TOWN OF COVENTRY POLICE PENSION PLAN PRESENTATION
Goals for Tonight • Financial Situation of the Police Pension Plan • Develop a Solution for the Future • Develop a partnership with the Town, IBPO and Retirees to implement the Solution
Condition of the Police Pension Fund Steve Lemanski, FSA, FCA, MAAA Enrolled Actuary Milliman
Actuarial Valuation Results 7/1/2011 7/1/2012 (for FY 2013) (for FY 2014) Accrued Liability – Actives $18,820,068 $16,995,268 Accrued Liability - Inactives 48,531,260 52,401,809 Total Accrued Liability 67,351,328 69,397,077 Actuarial Value of Assets 7,598,092 6,899,524 Unfunded Accrued Liability 59,753,236 62,497,553 Funded Ratio 11.3% 9.9% Annual Required Contribution 4,481,020 (ARC)
History of Actual Contributions Fiscal Year Contribution Amount 1997 900,000 1998 900,000 1999 950,000 2000 1,000,000 2001 1,200,000 2002 1,200,000 2003 1,350,000 2004 1,350,000 2005 1,550,000 2006 2,174,733 2007 2,374,733 2008 2,274,733 2009 2,274,733 2010 2,274,733 2011 2,274,733 2012 2,274,733
RI Retirement Security Act and Independent Pension Funds R.I.G.L. Section 45-65-6 “The initial actuarial experience study shall be submitted to the study commission on or before April 1, 2012, and subsequent actuarial experience studies must be submitted to the study commission no less frequently than once every three (3) years.” “In any case in which an actuary certifies that a locally administered plan is in critical status [“a plan’s funded percentage for such plan year is less than sixty percent (60%)] for a plan year, the municipality administering such a plan shall, not later than thirty (30) business days following the certification: provide notification of the critical status to the participants and beneficiaries of the plan and to the general assembly, the governor, the general treasurer, the director of revenue, and the auditor general.” “Within one hundred eighty (180) days of sending the critical status notice, the municipality shall submit to the study commission a reasonable alternative funding improvement plan to emerge from critical status.”
Estimated Future ARC Payments under Funding Improvement Plan Fiscal year ending 2013 = 2,274,733 2014 = 2,274,733* 2015 = 2,886,400 2016 = 3,459,100 2020 = 3,861,000 2025 = 4,458,000 2030 = 5,359,500 2035 = 7,034,100 2037 = 8,549,600 Note: Assumes all proposed benefit changes are enacted, effective retroactive to the July 1, 2012 actuarial valuation. Amounts include estimated employer contributions to proposed DC plan for new hires. FY 2014 proposed budgeted amount is $ 3,024,733.
Requested Agreement Options - Place Moratorium on COLA’S for active and inactive participants - Otherwise adjust COLA’s to positively impact unfunded liability
Impact of placing moratorium on COLA for inactive participants as of July 1, 2012 With COLA Without COLA Accrued Liability - Actives $16,995,268 $16,995,268 Inactive Liability - Inactives 52,401,809 39,783,833 Total Accrued Liability 69,397,077 56,779,101 Actuarial Value of Assets 6,899,524 6,899,524 Unfunded Accrued Liability 62,497,553 49,879,577 Funded Ratio 9.9% 12.2% ARC – for FYE 2014 4,481,020 3,737,510 Note: Assumes first date at which no COLA is granted is July 1, 2013 for current inactive participants. Accrued Liability for active participants reflects current benefit provisions.
Partnership Participation Town presents required payment of ARC to Taxpayers at the Financial Town Meeting Active Police Officers agree to moratorium or adjustment to COLA, or same is ordered by arbitration Retirees agree to moratorium or adjustment to COLA
Questions • Questions from retirees only • Raise hand and wait to be called upon • Come forward to the microphone and identify yourself and your address • Keep questions to 3 minutes • For those on the webcast e-mail your questions with your name and address • Do not ask the same question twice • After tonight's meeting you can call or e-mail the Town Manager’s Office (401-822 9185 or thoover@town.co ventry,ri.us) with any further questions
TOWN OF COVENTRY POLICE PENSION PLAN PRESENTATION
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