MPERS’ Board Commended for Funding Policies
July 27, 2020-Cheiron was hired to perform an actuarial audit of MPERS’ current actuary, GRS. The scope of the audit was a review of MPERS most recent annual valuation and experience study, including a review of the assumptions associated with each.
The independent audit report from Cheiron compliments the Board’s Temporary Policy, which accelerates the funding of the liability for retired members. In addition, the creation of a contribution stabilization reserve fund, which further accelerates funding, has the potential to provide significantly reduced volatility with employer contributions. This becomes increasingly important as the System gets closer to the end of closed amortization periods.
In summary, this audit provides confirmation on key points related to actuarial services:
- The results reported by MPERS actuary, GRS, can be relied upon;
- The communication of the actuarial valuation results is complete and reasonable; and
- The fees paid by MPERS to the current actuary appear to be reasonable based on the level of services received and typical of the industry.
The audit does include recommendations that will be reviewed and considered by the Board in the coming weeks. The actuary is the key consultant essential to effective funding of the plan, which is critical for MPERS to be on course to meet unfunded liabilities. The favorable conclusions mentioned above are important assurance to the Board and stakeholders that MPERS is on track to address the funding shortfalls of the past.