RPVCCA_CC_SR_2014_02_04_04_Updated_Pension_Liability_MemorandumCITY OF RANCHO PALOS VERDES
MEMORANDUM
TO:
FROM:
DATE:
SUBJECT:
REVIEWED:
HONORABLE MAYOR & CITY COUNCIL MEMBERS
DENNIS McLEAN, DIRECTOR OF FINANCE & ~
INFORMATION TECHNOLOGY
FEBRUARY 4, 2014
UPDATED PENSION LIABILITY MEMORANDUM FROM
THE FINANCE ADVISORY COMMITTEE (Supports 2013
City Council Goal of Government Efficiency, Fiscal
Control and Transparency)
CAROLYN LEHR, CITY MANAGER ~
Project Manager: Kathryn Downs, Deputy Director of Finance & Information
Technology \D{)
RECOMMENDATION
Receive and file the December 11, 2013 updated version of the Memorandum from the
Finance Advisory Committee (FAC) titled "Update #2 re the City's Unfunded Pension
Liability" (Attachment A).
EXECUTIVE SUMMARY
The FAC Work Plan for 2013-14 includes the following task:
"Continue to study new financial reporting standards impacting the City's employee pension
plan, as well as changes to pension plan provider assumptions and methodologies".
Information contained in this Staff Report was provided to the FAC on December 11, 2013.
At that meeting, the FAC updated its Memorandum to the City Council regarding the City's
unfunded pension liability.
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UPDATED PENSION LIABILITY MEMORANDUM FROM THE FINANCE ADVISORY
COMMITTEE
February 4, 2014
Page 2 of 5
BACKGROUND & DISCUSSION
The California Public Employees Retirement System (CalPERS) recently released the
Annual Valuation Report (AVR) for the City's pension plan dated June 30, 2012 (see
Attachment B). As a reminder, the City has three tiers of pension benefits for its
employees. The number of full-time employees in each tier is summarized below.
lstTier (2.5% ~ 55) 43
2nd Tier (2%@ 60) 5
3rd Tier (2%@ 62) 3
Vacant 6
~!~J:i,~1~
The FY13-14 salary budget is $5.5 million for full-time employees. With employee
turnover, the number of employees earning 1st Tier pension benefit will be reduced. The 6
positions that are currently vacant will be filled with employees earning either 2nd or 3rd Tier
pension benefits.
Both employer and employee contribution rates are summarized below.
-~!1 ~. Ii __ ~r .. ~!!Y ..
·2nd Tier
·3rd Ti:er
3rd Tfrer Employee
Employer Contribution Rates
1st Tier Benefit (2. 5% @ 55)
_?!_!.~_§9_
60
62 6.250%
6.2SC°Ai
6.250%
6.251Y!O
The FY14-15 employer contribution rate has been set at 15.701%for1st Tier benefits. This
is the same rate that was projected for FY14-15 with the June 30, 2011 AVR.
The projected employer contribution rate for FY15-16 is 16.7%. This is less than the
17.32% assumption that was included in the 2013 Five-Year Financial Model. CalPERS
indicated that the 16. 7% projection includes the estimated 12% investment return for FY12-
4-2
UPDATED PENSION LIABILITY MEMORANDUM FROM THE FINANCE ADVISORY
COMMITTEE
February 4, 2014
Page 3 of 5
13, as well as the new amortization and smoothing policy adopted by the Cal PERS Board
in April 2013.
CalPERS provided a five-year outlook of the expected employer contribution rates, as
summarized below.
r~ii, ,,,:§~~tlt1~~~MJi~iilt~~, "~S;~~@~~§~
' 16.2%1 17.2%: 18.3%1 19.3% 20.3%;
Cal PERS also reported that the Public Employees' Pension Reform Act of 2013 (PEPRA)
will result in a shift of new members away from existing pools (as demonstrated above for
the City). CalPERS expects that shift may necessitate a change in the method of
allocating the unfunded liability for pooled plans. In other words, in the future, the pool's
unfunded liability may be allocated over less employees resulting in an increase of the
employer contribution rate.
Finally, CalPERS expects to conduct a review of economic and demographic assumptions
in the near future (including improved mortality rates). Changes to these assumptions will
likely result in increased employer contribution rates in the future. The five-year outlook,
summarized above, does not include the impacts of any changes to economic and
demographic assumptions.
2nd Tier Benefit (2% @ 60)
The FY14-15 employer contribution rate is 8.005%, which is a slight reduction from FY13-
14. The assumption included in the 2013 Five-Year Financial Model for the 2nd Tier
employer contribution rate was 8.65%.
3rd Tier Benefit (2% @ 62)
The FY14-15 employer contribution rate is 6.250%, which is the same rate as FY13-14.
Unfunded Pension Liability
The 2.5% @ 55 pool has an unfunded liability; and the City, as a member of that pool, is
responsible for a portion of the pool's unfunded liability. An unfunded pension liability
exists when the present value of projected benefits exceeds plan assets. The unfunded
liability is paid through a portion of the employer contribution rate. CalPERS has provided
calculations of the City's share of the 2.5% @ 55 pool's unfunded liability.
As presented in previous reports to the City Council and the FAC, there are 3 different
valuations of the City's share of the pool's unfunded liability, as summarized below. The
estimates have been presented from the AVR's dated June 30, 2011 (prior year) and the
June 30, 2012 (current year).
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UPDATED PENSION LIABILITY MEMORANDUM FROM THE FINANCE ADVISORY
COMMITTEE
February 4, 2014
Page 4 of 5
Actuarial Liabnity
Market Liability
3, 714,970 4,050,017
6,008,649 7,873,359
Hyr:iothetical Termination Liabi_~ity · 16,571,8_53 32,025,762
The Actuarial Liability is equal to the present value of projected benefits, less the actuarial
value of plan assets. The Market Liability is equal to the present value of projected
benefits, less the market value of plan assets.
The Hypothetical Termination Liability (HTL) is a formula derived by CalPERS to protect
the system from future risk when employers terminate a contract with CalPERS. Upon
contract termination, CalPERS retains the obligation to make future payments to retirees.
This HTL would only be paid in the event that the City terminated its contract with
CalPERS.
As expected and reported by both Staff and the FAC in the March 2013 Staff Report to the
FAC and the March 2013 FAC Memorandum to the City Council, the HTL near doubled
from June 30, 2011 to June 30, 2012. The U.S. Treasury discount rate used by CalPERS
for the June 30, 2011 calculation of the HTL was 4.82%. The corresponding rate at June
30, 2012 was 2.98% (previously reported by CalPERS as 2.87%).
For June 30, 2013, the corresponding discount rate reported by CalPERS was 3.72%.
Staff and the FAC previously estimated the HTL at June 30, 2012 by increasing the HTL by
the same percentage decrease in the discount rate. Applying that same logic, one can
estimate the effect of the June 30, 2013 discount rate on the HTL. The discount rate
increased by 25% from June 30, 2012 to June 30, 2013. Decreasing the HTL by that same
25% results in an estimate of $24 million at June 30, 2013. However, it should be noted
that one cannot accurately estimate the HTL when it is based upon an unfunded liability
that changes near daily depending upon investment returns, market value of the
investment portfolio, and actual retirement benefit payments.
Financial Statement Disclosure
The Governmental Accounting Standards Board (GASB) issued Statement No. 68,
Accounting and Financial Reporting for Pensions. The City will be required to implement
the new reporting standard with the June 30, 2015 financial statements. As discussed in
previous reports to both the FAC and City Council, the City's independent auditor does not
encourage early implementation for two reasons: 1) not all information required for
implementation has been provided by CalPERS; and 2) other new accounting and
reporting standards will need to be implemented prior to implementing GASB Statement
No. 68.
However, in response to local interest in the City's unfunded pension liability, Staff
expanded the Notes to Financial Statements for June 30, 2012 to include more information
4-4
UPDATED PENSION LIABILITY MEMORANDUM FROM THE FINANCE ADVISORY
COMMITTEE
February 4, 2014
Page 5 of 5
than was required. In its March 2013 Memorandum to the City Council, the FAC
recommended that Staff further expand the financial statement disclosure by including
information about the Market Liability discussed above. Staff expects to include the
additional information in the Notes to Financial Statements for June 30, 2013.
CalPERS Investment Returns
On January 13, 2014, CalPERS reported a 16.2% investment return forthe calendar year
ended December 31, 2013. It should be noted that this is a preliminary estimate that may
change slightly after records are finalized. A history of CalPERS investment returns is
summarized in the following chart. CalPERS assumes a 7.5% investment return when
calculating employer contributions.
2004· 16.7% 13.4%:
2005i 12.6%: 11.1%;
2006'
"---···-·-----·,'.
12.3% 15.7%
2007 19.1% 10.2%
2008 -4.9% -27.8%
2009 -23.4% 12.1%
2010 11.6% 12.6%
2011 20.9% 1.1%
2012 1.0%• 13.3%. r·· 20131 13.2%1 16.2%:
4-5
Attachment A
MEMORANDUM
To: Rancho Palos Verdes City Council
From: Finance Advisory Committee
Date: December 11, 2013
Subject: Update #2 re the City's Unfunded Pension Liability
On April 25, 2012, the Finance Advisory Committee ("FAC") submitted a memorandum
to the City Council discussing alternative calculations of the unfunded pension liability
for the City of Rancho Palos Verdes. On March 6, 2013, we provided the Council with
an update to that memorandum based on the Actuarial Valuation Report ("A VR") from
CalPERS for the fiscal year ending June 30, 2011.
During the first quarter of 2013, CalPERS advised us that no agencies had terminated
their plans since the implementation of the 2011 rules, but that about 20 agencies had
requested pre-termination valuations and one small agency (not a city) was in the process
of final termination. At the April 25 F AC meeting, it was suggested that we should
contact some or all of those agencies to see if other cities have concerns similar to ours,
and if so, whether any of them have developed any ideas or approaches which we may
have overlooked or not fully explored. Staff suggested that it should coordinate inquiries
to those agencies that had requested termination data from CalPERS. At the July 24,
2013 F AC meeting, staff reported that the results of such contacts had been inconsistent
and indeterminate, i.e., that there was no dominant trend, no new set of concerns
expressed by other agencies, and no approaches to the issues that we had not considered.
We have now received the A VR from CalPERS for the fiscal year ending June 30, 2012.
A Staff Report addressing this report was presented to the FAC at its December 11, 2013
meeting.
In its A VR for the fiscal year ended June 30, 2012, Ca!PERS reported that RPV's
unfunded pension liability for fiscal 2012 was approximately $4 million based upon its
actuarial assumptions (up from $3.7 million for the fiscal year ended June 30, 2012, and
from a calculated estimate of $3.2 million for the fiscal year ended June 30, 2011).
CalPERS reported that RPV's unfunded pension liability based upon market assumptions
was approximately $7.9 million based upon market assumptions (up from approximately
$6 million for the prior year). CalPERS also provided a calculation of the amount the
City would have had to pay if it had terminated its plan on June 30, 2012. This number,
approximately $32 million, is almost twice as much as the $16.6 million figure reported
4-6
Attachment A
by CalPERS for the prior year. This increase was primarily caused by a significant
decrease in the US Treasury discount rate.
CalPERS anticipates raising employer contribution rates, currently at 15. 7% by about 1 %
a year over the next 5 years, reaching 20.3% in FYI 9-20. CalPERS states that it intends
to conduct a review of economic and demographic assumptions which could increase
these percentages even further.
The FAC remains concerned that the total of CalPERS' unfunded pension liabilities have
continued to increase despite strong economic markets in recent years. Although
CalPERS has now reported a 12% investment return for the fiscal year ended June 30,
2013 (the period immediately following the period covered by the latest A VR), its overall
investment results have been both weaker than the general market and inconsistent from
year to year.
We continue to believe that it is important for both the Council and the public to be aware
of and understand this issue. In our March 6, 2013, memorandum, we recommended that
the applicable note in the City's Comprehensive Annual Financial Report ("CAFR")
include a statement concerning the estimated market value of our unfunded pension
liability. The Council agreed with that recommendation and it is our understanding that
Staff will expand that note accordingly in the next CAFR.
We have no other specific recommendation for action by the City at this time, but we will
continue to monitor the situation and will report back to the Council as new information
becomes available.
2
4-7
California Public Employees’ Retirement System
Actuarial Office
P.O. Box 942709
Sacramento, CA 94229-2709
TTY: (916) 795-3240
(888) 225-7377 phone – (916) 795-2744 fax
www.calpers.ca.gov
October 2013
MISCELLANEOUS PLAN OF THE CITY OF RANCHO PALOS VERDES
(CalPERS ID: 3846845523)
Annual Valuation Report as of June 30, 2012
Dear Employer,
As an attachment to this letter, you will find a copy of Section 1 of the June 30, 2012 actuarial
valuation report of your pension plan. Because this plan is in a risk pool, the following valuation
report has been separated into two Sections:
x Section 1 contains specific information for your plan, including the development of your
pooled employer contribution rate, and
x Section 2 contains the Risk Pool Actuarial Valuation appropriate to your plan, as of June
30, 2012.
Section 2 can be found on the CalPERS website at (www.calpers.ca.gov) then select in order
“Employers”, “Actuarial, Risk Pooling & GASB 27 Information”, ”Risk Pooling”, ”Risk Pool Annual
Valuation Reports”, then select the appropriate pool report.
Your 2012 actuarial valuation report contains important actuarial information about your
pension plan at CalPERS. Your CalPERS staff actuary, whose signature appears in the Actuarial
Certification Section on page 1, is available to discuss your report with you.
Future Contribution Rates
The exhibit below displays the Minimum Employer Contribution Rate, before any cost sharing,
for 2014-15 along with estimates of the contribution rate for 2015-16. The estimated rate for
2015-16 is based on a projection of the most recent information we have available, including an
estimated 12% investment return for fiscal 2012-13, and the impact of the new smoothing
methods adopted by the CalPERS Board in April 2013 that will impact employer rates for the
first time in 2015-16. See Section 2 Risk Analysis, “Analysis of Future Investment Return
Scenarios”, for how much the Risk Pool’s portion of your rate is expected to increase beyond
2015-16 under a variety of investment return scenarios. Please disregard any projections
provided to you in the past.
Fiscal Year Employer Contribution Rate
2014-15 15.701%
2015-16 16.7% (projected)
Member contributions, other than cost sharing (whether paid by the employer or the
employee), are in addition to the above rates. The employer contribution rates in this
report do not reflect any cost sharing arrangements you may have with your
employees.
Attachment B
4-8
MISCELLANEOUS PLAN OF THE CITY OF RANCHO PALOS VERDES
(CalPERS ID: 3846845523)
Annual Valuation Report as of June 30, 2012
Page 2
The estimate for 2015-16 assumes unfunded liability payments will continue to be
allocated on and amortized over payroll increasing 3% per year. However, effective
January 1, 2013 the Public Employees’ Pension Reform Act of 2013 (PEPRA) will
result in a shift of new members away from existing pools. This is expected to
reduce the payroll increases for these pools. As a result, effective with the June 30,
2013 valuation, CalPERS may need to change its method of allocating pooled plan
unfunded liability. These potential changes in allocating pooled plan unfunded
liability could significantly impact 2015-16 and later rates.
The estimate for 2015-16 also assumes that there are no future contract amendments and no
liability gains or losses (such as larger than expected pay increases, more retirements than
expected, etc.) This is a very important assumption because these gains and losses do occur
and can have a significant effect on your contribution rate. Even for the largest plans or pools,
such gains and losses can impact the employer’s contribution rate by one or two percent of
payroll or even more in some less common circumstances. These gains and losses cannot be
predicted in advance so the projected employer contribution rates are just estimates. Your
actual rate for 2015-16 will be provided in next year’s valuation report.
Changes since the Prior Year’s Valuation
On January 1, 2013, the Public Employees’ Pension Reform Act of 2013 (PEPRA) took effect.
The impact of most of the PEPRA changes will first show up in the rates and the benefit
provision listings of the June 30, 2013 valuation which sets the contribution rates for the 2015-
16 fiscal year. For more detailed information on changes due to PEPRA, please refer to the
CalPERS website.
On April 17, 2013, the CalPERS Board of Administration approved a recommendation to change
the CalPERS amortization and rate smoothing policies. Beginning with the June 30, 2013
valuations that set the 2015-16 rates, CalPERS will employ an amortization and smoothing
policy that will pay for all gains and losses over a fixed 30-year period with the increases or
decreases in the rate spread directly over a 5-year period. The impact of this new actuarial
methodology is reflected in the “Analysis of Future Investment Return Scenarios” subsection of
the “Risk Analysis” section of your Section 2 report.
A review of the preferred asset allocation mix for CalPERS investment portfolio will be
performed in late 2013, which could influence future discount rates. In addition, CalPERS will
review economic and demographic assumptions, including mortality rate improvements that are
likely to increase employer contribution rates in future years. The “Analysis of Future
Investment Return Scenarios” subsection does not reflect the impact of assumption changes
that we expect will also impact future rates.
Besides the above noted changes, there may also be changes specific to your plan such as
contract amendments and funding changes.
Further descriptions of general changes are included in the “Highlights and Executive Summary”
section and in Appendix A, “Statement of Actuarial Data, Methods and Assumptions” of your
Section 2 report.
Attachment B
4-9
MISCELLANEOUS PLAN OF THE CITY OF RANCHO PALOS VERDES
(CalPERS ID: 3846845523)
Annual Valuation Report as of June 30, 2012
Page 3
We understand that you might have a number of questions about these results. While we are
very interested in discussing these results with your agency, in the interest of allowing us to
give every public agency their result, we ask that, you wait until after November 30 to contact
us with actuarial related questions.
If you have other questions, please call our customer contact center at (888) CalPERS or (888-
225-7377).
Sincerely,
ALAN MILLIGAN
Chief Actuary
Attachment B
4-10
THIS PAGE
INTENTIONALLY
LEFT BLANK
Attachment B
4-11
ACTUARIAL VALUATION
as of June 30, 2012
for the
MISCELLANEOUS PLAN
of the
CITY OF RANCHO PALOS VERDES
(CalPERS ID: 3846845523)
REQUIRED CONTRIBUTIONS
FOR FISCAL YEAR
July 1, 2014 - June 30, 2015
Attachment B
4-12
TABLE OF CONTENTS
SECTION 1 – PLAN SPECIFIC INFORMATION
SECTION 2 – RISK POOL ACTUARIAL VALUATION INFORMATION
(CY) FIN PROCESS CONTROL ID: 420069 (PY) FIN PROCESS CONTROL ID: 399640 REPORT ID: 73163
Attachment B
4-13
Section 1
CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM
Plan Specific Information
for the
MISCELLANEOUS PLAN
of the
CITY OF RANCHO PALOS VERDES
(CalPERS ID: 3846845523)
(Rate Plan: 1107)
Attachment B
4-14
TABLE OF CONTENTS
ACTUARIAL CERTIFICATION 1
HIGHLIGHTS AND EXECUTIVE SUMMARY 3
x INTRODUCTION 3
x PURPOSE OF SECTION 1 3
x REQUIRED EMPLOYER CONTRIBUTION 4
x PLAN’S FUNDED STATUS 5
x PROJECTED CONTRIBUTIONS 5
x RATE VOLATILITY 6
FINANCIAL AND DEMOGRAPHIC INFORMATION 7
x PLAN’S SIDE FUND 7
x DEVELOPMENT OF THE ACTUARIAL VALUE OF ASSETS 8
x FUNDING HISTORY 8
x PLAN’S TOTAL NORMAL COST RATE 8
x HYPOTHETICAL TERMINATION LIABILITY 9
x PARTICIPANT DATA 10
x LIST OF CLASS 1 BENEFIT PROVISIONS 10
INFORMATION FOR COMPLIANCE WITH GASB STATEMENT NO. 27 11
PLAN’S MAJOR BENEFIT OPTIONS 15
Attachment B
4-15
SECTION 1 – PLAN SPECIFIC INFORMATION FOR THE MISCELLANEOUS PLAN OF THE CITY OF
RANCHO PALOS VERDES
CalPERS Actuarial Valuation – June 30, 2012 Page 1
Rate Plan belonging to Miscellaneous 2.5% at 55 Risk Pool
ACTUARIAL CERTIFICATION
Section 1 of this report is based on the member and financial data contained in our records as of June 30,
2012 which was provided by your agency and the benefit provisions under your contract with CalPERS.
Section 2 of this report is based on the member and financial data as of June 30, 2012 provided by
employers participating in the risk pool to which your plan belongs and benefit provisions under the CalPERS
contracts for those agencies.
As set forth in Section 2 of this report, the Pool Actuary has certified that, in her opinion, the valuation of
the Risk Pool containing your MISCELLANEOUS PLAN has been performed in accordance with generally
accepted actuarial principles consistent with standards of practice prescribed by the Actuarial Standards
Board, and that the assumptions and methods are internally consistent and reasonable for the Risk Pool as
of the date of this valuation and as prescribed by the CalPERS Board of Administration according to
provisions set forth in the California Public Employees’ Retirement Law. Changes to the pool that will occur
as a result of PEPRA are not reflected in this report.
Having relied upon the information set forth in Section 2 of this report and based on the census and benefit
provision information for your plan, it is my opinion as your Plan Actuary that the Side Fund as of June 30,
2012 and employer contribution rate as of July 1, 2014, have been properly and accurately determined in
accordance with the principles and standards stated above.
The undersigned is an actuary for CalPERS, who is a member of both the American Academy of Actuaries
and Society of Actuaries and meets the Qualification Standards of the American Academy of Actuaries to
render the actuarial opinion contained herein.
KUNG-PEI HWANG, ASA, MAAA
Senior Pension Actuary, CalPERS
Plan Actuary
Attachment B
4-16
SECTION 1 – PLAN SPECIFIC INFORMATION FOR THE MISCELLANEOUS PLAN OF THE CITY OF
RANCHO PALOS VERDES
CalPERS Actuarial Valuation – June 30, 2012 Page
Rate Plan belonging to Miscellaneous 2.5% at 55 Risk Pool
3
HIGHLIGHTS AND EXECUTIVE SUMMARY
Introduction
This report presents the results of the June 30, 2012 actuarial valuation of the MISCELLANEOUS PLAN of the
CITY OF RANCHO PALOS VERDES of the California Public Employees’ Retirement System (CalPERS). This
actuarial valuation was used to set the 2014-15 required employer contribution rates.
On January 1, 2013, the Public Employees’ Pension Reform Act of 2013 (PEPRA) took effect. The impact of
most of the PEPRA changes will first show up in the assumptions and the benefit provision listings of the
June 30, 2013 valuation for the 2015-16 rates. For more information on PEPRA, please refer to the CalPERS
website.
On April 17, 2013, the CalPERS Board of Administration approved a recommendation to change the CalPERS
amortization and smoothing policies. Prior to this change, CalPERS employed an amortization and smoothing
policy which spread investment returns over a 15-year period with experience gains and losses paid for over
a rolling 30-year period. After this change, CalPERS will employ an amortization and smoothing policy that
will pay for all gains and losses over a fixed 30-year period with the increases or decreases in the rate
spread directly over a 5-year period.
The new amortization and smoothing policy will be used for the first time in the June 30, 2013 actuarial
valuations. These valuations will be performed in the fall of 2014 and will set employer contribution rates for
the Fiscal Year 2015-16.
As stewards of the System, CalPERS must ensure that the pension fund is sustainable over multiple
generations. Our strategic plan calls for us to take an integrated view of our assets and liabilities and to take
steps designed to achieve a fully funded plan. A review of the preferred asset allocation mix for CalPERS
investment portfolio will be performed in late 2013 which will influence future discount rates. In addition
CalPERS will review economic and demographic assumptions, including mortality rate improvements that are
likely to increase employer contribution rates in future years.
Purpose of Section 1
This section 1 report for the MISCELLANEOUS PLAN of the CITY OF RANCHO PALOS VERDES of the
California Public Employees’ Retirement System (CalPERS) was prepared by the Plan Actuary in order to:
x Set forth the actuarial assets and accrued liabilities of this plan as of June 30, 2012;
x Determine the required employer contribution rate for this plan for the fiscal year July 1, 2014 through
June 30, 2015;
x Provide actuarial information as of June 30, 2012 to the CalPERS Board of Administration and other
interested parties; and
x Provide pension information as of June 30, 2012 to be used in financial reports subject to Governmental
Accounting Standards Board (GASB) Statement Number 27 for a Cost Sharing Multiple Employer
Defined Benefit Pension Plan.
The use of this report for any other purposes may be inappropriate. In particular, this report does not
contain information applicable to alternative benefit costs. The employer should contact their actuary before
disseminating any portion of this report for any reason that is not explicitly described above.
Attachment B
4-17
SECTION 1 – PLAN SPECIFIC INFORMATION FOR THE MISCELLANEOUS PLAN OF THE CITY OF
RANCHO PALOS VERDES
CalPERS Actuarial Valuation – June 30, 2012 Page
Rate Plan belonging to Miscellaneous 2.5% at 55 Risk Pool
4
Required Employer Contribution
Fiscal Year Fiscal Year
Actuarially Determined Employer Contributions: 2013-14 2014-15
Required Employer Contributions (in Projected Dollars)
Risk Pool’s Net Employer Normal Cost $ 505,857 $ 529,548
Risk Pool’s Payment on Amortization Bases 278,032 371,386
Surcharge for Class 1 Benefits
a) FAC 1 32,117 33,692
Phase out of Normal Cost Difference 0 0
Amortization of Side Fund 0 0
Total Employer Contribution $ 816,006 $ 934,626
Projected Payroll for the Contribution Fiscal Year
$
5,566,207 $ 5,952,656
Required Employer Contributions (Percentage of Payroll)
Risk Pool’s Net Employer Normal Cost 9.088% 8.896%
Risk Pool’s Payment on Amortization Bases 4.995% 6.239%
Surcharge for Class 1 Benefits
a) FAC 1 0.577% 0.566%
Phase out of Normal Cost Difference 0.000% 0.000%
Amortization of Side Fund 0.000% 0.000%
Total Employer Contribution 14.660% 15.701%
Minimum Employer Contribution Rate1 14.660% 15.701%
Annual Lump Sum Prepayment Option2 $ 787,026 $ 901,433
Appendix C of Section 2 of this report contains a list of Class 1 benefits and corresponding surcharges for
each benefit.
Risk pooling was implemented for most plans as of June 30, 2003. The normal cost difference was
scheduled to be phased out over a five year period. The phase out of normal cost difference is 100 percent
for the first year of pooling, and is incrementally reduced by 20 percent of the original normal cost
difference for each subsequent year.
1 The Minimum Employer Contribution Rate under PEPRA is the greater of the required employer rate or the
total employer normal cost.
2Payment must be received by CalPERS before the first payroll reported to CalPERS of the new fiscal year
and after June 30. The prepayment amount applies only to this plan. Please note that it is not
possible to prepay contributions for new plans that had no reported membership prior to June
30, 2012.
Attachment B
4-18
SECTION 1 – PLAN SPECIFIC INFORMATION FOR THE MISCELLANEOUS PLAN OF THE CITY OF
RANCHO PALOS VERDES
CalPERS Actuarial Valuation – June 30, 2012 Page
Rate Plan belonging to Miscellaneous 2.5% at 55 Risk Pool
5
Plan’s Funded Status
June 30, 2011 June 30, 2012
1. Present Value of Projected Benefits (PVB) 31,808,573 $ 34,508,000
2. Entry Age Normal Accrued Liability 25,552,394 28,080,069
3. Plan’s Actuarial Value of Assets (AVA) 21,837,424 $ 24,030,052
4. Unfunded Liability (AVA Basis) [(2) - (3)] 3,714,970 $ 4,050,017
5. Funded Ratio (AVA Basis) [(3) / (2)] 85.5% 85.6%
6. Plan’s Market Value of Assets (MVA) 19,543,745 $ 20,206,710
7. Unfunded Liability (MVA Basis) [(2) - (6)] 6,008,649 7,873,359
8. Funded Ratio (MVA Basis) [(6) / (2)] 76.5% 72.0%
Projected Contributions
The rate shown below is an estimate for the employer contribution for Fiscal Year 2015-16. The estimated
rate is based on a projection of the most recent information we have available, including an estimate of the
investment return for fiscal year 2012-13, namely 12 percent. It also reflects implementation of the more
conservative rate smoothing method mentioned earlier.
Projected Employer Contribution Rate: 16.7%
The estimate also assumes that there are no liability gains or losses among the plans in your risk pool, that
your plan has no new amendments in the next year, and that your plan’s and your risk pool’s payrolls both
increase exactly 3.0 percent in the 2012-13 fiscal year. Therefore, the projected employer contribution rate
for 2015-16 is just an estimate. Your actual rate for 2015-16 will be provided in next year’s valuation report.
Attachment B
4-19
SECTION 1 – PLAN SPECIFIC INFORMATION FOR THE MISCELLANEOUS PLAN OF THE CITY OF
RANCHO PALOS VERDES
CalPERS Actuarial Valuation – June 30, 2012 Page
Rate Plan belonging to Miscellaneous 2.5% at 55 Risk Pool
6
Rate Volatility
Your plan’s employer contribution rate will inevitably fluctuate, for many reasons. One of the biggest causes
of fluctuations for pooled plans has been from changes in the side fund rate resulting from unexpected
changes in payroll. The following figure shows how much your 2015-16 side fund rate would change for
each 1 percent deviation between our 3 percent payroll growth assumption and your actual 2012-13 payroll
growth.
POTENTIAL 2015-16 RATE IMPACT
FROM 2012-13 PAYROLL DEVIATION
% Rate Change per 1% Deviation from Assumed 3.0% Payroll Growth: 0.000%
Examples: To see how your employer contribution rate might be affected by unexpected payroll change,
suppose the following:
x The Percentage Rate Change per 1 percent Deviation figure given above is -0.400%
x Your plan’s payroll increased 10 percent in 2012-13 (7.0 percent more than our 3.0 percent
assumption).
Then your 2015-16 rate would decrease -0.400% x (10 – 3.0) = 2.80% from that cause alone.
Or conversely, using the same Percentage Rate Change per 1 percent Deviation figure given above, suppose
your plan’s payroll remained the same in 2012-13 (3.0 percent less than our 3.0 percent assumption).
Then your 2015-16 rate would increase -0.400% x (0 – 3.0) = 1.2% from that cause alone.
Note that if your plan had a negative side fund, an unexpected payroll increase would spread the payback of
the negative side fund over a bigger payroll, which would decrease your plan’s side fund percentage rate
and the total employer contribution rate. On the other hand, if your plan had a positive side fund, an
unexpected payroll increase would spread the payback of the positive side fund over a larger payroll, which
would increase your plan’s side fund percentage rate and the total employer contribution rate. In either
case, the amortization of Side Fund dollar amount would not change.
Another big cause of rate fluctuations has been from investment return volatility. The degree to which your
plan’s rates may be susceptible to investment return volatility is described in the Risk Analysis section of
your Section 2 report under “Volatility Ratios”.
Attachment B
4-20
SECTION 1 – PLAN SPECIFIC INFORMATION FOR THE MISCELLANEOUS PLAN OF THE CITY OF
RANCHO PALOS VERDES
CalPERS Actuarial Valuation – June 30, 2012 Page
Rate Plan belonging to Miscellaneous 2.5% at 55 Risk Pool
7
FINANCIAL AND DEMOGRAPHIC INFORMATION
Plan’s Side Fund
At the time your plan joined the Risk Pool, a side fund was created to account for the difference between
the funded status of the pool and the funded status of your plan, in addition to your existing unfunded
liability. The side fund for your plan as of the June 30, 2012 valuation is shown in the following table.
Your side fund will be credited, on an annual basis, with the actuarial investment return assumption. This
assumption is 7.5 percent. A positive side fund will cause your required employer contribution rate to be
reduced by the Amortization of Side Fund shown above in Required Employer Contributions. A negative side
fund will cause your required employer contribution rate to be increased by the Amortization of Side Fund.
In the absence of subsequent contract amendments or funding changes, the side fund will disappear at the
end of the amortization period shown below.
Plan’s Side Fund Reconciliation
June 30, 2011 June 30, 2012
Side Fund as of valuation date* $ 0 $ 0
Adjustments 0 0
Side Fund Payment 0 0
Side Fund one year later $ 0 $ 0
Adjustments 0 0
Side Fund Payment 0 0
Side Fund two years later $ 0 $ 0
Amortization Period 12 11
Side Fund Payment during last year $ 0 $ 0
* If your agency employed superfunded vouchers in fiscal year 2011-12 to pay employee contributions, the
June 30, 2012 Side Fund amount has been adjusted by a like amount without any further adjustment to the
Side Fund’s amortization period. Similarly, the Side Fund has been adjusted for the increase in liability from
any recently adopted Class 1 or Class 2 contract amendments. Also, the Side Fund may be adjusted or
eliminated due to recent lump sum payments. Contract amendments and lump sum payments may result in
an adjustment to the Side Fund amortization period.
Attachment B
4-21
SECTION 1 – PLAN SPECIFIC INFORMATION FOR THE MISCELLANEOUS PLAN OF THE CITY OF
RANCHO PALOS VERDES
CalPERS Actuarial Valuation – June 30, 2012 Page
Rate Plan belonging to Miscellaneous 2.5% at 55 Risk Pool
8
Development of the Actuarial Value of Assets
June 30, 2012
1. Plan’s Accrued Liability $ 28,080,069
2. Plan’s Side Fund 0
3. Pool’s Accrued Liability 2,254,622,362
4. Pool’s Side Fund (107,443,058)
5. Pool’s Actuarial Value of Assets Including Receivables 1,837,489,422
6. Plan’s Actuarial Value of Assets (AVA) Including Receivables [(1 + 2) / (3 + 4) x 5] $ 24,030,052
7. Pool’s Market Value of Assets (MVA) Including Receivables 1,545,132,565
8. Plan’s Market Value of Assets (MVA) Including Receivables [(1 + 2) / (3 + 4) x 7] $ 20,206,710
Funding History
The Funding History below shows the actuarial accrued liability, the plan’s share of the pool’s market value
of assets, plan’s share of the pool’s unfunded liability, funded ratio and the annual covered payroll.
[funding_history]
Valuation
Date
Accrued
Liability
(AL)
Share of Pool’s
Market Value of
Assets (MVA)
Plan’s Share of
Pool’s Unfunded
Liability
Funded
Ratio
Annual
Covered
Payroll
06/30/2011 $ 25,552,394 $ 19,543,745 $ 6,008,649 76.5% $ 5,093,868
06/30/2012 28,080,069 20,206,710 7,873,359 72.0% 5,447,523
Plan’s Total Normal Cost Rate
The Public Employees’ Pension Reform Act of 2013 requires that new employees pay at least 50 percent of
the total annual normal cost and that current employees approach the same goal through collective
bargaining. Please refer to the CalPERS website for more details.
Shown below are the total annual normal cost rates for your plan.
Total Normal Cost Rate Fiscal Year Fiscal Year
2013-14 2014-15
Pool’s Net Total Normal Cost Rate 16.976% 16.788%
Surcharge for Class 1 Benefits
a) FAC 1 0.577% 0.566%
Plan’s Total Normal Cost Rate 17.553% 17.354%
Attachment B
4-22
SECTION 1 – PLAN SPECIFIC INFORMATION FOR THE MISCELLANEOUS PLAN OF THE CITY OF
RANCHO PALOS VERDES
CalPERS Actuarial Valuation – June 30, 2012 Page
Rate Plan belonging to Miscellaneous 2.5% at 55 Risk Pool
9
Hypothetical Termination Liability
Below is an estimate of the financial position of your plan if you had terminated your contract with CalPERS
as of June 30, 2011 or 2012 using the discount rates shown below. Your plan liability on a termination basis
is calculated differently compared to the plan’s ongoing funding liability. In August 2011, the CalPERS Board
adopted a more conservative investment policy and asset allocation strategy for the Terminated Agency
Pool. Since the Terminated Agency Pool has limited funding sources, expected benefit payments are secured
by risk-free assets. With this change, CalPERS increased benefit security for members while limiting its
funding risk. This asset allocation has a lower expected rate of return than the PERF. Consequently, the
lower discount rate for the Terminated Agency pool results in higher liabilities for terminated plans.
In order to terminate your plan, you must first contact our Retirement Services Contract Unit to initiate a
Resolution of Intent to Terminate. The completed Resolution will allow your plan actuary to give you a
preliminary termination valuation with a more up-to-date estimate of your plan liabilities. CalPERS advises
you to consult with your plan actuary before beginning this process.
[hypothetical_termination_liability]
Valuation
Date
Hypothetical
Termination
Liability1
Market Value
of Assets
(MVA)
Unfunded
Termination
Liability
Termination
Funded
Ratio
Termination
Liability
Discount
Rate2
06/30/2011 $ 36,115,598 $19,543,745 $ 16,571,853 54.1% 4.82%
06/30/2012 52,232,472 20,206,710 32,025,762 38.7% 2.98%
1 The hypothetical liabilities calculated above include a 7 percent mortality load contingency in accordance
with Board policy. Other actuarial assumptions, such as wage and inflation assumptions, can be found in
appendix A.
2 The discount rate assumption used for termination valuations is a weighted average of the 10 and 30-year
US Treasury yields in effect on the valuation date that equal the duration of the pension liabilities. For
purposes of this hypothetical termination liability estimate, the discount rate used, 2.98 percent, is the yield
on the 30-year US Treasury Separate Trading of Registered Interest and Principal of Securities (STRIPS) as
of June 30, 2012. In last year’s report the May 2012 rate of 2.87 percent was inadvertently shown rather
than the June rate of 2.98 percent. Please note, as of June 30, 2013 the 30-year STRIPS yield was 3.72
percent.
Attachment B
4-23
SECTION 1 – PLAN SPECIFIC INFORMATION FOR THE MISCELLANEOUS PLAN OF THE CITY OF
RANCHO PALOS VERDES
CalPERS Actuarial Valuation – June 30, 2012 Page
Rate Plan belonging to Miscellaneous 2.5% at 55 Risk Pool
10
Participant Data
The table below shows a summary of your plan’s member data upon which this valuation is based:
June 30, 2011 June 30, 2012
Projected Payroll for Contribution Purposes $ 5,566,207 $ 5,952,656
Number of Members
Active 85 87
Transferred 52 50
Separated 95 97
Retired 38 41
List of Class 1 Benefit Provisions
x One Year Final Compensation
Attachment B
4-24
SECTION 1 – PLAN SPECIFIC INFORMATION FOR THE MISCELLANEOUS PLAN OF THE CITY OF
RANCHO PALOS VERDES
CalPERS Actuarial Valuation – June 30, 2012 Page
Rate Plan belonging to Miscellaneous 2.5% at 55 Risk Pool
11
Information for Compliance with GASB Statement No. 27
for Cost-Sharing Multiple-Employer Defined Benefit Plan
Disclosure under GASB 27 follows. However, note that effective for financial statements for
fiscal years beginning after June 15, 2014, GASB 68 replaces GASB 27. Disclosure required
under GASB 68 will require additional reporting. CalPERS is planning to provide GASB 68
disclosure information upon request for an additional fee. We urge you to start discussions
with your auditors on how to implement GASB 68.
Your plan is part of the Miscellaneous 2.5% at 55 Risk Pool, a cost-sharing multiple-employer defined benefit
plan. Under GASB 27, an employer should recognize annual pension expenditures/expense equal to its
contractually required contributions to the plan. Pension liabilities and assets result from the difference
between contributions required and contributions made. The contractually required contribution for the
period July 1, 2014 to June 30, 2015 has been determined by an actuarial valuation of the plan as of June
30, 2012. Your unadjusted contribution rate for the indicated period is 15.701% percent of payroll. In order
to calculate the dollar value of the contractually required contributions for inclusion in financial statements
prepared as of June 30, 2015, this contribution rate, less any employee cost sharing, and as modified by any
subsequent financing changes or contract amendments for the year, would be multiplied by the payroll of
covered employees that was actually paid during the period July 1, 2014 to June 30, 2015. However, if this
contribution is fully prepaid in a lump sum, then the dollar value of contractually required contributions is
equal to the lump sum prepayment. The employer and the employer’s auditor are responsible for determining
the contractually required contributions. Further, the required contributions in dollars and the percentage of
that amount contributed for the current year and each of the two preceding years is to be disclosed under
GASB 27.
A summary of principal assumptions and methods used to determine the contractually required
contributions is shown below for the cost-sharing multiple-employer defined benefit plan.
Valuation Date June 30, 2012
Actuarial Cost Method Entry Age Normal Cost Method
Amortization Method Level Percent of Payroll
Average Remaining Period 19 Years as of the Valuation Date
Asset Valuation Method 15 Year Smoothed Market
Actuarial Assumptions
Discount Rate 7.50% (net of administrative expenses)
Projected Salary Increases 3.30% to 14.20% depending on Age, Service, and type of employment
Inflation 2.75%
Payroll Growth 3.00%
Individual Salary Growth A merit scale varying by duration of employment coupled with an
assumed annual inflation growth of 2.75% and an annual production
growth of 0.25%.
Complete information on assumptions and methods is provided in Appendix A of the Section 2 report.
Appendix B of the Section 2 report contains a description of benefits included in the Risk Pool Actuarial
Valuation.
A Schedule of Funding for the Risk Pool’s actuarial value of assets, accrued liability, their relationship, and
the relationship of the unfunded liability (UL) to payroll for the risk pool(s) to which your plan belongs can
be found in Section 2 of the report.
Attachment B
4-25
PLAN’S MAJOR BENEFIT OPTIONS
Attachment B
4-26
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Attachment B
4-27
Section 2
CALIFORNIA PUBLIC EM PLOYEES’ RETIREMENT SYSTEM
Miscellaneous 2.5% at 55 Risk Pool
as of June 30, 2012
Attachment B
4-28
TABLE OF CONTENTS
ACTUARIAL CERTIFICATION 1
HIGHLIGHTS AND EXECUTIVE SUMMARY
Purpose of Section 2 5
Risk Pool’s Required Employer Contribution 5
Risk Pool’s Required Base Employer Rate 6
Risk Pool’s Net Total Normal Cost Rate 6
Funded Status of the Risk Pool 6
Cost 7
Changes since the Prior Year’s Valuation 7
Subsequent Events 8
ASSETS
Reconciliation of the Market Value of Assets 11
Development of the Actuarial Value of Assets 11
Asset Allocation 12
CalPERS History of Investment Returns 13
LIABILITIES AND RATES
Development of Pool’s Accrued and Unfunded Liabilities 17
(Gain)/Loss Analysis 06/30/11 - 06/30/12 18
Schedule of Amortization Bases for the Risk Pool 19
Development of Risk Pool’s Annual Required Base Contribution 20
Pool’s Employer Contribution Rate History 21
Funding History 21
RISK ANALYSIS
Volatility Ratios 25
Projected Rates 26
Analysis of Future Investment Return Scenarios 26
Analysis of Discount Rate Sensitivity 27
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
Actuarial Data A-1
Actuarial Methods A-1
Actuarial Assumptions A-3
Miscellaneous A-17
APPENDIX B – PRINCIPAL PLAN PROVISIONS B-1
APPENDIX C – PLAN OPTIONS AND VARIABLES
Classification of Optional Benefits C-1
Example of Individual Agency’s Rate Calculation C-3
Distribution of Class 1 Benefits C-3
APPENDIX D – PARTICIPATING EMPLOYERS D-1
APPENDIX E – PARTICIPANT DATA
Source of the Participant Data E-1
Data Validation Tests and Adjustments E-1
Summary of Valuation Data E-2
Active Members E-3
Transferred and Terminated Members E-4
Retired Members and Beneficiaries E-5
APPENDIX F – GLOSSARY OF ACTUARIAL TERMS F-1
Risk Pool Valuation Job ID: 625
Attachment B
4-29
ACTUARIAL CERTIFICATION
CalPERS Actuarial Valuation – June 30, 2012 1
Miscellaneous 2.5% at 55 Risk Pool
ACTUARIAL CERTIFICATION
To the best of our knowledge, Section 2 of this report is complete and accurate and contains sufficient
information to disclose, fully and fairly, the funded condition of the Miscellaneous 2.5% at 55 Risk Pool. This
valuation is based on the member and financial data as of June 30, 2012 provided by the various CalPERS
databases and the benefits under this Risk Pool with CalPERS as of the date this report was produced.
Changes to the pool that will occur as a result of PEPRA are not reflected in this report. It is our opinion that
the valuation has been performed in accordance with generally accepted actuarial principles, in accordance
with standards of practice prescribed by the Actuarial Standards Board, and that the assumptions and
methods are internally consistent and reasonable for this risk pool, as prescribed by the CalPERS Board of
Administration according to provisions set forth in the California Public Employees’ Retirement Law.
The undersigned are CalPERS staff actuaries who are members of the American Academy of Actuaries and
the Society of Actuaries and meets the Qualification Standards of the American Academy of Actuaries to
render the actuarial opinion contained herein.
SHELLY CHU, ASA, MAAA
Senior Pension Actuary, CalPERS
Pool Actuary
JORDAN FASSLER, ASA, MAAA
Associate Pension Actuary, CalPERS
Pool Reviewing Actuary
Attachment B
4-30
HIGHLIGHTS AND EXECUTIVE SUMMARY
PURPOSE OF SECTION 2
RISK POOL’S REQUIRED EMPLOYER CONTRIBUTION
RISK POOL’S REQUIRED BASE EMPLOYER RATE
RISK POOL’S NET TOTAL NORMAL COST RATE
FUNDED STATUS OF THE RISK POOL
COST
CHANGES SINCE THE PRIOR YEAR’S VALUATION
SUBSEQUENT EVENTS
Attachment B
4-31
HIGHLIGHTS AND EXECUTIVE SUMMARY
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
5
Purpose of Section 2
This Actuarial Valuation for the Miscellaneous 2.5% at 55 Risk Pool of the California Public Employees’ Retirement
System (CalPERS) was performed by CalPERS' staff actuaries using data as of June 30, 2012 in order to:
Set forth the actuarial assets and accrued liabilities of this risk pool as of June 30, 2012
Determine the required contribution rate of the pool for the fiscal year July 1, 2014 through June 30,
2015
Provide actuarial information as of June 30, 2012 to the CalPERS Board of Administration and other
interested parties
The use of this report for any other purposes may be inappropriate. In particular, this report does not contain
information applicable to alternative benefit costs. The employer should contact their actuary before
disseminating any portion of this report for any reason that is not explicitly described above.
California Actuarial Advisory Panel Recommendations
This report satisfies all basic disclosure requirements under the Model Disclosure Elements for Actuarial Valuation
Reports recommended by the California Actuarial Advisory Panel, except for the original base amounts of the
various components of the unfunded liability amortization.
The report gives the following additional information classified as enhanced risk disclosures under the Model
Disclosure Elements for Actuarial Valuation Reports recommended by the California Actuarial Advisory Panel:
“Deterministic stress test”, projecting future results under different investment income scenarios.
“Sensitivity analysis”, showing the impact on current valuation results of a plus or minus 1% change in
the discount rate.
Risk Pool's Required Employer Contribution
Fiscal Year Fiscal Year
2013-14 2014-15
1) Contribution in Projected Dollars
a) Total Pool’s Normal Cost 67,890,150 65,043,903
b) Employee Contribution 30,178,501 29,254,373
c) Pool’s Gross Employer Normal Cost [(1a) – (1b)] $ 37,711,649 $ 35,789,530
d) Payment on Pool’s Amortization Bases 19,111,950 23,126,761
e) Payment on Employer Side Funds 13,147,145 11,275,447
f) Total Required Employer Contribution* [(1c)+(1d)+(1e)] $ 69,967,600 $ 70,192,702
* Total may not add up due to rounding
2) Contribution as a Percentage of Projected Pay
a) Total Pool’s Normal Cost 17.745% 17.547%
b) Employee Contribution 7.888% 7.892%
c) Pool’s Gross Employer Normal Cost [(2a) – (2b)] 9.857% 9.655%
d) Payment on Pool’s Amortization Bases 4.995% 6.239%
e) Payment on Employer Side Funds 3.436% 3.042%
f) Total Required Employer Contribution [(2c)+(2d)+(2e)] 18.288% 18.936%
These rates are the total required employer contributions to the pool for fiscal years 2013-14 and 2014-15. The
Pool’s Gross Employer Normal Cost includes the Class 1 surcharges for all employers that contract for the Class 1
type benefits. The payment on the pool’s amortization bases is the payment on the ongoing cumulative gains and
losses experienced by the pool since its June 30, 2003 inception. The payment on employer side funds is the
combination of all expected individual amortization payments on every side fund in the pool.
Attachment B
4-32
HIGHLIGHTS AND EXECUTIVE SUMMARY
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
6
Risk Pool's Required Base Employer Rate
Fiscal Year Fiscal Year
2013-14 2014-15
1. Pool’s Gross Employer Normal Cost 9.857% 9.655%
Less: Surcharges for Class 1 Benefits 0.769% 0.759%
2. Pool’s Net Employer Normal Cost 9.088% 8.896%
3. Payment on Pool's Amortization Bases 4.995% 6.239%
4. Pool’s Base Employer Rate 14.083% 15.135%
The base employer contribution rate is the rate that each plan within the pool pays before any adjustments are
made. It represents the pool funding for basic benefits (no Class 1 surcharges) for the fiscal year shown. To
arrive at a plan's total contribution rate, several components must be added to this base rate. These components
are Class 1 benefit surcharges, normal cost phase-out and any side fund payment. More information about those
additional components can be found in Section 1 of this report.
Risk Pool's Net Total Normal Cost Rate
Fiscal Year Fiscal Year
2013-14 2014-15
1. Pool’s Net Employer Normal Cost 9.088% 8.896%
2. Pool’s Employee Contribution Rate 7.888% 7.892%
3. Pool’s Net Total Normal Cost Rate 16.976% 16.788%
Funded Status of the Risk Pool
June 30, 2011 June 30, 2012
1. Present Value of Projected Benefits $ 2,594,764,339 $ 2,689,199,481
2. Entry Age Normal Accrued Liability $ 2,135,350,204 $ 2,254,622,362
3. Actuarial Value of Assets (AVA) $ 1,724,200,585 $ 1,837,489,422
4. Unfunded Liability (AVA Basis) [(2) – (3)] 411,149,619 417,132,940
5. Funded Ratio (AVA Basis) [(3) / (2)] 80.8% 81.5%
6. Market Value of Assets (MVA) $ 1,543,100,350 $ 1,545,132,565
7. Unfunded Liability (MVA Basis) [(2) – (6)] $ 592,249,854 $ 709,489,797
8. Funded Ratio (MVA Basis) [(6) / (2)] 72.3% 68.5%
Attachment B
4-33
HIGHLIGHTS AND EXECUTIVE SUMMARY
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
7
Cost
Actuarial Cost Estimates in General
What will this plan or pool cost? Unfortunately, there is no simple answer. There are two major reasons for the
complexity of the answer:
First, all actuarial calculations, including those in this report, are based on a number of assumptions about the
future. These assumptions can be divided into two categories.
Demographic assumptions include the percentage of employees that will terminate, die, become
disabled, and retire in each future year.
Economic assumptions include future salary increases for each active employee, and the assumption
with the greatest impact, future asset returns at CalPERS for each year into the future until the last
dollar is paid to current members of your plan.
While CalPERS has set these assumptions as our best estimate of the real future of your plan, it must be
understood that these assumptions are very long term predictors and will surely not be realized in any one year.
For example, while the asset earnings at CalPERS have averaged more than the assumed return of 7.5 percent
over the past twenty year period ending June 30, 2013, returns for each fiscal year ranged from -24 percent to
+21.7 percent.
Second, the very nature of actuarial funding produces the answer to the question of plan or pool cost as the sum
of two separate pieces:
The Normal Cost (i.e., the future annual premiums in the absence of surplus or unfunded liability)
expressed as a percentage of total active payroll, and
The Past Service Cost or Accrued Liability (i.e., representing the current value of the benefit for all
credited past service of current members) which is expressed as a lump sum dollar amount.
The cost is the sum of a percent of future pay and a lump sum dollar amount (the sum of an apple and an orange
if you will). To communicate the total cost, either the Normal Cost (i.e., future percent of payroll) must be
converted to a lump sum dollar amount (in which case the total cost is the present value of benefits), or the Past
Service Cost (i.e., the lump sum) must be converted to a percent of payroll (in which case the total cost is
expressed as the employer’s rate, part of which is permanent and part temporary). Converting the Past Service
Cost lump sum to a percent of payroll requires a specific amortization period, and the plan or pool rate will vary
depending on the amortization period chosen.
Changes since the Prior Year’s Valuation
Benefits
The standard actuarial practice at CalPERS is to recognize mandated legislative benefit changes in the first
annual valuation following the effective date of the legislation. Voluntary benefit changes by employers within
the risk pool are generally included in the first valuation that is prepared after the amendment becomes effective
even if the valuation date is prior to the effective date of the amendment.
The valuation generally reflects plan changes by amendments effective prior to July 1, 2013. Please refer to
Appendix B for a summary of the plan provisions used in this valuation report. The provisions in Appendix B do
not indicate the class of benefits voluntarily contracted for by individual employers within the risk pool. Refer to
Section 1 of the valuation report for a list of your specific contracted benefits. The increase in the pool’s unfunded
liabilities due to Class 1 or 2 amendments by individual employers within the pool is embedded in the Liability
(Gain) / Loss shown in the (Gain) / Loss section of this report. This amount, however, is offset by additional
contributions through a surcharge for employers who voluntarily contract for those benefits.
Public Employees’ Pension Reform Act of 2013 (PEPRA)
On January 1, 2013, the Public Employees’ Pension Reform Act of 2013 (PEPRA) took effect, requiring that a
public employer’s contribution to a defined benefit plan, in combination with employee contributions to that
defined benefit plan, shall not be less than the normal cost rate. Beginning July 1, 2013, this means that some
Attachment B
4-34
HIGHLIGHTS AND EXECUTIVE SUMMARY
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
8
plans with surplus will be paying more than they otherwise would. For more information on PEPRA please refer to
the CalPERS website.
Subsequent Events
Actuarial Methods and Assumptions
On April 17, 2013, the CalPERS Board of Administration approved a recommendation to change the CalPERS
amortization and rate smoothing policies. Beginning with the June 30, 2013 valuations that set the 2015-16 rates,
CalPERS will employ an amortization and smoothing policy that will pay for all gains and losses over a fixed 30-
year period with the increases or decreases in the rate spread directly over a 5-year period. The impact of this
new actuarial methodology is reflected in the “Analysis of Future Investment Return Scenarios” subsection of the
“Risk Analysis” section of your Section 2 report.
Not reflected in the “Analysis of Future Investment Return Scenarios” subsection of the “Risk Analysis” section
is the impact of assumption changes that we expect will also impact future rates. A review of the preferred asset
allocation mix for CalPERS investment portfolio will be performed in late 2013, which could influence future
discount rates. In addition, CalPERS will review economic and demographic assumptions, including mortality rate
improvements that are likely to increase employer contribution rates in future years. The partial closure of the
pool (to most new hires) due to the enactment of PEPRA will also impact future pool rates.
Attachment B
4-35
ASSETS
RECONCILIATION OF THE MARKET VALUE OF ASSETS
DEVELOPMENT OF THE ACTUARIAL VALUE OF ASSETS
ASSET ALLOCATION
CALPERS HISTORY OF INVESTMENT RETURNS
Attachment B
4-36
ASSETS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
11
Reconciliation of the Market Value of Assets
1. Market Value of Assets as of June 30, 2011 Including Receivables $ 1,543,100,350
2. Receivables for Service Buybacks as of June 30, 2011 3,655,982
3. Market Value of Assets as of June 30, 2011 [1 - 2] 1,539,444,368
4. Employer Contributions 64,466,540
5. Employee Contributions 29,922,117
6. Benefit Payments to Retirees and Beneficiaries (86,923,862)
7. Refunds (1,481,075)
8. Lump Sum Payments 0
9. Transfers and Miscellaneous Adjustments (4,032,569)
10. Investment Return (2,881,315)
11. Market Value of Assets as of June 30, 2012 (w/o Pool Transfers) $ 1,538,514,204
12. Transfers into and out of the Risk Pool 692,161
13. Market Value of Assets as of June 30, 2012 $ 1,539,206,365
14. Receivables for Service Buybacks as of June 30, 2012 5,926,200
15. Market Value of Assets as of June 30, 2012 Including Receivables [13 + 14] 1,545,132,565
Development of the Actuarial Value of Assets
1. Actuarial Value of Assets as of June 30, 2011 Used for Rate Setting Purposes 1,724,200,585
2. Receivables for Service Buyback as of June 30, 2011 3,655,982
3. Actuarial Value of Assets as of June 30, 2011 [1 - 2] 1,720,544,603
4. Employer Contributions 64,466,540
5. Employee Contributions 29,922,117
6. Benefit Payments to Retirees and Beneficiaries (86,923,862)
7. Refunds (1,481,075)
8. Lump Sum Payments 0
9. Transfers and Miscellaneous Adjustments (4,032,569)
10. Expected Investment Income at 7.5% 129,112,691
11. Expected Actuarial Value of Assets (w/o Pool Transfers) $ 1,851,608,445
12. Market Value of Assets June 30, 2012 (w/o Pool Transfers) 1,538,514,204
13. Preliminary Actuarial Value of Assets (w/o Pool Transfers) [(11) + ((12) - (11)) / 15] 1,830,735,496
14. Preliminary Actuarial Value to Market Value Ratio 119.0%
15. Final Actuarial Value to Market Value Ratio (minimum 80%, maximum 120%) 119.0%
16. Market Value of Assets June 30, 2012 1,539,206,365
17. Actuarial Value of Assets as of June 30, 2012 1,831,563,222
18. Receivables for Service Buybacks as of June 30, 2012 5,926,200
19. Actuarial Value of Assets as of June 30, 2012 Used for Rate Setting Purposes [17 + 18] 1,837,489,422
Attachment B
4-37
ASSETS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
12
Asset Allocation
CalPERS adheres to an Asset Allocation Strategy which establishes asset class allocation policy targets and ranges,
and manages those asset class allocations within their policy ranges. CalPERS recognizes that over 90 percent of
the variation in investment returns of a well-diversified pool of assets can typically be attributed to asset allocation
decisions. The Board approved in December 2010 policy asset class targets and ranges listed below. These policy
asset allocation targets and ranges are expressed as a percentage of total assets and were expected to be
implemented over a period of one to two years beginning July, 1 2011 and reviewed again in December 2013.
The asset allocation and market value of assets shown below reflect the values of the Public Employees
Retirement Fund (PERF) in its entirety as of June 30, 2012. The assets for Miscellaneous 2.5% at 55 Risk Pool are
part of the Public Employees Retirement Fund (PERF) and are invested accordingly.
(A)
Asset Class
(B)
Market Value
($ Billion)
(C)
Policy Target
Allocation
(D)
Policy Target
Range
1) Public Equity 113.0 50.0% +/- 7%
2) Private Equity 33.9 14.0% +/- 4%
3) Fixed Income 42.6 17.0% +/- 5%
4) Cash Equivalents 7.5 4.0% +/- 5%
5) Real Assets 24.8 11.0% +/- 3%
6) Inflation Assets 7.0 4.0% +/- 3%
7) Absolute Return Strategy (ARS) 5.1 0.0% N/A
Total Fund $233.9 100.0% N/A
Public Equity
48.3%
Private Equity
14.5%
Income
18.2%
3.2%
Liquidity
Real Assets
10.6%
3.0%
Inflation
ARS
2.2%
Asset Allocation at 6/30/2012
Attachment B
4-38
ASSETS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
13 13
CalPERS History of Investment Returns
The following is a chart with historical annual returns of the Public Employees Retirement Fund for each fiscal
year ending on June 30. Beginning with June 30, 2002, the figures are reported as gross of fees.
-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
1
2
.
5
%
1
4
.
5
%
2
.
0
%
1
6
.
3
%
1
5
.
3
%
2
0
.
1
%
1
9
.
5
%
1
2
.
5
%
1
0
.
5
%
-
7
.
2
%
-
6
.
1
%
3
.
7
%
1
6
.
6
%
1
2
.
3
%
1
1
.
8
%
1
9
.
1
%
-
5
.
1
%
-
2
4
.
0
%
1
3
.
3
%
2
1
.
7
%
0
.
1
%
Attachment B
4-39
LIABILITIES AND RATES
DEVELOPMENT OF POOL’S ACCRUED AND UNFUNDED LIABILITIES
(GAIN)/LOSS ANALYSIS 06/30/11 - 06/30/12
SCHEDULE OF AMORTIZATION BASES FOR THE RISK POOL
DEVELOPMENT OF RISK POOL’S ANNUAL REQUIRED BASE CONTRIBUTION
POOL’S EMPLOYER CONTRIBUTION RATE HISTORY
FUNDING HISTORY
Attachment B
4-40
LIABILITIES AND RATES
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
17
Development of Pool’s Accrued and Unfunded Liabilities
1. Present Value of Projected Benefits June 30, 2011 June 30, 2012
a) Active Members $ 1,362,409,479 $ 1,333,215,341
b) Transferred Members 178,048,445 176,371,372
c) Separated Members 58,120,625 61,945,008
d) Members and Beneficiaries Receiving Payments 996,185,790 1,117,667,760
e) Total $ 2,594,764,339 $ 2,689,199,481
2. Present Value of Future Employer Normal Costs $ 246,813,830 $ 230,850,022
3. Present Value of Future Employee Contributions $ 212,600,305 $ 203,727,097
4. Entry Age Normal Accrued Liability
a) Active Members [(1a) - (2) - (3)] $ 902,995,344 $ 898,638,222
b) Transferred Members (1b) 178,048,445 176,371,372
c) Separated Members (1c) 58,120,625 61,945,008
d) Members and Beneficiaries Receiving Payments (1d) 996,185,790 1,117,667,760
e) Total $ 2,135,350,204 $ 2,254,622,362
5. Actuarial Value of Assets (AVA) Including Receivables $ 1,724,200,585 $ 1,837,489,422
6. Unfunded Accrued Liability (AVA Basis) [(4e) - (5)] 411,149,619 417,132,940
7. Funded Ratio (AVA Basis) [(5) / (4e)] 80.8% 81.5%
8. Side Funds $ (117,829,589) $ (107,443,058)
9. Unfunded Liability excluding Side Funds [(4e) - (5) + (8)] 293,320,030 309,689,882
10. Market Value of Assets (MVA) Including Receivables $ 1,543,100,350 $ 1,545,132,565
11. Funded Ratio (MVA Basis) [(10) / (4e)] 72.3% 68.5%
Attachment B
4-41
LIABILITIES AND RATES
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
18
(Gain)/Loss Analysis 06/30/11 - 06/30/12
To calculate the cost requirements of your pool, we use assumptions about future events that affect the
amount and timing of benefits to be paid and assets to be accumulated. Each year actual experience is
contrasted against the expected experience based on the actuarial assumptions. The differences are
reflected below as your pool’s actuarial gains or losses.
1. Total (Gain)/Loss for the Year
a) Unfunded Liability/(Surplus) as of June 30, 2011 $ 293,320,030
b) Expected payment on the Unfunded Liability 14,598,888
c) Interest accumulation [.075 X (1a) - ((1.075)^.5 - 1) X (1b)] 21,461,440
d) Expected Unfunded Liability before other changes [(1a) - (1b) + (1c)] 300,182,582
e) Change due to assumption changes 0
f) Expected Unfunded Liability after changes[(1d) + (1e)] 300,182,582
g) Actual Unfunded Liability/(Surplus) as of June 30, 2012 309,689,882
h) Total (Gain)/Loss [(1g) - (1f)] $ 9,507,300
2. Contribution (Gain)/Loss for the Year
a) Expected contribution (Employer and Employee) $ 97,464,066
b) Interest on Expected Contributions 3,588,828
c) Total expected Contributions with interest [(2a) + (2b)] 101,052,894
d) Actual Contributions 94,388,657
e) Interest on Actual Contributions 3,475,586
f) Total Actual Contributions with interest [(2d) + (2e)] 97,864,243
g) Contribution (Gain)/Loss [(2c) - (2f)] $ 3,188,651
3. Asset (Gain)/Loss for the Year
a) Actuarial Value of Assets as of 06/30/11 Including Receivables $ 1,724,200,585
b) Receivables as of 06/30/11 3,655,982
c) Actuarial Value of Assets as of 06/30/11 1,720,544,603
d) Contributions received 94,388,657
e) Benefits and Refunds Paid (88,404,937)
f) Transfers and miscellaneous adjustments (4,032,569)
g) Expected interest 129,112,691
h) Transfers into the pool (AVA Basis) 12,431,377
i) Transfers out of the pool (AVA Basis) (11,607,747)
j) Expected Assets as of 06/30/12 [Sum (3c) through (3i)] 1,852,432,075
k) Receivables as of 06/30/12 5,926,200
l) Expected Assets Including Receivables 1,858,358,275
m) Actual Actuarial Value of Assets as of 06/30/12 Including Receivables 1,837,489,422
n) Asset (Gain)/Loss [(3l) – (3m)] $ 20,868,853
4. Liability (Gain)/Loss for the Year
a) Total (Gain)/Loss (1h) $ 9,507,300
b) Contribution (Gain)/Loss (2g) 3,188,651
c) Asset (Gain)/Loss excluding side fund (3n) 20,868,853
d) Liability (Gain)/Loss [(4a) - (4b) - (4c)]* $ (14,550,204)
* Includes (Gain)/Loss on plans transferring into the pool.
Attachment B
4-42
LIABILITIES AND RATES
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
19
Schedule of Amortization Bases for the Risk Pool
The schedule below shows the development of the payment on the Pool’s amortization bases used to determine the Total Required Employer Contributions to the
Pool. Each row of the schedule gives a brief description of a base (or portion of the Unfunded Actuarial Liability), the balance of the base on the valuation date,
and the number of years remaining in the amortization period. In addition, we show the expected payments for the two years immediately following the valuation
date, the balances on the dates a year and two years after the valuation date, and the scheduled payment for fiscal year 2014-15. Please refer to Appendix A for
an explanation of how amortization periods are determined.
Schedule of Amortization
Reason for Base
Amortization
Period
Balance on
June 30, 2012
Expected
Payment 12-13
Balance
June 30, 2013
Expected
Payment 13-14
Balance
June 30, 2014
Scheduled
Payment for
2014-15
Payment as
a percentage
of payroll
2004 FRESH START 22 $4,979,552 $337,692 $5,002,892 $346,856 $5,018,481 $357,262 0.096%
2005 (GAIN)/LOSS 30 $85,373,221 $4,566,743 $87,041,313 $4,613,140 $88,786,406 $5,331,670 1.439%
2005 PAYMENT (GAIN)/LOSS 30 $(580,609) $(3,430,412) $2,932,573 $(1,486,318) $4,693,562 $281,851 0.077%
2009 ASSUMPTION CHANGE 17 $102,174,885 $7,994,684 $101,548,937 $8,209,700 $100,653,109 $8,455,991 2.281%
2009 SPECIAL (GAIN)/LOSS 27 $59,570,613 $3,647,079 $60,257,037 $3,746,795 $60,891,555 $3,859,199 1.041%
2010 SPECIAL (GAIN)/LOSS 28 $18,666,527 $1,123,550 $18,901,595 $1,154,397 $19,122,310 $1,189,029 0.321%
2011 ASSUMPTION CHANGE 19 $42,547,698 $(1,303,769) $47,090,552 $1,185,197 $49,393,505 $3,854,025 1.040%
2011 SPECIAL (GAIN)/LOSS 29 $(3,042,005) $0 $(3,270,155) $(196,375) $(3,311,811) $(202,266) (0.055%)
Total excluding side funds $309,689,882 $12,935,567 $319,504,744 $17,573,392 $325,247,117 $23,126,761 6.239%
The special (gain)/loss bases were special bases established for the gain/loss that is recognized in the 2009, 2010, and 2011 annual valuations. Unlike the
gain/loss occurring in previous and subsequent years, the gain/loss recognized in the 2009, 2010, and 2011 annual valuations will be amortized over fixed and
declining 30 year periods so that these annual gain/losses will be fully paid off in 30 years. The gain/loss recognized in 2012 and later valuations will be combined
with the gain/loss from 2008 and earlier valuations.
Attachment B
4
-
4
3
LIABILITIES AND RATES
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
20
Development of Risk Pool’s Annual Required Base
Contribution
Fiscal Year Fiscal Year
2013-14 2014-15
1. Contribution in Projected Dollars
a) Total Normal Cost $ 67,890,150 $ 65,043,903
b) Employee Contribution 30,178,501 29,254,373
c) Pool’s Gross Employer Normal Cost [(1a) - (1b)] 37,711,649 35,789,530
d) Total Surcharges for Class 1 Benefits 2,942,098 2,813,491
e) Net Employer Normal Cost [(1c) - (1d)] 34,769,551 32,976,039
f) Payment on Pool’s Amortization Bases $ 19,111,950 $ 23,126,761
g) Total Required Employer Contributions [(1e) + (1f)] 53,881,501 56,102,800
2. Annual Covered Payroll as of Valuation Date $ 350,121,750 $ 339,228,272
3. Projected Payroll for Contribution Fiscal Year $ 382,587,490 $ 370,683,892
4. Contribution as a % of Projected Pay
a) Total Normal Cost [(1a) / (3)] 17.745% 17.547%
b) Employee Contribution [(1b) / (3)] 7.888% 7.892%
c) Pool’s Gross Employer Normal Cost [(1c) / (3)] 9.857% 9.655%
d) Total Surcharges for Class 1 Benefits [(1d) / (3)] 0.769% 0.759%
e) Net Employer Normal Cost [(1e) / (3)] 9.088% 8.896%
f) Payment on Pool’s Amortization Bases [(1f) / (3)] 4.995% 6.239%
g) Total Required Employer Contributions [(1g) / (3)] 14.083% 15.135%
Attachment B
4-44
LIABILITIES AND RATES
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
21
Pool’s Employer Contribution Rate History
Fiscal
Date
Net
Employer
Normal Cost
Total
Surcharges
for Class 1
Benefits
Gross
Employer
Normal
Cost
Payment on
Pool’s
Amortization
Bases
Total
Payment On
Employer
Side Funds
Total
Employer
Contribution
06/30/2008 8.478% 0.756% 9.234% 1.202% 3.690% 14.126%
06/30/2009 8.715% 0.774% 9.489% 4.034% 3.660% 17.183%
06/30/2010 8.780% 0.782% 9.562% 4.527% 3.469% 17.558%
06/30/2011 9.088% 0.769% 9.857% 4.995% 3.436% 18.288%
06/30/2012 8.896% 0.759% 9.655% 6.239% 3.042% 18.936%
Funding History
However, note that beginning next year, GASB 68 will supersede GASB 27. Disclosure required under GASB 68
will require additional reporting which CalPERS may be able to provide for an additional cost.
Valuation
Date
Accrued
Liabilities
(AL)
Market Value
of Assets
(MVA)
Funded
Ratio
(MVA/AL)
06/30/2008 $1,537,909,933 $1,353,157,484 88.0%
06/30/2009 $1,834,424,640 $1,088,733,372 59.4%
06/30/2010 $1,972,910,641 $1,261,453,576 63.9%
06/30/2011 $2,135,350,204 $1,543,100,350 72.3%
06/30/2012 $2,254,622,362 $1,545,132,565 68.5%
Valuation
Date
Accrued
Liabilities
(AL)
Actuarial
Value of
Assets (AVA)
Unfunded
Liabilities
(UL)
Funded
Ratio
(AVA/AL)
Annual
Covered
Payroll
UL As a %
of Payroll
06/30/2008 $1,537,909,933 $1,337,707,835 $200,202,098 87.0% $333,307,600 60.1%
06/30/2009 $1,834,424,640 $1,493,430,831 $340,993,809 81.4% $355,150,151 96.0%
06/30/2010 $1,972,910,641 $1,603,482,152 $369,428,489 81.3% $352,637,380 104.8%
06/30/2011 $2,135,350,204 $1,724,200,585 $411,149,619 80.8% $350,121,750 117.4%
06/30/2012 $2,254,622,362 $1,837,489,422 $417,132,940 81.5% $339,228,272 123.0%
Information shown here is for compliance with GASB No. 27 for a cost-sharing multiple-employer defined benefit
plan.
Attachment B
4-45
RISK ANALYSIS
VOLATILITY RATIOS
PROJECTED RATES
ANALYSIS OF FUTURE INVESTMENT RETURN SCENARIOS
ANALYSIS OF DISCOUNT RATE SENSITIVITY
Attachment B
4-46
RISK ANALYSIS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
25
Volatility Ratios
The actuarial calculations supplied in this communication are based on a number of assumptions about very
long term demographic and economic behavior. Unless these assumptions (terminations, deaths,
disabilities, retirements, salary growth, and investment return) are exactly realized each year, there will be
differences on a year to year basis. The year-to-year differences between actual experience and the
assumptions are called actuarial gains and losses and serve to lower or raise the employer’s rates from one
year to the next. Therefore, the rates will inevitably fluctuate, especially due to the ups and downs of
investment returns.
Asset Volatility Ratio (AVR)
Pools that have higher asset to payroll ratios produce more volatile employer rates due to investment
return. For example, a pool with an asset to payroll ratio of 8 may experience twice the contribution
volatility due to investment return volatility than a pool with an asset to payroll ratio of 4. Below we have
shown your asset volatility ratio, a measure of the pool’s potential future rate volatility. It should be noted
that this ratio increases over time but generally tends to stabilize as the pool matures.
Liability Volatility Ratio
Pools that have higher liability to payroll ratios produce more volatile employer rates due to investment
return. For example, a pool with an liability to payroll ratio of 8 may experience twice the contribution
volatility due to investment return volatility than a pool with an liability to payroll ratio of 4. Below we have
shown your volatility index, a measure of the plan’s potential future rate volatility. It should be noted that
this ratio increases over time but generally tends to stabilize as the pool matures.
As of June 30, 2012
1. Market Value of Assets without Receivables $ 1,539,206,365
2. Payroll 339,228,272
3. Asset Volatility Ratio (AVR = 1. / 2.) 4.5
4. Accrued Liability 2,254,622,362
5. Payroll 339,228,272
6. Liability Volatility Ratio (4. / 5.) 6.6
Attachment B
4-47
RISK ANALYSIS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
26
Projected Rates
On April 17, 2013, the CalPERS Board of Administration approved a recommendation to change the CalPERS
amortization and smoothing policies. Beginning with the June 30, 2013 valuations that will set the 2015-16 rates,
CalPERS will employ an amortization and rate smoothing policy that will pay for all gains and losses over a fixed
30-year period with the increases or decreases in the rate spread directly over a 5-year period. The table below
shows projected pool contribution rates (before cost sharing) for the next five Fiscal Years, assuming CalPERS
earns 12 percent for fiscal year 2012-13 and 7.50 percent every fiscal year thereafter, and assuming
that all other actuarial assumptions will be realized and that no further changes to assumptions, contributions,
benefits, or funding will occur between now and the beginning of the fiscal year 2015-16. Consequently,
these projections do not take into account potential rate increases from likely future assumption
changes. In addition they do not take into account the positive impact PEPRA is expected to gradually have on
the normal cost nor the possibility that a plan may be required under PEPRA to contribute a higher normal cost
than would otherwise be calculated. PEPRA is expected to reduce expected payroll for this pool in the future and
as a result CalPERS may need to change its method of allocating pooled plan unfunded liability. These potential
changes are not reflected in the projected rates.
New Rate Projected Future Pool Contribution Rates
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
Contribution Rates: 15.135% 16.2% 17.2% 18.3% 19.3% 20.3%
Analysis of Future Investment Return Scenarios
In July 2013, the investment return for fiscal year 2012-13 was announced to be 12.5 percent. Note that this
return is before administrative expenses and also does not reflect final investment return information for real
estate and private equities. The final return information for these two asset classes is expected to be available
later in October. For purposes of projecting future employer rates, we are assuming a 12 percent investment
return for fiscal year 2012-13.
The investment return realized during a fiscal year first affects the contribution rate for the fiscal year 2 years
later. Specifically, the investment return for 2012-13 will first be reflected in the June 30, 2013 actuarial
valuation that will be used to set the 2015-16 employer contribution rates, the 2013-14 investment return will
first be reflected in the June 30, 2014 actuarial valuation that will be used to set the 2016-17 employer
contribution rates and so forth.
Based on a 12 percent investment return for fiscal year 2012-13 and the April 17, 2013 CalPERS Board-approved
amortization and rate smoothing method change and assuming that all other actuarial assumptions will be
realized and that no further changes to assumptions, contributions, benefits, or funding will occur between now
and the beginning of the fiscal year 2015-16, the effect on the 2015-16 Employer Rate is as follows:
Estimated 2015-16 Pool’s Base
Employer Rate
Estimated Increase in Pool’s Base Employer Rate
between 2014-15 and 2015-16
16.2% 1.0%
As part of this report, a sensitivity analysis was performed to determine the effects of various investment returns
during fiscal years 2013-14, 2014-15 and 2015-16 on the 2016-17, 2017-18 and 2018-19 employer rates. Once
again, the projected rate increases assume that all other actuarial assumptions will be realized and that no
further changes to assumptions, contributions, benefits, or funding will occur.
Attachment B
4-48
RISK ANALYSIS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
27
Five different investment return scenarios were selected.
The first scenario is what one would expect if the markets were to give us a 5th percentile return from
July 1, 2013 through June 30, 2016. The 5th percentile return corresponds to a negative -4.1 percent
return for each of the 2013-14, 2014-15 and 2015-16 fiscal years.
The second scenario is what one would expect if the markets were to give us a 25th percentile return
from July 1, 2013 through June 30, 2016. The 25th percentile return corresponds to a 2.6 percent
return for each of the 2013-14, 2014-15 and 2015-16 fiscal years.
The third scenario assumed the return for 2013-14, 2014-15, 2015-16 would be our assumed 7.5
percent investment return which represents about a 49th percentile event.
The fourth scenario is what one would expect if the markets were to give us a 75th percentile return
from July 1, 2013 through June 30, 2016. The 75th percentile return corresponds to a 11.9 percent
return for each of the 2013-14, 2014-15 and 2015-16 fiscal years.
Finally, the last scenario is what one would expect if the markets were to give us a 95th percentile
return from July 1, 2013 through June 30, 2016. The 95th percentile return corresponds to a 18.5
percent return for each of the 2013-14, 2014-15 and 2015-16 fiscal years.
The table below shows the estimated changes in the Pool’s Base rate for 2016-17, 2017-18 and 2018-19 under
the five different scenarios.
2013-16
Investment Return
Scenario
Estimated Change in Pool’s Base Rate Between Year Shown and Preceding
Year
2016-17 2017-18 2018-19 Cumulative
Increase
-4.10% (5th percentile) 1.9% 2.7% 3.4% 8.0%
2.60% (25th percentile) 1.4% 1.7% 2.1% 5.2%
7.5% 1.0% 1.0% 1.0% 3.0%
11.90% (75th percentile) 0.7% 0.4% 0.0% 1.1%
18.50% (95th percentile) 0.3% -0.7% -1.7% -2.1%
Analysis of Discount Rate Sensitivity
The following analysis looks at the 2014-15 employer contribution rates under two different discount rate
scenarios. Shown below are the employer contribution rates assuming discount rates that are 1 percent lower
and 1 percent higher than the current valuation discount rate. This analysis gives an indication of the potential
required employer contribution rates if the PERF were to realize investment returns of 6.50 percent or 8.50
percent over the long-term.
This type of analysis gives the reader a sense of the long-term risk to the risk pool contribution rates.
2014-15 Employer Contribution Rate
As of June 30, 2012 6.50% Discount
Rate (-1%) 7.50% Discount Rate
(assumed rate) 8.50% Discount
Rate (+1%)
Pool’s Gross Employer Normal Cost 13.6% 9.7% 6.6%
Payment on Pool’s Amortization Bases 12.5% 6.2% 0.3%
Total 26.1% 15.9% 6.9%
Attachment B
4-49
APPENDICES
APPENDIX A - ACTUARIAL METHODS AND ASSUMPTIONS
APPENDIX B - PLAN PROVISIONS
APPENDIX C - PLAN OPTIONS AND VARIABLES
APPENDIX D - LIST OF PARTICIPATING EMPLOYERS
APPENDIX E - PARTICIPANT DATA
APPENDIX F - GLOSSARY OF ACTUARIAL TERMS
Attachment B
4-50
APPENDIX A
ACTUARIAL METHODS AND ASSUMPTIONS
ACTUARIAL DATA
ACTUARIAL METHODS
ACTUARIAL ASSUMPTIONS
MISCELLANEOUS
Attachment B
4-51
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
A-1
Actuarial Data
As stated in the Actuarial Certification, the data which serves as the basis of this valuation has been obtained from
the various CalPERS databases. We have reviewed the valuation data and believe that it is reasonable and
appropriate in aggregate. We are unaware of any potential data issues that would have a material effect on the
results of this valuation, except that data does not always contain the latest salary information for former members
now in reciprocal systems and does not recognize the potential for unusually large salary deviation in certain cases
such as elected officials. Therefore, salary information in these cases may not be accurate. These situations are
relatively infrequent, however, and when they do occur, they generally do not have a material impact on the
employer contribution rates.
Actuarial Methods
Funding Method
The actuarial funding method used for the Retirement Program is the Entry Age Normal Cost Method. Under this
method, projected benefits are determined for all members and the associated liabilities are spread in a manner that
produces level annual cost as a percent of pay in each year from the age of hire (entry age) to the assumed
retirement age. The cost allocated to the current fiscal year is called the normal cost.
The actuarial accrued liability for active members is then calculated as the portion of the total cost of the pool
allocated to prior years. The actuarial accrued liability for members currently receiving benefits, for active members
beyond the assumed retirement age, and for members entitled to deferred benefits, is equal to the present value of
the benefits expected to be paid. No normal costs are applicable for these participants.
The excess of the total actuarial accrued liability over the actuarial value of plan assets is called the unfunded
actuarial accrued liability. Funding requirements are determined by adding the normal cost and an amortization of
the unfunded liability as a level percentage of assumed future payrolls. All changes in liability due to changes in
actuarial assumptions, or changes in actuarial methodology are amortized separately over a 20-year period. All new
gains or losses are tracked and amortized over a rolling 30-year period. If a pool’s accrued liability exceeds the
actuarial value of assets, the annual contribution with respect to the total unfunded liability may not be less than the
amount produced by a 30-year amortization of the unfunded liability.
Additional contributions will be required for any plan or pool if their cash flows hamper adequate funding progress by
preventing the expected funded status on a market value of assets basis of the plan to either:
Increase by at least 15 percent by June 30, 2043; or
Reach a level of 75 percent funded by June 30, 2043
The necessary additional contribution will be obtained by changing the amortization period of the gains and losses
except for those occurring in the fiscal years 2008-2009, 2009-2010, and 2010-2011 to a period which will result in
the satisfaction of the above criteria. CalPERS actuaries will reassess the criteria above when performing each future
valuation to determine whether or not additional contributions are necessary.
An exception to the funding rules above is used whenever the application of such rules results in inconsistencies. In
these cases a “fresh start” approach is used. This simply means that the current unfunded actuarial liability is
projected and amortized over a set number of years. As mentioned above, if the annual contribution on the total
unfunded liability was less than the amount produced by a 30-year amortization of the unfunded liability, the plan
actuary would implement a 30-year fresh start. However, in the case of a 30-year fresh start, just the unfunded
liability not already in the (gain)/loss base (which already is amortized over 30 years) will go into the new fresh start
base. In addition, a fresh start is needed in the following situations:
1) When a positive payment would be required on a negative unfunded actuarial liability (or conversely a
negative payment on a positive unfunded actuarial liability); or
2) When there is excess assets, rather than an unfunded liability. In this situation a 30-year fresh start is used,
unless a larger fresh start is needed to avoid a negative total rate.
Attachment B
4-52
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
A-2
It should be noted that the actuary may choose to use a fresh start under other circumstances. In all cases, the
period of the fresh start is chosen by the actuary according to his or her best judgment, but not be less than five
years, nor greater than 30 years.
Asset Valuation Method
In order to dampen the effect of short term market value fluctuations on employer contribution rates, the following
asset smoothing technique is used. First an Expected Value of Assets is computed by bringing forward the prior
year’s Actuarial Value of Assets and the contributions received and benefits paid during the year at the assumed
actuarial rate of return. The Actuarial Value of Assets is then computed as the Expected Value of Assets plus one-
fifteenth of the difference between the actual Market Value of Assets and the Expected Value of Assets as of the
valuation date. However, in no case will the Actuarial Value of Assets be less than 80 percent, nor greater than 120
percent of the actual Market Value of Assets.
In June 2009, the CalPERS Board adopted changes to the asset smoothing method in order to phase in over a three-
year period the impact of the negative -24 percent investment loss experienced by CalPERS in fiscal year 2008-2009.
The following changes were adopted:
Increase the corridor limits for the actuarial value of assets from 80 percent-120 percent of market value to
60 percent-140 percent of market value on June 30, 2009
Reduce the corridor limits for the actuarial value of assets to 70 percent-130 percent of market value on
June 30, 2010
Return to the 80 percent-120 percent of market value corridor limits for the actuarial value of assets on
June 30, 2011 and thereafter
On April 17, 2013, the CalPERS Board of Administration approved a recommendation to change the
CalPERS amortization and rate smoothing policies. Beginning with the June 30, 2013 valuations that
set the 2015-16 contribution rates, CalPERS will employ an amortization and smoothing policy that will
pay for all gains and losses over a fixed 30-year period with the increases or decreases in the rate
spread directly over a 5-year period.
Attachment B
4-53
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
A-3
Actuarial Assumptions
Economic Assumptions
Discount Rate
7.5 percent compounded annually (net of expenses). This assumption is used for all plans.
Termination Liability Discount Rate
The discount rate used for termination valuation is a weighted average of the 10 and 30-year US Treasury
yields in effect on the valuation date that equal the duration of the pension liabilities. For purposes of this
hypothetical termination liability estimate, the discount rate used, 2.98 percent, is the yield on the 30-year
US Treasury Separate Trading of Registered Interest and Principal of Securities (STRIPS) as of June 30,
2012. Please note, as of June 30, 2013 the 30-year STRIPS yield was 3.72 percent.
Salary Growth
Annual increases vary by category, entry age, and duration of service. Sample which is assumed increases
are shown below.
Public Agency Miscellaneous
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.1420 0.1240 0.0980
1 0.1190 0.1050 0.0850
2 0.1010 0.0910 0.0750
3 0.0880 0.0800 0.0670
4 0.0780 0.0710 0.0610
5 0.0700 0.0650 0.0560
10 0.0480 0.0460 0.0410
15 0.0430 0.0410 0.0360
20 0.0390 0.0370 0.0330
25 0.0360 0.0360 0.0330
30 0.0360 0.0360 0.0330
Public Agency Fire
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.1050 0.1050 0.1020
1 0.0950 0.0940 0.0850
2 0.0870 0.0830 0.0700
3 0.0800 0.0750 0.0600
4 0.0740 0.0680 0.0510
5 0.0690 0.0620 0.0450
10 0.0510 0.0460 0.0350
15 0.0410 0.0390 0.0340
20 0.0370 0.0360 0.0330
25 0.0350 0.0350 0.0330
30 0.0350 0.0350 0.0330
Attachment B
4-54
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
A-4
Public Agency Police
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.1090 0.1090 0.1090
1 0.0930 0.0930 0.0930
2 0.0810 0.0810 0.0780
3 0.0720 0.0700 0.0640
4 0.0650 0.0610 0.0550
5 0.0590 0.0550 0.0480
10 0.0450 0.0420 0.0340
15 0.0410 0.0390 0.0330
20 0.0370 0.0360 0.0330
25 0.0350 0.0340 0.0330
30 0.0350 0.0340 0.0330
Public Agency County Peace Officers
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.1290 0.1290 0.1290
1 0.1090 0.1060 0.1030
2 0.0940 0.0890 0.0840
3 0.0820 0.0770 0.0710
4 0.0730 0.0670 0.0610
5 0.0660 0.0600 0.0530
10 0.0460 0.0420 0.0380
15 0.0410 0.0380 0.0360
20 0.0370 0.0360 0.0340
25 0.0350 0.0340 0.0330
30 0.0350 0.0340 0.0330
Schools
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.1080 0.0960 0.0820
1 0.0940 0.0850 0.0740
2 0.0840 0.0770 0.0670
3 0.0750 0.0700 0.0620
4 0.0690 0.0640 0.0570
5 0.0630 0.0600 0.0530
10 0.0450 0.0440 0.0410
15 0.0390 0.0380 0.0350
20 0.0360 0.0350 0.0320
25 0.0340 0.0340 0.0320
30 0.0340 0.0340 0.0320
The Miscellaneous salary scale is used for Local Prosecutors.
The Police salary scale is used for Other Safety, Local Sheriff, and School Police.
Overall Payroll Growth
3.00 percent compounded annually (used in projecting the payroll over which the unfunded liability is
amortized). This assumption is used for all plans.
Inflation
2.75 percent compounded annually. This assumption is used for all plans.
Attachment B
4-55
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
A-5
Non-valued Potential Additional Liabilities
The potential liability loss for a cost-of-living increase exceeding the 2.75 percent inflation assumption, and
any potential liability loss from future member service purchases are not reflected in the valuation.
Miscellaneous Loading Factors
Credit for Unused Sick Leave
Final Average Salary is increased by 1 percent for those agencies that have accepted the provision providing
Credit for Unused Sick Leave.
Conversion of Employer Paid Member Contributions (EPMC)
Final Average Salary is increased by the Employee Contribution Rate for those agencies that have
contracted for the provision providing for the Conversion of Employer Paid Member Contributions (EPMC)
during the final compensation period.
Norris Decision (Best Factors)
Employees hired prior to July 1, 1982 have projected benefit amounts increased in order to reflect the use of
“Best Factors” for these employees in the calculation of optional benefit forms. This is due to a 1983
Supreme Court decision, known as the Norris decision, which required males and females to be treated
equally in the determination of benefit amounts. Consequently, anyone already employed at that time is
given the best possible conversion factor when optional benefits are determined. No loading is necessary for
employees hired after July 1, 1982.
Termination Liability
The termination liabilities include a 7 percent contingency load. This load is for unforeseen improvements in
mortality.
Demographic Assumptions
Pre-Retirement Mortality
Non-Industrial Death Rates vary by age and gender. Industrial Death rates vary by age. See sample rates in
table below. The non-industrial death rates are used for all plans. The industrial death rates are used for
Safety Plans (except for Local Prosecutor safety members where the corresponding Miscellaneous Plan does
not have the Industrial Death Benefit).
Non-Industrial Death Industrial Death
(Not Job-Related) (Job-Related)
Age Male Female Male and Female
20 0.00047 0.00016 0.00003
25 0.00050 0.00026 0.00007
30 0.00053 0.00036 0.00010
35 0.00067 0.00046 0.00012
40 0.00087 0.00065 0.00013
45 0.00120 0.00093 0.00014
50 0.00176 0.00126 0.00015
55 0.00260 0.00176 0.00016
60 0.00395 0.00266 0.00017
65 0.00608 0.00419 0.00018
70 0.00914 0.00649 0.00019
75 0.01220 0.00878 0.00020
80 0.01527 0.01108 0.00021
Miscellaneous Plans usually have Industrial Death rates set to zero unless the agency has specifically
contracted for Industrial Death benefits. If so, each Non-Industrial Death rate shown above will be split into
two components: 99 percent will become the Non-Industrial Death rate and 1 percent will become the
Industrial Death rate.
Attachment B
4-56
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
A-6
Post-Retirement Mortality
Rates vary by age, type of retirement and gender. See sample rates in table below. These rates are used for
all plans.
Healthy Recipients
Non-Industrially Disabled Industrially Disabled
(Not Job-Related) (Job-Related)
Age Male Female Male Female Male Female
50 0.00239 0.00125 0.01632 0.01245 0.00443 0.00356
55 0.00474 0.00243 0.01936 0.01580 0.00563 0.00546
60 0.00720 0.00431 0.02293 0.01628 0.00777 0.00798
65 0.01069 0.00775 0.03174 0.01969 0.01388 0.01184
70 0.01675 0.01244 0.03870 0.03019 0.02236 0.01716
75 0.03080 0.02071 0.06001 0.03915 0.03585 0.02665
80 0.05270 0.03749 0.08388 0.05555 0.06926 0.04528
85 0.09775 0.07005 0.14035 0.09577 0.11799 0.08017
90 0.16747 0.12404 0.21554 0.14949 0.16575 0.13775
95 0.25659 0.21556 0.31025 0.23055 0.26108 0.23331
100 0.34551 0.31876 0.45905 0.37662 0.40918 0.35165
105 0.58527 0.56093 0.67923 0.61523 0.64127 0.60135
110 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000
The mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience
Study adopted by the CalPERS Board, first used in the June 30, 2009 valuation. For purposes of the post-
retirement mortality rates, those revised rates include 5 years of projected on-going mortality improvement
using Scale AA published by the Society of Actuaries until June 30, 2010. There is no margin for future mortality
improvement beyond the valuation date. The mortality assumption will be reviewed with the next experience
study expected to be completed for the June 30, 2013 valuation to determine an appropriate margin to be used.
Marital Status
For active members, a percentage married upon retirement is assumed according to the following table.
Member Category Percent Married
Miscellaneous Member 85%
Local Police 90%
Local Fire 90%
Other Local Safety 90%
School Police 90%
Age of Spouse
It is assumed that female spouses are 3 years younger than male spouses. This assumption is used for all
plans.
Terminated Members
It is assumed that terminated members refund immediately if non-vested. Terminated members who are
vested are assumed to follow the same service retirement pattern as active members but with a load to
reflect the expected higher rates of retirement, especially at lower ages. The following table shows the load
factors that are applied to the service retirement assumption for active members to obtain the service
retirement pattern for separated vested members:
Age Load Factor
50 450%
51 250%
52 through 56 200%
57 through 60 150%
61 through 64 125%
65 and above 100% (no change)
Attachment B
4-57
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
A-7
Termination with Refund
Rates vary by entry age and service for Miscellaneous Plans. Rates vary by service for Safety Plans. See
sample rates in tables below.
Public Agency Miscellaneous
Duration of
Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40 Entry Age 45
0 0.1742 0.1674 0.1606 0.1537 0.1468 0.1400
1 0.1545 0.1477 0.1409 0.1339 0.1271 0.1203
2 0.1348 0.1280 0.1212 0.1142 0.1074 0.1006
3 0.1151 0.1083 0.1015 0.0945 0.0877 0.0809
4 0.0954 0.0886 0.0818 0.0748 0.0680 0.0612
5 0.0212 0.0193 0.0174 0.0155 0.0136 0.0116
10 0.0138 0.0121 0.0104 0.0088 0.0071 0.0055
15 0.0060 0.0051 0.0042 0.0032 0.0023 0.0014
20 0.0037 0.0029 0.0021 0.0013 0.0005 0.0001
25 0.0017 0.0011 0.0005 0.0001 0.0001 0.0001
30 0.0005 0.0001 0.0001 0.0001 0.0001 0.0001
35 0.0001 0.0001 0.0001 0.0001 0.0001 0.0001
Public Agency Safety
Duration of Service Fire Police County Peace Officer
0 0.0710 0.1013 0.0997
1 0.0554 0.0636 0.0782
2 0.0398 0.0271 0.0566
3 0.0242 0.0258 0.0437
4 0.0218 0.0245 0.0414
5 0.0029 0.0086 0.0145
10 0.0009 0.0053 0.0089
15 0.0006 0.0027 0.0045
20 0.0005 0.0017 0.0020
25 0.0003 0.0012 0.0009
30 0.0003 0.0009 0.0006
35 0.0003 0.0009 0.0006
The Police Termination and Refund rates are used for Public Agency Local Prosecutors, Other Safety, Local Sheriff,
and School Police.
Schools
Duration of
Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40 Entry Age 45
0 0.1730 0.1627 0.1525 0.1422 0.1319 0.1217
1 0.1585 0.1482 0.1379 0.1277 0.1174 0.1071
2 0.1440 0.1336 0.1234 0.1131 0.1028 0.0926
3 0.1295 0.1192 0.1089 0.0987 0.0884 0.0781
4 0.1149 0.1046 0.0944 0.0841 0.0738 0.0636
5 0.0278 0.0249 0.0221 0.0192 0.0164 0.0135
10 0.0172 0.0147 0.0122 0.0098 0.0074 0.0049
15 0.0115 0.0094 0.0074 0.0053 0.0032 0.0011
20 0.0073 0.0055 0.0038 0.0020 0.0002 0.0002
25 0.0037 0.0023 0.0010 0.0002 0.0002 0.0002
30 0.0015 0.0003 0.0002 0.0002 0.0002 0.0002
35 0.0002 0.0002 0.0002 0.0002 0.0002 0.0002
Attachment B
4-58
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
A-8
Termination with Vested Benefits
Rates vary by entry age and service for Miscellaneous Plans. Rates vary by service for Safety Plans. See
sample rates in tables below.
Public Agency Miscellaneous
Duration of
Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40
5 0.0656 0.0597 0.0537 0.0477 0.0418
10 0.0530 0.0466 0.0403 0.0339 0.0000
15 0.0443 0.0373 0.0305 0.0000 0.0000
20 0.0333 0.0261 0.0000 0.0000 0.0000
25 0.0212 0.0000 0.0000 0.0000 0.0000
30 0.0000 0.0000 0.0000 0.0000 0.0000
35 0.0000 0.0000 0.0000 0.0000 0.0000
Public Agency Safety
Duration of
Service Fire Police
County Peace
Officer
5 0.0162 0.0163 0.0265
10 0.0061 0.0126 0.0204
15 0.0058 0.0082 0.0130
20 0.0053 0.0065 0.0074
25 0.0047 0.0058 0.0043
30 0.0045 0.0056 0.0030
35 0.0000 0.0000 0.0000
When a member is eligible to retire, the termination with vested benefits probability is set to zero.
After termination with vested benefits, a miscellaneous member is assumed to retire at age 59 and a
safety member at age 54.
The Police Termination with vested benefits rates are used for Public Agency Local Prosecutors, Other
Safety, Local Sheriff, and School Police.
Schools
Duration of
Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40
5 0.0816 0.0733 0.0649 0.0566 0.0482
10 0.0629 0.0540 0.0450 0.0359 0.0000
15 0.0537 0.0440 0.0344 0.0000 0.0000
20 0.0420 0.0317 0.0000 0.0000 0.0000
25 0.0291 0.0000 0.0000 0.0000 0.0000
30 0.0000 0.0000 0.0000 0.0000 0.0000
35 0.0000 0.0000 0.0000 0.0000 0.0000
Attachment B
4-59
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
A-9
Non-Industrial (Not Job-Related) Disability
Rates vary by age and gender for Miscellaneous Plans.
Rates vary by age for Safety Plans.
Miscellaneous Fire Police County Peace Officer Schools
Age Male Female Male and Female Male and Female Male and Female Male Female
20 0.0001 0.0001 0.0001 0.0001 0.0001 0.0001 0.0001
25 0.0001 0.0001 0.0001 0.0001 0.0001 0.0001 0.0001
30 0.0002 0.0002 0.0001 0.0002 0.0001 0.0002 0.0001
35 0.0006 0.0009 0.0001 0.0003 0.0004 0.0006 0.0004
40 0.0015 0.0016 0.0001 0.0004 0.0007 0.0014 0.0009
45 0.0025 0.0024 0.0002 0.0005 0.0013 0.0028 0.0017
50 0.0033 0.0031 0.0005 0.0008 0.0018 0.0044 0.0030
55 0.0037 0.0031 0.0010 0.0013 0.0010 0.0049 0.0034
60 0.0038 0.0025 0.0015 0.0020 0.0006 0.0043 0.0024
The Miscellaneous Non-Industrial Disability rates are used for Local Prosecutors.
The Police Non-Industrial Disability rates are used for Other Safety, Local Sheriff, and School Police.
Industrial (Job-Related) Disability
Rates vary by age and category.
Age Fire Police County Peace Officer
20 0.0002 0.0007 0.0003
25 0.0012 0.0032 0.0015
30 0.0025 0.0064 0.0031
35 0.0037 0.0097 0.0046
40 0.0049 0.0129 0.0063
45 0.0061 0.0161 0.0078
50 0.0074 0.0192 0.0101
55 0.0721 0.0668 0.0173
60 0.0721 0.0668 0.0173
The Police Industrial Disability rates are used for Local Sheriff and Other Safety.
Fifty Percent of the Police Industrial Disability rates are used for School Police.
One Percent of the Police Industrial Disability rates are used for Local Prosecutors.
Normally, rates are zero for Miscellaneous Plans unless the agency has specifically contracted for
Industrial Disability benefits. If so, each Miscellaneous Non-Industrial Disability rate will be split into two
components: 50 percent will become the Non-Industrial Disability rate and 50 percent will become the
Industrial Disability rate.
Attachment B
4-60
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
A-10
Service Retirement
Retirement rate vary by age, service, and formula, except for the safety ½ @ 55 and 2% @ 55 formulas,
where retirement rates vary by age only.
Public Agency Miscellaneous 1.5% @ 65
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.008 0.011 0.013 0.015 0.017 0.019
51 0.007 0.010 0.012 0.013 0.015 0.017
52 0.010 0.014 0.017 0.019 0.021 0.024
53 0.008 0.012 0.015 0.017 0.019 0.022
54 0.012 0.016 0.019 0.022 0.025 0.028
55 0.018 0.025 0.031 0.035 0.038 0.043
56 0.015 0.021 0.025 0.029 0.032 0.036
57 0.020 0.028 0.033 0.038 0.043 0.048
58 0.024 0.033 0.040 0.046 0.052 0.058
59 0.028 0.039 0.048 0.054 0.060 0.067
60 0.049 0.069 0.083 0.094 0.105 0.118
61 0.062 0.087 0.106 0.120 0.133 0.150
62 0.104 0.146 0.177 0.200 0.223 0.251
63 0.099 0.139 0.169 0.191 0.213 0.239
64 0.097 0.136 0.165 0.186 0.209 0.233
65 0.140 0.197 0.240 0.271 0.302 0.339
66 0.092 0.130 0.157 0.177 0.198 0.222
67 0.129 0.181 0.220 0.249 0.277 0.311
68 0.092 0.129 0.156 0.177 0.197 0.221
69 0.092 0.130 0.158 0.178 0.199 0.224
70 0.103 0.144 0.175 0.198 0.221 0.248
Public Agency Miscellaneous 2% @ 60
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.011 0.015 0.018 0.021 0.023 0.026
51 0.009 0.013 0.016 0.018 0.020 0.023
52 0.013 0.018 0.022 0.025 0.028 0.031
53 0.011 0.016 0.019 0.022 0.025 0.028
54 0.015 0.021 0.025 0.028 0.032 0.036
55 0.023 0.032 0.039 0.044 0.049 0.055
56 0.019 0.027 0.032 0.037 0.041 0.046
57 0.025 0.035 0.042 0.048 0.054 0.060
58 0.030 0.042 0.051 0.058 0.065 0.073
59 0.035 0.049 0.060 0.068 0.076 0.085
60 0.062 0.087 0.105 0.119 0.133 0.149
61 0.079 0.110 0.134 0.152 0.169 0.190
62 0.132 0.186 0.225 0.255 0.284 0.319
63 0.126 0.178 0.216 0.244 0.272 0.305
64 0.122 0.171 0.207 0.234 0.262 0.293
65 0.173 0.243 0.296 0.334 0.373 0.418
66 0.114 0.160 0.194 0.219 0.245 0.274
67 0.159 0.223 0.271 0.307 0.342 0.384
68 0.113 0.159 0.193 0.218 0.243 0.273
69 0.114 0.161 0.195 0.220 0.246 0.276
70 0.127 0.178 0.216 0.244 0.273 0.306
Attachment B
4-61
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
A-11
Public Agency Miscellaneous 2% @ 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.015 0.020 0.024 0.029 0.033 0.039
51 0.013 0.016 0.020 0.024 0.027 0.033
52 0.014 0.018 0.022 0.027 0.030 0.036
53 0.017 0.022 0.027 0.032 0.037 0.043
54 0.027 0.034 0.041 0.049 0.056 0.067
55 0.050 0.064 0.078 0.094 0.107 0.127
56 0.045 0.057 0.069 0.083 0.095 0.113
57 0.048 0.061 0.074 0.090 0.102 0.122
58 0.052 0.066 0.080 0.097 0.110 0.131
59 0.060 0.076 0.092 0.111 0.127 0.151
60 0.072 0.092 0.112 0.134 0.153 0.182
61 0.089 0.113 0.137 0.165 0.188 0.224
62 0.128 0.162 0.197 0.237 0.270 0.322
63 0.129 0.164 0.199 0.239 0.273 0.325
64 0.116 0.148 0.180 0.216 0.247 0.294
65 0.174 0.221 0.269 0.323 0.369 0.439
66 0.135 0.171 0.208 0.250 0.285 0.340
67 0.133 0.169 0.206 0.247 0.282 0.336
68 0.118 0.150 0.182 0.219 0.250 0.297
69 0.116 0.147 0.179 0.215 0.246 0.293
70 0.138 0.176 0.214 0.257 0.293 0.349
Public Agency Miscellaneous 2.5% @ 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.026 0.033 0.040 0.048 0.055 0.062
51 0.021 0.026 0.032 0.038 0.043 0.049
52 0.021 0.026 0.032 0.038 0.043 0.049
53 0.026 0.033 0.040 0.048 0.055 0.062
54 0.043 0.054 0.066 0.078 0.089 0.101
55 0.088 0.112 0.136 0.160 0.184 0.208
56 0.055 0.070 0.085 0.100 0.115 0.130
57 0.061 0.077 0.094 0.110 0.127 0.143
58 0.072 0.091 0.111 0.130 0.150 0.169
59 0.083 0.105 0.128 0.150 0.173 0.195
60 0.088 0.112 0.136 0.160 0.184 0.208
61 0.083 0.105 0.128 0.150 0.173 0.195
62 0.121 0.154 0.187 0.220 0.253 0.286
63 0.105 0.133 0.162 0.190 0.219 0.247
64 0.105 0.133 0.162 0.190 0.219 0.247
65 0.143 0.182 0.221 0.260 0.299 0.338
66 0.105 0.133 0.162 0.190 0.219 0.247
67 0.105 0.133 0.162 0.190 0.219 0.247
68 0.105 0.133 0.162 0.190 0.219 0.247
69 0.105 0.133 0.162 0.190 0.219 0.247
70 0.125 0.160 0.194 0.228 0.262 0.296
Attachment B
4-62
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
A-12
Public Agency Miscellaneous 2.7% @ 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.028 0.035 0.043 0.050 0.058 0.065
51 0.022 0.028 0.034 0.040 0.046 0.052
52 0.022 0.028 0.034 0.040 0.046 0.052
53 0.028 0.035 0.043 0.050 0.058 0.065
54 0.044 0.056 0.068 0.080 0.092 0.104
55 0.091 0.116 0.140 0.165 0.190 0.215
56 0.061 0.077 0.094 0.110 0.127 0.143
57 0.063 0.081 0.098 0.115 0.132 0.150
58 0.074 0.095 0.115 0.135 0.155 0.176
59 0.083 0.105 0.128 0.150 0.173 0.195
60 0.088 0.112 0.136 0.160 0.184 0.208
61 0.085 0.109 0.132 0.155 0.178 0.202
62 0.124 0.158 0.191 0.225 0.259 0.293
63 0.107 0.137 0.166 0.195 0.224 0.254
64 0.107 0.137 0.166 0.195 0.224 0.254
65 0.146 0.186 0.225 0.265 0.305 0.345
66 0.107 0.137 0.166 0.195 0.224 0.254
67 0.107 0.137 0.166 0.195 0.224 0.254
68 0.107 0.137 0.166 0.195 0.224 0.254
69 0.107 0.137 0.166 0.195 0.224 0.254
70 0.129 0.164 0.199 0.234 0.269 0.304
Public Agency Miscellaneous 3% @ 60
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.026 0.033 0.040 0.048 0.055 0.062
51 0.021 0.026 0.032 0.038 0.043 0.049
52 0.019 0.025 0.030 0.035 0.040 0.046
53 0.025 0.032 0.038 0.045 0.052 0.059
54 0.039 0.049 0.060 0.070 0.081 0.091
55 0.083 0.105 0.128 0.150 0.173 0.195
56 0.055 0.070 0.085 0.100 0.115 0.130
57 0.061 0.077 0.094 0.110 0.127 0.143
58 0.072 0.091 0.111 0.130 0.150 0.169
59 0.080 0.102 0.123 0.145 0.167 0.189
60 0.094 0.119 0.145 0.170 0.196 0.221
61 0.088 0.112 0.136 0.160 0.184 0.208
62 0.127 0.161 0.196 0.230 0.265 0.299
63 0.110 0.140 0.170 0.200 0.230 0.260
64 0.110 0.140 0.170 0.200 0.230 0.260
65 0.149 0.189 0.230 0.270 0.311 0.351
66 0.110 0.140 0.170 0.200 0.230 0.260
67 0.110 0.140 0.170 0.200 0.230 0.260
68 0.110 0.140 0.170 0.200 0.230 0.260
69 0.110 0.140 0.170 0.200 0.230 0.260
70 0.132 0.168 0.204 0.240 0.276 0.312
Attachment B
4-63
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
A-13
Public Agency Fire ½ @ 55 and 2% @ 55
Age
50
51
52
53
54
55
Rate
0.01588
0.00000
0.03442
0.01990
0.04132
0.07513
Age
56
57
58
59
60
Rate
0.11079
0.00000
0.09499
0.04409
1.00000
Public Agency Police ½ @ 55 and 2% @ 55
Age
50
51
52
53
54
55
Rate
0.02552
0.00000
0.01637
0.02717
0.00949
0.16674
Age
56
57
58
59
60
Rate
0.06921
0.05113
0.07241
0.07043
1.00000
Public Agency Police 2%@ 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.014 0.014 0.014 0.014 0.025 0.045
51 0.012 0.012 0.012 0.012 0.023 0.040
52 0.026 0.026 0.026 0.026 0.048 0.086
53 0.052 0.052 0.052 0.052 0.096 0.171
54 0.070 0.070 0.070 0.070 0.128 0.227
55 0.090 0.090 0.090 0.090 0.165 0.293
56 0.064 0.064 0.064 0.064 0.117 0.208
57 0.071 0.071 0.071 0.071 0.130 0.232
58 0.063 0.063 0.063 0.063 0.115 0.205
59 0.140 0.140 0.140 0.140 0.174 0.254
60 0.140 0.140 0.140 0.140 0.172 0.251
61 0.140 0.140 0.140 0.140 0.172 0.251
62 0.140 0.140 0.140 0.140 0.172 0.251
63 0.140 0.140 0.140 0.140 0.172 0.251
64 0.140 0.140 0.140 0.140 0.172 0.251
65 1.000 1.000 1.000 1.000 1.000 1.000
These rates also apply to Local Prosecutors, Local Sheriff, School Police, and Other Safety.
Attachment B
4-64
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
A-14
Public Agency Fire 2%@50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.007 0.007 0.007 0.007 0.010 0.015
51 0.008 0.008 0.008 0.008 0.013 0.019
52 0.017 0.017 0.017 0.017 0.027 0.040
53 0.047 0.047 0.047 0.047 0.072 0.107
54 0.064 0.064 0.064 0.064 0.098 0.147
55 0.087 0.087 0.087 0.087 0.134 0.200
56 0.078 0.078 0.078 0.078 0.120 0.180
57 0.090 0.090 0.090 0.090 0.139 0.208
58 0.079 0.079 0.079 0.079 0.122 0.182
59 0.073 0.073 0.073 0.073 0.112 0.168
60 0.114 0.114 0.114 0.114 0.175 0.262
61 0.114 0.114 0.114 0.114 0.175 0.262
62 0.114 0.114 0.114 0.114 0.175 0.262
63 0.114 0.114 0.114 0.114 0.175 0.262
64 0.114 0.114 0.114 0.114 0.175 0.262
65 1.000 1.000 1.000 1.000 1.000 1.000
Public Agency Police 3%@ 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.019 0.019 0.019 0.019 0.040 0.060
51 0.024 0.024 0.024 0.024 0.049 0.074
52 0.024 0.024 0.024 0.024 0.051 0.077
53 0.059 0.059 0.059 0.059 0.121 0.183
54 0.069 0.069 0.069 0.069 0.142 0.215
55 0.116 0.116 0.116 0.116 0.240 0.363
56 0.076 0.076 0.076 0.076 0.156 0.236
57 0.058 0.058 0.058 0.058 0.120 0.181
58 0.076 0.076 0.076 0.076 0.157 0.237
59 0.094 0.094 0.094 0.094 0.193 0.292
60 0.141 0.141 0.141 0.141 0.290 0.438
61 0.094 0.094 0.094 0.094 0.193 0.292
62 0.118 0.118 0.118 0.118 0.241 0.365
63 0.094 0.094 0.094 0.094 0.193 0.292
64 0.094 0.094 0.094 0.094 0.193 0.292
65 1.000 1.000 1.000 1.000 1.000 1.000
These rates also apply to Local Prosecutors, Local Sheriff, School Police, and Other Safety.
Attachment B
4-65
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
A-15
Public Agency Fire 3%@55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.012 0.012 0.012 0.018 0.028 0.033
51 0.008 0.008 0.008 0.012 0.019 0.022
52 0.018 0.018 0.018 0.027 0.042 0.050
53 0.043 0.043 0.043 0.062 0.098 0.114
54 0.057 0.057 0.057 0.083 0.131 0.152
55 0.092 0.092 0.092 0.134 0.211 0.246
56 0.081 0.081 0.081 0.118 0.187 0.218
57 0.100 0.100 0.100 0.146 0.230 0.268
58 0.081 0.081 0.081 0.119 0.187 0.219
59 0.078 0.078 0.078 0.113 0.178 0.208
60 0.117 0.117 0.117 0.170 0.267 0.312
61 0.078 0.078 0.078 0.113 0.178 0.208
62 0.098 0.098 0.098 0.141 0.223 0.260
63 0.078 0.078 0.078 0.113 0.178 0.208
64 0.078 0.078 0.078 0.113 0.178 0.208
65 1.000 1.000 1.000 1.000 1.000 1.000
Public Agency Police 3%@ 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.070 0.070 0.070 0.131 0.193 0.249
51 0.050 0.050 0.050 0.095 0.139 0.180
52 0.061 0.061 0.061 0.116 0.171 0.220
53 0.069 0.069 0.069 0.130 0.192 0.247
54 0.071 0.071 0.071 0.134 0.197 0.255
55 0.090 0.090 0.090 0.170 0.250 0.322
56 0.069 0.069 0.069 0.130 0.191 0.247
57 0.080 0.080 0.080 0.152 0.223 0.288
58 0.087 0.087 0.087 0.164 0.242 0.312
59 0.090 0.090 0.090 0.170 0.251 0.323
60 0.135 0.135 0.135 0.255 0.377 0.485
61 0.090 0.090 0.090 0.170 0.251 0.323
62 0.113 0.113 0.113 0.213 0.314 0.404
63 0.090 0.090 0.090 0.170 0.251 0.323
64 0.090 0.090 0.090 0.170 0.251 0.323
65 1.000 1.000 1.000 1.000 1.000 1.000
These rates also apply to Local Prosecutors, Local Sheriff, School Police, and Other Safety.
Attachment B
4-66
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
A-16
Public Agency Fire 3%@50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.034 0.034 0.034 0.048 0.068 0.080
51 0.046 0.046 0.046 0.065 0.092 0.109
52 0.069 0.069 0.069 0.097 0.138 0.163
53 0.084 0.084 0.084 0.117 0.166 0.197
54 0.103 0.103 0.103 0.143 0.204 0.241
55 0.127 0.127 0.127 0.177 0.252 0.298
56 0.121 0.121 0.121 0.169 0.241 0.285
57 0.101 0.101 0.101 0.141 0.201 0.238
58 0.118 0.118 0.118 0.165 0.235 0.279
59 0.100 0.100 0.100 0.140 0.199 0.236
60 0.150 0.150 0.150 0.210 0.299 0.354
61 0.100 0.100 0.100 0.140 0.199 0.236
62 0.125 0.125 0.125 0.175 0.249 0.295
63 0.100 0.100 0.100 0.140 0.199 0.236
64 0.100 0.100 0.100 0.140 0.199 0.236
65 1.000 1.000 1.000 1.000 1.000 1.000
Schools 2%@ 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.005 0.009 0.013 0.015 0.016 0.018
51 0.005 0.010 0.014 0.017 0.019 0.021
52 0.006 0.012 0.017 0.020 0.022 0.025
53 0.007 0.014 0.019 0.023 0.026 0.029
54 0.012 0.024 0.033 0.039 0.044 0.049
55 0.024 0.048 0.067 0.079 0.088 0.099
56 0.020 0.039 0.055 0.065 0.072 0.081
57 0.021 0.042 0.059 0.070 0.078 0.087
58 0.025 0.050 0.070 0.083 0.092 0.103
59 0.029 0.057 0.080 0.095 0.105 0.118
60 0.037 0.073 0.102 0.121 0.134 0.150
61 0.046 0.090 0.126 0.149 0.166 0.186
62 0.076 0.151 0.212 0.250 0.278 0.311
63 0.069 0.136 0.191 0.225 0.251 0.281
64 0.067 0.133 0.185 0.219 0.244 0.273
65 0.091 0.180 0.251 0.297 0.331 0.370
66 0.072 0.143 0.200 0.237 0.264 0.295
67 0.067 0.132 0.185 0.218 0.243 0.272
68 0.060 0.118 0.165 0.195 0.217 0.243
69 0.067 0.133 0.187 0.220 0.246 0.275
70 0.066 0.131 0.183 0.216 0.241 0.270
Attachment B
4-67
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2.5% at 55 Risk Pool
A-17
Miscellaneous
Superfunded Status
Prior to enactment of the Public Employees’ Pension Reform Act (PEPRA) effective January 1, 2013, a plan in
superfunded status (actuarial value of assets exceeding present value of benefits) would normally pay a zero
employer contribution rate while also being permitted to use its superfunded assets to pay its employee s’ normal
member contributions.
However, Section 7522.52(a) of PEPRA states, “In any fiscal year a public employer’s contribution to a defined
benefit plan, in combination with employee contributions to that defined benefit plan, shall not be less than the total
normal cost rate…” This means that not only must employers pay their employer normal cost, regardless of plan
surplus, but also that employers may no longer use superfunded assets to pay employee normal member
contributions.
Superfunded status applies only to individual plans, not risk pools. For rate plans within a risk pool, actuarial value of
assets is the sum of the rate plan’s side fund plus the rate plan’s pro-rata share of non-side fund assets.
Internal Revenue Code Section 415
The limitations on benefits imposed by Internal Revenue Code Section 415 were taken into account in this valuation.
Each year the impact of any changes in this limitation since the prior valuation is included and amortized as part of
the actuarial gain or loss base. This results in lower contributions for those employers contributing to the
Replacement Benefit Fund and it also protects CalPERS from prefunding expected benefits in excess of limits imposed
by federal tax law.
Internal Revenue Code Section 401(a)(17)
The limitations on compensation imposed by Internal Revenue Code Section 401(a)(17) were taken into account in
this valuation. Each year the impact of any changes in this compensation limitation since the prior valuation is
included and amortized as part of the actuarial gain or loss base.
PEPRA Assumptions
The Public Employees’ Pension Reform Act of 2013 (PEPRA) requires new benefits and member contributions for new
members as defined by PEPRA, that are hired after January 1, 2013. For non-pooled plans, these members will first
be reflected in the June 30, 2013 non-pooled plan valuations. Members in pooled plans will be reflected in the new
Miscellaneous and Safety risk pools created by the CalPERS Board in November 2012 in response to the passage of
PEPRA, beginning with the June 30, 2013 valuation. Different assumptions for the new PEPRA members will be
disclosed in the 2013 valuation.
Attachment B
4-68
APPENDIX B
PRINCIPAL PLAN PROVISIONS
Attachment B
4-69
APPENDIX B - PRINCIPAL PLAN PROVISIONS
CalPERS Actuarial Valuation – June 30, 2012 B-1
Miscellaneous 2.5% at 55 Risk Pool
The following is a description of the principal plan provisions used in calculating the liabilities of the Miscellaneous
2.5% at 55 Risk Pool. Plan provisions are divided based on whether they are standard, Class 1, Class 2 or Class 3
benefits. Standard benefits are applicable to all members of the risk pool while Class 1, 2 or 3 benefits vary
among employers. Provided at the end of the listing in Appendix C is a table showing the percentage of members
participating in the pool that are subject to Class 1 benefits.
Many of the statements in this summary are general in nature, and are intended to provide an easily understood
summary of the complex Public Employees’ Retirement Law. The law itself governs in all situations.
PEPRA Benefit Changes
The Public Employees’ Pension Reform Act of 2013 (PEPRA) requires new benefits and member contributions for
new members as defined by PEPRA, that are hired after January 1, 2013. For non-pooled plans, these members
will first be reflected in the June 30, 2013 non-pooled plan valuations. Members in pooled plans will be reflected
in the new Miscellaneous and new Safety risk pools created by the CalPERS Board in November 2012 in response
to the passage of PEPRA, also beginning with the June 30, 2013 valuation.
Service Retirement
Eligibility
A CalPERS member becomes eligible for Service Retirement upon attainment of age 50 with at least 5 years of
credited service (total service across all CalPERS employers, and with certain other Retirement Systems with
which CalPERS has reciprocity agreements). For employees hired into a plan with the 1.5% at 65 formula,
eligibility for service retirement is age 55 with at least 5 years of service.
Benefit
The Service Retirement benefit is a monthly allowance equal to the product of the benefit factor, years of service,
and final compensation.
The benefit factor for this group of employees comes from the 2.5% at 55 or 1.5% at 65 Miscellaneous
benefit formula factor table. The factor depends on the member’s age at retirement. Listed below are the
factors for retirement at whole year ages:
Retirement Age 2.5% at 55 Miscellaneous
Factor
50 2.0%
51 2.1%
52 2.2%
53 2.3%
54 2.4%
55 & Up 2.5%
The years of service is the amount credited by CalPERS to a member while he or she is employed in this
group (or for other periods that are recognized under the employer’s contract with CalPERS). For a member
who has earned service with multiple CalPERS employers, the benefit from each employer is calculated
separately according to each employer’s contract, and then added together for the total allowance. Any
unused sick leave accumulated at the time of retirement will be converted to credited service at a rate of
0.004 years of service for each day of sick leave.
The final compensation is the monthly average of the member’s highest 36 or 12 consecutive months’ full-
time equivalent monthly pay (no matter which CalPERS employer paid this compensation). The standard
benefit available to all members is 36 months. Employers have the option of providing a final compensation
Attachment B
4-70
APPENDIX B - PRINCIPAL PLAN PROVISIONS
CalPERS Actuarial Valuation – June 30, 2012 B-2
Miscellaneous 2.5% at 55 Risk Pool
equal to the highest 12 consecutive months by contracting for this Class 1 optional benefit. Final
compensation must be defined by the highest 36 consecutive months’ pay under the 1.5% at 65 formula.
Employees must be covered by Social Security with the 1.5% at 65 formula. Social Security is optional for all
other benefit formulas. For employees covered by the modified formula, the final compensation is offset by
$133.33 (or by one third if the final compensation is less than $400). Employers have the option to contract
for the Class 3 benefit that will eliminate the offset applicable to the final compensation of employees
covered by a modified formula.
The Miscellaneous Service Retirement benefit is not capped. The Safety Service Retirement benefit is capped
at 90 percent of final compensation.
Vested Deferred Retirement
Eligibility for Deferred Status
A CalPERS member becomes eligible for a deferred vested retirement benefit when he or she leaves employment,
keeps his or her contribution account balance on deposit with CalPERS, and has earned at least 5 years of
credited service (total service across all CalPERS employers, and with certain other Retirement Systems with
which CalPERS has reciprocity agreements).
Eligibility to Start Receiving Benefits
The CalPERS member becomes eligible to receive the deferred retirement benefit upon satisfying the eligibility
requirements for Deferred Status and upon attainment of age 50 (55 for employees hired into a 1.5% @ 65
plan).
Benefit
The vested deferred retirement benefit is the same as the Service Retirement benefit, where the benefit factor is
based on the member’s age at allowance commencement. For members who have earned service with multiple
CalPERS employers, the benefit from each employer is calculated separately according to each employer’s
contract, and then added together for the total allowance.
Non-Industrial (Non-Job Related) Disability Retirement
Eligibility
A CalPERS member is eligible for Non-Industrial Disability Retirement if he or she becomes disabled and has at
least 5 years of credited service (total service across all CalPERS employers, and with certain other Retirement
Systems with which CalPERS has reciprocity agreements). There is no special age requirement. Disabled means
the member is unable to perform his or her job because of an illness or injury which is expected to be permanent
or to last indefinitely. The illness or injury does not have to be job related. A CalPERS member must be actively
working with any CalPERS employer at the time of disability in order to be eligible for this benefit.
Standard Benefit
The standard Non-Industrial Disability Retirement benefit is a monthly allowance equal to 1.8 percent of final
compensation, multiplied by service, which is determined as follows:
Service is CalPERS credited service, for members with less than 10 years of service or greater than 18.518
years of service; or
Service is CalPERS credited service plus the additional number of years that the member would have worked
until age 60, for members with at least 10 years but not more than 18.518 years of service. The maximum
benefit in this case is 33 1/3 percent of Final Compensation.
Attachment B
4-71
APPENDIX B - PRINCIPAL PLAN PROVISIONS
CalPERS Actuarial Valuation – June 30, 2012 B-3
Miscellaneous 2.5% at 55 Risk Pool
Members who are eligible for a larger service retirement benefit may choose to receive that benefit in lieu of a
disability benefit. Members eligible to retire, and who have attained the normal retirement age determined by
their service retirement benefit formula, will receive the same dollar amount for disability retirement as that
payable for service retirement. For members who have earned service with multiple CalPERS employers, the
benefit attributed to each employer is the total disability allowance multiplied by the ratio of service with a
particular employer to the total CalPERS service.
Improved Benefit
Employers have the option of providing this improved benefit by contracting for this Class 3 optional benefit.
The improved Non-Industrial Disability Retirement benefit is a monthly allowance equal to 30 percent of final
compensation for the first 5 years of service, plus 1% for each additional year of service to a maximum of 50
percent of final compensation.
Members who are eligible for a larger service retirement benefit may choose to receive that benefit in lieu of a
disability benefit. Members eligible to retire, and who have attained the normal retirement age determined by
their service retirement benefit formula, will receive the same dollar amount for disability retirement as that
payable for service retirement. For members who have earned service with multiple CalPERS employers, the
benefit attributed to each employer is the total disability allowance multiplied by the ratio of service with a
particular employer to the total CalPERS service.
Industrial (Job Related) Disability Retirement
Employers have the option of providing this improved benefit by contracting for this Class 1 optional benefit.
Eligibility
An employee is eligible for Industrial Disability Retirement if he or she becomes disabled while working, where
disabled means the member is unable to perform the duties of the job because of a work-related illness or injury
which is expected to be permanent or to last indefinitely. A CalPERS member who has left active employment
within this group is not eligible for this benefit, except to the extent described in the next paragraph.
Standard Benefit
The standard Industrial Disability Retirement benefit is a monthly allowance equal to 50 percent of final
compensation. For a CalPERS member not actively employed in this group who became disabled while employed
by some other CalPERS employer, the benefit is a return of or annuitization of the accumulated member
contributions with respect to employment in this group. However, if a member is eligible for Service Retirement
and if the Service Retirement benefit is more than the Industrial Disability Retirement benefit, the member may
choose to receive the larger benefit.
Increased Benefit (75 percent of Final Compensation)
The increased Industrial Disability Retirement benefit is a monthly allowance equal to 75 percent of final
compensation for total disability. For a CalPERS member not actively employed in this group who became
disabled while employed by some other CalPERS employer, the benefit is a return of or annuitization of the
accumulated member contributions with respect to employment in this group. However, if a member is eligible for
Service Retirement and if the Service Retirement benefit is more than the Industrial Disability Retirement benefit,
the member may choose to receive the larger benefit.
Post-Retirement Death Benefit
Standard Lump Sum Payment
Upon the death of a retiree, a one-time lump sum payment of $500 will be made to the retiree’s designated
survivor(s), or to the retiree’s estate.
Improved Lump Sum Payment
Employers have the option of providing any of these improved lump sum death benefit by contracting for any of
these class 3 optional benefits.
Attachment B
4-72
APPENDIX B - PRINCIPAL PLAN PROVISIONS
CalPERS Actuarial Valuation – June 30, 2012 B-4
Miscellaneous 2.5% at 55 Risk Pool
Upon the death of a retiree, a one-time lump sum payment of $600, $2,000, $3,000, $4,000 or $5,000 will be
made to the retiree’s designated survivor(s), or to the retiree’s estate.
Form of Payment for Retirement Allowance
Standard Form of Payment
Generally, the retirement allowance is paid to the retiree in the form of an annuity for as long as he or she is
alive. The retiree may choose to provide for a portion of his or her allowance to be paid to any designated
beneficiary after the retiree’s death. CalPERS provides for a variety of such benefit options, which the retiree pays
for by taking a reduction in his or her retirement allowance. The larger the amount to be provided to the
beneficiary is, and the younger the beneficiary is, the greater the reduction to the retiree’s allowance.
Improved Form of Payment (Post Retirement Survivor Allowance)
Employers have the option to contract for this Class 1 benefit providing an improved post retirement survivor
allowance.
For retirement allowances with respect to service subject to the modified formula, 25 percent of the retirement
allowance will automatically be continued to certain statutory beneficiaries upon the death of the retiree, without
a reduction in the retiree’s allowance. For retirement allowances with respect to service subject to the full
formula, 50 percent of the retirement allowance will automatically be continued to certain statutory beneficiaries
upon the death of the retiree, without a reduction in the retiree’s allowance. This additional benefit is often
referred to as post retirement survivor allowance (PRSA) or simply as survivor continuance.
In other words, 25 percent or 50 percent of the allowance, the continuance portion, is paid to the retiree for as
long as he or she is alive, and that same amount is continued to the retiree’s spouse (or if no eligible spo use, to
unmarried children until they attain age 18; or, if no eligible children, to a qualifying dependent parent) for the
rest of his or her lifetime. This benefit will not be discontinued in the event the spouse remarries.
The remaining 75 percent or 50 percent of the retirement allowance, which may be referred to as the option
portion of the benefit, is paid to the retiree as an annuity for as long as he or she is alive. Or, the retiree may
choose to provide for some of this option portion to be paid to any designated beneficiary after the retiree’s
death. CalPERS offers a variety of such benefit options, which the retiree pays for by taking a reduction to the
option portion of his or her retirement allowance.
Pre-Retirement Death Benefits
Basic Death Benefit
Eligibility
An employee’s beneficiary (or estate) may receive the Basic Death benefit if the member dies while actively
employed. A CalPERS member must be actively employed with the CalPERS employer providing this benefit to be
eligible for this benefit. A member’s survivor who is eligible for any other pre-retirement death benefit described
below may choose to receive that death benefit instead of this Basic Death benefit.
Standard Benefit
The Basic Death Benefit is a lump sum in the amount of the member’s accumulated contributions, where interest
is currently credited at 7.5 percent per year, plus a lump sum in the amount of one month's salary for each
completed year of current service, up to a maximum of six months' salary. For purposes of this benefit, one
month's salary is defined as the member's average monthly full-time rate of compensation during the 12 months
preceding death.
Attachment B
4-73
APPENDIX B - PRINCIPAL PLAN PROVISIONS
CalPERS Actuarial Valuation – June 30, 2012 B-5
Miscellaneous 2.5% at 55 Risk Pool
1957 Survivor Benefit
Eligibility
An employee’s eligible survivor(s) may receive the 1957 Survivor benefit if the member dies while actively
employed, has attained at least age 50, and has at least 5 years of credited service (total service across all
CalPERS employers and with certain other Retirement Systems with which CalPERS has reciprocity agreements).
A CalPERS member must be actively employed with the CalPERS employer providing this benefit to be eligible for
this benefit. An eligible survivor means the surviving spouse to whom the member was married at least one year
before death or, if there is no eligible spouse, to the member's unmarried children under age 18. A member’s
survivor may choose this benefit in lieu of the Basic Death benefit or the Special Death benefit.
Standard Benefit
The 1957 Survivor benefit is a monthly allowance equal to one-half of the unmodified Service Retirement benefit
that the member would have been entitled to receive if the member had retired on the date of his or her death.
If the benefit is payable to the spouse, the benefit is discontinued upon the death of the spouse. If the benefit is
payable to a dependent child, the benefit will be discontinued upon death or attainment of age 18, unless the
child is disabled. There is a guarantee that the total amount paid will at least equal the Basic Death benefit.
Optional Settlement 2W Death Benefit
Eligibility
An employee’s eligible survivor may receive the Optional Settlement 2W Death benefit if the member dies while
actively employed, has attained at least age 50, and has at least 5 years of credited service (total service across
all CalPERS employers and with certain other Retirement Systems with which CalPERS has reciprocity
agreements). A CalPERS member who is no longer actively employed with any CalPERS employer is not eligible
for this benefit. An eligible survivor means the surviving spouse to whom the member was married at least one
year before death. A member’s survivor may choose this benefit in lieu of the Basic Death benefit or the 1957
Survivor benefit.
Standard Benefit
The Optional Settlement 2W Death benefit is a monthly allowance equal to the Service Retirement benefit that
the member would have received had the member retired on the date of his or her death and elected Optional
Settlement 2W. (A retiree who elects Optional Settlement 2W receives an allowance that has been reduced so
that it will continue to be paid after his or her death to a surviving beneficiary.) The allowance is payable as long
as the surviving spouse lives, at which time it is continued to any unmarried children under age 18, if applicable.
There is a guarantee that the total amount paid will at least equal the Basic Death Benefit.
Special Death Benefit
Eligibility
An employee’s eligible survivor(s) may receive the Special Death benefit if the member dies while actively
employed and the death is job-related. A CalPERS member who is no longer actively employed with any CalPERS
employer is not eligible for this benefit. An eligible survivor means the surviving spouse to whom the member was
married prior to the onset of the injury or illness that resulted in death. If there is no eligible spouse, an eligible
survivor means the member's unmarried children under age 22. An eligible survivor who chooses to receive this
benefit will not receive any other death benefit.
Improved Benefit
The Special Death benefit is a monthly allowance equal to 50 percent of final compensation, and will be increased
whenever the compensation paid to active employees is increased but ceasing to increase when the member
would have attained age 50. The allowance is payable to the surviving spouse until death at which time the
allowance is continued to any unmarried children under age 22. There is a guarantee that the total amount paid
will at least equal the Basic Death Benefit.
Attachment B
4-74
APPENDIX B - PRINCIPAL PLAN PROVISIONS
CalPERS Actuarial Valuation – June 30, 2012 B-6
Miscellaneous 2.5% at 55 Risk Pool
If the member’s death is the result of an accident or injury caused by external violence or physical force incurred
in the performance of the member’s duty, and there are eligible surviving children (eligible means unmarried
children under age 22) in addition to an eligible spouse, then an additional monthly allowance is paid equal
to the following:
if 1 eligible child: 12.5% of final compensation
if 2 eligible children: 20.0% of final compensation
if 3 or more eligible children: 25.0% of final compensation
Cost-of-Living Adjustments (COLA)
Standard Benefit
Beginning the second calendar year after the year of retirement, retirement and survivor allowances will be
annually adjusted on a compound basis by 2 percent. However, the cumulative adjustment may not be greater
than the cumulative change in the Consumer Price Index since the date of retirement.
Improved Benefit
Employers have the option of providing any of these improved cost-of-living adjustments by contracting for any
one of these Class 1 optional benefits. An improved COLA is not available in conjunction with the 1.5% at 65
formula.
Beginning the second calendar year after the year of retirement, retirement and survivor allowances will be
annually adjusted on a compound basis by either 3 percent, 4 percent or 5 percent. However, the cumulative
adjustment may not be greater than the cumulative change in the Consumer Price Index since the date of
retirement.
Purchasing Power Protection Allowance (PPPA)
Retirement and survivor allowances are protected against inflation by PPPA. PPPA benefits are cost-of-living
adjustments that are intended to maintain an individual’s allowance at 80 percent of the initial allowance at
retirement adjusted for inflation since retirement. The PPPA benefit will be coordinated with other cost-of-living
adjustments provided under the plan.
Employee Contributions
Each employee contributes toward his or her retirement based upon the following schedule.
The percent contributed below the monthly compensation breakpoint is 0 percent.
The monthly compensation breakpoint is $0 for full and supplemental formula members, except for those
members in the CSU auxiliary organizations where the breakpoint is $513.
The monthly compensation breakpoint is $133.33 for employees covered by the modified formula.
The percent contributed above the monthly compensation breakpoint is 8 percent for 2.5% at 55
Miscellaneous Benefit Formula and 2 percent for 1.5% at 65, except for those members in the CSU auxiliary
organizations where the contribution rate has been set at the State member level.
The employer may choose to “pick-up” these contributions for the employees (Employer Paid Member
Contributions), or EMPC. An employer may also include Employee Cost Sharing in the contract, where employees
contribute an additional percentage of compensation based on any optional benefit for which a contract
amendment was made on or after January 1, 1979.
Attachment B
4-75
APPENDIX B - PRINCIPAL PLAN PROVISIONS
CalPERS Actuarial Valuation – June 30, 2012 B-7
Miscellaneous 2.5% at 55 Risk Pool
Refund of Employee Contributions
If the member’s service with the employer ends, and if the member does not satisfy the eligibility conditions for
any of the retirement benefits above, the member may elect to receive a refund of his or her employee
contributions, which are credited annually with 6 percent interest.
1959 Survivor Benefit
This is a pre-retirement death benefit available only to members not covered by Social Security. Any agency
joining CalPERS subsequent to 1993 was required to provide this benefit if the members were not covered by
Social Security. The benefit is optional for agencies joining CalPERS prior to 1994. Levels 1, 2 and 3 are now
closed. Any new agency or any agency wishing to add this benefit or increase the current level must choose the
4th or Indexed Level.
This benefit is not included in the results presented in this valuation. More information on this benefit is available
on the CalPERS website at www.calpers.ca.gov.
Attachment B
4-76
APPENDIX C
PLAN OPTIONS AND VARIABLES
CLASSIFICATION OF OPTIONAL BENEFITS
EXAMPLE OF INDIVIDUAL AGENCY’S RATE CALCULATION
DISTRIBUTION OF CLASS 1 BENEFITS
Attachment B
4-77
APPENDIX C – PLAN OPTIONS AND VARIABLES
CalPERS Actuarial Valuation – June 30, 2012 C-1
Miscellaneous 2.5% at 55 Risk Pool
Classification of Optional Benefits
Below is the list of the available optional benefit provisions and their initial classification upon establishment
of risk pools. When new benefits become available as a result of legislation, the Chief Actuary will determine
their classification in accordance with the criteria established in the Board policy.
Class 1
Class 1 benefits have been identified to be additional benefits which have a significant, ongoing effect on
the total plan cost. In some cases, a Class 1 benefit may be an alternate benefit formula. These benefits
vary by employer across the risk pool. Agencies contracting for a Class 1 benefit will be responsible for the
past service liability associated with such benefit and will be required to pay a surcharge established by the
actuary to cover the ongoing cost (normal cost) of the Class 1 benefit.
The table below shows the list of Class 1 benefits and their applicable surcharge for the Miscellaneous 2.5%
at 55 Risk Pool. Last year’s surcharges are shown for comparison.
{classification_optional_benefits} June 30, 2011 June 30, 2012
One Year Final Compensation 0.577% 0.566%
EPMC by contract, 7% 1.081% 1.059%
EPMC by contract, 8% 1.236% 1.210%
EPMC by contract, 9% N/A N/A
25% PRSA 0.917% 0.900%
50% PRSA 0.917% 0.900%
3% Annual COLA 1.100% 1.087%
4% Annual COLA 1.100% 1.087%
5% Annual COLA 1.100% 1.087%
IDR For Local Miscellaneous Members 0.473% 0.446%
Increased IDR Allowance to 75% of Compensation 0.829% 0.814%
Improved Industrial Disability Allowance for Local Safety Members N/A N/A
Employee Cost Sharing varies varies
Employee Contribution Rate for CSUC Auxiliary Organizations
Reduced to State Member Level - Covered by Social Security 2.000% 2.000%
Employee Contribution Rate for CSUC Auxiliary Organizations
Reduced to State Member Level - Not Covered by Social Security 1.000% 1.000%
For employers contracting for more than one Class 1 benefit, the surcharges listed in this table will be added
together
Employee cost sharing had been eliminated as a surcharge from some of the June 30, 2010
valuations and from all of the June 30, 2011 and later valuations. It is now shown on My|CalPERS as
a rate adjustment.
Attachment B
4-78
APPENDIX C – PLAN OPTIONS AND VARIABLES
CalPERS Actuarial Valuation – June 30, 2012 C-2
Miscellaneous 2.5% at 55 Risk Pool
Class 2
Class 2 benefits have been identified to be the ancillary benefits providing one-time increases in benefits.
These benefits vary by employer across the risk pool. Agencies contracting for a Class 2 benefit will be
responsible for the past service liability associated with such benefit.
The following benefits shall be classified as Class 2:
One-time 1% to 6% Ad Hoc COLA Increases for members who retired or died prior to
January 1, 1998 (Section 21328)
"Golden Handshakes" – Section 20903 Two Years Additional Service Credit
Credit for Prior Service Paid for by the Employer
Military Service Credit (Section 20996)
Credit for Local Retirement System Service for Employees of Agencies Contracted on a Prospective
basis (Section 20530.1)
Prior Service Credit for Employees of an Assumed Agency Function (Section 20936)
Limit Prior Service to Members Employed on Contract Date (Section 20938)
Public Service Credit for Limited Prior Service (Section 21031)
Public Service Credit for Employees of an Assumed Agency or Function (Section 21025)
Class 3
Class 3 benefits have been identified to be additional benefits which have a minimal effect on the total
plan cost. Class 3 benefits may vary by rate plan within each risk pool. However, the employer
contribution rate will not vary within the risk pool due to the Class 3 benefits.
The following benefits shall be classified as Class 3:
Full formula plus social security
Post Retirement Lump Sum Death Benefit
$600 lump sum retired death benefit (Section 21622)
$2,000 lump sum retired death benefit (Section 21623.5)
$3,000 lump sum retired death benefit (Section 21623.5)
$4,000 lump sum retired death benefit (Section 21623.5)
$5,000 lump sum retired death benefit (Section 21623.5)
Improved non-industrial disability allowance (Section 21427)
Special death benefit for local miscellaneous members (Section 21540.5)
Service Credit Purchased by Member
Partial Service Retirement (Section 21118)
Optional Membership for Part Time Employees (Section 20325)
Extension of Reciprocity Rights for Elective Officers (Section 20356)
Removal of Contract Exclusions Prospectively Only (Section 20503)
Alternate Death Benefit for Local Fire Members credited with 20 or more years of service (Section
21547.7)
Attachment B
4-79
APPENDIX C – PLAN OPTIONS AND VARIABLES
CalPERS Actuarial Valuation – June 30, 2012 C-3
Miscellaneous 2.5% at 55 Risk Pool
Example Of Individual Agency's Rate Calculation
An individual employer rate is comprised of several components. These include the pool's net employer
normal cost, payment on the pool's unfunded liability, additional surcharge payments for contracted Class 1
benefits, the normal cost phase-out and an agency’s payment for their own side fund. An example of the
total rate for an employer might look something like this:
Net Pool's Employer Normal Cost 8.896%
Rate Plan Surcharges 0.566%
Total Employer Normal Cost 9.462%
Plus: Plan’s share of Pool's Payment on the Amortization Bases 6.239%
Side Fund Amortization Payment 2.600%
Total Employer Rate for fiscal year 2014-15 18.301%
Your plan’s actual required contribution can be found in Section 1.
Distribution of Class 1 Benefits
% of members in the pool
Final Compensation with contracted benefit
One Year Final Compensation 79.2%
Three Years Final Compensation 20.8%
Post Retirement Survivor Continuance (PRSA)
No PRSA 75.7%
With PRSA 24.3%
Cost-of-Living Adjustments (COLA)
2% COLA 96.4%
3% COLA 0.9%
4% COLA 1.9%
5% COLA 0.8%
Industrial Disability Benefit
None 95.5%
Standard Industrial Disability Benefit (50% of Final Compensation) 3.3%
Improved Industrial Disability Benefit (75% of Final Compensation) 1.3%
Improved Industrial Disability Benefit (50% - 90% of Final Compensation) 0.0%
Attachment B
4-80
APPENDIX D
PARTICIPATING EMPLOYERS
Attachment B
4-81
APPENDIX D - PARTICIPATING EMPLOYERS
CalPERS Actuarial Valuation – June 30, 2012 D-1
Miscellaneous 2.5% at 55 Risk Pool
Employer Name
ALAMEDA COUNTY SCHOOLS INSURANCE GROUP
ALAMEDA COUNTY TRANSPORTATION COMMISSION
ALAMEDA COUNTY WASTE MANAGEMENT AUTHORITY
ALBANY MUNICIPAL SERVICES JOINT POWERS AUTHORITY
ANDERSON FIRE PROTECTION DISTRICT
ARROYO GRANDE DISTRICT CEMETERY
ASSOCIATION OF BAY AREA GOVERNMENTS
ASSOCIATION OF CALIFORNIA WATER AGENCIES
BEAUMONT DISTRICT LIBRARY
BIG BEAR CITY COMMUNITY SERVICES DISTRICT
BUTTE COUNTY MOSQUITO AND VECTOR CONTROL DISTRICT
CALIFORNIA ASSOCIATION FOR PARK AND RECREATION INDEMNITY
CAYUCOS SANITARY DISTRICT
CAYUCOS-MORRO BAY CEMETERY DISTRICT
CENTRAL COUNTY FIRE DEPARTMENT
CENTRAL FIRE PROTECTION DISTRICT OF SANTA CRUZ COUNTY
CHESTER PUBLIC UTILITY DISTRICT
CHINO BASIN WATERMASTER
CHINO VALLEY INDEPENDENT FIRE DISTRICT
CITY OF ALBANY
CITY OF ARROYO GRANDE
CITY OF ATASCADERO
CITY OF BLUE LAKE
CITY OF BLYTHE
CITY OF CALISTOGA
CITY OF CAPITOLA
CITY OF CHOWCHILLA
CITY OF CRESCENT CITY
CITY OF DIXON
CITY OF DUARTE
CITY OF EAST PALO ALTO
CITY OF FIREBAUGH
CITY OF FOUNTAIN VALLEY
CITY OF GRASS VALLEY
CITY OF GROVER BEACH
CITY OF GUSTINE
CITY OF HEALDSBURG
CITY OF HOLLISTER
CITY OF IONE
CITY OF JACKSON
CITY OF LA PUENTE
CITY OF LA QUINTA
CITY OF LA VERNE
CITY OF LAKE ELSINORE
CITY OF LAKEPORT
CITY OF LARKSPUR
CITY OF LEMON GROVE
CITY OF LOMITA
CITY OF MILL VALLEY
CITY OF NEVADA CITY
CITY OF OAKDALE
CITY OF OAKLEY
CITY OF PINOLE
CITY OF PISMO BEACH
CITY OF PLACERVILLE
CITY OF RANCHO MIRAGE
CITY OF RANCHO PALOS VERDES
Attachment B
4-82
APPENDIX D - PARTICIPATING EMPLOYERS
CalPERS Actuarial Valuation – June 30, 2012 D-2
Miscellaneous 2.5% at 55 Risk Pool
CITY OF RANCHO SANTA MARGARITA
CITY OF SAN CARLOS
CITY OF SAN PABLO
CITY OF SANGER
CITY OF SANTA PAULA
CITY OF SAUSALITO
CITY OF SCOTTS VALLEY
CITY OF SIERRA MADRE
CITY OF SOLANA BEACH
CITY OF SOLVANG
CITY OF SOUTH EL MONTE
CITY OF TEMPLE CITY
CITY OF TWENTYNINE PALMS
CITY OF WASCO
CITY OF WATERFORD
COASTSIDE COUNTY WATER DISTRICT
CRESTLINE VILLAGE WATER DISTRICT
DE LUZ COMMUNITY SERVICES DISTRICT
DENAIR COMMUNITY SERVICES DISTRICT
DESERT WATER AGENCY
EAST BAY DISCHARGERS AUTHORITY
EASTERN SIERRA TRANSIT AUTHORITY
EXPOSITION METRO LINE CONSTRUCTION AUTHORITY
FALLBROOK PUBLIC UTILITY DISTRICT
FEATHER RIVER AIR QUALITY MANAGEMENT DISTRICT
GOLDEN SIERRA JOB TRAINING AGENCY
GREAT BASIN UNIFIED AIR POLLUTION CONTROL DISTRICT
HEBER PUBLIC UTILITY DISTRICT
HERITAGE RANCH COMMUNITY SERVICES DISTRICT
HERLONG PUBLIC UTILITY DISTRICT
HI-DESERT WATER DISTRICT
HIDDEN VALLEY LAKE COMMUNITY SERVICES DISTRICT
HIGGINS AREA FIRE PROTECTION DISTRICT
HOUSING AUTHORITY OF THE CITY OF MADERA
KENTFIELD FIRE PROTECTION DISTRICT
KERN COUNTY COUNCIL OF GOVERNMENTS
KIRKWOOD MEADOWS PUBLIC UTILITY DISTRICT
LAKE ARROWHEAD COMMUNITY SERVICES DISTRICT
LOS ANGELES COUNTY AREA "E" CIVIL DEFENSE AND DISASTER BOARD
LOS ANGELES COUNTY LAW LIBRARY
LOS ANGELES MEMORIAL COLISEUM COMMISSION
MC FARLAND RECREATION AND PARK DISTRICT
METRO GOLD LINE FOOTHILL EXTENSION CONSTRUCTION AUTHORITY
MIDPENINSULA REGIONAL OPEN SPACE DISTRICT
MONTE VISTA COUNTY WATER DISTRICT
NAPA COUNTY TRANSPORTATION AND PLANNING AGENCY
NEVADA COUNTY RESOURCE CONSERVATION DISTRICT
NORTH MARIN WATER DISTRICT
OLIVENHAIN MUNICIPAL WATER DISTRICT
ORO LOMA SANITARY DISTRICT
OXNARD HARBOR DISTRICT
PEBBLE BEACH COMMUNITY SERVICES DISTRICT
PHELAN PINON HILLS COMMUNITY SERVICES DISTRICT
PLEASANT VALLEY RECREATION AND PARK DISTRICT
PUBLIC AGENCY RISK SHARING AUTHORITY OF CALIFORNIA
RAINBOW MUNICIPAL WATER DISTRICT
RANCHO CUCAMONGA FIRE PROTECTION DISTRICT
RANCHO SANTA FE FIRE PROTECTION DISTRICT
REDWOOD EMPIRE SCHOOL INSURANCE GROUP
Attachment B
4-83
APPENDIX D - PARTICIPATING EMPLOYERS
CalPERS Actuarial Valuation – June 30, 2012 D-3
Miscellaneous 2.5% at 55 Risk Pool
REGIONAL COUNCIL OF RURAL COUNTIES
ROSAMOND COMMUNITY SERVICES DISTRICT
ROSE BOWL OPERATING COMPANY
ROWLAND WATER DISTRICT
SACRAMENTO AREA COUNCIL OF GOVERNMENTS
SACRAMENTO TRANSPORTATION AUTHORITY
SACRAMENTO-YOLO MOSQUITO AND VECTOR CONTROL DISTRICT
SAN BENITO COUNTY WATER DISTRICT
SAN BERNARDINO VALLEY WATER CONSERVATION DISTRICT
SAN ELIJO JOINT POWERS AUTHORITY
SAN FRANCISCO BAY AREA WATER EMERGENCY TRANSPORTATION AUTHORITY
SAN LUIS WATER DISTRICT
SAN MATEO COUNTY HARBOR DISTRICT
SANTA CLARA COUNTY LAW LIBRARY
SANTA CRUZ PORT DISTRICT
SEWERAGE COMMISSION--OROVILLE REGION
SHASTA LAKE FIRE PROTECTION DISTRICT
SHASTA LOCAL AGENCY FORMATION COMMISSION
SOQUEL CREEK WATER DISTRICT
SOUTH COUNTY SUPPORT SERVICES AGENCY
SOUTH ORANGE COUNTY WASTEWATER AUTHORITY
SOUTH SAN JOAQUIN IRRIGATION DISTRICT
SOUTH SAN LUIS OBISPO COUNTY SANITATION DISTRICT
SOUTHEAST AREA SOCIAL SERVICES FUNDING AUTHORITY
SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY
SOUTHWEST TRANSPORTATION AGENCY
SUMMIT CEMETERY DISTRICT
SUSANVILLE SANITARY DISTRICT
TOWN OF COLMA
TOWN OF CORTE MADERA
TOWN OF FAIRFAX
TOWN OF TRUCKEE
TOWN OF WOODSIDE
TRABUCO CANYON WATER DISTRICT
TRI-DAM PROJECT
TRINDEL INSURANCE FUND
TWIN CITIES POLICE AUTHORITY
UNITED WATER CONSERVATION DISTRICT
VALLEY SANITARY DISTRICT
VALLEY OF THE MOON WATER DISTRICT
VALLEY-WIDE RECREATION AND PARK DISTRICT
VICTOR VALLEY WASTEWATER RECLAMATION AUTHORITY
WATER FACILITIES AUTHORITY
WEST BAY SANITARY DISTRICT
WEST CONTRA COSTA INTEGRATED WASTE MANAGEMENT AUTHORITY
WEST VALLEY MOSQUITO AND VECTOR CONTROL DISTRICT
WEST VALLEY SANITATION DISTRICT OF SANTA CLARA COUNTY
WESTERN MUNICIPAL WATER DISTRICT
WILLOW COUNTY WATER DISTRICT
WILLOW CREEK COMMUNITY SERVICES DISTRICT
WINTERS CEMETERY DISTRICT
YOLO COUNTY PUBLIC AGENCY RISK MANAGEMENT INSURANCE AUTHORITY
YOLO COUNTY TRANSPORTATION DISTRICT
Attachment B
4-84
APPENDIX E
PARTICIPANT DATA
SOURCE OF THE PARTICIPANT DATA
DATA VALIDATION TESTS AND ADJUSTMENTS
SUMMARY OF VALUATION DATA
ACTIVE MEMBERS
TRANSFERRED AND TERMINATED MEMBERS
RETIRED MEMBERS AND BENEFICIARIES
Attachment B
4-85
APPENDIX E – PARTICIPANT DATA
CalPERS Actuarial Valuation – June 30, 2012 E-1
Miscellaneous 2.5% at 55 Risk Pool
Source of the Participant Data
The data was extracted from various databases within CalPERS and placed in a database by a series of extract
programs. Included in this data are:
Individual member and beneficiary information,
Employment and payroll information,
Accumulated contributions with interest,
Service information,
Benefit payment information,
Information about the various organizations which contract with CalPERS, and
Detailed information about the plan provisions applicable to each group of members.
Data Validation Tests and Adjustments
Once the information is extracted from the various computer systems into the database, update queries are then
run against this data to correct for flaws found in the data. This part of the process is intended to validate the
participant data for all CalPERS plans. The data is then checked for reasonableness and consistency with data
from the prior valuation.
Checks on the data include:
A reconciliation of the membership of the plans,
Comparisons of various member statistics (average attained age, average entry age, average salary,
etc.) for each plan with those from the prior year valuation,
Comparisons of pension amounts for each retiree and beneficiary receiving payments with those from
the prior year valuation,
Checks for invalid ages and dates, and
Reasonableness checks on various key data elements such as service and salary
As a result of the tests on the data, a number of adjustments were determined to be necessary. These included:
Dates of hire and dates of entry were adjusted where necessary to be consistent with the service fields,
the date of birth and each other.
Attachment B
4-86
APPENDIX E – PARTICIPANT DATA
CalPERS Actuarial Valuation – June 30, 2012 E-2
Miscellaneous 2.5% at 55 Risk Pool
Summary of Valuation Data
June 30, 2011 June 30, 2012
1. Number of Plans in the Risk Pool 165 170
2. Active Members
a) Counts 5,276 5,052
b) Average Attained Age 45.96 46.37
c) Average Entry Age on Rate Plan 36.44 36.46
d) Average Years of Service 9.52 9.91
e) Average Annual Covered Pay $ 66,361 $ 67,147
f) Annual Covered Payroll $ 350,121,750 $ 339,228,272
g) Projected Annual Payroll for Contribution Year $ 382,587,490 $ 370,683,892
h) Present Value of Future Payroll $ 2,690,905,777 $ 2,576,816,841
3. Transferred Members
a) Counts 2,501 2,497
b) Average Attained Age 47.62 47.84
c) Average Years of Service 3.85 3.84
d) Average Annual Covered Pay $ 85,483 $ 84,159
4. Terminated Members
a) Counts 2,555 2,687
b) Average Attained Age 46.04 46.08
c) Average Years of Service 3.08 3.07
d) Average Annual Covered Pay $ 42,249 $ 43,252
5. Retired Members and Beneficiaries
a) Counts* 4,963 4,905
b) Average Attained Age 68.03 67.72
c) Average Annual Benefits* $ 16,531 $ 18,821
6. Active to Retired Ratio [(2a) / (5a)] 1.06 1.03
Counts of members included in the valuation are counts of the records processed by the valuation. Multiple
records may exist for those who have service in more than one valuation group. This does not result in double
counting of liabilities.
* Values may not match those on pages E-5 and E-6 due to inclusion of community property settlements.
Attachment B
4-87
APPENDIX E – PARTICIPANT DATA
CalPERS Actuarial Valuation – June 30, 2012 E-3
Miscellaneous 2.5% at 55 Risk Pool
Active Members
Counts of members included in the valuation are counts of the records processed by the valuation. Multiple
records may exist for those who have service in more than one valuation group. This does not result in double
counting of liabilities.
Distribution of Active Members by Age and Service
Years of Service at Valuation Date
Attained
Age 0-4 5-9 10-14 15-19 20-24 25+ Total
15-24 91 4 0 0 0 0 95
25-29 248 89 0 0 0 0 337
30-34 235 235 54 1 0 0 525
35-39 195 221 115 26 3 0 560
40-44 191 200 134 70 25 3 623
45-49 220 210 160 79 80 43 792
50-54 199 229 181 104 107 123 943
55-59 142 172 124 82 56 91 667
60-64 78 94 70 51 34 48 375
65 and over 35 34 36 12 10 8 135
All Ages 1634 1488 874 425 315 316 5,052
Distribution of Average Annual Salaries by Age and Service
Years of Service at Valuation Date
Attained
Age 0-4 5-9 10-14 15-19 20-24 25+ Average
15-24 $28,221 $40,772 $0 $0 $0 $0 $28,749
25-29 43,603 54,313 0 0 0 0 46,431
30-34 52,773 58,907 64,593 43,406 0 0 56,717
35-39 56,146 65,104 66,568 71,331 62,199 0 62,559
40-44 62,484 69,601 73,403 76,987 75,858 74,768 69,343
45-49 68,891 71,782 72,070 75,846 75,367 85,409 72,544
50-54 66,472 72,200 74,777 81,742 82,475 81,950 74,976
55-59 76,991 67,783 75,220 78,210 87,285 76,257 75,201
60-64 73,139 75,356 62,194 73,636 72,332 81,328 72,694
65 and over 31,793 50,886 64,464 47,492 66,141 108,509 53,800
Average 58,017 66,686 70,992 76,514 79,193 81,291 67,147
Attachment B
4-88
APPENDIX E – PARTICIPANT DATA
CalPERS Actuarial Valuation – June 30, 2012 E-4
Miscellaneous 2.5% at 55 Risk Pool
Transferred and Terminated Members
Distribution of Transfers to Other CalPERS Plans by Age and Service
Years of Service at Valuation Date
Attained
Age 0-4 5-9 10-14 15-19 20-25 25+ Total
Average
Salary
15-24 14 0 0 0 0 0 14 $38,741
25-29 86 6 0 0 0 0 92 57,814
30-34 187 17 0 0 0 0 204 66,872
35-39 203 41 4 1 0 0 249 71,514
40-44 237 72 22 3 0 0 334 83,736
45-49 322 106 24 13 3 1 469 88,994
50-54 333 123 38 16 4 0 514 89,752
55-59 270 89 27 8 2 0 396 90,541
60-64 117 33 16 4 1 0 171 96,199
65 and over 41 8 2 2 1 0 54 86,890
All Ages 1810 495 133 47 11 1 2,497 84,159
Distribution of Terminated Participants with Funds on Deposit by Age and Service
Years of Service at Valuation Date
Attained
Age 0-4 5-9 10-14 15-19 20-25 25+ Total
Average
Salary
15-24 46 0 0 0 0 0 46 $25,231
25-29 176 8 0 0 0 0 184 33,502
30-34 270 18 0 0 0 0 288 38,445
35-39 277 47 5 0 0 0 329 41,332
40-44 269 60 17 5 0 0 351 46,586
45-49 322 83 19 8 3 1 436 51,621
50-54 326 89 36 10 3 1 465 47,329
55-59 200 67 19 3 0 2 291 41,969
60-64 165 30 11 3 0 0 209 40,217
65 and over 64 18 5 1 0 0 88 31,109
All Ages 2115 420 112 30 6 4 2,687 43,252
Attachment B
4-89
APPENDIX E – PARTICIPANT DATA
CalPERS Actuarial Valuation – June 30, 2012 E-5
Miscellaneous 2.5% at 55 Risk Pool
Retired Members and Beneficiaries
Distribution of Retirees and Beneficiaries by Age and Retirement Type*
Attained
Age
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death
After
Retirement Total
Under 30 0 0 0 0 0 1 1
30-34 0 3 0 0 0 1 4
35-39 0 4 2 0 0 1 7
40-44 0 7 9 0 0 6 22
45-49 0 9 12 1 0 6 28
50-54 150 37 11 3 1 13 215
55-59 682 38 17 1 0 25 763
60-64 997 39 15 5 0 29 1,085
65-69 990 44 8 4 1 54 1,101
70-74 522 31 9 8 0 69 639
75-79 330 16 2 4 0 83 435
80-84 205 9 0 1 0 82 297
85 and Over 184 4 0 5 0 115 308
All Ages 4060 241 85 32 2 485 4,905
Distribution of Average Annual Amounts for Retirees and Beneficiaries by Age and Retirement Type*
Attained
Age
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death After
Retirement Average
Under 30 $0 $0 $0 $0 $0 $6,941 $6,941
30-34 0 10,267 0 0 0 901 7,925
35-39 0 16,015 173 0 0 43,973 15,482
40-44 0 10,306 538 0 0 14,456 7,441
45-49 0 9,479 4,080 19,268 0 10,188 7,667
50-54 16,791 10,799 3,450 18,482 1,193 17,169 15,051
55-59 23,846 12,155 3,524 22,221 0 16,437 22,566
60-64 23,312 15,591 4,167 8,540 0 16,698 22,525
65-69 19,811 13,160 7,570 12,132 67 11,964 19,025
70-74 18,577 11,654 3,010 10,945 0 14,033 17,436
75-79 16,217 8,165 1,086 7,000 0 14,302 15,401
80-84 14,190 9,777 0 1,804 0 12,742 13,615
85 and Over 15,074 8,815 0 6,041 0 10,663 13,199
All Ages 20,287 12,100 3,580 10,492 630 13,176 18,821
Attachment B
4-90
APPENDIX E – PARTICIPANT DATA
CalPERS Actuarial Valuation – June 30, 2012 E-6
Miscellaneous 2.5% at 55 Risk Pool
Retired Members and Beneficiaries (continued)
Distribution of Retirees and Beneficiaries by Years Retired and Retirement Type*
Years
Retired
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death
After
Retirement Total
Under 5 Yrs 1691 34 19 11 0 191 1,946
5-9 1107 41 27 5 0 115 1,295
10-14 574 61 16 4 0 78 733
15-19 342 56 12 5 1 51 467
20-24 195 28 5 3 0 35 266
25-29 101 10 4 1 0 7 123
30 and Over 50 11 2 3 1 8 75
All Years 4060 241 85 32 2 485 4,905
Distribution of Average Annual Amounts for Retirees and Beneficiaries by Years Retired and
Retirement Type*
Years
Retired
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death
After
Retirement Average
Under 5 Yrs $24,769 $10,566 $1,512 $13,644 $0 $16,391 $23,409
5-9 20,299 17,571 3,705 11,449 0 12,080 19,103
10-14 15,492 11,631 4,195 12,857 0 10,538 14,382
15-19 14,138 11,163 6,712 4,552 1,193 12,399 13,270
20-24 13,616 11,503 4,918 8,218 0 8,933 12,553
25-29 13,391 8,379 763 10,708 0 7,233 12,201
30 and Over 5,521 8,720 138 6,283 67 6,654 5,925
All Years 20,287 12,100 3,580 10,492 630 13,176 18,821
* Counts of members do not include alternate payees receiving benefits while the member is still working.
Therefore, the total counts may not match information on page E-2 of the report. Multiple records may exist for
those who have service in more than one coverage group. This does not result in double counting of liabilities.
Attachment B
4-91
APPENDIX F
GLOSSARY OF ACTUARIAL TERMS
Attachment B
4-92
APPENDIX F – GLOSSARY OF ACTUARIAL TERMS
CalPERS Actuarial Valuation – June 30, 2012 F-1
Miscellaneous 2.5% at 55 Risk Pool
Glossary of Actuarial Terms
Accrued Liability (also called Actuarial Accrued Liability or Entry Age Normal Accrued Liability)
The total dollars needed as of the valuation date to fund all benefits earned in the past for current
members.
Actuarial Assumptions
Assumptions made about certain events that will affect pension costs. Assumptions generally can be
broken down into two categories: demographic and economic. Demographic assumptions include
mortality, disability and retirement rates. Economic assumptions include discount rate, salary growth and
inflation.
Actuarial Methods
Procedures employed by actuaries to achieve certain funding goals of a pension plan. Actuarial methods
include funding method, setting the length of time to fund the Accrued Liability and determining the
Actuarial Value of Assets.
Actuarial Valuation
The determination, as of a valuation date, of the Normal Cost, Accrued liability, Actuarial Value of Assets
and related actuarial present values for a pension plan. These valuations are performed annually or when
an employer is contemplating a change to their plan provisions.
Actuarial Value of Assets
The Actuarial Value of Assets used for funding purposes is obtained through an asset smoothing
technique where investment gains and losses are partially recognized in the year they are incurred, with
the remainder recognized in subsequent years.
This method helps to dampen large fluctuations in the employer contribution rate.
Amortization Bases
Separate payment schedules for different portions of the Unfunded Liability. The total Unfunded Liability
of a Risk Pool or non-pooled plan can be segregated by "cause", creating “bases” and each such base will
be separately amortized and paid for over a specific period of time. This can be likened to a home
mortgage that has 24 years of remaining payments and a second on that mortgage that has 10 years left.
Each base or each mortgage note has its own terms (payment period, principal, etc.) but all bases are
amortized using investment and payroll assumptions from the current valuation.
Generally in an actuarial valuation, the separate bases consist of changes in unfunded liabilities due to
amendments, actuarial assumption changes, actuarial methodology changes, and gains and losses.
Payment periods are determined by Board policy and vary based on the cause of the change.
Amortization Period
The number of years required to pay off an Amortization Base.
Annual Required Contributions (ARC)
The employer's periodic required annual contributions to a defined benefit pension plan, calculated in
accordance with the plan assumptions. The ARC is determined by multiplying the employer contribution
rate by the payroll reported to CalPERS for the applicable fiscal year. However, if this contribution is fully
prepaid in a lump sum, then the dollar value of the ARC is equal to the Lump Sum Prepayment.
Class 1 Benefits
Class 1 benefits have been identified to be additional benefits which have a significant, ongoing effect on
the total plan cost. In some cases, a Class 1 benefit may be an alternate benefit formula. These benefits
vary by employer across the risk pool. Agencies contracting for a Class 1 benefit will be responsible for
the past service liability associated with such benefit and will be required to pay a surcharge established
by the actuary to cover the ongoing cost (normal cost) of the Class 1 benefit.
Attachment B
4-93
APPENDIX F – GLOSSARY OF ACTUARIAL TERMS
CalPERS Actuarial Valuation – June 30, 2012 F-2
Miscellaneous 2.5% at 55 Risk Pool
Class 2 Benefits
Class 2 benefits have been identified to be the ancillary benefits providing one-time increases in
benefits. These benefits vary by employer across the risk pool. Agencies contracting for a Class 2 benefit
will be responsible for the past service liability associated with such benefit.
Class 3 Benefits
Class 3 benefits have been identified to be additional benefits which have a minimal effect on the total
plan cost. Class 3 benefits may vary by rate plan within each risk pool. However, the employer
contribution rate will not vary within the risk pool due to the Class 3 benefits.
Classic member (under PEPRA)
A classic member is anyone in CALPERS not defined as a new member under PEPRA (see
definition of new member below.)
Discount Rate
The actuarial assumption that was called “investment return” in earlier CalPERS reports or “actuarial
interest rate” in Section 20014 of the California Public Employees’ Retirement Law (PERL).
Entry Age
The earliest age at which a plan member begins to accrue benefits under a defined benefit pension plan
or Risk Pool. In most cases, this is the same as the date of hire.
(The assumed retirement age less the entry age is the amount of time required to fund a member's total
benefit. Generally, the older a member is at hire, the greater the Normal Cost. This is mainly because
there is less time to earn investment income to fund the future benefits.)
Entry Age Normal Cost Method
An actuarial cost method designed to fund a member's total plan benefit over the course of his or her
career. This method is designed to produce stable employer contributions in amounts that increase at
the same rate as the employer’s payroll (i.e. level % of payroll).
Fresh Start
A Fresh Start is the single amortization base created when multiple amortization bases are collapsed into
one base and amortized over a new funding period.
Funded Status
A measure of how well funded a plan or risk pool is. Or equivalently, how "on track" a plan or risk pool is
with respect to assets vs. accrued liabilities. A ratio greater than 100% means the plan or risk pool has
more assets than liabilities and a ratio less than 100% means liabilities are greater than assets. A funded
ratio based on the Actuarial Value of Assets indicates the progress toward fully funding the plan using
the actuarial cost methods and assumptions. A funded ratio based on the Market Value of Assets
indicates the short-term solvency of the plan.
GASB 27
Statement No. 27 of the Governmental Accounting Standards Board. The accounting standard governing
a state or local governmental employer’s accounting for pensions.
GASB 68
Statement No. 68 of the Governmental Accounting Standards Board. The accounting standard governing
a state or local governmental employer’s accounting and financial reporting for pensions. GASB 68
replaces GASB 27 effective for the first fiscal year beginning after June 15, 2014.
New member (under PEPRA)
A new member includes an individual who becomes a member of a public retirement system
for the first time on or after January 1, 2013, and who was not a member of another public
retirement system prior to that date, and who is not subject to reciprocity with another
public retirement system.
Attachment B
4-94
APPENDIX F – GLOSSARY OF ACTUARIAL TERMS
CalPERS Actuarial Valuation – June 30, 2012 F-3
Miscellaneous 2.5% at 55 Risk Pool
Normal Cost (also called Total Normal Cost)
The annual cost of service accrual for the upcoming fiscal year for active employees. The required
employee contributions are part of the Total Normal Cost. The remaining portion, called the employer
normal cost, includes surcharges for applicable class 1 benefits and should be viewed as the long term
employer contribution rate.
Pension Actuary
A person who is responsible for the calculations necessary to properly fund a pension plan.
PEPRA
Public Employees’ Pension Reform Act of 2013
Prepayment Contribution
A payment made by the employer to reduce or eliminate the year’s required employer contribution.
Present Value of Benefits (PVB)
The total dollars needed as of the valuation date to fund all benefits earned in the past or expected to
be earned in the future for current members.
Risk Pool
Using the benefit of the law of large numbers, a risk pool is a collection of employer plans for the
purpose of sharing risk. If a pooled plan has active members at the time of valuation, it belongs to the
risk pool composed of all other pooled plans with the same benefit formula. If a plan has no active
members at the time of valuation, it belongs to the inactive pool.
Rolling Amortization Period
An amortization period that remains the same each year, rather than declining.
Side Fund
At the time a plan joined a risk pool, a Side Fund was created to account for the difference between the
funded status of the pool and the funded status of the plan. The plan’s Side Fund is amortized on an
annual basis, with the discount rate net of, for active plans, the payroll growth rate assumption. The
actuarial investment return assumption is currently 7.5%. A positive Side Fund cause the plan’s required
employer contribution rate to be reduced by the Amortization of Side Fund rate component shown in the
Required Employer Contributions section. A negative Side Fund cause the plan’s required employer
contribution rate to be increased by the Amortization of Side Fund rate component. In the absence of
subsequent contract amendments or funding changes, a plan’s Side Fund will disappear at the end of
the Amortization Period.
Superfunded
A condition existing when a plan’s Actuarial Value of Assets exceeds its Present Value of Benefits. Prior
to the passage of PEPRA, when this condition existed on a given valuation date for a given plan,
employee contributions for the rate year covered by that valuation could be waived.
Unfunded Liability
When a plan or pool’s Actuarial Value of Assets is less than its Accrued Liability, the difference is the
plan or pool’s Unfunded Liability of the Unfunded Liability is positive, the plan or pool will have to pay
contributions exceeding the Normal Cost.
Attachment B
4-95
Section 2
CALIFORNIA PUBLIC EM PLOYEES’ RETIREMENT SYSTEM
Miscellaneous 2% at 60 Risk Pool
as of June 30, 2012
Attachment B
4-96
TABLE OF CONTENTS
ACTUARIAL CERTIFICATION 1
HIGHLIGHTS AND EXECUTIVE SUMMARY
Purpose of Section 2 5
Risk Pool’s Required Employer Contribution 5
Risk Pool’s Required Base Employer Rate 6
Risk Pool’s Net Total Normal Cost Rate 6
Funded Status of the Risk Pool 6
Cost 7
Changes since the Prior Year’s Valuation 7
Subsequent Events 8
ASSETS
Reconciliation of the Market Value of Assets 11
Development of the Actuarial Value of Assets 11
Asset Allocation 12
CalPERS History of Investment Returns 13
LIABILITIES AND RATES
Development of Pool’s Accrued and Unfunded Liabilities 17
(Gain)/Loss Analysis 06/30/11 - 06/30/12 18
Schedule of Amortization Bases for the Risk Pool 19
Development of Risk Pool’s Annual Required Base Contribution 20
Pool’s Employer Contribution Rate History 21
Funding History 21
RISK ANALYSIS
Volatility Ratios 25
Projected Rates 26
Analysis of Future Investment Return Scenarios 26
Analysis of Discount Rate Sensitivity 27
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
Actuarial Data A-1
Actuarial Methods A-1
Actuarial Assumptions A-3
Miscellaneous A-17
APPENDIX B – PRINCIPAL PLAN PROVISIONS B-1
APPENDIX C – PLAN OPTIONS AND VARIABLES
Classification of Optional Benefits C-1
Example of Individual Agency’s Rate Calculation C-3
Distribution of Class 1 Benefits C-3
APPENDIX D – PARTICIPATING EMPLOYERS D-1
APPENDIX E – PARTICIPANT DATA
Source of the Participant Data E-1
Data Validation Tests and Adjustments E-1
Summary of Valuation Data E-2
Active Members E-3
Transferred and Terminated Members E-4
Retired Members and Beneficiaries E-5
APPENDIX F – GLOSSARY OF ACTUARIAL TERMS F-1
Risk Pool Valuation Job ID: 618
Attachment B
4-97
ACTUARIAL CERTIFICATION
CalPERS Actuarial Valuation – June 30, 2012 1
Miscellaneous 2% at 60 Risk Pool
ACTUARIAL CERTIFICATION
To the best of our knowledge, Section 2 of this report is complete and accurate and contains sufficient
information to disclose, fully and fairly, the funded condition of the Miscellaneous 2% at 60 Risk Pool. This
valuation is based on the member and financial data as of June 30, 2012 provided by the various CalPERS
databases and the benefits under this Risk Pool with CalPERS as of the date this report was produced.
Changes to the pool that will occur as a result of PEPRA are not reflected in this report. It is our opinion that
the valuation has been performed in accordance with generally accepted actuarial principles, in accordance
with standards of practice prescribed by the Actuarial Standards Board, and that the assumptions and
methods are internally consistent and reasonable for this risk pool, as prescribed by the CalPERS Board of
Administration according to provisions set forth in the California Public Employees’ Retirement Law.
The undersigned are CalPERS staff actuaries who are members of the American Academy of Actuaries and
the Society of Actuaries and meets the Qualification Standards of the American Academy of Actuaries to
render the actuarial opinion contained herein.
SHELLY CHU, ASA, MAAA
Senior Pension Actuary, CalPERS
Pool Actuary
BARBARA J. WARE, FSA, MAAA
Enrolled Actuary
Senior Pension Actuary, CalPERS
Pool Reviewing Actuary
Attachment B
4-98
HIGHLIGHTS AND EXECUTIVE SUMMARY
PURPOSE OF SECTION 2
RISK POOL’S REQUIRED EMPLOYER CONTRIBUTION
RISK POOL’S REQUIRED BASE EMPLOYER RATE
RISK POOL’S NET TOTAL NORMAL COST RATE
FUNDED STATUS OF THE RISK POOL
COST
CHANGES SINCE THE PRIOR YEAR’S VALUATION
SUBSEQUENT EVENTS
Attachment B
4-99
HIGHLIGHTS AND EXECUTIVE SUMMARY
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
5
Purpose of Section 2
This Actuarial Valuation for the Miscellaneous 2% at 60 Risk Pool of the California Public Employees’ Retirement
System (CalPERS) was performed by CalPERS' staff actuaries using data as of June 30, 2012 in order to:
Set forth the actuarial assets and accrued liabilities of this risk pool as of June 30, 2012
Determine the required contribution rate of the pool for the fiscal year July 1, 2014 through June 30,
2015
Provide actuarial information as of June 30, 2012 to the CalPERS Board of Administration and other
interested parties
The use of this report for any other purposes may be inappropriate. In particular, this report does not contain
information applicable to alternative benefit costs. The employer should contact their actuary before
disseminating any portion of this report for any reason that is not explicitly described above.
California Actuarial Advisory Panel Recommendations
This report satisfies all basic disclosure requirements under the Model Disclosure Elements for Actuarial Valuation
Reports recommended by the California Actuarial Advisory Panel, except for the original base amounts of the
various components of the unfunded liability amortization.
The report gives the following additional information classified as enhanced risk disclosures under the Model
Disclosure Elements for Actuarial Valuation Reports recommended by the California Actuarial Advisory Panel:
“Deterministic stress test”, projecting future results under different investment income scenarios.
“Sensitivity analysis”, showing the impact on current valuation results of a plus or minus 1% change in
the discount rate.
Risk Pool's Required Employer Contribution
Fiscal Year Fiscal Year
2013-14 2014-15
1) Contribution in Projected Dollars
a) Total Pool’s Normal Cost 29,526,206 31,429,945
b) Employee Contribution 14,562,900 15,662,566
c) Pool’s Gross Employer Normal Cost [(1a) – (1b)] $ 14,963,306 $ 15,767,378
d) Payment on Pool’s Amortization Bases 2,676,208 3,081,966
e) Payment on Employer Side Funds 3,306,948 1,837,466
f) Total Required Employer Contribution* [(1c)+(1d)+(1e)] $ 20,946,086 $ 20,686,709
* Total may not add up due to rounding
2) Contribution as a Percentage of Projected Pay
a) Total Pool’s Normal Cost 13.937% 13.794%
b) Employee Contribution 6.874% 6.874%
c) Pool’s Gross Employer Normal Cost [(2a) – (2b)] 7.063% 6.920%
d) Payment on Pool’s Amortization Bases 1.263% 1.353%
e) Payment on Employer Side Funds 1.561% 0.806%
f) Total Required Employer Contribution [(2c)+(2d)+(2e)] 9.887% 9.079%
These rates are the total required employer contributions to the pool for fiscal years 2013-14 and 2014-15. The
Pool’s Gross Employer Normal Cost includes the Class 1 surcharges for all employers that contract for the Class 1
type benefits. The payment on the pool’s amortization bases is the payment on the ongoing cumulative gains and
losses experienced by the pool since its June 30, 2003 inception. The payment on employer side funds is the
combination of all expected individual amortization payments on every side fund in the pool.
Attachment B
4-100
HIGHLIGHTS AND EXECUTIVE SUMMARY
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
6
Risk Pool's Required Base Employer Rate
Fiscal Year Fiscal Year
2013-14 2014-15
1. Pool’s Gross Employer Normal Cost 7.063% 6.920%
Less: Surcharges for Class 1 Benefits 0.277% 0.268%
2. Pool’s Net Employer Normal Cost 6.786% 6.652%
3. Payment on Pool's Amortization Bases 1.263% 1.353%
4. Pool’s Base Employer Rate 8.049% 8.005%
The base employer contribution rate is the rate that each plan within the pool pays before any adjustments are
made. It represents the pool funding for basic benefits (no Class 1 surcharges) for the fiscal year shown. To
arrive at a plan's total contribution rate, several components must be added to this base rate. These components
are Class 1 benefit surcharges, normal cost phase-out and any side fund payment. More information about those
additional components can be found in Section 1 of this report.
Risk Pool's Net Total Normal Cost Rate
Fiscal Year Fiscal Year
2013-14 2014-15
1. Pool’s Net Employer Normal Cost 6.786% 6.652%
2. Pool’s Employee Contribution Rate 6.874% 6.874%
3. Pool’s Net Total Normal Cost Rate 13.660% 13.526%
Funded Status of the Risk Pool
June 30, 2011 June 30, 2012
1. Present Value of Projected Benefits $ 898,658,973 $ 965,549,148
2. Entry Age Normal Accrued Liability $ 682,375,804 $ 736,231,913
3. Actuarial Value of Assets (AVA) $ 639,237,247 $ 701,224,211
4. Unfunded Liability (AVA Basis) [(2) – (3)] 43,138,557 35,007,702
5. Funded Ratio (AVA Basis) [(3) / (2)] 93.7% 95.3%
6. Market Value of Assets (MVA) $ 572,006,330 $ 589,970,009
7. Unfunded Liability (MVA Basis) [(2) – (6)] $ 110,369,474 $ 146,261,904
8. Funded Ratio (MVA Basis) [(6) / (2)] 83.8% 80.1%
Attachment B
4-101
HIGHLIGHTS AND EXECUTIVE SUMMARY
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
7
Cost
Actuarial Cost Estimates in General
What will this plan or pool cost? Unfortunately, there is no simple answer. There are two major reasons for the
complexity of the answer:
First, all actuarial calculations, including those in this report, are based on a number of assumptions about the
future. These assumptions can be divided into two categories.
Demographic assumptions include the percentage of employees that will terminate, die, become
disabled, and retire in each future year.
Economic assumptions include future salary increases for each active employee, and the assumption
with the greatest impact, future asset returns at CalPERS for each year into the future until the last
dollar is paid to current members of your plan.
While CalPERS has set these assumptions as our best estimate of the real future of your plan, it must be
understood that these assumptions are very long term predictors and will surely not be realized in any one year.
For example, while the asset earnings at CalPERS have averaged more than the assumed return of 7.5 percent
over the past twenty year period ending June 30, 2013, returns for each fiscal year ranged from -24 percent to
+21.7 percent.
Second, the very nature of actuarial funding produces the answer to the question of plan or pool cost as the sum
of two separate pieces:
The Normal Cost (i.e., the future annual premiums in the absence of surplus or unfunded liability)
expressed as a percentage of total active payroll, and
The Past Service Cost or Accrued Liability (i.e., representing the current value of the benefit for all
credited past service of current members) which is expressed as a lump sum dollar amount.
The cost is the sum of a percent of future pay and a lump sum dollar amount (the sum of an apple and an orange
if you will). To communicate the total cost, either the Normal Cost (i.e., future percent of payroll) must be
converted to a lump sum dollar amount (in which case the total cost is the present value of benefits), or the Past
Service Cost (i.e., the lump sum) must be converted to a percent of payroll (in which case the total cost is
expressed as the employer’s rate, part of which is permanent and part temporary). Converting the Past Service
Cost lump sum to a percent of payroll requires a specific amortization period, and the plan or pool rate will vary
depending on the amortization period chosen.
Changes since the Prior Year’s Valuation
Benefits
The standard actuarial practice at CalPERS is to recognize mandated legislative benefit changes in the first
annual valuation following the effective date of the legislation. Voluntary benefit changes by employers within
the risk pool are generally included in the first valuation that is prepared after the amendment becomes effective
even if the valuation date is prior to the effective date of the amendment.
The valuation generally reflects plan changes by amendments effective prior to July 1, 2013. Please refer to
Appendix B for a summary of the plan provisions used in this valuation report. The provisions in Appendix B do
not indicate the class of benefits voluntarily contracted for by individual employers within the risk pool. Refer to
Section 1 of the valuation report for a list of your specific contracted benefits. The increase in the pool’s unfunded
liabilities due to Class 1 or 2 amendments by individual employers within the pool is embedded in the Liability
(Gain) / Loss shown in the (Gain) / Loss section of this report. This amount, however, is offset by additional
contributions through a surcharge for employers who voluntarily contract for those benefits.
Public Employees’ Pension Reform Act of 2013 (PEPRA)
On January 1, 2013, the Public Employees’ Pension Reform Act of 2013 (PEPRA) took effect, requiring that a
public employer’s contribution to a defined benefit plan, in combination with employee contributions to that
defined benefit plan, shall not be less than the normal cost rate. Beginning July 1, 2013, this means that some
Attachment B
4-102
HIGHLIGHTS AND EXECUTIVE SUMMARY
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
8
plans with surplus will be paying more than they otherwise would. For more information on PEPRA please refer to
the CalPERS website.
Subsequent Events
Actuarial Methods and Assumptions
On April 17, 2013, the CalPERS Board of Administration approved a recommendation to change the CalPERS
amortization and rate smoothing policies. Beginning with the June 30, 2013 valuations that set the 2015-16 rates,
CalPERS will employ an amortization and smoothing policy that will pay for all gains and losses over a fixed 30-
year period with the increases or decreases in the rate spread directly over a 5-year period. The impact of this
new actuarial methodology is reflected in the “Analysis of Future Investment Return Scenarios” subsection of the
“Risk Analysis” section of your Section 2 report.
Not reflected in the “Analysis of Future Investment Return Scenarios” subsection of the “Risk Analysis” section
is the impact of assumption changes that we expect will also impact future rates. A review of the preferred asset
allocation mix for CalPERS investment portfolio will be performed in late 2013, which could influence future
discount rates. In addition, CalPERS will review economic and demographic assumptions, including mortality rate
improvements that are likely to increase employer contribution rates in future years. The partial closure of the
pool (to most new hires) due to the enactment of PEPRA will also impact future pool rates.
Attachment B
4-103
ASSETS
RECONCILIATION OF THE MARKET VALUE OF ASSETS
DEVELOPMENT OF THE ACTUARIAL VALUE OF ASSETS
ASSET ALLOCATION
CALPERS HISTORY OF INVESTMENT RETURNS
Attachment B
4-104
ASSETS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
11
Reconciliation of the Market Value of Assets
1. Market Value of Assets as of June 30, 2011 Including Receivables $ 572,006,330
2. Receivables for Service Buybacks as of June 30, 2011 994,631
3. Market Value of Assets as of June 30, 2011 [1 - 2] 571,011,699
4. Employer Contributions 19,670,299
5. Employee Contributions 13,801,733
6. Benefit Payments to Retirees and Beneficiaries (23,116,585)
7. Refunds (1,211,479)
8. Lump Sum Payments 0
9. Transfers and Miscellaneous Adjustments (3,802,925)
10. Investment Return (1,197,346)
11. Market Value of Assets as of June 30, 2012 (w/o Pool Transfers) $ 575,155,395
12. Transfers into and out of the Risk Pool 13,366,622
13. Market Value of Assets as of June 30, 2012 $ 588,522,017
14. Receivables for Service Buybacks as of June 30, 2012 1,447,992
15. Market Value of Assets as of June 30, 2012 Including Receivables [13 + 14] 589,970,009
Development of the Actuarial Value of Assets
1. Actuarial Value of Assets as of June 30, 2011 Used for Rate Setting Purposes 639,237,247
2. Receivables for Service Buyback as of June 30, 2011 994,631
3. Actuarial Value of Assets as of June 30, 2011 [1 - 2] 638,242,616
4. Employer Contributions 19,670,299
5. Employee Contributions 13,801,733
6. Benefit Payments to Retirees and Beneficiaries (23,116,585)
7. Refunds (1,211,479)
8. Lump Sum Payments 0
9. Transfers and Miscellaneous Adjustments (3,802,925)
10. Expected Investment Income at 7.5% 48,064,864
11. Expected Actuarial Value of Assets (w/o Pool Transfers) $ 691,648,523
12. Market Value of Assets June 30, 2012 (w/o Pool Transfers) 575,155,395
13. Preliminary Actuarial Value of Assets (w/o Pool Transfers) [(11) + ((12) - (11)) / 15] 683,882,314
14. Preliminary Actuarial Value to Market Value Ratio 118.9%
15. Final Actuarial Value to Market Value Ratio (minimum 80%, maximum 120%) 118.9%
16. Market Value of Assets June 30, 2012 588,522,017
17. Actuarial Value of Assets as of June 30, 2012 699,776,219
18. Receivables for Service Buybacks as of June 30, 2012 1,447,992
19. Actuarial Value of Assets as of June 30, 2012 Used for Rate Setting Purposes [17 + 18] 701,224,211
Attachment B
4-105
ASSETS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
12
Asset Allocation
CalPERS adheres to an Asset Allocation Strategy which establishes asset class allocation policy targets and ranges,
and manages those asset class allocations within their policy ranges. CalPERS recognizes that over 90 percent of
the variation in investment returns of a well-diversified pool of assets can typically be attributed to asset allocation
decisions. The Board approved in December 2010 policy asset class targets and ranges listed below. These policy
asset allocation targets and ranges are expressed as a percentage of total assets and were expected to be
implemented over a period of one to two years beginning July, 1 2011 and reviewed again in December 2013.
The asset allocation and market value of assets shown below reflect the values of the Public Employees
Retirement Fund (PERF) in its entirety as of June 30, 2012. The assets for Miscellaneous 2% at 60 Risk Pool are
part of the Public Employees Retirement Fund (PERF) and are invested accordingly.
(A)
Asset Class
(B)
Market Value
($ Billion)
(C)
Policy Target
Allocation
(D)
Policy Target
Range
1) Public Equity 113.0 50.0% +/- 7%
2) Private Equity 33.9 14.0% +/- 4%
3) Fixed Income 42.6 17.0% +/- 5%
4) Cash Equivalents 7.5 4.0% +/- 5%
5) Real Assets 24.8 11.0% +/- 3%
6) Inflation Assets 7.0 4.0% +/- 3%
7) Absolute Return Strategy (ARS) 5.1 0.0% N/A
Total Fund $233.9 100.0% N/A
Public Equity
48.3%
Private Equity
14.5%
Income
18.2%
3.2%
Liquidity
Real Assets
10.6%
3.0%
Inflation
ARS
2.2%
Asset Allocation at 6/30/2012
Attachment B
4-106
ASSETS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
13 13
CalPERS History of Investment Returns
The following is a chart with historical annual returns of the Public Employees Retirement Fund for each fiscal
year ending on June 30. Beginning with June 30, 2002, the figures are reported as gross of fees.
-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
1
2
.
5
%
1
4
.
5
%
2
.
0
%
1
6
.
3
%
1
5
.
3
%
2
0
.
1
%
1
9
.
5
%
1
2
.
5
%
1
0
.
5
%
-
7
.
2
%
-
6
.
1
%
3
.
7
%
1
6
.
6
%
1
2
.
3
%
1
1
.
8
%
1
9
.
1
%
-
5
.
1
%
-
2
4
.
0
%
1
3
.
3
%
2
1
.
7
%
0
.
1
%
Attachment B
4-107
LIABILITIES AND RATES
DEVELOPMENT OF POOL’S ACCRUED AND UNFUNDED LIABILITIES
(GAIN)/LOSS ANALYSIS 06/30/11 - 06/30/12
SCHEDULE OF AMORTIZATION BASES FOR THE RISK POOL
DEVELOPMENT OF RISK POOL’S ANNUAL REQUIRED BASE CONTRIBUTION
POOL’S EMPLOYER CONTRIBUTION RATE HISTORY
FUNDING HISTORY
Attachment B
4-108
LIABILITIES AND RATES
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
17
Development of Pool’s Accrued and Unfunded Liabilities
1. Present Value of Projected Benefits June 30, 2011 June 30, 2012
a) Active Members $ 587,974,870 $ 617,938,237
b) Transferred Members 43,285,891 41,919,682
c) Separated Members 29,815,917 36,911,221
d) Members and Beneficiaries Receiving Payments 237,582,295 268,780,008
e) Total $ 898,658,973 $ 965,549,148
2. Present Value of Future Employer Normal Costs $ 102,988,383 $ 108,235,611
3. Present Value of Future Employee Contributions $ 113,294,786 $ 121,081,624
4. Entry Age Normal Accrued Liability
a) Active Members [(1a) - (2) - (3)] $ 371,691,701 $ 388,621,002
b) Transferred Members (1b) 43,285,891 41,919,682
c) Separated Members (1c) 29,815,917 36,911,221
d) Members and Beneficiaries Receiving Payments (1d) 237,582,295 268,780,008
e) Total $ 682,375,804 $ 736,231,913
5. Actuarial Value of Assets (AVA) Including Receivables $ 639,237,247 $ 701,224,211
6. Unfunded Accrued Liability (AVA Basis) [(4e) - (5)] 43,138,557 35,007,702
7. Funded Ratio (AVA Basis) [(5) / (4e)] 93.7% 95.3%
8. Side Funds $ 1,499,824 $ 2,948,645
9. Unfunded Liability excluding Side Funds [(4e) - (5) + (8)] 44,638,381 37,956,347
10. Market Value of Assets (MVA) Including Receivables $ 572,006,330 $ 589,970,009
11. Funded Ratio (MVA Basis) [(10) / (4e)] 83.8% 80.1%
Attachment B
4-109
LIABILITIES AND RATES
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
18
(Gain)/Loss Analysis 06/30/11 - 06/30/12
To calculate the cost requirements of your pool, we use assumptions about future events that affect the
amount and timing of benefits to be paid and assets to be accumulated. Each year actual experience is
contrasted against the expected experience based on the actuarial assumptions. The differences are
reflected below as your pool’s actuarial gains or losses.
1. Total (Gain)/Loss for the Year
a) Unfunded Liability/(Surplus) as of June 30, 2011 $ 44,638,381
b) Expected payment on the Unfunded Liability 1,573,561
c) Interest accumulation [.075 X (1a) - ((1.075)^.5 - 1) X (1b)] 3,289,937
d) Expected Unfunded Liability before other changes [(1a) - (1b) + (1c)] 46,354,757
e) Change due to assumption changes 0
f) Expected Unfunded Liability after changes[(1d) + (1e)] 46,354,757
g) Actual Unfunded Liability/(Surplus) as of June 30, 2012 37,956,347
h) Total (Gain)/Loss [(1g) - (1f)] $ (8,398,410)
2. Contribution (Gain)/Loss for the Year
a) Expected contribution (Employer and Employee) $ 33,947,642
b) Interest on Expected Contributions 1,250,022
c) Total expected Contributions with interest [(2a) + (2b)] 35,197,664
d) Actual Contributions 33,472,032
e) Interest on Actual Contributions 1,232,509
f) Total Actual Contributions with interest [(2d) + (2e)] 34,704,541
g) Contribution (Gain)/Loss [(2c) - (2f)] $ 493,123
3. Asset (Gain)/Loss for the Year
a) Actuarial Value of Assets as of 06/30/11 Including Receivables $ 639,237,247
b) Receivables as of 06/30/11 994,631
c) Actuarial Value of Assets as of 06/30/11 638,242,616
d) Contributions received 33,472,032
e) Benefits and Refunds Paid (24,328,064)
f) Transfers and miscellaneous adjustments (3,802,925)
g) Expected interest 48,064,864
h) Transfers into the pool (AVA Basis) 15,893,448
i) Transfers out of the pool (AVA Basis) 0
j) Expected Assets as of 06/30/12 [Sum (3c) through (3i)] 707,541,971
k) Receivables as of 06/30/12 1,447,992
l) Expected Assets Including Receivables 708,989,963
m) Actual Actuarial Value of Assets as of 06/30/12 Including Receivables 701,224,211
n) Asset (Gain)/Loss [(3l) – (3m)] $ 7,765,752
4. Liability (Gain)/Loss for the Year
a) Total (Gain)/Loss (1h) $ (8,398,410)
b) Contribution (Gain)/Loss (2g) 493,123
c) Asset (Gain)/Loss excluding side fund (3n) 7,765,752
d) Liability (Gain)/Loss [(4a) - (4b) - (4c)]* $ (16,657,285)
* Includes (Gain)/Loss on plans transferring into the pool.
Attachment B
4-110
LIABILITIES AND RATES
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
19
Schedule of Amortization Bases for the Risk Pool
The schedule below shows the development of the payment on the Pool’s amortization bases used to determine the Total Required Employer Contributions to the
Pool. Each row of the schedule gives a brief description of a base (or portion of the Unfunded Actuarial Liability), the balance of the base on the valuation date,
and the number of years remaining in the amortization period. In addition, we show the expected payments for the two years immediately following the valuation
date, the balances on the dates a year and two years after the valuation date, and the scheduled payment for fiscal year 2014-15. Please refer to Appendix A for
an explanation of how amortization periods are determined.
Schedule of Amortization
Reason for Base
Amortization
Period
Balance on
June 30, 2012
Expected
Payment 12-13
Balance
June 30, 2013
Expected
Payment 13-14
Balance
June 30, 2014
Scheduled
Payment for
2014-15
Payment as
a percentage
of payroll
2004 FRESH START 22 $2,783,655 $188,776 $2,796,702 $193,898 $2,805,417 $199,715 0.088%
2005 (GAIN)/LOSS 30 $(3,142,403) $316,385 $(3,706,119) $319,600 $(4,315,447) $(259,145) (0.113%)
2005 PAYMENT (GAIN)/LOSS 30 $(1,098,822) $118,357 $(1,303,948) $(707,747) $(667,937) $(40,111) (0.017%)
2009 ASSUMPTION CHANGE 17 $14,515,757 $1,135,787 $14,426,830 $1,166,334 $14,299,561 $1,201,324 0.527%
2009 SPECIAL (GAIN)/LOSS 27 $12,500,082 $765,290 $12,644,119 $786,214 $12,777,264 $809,800 0.355%
2010 SPECIAL (GAIN)/LOSS 28 $2,191,084 $131,883 $2,218,676 $135,504 $2,244,583 $139,569 0.061%
2011 ASSUMPTION CHANGE 19 $14,071,545 $(586,200) $15,734,696 $396,018 $16,504,198 $1,287,772 0.565%
2011 SPECIAL (GAIN)/LOSS 29 $(3,864,551) $0 $(4,154,392) $(249,473) $(4,207,312) $(256,958) (0.113%)
Total excluding side funds $37,956,347 $2,070,278 $38,656,564 $2,040,348 $39,440,327 $3,081,966 1.353%
The special (gain)/loss bases were special bases established for the gain/loss that is recognized in the 2009, 2010, and 2011 annual valuations. Unlike the
gain/loss occurring in previous and subsequent years, the gain/loss recognized in the 2009, 2010, and 2011 annual valuations will be amortized over fixed and
declining 30 year periods so that these annual gain/losses will be fully paid off in 30 years. The gain/loss recognized in 2012 and later valuations will be combined
with the gain/loss from 2008 and earlier valuations.
Attachment B
4
-
1
1
1
LIABILITIES AND RATES
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
20
Development of Risk Pool’s Annual Required Base
Contribution
Fiscal Year Fiscal Year
2013-14 2014-15
1. Contribution in Projected Dollars
a) Total Normal Cost $ 29,526,206 $ 31,429,945
b) Employee Contribution 14,562,900 15,662,566
c) Pool’s Gross Employer Normal Cost [(1a) - (1b)] 14,963,306 15,767,378
d) Total Surcharges for Class 1 Benefits 586,838 610,644
e) Net Employer Normal Cost [(1c) - (1d)] 14,376,468 15,156,734
f) Payment on Pool’s Amortization Bases $ 2,676,208 $ 3,081,966
g) Total Required Employer Contributions [(1e) + (1f)] 17,052,676 18,238,700
2. Annual Covered Payroll as of Valuation Date $ 193,877,169 $ 208,517,122
3. Projected Payroll for Contribution Fiscal Year $ 211,854,817 $ 227,852,289
4. Contribution as a % of Projected Pay
a) Total Normal Cost [(1a) / (3)] 13.937% 13.794%
b) Employee Contribution [(1b) / (3)] 6.874% 6.874%
c) Pool’s Gross Employer Normal Cost [(1c) / (3)] 7.063% 6.920%
d) Total Surcharges for Class 1 Benefits [(1d) / (3)] 0.277% 0.268%
e) Net Employer Normal Cost [(1e) / (3)] 6.786% 6.652%
f) Payment on Pool’s Amortization Bases [(1f) / (3)] 1.263% 1.353%
g) Total Required Employer Contributions [(1g) / (3)] 8.049% 8.005%
Attachment B
4-112
LIABILITIES AND RATES
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
21
Pool’s Employer Contribution Rate History
Fiscal
Date
Net
Employer
Normal Cost
Total
Surcharges
for Class 1
Benefits
Gross
Employer
Normal
Cost
Payment on
Pool’s
Amortization
Bases
Total
Payment On
Employer
Side Funds
Total
Employer
Contribution
06/30/2008 6.553% 0.302% 6.855% 0.202% 1.914% 8.971%
06/30/2009 6.622% 0.295% 6.917% 1.111% 1.636% 9.664%
06/30/2010 6.640% 0.293% 6.933% 1.206% 1.708% 9.847%
06/30/2011 6.786% 0.277% 7.063% 1.263% 1.561% 9.887%
06/30/2012 6.652% 0.268% 6.920% 1.353% 0.806% 9.079%
Funding History
However, note that beginning next year, GASB 68 will supersede GASB 27. Disclosure required under GASB 68
will require additional reporting which CalPERS may be able to provide for an additional cost.
Valuation
Date
Accrued
Liabilities
(AL)
Market Value
of Assets
(MVA)
Funded
Ratio
(MVA/AL)
06/30/2008 $532,483,463 $518,569,684 97.4%
06/30/2009 $582,841,869 $403,326,924 69.2%
06/30/2010 $624,423,437 $467,903,476 74.9%
06/30/2011 $682,375,804 $572,006,330 83.8%
06/30/2012 $736,231,913 $589,970,009 80.1%
Valuation
Date
Accrued
Liabilities
(AL)
Actuarial
Value of
Assets (AVA)
Unfunded
Liabilities
(UL)
Funded
Ratio
(AVA/AL)
Annual
Covered
Payroll
UL As a %
of Payroll
06/30/2008 $532,483,463 $513,147,099 $19,336,364 96.4% $183,387,608 10.5%
06/30/2009 $582,841,869 $553,953,526 $28,888,343 95.0% $184,319,666 15.7%
06/30/2010 $624,423,437 $594,492,164 $29,931,273 95.2% $186,777,830 16.0%
06/30/2011 $682,375,804 $639,237,247 $43,138,557 93.7% $193,877,169 22.3%
06/30/2012 $736,231,913 $701,224,211 $35,007,702 95.3% $208,517,122 16.8%
Information shown here is for compliance with GASB No. 27 for a cost-sharing multiple-employer defined benefit
plan.
Attachment B
4-113
RISK ANALYSIS
VOLATILITY RATIOS
PROJECTED RATES
ANALYSIS OF FUTURE INVESTMENT RETURN SCENARIOS
ANALYSIS OF DISCOUNT RATE SENSITIVITY
Attachment B
4-114
RISK ANALYSIS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
25
Volatility Ratios
The actuarial calculations supplied in this communication are based on a number of assumptions about very
long term demographic and economic behavior. Unless these assumptions (terminations, deaths,
disabilities, retirements, salary growth, and investment return) are exactly realized each year, there will be
differences on a year to year basis. The year-to-year differences between actual experience and the
assumptions are called actuarial gains and losses and serve to lower or raise the employer’s rates from one
year to the next. Therefore, the rates will inevitably fluctuate, especially due to the ups and downs of
investment returns.
Asset Volatility Ratio (AVR)
Pools that have higher asset to payroll ratios produce more volatile employer rates due to investment
return. For example, a pool with an asset to payroll ratio of 8 may experience twice the contribution
volatility due to investment return volatility than a pool with an asset to payroll ratio of 4. Below we have
shown your asset volatility ratio, a measure of the pool’s potential future rate volatility. It should be noted
that this ratio increases over time but generally tends to stabilize as the pool matures.
Liability Volatility Ratio
Pools that have higher liability to payroll ratios produce more volatile employer rates due to investment
return. For example, a pool with an liability to payroll ratio of 8 may experience twice the contribution
volatility due to investment return volatility than a pool with an liability to payroll ratio of 4. Below we have
shown your volatility index, a measure of the plan’s potential future rate volatility. It should be noted that
this ratio increases over time but generally tends to stabilize as the pool matures.
As of June 30, 2012
1. Market Value of Assets without Receivables $ 588,522,017
2. Payroll 208,517,122
3. Asset Volatility Ratio (AVR = 1. / 2.) 2.8
4. Accrued Liability 736,231,913
5. Payroll 208,517,122
6. Liability Volatility Ratio (4. / 5.) 3.5
Attachment B
4-115
RISK ANALYSIS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
26
Projected Rates
On April 17, 2013, the CalPERS Board of Administration approved a recommendation to change the CalPERS
amortization and smoothing policies. Beginning with the June 30, 2013 valuations that will set the 2015-16 rates,
CalPERS will employ an amortization and rate smoothing policy that will pay for all gains and losses over a fixed
30-year period with the increases or decreases in the rate spread directly over a 5-year period. The table below
shows projected pool contribution rates (before cost sharing) for the next five Fiscal Years, assuming CalPERS
earns 12 percent for fiscal year 2012-13 and 7.50 percent every fiscal year thereafter, and assuming
that all other actuarial assumptions will be realized and that no further changes to assumptions, contributions,
benefits, or funding will occur between now and the beginning of the fiscal year 2015-16. Consequently,
these projections do not take into account potential rate increases from likely future assumption
changes. In addition they do not take into account the positive impact PEPRA is expected to gradually have on
the normal cost nor the possibility that a plan may be required under PEPRA to contribute a higher normal cost
than would otherwise be calculated. PEPRA is expected to reduce expected payroll for this pool in the future and
as a result CalPERS may need to change its method of allocating pooled plan unfunded liability. These potential
changes are not reflected in the projected rates.
New Rate Projected Future Pool Contribution Rates
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
Contribution Rates: 8.005% 8.6% 9.3% 9.9% 10.6% 11.2%
Analysis of Future Investment Return Scenarios
In July 2013, the investment return for fiscal year 2012-13 was announced to be 12.5 percent. Note that this
return is before administrative expenses and also does not reflect final investment return information for real
estate and private equities. The final return information for these two asset classes is expected to be available
later in October. For purposes of projecting future employer rates, we are assuming a 12 percent investment
return for fiscal year 2012-13.
The investment return realized during a fiscal year first affects the contribution rate for the fiscal year 2 years
later. Specifically, the investment return for 2012-13 will first be reflected in the June 30, 2013 actuarial
valuation that will be used to set the 2015-16 employer contribution rates, the 2013-14 investment return will
first be reflected in the June 30, 2014 actuarial valuation that will be used to set the 2016-17 employer
contribution rates and so forth.
Based on a 12 percent investment return for fiscal year 2012-13 and the April 17, 2013 CalPERS Board-approved
amortization and rate smoothing method change and assuming that all other actuarial assumptions will be
realized and that no further changes to assumptions, contributions, benefits, or funding will occur between now
and the beginning of the fiscal year 2015-16, the effect on the 2015-16 Employer Rate is as follows:
Estimated 2015-16 Pool’s Base
Employer Rate
Estimated Increase in Pool’s Base Employer Rate
between 2014-15 and 2015-16
8.6% 0.6%
As part of this report, a sensitivity analysis was performed to determine the effects of various investment returns
during fiscal years 2013-14, 2014-15 and 2015-16 on the 2016-17, 2017-18 and 2018-19 employer rates. Once
again, the projected rate increases assume that all other actuarial assumptions will be realized and that no
further changes to assumptions, contributions, benefits, or funding will occur.
Attachment B
4-116
RISK ANALYSIS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
27
Five different investment return scenarios were selected.
The first scenario is what one would expect if the markets were to give us a 5th percentile return from
July 1, 2013 through June 30, 2016. The 5th percentile return corresponds to a negative -4.1 percent
return for each of the 2013-14, 2014-15 and 2015-16 fiscal years.
The second scenario is what one would expect if the markets were to give us a 25th percentile return
from July 1, 2013 through June 30, 2016. The 25th percentile return corresponds to a 2.6 percent
return for each of the 2013-14, 2014-15 and 2015-16 fiscal years.
The third scenario assumed the return for 2013-14, 2014-15, 2015-16 would be our assumed 7.5
percent investment return which represents about a 49th percentile event.
The fourth scenario is what one would expect if the markets were to give us a 75th percentile return
from July 1, 2013 through June 30, 2016. The 75th percentile return corresponds to a 11.9 percent
return for each of the 2013-14, 2014-15 and 2015-16 fiscal years.
Finally, the last scenario is what one would expect if the markets were to give us a 95th percentile
return from July 1, 2013 through June 30, 2016. The 95th percentile return corresponds to a 18.5
percent return for each of the 2013-14, 2014-15 and 2015-16 fiscal years.
The table below shows the estimated changes in the Pool’s Base rate for 2016-17, 2017-18 and 2018-19 under
the five different scenarios.
2013-16
Investment Return
Scenario
Estimated Change in Pool’s Base Rate Between Year Shown and Preceding
Year
2016-17 2017-18 2018-19 Cumulative
Increase
-4.10% (5th percentile) 1.2% 1.7% 2.2% 5.1%
2.60% (25th percentile) 0.9% 1.1% 1.3% 3.3%
7.5% 0.6% 0.6% 0.6% 1.8%
11.90% (75th percentile) 0.4% 0.2% 0.0% 0.6%
18.50% (95th percentile) 0.1% -0.4% -1.1% -1.4%
Analysis of Discount Rate Sensitivity
The following analysis looks at the 2014-15 employer contribution rates under two different discount rate
scenarios. Shown below are the employer contribution rates assuming discount rates that are 1 percent lower
and 1 percent higher than the current valuation discount rate. This analysis gives an indication of the potential
required employer contribution rates if the PERF were to realize investment returns of 6.50 percent or 8.50
percent over the long-term.
This type of analysis gives the reader a sense of the long-term risk to the risk pool contribution rates.
2014-15 Employer Contribution Rate
As of June 30, 2012 6.50% Discount
Rate (-1%) 7.50% Discount Rate
(assumed rate) 8.50% Discount
Rate (+1%)
Pool’s Gross Employer Normal Cost 10.0% 6.9% 4.5%
Payment on Pool’s Amortization Bases 5.2% 1.4% -2.1%
Total 15.2% 8.3% 2.5%
Attachment B
4-117
APPENDICES
APPENDIX A - ACTUARIAL METHODS AND ASSUMPTIONS
APPENDIX B - PLAN PROVISIONS
APPENDIX C - PLAN OPTIONS AND VARIABLES
APPENDIX D - LIST OF PARTICIPATING EMPLOYERS
APPENDIX E - PARTICIPANT DATA
APPENDIX F - GLOSSARY OF ACTUARIAL TERMS
Attachment B
4-118
APPENDIX A
ACTUARIAL METHODS AND ASSUMPTIONS
ACTUARIAL DATA
ACTUARIAL METHODS
ACTUARIAL ASSUMPTIONS
MISCELLANEOUS
Attachment B
4-119
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
A-1
Actuarial Data
As stated in the Actuarial Certification, the data which serves as the basis of this valuation has been obtained from
the various CalPERS databases. We have reviewed the valuation data and believe that it is reasonable and
appropriate in aggregate. We are unaware of any potential data issues that would have a material effect on the
results of this valuation, except that data does not always contain the latest salary information for former members
now in reciprocal systems and does not recognize the potential for unusually large salary deviation in certain cases
such as elected officials. Therefore, salary information in these cases may not be accurate. These situations are
relatively infrequent, however, and when they do occur, they generally do not have a material impact on the
employer contribution rates.
Actuarial Methods
Funding Method
The actuarial funding method used for the Retirement Program is the Entry Age Normal Cost Method. Under this
method, projected benefits are determined for all members and the associated liabilities are spread in a manner that
produces level annual cost as a percent of pay in each year from the age of hire (entry age) to the assumed
retirement age. The cost allocated to the current fiscal year is called the normal cost.
The actuarial accrued liability for active members is then calculated as the portion of the total cost of the pool
allocated to prior years. The actuarial accrued liability for members currently receiving benefits, for active members
beyond the assumed retirement age, and for members entitled to deferred benefits, is equal to the present value of
the benefits expected to be paid. No normal costs are applicable for these participants.
The excess of the total actuarial accrued liability over the actuarial value of plan assets is called the unfunded
actuarial accrued liability. Funding requirements are determined by adding the normal cost and an amortization of
the unfunded liability as a level percentage of assumed future payrolls. All changes in liability due to changes in
actuarial assumptions, or changes in actuarial methodology are amortized separately over a 20-year period. All new
gains or losses are tracked and amortized over a rolling 30-year period. If a pool’s accrued liability exceeds the
actuarial value of assets, the annual contribution with respect to the total unfunded liability may not be less than the
amount produced by a 30-year amortization of the unfunded liability.
Additional contributions will be required for any plan or pool if their cash flows hamper adequate funding progress by
preventing the expected funded status on a market value of assets basis of the plan to either:
Increase by at least 15 percent by June 30, 2043; or
Reach a level of 75 percent funded by June 30, 2043
The necessary additional contribution will be obtained by changing the amortization period of the gains and losses
except for those occurring in the fiscal years 2008-2009, 2009-2010, and 2010-2011 to a period which will result in
the satisfaction of the above criteria. CalPERS actuaries will reassess the criteria above when performing each future
valuation to determine whether or not additional contributions are necessary.
An exception to the funding rules above is used whenever the application of such rules results in inconsistencies. In
these cases a “fresh start” approach is used. This simply means that the current unfunded actuarial liability is
projected and amortized over a set number of years. As mentioned above, if the annual contribution on the total
unfunded liability was less than the amount produced by a 30-year amortization of the unfunded liability, the plan
actuary would implement a 30-year fresh start. However, in the case of a 30-year fresh start, just the unfunded
liability not already in the (gain)/loss base (which already is amortized over 30 years) will go into the new fresh start
base. In addition, a fresh start is needed in the following situations:
1) When a positive payment would be required on a negative unfunded actuarial liability (or conversely a
negative payment on a positive unfunded actuarial liability); or
2) When there is excess assets, rather than an unfunded liability. In this situation a 30-year fresh start is used,
unless a larger fresh start is needed to avoid a negative total rate.
Attachment B
4-120
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
A-2
It should be noted that the actuary may choose to use a fresh start under other circumstances. In all cases, the
period of the fresh start is chosen by the actuary according to his or her best judgment, but not be less than five
years, nor greater than 30 years.
Asset Valuation Method
In order to dampen the effect of short term market value fluctuations on employer contribution rates, the following
asset smoothing technique is used. First an Expected Value of Assets is computed by bringing forward the prior
year’s Actuarial Value of Assets and the contributions received and benefits paid during the year at the assumed
actuarial rate of return. The Actuarial Value of Assets is then computed as the Expected Value of Assets plus one-
fifteenth of the difference between the actual Market Value of Assets and the Expected Value of Assets as of the
valuation date. However, in no case will the Actuarial Value of Assets be less than 80 percent, nor greater than 120
percent of the actual Market Value of Assets.
In June 2009, the CalPERS Board adopted changes to the asset smoothing method in order to phase in over a three-
year period the impact of the negative -24 percent investment loss experienced by CalPERS in fiscal year 2008-2009.
The following changes were adopted:
Increase the corridor limits for the actuarial value of assets from 80 percent-120 percent of market value to
60 percent-140 percent of market value on June 30, 2009
Reduce the corridor limits for the actuarial value of assets to 70 percent-130 percent of market value on
June 30, 2010
Return to the 80 percent-120 percent of market value corridor limits for the actuarial value of assets on
June 30, 2011 and thereafter
On April 17, 2013, the CalPERS Board of Administration approved a recommendation to change the
CalPERS amortization and rate smoothing policies. Beginning with the June 30, 2013 valuations that
set the 2015-16 contribution rates, CalPERS will employ an amortization and smoothing policy that will
pay for all gains and losses over a fixed 30-year period with the increases or decreases in the rate
spread directly over a 5-year period.
Attachment B
4-121
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
A-3
Actuarial Assumptions
Economic Assumptions
Discount Rate
7.5 percent compounded annually (net of expenses). This assumption is used for all plans.
Termination Liability Discount Rate
The discount rate used for termination valuation is a weighted average of the 10 and 30-year US Treasury
yields in effect on the valuation date that equal the duration of the pension liabilities. For purposes of this
hypothetical termination liability estimate, the discount rate used, 2.98 percent, is the yield on the 30-year
US Treasury Separate Trading of Registered Interest and Principal of Securities (STRIPS) as of June 30,
2012. Please note, as of June 30, 2013 the 30-year STRIPS yield was 3.72 percent.
Salary Growth
Annual increases vary by category, entry age, and duration of service. Sample which is assumed increases
are shown below.
Public Agency Miscellaneous
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.1420 0.1240 0.0980
1 0.1190 0.1050 0.0850
2 0.1010 0.0910 0.0750
3 0.0880 0.0800 0.0670
4 0.0780 0.0710 0.0610
5 0.0700 0.0650 0.0560
10 0.0480 0.0460 0.0410
15 0.0430 0.0410 0.0360
20 0.0390 0.0370 0.0330
25 0.0360 0.0360 0.0330
30 0.0360 0.0360 0.0330
Public Agency Fire
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.1050 0.1050 0.1020
1 0.0950 0.0940 0.0850
2 0.0870 0.0830 0.0700
3 0.0800 0.0750 0.0600
4 0.0740 0.0680 0.0510
5 0.0690 0.0620 0.0450
10 0.0510 0.0460 0.0350
15 0.0410 0.0390 0.0340
20 0.0370 0.0360 0.0330
25 0.0350 0.0350 0.0330
30 0.0350 0.0350 0.0330
Attachment B
4-122
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
A-4
Public Agency Police
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.1090 0.1090 0.1090
1 0.0930 0.0930 0.0930
2 0.0810 0.0810 0.0780
3 0.0720 0.0700 0.0640
4 0.0650 0.0610 0.0550
5 0.0590 0.0550 0.0480
10 0.0450 0.0420 0.0340
15 0.0410 0.0390 0.0330
20 0.0370 0.0360 0.0330
25 0.0350 0.0340 0.0330
30 0.0350 0.0340 0.0330
Public Agency County Peace Officers
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.1290 0.1290 0.1290
1 0.1090 0.1060 0.1030
2 0.0940 0.0890 0.0840
3 0.0820 0.0770 0.0710
4 0.0730 0.0670 0.0610
5 0.0660 0.0600 0.0530
10 0.0460 0.0420 0.0380
15 0.0410 0.0380 0.0360
20 0.0370 0.0360 0.0340
25 0.0350 0.0340 0.0330
30 0.0350 0.0340 0.0330
Schools
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.1080 0.0960 0.0820
1 0.0940 0.0850 0.0740
2 0.0840 0.0770 0.0670
3 0.0750 0.0700 0.0620
4 0.0690 0.0640 0.0570
5 0.0630 0.0600 0.0530
10 0.0450 0.0440 0.0410
15 0.0390 0.0380 0.0350
20 0.0360 0.0350 0.0320
25 0.0340 0.0340 0.0320
30 0.0340 0.0340 0.0320
The Miscellaneous salary scale is used for Local Prosecutors.
The Police salary scale is used for Other Safety, Local Sheriff, and School Police.
Overall Payroll Growth
3.00 percent compounded annually (used in projecting the payroll over which the unfunded liability is
amortized). This assumption is used for all plans.
Inflation
2.75 percent compounded annually. This assumption is used for all plans.
Attachment B
4-123
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
A-5
Non-valued Potential Additional Liabilities
The potential liability loss for a cost-of-living increase exceeding the 2.75 percent inflation assumption, and
any potential liability loss from future member service purchases are not reflected in the valuation.
Miscellaneous Loading Factors
Credit for Unused Sick Leave
Final Average Salary is increased by 1 percent for those agencies that have accepted the provision providing
Credit for Unused Sick Leave.
Conversion of Employer Paid Member Contributions (EPMC)
Final Average Salary is increased by the Employee Contribution Rate for those agencies that have
contracted for the provision providing for the Conversion of Employer Paid Member Contributions (EPMC)
during the final compensation period.
Norris Decision (Best Factors)
Employees hired prior to July 1, 1982 have projected benefit amounts increased in order to reflect the use of
“Best Factors” for these employees in the calculation of optional benefit forms. This is due to a 1983
Supreme Court decision, known as the Norris decision, which required males and females to be treated
equally in the determination of benefit amounts. Consequently, anyone already employed at that time is
given the best possible conversion factor when optional benefits are determined. No loading is necessary for
employees hired after July 1, 1982.
Termination Liability
The termination liabilities include a 7 percent contingency load. This load is for unforeseen improvements in
mortality.
Demographic Assumptions
Pre-Retirement Mortality
Non-Industrial Death Rates vary by age and gender. Industrial Death rates vary by age. See sample rates in
table below. The non-industrial death rates are used for all plans. The industrial death rates are used for
Safety Plans (except for Local Prosecutor safety members where the corresponding Miscellaneous Plan does
not have the Industrial Death Benefit).
Non-Industrial Death Industrial Death
(Not Job-Related) (Job-Related)
Age Male Female Male and Female
20 0.00047 0.00016 0.00003
25 0.00050 0.00026 0.00007
30 0.00053 0.00036 0.00010
35 0.00067 0.00046 0.00012
40 0.00087 0.00065 0.00013
45 0.00120 0.00093 0.00014
50 0.00176 0.00126 0.00015
55 0.00260 0.00176 0.00016
60 0.00395 0.00266 0.00017
65 0.00608 0.00419 0.00018
70 0.00914 0.00649 0.00019
75 0.01220 0.00878 0.00020
80 0.01527 0.01108 0.00021
Miscellaneous Plans usually have Industrial Death rates set to zero unless the agency has specifically
contracted for Industrial Death benefits. If so, each Non-Industrial Death rate shown above will be split into
two components: 99 percent will become the Non-Industrial Death rate and 1 percent will become the
Industrial Death rate.
Attachment B
4-124
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
A-6
Post-Retirement Mortality
Rates vary by age, type of retirement and gender. See sample rates in table below. These rates are used for
all plans.
Healthy Recipients
Non-Industrially Disabled Industrially Disabled
(Not Job-Related) (Job-Related)
Age Male Female Male Female Male Female
50 0.00239 0.00125 0.01632 0.01245 0.00443 0.00356
55 0.00474 0.00243 0.01936 0.01580 0.00563 0.00546
60 0.00720 0.00431 0.02293 0.01628 0.00777 0.00798
65 0.01069 0.00775 0.03174 0.01969 0.01388 0.01184
70 0.01675 0.01244 0.03870 0.03019 0.02236 0.01716
75 0.03080 0.02071 0.06001 0.03915 0.03585 0.02665
80 0.05270 0.03749 0.08388 0.05555 0.06926 0.04528
85 0.09775 0.07005 0.14035 0.09577 0.11799 0.08017
90 0.16747 0.12404 0.21554 0.14949 0.16575 0.13775
95 0.25659 0.21556 0.31025 0.23055 0.26108 0.23331
100 0.34551 0.31876 0.45905 0.37662 0.40918 0.35165
105 0.58527 0.56093 0.67923 0.61523 0.64127 0.60135
110 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000
The mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience
Study adopted by the CalPERS Board, first used in the June 30, 2009 valuation. For purposes of the post-
retirement mortality rates, those revised rates include 5 years of projected on-going mortality improvement
using Scale AA published by the Society of Actuaries until June 30, 2010. There is no margin for future mortality
improvement beyond the valuation date. The mortality assumption will be reviewed with the next experience
study expected to be completed for the June 30, 2013 valuation to determine an appropriate margin to be used.
Marital Status
For active members, a percentage married upon retirement is assumed according to the following table.
Member Category Percent Married
Miscellaneous Member 85%
Local Police 90%
Local Fire 90%
Other Local Safety 90%
School Police 90%
Age of Spouse
It is assumed that female spouses are 3 years younger than male spouses. This assumption is used for all
plans.
Terminated Members
It is assumed that terminated members refund immediately if non-vested. Terminated members who are
vested are assumed to follow the same service retirement pattern as active members but with a load to
reflect the expected higher rates of retirement, especially at lower ages. The following table shows the load
factors that are applied to the service retirement assumption for active members to obtain the service
retirement pattern for separated vested members:
Age Load Factor
50 450%
51 250%
52 through 56 200%
57 through 60 150%
61 through 64 125%
65 and above 100% (no change)
Attachment B
4-125
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
A-7
Termination with Refund
Rates vary by entry age and service for Miscellaneous Plans. Rates vary by service for Safety Plans. See
sample rates in tables below.
Public Agency Miscellaneous
Duration of
Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40 Entry Age 45
0 0.1742 0.1674 0.1606 0.1537 0.1468 0.1400
1 0.1545 0.1477 0.1409 0.1339 0.1271 0.1203
2 0.1348 0.1280 0.1212 0.1142 0.1074 0.1006
3 0.1151 0.1083 0.1015 0.0945 0.0877 0.0809
4 0.0954 0.0886 0.0818 0.0748 0.0680 0.0612
5 0.0212 0.0193 0.0174 0.0155 0.0136 0.0116
10 0.0138 0.0121 0.0104 0.0088 0.0071 0.0055
15 0.0060 0.0051 0.0042 0.0032 0.0023 0.0014
20 0.0037 0.0029 0.0021 0.0013 0.0005 0.0001
25 0.0017 0.0011 0.0005 0.0001 0.0001 0.0001
30 0.0005 0.0001 0.0001 0.0001 0.0001 0.0001
35 0.0001 0.0001 0.0001 0.0001 0.0001 0.0001
Public Agency Safety
Duration of Service Fire Police County Peace Officer
0 0.0710 0.1013 0.0997
1 0.0554 0.0636 0.0782
2 0.0398 0.0271 0.0566
3 0.0242 0.0258 0.0437
4 0.0218 0.0245 0.0414
5 0.0029 0.0086 0.0145
10 0.0009 0.0053 0.0089
15 0.0006 0.0027 0.0045
20 0.0005 0.0017 0.0020
25 0.0003 0.0012 0.0009
30 0.0003 0.0009 0.0006
35 0.0003 0.0009 0.0006
The Police Termination and Refund rates are used for Public Agency Local Prosecutors, Other Safety, Local Sheriff,
and School Police.
Schools
Duration of
Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40 Entry Age 45
0 0.1730 0.1627 0.1525 0.1422 0.1319 0.1217
1 0.1585 0.1482 0.1379 0.1277 0.1174 0.1071
2 0.1440 0.1336 0.1234 0.1131 0.1028 0.0926
3 0.1295 0.1192 0.1089 0.0987 0.0884 0.0781
4 0.1149 0.1046 0.0944 0.0841 0.0738 0.0636
5 0.0278 0.0249 0.0221 0.0192 0.0164 0.0135
10 0.0172 0.0147 0.0122 0.0098 0.0074 0.0049
15 0.0115 0.0094 0.0074 0.0053 0.0032 0.0011
20 0.0073 0.0055 0.0038 0.0020 0.0002 0.0002
25 0.0037 0.0023 0.0010 0.0002 0.0002 0.0002
30 0.0015 0.0003 0.0002 0.0002 0.0002 0.0002
35 0.0002 0.0002 0.0002 0.0002 0.0002 0.0002
Attachment B
4-126
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
A-8
Termination with Vested Benefits
Rates vary by entry age and service for Miscellaneous Plans. Rates vary by service for Safety Plans. See
sample rates in tables below.
Public Agency Miscellaneous
Duration of
Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40
5 0.0656 0.0597 0.0537 0.0477 0.0418
10 0.0530 0.0466 0.0403 0.0339 0.0000
15 0.0443 0.0373 0.0305 0.0000 0.0000
20 0.0333 0.0261 0.0000 0.0000 0.0000
25 0.0212 0.0000 0.0000 0.0000 0.0000
30 0.0000 0.0000 0.0000 0.0000 0.0000
35 0.0000 0.0000 0.0000 0.0000 0.0000
Public Agency Safety
Duration of
Service Fire Police
County Peace
Officer
5 0.0162 0.0163 0.0265
10 0.0061 0.0126 0.0204
15 0.0058 0.0082 0.0130
20 0.0053 0.0065 0.0074
25 0.0047 0.0058 0.0043
30 0.0045 0.0056 0.0030
35 0.0000 0.0000 0.0000
When a member is eligible to retire, the termination with vested benefits probability is set to zero.
After termination with vested benefits, a miscellaneous member is assumed to retire at age 59 and a
safety member at age 54.
The Police Termination with vested benefits rates are used for Public Agency Local Prosecutors, Other
Safety, Local Sheriff, and School Police.
Schools
Duration of
Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40
5 0.0816 0.0733 0.0649 0.0566 0.0482
10 0.0629 0.0540 0.0450 0.0359 0.0000
15 0.0537 0.0440 0.0344 0.0000 0.0000
20 0.0420 0.0317 0.0000 0.0000 0.0000
25 0.0291 0.0000 0.0000 0.0000 0.0000
30 0.0000 0.0000 0.0000 0.0000 0.0000
35 0.0000 0.0000 0.0000 0.0000 0.0000
Attachment B
4-127
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
A-9
Non-Industrial (Not Job-Related) Disability
Rates vary by age and gender for Miscellaneous Plans.
Rates vary by age for Safety Plans.
Miscellaneous Fire Police County Peace Officer Schools
Age Male Female Male and Female Male and Female Male and Female Male Female
20 0.0001 0.0001 0.0001 0.0001 0.0001 0.0001 0.0001
25 0.0001 0.0001 0.0001 0.0001 0.0001 0.0001 0.0001
30 0.0002 0.0002 0.0001 0.0002 0.0001 0.0002 0.0001
35 0.0006 0.0009 0.0001 0.0003 0.0004 0.0006 0.0004
40 0.0015 0.0016 0.0001 0.0004 0.0007 0.0014 0.0009
45 0.0025 0.0024 0.0002 0.0005 0.0013 0.0028 0.0017
50 0.0033 0.0031 0.0005 0.0008 0.0018 0.0044 0.0030
55 0.0037 0.0031 0.0010 0.0013 0.0010 0.0049 0.0034
60 0.0038 0.0025 0.0015 0.0020 0.0006 0.0043 0.0024
The Miscellaneous Non-Industrial Disability rates are used for Local Prosecutors.
The Police Non-Industrial Disability rates are used for Other Safety, Local Sheriff, and School Police.
Industrial (Job-Related) Disability
Rates vary by age and category.
Age Fire Police County Peace Officer
20 0.0002 0.0007 0.0003
25 0.0012 0.0032 0.0015
30 0.0025 0.0064 0.0031
35 0.0037 0.0097 0.0046
40 0.0049 0.0129 0.0063
45 0.0061 0.0161 0.0078
50 0.0074 0.0192 0.0101
55 0.0721 0.0668 0.0173
60 0.0721 0.0668 0.0173
The Police Industrial Disability rates are used for Local Sheriff and Other Safety.
Fifty Percent of the Police Industrial Disability rates are used for School Police.
One Percent of the Police Industrial Disability rates are used for Local Prosecutors.
Normally, rates are zero for Miscellaneous Plans unless the agency has specifically contracted for
Industrial Disability benefits. If so, each Miscellaneous Non-Industrial Disability rate will be split into two
components: 50 percent will become the Non-Industrial Disability rate and 50 percent will become the
Industrial Disability rate.
Attachment B
4-128
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
A-10
Service Retirement
Retirement rate vary by age, service, and formula, except for the safety ½ @ 55 and 2% @ 55 formulas,
where retirement rates vary by age only.
Public Agency Miscellaneous 1.5% @ 65
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.008 0.011 0.013 0.015 0.017 0.019
51 0.007 0.010 0.012 0.013 0.015 0.017
52 0.010 0.014 0.017 0.019 0.021 0.024
53 0.008 0.012 0.015 0.017 0.019 0.022
54 0.012 0.016 0.019 0.022 0.025 0.028
55 0.018 0.025 0.031 0.035 0.038 0.043
56 0.015 0.021 0.025 0.029 0.032 0.036
57 0.020 0.028 0.033 0.038 0.043 0.048
58 0.024 0.033 0.040 0.046 0.052 0.058
59 0.028 0.039 0.048 0.054 0.060 0.067
60 0.049 0.069 0.083 0.094 0.105 0.118
61 0.062 0.087 0.106 0.120 0.133 0.150
62 0.104 0.146 0.177 0.200 0.223 0.251
63 0.099 0.139 0.169 0.191 0.213 0.239
64 0.097 0.136 0.165 0.186 0.209 0.233
65 0.140 0.197 0.240 0.271 0.302 0.339
66 0.092 0.130 0.157 0.177 0.198 0.222
67 0.129 0.181 0.220 0.249 0.277 0.311
68 0.092 0.129 0.156 0.177 0.197 0.221
69 0.092 0.130 0.158 0.178 0.199 0.224
70 0.103 0.144 0.175 0.198 0.221 0.248
Public Agency Miscellaneous 2% @ 60
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.011 0.015 0.018 0.021 0.023 0.026
51 0.009 0.013 0.016 0.018 0.020 0.023
52 0.013 0.018 0.022 0.025 0.028 0.031
53 0.011 0.016 0.019 0.022 0.025 0.028
54 0.015 0.021 0.025 0.028 0.032 0.036
55 0.023 0.032 0.039 0.044 0.049 0.055
56 0.019 0.027 0.032 0.037 0.041 0.046
57 0.025 0.035 0.042 0.048 0.054 0.060
58 0.030 0.042 0.051 0.058 0.065 0.073
59 0.035 0.049 0.060 0.068 0.076 0.085
60 0.062 0.087 0.105 0.119 0.133 0.149
61 0.079 0.110 0.134 0.152 0.169 0.190
62 0.132 0.186 0.225 0.255 0.284 0.319
63 0.126 0.178 0.216 0.244 0.272 0.305
64 0.122 0.171 0.207 0.234 0.262 0.293
65 0.173 0.243 0.296 0.334 0.373 0.418
66 0.114 0.160 0.194 0.219 0.245 0.274
67 0.159 0.223 0.271 0.307 0.342 0.384
68 0.113 0.159 0.193 0.218 0.243 0.273
69 0.114 0.161 0.195 0.220 0.246 0.276
70 0.127 0.178 0.216 0.244 0.273 0.306
Attachment B
4-129
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
A-11
Public Agency Miscellaneous 2% @ 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.015 0.020 0.024 0.029 0.033 0.039
51 0.013 0.016 0.020 0.024 0.027 0.033
52 0.014 0.018 0.022 0.027 0.030 0.036
53 0.017 0.022 0.027 0.032 0.037 0.043
54 0.027 0.034 0.041 0.049 0.056 0.067
55 0.050 0.064 0.078 0.094 0.107 0.127
56 0.045 0.057 0.069 0.083 0.095 0.113
57 0.048 0.061 0.074 0.090 0.102 0.122
58 0.052 0.066 0.080 0.097 0.110 0.131
59 0.060 0.076 0.092 0.111 0.127 0.151
60 0.072 0.092 0.112 0.134 0.153 0.182
61 0.089 0.113 0.137 0.165 0.188 0.224
62 0.128 0.162 0.197 0.237 0.270 0.322
63 0.129 0.164 0.199 0.239 0.273 0.325
64 0.116 0.148 0.180 0.216 0.247 0.294
65 0.174 0.221 0.269 0.323 0.369 0.439
66 0.135 0.171 0.208 0.250 0.285 0.340
67 0.133 0.169 0.206 0.247 0.282 0.336
68 0.118 0.150 0.182 0.219 0.250 0.297
69 0.116 0.147 0.179 0.215 0.246 0.293
70 0.138 0.176 0.214 0.257 0.293 0.349
Public Agency Miscellaneous 2.5% @ 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.026 0.033 0.040 0.048 0.055 0.062
51 0.021 0.026 0.032 0.038 0.043 0.049
52 0.021 0.026 0.032 0.038 0.043 0.049
53 0.026 0.033 0.040 0.048 0.055 0.062
54 0.043 0.054 0.066 0.078 0.089 0.101
55 0.088 0.112 0.136 0.160 0.184 0.208
56 0.055 0.070 0.085 0.100 0.115 0.130
57 0.061 0.077 0.094 0.110 0.127 0.143
58 0.072 0.091 0.111 0.130 0.150 0.169
59 0.083 0.105 0.128 0.150 0.173 0.195
60 0.088 0.112 0.136 0.160 0.184 0.208
61 0.083 0.105 0.128 0.150 0.173 0.195
62 0.121 0.154 0.187 0.220 0.253 0.286
63 0.105 0.133 0.162 0.190 0.219 0.247
64 0.105 0.133 0.162 0.190 0.219 0.247
65 0.143 0.182 0.221 0.260 0.299 0.338
66 0.105 0.133 0.162 0.190 0.219 0.247
67 0.105 0.133 0.162 0.190 0.219 0.247
68 0.105 0.133 0.162 0.190 0.219 0.247
69 0.105 0.133 0.162 0.190 0.219 0.247
70 0.125 0.160 0.194 0.228 0.262 0.296
Attachment B
4-130
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
A-12
Public Agency Miscellaneous 2.7% @ 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.028 0.035 0.043 0.050 0.058 0.065
51 0.022 0.028 0.034 0.040 0.046 0.052
52 0.022 0.028 0.034 0.040 0.046 0.052
53 0.028 0.035 0.043 0.050 0.058 0.065
54 0.044 0.056 0.068 0.080 0.092 0.104
55 0.091 0.116 0.140 0.165 0.190 0.215
56 0.061 0.077 0.094 0.110 0.127 0.143
57 0.063 0.081 0.098 0.115 0.132 0.150
58 0.074 0.095 0.115 0.135 0.155 0.176
59 0.083 0.105 0.128 0.150 0.173 0.195
60 0.088 0.112 0.136 0.160 0.184 0.208
61 0.085 0.109 0.132 0.155 0.178 0.202
62 0.124 0.158 0.191 0.225 0.259 0.293
63 0.107 0.137 0.166 0.195 0.224 0.254
64 0.107 0.137 0.166 0.195 0.224 0.254
65 0.146 0.186 0.225 0.265 0.305 0.345
66 0.107 0.137 0.166 0.195 0.224 0.254
67 0.107 0.137 0.166 0.195 0.224 0.254
68 0.107 0.137 0.166 0.195 0.224 0.254
69 0.107 0.137 0.166 0.195 0.224 0.254
70 0.129 0.164 0.199 0.234 0.269 0.304
Public Agency Miscellaneous 3% @ 60
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.026 0.033 0.040 0.048 0.055 0.062
51 0.021 0.026 0.032 0.038 0.043 0.049
52 0.019 0.025 0.030 0.035 0.040 0.046
53 0.025 0.032 0.038 0.045 0.052 0.059
54 0.039 0.049 0.060 0.070 0.081 0.091
55 0.083 0.105 0.128 0.150 0.173 0.195
56 0.055 0.070 0.085 0.100 0.115 0.130
57 0.061 0.077 0.094 0.110 0.127 0.143
58 0.072 0.091 0.111 0.130 0.150 0.169
59 0.080 0.102 0.123 0.145 0.167 0.189
60 0.094 0.119 0.145 0.170 0.196 0.221
61 0.088 0.112 0.136 0.160 0.184 0.208
62 0.127 0.161 0.196 0.230 0.265 0.299
63 0.110 0.140 0.170 0.200 0.230 0.260
64 0.110 0.140 0.170 0.200 0.230 0.260
65 0.149 0.189 0.230 0.270 0.311 0.351
66 0.110 0.140 0.170 0.200 0.230 0.260
67 0.110 0.140 0.170 0.200 0.230 0.260
68 0.110 0.140 0.170 0.200 0.230 0.260
69 0.110 0.140 0.170 0.200 0.230 0.260
70 0.132 0.168 0.204 0.240 0.276 0.312
Attachment B
4-131
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
A-13
Public Agency Fire ½ @ 55 and 2% @ 55
Age
50
51
52
53
54
55
Rate
0.01588
0.00000
0.03442
0.01990
0.04132
0.07513
Age
56
57
58
59
60
Rate
0.11079
0.00000
0.09499
0.04409
1.00000
Public Agency Police ½ @ 55 and 2% @ 55
Age
50
51
52
53
54
55
Rate
0.02552
0.00000
0.01637
0.02717
0.00949
0.16674
Age
56
57
58
59
60
Rate
0.06921
0.05113
0.07241
0.07043
1.00000
Public Agency Police 2%@ 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.014 0.014 0.014 0.014 0.025 0.045
51 0.012 0.012 0.012 0.012 0.023 0.040
52 0.026 0.026 0.026 0.026 0.048 0.086
53 0.052 0.052 0.052 0.052 0.096 0.171
54 0.070 0.070 0.070 0.070 0.128 0.227
55 0.090 0.090 0.090 0.090 0.165 0.293
56 0.064 0.064 0.064 0.064 0.117 0.208
57 0.071 0.071 0.071 0.071 0.130 0.232
58 0.063 0.063 0.063 0.063 0.115 0.205
59 0.140 0.140 0.140 0.140 0.174 0.254
60 0.140 0.140 0.140 0.140 0.172 0.251
61 0.140 0.140 0.140 0.140 0.172 0.251
62 0.140 0.140 0.140 0.140 0.172 0.251
63 0.140 0.140 0.140 0.140 0.172 0.251
64 0.140 0.140 0.140 0.140 0.172 0.251
65 1.000 1.000 1.000 1.000 1.000 1.000
These rates also apply to Local Prosecutors, Local Sheriff, School Police, and Other Safety.
Attachment B
4-132
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
A-14
Public Agency Fire 2%@50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.007 0.007 0.007 0.007 0.010 0.015
51 0.008 0.008 0.008 0.008 0.013 0.019
52 0.017 0.017 0.017 0.017 0.027 0.040
53 0.047 0.047 0.047 0.047 0.072 0.107
54 0.064 0.064 0.064 0.064 0.098 0.147
55 0.087 0.087 0.087 0.087 0.134 0.200
56 0.078 0.078 0.078 0.078 0.120 0.180
57 0.090 0.090 0.090 0.090 0.139 0.208
58 0.079 0.079 0.079 0.079 0.122 0.182
59 0.073 0.073 0.073 0.073 0.112 0.168
60 0.114 0.114 0.114 0.114 0.175 0.262
61 0.114 0.114 0.114 0.114 0.175 0.262
62 0.114 0.114 0.114 0.114 0.175 0.262
63 0.114 0.114 0.114 0.114 0.175 0.262
64 0.114 0.114 0.114 0.114 0.175 0.262
65 1.000 1.000 1.000 1.000 1.000 1.000
Public Agency Police 3%@ 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.019 0.019 0.019 0.019 0.040 0.060
51 0.024 0.024 0.024 0.024 0.049 0.074
52 0.024 0.024 0.024 0.024 0.051 0.077
53 0.059 0.059 0.059 0.059 0.121 0.183
54 0.069 0.069 0.069 0.069 0.142 0.215
55 0.116 0.116 0.116 0.116 0.240 0.363
56 0.076 0.076 0.076 0.076 0.156 0.236
57 0.058 0.058 0.058 0.058 0.120 0.181
58 0.076 0.076 0.076 0.076 0.157 0.237
59 0.094 0.094 0.094 0.094 0.193 0.292
60 0.141 0.141 0.141 0.141 0.290 0.438
61 0.094 0.094 0.094 0.094 0.193 0.292
62 0.118 0.118 0.118 0.118 0.241 0.365
63 0.094 0.094 0.094 0.094 0.193 0.292
64 0.094 0.094 0.094 0.094 0.193 0.292
65 1.000 1.000 1.000 1.000 1.000 1.000
These rates also apply to Local Prosecutors, Local Sheriff, School Police, and Other Safety.
Attachment B
4-133
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
A-15
Public Agency Fire 3%@55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.012 0.012 0.012 0.018 0.028 0.033
51 0.008 0.008 0.008 0.012 0.019 0.022
52 0.018 0.018 0.018 0.027 0.042 0.050
53 0.043 0.043 0.043 0.062 0.098 0.114
54 0.057 0.057 0.057 0.083 0.131 0.152
55 0.092 0.092 0.092 0.134 0.211 0.246
56 0.081 0.081 0.081 0.118 0.187 0.218
57 0.100 0.100 0.100 0.146 0.230 0.268
58 0.081 0.081 0.081 0.119 0.187 0.219
59 0.078 0.078 0.078 0.113 0.178 0.208
60 0.117 0.117 0.117 0.170 0.267 0.312
61 0.078 0.078 0.078 0.113 0.178 0.208
62 0.098 0.098 0.098 0.141 0.223 0.260
63 0.078 0.078 0.078 0.113 0.178 0.208
64 0.078 0.078 0.078 0.113 0.178 0.208
65 1.000 1.000 1.000 1.000 1.000 1.000
Public Agency Police 3%@ 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.070 0.070 0.070 0.131 0.193 0.249
51 0.050 0.050 0.050 0.095 0.139 0.180
52 0.061 0.061 0.061 0.116 0.171 0.220
53 0.069 0.069 0.069 0.130 0.192 0.247
54 0.071 0.071 0.071 0.134 0.197 0.255
55 0.090 0.090 0.090 0.170 0.250 0.322
56 0.069 0.069 0.069 0.130 0.191 0.247
57 0.080 0.080 0.080 0.152 0.223 0.288
58 0.087 0.087 0.087 0.164 0.242 0.312
59 0.090 0.090 0.090 0.170 0.251 0.323
60 0.135 0.135 0.135 0.255 0.377 0.485
61 0.090 0.090 0.090 0.170 0.251 0.323
62 0.113 0.113 0.113 0.213 0.314 0.404
63 0.090 0.090 0.090 0.170 0.251 0.323
64 0.090 0.090 0.090 0.170 0.251 0.323
65 1.000 1.000 1.000 1.000 1.000 1.000
These rates also apply to Local Prosecutors, Local Sheriff, School Police, and Other Safety.
Attachment B
4-134
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
A-16
Public Agency Fire 3%@50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.034 0.034 0.034 0.048 0.068 0.080
51 0.046 0.046 0.046 0.065 0.092 0.109
52 0.069 0.069 0.069 0.097 0.138 0.163
53 0.084 0.084 0.084 0.117 0.166 0.197
54 0.103 0.103 0.103 0.143 0.204 0.241
55 0.127 0.127 0.127 0.177 0.252 0.298
56 0.121 0.121 0.121 0.169 0.241 0.285
57 0.101 0.101 0.101 0.141 0.201 0.238
58 0.118 0.118 0.118 0.165 0.235 0.279
59 0.100 0.100 0.100 0.140 0.199 0.236
60 0.150 0.150 0.150 0.210 0.299 0.354
61 0.100 0.100 0.100 0.140 0.199 0.236
62 0.125 0.125 0.125 0.175 0.249 0.295
63 0.100 0.100 0.100 0.140 0.199 0.236
64 0.100 0.100 0.100 0.140 0.199 0.236
65 1.000 1.000 1.000 1.000 1.000 1.000
Schools 2%@ 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.005 0.009 0.013 0.015 0.016 0.018
51 0.005 0.010 0.014 0.017 0.019 0.021
52 0.006 0.012 0.017 0.020 0.022 0.025
53 0.007 0.014 0.019 0.023 0.026 0.029
54 0.012 0.024 0.033 0.039 0.044 0.049
55 0.024 0.048 0.067 0.079 0.088 0.099
56 0.020 0.039 0.055 0.065 0.072 0.081
57 0.021 0.042 0.059 0.070 0.078 0.087
58 0.025 0.050 0.070 0.083 0.092 0.103
59 0.029 0.057 0.080 0.095 0.105 0.118
60 0.037 0.073 0.102 0.121 0.134 0.150
61 0.046 0.090 0.126 0.149 0.166 0.186
62 0.076 0.151 0.212 0.250 0.278 0.311
63 0.069 0.136 0.191 0.225 0.251 0.281
64 0.067 0.133 0.185 0.219 0.244 0.273
65 0.091 0.180 0.251 0.297 0.331 0.370
66 0.072 0.143 0.200 0.237 0.264 0.295
67 0.067 0.132 0.185 0.218 0.243 0.272
68 0.060 0.118 0.165 0.195 0.217 0.243
69 0.067 0.133 0.187 0.220 0.246 0.275
70 0.066 0.131 0.183 0.216 0.241 0.270
Attachment B
4-135
APPENDIX A – ACTUARIAL METHODS AND ASSUMPTIONS
CalPERS Actuarial Valuation – June 30, 2012
Miscellaneous 2% at 60 Risk Pool
A-17
Miscellaneous
Superfunded Status
Prior to enactment of the Public Employees’ Pension Reform Act (PEPRA) effective January 1, 2013, a plan in
superfunded status (actuarial value of assets exceeding present value of benefits) would normally pay a zero
employer contribution rate while also being permitted to use its superfunded assets to pay its employee s’ normal
member contributions.
However, Section 7522.52(a) of PEPRA states, “In any fiscal year a public employer’s contribution to a defined
benefit plan, in combination with employee contributions to that defined benefit plan, shall not be less than the total
normal cost rate…” This means that not only must employers pay their employer normal cost, regardless of plan
surplus, but also that employers may no longer use superfunded assets to pay employee normal member
contributions.
Superfunded status applies only to individual plans, not risk pools. For rate plans within a risk pool, actuarial value of
assets is the sum of the rate plan’s side fund plus the rate plan’s pro-rata share of non-side fund assets.
Internal Revenue Code Section 415
The limitations on benefits imposed by Internal Revenue Code Section 415 were taken into account in this valuation.
Each year the impact of any changes in this limitation since the prior valuation is included and amortized as part of
the actuarial gain or loss base. This results in lower contributions for those employers contributing to the
Replacement Benefit Fund and it also protects CalPERS from prefunding expected benefits in excess of limits imposed
by federal tax law.
Internal Revenue Code Section 401(a)(17)
The limitations on compensation imposed by Internal Revenue Code Section 401(a)(17) were taken into account in
this valuation. Each year the impact of any changes in this compensation limitation since the prior valuation is
included and amortized as part of the actuarial gain or loss base.
PEPRA Assumptions
The Public Employees’ Pension Reform Act of 2013 (PEPRA) requires new benefits and member contributions for new
members as defined by PEPRA, that are hired after January 1, 2013. For non-pooled plans, these members will first
be reflected in the June 30, 2013 non-pooled plan valuations. Members in pooled plans will be reflected in the new
Miscellaneous and Safety risk pools created by the CalPERS Board in November 2012 in response to the passage of
PEPRA, beginning with the June 30, 2013 valuation. Different assumptions for the new PEPRA members will be
disclosed in the 2013 valuation.
Attachment B
4-136
APPENDIX B
PRINCIPAL PLAN PROVISION
Attachment B
4-137
APPENDIX B - PRINCIPAL PLAN PROVISIONS
CalPERS Actuarial Valuation – June 30, 2012 B-1
Miscellaneous 2% at 60 Risk Pool
The following is a description of the principal plan provisions used in calculating the liabilities of the Miscellaneous
2% at 60 Risk Pool. Plan provisions are divided based on whether they are standard, Class 1, Class 2 or Class 3
benefits. Standard benefits are applicable to all members of the risk pool while Class 1, 2 or 3 benefits vary
among employers. Provided at the end of the listing in Appendix C is a table showing the percentage of members
participating in the pool that are subject to Class 1 benefits.
Many of the statements in this summary are general in nature, and are intended to provide an easily understood
summary of the complex Public Employees’ Retirement Law. The law itself governs in all situations.
PEPRA Benefit Changes
The Public Employees’ Pension Reform Act of 2013 (PEPRA) requires new benefits and member contributions for
new members as defined by PEPRA, that are hired after January 1, 2013. For non-pooled plans, these members
will first be reflected in the June 30, 2013 non-pooled plan valuations. Members in pooled plans will be reflected
in the new Miscellaneous and new Safety risk pools created by the CalPERS Board in November 2012 in response
to the passage of PEPRA, also beginning with the June 30, 2013 valuation.
Service Retirement
Eligibility
A CalPERS member becomes eligible for Service Retirement upon attainment of age 50 with at least 5 years of
credited service (total service across all CalPERS employers, and with certain other Retirement Systems with
which CalPERS has reciprocity agreements). For employees hired into a plan with the 1.5% at 65 formula,
eligibility for service retirement is age 55 with at least 5 years of service.
Benefit
The Service Retirement benefit is a monthly allowance equal to the product of the benefit factor, years of service,
and final compensation.
The benefit factor for this group of employees comes from the 2% at 60 or 1.5% at 65 Miscellaneous
benefit formula factor table. The factor depends on the member’s age at retirement. Listed below are the
factors for retirement at whole year ages:
Retirement
Age
1.5% at 65
Miscellaneous
Factor
2% at 60
Miscellaneous
Factor
Retirement
Age
1.5% at 65
Miscellaneous
Factor
2% at 60
Miscellaneous
Factor
50 0.5000% 1.092% 58 1.0334% 1.758%
51 0.5667% 1.156% 59 1.1000% 1.874%
52 0.6334% 1.224% 60 1.1667% 2.000%
53 0.7000% 1.296% 61 1.2334% 2.134%
54 0.7667% 1.376% 62 1.3000% 2.272%
55 0.8334% 1.460% 63 1.3667% 2.418%
56 0.9000% 1.552% 64 1.4334% 2.418%
57 0.9667% 1.650% 65 & Up 1.5000% 2.418%
The years of service is the amount credited by CalPERS to a member while he or she is employed in this
group (or for other periods that are recognized under the employer’s contract with CalPERS). For a member
who has earned service with multiple CalPERS employers, the benefit from each employer is calculated
separately according to each employer’s contract, and then added together for the total allowance. Any
unused sick leave accumulated at the time of retirement will be converted to credited service at a rate of
0.004 years of service for each day of sick leave.
Attachment B
4-138
APPENDIX B - PRINCIPAL PLAN PROVISIONS
CalPERS Actuarial Valuation – June 30, 2012 B-2
Miscellaneous 2% at 60 Risk Pool
The final compensation is the monthly average of the member’s highest 36 or 12 consecutive months’ full-
time equivalent monthly pay (no matter which CalPERS employer paid this compensation). The standard
benefit available to all members is 36 months. Employers have the option of providing a final compensation
equal to the highest 12 consecutive months by contracting for this Class 1 optional benefit. Final
compensation must be defined by the highest 36 consecutive months’ pay under the 1.5% at 65 formula.
Employees must be covered by Social Security with the 1.5% at 65 formula. Social Security is optional for all
other benefit formulas. For employees covered by the modified formula, the final compensation is offset by
$133.33 (or by one third if the final compensation is less than $400). Employers have the option to contract
for the Class 3 benefit that will eliminate the offset applicable to the final compensation of employees
covered by a modified formula.
The Miscellaneous Service Retirement benefit is not capped. The Safety Service Retirement benefit is capped
at 90 percent of final compensation.
Vested Deferred Retirement
Eligibility for Deferred Status
A CalPERS member becomes eligible for a deferred vested retirement benefit when he or she leaves employment,
keeps his or her contribution account balance on deposit with CalPERS, and has earned at least 5 years of
credited service (total service across all CalPERS employers, and with certain other Retirement Systems with
which CalPERS has reciprocity agreements).
Eligibility to Start Receiving Benefits
The CalPERS member becomes eligible to receive the deferred retirement benefit upon satisfying the eligibility
requirements for Deferred Status and upon attainment of age 50 (55 for employees hired into a 1.5% @ 65
plan).
Benefit
The vested deferred retirement benefit is the same as the Service Retirement benefit, where the benefit factor is
based on the member’s age at allowance commencement. For members who have earned service with multiple
CalPERS employers, the benefit from each employer is calculated separately according to each employer’s
contract, and then added together for the total allowance.
Non-Industrial (Non-Job Related) Disability Retirement
Eligibility
A CalPERS member is eligible for Non-Industrial Disability Retirement if he or she becomes disabled and has at
least 5 years of credited service (total service across all CalPERS employers, and with certain other Retirement
Systems with which CalPERS has reciprocity agreements). There is no special age requirement. Disabled means
the member is unable to perform his or her job because of an illness or injury which is expected to be permanent
or to last indefinitely. The illness or injury does not have to be job related. A CalPERS member must be actively
working with any CalPERS employer at the time of disability in order to be eligible for this benefit.
Standard Benefit
The standard Non-Industrial Disability Retirement benefit is a monthly allowance equal to 1.8 percent of final
compensation, multiplied by service, which is determined as follows:
Service is CalPERS credited service, for members with less than 10 years of service or greater than 18.518
years of service; or
Service is CalPERS credited service plus the additional number of years that the member would have worked
until age 60, for members with at least 10 years but not more than 18.518 years of service. The maximum
benefit in this case is 33 1/3 percent of Final Compensation.
Attachment B
4-139
APPENDIX B - PRINCIPAL PLAN PROVISIONS
CalPERS Actuarial Valuation – June 30, 2012 B-3
Miscellaneous 2% at 60 Risk Pool
Members who are eligible for a larger service retirement benefit may choose to receive that benefit in lieu of a
disability benefit. Members eligible to retire, and who have attained the normal retirement age determined by
their service retirement benefit formula, will receive the same dollar amount for disability retirement as that
payable for service retirement. For members who have earned service with multiple CalPERS employers, the
benefit attributed to each employer is the total disability allowance multiplied by the ratio of service with a
particular employer to the total CalPERS service.
Improved Benefit
Employers have the option of providing this improved benefit by contracting for this Class 3 optional benefit.
The improved Non-Industrial Disability Retirement benefit is a monthly allowance equal to 30 percent of final
compensation for the first 5 years of service, plus 1% for each additional year of service to a maximum of 50
percent of final compensation.
Members who are eligible for a larger service retirement benefit may choose to receive that benefit in lieu of a
disability benefit. Members eligible to retire, and who have attained the normal retirement age determined by
their service retirement benefit formula, will receive the same dollar amount for disability retirement as that
payable for service retirement. For members who have earned service with multiple CalPERS employers, the
benefit attributed to each employer is the total disability allowance multiplied by the ratio of service with a
particular employer to the total CalPERS service.
Industrial (Job Related) Disability Retirement
Employers have the option of providing this improved benefit by contracting for this Class 1 optional benefit.
Eligibility
An employee is eligible for Industrial Disability Retirement if he or she becomes disabled while working, where
disabled means the member is unable to perform the duties of the job because of a work-related illness or injury
which is expected to be permanent or to last indefinitely. A CalPERS member who has left active employment
within this group is not eligible for this benefit, except to the extent described in the next paragraph.
Standard Benefit
The standard Industrial Disability Retirement benefit is a monthly allowance equal to 50 percent of final
compensation. For a CalPERS member not actively employed in this group who became disabled while employed
by some other CalPERS employer, the benefit is a return of or annuitization of the accumulated member
contributions with respect to employment in this group. However, if a member is eligible for Service Retirement
and if the Service Retirement benefit is more than the Industrial Disability Retirement benefit, the member may
choose to receive the larger benefit.
Increased Benefit (75 percent of Final Compensation)
The increased Industrial Disability Retirement benefit is a monthly allowance equal to 75 percent of final
compensation for total disability. For a CalPERS member not actively employed in this group who became
disabled while employed by some other CalPERS employer, the benefit is a return of or annuitization of the
accumulated member contributions with respect to employment in this group. However, if a member is eligible for
Service Retirement and if the Service Retirement benefit is more than the Industrial Disability Retirement benefit,
the member may choose to receive the larger benefit.
Post-Retirement Death Benefit
Standard Lump Sum Payment
Upon the death of a retiree, a one-time lump sum payment of $500 will be made to the retiree’s designated
survivor(s), or to the retiree’s estate.
Improved Lump Sum Payment
Employers have the option of providing any of these improved lump sum death benefit by contracting for any of
these Class 3 optional benefits.
Attachment B
4-140
APPENDIX B - PRINCIPAL PLAN PROVISIONS
CalPERS Actuarial Valuation – June 30, 2012 B-4
Miscellaneous 2% at 60 Risk Pool
Upon the death of a retiree, a one-time lump sum payment of $600, $2,000, $3,000, $4,000 or $5,000 will be
made to the retiree’s designated survivor(s), or to the retiree’s estate.
Form of Payment for Retirement Allowance
Standard Form of Payment
Generally, the retirement allowance is paid to the retiree in the form of an annuity for as long as he or she is
alive. The retiree may choose to provide for a portion of his or her allowance to be paid to any designated
beneficiary after the retiree’s death. CalPERS provides for a variety of such benefit options, which the retiree pays
for by taking a reduction in his or her retirement allowance. The larger the amount to be provided to the
beneficiary is, and the younger the beneficiary is, the greater the reduction to the retiree’s allowance.
Improved Form of Payment (Post Retirement Survivor Allowance)
Employers have the option to contract for this Class 1 benefit providing an improved post retirement survivor
allowance.
For retirement allowances with respect to service subject to the modified formula, 25 percent of the retirement
allowance will automatically be continued to certain statutory beneficiaries upon the death of the retiree, without
a reduction in the retiree’s allowance. For retirement allowances with respect to service subject to the full
formula, 50 percent of the retirement allowance will automatically be continued to certain statutory beneficiaries
upon the death of the retiree, without a reduction in the retiree’s allowance. This additional benefit is often
referred to as post retirement survivor allowance (PRSA) or simply as survivor continuance.
In other words, 25 percent or 50 percent of the allowance, the continuance portion, is paid to the retiree for as
long as he or she is alive, and that same amount is continued to the retiree’s spouse (or if no eligible spouse, to
unmarried children until they attain age 18; or, if no eligible children, to a qualifying dependent parent) for the
rest of his or her lifetime. This benefit will not be discontinued in the event the spouse remarries.
The remaining 75 percent or 50 percent of the retirement allowance, which may be referred to as the option
portion of the benefit, is paid to the retiree as an annuity for as long as he or she is alive. Or, the retiree may
choose to provide for some of this option portion to be paid to any designated beneficiary after the retiree’s
death. CalPERS offers a variety of such benefit options, which the retiree pays for by taking a reduction to the
option portion of his or her retirement allowance.
Pre-Retirement Death Benefits
Basic Death Benefit
Eligibility
An employee’s beneficiary (or estate) may receive the Basic Death benefit if the member dies while actively
employed. A CalPERS member must be actively employed with the CalPERS employer providing this benefit to be
eligible for this benefit. A member’s survivor who is eligible for any other pre-retirement death benefit described
below may choose to receive that death benefit instead of this Basic Death benefit.
Standard Benefit
The Basic Death Benefit is a lump sum in the amount of the member’s accumulated contributions, where interest
is currently credited at 7.5 percent per year, plus a lump sum in the amount of one month's salary for each
completed year of current service, up to a maximum of six months' salary. For purposes of this benefit, one
month's salary is defined as the member's average monthly full-time rate of compensation during the 12 months
preceding death.
Attachment B
4-141
APPENDIX B - PRINCIPAL PLAN PROVISIONS
CalPERS Actuarial Valuation – June 30, 2012 B-5
Miscellaneous 2% at 60 Risk Pool
1957 Survivor Benefit
Eligibility
An employee’s eligible survivor(s) may receive the 1957 Survivor benefit if the member dies while actively
employed, has attained at least age 50, and has at least 5 years of credited service (total service across all
CalPERS employers and with certain other Retirement Systems with which CalPERS has reciprocity agreements).
A CalPERS member must be actively employed with the CalPERS employer providing this benefit to be eligible for
this benefit. An eligible survivor means the surviving spouse to whom the member was married at least one year
before death or, if there is no eligible spouse, to the member's unmarried children under age 18. A member’s
survivor may choose this benefit in lieu of the Basic Death benefit or the Special Death benefit.
Standard Benefit
The 1957 Survivor benefit is a monthly allowance equal to one-half of the unmodified Service Retirement benefit
that the member would have been entitled to receive if the member had retired on the date of his or her death.
If the benefit is payable to the spouse, the benefit is discontinued upon the death of the spouse. If the benefit is
payable to a dependent child, the benefit will be discontinued upon death or attainment of age 18, unless the
child is disabled. There is a guarantee that the total amount paid will at least equal the Basic Death benefit.
Optional Settlement 2W Death Benefit
Eligibility
An employee’s eligible survivor may receive the Optional Settlement 2W Death benefit if the member dies while
actively employed, has attained at least age 50, and has at least 5 years of credited service (total service across
all CalPERS employers and with certain other Retirement Systems with which CalPERS has reciprocity
agreements). A CalPERS member who is no longer actively employed with any CalPERS employer is not eligible
for this benefit. An eligible survivor means the surviving spouse to whom the member was married at least one
year before death. A member’s survivor may choose this benefit in lieu of the Basic Death benefit or the 1957
Survivor benefit.
Standard Benefit
The Optional Settlement 2W Death benefit is a monthly allowance equal to the Service Retirement benefit that
the member would have received had the member retired on the date of his or her death and elected Optional
Settlement 2W. (A retiree who elects Optional Settlement 2W receives an allowance that has been reduced so
that it will continue to be paid after his or her death to a surviving beneficiary.) The allowance is payable as long
as the surviving spouse lives, at which time it is continued to any unmarried children under age 18, if applicable.
There is a guarantee that the total amount paid will at least equal the Basic Death Benefit.
Special Death Benefit
Eligibility
An employee’s eligible survivor(s) may receive the Special Death benefit if the member dies while actively
employed and the death is job-related. A CalPERS member who is no longer actively employed with any CalPERS
employer is not eligible for this benefit. An eligible survivor means the surviving spouse to whom the member was
married prior to the onset of the injury or illness that resulted in death. If there is no eligible spouse, an eligible
survivor means the member's unmarried children under age 22. An eligible survivor who chooses to receive this
benefit will not receive any other death benefit.
Improved Benefit
The Special Death benefit is a monthly allowance equal to 50 percent of final compensation, and will be increased
whenever the compensation paid to active employees is increased but ceasing to increase when the member
would have attained age 50. The allowance is payable to the surviving spouse until death at which time the
allowance is continued to any unmarried children under age 22. There is a guarantee that the total amount paid
will at least equal the Basic Death Benefit.
Attachment B
4-142
APPENDIX B - PRINCIPAL PLAN PROVISIONS
CalPERS Actuarial Valuation – June 30, 2012 B-6
Miscellaneous 2% at 60 Risk Pool
If the member’s death is the result of an accident or injury caused by external violence or physical force incurred
in the performance of the member’s duty, and there are eligible surviving children (eligible means unmarried
children under age 22) in addition to an eligible spouse, then an additional monthly allowance is paid equal
to the following:
if 1 eligible child: 12.5% of final compensation
if 2 eligible children: 20.0% of final compensation
if 3 or more eligible children: 25.0% of final compensation
Cost-of-Living Adjustments (COLA)
Standard Benefit
Beginning the second calendar year after the year of retirement, retirement and survivor allowances will be
annually adjusted on a compound basis by 2 percent. However, the cumulative adjustment may not be greater
than the cumulative change in the Consumer Price Index since the date of retirement.
Improved Benefit
Employers have the option of providing any of these improved cost-of-living adjustments by contracting for any
one of these Class 1 optional benefits. An improved COLA is not available in conjunction with the 1.5% at 65
formula.
Beginning the second calendar year after the year of retirement, retirement and survivor allowances will be
annually adjusted on a compound basis by either 3 percent, 4 percent or 5 percent. However, the cumulative
adjustment may not be greater than the cumulative change in the Consumer Price Index since the date of
retirement.
Purchasing Power Protection Allowance (PPPA)
Retirement and survivor allowances are protected against inflation by PPPA. PPPA benefits are cost-of-living
adjustments that are intended to maintain an individual’s allowance at 80 percent of the initial allowance at
retirement adjusted for inflation since retirement. The PPPA benefit will be coordinated with other cost-of-living
adjustments provided under the plan.
Employee Contributions
Each employee contributes toward his or her retirement based upon the following schedule.
The percent contributed below the monthly compensation breakpoint is 0 percent.
The monthly compensation breakpoint is $0 for full and supplemental formula members, except for those
members in the CSU auxiliary organizations where the breakpoint is $513.
The monthly compensation breakpoint is $133.33 for employees covered by the modified formula.
The percent contributed above the monthly compensation breakpoint is 7 percent for 2% at 60 Miscellaneous
Benefit Formula and 2 percent for 1.5% at 65, except for those members in the CSU auxiliary organizations
where the contribution rate has been set at the State member level.
The employer may choose to “pick-up” these contributions for the employees (Employer Paid Member
Contributions), or EMPC. An employer may also include Employee Cost Sharing in the contract, where employees
contribute an additional percentage of compensation based on any optional benefit for which a contract
amendment was made on or after January 1, 1979.
Attachment B
4-143
APPENDIX B - PRINCIPAL PLAN PROVISIONS
CalPERS Actuarial Valuation – June 30, 2012 B-7
Miscellaneous 2% at 60 Risk Pool
Refund of Employee Contributions
If the member’s service with the employer ends, and if the member does not satisfy the eligibility conditions for
any of the retirement benefits above, the member may elect to receive a refund of his or her employee
contributions, which are credited annually with 6 percent interest.
1959 Survivor Benefit
This is a pre-retirement death benefit available only to members not covered by Social Security. Any agency
joining CalPERS subsequent to 1993 was required to provide this benefit if the members were not covered by
Social Security. The benefit is optional for agencies joining CalPERS prior to 1994. Levels 1, 2 and 3 are now
closed. Any new agency or any agency wishing to add this benefit or increase the current level must choose the
4th or Indexed Level.
This benefit is not included in the results presented in this valuation. More information on this benefit is available
on the CalPERS website at www.calpers.ca.gov.
Attachment B
4-144
APPENDIX C
PLAN OPTIONS AND VARIABLES
CLASSIFICATION OF OPTIONAL BENEFITS
EXAMPLE OF INDIVIDUAL AGENCY’S RATE CALCULATION
DISTRIBUTION OF CLASS 1 BENEFITS
Attachment B
4-145
APPENDIX C – PLAN OPTIONS AND VARIABLES
CalPERS Actuarial Valuation – June 30, 2012 C-1
Miscellaneous 2% at 60 Risk Pool
Classification of Optional Benefits
Below is the list of the available optional benefit provisions and their initial classification upon establishment
of risk pools. When new benefits become available as a result of legislation, the Chief Actuary will determine
their classification in accordance with the criteria established in the Board policy.
Class 1
Class 1 benefits have been identified to be additional benefits which have a significant, ongoing effect on
the total plan cost. In some cases, a Class 1 benefit may be an alternate benefit formula. These benefits
vary by employer across the risk pool. Agencies contracting for a Class 1 benefit will be responsible for the
past service liability associated with such benefit and will be required to pay a surcharge established by the
actuary to cover the ongoing cost (normal cost) of the Class 1 benefit.
The table below shows the list of Class 1 benefits and their applicable surcharge for the Miscellaneous 2%
at 60 Risk Pool. Last year’s surcharges are shown for comparison.
{classification_optional_benefits} June 30, 2011 June 30, 2012
One Year Final Compensation 0.437% 0.430%
EPMC by contract, 7% 0.847% 0.835%
EPMC by contract, 8% N/A N/A
EPMC by contract, 9% N/A N/A
25% PRSA 0.719% 0.710%
50% PRSA 0.719% 0.710%
3% Annual COLA 0.769% 0.760%
4% Annual COLA 0.769% 0.760%
5% Annual COLA 0.769% 0.760%
IDR For Local Miscellaneous Members 0.475% 0.471%
Increased IDR Allowance to 75% of Compensation 0.830% 0.821%
Improved Industrial Disability Allowance for Local Safety Members N/A N/A
Employee Cost Sharing varies varies
Employee Contribution Rate for CSUC Auxiliary Organizations
Reduced to State Member Level - Covered by Social Security 2.000% 2.000%
Employee Contribution Rate for CSUC Auxiliary Organizations
Reduced to State Member Level - Not Covered by Social Security 1.000% 1.000%
1.5% @ 65 Miscellaneous (1.010%) (1.010%)
For employers contracting for more than one Class 1 benefit, the surcharges listed in this table will be added
together
Employee cost sharing had been eliminated as a surcharge from some of the June 30, 2010
valuations and from all of the June 30, 2011 and later valuations. It is now shown on My|CalPERS as
a rate adjustment.
Attachment B
4-146
APPENDIX C – PLAN OPTIONS AND VARIABLES
CalPERS Actuarial Valuation – June 30, 2012 C-2
Miscellaneous 2% at 60 Risk Pool
Class 2
Class 2 benefits have been identified to be the ancillary benefits providing one-time increases in benefits.
These benefits vary by employer across the risk pool. Agencies contracting for a Class 2 benefit will be
responsible for the past service liability associated with such benefit.
The following benefits shall be classified as Class 2:
One-time 1% to 6% Ad Hoc COLA Increases for members who retired or died prior to
January 1, 1998 (Section 21328)
"Golden Handshakes" – Section 20903 Two Years Additional Service Credit
Credit for Prior Service Paid for by the Employer
Military Service Credit (Section 20996)
Credit for Local Retirement System Service for Employees of Agencies Contracted on a Prospective
basis (Section 20530.1)
Prior Service Credit for Employees of an Assumed Agency Function (Section 20936)
Limit Prior Service to Members Employed on Contract Date (Section 20938)
Public Service Credit for Limited Prior Service (Section 21031)
Public Service Credit for Employees of an Assumed Agency or Function (Section 21025)
Class 3
Class 3 benefits have been identified to be additional benefits which have a minimal effect on the total
plan cost. Class 3 benefits may vary by rate plan within each risk pool. However, the employer
contribution rate will not vary within the risk pool due to the Class 3 benefits.
The following benefits shall be classified as Class 3:
Full formula plus social security
Post Retirement Lump Sum Death Benefit
$600 lump sum retired death benefit (Section 21622)
$2,000 lump sum retired death benefit (Section 21623.5)
$3,000 lump sum retired death benefit (Section 21623.5)
$4,000 lump sum retired death benefit (Section 21623.5)
$5,000 lump sum retired death benefit (Section 21623.5)
Improved non-industrial disability allowance (Section 21427)
Special death benefit for local miscellaneous members (Section 21540.5)
Service Credit Purchased by Member
Partial Service Retirement (Section 21118)
Optional Membership for Part Time Employees (Section 20325)
Extension of Reciprocity Rights for Elective Officers (Section 20356)
Removal of Contract Exclusions Prospectively Only (Section 20503)
Alternate Death Benefit for Local Fire Members credited with 20 or more years of service (Section
21547.7)
Attachment B
4-147
APPENDIX C – PLAN OPTIONS AND VARIABLES
CalPERS Actuarial Valuation – June 30, 2012 C-3
Miscellaneous 2% at 60 Risk Pool
Example Of Individual Agency's Rate Calculation
An individual employer rate is comprised of several components. These include the pool's net employer
normal cost, payment on the pool's unfunded liability, additional surcharge payments for contracted Class 1
benefits, the normal cost phase-out and an agency’s payment for their own side fund. An example of the
total rate for an employer might look something like this:
Net Pool's Employer Normal Cost 6.652%
Rate Plan Surcharges 0.430%
Total Employer Normal Cost 7.082%
Plus: Plan’s share of Pool's Payment on the Amortization Bases 1.353%
Side Fund Amortization Payment 2.600%
Total Employer Rate for fiscal year 2014-15 11.035%
Your plan’s actual required contribution can be found in Section 1.
Distribution of Class 1 Benefits
% of members in the pool
Final Compensation with contracted benefit
One Year Final Compensation 23.3%
Three Years Final Compensation 76.7%
Post Retirement Survivor Continuance (PRSA)
No PRSA 89.2%
With PRSA 10.8%
Cost-of-Living Adjustments (COLA)
2% COLA 97.7%
3% COLA 2.1%
4% COLA 0.1%
5% COLA 0.0%
Industrial Disability Benefit
None 95.4%
Standard Industrial Disability Benefit (50% of Final Compensation) 4.3%
Improved Industrial Disability Benefit (75% of Final Compensation) 0.4%
Improved Industrial Disability Benefit (50% - 90% of Final Compensation) 0.0%
Attachment B
4-148
APPENDIX D
PARTICIPATING EMPLOYERS
Attachment B
4-149
APPENDIX D - PARTICIPATING EMPLOYERS
CalPERS Actuarial Valuation – June 30, 2012 D-1
Miscellaneous 2% at 60 Risk Pool
Employer Name
ACADEMIC SENATE FOR CALIFORNIA COMMUNITY COLLEGES
ACCESS SERVICES INCORPORATED
ALAMEDA COUNTY LAW LIBRARY
ALBANY MUNICIPAL SERVICES JOINT POWERS AUTHORITY
ALTA IRRIGATION DISTRICT
AMADOR WATER AGENCY
ANGIOLA WATER DISTRICT
ASSOCIATED STUDENTS CALIFORNIA STATE UNIVERSITY SAN BERNARDINO
ASSOCIATED STUDENTS INCORPORATED OF CALIFORNIA STATE UNIVERSITY STANISLAUS
ASSOCIATION OF CALIFORNIA WATER AGENCIES - JOINT POWERS INSURANCE AUTHORITY
ATASCADERO CEMETERY DISTRICT
AVILA BEACH COMMUNITY SERVICES DISTRICT
BETA HEALTHCARE GROUP RISK MANAGEMENT AUTHORITY
BARD WATER DISTRICT
BARDSDALE CEMETERY DISTRICT
BARSTOW CEMETERY DISTRICT
BEACH CITIES HEALTH DISTRICT
BEAR MOUNTAIN RECREATION AND PARK DISTRICT
BELLA VISTA WATER DISTRICT
BENICIA CITY HOUSING AUTHORITY
BLANCHARD/SANTA PAULA PUBLIC LIBRARY DISTRICT
BODEGA BAY FIRE PROTECTION DISTRICT
BOLINAS COMMUNITY PUBLIC UTILITY DISTRICT
BORON COMMUNITY SERVICES DISTRICT
BORREGO SPRINGS FIRE PROTECTION DISTRICT
BRANNAN-ANDRUS LEVEE MAINTENANCE DISTRICT
BURNEY BASIN MOSQUITO ABATEMENT DISTRICT
BYRON-BETHANY IRRIGATION DISTRICT
CAL POLY POMONA FOUNDATION, INC.
CALIFORNIA CENTRAL VALLEY FLOOD CONTROL ASSOCIATION
CALIFORNIA INTERSCHOLASTIC FEDERATION, CENTRAL SECTION
CALIFORNIA INTERSCHOLASTIC FEDERATION, SOUTHERN SECTION
CALIFORNIA PINES COMMUNITY SERVICES DISTRICT
CALIFORNIA SCHOOL BOARDS ASSOCIATION
CALIFORNIA SPECIAL DISTRICTS ASSOCIATION
CALIFORNIA STATE UNIVERSITY, BAKERSFIELD FOUNDATION
CAMARILLO HEALTH CARE DISTRICT
CAMBRIA CEMETERY DISTRICT
CARMEL AREA WASTEWATER DISTRICT
CASITAS MUNICIPAL WATER DISTRICT
CASTROVILLE COMMUNITY SERVICES DISTRICT
CAWELO WATER DISTRICT
CENTERVILLE COMMUNITY SERVICES DISTRICT
CENTRAL CALAVERAS FIRE AND RESCUE PROTECTION DISTRICT
CHINO BASIN WATER CONSERVATION DISTRICT
CITRUS PEST CONTROL DISTRICT #2 OF RIVERSIDE COUNTY
CITY AND COUNTY OF SAN FRANCISCO
CITY OF ADELANTO
CITY OF ALBANY
CITY OF ARTESIA
CITY OF ATWATER
CITY OF BIGGS
CITY OF BISHOP
CITY OF BRADBURY
CITY OF BRISBANE
CITY OF CALIMESA
CITY OF CALIPATRIA
Attachment B
4-150
APPENDIX D - PARTICIPATING EMPLOYERS
CalPERS Actuarial Valuation – June 30, 2012 D-2
Miscellaneous 2% at 60 Risk Pool
CITY OF CALISTOGA
CITY OF CARMEL-BY-THE-SEA
CITY OF CLAYTON
CITY OF COLFAX
CITY OF COLUSA
CITY OF CORNING
CITY OF COTATI
CITY OF DEL REY OAKS
CITY OF DUARTE
CITY OF EASTVALE
CITY OF ETNA
CITY OF FARMERSVILLE
CITY OF FOUNTAIN VALLEY
CITY OF GONZALES
CITY OF HERMOSA BEACH
CITY OF HIDDEN HILLS
CITY OF IMPERIAL
CITY OF KERMAN
CITY OF LA HABRA HEIGHTS
CITY OF LA PALMA
CITY OF LAGUNA HILLS
CITY OF LAGUNA NIGUEL
CITY OF LAKE ELSINORE
CITY OF LATHROP
CITY OF LEMON GROVE
CITY OF LINCOLN
CITY OF LOMITA
CITY OF LOS ALTOS
CITY OF LOS BANOS
CITY OF MONTAGUE
CITY OF MORRO BAY
CITY OF NEVADA CITY
CITY OF OAKDALE
CITY OF OAKLEY
CITY OF OJAI
CITY OF ORANGE COVE
CITY OF PLACENTIA
CITY OF RANCHO SANTA MARGARITA
CITY OF RIVERBANK
CITY OF ROLLING HILLS
CITY OF SIGNAL HILL
CITY OF SOLANA BEACH
CITY OF SOLEDAD
CITY OF SOUTH EL MONTE
CITY OF WEED
CLEAR CREEK COMMUNITY SERVICES DISTRICT
CLOVERDALE CITRUS FAIR
CLOVIS CEMETERY DISTRICT
COACHELLA VALLEY MOSQUITO AND VECTOR CONTROL DISTRICT
COALINGA-HURON CEMETERY DISTRICT
COALINGA-HURON RECREATION AND PARK DISTRICT
COALINGA/HURON UNIFIED SCHOOL DISTRICT LIBRARY DISTRICT
COLFAX CEMETERY DISTRICT
COMMUNITY COLLEGE LEAGUE OF CALIFORNIA
COMMUNITY DEVELOPMENT COMMISSION OF MENDOCINO COUNTY
COMPTON CREEK MOSQUITO ABATEMENT DISTRICT
CONSOLIDATED MOSQUITO ABATEMENT DISTRICT
CONTRA COSTA COUNTY LAW LIBRARY
CORNING WATER DISTRICT
Attachment B
4-151
APPENDIX D - PARTICIPATING EMPLOYERS
CalPERS Actuarial Valuation – June 30, 2012 D-3
Miscellaneous 2% at 60 Risk Pool
COSTA MESA SANITARY DISTRICT
COTTONWOOD WATER DISTRICT
CROCKETT COMMUNITY SERVICES DISTRICT
CUTLER PUBLIC UTILITY DISTRICT
CUTLER-OROSI JOINT POWERS WASTEWATER AUTHORITY
DAVIS CEMETERY DISTRICT
DEL NORTE COUNTY LIBRARY DISTRICT
DEL REY COMMUNITY SERVICES DISTRICT
DELANO MOSQUITO ABATEMENT DISTRICT
DURHAM MOSQUITO ABATEMENT DISTRICT
EAST CONTRA COSTA IRRIGATION DISTRICT
EAST ORANGE COUNTY WATER DISTRICT
EBBETTS PASS FIRE PROTECTION DISTRICT
FALL RIVER VALLEY COMMUNITY SERVICES DISTRICT
FEATHER WATER DISTRICT
FLORIN COUNTY WATER DISTRICT
FORT BRAGG FIRE PROTECTION AUTHORITY
FRESNO COUNTY LAW LIBRARY
FULLERTON CALIFORNIA STATE UNIVERSITY ASSOCIATED STUDENTS
FULTON EL-CAMINO RECREATION AND PARK DISTRICT
GLENDALE COLLEGE, ASSOCIATED STUDENTS OF
GOLDEN HILLS COMMUNITY SERVICES DISTRICT
GREATER ANAHEIM SPECIAL EDUCATION LOCAL PLAN AREA
GREEN VALLEY COUNTY WATER DISTRICT
GROSSMONT SCHOOLS FEDERAL CREDIT UNION
GUALALA COMMUNITY SERVICES DISTRICT
HEALTH PLAN OF SAN JOAQUIN
HILTON CREEK COMMUNITY SERVICES DISTRICT
HOUSING AUTHORITY OF THE CITY OF CALEXICO
HOUSING AUTHORITY OF THE CITY OF LIVERMORE
HOUSING AUTHORITY OF THE CITY OF SAN BUENAVENTURA
HOUSING AUTHORITY OF THE CITY OF SOUTH SAN FRANCISCO
HUMBOLDT COUNTY ASSOCIATION OF GOVERNMENTS
INDIAN WELLS VALLEY WATER DISTRICT
INLAND EMPIRE RESOURCE CONSERVATION DISTRICT
INTELECOM INTELLIGENT TELECOMMUNICATIONS
INVERNESS PUBLIC UTILITY DISTRICT
JACKSON VALLEY IRRIGATION DISTRICT
KAWEAH DELTA WATER CONSERVATION DISTRICT
KELSEYVILLE FIRE PROTECTION DISTRICT
KERN COUNTY LAW LIBRARY
KERN HEALTH SYSTEMS
KERN RIVER VALLEY CEMETERY DISTRICT
KERN-TULARE WATER DISTRICT
KETTLEMAN CITY COMMUNITY SERVICES DISTRICT
KINGS WASTE AND RECYCLING AUTHORITY
KINNELOA IRRIGATION DISTRICT
LA HABRA HEIGHTS COUNTY WATER DISTRICT
LA PUENTE VALLEY COUNTY WATER DISTRICT
LAKE DON PEDRO COMMUNITY SERVICES DISTRICT
LAMONT PUBLIC UTILITY DISTRICT
LASSEN COUNTY WATERWORKS DISTRICT #1
LEAGUE OF CALIFORNIA CITIES
LEE LAKE WATER DISTRICT
LEVEE DISTRICT #1 OF SUTTER COUNTY
LINDA FIRE PROTECTION DISTRICT
LINDSAY STRATHMORE PUBLIC CEMETERY DISTRICT
LITTLEROCK CREEK IRRIGATION DISTRICT
LIVE OAK CEMETERY DISTRICT
Attachment B
4-152
APPENDIX D - PARTICIPATING EMPLOYERS
CalPERS Actuarial Valuation – June 30, 2012 D-4
Miscellaneous 2% at 60 Risk Pool
LONG BEACH STATE UNIVERSITY, ASSOCIATED STUDENTS
LOS ALAMOS COMMUNITY SERVICES DISTRICT
LOS ANGELES COUNTY WEST VECTOR CONTROL DISTRICT
LOWER LAKE COUNTY WATERWORKS DISTRICT #1
MAJESTIC PINES COMMUNITY SERVICES DISTRICT
MAMMOTH LAKES FIRE DISTRICT
MANAGEMENT OF EMERYVILLE SERVICES AUTHORITY
MARINA COAST WATER DISTRICT
MARINWOOD COMMUNITY SERVICES DISTRICT
MARIPOSA PUBLIC UTILITY DISTRICT
MCCLOUD COMMUNITY SERVICES DISTRICT
MEINERS OAKS COUNTY WATER DISTRICT
MENDOCINO CITY COMMUNITY SERVICES DISTRICT
MENDOCINO TRANSIT AUTHORITY
MID-PLACER PUBLIC SCHOOLS TRANSPORTATION AGENCY
MIDWAY HEIGHTS COUNTY WATER DISTRICT
MILLVIEW COUNTY WATER DISTRICT
MINTER FIELD AIRPORT DISTRICT
MONTEREY COUNTY REGIONAL FIRE PROTECTION DISTRICT
MORONGO BASIN TRANSIT AUTHORITY
MOTHER LODE JOB TRAINING AGENCY
MOUNTAINS RECREATION AND CONSERVATION AUTHORITY
MURPHYS SANITARY DISTRICT
NAPA COUNTY RESOURCE CONSERVATION DISTRICT
NAPA COUNTY TRANSPORTATION AND PLANNING AGENCY
NATIONAL ORANGE SHOW
NEVADA CEMETERY DISTRICT
NEWCASTLE, ROCKLIN, GOLD HILL CEMETERY DISTRICT
NEWPORT BEACH CITY EMPLOYEES FEDERAL CREDIT UNION
NORTH DELTA WATER AGENCY
NORTH KERN WATER STORAGE DISTRICT
NOVATO SANITARY DISTRICT
OAKDALE IRRIGATION DISTRICT
OPHIR HILL FIRE PROTECTION DISTRICT
ORO LOMA SANITARY DISTRICT
OROSI PUBLIC UTILITY DISTRICT
OROVILLE CEMETERY DISTRICT
PALM RANCH IRRIGATION DISTRICT
PALO VERDE VALLEY DISTRICT LIBRARY
PASO ROBLES CITY HOUSING AUTHORITY
PATTERSON IRRIGATION DISTRICT
PENN VALLEY FIRE PROTECTION DISTRICT
PINEDALE COUNTY WATER DISTRICT
PIXLEY IRRIGATION DISTRICT
PLACER MOSQUITO AND VECTOR CONTROL DISTRICT
PLANNING AND SERVICE AREA II AREA AGENCY ON AGING
PLEASANT VALLEY COUNTY WATER DISTRICT
PLEASANT VALLEY RECREATION AND PARK DISTRICT
POMONA VALLEY TRANSPORTATION AUTHORITY
POMONA, CALIF STATE POLYTECHNIC UNIVERSITY, ASSOCIATED STUDENTS, INC.
PORTER VISTA PUBLIC UTILITY DISTRICT
PORTERVILLE IRRIGATION DISTRICT
PORTERVILLE PUBLIC CEMETERY DISTRICT
PURISSIMA HILLS COUNTY WATER DISTRICT
RECLAMATION DISTRICT # 999
RECLAMATION DISTRICT #3
RED BLUFF CEMETERY DISTRICT
REDWOOD COAST REGIONAL CENTER
REEDLEY CEMETERY DISTRICT
Attachment B
4-153
APPENDIX D - PARTICIPATING EMPLOYERS
CalPERS Actuarial Valuation – June 30, 2012 D-5
Miscellaneous 2% at 60 Risk Pool
RESORT IMPROVEMENT DISTRICT NO. 1
RIO ALTO WATER DISTRICT
RIO VISTA CEMETERY DISTRICT
RIVERBANK CITY HOUSING AUTHORITY
ROSEVILLE PUBLIC CEMETERY DISTRICT
SALTON COMMUNITY SERVICES DISTRICT
SAN BERNARDINO VALLEY MUNICIPAL WATER DISTRICT
SAN DIEGO COUNTY LAW LIBRARY
SAN FRANCISCO COMMUNITY COLLEGE DISTRICT BOOKSTORE AUXILIARY
SAN FRANCISCO LAW LIBRARY
SAN JACINTO VALLEY CEMETERY DISTRICT
SAN LUIS OBISPO CAL POLY ASSOCIATED STUDENTS, INC.
SAN MATEO COUNTY IN-HOME SUPPORTIVE SERVICES PUBLIC AUTHORITY
SANGER CEMETERY DISTRICT
SANTA BARBARA COUNTY LAW LIBRARY
SANTA BARBARA COUNTY SPECIAL EDUCATION LOCAL PLAN AREA
SANTA BARBARA REGIONAL HEALTH AUTHORITY
SANTA CRUZ PORT DISTRICT
SANTA CRUZ REGIONAL 9-1-1
SANTA PAULA CITY HOUSING AUTHORITY
SERRANO WATER DISTRICT
SHASTA COMMUNITY SERVICES DISTRICT
SHASTA VALLEY CEMETERY DISTRICT
SIERRA LAKES COUNTY WATER DISTRICT
SIERRA-SACRAMENTO VALLEY EMERGENCY MEDICAL SERVICES AGENCY
SILVEYVILLE CEMETERY DISTRICT
SOLANO IRRIGATION DISTRICT
SONOMA MARIN AREA RAIL TRANSIT DISTRICT
SOUTH BAY REGIONAL PUBLIC COMMUNICATIONS AUTHORITY
SOUTH BAYSIDE SYSTEM AUTHORITY
SOUTH KERN CEMETERY DISTRICT
SOUTHEAST AREA SOCIAL SERVICES FUNDING AUTHORITY
STALLION SPRINGS COMMUNITY SERVICES DISTRICT
STANISLAUS COUNTY HOUSING AUTHORITY
STRAWBERRY RECREATION DISTRICT
SYLVAN CEMETERY DISTRICT
TAHOE RESOURCE CONSERVATION DISTRICT
TEHACHAPI VALLEY RECREATION AND PARK DISTRICT
TEHACHAPI-CUMMINGS COUNTY WATER DISTRICT
TEHAMA COUNTY MOSQUITO ABATEMENT DISTRICT
THREE RIVERS COMMUNITY SERVICES DISTRICT
TOWN OF LOS ALTOS HILLS
TOWN OF PARADISE
TOWN OF YUCCA VALLEY
TULARE MOSQUITO ABATEMENT DISTRICT
TULARE PUBLIC CEMETERY DISTRICT
TURLOCK MOSQUITO ABATEMENT DISTRICT
UNION PUBLIC UTILITY DISTRICT
UNIVERSITY STUDENT UNION CALIFORNIA STATE UNIVERSITY STANISLAUS
VACAVILLE FIRE PROTECTION DISTRICT
VACAVILLE-ELMIRA CEMETERY DISTRICT
VALLEY-WIDE RECREATION AND PARK DISTRICT
VENTURA COUNTY LAW LIBRARY
VENTURA COUNTY TRANSPORTATION COMMISSION
VENTURA RIVER COUNTY WATER DISTRICT
VISALIA PUBLIC CEMETERY DISTRICT
WASCO RECREATION AND PARK DISTRICT
WASHINGTON COLONY CEMETERY DISTRICT
WEAVERVILLE SANITARY DISTRICT
Attachment B
4-154
APPENDIX D - PARTICIPATING EMPLOYERS
CalPERS Actuarial Valuation – June 30, 2012 D-6
Miscellaneous 2% at 60 Risk Pool
WEST KERN WATER DISTRICT
WESTWOOD COMMUNITY SERVICES DISTRICT
WILTON FIRE PROTECTION DISTRICT
WINTERHAVEN WATER DISTRICT
WINTON WATER AND SANITARY DISTRICT
YOLO COUNTY FEDERAL CREDIT UNION
YORBA LINDA WATER DISTRICT
YUCAIPA VALLEY WATER DISTRICT
Attachment B
4-155
APPENDIX E
PARTICIPANT DATA
SOURCE OF THE PARTICIPANT DATA
DATA VALIDATION TESTS AND ADJUSTMENTS
SUMMARY OF VALUATION DATA
ACTIVE MEMBERS
TRANSFERRED AND TERMINATED MEMBERS
RETIRED MEMBERS AND BENEFICIARIES
Attachment B
4-156
APPENDIX E – PARTICIPANT DATA
CalPERS Actuarial Valuation – June 30, 2012 E-1
Miscellaneous 2% at 60 Risk Pool
Source of the Participant Data
The data was extracted from various databases within CalPERS and placed in a database by a series of extract
programs. Included in this data are:
Individual member and beneficiary information,
Employment and payroll information,
Accumulated contributions with interest,
Service information,
Benefit payment information,
Information about the various organizations which contract with CalPERS, and
Detailed information about the plan provisions applicable to each group of members.
Data Validation Tests and Adjustments
Once the information is extracted from the various computer systems into the database, update queries are then
run against this data to correct for flaws found in the data. This part of the process is intended to validate the
participant data for all CalPERS plans. The data is then checked for reasonableness and consistency with data
from the prior valuation.
Checks on the data include:
A reconciliation of the membership of the plans,
Comparisons of various member statistics (average attained age, average entry age, average salary,
etc.) for each plan with those from the prior year valuation,
Comparisons of pension amounts for each retiree and beneficiary receiving payments with those from
the prior year valuation,
Checks for invalid ages and dates, and
Reasonableness checks on various key data elements such as service and salary
As a result of the tests on the data, a number of adjustments were determined to be necessary. These included:
Dates of hire and dates of entry were adjusted where necessary to be consistent with the service fields,
the date of birth and each other.
Attachment B
4-157
APPENDIX E – PARTICIPANT DATA
CalPERS Actuarial Valuation – June 30, 2012 E-2
Miscellaneous 2% at 60 Risk Pool
Summary of Valuation Data
June 30, 2011 June 30, 2012
1. Number of Plans in the Risk Pool 246 301
2. Active Members
a) Counts 3,556 3,860
b) Average Attained Age 45.34 45.11
c) Average Entry Age on Rate Plan 36.66 36.71
d) Average Years of Service 8.68 8.41
e) Average Annual Covered Pay $ 54,521 $ 54,020
f) Annual Covered Payroll $ 193,877,169 $ 208,517,122
g) Projected Annual Payroll for Contribution Year $ 211,854,817 $ 227,852,289
h) Present Value of Future Payroll $ 1,644,246,030 $ 1,757,579,774
3. Transferred Members
a) Counts 1,151 1,099
b) Average Attained Age 47.19 47.56
c) Average Years of Service 3.22 3.27
d) Average Annual Covered Pay $ 64,025 $ 63,317
4. Terminated Members
a) Counts 2,177 2,414
b) Average Attained Age 43.73 43.90
c) Average Years of Service 2.63 2.82
d) Average Annual Covered Pay $ 38,336 $ 38,667
5. Retired Members and Beneficiaries
a) Counts* 1,685 1,769
b) Average Attained Age 70.05 70.01
c) Average Annual Benefits* $ 12,902 $ 13,972
6. Active to Retired Ratio [(2a) / (5a)] 2.11 2.18
Counts of members included in the valuation are counts of the records processed by the valuation. Multiple
records may exist for those who have service in more than one valuation group. This does not result in double
counting of liabilities.
* Values may not match those on pages E-5 and E-6 due to inclusion of community property settlements.
Attachment B
4-158
APPENDIX E – PARTICIPANT DATA
CalPERS Actuarial Valuation – June 30, 2012 E-3
Miscellaneous 2% at 60 Risk Pool
Active Members
Counts of members included in the valuation are counts of the records processed by the valuation. Multiple
records may exist for those who have service in more than one valuation group. This does not result in double
counting of liabilities.
Distribution of Active Members by Age and Service
Years of Service at Valuation Date
Attained
Age 0-4 5-9 10-14 15-19 20-24 25+ Total
15-24 140 3 0 0 0 0 143
25-29 324 63 1 0 0 0 388
30-34 276 142 41 0 0 0 459
35-39 192 152 83 21 3 0 451
40-44 166 113 75 43 13 0 410
45-49 167 131 82 60 31 6 477
50-54 177 135 100 72 46 36 566
55-59 122 104 92 69 55 65 507
60-64 80 85 63 43 29 40 340
65 and over 22 31 29 17 8 12 119
All Ages 1666 959 566 325 185 159 3,860
Distribution of Average Annual Salaries by Age and Service
Years of Service at Valuation Date
Attained
Age 0-4 5-9 10-14 15-19 20-24 25+ Average
15-24 $31,917 $31,999 $0 $0 $0 $0 $31,919
25-29 37,132 39,268 34,873 0 0 0 37,473
30-34 43,844 47,564 50,254 0 0 0 45,567
35-39 45,906 50,981 55,044 60,710 51,347 0 50,023
40-44 49,812 57,520 60,416 69,236 59,646 0 56,225
45-49 48,732 54,993 61,323 65,195 64,092 79,882 56,077
50-54 60,234 59,682 61,416 69,909 67,963 72,092 62,924
55-59 60,888 57,153 58,129 71,943 77,252 67,737 63,779
60-64 62,628 57,721 57,629 69,125 78,659 72,197 63,790
65 and over 38,473 62,708 54,615 65,918 54,452 47,181 54,593
Average 46,679 53,835 58,176 68,475 70,315 68,752 54,020
Attachment B
4-159
APPENDIX E – PARTICIPANT DATA
CalPERS Actuarial Valuation – June 30, 2012 E-4
Miscellaneous 2% at 60 Risk Pool
Transferred and Terminated Members
Distribution of Transfers to Other CalPERS Plans by Age and Service
Years of Service at Valuation Date
Attained
Age 0-4 5-9 10-14 15-19 20-25 25+ Total
Average
Salary
15-24 5 0 0 0 0 0 5 $31,635
25-29 46 4 1 0 0 0 51 44,142
30-34 102 12 0 0 0 0 114 57,495
35-39 92 20 8 0 0 0 120 60,834
40-44 117 20 7 2 0 0 146 66,842
45-49 128 23 14 5 1 1 172 67,875
50-54 135 32 11 6 1 0 185 65,545
55-59 110 30 20 4 3 1 168 65,642
60-64 86 15 4 3 1 0 109 61,979
65 and over 22 3 2 2 0 0 29 68,219
All Ages 843 159 67 22 6 2 1,099 63,317
Distribution of Terminated Participants with Funds on Deposit by Age and Service
Years of Service at Valuation Date
Attained
Age 0-4 5-9 10-14 15-19 20-25 25+ Total
Average
Salary
15-24 53 0 0 0 0 0 53 $26,562
25-29 214 13 0 0 0 0 227 30,574
30-34 339 28 2 0 0 0 369 32,590
35-39 297 41 1 1 0 0 340 35,490
40-44 292 45 11 5 1 0 354 40,081
45-49 207 58 19 8 3 0 295 45,167
50-54 200 58 17 6 4 0 285 46,360
55-59 192 44 16 10 1 3 266 42,015
60-64 119 22 7 8 1 1 158 42,745
65 and over 56 9 1 0 0 1 67 33,523
All Ages 1969 318 74 38 10 5 2,414 38,667
Attachment B
4-160
APPENDIX E – PARTICIPANT DATA
CalPERS Actuarial Valuation – June 30, 2012 E-5
Miscellaneous 2% at 60 Risk Pool
Retired Members and Beneficiaries
Distribution of Retirees and Beneficiaries by Age and Retirement Type*
Attained
Age
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death
After
Retirement Total
Under 30 0 0 0 0 0 0 0
30-34 0 1 0 0 0 0 1
35-39 0 0 0 0 0 1 1
40-44 0 0 0 0 0 1 1
45-49 0 8 1 0 0 4 13
50-54 32 8 2 2 0 8 52
55-59 126 21 1 5 0 5 158
60-64 293 21 1 6 0 12 333
65-69 411 13 4 3 0 18 449
70-74 233 10 1 0 0 19 263
75-79 159 6 0 1 0 29 195
80-84 117 6 0 0 0 38 161
85 and Over 78 3 0 2 0 59 142
All Ages 1449 97 10 19 0 194 1,769
Distribution of Average Annual Amounts for Retirees and Beneficiaries by Age and Retirement Type*
Attained
Age
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death After
Retirement Average
Under 30 $0 $0 $0 $0 $0 $0 $0
30-34 0 43 0 0 0 0 43
35-39 0 0 0 0 0 25,240 25,240
40-44 0 0 0 0 0 8,646 8,646
45-49 0 8,313 325 0 0 15,398 9,879
50-54 4,971 12,262 804 10,886 0 9,831 6,908
55-59 10,137 11,920 251 20,057 0 6,307 10,504
60-64 13,141 10,169 1,300 13,946 0 12,465 12,908
65-69 17,522 7,606 838 10,903 0 17,597 17,045
70-74 15,841 9,219 127 0 0 9,164 15,047
75-79 14,492 13,787 0 7,394 0 15,579 14,596
80-84 14,996 12,725 0 0 0 10,580 13,869
85 and Over 12,838 11,697 0 9,950 0 8,333 10,901
All Ages 14,658 10,451 696 13,986 0 11,297 13,972
Attachment B
4-161
APPENDIX E – PARTICIPANT DATA
CalPERS Actuarial Valuation – June 30, 2012 E-6
Miscellaneous 2% at 60 Risk Pool
Retired Members and Beneficiaries (continued)
Distribution of Retirees and Beneficiaries by Years Retired and Retirement Type*
Years
Retired
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death
After
Retirement Total
Under 5 Yrs 614 22 1 7 0 57 701
5-9 368 26 4 8 0 62 468
10-14 209 14 3 1 0 25 252
15-19 113 15 1 1 0 21 151
20-24 82 6 1 0 0 13 102
25-29 42 4 0 0 0 8 54
30 and Over 21 10 0 2 0 8 41
All Years 1449 97 10 19 0 194 1,769
Distribution of Average Annual Amounts for Retirees and Beneficiaries by Years Retired and
Retirement Type*
Years
Retired
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death
After
Retirement Average
Under 5 Yrs $16,137 $10,213 $523 $13,046 $0 $14,438 $15,759
5-9 14,826 11,272 795 17,638 0 11,833 14,160
10-14 11,328 7,059 961 6,012 0 11,555 10,969
15-19 15,514 9,925 251 7,394 0 7,908 13,746
20-24 14,569 12,006 127 0 0 7,740 13,406
25-29 9,299 14,230 0 0 0 5,751 9,139
30 and Over 8,076 11,934 0 9,950 0 4,177 8,348
All Years 14,658 10,451 696 13,986 0 11,297 13,972
* Counts of members do not include alternate payees receiving benefits while the member is still working.
Therefore, the total counts may not match information on page E-2 of the report. Multiple records may exist for
those who have service in more than one coverage group. This does not result in double counting of liabilities.
Attachment B
4-162
APPENDIX F
GLOSSARY OF ACTUARIAL TERMS
Attachment B
4-163
APPENDIX F – GLOSSARY OF ACTUARIAL TERMS
CalPERS Actuarial Valuation – June 30, 2012 F-1
Miscellaneous 2% at 60 Risk Pool
Glossary of Actuarial Terms
Accrued Liability (also called Actuarial Accrued Liability or Entry Age Normal Accrued Liability)
The total dollars needed as of the valuation date to fund all benefits earned in the past for current
members.
Actuarial Assumptions
Assumptions made about certain events that will affect pension costs. Assumptions generally can be
broken down into two categories: demographic and economic. Demographic assumptions include
mortality, disability and retirement rates. Economic assumptions include discount rate, salary growth and
inflation.
Actuarial Methods
Procedures employed by actuaries to achieve certain funding goals of a pension plan. Actuarial methods
include funding method, setting the length of time to fund the Accrued Liability and determining the
Actuarial Value of Assets.
Actuarial Valuation
The determination, as of a valuation date, of the Normal Cost, Accrued liability, Actuarial Value of Assets
and related actuarial present values for a pension plan. These valuations are performed annually or when
an employer is contemplating a change to their plan provisions.
Actuarial Value of Assets
The Actuarial Value of Assets used for funding purposes is obtained through an asset smoothing
technique where investment gains and losses are partially recognized in the year they are incurred, with
the remainder recognized in subsequent years.
This method helps to dampen large fluctuations in the employer contribution rate.
Amortization Bases
Separate payment schedules for different portions of the Unfunded Liability. The total Unfunded Liability
of a Risk Pool or non-pooled plan can be segregated by "cause", creating “bases” and each such base will
be separately amortized and paid for over a specific period of time. This can be likened to a home
mortgage that has 24 years of remaining payments and a second on that mortgage that has 10 years left.
Each base or each mortgage note has its own terms (payment period, principal, etc.) but all bases are
amortized using investment and payroll assumptions from the current valuation.
Generally in an actuarial valuation, the separate bases consist of changes in unfunded liabilities due to
amendments, actuarial assumption changes, actuarial methodology changes, and gains and losses.
Payment periods are determined by Board policy and vary based on the cause of the change.
Amortization Period
The number of years required to pay off an Amortization Base.
Annual Required Contributions (ARC)
The employer's periodic required annual contributions to a defined benefit pension plan, calculated in
accordance with the plan assumptions. The ARC is determined by multiplying the employer contribution
rate by the payroll reported to CalPERS for the applicable fiscal year. However, if this contribution is fully
prepaid in a lump sum, then the dollar value of the ARC is equal to the Lump Sum Prepayment.
Class 1 Benefits
Class 1 benefits have been identified to be additional benefits which have a significant, ongoing effect on
the total plan cost. In some cases, a Class 1 benefit may be an alternate benefit formula. These benefits
vary by employer across the risk pool. Agencies contracting for a Class 1 benefit will be responsible for
the past service liability associated with such benefit and will be required to pay a surcharge established
by the actuary to cover the ongoing cost (normal cost) of the Class 1 benefit.
Attachment B
4-164
APPENDIX F – GLOSSARY OF ACTUARIAL TERMS
CalPERS Actuarial Valuation – June 30, 2012 F-2
Miscellaneous 2% at 60 Risk Pool
Class 2 Benefits
Class 2 benefits have been identified to be the ancillary benefits providing one-time increases in
benefits. These benefits vary by employer across the risk pool. Agencies contracting for a Class 2 benefit
will be responsible for the past service liability associated with such benefit.
Class 3 Benefits
Class 3 benefits have been identified to be additional benefits which have a minimal effect on the total
plan cost. Class 3 benefits may vary by rate plan within each risk pool. However, the employer
contribution rate will not vary within the risk pool due to the Class 3 benefits.
Classic member (under PEPRA)
A classic member is anyone in CALPERS not defined as a new member under PEPRA (see
definition of new member below.)
Discount Rate
The actuarial assumption that was called “investment return” in earlier CalPERS reports or “actuarial
interest rate” in Section 20014 of the California Public Employees’ Retirement Law (PERL).
Entry Age
The earliest age at which a plan member begins to accrue benefits under a defined benefit pension plan
or Risk Pool. In most cases, this is the same as the date of hire.
(The assumed retirement age less the entry age is the amount of time required to fund a member's total
benefit. Generally, the older a member is at hire, the greater the Normal Cost. This is mainly because
there is less time to earn investment income to fund the future benefits.)
Entry Age Normal Cost Method
An actuarial cost method designed to fund a member's total plan benefit over the course of his or her
career. This method is designed to produce stable employer contributions in amounts that increase at
the same rate as the employer’s payroll (i.e. level % of payroll).
Fresh Start
A Fresh Start is the single amortization base created when multiple amortization bases are collapsed into
one base and amortized over a new funding period.
Funded Status
A measure of how well funded a plan or risk pool is. Or equivalently, how "on track" a plan or risk pool is
with respect to assets vs. accrued liabilities. A ratio greater than 100% means the plan or risk pool has
more assets than liabilities and a ratio less than 100% means liabilities are greater than assets. A funded
ratio based on the Actuarial Value of Assets indicates the progress toward fully funding the plan using
the actuarial cost methods and assumptions. A funded ratio based on the Market Value of Assets
indicates the short-term solvency of the plan.
GASB 27
Statement No. 27 of the Governmental Accounting Standards Board. The accounting standard governing
a state or local governmental employer’s accounting for pensions.
GASB 68
Statement No. 68 of the Governmental Accounting Standards Board. The accounting standard governing
a state or local governmental employer’s accounting and financial reporting for pensions. GASB 68
replaces GASB 27 effective for the first fiscal year beginning after June 15, 2014.
New member (under PEPRA)
A new member includes an individual who becomes a member of a public retirement system
for the first time on or after January 1, 2013, and who was not a member of another public
retirement system prior to that date, and who is not subject to reciprocity with another
public retirement system.
Attachment B
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APPENDIX F – GLOSSARY OF ACTUARIAL TERMS
CalPERS Actuarial Valuation – June 30, 2012 F-3
Miscellaneous 2% at 60 Risk Pool
Normal Cost (also called Total Normal Cost)
The annual cost of service accrual for the upcoming fiscal year for active employees. The required
employee contributions are part of the Total Normal Cost. The remaining portion, called the employer
normal cost, includes surcharges for applicable class 1 benefits and should be viewed as the long term
employer contribution rate.
Pension Actuary
A person who is responsible for the calculations necessary to properly fund a pension plan.
PEPRA
Public Employees’ Pension Reform Act of 2013
Prepayment Contribution
A payment made by the employer to reduce or eliminate the year’s required employer contribution.
Present Value of Benefits (PVB)
The total dollars needed as of the valuation date to fund all benefits earned in the past or expected to
be earned in the future for current members.
Risk Pool
Using the benefit of the law of large numbers, a risk pool is a collection of employer plans for the
purpose of sharing risk. If a pooled plan has active members at the time of valuation, it belongs to the
risk pool composed of all other pooled plans with the same benefit formula. If a plan has no active
members at the time of valuation, it belongs to the inactive pool.
Rolling Amortization Period
An amortization period that remains the same each year, rather than declining.
Side Fund
At the time a plan joined a risk pool, a Side Fund was created to account for the difference between the
funded status of the pool and the funded status of the plan. The plan’s Side Fund is amortized on an
annual basis, with the discount rate net of, for active plans, the payroll growth rate assumption. The
actuarial investment return assumption is currently 7.5%. A positive Side Fund cause the plan’s required
employer contribution rate to be reduced by the Amortization of Side Fund rate component shown in the
Required Employer Contributions section. A negative Side Fund cause the plan’s required employer
contribution rate to be increased by the Amortization of Side Fund rate component. In the absence of
subsequent contract amendments or funding changes, a plan’s Side Fund will disappear at the end of
the Amortization Period.
Superfunded
A condition existing when a plan’s Actuarial Value of Assets exceeds its Present Value of Benefits. Prior
to the passage of PEPRA, when this condition existed on a given valuation date for a given plan,
employee contributions for the rate year covered by that valuation could be waived.
Unfunded Liability
When a plan or pool’s Actuarial Value of Assets is less than its Accrued Liability, the difference is the
plan or pool’s Unfunded Liability of the Unfunded Liability is positive, the plan or pool will have to pay
contributions exceeding the Normal Cost.
Attachment B
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