Funding Status

At its core, SCERS’ funding objective is simple but powerful: to ensure that the retirement benefits promised to members are paid, not just today, but decades into the future. To achieve this, SCERS strives to maintain a well-funded plan status through a combination of prudent investments and contributions from both members and employers.

A retirement system is considered “well-funded” when the assets it has accumulated are sufficient to cover the benefits that members have earned to date. The greater the level of funding, the stronger the ratio of assets to liabilities, and the more investment potential the system has to generate future growth. A well-funded system ensures that the cost of benefits is paid for during members’ working careers—rather than being passed on to future generations of taxpayers.

Managing Volatility

Because investment returns can fluctuate significantly from year to year, SCERS uses techniques to smooth these ups and downs so that contribution rates remain stable. Specifically, SCERS “smooths” the calculation of actuarial assets over a rolling seven-year period. This means that unusually high or low returns in a single year are phased in gradually rather than being recognized all at once. The result is greater predictability in employer contribution rates and better employer planning for long-term budgets.

Independent Oversight

Each year, SCERS engages an independent actuarial consulting firm to perform its annual actuarial valuation. This valuation measures the plan’s funding status, determines contribution requirements, and projects long-term obligations. Every three to five years, Segal also conducts a comprehensive review of SCERS’ actuarial assumptions—both economic (such as investment return and inflation) and non-economic (such as mortality and retirement rates). The most recent review was completed as of June 30, 2022, ensuring that SCERS’ assumptions remain realistic and in line with actual member experience.

Why Funding Status Matters

For members, funding status provides confidence that SCERS is managing assets responsibly and preparing for the future. For employers, it offers a clearer picture of contribution requirements and how those may change over time. And for the broader community, it demonstrates that SCERS is fulfilling its mission without shifting costs unfairly to future generations.

SCERS’ long-term objective is not only to meet benefit promises, but to do so in a way that is sustainable, fair across generations, and transparent to members and the public.