Funding for your retirement benefit
is provided from three sources: employer contributions, employee
contributions, and investment earnings. Each year, Merced County
Employees’ Retirement Association (MercedCERA) engages an
independent actuarial firm to conduct an accounting of the Plan’s
funded level. The main purpose of the actuarial valuation is to
determine the employer and employee contribution rates that will
sufficiently fund the plan.
If all of the assumptions occur exactly as predicted, the Plan
will be funded at 100%. However, it is very unlikely that all
assumptions will be exactly on target. The Plan may experience
some years that exceed earnings and some years when the earnings
assumption is not met. The ideal is to create a well-funded plan
over time by having more over funding than under funding.
In addition to the annual actuarial valuation, MercedCERA’s
actuary conducts an experience study every three years that
compares prior actuarial assumptions to actual experience, and
sets assumptions for the future based on current data. This
adjustment is crucial to ensuring the assumptions used in the
actuarial valuation are appropriate and will provide a good basis
for establishing the employer and employee contribution rates
needed to fund the plan.