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Supplemental Benefits Issues and Options

P. Supplemental Benefits Issues and Options. December 15, 2005. Syllabus. Brief Overview Current Benefits Decisions from Prior Meetings Options Proposed Next Steps. Undistributed Earnings. AKA Excess Earnings Earnings available after: Crediting regular interest

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Supplemental Benefits Issues and Options

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  1. P Supplemental BenefitsIssues and Options December 15, 2005

  2. Syllabus • Brief Overview • Current Benefits • Decisions from Prior Meetings • Options Proposed • Next Steps

  3. Undistributed Earnings • AKA Excess Earnings • Earnings available after: • Crediting regular interest • Filling Contingency Reserve • Calculated on smoothed basis • Limited expectations for near future • Approximately $72.5 million as of June 30, 2005

  4. Undistributed Earnings • Acceptable Uses under 37 Act • Save it (Bigger Contingency Reserve) • Pay for current benefits • Regular benefits • Settlement benefits • Pay for COL contributions • Create Additional Benefits

  5. Additional Benefits • Generally temporary (as long as money lasts) • Reconfirmed by Retirement Board each year • Examples • Purchasing Power COLA • Dollars for Retiree Health

  6. Purchasing Power COLA • Originally paid to retirees and beneficiaries who had lost 25% or more of purchasing power since beginning benefit payments • Retired on or before April 1, 1981 • Approximately 575 retirees and beneficiaries • Board decided to freeze benefits at current level

  7. Estimated PVB as of 6/30/2005 – Purchasing Power Benefits

  8. Current Retiree Health Benefits • Two Pieces • Settlement Section 9 • Non-guaranteed benefits

  9. Settlement Section 9 • $3 per year of service • Guaranteed • Additional amounts when additional undistributed earnings are available

  10. Non-Guaranteed Benefits • If member prior to 1990: • $45 plus • $3.50 per year of service • If member after 1989: • $5 per year of service • Maximum: $150

  11. Current Features • Paid to all annuitants • Paid from the date of retirement • Paid for life of member • Same amount continues to spouse upon member’s death

  12. Estimated Funded Percentage as of 6/30/2005 – Non-Valuation Benefits

  13. Unmodified Benefit without COL

  14. TAO without COL

  15. Unmodified Benefit with COL

  16. TAO with COL – Equivalent

  17. TAO with COL – Current

  18. Preliminary TAO Decision • Continue paying TAO COLA using current methodology

  19. Increase in Member Contribution Rates 7.5% Estimated Additional Liability

  20. TAO Options • Charge additional liability to County and Members • Pay for additional liability for both County and Members ($15 million) • Pay for additional liability for either County or Members ($7.5 million) • Pay for portion of additional liability

  21. Options for Retiree Health • Decrease payment to beneficiary not already receiving to 60% of retiree benefit • Split between Current Retirees and Future Retirees

  22. Current Retirees • Four potential cut off dates • June 30, 2006 • June 30, 2007 • June 30, 2008 • June 30, 2009

  23. Calculations • Based on data and assumptions from June 30, 2004 Actuarial Valuation of FCERA • All Dollars in Millions

  24. Current Retirees Through June 30, 2006

  25. Current Retirees Through June 30, 2007

  26. Current Retirees Through June 30, 2008

  27. Current Retirees Through June 30, 2009

  28. Future Retirees • To be eligible must either • Retire directly from County service • Service, disability or survivor • Have at least 20 years of service

  29. Future Retirees • Two potential cut off dates • June 30, 2005 • June 30, 1999

  30. Future Retirees (after 2006) Through June 30, 2005

  31. Future Retirees (after 2007) Through June 30, 2005

  32. Future Retirees (after 2008) Through June 30, 2005

  33. Future Retirees (after 2009) Through June 30, 2005

  34. Future Retirees (after 2006) Through June 30, 1999

  35. Future Retirees (after 2007) Through June 30, 1999

  36. Future Retirees (after 2008) Through June 30, 1999

  37. Future Retirees (after 2009) Through June 30, 1999

  38. Where do we go from here?

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