References. Same concepts apply to all cost- sharing plans

Size: px

Start display at page:

Download "References. Same concepts apply to all cost- sharing plans"

Andrea Harmon
6 years ago
Views:

2/27/17 How to Read an Actuarial Report (and Derive

Treasurer March 2, 2017 References LGERS December 31, 2014

pdf JE template workbook Summary Exhibit tab o h?ps://www.

1 2/27/17 How to Read an Actuarial Report (and Derive Journal Entries) Preeta Nayak, Department of State Treasurer March 2, 2017 References LGERS December 31, 2014 Valua:on Report o h?ps:// Re:rement%20Reports/ LGERSActuarialValua:on_December31_ 2014.pdf JE template workbook Summary Exhibit tab o h?ps:// audit_acct/pages/pension- Standards- Unit- Tools.aspxGASB 68 Same concepts apply to all cost- sharing plans 2 1

2 Timeline 12/31/2014 Actuarial valua:on for ending balances 6/30/2016 Repor:ng date current year 6/30/2015 Measurement date of NPL, ending balances, pension expense, deferrals 6/30/2017 FY 2016 plan contribu:ons (deferred ou_lows) recognized in NPL 3 Abbreviations Ø DO deferred outflows of resources Ø DI deferred inflows of resources Ø FYE fiscal year end Ø NPL net pension liability Ø NPA net pension asset Ø SLGFD State and Local Government Finance Division Ø TSERS Teachers and State Employees Retirement System Ø LGERS Local Government Employees Retirement System 4 2

3 Valuation overview Why perform valuation? o Determine contribution rates o Differences between current and prior valuation o Meet standards of GASB and other regulatory requirements Results o Contribution rates o Actuarial value of assets and accrued liability o Other 5 Tour of Report Valuation process Demographic and financial data Employer contribution Plan balance sheet Accounting results Projections General actuarial terms, methods, summary of provisions Detailed employer participant information 6 3

4 Accounting Results - TPL Total Pension Liability calculation Table 18 on page 33 7 Accounting Results - NPL NPL calculation Table 19, page 33 RSI o Proportionate share of NPL o Funded percentage 8 4

Sensitivity Analysis Table 20, page 34 Notes to financial statements 9 JE components NPL Component Source Loca/on in Audit Report Deferrals Experience Investment earnings Valua:on report (LGERS page

5 Sensitivity Analysis Table 20, page 34 Notes to financial statements 9 JE components NPL Component Source Loca/on in Audit Report Deferrals Experience Investment earnings Valua:on report (LGERS page 33) Actuaries data tables, LGERS page 33 SNP, RSI SNP, notes Pension expense Actuaries data tables SOA, notes Actual contribu:ons Amor:za:on periods Propor:onate share percentage Accoun:ng system, valua:on report (page 33) GASB Statement 68 and actuaries data tables Based on projected payroll (actuaries) SNP, notes, RSI Notes, RSI 10 5

6 Pension Expense Not in valuation report o Two components Actuarially allocated Is on data tables q Includes amortized deferral amounts Difference between unit s contributions and ORBIT contributions 11 Journal Entries Includes CY amortizations, pension expense, current year NPA/NPL Contributions made subsequent to the measurement date (deferred outflows) Reclass entries 12 6

7 Deferrals Data comes from Summary Exhibit tab Four deferrals o Proportionate share deferrals o Difference between expected and actual experience o Difference between projected and actual earnings o Change of assumptions (every 5 years) Amortized to pension expense 13 Deferrals - proportional share Actually 2 different deferrals Change in proportionate share What unit contributed compared to what its proportionate share of contributions is Amortized to pension expense 14 7

8 Deferrals - expected vs actual experience Demographic and economic data Numbers come from actuarial report o Table 18, page 33 Amortized to pension expense over actuarially determined amortization period 15 Deferrals - Change of assumptions Future demographic and economic data Assessed every 5 years next study used with December 31, 2015 valuation Numbers come from actuarial report o Table 18, page 33 Amortized to pension expense over actuarially determined amortization period 16 8

9 Deferrals actual vs projected investment earnings How investments performed compared to what was projected o Overperform DI reduce pension expense over time o Underperform DO increase pension expense over time Included in collective pension expense Amortized to pension expense over 5 years Only deferral that can be netted 17 Entries Purpose Reverse beginning DO and record effect of measurement period contribu:ons on NPL Source ORBIT Adjust ending deferred ou_low and inflow balances to reflect CY change in propor:on Record prior years amor:za:on of deferrals Establish current year s deferrals Record current year s amor:za:on of deferrals GASB 68, paragraph 54 Data tables 18 9

10 Pension expense Deferrals get amortized to pension expense annually Amortization of inflows will reduce pension expense outflows will increase it Two components o Current year s share of collective/contribution differences o Offset to amortization of deferrals 19 Pension Expense, Reclass Entries Purpose Record propor:onate share of collec:ve pension expense Source Data tables (actuarially determined) Reclass contribu:ons made subsequent to measurement date to DO GASB 68, paragraph 57 Deferrals cleanup reclassify and consolidate to match data tables 20 10

11 Year 3 JE template wrap-up Year 3 JE template is less complicated than year 2 template All entries should look familiar Will add another layer All units using same set of entries No need to choose implementation year Will not be able to use template if implementing this year Annual entries 21 Questions? Preeta Nayak at or preeta.nayak@nctreasurer.com Pension Standards Page - Pages/Pension-Standards.aspx 22 11

12 Thank You! Together we can build and maintain a fiscally strong and prosperous North Carolina. 12

Pension Standard GASB 68. Sharon Edmundson and Preeta Nayak

Pension Standard GASB 68. Sharon Edmundson and Preeta Nayak Pension Standard GASB 68 Sharon Edmundson and Preeta Nayak July 20, 2015 Agenda GASB 68 Statement review Changes to sample statements Journal entry template GASB 68 Plans o Local Government Employees Retirement