Legislative Commission on Pensions and Retirement
Motion LCPR18-M3
................ moves that the Legislative Commission on Pensions and Retirement (LCPR) approve changes to the demographic and economic assumptions used in the annual actuarial valuations of the St. Paul Teachers Retirement Fund Association (SPTRFA), pursuant to Minnesota Statutes, Section 356.215, Subdivision 18, effective for use in the actuarial valuation for fiscal year 2018; provided, however, that if legislation that reduces the assumption for investment rate of return to 7.5% is not enacted in 2018, none of the proposed changes to the economic assumptions shall take effect.
In support of the proposed changes, SPTRFA has submitted, for consideration by the LCPR, a letter from the SPTRFA executive director, stating that the changes have been approved by its board of trustees, and attaching the experience study from its actuary, recommending the following assumption changes, for which further detail is provided in the experience study:
Economic Assumptions
(effective only if the change to the investment rate assumption becomes law)
- Decrease the current investment return assumption from 8.0% to 7.5%
- Decrease the price inflation assumption from 3.00% to 2.50%
- Decrease the payroll growth assumption from 4.00% to 3.00%
- Adjust rates of merit and seniority, resulting in an overall decrease to the assumed rates of merit and seniority increases
Demographic Assumptions
(effective upon approval by the LCPR)
- Adjust the assumed retirement rates and rates of withdrawal
- Decrease the assumed rates of disability by 16%
- Change the base mortality table to the RP-2014 mortality table, white collar adjustment, with rates age-adjusted for some tables to better fit observed plan experience and with future improvement projected using scale MP-2017
In support of this motion, the LCPR acknowledges receipt of the following:
- Letter from the executive director of SPTRFA, dated February 28, 2018, to the executive director of the LCPR; and
- Five-Year Experience Study report from GRS Retirement Consulting, dated March 1, 2018, addressed to the board of trustees of SPTRFA.