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CALPERS UPCOMING ISSUES <br /> • Ca1PERS actuarial staff recommended& CaIPERS Board adopted changes to <br /> contribution policy. Four reasons why: <br /> • Asset corridor generates volatility with extreme events <br /> • Slow funded status progress <br /> • Current method needs improved transparency <br /> • GASB 68 encourages faster funding by requiring a lower discount rate for <br /> slower funding <br /> • Changes—Direct rate smoothing base on: <br /> • 5-year ramp up <br /> • No asset smoothing <br /> • Future Gains/losses 25 year amortization period <br /> ❑ With 5 year ramp up means paid over 30 years <br /> • Method&Assumption changes 15 year amortization period <br /> ❑ With 5 year ramp up means paid over 20 years <br /> • No cap on rate increases each year <br /> March 18,2014 3 � ' <br /> CALPERS UPCOMING ISSUES <br /> • Ca1PERS actuarial staff recommended& Ca1PERS Board adopted assumption <br /> changes: <br /> • No changes on economic assumptions <br /> • Future mortality improvement with 20 years projection <br /> • Earlier retirements for Police Safety and <br /> • Higher future pay increases for Safety <br /> • Impact on assumption changes using newly adopted contribution policy—20 <br /> years amortization with 5 years ramp up and 5 years ramp down <br /> • Timing: <br /> • Direct Rate Smoothing: <br /> ❑ Included in 6/30/13 valuation(first impact 2015/16 rates) <br /> ❑ Full impact in 2019/20 rates. <br /> • Assumption changes: <br /> ❑ Included in 6/30/14 valuation(first impact 2016/17 rates) <br /> ❑ Full impact in 2020/21 rates <br /> March 18,2014 4 ". c;arruivr ''`v <br />