Oklahoma Public Fund Trustee Education Conference

Slides:



Advertisements
Similar presentations
© 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks.
Advertisements

IAS 19 vs. FAS158, 132R, 87, etc. versus. The scope is broad and includes wages, vacation or holiday pay, bonus, termination benefits, etc. as well as.
Overview of New Pension Accounting Requirements Under GASB Statements No. 67 and No. 68 September 2013.
Changes in Accounting and Reporting for Pensions Presented to House Appropriations Committee _____________________________________.
1 GASB 68 Accounting and Reporting for Pensions an Amendment of GASB Statement No. 27 Presented by: Kevin S. Wong, CPA Gilbert Associates, Inc.
THE NEW PENSION ACCOUNTING AND ITS IMPACT ON FUNDING CSFMO Oakland, California February 21,
League of Minnesota Cities Fiscal Futures Policy Committee August 28, 2013 Presented by: Dave DeJonge, Assistant Executive Director, PERA.
© 2004 The McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Chapter 17 Pensions.
Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Slide 17-1 Chapter Seventeen Pensions Pensions.
Florida Government Finance Officers Association Webinar GASB’s New Pension Standards December 18, 2014.
GASB Pension Standards: An Educational Overview PEBA Retirement Division GFOA Fall Conference October 12,
Communicating the Facts on GASB 68
Changes in Accounting and Reporting for Pensions Presented to Senate Finance Committee _____________________________________.
Pension Accounting and Financial Reporting GASB Invitation to Comment The views expressed in this presentation are those of Mr. Bean. Official positions.
Auxiliary Organizations GASB Statement No. 68 Accounting and Financial Reporting for Pensions Sheralin Klinthong, Associate Director, FS / SFSR Chancellor’s.
GASB Technical Update Mark Thomas KPMG LLP Year-End GAAP Training April 18, 2014.
April 8, Statement No. 65, Items Previously Recorded as Assets and Liabilities Statement No. 67, Financial Reporting for Pension Plans-an amendment.
GASB 68 Employer Training Presenters: Shelley Johnson Foster & Foster System Actuary for LASERS and TRSL Artie Fillastre LASERS Chief Financial Officer.
Pension Funding Risks & Possible Method Changes Alan Milligan Chief Actuary.
Pension Accounting GASB Pension Accounting and Financial Reporting - Overview SAAABA Annual Business Seminar– April 18, 2012 Cindy Peters – Accountant.
Copyright © 2014 by The Segal Group, Inc. All rights reserved. GASB Statements 67 & 68 – Audit & Budget Committee Discount Rate and Allocation of Assets/Liabilities.
1 Accounting for Postemployment Benefits C hapter 19.
GASB Standards on Pensions
Chapter 21: Accounting for Pensions and Postretirement Benefits
Precision Experience Assurance The New Pension Standards GASB Statements 67 and 68 Milestone Professional Services, CPE Day September 13, 2013, Kissimmee.
1 Your Tilted Balance Sheet – GASB 68 Overview Presented by: Kevin S. Wong, CPA Gilbert Associates, Inc. September 12, 2013.
Public Employees Retirement Association of Minnesota An Overview of GASB 68 for Cost-Sharing Plans Dave DeJonge Assistant Executive Director, PERA.
City of Hallandale Beach Professional/Management Retirement Plan Actuarial Review March 17, 2014.
GASB 45 at SMCCCD District Committee on Budget and Finance October 3, 2006.
Inside the New GASB Pensions Standards Municipal Analysts Group of New York February 15, 2013 Thad Calabrese, Assistant Professor, NYU Dean Michael Mead,
2015 BAW Conference GASB 68 Implementation: Are we there yet? Ashley Brindle.
Presented by: G.S. Curran & Co. GASB 68 FOR COST SHARING EMPLOYERS OF THE ASSESSORS’ RETIREMENT FUND.
Governmental Accounting Standards Board (GASB) Other Postemployment Benefits (OPEB)
Actuarial Assumptions and Methods: What is Reasonable?
Cavanaugh Macdonald C O N S U L T I N G, L L C The experience and dedication you deserve MAPERS 2012 Conference GASB Update July 12, 2012 Presented by:
Chapter 10 Objectives: Learn about permanent funds Learn about fiduciary funds Learn how gains and losses are treated How trusts guard against inflation.
James Marta CPA, CGMA, ARPM Ken Hearnsberger, Finance Manager NBSIA Matt Nethaway, CPA 1.
GASB 67 & 68 Disclosures Implementing and Auditing GASB’s New Pension Standards.
Governmental Accounting Pensions and Other Postemployment Benefits Local Government Corporation.
Governmental Accounting and Standards Board Pension Accounting Changes September 10, 2013.
Prepared by Aon Hewitt Retirement and Investment Consulting Presentation to Iowa School Districts Changes in Postemployment Benefit Accounting July 2015.
Town of Plymouth, Massachusetts Results of the January 1, 2015 GASB 45 Valuation September 22, 2015 Linda L. Bournival, FSA Consulting Actuary KMS Actuaries,
April 14, 2016 TECHNICAL UPDATE Mark Thomas, Partner, KPMG LLP.
Presented by: Chris Pembrook, CPA, MBA, CGAP, Cr.FA Frank Crawford, CPA @fcrawfordcpa.
Copyright © 2016 by The Segal Group, Inc. All rights reserved. MGFOA Annual Meeting 2016 OPEB and GASB 74/75 May 11, 2016 Daniel J. Rhodes, FSA, MAAA Vice.
Actuarial Status Update of the Employees’ Retirement Fund of the City of Fort Worth May 4, 2010 Presented by Doug Anderson, EA, ASA, MAAA Gallagher Benefit.
Essentials of Accounting for Governmental and Not-for-Profit Organizations Chapter 7 Fiduciary Funds Copyright © 2015 McGraw-Hill Education. All rights.
GASB AND OPEB OBLIGATIONS – PROPOSING NEW ACCOUNTING STANDARDS TO IMPROVE TRANSPARENCY IN FINANCIAL REPORTING Roberta J. Cable, Patricia Healy and Claudia.
THE BASICS OF THE GASB OPEB CALCULATION PRESENTED BY: MARK VAN BUSKIRK, PHD, ASA, MAAA HOLMES MURPHY AND ASSOCIATES SEPTEMBER 23,
GASB’s OPEB Changes - Will they impact public sector health care benefits? November 7, 2014 Eric Gary, FSA, FCA, MAAA Chief Health Actuary.
GASB 74 and 75: Other Post-Employment Benefits (OPEB)
CHAPTER 17 Pensions 2.
Accounting for Postemployment Benefits
Accounting for superannuation plans
OPEB Just Like Pensions but Not! October 12, 2017
Section 28 Employee Benefits
The New GASB 74/75 StandardS
GASB 68-Accounting and Financial Reporting for Pensions
FINANCIAL AUDITS AND gasB UPDATES WHAT IS NEW AND HOW TO BE PREPARED
Other Post Employment Benefits
OPEB Communication Resources
Chapter 20: Accounting for Pensions and Postretirement Benefits
GASB 75 Employer Reporting Other Postemployment Benefits (OPEB)
10/28/2014 The Municipal Analysts Group of New York What’s New With the GASB and What Does It Mean for Municipal Credit? Mr. Bean.
Beth Wright Managing Director
GASB 45 Other (than Pension) Post Employment Benefits Date Here
GASB 67 and 68: Pension Fund Reporting
Greene Finney Annual Conference May 30, 2019
Pension Regulations Presented by David Maccoux, CPA, Shareholder
GASB Update Colorado pera
Presentation transcript:

Oklahoma Public Fund Trustee Education Conference Request for Proposals Actuarial Consulting Services April 13, 2010 Actuarial Topics Update Alisa Bennett, FSA, MAAA, EA, FCA Brent Banister, PhD, FSA, MAAA, EA, FCA September 26, 2014

Topics for Today New GASB Standard for OPEB Plans GASB 67 and 68 Implementation Funding and Disclosure Proposals

New GASB Standard for OPEB Plans Exposure Draft of proposed OPEB accounting changes has been released. Comment deadline was August 29, 2014. Proposed effective date for fiscal years on or after December 15, 2015 for Plans, December 15, 2016 for Employers. Similar to GASB 67/68 pension changes: Divorce funding and accounting (no ARC). If funding, will have to define actuarially determined contribution (ADC) and funding policy. Some discussion suggesting plans not funding will disclose pay as you go employer amounts.

New GASB Standard for OPEB Plans Similar to GASB 67/68 pension changes: Net OPEB Liability (NOL) moves to balance sheet of employers. NOL is: Actuarial accrued liability (referred to in statements as Total OPEB Liability or TOL) based on Entry Age Normal funding method, less Plan’s Fiduciary Net Position (market value of assets). Discount rate = a blended single rate that is the equivalent of the long-term rate while assets are available and a municipal bond index for the remaining period. Many OPEB plans already using a “blended rate” although more loosely defined. Entry Age Normal (EAN) level percent of pay cost method. Many OPEB benefits are not pay related. Method said to be chosen to enhance comparability.

New GASB Standard for OPEB Plans Similar to GASB 67/68 pension changes: OPEB Expense EAN normal cost Interest on the NOL Immediate recognition of changes in active and inactive liability due to plan amendments Deferred recognition (over average remaining service life) of changes in active and inactive liability due to assumption changes and actual experience Deferred recognition of investment gains and losses over five years. Deferred inflows/outflows

New GASB Standard for OPEB Plans Cost sharing employers will need to report proportionate share of NOL, OPEB expense and deferred inflows and outflows. Must account for special funding situations when a non-employer contributing entity is present. Extensive footnote disclosure and supplementary information required. 10 year schedules of many items. Sensitivity disclosures: +/- 1% discount rate, +/- 1% health trend = 9 NOL measurements.

New GASB Standard for OPEB Plans Valuations every 2 years. (Not 3 years even if fewer than 200 participants.) OPEB plans that are not administered through trusts that meet the specified criteria, proposed Statement would require an approach parallel to that which would be required for OPEB plans that are administered through trusts that meet the specified criteria. Essentially similar note disclosures and required supplementary information would be required to be presented. NOL must include cross-employer subsidies in addition to the implicit subsidy. May include liabilities that will not be paid by the entity.

GASB 67 and 68 Most plans are in the middle of their first GASB 67 report right now Many plans will also be using these results as the basis for the amounts employers will book and disclose under GASB 68 next year Auditing member data in cost-sharing multiple employer plans is proving to be an issue

GASB 67 and 68 Actuarial Issues Behind the scenes, here are some things your actuary may be dealing with: Projecting cash flows to determine the discount rate What will assets earn long term? What will contributions be? Timing of fiscal years and plan years – they aren’t always the same Special funding situations – or just someone else helping out with funding? Employers who have special additional contributions Auditors will need to help

GASB 67 and 68 Actuarial Issues For GASB 68, the liability and cost must be allocated across employers based on “future contribution effort” Sometimes this is as simple as looking at the prior year proportions of contributions or pay If different contribution rates apply to different employers, this can get much more complicated Often requires sophisticated projections Long term is how long? Range of employers sizes from one employee to thousands of employees affects numerical precision

Public Plan Funding Current valuations are likely to look better than they have the last few years The 2008-09 investment loss has been recognized in most asset smoothing methods The year ending 6/30/14 was very good Pay raises and COLAs have been generally below expectation, producing actuarial gains Calls for changes seem to be growing

What’s Being Proposed Elsewhere? Replacing traditional plans with Defined Contribution plans or Cash Balance plans Shifts risk from the employer to the employee More comparable to the private sector Imposing funding requirements on public plans Mandatory or voluntary Valuing public plans on a Market Value basis Additional disclosures

Alternate Plan Designs Traditional Defined Benefit (DB) plans frequently have a benefit that is a multiplier (e.g. 1.5% or 2%) time years of service times final pay. Benefit is guaranteed for life. Traditional Defined Contribution (DC) plans provide a specified rate of pay (can vary with age or service) to be placed into an individual account which then grows (or shrinks) with the market. Benefit is the account balance until it is gone. Cash Balance plans have some features of DB and DC plans. The account gets pay credits like a DC plan, but growth may be defined and annuitization is normally like a DB plan.

Comparison of Plan Designs DB plans tend to benefit longer service employees and those who are employed later in their career. Investment and mortality risk fall more on those who fund the plan (employer and possibly active members). DC plans and Cash Balance plans tend to benefit shorter service employees and those who are employed earlier in their career. Investment and mortality risk fall on individuals.

Funding Guidelines California Conference of Consulting Actuaries Most plans are now required to fund the actuarial rate Restriction of amortization period to avoid negative amortization Conference of Consulting Actuaries White paper, based somewhat on California model Information for actuaries, has no binding authority Observation – lots of governments have made funding a priority – this could reduce clamoring for rigid rules

Market Value of Pension Obligations Basic concept – the value of the liabilities is what it would cost to transfer current obligations to an insurance company Few plans could legally do this “Market” doesn’t exist – so frequently tied to Treasury bonds (which have not been market-based due to Fed intervention) Corporate plans are now valued this way, primarily to make sure a terminating plan can pay all costs Sometimes called “Risk Free” since returns could be locked in with matching bonds Ignores value of investment return on funding

SOA Blue Ribbon Panel Society of Actuaries (SOA) put together a panel to look into public pension plans Most members were not actuaries, and not all actuaries had public plan background Primary recommendation was for additional disclosure, particularly in regards to risk SOA is not responsible for the Panel’s work, but has been promoting it Many of the ideas would be beneficial to many plans, but universal application has challenges Systems range from very tiny to over $100 Billion Funding policies vary greatly by jurisdiction

Actuarial Standards Board Actuarial Standards Board (ASB) is the only actuarial group able to bind what actuaries do Blue Ribbon Panel asked the ASB to consider its recommendation and issue standards as needed ASB recently issued an exposure draft asking for comments from the actuarial profession and those affected by the proposed standards No specifics proposed yet Could be a departure from principles based approach used for other standards