Think of it as a projected shortfall. The amount represents the additional assets needed on the valuation date to meet the expected liabilities of the plan incurred from members’ past service.
CalSTRS is a long-term investor with broad portfolio diversification. With a structured solution in place to handle the debt over time, funding at 100 percent is not necessary.
CalSTRS is funded at 69 percent as of the end of the 2010-2011 fiscal year, a decrease of 2 percentage points from the previous year.
What is an actuarial valuation?
An actuarial valuation provides a snapshot of the fund's assets and liabilities over a 30-year period. CalSTRS assets must balance with cost of future benefits over the long term to pay the pension promise to all generations of teachers.
Based on current projections, CalSTRS has assets to pay benefits through the early 2040s. If there is no change to contribution levels, the state as the plan sponsor would be obligated to fund benefits on a pay-as-you-go-basis.
Why is an actuarial valuation necessary?
An actuarial valuation determines CalSTRS long-term ability to cover the benefits already earned by the members of the Defined Benefit Program.
