Below is a press release from the Mississippi Joint Legislative PEER Committee:
The PEER Committee released its report titled 2022 Update on Financial Soundness of the Public Employees’ Retirement System.
2022 Update on Financial Soundness of the Public Employees’ Retirement System: https://www.peer.ms.gov/Reports/reports/rpt685.pdf
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Some of the Committee’s major findings include:
- As of June 30, 2022, all three of the Public Employees’ Retirement System (PERS) plan’s evaluation metrics (i.e., funded ratio, cash flow as a percentage of assets, and actuarially determined contribution/ fixed contribution rate ratio) are at red signal-light status (i.e., fails the metric target) based on the most recent evaluation of the funding policy.
- PERS experienced a negative investment (-8.54%) for the plan in FY 2022. In its June 2022 meeting, the PERS Board adopted changes to the overall asset allocation model utilized by each of the PERS plans to include private credit and private infrastructure based on the recommendation of PERS’s investment consultant, Callan LLC.
- In its December 2022 meeting, the PERS Board voted to increase the employer contribution from 17.40% to 22.40%. The prospective date for implementation of this change is July 1, 2024.
- While actual wage increases for FY 2022 were above the projected annual rate of wage increase of 2.65%, the PERS actual average annual payroll increase has remained below the actuarial model’s projected rate over the last 5- and 10-year periods.
- The ratio of active employees to retiree members in the PERS plan decreased from 1.81:1 in FY 2012 to 1.24:1 in FY 2022, or approximately 31.49%.
- The PERS Board’s investment assumption target is 7.00%. Due to the Board’s funding policy, the current investment assumption rate will be reduced over time from its current rate, 7.55%, until it reaches the target rate of 7.00%. While PERS’s actuary did provide the methodology for the funding policy, selection of this methodology has delayed implementation of the assumption reduction and exacerbated the plan’s lower-than-projected investment returns.
- As of June 30, 2022, PERS’s anticipated accrued liability payment period was 48.8 years, a decrease from 50.9 years as of June 30, 202. The PERS Board’s actuary attributes the decrease primarily to higher-than-expected wage growth experienced by the plan during FY 2022.
Should you have questions about the report, please contact James F. (Ted) Booth, PEER Executive Director, at 601-359-1226.
