Current through Register Vol. 54, No. 44, November 2, 2024
(a)
Selection of actuarial
assumptions. The actuarial valuation report shall be prepared using
actuarial assumptions selected jointly by the actuary of the municipal pension
plan and the governing body of the municipal pension plan. The actuarial
assumptions shall represent the best available joint estimate of the actuary
and the governing body of future occurrences in the case of each actuarial
assumption. The economic actuarial assumptions shall additionally be either
within the range for economic actuarial assumptions specified in subsection (b)
or accompanied in the actuarial valuation report with the documentation
specified in subsection (c) that explains and justifies the choice of one or
more assumptions outside of the range.
(b)
Range of economic actuarial
assumptions. No explanatory or justificatory documentation as
specified in subsection (c) is required to accompany the actuarial valuation
report if the following conditions are met:
(1) Economic actuarial assumptions reflect
annual percentage increase amounts.
(2) The actuarial assumption as to interest
or investment earnings is not less than 5% or more than 9%.
(3) The actuarial assumption as to salary
projection or individual pension plan member salary increase for municipal
pension plans with a salary related benefit plan is not greater than the
actuarial assumption as to interest or investment earnings and is not less than
the amount of the actuarial assumption as to interest or investment earnings
reduced by 3%. If the actuarial assumption as to salary projection or
individual pension plan member salary increase applicable to the municipal
pension plan is in the form of probability rates that differ for various ages,
the rate to be used for this comparison shall be calculated by the actuary
preparing the report, with appropriate accompanying documentation, and shall be
the average rate under the probability table for the ages 30 through
50.
(4) The actuarial assumption as
to total covered payroll increase, for a municipal pension plan of a
municipality that has been determined to be financially distressed and to which
a remedy of delayed implementation of the funding standard under section 607(g)
or (h) of the act (53 P. S. §
895.607(g) or
(h)) is applicable, is not greater than 4%
nor less than .0%.
(5) The
actuarial assumption as to inflation, for a municipal pension plan that
provides for automatic cost-of-living postretirement adjustments based on
increases in the Federal consumer price index or other recognized measure of
inflation, is not greater than the amount of the actuarial assumption as to
interest or investment earnings reduced by 2% and is not less than the amount
of the actuarial assumption as to interest or investment earnings reduced by
5%.
(c)
Documentation required for certain actuarial assumptions.
(1) If the economic actuarial assumptions
used to prepare the actuarial valuation report are outside the range of
economic actuarial assumptions specified in subsection (b), or if the economic
actuarial assumptions utilize annuity rates or differ between preretirement
experience and postretirement experience, the actuary preparing the actuarial
valuation report shall submit documentation that explains the choice of
economic actuarial assumptions made by the actuary and the governing body of
the municipal pension plan and justifies their use in preparing the actuarial
valuation report.
(2) The
documentation, at a minimum, shall cite aspects of the benefit plan of the
municipal pension plan in question that affect the choice of the particular
economic actuarial assumptions in question and the particular circumstances and
specific experience of the municipal pension plan and its investment
performance and of the municipality and its salary structure that caused the
actuary and the governing body of the municipal pension plan to conclude that a
set of actuarial assumptions within the range specified in subsection (b) is
inappropriate and to conclude that the particular economic actuarial
assumptions chosen are appropriate.
This section cited in 16 Pa. Code §
205.8 (relating to Supplemental
State Assistance).
