HomeMy WebLinkAboutNC Comprehensive Report (Finance) (64)CITY OF NATIONAL CITY
Notes to the Basic Financial Statements
(Continued)
(8) City Defined Benefit Pension Plan (PERS)
The City of National City contributes to the California Public Employees Retirement
System (PERS). The miscellaneous employees of the City and the safety employees are
part of a single -employer defined benefit pension plan. PERS provides retirement and
disability benefits, annual cost of living adjustment, and death benefits to plan members
and beneficiaries. PERS acts as a common investment and administrative agent for
participating public entities within the State of California. Copies of PERS' annual
financial report may be obtained from its executive office at 400 "P" Street, Sacramento,
California 95814.
Miscellaneous and safety participants are required to contribute 8% and 9%, respectively,
of their annual covered salary. The City makes the contributions required of City
employees on their behalf and for their account. Benefit provisions and all other
requirements are established by state statute and City contract with employee bargaining
groups.
Under GASB 27, an employer reports an annual pension cost (APC) equal to the annual
required contribution (ARC) plus an adjustment for the cumulative difference between
the APC and the employer's actual plan contributions for the year. The cumulative
difference is called the net pension obligation (NPO). The ARC for the period July 1,
2010 to June 30, 2012 has been determined by an actuarial valuation of the plan as of
June 30, 2009. The contribution rate indicated for the period is 34.135% of payroll for
the safety plan and 18.046% of payroll for the miscellaneous plan. In order to calculate
the dollar value of the ARC for inclusion in the financial statements prepared as of June
30, 2012, the contribution rate is multiplied by the payroll of covered employees that
were paid during the period from July 1, 2011 to June 30, 2012.
A summary of principle assumptions and methods used to determine the ARC is shown
below.
Valuation Date
Actuarial Cost Method
Amortization Method
Average Remaining Period
Asset Valuation Method
Actuarial Assumptions
Investment Rate of Return
Projected Salary Increases
Inflation
Payroll Growth
Individual Salary Growth
City Miscellaneous Employees Group
June 30, 2009
Entry Age Normal Cost Method
Level Percent of Payroll
25Years as of the Valuation Date
15 Year Smoothed Market
7.75% (net of administrative expenses)
3.55% to 14.45% depending on Age,
Service, and type of employment
3.00%
3.25%
A merit scale varying by duration of
employment coupled with an assumed
annual inflation component of 3.00%
and an annual production growth of
0.25%
Safety Employees Group
June 30,2009
Entry Age Normal Cost Method
Level Percent of Payroll
31 Years as of the Valuation Date
15 Year Smoothed Market
7.75% (net of administrative expenses)
3.25% to 13.15% depending on Age,
Service, and type of employment
3.00%
3.25%
A merit scale varying by duration of
employment coupled with an assumed
annual inflation component of 3.00%
and an annual production growth of
0.25%
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