ACTUARIAL QUANDARY: CHANGE IN METHODOLOGY MAY BE COSTLY FOR LACERA.(Los Angeles County Employees' Retirement Association)(Statistical Data Included)

Pensions & Investments, February, 1999 by Hemmerick, Steve

PASADENA, Calif. -- Officials at the Los Angeles County Employees' Retirement Association are facing a potential drop in funded status -- to 93% from 103% -- under the preliminary findings of a new actuarial report. The potential funding level plunge, a difference of more than $2 billion, results from proposed changes in actuarial valuation methods recommended by Watson Wyatt & Co., Los Angeles, the $25 billion plan's new actuary.

The proposed changes in actuarial valuation methodology for LACERA also raise questions about just how overfunded many U.S. pension plans really are. Critical issue The funding ratio of pension funds is critical because trustees base decisions on the information, in some cases turning over so-called surplus assets to...

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