HomeMy WebLinkAbout05. CCCERA Board actions related to economic and demographic assumptions 5.
Central Contra Costa Sanitary District
December 19, 2016
TO: ADMINISTRATION COMMITTEE
VIA: ROGER S. BAILEY, GENERAL MANAGER
ANN SASAKI, DEPUTY GENERAL MANAGER
FROM: TEJI O'MALLEY, HUMAN RESOURCES MANAGER
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SUBJECT: CONTRA COSTA COUNTY EMPLOYEES' RETIREMENT ASSOCATION
(CCCERA) BOARD ACTIONS RELATED TO ECONOMIC AND
DEMOGRAPHIC ASSUMPTIONS
In June 2016, staff informed the Administration Committee that the CCCERA Board of
Trustees had adopted changes to the economic assumptions utilized by their actuary to
determine pension costs. At that time, staff notified the Committee that the CCCERA
Board was also set to adopt changes to the demographic assumptions, and staff would
update the Committee once those changes had been adopted and the December 31 ,
2015 (setting the rates for Fiscal Year (FY) 2017-18) actuarial valuation was issued.
To recap, the economic assumptions that were adopted and were to be utilized in the
December 31, 2015 valuation were as follows:
• Assumed earnings/discount rate decreased from 7.25% to 7.00%.
• Inflation rate decreased from 3.25% to 2.75%
• Wage inflation (projected payroll) rate decreased from 4.00% to 3.25%
In October 2016, the Board of Trustees adopted the 2015 valuation that included
several changes to the demographic assumptions. Specifically, the Board adopted the
following assumptions:
• Post-Retirement mortality rates were adjusted, both increased and decreased
based upon age categories.
• Pre-Retirement (In-Service) mortality, disability, and early withdrawal rates were
adjusted, both increased and decreased based upon age categories.
• Retirement rates (percentage of those retiring at any given age) were adjusted,
both increased and decreased based upon age categories.
Central Contra Costa Sanitary District
CCCERA Board Actions Related to Economic and Demographic Assumptions
Page 2 of 3
Additionally, the valuation adjusted the following assumptions based upon actual
experience:
• Leave cash-out assumptions decreased from 6.50% to 5.50%. This was mainly
as a result of the implementation of AB 197 and CCCERA's action to eliminate
straddling.
• Sick leave conversion rates decreased from 1.25% to 1.20%.
Based upon the aforementioned assumptions, Central San's contribution rates, as well
as the UAAL (Unfunded Actuarial Accrued Liability) amounts, for FY 2017-18 are
reflected in the following table. The table also includes the previous five fiscal years
contribution rates and UAAL amounts for comparative purposes.
Fiscal Year Legacy PEPRA*
(hired pre-2013) (hired post-2013)
2017-18 Normal Costs** 17.08% 11.70%
UAAL 36.31% 36.31%
Total UAAL: $88,182,228
2016-17 Normal Costs 16.99% 12.06%
UAAL*** 38.98% 38.98%
Total UAAL: $100,955,188
2015-16 Normal Costs 17.46% 12.62%
UAAL*** 43.12% 43.12%
Total UAAL:$120,792,362
2014-15 Normal Costs 21.53% 10.92%
UAAL*** 53.83% 53.02%
Total UAAL: $142,523,585
2013-14 Normal Costs 22.21% N/A
UAAL 40.12% N/A
Total UAAL: $109,168,803
2012-13 Normal Costs 21.94% N/A
UAAL 35.78% N/A
Total UAAL: $99,841,380
PEPRA stands for the California Public Employees' Pension Reform Act of 2013.
**These rates are only employer normal costs (Basic and Cost of Living Adjustment(COLA))and do not include
Central San's subvention of the employee share of normal costs. Central San will no longer be subventing any
portion of the employee share effective April 18, 2017.
*** UAAL amounts are from the December 31 s`valuation of each year.Actual amounts were slightly lower due to the
supplemental UAAL payment in the noted three fiscal years.
Central Contra Costa Sanitary District
CCCERA Board Actions Related to Economic and Demographic Assumptions
Page 3of3
The valuation(s) also determine the employee contribution rates and those are reflected
in the below table. Again, for comparison purposes, the previous five fiscal years have
also been included.
Fiscal Year Legacy* PEPRA**
(hired pre-2013) (hired post-2013)
2017-18 11.85% 11.70%
2016-17 11.76% 12.06%
2015-16 11.18% 12.62%
2014-15 11.57% 11.00%
2013-14 10.38% N/A
2012-13 10.47% N/A
*Rates are reflective of an employee whose age of entry is 36 years.
**Based upon an average age of entry.
Please note that the changes to the economic and demographic assumptions were not
the only factors considered when determining Central San's FY 2017-18 contribution
rates. In addition to the changes in the economic and demographic assumptions, the
other components include investment gains or losses, actual experience related to the
economic and demographic assumptions, and contribution variances which occur from
delaying the implementation of new rates until 18 months after the actuarial valuation
date (December 31 st of each year).
CCCERA's actuary is currently calculating the projected rates for all employers for the
next five years and once that information is available, staff will apprise the Board.
Staff will be at the meeting to answer any questions or provide additional clarification.