Comprehensive Annual Financial Report - Minnesota State ...

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Actuary's Certification Letter 54 For the PEPFF, the following changes were recognized: • The Minneapolis Police and Firefighter’s Relief Associations were merged into the Police & Fire Plan on December 30, 2011. The Virginia Fire and Fairmont Police Relief Associations were merged into the Police & Fire Plan on June 29, 2012. Unfunded liabilities will be paid by Minneapolis and Virginia through future annual amortization payments. • Using the methodology outlined in MN statutes, the amortization period was extended by 1 year. For the PECF, the following changes were recognized: • Mortality tables were changed to RP-2000 tables. • The salary scale rates were adjusted to more closely reflect actual experience. • The payroll growth assumption was changed from 4.50% to 3.75%. • The form of benefit assumption for active married members was adjusted. • Retirement, termination and disability rates were adjusted to more closely reflect actual experience. Select termination rates of 25%, 20% and 15% were adopted for the first three years of employment. • Using the methodology outlined in MN statutes, the amortization period was extended by 8 years. In the aggregate, the basic financial and membership data provided to us as of June 30, 2012 by the association office appears reasonable in comparison to last year, and we have relied upon the data as submitted in performing the actuarial valuation and preparing trend data schedules. The actuarial cost method and the assumptions related to asset valuation, investment return, earnings progression and active member payroll growth are specified by state statute. All other assumptions are based on actual experience with changes recommended by the actuary, adopted by the PERA Board, and approved by the Legislative Commission on Pensions and Retirement (LCPR). Public Employees Retirement Association of Minnesota (Continued) To the best of our knowledge and belief, the valuations were performed in accordance with generally accepted actuarial principles and procedures, current GASB pronouncements, the requirements of Minnesota Statutes, Section 356.215, and the requirements of the Standards for Actuarial Work established by the LCPR. In our opinion, the results of the reports reflect the actuarial position of the plans on an ongoing basis under the prescribed assumptions, methods, and procedures. The undersigned credentialed actuaries meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion contained in this report. In addition, Mr. Murphy meets the requirements of “approved actuary” under Minnesota Statutes, Section 356.215, Subdivision 1, Paragraph (c). The signing actuaries are independent of the plan sponsor. We are not aware of any relationship that would impair the objectivity of our work. Respectfully submitted, Brian B. Murphy, FSA, EA, MAAA Bonita J. Wurst, ASA, EA, MAAA BBM/BJW:sc
General Employees Retirement Fund Actuarial Cost Method Entry Age Normal, with costs allocated as a level percentage of payroll. Actuarial gains (losses) reduce (increase) the unfunded actuarial accrued liability. (1960)* Actuarial Assumptions 1. Mortality a. Active RP 2000 non-annuitant generational mortality table, white collar adjustment, set forward 5 years for males and set back 3 years for females. (2010) b. Retired RP 2000 annuitant generational mortality table, white collar adjustment, set back 2 years for females. (2010) c. Disabled RP 2000 disabled retiree mortal ity table set back 4 years for males and set forward 7 years for females. (2010) 2. Retirement Age Age related table from age 55 to 70. (2010) 3. Disability Graded rates.(2000) 4. Termination Select & Ultimate Table with select rates applicable to the first 3 years of employment. (2002) 5. Allowance for Prior year expenses expressed Expenses as a percentage of prior year payroll. (1989) 6. Earnings Progression Service based table. (2012) 7. Active Member 3.75 per year. (2011) Payroll Growth 8. Investment Return 8.0% compounded annually FY 2013-2017, 8.5% thereafter (2012) 9 Retiree COLA 1% per year until the fund is 90% funded, then 2.5% per year. (2010) Asset Valuation Method Fair market value smoothed over 5 years. (2008) * Year in parenthesis is the date of adoption. Actuarial Section Summary of Actuarial Assumptions and Methods Public Employees Police & Fire Fund Actuarial Cost Method Entry Age Normal, with costs allocated as a level percentage of payroll. Actuarial gains (losses) reduce (increase) the unfunded actuarial accrued liability. (1960) Actuarial Assumptions 1. Mortality a. Active RP 2000 non-annuitant generational mortality table, white collar adjustment, set back 2 years. (2011) b. Retired RP 2000 annuitant generational mortality, white collar adjustment. (2011) c. Disabled RP 2000 healthy annuitant mortality table, white collar adjustment, set forward 8 years. (2011) 2. Retirement Age Age related table from age 50 to 70. (2011) 3. Disability Graded rates. (2003) 4. Termination Select & Ultimate Table with select rates applicable to the first 3 years of employment. (2011) 5. Allowance for Prior year expenses expressed Expenses as a percentage of prior year payroll. (1989) 6. Earnings Progression Service based table. (2011) 7. Active Member 3.75% per year. (2011) Payroll Growth 8. Investment Return 8.0% compounded annually FY 2013-2017, 8.5% thereafter (2012) 9. Retiree COLA CPI up tp 1.5% until the fund is 90% funded, then CPI up to 2.5% per year. (2010) Asset Valuation Method Fair market value smoothed over 5 years. (2008) Public Employees Retirement Association of Minnesota 55
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Pink Lady Slipper, Minnesota State
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Board of Trustees Don Rambow — Bo
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Achievement Awards President's Repo
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Achievement Awards GFOA The Governm
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December 27, 2012 Board of Trustees
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Economic Conditions and Outlook Alt
Page 13 and 14: National Recognition PERA has an ou
Page 15 and 16: Ross E. Arneson General Membership
Page 17 and 18: The Public Employees Police and Fir
Page 19 and 20: Pre-Age 62 Increase — This pensio
Page 21 and 22: Legislative Auditor’s Report Mana
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Page 25 and 26: Financial Highlights å PERA’s Ne
Page 27 and 28: made in 2010 and contribution rate
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Page 31 and 32: Statewide Public Employees Agency F
Page 33 and 34: Financial Section Minneapolis Emplo
Page 35 and 36: facilities. Elected officials and a
Page 37 and 38: are recognized as revenues when due
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Page 45 and 46: Employer pension contributions for
Page 47 and 48: Schedule of Employer Contributions
Page 49 and 50: Source of Expenses Schedule of Inve
Page 51 and 52: Investment Report Investment Result
Page 53 and 54: Investment Report MINNESOTA STATE B
Page 55 and 56: 25% 20% 15% 10% 5% 0% -5% -10% -15%
Page 57 and 58: Investment Summary at Fair Value Fo
Page 59 and 60: SBI & Consultants: State Board of I
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Page 69 and 70: General Employees Retirement Fund A
Page 71 and 72: Public Employees Correctional Fund
Page 75 and 76: Public Employees Correctional Fund
Page 77 and 78: Introduction Schedule of Changes in
Page 79 and 80: Introduction December 14, 2012 Publ
Page 81 and 82: Statistical Section 2007 2008 2009
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Page 93 and 94: General Employees Retirement Fund S
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Page 105 and 106: PIERZ PIKE PIKE BAY PIKE CREEK PILL
Page 107 and 108: BROOKLYN CENTER ISD-286 BROOTEN ISD
Page 109 and 110: VILLARD ISD-615 VIRGINIA ISD-706 WA
Page 111 and 112: CROW WING COUNTY SWCD CURRIE DUVRAY
Page 113 and 114: 2012 Comprehensive Financial Report
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