HomeMy WebLinkAbout07.a.2) CCCERA Update7a.2)
Central Contra Costa Sanitary District
May 19, 2011
TO: HONORABLE BOARD OF DIRECTORS
VIA: JAMES M. KELLY, GENERAL MANAGER qlavy
FROM: RANDALL M. MUSGRAVES, DIRECTOR OF ADMINISTRATION PA
DEBBIE RATCLIFF, CONTROLLER , 41t
SUBJECT: CONTRA COSTA COUNTY EMPLOYEES' RETIREMENT
ASSOCIATION (CCCERA) 5/4/2011 BOARD MEETING
Attached is a copy of the May 4, 2011 CCCERA Board meeting agenda and the
agenda material for agenda item #5. The item addresses the contribution rates for new
members on or after January 1, 2011.
#5 Presentation from The Segal Company on contribution rates for new members
on or after January 1, 2011.
The Segal Company presented the results of an analysis regarding the effect of
potential new contribution rates for members of CCCERA with new membership dates
on or after January 1, 2011. Employees hired on or after January 1, 2011 have lower
terminal pay assumptions; the pay must be earned and payable in the final
compensation period to be used in the pension calculation.
Because of de- pooling that takes effect July 1, 2011, The Segal Company needed to
provide two sets of contribution rates — one with combined rates that hadn't been de-
pooled yet (January 1, 2011 — June 30, 2011), and the other with separate de- pooled
rates (July 1, 2011 — June 30, 2012).
Contra Costa County representatives urged the Board to implement on July 1, 2011 to
better accommodate their financial software. A motion was made to adopt the new
rates for new hires with membership on or after January 1, 2011, but to be effective
starting July, 2011. The Board passed this motion.
The newly calculated rates for members hired on or after January 1, 2011 will reduce
the percentage of payroll paid for both the employer and employee. Since there are
only five (5) new hires as of January 1, 2011, the impact in the first six months is small.
For the District, the employer rate will be reduced by 1.68 %, or approximately $1,200
for the six month period, and the average employee paid cost of living portion will be
reduced by .27 %, or approximately $250. These percentages are a percent of salary.
The next actuarial evaluation will give employers credit for the overpayments made for
new hires during the January 2011 — June 30, 2011 window.
The District's Finance & Accounting Division will create new benefit pay codes in the
payroll software to accommodate this change.
Staff will be available to answer any questions the Board may have.
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4 Employees' Petirement Association
1355 willow way suite 221 concord ca 94520
925.52
RETIREMENT BOARD MEETING
FIRST MONTHLY MEETING
9:00 a.m.
May 4, 2011
RECD jVFD
1.3960 fax 925.646.5747
BY:
Retirement Board Conference Room
The Willows Office Park
1355 Willow Way
Suite 221
Concord, California
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THE RETIREMENT BOARD MAY DISCUSS AND TAKE ACTION ON THE
FOLLOWING:
1. Pledge of Allegiance
2. Accept comments from the public.
Approve minutes from the April 13 and 21, 2011 meetings.
4. Routine items for May 4, 2011.
a. Approve certifications of membership.
b. Approve service and disability allowances.
c. Accept disability applications and authorize subpoenas as required.
d. Approve death benefits.
5. Presentation from The Segal Company on contribution rates for new members on or
after January 1, 2011.
6. Consider and take possible action on contribution rates for new members on or after
January 1, 2011.
CLOSED SESSION
7. The Board will go into closed session under Gov. Code Section 54957 to
consider recommendations from the Medical Advisor and/or staff regarding the
following disability retirement applications:
Member
a. Ronald Yates
b. Mary Smith
OPEN SESSION
Type Sought
Service Connected
Non Service Connected
Recommendation
Service Connected
Non Service Connected
8. Consider and take possible action to change the June 8, 2011 meeting date.
FBoard will provide reasonable
ns for persons with disabilities
nd Board meetings who contact
Office at least 24 hours before a meeting
'T-SEGAL
THE SEGAL COMPANY
100 Montgomery Street Suite 500 San Francisco, CA 94104 -4308
T 415.263.8200 F 415.263.8290 www.segalco.com
April 26, 2011
Ms. Marilyn Leedom
Chief Executive Officer
Contra Costa County Employees' Retirement Association
1355 Willow Way, Suite 221
Concord, CA 94520
MEETING DATE
MAY 0 4 2011
ITEM
Re: Contra Costa County Employees' Retirement Association
Employer and Member Contribution Rates for Members with Membership Dates
on or after January 1, 2011
Dear Marilyn:
This letter responds to your request for us to calculate the employer and member contribution
rates that would apply only to members with membership dates on or after January 1, 2011.
These members are subject to the amended policy that determines which pay items are
considered compensation for retirement purposes. Background information on that policy can be
found in our April 7, 2011 letter.
Methodologies and Assumptions Used
Key methodologies and assumptions used in these calculations are as follows:
> Rates for the first six months of 2011 and for the July 1, 2011 through June 30, 2012 year
are based on the same actuarial assumptions used in the December 31, 2008 and 2009
valuations, respectively, with one exception. New terminal pay assumptions (as a
percentage of final average pay excluding such terminal pay) by tier have been applied
and are as follows:
General Tier 1: 3.50%
General Tier 2: 0.50%
General Tier 3: 1.25%
Safety Tier A: 1.50%
Safety Tier C: 0.50%
Benefits, Compensation and HR Consulting Offices throughout the United States and Canada
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Founding Member of the Multinational Group of Actuaries and Consultants, a global affllation of independent firms
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Ms. Marilyn Leedom
April 26, 2011
Page 2
> Demographics for members with membership dates on or after January 1, 2011 are
assumed to be the same as for the members included in the December 31, 2008 and 2009
valuations, respectively.
> The amortization cost for the Unfunded Actuarial Accrued Liability (UAAL) for
members with membership dates before January 1, 2011 has been expressed as a
percentage of total future payroll, including members with membership dates on or after
January 1, 2011. This has been done in order to continue the open group level percent of
payroll amortization methodology for the UAAL associated with members with
membership dates before January 1, 2011. It is also consistent with the methodology
applied when Safety Tier C was implemented.
> Based on statute, all members will continue to contribute one -half of the Cost -of- Living
(COL) normal cost component that is associated with the terminal pay assumption.
Results
Table 1 contains the employer contribution rates for members with membership dates on or after
January 1, 2011 that will apply during the period from January 1, 2011 through June 30, 2011.
Table 2 contains similar information, but for the period from July 1, 2011 through June 30, 2012.
Tables 3 and 4 contain information on the member contribution rates that will apply during those
same two time periods.
We would recommend continuing to apply the same Refundability factors as are applied for
members with membership dates before January 1, 2011.
December 31, 2010 Valuation
Note that employer and member rates for members with membership dates on or after January 1,
2011 will also be determined in the December 31, 2010 valuation that is currently in progress.
Those rates will apply to the period from July 1, 2012 through June 30, 2013.
Based on the Board action taken on April 13, 2011, that valuation will also reflect terminal pay
assumptions by cost group rather than by tier. This methodology will be applied both to
members with membership dates before January 1, 2011 and those with membership dates on or
after January 1, 2011.
Unless otherwise noted, the calculations in this study are based on the December 31, 2008 and
December 31, 2009 actuarial valuations including the actuarial assumptions on which each
valuation was based. These calculations and those valuations were completed under the
supervision of John Monroe, ASA, MAAA, Enrolled Actuary.
5126039x1/05337.013
Ms. Marilyn Leedom
April 26, 2011
Page 3
Please let us know if you have any questions, and we look forward to discussing this with your
Board.
Sincerely,
Paul Angelo, FSA, EA, MAAA
Senior Vice President and Actuary
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Enclosures
5126039v1/05337.013
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John Monroe, ASA, EA, MAAA
Vice President and Associate Actuary