HomeMy WebLinkAboutNC Comprehensive Report (Finance) (68)CITY OF NATIONAL CITY
Notes to the Basic Financial Statements
(Continued)
Other Postemployment Benefit Plan, (Continued)
Actuarial valuations of an ongoing plan involve estimates of the value of reported
amounts and assumptions about the probability of occurrence of events far into the future.
Examples include assumptions about future employment, mortality, and the healthcare
cost trend. Ainounts determined regarding the funded status of the plan and the annual
required contributions of the employer are subject to continual revision as actual results
are compared with past expectations and new estimates are made about the future. The
schedule of funding progress, presented as required supplementary information following
the notes to the financial statements, presents multi -year trend information about whether
the actuarial value of plan assets is increasing or decreasing over time relative to the
actuarial accrued liabilities for the benefits.
Actuarial Methods and Assumptions, Projections of benefits for financial reporting
purposes are based on the substantive plan (the plan as understood by the employer and
the plan members) and include the types of benefits provided at the time of each valuation
and the historical pattern of sharing of benefit costs between employer and plan members
to that point. The actuarial methods and assumptions used include techniques that are
designed to reduce the effects of short-term volatility in actuarial accrued liabilities and
the actuarial assets, consistent with the long-term perspective of the calculations.
The actuarial cost method used for determining the benefit obligations is the Frozen Entry
Age Actuarial Cost Method. The actuarial assumptions included a 5% percent investment
rate of return, which is the assumed rate of the expected long-term investment returns on
plan assets calculated based on the funded level of the plan at the valuation date. The
UAAL is being amortized as a level percentage of projected payroll over 20 years. It is
assumed the City's payroll will increase 3.25% per year.
Actuarial Actuarial
Valuation Value of
Date Assets (a)
7/01/08 $
7/01/10 $
SCHEDULE OF FUNDING PROGRESS
Actuarial
Accrued Unfunded
Liability AAL Funded Covered
(AAL)-Entry (UAAL) Ratio Payroll
Age (b) ( �)
$1,058,356 $1,058,356 0% $22,466,000
$1,370,805 $1,370,805 0% $18,322,000
UAAL as a
Percentage of
Covered
Payroll
(a-b)/c)
4.7%
7.5%
60