Pension Sub Committee Regular Meeting 12/13/2012-Approved

Meeting date: 
Wednesday, February 13, 2013

TOWN OF SIMSBURY
PENSION SUB-COMMITTEE

Minutes of Special Meeting
Thursday, December 13, 2012
7:30 a.m. in the Board of Education Conference Room

I. Call to Order
In attendance were: Nick Mason from the Board of Finance. Lisa Heavner from the Board of Selectmen. Paul McAlenney and Philip Schultz, members-at-large. Burke La Clair, business manager for the Board of Education. Thomas Cooke, Director of Administrative Services.
Mary Ann Harris, Finance Director. Becky Sielman, consulting actuary from Milliman.
Mr. Cooke opened the meeting at 7:34 a.m.
II. Acceptance of Minutes
Ms. Heavner made a motion to approve the draft minutes of the November 15, 2012 Pension Sub-Committee meeting. Mr. Mason seconded the motion. All were in favor, and the motion
was passed unanimously.
III. Adoption of Regular Meeting Dates for 2013
A motion was made by Mr. Schultz to adopt the 2013 regular meeting dates for Pension Sub-Committee, as they were presented on the agenda. Ms. Heavner seconded the motion. All
were in favor, and the motion was passed unanimously. 2013 Pension Sub-Committee regular meetings will be held at 7:30 a.m. on Thursday in the Board of Education Conference Room on the following dates: February 14; May 9; September 12 and November 14.
IV. Milliman Presentation on the Experience Study
Ms. Sielman presented a 30-page report titled “Town of Simsbury Retirement Program 2012 Experience Study.” She noted that the objective of the experience study was to review the assumptions used in preparing the pension plan valuations for all the town’s pension plans to ensure maximum accuracy.   The three main factors considered were economic assumptions, demographic assumptions and funding methods.
Ms. Sielman noted that interest rate assumptions play a vital role in paying for benefits. Specifically, the earnings on investments help determine how much the town should contribute to its pension plans. The Actuarial Standard of Practice (ASOP) was reviewed to explain all the factors involved in setting the interest rate assumption. Ms. Sielman also noted that individuals are living longer than previously expected, and those who are age-eligible for retirement are continuing to work. Job turnover has also been less frequent.
Ms. Sielman recommended that the town consider reducing the interest rate assumption from the current 7.75%. She presented two single page reports. One report showed the impact of proposed assumption changes for the 2011 OPEB Valuation (Other Post-Employment Benefits). The other report showed the impact of proposed assumption changes to the 2012 Pension Plan Valuations for town government, education and police employees. In both reports, five factors—valuation timing adjustments, demographic assumptions, interest rates, salary scales, and amortization periods—were slightly changed so the subcommittee could see how figures in the current plan would be affected.
To determine their target and responsibilities going forward, the subcommittee requested that Ms. Sielman prepare a summary page at the beginning of her next report, evaluating what would happen if they chose an incremental approach to reducing the interest rate assumption. They also asked Ms. Sielman to give them a preview of how the current numbers would change if the following alterations happened simultaneously: The interest rate went down by 25 basis points (.25%); the salary scale was adjusted; and the amortization period was lengthened from 21 years to 30 years.
V. Adjourn
Ms. Heavner made a motion to adjourn the meeting. Mr. Mason seconded the motion. All were in favor. The motion was passed unanimously. The meeting was adjourned at 8:50 a.m.
Respectfully submitted,
Lorrie McElligott
Commission Clerk