HomeMy WebLinkAbout06.a.1) Presentation from actuary John Bartel re reporting of UAAL and OPEB as part of annual compensation[) IRII L 1 I I \II\ II (
• Question
,.
CENTRAL CONTRA COSTA SANITARY DISTRICT
What Should Be Provided to Employees for "Cost" of
Pensions?
John E. Bartel , President
Bartel Associates, LLC
December 17,2015
AGENDA
Topic Slide
• Definition of Terms
1
3
5
7
• Value of Pension!OPEB Plan to Employees
• Cost ofPension!OPEB Plan to the District
~ 12/17/2015
~.a./)
QUESTlON
• What should be included on employees ' pay stubs for pension and/or OPEB
benefits?
• Two options:
• Value of pension/OPEB plan to employees or
• Cost of pension/OPEB plan to the District
~ 12/17/2015
QUESTlON
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~ 12 /17/2015 2
I DEFINITION OF TERMS I ~--~!'========================~~~ --~
• PVB-Present Value of all Projected Benefits:
• Discounted value (at valuation date), of all future expected benefit payments based
on various (actuarial) assumptions
• Normal Cost:
• Portion of PVB allocated to (or "earned " during) current year
• Value of members current years ' service benefit
• Paid by both members and employer
• Actuarial Liability:
• Discounted v alue (at measurement date) of benefits attributed or earned through
me asurement da te [value of past service benefit]
• Portion of PVB "earned" at measurement
• Generally all paid by employer
• Target:
• Have money in the bank to cover Actuarial Liability (past service)
~ 12/17/2015 3
I DEFINITION OF TERMS I ~--~~~'========================~~~ --~
• Unfunded Liability:
• Money short of target at measurement date
• Total Contribution:
• Total Normal Cost
• Payment on the Unfunded Liability
0 Expressed as percent of payroll for budgeting and convenience
0 Typically based on closed amortization period that varies based on cause of
unfunded liability (e.g. CCCERA):
0 I 2 /31 /07 UAL amortized over I 5 year closed period (8 years remaining)
0 Gains /losses and assumption/method changes over closed I 8 years from
occurrence
0 Plan amendments over closed 1 0 years from occurrence
0 Early retirement incentives 1 year
~ 12/17/2015 4
.-------,I VALUE OF PENSION/OPEB PLAN TO EMPLOYEES 1 .-I -----.
• Best represented by the Normal Cost
• Note
• Pay stub reflects compensation "earned" during pay period
Similarly Normal Cost reflects benefit attributed (or earned) during pay period
• Member Contribution Rates vary based on benefit tier and entry age for Pension
D Should vary any amount shown based on benefit tier and entry age
• Payment on the Unfunded Liability:
D Includes impact of prior benefit increases, current retirees, investment losses ,
etc. Cannot reasonably be allocated to actives.
D Has nothing to do with benefits earned during period
D While paid as a percent of pay, can not be attributed or allocated to individual s
D CCC ERA decides amortization period
• Employer Normal Cost Rate varies based on benefit tier for both Pension and OPEB
(iti) 12117/2015 5
.--------,I VALUE OF PENSION/OPEB PLAN TO EMPLOYEES 1.--1 -----.
• Recommend showing:
• Total Normal Cost
• Member Contribution
D As an offset to Total Normal Cost
• Net Normal Cost
• Both as rate and dollar amounts
(iti) 12 /17/2015 6
COST OF PENSION/OPEB PLAN TO DISTRICT I I
• Best represented by the Total Contribution
• Note
• Member Contribution Rates vary based on benefit tier and entry age for Pension and
benefit tier for OPEB
D Should vary any amount shown based on benefit tier and entry age
• Pay stub reflects compensation "earned" during pay period
Total District Cost reflects amount "paid" by District during pay period
• Payment on the Unfunded Liability:
Payment is the same percent of pay, regardless oftier, prior service, etc.
D Includes impact of prior benefit increases, current retirees, investment losses ,
etc . Cannot reasonably be allocated to actives.
D Has nothing to do with benefits earned during period
D While paid as a percent of pay, can not be attributed or allocated to individual s
D CCC ERA decides amortization period
D Significantly overstates individual 's cost
m:r 12/17/2015 7
I COST OF PENSION/OPEB PLAN TO DISTRICT I ~--~~~ ========================~'!~ --~
• Recommend showing:
• Total Normal Cost
• Member Contribution
• Net Normal Cost
• Unfunded Liability payment
• Total District Cost
• Both as rate and dollar amounts
m:r 12/17/2015 8