Guam Retirement Fund's Unfunded Liability Rises to $1.2 Billion

Guam Retirement Fund's unfunded liability rises to $1.2B, raising concerns about long-term financial stability. Despite this, the Fund closed FY 2023 with a $182M combined increase, demonstrating strong financial management.

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Emmanuel Abara Benson
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Guam Retirement Fund's Unfunded Liability Rises to $1.2 Billion in 2022

Guam Retirement Fund's Unfunded Liability Rises to $1.2 Billion

The Government of Guam Retirement Fund's unfunded liability has increased from $1.1 billion in 2021 to $1.2 billion, according to a newly released audit report. The report reveals that the unfunded liability has grown significantly from $552 million in 1995 to its current level as of September 30, 2022.

The audit report also highlights a decrease in the security ratio from 66.5% in 1997 to 63.76% in 2022, while the unfunded liability ratio increased from 33.5% in 1995 to 36.24% in 2022. Additionally, the actuarially determined contribution rate saw an increase from 28.43% to 29.43%.

Why this matters: The growing unfunded liability of the Guam Retirement Fund raises concerns about the long-term financial stability of the pension system and its ability to meet future obligations to retirees. Addressing this issue is critical for ensuring the financial security of Guam's public sector employees and retirees.

Despite the increase in unfunded liability, the Retirement Fund closed fiscal 2023 with a combined increase or net profit of $182 million. The Defined Benefit Plan's net position increased by $112.7 million, while the Defined Contribution Plan's net position increased by $69.2 million.

The audit report also noted that there were no material weaknesses or significant deficiencies in the Fund's compliance and internal control for the 18th consecutive year. This finding demonstrates the Retirement Fund's commitment to maintaining strong financial management practices and transparency.

As the Government of Guam Retirement Fund continues to navigate the challenges posed by its growing unfunded liability, policymakers and stakeholders will need to work together to develop strategies for addressing this issue and ensuring the long-term sustainability of the pension system. The newly released audit report functions as a reminder of the importance of prudent financial management and the need for ongoing efforts to strengthen the Retirement Fund's financial position.

Key Takeaways

  • Guam Retirement Fund's unfunded liability increased from $1.1B in 2021 to $1.2B in 2022.
  • Unfunded liability ratio rose from 33.5% in 1995 to 36.24% in 2022, security ratio fell to 63.76%.
  • Actuarially determined contribution rate increased from 28.43% to 29.43%.
  • Retirement Fund closed FY 2023 with a $182M combined increase, no material weaknesses found.
  • Addressing growing unfunded liability is critical for Guam's public sector employees and retirees.