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Next Member Contribution Rate Announced

The ASRS is pleased to announce lower contribution rates! Backed by strong investment returns this past fiscal year, contribution rates paid by active members and their employers will decrease by 0.24 percent starting July 1, 2022 – the beginning of the next fiscal year. 

The total contribution rate for employees, which is also matched by employers, will be 12.17 percent, down from the current 12.41 percent.

Current and future contribution rates

A number of factors go into the development of annual contribution rates. At the end of each fiscal year (June 30), a valuation of the ASRS benefit plans is undertaken by an outside actuarial firm. Guided by the ASRS Funding Policy, the valuation and the recommended contribution rate for the new fiscal year are presented to the ASRS Board of Trustees for adoption.

The two main components of the contribution rate are the contributions required to fund the normal cost of the pension benefit for the year, plus the contributions needed to make up for any previous shortfall that may have occurred. This would include past years when returns fell below expectations, and factors in changing assumptions and demographics, such as increased life expectancies.

A primary goal related to contribution rates, as outlined in the Funding Policy, is to mitigate contribution rate volatility from year to year while keeping the ASRS on a path to a fully funded status. To effectuate this, the ASRS uses a phase-in policy of recognizing investment gains and losses over a period of time rather than all in one year. The same phase-in philosophy is applied to adopting other necessary changes such as recognizing increased life-expectancies.

With the assumption the ASRS will continue to meet an expected investment rate of return of 7.5%, overall contribution rates are projected to remain steady over the long-term, with a continued slight downward trend. 

See more on our Contribution Rates page, or watch our video on how contribution rates are determined.

by Dave Cannella, Public Affairs

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