HomeMy WebLinkAboutARC 1945 PENSION PLAN ACTURIAL VALUATION AS OF JANUARY 1, 20121
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Prepared By:
1 CBIZ Benefits & Insurance Services, Inc.
44 Baltimore Street
Cumberland, MD 21502
1 301 777 1500
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CBIZ
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Augusta - Richmond County 1945 Pension Plan
Actuarial Valuation
as of
January 1, 2012
Table of Contents
Section I: Highlights and Actuarial Certification
Highlights
Actuarial Certification
Section II: Funding Development
Normal Cost 1
Actuarial Gain /Loss Development 2
Development of Minimum Annual Contribution 3
Funding Standard Account 4
Amortization Schedule 5
Reconciliation of Plan Assets 6
Section III: Valuation Data Summary
Participant Statistical Information 9
Section IV: Financial Information
Information for Financial Statements 10
GASB 27 Notes to Financial Statements 11
GASB 27 Required Supplementary Information 12
Schedule of Funding Progress 13
Section V: Basis for Actuarial Valuation
Summary of Actuarial Assumptions and Plan Provisions 14
Augusta - Richmond County 1945 Pension Plan
Actuarial Valuation as of January 1, 2012
1 Section I:
Highlights and Actuarial Certification
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Augusta - Richmond County 1945 Pension Plan
Actuarial Valuation as of January 1, 2012
' Report Highlights and Actuarial Certification
For the 2012 Plan Year
1
We herewith present the results of the actuarial valuation of the plan for the 2012 plan year, based on
' census information as of January 1, 2012, as provided by the county, and Trust information as provided
by the Trustee.
The actuarial valuation report sets forth minimum required contributions to the plan, as well as certain
other actuarial calculations and basis of actuarial valuation. The results of this report also serve as the
basis for the calculation of the annual pension cost and pension obligations required by the
Governmental Accounting Standards Board (GASB).
' Georgia Law (O.C.G.A. 47 -20) sets minimum funding standards for local municipal defined benefit pension plans.
The pension plan and the county are presumably subject to the reporting requirements of Statements 25, and
reporting standards for the pension plan. We will issue a separate report detailing the required GASB 25
' current and historical plan obligations, funding levels, and contribution amounts.
The standards of accounting and financial reporting for pension plan costs and obligations in the county's
' financial reports, as required by GASB 27, is provided in this report. The annual pension cost will not equal
the State required contribution in all years.
We believe the methods and assumptions used to determine the annual contribution for the plans are
reasonable, considering the historical experience of the plan and reasonable expectations for the future.
CBIZ Benefits & Insurance Services, Inc. relied on the following information in preparing the actuarial valuation
results presented in this report:
(1) Active and inactive participant data as of January 1, 2012, as provided by Augusta- Richmond County.
' (2) Plan provisions as of January 1, 2012, as set forth in controlling plan documents adopted and
executed by Augusta- Richmond County.
(3) The value of plan assets as furnished by the Trustee as of January 1, 2012.
Highlights of this report: • 2012 2011
' Employer Minimum Contribution for the Plan Year $257,471 $390,996
- as a percent of payroll 205.6% 311.9%
' - after the application of any credit balance if applicable
Employer Recommended Contribution for the Plan Year $291,502 $458,696
- as a percent of payroll 232.8% 365.9%
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' Augusta - Richmond County 1945 Pension Plan
Actuarial Valuation as of January 1, 2012
Report Highlights and Actuarial Certification
For the 2012 Plan Year
Changes Since the Last Valuation:
There have been no substantive changes since the last valuation.
We are available to answer any questions on the material contained in the report, or to provide
explanations of further details as may be appropriate. The undersigned actuary meets the
Qualification Standards of the American Academy of Actuaries to render the actuarial opinions
contained in this report.
William G. Karbon, EA, MSPA.
Senior Retirement Plan Consultant
Enrolled Actuary Number: 11 -4568
Date
lAP-
Weixing Han, EA, QPA
Staff Actuary
Enrolled Actuary Number: 11 -7501
Date
Augusta - Richmond County 1945 Pension Plan
Actuarial Valuation as of January 1, 2012 II
1 Section II:
Funding Development
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Augusta - Richmond County 1945 Pension Plan
Actuarial Valuation as of January 1, 2012
1
Normal Cost
Normal Cost by Plan Benefit Type
a. Retirement Benefits
b. Termination Benefits
c. Disability Benefits
d. Death Benefits
e.Total Normal Cost
f. Interest for the Plan Year
g. Cost of Pre - Retirement Death Benefit
h. Normal Cost for the Plan Year
- as a percent of payroll
Augusta - Richmond County 1945 Pension Plan
Actuarial Valuation as of January 1, 2012
2012
2011
$0 $0
0 $0
0 $0
0 0
$0 $0
0 0
0 0
$0 $0
0.0% 0.0%
1
Development of the Actuarial Gain /Loss
Actuarial Gain /Loss Development
The actuarial gain /(loss) consist of the asset gain /(loss) and the liability gain /(loss).
1. Actuarial Asset Gain /(Loss)
a. Actuarial Value of Assets as of January 1, 2011 $7,860,568
b. Interest on item (la.) to the end of 2011 628,845
c. Contributions made for the 2011 Plan Year * 397,577
d. Interest on item (1c.) to the end of 2011 0
e. Expected Benefit Payments for 2011 with interest 1,010,351
f. Expected Actuarial Value of Assets as of January 1, 2012 $7,876,639
g. Actuarial Value of Assets as of January 1, 2012 ** 7,152,239
h. Actuarial Asset Gain /(Loss) (g. - f.) ($724,400)
2. Actuarial Liability Gain /(Loss)
a. Actuarial Accrued Liability as of January 1, 2011 $11,366,929
b. Normal Cost as of January 1, 2011 0
b. Interest on item (2a. + 2b.) to the end of 2011 909,354
d. Expected Benefit Payments for 2011 with interest 1,010,351
e. Expected Actuarial Accrued Liability as of January 1, 2012 $11,265,932
f. Actuarial Accrued Liability as of January 1, 2012 9,398,563
g. Actuarial Liability Gain /(Loss) (e. - f.) $1,867,369
3. Total Actuarial Gain /(Loss) (1.j. + 2.i.) $1,142,969
4. Adjustment $0
5. Actuarial Gain /(Loss) subject to amortization $1,142,969
*Includes estimated 2011 employee contributions.
* *Reflects change to asset smoothing. (See page 7 for details).
Augusta - Richmond County 1945 Pension Plan
Actuarial Valuation as of January 1, 2012 2
Development of Minimum Annual Contribution
1. Participant Counts
a. Active Participants
b. Retirees and Beneficiaries
c. Deferred Vested (former employees)
d. Disabled in Pay Status
e. Total
2. Covered Compensation for Active Participants
2012 2011
2 2
25 29
0 0
1 1
28 32
$125,222 $125,359
3. Actuarial Accrued Liability
a. Active Participants $1,026,100 $1,009,705
b. Retirees and Disabled 8,372,463 10,357,224
c. Deferred Vested (former employees) 0 0
d. Total $9,398,563 $11,366,929
4. Actuarial Asset Value (see page 7 for detail)* $7,152,239 $7,860,568
5. Unfunded Actuarial Accrued Liability ( 3. - 4.) $2,246,324 $3,506,361
6. Total Amortizations $264,045 $397,577
7. Normal Cost for the Plan Year $0 $0
8. Administrative Expenses for the Plan Year $0 $0
9. Minimum Contribution for the Plan Year
a. Employer Contribution
b. Estimated Employee Contribution
c. Total (Before Application of the Credit Balance)
10. Employer Contributions as a Percent of Plan Cost
11. Employee Contributions as a Percent of Plan Cost
*Reflects change to asset smoothing.
$257,471
6,574
$264,045
$390,996
6,581
$397,577
205.6% 311.9%
2.5% 1.7%
Augusta - Richmond County 1945 Pension Plan
Actuarial Valuation as of January 1, 2012 3
Funding Standard Account (Level Dollar)
2012 2011
Charges:
a. Employer Normal Cost (end of year) $0 $0
b. Expenses (end of year) 0 0
c. PreRetirement Death Benefit Expense 0 0
d. Amortization Charges (end of year)* 391,003 390,996
e. Total $391,003 $390,996
Credits:
a. Prior Year Credit Balance $0 $0
b. Employer Contributions for Plan Year N/A 390,996
c. Interest on a. and b. 0 0
d. Amortization Credits 133,532 0
e. Total N/A $390,996
Credit Balance N/A $0
*Net of estimated employee contributions
Augusta - Richmond County 1945 Pension Plan
Actuarial Valuation as of January 1, 2012 4
Amortization Schedule ( Georgia Code 47 -20 -10 )
Level Dollar
Charges:
Description
a. Initial Liability
b. 2008 Actuarial Loss
c. 2009 -2010 Actuarial Loss
d. Total
Credits:
Date Initial Initial
Description Established Amount Years
a. 2011 Actuarial Loss
b. Total
Total Amortizations
Date
Established
2008
2009
2011
Initial
Amount
$1,244,005
2,078,307
378,903
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Equation of Balance:
1. Net amount of amortizations outstanding as of January 1, 2012
2. Credit Balance in Funding Standard Account as of January 1,2012
3. Reconciliation account balance on January 1, 2012
4. Unfunded actuarial liability as of January 1, 2012 (1.- 2. -3.)
Initial Years
Years Remaining
26
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Years
Remaining
2012 1,142,969 15 15
End of Year
Amortization
Amount
$110,502
242,808
44,267
$397,577
Amortization
Amount
$133,532
$133,532
$264,045
Outstanding
Balance
$1,194,525
1,829,820
364,948
$3,389,293
Outstanding
Balance
$1,142,969
$1,142,969
$2,246,324
$2,246,324
0
0
$2,246,324
Augusta - Richmond County 1945 Pension Plan
Actuarial Valuation as of January 1, 2012 5
Reconciliation of Plan Assets
1. Fund Balance of Plan Assets as of January 1, 2011 $6,584,560
2. Changes in Assets During the Year
Income
a. Employer Contributions $302,191
b. Employee Contributions 6,253
c. Interest and Dividends 175,459
d. Money Market Earnings 0
g. Realized and Unrealized Gains (176,169)
h. Other Income 0
i. Total Income 307,734
Disbursements
j. Benefits Paid 983,433
k. Foreign Taxes Withheld 665
1. Legal Fees 0
m. Investment Fees 38,531
n. Total Disbursements 1,022,629
Net Income ($714,895)
3. Fund Balance of Plan Assets as of January 1, 2012 $5,869,665
4. 2010 employer Contributions Receivable 38,260
5. 2011 employer Contributions Receivable 390,996
6. 2011 employee Contributions Receivable 244
7. Benefits Payable 72,053
8. Payable to the 1949 Plan 0
9. Total Market Value of Plan as of January 1, 2012 $6,227,112
10. Actuarial Value of Assets (see page 7 for detail) as of January 1, 2012 $7,152,239
*Reflects change to asset smoothing.
Augusta - Richmond County 1945 Pension Plan
Actuarial Valuation as of January 1, 2012 6
• I • MN MI NM MN MI I MN I • INIMENIIIM
Reconciliation of Plan Assets (Continued)
Gain /(Loss) on Asset Performance 2008 2009 2010 2011
Market Value of Assets at Beginning of Plan Year $9,839,493 $6,772,873 $7,084,637 $6,841,251
Interest at 8.0% $787,159 541,830 566,771 547,300
Contributions* $203,622 315,032 353,310 397,577
Interest on Employer Contributions at 8.0% $607 0 0 0
Distributions with interest ($1,015,426) (1,064,408) (1,021,129) (1,010,351)
Expected Market Value of Assets at End of Plan Year $9,815,455 $6,565,327 $6,983,589 $6,775,777
Actual Market Value of Assets 6,772,873 7,084,637 6,841,251 6,227,112
Actuarial Asset Gain /(Loss) ($3,042,582) $519,310 ($142,338) ($548,665)
1. Market Value of Assets (MVA) as ofJanuary 1, 2012
2. Increase /(Decrease) in Asset Value from Prior Years' (Gain) /Loss:
80% of 2011 Investment (Gain) /Loss
60% of 2010 Investment (Gain) /Loss
40% of 2009 Investment (Gain) /Loss
20% of 2008 Investment (Gain) /Loss
Total Increase /(Decrease)
3. Actuarial Value of Assets as ofJanuary 1, 2012 prior to
application of 80% /120% corridor
4. Minimum Actuarial Value of Assets as ofJanuary 1, 2012 (80% of MVA)
5. Maximum Actuarial Value of Assets as ofJanuary 1, 2012 (120% of MVA)
6. Actuarial Value of Assets as of January 1, 2012
= greater of (4) and lesser of (3) and (5)
7. Actuarial Value of Assets as a Percentage of Market Value
*Includes estimated employee contributions
** Reflects change to asset smoothing.
$438,932
85,403
(207,724)
608,516
Actuarial
Value
$6,227,112
925,127
$7,152,239
4,981,689
7,472,534
$7,152,239 **
114.86%
Augusta- Richmond County 1945 Pension Plan
Actuarial Valuation as of January 1, 2012 7
Reconciliation of Plan Assets (Continued)
Contributions
Employee
Date
Employer
Date
Augusta - Richmond County 1945 Pension Plan
Actuarial Valuation as of January 1, 2012
Applied to Employer
Plan Year Contribution
Employee
Contribution
Interest to
End of Plan
Year
Monthly Payments
Made During 2011 2011 $0 $6,261 $0 $6,261
Applied to Employer
Plan Year Contribution
Employee
Contribution
Interest to
End of Plan
Year
Total
Total
Expected 2011
Contribution 2011 $390,996
$0 $390,996
Expected 2010
Contribution 2010 $38,260
$0 $0 $38,260
Payments Made
During 2011 2010 $302,191
$0 $0 $302,191
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Section III:
Valuation Data Summary
Augusta - Richmond County 1945 Pension Plan
Actuarial Valuation as of January 1, 2012
Active and Inactive Participant
Statistical Information
Participant Statistics
Active Participants January 1, 2012 January 1, 2011
a. Number 2 2
b. Average Age 60.14 59.14
c. Average Service 41.25 40.25
d. Average Compensation $65,742 $65,814
Deferred Vested Participants
a. Number 0 0
b. Average Annual Benefits N/A N/A
Retirees
a. Number 19 22
b. Average Annual Benefits $38,676 $40,809
Beneficiaries
a. Number 6 7
b. Average Annual Benefits $16,470 $16,919
Disabled Participants Receiving Benefits
a. Number
b. Average Annual Benefits
Augusta - Richmond County 1945 Pension Plan
Actuarial Valuation as of January 1, 2012
1 1
$29,053 $28,652
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1 Section IV:
Financial Information
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Augusta- Richmond County 1945 Pension Plan
Actuarial Valuation as of January 1, 2012
Information for Financial Statements
1. Actuarial Present Value of Accumulated Plan Benefits 2012
a. Vested
i. Retirees (and others in pay status) $8,372,463
ii. Deferred Vested (former employees) 0
iii. Vested Active Participants 917,997
Total " 9,290,460
b. Nonvested 0
Total $9,290,460
2. Effect of Future Salary Increases 108,103
3. Total Actuarial Accrued Liability 9,398,563
4. Net Assets Available for Benefits (including receivables) 6,227,112
5. Net Assets in Excess of Actuarial Present Value of ($3,063,348)
Accumulated Plan Benefits
6. Principal Actuarial Assumptions
a. Investment Return
b. Rate of Future Salary Increases
(not applicable to Accumulated Plan Benefits calculations)
8.0%
5.0%
Augusta - Richmond County 1945 Pension Plan
Actuarial Valuation as of January 1, 2012 10
GASB 27 Notes to Financial Statements
Note X. Pension Plan
The employer sponsors County 1945 Plan (The Plan), which is a single- employer defined benefit pension
plan. The plan provides retirement, disability and death benefits to plan participants and beneficiaries, as
well as automatic cost -of- living adjustments. No employees hired after Sptember 30, 1975 will be eligible
to participate in the plan. The plan was initially established by the Richmond County Commission, prior to
its consolidation with the City of Augusta. The Plan can be amended by the Augusta - Richmond County
Commission by passage of a resolution by its members.
Funding Policy: The employer is required to contribute an actuarially determined amount annually to the
Plan's trust. The contribution amount is determined using actuarial methods and assumptions approved by
The Plan's trustees and must satisfy the minimum contribution requirement contained in the State of
Georgia statutes.
Annual Pension Cost: The employer's annual pension cost and net pension obligation for the pension plan
for the current year were determined as follows:
Derivation of Net Pension Obligation:
Net Pension Obligation as of Beginning of Prior Year
Annual Pension Cost for Prior Year 391,324 340,781
Actual Contributions to Plan for Prior Year 390,996 340,451
Increase in Net Pension Obligation $328 $330
Net Pension Obligation as of Beginning of the Year
Derivation of Annual Pension Cost:
Annual Required Contribution
Interest on Net Pension Obligation
Amortization of Net Pension Obligation
($74,513) ($74,843)
($74,185) ($74,513)
$257,471
(5,935)
6,262
$257,798
2012 2011
$390,996
(5,961)
6,289
$391,324
Augusta - Richmond County 1945 Pension Plan
Actuarial Valuation as of January 1, 2012 11
GASB 27 Notes to Financial Statements
Basis of Valuation
Current Valuation Date
Annual Return on Invested Plan Assets
Projected Annual Salary Increases
Expected Annual Inflation
Actuarial Value of Assets
Actuarial Funding Method
Amortization Method
Annual
Fiscal Year Pension Cost
Beginning (APC)
January 1, 2012 $257,798
January 1, 2011 391,324
January 1, 2010 340,781
January 1, 2009 340,951
January 1, 2008 143,673
January 1, 2007 $214,686
Trend Information for the Plan
Actual County
Contribution
N/A
390,996
340,451
302,173
191,465
$251,598
Percentage
of APC
Contributed
N/A
100%
100%
89%
133%
117%
January 1, 2012
8.00%
5.00%
3.00%
Market Value
Projected Unit Credit
Level Percent of Pay
(Closed)
Net Pension
Obligation
($74,185)
(74,513)
(74,843)
(113,621)
(65,829)
($28,917)
Augusta - Richmond County 1945 Pension Plan
Actuarial Valuation as of January 1, 2012 12
GASB 27 Required Supplementary Information
Schedule of Funding Progress
Fiscal Year
Ending
December 31, 2011
December 31, 2010
December 31, 2008
December 31, 2007
December 31, 2006
December 31, 2005
Actuarial
Value of
Assets
(a)
$7,152,239
$7,860,568
$8,127,448
$9,839,493
$9,749,998
$9,009,519
*Reflects change to asset smoothing.
Actuarial
Accrued
Liability
(AAL)
Projected
Unit Credit
(b)
$9,398,563
$11,366,929
$11,403,336
$11,083,498
$10,469,945
$10,338,640
Unfunded
AAL
(UAAL)
(b -a)
$2,246,324
$3,506,361
$3,275,888
$1,244,005
$719,947
$1,329,121
Funded
Ratio
(a /b)
76.1%
69.2%
71.3%
88.8%
93.1%
87.1%
Covered
Payroll
c
$125,222
$125,359
$244,941
$252,660
$240,629
$223,443
The assets and liabilities shown above reflect expected amounts as of the last day of the plan year.
These amounts may vary from those used in determining the required contribution, since those
calculations use actual amounts as of the first day of the next plan year.
UAAL as
a Percent
of
Covered
Payroll
[(b -a) /c]
1793.9%
2797.1%
1337.4%
492.4%
299.2%
594.8%
Augusta - Richmond County 1945 Pension Plan
Actuarial Valuation as of January 1, 2012 13
Section V:
Actuarial Assumptions and Plan Provisions
Augusta - Richmond County 1945 Pension Plan
Actuarial Valuation as of January 1, 2012
Summary of Actuarial Assumptions and Methods
Investments Return: 8.00% per annum
Salary Increases: 5.00% per annum
Mortality: 1983 Group Annuity Mortality Table, sex - distinct male and female rates
Termination: An experience- based, age - related set of rates; sample rates as follows:
Changes Since the None
Last Valuation:
Probability of Probability of
Age Termination Age Termination
20 31.4% 40 5.1%
25 16.1% 45 3.1%
30 9.6% 50 8.0%
35 7.0% 55 6.0%
Disability: Rates of disability are based on published studies conducted by the
Social Security Administration; sample rates as follows:
Male Probability of Female Probability of
Age Disability Age Disability
20 0.04% 20 0.02%
30 0.10% 30 0.07%
-40 0.23% 40 0.18%
50 0.64% 50 0.50%
60 2.24% 60 1.41%
Retirement: All participants are assumed to retire at age 60, or current age if later.
COLA Increases: CPI is assumed to increase 3.00%
Asset Method: Smoothed market value with a 5 -year smoothing period.
Funding Method: Projected Unit Credit. This cost method measures past service liabilities as the
actuarial present value of benefits accrued for service up to the valuation date,
but based on salaries projected to the date of assumed retirement from the plan.
The current year accrual is based on benefits accrued for the year of service
beginning on the valuation date, but based on salaries projected to the date of
assumed retirement from the plan
Augusta - Richmond County 1945 Pension Plan
Actuarial Valuation as of January 1, 2012 14
Summary of Plan Provisions
Effective Date:
Eligible Employees:
Service:
Eamings:
Employee Contributions:
Highest Earnings:
Accrued Benefit:
Normal Retirement:
Eligibility
Benefit
Early Retirement
Eligibility
Benefit
Disability:
March 1, 1945
Regular, full -time County employees hired before age 60, excluding
all employees hired after September 30, 1975 and employees of the Department of
Family and Children's Services, the Department of Health, and the Department of
Public Welfare. The plan also excludes any employee covered by any other
retirement program to which the County contributes, including Social Security.
The period of continuous service from date of hire to termination date during
which the participant made any required employee contributions.
Total Compensation paid to an employee.
After -tax contributions of 5.00% of total compensation. Employee contributions
will be accumulated with interest at a rate of 5.00% per annum.
The highest monthly Earnings received within the 72 -month period immediately
preceding termination of employment.
2.00% of Highest Earnings times Service.
Attainment of age 60
Accrued Benefit as of date of termination
Later of attainment of age 50 and completion of 15 years of Service
(a) A deferred benefit commencing at normal retirement equal to the accrued
benefit at termination, or
(b) An immediate benefit equal to the Accrued Benefit at termination, reduced
by 5/12 % for each month that payments commence prior to normal retirement.
If the participant has completed at lease one year of Service and suffers an
employment related total and permanent disability, benefit equals 50% of
highest earnings minus any Workers' Compensation payments.
Augusta - Richmond County 1945 Pension Plan
Actuarial Valuation as of January 1, 2012 15
Summary of Plan Provisions (Continued)
Disability Continued: If the participant's disability is total and permanent, but is not employment
related, the participant will receive a return of their contributions with
interest, less any payments received from this plan.
Pre - retirement Death:
Vesting Schedule:
Cost -of- Living:
Changes Since the
Last Valuation:
If the participant's disability is temporary, and they have completed 12 years
of Service and been disabled for 4 weeks, the benefit equals their accrued
benefit, reduced by any Worker's Compensation payments. Temporary
disability is defined as an inability to perform job duties.
If death was employment - related, benefit equals 25% of monthly earnings at the
time of death, commencing immediately after Worker's Compensation payments
cease. Benefit is payable until the surviving spouse dies or is remarried or until
unmarried children attain age 18.
Post - retirement Death: Benefit equals 60% of the participants retirement benefit, payable until the death or
remarriage of the surviving spouse.
Termination: If the participant has not completed 10 year of Service, benefit equal's the
participant's contributions with interest.
If the participant has completed at least 10 years of service, a deferred benefit
equal to their accrued benefit at termination times their vesting percentage, with
benefits commencing at normal retirement.
Annual cost of living adjustment are provided, effective each March 1st, equal
to the change in the Consumer Price Index during the preceding calendar year,
but not to exceed 5.00% in any year without Council approval.
None
Complete Years Vesting
of Service Percentage
<10 0.0%
10 50.0%
11 60.0%
12 70.0%
13 80.0%
14 90.0%
15 or more 100.0%
Augusta - Richmond County 1945 Pension Plan
Actuarial Valuation as of January 1, 2012 16