.6 123.1 126.0
119.2 116.7 112.4 113.7 112.7 108.5 104.8 108.8 113.2 111.1
Annual covered payroll
(c)
$ 2,680,972 2,809,199 2,674,155 2,571,042 2,486,780 2,414,884 2,335,773 2,315,625 2,352,920 2,384,358
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
3,688 3,778 3,780 3,745 3,780 3,815 3,867 3,850 3,764 3,875
48,621 51,102 52,083 51,293 52,331 51,898 52,807 53,628 54,272 57,401
Unfunded AAL/ (funded excess) as percentage of covered payroll
[(b-a)/c]
38.8 % 59.2 84.7 126.4 160.4 187.1 207.8 199.3 188.0 182.2
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
(154.3) (165.5) (179.4) (122.2) (106.7) (105.5) (118.4) (146.1) (157.9) (171.3)
(98.3) (87.7) (67.5) (75.2) (70.7) (50.8) (30.5) (56.2) (84.9) (72.6)
Schedules of Funding Progress - Defined Benefit Plans
(Dollar amounts in thousands)
Actuarial Section
Schedules of Funding Progress - Defined Benefit Plans
(Dollar amounts in thousands)
Georgia Military Pension Fund
Actuarial valuation
date
6/30/2007 6/30/2008 6/30/2009 6/30/2010 6/30/2011 6/30/2012 6/30/2013 6/30/2014 6/30/2015 6/30/2016
Actuarial value of plan assets
(a)
$
4,165
5,269
6,413
7,558
8,702
10,087
12,131
14,264
16,446
18,414
Actuarial accrued liability (AAL) entry-age
(b)
19,887 19,124 21,021 23,773 26,767 28,231 30,056 31,815 35,213 38,211
Unfunded AAL/ (funded excess)
(b-a)
15,722 13,855 14,608 16,215 18,065 18,144 17,925 17,551 18,767 19,797
Funded ratio (a/b)
20.9 % 27.6 30.5 31.8 32.5 35.7 40.4 44.8 46.7 48.2
Annual covered payroll
(c)
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Unfunded AAL/ (funded excess) as percentage of covered payroll
[(b-a)/c]
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
115
This data, except for annual covered payroll, was provided by the System's actuary.
No statistics regarding covered payroll are available. Contributions are not based on members' salaries, but are simply $4.00 per month, per member for nine months each fiscal year if hired prior to July 1, 2012 and $10 per month, per member for nine months if hired after July 1, 2012. No statistics regarding covered payroll are available. Active and inactive plan member information is maintained by the Georgia Department of Defense.
Note: Payroll data on pages 114-115 for fiscal year 2016 will not equal that which is presented in the Financial section in the Schedules of Employers' and Nonemployers' Contributions on pages 62-63. Valuation data at that time was a snapshot of the valuation date, annualized for new hires, but does not include those who terminated during the year.
See accompanying notes to required supplementary schedules and accompanying independent auditors' report.
Actuarial Section
Schedule of Retirees Added to and Removed from Rolls
ERS
Actuarial Section
Year Ended
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Added to Rolls
Removed from Rolls
Roll End of Year
Number
2,410 2,422 2,444 2,665 2,797 2,956 3,664 2,440 2,656 2,572
Annual Allowances (in thousands)
$ 114,719 82,644 85,329 70,383 69,031 71,464 88,855 51,178 54,003 51,031
Number
1,075 1,017 1,055 1,051 1,170 1,305 1,176 1,059 1,350 1,342
Annual Allowances (in thousands)
$ 20,598 21,299 20,194 22,413 25,347 27,696 26,334 22,997 30,927 30,724
Number
34,174 35,579 36,968 38,582 40,209 41,860 44,348 45,729 47,035 48,265
Annual Allowances (in thousands)
$ 936,278 997,623
1,062,758 1,110,728 1,154,412 1,198,180 1,260,701 1,288,882 1,311,958 1,332,265
% Increase in Annual Allowance
11.2 % 6.6 6.5 4.5 3.9 3.8 5.2 2.2 1.8 1.5
Average Annual Allowances
$ 27,397 28,040 28,748 28,789 28,710 28,624 28,427 28,185 27,893 27,603
PSERS
Added to Rolls
Removed from Rolls
Year Ended
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Number
816 899 886 1,001 1,174 1,133 1,298 1,345 1,247 1,363
Annual Allowances (in thousands)
$ 4,749 4,514 5,290 4,494 3,168 3,192 3,803 3,749 3,482 3,927
Number
637 605 575 642 731 684 650 647 690 763
Annual Allowances (in thousands)
$ 2,353 2,371 2,260 2,666 3,072 2,834 2,738 2,604 2,679 2,890
Roll End of Year
Number
13,193 13,487 13,798 14,157 14,600 15,049 15,697 16,395 16,952 17,552
Annual Allowances (in thousands)
$ 46,662 48,805 51,835 53,663 53,759 54,117 55,182 56,327 57,130 58,167
% Increase in Annual Allowance
5.4 % 4.6 6.2 3.5 0.2 0.7 2.0 2.1 1.4 1.8
Average Annual Allowances
$ 3,537 3,619 3,757 3,791 3,682 3,596 3,515 3,436 3,370 3,314
GJRS
Added to Rolls
Removed from Rolls
Year Ended
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Number
13 14 29 16 15 22 42 23 21 13
Annual Allowances (in thousands)
$ 853 902
2,238 933
1,168 1,732 2,763 1,175 1,416
919
Number
7 7 6 10 2 8 13 9 11 5
Annual Allowances (in thousands)
$
297
410
191
508
105
405
629
326
561
269
Roll End of Year
Number
171 178 201 207 220 234 263 277 287 295
Annual Allowances (in thousands)
$ 9,473 9,965
12,012 12,437 13,500 14,827 16,961 17,810 18,665 19,315
% Increase in Annual Allowance
6.2 % 5.2 20.5 3.5 8.5 9.8 14.4 5.0 4.8 3.5
Average Annual Allowances
$ 55,398 55,983 59,761 60,082 61,364 63,363 64,490 64,296 65,035 65,475
(continued) 116
Schedule of Retirees Added to and Removed from Rolls
LRS
Actuarial Section
Added to Rolls
Year Ended
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Number
17 13 10 10 18 10 32 6 13 9
Annual Allowances (in thousands)
$ 151 130 117 106 104 66 200 30 87 58
Removed from Rolls
Number
9 11 7 3 10 11 15 7 12 13
Annual Allowances (in thousands)
$
74
100
54
36
86
82
140
61
112
111
Roll End of Year
Number
224 226 229 236 244 243 260 259 260 256
Annual Allowances (in thousands)
$ 1,609 1,639 1,702 1,772 1,790 1,774 1,834 1,803 1,778 1,725
% Increase in Annual Allowance
5.0 % 1.9 3.8 4.1 1.0 (0.9) 3.4 (1.7) (1.4) (3.0)
Average Annual Allowances
$ 7,183 7,252 7,432 7,508 7,336 7,300 7,054 6,961 6,838 6,738
GMPF
Added to Rolls
Removed from Rolls
Roll End of Year
Year Ended
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Number
73 71 85 92 94 95 83 62 54 79
Annual Allowances (in thousands)
$ 83 76 91
100 101 106
87 68 55 82
Number
1 2 3 1 3 3 5 5 6 9
Annual Allowances (in thousands)
$
1
2
4
1
4
3
5
6
5
9
Number
235 304 386 477 568 660 738 795 843 913
Annual Allowances (in thousands)
$
260
334
421
520
617
720
802
864
914
987
% Increase in Annual Allowance
46.1 % 28.5 26.0 23.5 18.7 16.7 11.4
7.7 5.8 8.0
Average Annual Allowances
$ 1,106 1,099 1,091 1,090 1,086 1,091 1,087 1,087 1,084 1,081
SEAD-OPEB is a post-employment life insurance plan which does not have annuity payments.
117
Analysis of Change in Unfunded Accrued Liability (UAL)
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
ERS
Interest (7.50) added to
$
previous UAL
Accrued liability contribution
Experience: Valuation asset growth Pensioners' mortality Turnover and retirements New entrants Salary increases Method changes Amendments (COLAs) Assumption changes Lawsuit Programming modification Data changes Misc. changes
Total
$
331.8 $
(514.7)
8.5 12.8 43.6
7.8 (0.6) 0.0 28.4 0.0 0.0 0.0 3.6 0.1
(78.7) $
346.2 $
(419.4)
(198.9) 13.9 50.8 10.3 (89.6) 0.0 0.0 80.4 0.0 0.0 14.4 (0.1)
(192.0) $
363.9 $
(321.7)
(228.9) 60.4 45.5 9.3
(159.4) 0.0 0.0 0.0 0.0 0.0 (6.0) 0.1
(236.8) $
Amount of Increase (Decrease) (in Millions)
338.8 $
299.2 $
243.7 $
169.8 $
(239.1)
253.7 20.6
103.7 14.1 (46.8)
(128.3) 0.0 0.0 0.0 0.0
18.7 (0.1)
335.3 $
(147.7)
396.3 15.5 93.8 12.1 (74.2) 0.0
(118.8) 0.0 0.0
26.3 12.9 12.6
528.0 $
(122.9)
433.6 16.4 91.4 28.4 49.0 0.0 0.0 0.0 0.0 (28.7) 9.1 20.2
740.2 $
(89.4)
710.1 49.2 118.4 15.0
(259.2) 0.0 0.0
250.7 0.0 0.0 (2.4)
22.5
984.7 $
Amount of Increase (Decrease) (in Thousands)
PSERS
Interest (7.50) added to previous UAL
$ 12,159.9 $ 11,918.7 $ 13,724.1 $ 13,830.7 $ 12,474.4 $ 10,349.3 $ 4,021.0 $
Accrued liability contribution
(17,394.7)
(17,704.8)
(15,915.4)
(12,497.7)
(4,843.8)
4,022.8
6,403.4
124.8 $
78.1 $
(99.7)
(86.3)
609.1 65.4
107.3 16.7
(296.9) 0.0
(358.6) 0.0
75.9 0.0
270.5 86.4
600.9 $
129.3 51.3
103.0 22.9 (22.7) 0.0
188.8 0.0 0.0 0.0 0.0
157.6
622.0 $
(1,567.9) $ (2,953.7) $
5,026.0
7,267.0
58.6
(35.3)
(59.5) 51.0 115.7 35.7 (33.2)
0.0 5.9 0.0 0.0 0.0 0.0 120.9 259.8
(5,596.9)
4,729.2
Actuarial Section
(continued) 118
Experience: Valuation asset growth Pensioners' mortality Turnover and retirements New entrants Method changes Amendments COLAs Assumption changes Lawsuit Data changes Allotment for expenses Misc. changes
841.0 (643.8) (228.2) 2,798.1
0.0 0.0 (5,492.0) 0.0 0.0 0.0 0.0 157.2
(12,207.0) 414.9
2,618.5 2,875.9
0.0 0.0 (14,772.9) 30,030.0 0.0 0.0 0.0 43.0
(14,071.0) 1,286.7 2,580.8 2,786.0 0.0 0.0
(14,398.9) 0.0 0.0 0.0 0.0
(64.9)
13,868.0 (381.9)
4,772.4 2,757.7 (9,259.0)
0.0 (14,813.1)
0.0 0.0 0.0 0.0 301.7
21,922.0 (1,149.5) 4,974.5 2,783.8
0.0 0.0 (20,664.9) 0.0 0.0 0.0 0.0 2,586.9
24,002.0 (3,000.5) 3,403.6 3,167.0
0.0 0.0 (16,603.6) 0.0 0.0 0.0 2,122.7 872.4
39,729.0 (828.9)
12,375.8 3,047.8 0.0 0.0
(14,121.2) 33,717.7
0.0 (2,192.3) 2,029.0
195.0
34,015.0 973.7
6,201.3 3,267.7
0.0 0.0 0.0 0.0 2,168.0 24,199.5 433.0 (197.3)
6,623.0 420.3
3,381.4 4,021.0
0.0 0.0 0.0 0.0 0.0 0.0 0.0 (281.8)
(3,737.0) (320.5)
1,053.3 3,556.9
0.0 0.0 36,404.3 0.0 0.0 0.0 0.0 (846.1)
Total
$ (7,802.5) $ 3,216.3 $ (24,072.6) $ 1,421.2 $ 18,083.4 $ 28,335.7 $ 84,376.3 $ 74,519.0 $ 18,477.2 $ 35,243.2
Analysis of Change in Unfunded Accrued Liability (UAL)
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
Actuarial Section
(continued) 119
GJRS
Interest (7.50) added to
$
previous UAL
Accrued liability contribution
Experience: Valuation asset growth Pensioners' mortality Turnover and retirements New entrants Salary increases Method changes Amendments (COLAs) Assumption changes Data changes Programming modification Misc. changes
Total
$
LRS
Interest (7.50) added to
$
previous UAL
Accrued liability contribution
Experience: Valuation asset growth Pensioners' mortality Turnover and retirements New entrants Method changes Amendments No COLAs Assumption changes Data changes Misc. changes
Total
$
Amount of Increase (Decrease) (in Thousands)
(3,457.6) $ (2,259.9) $ (1,207.3) $ (1,977.2) $ (2,774.8) $ (2,891.5) $ (2,636.2) $ (3,360.0) $ (3,585.9) $
(746.2)
3,754.1
5,803.3
5,187.8
4,710.8
4,079.8
4,592.1
3,596.2
4,498.3
562.3 1,530.2
872.4 1,190.9
209.7 0.0
3,179.6 0.0 0.0 0.0
1,086.9
4,428.2
(5,855.8) 639.6 (370.0)
1,539.1 (8,848.5)
0.0 0.0 (5,030.9) 0.0 0.0 464.1
(6,807.0) 2,138.5 (5,962.8) 1,272.3 (10,382.5)
0.0 0.0 0.0 0.0 0.0 1,110.1
$ (15,968.2) $ (14,035.4) $
4,949.6 533.8
3,941.4 3,138.0 (4,620.6) (6,827.0)
0.0 0.0 0.0 4,606.4 1,333.8
10,266.0 $
8,638.5 376.9
2,080.7 442.3
(4,536.5) 0.0
(870.0) 0.0 0.0
1,648.9 917.5
9,404.0 2,076.8
(276.3) 750.1 1,265.9
0.0 0.0 0.0 0.0 0.0 (12,852.1)
16,228.0 560.9
2,290.6 0.0
(10,213.5) 0.0 0.0
(14,826.5) 579.1 0.0 21.3
13,941.0 1,102.3 1,982.9 967.2
(10,561.2) 0.0
(2,359.4) 0.0
4,581.2 0.0
(240.6)
3,164.0 409.3
1,243.3 354.2
(3,432.4) 0.0
1,265.0 0.0 0.0 0.0
(903.4)
10,634.3 $ 1,556.7 $ (3,404.2) $ 9,649.6 $ 3,102.3 $
Amount of Increase (Decrease) (in Thousands)
(445.9) $
(421.9) $
(343.3) $
(301.8) $
(302.5) $
(343.4) $
(508.5) $
(468.9) $ (426.9) $
338.3
173.4
161.9
(62.4)
33.9
107.1
(32.5)
(21.1)
(26.3)
24.1 (66.1) (198.9) 26.8
0.0 51.5 (418.2)
0.0 0.0 (4.7)
(693.1) $
(491.6) (50.8) (10.1) 35.1 0.0 0.0
(452.6) 852.3
0.0 46.2
(320.0) $
(576.5) 323.8 (347.5) 135.2
0.0 0.0 (470.8) 0.0 0.0 69.9
(1,047.3) $
513.9 (29.6) 17.4 144.5 (418.0) (488.1)
0.0 0.0 0.0 71.1
(553.1) $
829.0 19.1 (84.3) 16.9 0.0
(549.7) 0.0 0.0 0.0
46.4
8.8 $
906.2 (18.7) 254.5 74.0
0.0 (481.8)
0.0 0.0 0.0 46.9
544.9 $
1,534.0 339.2 105.1 98.8 0.0 (465.3) 0.0 975.2 114.8 41.6
2,202.4 $
1,307.4 240.7 (5.7) 0.0 0.0 0.0 0.0 0.0
(1,529.1) (51.7)
(528.4) $
241.7 (2.2)
(429.8) 35.9 0.0 0.0 0.0 0.0 0.0 47.4
(560.2) $
(3,729.5)
3,953.2
(1,026.0) (154.4)
(1,614.7) 659.5 369.8 0.0 24.1 0.0 0.0 0.0
3,433.5 1,915.5
(432.3)
(31.1)
(155.0) 119.4 423.8
0.0 0.0 0.0 0.0 0.0 0.0 147.9 72.7
Analysis of Change in Unfunded Accrued Liability (UAL)
GMPF*
Interest (7.50) added to previous UAL
Accrued liability contribution
Experience: Valuation asset growth Pensioners' mortality Turnover and retirements New entrants Method changes Assumption changes Expense Deficit Misc. changes
Total
2016
2015
2014
2013
2012
2011
Amount of Increase (Decrease) (in Thousands)
$ 1,407.5 $ 1,316.3 $
1,344.3 $
1,360.8 $
1,354.9 $
1,216.1
(1,698.6)
(1,765.6)
(1,775.3)
(1,661.5)
(1,502.4)
(1,173.3)
59.0 119.3 233.3 165.1
0.0 0.0 0.0 744.4
$ 1,030.0
(203.0) 126.1 120.5 236.9
0.0 985.8
0.0 398.7
$ 1,215.7 $
(247.0) 88.8 (87.9)
142.6 0.0 0.0 0.0
161.1
(373.4) $
39.3 80.2 186.4 137.8 (393.0)
0.0 0.0 30.6
(219.4) $
107.0 68.3 17.9
127.1 0.0 0.0 0.0
(93.6)
79.2 $
113.8 58.5 205.4 1,469.6
0.0 0.0 37.0 (77.0)
1,850.1
*Note: Data prior to 2011 is not available for GMPF.
120
Actuarial Section
SEAD-OPEB: Data is not available.
Actuarial Section
Solvency Test Results
(Dollar amounts in thousands)
ERS
Actuarial Valuation as of 7/1
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Actuarial Accrued Liability for:
Active Member Contributions
Retirants & Beneficiaries
Active Member (Employer
Funded Portion)
Valuation Assets
(1)
(2)
$ 645,907 $ 9,020,890 $
616,177
9,756,529
589,012
10,034,939
551,607
10,652,040
503,867
11,058,344
460,861
11,420,011
405,841
11,935,364
385,058
12,108,737
367,462
12,520,321
368,281
12,592,980
(3)
5,218,382 $ 13,843,689
5,308,151
14,017,346
5,254,071
13,613,606
5,091,705
13,046,193
5,094,694
12,667,557
4,897,050
12,260,595
4,641,244
12,129,803
4,498,168
12,376,120
4,211,744
12,675,649
4,238,427
12,854,518
Portion of Aggregate Accrued Liabilities Covered by Assets
(1)
100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
(2)
100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
98.2% 99.0% 98.3% 99.2%
(3)
80.0% 68.7% 56.9% 36.2% 21.7%
7.8% 0.0% 0.0% 0.0% 0.0%
PSERS
Actuarial Valuation as of 7/1
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Actuarial Accrued Liability for:
Active Member Contributions
Retirants & Beneficiaries
Active Member (Employer
Funded Portion)
Valuation Assets
(1)
$ 14,796 $ 15,285 15,862 16,361 16,627 16,917 17,016 16,995 17,196 17,413
(2)
456,868 $ 469,601 506,659 528,808 532,509 537,284 549,796 566,344 585,471 609,807
(3)
274,414 $ 286,064 300,711 330,227 336,790 341,123 343,444 341,026 364,742 361,663
785,460 791,855 769,618 737,406 719,601 710,915 727,268 765,450 805,277 834,554
Portion of Aggregate Accrued Liabilities Covered by Assets
(1)
100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
(2)
100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
(3)
100.0% 100.0%
82.2% 58.2% 50.6% 45.9% 46.7% 53.4% 55.5% 57.3%
GJRS
Actuarial Valuation as of 7/1
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Actuarial Accrued Liability for:
Active Member Contributions
(1)
$ 52,707 59,838 61,188 67,293 71,047 73,998 73,949 80,007 84,170 91,991
Retirants & Beneficiaries
Active Member (Employer
Funded Portion)
(2)
$
87,333 $
90,601
108,923
117,730
128,991
141,880
162,364
162,527
174,147
180,107
(3)
109,238 118,077 112,363 96,473 90,440 92,984 99,479 100,894 91,981 104,642
Valuation Assets
$ 297,090 313,315 317,624 320,050 327,483 335,225 351,889 373,560 396,399 418,412
Portion of Aggregate Accrued Liabilities Covered by Assets
(1)
100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
(2)
100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
(3)
100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
(continued) 121
Actuarial Section
Solvency Test Results
(Dollar amounts in thousands)
LRS
Actuarial Valuation as of 7/1
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Actuarial Accrued Liability for:
Active Member Contributions
(1)
$ 2,484 2,853 2,908 3,166 2,921 3,185 2,951 3,430 3,287 3,630
Retirants & Beneficiaries
Active Member (Employer
Funded Portion)
(2)
$ 19,847 $ 19,366 18,465 19,208 19,759 19,200 19,623 19,006 19,873 19,202
(3)
2,026 2,235 2,150 2,629 2,564 2,581 2,330 2,477 2,530 2,701
Valuation Assets
$ 30,049 30,706 30,303 29,581 29,278 28,990 29,481 30,538 31,635 32,171
Portion of Aggregate Accrued Liabilities Covered by Assets
(1)
100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
(2)
100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
(3)
100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
GMPF
Actuarial Valuation as of 7/1
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Actuarial Accrued Liability for:
Active Member Contributions
(1)
$
0
0
0
0
0
0
0
0
0
0
Retirants & Beneficiaries
Active Member (Employer
Funded Portion)
(2)
$ 7,655 9,449
12,742 14,015 15,379 17,518 19,396 21,389 24,075 26,337
(3)
$ 12,232 9,675 8,279 9,758 11,388
10,713 10,660 10,426 11,138 11,874
Valuation Assets
$ 4,165 5,269 6,413 7,558 8,702
10,087 12,131 14,264 16,446 18,414
Portion of Aggregate Accrued Liabilities Covered by Assets
(1)
(2)
(3)
n/a
54.4%
0.0%
n/a
55.8%
0.0%
n/a
50.3%
0.0%
n/a
53.9%
0.0%
n/a
56.6%
0.0%
n/a
57.6%
0.0%
n/a
62.5%
0.0%
n/a
66.7%
0.0%
n/a
68.3%
0.0%
n/a
69.9%
0.0%
SEAD-OPEB
Actuarial Valuation as of 7/1
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Actuarial Accrued Liability for:
Active Member Contributions
(1)
$
0
0
0
0
0
0
0
0
0
0
Retirants & Beneficiaries
Active Member (Employer
Funded Portion)
(2)
$ 436,530 486,569 524,718 516,633 503,327 528,165 586,228 621,502 621,426 652,291
(3)
$ 206,001 213,315 208,953 174,368 175,093 176,452 168,558 166,518 148,321 180,078
Valuation Assets
$ 778,048 737,114 628,199 680,449 807,893 818,284 907,831
1,037,901 1,046,559 1,028,541
Portion of Aggregate Accrued Liabilities Covered by Assets
(1)
(2)
(3)
n/a
100.0%
100.0%
n/a
100.0%
100.0%
n/a
100.0%
49.5%
n/a
100.0%
93.9%
n/a
100.0%
100.0%
n/a
100.0%
100.0%
n/a
100.0%
100.0%
n/a
100.0%
100.0%
n/a
100.0%
100.0%
n/a
100.0%
100.0%
SEAD-OPEB was created effective July 1, 2007. 122
(continued)
Statistical Section
Statistical Section
ERS
GMPF
GJRS
ERSGA
LRS
PSR
GDCP
PSERS
E RSGA
Serving those who serve Georgia
Employees' Retirement System of Georgia
Statistical Section
Introduction
The objective of the statistical section is to provide a historical perspective, context and relevant details to assist readers in evaluating the condition of the plans. All nonaccounting data is taken from ERSGA's internal sources except for information which is derived from the actuarial valuations. FY2010 was the first year ERSGA added this information in their Annual Financial Report. Therefore, historical detail may not be complete for some schedules. Statistical information is not presented for SCJRF and DARF as both plans are immaterial, have no active members, and are closed to new members.
Fiduciary Funds Financial Trends
The following schedules have been included to help the reader understand how the System's financial position has changed over the past 10 years:
Additions by Source Deductions by Type Changes in Fiduciary Net Position Operational Trends The following schedules have been included to help the readers understand how the System's financial report relates to the services provided by the System and the activities it performs: Retiree Information Withdrawal (Refund) Data New Retiree Elections Overall Plan Statistics
Proprietary Fund
Schedule of Revenue and Expenses 10-year Schedule of Membership
124
125
(continued)
2008
2009
2010
2011
2012
2013
2014
2015
ERS
Employee Contributions
$
48,324
43,978
42,052
39,480
36,561
38,955
32,423
Employer Contributions
286,256
281,206
263,064 261,132 274,034 358,992 418,807
Nonemployer Contributions
--
--
--
--
--
--
10,945
Net Investment Income (Loss)
(482,679) (1,726,302) 1,176,741 2,269,270 231,782 1,495,849 2,021,748
Other
--
--
--
--
--
--
--
33,713 505,668
12,495 474,147
10
Total Additions to (Deductions from) Fiduciary Net Position
$ (148,099) (1,401,118) 1,481,857 2,569,882 542,377 1,893,796 2,483,923 1,026,033
PSERS
Employee Contributions
$
Employer Contributions
Nonemployer Contributions
Net Investment Income (Loss)
Other
Total Additions to (Deductions
from) Fiduciary Net Position
$
1,451 2,869
-- (27,052)
588
(22,144)
1,472 5,096
-- (97,156)
588
(90,000)
1,483 5,530
-- 66,404
--
1,451 7,509
-- 128,096
--
1,426 15,884
-- 13,554
--
1,538 24,829
-- 88,067
--
1,659 --
27,160 123,799
--
73,417 137,056
30,864
114,434 152,618
1,800 --
28,461 30,129
--
60,390
GJRS
Employee Contributions
$
Employer Contributions
Nonemployer Contributions
Net Investment Income (Loss)
Other
Total Additions to (Deductions
from) Fiduciary Net Position
$
4,698 2,395
-- (10,702)
175
(3,434)
4,612 1,703
-- (38,164)
175
(31,674)
5,018 3,369
-- 27,378
175
35,940
4,721 1,163
-- 57,330
--
4,904 2,083
-- 6,571
--
63,214
13,558
4,408 2,279
-- 42,104
--
4,731 1,373 1,002 60,012
--
48,791
67,118
5,061 2,696 1,564 14,697
--
24,018
LRS
Employee Contributions
$
Employer Contributions
Nonemployer Contributions
Net Investment Income (Loss)
Other
Total Additions to (Deductions
from) Fiduciary Net Position
$
320 73 --
(1,051) 110
(548)
320 71 --
(3,772) 110
(3,271)
318 75 --
2,610 110
3,113
320 75 --
5,194 --
5,589
323 76 -- 550 --
949
373 128
-- 3,573
--
4,074
282 45 --
4,969 --
5,296
327 -- -- 1,189 --
1,516
2016
2017
31,961 583,082
12,484 141,292
10
35,863 613,201
12,080 1,475,626
10
768,829 2,136,780
1,925 --
28,580 9,809 --
2,084 --
26,277 97,715
--
40,314
126,076
5,507 4,754 2,869 5,055
--
18,185
4,906 4,081 2,603 49,259
--
60,849
328
327
--
--
--
--
363
3,741
--
--
691
4,068
Statistical Section
Additions by Source - Contribution/Investment Income (in thousands)
126
(continued)
GMPF
Employee Contributions Employer Contributions Nonemployer Contributions Net Investment Income (Loss) Other
Total Additions to (Deductions from) Fiduciary Net Position
SEAD - OPEB
Employee Contributions Employer Contributions Insurance Premiums Net Investment Income (Loss) Other
Total Additions to (Deductions from) Fiduciary Net Position
Defined Contribution Plan - GDCP
Employee Contributions Employer Contributions Nonemployer Contributions Net Investment Income (Loss) Other
Total Additions to (Deductions from) Fiduciary Net Position
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
$
--
--
1,103
1,323
--
--
(191)
(657)
--
--
$
912
666
-- 1,434
-- 565
--
1,999
-- 1,282
-- 1,465
--
-- 1,521
-- 221
--
2,747
1,742
-- 1,703
-- 1,374
--
-- 1,892
-- 2,179
--
3,077
4,071
-- 1,893
-- 585
--
2,478
-- 1,990
-- 240
--
2,230
-- 2,018
-- 2,262
--
4,280
$
--
--
--
--
7,756
7,551
(27,032) (96,424)
--
--
-- -- 6,755 69,340 --
-- -- 6,437 144,270 --
-- -- 5,532 17,193 --
-- -- 5,075 108,148 --
-- -- 4,502 154,868 --
-- -- 4,187 37,876 --
-- -- 3,931 12,559 --
-- 1 3,793 125,550 --
$ (19,276) (88,873)
76,095 150,707 22,725
113,223 159,370
42,063
16,490 129,344
$ 15,860
15,608
16,002
--
--
--
--
--
--
(331) (5,294) 10,319
--
--
--
17,656 -- --
775 --
17,171 -- --
652 --
16,676 -- --
137 --
16,290 -- --
1,368 --
15,655 -- --
1,326 --
14,708 -- --
5,591 --
14,921 -- --
(1,056) --
$ 15,529
10,314
26,321
18,431
17,823
16,813
17,658
16,981
20,299 13,865
Statistical Section
Additions by Source - Contribution/Investment Income (in thousands)
Statistical Section
Additions by Source - Contribution/Investment Income (in thousands)
127
Defined Contribution Plan - 401(k)
Employee Contributions Employer Contributions Nonemployer Contributions Net Investment Income (Loss) Other
Total Additions to (Deductions from) Fiduciary Net Position
Defined Contribution Plan - 457
Employee Contributions Employer Contributions Nonemployer Contributions Net Investment Income (Loss) Other
Total Additions to (Deductions from) Fiduciary Net Position
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
$ 38,927
33,432
14,193
6,939
--
--
(21,302) (50,330)
921
750
33,899 15,664
-- 25,283
385
38,006 25,442
-- 59,581
446
40,331 4,355
-- 3,112
800
44,428 18,279
-- 52,835
948
53,724 21,513
-- 78,583
1,122
64,870 25,615
-- 17,665
--
79,422 29,982
-- 5,281 1,429
93,608 36,761
-- 88,771
1,584
$ 32,739
(9,209)
75,231 123,475
48,598 116,490 154,942 109,448 116,114 220,724
$
26,466
24,087
--
--
--
--
(31,343) (70,066)
761
626
21,171 -- --
35,806 468
20,108 -- --
70,963 339
19,551 -- --
7,785 --
18,753 -- --
55,737 --
17,623 -- --
73,746 --
17,445 -- --
18,991 --
17,413 -- --
7,855 --
18,899 -- --
59,541 --
$
(4,116) (45,353)
57,445
91,410
27,336
74,490
91,369
36,436
25,268
78,440
Statistical Section
Deductions by Type (in thousands)
ERS
Fiscal Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Benefit Payments
Service
Partial Lump-Sum
Option
$
797,052
889,669
878,482
921,136
964,485
1,007,816
1,051,993
1,076,676
1,092,909
1,130,996
24,792 22,011 23,480 30,946 31,963 35,933 24,567 24,391 19,154 19,765
Disability
131,709 135,743 146,031 140,849 143,317 145,152 146,245 147,418 147,706 151,772
Survivor Benefits
66,397 69,735 82,676 75,891 76,973 80,300 83,193 85,794 87,843 91,750
Total Benefit Payments
$ 1,019,950 1,117,158 1,130,669 1,168,822 1,216,738 1,269,201 1,305,998 1,334,278 1,347,633 1,394,283
Net Administrative
Expenses
18,805 16,809 14,505 14,431 12,051 12,889
7,440 7,872 8,506 8,732
Refunds
Total Deductions
from Fiduciary Net Position
7,815 $ 6,597 6,483 7,515 7,767 7,390 8,757 7,450 7,087 9,033
1,046,570 1,140,564 1,151,657 1,190,768 1,236,556 1,289,480 1,322,195 1,349,600 1,363,226 1,412,048
PSERS
Benefit Payments
Fiscal Year
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Service
$
41,607
45,159
45,741
46,548
46,911
47,805
48,911
49,704
50,572
52,012
Disability
4,956 5,232 5,402 5,369 5,369 5,328 5,280 5,227 5,172 5,117
Survivor Benefits
1,682 1,806 2,052 2,063 1,903 1,908 1,998 2,041 2,160 2,249
Total Benefit Payments
$
48,245
52,197
53,195
53,980
54,183
55,041
56,189
56,972
57,903
59,378
Net Administrative
Expenses
588 588 1,956 2,046 2,040 2,021 1,450 1,545 1,321 1,308
Refunds
308 261 251 267 349 492 514 456 465 1,031
Total Deductions from
Fiduciary Net Position
$
49,141
53,046
55,402
56,293
56,572
57,554
58,153
58,973
59,689
61,717
GJRS
Benefit Payments
Fiscal Year
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Service
$
8,259
9,453
10,633
11,245
12,608
14,273
15,305
16,084
16,677
19,349
Disability
110 112 114 112 113 112 112 112 112 114
Survivor Benefits
1,498 1,546 1,618 1,654 1,695 1,865 2,024 2,169 2,222 2,321
Total Benefit Payments
$
9,867
11,111
12,365
13,011
14,416
16,250
17,441
18,365
19,011
21,784
Net Administrative
Expenses
175 175 270 290 310 313 754 819 754 728
Refunds
14 263 139 260 146 105
22 772 261 166
Total Deductions from
Fiduciary Net Position
$
10,056
11,549
12,774
13,561
14,872
16,668
18,217
19,956
20,026
22,678
128
(continued)
Statistical Section
Deductions by Type (in thousands)
LRS Benefit Payments
Fiscal Year
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Service
$
1,228
1,265
1,308
1,309
1,364
1,376
1,336
1,315
1,294
1,323
Survivor Benefits
406 425 436 452 446 448 465 441 429 440
Total Benefit Payments
$
1,634
1,690
1,744
1,761
1,810
1,824
1,801
1,756
1,724
1,763
Net Administrative
Expenses
110 110 120 131 110 119 152 169 313 224
Refunds
Total Deductions from
Fiduciary Net Position
65 $ 49 47 60 74 88 30 26 38 75
1,809 1,849 1,911 1,952 1,994 2,031 1,983 1,951 2,075 2,062
GMPF
Fiscal Year
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Benefit Payments
Service*
Total Benefit Payments
$
303 $
303
382
382
489
489
579
579
678
678
772
772
841
841
896
896
963
963
1,042
1,042
Net Administrative
Expenses
Total Deductions from
Fiduciary Net Position
-- $ -- 43 37 34 31 110 121 262 244
303 382 532 616 712 803 951 1,017 1,225 1,286
*The only type of retirement in GMPF is a service retirement.
SEAD-OPEB
Fiscal Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Benefit Payments
Death Benefits**
$
21,455
19,839
23,642
23,060
24,855
28,482
28,891
32,979
33,911
36,058
Total Benefit Payments
$
21,455
19,839
23,642
23,060
24,855
28,482
28,891
32,979
33,911
36,058
Net Administrative
Expenses
Total Deductions from
Fiduciary Net Position
203 $ 203 203 203 203 203 414 428 599 576
21,658 20,042 23,845 23,263 25,058 28,685 29,305 33,407 34,510 36,634
**The only type of benefit in SEAD-OPEB is a death benefit.
(continued) 129
Statistical Section
Deductions by Type (in thousands)
Defined Contribution Plan - GDCP
Fiscal Year
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Benefit Payments
Periodic Payments
Total Benefit Payments
Net Administrative
Expenses
$
9$
9
9
9
9
9
9
9
11
11
9
9
9
9
--
--
--
35
--
--
310 310 1,110 1,180 1,138 1,160 991 990 766 785
Refunds
Total Deductions from
Fiduciary Net Position
11,514 $ 10,377 10,613 11,390 12,749 14,415 17,721 22,340 11,911 11,544
11,833 10,696 11,732 12,579 13,898 15,584 18,721 23,330 12,712 12,329
Defined Contribution Plan - 401(k)
Fiscal Year
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Benefit Payments
Distributions
$
26,548
21,105
23,618
42,457
36,986
57,351
43,133
95,428
46,508
55,866
Total Benefit Payments
$
26,548
21,105
23,618
42,457
36,986
57,351
43,133
95,428
46,508
55,866
Net Administrative
Expenses
Total Deductions from
Fiduciary Net Position
1,472 $ 1,028
829 2,054 2,111 2,457 2,300 2,755 2,832 3,096
28,020 22,133 24,447 44,511 39,097 59,808 45,433 98,183 49,340 58,962
Defined Contribution Plan - 457
Fiscal Year
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Benefit Payments
Distributions
$
41,555
37,257
37,014
44,773
41,835
63,388
45,807
50,479
43,288
38,872
Total Benefit Payments
$
41,555
37,257
37,014
44,773
41,835
63,388
45,807
50,479
43,288
38,872
Net Administrative
Expenses
Total Deductions from
Fiduciary Net Position
1,169 $ 1,769 2,115 1,064
910 996 812 866 820 789
42,724 39,026 39,129 45,837 42,745 64,384 46,619 51,345 44,108 39,661
130
(continued) 131
ERS
Total Additions Total Deductions Transfer In (Out) Changes in Fiduciary Net Position
PSERS
Total Additions Total Deductions Transfer In (Out) Changes in Fiduciary Net Position
GJRS
Total Additions Total Deductions Transfer In (Out) Changes in Fiduciary Net Position
LRS
Total Additions Total Deductions Transfer In (Out) Changes in Fiduciary Net Position
GMPF
Total Additions Total Deductions Transfer In (Out) Changes in Fiduciary Net Position
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
$ (148,099) (1,401,118) 1,481,857 2,569,882
1,046,570 1,140,564 1,151,657 1,190,768
--
--
--
--
(1,194,669) (2,541,682) 330,200 1,379,114
542,377 1,236,556
(12,724) (706,903)
1,893,796 1,289,480
(5,009) 599,307
2,483,923 1,322,195
-- 1,161,728
1,026,033 1,349,600
-- (323,567)
768,829 1,363,226
-- (594,397)
2,136,780 1,412,048
-- 724,732
(22,144) 49,141
-- (71,285)
(90,000) 53,046
-- (143,046)
73,417 55,402
-- 18,015
137,056 56,293 -- 80,763
30,864 56,572
-- (25,708)
114,434 57,554
-- 56,880
152,618 58,153 -- 94,465
60,390 58,973
-- 1,417
40,314 59,689
-- (19,375)
126,076 61,717 -- 64,359
(3,434) 10,056
-- (13,490)
(31,674) 11,549
-- (43,223)
35,940 12,774
-- 23,166
63,214 13,561
-- 49,653
13,558 14,872
-- (1,314)
48,791 16,668
-- 32,123
67,118 18,217
-- 48,901
24,018 19,956
-- 4,062
18,185 20,026
-- (1,841)
60,849 22,678
-- 38,171
(548) 1,809
-- (2,357)
(3,271) 1,849
-- (5,120)
3,113 1,911
-- 1,202
5,589 1,952
-- 3,637
949 1,994
-- (1,045)
4,074 2,031
-- 2,043
5,296 1,983
-- 3,313
1,516 1,951
-- (435)
691 2,075
-- (1,384)
4,068 2,062
-- 2,006
912
666
1,999
2,747
1,742
3,077
4,071
2,478
2,230
4,280
303
382
532
616
712
803
951
1,017
1,225
1,286
--
--
--
--
--
--
--
--
--
--
609
284
1,467
2,131
1,030
2,274
3,120
1,461
1,005
2,994
Changes in Fiduciary Net Position (in thousands)
Statistical Section
132
SEAD - OPEB
Total Additions Total Deductions Transfer In (Out) Changes in Fiduciary Net Position
Defined Contribution Plan - GDCP
Total Additions Total Deductions Transfer In (Out) Changes in Fiduciary Net Position
Defined Contribution Plan - 401(k)
Total Additions Total Deductions Transfer In (Out) Changes in Fiduciary Net Position
Defined Contribution Plan - 457
Total Additions Total Deductions Transfer In (Out) Changes in Fiduciary Net Position
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
$ (19,276) (88,873)
21,658
20,042
--
--
(40,934) (108,915)
76,095 23,845
-- 52,250
150,707 23,263 --
127,444
22,725 25,058 12,724 10,391
113,223 28,685
5,009 89,547
159,370 29,305 5
130,070
42,063 33,407
2 8,658
16,490 34,510
2 (18,018)
129,344 36,634 -- 92,710
15,529 11,833
-- 3,696
10,314 10,696
-- (382)
26,321 11,732
-- 14,589
18,431 12,579
-- 5,852
17,823 13,898
-- 3,925
16,813 15,584
-- 1,229
17,658 18,721
-- (1,063)
16,981 23,330
-- (6,349)
20,299 12,712
-- 7,587
13,865 12,329
-- 1,536
32,739 28,020
-- 4,719
(9,209) 22,133
-- (31,342)
75,231 24,447
-- 50,784
123,475 44,511 -- 78,964
48,598 39,097
-- 9,501
116,490 59,808
-- 56,682
154,942 45,433 --
109,509
109,448 98,183 -- 11,265
116,114 49,340
-- 66,774
220,724 58,962 --
161,762
(4,116) 42,724
-- (46,840)
(45,353) 39,026
-- (84,379)
57,445 39,129
-- 18,316
91,410 45,837
-- 45,573
27,336 42,745
-- (15,409)
74,490 64,384
-- 10,106
91,369 46,619
-- 44,750
36,436 51,345
-- (14,909)
25,268 44,108
-- (18,840)
78,440 39,661
-- 38,779
Changes in Fiduciary Net Position (in thousands)
Statistical Section
Number of Retirees
Statistical Section
133
Average Monthly Payments to Retirees
Statistical Section
134
Annual Benefit
Statistical Section
135
Withdrawal Statistics
Statistical Section
Note: The GMPF Plan does not have a refund feature. 136
Statistical Section
Average Monthly Benefit Payment for New Retirees - ERS
10-15
Years of Credited Service
16-20
21-25
26-30
Over 30
Total
2008
Average Monthly Benefit Average Final Average Salary Number of Retirees
2009
Average Monthly Benefit Average Final Average Salary Number of Retirees
2010
Average Monthly Benefit Average Final Average Salary Number of Retirees
2011
Average Monthly Benefit Average Final Average Salary Number of Retirees
2012
Average Monthly Benefit Average Final Average Salary Number of Retirees
2013
Average Monthly Benefit Average Final Average Salary Number of Retirees
2014
Average Monthly Benefit Average Final Average Salary Number of Retirees
2015
Average Monthly Benefit Average Final Average Salary Number of Retirees
2016
Average Monthly Benefit Average Final Average Salary Number of Retirees
2017
Average Monthly Benefit Average Final Average Salary Number of Retirees
$701.03 $3,025.39
309
$1,068.51 $3,181.44
306
$1,457.03 $3,408.23
280
$1,899.48 $3,767.28
290
$3,576.69 $4,489.73
1,032
$2,342.60 $3,873.97
2,217
$717.65 $3,109.07
344
$1,059.22 $3,179.28
320
$1,458.18 $3,483.90
301
$1,910.75 $3,875.27
324
$3,627.21 $4,548.96
949
$2,272.58 $3,891.02
2,238
$694.23 $3,023.45
391
$1,086.00 $3,345.36
324
$1,502.32 $3,555.21
332
$1,849.65 $3,802.65
375
$3,653.29 $4,588.73
981
$2,247.01 $3,900.93
2,403
$734.74 $3,228.07
437
$1,107.16 $3,205.88
322
$1,504.51 $3,478.73
389
$1,995.24 $3,762.88
461
$3,575.54 $4,532.07
885
$2,143.95 $3,825.88
2,494
$729.60 $3,040.00
518
$1,247.16 $3,275.37
385
$1,624.82 $3,388.85
414
$2,125.35 $3,807.26
486
$3,708.26 $4,702.47
776
$2,109.84 $3,775.94
2,578
$836.73 $3,391.36
684
$1,183.19 $3,339.84
453
$1,650.14 $3,411.24
466
$2,120.33 $3,765.16
780
$3,487.96 $4,659.17
1,033
$2,088.46 $3,855.98
3,416
$769.91 $3,309.44
483
$1,232.07 $3,337.66
306
$1,527.47 $3,263.54
311
$2,057.32 $3,718.37
477
$3,242.25 $4,486.34
542
$1,870.02 $3,699.86
2,119
$750.98 $3,269.25
524
$1,224.00 $3,443.88
316
$1,620.88 $3,547.63
341
$2,068.82 $3,750.99
623
$3,074.69 $4,536.68
561
$1,837.97 $3,760.27
2,365
$759.54 $3,189.20
559
$1,224.52 $3,376.84
340
$1,760.28 $3,657.08
330
$2,171.75 $3,935.01
530
$2,996.81 $4,618.83
466
$1,783.98 $3,764.34
2,225
$796.76 $3,479.90
551
$1,204.27 $3,405.67
395
$1,786.30 $3,850.73
359
$2,109.53 $3,813.78
453
$2,870.19 $4,595.25
470
$1,732.36 $3,829.66
2,228
137
(continued)
Statistical Section
Average Monthly Benefit Payment for New Retirees - PSERS
10-15
Years of Credited Service
16-20
21-25
26-30
Over 30
Total
2008
Average Monthly Benefit Number of Retirees
2009
Average Monthly Benefit Number of Retirees
2010
Average Monthly Benefit Number of Retirees
2011
Average Monthly Benefit Number of Retirees
2012
Average Monthly Benefit Number of Retirees
2013
Average Monthly Benefit Number of Retirees
2014
Average Monthly Benefit Number of Retirees
2015
Average Monthly Benefit Number of Retirees
2016
Average Monthly Benefit Number of Retirees
2017
Average Monthly Benefit Number of Retirees
$149.91 362
$219.81 199
$279.58 116
$349.05 99
$439.31 98
$238.04 874
$156.52 391
$224.92 200
$289.93 157
$357.58 91
$460.04 90
$242.89 929
$157.66 448
$224.92 200
$300.93 162
$359.24 76
$464.07 105
$243.41 1,001
$158.67 463
$227.68 200
$297.01 126
$374.01 79
$479.42 114
$245.04 982
$159.25 480
$236.46 182
$303.66 136
$362.36 74
$476.51 87
$238.59 958
$159.34 580
$232.10 255
$300.66 175
$360.75 113
$478.49 133
$245.72 1,256
$154.20 603
$227.41 268
$297.58 147
$345.98 121
$437.20 131
$233.71 1,270
$155.20 568
$225.02 254
$290.82 166
$360.11 105
$471.12 99
$233.25 1,192
$160.28 529
$232.09 273
$298.45 454
$358.11 103
$489.48 103
$242.18 1,162
$153.93 515
$226.90 230
$286.35 126
$348.16 78
$437.62 104
$228.12 1,053
Note: PSERS is not a final average pay plan.
(continued) 138
Statistical Section
Average Monthly Benefit Payment for New Retirees - GJRS
10-15
Years of Credited Service
16-20
21-25
26-30
Over 30
Total
2008
Average Monthly Benefit Average Final Average Salary Number of Retirees
2009
Average Monthly Benefit Average Final Average Salary Number of Retirees
2010
Average Monthly Benefit Average Final Average Salary Number of Retirees
2011
Average Monthly Benefit Average Final Average Salary Number of Retirees
2012
Average Monthly Benefit Average Final Average Salary Number of Retirees
2013
Average Monthly Benefit Average Final Average Salary Number of Retirees
2014
Average Monthly Benefit Average Final Average Salary Number of Retirees
2015
Average Monthly Benefit Average Final Average Salary Number of Retirees
2016
Average Monthly Benefit Average Final Average Salary Number of Retirees
2017
Average Monthly Benefit Average Final Average Salary Number of Retirees
$2,485.43 $6,662.15
4
0
$7,368.55
$4,735.08
0
$9,934.33
$6,342.20
0
2
2
0
$4,863.02
0
$7,646.23
0
8
$4,874.28 $9,519.58
8
$5,883.17 $8,825.88
5
$7,366.55 $10,071.58
7
$6,630.61 $8,881.08
5
$7,639.64 $10,232.57
2
$6,478.85 $9,506.14
27
$6,337.43 $10,490.01
1
$4,563.90 $7,018.08
5
$7,643.86 $10,490.01
2
$6,422.80 $8,602.74
4
0
$6,242.00
0
$9,150.21
0
12
$4,632.24 $9,211.23
4
$10,170.24 $14,910.13
2
$9,799.81 $13,052.66
2
$8,428.40 $11,264.63
3
0
$7,614.02
0 $11,505.85
0
11
$4,204.95 $7,788.39
5
$6,610.26 $9,887.17
4
$7,565.84 $10,361.29
4
$8,791.96 $11,714.95
7
$7,831.84 $10,490.01
1
$6,915.64 $10,035.77
20
$5,179.20 $9,271.48
8
$5,844.29 $8,344.35
7
$6,170.52 $8,370.72
7
$7,954.14 $10,624.52
5
$6,169.77 $8,864.27
7
$6,132.24 $9,010.27
34
$2,989.92 $6,265.39
6
$4,468.12 $7,772.95
2
$6,496.50 $8,998.48
7
0
$2,703.82
$4,470.15
0
$4,289.57
$7,166.46
0
3
18
$4,010.30 $6,937.39
2
$6,317.44 $9,141.51
5
$7,051.15 $9,751.01
7
$7,589.28 $10,165.12
2
$2,406.28 $3,222.98
1
$6,267.69 $8,905.45
17
0
$6,534.36
$8,121.58
0
$9,655.37 $11,204.04
0
6
2
0
$8,635.31
$7,120.51
0 $11,566.18 $10,211.83
0
1
9
$4,519.89 $9,049.84
10
$6,690.09 $9,833.21
18
$8,737.31 $12,013.62
13
$5,895.46 $7,896.41
4
$8,026.56 $10,750.81
10
$6,964.60 $10,232.13
55
(continued) 139
Statistical Section
Average Monthly Benefit Payment for New Retirees - LRS
8 - 14
Years of Credited Service
15 - 19
20 - 24
25 - 29 30 & over
Total
2008
Average Monthly Benefit Number of Retirees
2009
Average Monthly Benefit Number of Retirees
2010
Average Monthly Benefit Number of Retirees
2011
Average Monthly Benefit Number of Retirees
2012
Average Monthly Benefit Number of Retirees
2013
Average Monthly Benefit Number of Retirees
2014
Average Monthly Benefit Number of Retirees
2015
Average Monthly Benefit Number of Retirees
2016
Average Monthly Benefit Number of Retirees
2017
Average Monthly Benefit Number of Retirees
$324.74 $604.63 $698.86
0
0 $542.74
4
4
2
0
0
10
$425.39 2
$650.99 1
0 $921.00 $1,203.00 $800.10
0
2
3
8
$372.93 $558.00
0
0
0 $465.47
8
1
0
0
0
9
$341.79 12
$589.12 1
0 $843.26 $934.73 $456.99
0
2
1
16
$363.66 $549.08
0
0 $1,286.43 $548.46
4
2
0
0
1
7
$308.15 14
$568.93 4
$670.94 2
0 $1,166.93
0
3
$497.03 23
$289.25 $480.21
0
0
0 $336.99
3
1
0
0
0
4
$341.03 5
$382.95 1
$642.84 3
0 $1,228.50
0
2
$588.51 11
$322.51 $524.09
0
0
0 $380.11
5
2
0
0
0
7
$362.52 $557.02 $740.79
0
0 $484.34
6
3
2
0
0
11
Note: LRS is not a final average pay plan.
(continued) 140
Statistical Section
Average Monthly Benefit Payment for New Retirees - GMPF
Years of Credited Service
20-25
26 - 30
Over 30
Total
2008
Average Monthly Benefit Number of Retirees
2009
Average Monthly Benefit Number of Retirees
2010
Average Monthly Benefit Number of Retirees
2011
Average Monthly Benefit Number of Retirees
2012
Average Monthly Benefit Number of Retirees
2013
Average Monthly Benefit Number of Retirees
2014
Average Monthly Benefit Number of Retirees
2015
Average Monthly Benefit Number of Retirees
2016
Average Monthly Benefit Number of Retirees
2017
Average Monthly Benefit Number of Retirees
$55.63 8
$83.61 18
$100.00 47
$91.10 73
$59.50 20
$87.63 19
$100.00 53
$88.64 92
$63.82 17
$85.83 18
$100.00 56
$90.44 91
$63.16 19
$91.47 17
$100.00 52
$90.40 88
$61.54 13
$90.33 15
$100.00 63
$92.83 90
$59.44 18
$89.55 22
$100.00 42
$88.29 82
$61.11 9
$90.53 19
$100.00 31
$91.02 59
$62.07 15
$94.10 16
$100.00 20
$86.99 51
$66.30 27
$89.29 14
$100.00 30
$85.07 71
$65.00 11
$89.05 21
$100.00 37
$91.09 69
Note: GMPF is not a final average pay plan.
141
Retired Members by Retirement Type
ERS June 30, 2017
Statistical Section
Amount of Monthly Benefit
$ 1 - 500 501 - 1,000 1,001 - 1,500 1,501 - 2,000 2,001 - 2,500 2,501 - 3,000 3,001 - 3,500 3,501 - 4,000 4,001 - 4,500 4,501 - 5,000 5,001 - 5,500 5,501 - 6,000 over 6,000
Totals
Retirement Type
Service Disability Survivor
3,726
259
339
7,890
1,048
327
6,442
1,163
239
5,011
939
166
3,944
790
107
3,214
585
72
2,563
420
52
2,145
319
43
1,704
228
24
1,518
173
12
1,189
121
8
811
67
8
1,866
89
11
42,023
6,201 1,408
PSERS June 30, 2017
Amount of Monthly Benefit
$ 1 - 100 101 - 200 201 - 300 301 - 400 401 - 500 over 500
Totals
Retirement Type Service Disability Survivor
97
8
235
6,146
39
145
4,795
314
49
2,667
399
6
1,588
291
1
1,155
169
--
16,448
1,220
436
(continued) 142
Retired Members by Retirement Type
GJRS June 30, 2017
Amount of Monthly Benefit
$ 1 - 1,000 1,001 - 2,000 2,001 - 3,000 3,001 - 4,000 4,001 - 5,000 5,001 - 6,000 6,001 - 7,000 7,001 - 8,000 over 8,000
Totals
Statistical Section
Retirement Type Service Disability Survivor
14
--
1
19
--
6
31
--
1
38
--
1
25
2
1
17
--
--
32
--
--
80
--
--
78
--
--
334
2
10
LRS June 30, 2017
Amount of Monthly Benefit
$ 1 - 250 251 - 500 501 - 750 751 - 1,000 over 1,000
Totals
Retirement Type
Service Disability Survivor
21
--
--
114
--
5
71
--
--
32
--
--
20
--
--
258
0
5
GMPF June 30, 2017
Amount of Monthly Benefit
$
1 - 49
50 - 100
over 100
Totals
Retirement Type Service -- 985 --
985
143
Retired Members by Optional Form of Benefit
ERS June 30, 2017
Statistical Section
Amount of Monthly Benefit
$ 1 - 500 501 - 1,000 1,001 - 1,500 1,501 - 2,000 2,001 - 2,500 2,501 - 3,000 3,001 - 3,500 3,501 - 4,000 4,001 - 4,500 4,501 - 5,000 over 5,000
Totals
Maximum Plan
1,319 4,091 3,301 2,557 1,995 1,551 1,083
841 601 489 926
Option 1
402 1,176 1,051
953 692 538 389 270 197 117 274
Form of Benefit Option 2 Option 3
1,239
406
1,828
637
1,338
641
870
561
603
461
446
334
310
309
259
214
167
181
135
179
298
448
Option 4
747 963 876 621 566 626 636 679 646 657 1,971
Option 5A Option 5B
150
61
363
207
402
235
281
273
276
248
162
214
141
167
103
141
52
112
47
79
88
165
18,754
6,059
7,493
4,371
8,988
2,065
1,902
Maximum Plan Option 1
Option 2 Option 3 Option 4
Option 5A Option 5B
Single life annuity
Reduced single life annuity with a guarantee of the remainder of the annuity savings fund account (contributions and interest), if any, to be paid upon the retiree's death 100% joint and survivor annuity with a popup option upon divorce
50% joint and survivor annuity with a popup option upon divorce
Various options, including a specified monthly amount payable to a beneficiary upon the retiree's death, several period certain annuities of varying length, and a five-year accelerated benefit 100% joint and survivor annuity with a popup option upon divorce or the death of the beneficiary before the retiree
50% joint and survivor annuity with a popup option upon divorce or the death of the beneficiary before the retiree
144
(continued)
Retired Members by Optional Form of Benefit
PSERS June 30, 2017
Statistical Section
Amount of Monthly Benefit
$ 1 - 100 101 - 200 201 - 300 301 - 400 401 - 500 over 500
Totals
Form of Benefit Maximum Plan Option AA Option AB Option AC Option AD Option B
1
50
253
6
4,504
1,043
345
9
4,236
506
183
5
2,653
267
59
8
1,698
103
42
4
1,242
42
18
5
12
18
93
335
45
183
14
71
2
31
--
17
14,334
2,011
900
37
166
655
Maximum Plan Option AA Option AB Option AC Option AD
Option B
Single life annuity
100% joint and survivor annuity
50% joint and survivor annuity
Joint and survivor annuity with a specified monthly amount payable to a beneficiary
Joint and survivor annuity with the amount payable to a beneficiary limited by the age difference between the retiree and the beneficiary Annuity for a guaranteed period of time (5, 10, 15, or 20 years). If retiree outlives guarantee period, there is no benefit due after retiree's death
145
(continued)
Retired Members by Optional Form of Benefit
GJRS June 30, 2017
Statistical Section
Amount of Monthly Benefit
$ 1 - 1,000 1,001 - 2,000 2,001 - 3,000 3,001 - 4,000 4,001 - 5,000 5,001 - 6,000 6,001 - 7,000 7,001 - 8,000 over 8,000
Form of Benefit Maximum Plan Spousal Coverage
--
15
1
24
4
28
2
37
5
23
8
9
6
26
19
61
14
64
Totals
59
287
Maximum Plan Single life annuity Spousal Coverage Indicates the member elected at enrollment that a survivor annuity be paid to a surviving spouse
LRS June 30, 2017
Amount of Monthly Benefit
$ 1 - 250 251 - 500 501 - 750 751 - 1,000 over 1,000
Totals
Maximum Plan Option B1 Option B2
Single life annuity 100% joint and survivor annuity 50% joint and survivor annuity
Form of Benefit
Maximum Plan Option B1
--
17
43
68
37
22
9
19
6
11
Option B2
4 8 12 4 3
95
137
31
GMPF and SEAD-OPEB June 30, 2017
The GMPF Plan provides a benefit only in one form, a life annuity. All 985 current retirees, therefore, have this same form of benefit. The SEAD-OPEB plan provides only a lump sum death benefit to a member's beneficiary(ies).
146
Top Participatory Employers FY10
ERS
Department of Corrections Department of Behavioral Health and Developmental Disability Department of Transportation Department of Labor Department of Juvenile Justice Department of Natural Resources Department of Human Resources Department of Driver Services Department of Community Health Department of Revenue
Total Top Employers Total ERS Member Count
PSERS
Gwinnett County Schools Cobb County Schools Dekalb County Schools Clayton County Schools Muscogee County Schools Henry County Schools Cherokee County Schools Forsyth County Schools Richmond County Schools Paulding County Schools
Total Top Employers Total PSERS Member Count
GJRS
Council of Superior Court Judges Council of State Court Judges Prosecuting Attorney's Council Council of Juvenile Judges
Total Top Employers Total GJRS Member Count
Data from 9 years prior is unavailable. FY10 data is the first available.
Data for SEAD-OPEB is not available.
Statistical Section
Member Count % of total plan
12,527 6,869 4,846 3,867 3,679 2,079 1,942 1,674 1,351 1,154
39,988 68,567
18.2% 10.0%
7.1% 5.7% 5.4% 3.0% 2.8% 2.4% 2.0% 1.7%
58.3%
3,931 2,471 2,234 1,382
970 909 902 894 877 715
15,285 39,962
9.8% 6.2% 5.6% 3.4% 2.4% 2.3% 2.3% 2.2% 2.2% 1.8%
38.2%
203
41.0%
108
21.8%
96
19.4%
71
14.4%
478
96.6%
495
147
Top Participatory Employers FY17
ERS
Department of Corrections Department of Behavioral Health and Developmental Disabilities Department of Transportation Department of Juvenile Justice Department of Human Services Department of Community Supervision Department of Public Safety Department of Natural Resources Department of Labor Department of Community Health
Total Top Employers Total ERS Member Count
PSERS
Gwinnett County Schools Cobb County Schools Dekalb County Schools Clayton County Schools Chatham County Schools Forsyth County Schools Richmond County Schools Houston County Schools Muscogee County Schools Cherokee County Schools
Total Top Employers Total PSERS Member Count
GJRS
Council of Superior Courts Council of State Court Judges Prosecuting Attorneys' Council Council of Juvenile Courts
Total Top Employers Total GJRS Member Count
SEAD-OPEB
Department of Corrections Department of Transportation Department of Human Services Department of Behavioral Health and Developmental Disabilities Department of Juvenile Justice Department of Natural Resources Department of Community Supervision Department of Public Safety Department of Labor Department of Revenue
Total Top Employers Total Active Member Count
Statistical Section
Member Count % of total plan
9,709 4,308 3,818 3,377 3,247 2,104 1,769 1,711 1,311
989
32,343 60,983
3,477 2,277 2,197 1,317
958 893 873 788 741 698
14,219 35,510
212 125 116
71
524 527
4,241 2,525 1,775 1,545 1,215 1,054 1,001
956 821 473
15,606 28,873
15.92% 7.06% 6.26% 5.54% 5.32% 3.45% 2.90% 2.81% 2.15% 1.62%
53.04%
9.79% 6.41% 6.19% 3.71% 2.70% 2.51% 2.46% 2.22% 2.09% 1.97%
40.04%
40.46% 23.85% 22.14% 13.55%
99.43%
14.69% 8.75% 6.15% 5.35% 4.21% 3.65% 3.47% 3.31% 2.84% 1.64%
54.05%
148
Schedule of Revenue and Expenses State Employees' Assurance Department Active Members Fund
Year ended June 30, 2017 (In thousands)
Operating revenue: Insurance premiums Total operating revenue
Operating expenses: Death benefits Administrative expenes Total operating expenses Total operating loss
Nonoperating revenues (expenses): Allocation of investment income from pooled investment fund Investment expenses Total nonoperating revenues Change in net position
Total net position: Beginning of year End of year
2017
$
599
599
4,019 64
4,083 (3,484)
29,847 (62)
29,785 26,301
240,985 $ 267,286
Statistical Section
2016 611 611
3,345 67
3,412 (2,801)
3,169 (60)
3,109 308
240,677 240,985
In fiscal year 2017, the System adopted provisions of GASB Statement No. 74 and revised its accounting methodology with regard to the presentation of SEAD-Active, and began reporting it as a proprietary fund. In previous years it was reported as a fiduciary fund. Additional years will be displayed as they become available.
149
Schedule of Membership State Employees' Assurance Department Active Members Fund
Statistical Section
Fiscal Year
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Covered Lives
75,859 69,745 62,305 55,412 49,212 43,127 38,711 35,142 31,869 28,873
150
151
System ERS
PSERS GJRS LRS GDCP SCJRF DARF SEAD GMPF
Net Position $13.1 billion
$868 million $441 million $33 million $111.3 million
Employer and Nonemployer Contributions Old Plan: 20.06% New Plan: 24.81% GSEPS 21.81%
($625 mil)
$26.3 million
6.98% ($6.7 million)
0% (None)
None
Employee Contributions
Old Plan: 6% (with 4.75% pickup) New Plan: 1.25%
GSEPS: 1.25% ($36 mil)
Active Members
Old Plan: (0.11%) 66 New Plan: (46.99%) 28,656 GSEPS: (52.90%) 32,261
Total: 60,983
$36 yr prior July 1, 2012 $90 yr after July 1, 2012 ($2.1 million)
35,510
7.5%
+2.5% Spousal
527
($4.9 million)
8.5%
(with 4.75% pickup)
222
($327 thousand)
7.5% ($14.9 million)
14,355
$6 thousand
$1.1 million
None
None
Inactives 57,329
48,189 60 164
103,154 None
$2 thousand $1.4 billion $20.7 million
$51 thousand $1 thousand
$2 million
None
New Plan: 0.25% Old Plan: 0.50%
($4.4 million)
None
None
No. Insured: 28,873
13,794
None 1,054 None
Retirees Total: 49,632
Service: 37,882 Beneficiary: 5,687 Disability: 5,423
Inv. Sep.: 487 Law. Enf.: 153
18,104
Annual Payment
Average Monthly Benefit
$1.4 billion
$2,272
$59 million
$276
346
$22 million
$5,712
263
$1.8 million
$550
0
N/A
N/A
16
$1.1 million
$5,510
5
$51 thousand
$855
No. Insured: 41,717
No. of Claims: 1,129 Amt. Pd: $40.1 mil
Average Claim: $35,303
985
$1.0 million
$91
Statistical Data at June 30, 2017
Statistical Section