The Governance of State and Local Retirement Systems: A Deterministic Simulation of Actuarial Inputs on Pension Funding Ratios and Actuarially-Determined Contributions

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by David S. T. Matkin and Gang Chen, The State University of New York at Albany

The purpose of this study is to: (1) develop software to simulate the actuarial liabilities and actuarially-determined contributions (ADC) of pension systems under different actuarial inputs, participant contributions, and asset levels; (2) produce a dataset of the funding ratios, liabilities and ADC combinations that result from all combinations of actuarial inputs under different conditions; and (3) analyze the data to better understand the influence of actuarial inputs on state and local government retirement policies. Our research questions are: (1) how do actuarial inputs affect the financial condition and budgetary cost of public pensions?; (2) how do actuarial inputs affect the policy decisions?; and (3) how do asset levels and participant characteristics interact with actuarial inputs?

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