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HomeMy WebLinkAboutCalPERS Actuarial Valuation prepared by John Bartel, Bartel (13) CITY OF HUNTINGTON BEACH MISCELLANE®US AND SAFETY PLANS Ca1PPRS Actuarial Issues — 6/30/09 Valuation Preliminary Results JOHN E.BARTEL May 2.2011 Agenda Topic Page Definitions 1 Safety Plan 3 Miscellaneous Plan 7 Contribution Policy 11 2"d Tier Options: Benefit Factors 13 Current&Alternative Benefits 15 Estimated Savings 19 Projected Payroll 29 COMMUNICATION Meeting [ate 1d)O Z/ Agenda Item No.�� ��^�9 J®A) o_\cli,—s Dire ofhmt,,F-t beach\calp..s 6-30-09\be 11-05-02 h tmgt-1—hci celpers mi.c sefen't2 09\•I doc Alternative Benefits • Alternative Benefits—Employees Hired> 10/1/11 • Miscellaneous: 2%@55, 2%@602 • Safety: 3%@55, 2%@50, 2%@55 • All alternative formula have same ancillary benefits, FAEI for Miscellaneous and Safety • Estimated Long Term Savings 1.City pays member contributions Current 2% . 55 2% 60 Miscellaneous Savings n/a 1.0% 2.0% Current 3% 55 2% 50 2% 55 Safety Savings n/a 1.5% 3.3% 4.2% 2. ity does not pay member contribution for Tier 2 Current 2% 55 2% 60. Miscellaneous Savings n/a 6.8% 7.8% Current 30/o 55 2% 50 2% 55 Safety Savings n/a 8.2% 10.0% 11.0% 2 We did not include 1.5%Q 65 for Miscellaneous because no agency has contracted this formula. May 2,2011 17 Alternative Benefits 3. ity does not pay member contributions for Tier 1 or Tier 2 2% 55 2% 60 Tier 2 Savings 6.8% 7.8% Tier 1 Savings: 5.8% 5.8% 3% 55 2% 50 2% 55 Total Tier 2 Savings 8.2% 10.0% 11.0% Tier I Savings: 6.8% 6.8% 6.8% ■ Estimated Savings • Projections based on benefits earned, not benefits being paid out • Tier 1 savings % apply to Tier I payroll, Tier 2 savings % apply to Tier 2 payroll May 2,2011 18 1 Estimated Savings (000,S) Miscellaneous 1. Both Tier 1 and Tier 2 with EPMC Savings 2.0% 55 Savings 2.0% 60 Employer Employee Employer Employee Year, Co' ntributioin Contribution Total Contribution Contribution Total 2011/12 $ 36 $ - $ 36 $ 72 $ - $ 72 2012/13 68 - 68 138 - 138 2013/14 100 - 100 202 - 202 2014/15 133 - 133 270 - 270 2015/16 169 - 169 342 - 342 2016/17 205 - 205 417 - 417 2017/18 244 - 244 495 - 495 2018/19 282 - 282 572 - 572 2019/20 322 - 322 655 - 655 2020/21 362 - 362 736 - 736 2021/22 404 - 404 820 - 820 171 May 2,201 I 19 - Estimated Savings (000,S) Miscellaneous 2. Tier 1 with EPMC and Tier 2 without EPMC Savings 2.0% 55 Savings 2.0% 60 Employer Employee Employer Employee Year Contributioin Contribution Total Contribution Contribution Total 2011/12 $ 36 $ 211 $ 247 $ 72 $ 211 $ 283 2012/13 68 401 469 138 401 539 2013/14 100 589 689 202 589 791 2014/15 133 786 919 270 786 1,056 2015/16 169 996 1,165 342 996 1,338 2016/17 205 1,214 1,419 417 1,214 1,631 2017/18 244 1,441 1,685 495 1,441 1,936 2018/19 282 1,665 1,947 572 1,665 2,237 2019/20 322 1,906 2,228 655 1,906 2,561 2020/21 362 2,142 2,504 736 2,142 2,878 2021/22 404 2,386 2,790 820 2,386 3,206 May 2,201 1 20 - - Estimated Savings (000's) Miscellaneous 3. Both Tier 1 and Tier 2 without EPMC Savin s 2% 55 Savin s 2% 60 Employer Employee Employer, Employee Year Contributioin Contribution Total Contribution Contribution Total 2011/12 $ 36 $ 3,066 $ 3,102 $ 72 $ 3,066 $ 3,138 2012/13 68 3,165 3,233 138 3,165 3,303 2013/14 100 3,268 3,368 202 3,268 3,470 2014/15 133 3,374 3,507 270 3,374 3,644 2015/16 169 3,484 3,653 342 3,484 3,826 2016/17 205 3,597 3,802 417 3,597 4,014 2017/18 244 3,714 3,958 495 3,714 4,209 2018/19 282 3,835 4,117 572 3,835 4,407 2019/20 322 3,960 4,282 655 3,960 4,615 2020/21 362 4,088 4,450 736 4,088 4,824 2021/22 404 4,221 4,625 820 4,221 5,041 May 2,2011 21 Estimated Savings (000's) This page intentionally left blank. Dz P, May z,zon 22 Estimated Savings (000's) Safety 1. Both Tier 1 and Tier 2 with EPMC Savin s 3% 55 Savin s 2% 50 Employer Employee Employer Employee Year Con'tributioin Contribution Total Contribution Contribution Total 2011/12 $ 21 $ - $ 21 $ 46 $ - $ 46 2012/13 48 - 48 104 - 104 2013/14 80 - 80 175 - 175 2014/15 112 - 112 243 - 243 2015/16 146 - 146 318 318 2016/17 182 - 182 397 - 397 2017/18 220 - 220 479 - 479 2018/19 258 - 258 561 - 561 2019/20 297 - 297 647 - 647 2020/21 336 - 336 732 - 732 2021/22 380 - 380 826 - 826 May 2,2011 23 Estimated Savings (000's) Safety 1. Tier 1 and Tier 2 with EPMC Savings 2% 55 Employer Employee Year Contribution Contribution Total 2011/12 $ 60 $ - $ 60 2012/13 136 - 136 2013/14 228 - 228 2014/15 317 - 317 2015/16 415 - 415 2016/17 517 - 517 2017/18 623 - 623 2018/19 730 - 730 2019/20 842 - 842 2020/21 953 - 953 2021/22 1,076 - 1,076 May 2,2011 24 Estimated Savings (000,S) Safety 2. Tier 1 with EPMC, Tier 2 without EPMC Savin s 3% 55 Savings 2% 50 Employer Employee Employer Employee Year Contributioin Contribution . Total Contribution Contribution Total 2011/12 $ 19 $ 94 $ 113 $ 47 $ 94 $ 141 2012/13 43 215 258 106 215 321 2013/14 71 361 432 178 361 539 2014/15 99 501 600 247 501 748 2015/16 130 655 785 323 655 978 2016/17 162 817 979 402 817 1,219 2017/18 195 985 1,180 485 985 1,470 2018/19 228 1,154 1,382 569 1,154 1,723 2019/20 263 1,331 1,594 656 1,331 1,987 2020/21 298 1,506 1,804 742 1,506 2,248 2021/22 337 1,701 2,038 838 1,701 2,539 May 2,2011 25 - Estimated Savings (000,S) Safety 2. Tier 1 with EPMC, Tier 2 without EPMC Savings 2% 55 Employer Employee Year Contribution Contribution Total 2011/12 $ 62 $ 94 $ 156 2012/13 140 215 355 2013/14 236 361 597 2014/15 327 501 828 2015/16 428 655 1,083 2016/17 534 817 1,351 2017/18 644 985 1,629 2018/19 754 1,154 1,908 2019/20 870 1,331 2,201 2020/21 984 1,506 2,490 2021/22 1,112 1,701 2,813 Safety { May 2,2011 26 .- Definitions Present Value of Benefits June 30,2009 Future Normal Cnsts _ Current Normal Cost Actuarial Liability ■ PVB-Present Value of all Projected Benefits: • Discounted value (at valuation date - 6/30/09), 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 s Current Normal Cost: • Portion of PVB allocated to(or"earned"during) current year • Value of employee and employer current service benefit May 2,2011 1 Definitions Present Value of Benefits June 30,2009 IJnNnded PVB Eccess Assets c 9«4 ttry Actuarial Liability - ■ 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 point in time. • Doesn't mean you're done contributing. ■ 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. May 2,2011 2 -- Summary of Demographic Information Safe 1994 .2001 2008 2009. Actives ■ Counts 388 381 374 387 ■ Average ® Age 41 41 41 41 City Service 15 13 12 13 PERSable Wages $56,600 $72,700 $98,400 $104,400 ■ Total PERSable Wages millions 22.0 27.7 36.8 40.4 Receiving Payments ■ Counts Service 133 218 220 ® Disablity 172 202 205 Beneficiaries 18 36 35 Total 197 323 456 460 ■ Average Annual City Provided Benefit • Service $38,600 $51,400 $52,600 • Disability 29,100 39,100 41,200 • Service Retirements in last 5 years 36,300 57,100 56,800 6, }. May 2,2071 3 Members Included in Valuation Safety 500 450 400 350 300 250 200 150 100 50 1994 1995 1996 1997 1998 1999 2000 2001 2012 2003 2004 2005 2006 2007 2008 2009 ❑Active 388 371 364 364 357 372 363 381 370 371 349 351 372 375 374 387 ®Receiving Payments 197 246 249 263 287 306 318 323 348 374 407 417 427 439 457 462 i r�_{ May 2,2011 4 Funded Status Safety j 120% I 100% a 80% i f 60% 40% a: 20% 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 ❑Funded Ratio-AVA 101% 96% 96% 106%113%119%112%104% 91% 84% 83% 83% 82% 82% 81% 77% 76% 71% pFundedRatio-MVA 100%102%104%118%125%130%117% 97% 83% 77% 82% 85%1 88% 6/30/10&6/30/11 funded status estimated 1> E May 2,2011 5 Employer Rate Projections Safety Investment Return Varies (7.75%) 55% 50% 45% h---- --.A........ .A......... ....----.A....-----A 40% I 35% 30% 25% 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 �-UnMod AVA,Exp IR 28.0% 29.2% 41.5% 41.6% 41.6% 41.6% 41.7% 4L7% -0--Mod AVA,Poor IR 28.0% 29.2% 34.2% 34.9% 43.2% 46.0% 48.4% 50.2% -�Mod AVA,Exp IR 28.0% 29.2% 34.2% 34.9% 39.4% 39.7% 40.1% 40.4% Mod AVA,Good IR 28.0% 29.2% 34.2% 34.9% 35.4% 35.6% .35.7% 35.6% I May 2,2011 6 ' Summary of Demographic Information Miscellaneous 1994 2001 2008 '2009 Actives ■ Counts 709 705 742 723 ■ Average • Age 44 46 47 47 ® City Service 12 13 13 13 • PERSable Wages $47,000 $51,000 $64,400 $67,000 ■ Total PERSable Wages millions 33.5 36.0 47.8 48.4 Receiving Payments ■ Counts Service 366 474 518 Disablity 79 85 89 Beneficiaries 56 82 88 Total 301 441 641 695 ■ Average Annual City Provided Benefit Service $15,700 $20,100 $22,500 Disability 8,400 9,700 9,300 Service Retirements in last 5 years, 17,500 19,400 24,300 May 2,2011 7 — Members Included in Valuation Miscellaneous 800 700 600 i 500 400 300 200 100 1994 1 1995 1 1996 1 1997 1 1998 1 1999 1 2000 2001 2002 2003 2004 2005 1 2006 1 2007 2008 2009 ❑Active 709 1 675 1 660 1 655 1 645 1 666 1 701 705 702 663 640 648 1 687 1 729 742 723 9 Receiving Payments 301 331 328 346 3641 396 424 442 451 507 551 580 600 625 641 695 I May 2,2011 8 -- Funded Status (Millions) Miscellaneous 160% - 140% 120% x 100% ? X I 60% 40% 20% 0% 1994 1995 1996 1997 1998 1999 2000 2001 2002 1 2003 2004 2005 2006 2007 2008 2009 2010 2011 ❑Funded Ratio-AVA 103%104%108%127%141%143%141%134%116%102%101% 98% 98% 97% 96% 88% 87% 81% ®Funded Ratio-MVA 103%110%117%141%1571152%148%125%L06% 92% 99% 301%104%ll3l 98% 65% 68% 68% 6/30/10&6/30/11 funded status estimated 1-, May 2,2011 9 Employer Rate Projections Miscellaneous Investment Return Varies (7.75%) 30% 25% i 20% 15% I 10% I i 5% 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 A UnMod AVA,Exp IR 9.8% 10.2% 20.2% 20.5% 20.8% 21.0% 21.1% 21.3% -11-Mod AVA,Poor 1R 9.8% 10.2% 15.3% 16.0% 21.9% 24.1% 26.0% 27.5% �Mod AVA,Ex IR 9.8% 10.2% 15.3% 16.0% 19.1% 19.5% 20.0% 20.4% -�Mod AVA,Good IR 9.8% 1 10.2% 15.3% 16.0% 16.5% 16.8% 17.0% 17.2% May 2,2011 10 Contribution Policy ■ Consider policy implications of not increasing Ca1PERS contributions: • UAL not being paid off • Generational shift of Unfunded Liability • Similar to minimum payment on credit card balance 7. 1May 2,2011 11 -- Contribution Policy ® Consider one of the following: • Adjust contribution to get rate close to rate prior to asset smoothing modification ❑ Requires changing amortization period each year: O Asking CalPERS to use "Fresh Start" O Higher rates 2011/12 and beyond • Use one time money to buy down the UAL ❑ Requires discussing with Ca1PERS before sending money May 2,2011 12 Benefit Factors Miscellaneous Age 2%(a)60 2%(a)55 2.5% 55 2.7%(&55 3%na,60 50 1.092% 1.426% 2.000% 2.000% 2.000% 51 1.156% 1.522% 2.100% 2.140% 2.100% 52 1.224% 1.628% 2.200% 2.280% 2.200% 53 1.296% 1.742% 2.300% 2.420% 2.300% 54 1.376% 1.866% 2.400% 2.560% 2.400% 55 1.460% 2.000% 2.500% 2.700% 2.500% 56 1.552% 2.052% 2.500% 2.700% 2.600% 57 1.650% 2.104% 2.500% 2.700% 2.700% 58 1.758% 2.156% 2.500% 2.700% 2.800% 59 1.874% 2.210% 2.500% 2.700% 2.900% 60 2.000% 2.262% 2.500% 2.700% 3.000% 61 2.134% 2.314% 2.500% 2.700% 3.000% 62 2.272% 2.366% 2.500% 2.700% 3.000% 63 2.418% 2.418% 2.500% 2.700% 3.000% 64 2.418% 2.418% 2.500% 2.700% 3.000% 65 2.418% 2.418% 2.500% 2.700% 3.000% Member Contribution Rate 7% 7% 8% 8% 8% May 2,2011 13 Benefit Factors Safety Age 2% @55 2% @50 3% @55 3% @50 50 1.426% 2.00% 2.40% 3.00% 51 1.522% 2.14% 2.52% 3.00% 52 1.628% 2.28% 2.64% 3.00% 53 1.742% 2.42% 2.76% 3.00% 54 1.866% 2.56% 2.88% 3.00% 55 2.00% 2.70% 3.00% 3.00% 56 2.00% 2.70% 3.00% 3.00% 57 2.00% 2.70% 3.00% 3.00% 58 2.00% 2.70% 3.00% 3.00% 59 2.00% 2.70% 3.00% 3.00% 60 2.00% 2.70% 3.00% 3.00% Member Contribution Rate 8% 9% 9% 9% i May 2,2011 14 Current Benefits ■ Key Terminology/Acronyms • FAE—Final Average Earnings • PRSA—Post Retirement Survivor Allowance • COLA—Cost of Living Adjustment • EPMC—Employer Paid Member Contributions • ER Contr—Employer Contributions • PERS on PERS ❑ Extra `cost' based on each benefit component that is attributable to contributions being PERSable wages. 7 May 2,2011 15 Current Benefits Miscellaneous Safety • Benefit Formula 2.5% @ 55 3% @ 50 • FAE One Year(FAE1) One Year(FAE1) • PRSA No No • COLA 2% 2% • EPMC1 5.75% 6.75% • 11/12 ER Contr. Normal Cost 8.0% 18.1% Amortizations 7.3 1.6.1 Subtotal 15.3 34.2 • EPMC 5.8 6.8 • PERS on PERS 0.0 0.0 • Total 21.1 41.0 I Through September 2011,employees pay an average 4.25%member contribution. Starting October 2008. employees pay an average 2.25%member contribution. EPMC is not reported as PERSable wages. May 2,2011 16 Estimated Savings (000's) 3. Both Tier 1 and Tier 2 without EPMC Savin s 3% 55 Savin s 2% 50 Employer Employee . Employer Employee Year Contributioin Contribution Total Contribution Contribution Total 2011/12 $ 19 $ 3,000 $ 3,019 $ 47 $ 3,000 $ 3,047 2012/13 43 3,098 3,141 106 3,098 3,204 2013/14 71 3,199 3,270 178 3,199 3,377 2014/15 99 3,303 3,402 247 3,303 3,550 2015/16 130 3,410 3,540 323 3,410 3,733 2016/17 162 3,521 3,683 402 3,521 3,923 2017/18 195 3,635 3,830 485 3,635 4,120 2018/19 228 3,753 3,981 569 3,753 4,322 2019/20 263 3,875 4,138 656 3,875 4,531 2020/21 298 4,001 4,299 742 4,001 4,743 2021/22 337 4,131 4,468 838 4,131 4,969 l _i 1 ; May 2,2011 27 Estimated Savings (000's) Safety 3. Both Tier 1 and Tier 2 without EPMC Savings 2% 55 Employer Employee Year Contribution Contribution Total 2011/12 $ 62 $ 3,000 $ 3,062 2012/13 140 3,098 3,238 2013/14 236 3,199 3,435 2014/15 327 3,303 3,630 2015/16 428 3,410 3,838 2016/17 534 3,521 4,055 2017/18 644 3,635 4,279 2018/19 754 3,753 4,507 2019/20 870 3,875 4,745 2020/21 984 4,001 4,985 2021/22 1,112 4,131 5,243 May 2,2011 28 Projected Payroll (000,S) Miscellaneous Year Tien I-' Tier 2 _: Total 2011/12 $ 49,648 $ 3,668 $ 53,317 2012/13 48,073 6,976 55,050 2013/14 46,598 10,241 56,839 2014/15 45,022 13,664 58,686 2015/16 43,268 17,325 60,593 2016/17 41,453 21,110 62,562 2017/18 39,527 25,068 64,596 2018/19 37,744 28,951 66,695 2019/20 35,706 33,156 68,863 2020/21 33,848 37,252 71,101 2021/22 31,919 41,493 73,411 07_1 May 2,2011 29 Projected Payroll (000,S) Safety Year" �� ��:Tier 1'_ Tier 2 Total 2011/12 $ 43,052 $ 1,399 $ 44,451 2012/13 42,711 3,185 45,895 2013/14 42,044 5,343 47,387 2014/15 41,503 7,424 48,927 2015/16 40,812 9,705 50,517 2016/17 40,060 12,099 52,159 2017/18 39,259 14,595 53,854 2018/19 38,503 17,102 55,604 2019/20 37,689 19,723 57,412 2020/21 36,960 22,318 59,278 2021/22 36,005 25,199 61,204 May 2,2011 30 --