Every two years, an actuarial valuation for the Fund is completed by the Consulting Actuary. The valuation provides the present and future liabilities of the Fund and compares that to current and projected Fund assets, respectively. The 2019 valuation concluded that the Fund was found to be in a strongly funded position, as it had been for the past two valuations. The current funded ratio is 107.1%, which was obtained by dividing value of assets (i.e. US$67,816 million) by the actuarial value of the accrued benefits (i.e. U$63,343 million).
Furthermore, the actuarial valuation revealed a small surplus of 0.5% of pensionable remuneration, well within the corridor of +/-2% of pensionable remuneration recommended by the Fund’s actuaries, which indicates that the Fund is very close to actuarial balance and is considered to be well funded.
Every four years, a consultant performs an Asset Liability Management (ALM) Study that evaluates the assets together with the liabilities of the Fund and is reviewed by the ALM Committee. The ALM Study uses long-term capital market assumptions to model the assets and develop the optimal strategic asset allocation which will help to deliver on the obligations of the Fund.
The last Asset-Liability Management study was submitted to the 66th session of the Pension Board in July 2019.
The Board took note of the results of the 2019 asset-liability management study and the conclusions of the Committee of Actuaries and the Assets and Liabilities Monitoring Committee, specifically: (a) The real rate of return earned by the Fund continues to be the most significant factor in maintaining solvency; (b) The 23.7 per cent contribution rate continues to be appropriate; (c) There are no expected future liquidity problems for the 30 years of the study, even though it is anticipated that benefits will exceed contributions in coming years in the context of the growing maturity of the Fund (see page 111 to 116 of the 2018 Board report here).