HomeMy WebLinkAboutAUGUSTA CITY 1949 PENSION PLAN ACTURIAL VALUATION AS OF JANUARY 1, 2012I
I
I
I
CBIZ
►*iC° s ? 2 _20/
Augusta City 1949 Pension Plan
Actuarial Valuation
as of
January 1, 2012
Your Business Just Got Easier.
Prepared By:
CBIZ Benefits & Insurance Services, Inc.
44 Baltimore Street
Cumberland, MD 21502
1 301 777 1500
Table of Contents
Section I: Highlights and Actuarial Certification
Highlights
Actuarial Certification
Section II: Funding Development
Normal Cost
Actuarial Gain /Loss Development
Development of Minimum Annual Contribution
Funding Standard Account
Amortization Schedule
Reconciliation of Plan Assets
Section V: Basis for Actuarial Valuation
Augusta City 1949 Pension Plan
Actuarial Valuation as of January 1, 2012
1
2
3
4
5
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
Summary of Actuarial Assumptions and Plan Provisions 14
Section I:
Highlights and Actuarial Certification
Augusta City 1949 Pension Plan
Actuarial Valuation as of January 1, 2012
Report Highlights and Actuarial Certification
For the 2012 Plan Year
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 $2,311,250 $1,543,071
- as a percent of payroll 73.3% 32.8%
Employer Recommended Contribution for the Plan Year $2,826,791 $1,954,994
- as a percent of payroll 89.7% 41.5%
- based on 12 year amortisation of unfunded liability
Augusta City 1949 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.
ig4),01,4.
William G. Karbon, EA, MSPA.
Senior Retirement Plan Consultant
Enrolled Actuary Number: 11 -4568
Date
Weixing Han, EA, QPA
Staff Actuary
Enrolled Actuary Number: 11 -7501
Date
Augusta City 1949 Pension Plan
Actuarial Valuation as of January 1, 2012 jj
Section II:
Funding Development
Augusta City 1949 Pension Plan
Actuarial Valuation as of January 1, 2012
Normal Cost
Normal Cost by Plan Benefit Type
Augusta City 1949 Pension Plan
Actuarial Valuation as of January 1, 2012
2012 2011
a. Retirement Benefits $488,054 $718,292
b. Termination Benefits 17,490 31,210
c. Disability Benefits 0 0
d. Death Benefits 0 0
e.Total Normal Cost $505,544 $749,502
f. Interest for the Plan Year 40,444 59,960
g. Cost of Pre - Retirement Death Benefit 0 0
h. Normal Cost for the Plan Year $545,988 $809,462
- as a percent ofpayroll 17.3% 17.2%
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 $68,221,054
b. Interest on item (1a.) 5,457,684
c. Contributions made for the 2011 Plan Year * 1,860,189
d. Interest on item (1c.) to the end of 2011 0
e. Expected Benefit Payments for 2011 with interest 5,067,293
f. Expected Actuarial Value of Assets as of January 1, 2012 $70,471,634
g. Actuarial Value of Assets as of January 1, 2012 ** 64,785,966
h. Actuarial Asset Gain /(Loss) (g. - f.) ($5,685,668)
2. Actuarial Liability Gain /(Loss)
a. Actuarial Accrued Liability as of January 1, 2011
b. Normal Cost as of January 1, 2011
c. Interest on items (2a. + 2b.)
d. Expected Benefit Payments for 2011 with interest
e. Expected Actuarial Accrued Liability as of January 1, 2012
f. Actuarial Accrued Liability as of January 1, 2012
g. Actuarial Liability Gain /(Loss) (e. - f.)
3. Total Actuarial Gain /(Loss) (1.j. + 2.i.)
$79,243,698
749,502
6,399,456
5,067,293
$81,325,363
83,583,477
($2,258,114)
($7,943,782)
4. Adjustment for full funding and /or negative unfunded accrued liability $0
5. Actuarial Gain /(Loss) subject to amortization ($7,943,782)
*Includes estimated employee contributions.
* *Reflects change to asset smoothing.
Augusta City 1949 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
11. Employee Contributions as a Percent of Plan Cost
*Reflects change to asset smoothing.
2012 2011
68 98
177 150
7 7
16 18
268 273
2. Covered Compensation for Active Participants $3,152,905 $4,707,547
3. Actuarial Accrued Liability
a. Active Participants $21,676,926 $30,831,975
b. Retirees and Disabled 61,255,813 47,812,466
c. Deferred Vested (former employees) 650,738 599,257
d. Total $83,583,477 $79,243,698
4. Actuarial Asset Value (see page 7 for detail)* $64,785,966 $68,221,054
5. Unfunded Actuarial Accrued Liability (3. - 4.) $18,797,511 $11,022,644
6. Total Amortizations $1,978,795 $1,050,727
7. Normal Cost for the Plan Year $545,988 $809,462
8. Administrative Expenses for the Plan Year $0 $0
9. Minimum Contribution for the Plan Year
a. Employer Contribution $2,311,250 $1,543,071
b. Estimated Employee Contribution 213,533 317,118
c. Total (Before Application of the Credit Balance) $2,524,783 $1,860,189
10. Employer Contributions as a Percent of Payroll 73.3% 32.8%
8.5% 17.0%
Augusta City 1949 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)* $332,455 $492,344
b. Expenses (end of year) 0 0
c. PreRetirement Death Benefit Expense 0 0
d. Amortization Charges (end of year) 1,978,795 1,050,727
e. Total
Credits:
$2,311,250 $1,543,071
a. Prior Year Credit Balance $0 $0
b. Employer Contributions for Plan Year N/A 1,543,071
c. Interest on a. and b. 0 0
d. Amortization Credits 0 0
e. Total N/A $1,543,071
Credit Balance N/A $0
*Net of estimated employee contributions
Augusta City 1949 Pension Plan
Actuarial Valuation as of January 1, 2012 4
Amortization Schedule ( Georgia Code 47 -20 -10 )
Level Dollar
Charges:
End of Year
Date Initial Initial Years Amortization Outstanding
Description Established Amount Years Remaining Amount Balance
a. Fresh Start 2009 $9,167,493 30 27 $814,325 $8,904,777
b. 2009 -2010 Actuarial Loss 2011 2,023,476 15 14 236,402 1,948,952
c. 2011 Actuarial Loss 2012 7,943,782 15 15 928,068 7,943,782
d. Total $1,978,795 $18,797,511
Credits:
Date Initial Initial Years Amortization Outstanding
Description Established Amount Years Remaining Amount Balance
a. None $0 $0
b. Total $0 $0
Total Amortizations $1,978,795 $18,797,511
Equation of Balance -
1. Net amount of amortizations outstanding as of January 1, 2012 $18,797,511
2. Credit Balance in Funding Standard Account as of January 1,2012 0
3. Reconciliation account balance on January 1, 2012 0
4. Unfunded actuarial liability as of January 1, 2012 (1.- 2. -3.) $18,797,511
Augusta City 1949 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
2. Changes in Assets During the Year
Income
a. Employer Contributions $1,306,477
b. Employee Contributions 294,720
c. Interests and Dividends 1,705,315
d. Money Market Earnings 0
e. Realized and Unrealized Gains (2,401,998)
f. Other Income 0
g. Total Income 904,514
Disbursements
h. Benefits Paid 4,794,616
i. Foreigh Taxes Withheld 30,975
j. Legal Fees 0
k. Investment Fees 383,325
1. Total Disbursements 5,208,916
Net Income . ($4,304,402)
3. Fund Balance of Plan Assets as of January 1, 2012 $55,355,451
4. 2010 Employer Contributions Receivable 96,776
5. 2011 Employer Contributions Receivable 1,543,071
6. 2011 Employee Contributions Receivable 8,815
7. Benefits Payable 457,369
8. Receivable from the 1945 Plan 0
9. Total Market Value of Plan as of January 1, 2012 $56,546,744
10. Actuarial Value of Assets as of January 1, 2012* $64,785,966
*Reflects change to asset smoothing.
$59,659,853
Augusta City 1949 Pension Plan
Actuarial Valuation as of January 1, 2012 6
r — lIIIII — — MK r■■ ■w M■ E■ IN MN NM w ■M ME NM NM
Reconciliation of Plan Assets (Continued)
Gain /(Loss) on Asset Performance 2008 2009 2010 2011
Market Value of Assets at Beginning of Plan Year $74,862,875 $54,839,186 $59,931,367 $60,695,483
Interest at 8.0% $5,989,030 4,387,135 4,794,509 4,855,639
Contributions* $399,581 1,688,991 1,785,870 1,860,189
Interest on Employer Contributions at 8.0% $0 0 0 0
Distributions with interest ($4,153,588) (4,645,856) (4,792,222) (5,067,293)
Expected Market Value of Assets at End of Plan Year $77,097,898 $56,269,456 $61,719,524 $62,344,018
Actual Market Value of Assets 54,839,186 59,931,367 60,695,483 56,546,744
Actuarial Asset Gain /(Loss) ($22,258,712) $3,661,911 ($1,024,041) ($5,797,273)
Actuarial
Value
1. Market Value of Assets (MVA) as of January 1, 2012 $56,546,744
2. Increase /(Decrease) in Asset Value from Prior Years' (Gain) /Loss:
80% of 2011 Investment (Gain) /Loss $4,637,819
60% of 2010 Investment (Gain) /Loss 614,425
40% of 2009 Investment (Gain) /Loss (1,464,764)
20% of 2008 Investment (Gain) /Loss 4,451,742
Total Increase /(Decrease) 8,239,222
3. Actuarial Value of Assets as of January 1, 2012 prior to
application of 80 %/120% corridor $64,785,966
4. Minimum Actuarial Value of Assets as of January 1, 2012 (80% of MVA) 45,237,395
5. Maximum Actuarial Value of Assets as of January 1, 2012 (120% of MVA) 67,856,093
6. Actuarial Value of Assets as of January 1, 2012
= greater of (4) and lesser of (3) and (5) $64,785,966 **
7. Actuarial Value of Assets as a Percentage of Market Value 114.57%
*Includes estimated employee contributions
* *Reflects change to asset smoothing.
Augusta City 1949 Pension Plan
Actuarial Valuation as of January 1, 2012 7
Payments Made
During 2011
2011
$0
$291,571
$0
$291,571
Payments Made
During 2011
2010
$1,306,477
$0
$0
$1,306,477
Expected 2011
Contribution
2011
$1,543,071
$0
$0
$1,543,071
Expected 2010
Contribution
2010
$96,776
$0
$0
$96,776
1
Reconciliation of Plan Assets (Continued)
Contributions
Date
Applied to Employer
Plan Year Contribution
Employee
Contribution
Interest to
End of Plan
Year
Total
Augusta City 1949 Pension Plan
Actuarial Valuation as of January 1, 2012
8
Section III:
Valuation Data Summary
Augusta City 1949 Pension Plan
Actuarial Valuation as of January 1, 2012
1 Active and Inactive Participant
Statistical Information
1
Participant Statistics
I Active Participants January 1, 2012 January J rY � J rY 1 2011
I a. Number 68 98
b. Average Age 53.94 53.77
c. Average Service 30.75 29.97
I d. Average Compensation $48,916 $50,678
1 Deferred Vested Participants
a. Number 7 7
I b. Average Annual Benefits $14,400 $14,400
I Retirees and Beneficiaries
a. Number 177 130
b. Average Annual Benefits $30,208 $25,607
I
Disabled Participants Receiving Benefits
I a. Number 16 18
b. Average Annual Benefits $25,584 $23,549
Augusta City 1949 Pension Plan
Actuarial Valuation as of January 1, 2012
Section IV:
Financial Information
Augusta City 1949 Pension Plan
Actuarial Valuation as of January 1, 2012
Information for Financial Statements
1. Actuarial Present Value of Accumulated Plan Benefits
a. Vested
i. Retirees (and others in pay status)
ii. Deferred Vested (former employees)
iii. Vested Active Participants
Total
b. Nonvested
Total
2. Effect of Future Salary Increases
3. Total Actuarial Accrued Liability
4. Net Assets Available for Benefits (including receivables)
5. Net Assets in Excess of Actuarial Present Value of
Accumulated Plan Benefits
6. Principal Actuarial Assumptions
a. Investment Return
b. Rate of Future Salary Increases
(not applicable to Accumulated Plan Benefits calculations)
2012
$61,255,813
650,738
19,770,667
81,677,218
0
$81,677,218
1,906,259
83,583,477
56,546,744
($25,130,474)
8.0%
5.5%
Augusta City 1949 Pension Plan
Actuarial Valuation as of January 1, 2012 10
GASB 27 Notes to Financial Statements
Note X. Pension Plan
The employer sponsors City 1949 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 February 28, 1987 will be eligible
to participate in the plan. The plan was established by 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 1,542,646 1,402,826
Actual Contributions to Plan for Prior Year 1,543,071 1,403,253
Increase in Net Pension Obligation ($425) ($427)
Net Pension Obligation as of Beginning of the Year
Derivation of Annual Pension Cost:
2012 2011
$96,452 $96,879
$96,027 $96,452
Annual Required Contribution $2,311,250 $1,543,071
Interest on Net Pension Obligation 7,682 7,716
Amortization of Net Pension Obligation (8,105) (8,141)
Annual Pension Cost $2,310,827 $1,542,646
Augusta City 1949 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 $2,310,827
January 1, 2011 1,542,646
January 1, 2010 1,402,826
January 1, 2009 1,403,253
January 1, 2008 0
January 1, 2007 $0
Trend Information for the Plan
Actual County
Contribution
N/A
1,543,071
1,403,253
1,306,374
0
$0
Percentage
of APC
Contributed
N/A
100%
100%
93%
0%
0%
January 1, 2012
8.00%
5.50%
3.00%
Market Value
Projected Unit Credit
Level Percent of Pay
(Closed)
Net Pension
Obligation
$96,027
96,452
96,879
0
0
$0
Augusta City 1949 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)
*Reflects change to asset smoothing.
Actuarial
Accrued
Liability
(AAL)
Projected
Unit Credit
(b)
$64,785,966 * $83,583,477
$68,221,054 * $79,243,698
$65,807,023 * $74,884,813
$74,862,875 $70,398,531
$72,348,604 $71,720,302
$67,859,472 $68,750,121
Unfunded
AAL
(UAAL)
(b -a)
$18,797,511
$11,022,644
$9,077,790
($4,464,344)
($628,302)
$890,649
Funded
Ratio
(a /b)
77.5%
86.1%
87.9%
106.3%
100.9%
98.7%
Covered
Payroll
c.
$3,152,905
$4,707,547
$5,775,104
$6,416,602
$6,082,087
$5,751,403
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]
596.2%
234.1%
157.2%
- 69.6%
- 10.3%
15.5%
Augusta City 1949 Pension Plan
Actuarial Valuation as of January 1, 2012 13
Section V:
Actuarial Assumptions and Plan Provisions
Augusta City 1949 Pension Plan
Actuarial Valuation as of January 1, 2012
Summary of Actuarial Assumptions and Methods
Investments Return:
Salary Increases:
Mortality:
Healthy Lives
Disabled Lives
Termination:
Disability:
Retirement:
COLA Increases:
Asset Method:
Funding Method:
Changes Since the
Last Valuation:
8.00% per annum
5.50% per annum
1983 Group Annuity Mortality Table, sex - distinct male and female rates
1965 Railroad Board Ultimate Mortality Table
An experience- based, age- related set of rates; sample rates as follows:
Age
20
25
30
35
Probability of
Termination
6.64%
5.35%
4.93%
4.61%
Age
40
45
50
55
Probability of
Termination
4.04%
3.57%
2.17%
1.38%
Rates of disability are based on published studies conducted by the
Social Security Administration; sample rates as follows:
Male
Age
20
30
40
50
60
All participants are assumed to retire at normal retirement, or current age of later.
CPI is assumed to increase 3.00%
Smoothed market value with a 5 -year smoothing period.
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
None
Probability of
Disability
0.13%
0.21%
0.44%
1.09%
2.90%
Female
Age
20
30
40
50
60
Probability of
Disability
0.04%
0.16%
0.39%
0.94%
1.93%
Augusta City 1949 Pension Plan
Actuarial Valuation as of January 1, 2012 14
Summary of Plan Provisions
Effective Date:
Eligible Employees:
Service:
Earnings:
Employee Contributions:
Average Earnings:
Accrued Benefit:
Normal Retirement:
Eligibility
Benefit
Early Retirement
Eligibility
Benefit
Disability:
March 1, 1949
Regular, full -time City employees hired after 1949 and before 1987, excluding
all employees of University Hospital, Sinking Fund Commission, the recorder, the
assistant recorder, and elected officials.
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 8.00% of total compensation if hired after July 1, 1980.
After -tax contributions of 5.00% of total compensation if hired before July 1, 1980.
The average annual pay rate during the last three years of employment.
preceding termination of employment.
2.15% of Average Earnings times Service limited to 30 years, plus
1.50% of Average Earnings times Service in excess of 30 years plus
$150 per month.
For police and fire employees, the later of attainment of age 55 and completion of
25 years of service. For all other employees, the later of attainment of age 60 and
completion of 25 years of Service. If the participant is permanently separated
involuntarily by the City, without fault on the participant's part, normal retirement
is the date of termination if they have completed at least 20 years of service.
Accrued Benefit as of date of termination
Any date no more than five years prior to normal retirement, after completing
at least 20 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 1/2 % for each month that payments commence prior to normal retirement.
If the participant's disability occurs after completion of ten years of service, the
benefit equals the accrued benefit minus any Worker's Compensation payments.
Augusta City 1949 Pension Plan
Actuarial Valuation as of January 1, 2012 15
Summary of Plan Provisions (Continued)
Disability Continued: If the participant suffers an employment related disability, the ten year service
requirement is waived and the benefit paid will not be less than 50% of Average
Eamings minus any Worker's Compensation payments not specifically awarded
for medical expenses.
Benefit commences immediately after Board approval of disability.
Pre - retirement Death: If death occurs prior to eligibility for plan benefits, benefit is a refund of employee
contributions.
Vesting Schedule:
If death occurs after meeting eligibility for benefits but prior to attaining age 55 and
completing ten years of service, benefit equals survivor's portion of a joint and
survivor annuity that is equivalent to the participant's accrued benefit, if elected by
the participant.
If the employee attains age 55 and completes ten years of service prior to death,
the survivor's portion of a 100% joint and survivor annuity, calculated as though
he had retired under that annuity option immediately prior to death.
If death was employment related, spouse may elect to receive 25% of monthly
pay at the time of death. Benefit is payable until the surviving spouse dies or until
unmarried children attain age 18.
Complete Years Vesting
of Service Percentage
<15 0.0%
15 50.0%
16 60.0%
17 70.0%
18 80.0%
19 90.0%
20 or more 100.0%
Termination: If the participant has not completed 15 year of Service, benefit equal's the
participant's contributions with interest.
If the participant has completed at least 15 years of service, a deferred benefit
equal to their accrued benefit at termination times their vesting percentage, with
benefits commencing at normal retirement.
Normal Form: Straight life annuity to the participant.
Augusta City 1949 Pension Plan
Actuarial Valuation as of January 1, 2012 16
Summary of Plan Provisions (Continued)
Cost -of- Living:
Changes Since Last None
Actuarial Report:
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.
Augusta City 1949 Pension Plan
Actuarial Valuation as of January 1, 2012 17