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Response to Segal Audit of June 30, 2005 Actuarial Valuation

P. Response to Segal Audit of June 30, 2005 Actuarial Valuation. August 16, 2006. Overview. Overall impression Areas of Agreement Issues for Discussion. Overall Impression. Audit is a useful part of actuarial process Valuation results were accurate, but not perfect

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Response to Segal Audit of June 30, 2005 Actuarial Valuation

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  1. P Response to Segal Audit of June 30, 2005Actuarial Valuation August 16, 2006

  2. Overview • Overall impression • Areas of Agreement • Issues for Discussion

  3. Overall Impression • Audit is a useful part of actuarial process • Valuation results were accurate, but not perfect • Assumptions reasonable • Segal methodology produces higher employer contribution • Questions about member contribution rates

  4. Areas of Agreement • Mistakes • Process Refinements • Reporting and Documentation

  5. Mistakes • Recommend adjusting with June 30, 2006 valuation • Safety retirement rates • Safety salary increase assumptions used in calculation of member contribution rates for members with less than 8 years of service • Vested Reciprocal Terminated Members over age 63 (55 for Safety) • Active member death benefit

  6. Process Refinements • Review in next experience analysis • COLA Timing • Salary Increase Timing • Add to information collected • Temporary Annuity Option Survivor Continuance

  7. Reporting and Documentation • Add to valuation report • Average member contribution rates • Development of member COL contributions • Reserve allocation • UAAL amortization • Explanation of process

  8. Reporting and Documentation • Minimum Amortization under GASB Statement 27 • Fixed in June 30, 2005 actuarial valuation

  9. Issues for Discussion • Member Contribution Rates • Cost Allocation

  10. Member Contribution Rates • Regular Basic – OK • Regular COL • Question about UAAL • Settlement Basic – OK • Settlement COL • Question about UAAL • Question about estimating UAAL

  11. Cost Allocation • Both approaches calculate costs based on current membership • P3approach assumes contributions for all employees there at beginning of each year. • Segal approach assumes contributions for all employees there at end of each year.

  12. Questions

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