MINUTES OF MEETING
STATE EMPLOYEES RETIREMENT COMMISSION
ACTUARIAL SUBCOMMITTEE
January 8, 2009
MEMBERS PARTICPATING
Peter R. Blum, Chairman
Robert Baus
Charles Casella
Richard Cosgrove
Claude Poulin
Steve Greatorex
Linda Yelmini
OTHER PARTICPANTS
Dr. Thomas Woodruff, Director, Retirement Services Division
Helen Kemp, Assistant Director, Retirement Services Division
Katie Balut, Supervisor, CMERS Unit, Retirement Services Division
Marilyn Rodriguez, Secretary, Retirement Services Division
Philip Bonanno, Buck Consultants
Janet Cranna, Buck Consultants
Andrew Zmich, Buck Consultants
Sean Smith, Buck Consultants
The meeting began at approximately 10:45 a.m. Mr. Baus participated by telephone conference call.
Mr. Bonanno began by presenting the highlights of the June 30, 2008 draft report for the Connecticut Municipal Employees retirement system (CMERS) experience study. He gave an overview of its findings and conclusions and spoke about the data and assumptions used in and for the investigation. Mr. Bonanno spoke about adjusting the rates to better reflect the actual experience. For example, Mr. Bonanno recommended to start the assumed rates of service retirement at age 45 instead of age 50 for the General Employee groups as CMERS provisions allow people to retire with 25 years of service and used the age of 75, rather than the age of 70, as the age where members are assumed to retire with 100% certainty.
Concerning the fund assets, Mr. Bonanno stated that market conditions during the past year were very challenging. Mr. Bonanno reviewed the assumption changes made as a result of the CMERS experience study. The interest rate was lowered from 8.5% to 8.25% and updated post retirement mortality tables (the RP 2000 table) were used in the draft provided the Subcommittee.
The subcommittee discussed at length the use of the RP 2000 table and agreed with the recommendation that the current table be changed to this more recent published mortality table. Buck will investigate this issue further with the intent of utilizing the RP 2000 table as a "base" and adjusting it in accordance with CMERS demographic information. Buck will recalculate the results using the revised post retirement mortality assumptions. Buck noted that the same analysis was utilized for the Police and Fire segment of CMERS. They also noted that instead of separate male and female assumptions, it utilized a unisex assumption because the percentage of female members in this population group is so small.
The subcommittee discussed Buck's recommended economic assumptions. While the subcommittee accepted most of Buck's recommendations in this area, after discussion, it did instruct Buck to utilize 3.5% rather than the proposed 3.75% as the assumed future cost-of-living increases for certain retirees.
With regard to the CMERS draft valuation, Mr. Bonanno noted some scrivener errors in some of the draft charts and provided replacement pages to the subcommittee. This will be corrected on the final document. The same concerns with regard to the post retirement mortality and other economic assumptions that were noted in the experience study were also noted for the CMERS valuation. Questions were asked concerning the stabilization reserve. Buck will review and adjust the reserve in light of these questions. Similar questions arose in the discussion on the preliminary draft Police/Fire Survivor Benefit Fund study and suggestions arose concerning reset of the entry age and unfunded liability.
Following lengthy and detailed discussion, the trustees asked that Buck make adjustments to several of the assumptions discussed and provide the subcommittee members with updated figures as soon as possible. In this subsequent results letter, Buck will separately show the impact of each requested assumption change (post-retirement and COLA). Buck' s recommendation with regard to service contribution and other rates will be revisited upon receipt of the subsequent results letter as the recommendations may change based upon the new assumptions. Buck expects to get the subsequent results letter to CMERS staff for distribution by January 16th.
Buck personnel left the meeting at approximately 12:45 p.m. After they left, the Executive Director provided subcommittee members with an update on the status of the actuarial RFPS to be issued this year as well as preliminary draft versions of such proposals.
Meeting adjourned at about 12:55 p.m.
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