HomeMy WebLinkAboutMINUTES - 10012013 - SD.5RECOMMENDATION(S):
ADOPT Resolution No. 2013/346 as approved by the Retirement Board, which establishes the retirement plan
contribution rates for employers and employees effective July 1, 2014 through June 30, 2015
FISCAL IMPACT:
The fiscal impact to the County is approximately $55.6 million (excluding the Contra Costa County Fire Protection
District). Please reference attached report, presented to the Board of Supervisors on August 6 for more detail.
BACKGROUND:
Each year, the Retirement Board establishes contribution rates for employee retirement plans based on an annual
actuarial valuation study. The FY 2014-15 rates were based upon the actuary's December 31, 2012 Valuation Report,
a copy of which can be found on the Contra Costa County Employees' Retirement Association's (CCCERA) website
at www.cccera.org under the Publications link. On July 24, 2013, the Retirement Board adopted the attached
resolution establishing employee and employer rates for General Tiers 1, 3, 4 and 5 and Safety Tiers A, C, D, and E
retirement plans for the 2014-15 fiscal year.
Please note the following:
APPROVE OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE
Action of Board On: 10/01/2013 APPROVED AS RECOMMENDED OTHER
Clerks Notes:
VOTE OF SUPERVISORS
AYE:John Gioia, District I Supervisor
Candace Andersen, District II Supervisor
Mary N. Piepho, District III Supervisor
Karen Mitchoff, District IV Supervisor
ABSENT:Federal D. Glover, District V
Supervisor
Contact: Lisa Driscoll, County Finance
Director 335-1023
I hereby certify that this is a true and correct copy of an action taken and entered on the minutes
of the Board of Supervisors on the date shown.
ATTESTED: October 1, 2013
David Twa, County Administrator and Clerk of the Board of Supervisors
By: Chris Heck, Deputy
cc: Robert Campbell, Auditor-Controller, Ted Cwiek, Human Resources Director
SD.5
To:Board of Supervisors
From:David Twa, County Administrator
Date:October 1, 2013
Contra
Costa
County
Subject:EMPLOYEE RETIREMENT PLAN CONTRIBUTION RATES FOR JULY 1, 2014 THROUGH JUNE 30, 2015
BACKGROUND: (CONT'D)
The rates are effective July 1, 2014 through June 30, 2015.
The rates quoted in these schedules are the employer and employee required rates without taking into
consideration any employer subvention of employee contributions or employee subvention of any employer
contributions. Contra Costa County subvents employee contributions and employees subvent Contra Costa
County in some labor agreements.
The rates are based on a 7.25% earning assumption and do not include adjustments for pension obligation bond
payments.
Attached is rate information by Tier for FY 2014-15.
CONSEQUENCE OF NEGATIVE ACTION:
Rates will not be properly applied to employees and the County which will cause an imbalance between what is
owed to the Contra Costa county Employees Retirement Association and what is put aside for those payments.
CHILDREN'S IMPACT STATEMENT:
None.
ATTACHMENTS
Resolution No. 2013/346
Exhibits A-I and Calculation Methodology
Rate Information by Tier
Board of Supervisors report of 8/6/2013
Exhibit ACONTRA COSTA COUNTY EMPLOYEES' RETIREMENT ASSOCIATIONGENERAL TIERS 1, 3, 4 and 5EMPLOYER CONTRIBUTION RATES EFFECTIVE FOR JULY 1, 2014 THROUGH JUNE 30, 2015Cost Group #1 Cost Group #2 Cost Group #3 Cost Group #4 Cost Group #5 Cost Group #6Moraga‐Orinda Districts Districts Central Contra Costa Contra Costa Contra Costa County DistrictsCountyFire DistrictFirst 5without POBCountywithout POBSanitary DistrictHousing AuthorityFire Protection Districtwithout POBBASIC Contribution RatesLegacy Members with Membership Date before January 1, 2011* 28.62% 25.46% 25.95% 34.39% 27.76% 33.53% 51.97% 31.59% 29.83% 25.84%(Tier 1 and Tier 3)Legacy Members with Membership Date on or after January 1, 2011* 29.24% 26.08% 26.57% 35.01% 27.34% 33.11% 50.39% 31.41% 31.24% 24.66%(Tier 1 and Tier 3)PEPRA Members with 3%/4% Maximun COLA** 22.97% 19.86% 20.34% 28.64% 22.61% 28.28% 43.07% 26.00% 24.45% 19.19%(Tier 4 and Tier 5)PEPRA Members with 2% Maximum COLA** 23.04% N/A N/A N/A 22.75% N/A N/A N/A N/A N/A(Tier 4 and Tier 5)COLA Contribution RatesLegacy Members with Membership Date before January 1, 2011* 10.14% 9.57% 8.37% 14.75% 10.09% 14.72% 23.39% 16.58% 13.70% 7.29%(Tier 1 and Tier 3)Legacy Members with Membership Date on or after January 1, 2011* 10.62% 10.05% 8.85% 15.23% 9.96% 14.59% 22.66% 16.03% 13.78% 6.94%(Tier 1 and Tier 3)PEPRA Members with 3%/4% Maximun COLA** 9.20% 8.64% 7.46% 13.74% 8.94% 13.48% 20.87% 15.76% 12.72% 5.81%(Tier 4 and Tier 5)PEPRA Members with 2% Maximum COLA** 8.06% N/A N/A N/A 7.91% N/A N/A N/A N/A N/A(Tier 4 and Tier 5)Non‐Refundability Factor 0.9845 0.9845 0.9845 0.9845 0.9360 0.9360 0.9486 0.9811 0.9602 0.9338* For members in Social Security, the rate should only be applied to monthly compensation in excess of $116.67.* The rate should only be applied to compensation up to the annual IRC 401(a)(17) compensation limit.** The rate should be applied to all compensation (whether or not in Social Security) up to the applicable annual GC 7522.10(c) compensation limit.Cost GroupLegacy TierPEPRA TierEmployer NameCost GroupLegacy TierPEPRA TierEmployer NameCost Group #1 Tier 1 Enhanced (2% @ 55)Tier 4 (2.5% @ 67)County General Cost Group #3 Tier 1 Enhanced (2% @ 55)Tier 4 (2.5% @ 67)Central Contra Costa Sanitary DistrictLAFCOCC Mosquito & Vector Control DistrictCost Group #4 Tier 1 Enhanced (2% @ 55)Tier 4 (2.5% @ 67)Contra Costa Housing AuthorityBethel Island Municipal Improvement DistrictFirst 5 - Children and Families CommissionCost Group #5 Tier 1 Enhanced (2% @ 55)Tier 4 (2.5% @ 67)Contra Costa County Fire Protection DistrictContra Costa County Employees' Retirement AssociationSuperior Court Cost Group #6 Tier 1 Non-enhanced (1.67% @ 55)Tier 4 (2.5% @ 67)Rodeo Sanitary DistrictEast Contra Costa Fire Protection DistrictByron Brentwood Cemetery DistrictMoraga-Orinda Fire Protection DistrictRodeo-Hercules Fire Protection DistrictSan Ramon Valley Fire Protection DistrictCost Group #2 Tier 3 Enhanced (2% @ 55)Tier 5 (2.5% @ 67)County GeneralIn-Home Supportive ServicesCC Mosquito & Vector Control DistrictSuperior CourtAll Cost Groups 2014‐15.xlsxExhibitAPage 28/8/2013
Exhibit BCONTRA COSTA COUNTY EMPLOYEES' RETIREMENT ASSOCIATIONSAFETY TIERS A, C, D and EEMPLOYER CONTRIBUTION RATES EFFECTIVE FOR JULY 1, 2014 THROUGH JUNE 30, 2015Cost Group #7 Cost Group #8 Cost Group #9 Cost Group #10 Cost Group #11 Cost Group #12Contra Costa County East Contra Costa County Moraga‐Orinda San Ramon Valley Rodeo‐HerculesCountyFire Protection DistrictFire Protection District(DSA only)Fire Protection DistrictFire Protection DistrictFire Protection DistrictBASIC Contribution RatesLegacy Members with Membership Date before January 1, 2011* 57.04% 49.71% 75.10% 53.62% 46.45% 62.70% 71.64%(Tier A and Tier C)Legacy Members with Membership Date on or after January 1, 2011* 59.24% 47.16% 72.55% 51.67% 43.09% 60.59% 69.23%(Tier A and Tier C)PEPRA Members 44.68% 38.51% 63.90% 44.34% 35.04% 51.48% 63.33%(Tier D and Tier E)COLA Contribution RatesLegacy Members with Membership Date before January 1, 2011* 32.73% 36.81% 56.17% 28.89% 33.58% 32.88% 38.38%(Tier A and Tier C)Legacy Members with Membership Date on or after January 1, 2011* 33.21% 36.17% 55.53% 28.61% 32.50% 32.39% 37.85%(Tier A and Tier C)PEPRA Members 29.87% 34.30% 53.66% 27.71% 30.79% 30.14% 36.99%(Tier D and Tier E)Non‐Refundability Factor 0.9924 0.9897 0.9897 0.8718 0.9938 0.9905 0.9860* The rate should be applied to all compensation up to the IRC 401(a)(17) compensation limit.** The rate should be applied to all compensation up to the applicable annual GC 7522.10(c) compensation limit.Cost GroupLegacy TierPEPRA TierEmployer NameCost Group # 7 Tier A Enhanced (3% @ 50) Tier D (2.7% @ 57) County SafetyCost Group # 8 Tier A Enhanced (3% @ 50) Tier D (2.7% @ 57) Contra Costa County Fire Protection DistrictEast Contra Costa Fire Protection DistrictCost Group # 9 Tier C Enhanced (3% @ 50) Tier E (2.7% @ 57) County Safety - DSA hires since January 1, 2007Cost Group # 10 Tier A Enhanced (3% @ 50) Tier D (2.7% @ 57) Moraga-Orinda Fire Protection DistrictCost Group # 11 Tier A Enhanced (3% @ 50) Tier D (2.7% @ 57) San Ramon Valley Fire Protection DistrictCost Group # 12 Tier A Non-enhanced (2% @ 50) Tier D (2.7% @ 57) Rodeo Hercules Fire Protection DistrictAll Cost Groups 2014‐15.xlsxExhibitBPage 38/8/2013
Exhibit C
GENERAL TIER 1 - "1.67% @ 55" (Non-Enhanced)
Effective 7/1/14 - 6/30/15
Expressed as a Percentage of Monthly Payroll*
Membership Date
Before 1/1/2011 On or After 1/1/2011
COLA Loading Factor: 53.23%47.00%
Entry Age Basic COLA COLA
15 6.07%3.23%2.85%
16 6.15%3.27%2.89%
17 6.24%3.32%2.93%
18 6.33%3.37%2.98%
19 6.41%3.41%3.01%
20 6.50%3.46%3.06%
21 6.59%3.51%3.10%
22 6.69%3.56%3.14%
23 6.78%3.61%3.19%
24 6.87%3.66%3.23%
25 6.97%3.71%3.28%
26 7.06%3.76%3.32%
27 7.16%3.81%3.37%
28 7.26%3.86%3.41%
29 7.36%3.92%3.46%
30 7.46%3.97%3.51%
31 7.56%4.02%3.55%
32 7.67%4.08%3.60%
33 7.77%4.14%3.65%
34 7.88%4.19%3.70%
35 8.00%4.26%3.76%
36 8.11%4.32%3.81%
37 8.23%4.38%3.87%
38 8.34%4.44%3.92%
39 8.46%4.50%3.98%
40 8.59%4.57%4.04%
41 8.72%4.64%4.10%
42 8.85%4.71%4.16%
43 8.99%4.79%4.23%
44 9.13%4.86%4.29%
45 9.29%4.95%4.37%
46 9.47%5.04%4.45%
47 9.62%5.12%4.52%
48 9.80%5.22%4.61%
49 9.94%5.29%4.67%
50 10.11%5.38%4.75%
51 10.14%5.40%4.77%
52 10.20%5.43%4.79%
53 10.07%5.36%4.73%
54 9.70%5.16%4.56%
55 9.70%5.16%4.56%
56 9.70%5.16%4.56%
57 9.70%5.16%4.56%
58 9.70%5.16%4.56%
59 9.70%5.16%4.56%
60 9.70%5.16%4.56%
*NOTE: For members in Social Security, the rate should only be applied to monthly compensation in excess of $116.67.
The rate should only be applied to compensation up to the annual IRC 401(a)(17) compensation limit.
Member Rates 7-1-14.xlsx Exhibit C Page 4
Exhibit D
SAFETY TIER A - "2% @ 50" (Non-Enhanced)
Effective 7/1/14 - 6/30/15
Expressed as a Percentage of Monthly Payroll*
Membership Date
Before 1/1/2011 On or After 1/1/2011
COLA Loading Factor: 65.51%60.26%
Entry Age Basic COLA COLA
15 8.90%5.83%5.36%
16 8.90%5.83%5.36%
17 8.90%5.83%5.36%
18 8.90%5.83%5.36%
19 8.90%5.83%5.36%
20 8.90%5.83%5.36%
21 8.90%5.83%5.36%
22 9.02%5.91%5.44%
23 9.15%5.99%5.51%
24 9.27%6.07%5.59%
25 9.40%6.16%5.66%
26 9.53%6.24%5.74%
27 9.66%6.33%5.82%
28 9.80%6.42%5.91%
29 9.94%6.51%5.99%
30 10.07%6.60%6.07%
31 10.21%6.69%6.15%
32 10.36%6.79%6.24%
33 10.50%6.88%6.33%
34 10.66%6.98%6.42%
35 10.81%7.08%6.51%
36 10.98%7.19%6.62%
37 11.14%7.30%6.71%
38 11.31%7.41%6.82%
39 11.50%7.53%6.93%
40 11.70%7.66%7.05%
41 11.90%7.80%7.17%
42 12.13%7.95%7.31%
43 12.38%8.11%7.46%
44 12.65%8.29%7.62%
45 12.86%8.42%7.75%
46 12.86%8.42%7.75%
47 12.87%8.43%7.76%
48 12.80%8.39%7.71%
49 12.51%8.20%7.54%
50 12.51%8.20%7.54%
51 12.51%8.20%7.54%
52 12.51%8.20%7.54%
53 12.51%8.20%7.54%
54 12.51%8.20%7.54%
55 12.51%8.20%7.54%
56 12.51%8.20%7.54%
57 12.51%8.20%7.54%
58 12.51%8.20%7.54%
59 12.51%8.20%7.54%
60 12.51%8.20%7.54%
*NOTE: The rate should be applied to all compensation up to the IRC 401(a)(17) compensation limit.
Member Rates 7-1-14.xlsx Exhibit D Page 5
Exhibit E
GENERAL TIER 1 - "2% @ 55" (Enhanced)
Effective 7/1/14 - 6/30/15
Expressed as a Percentage of Monthly Payroll*
Membership Date
Before 1/1/2011 On or After 1/1/2011
COLA Loading Factor: 62.93% 59.61%
Entry Age Basic COLA COLA
15 5.31% 3.34% 3.17%
16 5.39% 3.39% 3.21%
17 5.47% 3.44% 3.26%
18 5.54% 3.49% 3.30%
19 5.62% 3.54% 3.35%
20 5.70% 3.59% 3.40%
21 5.78% 3.64% 3.45%
22 5.86% 3.69% 3.49%
23 5.94% 3.74% 3.54%
24 6.02% 3.79% 3.59%
25 6.11% 3.85% 3.64%
26 6.19% 3.90% 3.69%
27 6.28% 3.95% 3.74%
28 6.37% 4.01% 3.80%
29 6.45% 4.06% 3.84%
30 6.54% 4.12% 3.90%
31 6.63% 4.17% 3.95%
32 6.72% 4.23% 4.01%
33 6.82% 4.29% 4.07%
34 6.91% 4.35% 4.12%
35 7.01% 4.41% 4.18%
36 7.10% 4.47% 4.23%
37 7.20% 4.53% 4.29%
38 7.30% 4.59% 4.35%
39 7.40% 4.66% 4.41%
40 7.51% 4.73% 4.48%
41 7.61% 4.79% 4.54%
42 7.73% 4.86% 4.61%
43 7.83% 4.93% 4.67%
44 7.95% 5.00% 4.74%
45 8.07% 5.08% 4.81%
46 8.19% 5.15% 4.88%
47 8.31% 5.23% 4.95%
48 8.44% 5.31% 5.03%
49 8.58% 5.40% 5.11%
50 8.73% 5.49% 5.20%
51 8.90% 5.60% 5.31%
52 9.04% 5.69% 5.39%
53 9.20% 5.79% 5.48%
54 9.34% 5.88% 5.57%
55 9.49% 5.97% 5.66%
56 9.52% 5.99% 5.67%
57 9.58% 6.03% 5.71%
58 9.45% 5.95% 5.63%
59 9.11% 5.73% 5.43%
60 9.11% 5.73% 5.43%
*NOTE: For members in Social Security, the rate should only be applied to monthly compensation in excess of $116.67.
The rate should only be applied to compensation up to the annual IRC 401(a)(17) compensation limit.
Member Rates 7-1-14.xlsx Exhibit E Page 6
Exhibit F
GENERAL TIER 3 - "2% @ 55" (Enhanced)
Effective 7/1/14 - 6/30/15
Expressed as a Percentage of Monthly Payroll*
Membership Date
Before 1/1/2011 On or After 1/1/2011
COLA Loading Factor: 53.95%49.19%
Entry Age Basic COLA COLA
15 5.31%2.86%2.61%
16 5.39%2.91%2.65%
17 5.47%2.95%2.69%
18 5.54%2.99%2.73%
19 5.62%3.03%2.76%
20 5.70%3.08%2.80%
21 5.78%3.12%2.84%
22 5.86%3.16%2.88%
23 5.94%3.20%2.92%
24 6.02%3.25%2.96%
25 6.11%3.30%3.01%
26 6.19%3.34%3.04%
27 6.28%3.39%3.09%
28 6.37%3.44%3.13%
29 6.45%3.48%3.17%
30 6.54%3.53%3.22%
31 6.63%3.58%3.26%
32 6.72%3.63%3.31%
33 6.82%3.68%3.35%
34 6.91%3.73%3.40%
35 7.01%3.78%3.45%
36 7.10%3.83%3.49%
37 7.20%3.88%3.54%
38 7.30%3.94%3.59%
39 7.40%3.99%3.64%
40 7.51%4.05%3.69%
41 7.61%4.11%3.74%
42 7.73%4.17%3.80%
43 7.83%4.22%3.85%
44 7.95%4.29%3.91%
45 8.07%4.35%3.97%
46 8.19%4.42%4.03%
47 8.31%4.48%4.09%
48 8.44%4.55%4.15%
49 8.58%4.63%4.22%
50 8.73%4.71%4.29%
51 8.90%4.80%4.38%
52 9.04%4.88%4.45%
53 9.20%4.96%4.53%
54 9.34%5.04%4.59%
55 9.49%5.12%4.67%
56 9.52%5.14%4.68%
57 9.58%5.17%4.71%
58 9.45%5.10%4.65%
59 9.11%4.91%4.48%
60 9.11%4.91%4.48%
*NOTE: For members in Social Security, the rate should only be applied to monthly compensation in excess of $116.67.
The rate should only be applied to compensation up to the annual IRC 401(a)(17) compensation limit.
Member Rates 7-1-14.xlsx Exhibit F Page 7
Exhibit G
SAFETY TIER A - "3% @ 50" (Enhanced)
Effective 7/1/14 - 6/30/15
Expressed as a Percentage of Monthly Payroll*
Membership Date
Before 1/1/2011 On or After 1/1/2011
COLA Loading Factor: 78.65%73.38%
Entry Age Basic COLA COLA
15 8.90%7.00%6.53%
16 8.90%7.00%6.53%
17 8.90%7.00%6.53%
18 8.90%7.00%6.53%
19 8.90%7.00%6.53%
20 8.90%7.00%6.53%
21 8.90%7.00%6.53%
22 9.02%7.09%6.62%
23 9.15%7.20%6.71%
24 9.27%7.29%6.80%
25 9.40%7.39%6.90%
26 9.53%7.50%6.99%
27 9.66%7.60%7.09%
28 9.80%7.71%7.19%
29 9.94%7.82%7.29%
30 10.07%7.92%7.39%
31 10.21%8.03%7.49%
32 10.36%8.15%7.60%
33 10.50%8.26%7.70%
34 10.66%8.38%7.82%
35 10.81%8.50%7.93%
36 10.98%8.64%8.06%
37 11.14%8.76%8.17%
38 11.31%8.90%8.30%
39 11.50%9.04%8.44%
40 11.70%9.20%8.59%
41 11.90%9.36%8.73%
42 12.13%9.54%8.90%
43 12.38%9.74%9.08%
44 12.65%9.95%9.28%
45 12.86%10.11%9.44%
46 12.86%10.11%9.44%
47 12.87%10.12%9.44%
48 12.80%10.07%9.39%
49 12.51%9.84%9.18%
50 12.51%9.84%9.18%
51 12.51%9.84%9.18%
52 12.51%9.84%9.18%
53 12.51%9.84%9.18%
54 12.51%9.84%9.18%
55 12.51%9.84%9.18%
56 12.51%9.84%9.18%
57 12.51%9.84%9.18%
58 12.51%9.84%9.18%
59 12.51%9.84%9.18%
60 12.51%9.84%9.18%
*NOTE: The rate should be applied to all compensation up to the IRC 401(a)(17) compensation limit.
Member Rates 7-1-14.xlsx Exhibit G Page 8
Exhibit H
SAFETY TIER C - "3% @ 50" (Enhanced)
Effective 7/1/14 - 6/30/15
Expressed as a Percentage of Monthly Payroll*
Membership Date
Before 1/1/2011 On or After 1/1/2011
COLA Loading Factor: 48.25%46.26%
Entry Age Basic COLA COLA
15 8.50%4.10%3.93%
16 8.50%4.10%3.93%
17 8.50%4.10%3.93%
18 8.50%4.10%3.93%
19 8.50%4.10%3.93%
20 8.50%4.10%3.93%
21 8.50%4.10%3.93%
22 8.62%4.16%3.99%
23 8.74%4.22%4.04%
24 8.86%4.27%4.10%
25 8.98%4.33%4.15%
26 9.11%4.40%4.21%
27 9.23%4.45%4.27%
28 9.36%4.52%4.33%
29 9.49%4.58%4.39%
30 9.62%4.64%4.45%
31 9.76%4.71%4.51%
32 9.90%4.78%4.58%
33 10.04%4.84%4.64%
34 10.18%4.91%4.71%
35 10.33%4.98%4.78%
36 10.49%5.06%4.85%
37 10.64%5.13%4.92%
38 10.81%5.22%5.00%
39 10.99%5.30%5.08%
40 11.17%5.39%5.17%
41 11.38%5.49%5.26%
42 11.57%5.58%5.35%
43 11.76%5.67%5.44%
44 11.87%5.73%5.49%
45 11.89%5.74%5.50%
46 11.80%5.69%5.46%
47 11.51%5.55%5.32%
48 11.90%5.74%5.50%
49 12.51%6.04%5.79%
50 12.51%6.04%5.79%
51 12.51%6.04%5.79%
52 12.51%6.04%5.79%
53 12.51%6.04%5.79%
54 12.51%6.04%5.79%
55 12.51%6.04%5.79%
56 12.51%6.04%5.79%
57 12.51%6.04%5.79%
58 12.51%6.04%5.79%
59 12.51%6.04%5.79%
60 12.51%6.04%5.79%
*NOTE: The rate should be applied to all compensation up to the IRC 401(a)(17) compensation limit.
Member Rates 7-1-14.xlsx Exhibit H Page 9
Exhibit I
PEPRA Tiers
Membership Date on or after January 1, 2013
Effective 7/1/14 - 6/30/15
Expressed as a Percentage of Monthly Payroll*
General Tiers Basic COLA Total
Tier 4 with 3% Maximum COLA 8.03%2.97%11.00%
Tier 4 with 2% Maximum COLA 7.96%1.79%9.75%
Tier 5 with 3%/4% Maximum COLA 7.75%2.75%10.50%
Tier 5 with 2% Maximum COLA 7.61%1.64%9.25%
Safety Tiers Basic COLA Total
Tier D 12.00%5.25%17.25%
Tier E 11.66%3.09%14.75%
*NOTE: The rate should be applied to all compensation (whether or not in Social Security) up to the
applicable annual Gov. Code 7522.10(c) compensation limit.
Member Rates 7-1-14.xlsx Exhibit I Page 10
Page 11
CONTRA COSTA COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION
SUBVENTION
All rates are shown as a percent of payroll.
Employee contribution rates vary depending upon their tier and age at entry. To compute the exact
subvention percent for each employee, do the following:
Employee rate – Decrease the employee’s rate by the subvention percent (i.e. 25%, 50%, etc.).
Employer rate – Increase the employer’s rate by a percent of the employee’s decrease using the
applicable refundability factor (found on Exhibits A and B):
EXAMPLE FOR COST GROUP #3: If the subvention percent is 25%, and
the employee’s rate is 6.00%,
Employee rates should be decreased by 1.50% (25% × 6.00%)
The employer rate should be increased by 1.4229% (1.50% × 0.9486)
Please note that for PEPRA members, subvention is generally not permitted. The standard under Gov.
Code §7522.30(a) is that employees pay at least 50 percent of normal costs and that employers not pay
any of the required employee contribution, but there are some exceptions. Gov. Code §7522.30(f) allows
the terms (regarding the employee’s required contribution) of a contract, including a memorandum of
understanding, that is in effect on January 1, 2013, to continue through the length of a contract. This
means that it is possible that an employer will subvent a portion of a PEPRA member’s required
contribution until the expiration date of the current contract, so long as it has been determined that the
contract has been impaired.
CAUTION – these rates are for employer subvention of up to one-half the member contribution under
Gov. Code §31581.1, NOT employer pick-up of employee contribution rates. When an employer
subvents, the contribution subvented is not placed in the member’s account and is therefore not available
to the member as a refund. For this reason, the employer pays the contribution at a discount (i.e. “Non-
Refundability Factor”).
Employer pick-ups of employee contributions are those made under Gov. Code §31581.2 and Internal
Revenue Code §414 (h)(2) for the sole purpose of deferring income tax. These contributions are added to
the member’s account, are available to the member as a refund and are considered by CCCERA as part of
the member’s compensation for retirement purposes.
EMPLOYEE PAYMENT OF EMPLOYER COST
There are several reasons why the attached contribution rates may need to be adjusted to increase the
employee portion including the following:
Gov. Code §31631 allows for members to pay all or part of the employer contributions.
Gov. Code §31639.95 allows for Safety members to pay a portion of the employer cost for the “3% at 50”
enhanced benefit.
Gov. Code §7522.30(c) requires that an employee’s contribution rate be at least equal to that of similarly
situated employees.
Page 12
Gov. Code §7522.30(e) allows the employee contributions to be more than one-half of the normal cost
rate if the increase has been agreed to through the collective bargaining process.
If you need to increase the employee contribution rate for any reason, you will need to adjust both
employee and employer rates as follows:
Employee rate – Increase the employee’s rate by the desired percent of payroll.
Employer rate – Decrease the employer’s rate by a percent of the cost-sharing percent of payroll
using the applicable refundability factor:
EXAMPLE FOR COST GROUP #11: If the required increase in the employee rate is 8.0%,
Employee rates should be increased by 8.0%.
The employer rate should be decreased by 7.924% (8.0% × 0.9905)
PREPAYMENT DISCOUNT FACTOR FOR 2014-15
Employer Contribution Prepayment Program & Discount Factor for 2014-15 is 0.9686
If you are currently participating in the prepayment program and wish to continue, you do not need to do
anything other than prepay the July 1, 2014 through June 30, 2015 contributions on or before July 31,
2014. If you wish to start participating, please contact the Accounting Division at the Retirement Office
by March 31, 2014.
The discount factor is calculated assuming the prepayment will be received on July 31 in accordance with
Gov. Code §31582(b) in lieu of 12 equal payments due at the end of each month in accordance with Gov.
Code §31582(a). The discount factor for the fiscal year July 1, 2014 through June 30, 2015 will be 0.9686
based on the interest assumption of 7.25% per annum.
Tier I Employer Employee Total Employer Employee Total Change
Basic Normal 12.09% 5.78% 17.87% 13.38% 6.37% 19.75% 1.88%
COLA Normal 3.32% 3.41% 6.73% 3.79% 4.01% 7.80% 1.07%
Basic UAAL 10.89% 0.00% 10.89% 15.24% 0.00% 15.24% 4.35%
COLA UAAL 3.84% 0.00% 3.84% 6.35% 0.00% 6.35% 2.51%
POBS 12.13%0.00%12.13%5.47%0.00%5.47%-6.66%
Total Pension Expense 42.27% 9.19% 51.46% 44.23% 10.38% 54.61% 3.15%
ER/EE Share of Total 82.14% 17.86% 100.00% 80.99% 19.01% 100.00%
Tier III Employer Employee Total Employer Employee Total Change
Basic Normal 11.34% 5.78% 17.12% 12.45% 6.37% 18.82% 1.70%
COLA Normal 3.22% 2.91% 6.13% 3.71% 3.44% 7.15% 1.02%
Basic UAAL 10.94% 0.00% 10.94% 15.31% 0.00% 15.31% 4.37%
COLA UAAL 3.84% 0.00% 3.84% 6.38% 0.00% 6.38% 2.54%
POBS 11.84%0.00%11.84%5.34%0.00%5.34%-6.50%
Total Pension Expense 41.18% 8.69% 49.87% 43.19% 9.81% 53.00% 3.13%
ER/EE Share of Total 82.57% 17.43% 100.00% 81.49% 18.51% 100.00%
PEPRA Tier 4 (3%)Employer Employee Total Employer Employee Total Change
Basic Normal 7.53% 7.57% 15.10% 7.97% 8.03% 16.00% 0.90%
COLA Normal 2.66% 2.68% 5.34% 2.95% 2.97% 5.92% 0.58%
Basic UAAL 10.72% 10.72% 15.00% 0.00% 15.00% 4.28%
COLA UAAL 3.77% 3.77% 6.25% 0.00% 6.25% 2.48%
POBS 12.13%0.00%12.13%5.47%0.00%5.47%-6.66%
Total Pension Expense 36.81% 10.25% 47.06% 37.64% 11.00% 48.64% 1.58%
ER/EE Share of Total 78.22% 21.78% 100.00% 77.38% 22.62% 100.00%
PEPRA Tier 4 (2%)Employer Employee Total Employer Employee Total Change
Basic Normal 7.49% 7.61% 15.10% 8.04% 7.96% 16.00% 0.90%
COLA Normal 1.62% 1.64% 3.26% 1.81% 1.79% 3.60% 0.34%
Basic UAAL 10.72% 10.72% 15.00% 0.00% 15.00% 4.28%
COLA UAAL 3.77% 3.77% 6.25% 0.00% 6.25% 2.48%
POBS 12.13%0.00%12.13%5.47%0.00%5.47%-6.66%
Total Pension Expense 35.73% 9.25% 44.98% 36.57% 9.75% 46.32% 1.34%
ER/EE Share of Total 79.44% 20.56% 100.00% 78.95% 21.05% 100.00%
PEPRA Tier 5 (2%)Employer Employee Total Employer Employee Total Change
Basic Normal 7.00% 7.61% 14.61% 7.75% 7.61% 15.36% 0.75%
COLA Normal 1.45% 1.64% 3.09% 1.66% 1.64% 3.30% 0.21%
Basic UAAL 10.72% 10.72% 15.00% 0.00% 15.00% 4.28%
COLA UAAL 3.77% 3.77% 6.25% 0.00% 6.25% 2.48%
POBS 11.84%0.00%11.84%5.34%0.00%5.34%-6.50%
Total Pension Expense 34.78% 9.25% 44.03% 36.00% 9.25% 45.25% 1.22%
ER/EE Share of Total 78.99% 21.01% 100.00% 79.56% 20.44% 100.00%
General Tiers
FY 2013-14 FY 2014-15
FY 2013-14 FY 2014-15
FY 2013-14 FY 2014-15
FY 2013-14 FY 2014-15
FY 2013-14 FY 2014-15
Page 1 of 2
Tier A Employer Employee Total Employer Employee Total Change
Basic Normal 22.06% 8.88% 30.94% 24.24% 9.80% 34.04% 3.10%
COLA Normal 6.68% 6.65% 13.33% 8.07% 7.71% 15.78% 2.45%
Basic UAAL 22.25% 22.25% 32.80% 0.00% 32.80% 10.55%
COLA UAAL 15.42% 15.42% 24.66% 0.00% 24.66% 9.24%
POBS 26.38%0.00%26.38%12.67%0.00%12.67%-13.71%
Total Pension Expense 92.79% 15.53% 108.32% 102.44% 17.51% 119.95% 11.63%
ER/EE Share of Total 85.66% 14.34% 100.00% 85.40% 14.60% 100.00%
Tier C Employer Employee Total Employer Employee Total Change
Basic Normal 18.51% 8.46% 26.97% 20.82% 9.36% 30.18% 3.21%
COLA Normal 3.57% 3.73% 7.30% 4.23% 4.52% 8.75% 1.45%
Basic UAAL 22.25% 22.25% 32.80% 0.00% 32.80% 10.55%
COLA UAAL 15.42% 15.42% 24.66% 0.00% 24.66% 9.24%
POBS 26.38%0.00%26.38%12.67%0.00%12.67%-13.71%
Total Pension Expense 86.13% 12.19% 98.32% 95.18% 13.88% 109.06% 10.74%
ER/EE Share of Total 87.60% 12.40% 100.00% 87.27% 12.73% 100.00%
PEPRA Tier D Employer Employee Total Employer Employee Total Change
Basic Normal 11.06% 11.08% 22.14% 11.88% 12.00% 23.88% 1.74%
COLA Normal 4.65% 4.67% 9.32% 5.21% 5.25% 10.46% 1.14%
Basic UAAL 22.25% 22.25% 32.80% 32.80% 10.55%
COLA UAAL 15.42% 15.42% 24.66% 24.66% 9.24%
POBS 26.38%0.00%26.38%12.67%0.00%12.67%-13.71%
Total Pension Expense 79.76% 15.75% 95.51% 87.22% 17.25% 104.47% 8.96%
ER/EE Share of Total 83.51% 16.49% 100.00% 83.49% 16.51% 100.00%
Cost Group 1 – County (Tier 1, 4)
Cost Group 2 – County (Tier 3, 5)
Cost Group 7 – County (Tier A)
Cost Group 9 – County (Tier C)
Assumptions: All rates are taken from the July 15, 2013, Segal Company report to the Contra Costa County Employees’
Retirement Association Board of Retirement (annual ‘Blue Book’). Tier 1, 3, A, and C rates assume a hire date prior to
January 1, 2011. PEPRA Tiers 4, D, and E assume hire date after January 1, 2013. All rates use figures over $350.
Employee normal costs are based on 28-year-old age of entry. Pension Obligation bonds for FY 13-14 are projected using
current payroll increased by 2%.
FY 2013-14 FY 2014-15
FY 2013-14 FY 2014-15
FY 2013-14 FY 2014-15
Safety Tiers
Page 2 of 2
RECOMMENDATION(S):
ACCEPT report of the impact on pension costs of Contra Costa County Employees' Retirement Association
(CCCERA) Actuarial Valuation and Review as of December 31, 2012.
FISCAL IMPACT:
This is an information report with no specific fiscal impact. A report will be forwarded to the Board in the next few
weeks requesting adoption of FY 2014-15 CCCERA rates. It should be noted that the fiscal impact, as described in
the background of this report, of increased rates is approximately $55.6 million (excluding the Contra Costa County
Fire Protection District).
BACKGROUND:
The rising costs of pension benefits continue to be a key issue in Contra Costa. Annually as part of the Budget
Message, the County Administrator reports and projects pension costs. In this year's April 15, 2013 letter, the County
Administrator noted that over the last two years, employees in the majority of our bargaining groups began paying a
greater percentage of pension costs and that
APPROVE OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD
COMMITTEE
Action of Board On: 08/06/2013 APPROVED AS RECOMMENDED OTHER
Clerks Notes:
VOTE OF SUPERVISORS
AYES 5 NOES ____
ABSENT ____ ABSTAIN ____
RECUSE ____
Contact: Lisa Driscoll, County Finance Director
(925) 335-1023
I hereby certify that this is a true and correct copy of an action taken and entered
on the minutes of the Board of Supervisors on the date shown.
ATTESTED: August 6, 2013
David J. Twa, County Administrator and Clerk of the Board of
Supervisors
By: June McHuen, Deputy
cc: Robert Campbell, Auditor-Controller
SD.4
To:Board of Supervisors
From:David Twa, County Administrator
Date:August 6, 2013
Contra
Costa
County
Subject:Impact of Contra Costa County Employees' Retirement Association Actuarial Valuation and Review as of December 31,
2012
BACKGROUND: (CONT'D)
just as we began to look forward to paying off a significant pension obligation bond in FY 2013-14, the anticipated
relief associated with that change was virtually eliminated by the pension board’s reduction of the assumed
investment rate of return from 7.75% to 7.25%.
In a letter dated March 12, 2013, CCCERA’s actuary issued a report which projected employer contribution rate
changes based on an estimated 14.17% gross market value investment return for 2012 and other changes in economic
assumptions including reducing the expected long-term rate of return assumption from 7.75% to 7.25%. The
projection was derived from the December 31, 2011 actuarial valuation results, which were the most current available
at that time.
At its Board meeting on July 24, the CCCERA board was presented with a report of the December 31, 2012
valuation figures by The Segal Group. At the conclusion of the report, the rates were adopted. The rates go into effect
July 1, 2014. The complete report can be found on CCCERA’s website at:
http://www.cccera.org/agendas/agendas%202013/agenda7.24.12.html. The following are highlights of that report.
Significant Issues in the Valuation Year (ending 12/31/12)
The California Public Employees’ Pension Reform Act (CalPEPRA) of 2013 (AB340) was passed on
September 12, 2012 and became effective on January 1, 2013. New PEPRA Tiers were created.
The results of this valuation reflect changes in the economic and non-economic assumptions adopted by the
CCCERA Board for the December 31, 2012 valuation.
Assumed Investment Rate of Return – decreased from 7.75% to 7.25%.
Retirement Rates – active members in all tiers are assumed to retire at slightly earlier ages overall.
Mortality Rates – all pre- and post-retirement mortality rates for non-disabled members have been
decreased.
Termination Rates – overall termination rates have been decreased.
Disability Incidence Rates – the probability of becoming disabled at each age has been decreased.
Individual Salary Increases – although inflationary and “across the board” increases (wage inflation)
decreased from 4.25% to 4.0%, Segal found the last three years’ of salary increases due to inflation and
across the board increases to be an anomaly and therefore the future salary increases due to promotional
and merit increases are projected slightly higher.
Terminal Pay – overall, the terminal pay assumptions are slightly higher at 12.5%. Terminal pay for
2012 averaged 9.16% for Cost Group 1. The three year average is 12.93% and the prior assumption was
12.0%. Currently, a court “stay” prevents CCCERA from implementing AB 197. The proposed
assumptions do not reflect any potential changes due to AB 197 pending a decision by the Contra Costa
County Superior Court. If CCCERA is successful in the suit, terminal pay would be approximately
2.99% for this group.
Service from Unused Sick Leave Conversion – overall sick leave conversion assumptions have been
decreased.
The ratio of the valuation value of assets to actuarial accrued liabilities decreased from 78.5% to 70.6%.
CCCERA’s UAAL has increased from $1.5 billion to $2.3 billion. This increase is primarily due to changes in
actuarial assumptions and an investment return on actuarial value (i.e. after smoothing) that fell short of the
7.75% assumed rate offset by lower than expected individual salary increases. Additional information is
provided below.
The changes in actuarial assumptions account for $570.2 million of the $815.5 million net increase.
Salary increases were not as high as assumed, which accounted for a $102.7 million decrease in the
UAAL.
The average employer rate calculated in this valuation (excluding any employer subvention of member rates or
member subvention of employer rates) has increased from 37.87% of payroll to 49.82% of payroll. This
increase is primarily due to changes in actuarial assumptions and the investment loss mentioned above.
The average member rate calculated in this valuation has increased from 10.98% of payroll to 12.20% of
payroll. This increase is primarily due to changes in actuarial assumptions.
The total unrecognized net investment gain as of December 31, 2012 is about $157 million as compared to an
unrecognized net investment loss of $389 million in the previous valuation. This net investment gain will be
recognized in the determination of the actuarial value of assets for funding purposes in the next few years.
The net deferred gains of $157 million represent about 3% of the market value of assets. Unless offset by
future investment losses or other unfavorable experience, the recognition of the $157 million market gains is
expected to have an impact on the Association’s future funded ratio and contribution rate requirements.
If the net deferred gains were recognized immediately in the valuation value of assets, the funded
percentage would increase from 70.6% to 72.7%.
If the net deferred gains were recognized immediately in the valuation value of assets, the average
employer contribution rate would decrease from 49.8% to about 48.0% of payroll.
Funding Status
Funding Status is used to determine whether the Pension Plan’s net Position will be sufficient to meet future
obligations. Assets are compared with the actuarial liabilities to determine what future contributions by the members
and by the employers are needed to pay all expected future benefits. This is an important measure. The chart below
provides several years of history beginning with the high of 2007. Although the funded ratio has dropped, rate
increases have been adopted which will ensure sufficient funding.
Summary of Actuarial Data
Exhibit A is a summary of key valuation results. As is always the case, future contribution requirements may differ
from those determined in the valuation because of:
Differences between actual experience and anticipated experience;
Changes in actuarial assumptions or methods;
Changes in statutory provisions; and
Differences between the contribution rates determined by the valuation and those adopted by the Board of
CCCERA.
Causes of Higher Than Predicted Rate Increases
Although significant rate increases were projected for FY 2014/15 based upon earlier Segal reports, actual rate
increases are significantly higher than had been anticipated. Over the last week CCCERA staff has conversed with
different employers and others trying to explain why the employer contribution rate in the valuation is so different
from their most recent projections. The explanation is that the effect that declining payroll has had on the contribution
rate was more significant than expected. Changes in payroll cause unpredictability in the contribution requirements.
The contribution requirement has two main components; the normal cost, and the amortization of the UAAL. The
normal cost rate is relatively stable, but the amortization rate is not. The amortization amount, however, is
predictable. The volatility comes in when expressed as a rate and the payroll growth differs from the assumption.
There is further slippage due to the 18-month delay when the amortization rate is applied to a different payroll
amount than was assumed. The 18-month delay is required in order for the actuary to prepare the necessary reports,
the Board of CCCERA to adopt the rates, and the employer to implement those rates.
Impact on County of Contra Costa
The following information is for planning purposes for FY 2014/15. The estimated salary base used is actual County
payroll from the August 10, 2012 pay through July 10, 2013 ($510.7 million). Because it is based upon actuals, the
base does not include vacant budgeted positions. The base excludes the Contra Costa County Fire Protection District.
The following assumptions have been applied for planning purposes:
the base has been adjusted for a 2% wage increase and a 0.5% merit increase;
the base wages are broken out by Tier I, Tier III, and Safety;
the safety tiers have been adjusted for the reduction in employee subvention;
the largest populations in each tier have been assumed for all (i.e. employees hired before 1/1/2011 for all and
Tier A for Safety);
the rates used for both FY 2013/14 and FY 2014/15 are from the 12/31/12 Segal report referred to as the ‘Blue
Book’;
the rates used are specifically for County Cost Groups as defined by CCCERA:
the FY 2013/14 rates assume 7.75% interest, 4.25% wage inflation, plus merit salary increase
assumptions,
the FY 2014/15 rates assume 7.25% interest, 4.00% wage inflation, plus merit salary increase
assumptions,
the employer subvention of the employee rate for general tiers is assumed to be zero;
the aggregate rate, under and over $350, has been applied to the salary base; and
a prepay factor discount of .96 was applied.
Per the assumptions above, the following rates have been applied to base salary:
The following year-over-year increase in pension cost is projected using these rates on the salary base as described:
The previous projection after the adopted change in assumed investment rate was a cost increase of approximately
$33 million. The current projection given all economic, non-economic and demographic updates from the tri-annual
study is $55.6 million.
Strategy
In June 2014, the County will pay off one of its two remaining pension obligation bonds (POBs). Because of this
bond retirement, pension costs in FY 2014/15 would have been $32.99 million less than in FY 2013/14. In June
2006, monies anticipated from this payoff were directed by the Board to the County’s Other Post Employment
Benefit Trust Fund.
At that time the report notes that there were contingencies to these resources being available in the future. One of the
contingencies specified was “CCCERA continuing to meet its assumed rate of investment—among other things”. It is
likely that the County Administrator will shortly recommend that the POB payment monies be redirected towards the
FY 2014/15 pension cost increase. This recommendation would reduce the gap between the $55.6 million projected
FY 2014/15 increase in pension costs and available funding to $22.7 million. This is still a very large number, but
significantly more manageable. Over the coming months County Administrator staff will work with departments to
plan for these increased costs. It is unlikely that current vacant positions will be filled.
The silver lining to these increased costs is that the CCCERA Board has taken seriously its fiduciary responsibility to
the fund and has taken steps to ensure that members’ pensions are adequately funded now and in the future. The
County, in turn, will take the necessary steps to adjust future budgets to fully fund its obligations. The City of Detroit
bankruptcy has made it impossible to ignore the financial issues looming for municipalities. In order to avoid being
the “Detroit of the Future”, Contra Costa must address its underlying issues−the high cost of benefits and specifically
the unfunded and unsustainable retirement benefits.
CONSEQUENCE OF NEGATIVE ACTION:
This is an information report requiring no specific action. A report will be forwarded to the Board in the next few
weeks requesting adoption of FY 2014-15 CCCERA rates.
CHILDREN'S IMPACT STATEMENT:
None.