8-37-304 - Unfunded accrued liability Accrued liability contribution rate.
8-37-304. Unfunded accrued liability Accrued liability contribution rate.
(a) On the basis of the actuarial valuation of June 30, 1981, the actuary shall determine the amount of the unfunded accrued liability for each member classification as the excess of:
(1) The actuarial accrued liability, determined according to the entry age normal actuarial cost method as defined by the Committee on Pension Terminology of the American Academy of Actuaries, for such classification; over
(2) The funds in hand with respect to such classification.
(b) As of June 30, 1981, and the date of each subsequent actuarial valuation, the actuary shall determine the accrued liability contribution rate for each member classification as the percentage of the earnable compensation of the members in such classification on the date of the valuation, which is equal to the dollar amount required to amortize the unfunded accrued liability established in subsection (a) in level dollar payments over the remainder of the forty-year period which commenced July 1, 1975. The board of trustees may designate a portion of the unfunded accrued liability (not exceeding the increase in the accrued liability arising from cost-of-living benefits) to be amortized as a percentage of the expected future payroll of the members of such classification during the remainder of the forty-year period, in which case the board of trustees shall specify the annual rate at which it is expected that the aggregate earnable compensation of the member classification will increase during such period. In determining the amount of unfunded accrued liability remaining to be amortized as of each valuation date after 1981, the actuary shall assume that the annual amortization contributions calculated at the time of the immediately preceding valuation have been made as anticipated. Notwithstanding any other law to the contrary, the board of trustees may establish an amortization period of less than forty (40) years or the board may establish separate amortization periods of less than forty (40) years for each state employee group, for each employer participating in the retirement system pursuant to chapter 35, part 2 of this title, and for teachers.
(c) Any change in the actuarial accrued liability arising from any amendment to chapters 34-37 of this title or from changes in actuarial assumptions may, at the discretion of the board of trustees, be amortized separately from the unfunded accrued liability already being amortized, or may be absorbed into the calculation of the normal cost rate described in § 8-37-303(a).
(d) The board of trustees, at its discretion, may direct the actuary to redetermine the unfunded accrued liability as of any valuation date.
[Acts 1972, ch. 814, § 8; 1978, ch. 788, § 6; T.C.A., § 8-3930(2); Acts 1984, ch. 601, § 12; 1993, ch. 345, § 1.]