During a valuation, an actuary takes a "snapshot" of the membership as of a given date to determine the plan’s liabilities and funded status.
An actuarial valuation projects the expected cash flow of plan members’ benefits. Actuarial projections are derived from a combination of judgment and science, based on assumptions about the likely occurrence of future events that affect the outcome and duration of pension benefits.
The completion of annual or biennial valuations of all 104 contributory retirement systems requires the assistance and cooperation of the private actuarial community. PERAC encourages retirement systems to conduct RFP's (Request for Proposals) to select private actuaries with whom they can establish ongoing relationships. There are a number of firms that provide actuarial services for pension plans. Recently completed valuation studies (including those completed by PERAC in-house and those provided by private actuaries) are posted on the PERAC website. Retirement boards are encouraged to view these reports and to contrast and compare the various presentations.
PERAC will accept a private valuation as meeting the biennial requirement stipulated in Chapter 32, provided the Commission staff has the opportunity to work with the private actuarial firm throughout the valuation process and to review their draft report before the valuation is finalized.