Thomas Lowman, FSA, EA, MAAAChief Actuary
Bolton Partners, Inc.
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1. Financial Stress (last)2. GASB Preliminary Views3. FE/MVL discussion4. CCA Public Plans Committee (Paul Angelo)5. Lower Interest Assumption?6. Law Suits/Fiduciary Responsibility
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Would change accounting for expense and disclosureDiscount Rate (not risk free)EAN methodAmortization periods shortAsset smoothing and 15% odd corridorCost sharing plan allocation
Comments due back on 9/17/10Read CCA comments for flavorAAA has two sets
Hearing/Exposure Draft/Final Draft
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1. Should Valuations be based on expected values or risk free values?
2. Are benefits risk free (or close to it)?3. Debate has been going on for 10 years (gets refined over
time)4. Law of one price/value to employee/”informs
funding”/funding?5. SOA Conference in 2009
a. Third issue is risk disclosure (all agree?)6. AAA PIC issue7. Currently an ASB issue8. Will even disclosure hurt?
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Why did this committee start (independent of AAA approval process)
Current activitiesTwo GASB responsesOther activities
Why you should join if involved in public plans
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8% is most common assumption If 8% was right 5 years ago, how can it still be right? Movement to lower assumptions Arithmetic vs. Geometric
Do you know which you are using? Is being right 50% of the time better than being right on
average?Why 50% and not 60%?Do you know the formula/difference between these two
rates?
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EAN Open Group method Stress leading to changes in opinion of what is and is not
protected Pension envy
◦ Social Security coverage What is politically easier to cut?
◦ New Hires 1,000 blue ribbon committees Benefit cuts are happening now along with increases in
employee contributions OPEB? Are Trustees making the right choices? Have you seen the Baltimore City billboard?
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