Board Approves Contribution Rate Changes for City Employees, Effective July 2012

Date: Apr 13, 2012

 

Important: These rate changes only apply to City of San Diego members of SDCERS; Unified Port District and Airport Authority members are not affected).

Active SDCERS members working for the City of San Diego will see a change in their member contribution rates beginning in July 2012. These member contributions are the required pre-tax contributions to the SDCERS trust fund that are deducted from members’ bi-weekly paychecks. Contribution rates are determined by a member’s plan (General or Safety plans) and age of entry into SDCERS.

Some members will see a decrease in their rates, while others will see an increase in their rates.

Please view the PDF at the bottom of this page to determine any change to your specific contribution rate.

Why Member Contribution Rates are Changing­
Contribution rates are based on actuarial assumptions and calculations provided by SDCERS’ actuary, Cheiron. A review of these rates and determination as to whether they must be adjusted occurs periodically. Based upon Cheiron’s Actuarial Experience Study completed in 2011, the SDCERS Board approved a new set of actuarial assumptions to be used in preparing the June 30, 2011 Actuarial Valuation. Following Cheiron’s presentation of the City of San Diego’s June 30, 2011 Actuarial Valuation to the SDCERS Board on January 20, 2012, Cheiron completed its analysis of how the new actuarial assumptions affected member contribution rates.

General Members
In the June 30, 2011 valuation, the investment return assumption—the forecast on the investment returns the SDCERS trust fund will earn—was decreased by 25 basis points, from 7.75% to 7.5%. By itself, this change would have increased member contribution rates. However, the final revised member rates for General members on average decreased slightly because of two offsetting factors:  a reduction in expected future wage increases, and an increase in the assumption regarding future turnover (the assumed rate at which members leave the plan prior to retirement.) 

Together, the changes to the wage increase and turnover assumptions more than offset the decrease in the investment return assumption. However, at younger ages the turnover assumption slightly decreased, resulting in slightly higher new member rates.

Safety Members
Safety members’ costs increased because, in addition to the decrease in investment return assumptions, this particular group of members is now expected to live longer and retire earlier, and there was no offsetting change in the assumption regarding the turnover of Safety members.

To view the upcoming contribution rates that go into effect in July 2012, click the document below and view the chart that applies to your member classification (General, Safety, etc.).
  Member Contribution Rates - Effective July 2012
 




Document Under Categories: Board, Contribution Rates

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