RES 08175 - Laserfiche WebLink

OOWTItALT AMENDMENT COST ANALYSIS - VAWATION BASIS: tuna 30, 2006 SAFETY FIRE PLAN FOR CIrY OF PLEASANTON Employer Number: 327 Benefit Deaaiptlon: Sactlon 21548, Pre-Retlromant Optlonsl Settlement 2 Death Benefit When a plan is amended, liability changes but assets do not. In addition, the desired state is to be 100% funded (i.e., to bring assets to equal accnied Ifabilily). Therefore, we disdose the ratio of aarued liability to payroll rather than assets tD payroll as a measure of the plan's potential future rate volatility. The higher the raft, the more volatile the future rate may be. The table below contains these measures of potential future rate volatility. As of ]une 30, 2006 Current Plan Post-Amendment Accrued Llabiltty # 111,700,371 # 111,839,721 payroll 12,203,017 12,203,017 Volatllity Index 9.2 9.2 It should also be noted that these ratios tend m stabilize as tine plan matures. That is, all plans with no past service start tfieir INes with zero assets and zero accrued liability -and so asset to payroll raft and liability to payrdl ratio of zero. However, as time goes by these ratios begin to rise and then tend to stabilize at some constant amount as the plan matures. Higher benefit levels and earlier expected retlrements produce higher constant future ratios. For example, our miscellaneous plans have average ratios that range from 2.6% for 2% Q- 60 plans tb 5.1% for 2.7% ~ 55 plans. For safety plans; the ratios range from 5.2% for 2% ~ 55 plans m 9.3% for 3% ~ 50 plans. Present Value of Projected Benefits The table below shows the change in the total present value of benefits for the proposed plan amendment. The present value of benefits represents the total dollars needed today to fund all future benefits for cunertmembers of the plan (i.e., witfiout regard bo future employees). The difference between this amount and current plan assets must be paid by future employee and employer contributions. As such, the change in the present value of benefits due to the plan amendment represents the "cost" of the plan amendment. However, for plans with excess assets some or all of this "cost" may already be oo~ered by current excess assets. As of dune 30, 2006 Current Plan Post-An+endmeM Tonal Asset st Msrket Value (MVA) # 96,351,146 # 96,351,146 Aduarisi Value of Asset (AVA) 90,841,578 90,841,578 AVA / IMVA 94.3% 94.3% Present Vslue of Proiecbed Benefits (PVB) # 137,674,616 # 137,904,146 Actuarial Value Of Assets (AVA) 90.841.578 90.841.578 Present Value of Futuro Employer and # 46,833,038 # 47,062,568 Employee Contributlons (PVB -AVA) Chan0e do PVB 229,530 Accrued Liability It is not required, nor necessarily desirable, to have accumulated assets sufficient to cover the total present value of benefits until every member has left employment. Instead, the actuarial funding process calculates a regular contribution schedule of employee contributions and employer contributions (called normal costs) which are designed to accumulate wits interest to equal the total present value of benefits by the time every member has IeR employment. As of each ]une 30, the actuary calculates the "desirable" level of plan assets as of that point in time by wbtracting the present value of scheduled future employee contributions and future employer normal costs from the total present value of benefits. The rewiting "desirable" level of assets is called the acr~ued/lad/lly. -- November 16, 2007 Page 2