REPORT DIGEST

 

JUDGES’ RETIREMENT SYSTEM OF ILLINOIS

 

Financial Audit

For the Year Ended June 30, 2010

 

Summary of Findings:

Total this audit:  0

Total last audit:  0

Repeated from last audit:  0

 

Release Date: March 3, 2011

 

State of Illinois, Office of the Auditor General

WILLIAM G. HOLLAND, AUDITOR GENERAL

 

To obtain a copy of the Report contact:

Office of the Auditor General, Iles Park Plaza, 740 E. Ash Street, Springfield, IL 62703

(217)    782-6046 or TTY (888) 261-2887

 

This Report Digest and Full Report are also available on the worldwide web at www.auditor.illinois.gov

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INTRODUCTION

 

This digest covers our financial audit of the Judges’ Retirement System of Illinois (System) for the year ended June 30, 2010.  A compliance examination report covering the year ending June 30, 2010 will be issued separately.

 

UNDERFUNDING OF THE SYSTEM

 

The actuarial accrued liability was valued at $1,819.4 million at June 30, 2010.  The actuarial value of assets (at smoothed value) totaled approximately $619.9 million at June 30, 2010.  The method for determining the actuarial value of the assets was changed beginning with the June 30, 2009 valuation.  The method was changed from the market value to a smoothed value where the actuarial investment gains or losses for each year are recognized in equal amounts over the ensuing five-year period.

 

The difference between the actuarial accrued liability and the actuarial value of assets of $1,199.5 million reflects the unfunded liability of the System at June 30, 2010.  The System had a funded ratio (at smoothed value) of 34.1% at June 30, 2010.  When using the market value, the System would have had a funded ratio of 28.8% at June 30, 2010.

 

LEGISLATIVE CHANGE TO PENSION CODE

 

Public Act 96-0889, which was signed into law April 2010, adds a new section to the Pension Code that applies different benefits to anyone first hired in a position covered by the System on or after January 1, 2011.  Changes in the pension law include initiating a cap on the salaries used to calculate retirement benefits, raising the minimum eligibility to draw a retirement benefit to age 67 with at least 8 years of service or age 62 with at least 8 years of service credit with a reduced annuity, and limiting cost-of-living annuity adjustments to the lesser of 3% or the annual increase in the Consumer Price Index, whichever is less.  The pension law changes do not apply to anyone who has System service prior to January 1, 2011.

 

AUDITORS’ OPINION

 

The auditors stated the financial statements of the Judges’ Retirement System of Illinois as of June 30, 2010, and for the year then ended, are fairly stated in all material respects.

 

WILLIAM G. HOLLAND

Auditor General

 

WGH:AKS

 

SPECIAL ASSISTANT AUDITORS

 

Our special assistant auditors for this audit were BKD, LLP.