TRS 2011 Comprehensive Annual Financial Report

TEACHER RETIREMENT SYSTEM OF TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT 2011
Actuarial Information Pension Trust Fund
Actuarial Methods and Assumptions
The actuarial valuation of TRS is prepared by Gabriel, Roeder, Smith & Company. The actuary relies on membership data and asset
information provided by TRS staff. While not verifying the data at their source, the actuary performs such tests for consistency
and reasonableness as deemed necessary to be satisfied with the appropriateness of using the data supplied.
A summary of the actuarial assumptions and methods used by the actuary are as follows:
The entry age normal actuarial cost method of valuation was used in determining liabilities and normal cost. Differences in the past
between assumed experience and actual experience (“actuarial gains and losses”) become part of the actuarial accrued liabilities.
Unfunded actuarial accrued liabilities are amortized to produce payments (principal and interest) which are level percents of payroll
contributions. These assumptions were adopted in April 2011.
Actuarial Assumptions
1. Investment Rate of Return: 8.00% per annum, net of investment and administrative expenses, compounded annually,
composed of an assumed 3.00% inflation rate and a 5.00% real rate of return.
2. Mortality, Disability Retirement, Withdrawal and Service Retirement Rates: Rates and scales developed in the actuarial
investigation as of August 31, 2007, with values at specimen ages shown in the tables below.
a) Probability of Decrement due to Death and Disability Retirement
Probability of Decrement due to Death and Disability Retirement
Male Members
Female Members
Disability
Disability
Age Death Retirement Age Death Retirement
20 0.000297 0.000003 20 0.000189 0.000006
30 0.000624 0.000042 30 0.000291 0.000065
40 0.000849 0.000381 40 0.000449 0.000234
50 0.001458 0.001287 50 0.000923 0.001256
60 0.003979 0.002455 60 0.002084 0.002436
70 0.012940 0.001760 70 0.007621 0.001658
Mortality Improvement: To account for future mortality improvement, the rates were chosen so that the assumed
mortality rates are smaller than the rates observed in the most recent experience study. The ratio of the actual member of deaths
occurring during this period to the expected number based on the selected assumptions was 108% for healthy male annuitants,
112% for healthy female annuitants, 103% for disabled male annuitants, and 110% for disabled female annuitants.
ACTUARIAL SECTION
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