AOFF Consulting Austin Hunt / Natalie Joseph / Jianzhen Wang / - PowerPoint PPT Presentation

AOFF Consulting Austin Hunt / Natalie Joseph / Jianzhen Wang / Jiahui Zhou

Introduction

Actuarial Funding Valuation

Recommendation for Active Retirement Rates Age Current New Age Current New 55 5% 5% 64 40% 30% 56 5% 5% 65 100% 30% 57 5% 5% 66 100% 30% 58 5% 5% 67 100% 30% 59 5% 10% 68 100% 30% 60 10% 20% 69 100% 30% 61 10% 25% 70 100% 65% 62 20% 30% 71 100% 100% 63 30% 30%

Assumptions Review

Active Retirement Rates Age Rates 55 5% 56 5% 57 5% 58 5% 59 5% 60 10% 61 10% 62 20% 63 30% 64 40% 65 100%

Active Retirement Rates Age Rates Mr. Switch , born in 2000 55 5% Age 60 in 2060 … … 60 10% … … Retire in 2060 – 2061: 10%

Active Retirement Rates # (Retire at Age 60) ← EVENTS RATE = DECREMENTS # (Age 60) ← TRIALS EXPOSURE YEAR 2012 YEAR 2013 YEAR 2014 YEAR 2015 YEAR 2016 12 14 6 7 8 DECREMENTS 51 72 54 46 44 EXPOSURE

Active Retirement Rates # (Retire at Age 60) ← EVENTS RATE = DECREMENTS # (Age 60) ← TRIALS EXPOSURE YEAR 2012 YEAR 2013 YEAR 2014 YEAR 2015 YEAR 2016 12 14 6 7 8 DECREMENTS 51 72 54 46 44 EXPOSURE 47 267 # = 17.60%

Active Retirement Rates Based on 2012-17 Valuation Data 100% 90% 80% Active Retirement Rates 70% 60% 50% 17.60% 40% 30% 20% 10% 0% 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 Age Actual Rates Based on Valuation Data

Active Retirement Rates Sample Population ESTIMATE Proportion Proportion 95% Age Rates CONFIDENCE INTERVAL 60 10% N = 267 P = 10% 0% 3% 5% 8% 10% 13% 15% 18% 20% 23% 25%

Active Retirement Rates with 95% Confidence Interval Around Current Assumption 100% 90% 80% Active Retirement Rates Age 60 CI 70% 60% 50% 10% 40% 30% 20% 10% 0% 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 Age Confidence Interval Current Assumption

Active Retirement Rates with 95% Confidence Interval Around Current Assumption 100% 90% 80% Active Retirement Rates 70% 60% 50% 40% 30% 20% 10% 0% 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 Age Actual in CI Actual out of CI Current Assumption

New Assumptions

Active Retirement Rates 100% 90% 80% Active Retirement Rates 70% 60% 50% 40% 30% 20% 10% 0% 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 Age Actual New Assumption Current Assumption

Active Retirement Rates 100% 90% 80% Active Retirement Rates 70% 60% 50% 40% 30% 20% 10% 0% 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 Age Actual New Assumption Current Assumption

Terminated Vested Retirement Rates 100% 90% Terminated Vested Retirement Rates 80% 70% 60% 50% 40% 30% 20% 10% 0% 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 Age New Assumption Current Assumption Actual

Active Termination Rates 40% 35% Active Termination Rates 30% 25% 20% 15% 10% 5% 0% 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 Age New Assumption Current Assumption Actual

Active Termination Rates 40% 35% Active Termination Rates 30% 25% 20% 15% 10% 5% 0% 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 Age New Assumption Current Assumption Actual

Active Termination Rates 40% 35% Active Termination Rates 30% 25% 20% 15% 10% 5% 0% 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 Age New Assumption Current Assumption Actual

Liability

Types of Participants RETIRED ACTIVE TERMINATED • Commenced • Increase future • Vested Benefit liability • Not vested

Application of Rates ACTIVE RETIREMENT RATES Active Retire Terminated ACTIVE TERMINATION TERMINATION VESTED RATES RETIREMENT RATES

Methodology Retirement Retirement Date Benefit Liability Mortality Discounting

Change in Liability $135 $132 M $130 $7M $125 M Liability of Affected Groups $125 $120 (in millions) $115 $110 $105 $100 Current New

Conclusion

Thank You

� � Appendix I CONFIDENCE INTERVAL ( P − Z P 1 − P , P + Z P 1 − P ) N N

Appendix II Plan Provisions § Annuity = $800 × Years of Service § Retirement Age: normal 65, early 55 § Vesting: 100% after 5 years of service Assumptions § Pre-retirement rates § Investment return: 7.5% § Mortality: age 80

Appendix III Present Value of Pension Payments for One Participant: ' | ∙ v2017 − t $800 & yx & an where i: investment return t: retirement year x: age at t y x : average years of service for age x group

Appendix IV Avg yrs Assumption Active in Still active Act-ret Age Liability of service rates '18 '18 '18 21.20 55 5% 44 42 2 $384,199 17.75 56 5% 41 39 2 $296,320 21.98 57 5% 33 32 2 $293,920 21.14 58 5% 38 36 2 $317,287 23.77 59 5% 48 46 2 $446,273 22.75 60 5% 47 44 2 $401,694 21.85 61 5% 34 32 2 $276,906 24.58 62 20% 24 19 5 $843,328 23.06 63 20% 21 17 4 $673,370 25.94 64 20% 14 12 3 $508,162 26.55 65 100% 4 0 4 $697,684