Section 895.202 - Contents of actuarial valuation report(a)Generally.--The actuarial valuation report shall contain actuarial exhibits, financial exhibits and demographic exhibits. The actuarial exhibits shall be prepared and certified by an approved actuary. The remaining exhibits may be prepared by a qualified person other than an approved actuary. The financial and demographic exhibits shall be prepared as of the end of the prior year. The submission by a municipality of a single report setting forth the various required contents items in total for the various pension plans associated with the Pennsylvania Municipal Retirement System shall be deemed to be compliance by that municipality with the requirements of this chapter only if the report also separately sets forth the various required contents items for the municipality.(b)Contents of actuarial exhibits; defined benefit plans self-insured in whole or in part.--For any pension plan which is a defined benefit plan and which is self-insured in whole or in part, all applicable actuarial exhibits shall be prepared in accordance with the entry age normal actuarial cost method with entry age established as the actual entry age for all plan members unless the municipality applies for and is granted authorization by the commission to use an alternative actuarial cost method. Authorization shall be granted if the municipality demonstrates on an individual pension plan basis that there are compelling reasons of an actuarial nature for the use of an alternative actuarial cost method. The commission shall issue rules and regulations specifying the criteria which the commission will use to determine the question of the existence of compelling reasons for the use of an alternative actuarial cost method, the documentation which a municipality seeking the authorization will be required to supply and the acceptable alternative actuarial cost methods which the commission may authorize. The actuarial cost method shall be used to value all aspects of the benefit plan or plans of the pension plan unless the municipality applies for and is granted authorization by the commission to use approximation techniques other than the actuarial cost method for aspects of the benefit plan or plans of the pension plan other than the retirement benefit. Authorization shall be granted if the municipality demonstrates on an individual pension plan basis that there are compelling reasons of an actuarial nature for the use of these approximation techniques. The commission shall issue rules and regulations specifying the criteria which the commission will use to determine the question of the existence of compelling reasons for the use of approximation techniques, the documentation which a municipality seeking the authorization will be required to supply and the acceptable approximation technique which the commission may authorize. The actuarial exhibits shall use actuarial assumptions which are, in the judgment of the actuary and the governing body of the plan, the best available estimate of future occurrences in the case of each assumption. With respect to economic actuarial assumptions, the assumptions shall either be within the range specified in rules and regulations issued by the commission or documentation explaining and justifying the choice of assumptions outside the range shall accompany the report. The actuarial exhibits shall measure all aspects of the benefit plan or plans of the pension plan in accordance with modifications in the benefit plan or plans, if any, and salaries which as of the valuation date are known or can reasonably be expected to be in force during the ensuing plan year. In preparing the actuarial exhibits or any actuarial valuation report, the municipality shall exclude the compensation of all DROP participants from the active member payroll and all DROP participants from active member data. The actuarial valuation report shall contain the following actuarial exhibits: (1) An exhibit of the normal cost of the benefits provided by the benefit plan as of the date of the actuarial valuation, expressed as a percentage of the future covered payroll of the active membership of the pension plan as of the date of the actuarial valuation.(2) An exhibit of the actuarial accrued liability of the benefit plan as of the date of the actuarial valuation in total which shall be the actuarial present value of all projected benefits provided by the benefit plan reduced by the actuarial present value of future normal costs, and in particular, which shall include the following required actuarial present values for pension plan benefits of related items: (i) Required actuarial present values on account of active members:(D) Refund liability due to withdrawal from active service or death.(E) Other benefits, specifying the nature of each type. This item shall include a footnote indicating the amount of accumulated member contributions without accrued interest.
(ii) Required actuarial present values on account of former members with a deferred, vested or otherwise nonforfeitable right to a retirement benefit.(iii) Required actuarial present values on account of former members who do not have a deferred, vested or otherwise nonforfeitable right to the retirement benefit and who have not withdrawn any accumulated member contributions.(iv) Required actuarial present values on account of benefit recipients:(C) Surviving spouse benefits.(D) Surviving child benefits.(E) Other benefits, specifying the nature of each type.(v) Required actuarial present values for other benefits provided by the benefit plan, specifying the nature of each type.(vi) Actuarial present value of future normal cost.(3) An exhibit of the unfunded actuarial accrued liability of the pension plan in total, which shall be the actuarial accrued liability of the pension plan calculated pursuant to paragraph (2) less the actuarial value of assets of the pension plan calculated pursuant to subsection (e)(1), and which, in particular, shall include the following: (i) The remaining balance of the unfunded actuarial accrued liability in existence as of the first actuarial valuation report required by this section occurring next following the date of enactment of this section.(ii) The remaining balance of each increment of unfunded actuarial accrued liability attributable to modifications in the benefit plan governing the pension plan which were applicable to active members, separately indicating each and designating each by the plan year in which the benefit plan modification was made effective.(iii) The remaining balance of each increment of unfunded actuarial accrued liability attributable to modifications in the benefit plan governing the pension plan which were applicable to retired members and other benefit recipients, separately indicating each and designating each by the plan year in which the benefit plan modification was made effective.(iv) The remaining balance of each increment of net unfunded actuarial accrued liability attributable to modifications in the actuarial assumptions used to calculate the actuarial accrued liability of the pension plan separately indicating each and designating each by the plan year in which the actuarial assumption modification was made effective.(v) The remaining balance of each increment or decrement of net unfunded actuarial accrued liability attributable to net actuarial experience losses or gains, separately indicating each and designating each by the plan year in which the actuarial experience loss or gain was recognized.(vi) Repealed by 2009, Oct. 9, P.L. 588, No. 51, § 2(2)(ii), imd. effective. The initial determination of the unfunded actuarial accrued liability attributable to a modification in the benefit plan governing the pension plan or to a modification in the actuarial assumptions used to calculate the actuarial accrued liability of the pension plan shall be made by calculating the unfunded actuarial accrued liability of the pension plan in accordance with the benefit plan provisions and actuarial assumptions which were in effect prior to the modification and by calculating the unfunded actuarial accrued liability of the pension plan in accordance with the modification in the provisions of the benefit plan governing the pension plan or the actuarial assumptions used to calculate the actuarial accrued liability of the pension plan, whichever is applicable, and the remaining benefit plan provisions and actuarial assumptions. The initial determination of the unfunded actuarial accrued liability attributable to an actuarial loss shall be made in conjunction with the analysis of increases or decreases in the unfunded actuarial accrued liability of the pension plan required pursuant to paragraph (6).
(4) An exhibit of any additional funding costs associated with the amortization of any unfunded actuarial accrued liability of the pension plan, indicating for each increment of unfunded actuarial accrued liability specified in paragraph (3), the level annual dollar contribution required to pay an amount equal to the actuarial assumption as to investment earnings applied to the principal amount of the remaining balance of the increment of unfunded actuarial accrued liability and to retire by the applicable amortization target date specified in this paragraph the principal amount of the remaining balance of the increment of unfunded actuarial accrued liability. The amortization target date applicable for each type of increment of unfunded actuarial accrued liability shall be as follows:(i) The following apply: (A) In the case of a pension plan established on or prior to January 1, 1985 for the unfunded actuarial accrued liability in existence as of the beginning of the plan year occurring in calendar year 1985, at the end of the plan year occurring in calendar year 2015; or(B) In the case of a pension plan established after January 1, 1985, for the unfunded actuarial accrued liability then or subsequently determined to be or to have been in existence as of the date of the establishment of the plan, at the end of the plan year occurring 30 years after the calendar year in which the pension plan was established.(ii) The following apply: (A) Increment or decrement of net unfunded actuarial accrued liability attributable to a change in actuarial assumptions, at the end of the plan year occurring 20 years after the calendar year in which actuarial assumption modification was effective.(B) Increment or decrement of net unfunded actuarial accrued liability attributable to a change in actuarial assumptions made on or after the effective date of this clause, at the end of the plan year occurring 15 years after the calendar year in which the actuarial assumption modification was effective.(iii) The following apply: (A) Increment of net unfunded actuarial accrued liability attributable to a modification in the benefit plan applicable to active members, at the end of the plan year occurring 20 years after the calendar year in which the benefit plan modification was effective.(B) From and after the effective date of this clause, the increment of net unfunded actuarial accrued liability attributable to a modification in the benefit plan mandated by new legislation, at the end of the plan year occurring 20 years after the calendar year in which the benefit plan modification was effective.(iv) The following apply: (A) Increment of unfunded actuarial accrued liability attributable to a modification in the benefit plan applicable to retired members and other benefit recipients, at the end of the plan year occurring 10 years after the calendar year in which the benefit plan modification was effective.(B) Except as provided under clause (C), increment of unfunded actuarial accrued liability attributable to a modification in the benefit plan for active members adopted on or after the effective date of this clause and not mandated by new legislation, at the end of the plan year occurring 10 years after the calendar year in which the benefit plan modification was effective.(C) An increment of unfunded actuarial accrued liability attributable to a modification in the benefit plan applicable to retired members and other benefit recipients not mandated by new legislation, at the end of the plan year following the year in which the modification was effective.(v) The following apply: (A) Increment or decrement of net unfunded actuarial accrued liability attributable to an actuarial experience loss or gain, at the end of plan year occurring 20 years after the calendar year in which the actuarial experience loss or gain was recognized.(B) Notwithstanding any other provision of this act or other law, as of the beginning of the plan year occurring in calendar year 2003, the outstanding balance of the increment of unfunded actuarial accrued liability attributable to the net actuarial investment losses incurred in calendar years 2001 and 2002 may, at the sole discretion of the municipality, be amortized with the amortization target date being the end of the plan year occurring 30 years after January 1, 2003. In order for a municipality to extend the applicable amortization period pursuant to this clause, the municipality must file a revised actuarial valuation report reflecting the amortization period extension provided for under this clause with the executive director of the commission no later than September 30, 2004. Any such revised actuarial valuation report may not be filed in lieu of the actuarial valuation report prepared in compliance with clause (A) and required to be filed on or before March 31, 2004, and may be used only for the purposes of recalculating the 2004 minimum municipal obligation of the municipality and calculating the 2005 minimum municipal obligation of the municipality to reflect the amortization period extension. Any such revised actuarial valuation report shall not affect distributions under the General Municipal Pension System State Aid Program under Chapter 4.(vi) Repealed by 2009, Oct. 9, P.L. 588, No. 51, § 2(2)(ii), imd. effective. With respect to any applicable pension plan other than a plan which comprises all or part of a moderately distressed or a severely distressed municipal pension system, if the remaining average period between the current average attained age of active members as of the valuation date and the later of their earliest average normal retirement age or their average assumed retirement age is less than the applicable period or periods ending with the amortization target date or dates specified in subparagraph (i), (ii), (iii) or (v)(A), the appropriate amortization target date for the applicable subparagraph determined with reference to the longest applicable remaining average period rounded to the next largest whole number shall be used. With respect to any plan year beginning after December 31, 1997, if, as of the beginning of the plan year, the ratio of the actuarial value of assets to the actuarial accrued liability exceeds 0.70 and the governing body of the municipality has passed a resolution to irrevocably commit the municipality to apply the limit on the additional funding costs, as provided herein, in the preparation of the current and all future exhibits under this paragraph, then the sum of the additional funding costs for subparagraphs (i), (ii), (iii), (iv) and (v) above shall not exceed the amount required to amortize the remaining unfunded actuarial accrued liability as of the beginning of the plan year over 10 years in level annual dollar contributions. The exhibit shall indicate the total dollar amount of additional funding costs associated with the amortization of any unfunded actuarial accrued liability of the pension plan applicable for that plan year and any subsequent plan year occurring prior to the preparation of the next required actuarial valuation report, which shall be the total of the additional funding costs associated with the amortization of each increment of unfunded actuarial accrued liability. The exhibit shall also indicate the plan year in which any unfunded actuarial accrued liability of the pension plan would be fully amortized if the total annual additional funding cost calculated pursuant to this paragraph were met continuously without increase or decrease in amount until the total unfunded actuarial accrued liability currently existing was fully amortized. In calculating the additional funding costs associated with the amortization of any unfunded actuarial accrued liability of the pension plan in any plan year, any amortization contribution made in the interval since the last actuarial valuation report shall be allocated to each type of increment of unfunded actuarial accrued liability in proportion to the remaining dollar amount of each type.
(5) An exhibit of the total administrative cost of the pension plan for the plan year occurring immediately prior to the plan year for which the actuarial valuation report is made.(6) An exhibit containing an analysis of the increase or decrease in the unfunded actuarial accrued liability of the pension plan since the most recent prior actuarial valuation report, including specifically an indication of increases or decreases due to the following:(i) Modifications in the benefit plan or plans of the pension plan.(ii) Changes in actuarial assumptions.(iii) Deviations in the actual experience of the pension plan from the experience expected by virtue of the actuarial assumptions.(iv) Presence or absence of payments to amortize the unfunded accrued liability of the pension plan.(v) Other reasons. The analysis shall be based on the best professional judgment of the approved actuary reached after preparing the various applicable actuarial exhibits of the actuarial valuation report. If, in the opinion of the approved actuary, the inclusion of any portion of this information is not appropriate, that portion of the analysis may be omitted with the provision of adequate explanation or justification of the appropriateness of the omission.
(7) An exhibit summarizing the economic and demographic actuarial assumptions used in the preparation of the actuarial exhibits.(8) A summary of the principal provisions of the benefit plan of the pension plan upon which the actuarial exhibits are based.(c)Contents of actuarial exhibits; defined contribution plans self-insured in whole or in part.--For any pension plan which is a defined contribution plan and which is self-insured, in whole or in part, for the liability attributable to benefit recipients and annuitants, the actuarial valuation report shall contain the following actuarial exhibits: (1) An exhibit of the required actuarial present values on account of benefit recipients and annuitants, which shall include the following required actuarial present values: (ii) Disability benefits.(iii) Surviving spouse benefits.(iv) Surviving child benefits.(v) Other benefits, specifying the nature of each type.(2) An exhibit indicating the member contributions accumulated at interest as apportioned to member accounts to the date of the valuation report, which shall be itemized as follows:(i) Balance of member contributions and interest attributable to benefits recipients.(ii) Member contributions and interest attributable to active members.(iii) Member contributions and interest attributable to former members with a deferred, vested or otherwise nonforfeitable right to a retirement benefit.(iv) Member contributions and interest attributable to former members without a deferred, vested or otherwise nonforfeitable right to a retirement benefit. The accumulations shall be separated in a manner which properly reflects any differences in retirement benefit purchase or calculation rates which may apply.
(3) An exhibit of the total administrative cost of the pension plan for the plan year occurring immediately prior to the plan year for which the actuarial valuation report is made.(4) An exhibit summarizing the actuarial assumptions as to preretirement mortality, postretirement mortality, disablement and investment income used in the preparation of the actuarial exhibits.(5) A summary of the principal provisions of the benefit plan of the pension plan upon which the actuarial exhibits are based.(d)Contents of actuarial exhibits; defined benefit or defined contribution plans insured in whole by an insurance carrier.--For any pension plan which is a defined benefit plan or a defined contribution plan and which is insured in whole by an insurance carrier authorized to do business in the Commonwealth, the actuarial valuation report shall contain the following actuarial exhibits: (1) An exhibit indicating the type, nature and issuer of the insurance coverage, as follows: (i) Type of insurance coverage. (B) Group master contract.(ii) Nature of insurance coverage. (B) Retirement income endowment.(C) Combination of retirement annuities and endowment.(iii) Issuer of insurance coverage for each policy or contract.(2) An exhibit indicating the following: (i) Actuarial present value of all benefits provided by the benefit plan.(ii) Actuarial value of the current insurance coverage.(iii) Actuarial present value of future insurance premium payments.(iv) Administrative cost included in current insurance premium payments.(3) A certification by an approved actuary that the aggregate insurance and annuity coverage applicable to the pension plan is in the opinion of the actuary sufficient to fully assume the risk of the provision of all retirement annuities and other retirement benefits applicable to the benefit plan of the pension plan.(4) A summary of the principal provisions of the benefit plan of the pension plan upon which the certification of sufficiency is based.(5) An exhibit summarizing any relevant significant actuarial assumptions and methods used by the actuary in formulating the opinion of sufficiency.(e)Contents of financial exhibits.--Each financial exhibit shall be prepared in a manner which is consistent with the other financial exhibits contained in the actuarial valuation report and the financial exhibits contained in the most recent prior actuarial report. The accounting basis for the financial exhibits shall be disclosed. The financial exhibits shall be prepared in a fashion which is reasonably calculated to fairly and accurately disclose the financial condition and affairs of the pension plan. In the event that there is implemented a change in the manner in which the financial exhibits are prepared, the financial exhibits prepared for inclusion in the actuarial valuation report for the year in which the change is implemented shall be prepared in accordance with both the change and the manner previously employed. The actuarial valuation report shall include the following financial exhibits: (1) An exhibit of the assets of the pension plan at their fair market value and valued pursuant to rules and regulations issued by the commission, which shall reflect variations in asset mix and reduce the impact of market fluctuations.(2) An exhibit of the current liabilities of the pension plan in total and in particular, which shall include the following items:(ii) Retirement benefit payments.(iii) Disability benefit payments.(iv) Survivor benefit payments.(vi) Accrued administrative expenses.(viii) Outstanding loans against insurance policies or contracts.(ix) Other current liabilities, if any, specifying the nature of each type.(3) A statement of the accumulated member contributions, if any are required, without interest credited to them.(4) An exhibit of the income of the pension plan, in total and in particular, which shall include the following items:(i) Member contributions.(ii) Allocations from the Commonwealth dedicated to pension plan purposes, if any.(iii) Municipal contributions.(iv) Interest on debt securities.(v) Dividends on equity securities.(vi) Realized capital gains on equity securities.(vii) Recognized unrealized capital gains on equity securities.(viii) Dividends on insurance policies or contracts.(ix) Other income, if any, specifying the nature of each type.(5) An exhibit of the deductions from the income of the pension plan in total and in particular, which shall include the following items:(i) Pension plan benefit payments.(C) Surviving spouse benefits.(D) Surviving child benefits.(E) Refunds to members terminating employment.(F) Refunds on behalf of deceased, active, former or retired members.(G) Other benefit payments, if any.(ii) Administrative expenses incurred.(iii) Realized capital losses on equity securities.(iv) Recognized unrealized capital losses on equity securities.(v) Other deductions from income, if any, specifying the nature of each type. The exhibit shall indicate the accounting basis on which the information presented in the exhibit was prepared.
(6) An exhibit indicating the administrative cost incurred by the pension plan in such detail as is deemed appropriate by the chief administrative officer of the pension plan.(f)Contents of demographic exhibits.--Each actuarial valuation report shall include the following demographic exhibit in the form of a summary tabulation of numbers and amounts, which shall be presented in the following form: | | | Annual |
| (1) | Active members | Number | Payroll |
| As of last valuation date | | |
| New entrants | | |
| Total | | |
| Separations from active service | | |
| Refund of contributions | | |
| Separation with deferred benefit | | |
| Separation with neither refund nor deferred benefit | | |
| Disability | | |
| Death | | |
| Retirement with service retirement benefit | | |
| Total separations | | |
| As of current valuation date | | |
| | | Annual |
| (2) | Benefit recipients | Number | Benefit |
| As of last valuation date | | |
| New benefit recipients | | |
| Total | | |
| Terminations | | |
| Deaths | | |
| Other | | |
| Total terminations | | |
| As of current valuation date | | |
The tabulation required pursuant to this paragraph shall be made separately for each of the following classes of benefit recipients:
(i) Service retirement benefit recipients.(ii) Disability benefit recipients.(iii) Surviving spouse benefit recipients.(iv) Surviving children benefit recipients.(v) Deferred benefit recipients. 1984, Dec. 18, P.L. 1005, No. 205, § 202, imd. effective. Amended 1986, Feb. 14, P.L. 23, No. 9, § 1, retroactive effective Sept. 30, 1985; 1997, Dec. 19, P.L. 612, No. 61, § 1, imd. effective; 2004, July 15, P.L. 715, No. 81, § 1, effective Sept. 13, 2004; 2009, Sept. 18, P.L. 396, No. 44, § 3, imd. effective. Affected by 2009, Oct. 9, P.L. 588, No. 51, § 2(2)(ii), imd. effective.