LACERA's 2007 INVESTIGATION OF EXPERIENCE
The opening letter to LACERA's 2007 Investigation of Experience document, shown below, includes a PDF link to the entire study. The document presents recommendations for changes to demographic, economic, and investment return assumptions, and more.
Click
here to access the Investigation of Experience Study Analysis PDF.
(NOTE: The document contains a Table of Contents with direct links to various sections.) (12-21-07)
December 5, 2007
Board of Investments
Los Angeles County Employees Retirement Association
300 North Lake Avenue, Suite 820
Pasadena, CA 91101-4199
Dear Members of the Board:
It is a pleasure to submit this report of our investigation of the experience of the Los Angeles County Employees Retirement Association through June 30, 2007. The results of this investigation are the basis for recommended changes in actuarial assumptions for the actuarial valuation to be performed as of June 30, 2007.
The purpose of this report is to communicate the results of our review of the actuarial methods and the economic and demographic assumptions to be used in the completion of the upcoming valuation. Several of our recommendations represent changes from the prior methods or assumptions and are designed to better anticipate the emerging experience of the System.
We have provided financial information showing in the estimated impact of the recommended assumptions on the June 30, 2006 actuarial valuation. We believe the recommended assumptions provide our best estimate of anticipated experience affecting LACERA. Nevertheless, the emerging costs will vary from those presented in this report to the extent that actual experience differs from that projected by the actuarial assumptions.
In preparing this report, we relied without audit on information (some oral and some in writing) supplied by LACERA’s staff. This information includes, but is not limited to, statutory provisions, employee data, and financial information. In our examination, after discussion with LACERA and certain adjustments, we have found the data to be reasonably consistent and comparable with data used for other purposes. Since the experience study results are dependent on the integrity of the data supplied, the results can be expected to differ if the underlying data is incomplete or missing. It should be noted that if any data or other information is inaccurate or incomplete, our determinations might need to be revised.
On the basis of the foregoing, we hereby certify that, to the best of our knowledge and belief, this report is complete and accurate and has been prepared in accordance with generally recognized and accepted actuarial principles and practices which are consistent with the Actuarial Standards of Practice promulgated by the Actuarial Standards Board and the applicable Guides to Professional Conduct, amplifying Opinions, and supporting Recommendations of the American Academy of Actuaries.
We further certify that the assumptions developed in this report satisfy ASB Standards of Practice, in particular, No. 27 (Selection of Economic Assumptions for Measuring Pension Obligations) and No. 35 (Selection of Demographic and Other Non-economic Assumptions for Measuring Pension Obligations).
Milliman has been engaged by LACERA as an independent actuary. Any distribution of this report must be in its entirety, including this cover letter, unless prior written consent is obtained from Milliman. Milliman's work product was prepared exclusively for LACERA for a specific and limited purpose. It is a complex, technical analysis that assumes a high level of knowledge concerning LACERA’s operations, and uses LACERA’s data, which Milliman has not audited. It is not for the use or benefit of any third party for any purpose. Any third party recipient of Milliman's work product who desires professional guidance should not rely upon Milliman's work product, but should engage qualified professionals for advice appropriate to its own specific needs.
We would like to acknowledge the help in the preparation of the data for this investigation given by the LACERA staff. We look forward to our discussions and the opportunity to respond to your questions and comments at your next meeting.
I, Karen Steffen, am a member of the American Academy of Actuaries and a Fellow of the Society of Actuaries, and meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion contained herein.
I, Nick Collier, am a member of the American Academy of Actuaries and an Associate of the Society of Actuaries, and meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion contained herein.
Sincerely, |
