ColumbiaMagazine.com
Printed from:

Welcome to Columbia Magazine  
 

























 
Cavanaugh Macdonald called to redo TRS Pension Bill analysis

By Woody Maglinger

Frankfort, KY - State Budget Director John Chilton will call upon Cavanaugh Macdonald, a Georgia consulting firm, to redo its analysis of the Teacher Retirement System (TRS) pension bill utilizing a more appropriate set of assumptions for comparative purposes.

Cavanaugh Macdonald's initial analysis of the current pension proposal uses assumptions that are very different from those in its annual valuation reports, including significant changes in retirement patterns and an investment return assumption very different from the rate recently approved by the TRS Board. The request for the recalculation recognizes that there will be certain assumption changes based upon the pension proposal, but the changes by Cavanaugh MacDonald regarding assumed investment returns and future retirement patterns were significant departures from those used in prior valuations.

Furthermore, while the statutes require a 20-year analysis, the State Budget Director will request the analysis be extended to 30 years so that the long-term effects of the pension proposal can be modeled within the 30-year amortization period contained within the legislation.

"The actuarial assumptions in Cavanaugh Macdonald's most recent report are significantly different from those in the actuarial calculations provided to our consultants during the planning process," said State Budget Director John Chilton. "In the past, a lack of realistic and rational actuarial assumptions helped obscure the distressed financial status of the plans and contributed to the long-term unsustainability of the plans. We will ask Cavanaugh Macdonald to prepare calculations with several alternative assumptions so that policy makers can make informed decisions based on scenarios that include realistic assumptions and that are satisfactorily reconciled with those that Cavanaugh Macdonald provided in the past."

Actuarial calculations help to inform policy makers as they consider proposals in the legislative process. Neither Cavanaugh Macdonald nor any other firm sets policy for Kentucky. Firms need to provide the full scope of information necessary to help understand how the future might look. There is no one single scenario that can be known in advance, and a recalculation of the analysis based upon the request provided by Director Chilton will provide a more complete picture of what the possible outcomes will be realized from the pension proposal.


This story was posted on 2017-11-15 08:31:48
Printable: this page is now automatically formatted for printing.
Have comments or corrections for this story? Use our contact form and let us know.


To sponsor news and features on ColumbiaMagazine, please use our contact form.

 























 
 
Quick Links to Popular Features


 

ColumbiaMagazine.com content is available as an RSS/XML feed for your RSS reader or other news aggregator.
Use the following link: http://www.columbiamagazine.com/columbiamagazinerss.php.

Contact us: Columbia Magazine and columbiamagazine.com are published by D'Zine, Ltd., PO Box 906, Columbia, KY 42728.
Phone: 270-250-2730 Fax: 270-751-0401


Please use our contact page, or send questions about technical issues with this site to webmaster@columbiamagazine.com. All logos and trademarks used on this site are property of their respective owners. All comments remain the property and responsibility of their posters, all articles and photos remain the property of their creators, and all the rest is copyright 1995-Present by Columbia! Magazine and D'Zine, Ltd. Privacy policy: use of this site requires no sharing of information. Voluntarily shared information may be published and made available to the public on this site and/or stored electronically. Anonymous submissions will be subject to additional verification. Cookies are not required to use our site. However, if you have cookies enabled in your web browser, some of our advertisers may use cookies for interest-based advertising across multiple domains. For more information about third-party advertising, visit the NAI web privacy site.