Patrice Beckham, an actuarial consultant from Cavanaugh Macdonald’s Omaha office said the pension system is poised for better performance in the future because of state legislature-approved changes that were made last year to help the fund. The article states, starting July 1, the IPERS contribution will increase to 14.45% of wages, up 1% from 2011. Sixty percent of contributions are funded by the government employers and 40% are paid by public employees. Some of the benefit reductions authorized by legislators last year include raising the number of years worked before being vest in the plan from four to seven and basing pension payments on the five highest salary years rather than three. Also, early retirees will face a greater reduction in their benefits.IPERS has approximately 325,000 members, including teachers, city and county workers and state employees, as well as retirees and former public workers.
According to the article, a report released by Cavanaugh Macdonald Consulting LLC shows IPERS ended the fiscal year on June 30 with an actuarial liability of $28.3 billion. The pension system is just under 80% funded, down from last year’s ratio of 81.4% and sharply lower than a decade ago, when the system was 97% funded.