10A Action Items 2018 1105 - Laserfiche WebLink

Home

48 On December 21, 2016, the Board of Administration voted to lower its discount rate from the current 7.5% to 7.0% over the next three years according to the following schedule. Fiscal Year Discount Rate 2018-19 7.375% 2019-20 7.250 2020-21 7.000 For public agencies like the City, the new discount rate took effect on July 1, 2018. Lowering the discount rate means employers that contract with CalPERS to administer their pension plans will see increases in their normal costs and unfunded actuarial liabilities. Active members hired after January 1, 2013, under the Public Employees' Pension Reform Act will also see their contribution rates rise. The three-year reduction of the discount rate will result in average employer rate increases of about 1 percent to 3 percent of normal cost as a percent of payroll for most miscellaneous retirement plans, and a 2 percent to 5 percent increase for most safety plans. Additionally, many CalPERS employers will see a 30 to 40 percent increase in their current unfunded accrued liability payments. These payments are made to amortize unfunded liabilities over 20 years to bring the pension fund to a fully funded status over the long-term. On February 13, 2018, the Board of Administration voted to shorten the period over which CalPERS will amortize actuarial gains and losses from 30 years to 20 years for new pension liabilities, effective for the June 30, 2019 actuarial valuations. Amortization payments for all unfunded accrued liability bases will be computed to remain a level dollar amount throughout the amortization period, and certain 5-year ramp-up and ramp-down periods will be eliminated. As a result of the shorter amortization period and elimination of certain 5-year ramp-up and ramp-down periods, the contributions required to be made by employers, including the City with respect to the Plans, are anticipated to increase beginning in fiscal year 2020-21. See also “APPENDIX A – AUDITED FINANCIAL STATEMENTS OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2017 Note 13” for additional information relating to the City’s retirement plans. Other Post–Employment Retirement Benefits City Plan Description. The City’s defined benefit OPEB Plan is a single–employer defined benefit healthcare plan for all permanent general and public safety employees. Retirees who have at least 5 years of service and meet certain criteria based upon retirement date, household income in the most recent calendar year and age are entitled to reimbursements for qualified expenses. Annual maximum reimbursement amounts differ depending on when an employee retired from City service. The majority of retirees may be eligible for a maximum of $4,320 in annual reimbursements. Amendments to benefit provisions are negotiated by various bargaining units at the City and must be approved by the City Council. In fiscal year 2008–09, the City established an irrevocable exclusive agent multi–employer benefit trust (the “OPEB PARS Trust”) which is administered by PARS. The PARS Trust is used to accumulate and invest assets necessary to reimburse retirees. As of September 30, 2018, the balance in OPEB PARS Trust was approximately $16 million. Separate financial reports are issued by PARS for the OPEB Plan. The report issued by PARS can be obtained by writing to PARS at 5141 California Avenue, Suite 150, Irvine, CA. 92617, or by calling 800–540–6369. The references to this