Question: (Pension fund schedule of funding progress) The following data come from the report prepared by the actuary for York City's retirement system as of December 31, 2012: Investments (at actuarial value) $2,921,000 Actuarial accrued liability $5,586,000 Annual covered payroll $1,128,000 The actuary's report also notes that the investment earnings assumption used in calculating the actuarial accrued liability was 8 percent, compared with 7.5 percent used in the preceding year. Use the information to do the following:
1. Compute these ratios:
(a) funded ratio and
(b) unfunded actuarial accrued liability as a percentage of covered payroll.
2. Discuss the significance of the change in the investment earnings assumption in the calculation of the actuarial accrued liability.
3. Based solely on the information in this problem, discuss whether the system is reasonably funded. What additional data do you need to help reach a conclusion?