The 2012 actuarial valuations were prepared by Buck Consultants, LLC, and reviewed by the Retirement Board at the May 2, 2013 meeting.  An actuarial valuation provides a snapshot of a pension fund’s financial condition, measuring assets against accrued benefits and projecting the future trajectory of the funded ratio (the ratio of assets to liabilities). 

 

As of December 31, 2012, the assets of the County Employees’ and Officers’ Annuity and Benefit Fund of Cook County were valued at $7.8 billion with liabilities of $14.6 billion, resulting in an unfunded liability of $6.8 billion.  The funded ratio declined from 57.5% in 2011 to 53.5% in 2012.  As of December 31, 2012, the assets of the Forest Preserve District Employees’ Annuity and Benefit Fund of Cook County were valued at $172.6 million with liabilities of $304.5 million, resulting in an unfunded liability of $131.9 million.  The funded ratio declined from 61.6% in 2011 to 56.7% in 2012.  

 

As identified by the actuary, the decrease in funded ratios in 2012 was driven by several factors, including insufficient statutory contribution rates and demographic events (retirement, mortality, and salary increases) that increased liabilities overall.  These circumstances over time have contributed to the growth of unfunded liabilities that compound annually, causing the funded ratios to decline. 

 

The increase in liabilities in 2012 was partially offset by growth in assets of over $900 million from strong investment performance, with returns of over 12% exceeding the 7.5% actuarial assumption.  Although the actuarial funded ratio is calculated using a five-year rolling average, on a market basis the 2012 growth in assets improved the funded status.   Investment returns have grown to account for roughly half of member benefit payments, while the portfolio continues to increase in valuation.