Michigan Judges  Retirement System Pension Actuarial Valuation Results  as of September 30, 2008

Michigan Judges Retirement System
Pension Actuarial Valuation Results as of September 30, 2008
Copyright © 2009 GRS – All rights reserved.
Actuarial Valuation Process
Member Data
Financial Data
Actuarial
Valuation
Actuarial Assumptions
Plan Provisions
%
Actuarial Cost Method
2
Membership Data
3
Ratio of Active Members to Pension Benefit Recipients
2
1
0
.48
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Valuation Year
4
.48
Pension Benefits Expressed as %’s of Active Member Pay Benefits as %'s of Pay
80%
64.2% 64.6%
60%
40%
20%
0%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Valuation Year
5
Average Annual Pensions
Pension Benefits
$40,000
$35,224 $35,265
$32,000
$24,000
$16,000
$8,000
$0
1999
6
2000
2001
2002 2003 2004
Valuation Year
2005
2006
2007
2008
Pension Benefit Payments by Fiscal Year (Amounts in Millions)
$18.92
$ 20
$19.18
Benefit Payments
16
12
8
4
0
1999
2000
2001
2002
2003
2004
2005
Plan Year Ending September 30th
7
2006
2007
2008
Growth of Pension Assets
(Amounts in Millions)
$ 400
$336
$301
Assets
300
$304
$270
200
100
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Valuation Year
Market Value
8
Actuarial Value
Actuarial & Market Net Rates of Return
9
Investment Gain/Loss
Investment Gain/Loss
(Amounts in Millions)
$ 25
20
15
10
5
0
-5
-10
-15
-20
$13.4
-$3.3
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Plan Year Ending September 30th
10
Demographic Gain/Loss
(Amounts in Millions)
Demographic Gain/Loss
$15
$5.0
5
$1.9
-5
-15
2001
2002
2003
2004
2005
2006
Plan Year Ending September 30th
11
2007
2008
Gain/(Loss) by Type of Activity
(Amounts in Millions)
Plan Year Ending 9/30
New Entrants
Retiree Deaths
12
2008
2007
2006
2005
2004
$ (0.38) (1.41) $ 0.00 0.37 $ 0.00 2.39 $ 0.00 (3.74) $ 0.00 (1.35) Investments
(3.29) 13.37 (1.98) (15.09) (12.68) Pay Increases
Withdrawal
3.17 (0.22) 3.22 1.11 3.52 0.27 4.68 (1.50) 4.44 (0.71) Retirements
3.30 (2.70) 1.59 0.45 1.13 Other
Total
0.57 1.74 (0.11) 15.26 (1.16) 4.63 0.10 (15.10) 0.14 (9.03) Employer Contribution %
Historical Employer Contribution %’s
Valuation as of September 30
13
0.00%
1.74%
Employer Contribution Dollars
Valuation as of September 30 (in Millions)
$5
$3.2
$3.2
$0.0
$0.0
0
$(4.7)
-5
2005
2006
($4.9)
2007
2008
Valuation Year
Normal Cost
14
Amortization
Total
Actuarial Accrued Liability Compared to
Actuarial Value of Assets (in Millions)
$ 350
$301.0
Dollar Amount
300
$247.1
250
$247.0
200
150
100
50
0
1999
2000
2001
2002
2003
2004
2005
2006
2007
Valuation Year
Actuarial Accrued Liability (AAL)
15
$303.7
Actuarial Value of Assets (AVA)
2008
Retirement System Funded % Based on Actuarial Value and Market Value of Assets
160%
136%
122%
Funded %
120%
123%
109%
80%
40%
0%
1999
2000
2001
2002
2003
2004
2005
Valuation Year
Funded % based on AVA
16
Funded % based on MVA
2006
2007
2008
Comments on the Investment Markets
¥ Investment markets have been very volatile.
¥ Valuation is based on a 5‐year smoothed value of assets.
• Reduces the volatility of the valuation results.
¥ 9/30/2008 smoothed value of assets was higher than market value. • Meeting the actuarial assumption will require average future market returns over 8%.
¥ 9/30/2008 valuation results based on market value:
• Funded percent would be 109.2% (instead of 123.0%).
• Employer contribution would be $1,246,556 (instead of $0).
17
Circular 230 Notice: Pursuant to regulations issued by the IRS, to the extent this presentation concerns tax matters, it is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax‐related penalties under the Internal Revenue Code or (ii) marketing or recommending to another party any tax‐related matter addressed within. Each taxpayer should seek advice based on the individual’s circumstances from an independent tax advisor.
This presentation shall not be construed to provide tax advice, legal advice or investment advice. 18