US - The US$32bn Pennsylvania SERS is bracing itself for a sharp spike in the number of retirements over the coming months.
Recent changes in employee contracts have meant a similar number of people would retire between May and June as usually retired over the course of an entire year.
“While SERS on average processes approximately 4,500 retirements a year; initial estimates indicate that approximately 4,000 people are preparing to retire in May and June alone this year,” the fund said.
In earlier news, SERS chairman Nicholas Maiale has told state officials to raise employer contributions now in order to avoid a 15.1% spike in 2012.
Act 2003-40 changed the funding period for most of SERS’ actuarial liabilities from 10 years to 30 years as pension deficits skyrocketed on the back of the stock market crash in the early 2000s.
But Maiale said the fund had achieved four years of investment returns far in excess of the assumed rate of return and, combined with the Act 40 amortisation schedule, meant the SERS employer rate would drop back down to zero for four years rather than rising slowly between now and 2012.
That would in turn result in a 15.1% employer contribution spike in 2012, which was expected to moderate but remain above 10% beyond 2030.
Maiale stressed that amending the Act to create an “actuarial fresh start” would solve the problem.
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