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ii. Patrick Donlan reviewed the actuarial cost method and commented <br />the Plan currently used the Aggregate cost method. Patrick <br />commented GASB 67/68 required the use of the Entry Age Normal <br />(EAN) cost method so there was a disconnect. Patrick <br />recommended switching to the EAN and stated there would be a <br />slight increase of 0.90% in the funding requirement. <br />iii. Patrick Donlan reviewed the investment return assumption. Patrick <br />reviewed the basic formula of Contributions + Investment Earnings <br />= Benefits + Expenses. Patrick commented he showed the funding <br />impact if the investment return assumption was reduced to 7.25% <br />or 7,00%. Patrick commented the current investment return <br />assumption of 7.55% was reasonable, but many of the plans across <br />the State were considering lowering their investment return <br />assumption. <br />iv. Patrick Donlan reviewed the current salary increase assumption. <br />Patrick commented based on the experience, he recommended <br />increasing the salary assumption in the first year of service from <br />10.00% to 15.00%. The funding requirement would decrease by <br />0.10%. <br />v. Patrick Donlan reviewed the retirement rates and reminded the <br />Board members could retire once they were vested, but there would <br />be a large benefit reduction. Patrick commented they have had <br />eleven members commence an early retirement over the past ten <br />years. Patrick commented he was proposing an assumption that <br />40.00% of members would commence their benefit immediately <br />and 60.00% would defer their benefits to age 50. Patrick <br />commented the funding requirements would decrease as the <br />recommended changes resulted in an overall later commencement <br />date for retirement, thereby decreasing current costs. <br />vi. Patrick Donlan reviewed the withdrawal rates. Patrick <br />recommended changing to an 8.00% assumption if the member had <br />less than six years of service and 7.50% if the member had over six <br />years of service. The aggregate effect is a decrease in the City's <br />contribution requirement. <br />vii. The Board discussed the recommended assumption changes. <br />Patrick commented he would recommend the Board to adopt the <br />combination and stay with the current investment return assumption <br />of 7.55%. Patrick commented the Board should consider making a <br />step to decrease the investment return assumption. The Board <br />discussed the historical Plan returns and reducing the investment <br />return assumption. Patrick commented the Board could make a <br />motion to adopt all the assumption changes and decrease the <br />investment return assumption so that funding requirements stayed <br />neutral. <br />viii. Carol Conroy commented it made sense to reduce the investment <br />return as long as there was not a huge financial burden to the City. <br />The Board approved all recommended changes as outlined in the May 10, 2021 experience <br />study and reduce the investment return assumption such that the overall cost impact to <br />the City was neutral and then reduce the investment return assumption by 0.50% over the <br />3 <br />