Our consultants keep abreast of the latest trends and legislative changes impacting our clients. We regularly write for publication, present at conferences, and conduct educational seminars for our clients. The following articles, speeches, and public presentations may be useful to you. Click the name of the document (in blue) to read it.

Pension Topics

“Comments on Proposed ASOP for Pension Risk Assessment and Disclosure
Actuarial Standards Board (ASB)
May 2015, by Ed Macdonald, ASA, FCA, MAAA and Brent A. Banister, PhD, FSA, FCA, MAAA, EA

Our letter to the ASB comments on the possibility of proposed ASOP for the assessment and disclosure of risk regarding pension obligations and contribution requirements. First, we suggest that language be included to allow the risk assessment to be provided after the valuation as part of an additional report. Second, we note that for an accurate assessment of the risk faced by a pension plan, both favorable and unfavorable outcomes must be considered. We believe the proposed language of should be modified to at least allow, and preferably encourage or require, the assessment and disclosure of both favorable and unfavorable events.

“Actuarial Topics Update”
Oklahoma Public Fund Trustee Education Conference
September 2014 by Alisa Bennett, FSA, MAAA, EA, FCA and Brent Banister, PhD, FSA, MAAA, EA, FCA

New GASB standards for OPEB plans are bringing changes to the public sector that are similar to GASB 67/68 pension changes. And, when it comes to the implementation of GASB 67 and 68 here’s what your actuary may be dealing with behind the scenes: projecting cash flows to determine the discount rate, projecting what assets will earn long term, projecting contributions, juggling timing of fiscal vs. plan years, and understanding special funding situations — including employers who have special additional contributions.

“How to Read an Actuarial Valuation Report”
Georgia Government Finance Officers Association
October 2013, by Alisa Bennett, FSA, EA, FCA, MAAA

For anyone who has to read actuarial valuation reports, this presentation explains in everyday language what can be the sometimes arcane and dry world of assessing actuarial experience and projecting the future. After reviewing this presentation, you will better understand funding requirements, assets, gain/loss, GASB accounting and assumptions.

“Accounting & Actuarial Challenges for PERS Today”
2013 Southern Conference on Teacher Retirement
April 22, 2013, by Tom Cavanaugh FSA, FCA, MAAA, EA

Reviews how to develop funding policies for pension plans, and why you can’t simply use pension expense as the funding level. Your funding policy should describe how the Board of Trustees intends to provide secure retirement benefits–but the process of developing the policy means the Board must understand actuarial funding principles. This presentation reviews key elements of funding policy statements, including: actuarial cost method, asset smoothing method, amortization of UAAL policy, and funding target.

“Risks & Benefits of Pension Obligation Bonds”
Florida Public Pension Trustees Association
January 29, 2013, by Jose Fernandez, ASA, EA, MAAA, FCA

New GASB accounting rules require cities to disclose unfunded liabilities on their balance sheets. Cities may wish to consider issuing a pension obligation bond (POB) to pay off a portion of all of their unfunded pension plan liabilities. While in a sense the city simply trades one liability for another, if the rate of return on the POB proceeds exceeds the interest rate paid on bonds, the city will save money.

GASB & OPEB Topics

“Comments on the GASB’s Proposed Exposure Draft Amending Statements No. 67, 68 and 73”

Comments to the Governmental Accounting Standards Board
February 2016, by Brent Banister, Ph.D., FSA, EA, FCA, MAAA and Eric Gary, FSA, FCA, MAAA

CMC is generally pleased with the amendments proposed by the Exposure Draft, and we believe most of the changes are appropriate. We do, however, have concerns with the proposed deviation provision of the Actuarial Standards of Practice (ASOPs). As actuaries governed by the Code of Professional Conduct (the Code), we believe we must adhere to the Code and avoid the creation of standards outside of the Code’s purview. While well-intentioned, we are concerned the GASB’s proposal may result in an actuary’s inability to meet her/his responsibilities under the Code, which would preclude an actuary meeting the Qualification Standards for Actuaries Issuing Statements of Actuarial Opinion in the United States from performing GASB-conforming valuations.

“GASB’s OPEB Changes: Will They Affect Public Sector Health Plans?”
Public Sector HealthCare Roundtable
November 2014, by Eric Gary, FSA, FCA, MAAA,

An overview of GASB changes effective for plans with fiscal years on or after December 15, 2015, and employers with fiscal years on or after December 15, 2016. While the changes are very similar to GASB 67/68 pension changes, several OPEB-specific changes also must be addressed.

“Change in GASB Liability Rules”
State and Local Government Benefits Association, Regional Conference
September 9, 2013, Alisa Bennett FSA, EA, FCA, MAAA

GASB Final Statements 67 and 68 were issued last summer with an effective date for plan years beginning after June 15, 2013, and for employers whose fiscal years begin after June 15, 2014. The statements bring significant changes to pension financial reporting in an attempt to divorce funding from accounting. This presentation summarizes the GASB changes, the timelines and what it means for employers.

“GASB Update”
MAPERS 2012 Conference 
July 2012, by Tom Cavanaugh FSA, FCA, MAAA, EA

In 2012, GASB issued Statements 67 and 68, having to do with accounting and financial reporting. The Board made changes to purportedly improve consistency and transparency, make pension reporting more useful, and to assist interested parties in evaluating the accountability and inter-period equity related to pensions. The presentation helps state and local governments understand how the new accounting requirements will be met, how to redesign funding guidelines, and outlines some questions that are still unanswered.

“Retiree Healthcare Costs and OPEB: What to Keep an Eye On”
Public Sector Healthcare Roundtable 
November 9, 2011, Alisa Bennett FSA, EA, FCA, MAAA

The impact of many changes due to health care reform are still unknown. Can health trend be brought down to our assumed ultimate level? Will drastic plan design changes be needed to avoid the “Cadillac” excise tax? From an OPEB perspective, how might raising the Medicare age impact retirement patterns? If affordable health insurance exchanges become reality, will early retirees opt for them rather that the employer sponsored plan? Will this cause adverse selection for your plan?

“Managing Drug Expenditures – One Year Later”
Public Sector HealthCare Roundtable 
November 2010, by Alisa Bennett, FSA, EA, FCA, MAAA

Explains the impact of Healthcare Reform on Medicare Part D coverage. Among other things, Healthcare Reform eliminates the Medicare Part D “doughnut hole.” Since approximately two-thirds of a Medicare-eligible retiree’s liability comes from drug costs, it is essential that employers find a way to maximize the benefit of these changes. This presentation explains options available to employers and focuses on the Employer Group Waiver Plan option in which the employer contracts directly with CMS to provide Medicare Part D drug coverage.