New Valuation Shows Slight Decrease in Funding Status
As expected, KPERS' new actuarial valuation report (as of December 31, 2021) shows a small drop in KPERS' funding position. This was due to reducing the System's long-term investment return assumption from 7.75% to 7.0% earlier this year.
- Funded ratio: 72%, down from 73% last year
- Unfunded actuarial liability: $9.8B, up from $8.5B last year
Three main factors eased the impact - Strong investment performance for 2021, additional contributions from pension funding bond proceeds and the Board reamortixing the undfunded actuarial liability. While reamortization did not directly affect funding status, it did help keep employer contribution rates more stable.
Funding has been gradually improving over the last decade from a low of 56% in 2012. And actuarial projections show this trend of steady growth should continue going forward if actuarial assumptions are met.
Even with the slight decrease, the Retirement System is on the right path, headed in the right direction. The KPERS State/School group should reach the 80% funded ratio mark in 2023 and 100% in 2039.
Continued funding improvements hinge on meeting our investment target over time, in addition to full and consistent employer contributions year after year.
Ever year, KPERS actuary completes a valuation of the Retirement System. The valuation looks at KPERS' financial health. It also helps plan future employer contribution rate and confirm our long-term funding projections.
*Note: The additional $1.25B in contributions that the State made in 2022 is not reflected in this year's unfunded liability and funded ratio.