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Home My WebLink AboutAUGUSTA-RICHMOND COUNTY 1945 PENSION PLAN ACTUARIAL VALUATION AS OF JANUARY 1, 2016 I Augusta-Richmond County 1945 Pension Plan Actuarial Valuation as of January 1, 2016 Prepared By: CBIZ Benefits & Insurance Services, Inc. 44 Baltimore Street Cumberland, MD 21502 1 301 777 1500 CBIZ our business is growing yours Table of Contents Section I: Highlights and Actuarial Certification Highlights I Actuarial Certification II 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 Section V: Basis for Actuarial Valuation Summary of Actuarial Assumptions and Plan Provisions 11 Augusta-Richmond County 1945 Pension Plan Actuarial Valuation as of January 1, 2016 Section I: Highlights and Actuarial Certification Augusta-Richmond County 1945 Pension Plan Actuarial Valuation as of January 1, 2016 Report Highlights and Actuarial Certification For the 2016 Plan Year We herewith present the results of the actuarial valuation of the plan for the 2016 plan year, based on census information as of January 1, 2016,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 GASB Statements 67 and 68 for the pension plan. We will issue separate reports complying with the required GASB 67 and 68 pension accounting standards. 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 1,2016,as provided by Augusta-Richmond County. (2) Plan provisions as of January 1,2016, 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 1,2016. Highlights of this report: 2016 2014 Employer Minimum Contribution for the Plan Year $242,708 $290,565 -as a percent of payroll 183.3% 219.5% Employer Recommended Contribution for the Plan Year $267,820 $340,648 -as a percent of payroll 202.2% 237.4% - based on 10 year amortization of unfunded liability Augusta-Richmond County 1945 Pension Plan Actuarial Valuation as of January 1, 2016 Highlights ort p and Actuarial Certification For the 2016 Plan Year Changes Since the Last Valuation: 1) The investment return assumption was decreased from 8.00% to 7.50%;2)The mortality table was changed from 1983 GAM to RP 2000 with Scale AA projection to year 2016; 3) funding method was changed from Projected Unit Credit to Entry Age Normal., 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. isw / Off "AIIIIFRPPWilliam G.Karbon,EA, ` .-A,MAAA Date Executive Vice President Enrolled Actuary Number: 14-4568 \-AlgA ,4"-r-?- 41 or", 67/0/1 Weixing Han,EA, QPA,MSPA. Date Staff Actuary Enrolled Actuary Number: 14-7501 Augusta-Richmond County 1945 Pension Plan Actuarial Valuation as of January 1, 2016 II Section II: Funding Development Augusta-Richmond County 1945 Pension Plan Actuarial Valuation as of January 1, 2016 I INormal Cost I I INormal Cost by Plan Benefit Type 2016 2014 a. Retirement Benefits $0 $0 Ib.Termination Benefits 0 0 c. Disability Benefits 0 0 I d. Death Benefits 0 0 e.Total Normal Cost $0 $0 f. Interest for the Plan Year 0 0 g. Cost of Pre-Retirement Death Benefit 0 0 h. Normal Cost for the Plan Year $0 $0 -as a percent ofpayroll 0.0% 0.0% Augusta-Richmond County 1945 Pension Plan 1 Actuarial Valuation as of January 1, 2016 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, 2014 $6,423,808 b. Interest on item (1a.) to the end of 2015 1,068,922 c. Contributions made for the 2014 and 2015 Plan Year* 595,026 d. Interest on item (1c.) 23,801 e. Expected Benefit Payments for 2014 and 2015 with interest 1,784,056 f. Expected Actuarial Value of Assets as of January 1,2016 $6,327,501 g.Actuarial Value of Assets as of January 1,2016** 6,318,083 h. Actuarial Asset Gain/(Loss) (g. - f.) ($9,418) 2. Actuarial Liability Gain/(Loss) a.Actuarial Accrued Liability as of January 1,2014 $8,756,203 b. Normal Cost for 2014 and 2015 0 c. Interest on items (2a. + 2b.) 1,457,032 d. Expected Benefit Payments for 2014 and 2015 with interestst 1,784,056 e. Expected Actuarial Accrued Liability as of January 1, 2016 $8,429,179 f. Actuarial Accrued Liability as of January 1,2016 7,647,033 g. Actuarial Liability Gain/(Loss) (e. - f.) $782,146 3. Total Actuarial Gain/(Loss) (1.j. + 2.i.) $772,728 4. Adjustment for full funding and/or negative unfunded accrued liability $0 5. Actuarial Gain/(Loss) subject to amortization $772,728 *Includes estimated employee contributions and estimated 2015 employer contribution. **Reflects change to asset smoothing. 2 Augusta-Richmond County 1945 Pension Plan Actuarial Valuation as of January 1, 2016 I IDevelopment of Minimum Annual Contribution 2016 2014 I1. Participant Counts a. Active Participants 2 2 I b. Retirees and Beneficiaries 20 22 c. Deferred Vested (former employees) 0 0 d. Disabled in Pay Status 1 1 Ie. Total 23 25 2. Covered Compensation for Active Participants $132,431 $132,346 I3. Actuarial Accrued Liability a. Active Participants $1,186,046 $1,110,628 b. Retirees and Disabled 7,018,102 7,645,575 c. Deferred Vested (former employees) 0 0 d. Total $8,204,148 $8,756,203 4. Actuarial Asset Value (see page 7 for detail)* $6,318,083 $6,423,808 5. Unfunded Actuarial Accrued Liability (3. - 4.) $1,886,065 $2,332,395 6. Total Amortizations $249,661 $297,513 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 $242,708 $290,565 b. Estimated Employee Contribution 6,953 6,948 c. Total (Before Application of the Credit Balance) $249,661 $297,513 10. Employer Contributions as a Percent of Payroll 183.3% 219.5% 11. Employee Contributions as a Percent of Plan Cost 2.8% 2.3% *Reflects change to asset smoothing. Augusta-Richmond County 1945 Pension Plan 3 Actuarial Valuation as of January 1, 2016 I IFunding Standard Account (Level Dollar) I 2016 2014-2015 ICharges: a. Employer Normal Cost (end of year)* $0 $0 b. Expenses (end of year) 0 0 c. PreRetirement Death Benefit Expense 0 0 i d. Amortization Charges (end of year) 505,063 939,702 e. Total $505,063 $939,702 I Credits: a. Prior Year Credit Balance $0 $0 b. Employer Contributions for Plan Year N/A 581,130 c. Interest on a. and b. 0 0 I d. Amortization Credits 262,355 358,572 e. Total N/A $939,702 Credit Balance N/A $0 *Net of estimated employee contributions Augusta-Richmond County 1945 Pension Plan 4 Actuarial Valuation as of January 1, 2016 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. Initial Liability 2008 $1,244,005 30 22 $106,168 $1,127,203 b. 2008 Actuarial Loss 2009 2,078,307 15 8 238,220 1,395,328 c. 2009-2010 Actuarial Loss 2011 378,903 15 10 43,274 297,036 d. 2012 Actuarial Loss 2013 678,102 15 12 77,182 597,023 e. Assumption Change 2016 557,115 30 30 47,172 557,115 f. Total $512,016 $3,973,705 Credits: Date Initial Initial Years Amortization Outstanding Description Established Amount Years Remaining Amount Balance a. 2011 Actuarial Gain 2012 $1,142,969 15 11 $130,311 $953,280 b. 2012 Actuarial Gain 2014 391,632 15 13 44,504 361,632 c. 2014-2015 Actuarial Gain 2016 772,728 15 15 87,540 772,728 d. Total $262,355 $2,087,640 Total Amortizations $249,661 $1,886,065 Equation of Balance: 1. Net amount of amortizations outstanding as of January 1,2016 $1,886,065 2. Credit Balance in Funding Standard Account as of January 1,2016 0 3. Reconciliation account balance on January 1,2016 0 4. Unfunded actuarial liability as of January 1, 2016 (1.-2.-3.) $1,886,065 5 Augusta-Richmond County 1945 Pension Plan Actuarial Valuation as of January 1, 2016 Reconciliation of Plan Assets 1. Fund Balance of Plan Assets as of January 1, 2014 $6,403,853 2. Changes in Assets During the Year Income a. Employer Contributions $590,170 b. Employee Contributions 13,273 c. Interests and Dividends 529,481 d. Money Market Earnings 0 e. Realized and Unrealized Gains (45,886) f. Other Income 134,802 g. Total Income 1,221,840 Disbursements h. Benefits Paid 1,646,964 i. Foreigh Taxes Withheld 0 j. Investment Fees 83,543 k. Other 0 1. Total Disbursements 1,730,507 Net Income ($508,667) 3. Fund Balance of Plan Assets as of January 1, 2016 $5,895,186 4. Employer Contributions Receivable 290,565 5. Employee Contributions Receivable 0 6. Benefits Payable 0 7. Receivable from the 1945 Plan 0 8. Total Market Value of Plan as of January 1, 2016 $6,185,751 9. Actuarial Value of Assets as of January 1,2016* $6,318,083 *Reflects change to asset smoothing. Augusta-Richmond County 1945 Pension Plan 6 Actuarial Valuation as of January 1, 2016 I I I . CO ,-+ 00 M O 0000 tf) a-+ �' II �-. N M .� c+-� o N tf O M 's�i to M o0 O. O 00 �} r. M Gam. N N- W 0�0 +�+ cc N 00 CO" N o0 nj N64 044. 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E J (� '� m to N V1 ) N chd a`n.+ o . . 42, y m 8 O 0) 3 4.1 W rn v, c� Q cd 0 y- O 0 y ' ` `n N vii `i N C '- v, U v w � ti o m L.• " cd L." ) 'J• CI) 'J CL) a w o .v w . > 0 .N L". c� ^� .. c� rr" \ c cd O N U N a1 O rn cd N m N N N N oY C 0 cd 0M E .m •v . co• 0 W 0 \ w w w w O g _� 0C .4 �c '� 0 O cV a� �/ O 0 0 0 r� .;21 cid .cd Y V 0 fB cb TO II C7 ., U ., Q W - —4N en 4 in .o N * * Q Q I IReconciliation of Plan Assets (Continued) IContributions I I Interest to I Applied to Employer Employee End of Plan Date Plan Year Contribution Contribution Year Total Payments Made During 2014 2014 $0 $6,661 $0 $6,661 I Payments Made During 2014 2013 $299,605 $0 $0 $299,605 Payments Made During 2015 2015 $6,611 $0 $6,611 Payments Made During 2015 2014 $290,565 $0 $0 $290,565 Expected 2015 IContribution 2015 $290,565 $0 $0 $290,565 Augusta-Richmond County 1945 Pension Plan Actuarial Valuation as of January 1, 2016 8 Section III: Valuation Data Summary • Augusta-Richmond County 1945 Pension Plan Actuarial Valuation as of January 1, 2016 Active and Inactive Participant Statistical Information IParticipant Statistics I Active Participants January 1,2016 January 1, 2014 a. Number 2 2 b. Average Age 64.14 62.14 c. Average Service 45.25 43.25 d. Average Compensation $69,527 $69,482 Deferred Vested Participants a. Number 0 0 b. Average Annual Benefits N/A N/A Retirees and Beneficiaries a. Number 20 22 b. Average Annual Benefits $36,591 $25,607 Disabled Participants Receiving Benefits a. Number 1 1 b. Average Annual Benefits $31,071 $30,522 9 Augusta-Richmond County 1945 Pension Plan Actuarial Valuation as of January 1, 2016 I Section IV: IFinancial Information I I I I I I I I I I I I I I I I Augusta-Richmond County 1945 Pension Plan 1 Actuarial Valuation as of January 1, 2016 Information for Financial Statements 1. Actuarial Present Value of Accumulated Plan Benefits 2016 a. Vested i. Retirees (and others in pay status) $7,018,102 ii. Deferred Vested (former employees) 0 iii. Vested Active Participants 1,147,645 Total 8,165,747 b. Nonvested 0 Total $8,165,747 2. Effect of Future Salary Increases 38,401 3. Total Actuarial Accrued Liability 8,204,148 4. Net Assets Available for Benefits (including receivables) 6,185,751 5. Net Assets in Excess of Actuarial Present Value of ($1,979,996) Accumulated Plan Benefits 6. Principal Actuarial Assumptions a. Investment Return 7.5% b. Rate of Future Salary Increases 5.0% (not applicable to Accumulated Plan Benefits calculations) Augusta-Richmond County 1945 Pension Plan Actuarial Valuation as of January 1, 2016 10 Section V: Actuarial Assumptions and Plan Provisions I I I I I I I I I I I Augusta-Richmond County 1945 Pension Plan Actuarial Valuation as of January 1, 2016 Summary of Actuarial Assumptions and Methods Investments Return: 7.50%per annum IFor the period ending December 31,2015,the investment return assumption was based on the following development using asset class building blocks and the associated expected long-term rates of return: Assumed Expected Long- Percentage Term Rate of Low End High End of I Asset Class of portfolio Return of Range Range Domestic Equity 65% 8.5% 9.5% 5.52% 6.17% International Equity 10% 5.0% - 6.0% 0.50% 0.60% IDomestic Bonds 20% 5.0% - 6.0% 1.00% 1.20% Cash 5% 1.0% - 1.5% 0.05% 0.07% Total 7.07% 8.04% Salary Increases: 5.00%per annum Professional judgment and input from the plan sponsor was used to develop the salary increase assumption. As the active population is relatively small and over 75% of plan liabilities belong to inactive participants, Ithis assumption does not significantly impact plan liabilities. Mortality: RP 2000 with Scale AA projection to year 2016. IThe Societyof Actuaries are developing a new mortalitytable for governmental employees. Until such time as the mortality table for governmental employees is released, the RP-2000 shall be used as it Irepresents the most up to date table pending this release. ITermination: An experience-based,age-related set of rates;sample rates as follows: ( Probability of Probability of Age Termination AAe Termination 20 31.4% 40 5.1% I 25 16.1% 45 3.1% 30 9.6% 50 8.0% 35 7.0% 55 6.0% Professional judgment was used to develop the turnover rates.As the active population is relatively small and over 85% of plan liabilities belong to inactive participants,this assumption does not significantly impact plan liabilities. 1 1 Augusta-Richmond County 1945 Pension Plan Actuarial Valuation as of January 1, 2016 11 ISummaryof Actuarial Assumptions Methods (Continued) IDisability: Rates of disability are based on published studies conducted by the . Social Security Administration; sample rates as follows: I Probability of IMale Age Disability Female Age Probability of Disability 20 0.04% 20 0.02% I 30 0.10% 30 0.07% 40 0.23% 40 0.18% 50 0.64% 50 0.50% I60 2.24% 60 1.41% Professional judgment was used to develop disability rates.As retirees represent more than 85% of plan liabilities Ithis assumption does not significantly impact plan liabilities. Retirement: All participants are assumed to retire at age 60, or current age if later. IProfessional judgment was used to develop the retirement assumption.As the plan does not provide for significant early retirement subsidies and the active participants represent less than 15% of the population, this assumption does not significantly impact plan liabilities. ICOLA Increases: CPI is assumed to increase 3.00% Asset Method: Smoothed market value with a 5-year smoothing period. IFunding Method: Entry Age Normal:A method under which the actuarial present value of the projected I benefits of each individual included in an actuarial valuation is allocated on a level basis over the service of the individual between entry age and assumed exit age(s). I Changes Since the 1)The investment return assumption was decreased from 8.00%to 7.50%;2) Last Valuation: The mortality table was changed from 1983 GAM to RP 2000 with Scale AA projection to year 2016; 3) funding method was changed from Projected IUnit Credit to Entry Age Normal. I I I I Augusta-Richmond County 1945 Pension Plan 12 IActuarial Valuation as of January 1, 2016 Summary of Plan Provisions Effective Date: March 1, 1945 Eligible Employees: 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. Service: The period of continuous service from date of hire to termination date during which the participant made any required employee contributions. Earnings: Total Compensation paid to an employee. Employee Contributions: After-tax contributions of 5.00% of total compensation. Employee contributions will be accumulated with interest at a rate of 5.00%per annum. Highest Earnings: The highest monthly Earnings received within the 72-month period immediately preceding termination of employment. Accrued Benefit: 2.00% of Highest Earnings times Service. Normal Retirement: Eligibility Attainment of age 60 Benefit Accrued Benefit as of date of termination Early Retirement Eligibility Later of attainment of age 50 and completion of 15 years of Service Benefit (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. Disability: 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 13 Actuarial Valuation as of January 1, 2016 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. 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. Pre-retirement Death: 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 50% of the participants retirement benefit,payable until the death or remarriage of the surviving spouse. Vesting Schedule: 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% 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. Cost-of-Living_ 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. Changes Since the None Last Valuation: Augusta-Richmond County 1945 Pension Plan 14 Actuarial Valuation as of January 1, 2016