p 3 actuaries you can understand 1 non-valuation benefits issues and options june 7, 2006 p
TRANSCRIPT
1P3 Actuaries you can
understand
Non-Valuation BenefitsIssues and Options
June 7, 2006
P
2P3 Actuaries you can
understand
Syllabus
• Review of Reserves
• Options Proposed
• Present Value
• Cash Flow
3P3 Actuaries you can
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Undistributed Earnings
• AKA Excess Earnings– Earnings available after:
• Crediting regular interest• Filling Contingency Reserve
– Calculated on smoothed basis– Limited expectations for near future
4P3 Actuaries you can
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Non-Valuation Reservesas of June 30, 2005
Market Value Actuarial Value
Supplemental Cost of Living Reserve 5,271,769 5,163,168
Retiree Health Insurance Reserve (BOR) 67,267,921 65,882,165
Preliminary Total 72,539,689 71,045,333
5P3 Actuaries you can
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Non-Valuation Reservesas of June 30, 2005
Market Value Actuarial Value
Preliminary Total 72,539,689 71,045,333
Transfer to Member COL Reserve (3,956,853) (3,875,339)
Remaining Total 68,582,836 67,169,994
6P3 Actuaries you can
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Non-Valuation Reservesas of June 30, 2005
Market Value Actuarial Value
Remaining Total 68,582,836 67,169,994
Match Liability for Supplemental COLA 10,439,460 10,224,402
Available for Retiree Health (BOR) 58,143,376 56,945,592
7P3 Actuaries you can
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Current Retiree Health Benefits
• Two Pieces– Settlement Section 9– Non-guaranteed benefits
8P3 Actuaries you can
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Settlement Section 9
• $3 per year of service
• Guaranteed
• Additional amounts when additional undistributed earnings are available
9P3 Actuaries you can
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Non-Guaranteed Benefits
• If member prior to 1990:– $45 plus– $3.50 per year of service
• If member after 1989:– $5 per year of service
• Maximum: $150
10P3 Actuaries you can
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Current Features
• Paid to all annuitants
• Paid from the date of retirement
• Paid for life of member
• Same amount continues to spouse upon member’s death
11P3 Actuaries you can
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Options for Retiree Health
• Decrease payment to beneficiary not already receiving to 60% of retiree benefit
• Split between Current Retirees and Future Retirees
12P3 Actuaries you can
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Current Retirees
• Proposed cut off dates– June 30, 2006– June 30, 2007– June 30, 2008– June 30, 2009– June 30, 2010– No Cut Off
13P3 Actuaries you can
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Calculations
• Based on data and assumptions from June 30, 2005 Actuarial Valuation of FCERA
• All Dollars in Millions
14P3 Actuaries you can
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Projected Annual Payout100% Continuance to Spouse
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1
2
3
4
5
6
7
8
9
10
2005 2015 2025 2035 2045
Mil
lio
ns
As of June 30
Act
uar
ial V
alu
e o
f A
sset
s
AllThru 2010Thru 2009Thru 2008Thru 2007Thru 2006
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Projected Annual Payout60% Continuance to Spouse
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1
2
3
4
5
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8
9
10
2005 2015 2025 2035 2045
Mil
lio
ns
As of June 30
Act
uar
ial V
alu
e o
f A
sset
s
AllThru 2010Thru 2009Thru 2008Thru 2007Thru 2006
16P3 Actuaries you can
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Present Value of Benefits at 8.16%
100% Continuance
60% Continuance
Thru 2006 54.5 52.1
Thru 2007 57.2 54.8
Thru 2008 59.9 57.4
Thru 2009 62.9 60.3
Thru 2010 65.4 62.7
All Current Members 90.4 85.8
17P3 Actuaries you can
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Retirees Thru June 30, 2006100% Continuance
0
20
40
60
80
100
120
2005 2015 2025 2035 2045
Mil
lio
ns
As of June 30
Act
uar
ial V
alu
e o
f A
sset
s
8.16%7.90%7.50%6.00%4.00%
18P3 Actuaries you can
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Retirees Thru June 30, 2007100% Continuance
0
10
20
30
40
50
60
2005 2015 2025 2035 2045
Mil
lio
ns
As of June 30
Act
uar
ial V
alu
e o
f A
sset
s
8.16%7.90%7.50%6.00%4.00%
19P3 Actuaries you can
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Retirees Thru June 30, 2008100% Continuance
0
10
20
30
40
50
60
2005 2015 2025 2035 2045
Mil
lio
ns
As of June 30
Act
uar
ial V
alu
e o
f A
sset
s
8.16%7.90%7.50%6.00%4.00%
20P3 Actuaries you can
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Retirees Thru June 30, 2009100% Continuance
0
10
20
30
40
50
60
2005 2015 2025 2035 2045
Mil
lio
ns
As of June 30
Act
uar
ial V
alu
e o
f A
sset
s
8.16%7.90%7.50%6.00%4.00%
21P3 Actuaries you can
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Retirees Thru June 30, 2010100% Continuance
0
10
20
30
40
50
60
2005 2015 2025 2035 2045
Mil
lio
ns
As of June 30
Act
uar
ial V
alu
e o
f A
sset
s
8.16%7.90%7.50%6.00%4.00%
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All Current Members100% Continuance
0
10
20
30
40
50
60
2005 2015 2025 2035 2045
Mil
lio
ns
As of June 30
Act
uar
ial V
alu
e o
f A
sset
s
8.16%7.90%7.50%6.00%4.00%
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Years Reserves Expected to Last100% Continuance
8.16% 7.90% 7.50% 6.00% 4.00%
Thru 2006 99 99 34 18 13
Thru 2007 35 27 22 16 12
Thru 2008 23 21 19 14 11
Thru 2009 19 18 16 13 11
Thru 2010 17 16 15 12 10
All Current Members 12 12 11 10 9
24P3 Actuaries you can
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Retirees Thru June 30, 200660% Continuance
0
50
100
150
200
250
2005 2015 2025 2035 2045
Mil
lio
ns
As of June 30
Act
uar
ial V
alu
e o
f A
sset
s
8.16%7.90%7.50%6.00%4.00%
25P3 Actuaries you can
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Retirees Thru June 30, 200760% Continuance
0
10
20
30
40
50
60
70
80
90
100
2005 2015 2025 2035 2045
Mil
lio
ns
As of June 30
Act
uar
ial V
alu
e o
f A
sset
s
8.16%7.90%7.50%6.00%4.00%
26P3 Actuaries you can
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Retirees Thru June 30, 200860% Continuance
0
10
20
30
40
50
60
2005 2015 2025 2035 2045
Mil
lio
ns
As of June 30
Act
uar
ial V
alu
e o
f A
sset
s
8.16%7.90%7.50%6.00%4.00%
27P3 Actuaries you can
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Retirees Thru June 30, 200960% Continuance
0
10
20
30
40
50
60
2005 2015 2025 2035 2045
Mil
lio
ns
As of June 30
Act
uar
ial V
alu
e o
f A
sset
s
8.16%7.90%7.50%6.00%4.00%
28P3 Actuaries you can
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Retirees Thru June 30, 201060% Continuance
0
10
20
30
40
50
60
2005 2015 2025 2035 2045
Mil
lio
ns
As of June 30
Act
uar
ial V
alu
e o
f A
sset
s
8.16%7.90%7.50%6.00%4.00%
29P3 Actuaries you can
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All Current Members60% Continuance
0
10
20
30
40
50
60
2005 2015 2025 2035 2045
Mil
lio
ns
As of June 30
Act
uar
ial V
alu
e o
f A
sset
s
8.16%7.90%7.50%6.00%4.00%
30P3 Actuaries you can
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Years Reserves Expected to Last60% Continuance
8.16% 7.90% 7.50% 6.00% 4.00%
Thru 2006 99 99 99 21 14
Thru 2007 99 99 31 17 13
Thru 2008 32 26 22 16 12
Thru 2009 22 20 18 14 11
Thru 2010 19 18 16 13 11
All Current Members 13 13 12 11 9
31P3 Actuaries you can
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