SUBJECT/RECOMMENDATION:
Title
Accept the actuary’s recommendations for changes to plan actuarial assumptions and methods, per the Experience Investigation completed by Gabriel Roeder Smith and Company for the five-year period ending December 31, 2022.
Body
SUMMARY:
The Plan’s actuaries, Gabriel Roeder Smith & Company (GRS), have completed an Experience Investigation study for the pension plan and have provided recommendations of changes to the assumptions and methods used in the plan’s annual actuarial valuation.
It has been five years since completion of the last experience study for the Clearwater Employees’ Pension Plan, with changes adopted by the Trustees in January 2019.
The pension plan ordinance requires a study of the actuarial assumptions at least every six years. The ordinance further states (Section 2.413 (i)) “Taking into account the result of such investigation, the trustees shall adopt for the retirement plan such mortality, service and other tables as are necessary and proper.”
The net effect of all changes recommended by the study would be an increase in the annual required contribution to the plan of $1,432,403, or 1.36% of covered pay. The results vary for each group, with non-hazardous employees seeing the largest impact (an increase of $1,166,633, or 1.96% of covered pay) and police officers seeing the smallest impact (a decrease of $140,994, or 0.69% of covered pay).
The proposed changes include changes to the salary increase assumption, assumed rates of future retirements, assumed rates of future separation from employment, assumed rates of future disability, the assumed probability of being married at retirement, and the assumed age difference between retirees and their beneficiaries. These changes are also described in more detail by the actuary in the attached Experience Investigation report.
Staff recommends approval of all recommended changes to more accurately determine the pension plan liability and required funding levels, per the professional advice of the plan’s actuaries.