HomeMy WebLinkAboutIR 24-1799 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 24-1799
To the Mayor and Members of the City Council February 6, 2024
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*a SUBJECT: FORT WORTH EMPLOYEE RETIREMENT FUND - ACTUARIAL
rrn IMPACT OF PROPOSED ASSUMPTIONS
The purpose of this informal report is a follow up to the letter emailed November 17, 2023 regarding the
Actuarial Impact of Proposed Assumptions. The letter outlined proposed changes in the actuarial assumptions
to be used in connection with the December 31, 2023, actuarial valuation of the Fort Worth Employee
Retirement Fund (Fund). Actuarial assumptions are projections of future events that affect the cost and
funding conditions of a pension plan. Gabriel Roeder Smith & Company (GRS) performed an experience
investigation for the four-year period ending December 31, 2022 on behalf of the Fund. As a result of this
study, GRS recommended several changes to the actuarial assumptions that were approved by the Fund's
Trustees at the December 20, 2023, Board meeting noted below. An actuarial assumption that is not shown,
then the original assumption remains unchanged.
Employees' Retirement Fund of the City of Fort Worth
Proposed Assumptions for the December 31,2023,Actuarial Valuation
ASSUMPTION DECEMBER 31,2022 ASSUMPTIONS DECEMBER 31,2023 PROPOSED
Administrative Expenses $6.6 million in the year beginning December This amount is reviewed annually based on
31,2022,adjusted annually as appropriate input from FWERF staff.
based on inflation and experience
Salary Scale(average General Employees:3.8% General Employees:4.2%
rates for employees with Police: 5.0% Police: 5.0%
5+years of service) Fire:4.2% Fire:4.2%
Overtime,Other Pay,and General Employees:3.50%for O/T pay, General Employees:No Change
Final Pay Adjustments 0.00%for Final Pay Police Officers: 7.5%for O/T Pay,2.00%
Police Officers: 7.00%for O/T Pay,2.00%for for Final Pay
Final Pay Firefighters:25.00%for Unscheduled O/T
Firefighters: 18.00%for Unscheduled O/T Pay,6.00%for Final Pay
Pay,6.00%for Final Pa
Sick Leave Loads General Employees:3.75% Remove current loads,and value sick leave
Police Officers:2.00% service conversions explicitly for each
Firefighters:2.50% member going forward.
Mortality Applicable Pub-2010 mortality table for pre- No change to base mortality tables.
retirement,disabled annuitants,and healthy Mortality improvement rates updated to use
annuitants for general employees and public the ultimate rates in the MP-2020 tables.
safety.Generational mortality improvements
projected from the year 2010 using ultimate
mortality improvement rates in the MP tables.
Duty Disability General Employees:0% General Employees: 10%
Police Officers:40% Police Officers: 70%
Firefighters: 15% Firefighters:No Change
Withdrawal Separate tables for the three employee groups; Updated tables for all three employee
general employee tables are age-based and groups;all three employee group tables are
sex-distinct,in a five-year select and ultimate now unisex and service based.
framework;the public safety tables are unisex
and service-based
Retirement from Active Unreduced: Separate tables for all employee Updated tables for all three employee
Employment groups based on the number of years member groups based on recent experience.No
has been eligible for Unreduced Retirement change for reduced retirement for General
Reduced:A table of rates from 50 to 64 for Employees.
General Employees;no reduced retirement
assumed for public safety
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 24-1799
To the Mayor and Members of the City Council February 6, 2024
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*a SUBJECT: FORT WORTH EMPLOYEE RETIREMENT FUND - ACTUARIAL
rrn IMPACT OF PROPOSED ASSUMPTIONS
Assumptions with No Change
The following assumptions remained the same: Interest Rate, Inflation, Payroll Growth, Duty Death,
Disability, DROP Participation, Retirement from Inactive Status, Percent Married, Spousal Age Difference,
Ad-Hoc COLA,Actuarial Cost Method, and Actuarial Asset Method. Details of these assumptions are
outlined in the November 17, 2023 letter.
Estimated Fiscal Impact of Proposed Assumptions
The following results are based on the valuation as of December 31, 2022. The new assumptions will first be
effective for the December 31, 2023,valuation.
Assumptions Current Assumptions Recommended Assumptions
Total Normal Cost Rate 15.86% 15.56%
UAAL millions $2.257.3 $2,267.1
Funded Ratio 54.8% 54.7%
30-Year ADEC1 31.59% 31.22%
Funding Period2 36 years 35 years
LBased on statutory contribution rates and zero liahility for future Ad Hoc and Variahle COLAs
2Incorporating risk-sharing contributions and payment of Ad Hoc COLAs
For any questions on this report, please contact Linda Webb, Executive Director, Fort Worth Employee
Retirement Fund (817) 632-8909, or Dianna Giordano, Human Resources Director, at (817) 392-7783, as both
are available to answer any questions.
David Cooke
City Manager
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS