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CITY OF CHICO MISCELLANEOUS AND SAFETY PLANS
CalPERS Actuarial Issues – 6/30/14 Valuation
Preliminary Results
Presented by John E. Bartel, President Prepared by Bianca Lin, Assistant Vice President Matthew Childs, Actuarial Analyst
Bartel Associates, LLC
March 15 2016
Agenda
o:\clients\city of chico\projects\calpers\6-30-14\ba chicoci 16-03-15 calpers misc safety 14.docx
Topic Page
Definitions 1
CalPERS Changes 3
Miscellaneous Plan: Demographic Information 5 Plan Funded Status 7 Contribution Rates & Projections 13
Safety Plan: Demographic Information 19 Plan Funded Status 21 Contribution Rates & Projections 27
City Comparison to Other Agencies 33
PEPRA Cost Sharing 37
Impact of Enhanced Formulas 39
March
PVB - P Di
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15 2016
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March 15 2016 3
CALPERS CHANGES
Contribution policy changes:
No asset smoothing
5-year ramp up
Included in 6/30/13 valuation (first impact 15/16 rates; full impact 19/20)
Assumption changes:
Anticipate future mortality improvement
Other, less significant, changes
Included in 6/30/14 valuation (first impact 16/17 rates; full impact 20/21)
Risk Mitigation Strategy
Move to more conservative investments over time Only when investment return is better than expected Lower discount rate in concert
Essentially use ≈50% of investment gains to pay for cost increases
Likely get to 6.5% over ≈ 20 years
March 15 2016
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CALPER
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4
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March 15 2016 5
SUMMARY OF DEMOGRAPHIC INFORMATION - MISCELLANEOUS
1994 2004 2013 2014 Actives Counts 220 240 217 177 Average
Age 44 47 48 48 City Service 10 10 12 13 PERSable Wages $34,200 $54,300 $66,200 $65,400
Total PERSable Wages (millions) 6.8 14.3 15.7 12.7 Receiving Payments Counts
Service 165 240 266 Disablity 19 9 9 Beneficiaries 35 26 27 Total 138 219 275 302
Average Annual City Provided Benefit1 Service $11,400 $28,200 $28,400 Disability 5,100 6,800 6,900 Service Retirements in last 5 years 15,800 34,100 32,900
1 Average City provided pensions are based on City service & City benefit formula, and are not
representative of benefits for long service employees.
March 15 2016
MEMBEERS INCLUUDED IN V
6
VALUATIOON - MISCCELLANEEOUS
March 15 2016
P
June 3
5$
8
152
100
(5
PLAN FUN
30, 2013
5,400,000
8,400,000
8,600,000
2,400,000
0,600,000
1,800,000)
NDED STA
Ac
Ret
Ina
To
Market
) (Unfun
7
ATUS - MI
ctive AAL
tiree AAL
active AAL
otal AAL
Value of A
nded Liabi
ISCELLAN
J
$
L
L
Assets
ility)
NEOUS
June 30, 20
50,800
102,400
10,600
163,800
114,400
(49,400
014
0,000
0,000
0,000
0,000
0,000
0,000)
March 15 2016 8
PLAN FUNDED STATUS - MISCELLANEOUS
What happened between 6/30/13 and 6/30/14?
Unfunded Liability (Increase)/Decrease ≈ $2.4 million
Reasons for Unfunded Liability increase
Asset gain/(loss): ≈ $9.9 million
Assumption Change gain/(loss): ≈ $(7.6) million
Actuarial gain/(loss): ≈ $2.6 million Average Salary $66,200 $65,400 Number of Actives 217 177 Number of Inactives 121 136 Number of Retirees 275 302
Other gain/(loss): ≈ $(2.5) million Contributions Other (expected)
March 15 2016 9
INVESTMENT RETURN - MISCELLANEOUS
Above assumes contributions, payments, etc. received evenly throughout year. Estimated June 30, 2016 based on CalPERS actual return through 12/31/15 and
assumed 7.5% annual return for the remaining 6 months.
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Est.
2016
MVA 2.0% 16.3%15.3%20.1%19.5%12.5%10.5%-7.2%-6.0% 3.7% 16.6%12.3%11.9%18.8%-5.1% -24.0 13.3%21.7% 0.1% 13.2%18.4% 2.4% 0.6%
-30.00%
-22.50%
-15.00%
-7.50%
0.00%
7.50%
15.00%
22.50%
30.00%MVA
March 15 2016
FUNNDED STA
6/30
ATUS (MIL
0/15 & 6/30/1
10
LLIONS) -
16 funded stat
- MISCELL
tus estimated
LANEOUSS
March 15 2016 11
CONTRIBUTION RATES - MISCELLANEOUS
97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17
ER Normal Cost 9.2% 9.3% 8.0% 8.1% 8.3% 8.4% 12.5% 12.6% 12.3% 12.4% 12.2% 12.3% 12.5% 12.5% 12.0% 11.8% 12.1% 11.8% 12.4% 13.2%
Total ER Cont Rate 10.2% 8.8% 1.7% 0.0% 0.0% 0.0% 11.4% 20.0% 21.2% 19.7% 20.3% 20.9% 20.8% 21.2% 23.3% 23.8% 26.3% 28.1% 31.2% 38.9%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
March 15 2016 12
CONTRIBUTION RATES - MISCELLANEOUS
6/30/13 6/30/14 2015/2016 2016/2017
Total Normal Cost 20.4% 21.2%
Employee Normal Cost 8.0% 8.0%
Employer Normal Cost 12.4% 13.2%
Amortization Bases 18.8% 25.8%
Total Employer Contribution Rate 31.2% 38.9%
Amortization Period Multiple Multiple
What Happened from 6/30/13 to 6/30/14:
2015/16 Rate 31.2%
Asset Method Change (2nd Year) 1.5%
Assumption Change (1st Year) 1.4%
Payroll Increased Less Than Expected 5.2%
(Gains)/Losses (0.4)%
2016/17 Rate 38.9%
March 15 2016 13
CONTRIBUTION PROJECTIONS - MISCELLANEOUS
Market Value Investment Return: June 30, 2013 13.2%2 June 30, 2014 18.4%2
June 30, 2015 2.4%2
Future returns3 based on stochastic analysis using 1,000 trials Single Year Returns at 25th Percentile 50th Percentile 75th Percentile
7.5% Investment Mix 0.6% 7.5% 15.3% 6.5% Investment Mix 1.3% 6.5% 11.9%
No Other: Gains/Losses, Method/Assumption Changes, Benefit Improvements Excludes Employer Paid Member Contributions (EPMC) New hire assumptions:
Assumes 50% of 2013 new hires will be Classic Members (3%@60) and 50% will be New Members with PEPRA benefits.
Assumes Classic Members will decrease from 50% to 0% of new hires over 20 years.
2 Based on CalPERS CAFR. 3 June 30, 2016 return based on CalPERS return of (3.0%) through 12/31/15 and assumed future returns for 6 months.
March 15 2016 14
CONTRIBUTION PROJECTIONS - MISCELLANEOUS
6.25%
6.50%
6.75%
7.00%
7.25%
7.50%
7.75%Discount Rate used as of Actuarial Valuation Date
95th percentile 75th percentile 50th percentile 25th percentile 5th Percentile
March 15 2016 15
CONTRIBUTION PROJECTIONS - MISCELLANEOUS
0%
10%
20%
30%
40%
50%
60%
70%
75th Percentile 50th Percentile 50th Percentile - No Risk Mitigation 25th Percentile
March 15 2016 16
CONTRIBUTION PROJECTIONS - MISCELLANEOUS
0%
10%
20%
30%
40%
50%
60%
70%
75th Percentile 50th Percentile 50th Percentile - No Risk Mitigation 25th Percentile
March 15 2016 17
CONTRIBUTION PROJECTIONS - MISCELLANEOUS
0%
25%
50%
75%
100%
125%
150%
175%Funded Status With Risk Mitigation
75th Percentile 50th Percentile 25th Percentile
March 15 2016 18
CONTRIBUTION PROJECTIONS - MISCELLANEOUS
25%
50%
75%
100%
125%
150%
175%Funded Status Without Risk Mitigation
75th Percentile 50th Percentile 25th Percentile
March 15 2016 19
SUMMARY OF DEMOGRAPHIC INFORMATION – SAFETY
1994 2004 2013 2014 Actives Counts 111 149 149 150 Average
Age 39 40 43 41 City Service 13 11 13 11 PERSable Wages $40,400 $73,400 $98,900 $91,200
Total PERSable Wages (millions) 4.9 12.0 16.1 14.9 Receiving Payments Counts
Service 61 99 111 Disablity 52 68 71 Beneficiaries 16 27 30 Total 92 129 194 212
Average Annual City Provided Benefit4 Service $15,900 $41,700 $47,700 Disability 18,800 31,200 32,300 Service Retirements in last 5 years 15,700 73,000 75,900
4 Average City provided pensions are based on City service & City benefit formula, and are not
representative of benefits for long service employees.
March 15 2016
MEEMBERS IINCLUDED
20
D IN VALUUATION – – SAFETY
March 15 2016
June 3
68$
91
4
164
116
(47
PLAN
30, 2013
8,800,000
1,600,000
4,200,000
4,600,000
6,800,000
7,800,000
N FUNDED
Ac
Re
Ina
T
Market
) (Unfun
21
D STATUS
ctive AAL
etiree AA
active AA
Total AAL
t Value of
nded Liab
S – SAFETY
J
L $
AL
AL
L
f Assets
bility)
Y
June 30, 2
61,800$
114,900
4,800
181,500
135,400
(46,100
2014
0,000
0,000
0,000
0,000
0,000
0,000)
March 15 2016 22
PLAN FUNDED STATUS – SAFETY
What happened between 6/30/13 and 6/30/14?
Unfunded Liability (Increase)/Decrease ≈ $1.7 million
Reasons for Unfunded Liability increase
Asset gain/(loss): ≈ $11.7 million
Assumption Change gain/(loss): ≈ $(7.5) million
Actuarial gain/(loss): ≈ $(0.2) million Average Salary $98,900 $91,200 Number of Actives 149 150 Number of Inactives 37 38 Number of Retirees 194 212
Other gain/(loss): ≈ $(2.3) million Contributions Other (expected)
March 15 2016 23
INVESTMENT RETURN – SAFETY
Above assumes contributions, payments, etc. received evenly throughout year. Estimated June 30, 2016 based on CalPERS actual return through 12/31/15 and
assumed 7.5% annual return for the remaining 6 months.
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Est.
2016
MVA 2.0% 16.3%15.3%20.1%19.5%12.5%10.5%-7.2%-6.0% 3.7% 16.6%12.3%11.9%18.8%-5.1% -24.0 13.3%21.7% 0.1% 13.2%18.4% 2.4% 0.6%
-30.00%
-22.50%
-15.00%
-7.50%
0.00%
7.50%
15.00%
22.50%
30.00%MVA
March 15 2016
FUNDED
6/30
D STATUS
0/15 & 6/30/1
24
(MILLIO
16 funded stat
ONS) – SAF
tus estimated
FETY
March 15 2016 25
CONTRIBUTION RATES – SAFETY
97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17
ER Normal Cost 14.9% 15.3% 12.8% 14.2% 19.0% 19.6% 19.5% 19.7% 18.4% 18.3% 18.2% 18.4% 18.6% 18.3% 19.4% 19.6% 20.1% 20.2% 20.2% 20.7%
Total ER Cont Rate 11.1% 11.7% 4.0% 7.8% 16.6% 21.0% 21.4% 30.1% 28.2% 25.3% 25.9% 26.9% 26.4% 27.5% 30.7% 31.0% 31.3% 32.9% 35.2% 39.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
March 15 2016 26
CONTRIBUTION RATES – SAFETY
6/30/13 6/30/14 2015/2016 2016/2017
Total Normal Cost 29.2% 29.8%
Employee Normal Cost 9.0% 9.1%
Employer Normal Cost 20.2% 20.7%
Amortization Bases 15.0% 18.3%
Total Employer Contribution Rate 35.2% 39.0%
Amortization Period Multiple Multiple
What Happened from 6/30/13 to 6/30/14:
2015/16 Rate 35.2%
Asset Method Change (2nd year) 1.5%
Assumption Change (1st year) 1.1%
Payroll Increased Less Than Expected 1.6%
(Gain)/Losses (0.4)%
2016/17 Rate 39.0%
March 15 2016 27
CONTRIBUTION PROJECTIONS – SAFETY
Market Value Investment Return: June 30, 2013 13.2%5 June 30, 2014 18.4%5
June 30, 2015 2.4%5
Future returns6 based on stochastic analysis using 1,000 trials Single Year Returns at 25th Percentile 50th Percentile 75th Percentile
7.5% Investment Mix 0.6% 7.5% 15.3% 6.5% Investment Mix 1.3% 6.5% 11.9%
No Other: Gains/Losses, Method/Assumption Changes, Benefit Improvements Excludes Employer Paid Member Contributions (EPMC) New hire assumptions:
Assumes 50% of 2013 new hires will be Classic Members (3%@50) and 50% will be New Members with PEPRA benefits.
Assumes Classic Members will decrease from 50% to 0% of new hires over 10 years
5 Based on CalPERS CAFR. 6 June 30, 2016 return based on CalPERS return of (3.0%) through 12/31/15 and assumed future returns for 6 months.
March 15 2016 28
CONTRIBUTION PROJECTIONS – SAFETY
6.25%
6.50%
6.75%
7.00%
7.25%
7.50%
7.75%Discount Rate used as of Actuarial Valuation Date
95th percentile 75th percentile 50th percentile 25th percentile 5th Percentile
March 15 2016 29
CONTRIBUTION PROJECTIONS – SAFETY
0%
10%
20%
30%
40%
50%
60%
70%
75th Percentile 50th Percentile 50th Percentile - No Risk Mitigation 25th Percentile
March 15 2016 30
CONTRIBUTION PROJECTIONS – SAFETY
0%
10%
20%
30%
40%
50%
60%
70%
80%
75th Percentile 50th Percentile 50th Percentile - No Risk Mitigation 25th Percentile
March 15 2016 31
CONTRIBUTION PROJECTIONS – SAFETY
25%
50%
75%
100%
125%
150%
175%Funded Status With Risk Mitigation
75th Percentile 50th Percentile 25th Percentile
March 15 2016 32
CONTRIBUTION PROJECTIONS – SAFETY
25%
50%
75%
100%
125%
150%
175%Funded Status Without Risk Mitigation
75th Percentile 50th Percentile 25th Percentile
March 15 2016 33
RATIO OF AAL TO PENSION WAGES - MISCELLANEOUS
0
2
4
6
8
10
12
14
16
County of B
utte
City of C
itrus Heights
City of C
hico
City of Fairfield
City of M
erced
City of O
roville
City of R
edding
City of San L
eandro
City of T
racy
City of V
acaville
City of Y
uba
6/30/14 Ratio of Actuarial Accrued Liability to Payroll - Miscellaneous
*All results taken from most recently available CalPERS 6/30/14 valuation reports.
March 15 2016 34
RATIO OF AAL TO PENSION WAGES - SAFETY
0
4
8
12
16
20
24
28C
ounty of Butte
City of C
itrus Heights
City of C
hico
City of Fairfield
City of M
erced
City of O
roville
City of R
edding
City of San L
eandro
City of T
racy
City of V
acaville
City of Y
uba
6/30/14 Ratio of Actuarial Accrued Liability to Payroll - Safety
*All results taken from most recently available CalPERS 6/30/14 valuation reports.
March 15 2016 35
RATIO OF MVA TO PENSION WAGES - MISCELLANEOUS
0
2
4
6
8
10
12
County of B
utte
City of C
itrus Heights
City of C
hico
City of Fairfield
City of M
erced
City of O
roville
City of R
edding
City of San L
eandro
City of T
racy
City of V
acaville
City of Y
uba
6/30/14 Ratio of Market Value of Assets to Payroll - Miscellaneous
*All results taken from most recently available CalPERS 6/30/14 valuation reports.
March 15 2016 36
RATIO OF MVA TO PENSION WAGES - SAFETY
0
4
8
12
16
20
24C
ounty of Butte
City of C
itrus Heights
City of C
hico
City of Fairfield
City of M
erced
City of O
roville
City of R
edding
City of San L
eandro
City of T
racy
City of V
acaville
City of Y
uba
6/30/14 Ratio of Actuarial Accrued Liability to Payroll - Safety
*All results taken from most recently available CalPERS 6/30/14 valuation reports.
March 15 2016 37
RATIO OF UAL TO PENSION WAGES - MISCELLANEOUS
0%
100%
200%
300%
400%
500%
County of B
utte
City of C
itrus Heights
City of C
hico
City of Fairfield
City of M
erced
City of O
roville
City of R
edding
City of San L
eandro
City of T
racy
City of V
acaville
City of Y
uba
6/30/14 Unfunded Actuarial Accrued Liability as a Percentage of Payroll - Miscellaneous
*All results taken from most recently available CalPERS 6/30/14 valuation reports.
March 15 2016 38
RATIO OF UAL TO PENSION WAGES - SAFETY
0%
100%
200%
300%
400%
500%
600%
County of B
utte
City of C
itrus Heights
City of C
hico
City of Fairfield
City of M
erced
City of O
roville
City of R
edding
City of San L
eandro
City of T
racy
City of V
acaville
City of Y
uba
6/30/14 Unfunded Actuarial Accrued Liability as a Percentage of Payroll - Safety
*All results taken from most recently available CalPERS 6/30/14 valuation reports.
March 15 2016 39
NORMAL COST RATE - MISCELLANEOUS
0%
2%
4%
6%
8%
10%
12%
14%
16%
County of B
utte
City of C
itrus Heights
City of C
hico
City of Fairfield
City of M
erced
City of O
roville
City of R
edding
City of San L
eandro
City of T
racy
City of V
acaville
City of Y
uba
Normal Cost Rate - Miscellaneous
*All results taken from most recently available CalPERS 6/30/14 valuation reports.
March 15 2016 40
NORMAL COST RATE - SAFETY
0%
5%
10%
15%
20%
25%C
ounty of Butte
City of C
itrus Heights
City of C
hico
City of Fairfield
City of M
erced
City of O
roville
City of R
edding
City of San L
eandro
City of T
racy
City of V
acaville
City of Y
uba
Normal Cost Rate - Safety
*All results taken from most recently available CalPERS 6/30/14 valuation reports
March 15 2016 41
PEPRA COST SHARING
Target of 50% of total normal cost for everyone
New members must pay greater of 50% of total normal cost or bargained amount if higher
Employer cannot pay any part of new member required employee contributions
Employer may impose current employees pay 50% of total normal cost (limited to certain amounts) if not agreed through collective bargaining by 1/1/18
Miscellaneous Plan
Current Members New Members
Tier 1 3%@60
Tier 2 2%@62
Employer Normal Cost 13.4% 6.31%
Member Normal Cost 8.0% 6.75%
Total Normal Cost 21.4% 13.06%
50% Target 10.7% 6.53%
March 15 2016 42
PEPRA COST SHARING
Safety Plan
Current Members New Members
Tier 1 3%@50
Tier 2 2.7%@57
Employer Normal Cost 20.9% 12.17%
Member Normal Cost 9.0% 12.00%
Total Normal Cost 28.9% 24.17%
50% Target 14.95% 12.09%
March 15 2016 43
IMPACT OF ENHANCED BENEFIT FORMULAS
Miscellaneous
2.5% @ 55 → 3% @ 60
Contract Amendment Cost Analysis Normal Cost Increase 3.7% Increase in UAL 7.2% Estimated impact of lower discount rate 5.0%
and other issues on benefit improvement
Safety
2% @ 50 → 3% @ 50
Contract Amendment Cost Analysis Normal Cost Increase 4.8% Increase in UAL 8.0% Estimated impact of lower discount rate 3.0%
and other issues on benefit improvement
≈15.8%
≈15.9%
March 15 2016
IMMPACT OF
Th
F ENHANC
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