HomeMy WebLinkAboutMINUTES - 03252014 - D.3
February 17, 2014
Ms. Lisa Driscoll
Finance Director
Contra Costa County
651 Pine Street, 10th floor
Martinez, CA 94553
Re: Complying with California Government Code Section 7507 Regarding Changes to
Pension Benefits of D.A. Investigators Association as of July 1, 2014
Dear Ms. Driscoll:
We have been asked to estimate the effect on the County
actuarial accrued liabilities and Annual Required Contributions resulting from a new tier of
benefits in the structure of Assembly Bill 340 (AB340) with a 2.00% Cost of Living
Adjustment (COLA). July 1, 2014 was used as the effective date for the proposed change for
the members of D.A. Investigators Association. We are comparing this benefit structure to
the AB340 structure with a 3.00% COLA which the plan currently provides.
Because this change affects only future employees, it will have no effect on the unfunded
actuarial accrued liabilities of
(CCCERA) as of July 1, 2014. We show the cost impacts on the enclosed charts per one
hire per year. The costs shown are combined employee and employer normal costs. By
going from a 3.00% COLA to a 2.00% COLA, the County will realize a savings. The savings
are equal to the excess of the normal cost for an AB340 structure with a 3.00% COLA over
the normal cost of an AB340 structure with a 2.00% COLA.
We have expressed the savings in annual dollar amounts and as percentages of covered
payroll for calendar years 2014, 2015, 2016, and 2017. These results are merely illustrative
and the actual impact will depend upon the actual demographic characteristics of the
employees as well as the pattern of future hiring.
Ms. Lisa Driscoll
February 17, 2014
Page 2
Future actuarial measurements may differ significantly from the current measurement
presented in this report due to such factors as: plan experience different from that
anticipated by the economic and demographic assumptions; increases or decreases
expected as part of the natural operation of the methodology used for these measurements;
and changes in plan provisions or applicable law. Due to the limited scope of this report, an
analysis of the potential range of such future measurements has not been performed.
The methods and assumptions used are the same as those used in the December 31, 2012,
actuarial valuation of CCCERA. Information on our new entrant profile is given in Note 2 of
the enclosed projections.
The report was prepared under the supervision of Charlie Chittenden, an Enrolled Actuary, a
Fellow of the Society of Actuaries, and a Member of the American Academy of Actuaries,
who met the Qualification Standards of the American Academy of Actuaries to render the
actuarial opinions contained in this report. This report has been prepared in accordance with
all Applicable Actuarial Standards of Practice. I am available to answer any questions on the
material contained in the report, or to provide explanations or further details as may be
appropriate.
Sincerely,
Charles E. Chittenden Joseph Son
Principal and Consulting Actuary Senior Consultant, Retirement Actuary
Enc.
Ms. Lisa Driscoll
February 17, 2014
Page 3
D.A. Investigators Association
Notes:
1. The methods and assumptions used to determine the savings were the same as those used for the
December 31, 2012, valuation.
2. The county is assumed to hire one active employee at July 1 of each projection year. The annual
valuation pay amounts at entry are assumed to be $82,800, $85,700, $88,700, and $91,800 for the
2014, 2015, 2016, and 2017 hires, respectively. The age at entry for new hires is assumed to be 44.
3. The maximum compensation limit for the retirement benefit is 120% of $115,064, or $138,077 for
2014 and it is expected to grow 2.00% per year.
4. In the AB340 benefit structure, the multiplier is 2.5% at 55. The multiplier increases by 0.1% for ages
above 55 to a maximum of 2.7% at 57. It decreases by 0.1% for ages below 55 to a minimum of 2.0%
at 50.
Calendar Year 2014 2015 2016 2017
Valuation Pay $37,500 $117,400 $202,200 $292,200
Annual Cost
AB340 with 3.00% COLA
i) $ $16,200 $50,800 $87,300 $126,100
ii) % of Pay 43.2% 43.3% 43.2% 43.2%
AB340 with 2.00% COLA
i) $ $14,600 $45,600 $78,400 $113,200
ii) % of Pay 38.9% 38.8% 38.8% 38.7%
Saving/ (Cost )
i) $ $1,600 $5,200 $8,900 $12,900
ii) % of Pay 4.3% 4.5% 4.4% 4.5%
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
2014 2015 2016 2017
Savi ng/ (Cost )AB340 with 3.00% COLA AB340 with 2.00% COLA
0.0%
20.0%
40.0%
60.0%
2014 2015 2016 2017
Savi ng/ (Cost )AB340 with 3.00% COLA AB340 with 2.00% COLA