P 3 Actuaries you can understand 1 Member Contribution Rates - Changes to Calculation of COL Rates January 10, 2007 P
P 3 Actuaries you can understand 2 Syllabus Calculation Methodology Impact of Change Transition Options
P 3 Actuaries you can understand 3 Member Contributions BASIC Regular COLA BASIC Settlement COLA Valuation Based Statutory Nature
P 3 Actuaries you can understand 4 Basic Accumulation toward target benefit at target retirement age Based on: –Benefit structure –Salary increase assumption –Life expectancy at retirement –Rate of Return assumption Varies by Age at Entry
P 3 Actuaries you can understand 5 COL Contributions Any increases in contributions shall be shared equally between the county or district and the contributing members …
P 3 Actuaries you can understand 6 COL Contributions Prior Methodology –Same assumptions as Employer Contributions –Same funding methods as Employer Contributions –Required COL Contribution for all members allocated proportionally to Basic Contribution Same % for General & Safety Same % for all Tiers
P 3 Actuaries you can understand 7 COL Contributions Prior Methodology –Required COL Contribution = 50% of (NC + Amortization of UAAL) –Rate changes phased in (50% of change) when rates change by more than 10% –Delayed contributions added to UAAL
P 3 Actuaries you can understand 8 COL Contributions Proposed Methodology –Same assumptions as Employer Contributions –Same funding methods as Employer Contributions –Required COL Contribution for all members allocated proportionally to Basic Contribution Same % for General & Safety Same % for all Tiers
P 3 Actuaries you can understand 9 COL Contributions Proposed Methodology –Required COL Contribution = 50% of (NC + Amortization of Deferred NC) –Rate changes phased in (50% of change) when rates change by more than 10% –Delayed NC contributions paid by Members over amortization period
P 3 Actuaries you can understand 10 Member COL Contributions Paid July 2003 – Dec 2006 Member COL Contributions 2003/ / / /2007 (thru 12/4) General – Regular COL 6,389, ,958, ,758, ,642, Safety – Regular COL 1,710, ,262, ,252, ,163, General - Settlemnt COL 1,338, ,949, ,410, Safety - Settlemnt COL 233, , , Total $8,100, $9,793, $12,504, $7,554,003.43
P 3 Actuaries you can understand 11 General Regular COL Rates
P 3 Actuaries you can understand 12 General Settlement COL Rates
P 3 Actuaries you can understand 13 Safety Regular COL Rates
P 3 Actuaries you can understand 14 Safety Settlement COL Rates
P 3 Actuaries you can understand 15 UAAL Paid – Percent of Pay
P 3 Actuaries you can understand 16 UAAL Paid - Dollars
P 3 Actuaries you can understand 17 Net COL UAAL Paid (with interest) FY 03/04FY 04/05FY 05/06FY 06/07 Total with Interest General Regular2,129, (2,936,517.79) 178, ,273, , General Settlement0 (669,332.85) 113, , , Safety Regular 568, , , , ,630, Safety Settlement0 66, , , ,906.34
P 3 Actuaries you can understand 18 Net COL UAAL Paid (with interest) Delayed NC UAAL Contributions Total with Interest General Regular (3,369,246.81) 4,105, , General Settlement (767,966.60) 963, , Safety Regular0.00 2,630, Safety Settlement ,906.34
P 3 Actuaries you can understand 19 Dealing with UAAL Should we treat past overpayments (UAAL contributions) the same as past underpayments (Delayed NC)? –Option 1 – Net UAAL Contributions against Delayed NC –Option 2 – Refund overpayments, amortize Delayed NC
P 3 Actuaries you can understand 20 FY 06/07 COL Rates Shared Repayment Spread over future working lifetime
P 3 Actuaries you can understand 21 Dealing with UAAL Should we share repayment of UAAL between General and Safety? Between Tiers? –Option A – Share charge (credit) for repayment of UAAL proportionally to ongoing contributions –Option B – Charge (credit) separately for Safety and General and within Tiers based on balance of UAAL paid
P 3 Actuaries you can understand 22 FY 06/07 COL Rates Separate Repayment of Net Payment Spread over future working lifetime
P 3 Actuaries you can understand 23 Dealing with UAAL Over what period should we amortize repayment of UAAL? –Option i – Future working lifetime of current employees –Option ii –Over three years –Option iii – One year
P 3 Actuaries you can understand 24 FY 06/07 COL Rates Separate Repayment of Net Repayment
P 3 Actuaries you can understand 25 Questions