January 1, 2014
Actuarial Valuation
of the
City of Fort Collins
General Employees’
Retirement Plan
Joel E. Stewart, ASA, EA, MAAA
Katie Antoline, ASA, MAAA
March 13, 2014
This work product was prepared solely to provide assistance to the City of Fort Collins and the General Employees’ Retirement
Committee. It may not be appropriate for other purposes. Milliman does not intend to benefit and assumes no duty or liability to
other parties who receive this work.
Certification
– Except as otherwise indicated in this presentation, the explanatory
notes contained in our draft January 1, 2014 actuarial valuation report,
including statements of reliance and limitations on use, continue to
apply.
This work product was prepared solely to provide assistance to the City of Fort Collins and the General Employees’ Retirement Committee. It may
not be appropriate for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.
1
Purposes of the Valuation
– Review demographic and financial experience
– Determine the funded status of the plan
– Provide financial reporting information pursuant to accounting
standards
This work product was prepared solely to provide assistance to the City of Fort Collins and the General Employees’ Retirement Committee. It may
not be appropriate for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.
2
Highlights
1.
2.
3.
4.
5.
6.
7.
Market Value of Assets
Actuarial Value of Assets
Ratio
Discount Rate for Liabilities
Present Value of Projected
Benefits
Actuarial Liability
Unfunded Actuarial Liability
8.
Actuarial Liability in Excess of
the Market Value of Assets
9.
Funded Percentage
10. Funded Percentage – MVA
Basis
2014
2013
$ 44,692,556
$ 41,530,376
92.9%
6.5%
$ 39,489,447
$ 38,940,438
98.6%
6.8%
$ 58,760,427
$ 56,182,808
$ 14,652,432
$ 57,348,259
$ 54,682,992
$ 15,742,554
$ 11,490,252
$ 15,193,545
73.9%
71.2%
79.5%
72.2%
This work product was prepared solely to provide assistance to the City of Fort Collins and the General Employees’ Retirement Committee. It may
not be appropriate for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.
3
Data Reconciliation
1/1/2013
Rehire
Actives
Term
Vested
140
129
185
454
N/A
N/A
0
N/A
Retired Total
Terminations
(2)
2
N/A
0
Retirements
(6)
(5)
11
0
0
(1)
(6)
(7)
(4)
(4)
0
(8)
0
0
0
0
(12)
(8)
5
(15)
Deaths
Cash Outs
Other
Net Change
1/1/2014
128
121
190
This work product was prepared solely to provide assistance to the City of Fort Collins and the General Employees’ Retirement Committee. It may
not be appropriate for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.
439
4
Summary of Plan Participants
This work product was prepared solely to provide assistance to the City of Fort Collins and the General Employees’ Retirement Committee. It may
not be appropriate for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.
5
Financial Data - 2013
1. Market Value – 1/1/2013
2. Income
a. Contributions
b. Income and appreciation
c. Total
3. Disbursements
a. Monthly benefits
b. Lump sum payments
c. Expenses
d. Total
$
39,489,065
$
2,067,363
7,201,472
9,268,835
$
$
$
2,170,022
1,874,306
21,016
4,065,344
4. Net Increase/(Decrease)
$
5,203,491
5. Market Value – 1/1/2014
$
44,692,556
This work product was prepared solely to provide assistance to the City of Fort Collins and the General Employees’ Retirement Committee. It may
not be appropriate for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.
6
Return on Market Value of Assets
Net of Expenses
30%
20%
10%
0%
-10%
10.1%
13.8%
-0.2%
8.8%
18.7%
20.5%
18.8%
9.5% 8.5% 12.2%
13.6%
21.1%
11.1%
11.6%
10.5%
-3.1%
-3.5% -9.3%
-4.0%
-20%
-26.5%
-30%
Assumed Return
Actual Return
This work product was prepared solely to provide assistance to the City of Fort Collins and the General Employees’ Retirement Committee. It may
not be appropriate for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.
7
Calculation of Actuarial Value of Assets
Original
Amount
Recognized
This Year
Recognized
in the Future
2009
2010
2011
2012
2013
$
6,829,340
1,133,859
(4,174,766)
1,543,072
4,599,341
$ 1,365,868
226,772
(834,953)
308,614
919,869
$
Total
$
9,930,846
$ 1,986,170
$ 3,162,180
Percent
Remaining
0
226,772
(1,669,906)
925,842
3,679,472
0%
20%
40%
60%
80%
Market Value of Assets – 12/31/2013
Gain/(Loss) Deferred
Preliminary Actuarial Value of Assets
$ 44,692,556
3,162,180
$ 41,530,376
Actuarial Value of Assets (subject to 20% Corridor)
Ratio to Market Value
$ 41,530,376
92.9%
This work product was prepared solely to provide assistance to the City of Fort Collins and the General Employees’ Retirement Committee. It may
not be appropriate for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.
8
Asset Values since 1995
$50
Millions
$40
$30
$20
Actuarial Value of Assets
Market Value of Assets
This work product was prepared solely to provide assistance to the City of Fort Collins and the General Employees’ Retirement Committee. It may
not be appropriate for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.
9
Cost Method - Liabilities
Actuarial Liability
This work product was prepared solely to provide assistance to the City of Fort Collins and the General Employees’ Retirement Committee. It may
not be appropriate for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.
10
Entry Age Normal Cost Method
Present Value of
Benefits
$58,760,427
Act. Liability
and PVFNC
$56,182,808
$2,577,619
Normal Cost
$487,063
This work product was prepared solely to provide assistance to the City of Fort Collins and the General Employees’ Retirement Committee. It may
not be appropriate for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.
11
Entry Age Normal Cost Method
Actuarial Liability
$56,182,808
$41,530,376
Assets
Unfunded (UAL)
$14,652,432
This work product was prepared solely to provide assistance to the City of Fort Collins and the General Employees’ Retirement Committee. It may
not be appropriate for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.
12
Gain/Loss
1. Actual UAL, 1/1/2013
2. Expected changes during 2013
$ 15,742,554
(545,822)
3. Expected UAL, 1/1/2014
$ 15,196,732
Changes:
4. Asset (gain)/loss
5. Salary change different than assumed
6. Pensioner Mortality Experience
7. Retirement and other terminations
8. Other demographic
9. Change in Investment Return assumption
10. Total
$ (1,986,170)
(273,473)
125,032
(111,573)
60,921
1,640,963
$
(544,300)
11. Actual UAL, 1/1/2014
$ 14,652,432
This work product was prepared solely to provide assistance to the City of Fort Collins and the General Employees’ Retirement Committee. It may
not be appropriate for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.
13
GASB Statements No. 67 and 68
1. Replace GASB 25/27
2. 67: Effective for plan fiscal years > 6/15/2013
68: Effective for employer fiscal years > 6/15/2014
3. “Net Pension Liability” (NPL) recognized on employer’s
balance sheet
• NPL = difference between Actuarial Accrued Liability under
Entry Age Normal and Market Value of Assets (no
smoothing)
• Current balance sheet item = Net Pension Obligation (asset)
4. Discount rate change for severely underfunded plans
without a sound funding policy
5. Expense replaces ARC (more volatile)
6. Expanded disclosures (“Required Supp. Information”)
This work product was prepared solely to provide assistance to the City of Fort Collins and the General Employees’ Retirement Committee. It may
not be appropriate for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.
14
GASB Statements No. 67 and 68
(continued)
December 31, 2013 Net Pension
Obligation (NPO)
$3,203,138
Actuarial Liability in Excess of the
Market Value of Assets
$11,490,252
This work product was prepared solely to provide assistance to the City of Fort Collins and the General Employees’ Retirement Committee. It may
not be appropriate for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.
15
Projection of Contributions, Benefit Payments, and Market Value of
Assets
$50
Millions
$40
$30
$20
$10
$0
Market Value of Assets
Contributions
Benefit Payments
Assumes Market Value of Assets earns 6.5% per annum, and contributions are 10.5% of compensation.
Includes excess contributions of $1,120,000 for 2014 - 2033.
16
Projection of Contributions, Benefit Payments, and Market Value of
Assets
$50
Millions
$40
$30
$20
$10
$0
Market Value of Assets
Contributions
Benefit Payments
Assumes Market Value of Assets earns 6.5% per annum, and contributions are 10.5% of compensation.
Includes excess contributions of $1,120,000 for 2014 - 2025.
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Projection of Contributions, Benefit Payments, and
Market Value of Assets
Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
Market
Value
44,692,556
46,079,632
47,148,706
47,858,281
48,323,601
48,599,531
48,442,356
48,104,780
47,612,862
46,985,738
46,133,983
45,319,586
44,407,643
42,389,410
40,177,576
37,975,940
35,691,877
33,484,434
31,191,343
28,891,825
Expected
Contribution
1,976,381
1,906,691
1,830,897
1,746,639
1,677,039
1,603,577
1,529,805
1,467,884
1,415,480
1,367,721
1,330,155
1,299,247
155,093
132,131
114,404
97,309
83,375
69,521
59,023
46,040
Benefit
Payment
3,423,585
3,748,864
4,088,206
4,284,831
4,427,593
4,790,608
4,881,294
4,947,228
4,994,423
5,124,357
4,996,594
5,008,493
4,877,990
4,915,067
4,747,802
4,671,513
4,439,149
4,368,843
4,219,767
4,028,875
Year
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
2053
Market
Value
Expected
Contribution
26,626,064
24,481,707
22,388,371
20,317,142
18,316,811
16,410,833
14,620,020
12,934,129
11,312,902
9,825,824
8,472,843
7,234,542
6,090,624
5,066,549
4,140,083
3,303,659
2,549,298
1,868,764
1,253,794
696,274
Assumes Market Value of Assets earns 6.5% per annum, and contributions are 10.5% of compensation.
Includes excess contributions of $1,120,000 for 2014 - 2025.
38,634
31,144
24,695
20,368
16,029
11,912
8,434
5,607
2,875
1,776
1,280
0
0
0
0
0
0
0
0
0
Benefit
Payment
3,760,791
3,568,427
3,408,312
3,204,449
2,982,313
2,746,174
2,527,839
2,355,743
2,120,507
1,895,392
1,698,119
1,526,933
1,338,302
1,178,741
1,032,646
899,939
780,366
673,435
578,481
494,729
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