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ACTUARIAL ASSUMPTIONS
(View in PDF Format)

  1. Actuarial Cost Method

    • Entry Age Normal Cost Method 

  2. Decrements

    • Pre-Retirement Mortality
      Representative values of the assumed annual rates of pre-retirement mortality among members in active service are as follows:
Age Ordinary Mortality Rate Service Mortality Rate Age Ordinary Mortality Rate Service Mortality Rate

20
25
30

35

.0017
.0018
.0020
.0030

.0002
.0004
.0005
.0005

40
45
50
54

.0043
.0055
.0077
.0103

.0005
.0006
.0009
.0003

  • Post-Retirement Healthy Mortality
    1983 Group Annuity Mortality Table

  • Post-Retirement Disabled Mortality
    1983 Group Annuity Mortality Table

  • Disability
    Representative values of the assumed annual rates of disability among members in active service are as follows:

Age Ordinary Disability Rate Service Disability Rate Age Ordinary Disability Rate Service Disability Rate

20
25
30
35

.0004
.0006
.0009
.0012

.0003
.0005
.0007
.0010

40
45
49

.0018
.0032
.0050

.0014
.0026
.0040

  • Retirement
    Members are assumed to retire at the earlier of 55 years old or when they attain 22 years.

  • Withdrawal from Active Status
    Representative values of the assumed annual rates of withdrawal among members in active service are as follow
Age Rate Age Rate
20 10.30% 35 1.82%
25 7.30% 40 0.99%
30 4.15% 45 0.48%
  1. Interest Rates

    • Used for Calculating All Liabilities (including GASB 25/27 liabilities)
      8.00% per annum

  2. Salary Increases

    • Individual Compensation
      Representative values of the assumed annual rates of future salary increase are as follows: (average assumed annual rate is 5.7%)

Age

Rate

Age

Rate

20 10.67% 40 5.10%
25 8.80% 45 5.03%
30 6.25% 50 5.06%
35 5.30% 55 5.12%
    • Aggregate Compensation
      The aggregate compensation used to compute the accrued liability contribution rate was assumed to increase at a rate of 3˝% per year.
  1. Marriage Assumptions

    • Percent Married
      75% of members are assumed married.

    • Age Difference Between Spouses
      Male spouses are assumed to be three years older than female spouses.
  2. Expenses
    The normal contribution rate is increased by anticipated non-investment expenses. The anticipated expenses for the 2006/2007 plan year are $400,000.
  3. Assets
    The Actuarial Value of Assets is equal to the Market Value of Assets adjusted to reflect a five-year phase-in of the difference between the expected return on Actuarial Value of Assets and the actual investment return.


The following assumptions have been changed during the last few plan years:

  1. Effective October 1, 1997:
    The post-retirement mortality table was changed to the 1983 Group Annuity Mortality Table.

  2. Effective October 1, 1999:

    1. The actuarial value of assets reflects a “fresh start” at market value, beginning a new five-year phase-in of gains and losses.

    2. The actuarial cost method was changed from frozen entry age to entry age.

  3. Effective October 1, 2006:
    1. The retirement decrement was changed to the earlier of age 55 or attainment of 22 years of service. This assumption has been changed to better reflect anticipated retirement behavior as a result of the change in plan provisions effective October 1, 2006.
    2. The percentage of active members assumed married was changed from 95% to 75%. This assumption was changed after a review of the marital status of recent retirees and current active members.
    3. On October 1, 2006, the Actuarial Value of Assets was changed to be equal to the Market Value of Assets, adjusted to reflect a five-year phase-in of the difference between the expected return on Actuarial Value of Assets and the actual investment return. The new method was applied retroactively so that five years of excess returns are smoothed in 2006. The prior Actuarial Value of Assets was equal to the Market Value of Assets adjusted to reflect a five-year phase-in of the net investment gain or loss.
    4. It is assumed that members who enter the DROP on or after October 1, 2006 will participate in the DROP for eight years. Therefore, the COLA payment to these members will be deferred eight years.

* Note: Assumption changes that have first been reflected in this valuation are shown in bold print.


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