CMC’s pension consulting services encompass every aspect of pension administration. Regardless of the type of defined benefit plan, CMC has experience that can help you manage your plan more effectively.
We perform valuations of pension benefits in order to determine the liability for all benefits promised to active, retired, and inactive plan members as of each valuation date. Applying the actuarial funding method and reflecting the actuarial value of assets will yield the employer contribution rates necessary to fund the promised benefits adequately and in accordance with Governmental Accounting Standards Board (GASB) Statements 67 and 68. We value making our reports easily understood. Our reports include a summary of plan provisions, an outline of assumptions and methods utilized in the valuation, displays of member statistics, and a glossary of terms.
Detailed Gain and Loss Analysis
Our normal valuation work includes an analysis of the sources of all actuarial gains and/or losses. However, it can be helpful to look in more detail at certain risk areas, such as changes in unfunded accrued liabilities. Gain/loss analysis examines each risk area and the changes each is undergoing. If any significant trends materialize, we make recommendations for changes in actuarial assumptions.
Our senior consultants have extensive experience in testimony before the legislature or a committee of the legislature. Recent topics we have addressed include: actuarial audit review, defined benefit vs. defined contribution plan design, alternative funding issues, system funding status, early retirement incentive plans, GASB compliance, and re-employment issues.
Impact of Re-Employment of Retirees
The re-employment of retirees has a significant impact on the cost of pension plans. We often assist in the development of a reasonable re-employment policy that is both affordable and meets the needs of the workforce.
The one thing an actuary can count on is that some assumptions will need to be modified over time. We recommend that, at least once every five years, an experience investigation be conducted. An experience study measures plan liabilities by comparing actual plan experience for the study period with that predicted by the current actuarial valuation assumptions. The investigation compares actual with expected experience for all economic and non-economic assumptions used in the annual actuarial valuation, makes recommendations for changes where appropriate, and determines the impact of the recommended changes on pension plan funding.
Asset Liability Forecasting
We develop detailed models to project the financial status of a plan during varying future economic cycles and with varying asset allocation strategies. The asset allocation strategies are analyzed in conjunction with the forecasted financial status of the system in order to develop an integrated investment and funding policy.
DROP, PLOP and Early Retirement Incentive Plans
The development of retirement policies and plan designs have a significant impact on retention policies. We work with our clients to develop strategies for the workforce, and design plan features that assist in supporting these strategies. Some of the plan designs that can accomplish specific workforce planning strategies are Deferred Retirement Option Plans (DROPs), Partial Lump Sum Option Plans (PLOPs), and Early Retirement Incentive Plans.
Expense and Disclosure Requirements of GASB 67/68
The calculation of the expense and other disclosure requirements of GASB 67 and 68 is key for the financial reporting of employers. We work on developing compliant disclosure items in a user-friendly presentation.
Plan Design Work
Our work includes both health and pension plan design. The design can be modular to obtain a certain goal and work within the structure of existing benefits. Alternatively, we can undertake a global benefits review and help you create plans that, together, satisfy a total compensation philosophy.
Assistance with Policy Considerations
To establish a design policy for a pension plan, it is necessary to consider several factors: the plan’s financial condition, its level of risk tolerance, the age range of participants and turnover rates, as well as funding ability. Once we understand these factors, and the relative weight and importance of each one, we can advise the plan on a policy that can help meet the plan’s objectives.
Knowledge of National Public Sector Trends
Our extensive client base and network of public sector systems enable us to provide valuable consulting advice to our clients. Drawing on our experience with other public employers, we can present solutions to our clients that represent the best ideas being used across the country. Then, we can create a custom solution for you.
Each anticipated retirement brings with it a benefit calculation. Performing these calculations can be time-consuming, and accuracy is essential. CMC provides benefit calculations to its clients, shouldering this responsibility and giving you confidence in the figures your retirees depend on.
Deferred Compensation Consulting
We believe retirement savings plans, such as Internal Revenue Code Section 401(k), 403(b) and 457 plans, are a valuable complement to an employer’s defined benefit plan. CMC can help in the design of the plans, as well as provide a review of Code compliance and/or plan administration.