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Home My WebLink AboutCity of Pasco Old Firemens GASB 68 Report 2016 CORRECTEDCity of Pasco GASB 68 Firefighters' Pension Fund Valuation Report as of January 1, 2016 May 9, 2016 ealthcare Ac t u a r i e s 16519 107th Place NE Bothell, Washington 98011 t: (425) 939-7444 f: (425) 939-0089 www.HealthcareActuaries.com ealtlleare ctu aT es Using Technology to Provide Cast -Effective Consulting May 9, 2016 Mr. Ron Musson City of Pasco 525 North Third Avenue Pasco, Washington 99301 16519 107th Place NE I Bothell, VILA 98011 t (425) 939-7444 1 f (425) 939-0089 w www.HealtheareActuaries.com Re: GASB 68 Firefighters' Pension Fund Valuation Report as of January 1, 2016 Dear Ron: At your request, we completed an actuarial valuation of the Firefighters' Pension Fund (FPF) as of December 31, 2015. This valuation is based on input from the City of Pasco, as well as our understanding of GASB Statement No. 68 "Accounting and Financial Reporting for Pensions" (GASB 68). As we understand it, the City adopted GASB 68 for the fiscal year ending December 31, 2015. In addition, the City elected to perform full valuations every two years and projected valuations in between the full valuations. This valuation represents a full valuation. We greatly appreciate your business. If you have any questions, please feel free to call us at (425) 939- 7444. Best Regards, V &i;4D Roger T. Burton, FSA, FCA, MAAA Health & Welfare Benefits Consulting. Actuarial Valuations. Strategic Benefits Planning. Flexible Benefits Executive Summary Overview Accounting Summary Accounting Information Statement of Fiduciary Net Position for the Fiscal Year Ending December 31, 2015 Statement of Changes in Fiduciary Net Position for the Fiscal Year Ended December 31, 2015 Changes in the Net Pension Liability Calculation of Expense Under GASB 68 Projection of Fiduciary Net Position FPF Cash -Flow Projections Projected Cash -Flow Chart Schedule of Changes in the City's Net Pension Liability and Related Ratios Schedule of Contributions Schedule of Investment Returns Draft Notes to the Financial Statements Basis of Valuation Substantive Plan Participant Summary Actuarial Assumptions Page i Contents 1 3 4 5 6 7 8 9 10 11 12 13 14 18 20 21 Executive Summary Overview Purpose of the Report Healthcare Actuaries prepared this report to meet employer financial accounting requirements under GASB Statements No. 68 "Accounting and Financial Reporting for Pensions" (GASB 68), issued in June 2012. This report includes information with respect to the obligation to provide ongoing pension benefits for retired firefighters for the fiscal year ending December 31, 2015. Changes Since the Prior Valuation The prior actuarial valuation was completed for fiscal year ending December 31, 2010. Due to the length of time between valuations, no prior valuation results or assumptions have been included in this report. Actuarial Certification Our determinations reflect the provisions and methods prescribed by GASB 68. In preparing this report, we relied on employee census, plan design, and plan assets provided directly or indirectly by the plan sponsor. We based the results in this report on this information, along with the actuarial assumptions and methods that we used. The plan sponsor, with the concurrence of its auditors, selected or agreed with the actuarial assumptions used. In our opinion, the assumptions used represent reasonable expectations of anticipated plan experience. We reviewed the census information for reasonableness, but we did not audit it. Actuarial computations under GASB 68 fulfill plan and employer accounting, and financial reporting requirements. The calculations are on a basis consistent with our understanding of GASB 68. Determinations for purposes other than meeting employer financial accounting requirements may be significantly different from the results in our report. Accordingly, additional determinations may be necessary for other purposes, such as judging benefit security at termination or the adequacy of funding for an on-going plan. The Plan Sponsor has the final decision regarding the appropriateness of the assumptions. Healthcare Actuaries' work is prepared solely for the internal business use of the City of Pasco. To the extent that Healthcare Actuaries' work is not subject to disclosure under applicable public record laws, our work may not be provided to third parties without Healthcare Actuaries' prior written consent. No third -party recipient of Healthcare Actuaries' work product should rely on Healthcare Actuaries' work product. Any third -party recipient should engage qualified professionals for advice appropriate to their own needs. Page 1 Overview There is no relationship between Healthcare Actuaries, its owner, subcontractors, or staff, and the City of Pasco beyond the contractual services that we perform for the City of Pasco. On the basis of the foregoing, we hereby certify that, to the best of our knowledge and belief, the report is complete and accurate and we prepared it in accordance with generally recognized and accepted actuarial principles and practices which are consistent with the applicable "Actuarial Standards of Practice" and "Actuarial Compliance Guidelines" as promulgated by the American Academy of Actuaries. The undersigneds are members of the American Academy of Actuaries and meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion contained herein. Nadine J Pileggi, ASA, MAAA Associate of the Society of Actuaries (ASA) Member of the American Academy of Actuaries (MAAA) Roger T. Burton, FSA, FCA, MAAA Fellow of the Society of Actuaries (FSA) Member of the American Academy of Actuaries (MAAA) Fellow of the Conference of Consulting Actuaries (FCA) Page 2 May 9, 2016 Date May 9, 2016 Date A summary of the key valuation results follows. Accounting Summary For Fiscal Year Ending Funded Status 12/31/2015 Total Pension Liability $ 1,185,733 Fiduciary Net Position 2,240,970 Net Pension Liability $ (1,055,237) Plan fiduciary net position as a percentage of the total pension liability 188.99% Covered payroll n/a UAAL as a percentage of covered payroll n/a 2015 Expense $ (80,481) 2016 Expense $ (39,665) 2016 Statutorially Determined Contribution $ 55,868 (expected State Fire Insurance Premiums to be recevied by the City) Page 3 Accounting Information Liabilities Payables: Investment management fees $ Due to broker for investments purchased Collateral payable for securities lending Other Total Liabilities $ Net Position Restricted for Pensions $ 2,240,970 Page 4 Statement of Fiduciary Net Position Fiscal Year Ending December 31, 2015 Assets Cash and deposits $ 145,233 Securities lending cash collateral - Total cash 145,233 Receivables: Contributions - Due from broker for investments sold Investment income (interest on investments) - Other 40,301 Total receivables 40,301 Investments: Domestic fixed income securities - Domestic equities 2,055,435 International equities - Real estate - Total Investments 2,055,435 Total Assets $ 2,240,970 Liabilities Payables: Investment management fees $ Due to broker for investments purchased Collateral payable for securities lending Other Total Liabilities $ Net Position Restricted for Pensions $ 2,240,970 Page 4 Statement of Changes in Fiduciary Net Position for the Fiscal Year Ended December 31, 2015 2015 Additions Contributions: Employer $ 54,506 Member - Total contributions 54,506 Investment income: Net appreciation in fair value of investments ($195,377) Interest and dividends 175,688 Less investment expense, other than from securities lending - Net income from investing, other than from securities lending (19,689) Securities lending income Less securities lending expense Net income from securities lending Net investment income (19,689) Other - Total additions $ 34,817 Deductions Benefit payments, including refund of member contributions $ 116,770 Administrative expense 3,398 Other - Total deductions $ 120,168 Net increase in net position $ (85,351) Net Position Restricted for Pensions Beginning of year $ 2,326,321 End of year $ 2,240,970 Page 5 Changes in the Net Pension Liability The funded status of the Plan as of fiscal year-end as well as other required disclosure information follows. Balances at January 1, 2015 Changes for the year: Service Cost Interest Differences between expected and actual experience Change in assumptions Contributions — employer Contributions — employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Net changes Balances at December 31, 2015 Increase (Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (b) (a) — (b) $ 1,220,026 $ 2,326,321 $ (1,106,295) 82,477 82,477 (0) (0) 54,506 (54,506) (19,689) 19,689 (116,770) (116,770) - (3,398) 3,398 $ (34,293) $ (85,351) $ 51,058 $ 1,185,733 $ 2,240,970 $ (1,055,237) Page 6 Calculation of Expense Under GASB 68 Expense 37,209 2016 2015 Service Cost $ - $ - Interest (on liabilities) 37,209 80,323 82,477 Interest (on assets) (157,196) (162,958) Differences between expected and actual experience* (0) Differences between expected and actual earnings** 37,209 Total Expense $ (39,665) $ (80,481) *Amounts to include in expense are calcuated as follows: 2016 2015 Expected Liabilities $ 1,185,733 n/a Actual Liabilities 1,185,733 n/a Difference $ 0 n/a *As there are no active members, all differences between expected and actual demographic and economic experience are recognized immediately. GASB 68 was adopted for the 2015 fiscal year, with liabilities measured as of December 31, 2015; therefore there are no differences in liability experience to be included for FYE 2016. **Amounts to include in expense are calculated as follows: 2016 2015 Expected Earnings (prior year) $ 162,958 $ - Actual Earnings (prior year, net of administrative and investment expenses) (23,087) Difference 186,045 Straight-line amortization over 5 years $ 37,209 $ Differences between expected and actual experience Changes of assumptions Net difference between projected and actual earnings on pension plan investments Total 12/31/2015 12/31/2015 Deferred Outflows Deferred Inflows of Resources of Resources $ $ 0 186,045 - $ 186,045 $ 0 Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year ended December 31: 2016 $ 37,209 2017 37,209 2018 37,209 2019 37,209 2020 37,209 Page 7 Projection of Fiduciary Net Position Page 8 Projected Beginning Projected Projected Projected Fiduciary Net Projected Total Benefit Administrative Investment Projected Ending Calendar Position Contributions Payments Expense Earnings Fiduciary Net Position Year (a) (b) (c) (d) (e) (f) _ (a)+(b)-(c)-(d)+(e) 2016 $ 2,240,970 $ 55,868 $ 108,852 $ 3,483 $ 157,104 $ 2,341,608 2017 2,341,608 57,265 107,949 3,570 164,328 2,451,682 2018 2,451,682 58,697 106,901 3,659 172,228 2,572,047 2019 2,572,047 60,164 105,737 3,751 180,864 2,703,587 2020 2,703,587 61,668 104,478 3,845 190,298 2,847,232 2021 2,847,232 63,210 103,148 3,941 200,596 3,003,949 2022 3,003,949 64,790 101,764 4,039 211,824 3,174,760 2023 3,174,760 66,410 100,334 4,140 224,057 3,360,753 2024 3,360,753 68,070 98,862 4,244 237,370 3,563,087 2025 3,563,087 69,772 97,354 4,350 251,846 3,783,001 2026 3,783,001 71,516 95,807 4,458 267,572 4,021,824 2027 4,021,824 73,304 94,208 4,570 284,645 4,280,995 2028 4,280,995 75,137 92,544 4,684 303,166 4,562,070 2029 4,562,070 77,015 90,799 4,801 323,247 4,866,732 2030 4,866,732 78,941 88,956 4,921 345,008 5,196,803 2031 5,196,803 80,914 86,995 5,044 368,578 5,554,256 2032 5,554,256 82,937 84,900 5,170 394,099 5,941,222 2033 5,941,222 85,010 82,659 5,300 421,722 6,359,995 2034 6,359,995 87,136 80,263 5,432 451,611 6,813,047 2035 6,813,047 89,314 77,705 5,568 483,941 7,303,028 2036 7,303,028 - 74,987 5,707 515,650 7,737,985 2037 7,737,985 72,111 5,850 546,629 8,206,653 2038 8,206,653 69,091 5,996 580,007 8,711,573 2039 8,711,573 65,930 6,146 615,963 9,255,460 2040 9,255,460 62,642 6,300 654,690 9,841,208 2041 9,841,208 59,242 6,457 696,393 10,471,902 2042 10,471,902 55,754 6,619 741,291 11,150,820 2043 11,150,820 52,201 6,784 789,614 11,881,450 2044 11,881,450 48,603 6,954 841,611 12,667,504 2045 12,667,504 44,981 7,128 897,543 13,512,938 2046 13,512,938 41,345 7,306 957,691 14,421,979 2047 14,421,979 37,720 7,488 1,022,356 15,399,126 2048 15,399,126 34,138 7,676 1,091,854 16,449,166 2049 16,449,166 30,629 7,867 1,166,524 17,577,194 2050 17,577,194 27,232 8,064 1,246,728 18,788,625 2051 18,788,625 23,979 8,266 1,332,848 20,089,228 2052 20,089,228 20,906 8,472 1,425,292 21,485,142 2053 21,485,142 18,035 8,684 1,524,497 22,982,919 2054 22,982,919 15,364 8,901 1,630,926 24,589,580 2055 24,589,580 12,909 9,124 1,745,078 26,312,625 2056 26,312,625 10,677 9,352 1,867,485 28,160,082 2057 28,160,082 8,684 9,586 1,998,717 30,140,529 2058 30,140,529 6,933 9,825 2,139,383 32,263,153 2059 32,263,153 5,424 10,071 2,290,134 34,537,792 2060 34,537,792 4,147 10,323 2,451,670 36,974,992 2061 36,974,992 3,095 10,581 2,624,739 39,586,055 2062 39,586,055 2,252 10,845 2,810,145 42,383,102 2063 42,383,102 1,594 11,117 3,008,749 45,379,141 2064 $ 45,379,141 $ 1,093 $ 11,394 $ 3,221,476 $ 48,588,129 Page 8 FPF Cash -Flow Projections The following shows the FPF cash flow projections for the next twenty years. Projected Pension Calendar Year Payments 2016 $ 108,852 2017 $ 107,949 2018 $ 106,901 2019 $ 105,737 2020 $ 104,478 2021 $ 103,148 2022 $ 101,764 2023 $ 100,334 2024 $ 98,862 2025 $ 97,354 2026 $ 95,807 2027 $ 94,208 2028 $ 92,544 2029 $ 90,799 2030 $ 88,956 2031 $ 86,995 2032 $ 84,900 2033 $ 82,659 2034 $ 80,263 2035 $ 77,705 Page 9 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 Projected Pension Payments 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 ■ Projected Pension Payments Page 10 Schedule of Changes in the City's Net Pension Liability and Related Ratios GASB 68 requires a disclosure of the changes in Net Pension Liability for the last 10 fiscal years, or as many years as are available Total Pension Liability 2015 Service Cost $ - Interest 82,477 Changes of benefit terms - Differences between expected and actual experience Changes of assumptions Benefit payments, included refunds of employee contributions (116,770) Net change in total pension liability (34,293) Total pension liability — beginning 1,220,026 Total pension liability — ending (a) $ 1,185,733 Plan Fiduciary Net Position Contributions — employer $ 54,506 Contributions — employee - Net investment income (19,689) Benefit payments, including refunds of employee contributions (116,770) Administrative expense (3,398) Other Net change in plan fiduciary net position (85,351) Plan fiduciary net position — beginning 2,326,321 Plan fiduciary net position — ending (b) 2,240,970 City's net pension liability — ending (a) — (b) $ (1,055,237) Plan fiduciary net position as a percentage of the total pension liability 188.99% Covered -employee payroll $ - City's net pension liability as a percentage of covered -employee payroll n/a Notes to schedule: The following assumptions were adopted as of 1/1 /2015: discount rate 7.1%, salary increases 3.00%, CPI 2.50%, mortality tables updated to RP -2014 with Scale MP -2014 projections. Prior years are not shown due to the length of time between actuarial valuations. Page 11 Schedule of Contributions GASB 68 requires a schedule of Contributions for the last 10 fiscal years, or as many years as are available. Statutorially Determined Contribution Less: Contributions Made Contribution deficiency (excess) Covered -employee payroll Contributions as a percentage of covered -employee payroll Notes to Schedule: Contribution came from State Fire Insurance Premiums. Page 12 2015 54,506 54,506 n/a Schedule of Investment Returns Annual money -weighted rate of return, net of investment expense 2015 -0.86% Ten-year schedule required. However, until a full ten years are available, information is presented for those years where information is available. Page 13 Draft Notes to the Financial Statements A draft of the required notes to the City's financial statements, based on the requirements of GASB 68 and our understanding of the City's Firefighters Pension Plan, follows. Notes to the Financial Statements for the Year Ended December 31, 2015 Summary of Significant Accounting Policies Method used to value investments. Investments are reported at fair value. Plan Description Plan Administration: The Firefighters" Pension Fund is administered by the City of Pasco. The plan is a single -employer defined benefit pension plan that provides pensions for firefighters that were hired prior to 1970. The municipal firefighters' pension board consists of the following five members, ex officio, the mayor, or in a city of the first class, the mayor or a designated representative who shall be an elected official of the city, who shall be chairperson of the board, the city comptroller or clerk, the chairperson of finance of the city council, or if there is no chairperson of finance, the city treasurer, and in addition, two regularly employed or retired firefighters elected by secret ballot of those employed and retired firefighters who are subject to the jurisdiction of the board. The members to be elected by the firefighters shall be elected annually for a two year term. The two firefighters elected as members shall, in turn, select a third eligible member who shall serve as an alternate in the event of an absence of one of the regularly elected members. In case a vacancy occurs in the membership of the firefighters or retired members, the members shall in the same manner elect a successor to serve the unexpired term. The board may select and appoint a secretary who may, but need not be a member of the board. In case of absence or inability of the chairperson to act, the board may select a chairperson pro tempore who shall during such absence or inability perform the duties and exercise the powers of the chairperson. A majority of the members of the board shall constitute a quorum and have power to transact business. Plan Membership: Plan membership is limited to active members of the Firefighters' Pension Fund (FPF) as of March 1, 1970. On that date, the Washington Law Enforcement Officers' and Firefighters' System (LEOFF) was established. FPF is responsible for paying the pensions of those members retired prior to March 1, 1970 and for providing the "excess benefit", the excess of FPF formula benefits over the LEOFF benefits. Therefore, the plan is closed to new members. At December 31, 2015, FPF membership consisted of the following: Inactive plan members retired prior to March 1, 1970: 0 Inactive plan members retired March 1, 1970 or after: 11 Active Plan Members: 0 Page 14 Draft Notes to the Financial Statements Benefits provided. All benefit terms are in statutes RCW 41.16, 41.18, and 41.26. FPF provides retirement, disability, and death benefits. Each firefighter in service on March 1, 1970 receives the greater of the benefit payable under the Washington Law Enforcement Officers' and Firefighters' Retirement System and the benefits available under the provisions of prior law. Where benefits under the old law exceed those under the new law for any firefighter, the excess benefits are paid from the FPF of the city employing the member on March 1, 1970. All members are retired and drawing benefits. Benefit terms provide for cost -of -living adjustments to each member's retirement benefit. There are two types of increases: escalation by salary in proportion to the current salary of the rank from which the firefighter retired, or an increase proportionate to the increase in the Seattle -area CPI, with the change computed annually. Regardless of the increase (or decrease) in the CPI, the benefits are increased at least 2% each year. The former applies to firefighters who retired from service after 1969, their survivors, and to firefighters who retired for duty disability (but not their survivors) after 1969. The latter applies to all other types of monthly benefits. Contributions. As long as the FPF provides for benefits to covered members, the City will be eligible to receive a share of the State's distribution of the fire insurance premium taxes. The amount the City receives is 25% of all monies received by the State from taxes on fire insurance premiums. Contributions can also come from taxes paid pursuant to the provisions of RCW 41.16.060. This statute require that each municipality levy up to $0.45 (only $0.225 of which can be in excess of the property tax limit pursuant to RCW 84.52.043) per $1,000 of assessed valuation, based on reports by a qualified actuary, to maintain the fund. Page 15 Draft Notes to the Financial Statements Investments The City of Pasco does not have a investment policy for pension fund assets. Rate of Return. For the year ended December 31, 2015, the annual money -weighted rate of return on pension plan investments, net of pension plan investment expense, was -0.86%. The money -weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amount actually invested. City's Net Pension Liability The components of the City's net pension liability at December 31, 2015 are as follows: Total pension liability Less: Plan fiduciary net position City's net pension liability Plan fiduciary net position as a percentage of the total pension liability $ 1,185,733 2,240,970 $ (1,055,237) 188.99% Page 16 Draft Notes to the Financial Statements Actuarial Assumptions: The total pension liability was determined by an actuarial valuation as of December 31, 2015, using the following actuarial assumptions, applied to all periods included in the measurement: Inflation Salary increases Investment rate of return 2.50% 3.00% 7.10% Healhthy life mortality rates were based on the RP -2014 mortality table, total dataset, fully generational projected with Scale MP -2014, set back one year for males and set forward one year for females. Disabled life mortality rates were based ont the RP -2014 mortality table, total dataset, fully generational projected with Scale MP -2014, set back two years for males and females. The long-term expected rate of return on pension plan investments assumption was based on the nature and mix of current and expected pension plan assets over a period of time representative of the expected length of time between the first day of service and date of the last benefit payment. Discount rate. The discount rate used to measure the total pension liability was 7.10%. The projection of cash flows used to determine the discount rate assumed City contributions were equal to the statutorially calculated contribution of state fire insurance premiums for the next 20 years. Based on this assumption, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payment for current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the net pension liability to changes in the discount rate. The net pension liability of the City, calculated using the discount rate of 7.10%, as well as what the City's net pension liability would be if it were calculated using a discount rate that is one -percentage -point lower, 6.10%, or one -percentage point higher, 8.10%, than the current rate, follows: Current Discount City's net pension liablity: 1% Decrease Rate 1% Increase 1,311,795 $ 1,185,733 $ 1,078,484 Page 17 Basis of Valuation Substantive Plan A general summary of the substantive plan used as the basis of the valuation follows. GENERAL INFORMATION Applicable Statutes RCW 41.16, 41.18, 41.26 Benefits Each firefighter in service on March 1, 1970 receives the greater of the benefit payable under LEOFF or FPF. Where benefits under the old law exceed those under the new for any firefighter, the excess benefits are paid from the FPF of the city employing the member on March 1, 1970. Service Retirement Benefit Member Eligibility: age 50 and 25 years of service (RCW 41.18.040) or Age 50 and five years of service (RCW 41.26.090). Amount of benefit: 50% of salary plus an additional 2% for each year of service in excess of 25 years. Maximum benefit of 60% of salary (does not apply for those retiring after July 1, 2006). Survivor Eligibility: spouse or child Amount of benefit: continuation of the firefighter's benefit. (If spouse — same, plus additional 5% of salary per child. If no spouse — 30% of salary for first child, 10% for each additional child. Maximum of 60% of salary). Duty Disability Retirement Benefit Member Eligibility: disabled after six-month waiting period. Amount of benefit: determined the same as Service Retirement Benefit. Recovery: restoration to service. Survivor Monthly pension equal to the amount of the monthly pension such retired firefighter was receiving at the time of his or her death. Non -Duty Disability Retirement Benefit Member Eligibility: disabled after 90 -day waiting period. Amount of benefit: 50% of salary, or service retirement benefit, if greater. Recovery: see Duty Disability Retirement. Limitations: no benefits payable if firefighter employed elsewhere when disabled. Survivor Eligibility: spouse or child Amount of benefit: 33.3% to widow or children only. 45.8% to widow and one child. 47.6% to widow and two children. 50.0% to widow and three children. Page 18 Substantive Plan Duty Death Benefit Eligibility: spouse or child Amount of benefit: If spouse — 50% of salary plus an additional 5% of salary per child; maximum benefit of 60% of salary. If no spouse — 50% of salary to children. Non Duty Death Benefit Eligibility: spouse or child Amount of benefit: provisions the same as Survivor's Benefit under Non -Duty Disability Retirement. Special Provisions Under disability or death benefits, a surviving spouse may elect a lump -sum payment of $5,000 in lieu of future monthly benefits. Vesting Termination after 20 years of service (RCW 41.18.130) or five years of service (RCW 41.26.090). Deferred Benefit Commences: when a firefighter would have had 25 years of service (RCW 41.18.130) or age 50 (RCW 41.26.090). Amount of benefit: 2% of salary for each year of service. Other provisions apply, see statutes. Death while vested prior to commencement of benefits: payment of firefighter's deferred benefit to spouse or child. Postretirement Increase Benefits Payable Under Annual increase proportionate to the increase in the Seattle -area CPI. LEOFF Minimum increase at least 2% each year. Benefits Payable Under FPF Type 1 Escalation by salary in proportion to current salary or rank from which the firefighter retired. Type 2 Annual increase proportionate to the increase in the Seattle -area CPI. Minimum increase at least 2% each year. Applicability Type 1 applies to firefighters who retired from service after 1969, their survivors, and to firefighters who retired for duty disability (but not their survivors) after 1961. Type 2 applies to all other types of monthly benefits Minimum Benefit After April 25, 1973, a minimum benefit of $300 per month to all retired firefighters and their survivors. This minimum is increased by the CPI. Funeral Benefit $500 RCW 41.18.140, no provision under RCW 41.26. Page 19 Participant Summary January 1, 2016 Age and service determined as of the census date. LEOFF Plan 1 Inactive Participants Retirees Covered Age and Widows Spouses Total < 65 1 1 2 65-69 1 1 2 70-74 2 1 3 75-79 3 1 4 80-84 2 0 2 85-89 1 0 1 90+ 1 0 1 Total 11 4 15 Monthly Pension Amounts as of December 31, 2015 Paid by City: Page 20 9,071 Actuarial Assumptions A summary of the actuarial assumptions used for this valuation follows. We considered the reasonableness of each assumption independently based on its own merits, consistent with each other assumption, and the combined impact of all assumptions. Assumption Rates Actuarial Cost Method Entry Age Asset Valuation Method Fair Market Value Measurement Date January 1, 2015 Discount Rate (or We based the long-term expected rate of return on pension plan Investment Return) investments assumption on the nature and mix of current and expected pension plan assets over a period of time representative of the expected length of time between the first day of service and date of the last benefit payment. The rate of 7.10% was selected. Cost of Living 2.50%, based on SSA OASDI 2015 report and City input. Salary Increases (for calculated benefit increases based on rank) 3.00%, based on City input. Healthy Mortality RP -2014 mortality table, total dataset, fully generational with mortality improvement scale MP -2014 set back one year for males and set forward one year for females. Disabled Mortality RP -2014 mortality table, total dataset, fully generational with mortality improvement scale MP -2014 set forward two years for males and females. Turnover n/a Disability n/a Retirement n/a Spouse Age We assumed that wives are three years younger than husbands. Page 21