p 3 actuaries you can understand 1 response to segal audit of june 30, 2005 actuarial valuation...

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1 P 3 Actuaries you can understand Response to Segal Audit of June 30, 2005 Actuarial Valuation August 16, 2006 P

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Page 1: P 3 Actuaries you can understand 1 Response to Segal Audit of June 30, 2005 Actuarial Valuation August 16, 2006 P

1P3 Actuaries you can

understand

Response to Segal Audit of June 30, 2005

Actuarial Valuation

August 16, 2006

P

Page 2: P 3 Actuaries you can understand 1 Response to Segal Audit of June 30, 2005 Actuarial Valuation August 16, 2006 P

2P3 Actuaries you can

understand

Overview

• Overall impression

• Areas of Agreement

• Issues for Discussion

Page 3: P 3 Actuaries you can understand 1 Response to Segal Audit of June 30, 2005 Actuarial Valuation August 16, 2006 P

3P3 Actuaries you can

understand

Overall Impression

• Audit is a useful part of actuarial process

• Valuation results were accurate, but not perfect– Assumptions reasonable– Segal methodology produces higher

employer contribution– Questions about member contribution rates

Page 4: P 3 Actuaries you can understand 1 Response to Segal Audit of June 30, 2005 Actuarial Valuation August 16, 2006 P

4P3 Actuaries you can

understand

Areas of Agreement

• Mistakes

• Process Refinements

• Reporting and Documentation

Page 5: P 3 Actuaries you can understand 1 Response to Segal Audit of June 30, 2005 Actuarial Valuation August 16, 2006 P

5P3 Actuaries you can

understand

Mistakes

• Recommend adjusting with June 30, 2006 valuation– Safety retirement rates– Safety salary increase assumptions used in

calculation of member contribution rates for members with less than 8 years of service

– Vested Reciprocal Terminated Members over age 63 (55 for Safety)

– Active member death benefit

Page 6: P 3 Actuaries you can understand 1 Response to Segal Audit of June 30, 2005 Actuarial Valuation August 16, 2006 P

6P3 Actuaries you can

understand

Process Refinements

• Review in next experience analysis– COLA Timing– Salary Increase Timing

• Add to information collected– Temporary Annuity Option Survivor

Continuance

Page 7: P 3 Actuaries you can understand 1 Response to Segal Audit of June 30, 2005 Actuarial Valuation August 16, 2006 P

7P3 Actuaries you can

understand

Reporting and Documentation

• Add to valuation report– Average member contribution rates– Development of member COL contributions

• Reserve allocation• UAAL amortization• Explanation of process

Page 8: P 3 Actuaries you can understand 1 Response to Segal Audit of June 30, 2005 Actuarial Valuation August 16, 2006 P

8P3 Actuaries you can

understand

Reporting and Documentation

• Minimum Amortization under GASB Statement 27– Fixed in June 30, 2005 actuarial valuation

Page 9: P 3 Actuaries you can understand 1 Response to Segal Audit of June 30, 2005 Actuarial Valuation August 16, 2006 P

9P3 Actuaries you can

understand

Issues for Discussion

• Member Contribution Rates

• Cost Allocation

Page 10: P 3 Actuaries you can understand 1 Response to Segal Audit of June 30, 2005 Actuarial Valuation August 16, 2006 P

10P3 Actuaries you can

understand

Member Contribution Rates

• Regular Basic – OK

• Regular COL– Question about UAAL

• Settlement Basic – OK

• Settlement COL– Question about UAAL– Question about estimating UAAL

Page 11: P 3 Actuaries you can understand 1 Response to Segal Audit of June 30, 2005 Actuarial Valuation August 16, 2006 P

11P3 Actuaries you can

understand

Cost Allocation

• Both approaches calculate costs based on current membership

•P3 approach assumes contributions for all

employees there at beginning of each year.

• Segal approach assumes contributions for all employees there at end of each year.

Page 12: P 3 Actuaries you can understand 1 Response to Segal Audit of June 30, 2005 Actuarial Valuation August 16, 2006 P

12P3 Actuaries you can

understand

Questions