The following information was reported in a state€™s Police Officers Pension Plan€™s schedule of funding progress. Dollar amounts are in millions.

The plan€™s schedule of employer contributions indicated that the employers€™ annual pension cost was $106 million in 2015 and $100 million in 2014. In both years the employers contributed 100 percent of those amounts.
1. Based on the limited data available, do you think that the fiscal health of the plan improved in 2015? Explain, citing the specific factors you took into account and telling why they are significant.
2. Suppose you were asked to prepare a schedule explaining the change in the value of assets. What factors might account for increases and decreases in this amount?
3. Suppose that you were asked to prepare a schedule explaining the change in the actuarial accrued liability. What factors might account for increases and decreases in this amount?
4. What is the total amount that employers should report as pension expenditures in 2015? How much must they add to, or subtract from, their pension liabilityaccounts?

Transcribed Image Text:

Valuation Date December 31, 2015 2014 Value of assets (a) Actuarial accrued liability (b) Unfunded actuarial accrued liability $2,411 $2,005 $2,902 $2,626 $ 491 83% 621 76% (b - a) Funded ratio (a/b) Covered payroll (c) Unfunded actuarial accrued liability 957902 as a percentage of covered payroll (b a)/c 51% 69%