The combined total of the required Fiscal Year 2023 State contribution
for the six retirement systems was $10.97 billion, an increase of $0.14
billion over the previous year. Cheiron verified the arithmetic calculations
made by the systems’ actuaries to develop the required State contribution
and reviewed the assumptions on which it was based.
The Illinois Pension Code (for TRS, SURS, SERS, JRS, and GARS)
establishes a method that does not adequately fund the systems, back
loading contributions and targeting the accumulation of assets equal to 90%
of the actuarial liability in the year 2045. This contribution level does not
conform to generally accepted actuarial principles and practices. Generally
accepted actuarial funding methods target the accumulation of assets equal to
100% of the actuarial liability, not 90%.
According to the systems’ 2021 actuarial valuation reports, the funded
ratio of the retirement systems ranged from 47.5% (CTPF) to 19.3%
(GARS), based on the actuarial value of assets as a ratio to the actuarial
liability. If there is a significant market downturn, the unfunded actuarial
liability and the required State contribution rate could both increase
significantly, putting the sustainability of the systems further into question.
Author(s): Frank J. Mautino
Publication Date: 22 Dec 2021
Publication Site: Office of the Auditor General, State of Illinois