US -The Public School Retirement System (PSRS) of Missouri has increased employer and employee contribution rates from 11.5% to 12% in a bid to reduce liabilities of nearly US$5bn.
The PSRS board said the driving force behind rising contribution rates was the System’s unfunded actuarial accrued liability (UAAL), which was around $4.8bn in June, 2005.
“The UAAL was primarily a result of the challenging investment markets of the early 2000’s, legislative benefit increases in the mid-to late-1990’s affecting both active and retired members, and current contribution rates that are below those needed to adequately fund the System,” the board said.
Absolute returns in 2001, 2002 and 2003 fell well below the System’s assumed 8% actuarial required rate of return on investments. While returns had improved considerably over the last two years, with annual returns in excess of 9%, the investment returns alone were not enough to begin paying off the UAAL.
The board stressed that PSRS was still in a “very strong” financial condition. “PSRS is in excess of 82.7% funded on an actuarial basis, which is very positive on both an absolute basis and when compared to other retirement plans.
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