There is a Link to full report at the bottom of this post...........
Requests for Information and Responses – Group Pension Plan for Employees of Coweta County, Georgia
1. Please provide a copy of the most recent actuarial valuation for the Group Pension Plan.
Actuarial valuation report attached.
2. Can you clarify that the RFP responses are limited to 10 pages in total (including the seven in the
RFP) or 10 additional pages which would total 17?
Your response to the questions in the RFP should not exceed 10 pages in total.
3. If we offer bundled services related to retirement plans, should we include pricing for those services in the proposal?
Yes, the Board is open to considering bundled services.
4. We don’t have an office in the state of Georgia. Is the requirement that the plan be serviced from an in-state office a hard and fast rule?
Yes, the Board would like for service to be provided by an office located within the state of
Georgia.
5. Would you consider a firm that would provide services located outside the state of Georgia?
No, the Board would like for service to be provided by an office located within the state of
Georgia.
6. Would you consider a firm that does not manage payments to participants or handle tax reporting?
Yes. These services may be provided by the winning firm, through a partnership, or solicited separately by the Board.
7. There are several questions that address bundled services, administration and individual participant services. May I assume that I can include benefits and pricing for those services to the County?
Yes, the Board is open to considering bundled services.
8. Do you have a preference towards discretionary investment management?
The Board would like the investment advisor to make recommendations, with the Board making the final decision.
9. Regarding your request for audited financial statements and our firm’s investment philosophy, may we include those as exhibits versus inside the 10 page maximum?
You may include the audited financial statements as an exhibit, outside of the 10 page maximum, but please include your firm’s investment philosophy within the 10 page maximum.
10. Can you please provide a copy of the current Investment Policy Statement for each of the three plans?
We currently do not have an Investment Policy Statement for any of the three plans.
11. Do you require references? If so, how many?
Item #4 asks for a list of at least three clients with $50 million or more in assets under advisement for a minimum of three years. Item #14 asks for the number and total assets under management of government pension plans and for other defined benefit plans. The Board is not requesting reference information for any of those clients at this time. References will be requested from the finalists.
12. Pension assets are invested in an insurance account. What is the market value adjustment, if any, for the pension assets?
If the contract is discontinued, all assets in the General Account are available in one of two ways:
1. In six payments over five years. General Account rates are reduced by 2% during the payout
period.
2. In a lump sum, subject to any market value adjustment. For New Funds, there is no market value adjustment. Renewal Funds are adjusted as follows:
a. We compare your Renewal Funds Rate to a “Market Rate” (the rate we are offering to new clients like you as of the date of discontinuance).
b. If your Renewal Funds Rate is greater than the Market Rate, there is no market value adjustment.
c. If the Market Rate exceeds the Renewal Funds Rate, the percentage shall be 100%
minus six times the excess.
13. In terms of custodial services, is the Board looking for the pension assets to be held at the winning firm?
Custodial services can be provided by the winning firm, through a partnership, or solicited
separately by the Board.
14. The RFP requests that the proposer must offer a one year fee guarantee. Is the Board only looking for a flat fee to be charged for our services OR are they looking for a certain amount of basis points on the assets to be charged for our services?
The Board is open to considering different fee structures.
15. How are the assets currently allocated in the pension plan?
100% insurance contract
16. Is the payment of benefit distributions and distribution of tax notices a service component that the investment consultant can help provide through a TPA?
The Board will consider investment consultants that do not provide this service, or who partner to provide this service.
17. Would the Board consider a discretionary outsourced solution to manage the assets of the pension?
The Board would like the investment advisor to make recommendations, with the Board making the final decision.
Group Pension Plan for Employees of
Coweta County, Georgia
Funding, Minimum Funding and Accounting Report as of July 1, 2013
For The Fiscal Year Ending September 30, 2014
A c t u a r i a l V a l u a ti on
February 20, 2014
Table of Contents
EXECUTIVE SUMMARY ........................................................................................3
Funding and Accounting Results with Comparison to Prior Valuation ....................................4
Assets ....................................................................................................................................5
Commentary and Review of Changes Since the Prior Valuation .............................................6
Actuarial Certification ............................................................................................................7
SUPPORTING EXHIBITS .......................................................................................8
1. Minimum Required Contribution Under Georgia Law ........................................9
2. Changes in Unfunded Actuarial Liability and Annual Normal Cost................... 10
3. Excess Contribution Account ........................................................................... 11
4. Amortization Schedule for Minimum Contribution ........................................... 12
5. Minimum Contribution..................................................................................... 13
6. Alternate Contributions .................................................................................... 14
7. Net Pension Obligation and GASB No. 27 Annual Pension Cost ...................... 15
8. GASB Nos. 25 and 27 Disclosure Information.................................................. 17
9. Annual Recommended Contribution for the Water Authority ............................ 20
10. Accounting Basis and Methods......................................................................... 21
11. Statement of Sponsor’s Funding and Accounting Assumptions ......................... 22
12. Statement of Assets .......................................................................................... 24
13. Change in Plan Assets ...................................................................................... 25
14. Development of Actuarial Value of Assets ....................................................... 27
15. Changes in Participant Group ........................................................................... 28
16. Summary of Statistical Information .................................................................. 29
APPENDICES.......................................................................................................... 30
A. Summary of Plan Provisions
B. Age and Service Distribution for Active Participants
C. Georgia State Code
EXECUTIVE SUMMARY
Funding and Accounting Results with Comparison to Prior Valuation
Assets
Commentary and Review of Changes Since the Prior Valuation
Actuarial Certification
Funding and Accounting Results with Comparison to Prior Valuation
This report contains the result of the 2013 actuarial valuation and includes a comparison with the last valuation performed in 2012. It includes the recommended contributions, the amount of the minimum required contribution under Georgia law as well as the Annual Pension Cost under GASB 27 for the fiscal year ending September 30, 2014.
Valuation Results
(Employer Contributions Only)2
Valuation Date
7/1/2012 7/1/2013
Fiscal Year Ending
9/30/2013 9/30/2014
Required Minimum, Before Credit Balance 2,850,684 3,220,500
Percent of Plan Year Covered Payroll 16.31% 18.41%
Required Minimum, After Credit Balance 482,162 0
Percent of Plan Year Covered Payroll 2.76% 0.00%
Annual Required Contribution (GASB 27) 3,401,258 3,531,746
Percent of Plan Year Covered Payroll 19.46% 20.19%
Recommended Contribution 3,786,444 3,971,740
Fund Unfunded Actuarial Accrued
Liability over 10 years
Liabilities for Past Service 69,819,070 74,742,029 (Actuarial Accrued Liability)
Assets
Market Value 42,581,277 46,212,997
Funded Ratio
61%
62%
1- This minimum is required under Chapter 20, Title 47 of the Official Code of Georgia, Annotated. It has been reduced by a credit for prior excess contributions. Prior contributions in excess of the minimum under Georgia law have accumulated to a credit of 3,300,912.
2- Expected Employee contributions for this year are: 480,987.
Assets
Asset Value and Allocation
7/1/2 012
7/1/20 13
Investment Categ ory
Ma rket
Va lue
Percent of
A ssets Market V alue
Percent of
Asset s
Cont ribution Rec eivable 0 0.0% - 0. 0%
Se curian Contract 4 2, 581, 277 1 00.0% 46, 21 2, 997 10 0. 0%
Total 4 2, 581, 277 1 00.0% 46, 21 2, 997 10 0. 0%
6/30/20 12 to 6/30/2 013
Empl oyer Co ntrib utions 3 ,7 21,513
Empl oyee Con tribu tio ns 4 89,673
Total Contribu tions 4 ,2 11,186
Earni ngs 1 ,6 13,857
Ben efits Paid ( 2, 19 3, 323) Exp enses Paid 0
Net Income (Expense) 3 ,6 31,720
Rate o f Return 3. 70% Exp ected Return 4. 00% Asset G ain (Lo ss) (13 0, 771)
The Water Authority’s share of the contribution for 2013-14 is $119,329 (see page 20).
Commentary and Review of Changes Since the Prior Valuation
Commentary
GASB 27 Pension Cost is determined under the Aggregate Cost method (same actuarial method as last year). The Georgia Minimum Contribution requirement is determined under the Entry Age Normal Cost method with the Unfunded Actuarial Accrued Liability (i.e. the liability for benefits earned up to the valuation date) is amortized in accordance with Georgia Code 40-27 (same actuarial method as last year). The recommended contribution is determined under the Entry Age Normal Cost method with the Unfunded Actuarial Accrued Liability amortized over 10 years (in the past, the recommended contribution was based on the GASB 27 calculation). Beginning in October 1, 2014, the method used to calculate the GASB 27 pension cost will change dramatically and therefore SHDR recommends adopting a new method to determine the recommended contribution. Determination of the Water Authority contribution is developed in Section 9.
Plan Experience
Plan experience is determined using the Entry Age Cost Method. Over the last year, Plan experience was less favorable than that expected under the Plan’s actuarial assumptions producing an overall experience loss. In some cases additional service was granted to some retiring employees. The effect of these items and other net (gains)/losses was an increase in the Plan’s Unfunded Actuarial Accrued Liability. Losses are shown as positive numbers, gains as negative numbers. The sources of this net loss are as follows:
Experience
Effect on Unfunded
Actuarial Liability
Investment Return $130,771
Liability Experience 2,350,662 Total $2,481,433
Plan Changes Since the Prior Valuation
None other than the granting of additional past service to certain retiring individuals. This change increased plan liabilities by $786,159.
Assumption Changes Since the Prior Valuation
None.
Funding Method Changes Since the Prior Valuation
None. Beginning in October 1, 2014, the method used to calculate the pension cost will be governed by GASB 68 resulting in a dramatic change in the
Comprehensive Annual Financial Report. SHDR recommends a review of the cost under the new standard at this time.
Actuarial Certification
We have performed an actuarial valuation of the Group Pension Plan for Employees of Coweta County, Georgia as of July 1, 2013 at the request of Coweta County, Georgia. We performed this valuation to: i) measure the funded status of the Plan, ii) develop a recommended contribution, iii) develop the minimum employer contribution under Georgia State Title 47, Chapter 20 for plan year ending June 30, 2014 and iv) determine the Annual Pension Cost under Statement No. 27 of the Governmental Accounting Standard Board (GASB No. 27) for the employer’s fiscal year ending September 30,
2014. The valuation also developed disclosure information for purposes of GASB No. 25 and GASB No. 27. The results of the valuation are set forth herein. The preceding pages represent our statement of findings, conclusions and recommendations.
Actuarial computations under GASB Nos. 25 and 27 are for purposes of fulfilling employer accounting requirements. The calculations reported herein have been made on a basis consistent with our understanding of GASB Nos. 25 and 27. Determinations for purposes other than meeting plan and employer financial accounting requirements may be significantly different from the results reported herein.
All costs, liabilities, and other factors under the Plan were determined in accordance with generally accepted actuarial principles and procedures. In our opinion, the actuarial assumptions used are reasonable. These assumptions represent our best estimate of the anticipated experience under the Plan by taking into account actual Plan experience and reasonable future expectations. The costs and actuarial exhibits presented in this report, in our opinion, fully and fairly disclose the actuarial position of the Plan.
Our valuation results, presented in this report are based on the unaudited assets and employee data provided by the Plan sponsor. We did not audit the data supplied to us, but have reviewed both. Based on our review, the data and assets appear to be reasonable.
Stanley, Hunt, DuPree & Rhine
I am a member of an actuarial organization and meet the qualification standards of the American Academy of Actuaries to render the actuarial opinion contained herein.
Lane B. West, FSA, FCA, MAAA, EA Senior Vice President /Consulting Actuary Enrolled Actuary No. 11-02663
February 20, 2014
Date
As part of SHDR’s quality standards procedures, the valuation results as reported herein have been reviewed by:
Eric E. Malacane, ASA, EA, MAAA Vice President/Actuary
February 20, 2014
Date
7701 Airport Center Drive, Mail Code: 527-99-02-20, Greensboro, NC 27409, (336) 291-1151 Blank Filler
SUPPORTING EXHIBITS
1. Minimum Required Contribution Under Georgia Law
Title 47, Chapter 20 of the Official Code of Georgia, Annotated sets forth minimum funding standards for pension plans maintained by Georgia governmental entities. It describes acceptable funding methods and establishes amortization periods for a plan and assumption changes.
On the basis of the valuation as of July 1, 2013, and relying upon title 47, Chapter 20 of the Official Code of Georgia, Annotated, the following information as shown in this section:
Changes in Unfunded Actuarial Liability and Annual Normal Cost
Excess Contribution Account
Amortization Schedule for Minimum Contribution
Development of Minimum Contribution
2. Changes in Unfunded Actuarial Liability and Annual Normal Cost
The 07/01/2013 valuation reveals an asset loss (C.1.); a liability loss (C.2.); and an increase in liabilities due to the granting of additional past service to certain retiring individuals (B.6.).
Changes in Unfunded Actuarial Liability and Annual Normal Cost (Entry Age Normal Method)
A. Unfunded Actuarial Liability
7/1/2012 7/1/2013
1 Actuarial Liability as of Valuation Date 69,819,070 74,742,029
2 Actuarial Value of Assets as of Valuation Date 42,581,277 46,212,997
3 Unfunded Actuarial Liability as of Valuation Date = (1)-
(2) 27,237,793 28,529,032
B. Expected Unfunded Actuarial Liability
1 Unfunded Actuarial Liability as of Prior Year
25,852,097
27,237,793
2 Normal Cost for Prior Year 921,636 799,990
3 Interest on (1) and (2) to Valuation Date 1,475,233 1,539,274
4 Contributions with interest to Valuation Date (Employer
and Employee)
4,165,962
4,315,617
5 Expected Unfunded Actuarial Liability as of Valuation
Date
= (1)+(2)+(3)-(4) 24,083,004 25,261,440
6 Adjustment due to Plan change - 786,159
7 Adjustment due to assumption change (1,310,829) -
8 Adjustment due to funding method change - -
9 (Gain)/ Loss 4,465,618 2,481,433
10 Unfunded Actuarial Liability as of Valuation Date after
changes 27,237,793 28,529,032
C. Experience Gain
1 Asset (gain) loss 67,792 130,771
2 Liability (gain) loss 4,397,826 2,350,662
3 Experience (gain) loss as of End of Year 4,465,618 2,481,433
D. Normal Cost
3. Excess Contribution Account
Charges
Valuation Year Ending
6/30/2013 6/30/2014
1 Normal Cost as of Valuation Date 799,990 758,792
2 Amortization charges as of Valuation Date 2,607,277 2,941,111
3 Interest through End of Year, on (1) and (2) 187,059 203,125
4 Total Charges 3,594,326 3,903,028
Credits
Balance
5 Excess Contribution Account Balance as of Valuation Date 2,245,257 3,300,912
6 Amortization credits as of Valuation Date 190,992 191,052
7 Interest through End of Year on (5) and (6) 133,750 191,709
8 Contributions with interest through End of Year ** 4,325,239 TBD *
9 Total credits 6,895,238 3,683,673
* TBD - to be determined.
** Employer and Employee Contributions
10 Excess Contribution Account Balance as of End of Year 3,300,912 (219,355)
(9)-(4)
Minimum Contribution (total of Employee and Employer Contributions)
3,920,842
Minimum Contribution (total of Employee and Employer
Contributions), Before Credit Balance
3,701,487
4. Amortization Schedule for Minimum Contribution
Under Title 47, Chapter 20 of the Official Code of Georgia Annotated
First
Payment
Payment
2012 Annual
Outstanding Balance
2013 Annual
Date
Period Initial Amount
Payment 7/1/2012 7/1/2013
Payment
Prior Actuary 7/1/2010 20 $ 21,948,495 $ 1,742,534 $ 20,687,428 $ 19,991,703 $ 1,743,078
Assumption Change 7/1/2011 30 $ 6,803,303 $ 443,287 $ 6,709,544 $ 6,612,502 $ 443,432
Actuarial Loss 7/1/2012 15 $ 4,465,619 $ 421,456 $ 4,465,619 $ 4,267,625 $ 421,585
Actuarial Loss 7/1/2013 15 $ 2,481,433 NA NA $ 2,481,433 $ 234,193
Service Grant 7/1/2013 10 $ 786,159 NA NA $ 786,159 $ 98,823
Total Charges $ 36,485,009 $ 2,607,277 $ 31,862,591 $ 34,139,422 $ 2,941,111
Actuarial Gain 7/1/2011 15 $ 1,118,592 $ 105,588 $ 1,068,712 $ 1,016,342 $ 105,620
Assumption Change 7/1/2012 30 $ 1,310,829 $ 85,404 $ 1,310,829 $ 1,293,136 $ 85,432
Total Credits $ 2,429,421 $ 190,992 $ 2,379,541 $ 2,309,478 $ 191,052
Net Total
$ 34,055,588
$ 2,416,285
$ 29,483,050
$ 31,829,944
$ 2,750,059
Credit Balance $ 2,245,257 $ 3,300,912
Unfunded Actuarial Accrued Liability $ 27,237,793 $ 28,529,032
5. Minimum Contribution
Development of Minimum Contribution - - The amounts shown below reflect the total contributio n due, not just the employer portion.
7/1/2013 to
6/30/ 2014
Required Contribution Prior to a pplication of Full Fund ing Limitation
1 Normal Cost as of Valuation Date
758,792
2 Amortization charges as of Valuatio n Date 2,941,111
3 Amortization credits as of Valuation Date 191,052
4 Exces s Con tribution Account Balance as of Valuation Date 3,300,912
5 Interest through End of Year on (1)+(2)-(3)-(4) 11,416
6 Req uired Minimum Contribution at En d of Year prior to 219,355
application of the Full F unding Limitation; (1)+(2)-(3)-(4)+(5),
minimum $0
7 Minimum Bef ore Credit for Excess Contribution Account 3,701,487
and F ull Funding Limitation
For this year, the F ull Fund ing Limitation does not effect the Minimum Required Co ntribution. Employee (Expected Contributions) 480,987
Minimum Employer Con tribution (after EE Contrs and befo re CB) 3,220,500
Minimum Employer Con tribution (after EE Contrs and after CB) -
6.
Alternate Contributions
Based on Entry Age Normal Method.
Da te of Valuation
7/1 /2 013
Alterna tiv e Fifteen-year Funding
1 Nor mal C ost as of Va lu atio n Date 758 ,792
2 15 Year Am ortization of the Unfund ed Ac tuar ia l Ac cru ed Liability 2,692 ,514
3 Sum of (1) a nd ( 2) 3,451 ,306
4 Inter est on ( 3) a t 5. 49% assuming monthly payments 85 ,587
5 Alternative 15-y ear Contribution assum ing m onthly paym ents (3 )+(4) 3,536 ,893
6 E xpec ted E mplo yee Contribut ions 480 ,987
7 E mplo yer Share (5 )-(6) 3,055 ,906
8 As Pe rce nt of Pa yroll
17%
Da te of Valuation
7/1 /2 013
Re commended Ten-yea r Funding (EAN Me thod with 10 Ye ar Funding of UAAL)
1 Nor mal C ost as of Va lu atio n Date 758 ,792
2 10 Year Am ortization of the Unfund ed Ac tuar ia l Ac cru ed Liability 3,586 ,186
3 Sum of (1) a nd ( 2) 4,344 ,978
4 Inter est on ( 3) a t 5. 49% assuming monthly payments 107 ,749
5 Alternative 10-y ear Contribution assum ing m onthly paym ents (3 )+(4) 4,452 ,727
6 E xpec ted E mplo yee Contribut ions 480 ,987
7 E mplo yer Share (5 )-(6) 3,971 ,740
8 As Pe rce nt of Pa yroll
23%
7. Net Pension Obligation and GASB No. 27 Annual Pension Cost
Coweta County, Georgia adopted Statement No. 27 of the Governmental Accounting Standards Board (GASB No. 27) for determining accrual costs and liabilities for this pension program.
GASB No. 27 calls for determination of an Annual Pension Cost (APC) and disclosure of certain items showing the Plan’s funded status, deferred items, and the Net Pension Obligation. For the current fiscal year, the Annual Pension Cost and the Net Pension Obligation (NPO) are developed in the following summary of results.
The Annual Required Contribution (ARC) shown is the normal cost determined under the Aggregate Method. The resulting expense amount satisfies
GASB No. 27 requirements for ARC.
The Annual Pension Cost (APC) consists of the Annual Required Contribution (ARC), plus interest on the beginning of the year NPO, minus an adjustment equal to the 15-year amortization of beginning of the 2010-11 year NPO. The 2011-12 and later amortizations are based on a level dollar amount using the equivalent amortization period (13 years for 2012-13 and 12 years for 2013-14) as determined by the Aggregate Method.
7/1/2012 to
6/30/ 2013
7/ 1/2013 to
6/ 30/2014
Annual Required Contri butio n (ARC) fo r G ASB 27
In terest Rate 5.49% 5.49%
1 Present Value of Ben efits as of Val uati on Date 80,817,578 85,080,201
2 Present Value of Futu re E mp loy ee Contributions 8,074,925 8,015,416
3 Asset s as o f Valuati on Date 42,581,277 46,212,997
4 Present Value of Futu re C ont rib utions (E m plo yer) (1-2-3) 30,161,376 30,851,788
5 Present Value of Futu re C omp ensation 159,130,843 156,939,279
6 Aggregate Norm al Cost as a pe rcent of Compen sa ti on (4/5) 18.95% 19.66%
7 Cu rre nt C omp ensation 17,475,306 17,490,422
8 Aggregate Met hod Normal Cost as o f Valuati on Da te (6 x 7) 3,311,570 3,438,617
9 Inter est for 1 /2 Ye ar 89,688 93,129
10 Annual Required Contri butio n (ARC for G ASB 27) 3,401,258 3,531,746
(E mplo yer P ortio n of Costs) (8 + 9)
M et hod: Aggr egate Cost M ethod
The following chart reconciles the Net Pension Obligation (NPO), which is a liability, on a fiscal year basis.
Fi scal Year E ndi ng
9/ 30/ 2013 9/3 0/2 014
a. NPO a t Beg inn ing of Ye ar 382, 398 4 2,415
b. ARC (Aggregate Method) 3 ,401, 258 3,53 1,746
c. Interest on NPO 20, 994 2,329
d. NPO Adjust ment (40, 722) ( 4,778)
e. APC ( b ) + ( c ) +( d ) 3 ,381, 530 3,52 9,297
f. Actu al Em pl oyer Cont ri but ion 3 ,721, 513 TBD
g. NPO at e nd o f year = (a)+ (e)-( f) 42, 415 TBD
Amor ti zation Pe rio d * 13 12
Valuati on Date for ARC 7/ 1/ 2012 7 /1/ 2013
Assu med Interest R ate 5. 49% 5.49%
TB D - to be det er mi ned
* - based on a ver age am ortiz at io n perio d of the Aggrega te Met hod.
8. GASB Nos. 25 and 27 Disclosure Information
Schedule of Funding Progress
Actuarial Normal Cost Unfunded
Valuation Actuarial Unfunded (Aggregate Liability as % of
Date Plan Assets Liability Liability Method)' Funded Ratio Covered Payroll Payroll
(a) (b) (b-a) (c) (a)/(b) (d) ((b-a)/d)
7/1/2010 35,070,636 56,806,521 21,735,885 3,054,709 61.7% 18,245,783 119.1%
7/1/2011 38,702,703 64,554,800 25,852,097 2,827,175 60.0% 17,191,528 150.4%
7/1/2012 42,581,277 69,819,070 27,237,793 3,401,258 61.0% 17,475,306 155.9%
7/1/2013 46,212,997 74,742,029 28,529,032 3,531,746 61.8% 17,490,422 163.1%
Accrued Liability is shown under Entry Age Method
Schedule of Contributions
Contribution as
Actuarial Annual Pension Actual Contribution as Percent of
FYE 9/30 Valuation Date Cost' Contribution' a Percent of APC Payroll
2010 7/1/2009 3,435,948 3,471,407 101.03% 19.03%
2011 7/1/2010 3,054,709 3,085,663 101.01% 16.91%
2012 7/1/2011 3,209,850 3,523,244 109.76% 20.49%
2013 7/1/2012 3,381,530 3,721,513 110.05% 21.30%
2014 7/1/2013 3,529,297 TBD TBD TBD
Annual Pension Cost Summary
Annual Pension Cost (APC)
Fiscal Year
Ending
BOY NPO
ARC'
Interest
Adjustment
Total APC' Actual
Contribution'
EOY NPO Interest
Rate
9/30/2010 762,205 3,435,948 45,732 (45,732) 3,435,948 3,471,407 726,746 6.00%
9/30/2011 726,746 3,054,709 43,605 (43,605) 3,054,709 3,085,663 695,792 6.00%
9/30/2012 695,792 3,245,688 38,338 (74,176) 3,209,850 3,523,244 382,398 5.51%
9/30/2013 382,398 3,401,258 20,994 (40,722) 3,381,530 3,721,513 42,415 5.49%
9/30/2014 42,415 3,531,746 2,329 (4,778) 3,529,297 TBD TBD 5.49%
For 2013 Fiscal Year, adjustment assumes amortization over 13 years and over 12 years for 2014 Fiscal Year.
' - Employer portion of the cost and contribution.
GASB Nos. 25/27 Annual Required Contribution (Aggregate Normal Cost)
Employer portion of the cost
GASB Nos. 25/27 ARC (Aggregate Method)
7/1/2013 to
6/30/2014
1. Funding interest rate 5.49%
2. Annual Required Contribution (ARC)
(a) Normal cost 3,438,617
(b) Supplemental cost
(i) Actuarial Liability N/A
(ii) Actuarial Value of Assets N/A
(iii) Unfunded Actuarial Liability: (i)-(ii) N/A
(iv) Years to amortize N/A
(v) Supplemental cost N/A
(c) BOY contribution: (a)+(b)(v) 3,438,617
(d) Contribution timing
(i) Fraction to year end: (11/24)
(ii) Compound interest to mid-year at 5.51% 93,129
(e) ARC: (c)+(d)(ii), not less than 0 3,531,746
Actuarial Present Value of Accrued Plan Benefits - Funding Status
The following is based on the projected unit credit method, a method mandated for non-governmental plans by FASB. The financial accounting f or governmental plan purpos es is bas ed on the Aggr egate Cost Method.
7/1/2012 to
6/30/2013
7/ 1/ 2013 to
6/ 30/2014
1 Effective Interest Rate
Actuarial pres ent value of vested benef its
5.39%
5.49%
Inactive P ar ticipants Receiving/Due a Benefit 27,612,818 33,173,163
Active P articipants with Vested Benefits 21,756,322 20,582,762
Total Vested Benefits 49,369,140 53,755,925
2 Actuarial pres ent value of Non-Vested Benefits 4,499,090 4,600,078
3 Total Actuarial pr esent value of Accrued Plan Benef its 53,868,230 58,356,003
4 Benefit Liability related to as sumed Future Pay I ncreases 4,582,881 4,805,668
5 Total P rojected Benefit Liability 58,451,111 63,161,671
6 Market Value of Assets 42,581,277 46,212,997
7 Total Unfund ed (surplus) Benefit Liability = (5) - (6) 15,869,834 16,948,674
9. Annual Recommended Contribution for the Water Authority
The Actuary recommends the Water Authority’s share of the contribution to be determined using the “aggregate method” of cost allocation.
A. Plan Assets Allocated to the Water Authority
Plan assets allocated to the Water Authority were first allocated at June 30, 2010. The Purpose of the annual allocation is to determine the contribution to be made by the Water Authority if it was a stand alone plan. In the past, the contribution requirement allocated to the Water Authority was based on head count. The 6/30/2013 asset allocaiton reflects the fact the Water Authority did not make a contribution in the 2012-2013 year.
6/30/10 to 6/30/11 6/30/11 to 6/30/12 6/30/12 to 6/30/13
Beginning Assets $ 2,065,151 $ 2,327,127 $ 2,315,878
Contributions 205,883 26,958 0
Benefit Payments (33,194) (125,450) 152,315
Rate of Return 4.15% 3.83% 3.70%
Return 89,287 87,243 82,870
Ending Assets $ 2,327,127 $ 2,315,878 $ 2,246,433
B. Annual Recom mended Contributi on 7/1/ 2013 to
06/30/2014
Interest Ra te 5.4 9%
1 Present Value of Benefi ts as of Valu at ion Date 3,225,3 39
1. a. Act ives 829,730
1.b. Inacti ves 2,395,609
2 Present Value of Future E mpl oyee C ont rib uti ons 0
3 Assets a s of Val uati on Date 2,246,4 33
4 Present Value of Future Con tributio ns (Employer) (1 -2-3) 978,9 06
5 Present Value of Future Ser vice Years for Actives 118
6 Aggregat e No rma l C ost p er Act ive Mem ber (4/ 5) 8,2 96
7 Numb er o f Acti ves 14
8 Aggregat e M et hod No rma l C ost as of V al uat io n Date (6 x 7) 1 16,141
9 Interest fo r 1/ 2 Year 3,188
10 Annua l Re com mended Cont ri but ion 1 19,329
(Em ployer Po rti on of Costs) (8 + 9)
Metho d: Ag greg ate Co st Meth od
10. Accounting Basis and Methods
Basis
GASB 27 – Aggregate Method
Georgia State Minimum Contribution – Entry Age Normal Method
Recommended Contribution – Entry Age Normal Method
Actuarial computations under Statement of Governmental Accounting Standards No. 27 (GASB No. 27) are for purposes of fulfilling employer accounting requirements. Determination for purposes other than meeting employer financial accounting requirements may be significantly different from the results reported herein. Accordingly, additional determinations are needed for other purposes, such as judging benefit security at termination.
We are not aware of any Employer commitments to make future plan amendments, any substantive commitments for benefits that exceed the benefits defined by the written plan, any significant liabilities other than for benefits, such as for legal or accounting fees, any event during the past year that might represent settlements or curtailments including purchase of annuity contracts, lump sum cash payments to participants, any irrevocable action that might relieve the company or the plan of primary responsibility for a pension obligation or eliminate significant risks related to the obligation and assets, any event that may significantly reduce the expected years of future service of employees, or any event that may eliminate for a significant number of employees the accrual of benefits for some or all of their future service.
The recommended funding policy of the Employer is to contribute to the Plan an amount equal to the contribution determined under the Entry Age Normal Method with a 10-year amortization of the Unfunded Actuarial Accrued Liability, at least equal to the employee contribution and not less than the minimum contribution required under Georgia Law.
The discount rate adopted by the Employer for valuing plan liabilities is within an acceptable range allowed under GASB No. 27 which, unlike FASB ASC 715, requires the use of a long term rate. The assumed rate of compensation increases is based on the long-term expectations of the Employer.
The relationship between the Employer and Stanley, Hunt, DuPree & Rhine, a division of BB&T Insurance, Inc. has been one of fee basis consultant on the part of Stanley, Hunt, DuPree & Rhine, and we are not aware of any circumstances or event during the course of this relationship which would impair our capacity to continue providing actuarial and other administrative and consulting services to the Employer. We feel that our independence with respect to the Employer has always been intact and we foresee nothing which would adversely affect that independence and objectivity.
Asset Valuation Method - The Actuarial Value of Assets is equal to the Market Value of Assets (as reported by the asset manager).
Amortization Method
For the Recommended Contribution, the Unfunded Actuarial Liability is amortized over a rolling 10-year period. For the Georgia State Minimum Contribution, the amortization periods in the law are followed.
For GASB 27, no unfunded actuarial liability is determined.
Valuation Date - The valuation date is July 1.
11. Statement of Sponsor’s Funding and Accounting Assumptions
Interest Rate 4.00% for four years (2013-2016) and 6.00% thereafter.
Mortality
Actives and non-disabled Inactives: RP-2000 Table projected to 2018
Disabled Lives: 1975 Social Security Table (interpolated version)
Termination
T-5 table: Sample rates are:
25 7.72% 50 2.56%
30 7.22% 55 0.94%
35 6.28% 60 0.09%
40 5.15% 63 & over 0.00%
45 3.98%
Assumed Retirement Age
Sample rate are:
55 3% 10% 12%
60 5% 15% 18%
63 15% 20% 25%
65 75% 100% 100%
67 & over 100% 100% 100%
Disability
Statement of Sponsor’s Accounting Assumptions (continued)
Sample rates of disability are:
25 0.15% 50 1.00%
30 0.20% 55 1.50%
35 0.25% 60 2.00%
40 0.40% 65 2.50%
45 0.56%
Marriage
Male participants are assumed to be three years older than their wives. It is assumed that 100 percent of male and 100 percent of female participants are married.
Expenses
Interest rate is assumed to be net of any expenses paid by the Plan.
Salary Scale
Compensation is assumed to increase at 2.5%.
Cost of Living Increase
Annual increase is assumed to be 2.5%.
Limit Increases
The IRS Compensation Limitation is assumed to increase at 3% annually. The IRS Dollar Benefit Limitation is assumed to increase at 3% annually.
Forms of Payment
100% of active participants and vested former participants or beneficiaries entitled to deferred benefits are assumed to receive benefits in the normal form (life annuity with annual cost of living increase (Social Security Increase with 2.5% minimum)).
Census Data
No future new entrants. No rehire of former employees. No liability is held for non-vested former employees even if a break-in-service has not occurred as of the valuation date. All participants are assumed to work the same number of hours in future years as reported for the year preceding the valuation
date.
12. Statement of Assets
7/1 /20 12
7 /1/ 2013
M arket Pe rcent of P erc ent of
Inv estm ent Ca teg ory Va lue Assets Marke t Val ue Assets
Contribution Receivable 0 0.0% - 0 .0%
Securian Contract 42 ,581,2 77 100.0% 4 6,212 ,997 100 .0%
Total 42 ,581,2 77 100.0% 4 6,212 ,997 100 .0%
13. Change in Plan Assets
Asset Reconciliation
1. Assets - Beginning
7/1/2012 to 7/1/2013
a. Per Trustee Report 42,581,277 b. Contribution receivable 0
c. Assets as of Beginning of Year = (a)+(b) 42,581,277
Income
2. Receipts
a. Employer Contributions 3,721,513 b. Employee Contributions 489,673
c. Total Receipts 4,211,186
3. Investment Gain/(Loss)
1,613,857
4. Other Income 0
5. Total Income 5,825,043
Expenses
6. Benefit payments to participants 2,193,323
7. Expenses 0
8. Total Expense 2,193,323
Net Income
9. Net income 3,631,720
10. Assets for Valuation as of End of Year 46,212,997
11. Contributions receivable 0
12. Assets per Trustee Report as of End of Year = (10)-(11) 46,212,997
Rate of Return (after expenses) 3.70%
Expected Return 4.00%
Asset Gain (Loss) (130,771)
Contributions Made
Contributions
EMPLOYER County Water Auth. Total
Cash Contributions 3,721,513 0 3,721,513
Accrued BOY 0 0 0
Accrued EOY 0 0 0
Incurred 3,721,513 0 3,721,513
EMPLOYEE
Cash Contributions* 489,673 0 489,673
Accrued BOY 0 0 0
Accrued EOY 0 0 0
Incurred 489,673 0 489,673
Grand Total (Cash)
4,211,186
0
4,211,186
Grand Total (Incurred) 4,211,186 0 4,211,186
Note: Employer & Employee "normal monthly accruals" paid in the month after the end of each year are ignored per the administrator.
* includes buybacks.
14. Development of Actuarial Value of Assets
Description of Actuarial Asset Basis
The Actuarial Value of Assets is determined as the Market Value of Assets.
15. Changes in Participant Group
Active
Participants
Inactive Participants Receiving Benefits
Inactive Participants Entitled to Future Benefits
Total
1. As of 07/01/2012 366 77 3 446
2. Change in Status
a) Retirement (14) 14 - 0
b) Death 0 (1) 0 (1)
c) Non-vested Termination
with Break-in-service
0
-
-
0
d) Non-vested Termination
without Break-in-service
0
-
-
0
e) Vested Termination (12) - 12 0
f) Vested Termination
commencing payments
0
0
0
0
g) Lump Sum - 0 (12) (12)
h) Disabled 0 0 0 0
i) Returned to Active 0 0 0 0
j) Fully paid out - 0 0 0
k) Net (26) 13 0 (13)
3. New Entrants
a) Entry prior to 07/01/2013 0 - - 0
b) Entry date = 07/01/2013 0 - - 0
c) Total New Entrants 0 - - 0
4. Adjustments 0 21 0 2
5. Net Changes = (2k)+(3c)+(4) (26) 15 0 (11)
6. As of 07/01/2013 340 92 3 435
1 Two retirees have been receiving payments but were first reported this year. They are Morris Florence and Bascom Smith.
16.
Summary of Statistical Information
Valuation
07/01/2012 Date
07/01/2013
Active Participants
Number of active participants 366 340
Average Age 46 47
Average Service (Credited) 12 13
Average Annual Salary $48,583 $51,508
Average Monthly Accrued Benefit $850 $898
Average Monthly Projected Benefit $2,629 $2,771
Number Vested 225 230
Inactive Participants (in pay status)
Number 77 92
Average Age 71 71
Average Monthly Pension $2,179 $2,193
All Other Inactive Participants (deferred)
Number
3
3
Average Age 48 54
Average Monthly Pension $690 $667
APPENDICES
A. Summary of Plan Provisions
General Information
Valuation Date July 1, 2013
Original Effective Date February 1, 1949
Effective Date of Last Amendment July 1, 2011 (December 31, 2011 effecting the participation of Water Authority employees)
Plan Year July 1 to June 30
Employer Fiscal Year October 1 to September 30
Plan Administrator Coweta County, Georgia
Eligibility Requirements
An Eligible Employee is any Employee employed more than 32 hours per week and classified full-time, or a person who serves in an office subject to
election.
Effective July 1, 2006, Participation in the Plan was frozen. No Employee shall be eligible to become a Participant on or after July 1, 2006. Effective
December 31, 2011, benefits for Water Authority employees were frozen.
Credited and Vesting Service
An Employee's completed years and months of Service from first day of employment. In the year of termination for reasons other than termination of employment, round 6 months of service up to the next year. If a prospective retiree uses unpaid leave to purchase credited service, those fractions do not round and are counted independent of the final Year of Service. From time to time, additional service is granted to retiring employees.
Compensation
Compensation is the rate of annual wages amount paid to an Employee as of the Anniversary Date, not in excess of the Compensation Limit.
Average Monthly Compensation means 1/12th of the annual Compensation of a Participant averaged over the three (3) consecutive Anniversary Dates which produce the highest average.
Vesting
All Participants shall be vested in the employer portion of the accrued benefit according to the following schedule. Participants are 100% vested at Early
Retirement Date, Normal Retirement Date, and Disability Retirement Date (with 10 Years of Credited Service).
Less than 10 0%
10 2% 14 10% 18 26% 22 54%
11 4% 15 14% 19 30% 23 62%
12 6% 16 18% 20 38% 24 70%
13 8% 17 22% 21 46% 25 or more 100%
Cost of Living Adjustment
Summary of Plan Provisions (continued)
Benefits are increased after retirement based upon Social Security Cost of Living Increases (not less than 2.5%).
Methods of Payments
Under the Normal Form of payment, a Participant's benefit is payable as a monthly annuity for life, without further payments after death. A Participant may also elect to receive the benefit under one of the following Actuarially Equivalent optional modes:
A reduced benefit is paid to the Participant while the Participant and any designated beneficiaries are both alive, with 50%, 66 2/3% or 100% of such benefit continued to the beneficiary after the death of the employee.
A reduced benefit is paid to the Participant for life, with 60 or 120 monthly payments guaranteed. If the Participant dies within the guarantee period, the payments continue to a beneficiary until 60 or 120 payments have been paid.
Normal Retirement
Eligibility
The Normal Retirement Date for each Participant is the first of the month coincident with or next following the earlier of:
the completion of 35 Years of Credited Service, or
the date the sum of a Participant’s age plus Years of Credited Service equals at least 85, or the later of age 65 or completion of 10 Years of Credited Service.
Benefit
The amount of monthly retirement benefit payable according to the Normal Form of payment is calculated as the sum of:
1.5% of Average Monthly Compensation multiplied by Years of Credited Service not in excess of 15 years, and
2.0% of Average Monthly Compensation multiplied by Years of Credited Service in excess of 15 but not in excess of 25 years, and
3.0% of Average Monthly Compensation multiplied by Years of Credit Service in excess of 25 but no in excess of 39 years. For 39 or more Years of Credited Service, the retirement benefit is equal to 85% of Average Monthly Compensation.
Accrued Benefit
The monthly Accrued Benefit is the benefit a Participant is entitled to receive pursuant to the formula above, as of any date. Accrued Benefit for Employee Contribution: Equal to the Accumulated Employee Contributions Benefit.
Accrued Benefit for Employer Contribution: The excess, if any, of the total Accrued Benefit over the Accumulated Employee Contribution Benefit derived from Employee Contributions.
Delayed Retirement
Summary of Plan Provisions (continued)
Eligibility is the first of the month on or next following the actual date the Participant terminates employment after Normal Retirement Date. The benefit is based on the Years of Credited Service as of his Deferred Retirement Date.
Early Retirement
Eligibility
Eligibility is contingent upon the attainment of age 55 and the completion of 10 Years of Credited Service.
Benefit
A Participant may retire on the first day of any month following attainment of eligibility. The amount of the monthly Early Retirement Benefit is the
Actuarial Equivalent of the Participant's Normal Retirement Benefit. No reduction for Early Retirement is made for Participants with at least 35 Years of
Credited Service.
Disability Retirement
Eligibility
Total and permanent disability determined by the Social Security Administration prior to reaching the Normal Retirement Date. Eligibility is contingent
upon the completion of 10 Years of Credited Service.
Benefit
Actuarial Equivalent of Participant’s Accrued Benefit as of the Disability Retirement Date.
Death Benefit
If death occurs prior to the Participant’s Earliest Retirement Date, the Beneficiary shall receive a death benefit equal to the Participant’s Employee Contributions with interest (at a rate of 5%). The death benefit payable on behalf of an active participant who dies while eligible for retirement is the actuarial present value of the accrued benefit. Post-retirement death benefits are dependent upon the form of payment selected.
Termination Benefit
A terminated Participant who is not vested in the employer accrued benefit may elect to immediately receive a lump sum of the Participant’s Employee Contributions with interest. Otherwise, payment of the Participant’s vested Accrued Benefit is deferred to the later of (1) the earlier of age 65 or Normal Retirement Age, and (2) termination date.
If the Employee Contribution Benefit is withdrawn, the employer provided vested benefit is forfeited.
Contributions
Contributions are made by Employees and the Employer. Each active participant who is accruing benefits contributes 2.75% of his/her compensation. The Employee Contribution accounts are credited with interest at the rate of 5% per year.
Amendments
The Employer reserves the right to amend or terminate the Plan at any time.
B. Age and Service Distribution for Active Participants
Age
Group
Age and Service Distribution for Active Participants (continued)
Age
Group C o m p l e t e d Y e a r s o f S e r v i c e
25-29 Yrs. 30-34 Yrs. 35-39 Yrs. 40 Yrs. + Total
Avg.
No. Comp. Avg.
No. Comp. Avg.
No. Comp. Avg.
No. Comp.
No.
0-24 0 0 0 0 0
25-29 0 0 0 0 13
30-34 0 0 0 0 38
35-39 0 0 0 0 46
40-44 0 0 0 0 53
45-49 6 0 0 0 71
50-54 4 0 0 0 47
55-59 3 1 0 0 30
60-64 2 0 0 0 27
65-69 1 0 0 0 11
70+ 0 0 0 0 4
Total 16 1 0 0 340
C. Georgia State Code
47-20-10.
(a) In order to assure the actuarial soundness of each retirement system, the minimum annual employer contribution for each retirement system, unless excepted by Code Section 47-20-13, shall be the sum of the amounts determined under paragraphs (1), (2), and (3) of this subsection minus the amount determined under paragraph (4) of this subsection; provided, however, that under no circumstances shall the minimum annual employer contribution be less than zero or result in a contribution credit for a subsequent year, as follows:
(1) The normal cost of the retirement system for the year; plus
(2) The amounts necessary to amortize:
(A) The unfunded actuarial accrued liability over a period of 40 years in the case of a retirement system in existence on January 1, 1983, based on the first actuarial valuation of the retirement system which is made on or after January 1, 1984; or
(B) The unfunded actuarial accrued liability over a period of 30 years in the case of a retirement system which is created or established after
January 1, 1983, based on the first actuarial valuation of the retirement system; plus
(C) The increase, if any, in unfunded actuarial accrued liability over a period of 20 years for any such increase which occurs after January 1,
1984, during any year as a result of changes made in the provisions of the retirement system affecting active employees; plus
(D) The increase, if any, in unfunded actuarial accrued liability over a period of 15 years for any such increase which occurs from experience under the actuarial assumptions applicable to the retirement system; plus
(E) The increase, if any, in unfunded actuarial accrued liability over a period of 30 years for any such increase resulting from changes in actuarial assumptions applicable to the retirement system; plus
(3) If not otherwise included in the calculations under paragraph (1) or (2) or paragraphs (1) and (2) of this subsection:
(A) The amount necessary to amortize over a period of ten years in equal annual installments the increase, if any, in unfunded actuarial accrued liability resulting from benefit increases granted during the year to beneficiaries under the retirement system; or
(B) The amount necessary to pay the amount of increase in benefits granted during the year to beneficiaries under the retirement system on a
current disbursement or pay-as-you-go basis; minus
Georgia State Code (continued)
(4) The amount:
(A) Necessary to amortize the decrease, if any, in unfunded actuarial accrued liability over a period of 20 years for any such decrease which occurs after January 1, 1984, during any year as a result of changes made in the provisions of the retirement system; plus
(B) Necessary to amortize the decrease in unfunded actuarial accrued liability, if any, over a period of 15 years for any such decrease which
occurs from experience under the actuarial assumptions applicable to the retirement system; plus
(C) Necessary to amortize the decrease in unfunded actuarial accrued liability, if any, over a period of 30 years for any such decrease resulting from changes in the actuarial assumptions applicable to the retirement system; plus
(D) In excess of the minimum annual employer contribution required by this Code section which accumulates after January 1, 1984; plus
(E) Employee contributions for the year.
(b) In the case of a retirement system which uses a formula related to the compensation of the members of the retirement system as a basis for the calculation of benefits under the retirement system, the amortization amounts required by subsection (a) of this Code section, except for the amount determined under paragraph (3) of subsection (a) of this Code section, may be determined as a level percentage of future compensation. If such level percentage amortization is used, the actuarial assumption for future annual payroll growth shall not exceed the actuarial assumed valuation interest rate of the retirement system less 2 ½ percent. The minimum standards provided by subsection (a) of this Code section are deemed to have been met if such level percentage amortization is used and the employer contribution is equal to or greater than the annual required contribution as is determined in accordance with the provisions of Governmental Accounting Standards Board Statements No. 25 and No. 27.
(c) In the case of a retirement system which does not use a formula related to the compensation of the members of such retirement system as a basis for the calculation of benefits under such retirement system, the minimum funding standards provided for in subsection (a) of this Code section shall be deemed to have been met if the employer contribution is equal to or greater than the annual contribution as determined in accordance with the provisions of Governmental Accounting Standards Board Statements No. 25 and No. 27.
Georgia State Code (continued)
(d)(1) The minimum funding standards provided for in subsection (a) of this Code section shall be deemed to have been met if as of the latest actuarial valuation a retirement system has a negative unfunded actuarial accrued liability and the employer contribution is equal to or greater than the annual required contribution as determined in accordance with the provisions of Governmental Accounting Standards Board Statements No. 25 and No. 27; provided, however, that in no case shall the negative unfunded actuarial accrued liability be amortized over a period of less than ten years. If a retirement system has such a negative unfunded actuarial accrued liability, the amounts necessary to amortize under paragraphs (2), (3), and (4) of subsection (a) of this Code section established prior to the current actuarial valuation date will be considered to be fully amortized under the minimum funding standards provided by subsection (a) of this Code section.
(2) In any actuarial valuation subsequent to the valuation in which a retirement system is found to have complied with the provisions of paragraph (1) of this subsection, if the retirement system still has a negative unfunded actuarial accrued liability, the only amortization required under such minimum funding standards will be an amortization of the negative unfunded actuarial accrued liability over a period of not less than ten years of the actuarial accrued liability. For any such subsequent actuarial valuations, whenever the retirement system again has an unfunded actuarial accrued liability, the minimum standards provided by subsection (a) of this Code section shall apply with new amounts necessary to amortize the newly created unfunded actuarial accrued liability.
(e) In determining the minimum annual employer contribution under subsection (a) of this Code section:
(1) All benefits which it is reasonable to anticipate will be paid from the retirement system because of the current active members and payments to beneficiaries shall be taken into account; and
(2) All costs, liabilities, and other factors under the retirement system shall be determined by an actuary on the basis of an actuarial cost method and actuarial assumptions which, in the aggregate, are reasonable, considering the experience of the retirement system and reasonable expectations, and which, in combination, offer the actuary’s best estimate of anticipated experience under the retirement system.
Georgia State Code (continued)
(f) Upon completion of the first actuarial investigation of a retirement system after January 1, 1984, and for each subsequent actuarial investigation, the minimum annual employer contribution required by this Code section shall be increased by an amount equivalent to the interest earned on such minimum annual employer contribution, based on the actuarial assumed valuation interest rate applicable to the retirement system, from the date of such actuarial investigation until the date the minimum annual employer contribution is made to the retirement system. This subsection shall not apply to a retirement system to which annual employer contributions are being made in excess of the minimum annual employer contribution required by this Code section.
(g) In no event will employee contributions of active members of a retirement system be used to pay benefits to beneficiaries under the retirement system.
(h) The minimum funding requirements of this Code section shall not apply to prefunding, in whole or in part, of anticipated future costs of providing health care benefits and related expenses including, without limitation, provision of all or part of the cost of health insurance coverage and health maintenance organization participation costs for retired employees of a political subdivision including those presently retired and those anticipated to retire in the future. Such prefunding may be maintained as part of the same investment pool as the fund receiving employer and employee contributions to pay the cost of providing retirement benefits under any retirement system maintained by the political subdivision for its employees so long as such funds are separately accounted for and separate records are maintained with respect to each fund. Funds maintained by a political subdivision for the purpose of prefunding health care benefits for retired employees may be invested and reinvested in accordance with the provisions of Code Section 47-1-12, and, for the purposes of that Code section and the home rule provisions of the laws and the Constitution of the State of Georgia, such funds shall be considered retirement funds.
Requests for Information and Responses – Group Pension Plan for Employees of Coweta County, Georgia
1. Please provide a copy of the most recent actuarial valuation for the Group Pension Plan.
Actuarial valuation report attached.
2. Can you clarify that the RFP responses are limited to 10 pages in total (including the seven in the
RFP) or 10 additional pages which would total 17?
Your response to the questions in the RFP should not exceed 10 pages in total.
3. If we offer bundled services related to retirement plans, should we include pricing for those services in the proposal?
Yes, the Board is open to considering bundled services.
4. We don’t have an office in the state of Georgia. Is the requirement that the plan be serviced from an in-state office a hard and fast rule?
Yes, the Board would like for service to be provided by an office located within the state of
Georgia.
5. Would you consider a firm that would provide services located outside the state of Georgia?
No, the Board would like for service to be provided by an office located within the state of
Georgia.
6. Would you consider a firm that does not manage payments to participants or handle tax reporting?
Yes. These services may be provided by the winning firm, through a partnership, or solicited separately by the Board.
7. There are several questions that address bundled services, administration and individual participant services. May I assume that I can include benefits and pricing for those services to the County?
Yes, the Board is open to considering bundled services.
8. Do you have a preference towards discretionary investment management?
The Board would like the investment advisor to make recommendations, with the Board making the final decision.
9. Regarding your request for audited financial statements and our firm’s investment philosophy, may we include those as exhibits versus inside the 10 page maximum?
You may include the audited financial statements as an exhibit, outside of the 10 page maximum, but please include your firm’s investment philosophy within the 10 page maximum.
10. Can you please provide a copy of the current Investment Policy Statement for each of the three plans?
We currently do not have an Investment Policy Statement for any of the three plans.
11. Do you require references? If so, how many?
Item #4 asks for a list of at least three clients with $50 million or more in assets under advisement for a minimum of three years. Item #14 asks for the number and total assets under management of government pension plans and for other defined benefit plans. The Board is not requesting reference information for any of those clients at this time. References will be requested from the finalists.
12. Pension assets are invested in an insurance account. What is the market value adjustment, if any, for the pension assets?
If the contract is discontinued, all assets in the General Account are available in one of two ways:
1. In six payments over five years. General Account rates are reduced by 2% during the payout
period.
2. In a lump sum, subject to any market value adjustment. For New Funds, there is no market value adjustment. Renewal Funds are adjusted as follows:
a. We compare your Renewal Funds Rate to a “Market Rate” (the rate we are offering to new clients like you as of the date of discontinuance).
b. If your Renewal Funds Rate is greater than the Market Rate, there is no market value adjustment.
c. If the Market Rate exceeds the Renewal Funds Rate, the percentage shall be 100%
minus six times the excess.
13. In terms of custodial services, is the Board looking for the pension assets to be held at the winning firm?
Custodial services can be provided by the winning firm, through a partnership, or solicited
separately by the Board.
14. The RFP requests that the proposer must offer a one year fee guarantee. Is the Board only looking for a flat fee to be charged for our services OR are they looking for a certain amount of basis points on the assets to be charged for our services?
The Board is open to considering different fee structures.
15. How are the assets currently allocated in the pension plan?
100% insurance contract
16. Is the payment of benefit distributions and distribution of tax notices a service component that the investment consultant can help provide through a TPA?
The Board will consider investment consultants that do not provide this service, or who partner to provide this service.
17. Would the Board consider a discretionary outsourced solution to manage the assets of the pension?
The Board would like the investment advisor to make recommendations, with the Board making the final decision.
Group Pension Plan for Employees of
Coweta County, Georgia
Funding, Minimum Funding and Accounting Report as of July 1, 2013
For The Fiscal Year Ending September 30, 2014
A c t u a r i a l V a l u a ti on
February 20, 2014
Table of Contents
EXECUTIVE SUMMARY ........................................................................................3
Funding and Accounting Results with Comparison to Prior Valuation ....................................4
Assets ....................................................................................................................................5
Commentary and Review of Changes Since the Prior Valuation .............................................6
Actuarial Certification ............................................................................................................7
SUPPORTING EXHIBITS .......................................................................................8
1. Minimum Required Contribution Under Georgia Law ........................................9
2. Changes in Unfunded Actuarial Liability and Annual Normal Cost................... 10
3. Excess Contribution Account ........................................................................... 11
4. Amortization Schedule for Minimum Contribution ........................................... 12
5. Minimum Contribution..................................................................................... 13
6. Alternate Contributions .................................................................................... 14
7. Net Pension Obligation and GASB No. 27 Annual Pension Cost ...................... 15
8. GASB Nos. 25 and 27 Disclosure Information.................................................. 17
9. Annual Recommended Contribution for the Water Authority ............................ 20
10. Accounting Basis and Methods......................................................................... 21
11. Statement of Sponsor’s Funding and Accounting Assumptions ......................... 22
12. Statement of Assets .......................................................................................... 24
13. Change in Plan Assets ...................................................................................... 25
14. Development of Actuarial Value of Assets ....................................................... 27
15. Changes in Participant Group ........................................................................... 28
16. Summary of Statistical Information .................................................................. 29
APPENDICES.......................................................................................................... 30
A. Summary of Plan Provisions
B. Age and Service Distribution for Active Participants
C. Georgia State Code
EXECUTIVE SUMMARY
Funding and Accounting Results with Comparison to Prior Valuation
Assets
Commentary and Review of Changes Since the Prior Valuation
Actuarial Certification
Funding and Accounting Results with Comparison to Prior Valuation
This report contains the result of the 2013 actuarial valuation and includes a comparison with the last valuation performed in 2012. It includes the recommended contributions, the amount of the minimum required contribution under Georgia law as well as the Annual Pension Cost under GASB 27 for the fiscal year ending September 30, 2014.
Valuation Results
(Employer Contributions Only)2
Valuation Date
7/1/2012 7/1/2013
Fiscal Year Ending
9/30/2013 9/30/2014
Required Minimum, Before Credit Balance 2,850,684 3,220,500
Percent of Plan Year Covered Payroll 16.31% 18.41%
Required Minimum, After Credit Balance 482,162 0
Percent of Plan Year Covered Payroll 2.76% 0.00%
Annual Required Contribution (GASB 27) 3,401,258 3,531,746
Percent of Plan Year Covered Payroll 19.46% 20.19%
Recommended Contribution 3,786,444 3,971,740
Fund Unfunded Actuarial Accrued
Liability over 10 years
Liabilities for Past Service 69,819,070 74,742,029 (Actuarial Accrued Liability)
Assets
Market Value 42,581,277 46,212,997
Funded Ratio
61%
62%
1- This minimum is required under Chapter 20, Title 47 of the Official Code of Georgia, Annotated. It has been reduced by a credit for prior excess contributions. Prior contributions in excess of the minimum under Georgia law have accumulated to a credit of 3,300,912.
2- Expected Employee contributions for this year are: 480,987.
Assets
Asset Value and Allocation
7/1/2 012
7/1/20 13
Investment Categ ory
Ma rket
Va lue
Percent of
A ssets Market V alue
Percent of
Asset s
Cont ribution Rec eivable 0 0.0% - 0. 0%
Se curian Contract 4 2, 581, 277 1 00.0% 46, 21 2, 997 10 0. 0%
Total 4 2, 581, 277 1 00.0% 46, 21 2, 997 10 0. 0%
6/30/20 12 to 6/30/2 013
Empl oyer Co ntrib utions 3 ,7 21,513
Empl oyee Con tribu tio ns 4 89,673
Total Contribu tions 4 ,2 11,186
Earni ngs 1 ,6 13,857
Ben efits Paid ( 2, 19 3, 323) Exp enses Paid 0
Net Income (Expense) 3 ,6 31,720
Rate o f Return 3. 70% Exp ected Return 4. 00% Asset G ain (Lo ss) (13 0, 771)
The Water Authority’s share of the contribution for 2013-14 is $119,329 (see page 20).
Commentary and Review of Changes Since the Prior Valuation
Commentary
GASB 27 Pension Cost is determined under the Aggregate Cost method (same actuarial method as last year). The Georgia Minimum Contribution requirement is determined under the Entry Age Normal Cost method with the Unfunded Actuarial Accrued Liability (i.e. the liability for benefits earned up to the valuation date) is amortized in accordance with Georgia Code 40-27 (same actuarial method as last year). The recommended contribution is determined under the Entry Age Normal Cost method with the Unfunded Actuarial Accrued Liability amortized over 10 years (in the past, the recommended contribution was based on the GASB 27 calculation). Beginning in October 1, 2014, the method used to calculate the GASB 27 pension cost will change dramatically and therefore SHDR recommends adopting a new method to determine the recommended contribution. Determination of the Water Authority contribution is developed in Section 9.
Plan Experience
Plan experience is determined using the Entry Age Cost Method. Over the last year, Plan experience was less favorable than that expected under the Plan’s actuarial assumptions producing an overall experience loss. In some cases additional service was granted to some retiring employees. The effect of these items and other net (gains)/losses was an increase in the Plan’s Unfunded Actuarial Accrued Liability. Losses are shown as positive numbers, gains as negative numbers. The sources of this net loss are as follows:
Experience
Effect on Unfunded
Actuarial Liability
Investment Return $130,771
Liability Experience 2,350,662 Total $2,481,433
Plan Changes Since the Prior Valuation
None other than the granting of additional past service to certain retiring individuals. This change increased plan liabilities by $786,159.
Assumption Changes Since the Prior Valuation
None.
Funding Method Changes Since the Prior Valuation
None. Beginning in October 1, 2014, the method used to calculate the pension cost will be governed by GASB 68 resulting in a dramatic change in the
Comprehensive Annual Financial Report. SHDR recommends a review of the cost under the new standard at this time.
Actuarial Certification
We have performed an actuarial valuation of the Group Pension Plan for Employees of Coweta County, Georgia as of July 1, 2013 at the request of Coweta County, Georgia. We performed this valuation to: i) measure the funded status of the Plan, ii) develop a recommended contribution, iii) develop the minimum employer contribution under Georgia State Title 47, Chapter 20 for plan year ending June 30, 2014 and iv) determine the Annual Pension Cost under Statement No. 27 of the Governmental Accounting Standard Board (GASB No. 27) for the employer’s fiscal year ending September 30,
2014. The valuation also developed disclosure information for purposes of GASB No. 25 and GASB No. 27. The results of the valuation are set forth herein. The preceding pages represent our statement of findings, conclusions and recommendations.
Actuarial computations under GASB Nos. 25 and 27 are for purposes of fulfilling employer accounting requirements. The calculations reported herein have been made on a basis consistent with our understanding of GASB Nos. 25 and 27. Determinations for purposes other than meeting plan and employer financial accounting requirements may be significantly different from the results reported herein.
All costs, liabilities, and other factors under the Plan were determined in accordance with generally accepted actuarial principles and procedures. In our opinion, the actuarial assumptions used are reasonable. These assumptions represent our best estimate of the anticipated experience under the Plan by taking into account actual Plan experience and reasonable future expectations. The costs and actuarial exhibits presented in this report, in our opinion, fully and fairly disclose the actuarial position of the Plan.
Our valuation results, presented in this report are based on the unaudited assets and employee data provided by the Plan sponsor. We did not audit the data supplied to us, but have reviewed both. Based on our review, the data and assets appear to be reasonable.
Stanley, Hunt, DuPree & Rhine
I am a member of an actuarial organization and meet the qualification standards of the American Academy of Actuaries to render the actuarial opinion contained herein.
Lane B. West, FSA, FCA, MAAA, EA Senior Vice President /Consulting Actuary Enrolled Actuary No. 11-02663
February 20, 2014
Date
As part of SHDR’s quality standards procedures, the valuation results as reported herein have been reviewed by:
Eric E. Malacane, ASA, EA, MAAA Vice President/Actuary
February 20, 2014
Date
7701 Airport Center Drive, Mail Code: 527-99-02-20, Greensboro, NC 27409, (336) 291-1151 Blank Filler
SUPPORTING EXHIBITS
1. Minimum Required Contribution Under Georgia Law
Title 47, Chapter 20 of the Official Code of Georgia, Annotated sets forth minimum funding standards for pension plans maintained by Georgia governmental entities. It describes acceptable funding methods and establishes amortization periods for a plan and assumption changes.
On the basis of the valuation as of July 1, 2013, and relying upon title 47, Chapter 20 of the Official Code of Georgia, Annotated, the following information as shown in this section:
Changes in Unfunded Actuarial Liability and Annual Normal Cost
Excess Contribution Account
Amortization Schedule for Minimum Contribution
Development of Minimum Contribution
2. Changes in Unfunded Actuarial Liability and Annual Normal Cost
The 07/01/2013 valuation reveals an asset loss (C.1.); a liability loss (C.2.); and an increase in liabilities due to the granting of additional past service to certain retiring individuals (B.6.).
Changes in Unfunded Actuarial Liability and Annual Normal Cost (Entry Age Normal Method)
A. Unfunded Actuarial Liability
7/1/2012 7/1/2013
1 Actuarial Liability as of Valuation Date 69,819,070 74,742,029
2 Actuarial Value of Assets as of Valuation Date 42,581,277 46,212,997
3 Unfunded Actuarial Liability as of Valuation Date = (1)-
(2) 27,237,793 28,529,032
B. Expected Unfunded Actuarial Liability
1 Unfunded Actuarial Liability as of Prior Year
25,852,097
27,237,793
2 Normal Cost for Prior Year 921,636 799,990
3 Interest on (1) and (2) to Valuation Date 1,475,233 1,539,274
4 Contributions with interest to Valuation Date (Employer
and Employee)
4,165,962
4,315,617
5 Expected Unfunded Actuarial Liability as of Valuation
Date
= (1)+(2)+(3)-(4) 24,083,004 25,261,440
6 Adjustment due to Plan change - 786,159
7 Adjustment due to assumption change (1,310,829) -
8 Adjustment due to funding method change - -
9 (Gain)/ Loss 4,465,618 2,481,433
10 Unfunded Actuarial Liability as of Valuation Date after
changes 27,237,793 28,529,032
C. Experience Gain
1 Asset (gain) loss 67,792 130,771
2 Liability (gain) loss 4,397,826 2,350,662
3 Experience (gain) loss as of End of Year 4,465,618 2,481,433
D. Normal Cost
3. Excess Contribution Account
Charges
Valuation Year Ending
6/30/2013 6/30/2014
1 Normal Cost as of Valuation Date 799,990 758,792
2 Amortization charges as of Valuation Date 2,607,277 2,941,111
3 Interest through End of Year, on (1) and (2) 187,059 203,125
4 Total Charges 3,594,326 3,903,028
Credits
Balance
5 Excess Contribution Account Balance as of Valuation Date 2,245,257 3,300,912
6 Amortization credits as of Valuation Date 190,992 191,052
7 Interest through End of Year on (5) and (6) 133,750 191,709
8 Contributions with interest through End of Year ** 4,325,239 TBD *
9 Total credits 6,895,238 3,683,673
* TBD - to be determined.
** Employer and Employee Contributions
10 Excess Contribution Account Balance as of End of Year 3,300,912 (219,355)
(9)-(4)
Minimum Contribution (total of Employee and Employer Contributions)
3,920,842
Minimum Contribution (total of Employee and Employer
Contributions), Before Credit Balance
3,701,487
4. Amortization Schedule for Minimum Contribution
Under Title 47, Chapter 20 of the Official Code of Georgia Annotated
First
Payment
Payment
2012 Annual
Outstanding Balance
2013 Annual
Date
Period Initial Amount
Payment 7/1/2012 7/1/2013
Payment
Prior Actuary 7/1/2010 20 $ 21,948,495 $ 1,742,534 $ 20,687,428 $ 19,991,703 $ 1,743,078
Assumption Change 7/1/2011 30 $ 6,803,303 $ 443,287 $ 6,709,544 $ 6,612,502 $ 443,432
Actuarial Loss 7/1/2012 15 $ 4,465,619 $ 421,456 $ 4,465,619 $ 4,267,625 $ 421,585
Actuarial Loss 7/1/2013 15 $ 2,481,433 NA NA $ 2,481,433 $ 234,193
Service Grant 7/1/2013 10 $ 786,159 NA NA $ 786,159 $ 98,823
Total Charges $ 36,485,009 $ 2,607,277 $ 31,862,591 $ 34,139,422 $ 2,941,111
Actuarial Gain 7/1/2011 15 $ 1,118,592 $ 105,588 $ 1,068,712 $ 1,016,342 $ 105,620
Assumption Change 7/1/2012 30 $ 1,310,829 $ 85,404 $ 1,310,829 $ 1,293,136 $ 85,432
Total Credits $ 2,429,421 $ 190,992 $ 2,379,541 $ 2,309,478 $ 191,052
Net Total
$ 34,055,588
$ 2,416,285
$ 29,483,050
$ 31,829,944
$ 2,750,059
Credit Balance $ 2,245,257 $ 3,300,912
Unfunded Actuarial Accrued Liability $ 27,237,793 $ 28,529,032
5. Minimum Contribution
Development of Minimum Contribution - - The amounts shown below reflect the total contributio n due, not just the employer portion.
7/1/2013 to
6/30/ 2014
Required Contribution Prior to a pplication of Full Fund ing Limitation
1 Normal Cost as of Valuation Date
758,792
2 Amortization charges as of Valuatio n Date 2,941,111
3 Amortization credits as of Valuation Date 191,052
4 Exces s Con tribution Account Balance as of Valuation Date 3,300,912
5 Interest through End of Year on (1)+(2)-(3)-(4) 11,416
6 Req uired Minimum Contribution at En d of Year prior to 219,355
application of the Full F unding Limitation; (1)+(2)-(3)-(4)+(5),
minimum $0
7 Minimum Bef ore Credit for Excess Contribution Account 3,701,487
and F ull Funding Limitation
For this year, the F ull Fund ing Limitation does not effect the Minimum Required Co ntribution. Employee (Expected Contributions) 480,987
Minimum Employer Con tribution (after EE Contrs and befo re CB) 3,220,500
Minimum Employer Con tribution (after EE Contrs and after CB) -
6.
Alternate Contributions
Based on Entry Age Normal Method.
Da te of Valuation
7/1 /2 013
Alterna tiv e Fifteen-year Funding
1 Nor mal C ost as of Va lu atio n Date 758 ,792
2 15 Year Am ortization of the Unfund ed Ac tuar ia l Ac cru ed Liability 2,692 ,514
3 Sum of (1) a nd ( 2) 3,451 ,306
4 Inter est on ( 3) a t 5. 49% assuming monthly payments 85 ,587
5 Alternative 15-y ear Contribution assum ing m onthly paym ents (3 )+(4) 3,536 ,893
6 E xpec ted E mplo yee Contribut ions 480 ,987
7 E mplo yer Share (5 )-(6) 3,055 ,906
8 As Pe rce nt of Pa yroll
17%
Da te of Valuation
7/1 /2 013
Re commended Ten-yea r Funding (EAN Me thod with 10 Ye ar Funding of UAAL)
1 Nor mal C ost as of Va lu atio n Date 758 ,792
2 10 Year Am ortization of the Unfund ed Ac tuar ia l Ac cru ed Liability 3,586 ,186
3 Sum of (1) a nd ( 2) 4,344 ,978
4 Inter est on ( 3) a t 5. 49% assuming monthly payments 107 ,749
5 Alternative 10-y ear Contribution assum ing m onthly paym ents (3 )+(4) 4,452 ,727
6 E xpec ted E mplo yee Contribut ions 480 ,987
7 E mplo yer Share (5 )-(6) 3,971 ,740
8 As Pe rce nt of Pa yroll
23%
7. Net Pension Obligation and GASB No. 27 Annual Pension Cost
Coweta County, Georgia adopted Statement No. 27 of the Governmental Accounting Standards Board (GASB No. 27) for determining accrual costs and liabilities for this pension program.
GASB No. 27 calls for determination of an Annual Pension Cost (APC) and disclosure of certain items showing the Plan’s funded status, deferred items, and the Net Pension Obligation. For the current fiscal year, the Annual Pension Cost and the Net Pension Obligation (NPO) are developed in the following summary of results.
The Annual Required Contribution (ARC) shown is the normal cost determined under the Aggregate Method. The resulting expense amount satisfies
GASB No. 27 requirements for ARC.
The Annual Pension Cost (APC) consists of the Annual Required Contribution (ARC), plus interest on the beginning of the year NPO, minus an adjustment equal to the 15-year amortization of beginning of the 2010-11 year NPO. The 2011-12 and later amortizations are based on a level dollar amount using the equivalent amortization period (13 years for 2012-13 and 12 years for 2013-14) as determined by the Aggregate Method.
7/1/2012 to
6/30/ 2013
7/ 1/2013 to
6/ 30/2014
Annual Required Contri butio n (ARC) fo r G ASB 27
In terest Rate 5.49% 5.49%
1 Present Value of Ben efits as of Val uati on Date 80,817,578 85,080,201
2 Present Value of Futu re E mp loy ee Contributions 8,074,925 8,015,416
3 Asset s as o f Valuati on Date 42,581,277 46,212,997
4 Present Value of Futu re C ont rib utions (E m plo yer) (1-2-3) 30,161,376 30,851,788
5 Present Value of Futu re C omp ensation 159,130,843 156,939,279
6 Aggregate Norm al Cost as a pe rcent of Compen sa ti on (4/5) 18.95% 19.66%
7 Cu rre nt C omp ensation 17,475,306 17,490,422
8 Aggregate Met hod Normal Cost as o f Valuati on Da te (6 x 7) 3,311,570 3,438,617
9 Inter est for 1 /2 Ye ar 89,688 93,129
10 Annual Required Contri butio n (ARC for G ASB 27) 3,401,258 3,531,746
(E mplo yer P ortio n of Costs) (8 + 9)
M et hod: Aggr egate Cost M ethod
The following chart reconciles the Net Pension Obligation (NPO), which is a liability, on a fiscal year basis.
Fi scal Year E ndi ng
9/ 30/ 2013 9/3 0/2 014
a. NPO a t Beg inn ing of Ye ar 382, 398 4 2,415
b. ARC (Aggregate Method) 3 ,401, 258 3,53 1,746
c. Interest on NPO 20, 994 2,329
d. NPO Adjust ment (40, 722) ( 4,778)
e. APC ( b ) + ( c ) +( d ) 3 ,381, 530 3,52 9,297
f. Actu al Em pl oyer Cont ri but ion 3 ,721, 513 TBD
g. NPO at e nd o f year = (a)+ (e)-( f) 42, 415 TBD
Amor ti zation Pe rio d * 13 12
Valuati on Date for ARC 7/ 1/ 2012 7 /1/ 2013
Assu med Interest R ate 5. 49% 5.49%
TB D - to be det er mi ned
* - based on a ver age am ortiz at io n perio d of the Aggrega te Met hod.
8. GASB Nos. 25 and 27 Disclosure Information
Schedule of Funding Progress
Actuarial Normal Cost Unfunded
Valuation Actuarial Unfunded (Aggregate Liability as % of
Date Plan Assets Liability Liability Method)' Funded Ratio Covered Payroll Payroll
(a) (b) (b-a) (c) (a)/(b) (d) ((b-a)/d)
7/1/2010 35,070,636 56,806,521 21,735,885 3,054,709 61.7% 18,245,783 119.1%
7/1/2011 38,702,703 64,554,800 25,852,097 2,827,175 60.0% 17,191,528 150.4%
7/1/2012 42,581,277 69,819,070 27,237,793 3,401,258 61.0% 17,475,306 155.9%
7/1/2013 46,212,997 74,742,029 28,529,032 3,531,746 61.8% 17,490,422 163.1%
Accrued Liability is shown under Entry Age Method
Schedule of Contributions
Contribution as
Actuarial Annual Pension Actual Contribution as Percent of
FYE 9/30 Valuation Date Cost' Contribution' a Percent of APC Payroll
2010 7/1/2009 3,435,948 3,471,407 101.03% 19.03%
2011 7/1/2010 3,054,709 3,085,663 101.01% 16.91%
2012 7/1/2011 3,209,850 3,523,244 109.76% 20.49%
2013 7/1/2012 3,381,530 3,721,513 110.05% 21.30%
2014 7/1/2013 3,529,297 TBD TBD TBD
Annual Pension Cost Summary
Annual Pension Cost (APC)
Fiscal Year
Ending
BOY NPO
ARC'
Interest
Adjustment
Total APC' Actual
Contribution'
EOY NPO Interest
Rate
9/30/2010 762,205 3,435,948 45,732 (45,732) 3,435,948 3,471,407 726,746 6.00%
9/30/2011 726,746 3,054,709 43,605 (43,605) 3,054,709 3,085,663 695,792 6.00%
9/30/2012 695,792 3,245,688 38,338 (74,176) 3,209,850 3,523,244 382,398 5.51%
9/30/2013 382,398 3,401,258 20,994 (40,722) 3,381,530 3,721,513 42,415 5.49%
9/30/2014 42,415 3,531,746 2,329 (4,778) 3,529,297 TBD TBD 5.49%
For 2013 Fiscal Year, adjustment assumes amortization over 13 years and over 12 years for 2014 Fiscal Year.
' - Employer portion of the cost and contribution.
GASB Nos. 25/27 Annual Required Contribution (Aggregate Normal Cost)
Employer portion of the cost
GASB Nos. 25/27 ARC (Aggregate Method)
7/1/2013 to
6/30/2014
1. Funding interest rate 5.49%
2. Annual Required Contribution (ARC)
(a) Normal cost 3,438,617
(b) Supplemental cost
(i) Actuarial Liability N/A
(ii) Actuarial Value of Assets N/A
(iii) Unfunded Actuarial Liability: (i)-(ii) N/A
(iv) Years to amortize N/A
(v) Supplemental cost N/A
(c) BOY contribution: (a)+(b)(v) 3,438,617
(d) Contribution timing
(i) Fraction to year end: (11/24)
(ii) Compound interest to mid-year at 5.51% 93,129
(e) ARC: (c)+(d)(ii), not less than 0 3,531,746
Actuarial Present Value of Accrued Plan Benefits - Funding Status
The following is based on the projected unit credit method, a method mandated for non-governmental plans by FASB. The financial accounting f or governmental plan purpos es is bas ed on the Aggr egate Cost Method.
7/1/2012 to
6/30/2013
7/ 1/ 2013 to
6/ 30/2014
1 Effective Interest Rate
Actuarial pres ent value of vested benef its
5.39%
5.49%
Inactive P ar ticipants Receiving/Due a Benefit 27,612,818 33,173,163
Active P articipants with Vested Benefits 21,756,322 20,582,762
Total Vested Benefits 49,369,140 53,755,925
2 Actuarial pres ent value of Non-Vested Benefits 4,499,090 4,600,078
3 Total Actuarial pr esent value of Accrued Plan Benef its 53,868,230 58,356,003
4 Benefit Liability related to as sumed Future Pay I ncreases 4,582,881 4,805,668
5 Total P rojected Benefit Liability 58,451,111 63,161,671
6 Market Value of Assets 42,581,277 46,212,997
7 Total Unfund ed (surplus) Benefit Liability = (5) - (6) 15,869,834 16,948,674
9. Annual Recommended Contribution for the Water Authority
The Actuary recommends the Water Authority’s share of the contribution to be determined using the “aggregate method” of cost allocation.
A. Plan Assets Allocated to the Water Authority
Plan assets allocated to the Water Authority were first allocated at June 30, 2010. The Purpose of the annual allocation is to determine the contribution to be made by the Water Authority if it was a stand alone plan. In the past, the contribution requirement allocated to the Water Authority was based on head count. The 6/30/2013 asset allocaiton reflects the fact the Water Authority did not make a contribution in the 2012-2013 year.
6/30/10 to 6/30/11 6/30/11 to 6/30/12 6/30/12 to 6/30/13
Beginning Assets $ 2,065,151 $ 2,327,127 $ 2,315,878
Contributions 205,883 26,958 0
Benefit Payments (33,194) (125,450) 152,315
Rate of Return 4.15% 3.83% 3.70%
Return 89,287 87,243 82,870
Ending Assets $ 2,327,127 $ 2,315,878 $ 2,246,433
B. Annual Recom mended Contributi on 7/1/ 2013 to
06/30/2014
Interest Ra te 5.4 9%
1 Present Value of Benefi ts as of Valu at ion Date 3,225,3 39
1. a. Act ives 829,730
1.b. Inacti ves 2,395,609
2 Present Value of Future E mpl oyee C ont rib uti ons 0
3 Assets a s of Val uati on Date 2,246,4 33
4 Present Value of Future Con tributio ns (Employer) (1 -2-3) 978,9 06
5 Present Value of Future Ser vice Years for Actives 118
6 Aggregat e No rma l C ost p er Act ive Mem ber (4/ 5) 8,2 96
7 Numb er o f Acti ves 14
8 Aggregat e M et hod No rma l C ost as of V al uat io n Date (6 x 7) 1 16,141
9 Interest fo r 1/ 2 Year 3,188
10 Annua l Re com mended Cont ri but ion 1 19,329
(Em ployer Po rti on of Costs) (8 + 9)
Metho d: Ag greg ate Co st Meth od
10. Accounting Basis and Methods
Basis
GASB 27 – Aggregate Method
Georgia State Minimum Contribution – Entry Age Normal Method
Recommended Contribution – Entry Age Normal Method
Actuarial computations under Statement of Governmental Accounting Standards No. 27 (GASB No. 27) are for purposes of fulfilling employer accounting requirements. Determination for purposes other than meeting employer financial accounting requirements may be significantly different from the results reported herein. Accordingly, additional determinations are needed for other purposes, such as judging benefit security at termination.
We are not aware of any Employer commitments to make future plan amendments, any substantive commitments for benefits that exceed the benefits defined by the written plan, any significant liabilities other than for benefits, such as for legal or accounting fees, any event during the past year that might represent settlements or curtailments including purchase of annuity contracts, lump sum cash payments to participants, any irrevocable action that might relieve the company or the plan of primary responsibility for a pension obligation or eliminate significant risks related to the obligation and assets, any event that may significantly reduce the expected years of future service of employees, or any event that may eliminate for a significant number of employees the accrual of benefits for some or all of their future service.
The recommended funding policy of the Employer is to contribute to the Plan an amount equal to the contribution determined under the Entry Age Normal Method with a 10-year amortization of the Unfunded Actuarial Accrued Liability, at least equal to the employee contribution and not less than the minimum contribution required under Georgia Law.
The discount rate adopted by the Employer for valuing plan liabilities is within an acceptable range allowed under GASB No. 27 which, unlike FASB ASC 715, requires the use of a long term rate. The assumed rate of compensation increases is based on the long-term expectations of the Employer.
The relationship between the Employer and Stanley, Hunt, DuPree & Rhine, a division of BB&T Insurance, Inc. has been one of fee basis consultant on the part of Stanley, Hunt, DuPree & Rhine, and we are not aware of any circumstances or event during the course of this relationship which would impair our capacity to continue providing actuarial and other administrative and consulting services to the Employer. We feel that our independence with respect to the Employer has always been intact and we foresee nothing which would adversely affect that independence and objectivity.
Asset Valuation Method - The Actuarial Value of Assets is equal to the Market Value of Assets (as reported by the asset manager).
Amortization Method
For the Recommended Contribution, the Unfunded Actuarial Liability is amortized over a rolling 10-year period. For the Georgia State Minimum Contribution, the amortization periods in the law are followed.
For GASB 27, no unfunded actuarial liability is determined.
Valuation Date - The valuation date is July 1.
11. Statement of Sponsor’s Funding and Accounting Assumptions
Interest Rate 4.00% for four years (2013-2016) and 6.00% thereafter.
Mortality
Actives and non-disabled Inactives: RP-2000 Table projected to 2018
Disabled Lives: 1975 Social Security Table (interpolated version)
Termination
T-5 table: Sample rates are:
25 7.72% 50 2.56%
30 7.22% 55 0.94%
35 6.28% 60 0.09%
40 5.15% 63 & over 0.00%
45 3.98%
Assumed Retirement Age
Sample rate are:
55 3% 10% 12%
60 5% 15% 18%
63 15% 20% 25%
65 75% 100% 100%
67 & over 100% 100% 100%
Disability
Statement of Sponsor’s Accounting Assumptions (continued)
Sample rates of disability are:
25 0.15% 50 1.00%
30 0.20% 55 1.50%
35 0.25% 60 2.00%
40 0.40% 65 2.50%
45 0.56%
Marriage
Male participants are assumed to be three years older than their wives. It is assumed that 100 percent of male and 100 percent of female participants are married.
Expenses
Interest rate is assumed to be net of any expenses paid by the Plan.
Salary Scale
Compensation is assumed to increase at 2.5%.
Cost of Living Increase
Annual increase is assumed to be 2.5%.
Limit Increases
The IRS Compensation Limitation is assumed to increase at 3% annually. The IRS Dollar Benefit Limitation is assumed to increase at 3% annually.
Forms of Payment
100% of active participants and vested former participants or beneficiaries entitled to deferred benefits are assumed to receive benefits in the normal form (life annuity with annual cost of living increase (Social Security Increase with 2.5% minimum)).
Census Data
No future new entrants. No rehire of former employees. No liability is held for non-vested former employees even if a break-in-service has not occurred as of the valuation date. All participants are assumed to work the same number of hours in future years as reported for the year preceding the valuation
date.
12. Statement of Assets
7/1 /20 12
7 /1/ 2013
M arket Pe rcent of P erc ent of
Inv estm ent Ca teg ory Va lue Assets Marke t Val ue Assets
Contribution Receivable 0 0.0% - 0 .0%
Securian Contract 42 ,581,2 77 100.0% 4 6,212 ,997 100 .0%
Total 42 ,581,2 77 100.0% 4 6,212 ,997 100 .0%
13. Change in Plan Assets
Asset Reconciliation
1. Assets - Beginning
7/1/2012 to 7/1/2013
a. Per Trustee Report 42,581,277 b. Contribution receivable 0
c. Assets as of Beginning of Year = (a)+(b) 42,581,277
Income
2. Receipts
a. Employer Contributions 3,721,513 b. Employee Contributions 489,673
c. Total Receipts 4,211,186
3. Investment Gain/(Loss)
1,613,857
4. Other Income 0
5. Total Income 5,825,043
Expenses
6. Benefit payments to participants 2,193,323
7. Expenses 0
8. Total Expense 2,193,323
Net Income
9. Net income 3,631,720
10. Assets for Valuation as of End of Year 46,212,997
11. Contributions receivable 0
12. Assets per Trustee Report as of End of Year = (10)-(11) 46,212,997
Rate of Return (after expenses) 3.70%
Expected Return 4.00%
Asset Gain (Loss) (130,771)
Contributions Made
Contributions
EMPLOYER County Water Auth. Total
Cash Contributions 3,721,513 0 3,721,513
Accrued BOY 0 0 0
Accrued EOY 0 0 0
Incurred 3,721,513 0 3,721,513
EMPLOYEE
Cash Contributions* 489,673 0 489,673
Accrued BOY 0 0 0
Accrued EOY 0 0 0
Incurred 489,673 0 489,673
Grand Total (Cash)
4,211,186
0
4,211,186
Grand Total (Incurred) 4,211,186 0 4,211,186
Note: Employer & Employee "normal monthly accruals" paid in the month after the end of each year are ignored per the administrator.
* includes buybacks.
14. Development of Actuarial Value of Assets
Description of Actuarial Asset Basis
The Actuarial Value of Assets is determined as the Market Value of Assets.
15. Changes in Participant Group
Active
Participants
Inactive Participants Receiving Benefits
Inactive Participants Entitled to Future Benefits
Total
1. As of 07/01/2012 366 77 3 446
2. Change in Status
a) Retirement (14) 14 - 0
b) Death 0 (1) 0 (1)
c) Non-vested Termination
with Break-in-service
0
-
-
0
d) Non-vested Termination
without Break-in-service
0
-
-
0
e) Vested Termination (12) - 12 0
f) Vested Termination
commencing payments
0
0
0
0
g) Lump Sum - 0 (12) (12)
h) Disabled 0 0 0 0
i) Returned to Active 0 0 0 0
j) Fully paid out - 0 0 0
k) Net (26) 13 0 (13)
3. New Entrants
a) Entry prior to 07/01/2013 0 - - 0
b) Entry date = 07/01/2013 0 - - 0
c) Total New Entrants 0 - - 0
4. Adjustments 0 21 0 2
5. Net Changes = (2k)+(3c)+(4) (26) 15 0 (11)
6. As of 07/01/2013 340 92 3 435
1 Two retirees have been receiving payments but were first reported this year. They are Morris Florence and Bascom Smith.
16.
Summary of Statistical Information
Valuation
07/01/2012 Date
07/01/2013
Active Participants
Number of active participants 366 340
Average Age 46 47
Average Service (Credited) 12 13
Average Annual Salary $48,583 $51,508
Average Monthly Accrued Benefit $850 $898
Average Monthly Projected Benefit $2,629 $2,771
Number Vested 225 230
Inactive Participants (in pay status)
Number 77 92
Average Age 71 71
Average Monthly Pension $2,179 $2,193
All Other Inactive Participants (deferred)
Number
3
3
Average Age 48 54
Average Monthly Pension $690 $667
APPENDICES
A. Summary of Plan Provisions
General Information
Valuation Date July 1, 2013
Original Effective Date February 1, 1949
Effective Date of Last Amendment July 1, 2011 (December 31, 2011 effecting the participation of Water Authority employees)
Plan Year July 1 to June 30
Employer Fiscal Year October 1 to September 30
Plan Administrator Coweta County, Georgia
Eligibility Requirements
An Eligible Employee is any Employee employed more than 32 hours per week and classified full-time, or a person who serves in an office subject to
election.
Effective July 1, 2006, Participation in the Plan was frozen. No Employee shall be eligible to become a Participant on or after July 1, 2006. Effective
December 31, 2011, benefits for Water Authority employees were frozen.
Credited and Vesting Service
An Employee's completed years and months of Service from first day of employment. In the year of termination for reasons other than termination of employment, round 6 months of service up to the next year. If a prospective retiree uses unpaid leave to purchase credited service, those fractions do not round and are counted independent of the final Year of Service. From time to time, additional service is granted to retiring employees.
Compensation
Compensation is the rate of annual wages amount paid to an Employee as of the Anniversary Date, not in excess of the Compensation Limit.
Average Monthly Compensation means 1/12th of the annual Compensation of a Participant averaged over the three (3) consecutive Anniversary Dates which produce the highest average.
Vesting
All Participants shall be vested in the employer portion of the accrued benefit according to the following schedule. Participants are 100% vested at Early
Retirement Date, Normal Retirement Date, and Disability Retirement Date (with 10 Years of Credited Service).
Less than 10 0%
10 2% 14 10% 18 26% 22 54%
11 4% 15 14% 19 30% 23 62%
12 6% 16 18% 20 38% 24 70%
13 8% 17 22% 21 46% 25 or more 100%
Cost of Living Adjustment
Summary of Plan Provisions (continued)
Benefits are increased after retirement based upon Social Security Cost of Living Increases (not less than 2.5%).
Methods of Payments
Under the Normal Form of payment, a Participant's benefit is payable as a monthly annuity for life, without further payments after death. A Participant may also elect to receive the benefit under one of the following Actuarially Equivalent optional modes:
A reduced benefit is paid to the Participant while the Participant and any designated beneficiaries are both alive, with 50%, 66 2/3% or 100% of such benefit continued to the beneficiary after the death of the employee.
A reduced benefit is paid to the Participant for life, with 60 or 120 monthly payments guaranteed. If the Participant dies within the guarantee period, the payments continue to a beneficiary until 60 or 120 payments have been paid.
Normal Retirement
Eligibility
The Normal Retirement Date for each Participant is the first of the month coincident with or next following the earlier of:
the completion of 35 Years of Credited Service, or
the date the sum of a Participant’s age plus Years of Credited Service equals at least 85, or the later of age 65 or completion of 10 Years of Credited Service.
Benefit
The amount of monthly retirement benefit payable according to the Normal Form of payment is calculated as the sum of:
1.5% of Average Monthly Compensation multiplied by Years of Credited Service not in excess of 15 years, and
2.0% of Average Monthly Compensation multiplied by Years of Credited Service in excess of 15 but not in excess of 25 years, and
3.0% of Average Monthly Compensation multiplied by Years of Credit Service in excess of 25 but no in excess of 39 years. For 39 or more Years of Credited Service, the retirement benefit is equal to 85% of Average Monthly Compensation.
Accrued Benefit
The monthly Accrued Benefit is the benefit a Participant is entitled to receive pursuant to the formula above, as of any date. Accrued Benefit for Employee Contribution: Equal to the Accumulated Employee Contributions Benefit.
Accrued Benefit for Employer Contribution: The excess, if any, of the total Accrued Benefit over the Accumulated Employee Contribution Benefit derived from Employee Contributions.
Delayed Retirement
Summary of Plan Provisions (continued)
Eligibility is the first of the month on or next following the actual date the Participant terminates employment after Normal Retirement Date. The benefit is based on the Years of Credited Service as of his Deferred Retirement Date.
Early Retirement
Eligibility
Eligibility is contingent upon the attainment of age 55 and the completion of 10 Years of Credited Service.
Benefit
A Participant may retire on the first day of any month following attainment of eligibility. The amount of the monthly Early Retirement Benefit is the
Actuarial Equivalent of the Participant's Normal Retirement Benefit. No reduction for Early Retirement is made for Participants with at least 35 Years of
Credited Service.
Disability Retirement
Eligibility
Total and permanent disability determined by the Social Security Administration prior to reaching the Normal Retirement Date. Eligibility is contingent
upon the completion of 10 Years of Credited Service.
Benefit
Actuarial Equivalent of Participant’s Accrued Benefit as of the Disability Retirement Date.
Death Benefit
If death occurs prior to the Participant’s Earliest Retirement Date, the Beneficiary shall receive a death benefit equal to the Participant’s Employee Contributions with interest (at a rate of 5%). The death benefit payable on behalf of an active participant who dies while eligible for retirement is the actuarial present value of the accrued benefit. Post-retirement death benefits are dependent upon the form of payment selected.
Termination Benefit
A terminated Participant who is not vested in the employer accrued benefit may elect to immediately receive a lump sum of the Participant’s Employee Contributions with interest. Otherwise, payment of the Participant’s vested Accrued Benefit is deferred to the later of (1) the earlier of age 65 or Normal Retirement Age, and (2) termination date.
If the Employee Contribution Benefit is withdrawn, the employer provided vested benefit is forfeited.
Contributions
Contributions are made by Employees and the Employer. Each active participant who is accruing benefits contributes 2.75% of his/her compensation. The Employee Contribution accounts are credited with interest at the rate of 5% per year.
Amendments
The Employer reserves the right to amend or terminate the Plan at any time.
B. Age and Service Distribution for Active Participants
Age
Group
Age and Service Distribution for Active Participants (continued)
Age
Group C o m p l e t e d Y e a r s o f S e r v i c e
25-29 Yrs. 30-34 Yrs. 35-39 Yrs. 40 Yrs. + Total
Avg.
No. Comp. Avg.
No. Comp. Avg.
No. Comp. Avg.
No. Comp.
No.
0-24 0 0 0 0 0
25-29 0 0 0 0 13
30-34 0 0 0 0 38
35-39 0 0 0 0 46
40-44 0 0 0 0 53
45-49 6 0 0 0 71
50-54 4 0 0 0 47
55-59 3 1 0 0 30
60-64 2 0 0 0 27
65-69 1 0 0 0 11
70+ 0 0 0 0 4
Total 16 1 0 0 340
C. Georgia State Code
47-20-10.
(a) In order to assure the actuarial soundness of each retirement system, the minimum annual employer contribution for each retirement system, unless excepted by Code Section 47-20-13, shall be the sum of the amounts determined under paragraphs (1), (2), and (3) of this subsection minus the amount determined under paragraph (4) of this subsection; provided, however, that under no circumstances shall the minimum annual employer contribution be less than zero or result in a contribution credit for a subsequent year, as follows:
(1) The normal cost of the retirement system for the year; plus
(2) The amounts necessary to amortize:
(A) The unfunded actuarial accrued liability over a period of 40 years in the case of a retirement system in existence on January 1, 1983, based on the first actuarial valuation of the retirement system which is made on or after January 1, 1984; or
(B) The unfunded actuarial accrued liability over a period of 30 years in the case of a retirement system which is created or established after
January 1, 1983, based on the first actuarial valuation of the retirement system; plus
(C) The increase, if any, in unfunded actuarial accrued liability over a period of 20 years for any such increase which occurs after January 1,
1984, during any year as a result of changes made in the provisions of the retirement system affecting active employees; plus
(D) The increase, if any, in unfunded actuarial accrued liability over a period of 15 years for any such increase which occurs from experience under the actuarial assumptions applicable to the retirement system; plus
(E) The increase, if any, in unfunded actuarial accrued liability over a period of 30 years for any such increase resulting from changes in actuarial assumptions applicable to the retirement system; plus
(3) If not otherwise included in the calculations under paragraph (1) or (2) or paragraphs (1) and (2) of this subsection:
(A) The amount necessary to amortize over a period of ten years in equal annual installments the increase, if any, in unfunded actuarial accrued liability resulting from benefit increases granted during the year to beneficiaries under the retirement system; or
(B) The amount necessary to pay the amount of increase in benefits granted during the year to beneficiaries under the retirement system on a
current disbursement or pay-as-you-go basis; minus
Georgia State Code (continued)
(4) The amount:
(A) Necessary to amortize the decrease, if any, in unfunded actuarial accrued liability over a period of 20 years for any such decrease which occurs after January 1, 1984, during any year as a result of changes made in the provisions of the retirement system; plus
(B) Necessary to amortize the decrease in unfunded actuarial accrued liability, if any, over a period of 15 years for any such decrease which
occurs from experience under the actuarial assumptions applicable to the retirement system; plus
(C) Necessary to amortize the decrease in unfunded actuarial accrued liability, if any, over a period of 30 years for any such decrease resulting from changes in the actuarial assumptions applicable to the retirement system; plus
(D) In excess of the minimum annual employer contribution required by this Code section which accumulates after January 1, 1984; plus
(E) Employee contributions for the year.
(b) In the case of a retirement system which uses a formula related to the compensation of the members of the retirement system as a basis for the calculation of benefits under the retirement system, the amortization amounts required by subsection (a) of this Code section, except for the amount determined under paragraph (3) of subsection (a) of this Code section, may be determined as a level percentage of future compensation. If such level percentage amortization is used, the actuarial assumption for future annual payroll growth shall not exceed the actuarial assumed valuation interest rate of the retirement system less 2 ½ percent. The minimum standards provided by subsection (a) of this Code section are deemed to have been met if such level percentage amortization is used and the employer contribution is equal to or greater than the annual required contribution as is determined in accordance with the provisions of Governmental Accounting Standards Board Statements No. 25 and No. 27.
(c) In the case of a retirement system which does not use a formula related to the compensation of the members of such retirement system as a basis for the calculation of benefits under such retirement system, the minimum funding standards provided for in subsection (a) of this Code section shall be deemed to have been met if the employer contribution is equal to or greater than the annual contribution as determined in accordance with the provisions of Governmental Accounting Standards Board Statements No. 25 and No. 27.
Georgia State Code (continued)
(d)(1) The minimum funding standards provided for in subsection (a) of this Code section shall be deemed to have been met if as of the latest actuarial valuation a retirement system has a negative unfunded actuarial accrued liability and the employer contribution is equal to or greater than the annual required contribution as determined in accordance with the provisions of Governmental Accounting Standards Board Statements No. 25 and No. 27; provided, however, that in no case shall the negative unfunded actuarial accrued liability be amortized over a period of less than ten years. If a retirement system has such a negative unfunded actuarial accrued liability, the amounts necessary to amortize under paragraphs (2), (3), and (4) of subsection (a) of this Code section established prior to the current actuarial valuation date will be considered to be fully amortized under the minimum funding standards provided by subsection (a) of this Code section.
(2) In any actuarial valuation subsequent to the valuation in which a retirement system is found to have complied with the provisions of paragraph (1) of this subsection, if the retirement system still has a negative unfunded actuarial accrued liability, the only amortization required under such minimum funding standards will be an amortization of the negative unfunded actuarial accrued liability over a period of not less than ten years of the actuarial accrued liability. For any such subsequent actuarial valuations, whenever the retirement system again has an unfunded actuarial accrued liability, the minimum standards provided by subsection (a) of this Code section shall apply with new amounts necessary to amortize the newly created unfunded actuarial accrued liability.
(e) In determining the minimum annual employer contribution under subsection (a) of this Code section:
(1) All benefits which it is reasonable to anticipate will be paid from the retirement system because of the current active members and payments to beneficiaries shall be taken into account; and
(2) All costs, liabilities, and other factors under the retirement system shall be determined by an actuary on the basis of an actuarial cost method and actuarial assumptions which, in the aggregate, are reasonable, considering the experience of the retirement system and reasonable expectations, and which, in combination, offer the actuary’s best estimate of anticipated experience under the retirement system.
Georgia State Code (continued)
(f) Upon completion of the first actuarial investigation of a retirement system after January 1, 1984, and for each subsequent actuarial investigation, the minimum annual employer contribution required by this Code section shall be increased by an amount equivalent to the interest earned on such minimum annual employer contribution, based on the actuarial assumed valuation interest rate applicable to the retirement system, from the date of such actuarial investigation until the date the minimum annual employer contribution is made to the retirement system. This subsection shall not apply to a retirement system to which annual employer contributions are being made in excess of the minimum annual employer contribution required by this Code section.
(g) In no event will employee contributions of active members of a retirement system be used to pay benefits to beneficiaries under the retirement system.
(h) The minimum funding requirements of this Code section shall not apply to prefunding, in whole or in part, of anticipated future costs of providing health care benefits and related expenses including, without limitation, provision of all or part of the cost of health insurance coverage and health maintenance organization participation costs for retired employees of a political subdivision including those presently retired and those anticipated to retire in the future. Such prefunding may be maintained as part of the same investment pool as the fund receiving employer and employee contributions to pay the cost of providing retirement benefits under any retirement system maintained by the political subdivision for its employees so long as such funds are separately accounted for and separate records are maintained with respect to each fund. Funds maintained by a political subdivision for the purpose of prefunding health care benefits for retired employees may be invested and reinvested in accordance with the provisions of Code Section 47-1-12, and, for the purposes of that Code section and the home rule provisions of the laws and the Constitution of the State of Georgia, such funds shall be considered retirement funds.
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