(a)General rule.--The board shall conduct an annual stress test of the system and submit the results of the stress test to the Governor, the General Assembly and the Independent Fiscal Office no later than July 1 of each year. The stress test shall include a scenario analysis, simulation analysis and sensitivity analysis. The board shall disclose in the report of the stress test results which industry standards were used and whether any changes to industry standards have been made.
(b)Report by Independent Fiscal Office.--No later than September 1 of each year, the Independent Fiscal Office shall produce a report summarizing the results of the stress test, including a calculation of the ratio of projected employer pension contributions to projected State revenues under a scenario analys
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(a) General rule.--The board shall conduct an annual stress test of the system and submit the results of the stress test to the Governor, the General Assembly and the Independent Fiscal Office no later than July 1 of each year. The stress test shall include a scenario analysis, simulation analysis and sensitivity analysis. The board shall disclose in the report of the stress test results which industry standards were used and whether any changes to industry standards have been made.
(b) Report by Independent Fiscal Office.--No later than September 1 of each year, the Independent Fiscal Office shall produce a report summarizing the results of the stress test, including a calculation of the ratio of projected employer pension contributions to projected State revenues under a scenario analysis.
(c) Definitions.--As used in this section, the following words and phrases shall have the meanings given to them in this subsection unless the context clearly indicates otherwise:
"Scenario analysis."Projections of assets, liabilities, unfunded actuarial accrued liabilities, the change in unfunded actuarial accrued liabilities, employer contributions, benefit payments, service costs, payroll and calculations of the ratios of assets to liabilities, employer contributions to payroll and operating cash flow to assets in sufficient number as determined prudent by the board as informed by recognized industry standards.
"Sensitivity analysis."The following:
(1) Estimates of the total normal cost and employer normal cost for new employees, calculated using various investment return assumptions in sufficient number as determined prudent by the board as informed by recognized industry standards.
(2) Estimates of the unfunded actuarial accrued liability and unfunded liability, calculated using various annual assumed rates of return in sufficient number as determined prudent by the board as informed by recognized industry standards.
"Simulation analysis."Projections of the range of required employer contributions for each of the next 20 years, based on analysis that simulates the volatility of annual investment returns above and below the assumed rate of return, applying methodology determined prudent by the board as informed by recognized industry standards.