Actuaries present PERS experience study; recommend minor demographic tweaks, no change to core economic assumptions

Consulting actuaries from CABMAC presented the Public Employees Retirement System of Mississippi’s biennial actuarial experience study on April 1 and recommended no material changes to the plan’s core economic assumptions while proposing modest demographic adjustments to better match recent experience.

Ed, the presenting actuary from CABMAC, told trustees the firm’s overall conclusion was “we're not changing much or we're not recommending changing much.” CABMAC recommended retaining a 2.4% price-inflation assumption, a 7% nominal investment-return assumption (about 5% real return in their development), and a 2.65% payroll growth assumption. On demographic assumptions, CABMAC proposed liability-weighted adjustments for mortality, modest revisions to retirement and withdrawal rates, and lower disability assumptions for PERS.

The actuaries explained their approach: economic inputs (inflation, investment returns, salary growth) drive long-term projections while demographic assumptions (mortality, retirement timing, terminations/withdrawals, disabilities) are adjusted to match recent experience and to be conservative. CABMAC emphasized that demographic assumptions rely on both observed headcount experience and liability-weighted measures; liability-weighted mortality and termination analyses led to smaller net liability effects than headcount measures alone.

CABMAC presented impact estimates showing the recommended package of assumption changes would reduce aggregate PERS liabilities by roughly $300 million versus the 2024 basis. The firm reported the change would increase the funded ratio modestly (from roughly 55.9% to approximately 56.2 in their presentation) and lower the actuarily determined contribution in their projections. CABMAC also said the recommended assumption changes would be implemented for the 2025 valuation and would not change the 2024 valuation results.

Board members asked technical questions about the construction of real vs. nominal returns, treatment of salary-scale variation after large recent increases, and how select-and-ultimate tables account for service and entry-age variation. Ed and Darby (CABMAC) explained that they use Callan’s capital-market assumptions and a mix of long-range forecasts, and that salary-scale smoothing is intended to avoid overreacting to short-term spikes in pay increases.

The actuaries noted a few plan-specific observations: Mississippi’s mortality experience is worse than many national tables, so CABMAC uses mortality assumptions aligned with the state’s observed experience; withdrawals are high among younger entrants (substantial first-year turnover for many age/service cells); and disability claims have declined, allowing small reductions in disability assumptions. CABMAC indicated many changes were minor and complementary—mortality increases and some retirement adjustments largely offset each other.

The board received the presentation as information. CABMAC suggested leaving the reports as draft while staff and trustees review questions and comments, with final adoption of recommended assumptions expected at a future meeting.