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Michigan State Police Retirement System
Pension Actuarial Valuation Results as of September 30, 2015
Member Data
Actuarial
Valuation
Actuarial Cost Method
Financial Data
Plan Provisions
Actuarial Assumptions
%
Actuarial Valuation Process
2
0
1,000
2,000
3,000
4,000
5,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
1,521 1,516
45 42
2,9532,963 2,987
Nu
mb
er
of
Me
mb
ers
Valuation Year
Actives Inactives Retirees & Beneficiaries DROP Members
1,603
44
Membership Data
257 221
294
3
Ratio of Active Members to Pension Benefit Recipients
0
1
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
.52 .54.51
Valuation Year
4
Pension Benefits Expressed as %’s of Active Member Pay
5
0%
20%
40%
60%
80%
100%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
95.9% 96.2% 99.3%
Valuation Year
0
10,000
20,000
30,000
40,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
$35,813 $36,521
Pen
sio
n B
enef
its
Valuation Year
$37,260
Average Annual Pensions as of September 30th of the Indicated Valuation Year
6
$
0
20
40
60
80
100
120
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
$110.8 $110.5 $115.5
Ben
efit
Paym
ents
Fiscal Year Ending September 30th
Actual Pension Benefit Payments by Fiscal Year (Amounts in Millions)
$
7
0
350
700
1,050
1,400
2005 2006 2006* 2007 2008 2009 2010 2011 2012 2013 2014 2015
$1,250
$1,127
$1,233
$1,069
$1,133 $1,197
Ass
ets
Valuation YearMarket Value Actuarial Value
Pension Assets (Amounts in Millions)
* After adjusting to market value.
8
$
5.81%
10.94%9.57%
13.18%15.75%
2.09%
-16%
-11%
-6%
-1%
4%
9%
14%
19%
2005 2006 2006* 2007 2008 2009 2010 2011 2012 2013 2014 2015
Ra
te o
f R
etu
rn
Plan Year Ending September 30th
Actuarial Market
Actuarial & Market Net Rates of Return#
* After adjusting to market value.
9 # Rates of return on Non Hybrid actuarial assets.
-100
-80
-60
-40
-20
0
20
40
60
80
100
2005 2006 2006* 2007 2008 2009 2010 2011 2012 2013 2014 2015
-$22.7
$30.7$17.4
Invest
ment
Gain
/(L
oss
)
Plan Year Ending September 30th
Investment Gain/(Loss) (Amounts in Millions)
$
* After adjusting to market value.
10
-20
-10
0
10
20
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
-$13.3
$4.7
-$6.5
Dem
ogra
ph
ic G
ain
/(L
oss
)
Plan Year Ending September 30th
Demographic Gain/(Loss) (Amounts in Millions)
$
11
Gain/(Loss) by Type of Activity (Amounts in Millions)
Plan Year
Ending 9/30 2015 2014 2013 2012 2011 2010
New Entrants * 0.00 0.00 0.00 (0.73) (0.89) (0.18)
Retiree Deaths (0.71) (2.78) (6.34) (5.57) (5.38) 0.56
Investments 17.43 30.70 (22.72) (93.39) (84.04) (73.67)
Pay Increases 5.40 8.93 (1.34) 11.94 11.74 11.17
Withdrawal (0.54) 0.42 0.36 (0.02) 0.37 0.90
Retirements (3.03) (0.75) (1.80) (2.40) (2.64) (1.80)
Other (7.62) (1.11) (4.20) (2.93) (1.58) 3.55
Total 10.93 35.41 (36.04) (93.10) (82.42) (59.47)
12
* New entrants with past service (rehires).
0%
10%
20%
30%
40%
50%
60%
2005 2006 2006* 2007# 2008 2009 2010 2010^ 2011 2012# 2013 2014 2014^ 2015
16.38%16.03% 15.31% 14.73%
37.43%36.85%
39.05%40.12%
Valuation Year
Normal Cost Amortization Payment
Historical Employer Contribution %’s Valuation as of September 30
53.81%
Em
plo
yer
Co
ntr
ibu
tio
n %
52.88%
* After adjusting to market value.
# Revised benefit provisions. ^ Revised actuarial assumptions.
54.85%
13
54.36%
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2005 2006 2006*2007# 2008 2009 2010 2010^ 2011 2012# 2013 2014 2014^ 2015
$1,724 $1,764$1,851$1,800
$1,069$1,133 $1,133
$1,197
Do
lla
r A
mo
un
t
Valuation Year
Actuarial Accrued Liability (AAL) Actuarial Value of Assets (AVA)
Actuarial Accrued Liability Compared to
Actuarial Value of Assets (in millions)
$
* After adjusting to market value.
# Revised benefit provisions.
^ Revised actuarial assumptions. 14
0%
20%
40%
60%
80%
100%
2005 20062006*2007#2008 2009 20102010^20112012#2013 20142014^2015
62%64% 63% 65%
71%
65%
69% 67%
Fu
nd
ed %
Valuation Year
Funded % based on AVA Funded % based on MVA
Retirement System Funded % Based on Actuarial Value and Market Value of Assets
* After adjusting to market value. # Revised benefit provisions. ^ Revised actuarial assumptions.
15
0%
100%
200%
300%
400%
500%
600%
2005 2006 2006*2007# 2008 2009 2010 2010^ 2011 2012# 2013 2014 2014^ 2015
593%594%
561%584%
489%
542%
457%
551%
Valuation Year
UAAL(AVA) as % of Payroll UAAL(MVA) as % of Payroll
Unfunded as Percentage of Payroll
* After adjusting to market value. # Revised benefit provisions. ^ Revised actuarial assumptions
16
Comment on the Investment Markets and Other Issues
Investment markets have been very volatile
Valuation is based on a 5-year smoothed value of assets Reduces the volatility of the valuation results
9/30/15 smoothed value of assets was lower than market value Provides some margin for possible adverse investment
experience over the next few years
Optional Forms of Payment Needed mostly for Hybrid Plan members
Review factors based on recent experience study
17
This presentation is intended to be used in conjunction with the September 30, 2015 pension annual actuarial valuation report issued on April 19, 2016. This presentation should not be relied on for any purpose other than the purpose described in the valuation report.
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.
The actuaries submitting this presentation (Mita Drazilov and Louise Gates) are Members of the American Academy of Actuaries and meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion contained herein.
18
Disclaimers
