ATU - Closed Plan IBEW - Closed Plan
Hire date Prior to November 25, 2012 Prior to January 1, 2013
Benefit formula 2 @ 55 2 @ 55
Benefit vesting schedule 5 years service 5 years service
Benefit payments monthly for life monthly for life
Final Average Compensation Period 36 months 36 months
Retirement age 53-63 55-65
Monthly benefits, as a % of eligible compensation 1.742%-2.418% 2.0%-2.418%
Required employee contribution rates 3.00% 4.00%
Required employer contribution rates 35.65% 34.65%
Pre-Retirement Death Benefit Post-Retirement Death Benefit
Disability 1.5% times average monthly final earnings times credited years of service Based on benefit election
50% Joint & Survivor SDTC Contract Employees
Employees Covered – At June 30, 2015 the following employees were covered by the benefit terms for each
Plan:
Inactive employees or beneficiaries currently receiving benefits 909 Inactive employees entitled to but not yet receiving benefits 223
Active employees 591
Contributions – Section 20814(c) of the California Public Employees’ Retirement Law (PERL) requires that
the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. For the period ended June 30, 2014 (the measurement date), the active employee contribution rate is 6.0-6.25% of annual pay, and the average employer’s contribution rate is 34.35% of annual payroll.
For the year ended June 30, 215, the contributions recognized as part of pension expense for the Plan were as follows:
Contributions - employer $ 12,628,190
San Diego Metropolitan Transit System
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2015
Note 12 – Employee Retirement Systems (Continued)
D. SDTC (Continued)
Net Pension Liability
SDTC’s net pension liability is measured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of the Plan is measured as of July 1, 2014, using an annual actuarial valuation as of July 1, 2014.
Actuarial Assumptions – The total pension liabilities in the July 1, 2014 actuarial valuations were
determined using the following actuarial assumptions:
Valuation Date July 1, 2014
Measurement Date July 1, 2014
Actuarial Cost Method Entry Age Normal
Actuarial Assumptions:
Discount Rate 7.50%
Inflation 3.00%
Payroll Growth
Projected Salary Increase 3.00% Investment Rate of Return (1) 7.50% Mortality
COLA Increase - Non-Contract Members 2.00%
1994 Group Annuity Mortality Table, weighting male rates by 50% and female rates by 50% for Clerical & Non-Contract employees
(1) Net of pension plan investment expenses
3.50% - 10.50% for Drivers and Mechanics 3.25% - 12.00% for Non-Contract Members 3.50% - 14.00% for Clerical Members
RP-2000 Combined Healthy Tables set forward one year for females-Drivers & Mechanics.
There were no changes in assumptions, benefit terms or other inputs that affected the measurement of the net pension liability. There were no changes between the measurement date of the net pension liability and the reporting date.
Discount Rate-The discount rate used to measure the Total Pension Liability was 7.50%
We have assumed that the employees will continue to contribute to the Plan at the required rates and the employer will continue the historical and legally required practice of contributing to the Plan based on an actuarially determined contribution, reflecting a payment equal to annual Normal Cost, a portion of the expected Administrative Expenses, and an amount necessary to amortize the remaining Unfunded Actuarial Liability as of July 1, 2012, over a closed 25-year period (23 years remaining as of the July 1, 2014 actuarial valuation), and amounts necessary to amortize the June 30, 2013 and June 30, 2014 gains/losses over closed layered 15-year periods. Future gains and losses will be recognized over separate 15 year closed periods. All amortization payments are level dollar amounts.
San Diego Metropolitan Transit System
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2015
Note 12 – Employee Retirement Systems (Continued)
D. SDTC (Continued)
We have not performed a formal cash flow projection as described under Paragraph 65 of GASB Statement 68. However, Paragraph 67 allows for alternative methods to confirm the sufficiency of the Net Position if the evaluations “can be made with sufficient reliability without a separate projection of cash flows into and out of the pension plan…” In our professional judgment, adherence to the actuarial funding policy described above will result in the pension plan’s projected Fiduciary Net Position being greater than or equal to the benefit payments projected for each future period. Therefore, the long-term expected rate of return on Plan investments was applied to all periods of projected benefit payments to determine the Total Pension Liability. According to Paragraph 30 of GASB Statement 68, the long-term expected rate of return should be determined net of pension plan investment expenses but without reduction for pension plan administrative expenses. The 7.50% investment return assumption used in the Total Pension Liability is net of investment expenses only.
The table below reflects long-term expected real rate of return by asset class. The critical inputs of the asset allocation model are the expected risk, return and correlations of different asset classes. The arithmetic rate of return is net of administrative expenses.
Asset Class Strategic Allocation Real Return Years 1-10 (a) Real Return Years 11+ (a)
United States Equity 20.00% 4.55% 4.55%
Global Equity 20.00 6.10 6.10 Fixed Income 25.00 1.00 1.00 Absolute Return 15.00 4.00 4.00 Real Return 20.00 3.15 3.15 (a) an expected inflation of 2.5% is used
Sensitivity of the Net Pension Liability to Changes in the Discount Rate - The following presents the net
pension liability for the SDTC Plan, calculated using the discount rate, as well as what SDTC’s net pension liability would be if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate:
1% Decrease 6.50%
Net Pension Liability $ 110,642,733 Current Discount Rate 7.50% Net Pension Liability $ 85,694,263
1% Increase 8.50%
San Diego Metropolitan Transit System
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2015
Note 12 – Employee Retirement Systems (Continued)
D. SDTC (Continued)
Changes in Net Pension Liability
The change in the Net Pension Liability for the SDTC Plan is as follows: Total Pension Liability Plan Fiduciary Net Position Net Pension Liability Balance at June 30, 2014 $ 241,331,470 $ 148,576,975 $ 92,754,495 Changes in the year:
Service cost 3,908,376 - 3,908,376 Interest on the total pension liabilities 17,812,979 - 17,812,979 Differences between expected and actual experience 2,905,692 - 2,905,692 Benefit payments, including refunds of members contributions (15,466,924) (15,466,924) - Contributions - employer - 12,628,190 (12,628,190) Contributions - employee - 899,791 (899,791) Net investment income - 18,417,439 (18,417,439) Administrative expenses - (258,142) 258,142
Net changes 9,160,123 16,220,354 (7,060,231) Balance at June 30, 2015 $ 250,491,593 $ 164,797,329 $ 85,694,264 Pension Plan Fiduciary Net Position – Detailed information about the SDTC Plan’s fiduciary net position is
available in the separately issued financial reports. The financial report may be obtained by writing to San Diego Transit Corporation, 1255 Imperial Avenue, Suite 1000, San Diego, CA 92101.
Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
For the year ended June 30, 2015, SDTC recognized pension expense of $8,895,979. At June 30, 2015 SDTC reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
Deferred Deferred Outflows of Inflows of
Resources Resources Pension contributions subsequent to measurement date $ 11,352,628 $ - Differences between actual and expected experience 1,937,128 - Net differences between projected and actual earnings on plan
investments - (5,265,148)
San Diego Metropolitan Transit System
Notes to Basic Financial Statements (Continued)
For the Year Ended June 30, 2015
Note 12 – Employee Retirement Systems (Continued)
D. SDTC (Continued)
The $11,352,628 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:
Year Ended June 30, Amounts 2016 $ 347,723 2017 347,723 2018 1,316,287 2019 1,316,287 2020 - Thereafter -
Payable to the Pension Plan
At June 30, 2015 SDTC reported a payable of $222,888 for the outstanding amount of contributions to the pension plan required for the year ended June 30, 2015.