Uniform Assumptions

What are the Uniform Assumptions and how are local governments supposed to use them?

The Act requires the State Treasurer to annually establish uniform actuarial assumptions for retirement systems that include, but are not limited to, investment returns, salary increase rates, mortality tables, discount rates, and healthcare inflation. These uniform assumptions will allow the citizens of Michigan to compare local retirement systems on a standard basis.

Unless local governments are using the uniform assumptions for financial reporting purposes, they will be required to report two sets of funded ratios and actuarially determined contributions within their Retirement System Annual Report (Form 5572). Treasury has updated the fiscal year 2019 Form 5572 to receive this information.

Please see the Treasurer’s memo at Uniform Assumptions for more information.

Are uniform assumptions used to trigger underfunded status?

No.

What are uniform assumptions used for?

Uniform assumptions are used for reporting purposes only. Local governments can use the numbers generated using uniform assumptions to evaluate their retirement systems using generally more conservative assumptions. Additionally, Treasury can use the numbers reported using uniform assumptions to evaluate retirement systems throughout the State on a uniform basis, allowing for an apples-to-apples comparison.

What happens if the numbers reported using uniform assumptions indicate that my local government is underfunded?

Underfunded status is determined solely based on the numbers found in the local government’s audited financial statements. Numbers reported using uniform assumptions are for reporting purposes only.