1. Member Contribution Rates Effective July 2006P
Member Contribution Rates Effective July 2006
May 3, 2006

2. Syllabus Review Contribution Structure Reasons for Increase
Smoothing of Rates

3. Member Contributions COLA 31873 COLA 31873 BASIC BASIC
Supplemental
31627
Supplemental
31627
Proposed Legislation
COLA 31873
COLA 31873
Based on Valuation
BASIC
or .4
BASIC
From 37 Act
General
Safety

4. Basic – General Members Tier 1
… the normal rate of contribution … shall be such as will provide an average annuity at age 60 equal to one 200th of the final compensation of members …
BASIC

5. Basic – General Members Tier 2
… the normal rate of contribution … shall be such as will provide an average annuity at age 60 equal to one 240th of the final compensation of members …
BASIC

6. Basic – General Members

7. Basic – Safety Members Tier 1 and Tier 2
The normal rate of contribution shall be such as will provide an average annuity at age 50 equal to one 200th of the final compensation…
BASIC

8. Basic – Safety Members

9. COLA Contributions
Any increases in contributions shall be shared equally between the county or district and the contributing members …
COLA

10. COL Contributions
FCERA Board previously decided that “Any increases in contributions” means contributions for both Normal Cost and Unfunded Actuarial Accrued Liability.

11. COLA Contributions
In 2004 Valuation, Basic rates were increased by 92% for COLA
In 2005 Valuation, Basic rates were increased by 132% for COLA
COLA

12. COLA Contributions
COLA

13. Supplemental Contribution
…to the extent undistributed earnings are unavailable in the future to make additional contributions on members’ behalf…then the employer and employee contribution rates shall be increased …
Supplemental
31627

14. Supplemental Contribution
Lawyers not yet in agreement
Look to proposed legislation (AB 2063) for guidance
Members electing Tier 2 would not make Supplemental Contributions
Supplemental
31627

15. AB 2063 – General Members
…the normal rates of contribution… shall be rates that provide an average annuity at age 55 years equal to the fraction of one 160th of the final compensation …
Supplemental
31627

16. Total Contributions – General Tier 1 Members

17. Total Contributions – General Tier 2 Members

18. AB 2063 – Safety Members
The normal rates of contribution… shall be rates that will provide an average annuity at age 50 years equal to the fraction of one 160th of the final compensation …
Supplemental
31627

19. Total Contributions – Safety Tier 1 Members

20. Total Contributions – Safety Tier 2 Members

21. Reasons for Increase Member Contributions – General Tier 1
Increase of approximately 39% from smoothed rates
Member Contributions – Safety Tier 1
Increase of approximately 21% from rates

22. Reasons for Increase

23. Reasons for Increase

24. Smoothing of Rates Fiscal Year 2004/2005
Purpose is to limit volatility of member contribution rates
April 2004 methodology adopted by Board of Retirement
If the total rate from the prior fiscal year had increased by more than 50%, the increase was limited to 50%

25. Smoothing of Rates Fiscal Year 2005/2006
In April 2005 Retirement Board adopted new rate smoothing methodology
If any rate increased by more than 10% from what was paid in the prior year, the increase will be halfway between what was paid the prior year and the new rate as calculated prior to any smoothing

26. Smoothing of Rates Fiscal Year 2006/2007
At April 19, 2006 meeting, Board asks Actuary to calculate rates based on prior year smoothing methodology

27. Member Contributions – General Tier 1

28. Member Contributions – General Tier 2

29. Member Contributions – Safety Tier 1

30. Member Contributions – Safety Tier 2

31. Questions