Laserfiche WebLink
<br />Ms. Carr asked to verify if the City was currently on a 30-year amortization, which was <br />confirmed. <br /> <br />2) If City Council and board’s desire to return to and stay closer to fully funded status by <br />adjusting assumptions, what would be the recommended assumptions to consider and <br />what would be the sensitivity to such changes. <br /> <br />Mr. Siepman said that assumptions were a tool to determine the obligations to the <br />plan. The real obligations to the plan would be what were the pension benefits that <br />the existing members get and for how long. What would the benefits be for the <br />currently active members when they retire and how long will they receive them. The <br />real obligations for the pension benefits are for as long as they go out. The goal would <br />be to see what the obligations are now so they can be funded now and not a pay as <br />you go. Basically the plan should be funding for a member’s retirement while that <br />member was still working. Mr. Siepman said the assumptions need to be realistic. He <br />said one end of the spectrum would be a conservative assumption leading to higher <br />costs and liabilities. The other end of the spectrum would be aggressive assumptions, <br />which would be harder to achieve. Mr. Siepman said an actuary can make a plan look <br />better funded by adjusting assumptions. The concept would be to get assumptions <br />that are realistic, not too aggressive or too conservative. The funded percentage, the <br />funded status and the cost would be an outgrowth of a choice of good assumptions. <br /> <br />Ms. Carr stated that if a Councilmember would ask where the City was; it would be Mr. <br />Siepman’s estimate based on his assumptions. He agreed although hesitant with the <br />word estimate. <br /> <br />Mr. Crow asked if the 6½% and the 30 year amortization were relatively standard <br />numbers for plans. Mr. Siepman stated not necessarily and but would be answered <br />with the next question. <br /> <br />3) What are the funding levels of other communities in the area and should the City <br />consider changing the actuarial assumption from 6½%. <br /> <br />Mr. Siepman stated the State of Missouri requires information to be provided for all <br />plans and used information from 2011, as listed below: <br /> <br /> Plan Funding % of Cities <br /> 100% 8% <br /> 90 – 99% 14% <br /> 80 – 89% 28% <br /> 70 – 79% 21% <br /> 60 – 69% 12% <br /> Less to 60% 17% <br /> <br />Mr. Siepman noted that the City’s non-uniform plan was at 77¼% funded, putting it in <br />the midrange category. He stated that much of what was being dealt with now was <br />the result of the market downturn in 2008. <br /> <br /> <br /> <br />2 <br /> <br />