Office of Program Policy Analysis and Government Accountability
Office of Program Policy Analysis and Government Accountability

Florida Retirement System Pension Plan Fully Funded and Valuation Met Standard

Report 07-24, April 2007




Report Summary

Our actuarial consultant, Gabriel, Roeder, Smith & Company, concluded that the 2006 valuation was made in accordance with relevant state laws and rules and actuarial standards and that the assumptions and methods used in the valuation were generally reasonable. However, our consultant also made several noteworthy observations and recommendations.

  • Our consultant noted that the 2006 valuation disclosed the actuarial present value of future benefits and the actuarial present values of future pay, which were not disclosed in the 2005 valuation. However, these values do not take into account an assumption for the probability that system members will participate in the Deferred Retirement Option Program (DROP). As a result, our consultant recommended that future valuations include such disclosures that fully reflect the effect of expected DROP participation.
  • Additionally, our consultant continues to recommend that the valuation be improved by providing prior year results in a side-by-side comparison with current year results as appropriate. This would provide a ready comparison of changes in values and percentage changes in the Florida Retirement System's membership, assets, and benefits.
  • Our consultant also noted that the amortization of the system's surplus determined using the system's rate stabilization method may not produce an equivalent result to amortizing the surplus over a 30-year period as set forth in Governmental Accounting Standards Board standards. For example, our consulting actuary pointed out that for the 2006 actuarial valuation, the amortization of the surplus using the rate stabilization method was $157 million, while an amortization of the surplus over a 30-year period was $329 million. However, our consultant also commented that this difference may not be considered a material amount in light of the size of the Florida Retirement System. To address this concern, we recommend that in future valuations, the Department of Management Services' consulting actuary monitor the rate stabilization mechanism for consistency with Governmental Accounting Standards Board standards and report the results of its monitoring activities.


Related Reports
  1. Actuarial Review of the July 1, 2013 Actuarial Valuation of the Florida Retirement System
    Report 14-FRS July 2014
  2. Actuarial Review of the July 1, 2012 Actuarial Valuation of the Florida Retirement System
    Report 13-FRS August 2013
  3. Florida Retirement System Pension Plan Valuation Met Standards
    Report 12-09 July 2012
  4. Florida Retirement System Pension Plan Valuation Met Standards
    Report 11-17 May 2011
Copies of this report in print or alternate accessible format may be obtained by email OPPAGA@oppaga.fl.gov, telephone (850) 488-0021, or mail 111 W. Madison St., Room 312 Tallahassee, FL 32399-1475.
Copies of this report in print or alternate accessible format may be obtained by email OPPAGA@oppaga.fl.gov, telephone (850) 488-0021, or mail 111 W. Madison St., Room 312 Tallahassee, FL 32399-1475.
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