Fort Walton Beach Council agenda — 04-26-11 regular — reading text

1 -4 Current Funded Status - Current Liabilities Current Funded Status 37,824, 943 40, 000, 000 30, 000, 000 20, 000, 000 10, 000, 000 Actuarial Value of Assets APV of Accumulated Plan Benefits A comparison of current actuarial value of 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 7.9 %. 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' s 81% funded position for current liabilities has decreased somewhat since the last valuation due to the unfavorable experience described earlier. If market value of assets were used, the Plan' s funded percentage would be 79 %.  1 -5 Current Funded Status - Proiected Liabilities Current Funded Status 39, 824, 706 40, 000, 000 34,351, 948 30, 000, 000 86% 20, 000, 000 Funded 10, 000, 000 - 0 Actuarial Value of 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 7.9 %. 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 has a reasonably good funded ratio for projected liabilities at 86 %. If market value of assets were compared, the Plan' s projected liability funded ratio would be 75 %.  1 -6 Funded Trend ( Projected Liability) Funded Trend 39, 824, 706 O 38, 220, 065 a 33, 336, 278 P7,7,rrp= 34,351, 948 pTllllrA d c 0 R 87% 86% Funded Funded R R 7 w+ V a 0 2008 2009 2010 N O E3 APV of Credited -Projected Benefits O Actuarial Value of Assets dv c R As shown above, the credited -projected benefit funded percentage has decreased aDV a somewhat since last year due to the unfavorable investment experience and changes in actuarial assumptions. rM N r rr N OMO Y I. L R O r ON RL 0 W U. E v rrR a  1 -7 Valuation Trend 587 37.3E;0$ 38.413 30. 000 20. 000 7.522 $ 7.252 5. 076 $ 6. 077 10. 000 + $ 5. 324 3. 961 $ 0. 000 Payroll Actuarial Present Value Actuarial Accrued Unfunded AAL APV) of Future Liability (AAL) UAAL) Benefits Payroll has grown less than expected, due mostly to decreases in membership and salary increases less than assumed. Projected liabilities ( APV of future benefits) also grew less as expected. Unfunded liabilities ( UAAL) have increased due to investment earnings less than assumed. CQ _ O Participation Trend Distribution of Active Members by Age l A ) nnR — wq — m n 50 45 40 35 30 25 20 15 10 5 0 Under 25 25 -29 30 -34 35 -39 40 -44 45 -49 50 -54 55 -59 60 -64 65 & Over True Costs The true costs of a retirement plan cannot be determined until its future unfolds. No one can precisely predict the interest earnings on fund assets, member termination 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. 0 Con  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, 2010, based upon: 1. the provisions of the Plan, as in effect on October 1, 2010, 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 1, 2010, provided by the City and the Trustees, as summarized in Appendix C; and 4. the member data as of October 1, 2010, 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