FROM MELODY REID: Fact sheet: City Contribution Impact of LACERS TIER II

[SEIU721REFORMERS]

Fact sheet: City Contribution Impact of LACERS TIER II

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FROM MELODY REID

Hi,
  FYI- In case you may be interested and have not seen this.  See the attached for a copy of the City Contribution Impact of LACERS TIER II.  This was sent to me on Oct 11th, but seems appropriate to pass along now.  I did not forward it earlier due to technical discussion on pension costing methodologies that most people would not find interesting or be familiar with.  
  This fact sheet discusses (in actuarial lingo) a proposal to look into changing the actuarial method for costing our pensions from the current Projected Unit Credit (PUC) to the Entry Age Normal (EAN) methodologies.  These two methodologies are commonly used in determining pension costs/funding.  I believe that the actuary was hired to analyze and determine the impact of continuing with the PUC after creating a Tier II and to see if any money could be saved using the EAN methodology.(my 2 cents) 
  Re: the conclusion: The conclusion is slightly inaccurate.  In of itself, yes, as stated, Tier II will not directly increase Tier I costs-true.  This is because they will be separate pension funds.  The current Tier I workers however, will not have the benefit of Tier II (new hires) to help fund their retirement costs and still have the previous retirees from the ERIP to fund.  This means that we, the members of the current Tier I, may very well have to pay much more to fund our own retirements plus that of those already retired before us. :-(

I welcome any comments and further information on this subject. 

Thank you

Have a great day! 

Sincerely,

Ms. Melody Reid, M.S., 

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