The Financial Status of the ASRS

The Arizona State Retirement System is marking its 65th Anniversary this year. It continues to be a privilege to provide a solid piece of retirement security to Arizona’s valued public servants.

Members can be confident that their retirement plan will be here to provide the life-long benefits for them in retirement.

Each year the ASRS compiles an Annual Comprehensive Financial Report (ACFR) detailing the financial status of the ASRS trust fund and the various plans it oversees, including the primary defined benefit pension plan. Please see our summary of the most recent year-end information on page two.

For the fiscal year ending June 30, 2017, the funded status of the plan – the ratio of the present value of future benefits to the actuarial value of assets to pay those benefits – was 70.5 percent. That represents a decrease from the previous year due to new actuarial assumptions being adopted which will, in the long-term, have a positive effect on the funding levels. The changes in actuarial assumptions include adopting new mortality tables that reflect increased longevity among retirees, a reduction in future expected investment returns from eight percent to 7.5 percent, and a pre-funding of possible future permanent benefit increases (PBI’s). Combined, these and other more modest changes are expected to lead to an even more stable plan over time, although putting modest upward pressure on contribution rates for the next few years. 

The next annual report will be available in the late fall and our next ACFR will be produced by the end of 2018. Our very preliminary numbers show an estimated rate of return of approximately 9.5 percent for the year ending June 30, 2018. While this is preliminary, such a positive return would have a modest positive impact on the funded status for the fiscal year just ended.

With a well-thought asset allocation plan, a highly professional investment staff, and solid oversight, the approximately $40 billion ASRS investment portfolio is able to routinely produces returns above industry and peer benchmarks. 

With a plan design that has equal contributions being made by members and employers, our professional investment plan and oversights, and in combination with a solid funding the Arizona State Retirement System will be enabled to continue to offer  sustainable pension, health insurance, and long term disability plans for the benefit of our members and retirees for the next 65 years – and well beyond.

Written by Paul Matson, Executive Director

This article appeared in "Financial Horizons " (Q3-2018) , a publication of the ASRS

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