HomeMy WebLinkAboutStaff Report Presentation 11/17/2014Presentation
CITY OF PETALUMA
$/1 RT E L MISCELLANEOUS AND SAFETY PLANS
/ 5�OCIATF.S LLC
CAPERS Actuarial Issues — 6/30/13 Valuation
Preliminary Review
Presented by John E. Bartel, President
Prepared by Bianca Lin, Assistant Vice President
Adam Zimmerer, Actuarial Analyst
Bartel Associates, LLC
R
November 17, 2014
Agenda
Tonic
Page
Definitions
1
Ca1PERS Changes
3
Miscellaneous Plan:
Demographic Information
5
Plan Funded Status
7
Plan Maturity
13
Contribution Rates & Projections
17
Safety Plan:
Demographic Information
21
Plan Funded Status
23
Plan Maturity
29
Contribution Rates & Projections
33
GASB 68
37
PEPRA Cost Sharing
39
okl nukiq of03 "Wo ,14-11-n 13.c ildo
DEFINITIONS
n..rvr�.r�.ar
IrXIM7
hr.tbr
d
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a
rrw
IY�r,
■ PVB - Present Value of all Projected Benefits:
• Discounted value (at valuation date - 6/30/13), of all future expected benefit
payments based on various (actuarial) assumptions
■ Actuarial Liability:
• Discounted value (at valuation date) of benefits earned through valuation date
[value of past service benefit]
• Portion of PVB "earned" at measurement
■ Current Normal Cost:
• Portion of PVB allocated to (or "earned" during) current year
• Value of employee and employer current service benefit
B.
November 17, 2014
DEFINITIONS
r—.IuN.W .fx -ra,
i�..3o.m[s
rumrr,r
.WY
Iw�p
■ Target- Have money in the bank to cover Actuarial Liability (past service)
■ Unfunded Liability - Money short of target at valuation date
■ Excess Assets / Surplus:
• Money over and above target at that noint in time.
• Doesn't mean you're done contributing.
i
■ Super Funded:
• Assets cover whole pie (PVB)
• If everything goes exactly like PERS calculated, you'll never have to put another
(employer or employee) dime in
'' November 17, 2014
9
CALPERS CHANGES
■ Contribution policy changes:
• No asset smoothing
• 5 -year ramp up
• Future Gains/losses: 25 year amortization period
❑ With 5 year ramp up means paid over 30 years
• Method & Assumption changes: 15 year amortization period
❑ With 5 year ramp up means paid over 20 years
• No cap on rate increases each year
■ Assumption changes:
• No changes to economic assumptions
• Anticipate future mortality improvement
• Earlier retirements for Miscellaneous 2.5%@55 & Safety
• Higher salary increases for Safety near retirement
'" November 17.2014
ter.
"r
7
CALPERS CHANGES
■ Timing:
• Contribution policy changes:
❑ Included in 6/30/13 valuation (first impact 2015/16 rates)
❑ Full impact in 2019/20 rates.
• Assumption changes:
❑ Included in 6/30/14 valuation (first impact 2016/17 rates)
❑ Full impact in 2020/21 rates.
November 17, 2014 4
I SUMMARY OF DEMOGRAPHIC INFORMATION - MISCELLANEOUS
Actives
IN Counts
■ Average
• Age
• City Service
• PERSable Wages
IN Total PERSable Wages (millions)
Receiving Payments
■ Counts
• Service
• Disablity
• Beneficiaries
• Total
■ Average Annual City Provided Benefit'
• Service
• Disability
• Service Retirements in last 5 years
1994
2003
2012
2013
167
200
179
171
44
46
48
49
10
9
10
11
$41,600
$55,100
$68,200
$68,200
7.8
12.1
13.3
12.7
93 186 193
13 17 19
18 17 19
92 124 220 231
$14,200 $20,800 $21,100
4,900 4,300 4,000
21,900 24,300 23,500
' Average City provided pensions are based on City service & City benefit formula, and are not
representative of benefits for long service employees.
November 17, 2014 5
MEMBERS INCLUDED IN VALUATION - MISCELLANEOUS
300 -
250
200
150
1o0
50
1991 1998 I W2 IWO 21M1 2002 21811 2004 2gli 011 2 U]. U08 0111 U I �01� `0
NAme 161 111 172 186 1116 192 200 199 208 216 239 251 218 206 IAS 119 171
trmnsfm 61 61 12 i1 13 81 92 85 85 94 93 108 111 IM 110 IIA IUI I
Vbe Tenn -n N- 21 1, l2 I6 69 69 10 88 40 94 96 100 M 120 125 124 121 1
arninAlSvmaO• 92 96 99 IIN 106 116 124 114 IN 148 149 159 182 199 214 220 111 1
�u.c4
ii
November 17, 2014 6
PLAN FUNDED STATUS - MISCELLANEOUS
r.,\'aloe o1we ru.
Joae 30.208
I.%M,P\N
' IJnipl
Jilin
P
Jun¢ pi, 2013
i
1 afuMed P. N
JJ✓M
Muebl
1.ltlNip
June 30.2012
$ 87,000,000
Actuarial Liability
74,800,000
Actuarial Asset Value
(12,200,000)
(Unfunded Liability)
June 30, 2012
❑ Number of Inactives
$ 87,000,000
Actuarial Liability
62,400,000
Market Asset Value
(24,600,000)
(Unfunded Liability)
,
November 17, 2014
7
June 30, 2013
$ 90,600,000
77,700,000
(12,900,000)
June 30. 2013
$ 90,600,000
68,400,000
(22,200,000)'
PLAN FUNDED STATUS - MISCELLANEOUS
■ What happened between 6/30/12 and 6/30/13?
• Market Value Asset Gain/(Loss) — 3.7 million
• Unfunded Liability (Increase)/Decrease z (10.0) million
■ Reasons for Unfunded Liability increase
• Actuarial Asset gain/(loss):
❑ Change from actuarial value to market value z (9.2) million
❑ Investment return = (0.8) million
• Actuarial gam/(loss):
� 0.6 million
❑ Average Salary
$68,200
-4 $68,200
❑ Number of Actives
179
--> 171
❑ Number of Inactives
231
—> 222
❑ Number of Retirees
220
231
• Other gain/(loss):
(0.6) million
❑ Contributions
❑ Other (expected)
, November 17, 2014
8
"A
30.00%.' -
22.5GA
]SOW.
7.50%
000%•
-750%
INVESTMENT RETURN -MISCELLANEOUS
Ln.
-IS OOY. �I '
-22.SOY.
-3000% 1998 199,91III 2004 2001 2002 2003 20041 2005/ 2006/ 20,`,'0,^9//II 20D8/ 20091 2010 2011 20',1,'2/III 2013/ 2014
1-fAVA 1VA 9312.5%II0.!%15511601341, 166y)3 AI1119Y'B.BY11 1%Y 124.0%.1133Ye1218'lY.�0IM I13.2Y 1180.1
Above assumes contributions, payments, etc. received evenly throughout year.
June 30, 2014 return of 18.0% used in CalPERS report.
1' November 17, 2014 9
ASSET VALUES (MILLIONS) - MISCELLANEOUS
S90
Sm I _ '
S70 - - 1
W.
A
5111' I.
Slo
So .
�� flYam' if I 41 A N 43 O !i 9 d Y 44 l2 l3
to 12! V N 41 A ]{ I n Q Y N Y Y N Y N I Y Y A p 1
6/30/14 & 6/30/15 asset values estimated
AVA is being set equal to MVA and a separate AVA is not available starting 6/30/13.
'' November 17, 2014 10
�A
FUNDED RATIO - MISCELLANEOUS
141MY
120%
9911
lar.'
I
x0"4
60% E
40%
20%
0%Y_`
T
Iq..rar+:.wa nT(I IwtCll)r+L1liRsl IIIiGI ri%I RT I rw I rIK I rm Irml nz I rnl me I r-41 ,,] 5K1 ami
6/30/14 & 6/30/15 funded status estimated.
AVA is being set equal to MVA and a separate AVA Is not available starting 6/30/13
n, November 17, 2014 11
1 I FUNDED STATUS (MILLIONS) - MISCELLANEOUS
too -
90 -
xu
20
60
50
40
30
20
t0
0
(r1.y��r�illn 21
A
6/30/14 & 6/30/15 funded status estimated
November 17.2014 12
1
PLAN MATURITY - MISCELLANEOUS
% of Total AALLine Graph with Actives, VTs and Retirees
70.0%
60.0%-
0.0%-50.0%
50.0%
40.0%-
30.0%
20.0%
100%
00%
•D
N N N N
b O O O O
N N N N N N N
O O O O O O O
N N N
O O O
�O
W
�O O O O O
�O O N w
O O O O O O �-•
.p cn P J 0° �O O
�'•N W
—Actives — Terms —Retirees
" '' November 17, 2014 13
PLAN MATURITY - MISCELLANEOUS
Asset Volatility Index: Ratio of MVA to Payroll
10
A
6 -
4 —�
2
O C C G C NN SN N SN SN SN O y O
J 0° �D O N w A to � V Oo �D O •-• N W
' �" November 17, 2014 14
I PLAN MATURITY - MISCELLANEOUS I
Liability Volatility Index: Ratio of AAL to Payroll
10
2
4-
2-
0
1 N.
I
Qj
November 17, 2014
15
PLAN MATURITY
- MISCELLANEOUS
Unfunded Aetna rial Accrued Liability as % of Payroll
300%
250% ---------------- ----- - --------- ---------------
200% . ............. ......... ...... ------
150%--
100% ------
150%100% --- - -------------------
50%
0%
-50%
-100%
-150%
-200%
nF, November 17,2014 16
200% -
I&M
160%
140%
120%•
10.0%
80%
&04-
40%
20%
CONTRIBUTION RATES - MISCELLANEOUS
00°h 99N0
on) , Q 2 0 3 031041 M1 101106 06/0] 01/08 OBI09 09/10 10/11 11/12 12/13313/14)14/11 11/161
�- ERW.WC.a 66% 61 b]% ]3°b 26% 1.9% 8.2% 83% 83% 8.4% 8.4% 8.4%�8.3 81%Ie.<%J %.1%f 97%I
rfi TohlER ContRne._41% 00% OOY. 0.0% 2.1% 86% 123% 113% 11.8% 11.3% 111% 11.1 112. 1139% 14,1 116. 118.0%I
November 17, 2014 17
CONTRIBUTION PROJECTIONS - MISCELLANEOUS
■ Market Value Investment Return:
• June 30, 2012 0.1%2
• June 30, 2013 13.2%3
• June 30, 2014 18.0%4
Poor Expected Good
• June 30, 2015 - 2019 0.2%-4.3% 7.5% 10.6% -15.1 %
■ No Other: Gains/Losses, Method/Assumption Changes, Benefit Improvements
■ Excludes Employer Paid Member Contributions (EPMC)
■ Includes CaIPERS Board adopted assumption changes, first impact 2016/17
■ Includes Tier 2 2.0%@60 effective December 28, 2012
■ New hire assumptions:
• Assumes 50% of 2013 new hires will be Classic Tier 2 Members
(2.0%@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 CaIPERS CAFR.
3 Based on CaTERS CAFR
° Based on CaIPERS 6/30/13 reporL
,
November 17, 2014 18
CONTRIBUTION PROJECTIONS - MISCELLANEOUS
4014 ,
31.6%
29.9% •
30%
20` 19.4% ZOA%
18.0% IV 19.5%
18.6!.
16.0%
16.0!.
•
13.1%
10% •
lose
0•/0 _
14/15 15/16 16117 17118 18/19 19'20 20/21 21/22 22/23
RaJesassuminano Gains,Losses I
November 17, 2014 19
CONTRIBUTION PROJECTIONS - MISCELLANEOUS
so!:
40%
Wiu4b73iF
• u:n • i:n •m.
•aw
30% - =
•.n
• n]F
7071
,r+
10-4
iMi•.-•.��-�.p.�.�.�.�-A.li.-•. -]n-w'P.i/.t103a.iA
0%
� ^'R]msauuvivg o°Gmiioaen
L)
November 17. 2014
20
SUMMARY OF DEMOGRAPHIC INFORMATION - SAFETY
-- - - --
1994
2003
2012
2013
Actives
12091 1
209 1211191 '011
2Q I Z
'11 1
IU
■ Counts
113
122
113
113
■ Average
■♦cmr
Ir'
169
120
• Age
38
38
40
41
6 City Service
11
9
11
12
6 PERSable Wages
$61,100
$70,400
$99,700
$101,400
■ Total PERSable Wages (millions)
7.7
9.5
12.3
12.5
Receiving Payments
rycHcd q'�1njnmiom
16
26
IO 18
■ Counts
It 16
IB
21
21 m 18
6 Service
19 19
34
62
65
6 Disablity
82
71
96
95
• Beneficiaries
118
8
12
12
6 Total
77
113
170
172
■ Average Annual City Provided Benefits
6 Service
$32,800
$57,000
$55,900
6 Disability
24,800
36,000
36,900
• Service Retirements in last 5 years
54,500
61,400
61,900
5 Average City provided pensions are based on City service & City benefit formula, and are not
representative of benefits for long service employees.
RNovember
17, 2014 21
MEMBERS INCLUDED IN VALUATION - SAFETY
IRO -
160
140
120
100
80 -
60
40
20 _
�11
12091 1
209 1211191 '011
2Q I Z
'11 1
IU
■♦cmr
Ir'
169
120
118
116 122
112
121
126 126] 129
Iltl IIS 112
IU
��Ibn54R
)/
)I
/S /S
H
52 57
58
55
61 62 61
M
61 57
53
55 1
rycHcd q'�1njnmiom
16
26
IO 18
22
It 16
IB
21
21 m 18
IS
19 19
ZO
20 1
�.Rc�xrcmX Ym na
]]
82
88 X9
95
IIn 11)
122
118
I30 I34 N5
156
159 172
170
172 1
ik i
November 17. 2014
22
PLAN FUNDED STATUS - SAFETY
hrw.trYlrMwr�M
i..rx•ts r'..ii,au
�m
June 30, 2012
June 30, 2013
$ 144,800,000
Actuarial Liability $
150,600,000
109,2002000
Actuarial Asset Value
112,600,000
(35,600,000)
(Unfunded Liability)
(38,000,000)
June 30, 2012
June 30. 2013
$ 144,800,000
Actuarial Liability $
150,600,000
91,100,000
Market Asset Value
98,900,000
(53,700,000)
(Unfunded Liability)
(51,700,000)
, November 17, 2014
23
PLAN FUNDED STATUS - SAFETY
■ What happened between 6/30/12 and 6/30/13?
• Market Value Asset Gain/(Loss)
• Unfunded Liability (Increase)/Decrease
5.4 million
(16.1) million
■ Reasons for Unfunded Liability increase
•
Actuarial Asset gain/(loss):
❑ Change from actuarial value to market
value
z (13.6) million
❑ Investment return
(1.1) million
•
Actuarial gain/(loss):
0.9 million
❑ Average Salary
$99,700
—> $101,400
❑ Number of Actives
113
113
❑ Number of Inactives
73
—4 75
❑ Number of Retirees
170
--> 172
•
Other gain/(loss):
z (2.3) million
❑ Contributions
❑ Other (expected)
/�J
'
November 17, 2014 24
INVESTMENT RETURN - SAFETY
3000°<
22.50%
1500°'
'1.50%
i
,
0001
i
-].501 _
-15.00%
-22.50% 1
.30.00%11998 1999 20W 2Wl 20'2 2003% 2004 4W5 2W6 2W2 200E II20W 2010 2011 2012 2013 20141
I-•-8NAI19 3%112.5%110.% -2 2% 4A%I3 , .116 6%112.33%111 B% 1 8%15 1%F2450Yd 13,3% 21.% 01113.2%118.0%1
Above assumes contributions, payments, etc received evenly throughout year.
June 30, 2014 return of 18.0% used in CaIPERS report.
November 17, 2014 25
ASSET VALUES (MILLIONS) - SAFETY
so
1 Yl
1 i68l lii �6 16t 'OOx 61s OMIbOs l2(�Ix{r1l •t 1x903911u1 ljit II)al]I3'1s 014 is
I•w•• I R 81 A 68 17 A S3 (4 22 11 3+1' 1 93 m n 19
e3
. 1'67 99 w 1x1
6/30/14 & 6/30/15 asset values estimated
AVA is being set equal to MVA and a separate AVA will not be used in future years
'' November 17, 2014
26
06
FUNDED RATIO - SAFETY
140% ..
120% ..
10o%. z
r
60%
0% .
IM q{ $11011: 1 t M01 Y05 � 'BOl 0 x�%%11 MIT bll bit
o1vW K. AVA IpB% IOT IWN IW1i 95% N% tl'w N% W% BOx YI% tlti 1 2 11% ='2
�IaMNwInWAIIIxI11fx ILx lroxl .lt%11%I ILMI xl ItM lYxlM%I• Itltl tYlY 9x1 Mxl
6/30/14 & 6/30/15 funded status estimated
AVA is being set equal to MVA and a separate AVA will not be used in future years.
November 17, 2014 27
180 1
160 -
140 .
120
100
80
60
40
20
0
is.. ,Al. d, I
FUNDED STATUS (MILLIONS) - SAFETY
11
6/30/14 & 6/30/15 funded status estimated
li I November 17, 2014 28 (OP
PLAN MATURITY - SAFETY
% of Total AAL Line Graph with Actives,VTs and Retirees
80.0%
N
N N
N N
700%
N
N
N
N N N N N
600%
500%
40.0%
0)�
300%
20.0%
November 17, 2014
10.0%
�. ..
..
0.0%
N
N N
N N N
N N N N N N N N
N W
f�\) —Actives — Terms —Retirees
'" November 17, 2014 29
PLAN MATURITY - SAFETY
7-1 11.
Asset Volatility Index: Ratio of MVAto Payroll
12
10 — -
:�-`�-rte'\``
4
Y.1
O
N
N N
N N
N
N
N
N
N N N N N
0)�
ANk
November 17, 2014
30
PLAN MATURITY - SAFETY
Liability Volatility Index: Ratio of AALto Payroll
14
12 ----
10 --
8 -
6 -
4-
2-
0
r
N
N N
N
N N
N
N N N N N N N
AW
' ' ''
November 17, 2014
31
PLAN MATURITY - SAFETY
Unfunded Actuarial Accrued Liability as % of Payroll
500%
400% ---' --
300% - --
200% r—"
100% ----- — — `
0% --'-
-100% - - —
-200% --
-300%
0
, November 17, 2014 32
1
450%-
40
50%-40 T.
35.0%
300%
250%-
200%'
50%-
200%-
150°%-
100%
50%
CONTRIBUTION RATES - SAFETY
00% 99N0 Lg01 I OIN3OM03A1 0605 OSpb 060] 0)p8 0&06 0
nW 11 1015 9/10 IH13 13114 1015 15116 1
%
19.M 19M
�f TOWEKCMtRt 9,9% 6W, 1.0%Ilfl%�XM 313%. N4 M.% UW, 2%3%jn1'.jr^ 341% 34.5% 37M 39%% I 43.M
1' November 17, 2014 33
CONTRIBUTION PROJECTIONS -SAFETY
■ Market Value Investment Return:
• June 30, 2012 0.1%6
• June 30, 2013 13.2%7
• June 30, 2014 18.0%8
Poor Exnected Good
• June 30, 2015 - 2019 0.2%-4.3% 7.5% 10.6% -15.1 %
■ No Other: Gains/Losses, Method/Assumption Changes, Benefit Improvements
■ Excludes Employer Paid Member Contributions (EPMC)
■ Includes CaIPERS Board adopted assumption changes, first impact 2016/17
■ Includes Tier 2, 3%@55 effective December 15, 2012
■ New hire assumptions:
• Assumes 50% of 2013 new hires will be Classic Tier 2 Members (3%@55)
and 50% will be New Members with PEPRA benefits.
• Assumes Classic Members will decrease from 50% to 0% of new hires
over 10 years
b Based on Ca1PERS CAFR
' Based on Ca1PERS CAFR.
e BasasseeJd on Ca1PERS 6/30/13 report.
/�
`" November 17, 2014 34
CONTRIBUTION PROJECTIONS - SAFETY
70%
63 8°0
58too
6041
+J.B•o
51. too
1
�y'�
.. _�1'�4
4q�1• 4,�.�.
48
40%
;41.
0
45.7°o
44.8°4
41.1%
36.5•° ,
30%
20%
10%
0% '
14/15 15116 16)17 17116 18119 19120 20/21 21/22 22/23
1--Rata=a nin¢no Gainsl. ft I
'" November 17, 2014
35
CONTRIBUTION PROJECTIONS - SAFETY
Lis
80%
7044*��..!iiti•*'Y 4„e-_
!� • ut!w
• ua
607: •.� AW
31174
4074 • a L•. orrl.rw
nr.
xlw
30%
��.q\ :ISYUYI�YIIYW _ _
xo%
6 1')4 IlyY�r
. t°Y•YaP4u'tcVAO'. L'�:,f'UPUIV 4Y u4tl'�L4I34H�!`.
10%
0% _ g,
Z n F 1 5 I iE E
�R�ex aswmi•a no Ga®vioaats
I7A
November I7, 2014
36
I GASB 68
■ Pension Accounting:
• GASB 68, Accounting for Employers, approved June 25, 2012
• Replaces GASB 27
• Effective 2014/15
■ Major Issues:
• Unfunded liability on balance sheet
• Expense calculation disconnected from contribution calculation
• Discount rate is
❑ Expected return on plan assets when assets sufficient to pay benefits
❑ Municipal bond rate when assets not sufficient to pay benefits
Likely caused CalPERS to modify assets smoothing and/or amortization
policy to avoid using discount rate lower than expected return (7.5%).
■ June 30, 2013 Unfunded Actuarial Liability (in Millions)
Total Pension Fiduciary Net Net Pension
Plan Liability (AAL) _.Position (MVA) Liability (UAL)
Safety $150.6 $98.9 $51.7
Miscellaneous 1 90.6 68.4 22.2
Total Net Pension Liability $73.9
RNovember 17, 2014 37
I GASB 68
■ Ca1PERS:
• Actuaries have approval from Ca1PERS Board to make necessary system
changes & have begun work.
• Intend to provide June 30, 2015 GASB 68 information in spring 2015.
• Expect to provide only upon request.
• Will charge small fee, set in early 2015.
1/
November 17, 2014
38
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
2% 55 2%na,62
• Employer Normal Cost 8.7% 6.25%
• Member Normal Cost 7.0% 6.25%
• Total Normal Cost 15.7% 12.50%
• 50% Target 7.85% 6.25%
Pf � November 17, 2014 39
PEPRA COST SHARING
■ Safety Plan:
• Employer Normal Cost
• Member Normal Cost
• Total Normal Cost
• 50% Target
Current Members New Members
3%na,50
2.7%(iO7
19.0%
11.55%
9.0%
11.75%
28.0%
23.30%
14.0%
11.65%
A November 17, 2014 40