Michigan State Employees’ Retirement System 6 MICHIGAN STATE EMPLOYEES’ RETIREMENT SYSTEM Letter

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  • MICHIGAN STATE EMPLOYEES’ RETIREMENT SYSTEM  1

    Michigan State Employees’ Retirement System

    A Pension and Other Employee Benefit Trust Fund of the State of Michigan

    Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2013

    M S E R S

    Prepared by: Financial Services

    for Office of Retirement Services

    P.O. Box 30171 Lansing, Michigan 48909-7671

    517-322-5103 1-800-381-5111

  • 2  MICHIGAN STATE EMPLOYEES’ RETIREMENT SYSTEM

    Table of Contents Introductory Section

    Certificate of Achievement ....................................................................................................................................... 4 Public Pension Standards Award .............................................................................................................................. 5 Letter of Transmittal ................................................................................................................................................. 6 Retirement Board Members ................................................................................................................................... 11 Advisors and Consultants ...................................................................................................................................... 11 Organization Chart ................................................................................................................................................ 12

    Financial Section Independent Auditor’s Report ................................................................................................................................ 14 Management’s Discussion and Analysis ................................................................................................................ 16 Basic Financial Statements Statement of Pension Plan and Other Postemployment Benefit Plan Net Position ............................................ 20 Statement of Changes in Pension Plan and Other Postemployment Benefit Plan Net Position ......................... 21 Notes to Basic Financial Statements .................................................................................................................. 22 Required Supplementary Information Schedules of Funding Progress........................................................................................................................... 43 Schedules of Employer and Other Contributions ............................................................................................... 44 Note to Required Supplementary Information ................................................................................................... 45 Supporting Schedules Summary Schedule of Administrative and other Expenses ............................................................................... 46 Schedule of Investment Expenses ..................................................................................................................... 47 Schedule of Payments for Professional Services ............................................................................................... 47 Detail of Changes in Plan Net Position (Pension and Other Postemployment Benefits) .................................. 48

    Investment Section Report on Investment Activity ............................................................................................................................... 50 Asset Allocation ..................................................................................................................................................... 59 Investment Results ................................................................................................................................................. 60 List of Largest Stock Holdings ............................................................................................................................... 62 List of Largest Bond Holdings ............................................................................................................................... 62 Schedule of Investment Fees .................................................................................................................................. 63 Schedule of Investment Commissions .................................................................................................................... 64 Investment Summary .............................................................................................................................................. 65

    Actuarial Section Actuary’s Certification ........................................................................................................................................... 68 Summary of Actuarial Assumptions and Methods ................................................................................................. 71 Schedule of Active Member Valuation Data .......................................................................................................... 73 Schedule of Changes in the Retirement Rolls ........................................................................................................ 74 Prioritized Solvency Test ....................................................................................................................................... 75 Analysis of System Experience .............................................................................................................................. 77 Summary of Plan Provisions ................................................................................................................................. 78

    Statistical Section Schedules of Additions by Source .......................................................................................................................... 83 Schedules of Deductions by Type .......................................................................................................................... 84 Schedules of Changes in Net Position .................................................................................................................... 85 Schedules of Benefits and Refunds by Type .......................................................................................................... 86 Schedules of Retired Members by Type of Benefit ................................................................................................ 87 Schedule of Other Postemployment Benefits ......................................................................................................... 89 Schedules of Average Benefit Payments ................................................................................................................ 90 Ten Year History of Membership ........................................................................................................................... 94

    Acknowledgements ......................................................................................................................................................... 95

  • MICHIGAN STATE EMPLOYEES’ RETIREMENT SYSTEM  3

    INTRODUCTORY SECTION

    Certificate of Achievement Public Pension Standards Award

    Letter of Transmittal Retirement Board Members

    Advisors and Consultants Organization Chart

  • INTRODUCTORY SECTION

    4  MICHIGAN STATE EMPLOYEES’ RETIREMENT SYSTEM

    Certificate of Achievement

  • INTRODUCTORY SECTION

    MICHIGAN STATE EMPLOYEES’ RETIREMENT SYSTEM  5

    Public Pension Standards Award

  • INTRODUCTORY SECTION

    6  MICHIGAN STATE EMPLOYEES’ RETIREMENT SYSTEM

    Letter of Transmittal

    State Employees’ Retirement System P.O. Box 30171 Lansing, Michigan 48909 Telephone 517-322-5103 Outside Lansing 1-800-381-5111

    STATE OF MICHIGAN

    RICK SNYDER, Governor

    DEPARTMENT OF TECHNOLOGY, MANAGEMENT & BUDGET

    December 19, 2013 The Honorable Rick Snyder Governor, State of Michigan, Members of the Legislature State of Michigan, Retirement Board Members and Members, Retirees and Beneficiaries Ladies and Gentlemen: We are pleased to present the comprehensive annual financial report of the Michigan State Employees’ Retirement System (System) for fiscal year 2013. INTRODUCTION TO REPORT The System was established by legislation under Public Act 240 of 1943 (the Michigan State Employees’ Retirement Act) and is administered by the Office of Retirement Services (ORS). The number of active and retired members and beneficiaries of the System and a list of participating employers is presented in Note 1 of the financial statements in the Financial Section of this report. The purpose of the System is to provide benefits for all State Employees. The services performed by the ORS staff provide benefits to members. Responsibility Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the leadership team of the System. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of the Sys

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