In the course of conducting our actuarial analysis, we make hundreds of assumptions and apply them over measurement periods that often exceed 50 years. In some cases, small changes in these assumptions, or experience that plays out differently than expected, can lead to significant changes in the measurements. These sensitivities can evolve as the plans grow and mature over time. The Legislature’s response to these changes, and their actions governing the state’s pension system, also affect plan risk.
To help all users of our actuarial measurements better understand these risks and their impacts, the Office of the State Actuary (OSA/we) developed this educational webpage, which serves as a reference guide for certain key risk metrics. The webpage is divided into the following sections, which readers can click to expand/collapse…
Ways to Measure Risk, which summarizes some of the key methods that actuaries use to evaluate risk
Risk Measurements for Washington’s Public Pension Plans, which details a few risk tests that OSA conducts and highlights items like investment returns and contribution rate solvency/affordability
Demographic Risks, which describes the risk of member experience unfolding differently than assumed, particularly member mortality
Historical Information, which provides a resource to track key data and assumption values over the past ten years
Plan Maturity Measures, which explains some of the risks plans face as they grow and mature over time including enterprise risk, contribution rate volatility, and liquidity risk
We illustrate the risks inherent in our actuarial measurements at a system-wide and plan level and consider how our actuarial measurements could vary under different circumstances. Such measurements include contribution rates, funded statuses, and actuarial fiscal notes.
This webpage also serves as our response to Actuarial Standards of Practice (ASOP) Number 51. ASOPs guide actuaries when performing and communicating their work. ASOP 51 stresses the importance of communicating risk in defined benefit pension plans, particularly in how actual future measurements may differ significantly from expected future measurements.
Recently, one of the most prominent risks has been the impacts from the COVID-19 health crisis. However, since this event emerged after our latest actuarial measurement date, the financial and demographic implications of this health crisis are not reflected in the analysis below. Readers who are interested in learning more about how COVID-19 may impact the Washington State retirement systems can see our separate
educational webpage devoted to this topic.
Unless otherwise noted, the projected figures shown below are as of the
June 30, 2017 Actuarial Valuation Report (AVR) and our
June 30, 2017 Projections. We refer to this date as our “measurement date”. We intend to update these projections every other year. Should you have any questions or interest in seeing other risk topics, please contact us at