HomeMy WebLinkAbout06.a.2) Handout-Actuary Report(a.4.2) Nandacf
CCCERA — Depooling
Preliminary Review
MiN E. B.%RTEL
November 4, 2010
AGENDA
Topic
Methodology Summary
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F' METHODOLOGY SUMMARY
■ Step I - December 31, 2002 Asset Allocation
• December 31, 2002 Actuarial Accrued Liability (AAL)
• December 31, 2002 Valuation /Assumptions
• Member's last employer /tier code
• Central San based on un- enhanced formula
• December 31, 2002 Unfunded Actuarial Accrued Liability (UAAL)
❑ Based on Employer UAAL Contribution Rate
❑ 12/31/02 UAAL =Payroll x UAAL Rate x Amortization Factor
• December 31, 2002 Valuation Value of Assets (VVA)
❑ 12/31/02 AAL - 12/31/02 UAAL
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METHODOLOGI' SUMMARY
■ Step 2 —Asset Roll- forward from December 31, 2002 to December 31, 2008
• End of each year = Beginning of year x (1+ Valuation Value investment return)
Benefit Payments x (1 +'h (VVIR))
Contributions x (1 +' /z (VVIR))
• Notes:
• Valuation Value= Actuarial Value adjusted for non valuation reserves
• Valuation Value investment return (VVIR) is net of expenses
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METHODOLOGY SUMMARY
■ Step 3 — December 31, 2008 Contribution Rates
• Determined December 3l, 2008 AAL
❑ December 31, 2008 Valuation/Assumptions
❑ Members last employer /tier code
❑ Central San based on enhanced formula
• December 31, 2008 un- pooled UAAL based on Step 2 and 12/31/08 AAL
• Determined December 31, 2008 pooled UAAL based on Employer UAAL
Contribution Rate
❑ 12/31/08 valuation UAAL = Payroll x UAAL Rate x Amortization Factor
• Additional UAAL Rate for de- pooling equals:
❑ difference between 12/31/08 un- pooled UAAL and 12/31/08 pooled UAAL
❑ amortized over 18 years
• Employer Contribution Rate
❑ Normal Cost plus
❑ UAAL Contribution Rate before de- pooling plus
❑ Additional UAAL Rate for de- pooling
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COMMENTS
• Longer service (assuming higher AAL) results in higher allocated assets and higher
funded ratio
• Higher payroll (assuming higher AAL) results in
• higher allocated assets
• higher allocated UAAL and
• lower funded ratio.
• Higher retiree liability:
• Same allocated UAAL
• higher allocated assets and
• higher funded ratio.
• POB:
• Rate adjustment likely biased in favor of those that did not issue POBs
• Roll- forward not biased by POB
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COMMENTS
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■ Segal valuation reports do not show Central San & County demographics separately,
however:
• Central San 6/30/09 OPEB Report
• Average age 47.2
• Average service 12.3
• Average compensation $87,000
• Segal 12/31/09 CCCERA Report total General
• Average age 46.9
• Average service 10.3
• Average compensation $69,900
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OTHER ISSUES
■ December 31, 2009 valuation
• De- pooling impact
❑ Greater for Central San than shown in 8/31/10 letter
6% (according to Segal) compared to 4.9%
❑ Lower for County
• Central San:
❑ Actual 2010/11 rate 30.94%
❑ De- pooling +6.00
❑ Estimated impact of asset losses +4.50
❑ Other changes -1.14
❑ Actual 2011/12 rate 40.30%
❑ Other changes includes:
O Method & assumption
O Demographic
O No detail
• No information on other rate groups
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