District Contribution and the Funded Ratio of the Plan October 19, 2016
Graham A. Schmidt, ASA, EA, FCA Anne D. Harper, FSA, EA, MAM
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Agenda • Actuarial Valuation as of January 1, 2016 • Plan costs by benefit and source • History of Plan cost and funding • Future of Plan liabilities, funding, and cost --C-ttEIRON
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Current Status: Plan Cost Summary of Preliminary Principal Plan Results January 1, 2015
January 1, 2016 °/o Change
Participant Counts
Active Participants Participants Receiving a Benefit Inactive Participants
1,922 1,940 220 4,082
Total
Annual Pay of Active Members Projected Fiscal Year Pensionable Payroll
1,964 2,010 230 4,204
2.19% 3.61% 4.55% 2.99°/o
$ $
130,534,361 $ 132,477,908 $
135,001,919 137,011,984
3.42% 3.42%
Actuarial Liability (AL)
$
Actuarial Value of Assets (AVA1) Unfi.mded Actuarial Liability (UAL)
856,235,546 $ 570,994,244
874,284,100 600,832,758
2.11% 5.23%
$
285,241,302 $ 66.7%
273,451,342 68.7%
-4.13% 3.05%
63.3% 59.2%
-3.78% 2.28%
FY2016-2017 46,767,430 34.13%
2.07% -0.46%
Assets and Liabilities
FlUlded Ratio (AVA1) FlUlded Ratio (MVA) Inactive FlUlded Ratio
65.8% 57.8%
Contributions
Plan Cost $ Contnbution Rate (as a Percentage of Payroll) 1
FY2015-2016 45,818,964 $ 34.59%
A VA includes the value of District contributions due for the remaining six months of the Fiscal Year.
--C-ttEIRON
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Current Status: Plan Cost
Development of Amortization Payment For Fiscal Year 2017
Date Established
Type of Base Charges 1. 2008 Extraordinary Actuarial Loss 2. Remaining UAL
1/1/2009 1/1/2016
$
Initial Amount
Initial Amortization Years
78,762,712 189,392,616
30 12
1/1/2016 Outstanding Balance
$
84,058,726 189,392,616
$
273,451,342
Remaining Amortization Years
23 12
Amortization Amount
$
5,501,824 19,522,707
$
25,024,531
Combination of two amortization "layer" payments comparable to 14-year single equivalent layer
--C-ttEIRON
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Current Status: Changes in Cost
FYE 2016 Net Employer Contribution
34.59%
Change in cost due to demographic gains/losses
-0.33%
(450,285)
Change in cost due to salary gains/losses dming2015
-0.74%
( 1,140,241)
Change in cost due to new entrants, amortization payroll
0.18%
1,939,493
Change in cost due to investment gains/losses dming 2015
0.43%
599,499
FYE 2017 Net Employer Contribution
--C-ttEIRON
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34.13%
$
$
45,818,964
46,767,430 October 19, 2016
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Plan Normal Cost By Benefit T&P Disability
--C-ttEIRON
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Death
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Plan Cost By Source Expenses Amortization (2008 Loss)
2%
12%
Normal Cost
41%
--C-ttEIRON
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Plan Cost History AC Transit Employees' Retirement Plan History of Plan Cost 40% ~ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ~
35% 4 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -~
30%
-I
....... Total Cost
-+- Normal Cost
-
25%
0
'-
>,
Cl.
--
20%
0~
Cl)
0
15%
0
10%
5% - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - <
--~---------------------------------------<
0% 7/1/94
7/1/96
1/1/98
1/1/00
1/1/02
1/1/04
1/1/06
1/1/08
1/1/1 0
1/1/12
1/1/14
1/1/1 6
Valuation Year
--C-ttEIRON
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October 19, 2016
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Plan Funding History AC Transit Employees' Retirement Plan History of Plan Funded Ratio
-.-AVA Basis 120% - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ----t
-.-MVA Basis
0
20% -t-- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -----1
0% - + - - - - - - - . - - - - - - - , - - - - - - , - - - - - - - - . - - - - - - - , - - - - - - , - - - - - - - - , - - - - - - - - 1 1/1/00 1/1/02 1/1/04 1/1/06 1/1/08 1/1/10 1/1/12 1/1/14 1/1/16
Valuation Year
--C-ttEIRON
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Looking Ahead • History of Plan liabilities • Changes in Amortization Policy • Project future contributions • Project future funded ratios
-C-ttEIRON
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History of Actuarial Liability ($) AC Transit Employees' Retirement Plan History of Plan Actuarial Liability $1 ,000,000,000 . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - , $900,000,000
-1------------------------------------1
$800,000,000
- 1 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -----c#-- - - - - I
$700,000,000
-+-------
_.... Liability
_._ Unfunded (AVA)
$600,000,000 - 1 - - - - - - - - - - - - - - - - - - - - - ------.-:.,,,,C-- - - - - - - - - 1 $500,000,000
- 1 - - - - - - - - - - - - - - - - - - -------M=------ - - - - - - - - - - - I
$0
+-----r--,------r---,-----,-----3'o,a::::a,,~--,------,---,------,---,------,----,-----,----,-----,----,------,----,-----,-----I
7/1 94 7/1/96 1/1/98 1/1/00 1/1/02 1/1/04 1/1/06 1/1/08 1/1/1 0 1/1/12 1/1/1 4 1/11 6 -$100,000,000 .....___ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ____,
Valuation Year
--C-ttEIRON
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Amortization Policy • At July meeting, Board requested educational presentation on amortization and funding policies • Current AC Transit amortization policy - 2008 extraordinary loss: 23-year closed period - Remainder of UAL: 12-year open (rolling) period, level percentage of payroll
• Current amortization policy is reasonable, however: - 12-year period may result in large change in contributions if large gain/loss or assumption change occurs - Rolling period means current UAL will not be fully paid off if all assumptions are met - Most public plans moving towards use of layered / closed amortization periods -C-ttEIRON
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Amortization Policy • Example of Layered Amortization Table IV-2 Cityof:XXX Schedule of Amorti1.ation Bases as of July 1, 2012 Used in Development of the City's Contribution for FY2014 Initial Date Amortization Established Initial Amount* Years
Type ofBase 1. June 30, 2007 UAL 2. Assumption Change 3. Experience Loss 4. Experience Loss 5. Experience Loss 6. Experience Gain**** 7. Experience Gain 8. Assumption Change 9. Experience Loss 10. Method Change 11. Non-Police UAL
7/1/2007 7/1/2008 7/1/2008 7/1/2009 7/1/2010 7/1/2010 7/1/2011 7/1/2011 7/1/2012 7/1/2012 7/1/2012
$
1,184,242,049 83,787,434 13,564,981 810,661,179 25,942,732 (50,000,000) (141,139,563) 188,313,322 36,799,824 2,465,954 1,564,122,860
20 30 15 15 15 14 15 30 15 30 15
TOTAL
--C-ttEIRON
July 1, 2012 Outs tanding Balance** $
368,436,353 $ 364,190,290 30,244,663 29,821,708 4,311,281 4,168,625 264,015,308 257,037,693 8,607,470 8,428,990 (15,157,254) (14,756,666) (47,468,129) (46,717,381) 63,333,632 64,459,571 36,799,824 39,559,811 2,465,954 2,650,900 1,564,122,860 1,550,667,393
$ 2,279,289,006
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Outstanding Remaining Amortization Balance for FY Amortization Payment for FY 2014 (BOY)*** 2014 (BOY) Years
$2,259,933,888
15 26 11 12 13 12 14 29 15 30 15
$
30,766,738 1,750,406 449,746 25,844,620 795,295 (1,483,753) (4,160,479) 3,497,661 3,342,007 141,107 163,414,719
$ 224,358,069 October 19, 2016
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Amortization Policy • At August meeting, after educational presentation and discussion, Board voted to modify amortization policy going forward - Close current UAL layers (i.e. current 12-year period for bulk of UAL will drop by one year each year until paid off) - Future changes in UAL will be amortized over separate layers, with length of period and other properties to be determined by Board at future meeting - The decision to close current UAL layer has no impact on FY2016-17 contribution, but will result in higher contributions and funded ratio in future years than would be required under old (rolling) amortization policy
--C-ttEIRON
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Rolling vs. Layered Amortization Old Policy (12-year Rolling) vs. New Amortization (12 year Closed) 40.00%
----r-----------------------------------
• Employ er Rate (Old - Rolling) • Employ er Rate (New - Closed/Layered) 30.00% 25.00%
20.00% 15.00%
10.00%
5.00%
0.00% r-,..
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--C-ttEIRON
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October 19, 2016 Classic Values , Innovative Advice 17 of 45
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Rolling vs. Layered Amortization Old Policy (12-year Rolling) vs. New Amortization (12-year Closed) 110.0% . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
-
1 r----------------~=============:: ; ; ;~=100.0%
0
90.0% + - - - - - - - - - - - - - - - ----7'oe:..._- - - - - - - - - - - - - =---IIC:----
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::::s n,
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70.0% - + - - - - - --------=--~
-=---------------------------
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Funded Ratio (Old - Rolling)
60.0% - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
"'C Q)
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u.
Funded Ratio - (New - Closed/Layered) 50.0%
-1----------------------------------
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--C-ttEIRON
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October 19, 2016 Classic Values , Innovative Advice 18 of 45
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Required Disclosures •
The purpose of this presentation is to discuss the current status and outlook for the Alameda - Contra Costa Transit District (AC Transit) Retirement Plan. This presentation is for the use of the Retirement Board in its education and outreach efforts.
•
In preparing this presentation, we relied on information (some oral and some written) supplied by Staff at AC Transit. This information includes, but is not limited to, the plan provisions, employee data, and financial information .
•
To the best of our knowledge, this presentation and its contents have been prepared in accordance with generally recognized and accepted actuarial principles and practices which are consistent with the Code of Professional Conduct and applicable Actuarial Standards of Practice set out by the Actuarial Standards Board. Furthermore, as credentialed actuaries, we meet the Qualification Standards of the American Academy of Actuaries to render the opinion contained in this presentation. This presentation does not address any contractual or legal issues. We are not attorneys and our firm does not provide any legal services or advice.
•
This presentation was prepared solely for the Retirement Board of AC Transit for the purposes described herein. This presentation is not intended to benefit any third party and Cheiron assumes no duty or liability to any such party.
Graham A. Schmidt, ASA, EA, FCA
--(-ttEIRON
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Anne D. Harper, FSA, EA, MAAA October 19, 2016
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Contacts
- Graham Schmidt •
[email protected], (703) 893-1456 x1137
-Anne Harper •
[email protected], (703) 893-1456 x1107
- Tim Doyle •
[email protected], (703) 893-1456 x1140
-C-ttEIRON
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