US - The Kansas Public Employees Retirement System (KPERS) has recorded a 30% unfunded actuarial liability (UAL).
According to KPERS, which has total assets of just less than US$ 11.3bn (as of June 2005) and a membership of over a 250,000, recent funding improvements mean it is in actuarial balance but poor funding projections could seriously hamper progress.
The report stated: “Funding projections would deteriorate further with a significant market downturn.”
KPERS stated the UAL will continue to increase until statutory employer rates “catch up” with actuarially- required rates. It warned 2006 will see costs for the State of Kansas continue to soar by an additional $30 to $40m more each year to make higher employer contributions and debt service payments.
Local employers will contribute approximately $7 to $15m more in each of the next ten years, the fund added.
The system’s investment return ending June 2005 offered some good news with 12.1% exceeding its long term actuarial target of 8%. Over the last ten years the annual return has averaged 9.1% compared to the five year average return of 3.5%.
Acting chief investment officer Scott Peppard commented on the recent upturn in performance: “The system holds a substantial portion of its equity investments within a global or international format. This proved to be especially fortuitous in fiscal year 2005. “International equity markets returned a combined 13.7%, versus the US equity investment returns of 9.3% Other positive contributions in the portfolio included traditional fixed income, 9.1%, and alternative investments 12.8%”
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