HomeMy WebLinkAboutRetirement Committee - Minutes - 02/14/2019iyttoltins
General Employees Retirement
Committee
215 N. Mason
2'd Floot
PO Box 580
Fort Collins, CO 80522
970.22-t.67Aa
970.221 .6782 - lax
fcgov.com
GENERAL Ewrployees' RETTREMENT Gorvtutrree
MINUTES
FEBRUARY 14,2019
215 N. MASoN - CorureReruce RooM 2A
- SEcoND FLooR -
1:15 prvr
Committee Members Present: Clark Mapes, Chairman
John Voss, Vice Chairman
James Lathrop
John Lindsay
Del Bernhardt
Ralph Zentz
Others Present: Blaine Dunn
Travis Storin
Joel Stewart, Milliman
Katie Antonline, Milliman
Carolyn Koontz
Meeting called to order at 1:18 pm.
Welcome New Committee Member Ralph Zentz
2. Consider Approving the Minutes from the meeting held on January 10, 2019
James Lathrop made a motion to approve the minutes of the January 10, 2019
GERC meeting. John Voss seconded the motion. The minutes were approved
unanimously.
3. Review -Evaluation Joel Stewart Key Assumptions to be Used in Annual Actuarial
Demographic Assumptions:
1) lVodality: New tables published in January 201 I by the Society of Actuaries
(SOA) based on public sector plan experience only. Past assumptions have been
based on the RP-2000 tables from the 90's. Life expectancy under the new table
is approximately two years higher for males and three years higher for females
when compared to the previous assumption. See table below;
ci
1. Citizen Participation and Plan Member Comments - None made or noted.
High-Level Effects of Recommendation: Vanes by particapant, with nrost participants
having an increased life expectancy. The following table shows the estimated impact to the
Plan's Net Pension Liability at Decenrber 31. 20 l8 under the new mortality tables.
12131 12018 (Estimated)
12t31t2017
otd
Monality
New
Mortalityi.2
New
Mortalityr'3
Discount Rate
1. Total Pension Liability (TPL)
2. Fiduciary Net Position (FNP)
6.25./.
$60.0m
M8.8m
6.25%
$59.6m
$43.1m
6.25%
$62.5m
$43.1m
5.64%
$66,7m
M3.1m
3. Net Pension Laability (NPL)
1 -2 S11 2m $ 16.5m S19 4m S23.6m
4, FNP as a % of TPL
2.t1. 81oiir 69% 650,6
2 3. 1 All Calorlated Calculated other assumptions using using the blended Plan's are lhe rate long-sarne based term as on investnenl those depletion disdosed mte in 2041 of in retum
our and Januaryl, the assumption.20-year 2018 Muni tunding bond rale vatuation of4.10olo, repon. as
required under GASB 67i68.
Joel Stewart: ln compliance with GASB Statement #68 - guidance for pension plan
reporting we have to do a depletion date projection. Project oul the assets and see if
there is a crossover time when the plan runs out of money (depletion date). Plan
experience and mortality rate - these changes require us to use a slightly lower
return rate (5.54%) to calculate the liability. 6.25ok is the current assumption for rate
o{ return. We will bring solvency models for discussion at the March 14th meeting.
Travis Storin; the combination of Q4 market conditions and the new mortality tables
are causing this issue. We were 81% funded last year - less well funded plan
$5.3M change is almost all market movement.
Policy states; when {unded amount goes below 70"/o, we are to consider increasing
the supplemental which is a Council funding decision. We recommend what that will
be. lt doesn't have to happen immediately - it can coincide with the next budget
cycle. The current inflection point is 2041. Auditors lock into tables and want to
know why you aren't using them. The GERP is a very mature plan and is very
sensitive to investment percentage fluctuations in the market.
2
f3lYtbouns !r.--
72o/o
JSlYt bothns
v'r,--\
2) Retirement Age: No changes recommended.
Current Assumption: For active participants the retirement assumption is a table of rates
based on age as follows.
Ase
Probability of
Retirement
55-60
61-64
65
66-68
69 & Over
5o/o
10
65
40
100
Deferred Vested participants are assumed to retire at age 65 (Normal Retirement)
3) Form ol Payment for Future Retirees from Active Employment (Lump Sum
Election): No changes recommended.
2014 2015 2016 2017 2018 Toral
Lump sums
Total exits
% taking a lump sum
2
15
13Vo
3
'17
18%
1
16
6o/o
0 3
13
23Vo
I
69
0o/o 13o/o
4) Retirement Age and Form of Payment for Future Retirees from Deferred Vested
Status: 100% taking an annuity is not accurate
Recommendation; Consider updating form of payment election assumption for
future retirees from deferred vested status to 70% elect an annuity upon
retirement and 30% elect a lump sum upon retirement.
current Assumption: 15016 of future retirees from active employment elect a lump sum
upon retirement (effective January 1 ,2017).
Discussio[: Expenence of lump sum elections over the lasl five years is summarized in the
following table.
J
8
Ci
Current Assumption: Defened Vested participants are assumed to retire at age 65
(Normal Retirement). 1009t, of future retirees from deferred vested status elect an annuity
upon retrrement.
Discussion: Experience of lump sum elections over the last five years is summanzed in the
following table.
2014 2015 2016 2017 2018 Toral
2
12
17%
5
12
42o/o
,|
10
1Oo/o
4
80%
1'l
180h
14
50
2So/o
The average age of all exits from defened vested slatus is M.4, and the average age of
those electing an annuity is 64 I Deferred vested participants cunently make up a
relatively small segment of the total liability, approximately 1390 at January 1, 2018.
5) Other Terminations ol Employment: No change recommended.
C urrent Assumption:
Graduated rates based on age- Withdrawal rates stop upon attainment of early retirement
el'gibility (age 55). Sample rates are shown below.
ins
Withdrawal
Aqe Male Female D isa b ility
35
40
45
50
55
60
8.58%
5.25
3.88
3.18
2.00
1.50
9.53%
7 .10
5.23
4.',t4
3.29
215
Discussion: The Plan experiences significantly fewer lerminations and disablements
versus retirement.
Economic Assumptions:
1) lnflation: Current Assumption 2.5% - No change recommended
ln its 2018 Trustees Report, the expected long{erm increase in the CPI used by the Social
Security Administration (SSA) under its inlermediate cost assumptions was 2.6o,.b. Semi-
annually, t\4illiman publishes a set of capital market outlook (Ctvlo) assumptions developed
by t\'{illiman's credentaaled investment professionals. The most recent Milliman C[$O uses a
long{erm inflation assumption of 2.3oib,
ci
Travis Storin mentioned that our Moody's Aaa rating continues. We are very proud
of that rating. Ivloody's was delighted to see our 6.25% assumption.
Agc
Under 55
55 to 59
60 to 64
65&Up
Total
Count
15
't4
32I
70
Salary increase experience from the past five years is summarized in the following table-
2014 201 5 2016 2017 2018
Actual (average) 2.1Yo
3.9%
2.9o/o
3.9%
2.5o/o
3.9%
3.40h
3.9o/o
3.8o/o
Ex ected avera 3.9olo
4) Administrative Expenses: No change recommended.
Discussion: The following table summarizes the actual to expected administrative
expenses for the last five years,
2014 2015 2016 2017 2018
22,706
21,251
1O7o/o
20,131
26,7U
7 5o/o
The levers that this committee can push and pull to have an impact on this liability.
The Net Pension Liability number goes on the City's balance sheet and is officially
recorded as a city liability. The solvency projection $.2M lnnrlhas been there for several
years.
John Voss; Council Finance Committee and City Council view supplemental as a debt
service payment. City staff and Council are very supportive of the plan's needs.
Travis Storin requested the committee allow stalf up to two weeks to review and
consider new assumptions and final valuation and supplemental funding. Stafj will
review with Mike Beckstead. Staff just received the assumptions yesterday. Request a
Special Meeting be called on February 28th, 2019.
Table the assumption changes until the Special GERC lvleeting on February 28th
iytbo[rns
3) Salary lncrease: No change recommended.
Actual
Expected
A/E
18,935
22,956
82o/o
30,745
20,886
147o/o
26.752
24,129
fSiYt bo[rns
!-.----
lVlove to defer final valuation work. Two reports; Funding Valuation and GASB
Disclosure Report can be reviewed at the March 14th meeting and publish after that
discussion. Depletion date is a GASB requirement. March deliverables are very
important to city and our auditors.
James Lathrop made a motion to take inlormation presented under advisement and to
defer action for a Special lVleeting of the GERC on February 28rh. John Voss seconded
the motion. None opposed. Motion passed.
4. Review / Finalize 2019 Work Plan
John Voss made a motion to adopt and approve the 2019 GERC Work Plan as
presented. Del Bernhardt seconded the motion. None opposed. The approved
2019 General Employees Retirement Committee (GERC) Work Plan will be posted.
5. Monthly lnvestment Report (Blaine Dunn)
2.39"/" YTD return - a better month-
We sold $750K out of the lnternational Fund this month.
We continue to be in compliance with all melrics. More heavily on weighted on
domestic funds.
6. Other Business
John Voss - GERC Committee recommendation acknowledged by Mayor Troxell A
copy ol his letter is in your packet.
Meeting adjourned aI2:29 pm
John Voss, Vice Chairman
Carolyn Koontz, Staff Liaison
c
6
111o/o
5
2) lnvestment Return: 6.25% No change recommended.
4
Lump sums
Total exits
% taking a lump sum
0.1970
0.30
o.44
0.69
1.19
1.80