Thomas Lowman, FSA, EA, MAAA Chief Actuary Bolton Partners, Inc

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MAAC Meeting October 8, 2010 Challenges facing Local Governments in Meeting their Benefit Obligations. Thomas Lowman, FSA, EA, MAAA Chief Actuary Bolton Partners, Inc. Todays Topics:. Financial Stress (last) GASB Preliminary Views FE/MVL discussion CCA Public Plans Committee (Paul Angelo) - PowerPoint PPT Presentation


<ul><li><p>Thomas Lowman, FSA, EA, MAAAChief ActuaryBolton Partners, Inc.*</p></li><li><p>Financial Stress (last)GASB Preliminary ViewsFE/MVL discussionCCA Public Plans Committee (Paul Angelo)Lower Interest Assumption?Law Suits/Fiduciary Responsibility</p><p>*</p></li><li><p>Would change accounting for expense and disclosureDiscount Rate (not risk free)EAN methodAmortization periods shortAsset smoothing and 15% odd corridorCost sharing plan allocationComments due back on 9/17/10Read CCA comments for flavorAAA has two setsHearing/Exposure Draft/Final Draft</p><p>*</p></li><li><p>Should Valuations be based on expected values or risk free values?Are benefits risk free (or close to it)?Debate has been going on for 10 years (gets refined over time)Law of one price/value to employee/informs funding/funding?SOA Conference in 2009a. Third issue is risk disclosure (all agree?)AAA PIC issueCurrently an ASB issueWill even disclosure hurt?*</p></li><li><p>Why did this committee start (independent of AAA approval process)Current activitiesTwo GASB responsesOther activitiesWhy you should join if involved in public plans*</p></li><li><p>8% is most common assumptionIf 8% was right 5 years ago, how can it still be right?Movement to lower assumptionsArithmetic vs. GeometricDo 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?</p><p>*</p></li><li><p>EAN Open Group methodStress leading to changes in opinion of what is and is not protectedPension envySocial Security coverageWhat is politically easier to cut?New Hires1,000 blue ribbon committeesBenefit cuts are happening now along with increases in employee contributionsOPEB?Are Trustees making the right choices?Have you seen the Baltimore City billboard?</p><p>*</p></li><li><p>*</p></li></ul>


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