The pension plan commissions an independent actuary to conduct a funding valuation each year. The actuary determines how much money is required to pay pensions by making assumptions about the future inflation rate, future return on invested assets, future salary increases, age at retirement, life expectancy and other factors.

The assumptions must be reasonable and provide a plausible snapshot of the plan's future health. Economic assumptions are approved by the pension plan's board members.

Valuation assumptions change over time and typically differ from actual results. Annual market fluctuations may cause the plan's investment performance to vary considerably compared to expected annual returns. Teachers' uses a smoothing method to mitigate short-term volatility in asset values.

The plan's demographic assumptions are reviewed annually and the January 1, 2017, valuation reflects a modest revision to the assumed retirement date for inactive members.