Department Of Defense Agency Financial Report 2007 - Section 2: Financial Information Page 59
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82Section 2: Financial Information
Department of Defense Agency Financial Report 2007
71
Note 17. Military Retirement and Other Federal Employment Benefits
As of September 30
2007
2006
Assumed
(Less: Assets
Present Value of
Present Value of
(amounts in millions)
Interest
Available to Pay
Unfunded Liability
Benefits
Benefits
Rate (%)
Benefits)
Pension and Health Actuarial Benefits
Military Retirement Pensions
$
1,025,320.6
6.0
$
(211,854.6)
$
813,466.0
$
963,696.1
Military Retirement Health Benefits
317,332.8
6.0
0.0
317,332.8
299,203.8
Military Medicare-Eligible Retiree Benefits
516,479.2
6.0
(107,454.2)
409,025.0
538,032.5
Total Pension and Health Actuarial Benefits
1,859,132.6
(319,308.8)
1,539,823.8
1,800,932.4
Other Actuarial Benefits
FECA
6,830.1
5.2
0.0
6,830.1
6,856.0
Voluntary Separation Incentive Programs
1,250.5
4.0
(548.6)
701.9
1,391.2
Department Education Benefits Fund
1,858.2
5.0
(1,417.8)
440.4
1,785.3
Total Other Actuarial Benefits
9,938.8
(1,966.4)
7,972.4
10,032.5
Other Federal Employment Benefits
5,608.1
(5,608.1)
0.0
4,804.6
Total Military Retirement and Other Federal
Employment Benefits
$
1,874,679.5
$
(326,883.3)
$
1,547,796.2
$
1,815,769.5
Actuarial Cost Method Used: Aggregate entry-age normal method
Assumptions: See below
Market Value of Investments in Market-based and Marketable Securities: $324.8 billion
Military Retirement Pensions
The Military Retirement Fund (MRF) is a defined benefit plan authorized by Public Law (P.L.) 98-94 to provide funds used
to pay annuities and pensions to retired military personnel and their survivors. The Board approves the long-term economic
assumptions for inflation, salary, and interest. The actuaries calculate the actuarial liabilities annually using economic
assumptions and actual experience (e.g., mortality and retirement rates). Due to reporting deadlines, the current year
actuarial present value of projected plan benefits rolls forward from the prior year’s valuation results. The Department used
the following assumptions in calculating the FY 2007 roll-forward amount.
Inflation
Salary
Interest
F iscal Year 2007
3.3% (actual)
2.2% (actual)
6.0%
F iscal Year 2008
2.3% (estimated)
3.5% (estimated)
6.0%
Long-Term
3.0%
3.75%
6.0%
Historically, the initial unfunded liability of the program was being amortized over a 50-year period. Effective FY 2008,
the initial unfunded liability will be paid over a 42-year period to ensure the annual payments cover the interest on the
unfunded actuarial liablity, with the last payment expected to be made October 1, 2025. All subsequent gains and losses
experienced by the system are amortized over a 30-year period.
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