WILLIAM G. HOLLAND
Iles Park Plaza
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Unfunded Liability at June 30, 1998 Totals $2,277 million
New benefit formula
This digest covers our financial audit of the System for the year ended June 30, 1998. A compliance audit covering the year ending June 30, 1998 is being issued separately.
It should be noted that, pursuant to the Illinois Pension Code, investments of the System are managed by the Illinois State Board of Investment.
UNDERFUNDING OF THE SYSTEM
The actuarial accrued liability was valued at $9,342 million at June 30, 1998. The actuarial value of assets (at market) totaled approximately $7,065 million at June 30, 1998. The difference between the liability and the assets of $2,277 million reflects the unfunded liability of the System at June 30, 1998. The State Employees' Retirement System had a funded ratio of 75.6% at June 30, 1998.
CHANGE IN BENEFIT FORMULA
On July 7, 1997, the Governor signed Public Act 90-0065 which contained numerous provisions affecting the System. The most significant change involves the System's transition from a step rate retirement benefit formula to a flat rate retirement benefit formula covering nearly 60,000 members of the System. The increased retirement benefit formula is applicable to all eligible members with a retirement effective date on and after January 1, 1998.
Our auditors state that the June 30, 1998 financial statements of the System are fairly presented.
SPECIAL ASSISTANT AUDITORS
McGladrey & Pullen, LLP were our special assistant auditors for this audit.