CITY OF SAUSALITO MISCELLANEOUS AND SAFETY PLANS. CalPERS Actuarial Issues 6/30/14 Valuation Preliminary Results

Transcription

1 CITY OF SAUSALITO MISCELLANEOUS AND SAFETY PLANS CalPERS Actuarial Issues 6/30/14 Valuation Preliminary Results Presented by John Bartel, President Prepared by Bianca Lin, Assistant Vice President Kevin Yang, Actuarial Analyst Bartel Associates, LLC May 17, 2016 Agenda Topic Page Definitions 1 CalPERS Changes 3 Investment Return 5 Miscellaneous Plan: Demographic Information 7 Plan Funded Status 8 Contribution Rates & Projections 9 Police Safety Plan: Demographic Information 17 Plan Funded Status 18 Contribution Rates & Projections 19 Fire Safety Plan: Demographic Information 27 Plan Funded Status 28 Contribution Rates & Projections 29 PEPRA 35 Paying Down the Unfunded Liability 37 o:\clients\city of sausalito\projects\calpers\ \ba sausalitoci calpers misc safety 14.docx Page 1 of 20

2 DEFINITIONS Present Value of Benefits June 30, 2014 Future Normal Costs Current Normal Cost Actuarial Liability PVB - Present Value of all Projected Benefits: Discounted value (at valuation date - 6/30/14), 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 Current Normal Cost: Portion of PVB allocated to (or earned during) current year Value of employee and employer current service benefit May 17, DEFINITIONS Present Value of Benefits June 30, 2014 Actuarial Liability Unfunded PVB (Unfunded 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 Page 2 of 20 May 17,

3 CALPERS CHANGES Contribution policy changes: No asset smoothing 5-year ramp up Included in 6/30/13 valuation (first impact 15/16 rates; full impact 19/20) Assumption changes: Anticipate future mortality improvement Other, less significant, changes Included in 6/30/14 valuation (first impact 16/17 rates; full impact 20/21) Risk Pool changes All Risk Pools combined into one Miscellaneous & one Safety Collect payment on UAL as dollar amount, not as % of pay Payments allocated to agencies based on liability & assets rather than payroll Included in 6/30/13 valuation (impacts 15/16 rates) May 17, CALPERS CHANGES Risk Mitigation Strategy Move to more conservative investments over time Only when investment return is better than expected Lower discount rate in concert Essentially use 50% of investment gains to pay for cost increases Likely get to 6.5% over 20 years May 17, Page 3 of 20

4 CALPERS CHANGES 7.75% Discount Rate used as of Actuarial Valuation Date 7.50% 7.25% 7.00% 6.75% 6.50% 6.25% 95th percentile 75th percentile 50th percentile 25th percentile 5th Percentile May 17, INVESTMENT RETURN 30.00% MVA 22.50% 15.00% 7.50% 0.00% -7.50% % % % Est MVA 2.0% 16.3%15.3%20.1%19.5%12.5%10.5%-7.2% -6.0% 3.7% 16.6%12.3%11.9%18.8%-5.1% %21.7% 0.1% 13.2%18.4% 2.4% 0.5% Above assumes contributions, payments, etc. received evenly throughout year. Estimated June 30, 2016 based on CalPERS actual (1.3%) return through 3/31/16 and assumed 7.5% annual return for the remaining 3 months. Page 4 of 20 May 17,

5 SUMMARY OF DEMOGRAPHIC INFORMATION - MISCELLANEOUS Actives Counts Average PERSable Wages $46,200 $83,000 $83,800 $86,600 Total PERSable Wages (millions) Inactive Counts Transferred n/a Separated n/a Retired May 17, FUNDED STATUS - MISCELLANEOUS Present Value of Benefits June 30, 2013 Present Value of Benefits June 30, 2014 Actuarial Liability Unfunded PVB Actuarial Liability Unfunded PVB (Unfunded Liability) (Unfunded Liability) June 30, 2013 June 30, 2014 $ 8,300,000 Active AAL $ 9,300,000 15,700,000 Retiree AAL 17,000,000 3,700,000 Inactive AAL 4,300,000 27,700,000 Actuarial Liability 30,600,000 21,100,000 Market Asset Value 24,500,000 (6,600,000) (Unfunded Liability) (6,100,000) May 17, Page 5 of 20

6 CONTRIBUTION RATES - MISCELLANEOUS Required Employer Contribution Risk Pool s Net Employer Normal Cost 6/30/13 Valuation 2015/2016 Contribution Rates Total 1 Tier I Tier II PEPRA 2.5%@55 2%@55 2.5%@67 9.0% 9.1% 8.0% 6.0% Class 1 Benefits FAC1 0.6% 0.6% 0.0% 0.0% PRSA 0.9% 0.9% 0.8% 0.7% Risk Pool s Payment on Amortization Bases 7.8% 8.1% 0.0% 0.0% Amortization of Side Fund 0.0% 0.0% 0.0% 0.0% Total ER Contribution 18.3% 18.7% 8.8% 6.7% Total ER Contribution $ $781 1 Weighting of total contribution projection based on estimated projected Tier 2 and PEPRA payrolls May 17, CONTRIBUTION RATES - MISCELLANEOUS Required Employer Contribution Risk Pool s Net Employer Normal Cost 6/30/14 Valuation 2015/2016 Contribution Rates Total 2 Tier I Tier II PEPRA 2.5%@55 2%@55 2.5%@67 9.2% 9.5% 8.2% 6.3% Class 1 Benefits FAC1 0.5% 0.6% 0.0% 0.0% PRSA 0.7% 0.7% 0.8% 0.7% Risk Pool s Payment on Amortization Bases 9.3% 10.5% 0.0% 0.0% Amortization of Side Fund 0.0% 0.0% 0.0% 0.0% Total ER Contribution 19.6% 21.3% 9.0% 6.9% Total ER Contribution $ $817 2 Weighting of total contribution projection based on estimated projected Tier 2 and PEPRA payrolls May 17, Page 6 of 20

7 CONTRIBUTION PROJECTIONS - MISCELLANEOUS Market Value Investment Return: June 30, % 3 June 30, % 4 Future returns based on stochastic analysis using 1,000 trials Single Year Returns at 25 th Percentile 50 th Percentile 75 th Percentile 7.5% Investment Mix 0.6% 7.5% 15.3% 6.5% Investment Mix 1.3% 6.5% 11.9% No Other: Gains/Losses, Method/Assumption Changes, Benefit Improvements Excludes Employer Paid Member Contributions (EPMC) Excludes employee cost sharing Includes Tier 2 (2%@55) effective January 1, 2013 New hire assumptions: Assumes 50% of 2013 new hires will be Classic Tier 2 Members (2%@55) and 50% will be New Members with PEPRA benefits. Assumes Classic Members will decrease from 50% to 0% of new hires over 20 years. 3 4 Based on CalPERS CAFR. June 30, 2016 return based on CalPERS return of (1.3%) through 3/31/16 and assumed future returns for 3 months. May 17, CONTRIBUTION PROJECTIONS - MISCELLANEOUS 40% 35% 30% 25% 20% 15% 10% 5% 28.8% 29.3% 30.0% 30.3% 25.1% 26.2% 27.7% 22.9% 20.9% 19.6% 18.3% 18.8% 19.3% 20.0% 20.4% 17.7% 15.3% 16.4% 12.9% 10.5% 10.4% 9.3% 10.8% 10.1% 9.9% 9.8% 9.8% 10.0% 10.0% 10.0% 10.0% 9.9% 7.8% 0% 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 24/25 25/26 75th Percentile Total 25th Percentile Normal Cost UAL Payment May 17, Page 7 of 20

8 CONTRIBUTION PROJECTIONS - MISCELLANEOUS $2,200 $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 1,645 1,578 1,497 1,429 1,333 1,227 1,138 1,106 1,053 1, /16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 24/25 25/26 75th Percentile Total 25th Percentile Normal Cost UAL Payment May 17, CONTRIBUTION PROJECTIONS - MISCELLANEOUS 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 75th Percentile 50th Percentile 50th Percentile -No Risk Mitigation 25th Percentile May 17, Page 8 of 20

9 FUNDED STATUS - MISCELLANEOUS Funded Status - With Risk Mitigation 200% 150% 100% 50% 0% 75th Percentile 50th Percentile 25th Percentile May 17, FUNDED STATUS - MISCELLANEOUS This page intentionally left blank. May 17, Page 9 of 20

10 SUMMARY OF DEMOGRAPHIC INFORMATION POLICE SAFETY Actives Counts Average PERSable Wages $71,000 $115,300 $116,400 $116,800 Total PERSable Wages (millions) Inactive Counts Transferred Separated Retired May 17, SUMMARY OF DEMOGRAPHIC INFORMATION POLICE SAFETY Present Value of Benefits June 30, 2013 Present Value of Benefits June 30, 2014 Actuarial Liability Unfunded PVB Actuarial Liability Unfunded PVB (Unfunded Liability) (Unfunded Liability) June 30, 2013 June 30, 2014 $ 4,400,000 Active AAL $ 5,800,000 20,200,000 Retiree AAL 21,700,000 3,900,000 Inactive AAL 3,700,000 28,500,000 Actuarial Liability 31,200,000 20,700,000 Market Asset Value 23,900,000 (7,800,000) (Unfunded Liability) (7,300,000) May 17, Page 10 of 20

11 CONTRIBUTION RATES POLICE SAFETY 6/30/13 Valuation 2015/2016 Contribution Rates Total 5 Tier 1 Tier 2 PEPRA 3%@55 2%@50 2.7%@57 Required Employer Contribution Risk Pool s Base Employer Normal Cost 15.5% 15.6% 13.8% 10.9% Class 1 Benefits FAC1 0.9% 0.9% 0.0% 0.0% PRSA 1.6% 1.7% 1.6% 1.5% Risk Pool s Payment on Amortization Bases 11.4% 11.4% 0.0% 0.0% Amortization of Side Fund 17.3% 17.3% 0.0% 0.0% Total ER Contribution 46.7% 46.9% 15.4% 12.4% Total ER Contribution $ (in 000 s) $ Weighting of total contribution projection based on estimated projected Tier 2 and PEPRA payrolls May 17, CONTRIBUTION RATES POLICE SAFETY 6/30/14 Valuation 2016/2017 Contribution Rates Total 6 Tier 1 Tier 2 PEPRA 3%@50 2%@50 2.7%@57 Required Employer Contribution Risk Pool s Base Employer Normal Cost 16.5% 16.7% 14.8% 11.4% Class 1 Benefits FAC1 1.0% 1.1% 0.0% 0.0% PRSA 1.6% 1.6% 1.6% 1.5% Risk Pool s Payment on Amortization Bases 13.5% 13.5% 0.0% 0.0% Amortization of Side Fund 17.3% 17.4% 0.0% 0.0% Total ER Contribution 48.9% 50.2% 16.4% 12.9% Total ER Contribution $ (in 000 s) $1,029 6 Weighting of total contribution projection based on estimated projected Tier 2 and PEPRA payrolls May 17, Page 11 of 20

12 CONTRIBUTION PROJECTIONS - POLICE SAFETY Market Value Investment Return: June 30, % 7 June 30, % 8 Future returns based on stochastic analysis using 1,000 trials Single Year Returns at 25 th Percentile 50 th Percentile 75 th Percentile 7.5% Investment Mix 0.6% 7.5% 15.3% 6.5% Investment Mix 1.3% 6.5% 11.9% No Other: Gains/Losses, Method/Assumption Changes, Benefit Improvements Excludes Employer Paid Member Contributions (EPMC) Excludes employee cost sharing Includes Tier 2 (2%@50) effective 12/13 New hire assumptions: Assumes 50% of 2013 new hires will be Classic Tier 2 Members (2%@50) and 50% will be New Members with PEPRA benefits. Assumes Classic Members will decrease from 50% to 0% of new hires over 20 years. 7 8 Based on CalPERS CAFR. June 30, 2016 return based on CalPERS return of (1.3%) through 3/31/16 and assumed future returns for 3 months. May 17, CONTRIBUTION PROJECTIONS - POLICE SAFETY 80% 70% 60% 50% 40% 30% 46.9% 28.7% 48.9% 50.8% 29.8% 32.8% 54.7% 36.9% 58.8% 41.4% 61.2% 63.9% 43.8% 46.2% 66.1% 67.1% 51.5% 52.4% 48.5% 49.5% 34.0% 35.0% 20% 18.2% 19.1% 18.0% 17.7% 17.4% 17.4% 17.7% 17.6% 17.6% 17.5% 17.4% 10% 0% 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 24/25 25/26 75th Percentile Total 25th Percentile UAL Payment Normal Cost May 17, Page 12 of 20

13 CONTRIBUTION PROJECTIONS - POLICE SAFETY $2,200 $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $ ,734 1,658 1,557 1,449 1,351 1,280 1,219 1,216 1,100 1,127 1,029 1, ,372 1, $0 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 24/25 25/26 75th Percentile Total 25th Percentile UAL Payment Normal Cost May 17, CONTRIBUTION PROJECTIONS - POLICE SAFETY 80% 70% 60% 50% 40% 30% 20% 10% 75th Percentile 50th Percentile 50th Percentile -No Risk Mitigation 25th Percentile May 17, Page 13 of 20

14 FUNDED STATUS POLICE SAFETY Funded Status - With Risk Mitigation 200% 150% 100% 50% 0% 75th Percentile 50th Percentile 25th Percentile May 17, FUNDED STATUS POLICE SAFETY This page intentionally left blank. May 17, Page 14 of 20

15 SUMMARY OF DEMOGRAPHIC INFORMATION FIRE SAFETY Actives Counts Average PERSable Wages $74,900 $89,000 $87,900 $ - Total PERSable Wages (millions) Inactive Counts Transferred Separated Retired May 17, SUMMARY OF DEMOGRAPHIC INFORMATION FIRE SAFETY Present Value of Benefits June 30, 2013 Present Value of Benefits June 30, 2014 Actuarial Liability Unfunded PVB Actuarial Liability Unfunded PVB (Unfunded Liability) (Unfunded Liability) June 30, 2013 June 30, 2014 $ 1,200,000 Active AAL $ - 12,300,000 Retiree AAL 15,200,000 7,400,000 Inactive AAL 7,200,000 20,900,000 Actuarial Liability 22,400,000 16,800,000 Market Asset Value 18,600,000 (4,100,000) (Unfunded Liability) (3,800,000) May 17, Page 15 of 20

16 CONTRIBUTION RATES FIRE SAFETY Required Employer Contribution Risk Pool s Net Employer Normal Cost 6/30/13 Valuation 2015/2016 Contribution Rates Total Tier I Tier II PEPRA 3%@50 Closed Closed 15.6% 15.6% N/A N/A Class 1 Benefits FAC1 0.9% 0.9% N/A N/A PRSA 1.7% 1.7% N/A N/A Risk Pool s Payment on Amortization Bases % 110.4% N/A N/A Amortization of Side Fund 0.0% 0.0% N/A N/A Total ER Contribution 128.6% 128.6% N/A N/A Total ER Contribution $ $226 Amortized as a level percentage of payroll May 17, CONTRIBUTION RATES FIRE SAFETY Required Employer Contribution Risk Pool s Net Employer Normal Cost 6/30/14 Valuation 2016/2017 Contribution Rates Total Tier I Tier II PEPRA 3%@50 Closed Closed N/A N/A N/A N/A Class 1 Benefits FAC1 N/A N/A N/A N/A PRSA N/A N/A N/A N/A Risk Pool s Payment on Amortization Bases 10 $297 $297 N/A N/A Amortization of Side Fund N/A N/A N/A N/A Total ER Contribution $ N/A N/A Level dollar amortization May 17, Page 16 of 20

17 CONTRIBUTION PROJECTIONS - FIRE SAFETY Market Value Investment Return: June 30, % 11 June 30, % 12 Future returns based on stochastic analysis using 1,000 trials Single Year Returns at 25 th Percentile 50 th Percentile 75 th Percentile 7.5% Investment Mix 0.6% 7.5% 15.3% 6.5% Investment Mix 1.3% 6.5% 11.9% No Other: Gains/Losses, Method/Assumption Changes, Benefit Improvements Excludes Employer Paid Member Contributions (EPMC) Excludes employee cost sharing Includes CalPERS Board adopted assumption changes, first impact 2016/17 Fire Safety is closed group, therefore no Tier 2 or PEPRA Based on CalPERS CAFR. June 30, 2016 return based on CalPERS return of (1.3%) through 3/31/16 and assumed future returns for 3 months. May 17, CONTRIBUTION PROJECTIONS FIRE SAFETY $1,250 Contributions - in 000 s $1,000 $750 $ $ $0 15/16 16/17 17/18 18/19 19/20 20/21 21/22 22/23 23/24 24/25 25/26 75th Percentile Total 25th Percentile May 17, Page 17 of 20

18 CONTRIBUTION PROJECTIONS FIRE SAFETY 1,400 1,200 1, th Percentile 50th Percentile 50th Percentile -No Risk Mitigation 25th Percentile May 17, FUNDED STATUS FIRE SAFETY Funded Status - With Risk Mitigation 200% 150% 100% 50% 0% 75th Percentile 50th Percentile 25th Percentile May 17, Page 18 of 20

19 PEPRA Target of 50% of total normal cost for everyone New members must pay greater of 50% of total normal cost or bargained amount if higher Employer cannot pay any part of new member required employee contributions Employer may impose current employees pay 50% of total normal cost (limited to certain amounts) if not agreed through collective bargaining by 1/1/18 Miscellaneous Plan: Current Members New Members Tier 1 2.5%@55 FAE1 Tier 2 2%@55 FAE3 Tier 3 2.5%@67 FAE3 Employer Normal Cost 10.7% 8.9 % 6.8% Member Normal Cost % 7.1% 6.6% Total Normal Cost 18.8% 16.0% 13.40% 50% Target 9.4% 8.0% 6.70% 13 Includes 0.1% employee cost sharing May 17, PEPRA Police Safety Plan Current Members New Members Tier 1 3%@55 Tier 2 2%@50 Tier 3 2.7%@57 Employer Normal Cost 18.7% 15.8% 11.9% Member Normal Cost % 9.6% 13.4% Total Normal Cost 28.3% 25.4% 25.3% 50% Target 14.15% 12.7% 12.65% Fire Safety Plan Current Members Tier 1 3%@55 Employer Normal Cost N/A Member Normal Cost N/A Total Normal Cost N/A 50% Target N/A 14 Includes 0.6% employee cost sharing May 17, Page 19 of 20

20 PAYING DOWN THE UNFUNDED LIABILITY Irrevocable Supplemental ( 115) Pension Trust City established trust with PARS 3/31/16 Balance Pension: $686,000 OPEB: $665,000 Assets could not be used by Council for other purposes Can only be used to Reimburse City for CalPERS contributions Make payments directly to CalPERS May 17, Page 20 of 20