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Received my annual report for fiscal 2011-2012 of the Police and Fire Retirement Fund. The numbers are a little bit weaker than in previous years, however the report states:
Overall Financial Condition: The Retirement System continues in sound actuarial condition in accordance with the principles of level percent-of-payroll financing.
Well, the first half of that sentence sounds good, but can someone rephrase the last half in plain english, using words of one syllable????
It means of the hundreds of ways of measuring pension fund success, we finally found one that says we haven't been negligent in our duties.Quote:
Originally Posted by Ray1936
I'll give it shot...Quote:
Originally Posted by Ray1936
Overall Financial Condition: The Retirement System continues in sound actuarial condition BUT we have serious problems and need to add some CYA accounting mumbo-jumbo-speak the retirees can't possibly understand.
If it was in sound actuarial condition shouldn't the sentence end after the word condition?
"It meets this one specific criteria, so how can we posibly be wrong?????"Quote:
Originally Posted by Ray1936
Ray, I'm no pension fund expert, but as a General Motors Corp. pensioner whose private defined-benefit pension plan was terminated in Aug 2012 [[at the same time VP Biden was chanting "bin Laden is dead and GM is alive"), let me attempt an explanation.Quote:
Originally Posted by Ray1936
According to this paper [[pg. 25) on the technical aspects of funding public defined-benefit pensions and assessing their actuarial soundness , "level-percent-of-payroll" and "level-dollar" are the two different methods used to determine the regular payments needed to reduce a pension fund's unfunded liabilities. Most public pension funds use "level percentage of payroll" and the rest use the "level dollar" method. The "level dollar" method produces a greater amortization amount than the "level percent" method.
Apparently the P&F Retirement System is using the method that puts the least strain on their pension fund. What they apparently cannot state is The Retirement System continues in sound actuarial condition in accordance with the principles of level dollar financing.
Added comment: The second half of that sentence in the report is a qualifier that tells you there is an unfunded liability that is being addressed. Knowing that this is a public pension fund that is exempt from ERISA and regardless of the magnitude of the liability, I wouldn't feel any better if they said they were using the "level dollar" method to address it.
Thanks, gang, especially mikeg. I think y'all nailed it.
7-11 down the street advertising for a midnight clerk. Better wander over there.