Resolution No. 5146 - Laserfiche WebLink

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CITY OF EUGENE, OREGON Notes to Basic Financial Statements (5) Other Information, continued (C) Retirement Plan – Oregon PERS (OPERS), continued Actuarial Valuations, continued The total pension liability in the December 31, 2012 actuarial valuation was determined using the following: Valuation Date:December 31, 2012 rolled forward to June 30, 2014. Experience Study Report:2012, published September 18, 2013 Actuarial cost methodEntry Age Normal Amortization method:Amortized as a level percentage of payroll as layered amortization bases over a closed period; Tier One/Tier Two UAL is amortized over 20 years and OPSRP pension UAL is amortized over 16 years. Asset valuation method:Market value of assets Actuarial assumptions Inflation rate:2.75% Investment rate of return:7.75% Projected salary increases:3.75% overall payroll growth; salaries for individuals are assumed to grow at 3.75% plus assumed rates of merit/longevity increases based on service. Mortality:Healthy retirees and beneficiaries: RP-2000 Sex-distinct, generational per Scale AA, with collar adjustments and set-backs as described in the valuation. Active members: Mortality rates are a percentage of healthy retiree rates that vary by group, as described in the valuation. Disabled retirees: Mortality rates are a percentage (65% for males, 90% for females) of the RP-2000 static combined disabled mortality sex-distinct table. Actuarial valuations of an ongoing plan involve estimates of the value of projected benefits and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. Experience studies are performed as of December 31 of even numbered years. The methods and assumptions shown above are based on the 2012 Experience Study which reviewed experience for the four-year period ending on December 31, 2012. GASB Statement No. 68 reporting requirements allows for the measurement date (June 30, 2014) to be 12 months prior to the reporting date (June 30, 2015) and the actuarial valuation date (December 31, 2012) to be 30 months prior to the reporting date. The new pension asset (liability) for the June 30, 2016 reporting data will be based on the December 31, 2014 actuarial valuation date. Discount Rate The discount rate used to measure the total pension liability was 7.75% for the Defined Benefit Pension Plan. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and those of the contributing employers are made at the contractually required rates, as actuarially determined. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments for the Defined Benefit Pension Plan was applied to all periods of projected benefit payments to determine the total pension liability. Long-Term Expected Rate of Return To develop an analytical basis for the selection of the long-term expected rate of return assumption, in July 2013 the PERS Board reviewed long-term assumptions developed by both Milliman’s capital market assumptions team and the Oregon Investment Council’s (OIC) investment advisors. The table below shows Milliman’s assumptions for each of the asset classes in which the plan was invested at that time based on the OIC long-term target asset allocation. The OIC’s description of each asset class was used to map the target allocation to the asset classes. continued 73