P 3 Actuaries you can understand 1 Impact of Richman Initiative on FCERA Costs April 20, 2005 P

P 3 Actuaries you can understand 2 Syllabus Closing Down a DB Plan –Changes in Amortizing UAAL Comparing Costs –Employer –Employee Costs Not Analyzed

P 3 Actuaries you can understand 3 Plan Compensation

P 3 Actuaries you can understand 4 Relative Size of Amortization Payments

P 3 Actuaries you can understand 5 Amortization of UAAL as a Percentage of Covered Payroll – Regular Benefits

P 3 Actuaries you can understand 6 Amortization of UAAL in Dollars – Regular Benefits

P 3 Actuaries you can understand 7 Total Contribution in Dollars – Regular Benefits

P 3 Actuaries you can understand 8 Amortization of UAAL as a Percentage of Covered Payroll – Settlement Benefits

P 3 Actuaries you can understand 9 Amortization of UAAL in Dollars – Settlement Benefits

P 3 Actuaries you can understand 10 Total Contribution in Dollars – Settlement Benefits

P 3 Actuaries you can understand 11 Total Contribution in Dollars – All Benefits

P 3 Actuaries you can understand 12 Total Contribution in Dollars – All Benefits

P 3 Actuaries you can understand 13 Total Employee Contribution in Dollars – Regular Benefits

P 3 Actuaries you can understand 14 Total Employee Contribution as a Percent of Covered Payroll – Regular Benefits

P 3 Actuaries you can understand 15 Costs Not Analyzed For new DC plan: –Death Benefits –Disability Benefits

P 3 Actuaries you can understand 16 Unintended Consequences Employee turnover –Switching to another public agency will be less attractive –Lower turnover for current employees Results in higher costs

P 3 Actuaries you can understand 17 Unintended Consequences Pay Levels –Recruiting experienced employees will be more difficult –Relative pay structure will need to remain intact –Pay levels may need to increase to fill positions –Pay level for other positions may increase to maintain balance

P 3 Actuaries you can understand 18 Unintended Consequences Plan Investments –Contribution rates are more volatile in closed plans –Mature plans are hurt more by bad investment years –Investments are likely to be adjusted to reduce risk –Reduced risk generally means reduced investment return

P 3 Actuaries you can understand 19 Questions