The proposed legislation aims to enhance the oversight and risk management of the Public Employees' Retirement Association (PERA) by implementing a structured schedule for actuarial evaluations and independent reviews. These measures are designed to ensure the financial health and transparency of PERA.
Key Provisions:
Actuarial Experience Study:
Frequency: Mandates that the PERA Board conduct an actuarial experience study every four years, starting in 2025.
Purpose: To assess the accuracy of actuarial assumptions by comparing them against actual plan experience, ensuring that the retirement system's financial projections remain reliable.
Periodic Actuarial Audit:
Frequency: Requires the PERA Board to commission an actuarial audit every four years, beginning in 2026.
Integration: Each audit must consider the findings from the most recent actuarial experience study conducted in the prior year, promoting a cohesive evaluation process.
Independent Review by State Auditor:
Initiation: Starting in 2027, and recurring every four years, the State Auditor is tasked with commissioning an independent review of the latest actuarial audit.
Objective: To provide an unbiased analysis of the audit's methodology and conclusions, ensuring that the audit appropriately reflects the results of the preceding actuarial experience study.
By establishing this systematic approach, the bill seeks to fortify PERA's financial oversight, ensuring that actuarial practices are both rigorous and transparent. This initiative reflects a commitment to the long-term sustainability and accountability of the retirement system.
Summary
Pension Review Commission. Currently, the public employees'
retirement association (PERA) board (board) conducts or causes to be conducted an actuarial experience study of PERA and a periodic actuarial audit of PERA. Both the actuarial experience study and the periodic actuarial audit, neither of which are referenced in current law, are conducted approximately once every 5 years, but the timing of the actuarial experience study and the periodic actuarial audit is not aligned.
The bill requires the board to conduct or cause to be conducted the
actuarial experience study in the 2025 calendar year and every 4 years thereafter, rather than every 5 years. In addition, the bill requires the board to conduct or cause to be conducted the periodic actuarial audit of PERA in the 2026 calendar year and every 4 years thereafter, rather than every 5 years, and ensure that each periodic actuarial audit takes into consideration the results and findings of the actuarial experience study that was conducted during the prior calendar year.
In addition, beginning in the 2027 calendar year, and every 4 years
thereafter, the state auditor is required to commission an independent review of the periodic actuarial audit that the board conducted or caused to be conducted in the prior calendar year by experts other than those already working on behalf of PERA. The experts commissioned to conduct the independent review are required to analyze how the periodic actuarial audit was conducted and provide an independent interpretation of the results of the periodic actuarial audit, including whether the periodic actuarial audit appropriately considered the results of the most recent actuarial experience study that the board conducted or caused to be conducted.
