Fort Walton Beach Council agenda — 08-22-2007 special agenda — reading text

0 Assets APV of Accumulated Plan Benefits A comparison of current assets of the fund with the current actuarial present value APV) of benefits accrued based on credited service and salary to date is commonly used to determine the Plan' s current funded status. This measurement is often used as a surrogate for the liability if the Plan were to stop future benefit accruals. It is called current liability" since it is based only on current earned benefits, even though the actual payment of those benefits extends many years into the future. The accumulated benefit liability APVs were developed using the assumed rate of future investment return of 8. 00%. The current liability is normally expected to be more than 100% funded for an ongoing plan since the plan will ultimately be liable for a greater accrued benefit ( the credited- projected benefit). The Plan funded position for current liabilities has deteriorated somewhat since the last valuation, due to the adverse experience described earlier. iii.#;.. ==.#:.: III!':: ~~'=~ !'~~ Conc~ Rts  1- 5 Current Funded Status - Projected Liabilities current Funded statusl 40,000,000 - 1 33,959, 890 29, 449,082 30,000,000 20, 000, 000 10, 000,000 0 Assets APV of Credited- Projected Benefits A comparison of assets with the APV of benefits accrued based on credited service to date, but projected salary at retirement ( referred to as credited-projected benefits), is often used to judge the progress to date of funding the " ultimate" liability associated with service earned to date. The credited- projected benefit liability APVs were developed using an assumed rate of interest discount of 8.00%. The credited- projected benefit liability is not normally expected to be 100% funded, but a maturing plan' s funded ratio should increase over time. The Plan continues to have an acceptable funded ratio for projected liabilities. n r-:-: r" I: ;~:-= COM~ 2tS  1- 6 Funded Trend ( Projected Liability) I Funded Trend I 40,000,000 33,959, 890 31,450, 113 29,449, 082 27,938, 158 30,000, 000 20,000,000 10,000, 000 0 2004 2005 2006 I~---. Assets rJ _~~V of Credi~ed- Pr~* cted Benefi~= As shown above, the credited- projected benefit funded percentage has decreased somewhat since last year due to the adverse investment and demographic experience. iiefuarSD5' ConC-~Rts  1- 7 Valuation Trend Valuation Trend in millions) 50. 000 B2~ . I j 43.021 39.92 r.a 2005 40.000 $ 36. 208 $ 02006 33. 885 31.397$ 27.815 30.000 $ 20.000 10.000 $ 3. 459 $4.436 0. 255 0. 000 Actuarial Present Value Actuarial Accrued Unfunded AAL Payroll APV)of Future Liability (AAL) ( VAAL) Benefits Projected liabilities (APV of future benefits) grew somewhat more than expected due to adverse demographic experience ( rehires, retirements, retiree experience, etc.). Increased unfunded liabilities ( UAAL) have arisen due to the shortfall in investment earnings as well as the effect of the above experience. I!:;~,,=~ t: ~-:!!~ ConcttRts  1- 8 Particioation Trend f Active Membe;byA~ 50 45 40 35 30 25 20 15 10 5 3004 - 2005 -.- 20061 o 25- 29 30-34 35-39 40- 44 45- 49 50-54 55- 59 60-64 65 & Over Under 25 True Costs The true costs of a retirement plan cannot be determined until its future unfolds. No termination one canprecisely predict the interest earnings on fund assets, member rates, future salary levels, mortality experience, etc. Estimates based on experience with similar groups, along with the judgment of the actuary and the Plan sponsor, can provide a reasonable approximation of this true cost. As actual experience emerges under the Plan, it will be necessary to study the continued appropriateness of the techniques and assumptions used and to adjust the contribution rate as necessary. ii:i: i!. CLU[!: Conc~ 2ts  2- 1 SECTION 2 ACTUARIAL VALUATION DEVELOPMENT Date and Basis of Valuation Estimated liabilities for the benefits provided by the City of Fort Walton Beach General Employees' Retirement Fund and the contributions required to fund these liabilities have been determined as of October 1, 2006, based upon: 1. the provisions of the Plan, as in effect on October I, 2006, as summarized in Appendix A; 2. the actuarial assumptions and actuarial cost method, as summarized in Appendix B; 3. the statement of trust fund assets at October I, 2006, provided by the City and the Trustees, as summarized in Appendix C; and 4. the member data as of October 1, 2006, provided by the City, as summarized in Appendix D. The trust fund asset information has been supplied by the City and the Trustees. The member data has been supplied by the City and provided as representative of the current participating group. While the asset and member information was reviewed for overall reasonableness, Actuarial Concepts has relied on the Trustees and the City for this information and does not assume responsibility for either its accuracy or completeness. 5 aLL:":;"":: : U: Conc~~ ts  2- 2 Member Reconciliation Members Retirees, Disabled Vested Pending Actives Beneficiaries Retirees Terminateds Refunds'" Members at 10/ 01/ 05 224 90 7 5 38 Increase (Decrease) Due to: Retirements ( 5) 6 ( 1) Vested Terminations ( 5) 4 1 Nonvested Terminations ( 30) 30 Rehires 5 New Entrants 43 Deaths Part-Time Status OnW/ C Contrib. Refunded ( 30) Members at 10/ 01/ 06 232 96 7 8 39 A. -. CO~c~Rts  2- 3 Valuation Financial Values 1. Participation a) Number of Active Members