Chicago Transit Authority Employees Retirement Plan is using an “optimistic assumption” for its 8.5% assumed rate of return as the funded status of the plan plummeted below the state-mandated 60% minimum funding level at the end of 2011, according to a report from the office of Illinois Auditor General William Holland.
The auditor general reviewed the plan's Jan. 1, 2012, actuarial valuations and concluded they were “not unreasonable in the aggregate,” but questioned whether the assumed rate is too high. The Illinois State Auditing Act requires the CTA plan to submit its most recent actuarial valuations to the auditor general by Sept. 30 every year for a review.
A decrease in the assumed rate of return would put the plan in more peril as the funded status dropped to 59% at the end of 2011 from 70% at the end of the prior year, triggering increases in employer and employee contributions. The plan had $1.66 billion in assets and $2.81 billion in liabilities at the end of 2011.