Illinois Auditor General Issues Report on Chicago Transit Authority
- Review of Information Submitted by the Retirement Plan for Chicago Transit Authority Employees
- 2018 Annual Review Performed in Accordance With Public Act
The Illinois State Auditing Act requires the Retirement Plan for Chicago Transit Authority Employees (Retirement Plan) to submit to the
The funded ratio of the Retirement Plan increased slightly from 52.49 percent in the
The OAG and our consultants, Aon, reviewed the Retirement Plan's assumptions contained in the
* Investment return assumption: The 8.25 percent investment return assumption used by the Plan remains at the upper end of investment return assumptions used by other plans. Both the Plan's actuary and Investment Consultant conducted projections that concluded the Plan's investments have a reasonable likelihood of achieving an investment return of 8.25 percent over a 10 to 30 year period. We recommend that the Plan continue to annually review the reasonableness of its investment return assumption.
* Mortality assumption: The mortality assumptions used by the Plan were chosen before final 2014 mortality tables were issued by the
* Active participant assumption: The active participant headcount increased from the prior year; however, the ratio of active participants to annuitants continued to decrease. Given the impact such a decline can have on future contribution levels, we recommend that the Plan continue to monitor the use of a constant headcount assumption.
This report does not constitute an audit as that term is defined in generally accepted government auditing standards.
ANNUAL REVIEW RESULTS AND CONCLUSIONS
STATUTORY REQUIREMENTS The Illinois State Auditing Act (30 ILCS 5/3-2.3(e)) requires the Retirement Plan for Chicago Transit Authority Employees (Retirement Plan) to submit to the
* On
* The OAG reviewed these documents and concluded that they met the requirements of the Auditing Act.
In addition, the Illinois Pension Code (40 ILCS 5/22-101(e)(3)) requires the Retirement Plan to determine, based on a report prepared by an enrolled actuary, the estimated funded ratio of the Retirement Plan's total assets to its total actuarially determined liabilities.
* The Plan is also required to determine the employee and employer contribution rates needed to meet funding requirements established by the Pension Code.
* The Auditor General is required to review the determination and the assumptions on which it is based and determine whether they are "unreasonable in the aggregate". (pages 3-5)
REVIEW OF ACTUARIAL VALUATION
The Retirement Plan submitted the Actuarial Valuation as of
The OAG and our consultants, Aon, reviewed the Retirement Plan's assumptions contained in the
In 2014, the Plan's actuary completed an experience study for the five year period ending
As a result of the experience study, the Plan lowered its investment return assumption from 8.50 percent to 8.25 percent in the
Key Retirement Plan Information
Plan investment return assumption: 8.25% 10-year historical rate of return: 5.8% Plan assets:
Our prior reviews have concluded that the investment return assumptions used by the Plan were at the upper range of investment return assumptions for comparable plans. The 8.25 percent investment return assumption remains at the upper end of investment return assumptions used by other plans. The Plan's
After the 2014 experience study, the Plan adopted generational mortality tables to account for future mortality improvements. The assumptions used in the
The Retirement Plan's active participant headcount increased from the prior year. However, the ratio of active participants to annuitants continued to decrease. A study sponsored by the
CONTRIBUTION RATES
The Pension Code requires the
The funded ratio of the Retirement Plan increased slightly from 52.49 percent in the
Since the funded ratio of the Plan was below 60 percent in the
AGENCY REVIEW
A draft of this Review was provided to the Retirement Plan for their review. The Retirement Plan commented that, with respect to the review of assumptions, the Plan has adopted a practice of having the actuary perform an experience review every five years. The next review will be performed in time to be used for the
This report does not constitute an audit as that term is defined in generally accepted government auditing standards.
This Annual Review was conducted by OAG staff with the assistance of our consultants, Aon.
Division Assistant Director
This report is transmitted in accordance with Section 3-14 of the Illinois State Auditing Act.
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