HomeMy WebLinkAboutAUGUSTA CITY 1949 PENSION PLAN ACTUARIAL VALUATION AS OF JANUARY 1, 2016 i
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Augusta City 1949 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
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 City 1949 Pension Plan
Actuarial Valuation as of January 1, 2016
Section I:
Highlights and Actuarial Certification
Augusta City 1949 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 $2,381,619 $2,256,722
-as a percent of payroll 109.6% 77.6%
Employer Recommended Contribution for the Plan Year $3,306,631 $2,941,590
-as a percent of payroll 152.1% 101.2%
-based on 10 year amortization of unfunded liability
Augusta City 1949 Pension Plan
Actuarial Valuation as of January 1, 2016
I
Report Highlights and Actuarial Certification
For the 2016 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.
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William G. Karbon,EA,MSPA,MAAA Date
Executive Vice President
Enrolled Actuary Number: 14-4568
kl\i-e/ '-' /-1 OrY‘i 6/1/cy;4.
Weixing Han,EA, QPA,MSPA. Date
Staff Actuary
Enrolled Actuary Number: 14-7501
Augusta City 1949 Pension Plan II
Actuarial Valuation as of January 1. 2016
Section II:
Funding Development
Augusta City 1949 Pension Plan
Actuarial Valuation as of January 1, 2016
Normal Cost
Normal Cost by Plan Benefit Type 2016 2014
a. Retirement Benefits $131,751 $351,059
b. Termination Benefits 42,951 14,526
c. Disability Benefits 24,209 0
d. Death Benefits 0 0
e.Total Normal Cost $198,911 $365,585
f. Interest for the Plan Year 14,918 29,247
g. Cost of Pre-Retirement Death Benefit 0 0
h. Normal Cost for the Plan Year $213,829 $394,832
-as a percent ofpayroll 9.8% 13.6%
Augusta City 1949 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 $64,261,414
b. Interest on item (1a.) to the end of 2015 10,693,099
c. Contributions made for the 2014 and 2015 Plan Year* 4,908,138
d. Interest on item (1c.) 196,326
e. Expected Benefit Payments for 2014 and 2015 with interest 13,848,268
f. Expected Actuarial Value of Assets as of January 1, 2016 $66,210,708
g.Actuarial Value of Assets as of January 1, 2016** 67,919,808
h.Actuarial Asset Gain/(Loss) (g. - f.) $1,709,100
2. Actuarial Liability Gain/(Loss)
a.Actuarial Accrued Liability as of January 1, 2014 $82,674,584
b. Normal Cost for 2014 and 2015 731,170
c. Interest on items (2a. + 2b.) 13,847,131
d. Expected Benefit Payments for 2014 and 2015 with interestst 13,848,268
e. Expected Actuarial Accrued Liability as of January 1, 2016 $83,404,617
f.Actuarial Accrued Liability as of January 1, 2016 81,343,993
g.Actuarial Liability Gain/(Loss) (e. - f.) $2,060,624
3. Total Actuarial Gain/(Loss) (1.j. + 2.i.) $3,769,724
4.Adjustment for full funding and/or negative unfunded accrued liability $0
5. Actuarial Gain/(Loss) subject to amortization $3,769,724
*Includes estimated employee contributions and estimated 2015 employer contribution.
**Reflects change to asset smoothing.
2
Augusta City 1949 Pension Plan
Actuarial Valuation as of January 1, 2016
Development of Minimum Annual Contribution
2016 2014
1. Participant Counts
a. Active Participants 46 59
b. Retirees and Beneficiaries 197 191
c. Deferred Vested (former employees) 7 7
d. Disabled in Pay Status 0 0
e. Total 250 257
2. Covered Compensation for Active Participants $2,173,529 $2,906,852
3. Actuarial Accrued Liability
a. Active Participants $20,896,458 $22,243,104
b. Retirees and Disabled 68,309,794 59,663,054
c. Deferred Vested (former employees) 974,662 768,426
d. Total $90,180,914 $82,674,584
4. Actuarial Asset Value (see page 7 for detail)* $67,919,808 $64,261,414
5. Unfunded Actuarial Accrued Liability (3. - 4.) $22,261,106 $18,413,170
6. Total Amortizations $2,318,118 $2,059,237
7. Normal Cost for the Plan Year $213,829 $394,832
8. Administrative Expenses for the Plan Year $0 $0
9. Minimum Contribution for the Plan Year
a. Employer Contribution $2,381,619 $2,256,722
b. Estimated Employee Contribution 150,328 197,347
c. Total (Before Application of the Credit Balance) $2,531,947 $2,454,069
10. Employer Contributions as a Percent of Payroll 109.6% 77.6%
11. Employee Contributions as a Percent of Plan Cost 5.9% 8.0%
*Reflects change to asset smoothing.
Augusta City 1949 Pension Plan 3
Actuarial Valuation as of January 1, 2016
Funding Standard Account (Level Dollar)
2016 2014-2015
Charges:
a. Employer Normal Cost (end of year)* $63,501 $394,970
b. Expenses (end of year) 0 0
c. PreRetirement Death Benefit Expense 0 0
d. Amortization Charges (end of year) 2,928,885 4,496,206
e. Total $2,992,386 $4,891,176
Credits:
a. Prior Year Credit Balance $0 $0
b. Employer Contributions for Plan Year N/A 4,513,444
c. Interest on a. and b. 0 0
d. Amortization Credits 610,767 377,732
e. Total N/A $4,891,176
Credit Balance N/A $0
*Net of estimated employee contributions
Augusta City 1949 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. Fresh Start 2009 $9,167,493 30 23 $781,499 $8,445,412
b. 2009-2010 Actuarial Loss 2011 2,023,476 15 10 231,098 1,586,275
c. 2011 Actuarial Loss 2012 7,943,782 15 11 905,682 6,625,448
d. 2012 Actuarial Loss 2013 2,305,139 15 12 262,373 2,029,529
e. Assumption Change 2016 8,836,921 30 30 748,233 8,836,921
f. Total $2,928,885 $27,523,585
Credits:
Date Initial Initial Years Amortization Outstanding
Description Established Amount Years Remaining Amount Balance
a. 2013 Actuarial Gain 2014 $1,616,596 15 13 $183,705 $1,492,756
b. 2014-2015 Actuarial Gain 2016 3,769,724 15 15 427,062 3,769,724
c. Total $610,767 $5,262,480
Total Amortizations $2,318,118 $22,261,105
Equation of Balance:
1. Net amount of amortizations outstanding as of January 1, 2016 $22,261,105
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.) $22,261,106
Augusta City 1949 Pension Plan 5
Actuarial Valuation as of January 1, 2016
Reconciliation of Plan Assets
1. Fund Balance of Plan Assets as of January 1, 2014 $68,369,201
2. Changes in Assets During the Year
Income
a. Employer Contributions $4,181,054
b. Employee Contributions 331,164
c. Interests and Dividends 4,105,357
d. Money Market Earnings 0
e. Realized and Unrealized Gains 654,441
f. Other Income 1,325,727
g. Total Income 10,597,743
Disbursements
h. Benefits Paid 12,821,152
i. Foreigh Taxes Withheld 0
j. Investment Fees 894,290
k. Other 45
1. Total Disbursements 13,715,487
Net Income ($3,117,744)
3. Fund Balance of Plan Assets as of January 1,2016 $65,251,457
4. Employer Contributions Receivable 2,256,722
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 $67,508,179
9. Actuarial Value of Assets as of January 1, 2016* $67,919,808
*Reflects change to asset smoothing.
Augusta City 1949 Pension Plan 6
Actuarial Valuation as of January 1, 2016
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Reconciliation of Plan Assets (Continued)
Contributions
Interest to
Applied to Employer Employee End of Plan
Date Plan Year Contribution Contribution Year Total
Payments Made
During 2014 2014 $0 $185,458 $0 $185,458
Payments Made
During 2014 2013 $1,924,332 $0 $0 $1,924,332
Payments Made
During 2015 2015 $145,706 $0 $145,706
Payments Made
During 2015 2014 $2,256,722 $0 $0 $2,256,722
Payments Made
During 2016 2015 $2,256,722 $0 $0 $2,256,722
Augusta City 1949 Pension Plan 8
Actuarial Valuation as of January 1, 2016
Section III:
Valuation Data Summary
Augusta City 1949 Pension Plan
Actuarial Valuation as of January 1, 2016
Active and Inactive Participant
Statistical Information
Participant Statistics
Active Participants January 1, 2016 January 1, 2014
a. Number 46 59
b. Average Age 57.08 55.81
c. Average Service 34.64 32.80
d. Average Compensation $49,849 $51,978
Deferred Vested Participants
a. Number 7 7
b. Average Annual Benefits $14,400 $14,400
Retirees and Beneficiaries
a. Number 197 191
b. Average Annual Benefits $31,188 $25,607
Disabled Participants Receiving Benefits
a. Number 0 0
b. Average Annual Benefits N/A N/A
9
• Augusta City 1949 Pension Plan
Actuarial Valuation as of January 1, 20l
Section IV:
Financial Information
Augusta City 1949 Pension Plan
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) $68,309,794
ii. Deferred Vested (former employees) 974,662
iii. Vested Active Participants 19,271,339
Total 88,555,795
b. Nonvested 0
Total $88,555,795
2. Effect of Future Salary Increases 1,625,119
3. Total Actuarial Accrued Liability 90,180,914
4. Net Assets Available for Benefits (including receivables) 67,508,179
5. Net Assets in Excess of Actuarial Present Value of ($21,047,616)
Accumulated Plan Benefits
6. Principal Actuarial Assumptions
a. Investment Return 7.5%
b. Rate of Future Salary Increases 5.5%
(not applicable to Accumulated Plan Benefits calculations)
Augusta City 1949 Pension Plan 10
Actuarial Valuation as of January 1, 2016
Section V:
Actuarial Assumptions and Plan Provisions
Augusta City 1949 Pension Plan
Actuarial Valuation as of January 1, 2016
Summary of Actuarial Assumptions and Methods
Investments Return: 7.50%per annum
For 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
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%
Domestic 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: 5.50%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,
this assumption does not significantly impact plan liabilities.
Mortality: RP 2000 with Scale AA projection to year 2016.
The Society of Actuaries are developing a new mortality table for governmental employees. Until such
time as the mortality table for governmental employees is released, the RP-2000 shall be used as it
represents the most up to date table pending this release.
Termination: An experience-based,age-related set of rates;sample rates as follows:
Probability Probability of
Age of Age Termination
20 6.64% 40 4.04%
25 5.35% 45 3.57%
30 4.93% 50 2.17%
35 4.61% 55 1.38%
Professional judgment was used to develop the turnover rates.As the active population is relatively small and over
75% of plan liabilities belong to inactive participants,this assumption does not significantly impact plan liabilities.
Augusta City 1949 Pension Plan
Actuarial Valuation as of January 1, 2016 11
Summary of Actuarial Assumptions and Methods (Continued)
Disability: Rates of disability are based on published studies conducted by the
Social Security Administration; sample rates as follows:
Probability Female Probability of
Male Age of Disability Age Disability
20 0.13% 20 0.04%
30 0.21% 30 0.16%
40 0.44% 40 0.39%
50 1.09% 50 0.94%
60 2.90% 60 1.93%
Professional judgment was used to develop disability rates.As retirees represent more than 75% of plan liabilities
this assumption does not significantly impact plan liabilities.
Retirement: All participants are assumed to retire at normal retirement,or current age of later.
Professional 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 25% of the population,this assumption
does not significantly impact plan liabilities.
COLA Increases: CPI is assumed to increase 3.00%
Asset Method: Smoothed market value with a 5-year smoothing period.
•
Funding Method:
Entry Age Normal:A method under which the actuarial present value of the
projected 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).
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
Unit Credit to Entry Age Normal.
Augusta City 1949 Pension Plan
Actuarial Valuation as of January 1, 2016 12
Summary of Plan Provisions
Effective Date: March 1, 1949
Eligible Employees: 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.
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 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.
Average Earnings: The average annual pay rate during the last three years of employment.
preceding termination of employment.
Accrued Benefit: 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.
Normal Retirement:
Eligibility 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.
Benefit Accrued Benefit as of date of termination
Early Retirement
Eligibility Any date no more than five years prior to normal retirement,after completing
at least 20 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 1/2% for each month that payments commence prior to normal retirement.
Disability: 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, 2016 13
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
Earnings 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.
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.
Vesting Schedule: 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, 2016 14
Summary of Plan Provisions (Continued)
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 Last None
Actuarial Report:
Augusta City 1949 Pension Plan
Actuarial Valuation as of January 1, 2016 15