Last week, we provided the Board of Trustees with our actuarial valuation reports for the 2023 school year. Admittedly they can be pretty dry reading, but they make some important points about the financial health of ATRS.
Every pension system like ours is built on a promise to pay lifetime retirement benefits to both our retired members and our active working members. Our ability to meet that promise for generations to come depends on many different factors – the health of the national economy, the performance of our investment portfolio, our members’ life expectancy, and increases in teacher pay that affect benefits and contributions, just to name a few examples.
Our actuaries’ job is to take all those variables into account, project what it will cost to pay those decades’ worth of retirement benefits, and then evaluate how prepared our system is to keep that promise. They update their projections and evaluations every year, so that we can make course corrections as necessary.
Our actuaries are with the firm of Gabriel, Roeder, Smith & Company (GRS). They are a national firm and work with many other pension systems around the country. Their firm has a long history with ATRS – they have been preparing the ATRS actuarial valuations for more than 60 years!
We are grateful for our long partnership with GRS. You can find out more about them at their website here: https://www.grsconsulting.com/
ATRS Financial Health
These latest valuation reports find that ATRS is 100% funded as to future benefit payments for all of our current retirees and beneficiaries. In other words, ATRS has enough assets on hand to fully pay out monthly benefits for life for every retired member. This is a goal that ATRS has consistently met every year since 1980.
When we zoom out to also consider the future benefits that will be owed to our members who are still working, ATRS is 82.1% funded. In other words, even if ATRS closed up shop and did nothing but send out checks to all of our members for the benefits they’ve already earned, we have enough funds on hand to pay 82.1% of those benefits.
This is a good, healthy number; pension systems are generally considered healthy if their funded position is 80% or greater. The reason why it doesn’t have to be 100% is that this number is a very conservative estimate. It doesn’t account for the member and employer contributions that ATRS will continue to collect in the coming years. It assumes a conservative investment return, and historically ATRS has earned returns larger than that assumed rate over time.
But it’s also important to remember that this 82.1% number is only a snapshot of a single moment. What’s more important is the trend over time and whether that funded position is stable. And when you look at our history, our position is stable. Over the last 20 years our funded position has ranged between 71% and 85%, and it has been trending up for several years.
What this means is that ATRS is financially strong, and that we are prepared to keep the promise of lifetime retirement benefits for all of our members.
Interesting Facts & Figures
The actuarial valuation reports also provide some interesting information on our System and its members during the 2023 school year:
- ATRS paid retirement benefits to 56,646 retirees and surviving beneficiaries, totaling nearly $1.347 billion. That’s about a 4% increase over 2022.
- The average member retirement benefit was $24,653 annually.
- We have 908 retirees who are age 90 to 94, and 246 retirees who are 95 or older.
- The average age of an ATRS retiree is 72, and the average age of an active employee is 44.
- About 77% of our members are female and 23% are male.
- Schools and our other covered employers reported 75,495 employees, receiving a total payroll of $3.492 billion.
- We have 832 active members still working who are 70 or older.
You can find our actuarial valuation reports and read them for yourself at this link: https://www.artrs.gov/publications
Retirement Season is Coming
I know some of you are starting to seriously plan for retirement at the end of this year. For those of you who intend to retire effective July 1, the application window will open March 1 and close May 31. And if you intend to enter T-DROP this year, your application must be received by ATRS between March 1 and May 31.
Please remember that you are responsible for sending us your retirement or T-DROP application. Never assume that your school business office will send the application for you, because that’s not their job.
In the coming weeks we will be distributing our 2024 Retirement Planner, applications, and other information to help you in making decisions and preparing your retirement application. If you have any questions, or if you would like to get benefit estimates to help you plan, please contact one of our counselors by emailing us at info@artrs.gov or calling (501) 682-1517.
Mark White
Executive Director, ATRS
MarkW@artrs.gov
Office: (501) 621-8853
Cell: (501) 541-2057