SEATTLE CITY RETIREMENT SYSTEM A Pension Trust Fund of the City of Seattle ANNUAL REPORT For the Year Ended December 31, 2014 Prepared by: Seattle City Employees? Retirement System Staff 720 Third Avenue, Suite 900 Seattle, WA 98104-1852 (206) 386?1292 (206) 386-1506 fax This page intentionally left blank 2014 Organizational Chart Board of Administration Mr. Nick Licata, Chair Mr. Lou Walter, Retired Member Mr. Glen Lee, Treasurer Ms. Jean Becker, Employee Member Ms. Susan Coskey, Secretary Ms. Sherri Crawford, Employee Member Mr. Robert Harvey Jr, Member Selected from Community Interim Executive Director Kenneth J. Nakatsu Chief Investment Chief Fin?alliial/Operating . . Of?cer Of?cer Of?ce Administrator Jason Malinowski jeff Davis Nina Melencio Deputy Chief Investment Of?cer Senior Management Information Technology Anthony Smith Systems Analyst Manager Lindsay Reid Claire Foster Investment I Strategic Adviser Information Technology Jill Johnson ?313?? Janet Donlon Kathy Weitz Senior Accountant Member Services Supervisor Deontrae Sherrard . . Tim Morrison Accountant Selam Teklemariam Retirement Speaahst . . Kate Azer Nltaya Kambhiranond Lee Brunk Ronda Iriarte Accounting Technician Erica Ramsey Doug Noble Dolly Newton Tomeka Williams Receptionist Frankie Graziani City of Seattle Seattle City Employees? Retirement System 720 Third Avenue, Suite 900, Seattle, WA 98104-1829, Telephone: (206) 386-1293, Fax: (206) 385-1506 To the Honorable Mayor and Seattle City Council Seattle, Washington I am pleased to transmit the 2014 Annual Report of the Seattle City Employees? Retirement System. This Annual Report consists of four sections: the Introductory Section contains the Executive Director?s letter of transmittal, an organizational chart for the System, and the table of contents for the report; the Financial Section contains the audited financial statements of the System, as well as a letter from the System's certified public accountants; the Actuarial Section contains the independent consulting actuary?s opinion, along with related actuarial data and statements; and the Statistical Section includes tables of significant data pertaining to the System operations. The compilation of this report is the result of the combined effort of the Staff under the leadership of the Retirement Board. The intention is to provide complete and reliable information to assist in management decisions, to present evidence of compliance with legal provisions, and to demonstrate responsible stewardship for the assets contributed by the members and their employers. The Executive Director and staff have reviewed the internal accounting controls and the financial statements, supporting schedules and statistical tables, and we are of the opinion that they fairly represent the condition of the Retirement System. The accuracy and completeness of the data contained in this report are the sole responsibility of the management of the Seattle City Employees? Retirement System. Overview of the Seattle City Employees' Retirement System The Retirement System was created and established by amendment to the Charter of the City of Seattle {Article XXII Section 13) submitted to the voters at the municipal election of March 8, 1927. The System, known thereafter as the Seattle City Employees? Retirement System (SCERS), is to provide retirement income to help maintain the quality of life for its former employees. The retirement plan is a defined benefit plan, which means the employee?s salary, years of service, and age at the time of retirement are used to determine the amount of retirement benefits. Members of the Retirement System also participate in Social Security. The Retirement System covers employees of the City of Seattle, the Seattle Public Library, and certain employees of King County and METRO. The Retirement System does not cover law enforcement officers and fire fighter employees. The year ended December 31, 2014, concludes our 87th year of operations. The City of Seattle also sponsors a voluntary deferred compensation plan which permits employees to make pre-tax contributions up to the federal limits and manage the investment allocation of their contributions. This plan is administered through the Seattle Department of Human Resources and a third party administrator. Distribution of the 2014 Annual Report The report will be posted to the System?s website. We trust the departments and Retirement System members will find this report both informative and helpful. We would like to express our gratitude to the staff, the advisors, and to the many other people who have worked so diligently to assure the successful operation of the System. Respectfully submitted, BOARD OF ADMINISTRATION, SEATTLE CITY RETIREMENT SYSTEM .i Kenneth J. Nakatsu Interim Executive Director TABLE OF CONTENTS INTRODUCTORY SECTION Organization Chart .. Letter of Transmittal .. Table of Contents .. FINANCIAL SECTION Independent Auditors? Report .. 1 Management Discussion 8; Analysis .. 3 Financial Statements Statement of Plan Net Position .. 10 Statement of Changes in Plan Net Position .. 11 Notes to Financial Statements .. 12 Required Supplementary Information Schedule of Changes in Net Pension Liability and Related Ratios .. 27 Schedule of Employer Contributions .. 28 Schedule of Investment Returns .. 29 Additional Information Schedule of Administrative Expenses .. 30 Schedule of Investment Expenses .. 31 ACTUARIAL SECTION Milliman Section 1 Summary of the Findings .. 1 Table 1 Summary of Results .. 7 Graph 1 Historical Asset Liability Comparison .. 8 Graph 2 Historical Funding Ratios .. 8 Section 2 Scope of the Report .. 9 Section 3 Assets .. 11 Table 2 Calculation of Value of Assets .. 13 Table 3 Summary of Plan Net Assets .. 14 Table 4 Summary of Changes in Plan Net Assets .. 15 Section 4 Actuarial Liabilities .. 17 Table 5 Actuarial Present Values .. 19 Table 6 Normal Cost Contribution Rates 20 Table 7 Unfunded Actuarial Accrued Liability .. 21 Section 5 Employer Contributions .. 23 Table 8 Contribution Rates as Percentage of Salary .. 25 Table 9 Amortization of Unfunded Actuarial Accrued Liability .. 26 Section 6 Actuarial Information for Accounting Purposes .. 27 Table 10 GASB Statement No 27 Annual Pension Cost and Net Pension Obligation .. 29 Table 11 Schedule of Funding Progress .. 30 Table 12 Solvency Test .. 31 Table 13 Schedule of Employer Contributions .. 32 Table 14 GASB Statement No 27 Five?Year Trend Information .. 33 Table 15 GASB Statement No 27 Five-Year Annual Development of Pension Cost .. 34 iv Section 7 Actuarial Gains or Losses .. 35 Table 16 Analysis of Actuarial Gains or Losses .. 36 Section 8 Contribution Rate Projections and Increases .. 37 Table 1? Projected Total Contribution Rates .. 38 Section 9 ProjECtion of Benefit Payments .. 41 Table 18 10-YearProjection of Benefit Payments .. 42 Appendices Appendix A Actuarial Procedures and A-l Table A-1 Summary of Valuation Assumptions as ofJanuary 1, 2014 .. A-4 Table A-2 Future Salaries .. A-S Table Retirement .. A-6 Table Disability .. Table A-5 Mortality .. A-B Table A-6 Other Terminations of Employment Among Members Not Eligible to Retire .. A-9 Table Probability of Refund .. A-10 Appendix Provisions of Governing Law .. 8-1 Appendix Valuation Data .. C-l Table C?l Summary of Membership Data .. Table C-2 Members Receiving Service Retirement Benefits as of January 1, 2014 .. C-3 Table Members Receiving Disability Retirement Benefits as ofJanuary 1, 2014 .. C-4 Table C-4 Survivors Receiving Retirement Benefits as of January 1, 2014 .. C-S Table Distribution of Employees and Salaries as of January 1, 2014 .. Appendix Glossary .. D-l STATISTICAL SECTION 2012 YE Investment Portfolio Composition and 2012 Fund Performance .. Revenues by Source .. ST-2 Expenses by Type .. ST-3 Benefit Expense by Type .. ST-4 Revenue Ratios by Source .. ST-S Investments Results .. Age Distribution of Pensioners .. Retirement Allowance Distribution .. Active Membership Experience .. Retiree Membership Experience .. ST-10 Miscellaneous Retired Information .. ST?ll Average Benefit Payments .. ST-12 New Active Members - by Department .. ST-14 Service Retirements Granted in 2014 .. Retired Members Deceased in 2014 .. ST-21 Deaths in Active Service in 2014 .. ST-25 Death Benefit System .. Unused Sick Leave .. ST-27 Retirement Estimate Information .. FINANCIAL Independent Auditors Report This page intentionally left blank SEATTLE CITY RETIREMENT SYSTEM Report of Independent Auditors and Financial Statements with Required Supplementary Information and Additional information December 31, 2014 and 2013 REPORT OF INDEPENDENT AUDITORS DISCUSSION AND ANALYSIS FINANCIAL STATEMENTS Statements of Plan Net Position Statements of Changes in Plan Net Position Notes to Financial Statements REQUIRED SUPPLEMENTARY INFORMATION Schedule of Changes in Net Pension Liability and Related Ratios Schedule of Employer Contributions Schedule of Investment Returns ADDITIONAL INFORMATION Schedule of AdministratiVe Expenses Schedule of Investment Expenses CONTENTS PAGE 1-2 10 1 1 12-26 27 28 29 30 31 "all Gil?onLarsonAlien LLP CLAoonneclcom CIiftonLarsonAllen INDEPENDENT REPORT Board of Administration Seattle City Employees' Retirement System Seattle, Washington Report on the Financial Statements We have audited the accompanying ?nancial statements of the Seattle City Employees' Retirement System (SCERS), which comprise the statements of plan net position as of December 31, 2014 and 2013, and the related statements of changes in plan net position for the years then ended, and the related notes to the ?nancial statements. Management?s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these ?nancial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Aaditors? Responsibility Our responsibility is to express an opinion on these ?nancial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the ?nancial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors? judgment, including the assessment of the risks of material misstatement of the ?nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity?s preparation and fair presentation of the ?nancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity? 5 internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of signi?cant accounting estimates made by management, as well as evaluating the overall presentation of the ?nancial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the ?nancial statements referred to above present fairly, in all material respects, the financial position of SCERS as of December 31, 2014 and 2013, and the results of its operations for the years then ended in accordance with accounting principles generally accepted in the United States of America. 1 INTERNATIONAL Report on Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management?s discussion and analysis and the schedules of changes in net pension liability and related ratios, employer contributions and investment returns, as listed in the table of contents, be presented to supplement the financial statements. Such information, although not a part of the ?nancial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of ?nancial reporting for placing the financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management?s responses to our inquiries, the financial statements, and other knowledge we obtained during our audits of the ?nancial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with suf?cient evidence to express an opinion or provide any assurance. Report on Other Information Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The additional information, as listed in the table of contents, is presented for purposes of additional analysis and is not a required part of the ?nancial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the ?nancial statements. The information has been subjected to the auditing procedures applied in the audits of the ?nancial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records Used to prepare the ?nancial statements or to the ?nancial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the additional information, as listed in the table of contents, is fairly stated in all material respects in relation to the financial statements as a whole. CIlftonLarsonAllen LLP Baltimore, Maryland June 22, 2015 SEATTLE CITY RETIREMENT SYSTEM DISCUSSION AND ANALYSIS Years Ended December 31, 2014 and 2013 This section presents management?s discussion and analysis of the Seattle City Employees? Retirement System's (SCERS or the System or SCERS) ?nancial performance during the years ended December 31, 2014 and 2013. Please read it in conjunction with the accompanying ?nancial statements and the related notes. The City of Seattle is responsible for establishing and maintaining an internal control structure designed to ensure the protection of assets from loss, theft, or misuse, and to ensure the accounting information generated is adequate to prepare ?nancial statements in conformity with generally accepted accounting principles. The internal control structure is designed to provide reasonable, though not absolute, assurance of achieving these objectives. As a department of the City of Seattle, the Seattle City Employees? Retirement System is subject to this internal control structure. In addition, section 4.36.140.D of the Seattle Municipal Code requires the Board of Administration to annually transmit a report of the financial condition of the System to the City Council. This report is prepared in accordance with the principles of governmental accounting and reporting promulgated by the Governmental Accounting Standards Board (GASB). Investments are stated at fair value, and revenues include the recognition of unrealized gains and losses. The accrual basis of accounting is used to record assets, liabilities, revenues and expenses. Revenue recognition occurs when earned without regard to the date of collection. Expense recognition occurs when the corresponding liabilities are incurred, regardless of payment date. The basis of contributions to the System follows the principles of level cost financing, with current service ?nanced on a current basis. Milliman Consultants and Actuaries, the consulting actuary, evaluates the funding status of the System. This report contains the following Information: 1. Basic Financial Statements including: a. Statements of Plan Net Position b. Statements of Changes in Plan Net Position c. Notes to the Financial Statements 2. Required Supplementary Information including: a. Schedule of Changes in Net Pension Liability and Related Ratios b. Schedule of Employer Contributions c. Schedule of Investment Returns 3. Additional Information including: a. Schedule of Administrative Expenses b. Schedule of Investment Expenses The basic ?nancial statements are described as follows: I The Statement of Plan Net Position shows the account balances at year-end and includes the net position available for future bene?t payments. The liabilities for future bene?t payments are not included in this statement; however, they are shown in the Schedule of Changes in Net Pension Liability and Related Ratios that is included in the Required Supplementary Information. SEATTLE CITY RETIREMENT SYSTEM DISCUSSION AND ANALYSIS Years Ended December 31, 2014 and 2013 The Statement of Changes in Plan Net Position shows the sources and uses of funds during the year and illustrates the change in net position from the previous year. The Notes to the Financial Statements are an integral part of the ?nancial statements and include additional detailed information and schedules to provide a better understanding of the ?nancial statements. The required supplementary information provides historical trends that help to reflect the ongoing plan perspective and the long-term nature of the de?ned bene?t plan. The Schedule of Changes in Net Pension Liability and Related Ratios contains actuarial information about the status of the plan. The Schedule of Employer Contributions contains historical trend information regarding the value of the total annual contributions the employer must pay and the actual contributions paid by employers in meeting this requirement. Financial Highlights SCERS assets that are held in trust for the payment of future bene?ts do not exceed the estimate of actuarially accrued liabilities as of December 31, 2014. Net position increased by $106 million during 2014. The primary driver was a $117 million increase in investment assets and receivables. Net position increased by $265 million during 2013. The primary driver was a $266 million increase in investment assets. Revenue additions to net position for 2014 were $276 million which includes member and employer contributions of $154 million and revenue from investment activity totaling $122 million. Revenue additions to net position for 2013 were $427 million which includes member and employer contributions of $137.4 million and revenue from investment activity totaling $289.8 million. Expenses (deductions from net position) for 2014 increased by $8.9 million from 2013. This can be primarily attributed to an $8.8 million increase in retiree bene?ts. In 2014, the net increase in the number of retirees receiving benefits was Expenses for 2013 increased by $9.4 million from 2012. This can be primarily attributed to a $7.3 million increase in retiree bene?ts. In 2014, the net increase in the number of retirees receiving bene?ts was SEATTLE CITY RETIREMENT SYSTEM DISCUSSION AND ANALYSIS Years Ended December 31, 2014 and 2013 Plan Net Position The table below provides a summary of assets and current liabilities for the years ended December 31: 2014 2013 2012 Cash, short-term investments and receivables 133,327,132 5 58,102,260 5 61,177,463 Investments at fair value 2,222,396,685 2,180,184,714 1,914,325,374 Securities lending collateral 25,231,590 13,595,048 10,154,781 Total assets 2,380,955,407 2,251,882,022 1,985,657,618 Securities lending payable 28,228,622 16,750,032 13,404,350 Other paya bles 30,023,090 18,223,505 20,817,994 Total liabilities 58,251,712 34,973,537 34,222,344 Total net assets 951 435 274 Changes in Plan Net Position The table below provides a summary of the changes in plan net position and reflects the activities of the fund for the years ended December 31: 2014 2013 2012 Additions: Employer contributions 5 89,988,898 5 77,073,667 5 62,515,432 Member contributions 63,969,504 60,342,581 57,086,346 Net investment and other 122,510,195 289,817,661 230,702,333 Total additions 276,468,597 427,233,909 350,304,111 Deductions: Reti ree bene?ts 150,239,008 141,424,206 134,135,553 Refunds of contributions 15,103,615 15,278,136 14,913,574 Administrative expenses 5,330,764 5,058,356 3,343,924 Total deductions 170,673,387 161,760,698 152,393,051 Net increase (decrease) 105,795,210 265,473,211 5 197,911.060 Revenues - Additions to Net Plan Assets 0 In 2014, employer contributions increased by $12.9 million compared to 2013. In 2013, employer contributions increased by $14.6 million compared to 2012. 0 Member contributions increased by $3.6 million compared to 2013. In 2013, member contributions increased by $3.3 million compared to 2012. 0 Net investment income was $122.5 million in 2014 compared to $289.8 million in 2013 and $230.7 million in 2012. SEATTLE CITY RETIREMENT SYSTEM DISCUSSION AND ANALYSIS Years Ended December 31, 2014 and 2013 Expenses - Deductions from Net Plan Assets 0 Retiree bene?ts increased in 2014 by $8.8 million compared to 2013, primarily due to the increased number of members making application for retirement and a mandatory 1.5% COLA (Cost of Living Adjustment). As a comparison, retiree bene?ts increased $7.3 million in 2013. Refunds of contributions decreased in 2014 by $0.2 million compared to amounts paid in 2013. In 2013, refunds increased $0.4 million compared to amounts paid in 2012. Changes In Plan Membership The table below re?ects the active membership and retiree changes for the years ended December 31: 2014 2013 Change Retirees and bene?ciaries receiving bene?ts 6,020 5,880 2.4% Current and terminated employees: Current employee members 8,746 8,604 1.7% Terminated members entitled to, but not yet 1,188 1,170 1.5% receiving bene?ts, Vested Terminated members not entitled to benefits beyond contributions and accumulated interest, Non-Vested 935 866 8.0% Total 10,869 10,640 2.2% SEATTLE CITY RETIREMENT SYSTEM DISCUSSION AND ANALYSIS Years Ended December 31, 2014 and 2013 Funding Status Schedule of Funding Progress Funding Ratio As of January 1" Valuation Date 100.0% 88.8% 92.4% 90.0% - - . . . 80.0% 74.3% 58.3% 70.0% '63'596 642296 60.0% 50.0% . . . 40.0% 30.0% . . 20.0% 10.0% 0.0% 008 2006 2 2010 201?] 2012 2013 2014 With the January 1, 2011 Valuation and the 2007-2010 Experience Study, the Board of Administration adopted a policy of asset smoothing over a 5?year period. The reported funding ratio as of January 1, 2012 re?ects that change. Prior to January 1, 2011, all funding ratios were reported on a marked-to-market basis. Funds are accumulated from employer and employee contributions and investment earnings, and are used to pay present and future benefit obligations and administrative expenses. We continue to make a constant effort to achieve a fully funded status, thereby assuring the participants of a ?nancially sound retirement system. In 2014, most active members contributed 10.03% of their salaries to the retirement fund and the City contributed 14.31%. . SEATTLE CITY RETIREMENT SYSTEM MANAGEM DISCUSSION AND ANALYSIS Years Ended December 31, 2014 and 2013 Investment Activities One-year returns on asset classes and comparative benchmarks are presented in the table below for the years ended December 31: 2014 Investment Performance Total Portfolio 5.7% Domestic Equities 13.1% Benchmark: U.S. Equities Custom Index 10.1% International Equities Benchmark: MSCI ACWI ex US Fixed Income 5.6% Benchmark: Barclays U.S. Universal Index 5.6% Real Return 7.6% Benchmark: CPI 3% 3.7% Private Equity Benchmark: ASP Custom Private Equity Index 16.8% Real Estate 11.2% Benchmark: Russell NCREIF Property Index 12.4% Cash 5.8% Benchmark: Citigroup 3-Month T-Bills 0.0% CITY RETIREMENT SYSTEM DISCUSSION AND ANALYSIS Years Ended December 31, 2014 and 2013 2013 Investment Performance Total Portfolio 15.5% Domestic Equities 32.7% Benchmark: U.S. Equities Custom Index 29.5% International Equities 17.3% Benchmark: MSCI ACWI ex US 15.8% Fixed Income Benchmark: Barclays U.S. Universal Index Real Return 1.9% Benchmark: CPI 3% 4.6% Private Equity 5.6% Bench mark: Russell 3000 3% 25.2% Real Estate 11.8% Benchmark: Russell NCREIF Property Index 13.0% Cash Benchmark: Citigroup 3-Month T-Bills 0.1% The investments of the System are governed primarily by the prudent investor rule. The prudent investor rule, as set forth by the Revised Code of Washington, establishes a standard for all fiduciaries, which includes anyone who has authority with respect to the fund. The System invests retirement funds for the long-term, anticipating both good and poor performing financial markets. The overall investment portfolio is positioned in a diversi?ed manner to maximize return given the System?s risk tolerance. Contacting the Seattle City Employees? Retirement System If you have questions about this report or need additional information, please contact us by telephone at: 206.386.1293 or by e-mail at: city.retirement@seattle.gov or you may mail your questions to: Seattle City Employees? Retirement System 720 Third Avenue, Suite 900 Seattle, WA 98104 FINANCIAL STATEMENTS SEATTLE CITY RETIREMENT SYSTEM STATEMENTS OF PLAN NET POSITION December 31, 2014 and 2013 2014 2013 Assets: Cash 2,726,099 5 41,672 Short-term investments 113,206,404 42,433,040 Total cash and short-term investments 115,932,503 42,474,712 Receivables: Members 2,901,009 2,737,213 Employer 4,203,851 2,991,610 Interest and dividends 4,052,719 4,171,873 Sales proceeds receivable 6,237,050 5,726,852 Total receivables 17,394,629 15,627,548 Investments, atfair value: Fixed income: U.S. government obligations 175,685,948 170,500,534 Domestic Corporate bonds 181,902,501 168,108,438 Mortga ge-backed 118,076,247 115,343,657 Foreign sovereign 62,846,773 63,253,024 Domestic stocks 743,020,216 700,186,774 International stocks 590,547,932 624,912,362 Real estate 243,557,977 231,616,985 Alternative 106,759,091 106,262,940 Total investments, at fair value 2,222,396,685 2,180,184,714 Securities lending col lateral 25,231,590 13,595,048 Total assets 2,380,955,407 2,251,882,022 Liabilities: Pensions payable and other 2,286,308 1,876,818 Obligations under securities lending 28,228,622 16,750,032 Investment commitments payable 27,736,782 16,346,687 Total liabilities 58,251,712 34,973,537 Net position held in trust for pension bene?ts The accompanying notes are an integral part of these ?nancial statements. 2,322,703,695 5 2,216,908,485 SEATTLE CITY RETIREMENT SYSTEM STATEMENTS OF CHANGES IN PLAN NET POSITION Years Ended December 31, 2014 and 2013 2014 2013 Additions: Contributions: Employer 5 89,988,898 5 77,073,667 Member 63,969,504 60,342,58 1 Total contributions 153,958,402 137,416,248 Investment activities: Investment income: Net cha nge in fair value of investments 93,680,606 267,444,45 1 Interest 11,584,482 8,377,595 Dividends 25,542,523 22,3 27,842 Net investment income 130,807,611 298,149,888 Securities lending activities: Securities lending income 23,941 11,511 Borrowing rebates 216,063 64,217 Total securities lending income 240,004 75,728 Securities lending management fees (59,989) (18,925) Net income from securities lending 180,015 56,803 Investrnent activity expenses: Investment ma nagement fees (7,802,096) (7,606,049) Investment consultant fees (333,389) (499,140) Investment custodial fees (341,946) (283,841) Total investment activity expenses (8,477,431) (8,389,030) Net income from investment activities 122,510,195 289,817,661 Total additions 276,468597 427,233,909 Deductions: Bene?ts 150,239,008 141,424,206 Refunds of contributions 15,103,615 15,278,136 Administrative expenses 5,330,764 5,058,356 Total deductions 170,673,387 161,760,698 Net change 105,795,210 265,473,211 Net position held in trust for pension bene?ts Beginning of year 2,216,908,485 1,951,435,274 End of year The accompanying notes are an integral part of these ?nancial statements. 5 2?322l703l695 2'216?908i485 SEATTLE CITY RETIREMENT SYSTEM NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 Note 1 - Plan Description The Seattle City Employees' Retirement System (the System) is a single-employer de?ned bene?t public employee retirement plan, covering employees of the City of Seattle and administered in accordance with Chapter 4.36 of the Seattle Municipal Code. The System is a pension trust fund of the City of Seattle. The System is administered by the Retirement System Board of Administration (the Board). The Board consists of seven members including the Chair of the Finance Committee of the Seattle City Council, the City of Seattle Finance Director, the City of Seattle Personnel Director, two active members and one retired member of the System who are elected by other system members, and one outside board member who is appointed by the other six board members. Elected and appointed board members serve for three-year terms. All employees of the City of Seattle are eligible for membership in the System with the exception of uniformed police and ?re personnel who are covered under a retirement system administered by the State of Washington. Employees of METRO and the King County Health Department who established membership in the System when these organizations were City of Seattle departments were allowed to continue their System membership (there are currently fewer than 50 members in this category). There are currently 6,020 retirees and bene?ciaries receiving bene?ts, and 8,746 active members of the System. There are 1,188 terminated, vested employees entitled to future bene?ts. The System provides retirement, death, and disability bene?ts. Retirement bene?ts vest after ?ve years of credited service, while death and disability bene?ts vest after ten years of service. Retirement benefits are calculated as 2% multiplied by years of creditable service, multiplied by ayerage salary, based on the highest 24 consecutive months. The bene?t is actuarially reduced for early retirement. Note 2 - Summary of Signi?cant Accounting Policies and Plan Asset Matters Basis of Accounting - These financial statements have been prepared with an ?economic resources" measurement focus on the accrual basis of accounting in accordance with generally accepted accounting principles, as prescribed by the Government Accounting Standards Board. Government Accounting Standards Board Standard No. 67, Financial Reporting for Pension Plans, is effective to ?scal years ending after June 15, 2014 and has been implemented in the ?nancial statements prepared by SCERS for the year ended December 31, 2014. This statement addresses accounting and ?nancial reporting requirements for pension plans that are administered though trusts. GASB 67 requires a change in actuarial calculation of total and net pension liability in addition to changes in the presentation of plan ?nancial statements, expanded note disclosures and additional required supplementary information. 12 SEATTLE RETIREMENT SYSTEM NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 Note 2 - Summary of Significant Accounting Policies and Plan Asset Matters (Continued) Use of Estimates in Preparing Financial Statements The preparation of ?nancial statements in conformity with accounting principles generally accepted in the United States of America requires the Board to make estimates and assumptions that affect the reported amounts of assets, liabilities, additions and deductions to net position held in trust for pension benefits and disclosure of contingent assets and liabilities at the date of the ?nancial statements and during the reporting period. Actual results could differ from those estimates. Cash and Short Term Investments - The System classi?es cash on deposit in ?nancial institutions and cash on deposit in the City of Seattle's internal cash management pool as cash. The System also recognizes certain short-term highly liquid securities with an original maturity of three months or less as short-term investments. Method Used to Value Investments - Plan investments are reported at fair value. Fair value is the amount that a plan can reasonably expect to receive for an investment in a current sale between a willing buyer and a willing seller, that is, other than in a forced or liquidation sale. All investments, with the exception of hedge funds, real estate and private equity, are valued based on closing market prices or broker quotes. Securities not having a quoted market price have been valued based on yields currently available on comparable securities of issuers with similar credit ratings. The fair value of real estate investments is based on estimated current values and independent appraisals. The fair value of private equity is based on management's valuation of estimates and assumptions from information and representations provided by the respective general partners, in the absence of readily ascertainable market values. Investment income consists of realized and unrealized appreciation (depreciation) in the fair value of investments, interest and dividend income earned, less investment expense, plus income from securities lending activities, less deduction for security lending expenses. Interest income is recorded on the accrual basis and dividends are recorded on the ex-dividend date. Securities and securities transactions are re?ected in the ?nancial statements on a trade-date basis. Investments are made in accordance with the Prudent Person Rule as de?ned by the State of Washington RCW 35.39.060. Federal income Tax Status - The System is a quali?ed plan under section 401(3) of the Internal Revenue Code and is exempt from federal income taxes under section 501(a). Contributions - Employee and employer contributions are reported in the year they are due to the System. Benefits and Refunds of Contributions - Bene?ts and refunds of contributions are recognized when due and payable in accordance with the System?s policy. 13 SEATTLE CITY RETIREMENT SYSTEM NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 Note 3 - Contributions Member and employer contributions rates are established by the Seattle Municipal Code Chapter 4.36. The employer contribution rate is determined by the actuarial formula identi?ed as the Entry Age Cost Method. The formula determines the amount of contributions necessary to fund the current service cost, representing the estimated amount necessary to pay for bene?ts earned by the employees during the current service year and the amount of contributions necessary to pay for prior service costs. Total required contributions, including amounts necessary to pay administrative costs, are determined through annual actuarial valuations. Actuarially determined contribution rates were 10.03% for most members in 2014 and 2013 and 14.31% and 12.89% for the employer in 2014 and 2013, respectively. There are no long-term contracts for contributions outstanding and currently no legally required reserves. See pg. 28 in the RSI for additional information on assumptions used in calculating the actuarially determined contribution rates. Note 4 - Cash policy for custodial credit risk of deposits is to rely on Federal Deposit Insurance Corporation (FDIC) and Washington Public Deposit Protection Commission (PDPC) insurance. FDIC insures the cash deposits up to $250,000. As provided by the State of Washington RCW 43.84, the PDPC collateralizes deposits in excess of $100,000. The bank balances of deposits of a FDIC institution as of the balance sheet date are insured. Note 5 - Investments Investment policy - The pension plan's policy in regard to the allocation of invested assets is established and may be amended by the SCERS Board by a majority vote of its members. It is the policy of the SCERS Board to pursue an investment strategy that reduces risk through the prudent diversi?cation of the portfolio across a broad selection of distinct asset classes. The pension plan's investment policy discourages the use of cash equivalents, except for liquidity purposes, and aims to refrain from dramatically shifting asset class allocations over short time spans. The following was the Board's adopted asset allocation policy as of December 31, 2014: Target Asset Class Allocation Equity: Public 51.0% Equity: Private 7.0% Fixed Income: Broad 20.0% Fixed Income: Inflation Linked 5.0% Real Assets: Real Estate 13.0% Diversifying Strategies 4.0% Total 100.0% 14 SEATTLE CITY RETIREMENT SYSTEM NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 Note 5 - Investments (Continued) Money-weighted rate of return -- As of December 31, 2014, the return for the System, based on a money-weighted rate of return methodology was 5.67%. Short-term investments include a Short-term Investment Fund (STIF), which is a collective trust that may include certificates of deposit, treasury bills, and mutual funds. Alternative investments, as presented in the statement of plan net position, currently include private equity and hedge funds. Custodial Credit Risk For investments, custodial credit risk is the risk that in the event of the failure of a ?nancial institution or a bank, the System will not be able to recover the value of its deposits or investments that are in the possession of an outside party. The System mitigates custodial credit risk by having its investment securities held by the System?s custodian (BNY Mellon) and the investments are registered in the System?s name. The System?s short-term investments are created through daily sweeps of excess cash by the System?s custodian, and invested in a vehicle managed by the custodian. Credit Risk - Credit risk is the risk that an issuer, or other counterparty, to an investment will not fulfill its obligations. In accordance with the System?s Investment Policy, the Retirement Board provides each of the System?s investment managers with a set of investment guidelines. These guidelines specify eligible investments, minimum diversification standards, and applicable investment restrictions necessary for diversi?cation and risk control. In general, these guidelines require that at least 70 percent of the net asset value of a manager's portfolio be invested in investment-grade securities. Managers do not have authority to depart from their guidelines. A summary of the credit ratings of the System?s ?xed income investments is provided on pages 22 and 23. Concentration of Credit Risk - Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. in accordance with the System's Investment Policy, the Retirement Board provides each of the System?s investment managers with a set of investment guidelines. These guidelines specify eligible investments, minimum diversification standards, and applicable investment restrictions necessary for diversi?cation and risk control. in general, these guidelines require that investments in any one issuer may not exceed 5 percent of the net asset value of a manager?s portfolio. Managers do not have authority to depart from their guidelines. 15 SEATTLE CITY RETIREMENT SYSTEM NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 Note 5 investments (Continued) Interest Rate Risk - Interest rate risk is the risk that changes in interest rats over time will adversely affect the fair value of an investment. Market or interest rate risk is the greatest risk faced by an investor in the debt securities market. The price of a debt security typically moves in the opposite direction of the change in interest rates. In accordance with the System?s Investment Policy, the Retirement Board provides each of the System's investment managers with a set of investment guidelines. These guidelines specify eligible investments, minimum diversi?cation standards, and applicable investment restrictions necessary for diversi?cation and risk control. In general, these guidelines require that the weighted average duration of the security holdings of a manager?s portfolio not vary from that of the applicable benchmark by more than 20 percent. Managers do not have authority to depart from their guidelines. A summary of the maturities of the System's ?xed income investments is provided on pages 20 and 21. The ?xed income portfolio is primarily managed by four external money management ?rms, hired through a competitive bid process, to manage a diversi?ed portfolio of ?xed income securities. Managers have agreed to a set of guidelines that provide ranges and limits for varying types of securities that may be held within the portfolio. A consultant is hired to measure performance and monitor the investment style. The Investment Committee reviews the consultant?s results quarterly. Foreign Currency Risk - Foreign currency risk is the risk that changes in exchange rates will adversely impact the fair value of an investment. The System's currency risk exposures, or exchange rate risk, primarily reside within the non-U5. equity and ?xed income investment holdings. The System expects these managers to maintain adequately diversi?ed portfolios to limit foreign currency and security risk. 16 SEATTLE CITY RETIREMENT SYSTEM NOTES TO STATEMENTS December 31, 2014 and 2013 Note 5 Investments (Continued) The System?s exposure to foreign currency risk in U.S. dollars as of December 31, 2014, is summarized in the following table. Currency Type Equity Fixed Income Derivatives Cash Total Australian Dollar 5 1,141,827 - 5 4,062,374 5 19,059 5 5,223,260 Brazil Real - (1,476) (27,623) (29,099) Canadian Dollar - 717,850 8,700,730 6,590 9,425,170 Columbian Peso - 560,553 (555,224) - 5,329 Danish Krone 2,434,401 2,336,600 (3,303,226) 3,584 1,471,359 Euro Currency Unit 22,713,984 12,006,124 (10,570,506) 155,743 24,305,345 Hong Kong Dollar 6,842,068 (4,054,212) 24,289 2,812,145 Hunga rIan Forint - - 5,514 - 5,514 Indian Rupee - - 1,158,506 - 1,158,506 Israeli Shekel - - 531,078 62 531,140 la pa nese Yen 5,325,096 201,102 11,251,909 14,039 16,792,146 Mexican New Peso 4,331,428 (1,278,420) 170,947 3,223,955 New Zealand Dollar - 2,199,187 (1,624,088) 27,934 603,033 Norwegian Krone 8,215,377 - (6,929,488) 231 1,286,120 Polish Zloty - - 2,290 - 2,290 Pound Sterling 23,151,493 17,901,666 (21,728,329) 1,315 19,3 26,145 Singapore Dolla 1,050,744 - 243,905 2,999 1,302,648 South Korean Won - - 2,904 2,904 Swedish Krona 2,048,254 759,310 54,935 485 2,862,984 Swiss Franc 6,032,773 - 2,379,905 49,834 8,462,512 Total 78,956817 41,012?44 5 (21,672,066); 477,111 98,773,406 The System's exposure to foreign currency risk in U.S. dollars as of December 31, 2013, is summarized in the following table. Currency Type Equity Fixed Income Derivatives Cash Total Australian Dollar 5 - 5 1,087,191 5 5,882,599 (4) 5 6,969,786 Brazil Real - - 5,433 - 5,433 Canadian Dollar 2,719,197 6,516,322 43,669 9,279,188 Swiss Franc 10,138,640 - (863,285) 332 9,275,687 Danish Krone 3,467,391 1,511,621 (3,944,188) 465 1,035,289 Euro Currency Unit 29,419,691 9,085,820 (8,351,423) 161,609 30,315,697 Mexican New Peso - - - - - NewZealand Dollar - - - - - Pound Sterling 26,906,355 21,503,088 (27,240,340) 31,695 21,200,798 Hong Kong Dollar 6,231,414 - (3,380,084) 24 2,851,354 Israeli Shekel - - 453,355 - 453,355 Japanese Yen 7,432,956 6,792 - 40,151 7,479,899 Swedish Krona - - - - - Total 83,596,447 5 35,913,709 5 (30,921,611) 5 277,941 5 88,866,486 17 SEATTLE CITY RETIREMENT SYSTEM NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 Note 5 - Investments (Continued) Derivatives - Foreign exchange forward contracts are periodically employed by the System to hedge currency risk of investments in foreign currencies. Generally, derivatives are subject both to market and to counterparty risk. The derivatives used by the System typically have no greater risk than their physical counterparts and, in many cases, are offset by exposures elsewhere in the portfolio. Counterparty risk, the risk that the ?other party" to a contract will default, is managed by careful screening of counterparties. Derivative securities are priced and accounted for at fair value. Foreign exchange fonivard contracts are valued at the price at which the transaction could be settled by offsets in the forward markets. The System?s pending derivative transactions as of December 31, 2014 are summarized in the following table. Total Unrealized Unrealized Unrealized Currency Type Purchases Gain] Loss Sells Gain/Loss Gain/Loss Australian Dollar 5 7,184,808 14,308 11,507,361 5 (274,487) 5 (260,179) Brazil Real 89,956 2,408 60,957 (1,032) 1,376 Canadian Dollar 1,201,114 6,422 10,016,444 (121,026) (114,604) Coiumbian Peso 591,210 25,669 12,873 (2,556) 23,113 Danish Krone 3,713,259 108,031 309,197 (7,195) 100,836 Euro Currency Unit 34,931,154 702,124 24,100,289 (441,765) 260,359 Hong Kong Dollar 4,054,998 786 - - 786 Hungarian Forint 300,858 22,123 303,124 (18,876) 3,247 Indian Rupee - - 1,175,662 (17,155) (17,155) Israeli Shekel - - 535,587 (4,509) (4,509) Japanese Yen 15,773,777 74,557 27,145,273 (194,143) (119,586) Mexican New Peso 1,354,593 66,262 9,962 (50) 66,212 New Zealand Dollar 3,484,950 (12,763) 1,862,745 10,880 (1,883) Norwegian Krone 9,085,550 798,836 1,430,071 (72,846) 725,990 Polish Zloty 194,131 11,869 196,132 (11,581) 288 Pound Sterling 39,983,884 65,809 18,129,997 59,747 125,556 Singapore Dollar - - 256,200 (7,295) (7,295) South Korean Won 228,900 1,100 227,851 2,851 3,951 Swedish Krona 765,917 41,626 831,525 (52,300) (10,674) Swiss Franc 300,064 4,936 2,751,374 (76,341) (71,405) Total 123,239,123 1,934,103 a 100,862,624 (1,229,679) a 704,424 18 SEATTLE CITY RETIREMENT SYSTEM NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 Note 5 - Investments (Continued) The System?s pending derivative transactions as of December 31, 2013 are summarized in the following table. Total Unrealized Unrealized Unrealized Curre Type Purchases Gain] Loss Sells Gail/Loss Gain} Loss Australian Dollar 5 9,686,759 5 (38,879) 15,681,130 (72,893) (111,772) Brazil Real 281,246 6,968 281,246 (1,535) 5,433 Canadian Dol la 3,592,050 9,004 10,128,543 (29,175) (20,171) Swiss Franc 916,574 (18,853) 68,843 3,299 (15,554) Da nish Krone 5,949,187 (141,444) 2,131,998 14,445 (126,999) Euro Currency Unit 18,421,729 (224,559) 10,279,455 15,410 (209,149) Mexican New Peso - - . . . New Zealand Dollar - - - - Pound Sterling 49,859,003 (922,795) 23,174,228 367,230 (555,565) Hong Kong Dollar 6,760,529 587 3,380,095 (237) 350 Israeli Shekel - - 448,679 4,676 4,676 13 pa nese Yen - - - - - Swedish Krona - - - Total 95,467,077 a (1.329971) 65a74i217 301,220 [1,028,751] 19 SEATTLE CITY RETIREMENT SYSTEM NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 Fixed income US. Government: Note 5 - Investments (Continued) Investment Treasury Notes and Bonds Treasury In?ation-Protected Securities Agencies Municipal Mortgage-Backed: Government Pass Through Corporate Pass Through Government CM 0's Corporate: Bonds Asset-Ba cked Private Placement Forei gn Sovereign: Bonds Total Fixed Income Fair Value 5 118,202,355 47,100,605 5,43 2,209 4,950,780 78,783,268 12,958,250 26,334,729 112,564,098 11,243,209 58,095,195 62,84 6,772 5 538,511,470 <1 6 20,439,937 16,841,953 1,455,033 27,206,174 . 1,857,512 55,499,919 3,154,405 1,939,694 20,388,618 5 148,783,245 As of December 31, 2014, the ?xed income portfolio of the System had the following investment maturities: Investment Maturities (in years) 1-5 5 55,823,557 5,498,120 2,339,627 438,169 4,460,189 25,801,218 3,240,332 15,196,111 3,846,310 5 116,643,633 6-10 5 31,534,478 5 9,596,321 868,768 402,2 15 3,6 73,761 2,152,034 16,668,296 2,674,324 13,494,777 18,547,894 >10 10,404,383 15,164,211 2,223,814 2,655,363 47,903,333 12,958,250 17,864,994 14,594,665 2,174,148 27,464,613 20.06 3,950 5 99,612,868 173,471,724 20 SEATTLE CITY RETIREMENT SYSTEM NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 Note 5 - Investments (Continued) As of December 31, 2013, the ?xed income portfolio of the System had the following investment maturities: Investment Maturttles (in years) Investment Fair Value <>10 Fixed income US. Government: Treasury Notes and Bonds Treasury In?ation-Protected Securities Agencies Municipal Mortgage-Backed: Government Pass Through Corporate Pass Through Government CM 0's Corporate: Bonds Asset-Ba cked Private Placement Foreign Sovereign: Bonds Total Fixed Income 5 122,316,986 37,342,153 4,678,602 4,454,752 76,560,976 12,794,720 17,223,784 129,670,754 16,419,562 23,547,117 63,364,293 503,873,704 5 610,638 3 13,436,569 1,719,885 1,262,527 36,785,971 1,803,905 390,736 29,645,181 3,269,207 55,415,593 6,841,407 13,829,186 23,326,020 17,029,619 5 171,307,206 49,300,987 30,323,082 844,951 1,640,468 3,608,396 - 637,059 43,032,277 3,306,782 1,090,964 27,091,473 5 160,876,439 5 35,619,390 7,519,076 2,029,746 2,423,548 43,307,399 12,794,720 13,317,518 17,786,315 6,271,373 6,907,082 11,684,273 159,660,440 21 SEATTLE CITY EM RETIREMENT SYSTEM NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 Note 5 - Investments (Continued) As of December 31, 2014, the fixed income portfolio of the System had the following investment ratings: Investment Fixed income US. Government: Treasury Notes and Bonds Treasury In? ation?Protected Semritle Agencies Municipal Mortgage?Ba dted: Government Pass Through Corporate Pass Through Government Corporate: Bonds Asset-Backed Private Placement Foreign Sovereign: Bonds Tot-I Fixed Income Fair Value 5 118,202,356 5 47, 1m,605 5,432,208 4,950,780 78,783,268 12,958,250 26,334,729 112,564,098 11,243,209 58,095,195 62,846,773 538 511 471 2, 333,186 1, 794,396 5, 162,148 2, 729,565 2,579,623 15 457 128 224,800,223 99,993,094 5 30,253,552 5,362,816 1,134,991 51,577,094 563,710 14,307,194 6,355,841 1,942,647 11,054,997 2, 199,187 1,452,546 1,965,771 251,999 35,93 6,301 23,483 17,036,954 4,724,281 61,401,335 Roth?s 1,502,852 281,352 29,849,036 13,098,009 2,14 1,182 46,872,431 21,218 827 1, 283,586 3, 159,011 5 4,464,642 94,137 2,361,999 5 2,456,136 Below 426,067 728,351 701,647 2% Not Rated 5 18,209,262 16,841,953 59,392 1,455,033 27,206,174 6,571 .513 11,057,290 37,344,938 3,292,443 7,953,013 51,202,500 181,203,511 22 SEA1TLE CITY RETIREMENT SYSTEM NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 Note 5 - Investments (Continued) As of December 31, 2013, the fixed income portfolio ofthe System had the following investment ratings: Ratirgs Investment Falr Value AA A 99 Below Not Rated Fixed income U.S. Government: TreasuryNotes and Bonds 5 122,316,986 5 - 5 104,679,740 - - 5 - 5 17,637,245 Treasury ln? ation-Protected Securitie 37,842,158 - 21,566,245 - - - - - 16,275,913 Age es 4,678,602 4,563,34 7 - - - - 15,255 Mu ni ci aI 4,454,752 793,166 667,91 5 1,71 1,606 - - - 1,282 .065 Morten ge-aacked: Govemme nt Pa 55 Throu 3h 76,560,976 - 33,153,570 - - - - - 38,402,406 Corporate Pa 55 Through 12,794,720 1,849,834 570,061 1,280,598 1,975,063 165,427 - - 6,953,737 Government CMO's 17,223,784 218,278 12,076,920 872,270 680,557 1,652,353 243,944 970,027 509,435 Corp orate: 8 129,670,754 665,800 9,459,943 42,601,22 9 36,483,968 2, 778,653 - . 37,681,161 Asse t- Ba cke 16,419,562 6,524,717 2,966,689 265,540 161,712 431,980 1,049,170 904,321 4,115,433 te PI ace ent 23,547,117 2,578,620 3,819,344 5,365,272 5,591,885 67,950 - 394,075 5,729,971 Foreign Sovereign: Bonds 63,364,293 5,922,992 3,144,595 3,023,151 1,957,227 599,910 - - 48,716,418 TothluedIncome 503l873i704 18,553,407 20%773i369 5 55,119,666 46,850,412 5 5?696l273 5 1,293,114 5 2,268,423 $177,319,040 23 SEATTLE CITY RETIREMENT SYSTEM NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 Note 6 - Securities Lending Transactions Under the authority of State of Washington RCW 41.28.005 and the Seattle Municipal Code 4.36.130, the System?s Board of Administration adopted investment policies that de?ne eligible investments, which include securities lending transactions. Through a custodial agent, the System participates in a securities lending program whereby securities are lent for the purpose of generating additional income to the System. The System lends securities from its investment portfolio on a collateralized basis to third parties, primarily ?nancial institutions. The market value of the required collateral must meet or exceed 102% of the market value of the securities lent, providing a margin against a decline in the market value of the collateral, and is limited to a volume of less than $75 million. The contractual agreement with the System?s custodian provides indemni?cation in the event the borrower fails to return the securities lent or fails to pay the System income it is due on the securities lent. Cash and U.S. government securities were received as collateral for these loans. The System invests cash collateral received; accordingly, investments made with cash collateral appear as an asset. A corresponding liability is recorded as the System must return the cash collateral to the borrower upon the expiration of the loan. Gross income from securities lending transactions are recorded in the operating statements as well as the various fees paid to the institution that oversees the lending activity. As of December 31, 2014, the fair value of securities on loan was $27,013,522. Associated cash collateral totaling $28,228,622 was received. The fair market value of the reinvested collateral was $25,231,590 at December 31, 2013, which includes an unrealized loss totaling $2,997,032. As of December 31, 2013, the fair value of securities on loan was $16,366,597. Associated cash collateral totaling $16,750,032 was received. The fair market value of the reinvested collateral was $13,595,048 at December 31, 2012, which includes an unrealized loss totaling $3,154,984. Note 7 Commitments The System has entered into capital commitments to fund partnership interests in certain alternative investments. At December 31, 2014, the System has unfunded commitments of $296,265,806 to these partnerships. Note 8 Net Pension Liability The components of the net pension liability as of December 31, 2014 were as follows: Total Pension Liability $3,430,722,236 Plan Fiduciary Net Position 2 322 703 695 Net Pension Liability Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 67.7% 24 SEATTLE CITY RETIREMENT SYSTEM NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 Note 8 Net Pension Liability (Continued) Actuarial assumptions The total pension liability was determined by an actuarial valuation as of January 1, 2014, and rolled forward using generally accepted actuarial procedures to December 31, 2014, using the following actuarial assumptions, applied to all periods including the measurement period: Investment Rate of Return: 7.50% compounded annually, net of expenses Salary Increases: 4.00% Mortality: Various rates based on mortality tables and using generational projection of improvement using Projection Scale AA. The investment return assumption was changed from 7.75% from the prior year valuation to 7.50% for the current year valuation. The annual assumed membership growth was reduced from 1.0% to 0.5% for the current year valuation. The actuarial assumptions used in the January 1, 2014 valuation, and the mortality tables included in Appendix A of the valuation, were based on the results of an actuarial experience study for the period January 1, 2010 through December 31, 2013. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and in?ation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected in?ation. Best estimates of geometric real rates of return for each major asset class included in the pension plan?s target asset allocation as of December 31, 2014 (see discussion of pension plan's investment policy) are summarized in the following table: Long-Tenn Expected Asset Class Real Rate of Return Equity: Public 4.93% Equity: Private 6.50% Fixed Income: Broad 1.35% Fixed Income: Inflation Linked 1.25% Real Assets: Real Estate 3.25% Diversifying Strategies 3.75% 25 SEATTLE CITY RETIREMENT SYSTEM NOTES TO FINANCIAL STATEMENTS December 31, 2014 and 2013 Note 8 Net Pension Liability (Continued) The above table reflects the expected (30 year) real rate of return for each major asset class. The eXpected inflation rate is projected at 3.25% for the same time period. Discount Rate. The discount rate used to measure the total pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and the participating governmental entity contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's ?duciary net position was projected to be available to make all projected future bene?t payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods on projected bene?t payment to determine the total pension liability. Sensitivity of the net pension liability. The following presents the net pension liability of the System, calculated using the discount rate of 7.50%, as well as what the System?s net pension liability would be if it were calculated using a discount rate that is 1% lower or 1% higher than the current rate: 1% Current 1% Decrease Discount Increase Rate $1,529,053,497 51.108.018.741 $753,951, 334 This information is an integral part of the accompanying financial statements. 26 REQUIRED SUPPLEMENTARY INFORMATION SEATTLE CITY RETIREMENT SYSTEM SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS (Dollar Amounts In Millions) December 31, 2014 Total pension liability Service Cost 5 94,017,562 Interest 241,885,785 Benefit changes - Difference between expected and actual experience - Changes of assumptions - Benefits payments (150,239,008) Refunds of contributions (15,103,615) Net change in total pension liability 170,560,724 Total pension liability - beginning 3,260,161,712 Total pension liability - ending 3,430,722,436 Plan net position Contributions - employer 89,988,898 Contributions - member 63,969,504 Net investment income 122,510,195 Bene?ts payments (150,239,008) Administrative expense (5,330,764) Refunds of contributions (15,103,615) Other - Net change in plan net posi?on 105,795,210 Plan net position - beginning 2,216,908,485 Plan net position - ending 2,322,703,695 Net pension Iiability- ending - 1,108,018,741 Ratio of plan net position to total pension liability - 67.70% Covered employee payroll 630,926,000 Net pension liabilityas a percentage of noveredemployee payroll 175.62% Note: Schedule is intended to show information for 10 years. Additional years will be displayed as they become available. 27 SEATTLE CITY EM RETIREMENT SYSTEM SCHEDULE OF EMPLOYER CONTRIBUTIONS (Dollar Amounts in Millions) 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Actuari ally determined empl oye' contri buti 0 5 94,018,000 83,770,1 19 5 67,06 1 ,7 47 5 72,346,935 5 93,923 ,454 4 6,933,422 46,245 ,3 24 5 40,1 14,562 37,754,849 5 34,094,865 Actual employer contributions 89,988,898 77,073,667 62,515,432 50,301,263 45,224,787 46,650,169 45,961,040 40,299,506 37,939,358 35,897,345 Annual contribution 46m)!!ch (91585 5) 4,02 9,102 6,696,452 4,546,315 22,045,672 48,698,667 283,253 284,284 (184,944) (184,509) (1,802,480) 630,92 6,000 597,900,000 567,800,000 557,000,000 563,200,000 580,900,000 572,400,000 501,900,000 472,500,000 447,000,000 Actual contributions as a percentage of covered- employee payroll 14.26% 12.89% 11.01% 9.03% 8.03% 8.03% 8.03% 8.03% 8.03% 8.03% Notes to Schedule: Valuation Date: Actuarially determined contribution rates are calculated as ofianuary 1, oneyear prior to thel'iscal year In which the contributions will apply. Methods and Assumpti ans used to determine contribution rates for ?scal year 2014 are: Actuarial cost method indi vidual Entry Age Normal Amortiation method Level percent Renaming amortization per Closed 30 years as ofianuary 1, 2013 Valuation Asset valuation method 5 years smoothed, In?ation 3.2596 Salary lncrea ses 4.00%, differs from actuarial valuation clue to exclusion of 0.50% active members hip growth assumption for 6458 calculations. Investment rate of return 7.50%, net of pension plan investment expens e, and gross of administrative expenses Cost oflJvingAdjustments As noted In theianuary 1, 2014 actuarial valuation. 28 SEATTLE CITY RETIREMENT SYSTEM SCHEDULE OF INVESTMENT RETURNS (Dollar Amounts in Millions) 2014 Total Portfolio 5.67% Note: Schedule is intended to show information for 10 years. Additional years will be displayed as they become available. 29 ADDITIONAL INFORMATION Personnel Services Salaries Bene?ts Total Personnel Services Maintenance and Operations Professional Services Of?ce rent Data processing and central costs Office supplies and othel'expenses Postage and telephone Travel Tra i ni rig Total Maintenance and Operations Total Administrative Expenses SEATTLE CITY RETIREMENT SYSTEM SCHEDULE OF ADMINISTRATIVE EXPENSES Years Ended December 31, 2014 and 2013 Budget Actual Expense 2014 2014 2013 1,668,433 1,799,299 5 1,503,736 590,786 591,828 824,854 2,259,219 2,391,127 2,328,590 682,341 1,132,389 1,022,691 215,853 209,299 229,996 1,230,825 1,270,343 1,197,169 272,187 236,716 188,758 56,533 45,673 46,096 65,387 34,004 31,360 18,782 11,213 13,696 2,541,908 2,939,637 2,729,766 4,801,127 5,330,764 5,058,356 30 SEATTLE CITY RETIREMENT SYSTEM SCHEDULE OF INVESTMENT EXPENSES Year Ended December 31, 2014 Investment Management Fees: Attucks Cap 5 38 Babson Tower Square Partners II 37,916 BlackRock 5 17,220 Bison Capital Equity Partners II 13,899 Ca pri 15,932 Carlyle Mezzanine Partners 136,834 Dimensional 321,957 Enhanced RAFI International 344,270 Fisher Investments 766,927 Jp Morga 2,204,661 Nogales Investors Fund II 41,416 Oaktree Capital Mezzanine Fund II 60,073 Pa ra metic 365,201 PCCP 79,241 PIMCO 1,305,773 Pugh Capital 194,538 Rea ms Asset Management 345,146 Rhumbine 113,707 Russell 225,673 Smith Whiley Pel ham Fund 70,939 TA Associates 282,790 Western Asset Management 357,945 Total Investment Management Fees 7,802,096 Performance Measurement: Pension Consulting Alliance 114,570 NEPC 218,819 Custodial Services: Bank of New York Mellon 341,946 Total Investment Expenses 8,477,431 Securities Lending Services: Bank of New York Mellon 5 59,989 31 ACTUARIAL Actuarial Valuation This page intentionally left blank Seattle City Employees? Retirement System 7? .51 Actuarial Valuation As of January 1, 2014 ?76? By Nick J. Collier Associate, Society of Actuaries Member, American Academy of Actuaries And Jennifer Sorensen Senta Associate, Society of Actuaries Member, American Academy of Actuaries I I I MIllIman I I I I I I 1301 Fifth Avenue Suite 3800 Seattle. WA 98101-2605 USA Tel +1 206 624 7940 Fax +1 205 623 3485 July 10, 2014 millimancom Retirement Board Seattle City Employees' Retirement System 720 Third Aven ue. Suite 900 Seattle, WA 98104 Dear Members of the Board: As requested, we have prepared an actuarial valuation of the Seattle City Employees? Retirement System (SCERS) as of January 1, 2014. This report reflects the benefit provisions and contribution rates in effect as of January 1, 2014. Actuarial Certification In preparing this report, we relied, without audit, on information (some oral and some in writing) supplied by SCERS staff. This information includes, but is not limited to, statutory provisions, employee data. and ?nancial information. We found this information to be reasonably consistent and comparable with information used for other purposes. The valuation results depend on the integrity of this information. It should be noted that the valuation was based on the DRAFT audited financial statements, as the ?nal audited statements were not yet available. If any of this information is inaccurate or incomplete our results may be different and our calculations may need to be revised. All costs, liabilities, rates of interest, and other factors for the System have been determined on the basis of actuarial assumptions and methods which are individually reasonable (taking into account the experience of the System and reasonable expectations). and which. in combination, offer a reasonable estimate of anticipated experience affecting the System. This valuation report is only an estimate of the System's financial condition as of a single date. It can neither predict the System?s future condition nor guarantee future ?nancial soundness. Actuarial valuations do not affect the ultimate cost of System bene?ts, only the timing of System contributions. While the valuation is based on an array of individually reasonable assumptions. other assumption sets may also be reasonable and valuation results based on those assumptions would be different. No one set of assumptions is uniquely correct. Determining results using alternative assumptions is outside the of our engagement. Future actuarial measurements may differ significantly from the current measurements presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period or additional cost or contribution requirements based on the plan's funded status); and changes in plan provisions or applicable law. Due to the limited scope of our assignment, we did not perform an analysis of the potential range of future measurements. The This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who receive this work. Milliman recommends that third parties be aided by their own actuary or other quali?ed professional when reviewing the Milliman work product. 533027?de Offices in Principal Cities Worldwide 20 003 SER 3BQUOO35ERTUEO14 I NJCIJDSMIO I - - Retirement Board I I I I Seattle City Employees? Retirement System July 10. 2014 Page 2 Retirement Board has the final decision regarding the appropriateness of the assumptions and adopted them as indicated in Appendix A at the May 8. 2014 meeting. Actuarial computations presented in this report are for purposes of determining the recommended funding amounts for SCERS. Actuarial computations under GASB Statement No. 25 are for purposes of fulfilling financial accounting requirements. The computations prepared for these two purposes may differ as disclosed in our report. The calculations in the enclosed report have been made on a basis consistent with our understanding of funding requirements and goals. Determinations for purposes other than meeting these requirements may be significantly different from the results contained in this report. Accordingly. additional determinations may be needed for other purposes. Milliman's work is prepared solely for the internal business use of SCERS. To the extent that Milliman's work is not subject to disclosure under applicable public records laws, Milliman?s work may not be provided to third parties without Milliman's prior written consent. Milliman does not intend to benefit or create a legal duty to any third party recipient of its work product. Milliman's consent to release its work product to any third party may be conditioned on the third party signing a Release, subject to the following exception(s): a) SCERS may provide a copy of Milliman's work. in its entirety, to the System's professional service advisors who are subject to a duty of con?dentiality and who agree to not use Milliman's work for any purpose other than to benefit the System. b) SCERS may provide a copy of Milliman's work, in its entirety, to other governmental entities, as required by law. No third party recipient of Milliman's work product should rely upon Milliman's work product. Such recipients should engage quali?ed professionals for advice appropriate to their own specific needs. The consultants who worked on this assignment are pension actuaries. Milliman's advice is not intended to be a substitute for quali?ed legal or accounting counsel. The signing actuaries are independent of the City of Seattle. We are not aware of any relationship that would impair the objectivity of our work. On the basis of the foregoing, we hereby certify that. to the best of our knowledge and belief. this report, along with the information contained in the Comprehensive Annual Financial Report, is complete and accurate and has been prepared in accordance with generally recognized and accepted actuarial principles and practices. We are members of the American Academy of Actuaries and meet the Quali?cation Standards to render the actuarial opinion contained herein. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. Milliman recommends that thind parties be aided by their own actuary or other quali?ed professional when reviewing the Milliman work product. sera0270docx 20 003 SER 10,2014 I Retirement Board - I I I I I I Seattle City Employees' Retirement System July 10, 2014 Page 3 We would like to express appreciation to the system staff, including Mr. Jeff Davis, who gave substantial assistance in supplying the data on which this report is based. Respectfully submitted, Nick J. Collier, ASA, EA, Principal and Consulting Actuary Jennifer Sorensen Senta, ASA. Consulting Actuary Thi's_work product was prepared solely for SC ERS for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who receiVe this work. Milliman recommends that third parties be aided by their own actuary or other quali?ed professional when reviewing the Milliman work product. 20 003 SER I Milliman January 1 2014 Actuarial Valuation Seattle City Employees' Retirement System Section 1 Table 1 Graph 1 Graph 2 Section 2 Section 3 Table 2 Table 3 Table 4 Section 4 Table 5 Table 6 Table 7 Section 5 Table 8 Table 9 Section 6 Table 10 Table 11 Table 12 Table 13 Table 14 Table 15 Section 7 Table 16 Section 8 Table 17 Section 9 Table 18 Table of Contents Page Summary of the Findings ..1 Summary of Results .. 7 Historical Asset and Liability Comparison .. 8 Historical Funding Ratios .. 8 Scope of the Report .. 9 Assets .. 11 Calculation of Actuarial Value of Assets at January 1. 2014 .. 13 Summary of Plan Net Assets (at Market Value) .. 14 Summary of Changes in Plan Net Assets (at Market Value) .. 15 Actuarial Liabilities .. 17 Actuarial Present Value of Future Bene?ts .. 19 Normal Cost Contribution Rates as Percentages of Salary .. 20 Unfunded Actuarial Accrued Liability .. 21 City Contributions .. 23 Contribution Rates as Percentages of Salary .. 25 Amortization of Unfunded Actuarial Accrued Liability .. 26 Actuarial Information for Accounting Purposes .. 27 GASB Statement No. 27 Annual Pension Cost and Net Pension Obligation .. 29 Schedule of Funding Progress .. 30 Solvency Test .. 31 Schedule of Employer Contributions .. 32 CASE Statement No. 27 Five?Year Trend Information .. 33 GASB Statement No. 27 Annual Development of Pension Cost .. 34 Actuarial Gains or Losses .. 35 Analysis of Actuarial Gains or Losses .. 36 Contribution Rate Projections and Increases .. 37 Projected Total Contribution Rates .. 38 Projection of Benefit Payments and Contribution Dollars .. 41 10?Year Projection of Bene?t Payments and Contributions .. 42 'Milliman sera0270.doc:( This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who receivs this work. Milliman recommends that third parties be aided by their own actuary or other quali?ed professional when reviewing the Milliman work product 20 003 SER I Milliman January 1, 2014 Actuarial Valuation Seattle City Employees? Retirement System Appendix A Table A-1 Table A-2 Table A-3 Table A-4 Table A-5 Table A-6 Table A-7 Appendix Appendix Table 0-1 Table (3-2 Table 0-3 Table 0-4 Table 0?5 Appendix Table of Contents (continued) Page Actuarial Procedures and Assumptions .. A-1 Summary of Valuation Assumptions ..A-4 Future Salaries ..A-5 Retirement ..A-B Disability ..A-7 Mortality ..A-8 Other Terminations of Employment Among Members Not Eligible to Retire ..A-Q Probability of Refund 0 Provisions of Governing Law .. B-1 Valuation Data .. C-1 Summary of Membership Data .. 0-2 Members Receiving Service Retirement Bene?ts as of January 1. 2014 .. 0-3 Members Receiving Disability Retirement Bene?ts as of January 1, 2014 .. C-4 Survivors Receiving Retirement Benefits as of January 2014 .. C-5 Distribution of Employees and Salaries as of January 1, 2014 .. Glossary .. D-1 'Milliman sera0270_docx 20 003 SER This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who receive this work. recommends that third parties be aided by their own actuary or other qualified professional when reviewing the Milliman work product. Milliman January 1, 2014 Actuarial Valuation Seattle City Employees' Retirement System Section 1 Summary of the Findings January 1. 2014 January 1. 2013 Total Actuarial Contribution Rate 25.76% 24.34% Funding Ratio 64.2% 63.5% We are pleased to present the results of the January 1, 2014 actuarial valuation. This valuation determines the recommended contribution rates payable beginning January 1, 2015. Several key points of the valuation are summarized as follows: Overview - 2014 Assumption Changes: At the May Board of Administration meeting, the Board adopted new assumptions based on the 2014 Investigation of Experience Report. The adopted assumptions included a decrease in the investment return assumption to 7.50%, a decrease in the annual assumed membership growth to 0.50%. and a slight increase in life expectancies for healthy male retirees. All assumption changes have been reflected in this January 1, 2014 actuarial valuation report. as outlined in Appendix A of this report. 0 Investment Returns: For the year ending December 31. 2013, the SCERS assets returned around 15% on a market basis (gross of investment expenses). a rate of return greater than the assumed rate. From January 1, 2013 to December 31, 2013, the SCERS assets were assumed to earn 7.75% (based on the investment return assumption in effect at January 1, 2013). The result is an actuarial gain on assets for the 2013 year. Note that only one-fifth of this gain will be recognized in the current year Actuarial Value of Assets (AVA), due to the asset smoothing method; see Section 3 of this report for details. Currently. a net asset gain is being deferred in the this implies that, if all actuarial assumptions were met in future years, the recommended contribution rate would be expected to decrease in future years. 0 City Contribution Rate: The recommended total contribution rate has increased from the prior valuation, from 24.34% to 25.76% of payroll. Since the employees contribute a fixed 10.03% of pay, the recommended employer contribution rate has increased from 14.31% of pay to 15.73%. The most signi?cant factor causing this increase was the implementation of new assumptions with the 2014 Investigation of Experience. See the section below titled ?Analysis of Change? for more details. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate I - I I - to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who I "nan receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when reviewing the Milliman work product. sera0270.docx 20 003 SER 33720.003.SER.10.2014 i January 1, 2014 Actuarial Valuation Seattle City Employees' Retirement System Summary of the Findings Overview - Funding Progress: On the basis of the January 1, 2013 actuarial (continued) valuation, the Funding Ratio (which is measured as the Actuarial Value of Assets divided by the Actuarial Accrued liability) was 63.5%. Based on the January 1, 2014 valuation. the Funding Ratio is 64.2%.The most signi?cant factor causing this increase was the recognition of deferred asset gains, as well as the current year asset gain, in the Actuarial Value of Assets. This was somewhat offset by the implementation of the new assumptions with the 2014 Investigation of Experience. See the section below titled "Analysis of Change? for more details. Note that these Funding Ratios are calculated using the Funding Ratio results based on the Market Value of Assets are shown in Exhibit 1 at the end of this section. - Funding Policy: In August 2013, the Seattle City Council passed a resolution to formally close the period over which any SCERS Unfunded Actuarial Accrued Liability (UAAL) will be amortized. This resolution stipulated that the 30-year amortization period would be closed as of the January 1, 2013 actuarial valuation. The result is that, for purposes ofthe January 1, 2014 valuation calculation. a 29-year remaining closed period is in effect. The effect of closing the UAAL amortization period is that the total SCERS UAAL is now projected to be fully paid off over the next 29 years. It is our understanding that this policy may be further revised in future years. Aetuaria' ReqUired Based on the actuarial valuation of the benefits in effect underthe contribmion Rate Seattle City Employees? Retirement System as of January 1, 2014. we recommend the total contribution rate be increased from 24.34% to 25.75%. The current contribution rates for the death benefit program are projected to be suf?cient to finance the $2,000 death benefit. - Based on a fixed member contribution rate of 10.03%, this means the City?s contribution rate should be increased from 14.31% to 15.73% effective January 1, 2015. This re?ects the City's commitment to fund the actuarial required contribution rate. which is based on a 29-year amortization of the UAAL beginning January 1, 2014. it should be noted that this rate is not equivalent to the current GASB Annual Required Contribution (ARC) because the actuarial required rate assumes an increase in membership, which is not consistent with current GASB reporting requirements. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate - I I - to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who I lman receive this work. Milliman recommends that third parties be aided by their own actuary or other quali?ed professional when reviewing the Milliman work product. sera0270.docx 20 003 SER NJCi?JDanlo Milliman January 1, 2014 Actuarial Valuation Seattle City Employees' Retirement System Summary of the Findings Actuarial Required Contribution Rate (continued) It should be noted that this 25.76% of pay is calculated based on the Actuarial Value of Assets see Section 3 of this report for details. This AVA is currently deferring a net actuarial asset gain of $122.6 million under the asset smoothing method. This means that if no actuarial gains or losses occur in the future. the actuarial required contribution rate would decrease over the next several years as the deferred asset gains are phased into the AVA. We have performed a ?ve?year projection of the contribution rates if 7.50% were returned on the market value of assets in each future year (and assuming that no other actuarial gains or losses occur). This projection shows the expected impact of recognizing the currently deferred asset gains and losses overtime. The result is a decrease in the contribution rate over the next several years. It is likely that the market value of assets will not return an annual average of exactly 7.50% over all future years. To show the potential impact of volatility in asset returns on the contribution rate. we have performed a projection of the contribution rates at the 51h and 95m percentile expected returns (thereby yielding a 90% asset?return?based confidence interval for the specified rates). These projections are shown in the chart below. Projected Total Actuarial Required Contribution Rate Contribution Assuming 7.50% 90% Asset Return Year? Future Returns Confidence Interval 2015 25.76% 25.76% - 25.76% 2016 25.31% 24.52% - 25.98% 2017 25.10% 23.29% - 26.71% 2018 24.55% 21.45% - 27.36% 2019 24.40% 19.80% - 28.41% 2020 24.08% 18.04% 29.20% Contribution yeariags valuation year by one year. For exampie: Contribution Year 2015 is based on the 2014 results, amortized over 29 years beginning in 2014, if the increase takes place in 2015. Compounded Average Return for Period Percentiie 95th 5th 1-Year Period 27. 9% -9. 9% 2- Year Period 21.5% -5. 2% 3- Year Pen'od 18. 7% -3. 0% 4- Year Period 17.1% -1. 7% 5-Year Period 16. 1% -0. 8% This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate . - Milliman to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who receive this Work. Milliman recommends that third parties be aided by their own actuary or other quali?ed professional when reviewing the Milliman work product. sera0270.docx 20 003 SER January 1, 2014 Actuarial Valuation Seattle City Employees' Retirement System Summary of the Findings Actuarial Required Contribution Rate (continued) Funding Progress Analysis of Change Contingent COLA Benefits The 90% con?dence interval results are based on the 5m and 95?h percentile compounded returns for one-, two-, three-, four- and ?ve- year periods. Since actuarial assets are used, deferred gains or losses would continue to decrease or increase the actuarial required contribution rate after these dates. See Section 8 of this report for a detailed discussion of the projected contribution rates. 0n the basis of the January 1, 2013 actuarial valuation, the Funding Ratio was 63.5%. Based on the January 1. 2014 valuation, the Funding Ratio is 64.2%. The increase in the Funding Ratio is due mainly to recognition of asset gains, both from prior years and from the current year. See Section 3 of this report for a full discussion. The recognition of actuarial asset gains in the Funding Ratio was somewhat offset by the adoption of new assumptions with the 2014 investigation of Experience. See the following section titled Analysis of Change for more details. The following chart shows the sources of change in the actuarial contribution rate and the funding ratio between the prior and current actuarial valuations. Actuarial Funding Sources of Change Contrib. Rate Ratio January 1. 2013 Actuarial Valuation 24.34 63.5 Expected Valuation-to-Valuation Change - 0.8 Asset GainILoss on Actuarial Value 1.6 Growth Different Than Expected 0.1 Changes in Assumptions 1.84 (1 Other 0.08 Total Change 1.42 0.70 January 1, 2014 Actuarial Valuation 25.76 64.2 The Seattle Municipal Code allows for an increase in the cost-of?Iiving adjustment (COLA) available to current and future retired members. Currently, the Floor COLA (also referred to as a Restoration of Purchasing Power COLA) is at the 65% level. The enhanced COLA benefit (70% Floor COLA) does not become effective until the System attains at least a 100% funding level. Since it is unknown when this benefit will become effective, especially given the current funded status of the System, we have not included the valuation of these potential bene?t changes the increase in the ROPP COLA to the 70% level) in this valuation. See Appendix A of this report for further details. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate Milliman to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when reviewing the Milliman work product. sera0270.docx 20 003 SER Milliman January 1, 2014 Actuarial Valuation Seattle City Employees' Retirement System Summary of the Findings Membership Information Total valuation payroll has increased by 4.7% since the 2013 valuation, and active membership has increased by 1.6% during this same period. As of January 1, 2014. the annualized payroll is $607 million for 8,603 active members. Membership Count 10,000 9.000 3.000 7.000 6,000 -- 5.000 4.000 3,000 2,000 1,000 1996 2006 2010 2012 2014 1999 2002 Active l:l Retired Retired member counts and average retirement benefit amounts continue to increase steadily. As of January 1, 2014, there were 5,880 retired members and beneficiaries with an average bene?t of $2.086 per month. This represents a 2.4% increase in count and a 4.2% increase in average bene?t amount. Average Retirement Benefit $3.000 - $2,000 1996 1999 2002 2006 2010 2012 2014 I uAnnuitants This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate Milliman to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when reviewing the Milliman work product. sem0270.docx 20 003 SER R. 102014 I Milliman January 1, 2014 Actuarial Valuation Seattle City Employees? Retirement System Summary of the Findings Analysis of Change in The following table summarizes the year-to?year change in member Member Population population. Deferred Retirees; Actives Members' Beneficiaries January 1, 2013 Valuation 8.465 1.973 5,742 Termination with Refund Death (209) (55) (259) Termination without Refund (178) 178 - Service Retirement (268) (55) 323 Disability Retirement (1) - 1 Rehires 16 (16) - New Records 779 11 73 Data Corrections (11 1 - January 1, 2014 Valuation 8,603 2.037 5,880 'Counfs include non-vested laminated members whose contributions are still on deposit with SCERS as of valuation date. Summary Exhibit A summary of the key results of this valuation. along with a comparison to the January 1, 2013 valuation. is shown in Table 1. Note that the valuation measures are based on the Actuarial Value of Assets. which recognizes asset gains and losses over a ?ve-year period; however, we have also shown key measures using the Market Value of Assets (MVA). Graphs 1 and 2 and the associated data table show historical asset and liability information, including the Present Value of Future Bene?ts (PVFB) and Present Value of Future Normal Costs at previous valuation dates. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate I - I I to use for other purposes, Milliman does not intend to bene?t and assumes no duty or liability to other parties who "nan receive this work. Milliman recommends that third parties be aided by their own actuary or other quali?ed professional when reviewing the Milliman work product. aera027l2l.docx 20 003 SER Milliman January 1. 2014 Actuarial Valuation Seattle City Employees? Retirement System Summary of the Findings Seattle City Em ployees' Retirement System Actuarial Valuation Table 1 Summary of Results Valuation Valuation Percentage January 1. 2014 January 1. 2013 Change I. Total Membership A. Active Members 8,603 8,465 1.6% B. Retired Members Bene?ciaries 5,880 5,742 2.4% C. Vested Terminated Members* 2,037 1,973 3.2% D. Total 16,520 16,180 2.1% It. Pay as of Valuation Date A. Annual Total ($millions) 606.9 579.4 4.7% B. Annual Average 70,548 63,449 3.1% ill. Average Bene?t Paid to Current Retirees and Bene?ciaries A. Service Retirement 2,226 2,143 3.9% B. Disability Retirement 1.235 1,156 6.3% C. Surviving Spouse and Dependents 1,276 1,240 2.9% D. Total 2,086 2,002 4.2% IV. Actuarial Accrued Liability ($millions) A. Active Members 5 1,603.1 1,511.9 6.0% B. Retired Members 1,497.0 1,364.5 9.7% C. Vested Terminated Members 160.0 148.9 7.5% D. Total 3,260.1 3,025.3 7.8% V. Assets A. Actuarial Value of Assets ($millions) 2,094.3 1,920.1 9.1% VI. Unfunded Actuarial Accrued Liability or Surplus Funding ($millions) 3 ?653 5 1.1052 55% VII. Amortization of UAAL Total Contribution Rate Needed for 29-Year** Amortization (as a of Payroll) 25.76% 24.34% 5.6% Funding Ratio 64.2% 63.5% 12% IX. Normal Cost as 3 Percent of Salary 15.79% 14.95% 5.6% Market Value of Assets (MVA) -- For Informational Purposes Only X. Assets Based on MVA A. Market Value of Assets ($millions) 2,216.9 1,951.4 13.6% XI. Amortization of UAAL Based on MVA A. Total Contribution Rate Needed for 29-Year? Amortization (as a of Payroll) 24.67% 24.06% 2.5% XII. Funding Ratio Based on MVA 68.0% 64.5% 5.4% includes non-vested terminated members whose contributions are stitt on deposit with SCERS as of vaiuation date. "Amortization method is ctosed 30-year beginning with January 1, 2013 valuation. 2013 vatues shown are over 30 years. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who . "nan receive this work. Milliman recommends that third parties be aided by their own actuary or other quali?ed professional when reviewing the Milliman work product sera0270_docx 20 003 SER 3820.0035ER102014 I Milliman January 1, 2014 Actuarial Valuation Seattle City Employees' Retirement System Summary of the Findings Graph 1 $4.500 $4.000 $3.500 $3.000 $2.500 $2.000 $1.500 $1.000 $500 $0 ($500) Historical Asset and Liability Comparison COCO coco L0) 886i 066i Z66l 1766!. 966i A66L 866i 666L 0003 3003 7003 9003 8002 OLOZ LL02 ZLOZ uActuarial Value of Assets Unfunded Actuarial Liability Graph 2 Historical Funding Ratios a Future Normal Costs El Funding Excess SLOZ 120% 100SMiIilOl?lSl Funding Year PVFB Assets UAAL Ratio 2000 1,872.4 1,582.7 469.3 (179.6) 112.8% 2002 2. 088.7 1.383. 7 507.3 197.7 87.5% 2004 2,229.8 1,527.5 450.9 251.4 85.9% 2006 2,448.5 1,791.8 431.0 225.8 88.8% 2008 2,825.8 2,119.4 531.2 175.2 92.4% 2010 3,328.7 1,645.3 674.9 1,008.5 62.0% 2011 3,379.6 2,013.7 670.6 695.4 74.3% 2012 3,494.1 1,954.3 634.8 905.0 68.3% 2013 3,679.8 1,920.1 654.5 1,105.2 63.5% 2014 4,007.3 2,094.3 747.2 1,165.8 64.2% This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate I i I to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who sera0270.docx professional when reviewing the Milliman work product. 20 003 SER I receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified VLOZ Milliman January 1, 2014 Actuarial Valuation Seattle City Employees' Retirement System Section 2 Scope of the Report I A This report presents the actuarial valuation of the Seattle City Employees' Retirement System as of January 1, 2014. A summary of the findings resulting from this valuation is presented in the previous section. Section 3 describes the assets of the System. A summary of the assets is set forth in Table 2. Sections 3, 4, and 5 describe how the obligations of the System are to be met under the actuarial cost method in use. Section 6 discloses actuarial information based on the requirements of Statements No. 25 and 27 of the Governmental Accounting Standards Board. Section 7 sets forth estimated actuarial gains or losses from the various sources. Section 8 shows projections of the System's funding under both optimistic and pessimistic scenarios. Appendix A is a summary of the actuarial procedures and assumptions used to compute the liabilities and contributions shown in this report. The current bene?t structure, as determined by the provisions of the governing law on January 1, 2014, is summarized in Appendix B. Schedules of valuation data classifying the data used in the valuation by various categories of contributing members. former contributing members and beneficiaries make up Appendix 0. Comparative statistics are presented on the System's membership and contribution rates. Appendix is a glossary of actuarial terms used in this report. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate I I I Milliman to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when reviewing the Milliman work product. seraOZ'i'Odocx 20 003 SER I Milliman January 1, 2014 Actuarial Valuation Seattle City Employees? Retirement System This page intentionally left blank. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate - I I - to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who I Iman receive this work. Milliman recommends that third parties be aided by their own actuary or other quali?ed professional when reviewing the Milliman work product seraDZ'r'Odocx 20 0'03 SER Milliman January 1, 2014 Actuarial Valuation Seattle City Employees? Retirement System Section 3 Assets A Financial Exhibits Actuarial Asset Method in many respects. an actuarial valuation can be regarded as an inventory process. The inventory is taken as of the actuarial valuation date, which for this valuation is January 1. 2014. On that date. the assets available for the payment of benefits are appraised. These assets are compared with the actuarial liabilities. which are generally well in excess of the assets. The actuarial process thus leads to a method of determining what contributions by members and their employers are needed to pay expected benefits. This section of the report deals with the asset determination. In the next section, the actuarial liabilities will be discussed. Section 5 will deal with the process for determining required contributions, based on the relationship between the assets and the actuarial liabilities. Table 2 shows the calculation of the Actuarial Value of Assets as of January 1. 2014. Note that a net gain is currently being deferred. This means that. if the system earns 7.50% in the future. the AVA will experience an actuarial gain over upcoming years as the remaining portions of deferred gains are recognized. In both the Executive Summary and Section 8 of this report, we discuss projections of the required contribution rates resulting from this expected increase in the AVA. Tables 3 and 4 summarize the ?nancial resources of the System on January 1. 2014 on a Market Value basis. Table 3 shows the Market Value of Assets at January 1. 2014 and January 1. 2013. Table 4 shows the changes in Market Value of Assets during the year ending January 1. 2013 and the year ending January 1. 2014. Tables 3 and 4 are taken directly from data furnished to us by SCERS staff. We have accepted these tables for use in this report without audit. but we have reviewed them for reasonableness and consistency with previous reports. Beginning with the January 1, 2011 actuarial valuation. SCERS adopted five-year asset smoothing. This smoothing process recognizes the asset gain or loss occurring in each year evenly over a ?ve-year penod. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate - ?o to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who I lman receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when reviewing the Milliman work product. ser80270.docx 20 003 SER I Milliman January 1, 2014 Actuarial Valuation Seattle City Employees? Retirement System Assets Actuarial Asset Method The following graph shows a historical comparison of the actuarial and (continuted) market assets used for valuation purposes. Note that prior to 2011 the AVA was equal to the MVA. Applicable Valuation Assets" $2,500 $2,000 $1.500 $1.000 $500 $0 2004 2006 2008 2010 2011 2012 2013 2014 1 ?Market Value +Acluarial Value I (in SMillions) *Pn'or to 2010, actuarial valuations were only performed every second year. . . This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate 12 I to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who receive this work. sera0270,docx 20 003 SER Milliman January 1, 2014 Actuarial Valuation Seattle City Employees' Retirement System Assets Table 2 Calculation of Actuarial Value of Assets at January 1, 2014 (All dollar amounts in millions) Five-Year Asset Smoothing Year Market Value at Total Bene?t Payments Expected Market Value of Assets Asset Current Deferred Ended Beginning of Year Contributions Plus Admin. Expenses investment Return Expected* Actual Gaintms) Phase Out Amount December 31. 2009 1,477.4 93.0 120.3 113.5 1.5636 1,645.3 81.7 0% - December 31, 2010 1,645.3 90.6 131.7 125.9 1.7301 1,812.8 82.7 20% 16.5 December 31, 2011 1,812.8 100.7 140.7 139.0 1,911.8 1,753.5 (158.3) 40% (63.3) December 31. 2012 1,753.5 119.6 152.4 134.6 1,855.3 1,951.4 96.1 60% 57.7 December 31. 2013 1,951.4 137.4 161.8 150.3 2,077.3 2,216.9 139.6 80% 111.7 Total Deferred at Jan. 1, 2014: 122.6 Market Value of Assets at Jan. 1. 2014: 2,216.9 Less Total Deferred at Jan. 1. 2014: 122.6 Actuarial Value of Assets at Jan. 1, 2014: 2,094.3 ?Expected Market Vatue of Assets assumes 7. 75% return, taking into account actual cash?ows during year. This expected rate of return re?ects the assumption in effect as of each previous year's actuariall valuation. I This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to bene?t and assumes no duty or iiabiIity to other parties who receive this work. Milliman recommends that third parties be aided by their own actuary or other quali?ed 13 professional when reviewing the Mt man work product. sera0270.docx 20 003 SER January 1, 2014 Actuarial Valuation Seattle City Employees' Retirement System Assets Table 3 Summary of Plan Net Assets (at Market Value) January 12014 January 1,2013 Market Value Distribution Market Value Distribution Assets Cash and short-term investments 42,474,712 1.9% 51,082,867 2.6% Securities lending collateral 13,595,048 0.6% 10,154,781 0.5% Receivables Employee 2,737,213 0.1% 2,452,509 0.1% Employer 2,991,610 0.1% 2,230,401 0.1% Interest and Dividends 4,171,873 0.2% 2,324,732 0.1% Sales Proceeds Receivable 5,726,852 0.3% 3,086,954 0.2% Total Receivables 15,627,548 0.7% 10,094,596 0.5% Investments at fair value Fixed Income US Government obligations 170,500,534 7.7% 123,684,185 6.3% Corporate bonds 168,108,438 76% 150,579,401 77% Mortgage backed 115,343,657 5.2% 113,394,160 5.8% Foreign sovereign 63,253,024 2.9% 54,363,415 2.8% Domestic stocks 700,186,774 31 581,330,209 29.8% International stocks 624,912,362 28.2% 554,959,429 28.4% Real estate 231,616,985 10.4% 216,761,221 11.1% Alternative 106,262,940 4. 8% 119,253, 354 6.1% Total investments 2,180,184,714 98.3% 1,914,325,374 98.1% Total assets 2,251,882,022 101.6% 1,985,657,618 101.8% Liabilities Pension 8 Other payables 1,876,818 1,667,979 Securities lending obligation 16,750,032 13,404,350 Investment commitments payable 16,346,687 07% 19,150,015 Total Liabilities 34,973,537 34,222,344 Market Value of Net Assets Held in Trust For Pension Benefits 2,216,908,485 100.0% 1,951,435,274 100.0% This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate I - I I - to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who I "nan receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when reviewing the Milliman work product ser30270.docx 20 003 SER I Milliman January 1, 2014 Actuarial Valuation Seattle City Employees? Retirement System Assets Table 4 Summary of Changes in Plan Net Assets (at Market Value) January 1,2014 January 1,2013 Market Value Market Value Additions Contributions Employer 77,073,667 62,515,432 Employee 60,342,581 57,086,346 Total contributions 137,416,248 119,601,778 Investment activities Investment income (loss) Net change in fair value of investments 267,444,451 204,254,962 Interest 8,377,595 9,781,842 Dividends 22,327,842 23,654,327 Net investment income (loss) 298,149,888 237,691,131 Securities lending activities Securities lending income 1 1,511 16,045 Borrowing rebates 64,217 82,493 Total securities lending income 75,728 98,538 Securities lending management fees (18,925) (24,467) Net income from securities lending 56.803 74,071 investment activity expenses Investment management fees (7,606,049) (6,313,848) Investment consultant fees (499,140) (499,140) Investment custodial fees (283,841) (249,881) Total investment activity expenses (8,389,030) (7,062,869) Total additions 427,233,909 350,304,111 Deductions Benefits 141,424,206 134,135,553 Refunds of contributions 15,278,136 14,913,574 Administrative expenses 5,058,356 3,343,924 Total deductions 161,760,698 152,393,051 Net increase/(Decrease) 265,473.21 1 197,911 ,060 Net position held in trust for pension benefits Beginning of Year 1,951,435,274 1,753,524,214 End of Year 2,216,908,485 1,951,435,274 This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate I M. I I - to use for other purposes. Millirnan does not intend to benefit and assumes no duty or liability to other parties who I "nan receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when reviewing the Milliman work product. sera0270.docx 20 003 SER Milliman January 1, 2014 Actuarial Valuation Seattle City Employees' Retirement System This page intentionally left blank. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate - I I - to use tor other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who Iman receive this work. Milliman recommends that third parties be aided by their own actuary or other quali?ed professional when reviewing the Milliman work product sera0270rdocx 20 003 SER Milliman January 1, 2014 Actuarial Valuation Seattle City Employees' Retirement System Section 4 Actuarial Liabilities Actuarial Present Value of Future Benefits Actuarial Cost Method In the previous section, an actuarial valuation was related to an inventory process and an analysis was given of the inventory of assets of the System as of the valuation date. January 1, 2014. In this section, the discussion will focus on the commitments of the System, which will be referred to as its actuarial liabilities (or, actuarial value of future benefits). In an active system, the present value of future actuarial liabilities will almost always exceed the actuarial assets. This is usually expected in all but a fully closed down fund, where no further contributions of any sort are anticipated. This deficiency has to be provided for by future contributions. The funding method for the system sets out a schedule of future contributions that will deal with any de?ciency in an orderly fashion. The determination of the level of future contributions needed is discussed in the next section (Section 5) of this report. Table 5 contains an analysis of the actuarial present value of all future benefits for contributing members, former contributing members, and beneficiaries. The analysis is given by type of benefit. The actuarial liabilities summarized in Table 5 include the actuarial present value of all future benefits expected to be paid with respect to each member. For an active member, this value includes a measure of both benefits already earned and future benefits to be earned. Thus, for all current members, active and retired, the value extends over bene?ts earnable and payable for the rest of their lives and, if an optional benefit is chosen, for the lives of their surviving beneficiaries. The actuarial assumptions used to determine the liabilities are based on the results of the 2014 Investigation of Experience Report. New assumptions were adopted by the Board effective with this January 1, 2014 actuarial valuation. See Appendix A of this report for details. The method used to determine how the actuarial cost for an individual (or for the System as a whole) is allocated to past and future years is referred to as the actuarial cost method. For this valuation, the individual entry age normal cost (EANC) method has been used. Under this method, the actuarial liabilities discussed above are allocated into two primary calculation components: 1. A normal cost 2. An actuarial accrued liability This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate 'Milliman to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when reviewing the Milliman work product. sera0270docx 20 003 SER 38120.003.SER.10.2014 Milliman January 1, 2014 Actuarial Valuation Seattle City Employees? Retirement System Actuarial Liabilities Normal Cost and Actuarial Accrued Liability The normal cost under the EANC method is developed so that bene?ts are allocated as a level percentage of payroll for each member. from the member?s membership date to the member?s termination date. One key feature of the EANC method is that normal costs tend to be stable from year to year (assuming no change in assumptions or bene?t provisions) because most members' entry age cost percentages do not change materially from year to year, and because the population typically does not change considerably from year to year. The normal cost rates as a percentage of payroll for the current and prior valuation are shown by benefit type in Table 6. These normal cost contribution rates are intended to be contributed in each year in order to fund the ongoing cost of bene?t accruals. The annual normal cost rate may be considered the ongoing cost of bene?t accruals for any given plan year. When the present value of all future normal costs is subtracted from the present value of total bene?ts, the result is the actuarial accrued liability (AAL). This can be thought of as the current value of all past normal costs, or the amount that would be in the fund if all prior actuarial assumptions had been exactly met. The AAL represents the portion of the present value of total bene?ts that the cost method allocates to past service. To the extent that this AAL exceeds plan assets. an unfunded actuarial accrued liability (UAAL) exists. Table 7 caiculates the UAAL, if any, for the current and prior valuations. Note that currently, a UAAL exists for the payoff of this UAAL is discussed in more detail in Section 5 (City Contributions) of this report. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate I I Milliman to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who receive this work. Milliman recommends that third parties be aided by their own actuary or other quali?ed professional when reviewing the Milliman work product seraD?Odocx 20 003 SER I Milliman January 1. 2014 Actuarial Valuation Seattle City Employees' Retirement System Actuarial Liabilities Table 5 Millions) Actuarial Present Value of Future Benefits (PVFB) January 1, 2014 January 1. 2013 A. Active Members Service Retirement Vested Retirement Disability Retirement Survivor Benefits Refund of Member Contributions Total B. Inactive Members and Annuitants Service Retirement Disability Retirement Beneficiaries Inactive Members Total C. Grand Total PVFB 2.2276 59.2 6.6 21.4 35.5 2,350.3 1,391.4 9.5 96.1 160.0 1,657.0 4,007.3 2,038.3 57.0 12.0 25.1 34.0 2,166.4 1.2619 9.6 93.0 148.9 1,513.4 3,679.3 This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate - I I - to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who I receive this work. Milliman recommends that third parties be aided by their own actuary or other quali?ed professional when reviewing the Milliman work product seraOZ'r'Odocx 20 003 SER I Milliman January 1, 2014 Actuarial Valuation Seattle City Employees' Retirement System Actuarial Liabilities Table 6 Normal Cost Contribution Rates as Percentages of Salary January 1, 2014 January 1, 2013 Service Retirement 12.49 Vested Retirement 1.25 Disability Retirement 0.07 Survivor Benefits 0.18 Refund of Member Contributions 1.20 Administrative Expenses 0.60 Total 15.79 "lo 11.63 1.26 0.14 0.19 1.33 0.40 14.95 This work product was prepared solely for SCE RS for the purposes described herein and may not be appropriate - I I - to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who I "nan receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when reviewing the Miliiman work product. sera0270.docx 20 003 SER Milliman January 1, 2014 Actuarial Valuation Seattle City Employees? Retirement System Actuarial Liabilities Table 7 Unfunded Actuarial Accrued Liability (UAAL) (5 Millions) - January 1, 2014 January 1. 2013 A. Actuarial present value of all future benefits for present and former members and their survivors (Table 3) 4,007.3 3,679.8 B. Less actuarial present value of total future normal costs for present members 747.2 654.5 C. Actuarial accrued liability? 3,260.1 3,025.3 D. Less actuarial value of assets available for benefits (Table 2) 2,094.3 1,920.1 E. Unfunded actuarial accrued liability (Funding Excess, if negative) - 1,165.8 1,105.2 F. Funding Ratio 64.2% 63.5% *The actuarial accrued liability as of January 2015 is projected to be $3,429.5 million. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate - I I - to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who I receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when reviewing the Milliman work product. sera0270.docx 20 003 SER January 1, 2014 Actuarial Valuation Seattle City Employees' Retirement System This page intentionally left blank. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate M. I - to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who I "nan receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when reviewing the Milliman work product sera0270.docx 20 003 SER r' Milliman January 1, 2014 Actuarial Valuation Seattle City Employees? Retirement System Section 5 City Contributions Funding Actuarial Gains and Losses Amortization of UAAL As shown in Table 7 in the previous section of this report. the AAL exceeds the current Actuarial Value of Assets. In other words, as of the January 1, 2014 valuation, a UAAL exists for SCERS. Because a UAAL exists, the total calculated actuarial contribution rate will consist of two components: 1. The normal cost contribution rate as of January 1, 2014 2. An amortization payment intended to pay off the UAAL in accordance with the SCERS funding policy The current SCERS funding policy was updated by a Seattle City Council resolution in August 2013. The funding policy specifies that the UAAL will be amortized as a level percentage of payroll over a closed 30-year period as of the January 1, 2013 actuarial valuation. This means that, for the January 1, 2014 valuation, the amortization contribution rate must pay off the current UAAL over a 29-year period. When experience is different from actuarial expectation, an actuarial gain or loss occurs. Ongoing actuarial gains and losses decrease and increase the UAAL. This year, a primary source of loss on the UAAL was the adoption of new assumptions with the 2014 Investigation of Experience. Section 7 of this report illustrates the historical actuarial gains and losses on the UAAL by source. Table 8 details the components of the actuarial required contribution rate of 25.76% by breaking it into the necessary funding components: normal cost and amortization of UAAL. It then illustrates the Split between member and employer contribution rates, assuming that member contributions are allocated entirely toward paying the ongoing normal cost of benefits. As of the January 1, 2014 valuation, the actuarial required contribution rate for the employer has increased to 15.73% beginning January 1, 2015. This is mainly due to the adoption of new assumptions with the 2014 investigation of Experience Report. The total contribution rate of 24.34% being paid in 2014 was calculated in order to amortize the January 1, 2013 UAAL over a 30?year period; however, this rate is not sufficient to amortize the January 1. 2014 UAAL over 29 years due to gains and losses that have occurred during the year, in addition to the impact of the new assumptions used to calculate the 2014 UAAL. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate 'Milliman to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who receive this work. Milliman recommends that third parties be aided by their own actuary or other quali?ed professional when reviewing the Milliman work product. ser30270.docx 20 003 SER Milliman January 1. 2014 Actuarial Valuation Seattle City Employees? Retirement System Employer Contributions Amortization of UAAL (continued) Table 9 details the expected amortization of the UAAL over the 29-year closed period beginning January 1, 2014. The total contribution rate needs to be immediately as of the beginning of the next calendar year) increased from 24.34% of pay to 25.76% of pay to be projected to amortize the UAAL over 29 years from January 1, 2014. Because this ?gure is based on an Actuarial Value of Assets that is currently deferring a net gain. this 25.76% is projected to decrease over the next several years if no other actuarial asset gains or losses were to occur. in Section 8 of this report, we have included a five-year projection of the actuarial required contribution, including optimistic and pessimistic investment return scenarios. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate 'Milliman to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. Milliman recommends that third parties be aided by their own actuary or other quali?ed professional when reviewing the Milliman work product. ser30270.docx 20 003 SER 10.201 4 I Milliman January 1, 2014 Actuarial Valuation Seattle City Employees' Retirement System Employer Contributions Table 8 Contribution Rates as Percentages of Salary Actuarial Required Contribution Beginning January 1, 2014 January 1, 2013 A. Total normal cost rate 15.79 14.95 B. UAAL amortization rate 9.97 9.39 C. Actuarial required contribution rate 25.76 24.34 D. Member contribution rate 10.03 10.03 Allocation of employer contribution rate Normal cost 5.76 4.92 Amortization payment 9.97 9.39 Total employer contribution rate 15.73 14.31 if member contributions are all allocated to paying normal cost. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate I I - to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who I receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when reviewing the Milliman work product sere0270.docx 20 003 SER l? Milliman January 1, 2014 Actuarial Valuation Seattle City Employees? Retirement System Employer Contributions Table 9 Amortization of Unfunded Actuarial Accrued Liability (UAAL) Millions) UAAL Total Contribution Normal UAAL Beginning Amortization Compounded Ending Payroll Rate Cost Rate Rate Balance Payment Interest Balance 2014 607 24.34% 15.79% 8.55% 35 1,1658 3 51.9 85.5 1,199.4 2015 634 25.76% 15.79% 9.97% 1,199.4 53.2 87.6 1,223.8 2015 663 25.76% 15.79% 9.97% 1,223.8 56.1 89.4 1,247.1 2017 693 25.76% 15.79% 9.97% 1,247.1 69.1 91.0 1,268.9 2018 724 25.76% 15.79% 9.97% 1,268.9 72.2 92.5 1,289.3 2019 757 25.76% 15.79% 9.97% 1,289.3 75.5 93.9 1,307.7 2020 791 25.76% 15.79% 9.97% 1,307.7 78.9 95.2 1,324.0 2021 827 25.76% 15.79% 9.97% 1,324.0 82.5 96.3 1,337.8 2022 864 25.76% 15.79% 9.97% 1,337.8 86.2 97.2 1,348.8 2023 903 25.76% 15.79% 9.97% 1,348.8 90.0 97.8 1,356.6 2024 944 25.76% 15.79% 9.97% 1,356.6 94.1 98.3 1,360. 8 2025 987 25.76% 15.79% 9.97% 1,360.8 98.4 98.4 1,360.8 2025 1032 25.76% 15.79% 9.97% 1,360.8 102.9 98.3 1,356.2 2027 1079 25.76% 15.79% 9.97% 1,356.2 107.5 97.8 1,346.3 2028 1128 25.76% 15.79% 9.97% 1,346.3 112.5 96.8 1,330.7 2029 1179 25.76% 15.79% 9.97% 1,330.7 117.6 95.5 1,308.6 2030 1232 25.76% 15.79% 9.97% 1,308.6 122.8 93.6 1,279.4 2031 1288 25.76% 15.79% 9.97% 1,279.4 128.4 91.2 1,242.2 2032 1346 25.76% 15.79% 9.97% 1,242.2 134.2 88.2 1,196.2 2033 1407 25.76% 15.79% 9.97% 1,196.2 140.3 84.5 1,140.4 2034 1471 25.76% 15.79% 9.97% 1,140.4 146.7 80.1 1,073.9 2035 1537 25.76% 15.79% 9.97% 1,073.9 153.3 74.9 995.5 2036 1606 25.75% 15.79% 9.97% 995.5 160.1 68.8 904.2 2037 1679 25.76% 15.79% 9.97% 904.2 167.4 61.6 798.4 2038 1755 25.76% 15.79% 9.97% 798.4 175.0 53.4 675.8 2039 1834 25.76% 15.79% 9.97% 676.8 182.9 44.0 538.0 2040 1917 25.76% 15.79% 9.97% 538.0 191.1 33.3 380.1 2041 2004 25.76% 15.79% 9.97% 380.1 199.8 21.2 201.5 2042 2095 25.76% 15.79% 9.97% 201.5 208.9 7.4 This Work product was prepared solely for SCERS for the purposes described herein and may not be appropriate M.I I . to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who Iman receive this work. Milliman recommends that third parties be aided by their own actuary or other quali?ed professional when reviewing the Milliman work product. sar30270.docx 20 003 SER I Milliman January 1, 2014 Actuarial Valuation Seattle City Employees? Retirement System Section 6 Actuarial Information for Accounting Purposes Q?s The Governmental Accounting Standards Board (GASB) has issued standards under Statements No. 25 and 27. Statement 25 is required reporting by the plan (the System) and Statement 27 is reporting by state and local governmental employers (the City). Statement 25 includes certain supplementary information: 1. A schedule of funding progress 2. A schedule of employer contributions It should be noted that GASB has recently issued new statements (Statements No. 67 and 68) that will supersede Statements No. 25 and 27. These will result in significant accounting changes. GASB Statement No. 67 will be effective beginning with the January 1, 2015 SCERS financial statements. and GASB Statement No. 68 will be effective beginning with the January 1. 2016 SCERS financial statements. The schedule of funding progress is shown in Table 11 and compares assets and liabilities over the years. Primarily due to the poor investment returns of 2000 through 2003. as well as the extreme market downturn of 2008, the plan is not fully funded. Another material factor in the current funding shortfall is the bene?t enhancements triggered in 2007 Ge. 65% Floor COLA and the 1.5% COLA for all retirees). The schedule of employer contributions is shown in Table 13 and shows that, except for the most recent three years, the employer has consistently made contributions equal to or greater than the GASB Actuarial Required Contribution (ARC). Table 10 develops the Annual Pension Cost (APC) and Net Pension Obligation (NPO). The NPO can be thought of as the accumulated value of APC in excess of employer contributions. Because contributions have exceeded the APC in prior years. a negative NPO had built up. This year, SCERS has a positive NPO. The current SCERS contribution rate is not sufficient to fund the UAAL over a period of 30 years or less under GASB calculation rules, since GASB rules preclude the use of an active membership growth assumption. Therefore, the GASB ARC will be equal to the amount needed to fund the normal cost for the year plus a 30?year amortization payment of the UAAL calculated with 0% membership growth. This is the minimum allowed for accounting purposes under current GASB parameters. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate - I to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when reviewing the Milliman work product. ser30270.docx 20 003 SER sarzo.ooa.sea.1o.2o14 r? Milliman January 1, 2014 Actuarial Valuation Seattle City Employees' Retirement System Actuarial Information for Accounting Purposes Actuarial Information Due to the large increase in the ARC, as well as the fact that the ARC (continued) was not fully funded by SCERS, the NFC is now positive. Note that the concept of the NFC) will no longer apply under the new GASB Statements No. 67 and 68. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate I I I - to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who I Iman receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when reviewing the Milliman work product. sera0270.docx 20 003 SER I Milliman January 1. 2014 Actuarial Valuation Seattle City Employees? Retirement System Actuarial Information for Accounting Purposes Table 10 GASB Statement No. 27 Annual Pension Cost and Net Pension Obligation For Fiscal Years Ending December 31, 2013 and December 31, 2014 Based on the January 1. 2012 and January 1. 2013 Valuations? 2013 2014 13 Total Normal Cost Rate 14.95% 14.95% 1b Employee Contribution Rate 10.03% 10.03% 1c Employer Normal Cost Rate (1a - 1b) 4.92% 4.92% 2a Total Employer Contribution Rate 12.89% 14.31% 2b Amortization Payment Rate (2a - 10) 7.97% 9.39% 2c Amortization Period 38 years 35 years 2d GASB 27 Amortization Rate 9.10% 10.68% 3 Total Annual Required Contribution (ARC) Rate (10 2d)" 14.02% 15.60% 4 Covered Employee Payroll"** 597.933.801 58 ARC (3 4} 83.830.319 5b Interest on Net Pension Obligation (NPO) (199.586) 50 ARC Adjustment 139.386 5d Annual Pension Cost (APC) (5a 5b 5c) 83,770.119 6 Employer Contribution 77,073,667 73 Change in NPO (5d - 6) 6.696.452 7b NPO at Beginning of Year 12,575,309} 70 NPO at End of Year (Ya 7b) 4,121,143 Beginning with the January 1. 2013 actuariai valuation report. GASB calculations take into account the tag between determination of the actuariai contribution rate and the date of expected contribution rate. For example, the January 1. 2011 actuariai vaiuation caicuiates the contribution rate beginning January 1. 2012 (for fiscai year ending December 31. 2012). This change was made due to new funding policy, adopted in 2011, to contribute the actuariain determined contribution rate (previousiy. a ?xed rate was contributed). it the amortization period determined by the actuai contribution rate exceeds the maximum amortization period required by GASB Statement No. 27, the ARC is determined using an amortization of the UAAL over 30 years. Covered payroii inciudes compensation paid to at! active empioyees on which contributions were made. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate - I to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who 9 I recaive this work. Milliman recommends that third parties be aided by their own actuary or other quali?ed professional when reviewing the Milliman work product. sera0270.docx 20 003 SER i Milliman January 1, 2014 Actuarial Valuation Seattle City Employees? Retirement System Actuarial information for Accounting Purposes Table 11 Schedule of Funding Progress (All dollar amounts in millions) Actuarial Unfunded UAAL as a Valuation Date Actuarial Value Actuarial Accrued Actuarial Accrued Covered Percentage of January 1 of Assets Liabilities (AAL) Liabilities (UAAL) Funded Ratio Payroll?? Covered Payroll 1984 329.8 5 544.0 5 214.2 60.6% 159.4 134.4% 1986 395.7 561.3 165.6 70.5 182.0 91.0 1988 445.4 595.3 149.9 74.8 199.0 75.3 1990 553.8 737.9 179.1 75.7 212.3 84.4 1992 660.0 810.5 150.5 81.4 239.4 62.9 1994 761.6 926.2 144.4 84.4 291.8 49.5 1996 960.2 1,019.7 39.5 96.1 310.6 12.7 1997 1,094.8 1,067.3 (7.5) 100.7 316.9 (2.4) 1998 1,224.6 1,266.7 42.1 96.7 341.5 12.3 1999 1,375.0 1,326.6 (48.4) 103.6 370.4 (13.1) 2000 1,582.7 1,403.1 (179.6) 112.8 383.6 (46.5) 2002 1,383.7 1,581.4 197.7 87.5 405.1 48.8 2004 1,527.5 1,778.9 251.4 85.9 424.7 59.2 2006 1,791.8 2,017.5 225.8 88.8 447.0 50.5 2008 2,119.4 2,294.6 175.2 92.4 501.9 34.9 2010 1,645.3 2,653.8 1,008.5 62.0 580.9 173.6 2011 2,013.7 2,709.0 695.4 74.3 563.2 123.5 2012 1,954.3 2,859.3 905.0 68.3 557.0 162.5 2013 1,920.1 3,025.3 1,105.2 63.5 567.8 194.6 2014 2,094.3 3,260.1 1,165.8 64.2 597.9 195.0 Covered Payroll includes compensation paid to all active employees on which contributions are calculated. Covered Payroll differs from the Active Member Valuation Payroll shown in Table i, which is an annualized compensation of only those members who were active on the actuarial valuation date. Re?ects increased COLA bene?ts adopted by the City Council after the valuation was completed. . This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified 30 professional when reviewing the Millirnan work product sera0270.docx 20 003 SER 33.120.003.5ER102014 Milliman January 1, 2014 Actuarial Valuation Seattle City Employees? Retirement System Actuarial Information for Accounting Purposes Table 12 Solvency Test (All dollar amounts in millions) Actuarial Accrued Liabilities for (A) (B) (Cl (D1 Actuarial Active Members Portion of Actuarial Accrued Liabilities Actuarial Value of lnactives, (Employer Covered by Assets Valuation Date ValuatiOn Active Member Retirees and Financed January 1 Assets Contributions Bene?ciaries Portion) Total (A) (B) (C) (D) 1984 5 329.8 3 90.1 243.0 5 210.9 5 544.0 100.0% 98.6% 0.0% 60.6% 1986 395.7 110.7 263.1 187.5 561.3 100.0 100.0 11.7 70.5 1988 445.4 136.0 303.6 155.7 595.3 100.0 100.0 3.7 74.8 1990 558.8 164.0 332.8 241.1 737.9 100.0 100.0 25.7 75.7 1992 660.0 202.6 357.9 250.0 810.5 100.0 100.0 39.8 81.4 1994 731.3 243.4 333.1 294.7 923.2 100.0 100.0 51.0 34.4 1993 930.2 294.1 409.3 313.3 1,019.7 100.0 100.0 37.5 93.1 1997 1,094.3 313.1 449.3 324.4 1,037.3 100.0 100.0 100.0 100.7 1993 1,224.3 337.3 551.3 377.3 1,233.7 100.0 100.0 33.9 93.7 1999 1,375.0 353.4 577.3 390.3 1,323.3 100.0 100.0 100.0 103.3 2000 1,582.7 385.2 599.4 418.5 1,403.1 100.0 100.0 100.0 112.8 2002 1,383.7 434.3 675.6 471.5 1,581.4 100.0 100.0 58.1 87.5 2004 1,527.5 482.5 758.9 537.5 1,778.9 100.0 100.0 53.2 85.9 2006 1,791.8 539.7 902.2 575.6 2,017.5 100.0 100.0 60.8 88.8 2008 2,119.4 590.1 1,084.9 619.6 2,294.6 100.0 100.0 71.7 92.4 2010 1,645.3 684.7 1,176.4 792.7 2,653.8 100.0 81.7 0.0 62.0 2011 2,013.7 683.7 1,290.9 734.4 2,709.0 100.0 100.0 5.3 74.3 2012 1,954.3 730.9 1,393.7 734.7 2.8593 100.0 87.8 0.0 68.3 2013 1,920.1 757.3 1,513.4 754.6 3,025.3 100.0 76.8 0.0 63.5 2014 2,094.3 792.4 1,657.0 810.7 3,260.1 100.0 78.6 0.0 64.2 Re?ects increased COLA bene?ts adopted by the City Councif after the valuation was compieted. This work product was prepared solely for SCERS for the purposes described herein and may not be appropn?ate to use for other purposes. Milliman does not intend to Milliman bene?t and assumes no duty or to other parties who receive this work. Milliman recommends that third parties be aided by their own actuary or other quali?ed 31 professional when reviewing the Miliiman work product seraoz?lococx 20 003 SER 3820.003.5ER.10.2014 I January 1, 2014 Actuarial Valuation Seattle City Employees? Retirement System Actuarial Information for Accounting Purposes Table 13 Schedule of Employer Contributions (All dollar amounts in millions) Fiscal Year Covered Actual Actual Annual Required Ending Employee Employer Employer Contribution Percentage of December 31 Payroll?? Contributionsm Contribution "film (ARC) ?Am ARC Contributed 1989 212.3 5 25.1 8.91% 8.91% 159.4% 1990 243.2 21.8 8.91 8.91 100.0 1991 239.4 21.5 8.91 8.91 100.0 1992 280.4 25.1 8.91 8.91 100.0 1993 291.8 28.1 8.91 8.91 100.0 1994 299.0 29.7 9.91 9.91 100.0 1995 310.9 27.9 9.91 9.91 100.0 1999 319.9 29.4 9.91 9.91 100.0 1997 319.3 29.3 9.91 9.91 100.0 1999 341.5 90.9 9.91 9.91 100.0 1999 370.4 29.7 8.03 4.50 178.0 2000 383.8 30.8 8.03 4.50 178.0 2001 405.1 32.7 8.03 3.04 284.0 2002 454.5 38.8 8.03 3.04 284.0 2003 424.7 34.2 8.03 8.03 100.0 2004 458.8 38.7 8.03 8.03 100.0 2005 447.0 35.9 8.03 8.03 100.0 2008 472.5 37.9 8.03 8.03 100.0 2007 501.9 40.3 8.03 8.03 100.0 2008 572.4 48.0 8.03 8.03 100.0 2009 580.9 48.7 8.03 8.03 100.0 2010 583.2 45.2 8.03 17.00 47.2 2011 557.0 50.3 9.03 13.11 88.9 2012 567.8 82.5 11.01 11.84 93.0 2013 597.9 77.1 12.89 14.02 91.9 Computed as the dollar amount of the actual employer contribution made as a percentage of payroll divided by the contribution rate, expressed as a percentage of payroll. The actual and required employer contributions are expressed as a percentage otpayroll. alter ?rst recognizing the $12 per employee assessment made for the death bene?ts. This assessment per employee is included in the actual employer contributions reported and has been previously recognized by the actuary in determining the ARC. The City makes employer contributions as a percentage of actual payroll as set in the City Ordinance. Thus, as long as the percentage equals the percentage required by the most recent actuarial valuation, the dollar amount or the Annual Required Contributions (ARC) is equal to the actual dollar amount of the employer contributions. The City Ordinance does not permit a reduction in the employer contribution rate less than the employee contribution rate. Thus. the City's contributions exceeded the ARC for 1999 through 2001 and resulted in a negative amount. ARC re?ects the increased COLA bene?ts adopted in 1998. ARC is calculated assuming 0.0% population growth. . This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to Milliman benefit and assumes no duty or liability to other parties who receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified 32 professional when reviewing the Milliman work product. seralJZTOdocx 20 003 SER 3820.003.SER.10.2014 January 1, 2014 Actuarial Valuation Seattle City Employees' Retirement System Actuarial Information for Accounting Purposes Table 14 GASB Statement No. 27 Five-Year Trend Information Fiscal Year Ending December 31, 2009 December 31, 2010 December 31, 2011 December 31, 2012 December 31, 2013 Annual Pension Contribution as a Net Pension Cost (APC) Percentage of APC Obligation (NPO) 46,933,422 99% (77,865,963) 93,923,454 48% (29,167,296) 72,346,935 70% (7,121,624) 67,061,747 93% (2,575,309) 83,770,119 92% 4,121,143 This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate . I I . to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who I receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when reviewing the Milliman work product. seraDZTOdocx 20 003 SER 38120.003.SER.10.2014 January 1, 2014 Actuarial Valuation Seattle City Employees' Retirement System Actuarial Information for Accounting Purposes Table 15 Fiscal Year Ending December 31, 2009 December 31, 2010 December 31, 2011 December 31. 2012 December 31, 2013 GASB Statement No. 27 Annual Development of Pension Cost ARC at EOY 46,650,169 95,743,634 73,028,744 67,228,221 83,830,319 Interest on NPO (6,056,564) (6,034,612) (2,269,455) (551,925) (199,556) ARC Adjustment 6,339,817 4,214,432 1,578,656 385,452 139,386 Annual Pension Cost 46,933,422 93,923,454 72,346,935 67,061,747 83,770,119 Total Employer Contributions 46,650,169 45,224,787 50,301,263 62,515,432 77,073,667 Amortization Period: Open 30 years, unless ?xed rate amortizes in less than 30 years. Amortization Method: Level Percentage of Projected Payroll. Change in NPO 283,253 48,698,667 22,045,672 4,546,315 6,696,452 NPO Balance (77,865,963) (29,167,295) (7,121,624) (2,575,309) 4,121,143 GainfLoss 50,518,847 22,727,481 4,712,789 6,756,652 Amort. Factor 12.32673 18.47603 18.47603 18.47603 18.47603 Amort. Of GainlLoss (6,339,817) (4,214,432) (1,575,655) (365,452) (139,355) Ending Balance (77,655,953) (29,157,296) (7,121,624) (2,575,309) 4,121,143 ser90270.docx I This werk product was prepared solely for SCERS for the purposes described herein and may not be appropriate to use for other purposes. does not intend to Milliman bene?t and assumes no duty or liability to other parties who receive this work. Milliman recommends that third parties be aided by their own actuary or other quali?ed 34 professional when reviewing the Milliman work product. 20 003 SER 38720.003.SER.10.2014I January 1, 2014 Actuarial Valuation Seattle City Employees' Retirement System Section 7 l1 Actuarial Gains or Losses An analysis of actuarial gains or losses was performed in conjunction with the January 1, 2012, January 1, 2013 and January 1, 2014 actuarial valuations. The results of our analysis of the financial experience of the System in the three most recent actuarial valuations are presented in Table 14. Each gain or loss shown represents our estimate of how much the given type of experience caused the UAAL to change in the period since the previous actuarial valuation. Gains and losses due to demographic sources are approximate. Demographic experience is analyzed in greater detail in our periodic assumption studies. There is one non-recurring item reflected in the current year?s actuarial gains and losses: I New assumptions effective with the January 1, 2014 actuarial valuation were adopted per the 2014 Investigation of Experience. See Appendix A of this report for details on assumptions. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate . I to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when reviewing the Milliman work product. ser80270.docx 20 003 SER 358120.003.SER.1D.2D14 r' January 1, 2014 Actuarial Valuation Seattle City Employees' Retirement System Actuarial Gains or Losses Table 16 Analysis of Actuarial Gains or Losses* (All dollar amounts in millions) Gaini(Loss) For Period 2013 2012 2011 Investment Income Investment income on AVA was greater (less) than assumed. 50.8 (151.6) 53 (173.9) Pay Increases Pay increases were less (greater) than expected. 3.3 3.1 31.7 Age and Service Retirements Members retired at older (younger) ages or with less (greater) ?nal average pay than expected. 11.7 13.7 14.4 Disability Retirements Disability claims were less (greater) than expected. (0.1) (0.1) (0.1) Death-in-Service Benefits Survivor claims were less (greater) than expected. - - - Withdrawal from Employment More (less) reserves were released by withdrawals than expected. (19.1) (14.9) (16.8) Death after Retirement Retirees died younger (lived longer) than expected. (3.1) (2.8) (7.8) Total Gain or (Loss) during Period from Financial Experience 43.5 (152.6) (152.5) Non-Recurring Items: Changes in actuarial assumptions and plan (76.7) - 9.1 amendments caused a gain (loss). Data revisions - (17.0) (30.5) Change in actuarial asset valuation method caused a gain (loss). NIA Composite Gain (Loss) During Period (33.2) (169.6) (173.9) Effects related to losses are shown in parentheses. Numerical results are expressed as a decrease (increase) in the UAAL. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate I - I l- to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who 6 I [man receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when reviewing the Milliman work product. ser80270docx 20 003 SER i Milliman January 1, 2014 Actuarial Valuation Seattle City Employees' Retirement System Section 8 Projection of Actuarial Required Contribution Rate Contribution Rate Projections and Increases This section of the January 1, 2014 actuarial valuation is devoted to a detailed discussion of the contribution rates currently needed, and projected to be needed. in order to effectively fund the System. This section illustrates two key points: 1. As mentioned throughout this report, the current AVA is deferring a net gain. As a result. if no actuarial asset gains or losses were to occur over the next several years the market return equals the actuarial required contribution rate would be projected to decrease (and the Funding Ratio would be projected to increase) as the remaining deferred gains are fully phased in. Currently, the City is contributing a total rate of 24.34% of payroll (employer and member). The actual contribution rate needed will vary in the future. We have shown projections to roughly quantify the potential impact of good and bad experience. We have performed a five-year projection of the actuarial required contribution rate under three different scenarios: 1. Assuming that the investment return assumption of 7.50% is met in each future year. 2. 3. Assuming that the assets return at the 51h percentile. Assuming that the assets return at the 95?h percentile. The result is effectively a 90% confidence interval (based on asset returns) of the projected contribution rates in these years. Note that 'in each scenario. all other actuarial assumptions are assumed to be met. The projections assume the City contributes the actuarial required contribution rate each year in the future. This rate is based on a 29- year closed amortization period as of January 1, 2014 and includes a 050% population growth assumption. Future returns at the 5'11 and 95th percentile are based on Milliman?s capital market assumptions and SCERS's target asset allocation as of January 1, 2014. Table 17 provides the results of these projections. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate Milliman to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liabii'rty to other parties who receive this work. Milliman recommends that third parties be aided by their own actuary or other quati?ed professional when reviewing the Milliman work product sera0270.docx 20 003 SER 38120.003.SER.10.2014 i Milliman January 1, 2014 Actuarial Valuation Seattle City'Employees? Retirement System Contribution Rate Projections and Increases Table 17 Projected Total Contribution Rates Projected Total Actuarial Required Contribution Rate 30% 26% Percent of Payroll 32 2015 2016 2017 Fiscal Year of Contribution* 2018 Expected Return qu? Pessimistic Scenario (95th Percentile) +0ptimistic Scenario (5th Percentile) 2019 2020 Projected Actuarial Required Total Contribution Rate Contribution Year? 2015 2016 2017 2018 2019 2020 If Asset Return at 95th Percentile 25.76% 25.98% 26.71% 27.36% 28.41% 29.20% Assuming 7.50% Future Returns 25.76% 25.31% 25.10% 24.55% 24.40% 24.08% If Asset Return at 5th Percentile 25.76% 24.52% 23.29% 21 .45% 19.80% 18.04% Contribution year lags calculation year by one year. For example: Contribution Year 2015 is based on the 2014 resuits, amortized over 29 years beginning in 2014, if the increase takes place in 2015. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate to use for other purposes. Miliirnan does not intend to bene?t and assumes no duty or liability to other parties who receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified 'Milliman professional when reviewing the Miliiman work product. sort-10270006): 20 003 SER i Milliman January 1, 2014 Actuarial Valuation Seattle City Employees? Retirement System Contribution Rate Projections and increases Assumed Returns for The projection above uses the 5lb and 95trl percentile returns based on Projection target asset allocation and Milliman?s January 1, 2014 capital market assumptions. These percentile returns vary by the number of years of return; for example. the Contribution Year 2015 number assumes one year of return at the one-year 5th or 95"1 percentile rate; the Contribution Year 2016 number assumes two years of return at the two-year 5?h or 95?h percentile rate. The percentile rates assumed for this analysis are shown in the table below: Compounded Average Return for Period 1-Year Period 2?Year Period 3-Year Period 4-Year Period 5-Year Period Contribution Increases The current contribution rate needs to be increased in order to be suf?cient to amortize the UAAL over a 29?year period as of the Percentile 95th 5th 27.9% 21.17.valuation date. As of January 1. 2015, an actuarial required contribution rate of 25.76% is projected to be needed in order to amortize the UAAL over a 29-year period beginning January 1, 2014. This represents a needed increase of 1.42% of pay. in addition to the current 24.34% of pay being contributed (by the employer and members combined). Note that due to the future recognition of deferred asset gains. this amount is expected to decrease in the next valuation, if all assumptions are met. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate 5 M. I I - to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who I receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when reviewing the Milliman work product. sera0270.docx 20 003 SER 38120.003.SER.10.2014 Milliman January 1, 2014 Actuarial Valuation Seattle City Employees' Retirement System This page intentionally left blank. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate I - I - to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who I receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when reviewing the Milliman work product. ser30270.docx 20 003 SER 33120.003.SER.1G.2014 I January 1, 2014 Actuarial Valuation Seattle City Employees' Retirement System Section 9 Projection of Benefit Payments and Contribution Dollars This section of the January 1, 2014 actuarial valuation illustrates projected SCERS benefit payments and dollar contributions over a 10?year period following the actuarial valuation. 1. These projections assume all actuarial assumptions, including 7.50% investment returns (on a market basis) in each future year, are met in Projection of Benefit the future. Payments and Contribution Dollars The projection of contribution dollars makes the following additional key assumptions: 1. Valuation payroll is assumed to grow with both wage inflation of 4.00% and annual population growth of 0.50% (per current SCERS assumptions). 2. The City is assumed to make the actuarially required contribution rate calculated in each projection year. 3. Future recognition of currently deferred asset gains or losses is reflected in the projection. Table 18 shows the results of these projections. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate . I I . to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who I lman receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when reviewing the Milliman work product. sera0270.docx 20 003 BER l? January 1, 2014 Actuarial Valuation Seattle City Employees? Retirement System Projection of Bene?t Payments and Contribution Dollars Table 18 10-Year Projection of Benefit Payments and Contributions* 10-Year Projection of Cash Flows in millions) Projected Projected Projected Projected Projected Projected Admin. Benefit Total Cash Total Net Cash Payroll Expenses Payments Outflow Contributions Flow 2015 634.3 3.8 176.8 180.6 163.4 (17.2) 2016 663.0 4.0 190.3 194.3 167.8 (26.5) 2017 693.0 4.2 203.8 208.0 173.9 (34.0) 2018 724.3 4.3 216.6 220.9 177.8 (43.1) 2019 757.0 4.5 229.4 233.9 184.7 (49.2) 2020 791.2 4.7 243.1 247.8 190.5 (57.3) 2021 827.0 5.0 256.6 261.6 199.1 (62.4) 2022 864.4 5.2 270.0 275.2 208.1 (67.0) 2023 903.5 5.4 283.2 288.6 217.6 (71.1) 2024 944.3 5.7 296.5 302.2 227.4 (74.8) Cash Flow Projections 350 300 250 200 1 50 1 00 50 SMillions (50) (1 cc) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 I Deontributions DBene?ts plus Admin. Expenses Cash Flow Total contn'butions include City and employee contributions, and reflect anticipated future recognition of currently deferred asset gains and losses. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate I to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who I "nan receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when reviewing the Milliman work product. seraoz'lodccx 20 003 SER January 1, 2014 Actuarial Valuation Seattle City Employees? Retirement System Appendix A Actuarial Procedures and Assumptions This section of the report describes the actuarial procedures and assumptions used in this valuation. The assumptions used in this valuation were adopted by the SCERS Board at its May 2014 meeting. The actuarial assumptions used in the valuation are intended to estimate the future experience of the members of the System and of the System itself in areas that affect the projected benefit flow and anticipated investment earnings. Any variations in future experience from that expected from these assumptions will result in corresponding changes in the estimated costs of the System?s benefits. Table A-1 summarizes the actuarial assumptions. Table A-2 presents expected annual salary increases for various years of service. Tables A-3 through A-6 show rates of decrement for service retirement, disablement, mortality, and otherterminations of employment. Table shows probabilities of vesting upon termination. Actuarial Cost Method The actuarial valuation was prepared using the entry age actuarial cost method. Under this method, the actuarial present value of the projected benefits of each individual included in the valuation is allocated as a level percentage of the individual?s projected compensation between entry age and assumed exit. The portion of this actuarial present value allocated to a valuation year is called the normal cost. The portion of this actuarial present value not provided for at a valuation date by the sum of the actuarial value of the assets, and the actuarial present value of future normal costs is called the unfunded actuarial accrued liability or UAAL. The UAAL is amortized as a level percentage of the projected salaries of present and future members of the System. Records and Data The data used in the valuation consist of financial information; records of age, sex, service, salary, contribution rates and account balances of contributing members; and records of age, sex, and amount of benefit for retired members and beneficiaries. All of the data were supplied by the System and are accepted for valuation purposes without audit. Replacement of The ages at entry and distribution by sex of future members are Terminated Members assumed to average the same as those of the present members they replace. If the number of active members should increase. it is further assumed that the average entry age of the larger group will be the same, from an actuarial standpoint, as that of the present group. Under these assumptions, the normal cost rates for active members will not vary with the termination of present members. This work product was prepared solely for SCERS for the purposes described hereln and may not be appropriate I - I I - to use for other purposes. does not intend to bene?t and assumes no duty or liability to other parties who "nan receive this work. Milliman recommends that third parties be aided by their own actuary or other quali?ed professional when reviewing the Milliman work product. sera0270.docx 20 003 SER 10.2014 1 January 1, 2014 Actuarial Valuation Seattle City Employees? Retirement System Appendix A Actuarial Procedures and Assumptions City Contributions The City contribution rate is determined as of the prior year?s valuation such that the combined member and City contribution rate is suf?cient to amortize the UAAL over a closed 30-year period beginning January 1, 2013. The amortization payment is based on a level percent of pay. Administrative The annual contribution assumed to be necessary to meet general Expense administrative expenses of the system. excluding investment expenses, is 0.60% of members? salaries. This ?gure is included in the calculation of the normal cost rate. Valuation of Assets The assets are valued using a five-year smoothing method based on the difference between the expected market value and the actual market value of the assets in each year. The expected market value is the prior year?s market value increased with the net increase in the cash flow, all increased with interest during the past fiscal year at the expected investment return rate assumption. Investment Earnings The annual rate of investment earnings of the assets of the System is assumed to be 7.50%. This rate is compounded annually and is net of investment expenses. Postretirement Benefit Postretirement bene?t increases include: Increases Automatic 1.5% Annual COLA This benefit applies to all members. - 65% Restoration of Purchasing Power (ROPP) The member?s benefit is the greater of 65% of the annual initial benefit adjusted for CPI or their applicable benefit. This minimum benefit is available to all retirees and beneficiaries. The financial impact of the ROPP benefit is valued assuming an annual price inflation rate of 3.25%. Additional contingent COLA increases that were adopted in 2001, but not effective until the System reaches at least a 100% funding ratio, are not included in the valuation results. Future Salaries Table illustrates the rates of future salary increases assumed for the purpose of the valuation. In addition to increases in salary due to promotions and longevity. this scale includes an assumed 4.00% per annum rate of increase in the general wage level of the membership. Service Retirement Table A-3 shows the annual assumed rates of retirement among members eligible for service retirement or reduced retirement. Separate rates are also used during the ?rst year a member is eligible for service retirement. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate - I - to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who I lman receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when reviewing the Milliman work product. sera?270docx 20 003 SER i? Milliman January 1, 2014 Actuarial Valuation Seattle City Employees' Retirement System Appendix A Actuarial Procedures and Assumptions Disability Mortality Other Terminations of Employment Probability of Refund Interest on Member Contributions Portability Probability of Marriage Commencement for Terminated Vested Members The rates of disability used in this valuation are illustrated in Table A-4. It is assumed that one?third of all disabilities are duty related and two- thirds occur while off duty. The mortality rates used in this valuation are illustrated in Table A-5. A written description of each table used is included in Table FM. The rates of assumed future withdrawal from active service for reasons other than death, disability. or retirement are shown for representative ages in Table A-6. Note that this assumption only applies to members who terminate and are not yet eligible for retirement. Terminating members may forfeit a vested right to a deferred benefit if they elect a refund of their accumulated contributions. Table A-7 gives the assumed probability, at selected ages, that a terminating member will elect to receive a refund of his accumulated contributions instead of a deferred bene?t. If a member terminates with more than 20 years of service, there is assumed to be a 20% probability that the member will elect a refund. Note that the probability of refund assumption only applies to members who terminate with a vested bene?t and are not yet eligible for retirement. Interest on member contributions made prior to January 1. 2012 is assumed to accrue at a rate of 5.75% per annum, compounded annually. Interest on member contributions made on or after January 1, 2012 is assumed to accrue at 4.75%. The cost of portability with other public retirement systems is not included in this valuation. We assumed 60% of the active members are married or have a registered domestic partner. Vested members who terminate but elect to leave their contributions in the System are assumed to commence receiving benefits at age 62. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate I - I. to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who I lman receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when reviewing the Milliman work product. sera0270.docx 20 003 SER l? Milliman January 1, 2014 Actuarial Valuation Seattle City Employees? Retirement System Appendix A Actuarial Procedures and Assumptions Table A-1 Summary of Valuation Assumptions January 1, 2014 Economic assumptions A Price in?ation 3.25% General wage increases 4.00 0. Investment return 7.50 Increase in membership 0.50 Interest on member accounts 5.75/4.75* ll. Demographic assumptions A. Salary increases due to promotion and longevity Table A-2 B. Retirement Table A-3 C. Disability Table A-4 D. Mortality? among contributing members Table A-5 Men RP 2000 Employees Table for Males. with ages set back six years. Women RP 2000 Employees Table for Females, with ages set back six years. E. Mortality? among service retired members and beneficiaries Table A-5 Men RP2000 Combined Healthy Males. with ages set back two years. Women RP2000 Combined Healthy Females, with ages set back one year. F. Mortality? among disabled members Table A-5 Men RP2000 Disabled Males, with ages set back four years. Women RP2000 Disabled Females. with ages set back four years. G. Other terminations of employment Table A-6 H. Probabilities of vesting on termination Table Member contributions made prior to January 1, 201r 2 are assumed to accrue interest at 5. 75%; contributions made on or alter that date are assumed to accrue at 4. 75%. ?All mortality tables are generational using Projection Scale AA to re?ect expected future mortality improvement. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate -l - to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who "nan receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when reviewing the Milliman work product. sera?zmdocx 20 003 SER 3820.003.SER.1D.2014 January 1, 2014 Actuarial Valuation Seattle City Employees? Retirement System Appendix A Actuarial Procedures and Assumptions Table A-2 Future Salaries Annual Rate of Increase Promotion and Years of Service Longevity Total* 0 to 1 4.50% 8.68% 1 to 2 3.50 7.64 2 to 3 2.75 6.86 3 to 4 2.00 6.08 4 to 5 1.50 5.56 9 to 10 0.80 4.83 14 to 15 0.45 4.47 19 to 20 0.29 4.30 24 to 25 0.25 4.26 29 to 30 0.25 4.26 35 or more 0.25 4.26 *Total rate shown re?ects compounded effect of men? increase and assumed wage growth of 4.00%. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate - I to use for other pmposas. Milliman does not intend to bene?t and assumes no duty or liability to other parties who _5 I receive this work. Milliman recommends that third parties be aided by their own actuary or other quali?ed professional when reviewing the Milliman work product. sera02?0.docx 20 003 BER I January 1, 2014 Actuarial Valuation Seattle City Employees? Retirement System Appendix A Actuarial Procedures and Assumptions Table A-3 Retirement Annual Probability Men Women Eligible for Full Benefits Eligible for Full Benefits Eligible for Less than 30 years Eligible for Less than 30 years Reduced 30 years or more of Reduced 30 years or more of Age Benefits of service service Bene?ts of service service Less than 50 0.0% 8.0% 8.0% 0.0% 10.0% 10.0% 50 5.0 8.0 10.0 5.0 10.0 10.0 51 5.0 8.0 10.0 5.0 10.0 10.0 52 5.0 8.0 12.0 5.0 10.0 12.0 53 3.0 8.0 12.0 3.0 10.0 12.0 54 3.0 8.0 12.0 3.0 10.0 12.0 55 6.0 8.0 12.0 6.0 10.0 12.0 56 5.0 8.0 12.0 5.0 10.0 12.0 57 5.0 8.0 12.0 5.0 13.0 12.0 58 5.0 8.0 12.0 5.0 13.0 12.0 59 5.0 8.0 15.0 8.0 13.0 15.0 60 6.0 14.0 15.0 8.0 15.0 15.0 61 9.0 12.0 15.0 12.0 13.0 15.0 62 15.0 20.0 30.0 15.0 20.0 26.5 63 12.0 18.0 22.0 12.0 18.0 20.0 64 9.5 18.0 22.0 13.0 18.0 20.0 65 40.0 32.0 40.0 30.0 66 40.0 32.0 40.0 38.0 67 40.0 32.0 40.0 38.0 68 30.0 26.0 33.0 32.0 69 30.0 26.0 33.0 32.0 70 1r immediate retirement is assumed for every person age 70 or over. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate I to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who _6 I receive this work. Milliman recommends that third parties be aided by their own actuary or other quali?ed professional when reviewing the Milliman work product. sera0270.docx 20 0'03 SER I Milliman January 1, 2014 Actuarial Valuation Seattle City Employees? Retirement System Appendix A Actuarial Procedures and Assumptions Table A-4 Disability? Annual Rates Age Men Women assumed that one-third of all disabilities are duty related and two-thirds are non-duty related. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who _7 I receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when reviewing the Milliman work product. sera0270.docx 20 003 SER Milliman January 1, 2014 Actuarial Valuation Seattle City Employees' Retirement System Appendix A Actuarial Procedures and Assumptions Table A-5 Mortality Annual Probability? Members Retired for Service Contributing Members and Beneficiaries of Members Disabled Members Age Men Women Men Women Men Women 22 0.03 0.02 0.03 0.02 2.26 0.74 27 0.04 0.02 0.04 0.02 2.26 0.74 32 0.04 0.02 0.04 0.03 2.26 0.74 37 0.05 0.03 0.08 0.05 2.26 0.74 42 0.08 0.05 0.11 0.08 2.26 0.74 47 0.11 0.08 0.15 0.12 2.26 0.74 52 0.16 0.12 0.21 0.19 2.64 0.98 57 0.23 0.18 0.36 0.31 3.29 1.45 62 0.33 0.28 0.67 0.58 3.93 1.97 67 0.54 0.43 1.27 1.10 4.66 2.53 72 NIA NIA 2.22 1.86 5.69 3.32 77 NIA WA 3.78 3.10 7.33 4.58 82 MIA NIA 6.44 5.08 9.76 6.35 87 MIA WA 11.08 8.64 12.83 8.78 92 NIA NA 18.34 14.46 16.22 12.25 *The mortality rates shown above are generationaiiy projected on an individuai basis using Projection Scale AA for the valuation. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate M- I - to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who I "nan receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when reviewing the Milliman work product. seraDZ?lOdocx 20 003 SER i Milliman January 1, 2014 Actuarial Valuation Seattle City Employees? Retirement System Appendix A Actuarial Procedures and Assumptions Table A-6 Other Terminations of Employment Among Members Not Eligible to Retire Years of Annual Rates for Annual Rates for Service Men Women 0 to 1 6.5% 8.0.5 0.5 This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate I . I . to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who I receive this work. Milliman recommends that third parties be aided by their own actuary or other quali?ed professional when reviewing the Milliman work product. sera0270.docx 20 003 SER I Milliman January 1, 2014 Actuarial Valuation Seattle City Employees? Retirement System Appendix A Actuarial Procedures and Assumptions Table A-7 Probability of Refund Probabilities of Refund Age upon Termination" 25 70.0% 30 65.0 35 55.0 40 48.0 45 43.0 50 38.0 55 36.0 60 40.0 If service is 20 or more years at iennination, probability of refund is equal to 20%. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who _10 I "nan receiVe this work. recommends that third parties be aided by their own actuary or other quali?ed professional when reviewing the Milliman work product. sera0270.docx 20 003 SER Milliman January 1. 2014 Actuarial Valuation Seattle City Employees? Retirement System Appendix Provisions of Governing Law Effective Date Members? Contribution Rate City Contribution Rate Final Compensation Service Retirement All actuarial calculations are based upon our understanding of the provisions governing the Seattle City Employees? Retirement System. Chapter 4.36 of the Seattle City Code. The bene?t and contribution provisions are summarized brie?y below, along with corresponding references to the City code. This summary encompasses the major provisions of the System; it does not attempt to cover all of the detailed provisions. The effective date of the retirement system was July 1. 1929. (Section 4.36.080) The members? contribution rate is 10.03% of salary as of January, 2012. Certain members who were contributing at a lower rate on June 23. 1972 continue to contribute at a lower rate. (Section 4.36.110A) The City contribution rate is the amount that is actuarially determined to be necessary to fund that portion of the retirement allowances not covered by the members' contributions. This amount shall be at least the members? contribution rate. (Sections 4.36.1 1 OC and 4.36.170) Final compensation is based on highest average compensation (excluding overtime) during any consecutive 24 months. (Sections 4.36.0400 and 4.36.0508) Eligibility 30 years of service; Age 52 and 20 years of service; Age 57 and 10 years of service; or Age 62 and 5 years of service. Nonna! Form Straight life benefit. Optional Forms Actuarial equivalent according to the mortaiity and interest basis adopted by the Retirement Board for such purposes. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate Milliman to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when reviewing the Milliman work product. sera0270.doox 20 003 SER 10.2014 Milliman January 1. 2014 Actuarial Valuation Seattle City Em ployees' Retirement System Appendix Provisions of Governing Law Service Retirement (continued) Amount of Allowance The total allowance is generally 2% times final compensation times total years of creditable service. However, if the member does not qualify in one of the following ways. the 2% factor is reduced by 0.1 for each year that retirement precedes the earliest date the member would be: Any age with 30 years of service. Age 51-59. providing the member's age and years of service total 80 or more. Age 60 or older with 20 years of service. Age 65 or older with ?ve years of service. The reduction is somewhat less than 0.1% for members with less than 20 years of service. For those hired on or after January 1, 1988. creditable service excludes the first six months of service. Maximum Allowance The formula-based retirement allowance (as described above) of any member shall be limited to 60% of ?nal compensation. except where the minimum allowance described below applies. Minimum Allowance A benefit based on twice the actuarial value of accumulated member contributions. This is not subject to the 60% of ?nal compensation maximum. (Sections 4.36.200. 4.36.210 and 4.36260) Note: Effective January 1. 2011. the conversion of the contributions to an annuity bene?t in the minimum allowance re?ects option factors that use the new mortality rates. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate Milliman to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. Milliman recommends that third parties be aided by their own actuary or other quali?ed B-2 professional when reviewing the Milliman work product. sera0270.docx 20 003 SER Milliman January 1, 2014 Actuarial Valuation Seattle City Employees' Retirement System Appendix Provisions of Governing Law Disability Retirement Death Benefits Withdrawal Benefits Eligibility Ten years of service credited within the 15 years preceding disability retirement. If disability occurs in the course of City employment, there is no service requirement. Normal Form Modi?ed cash refund annuity. An optional survivor's benefit is available if the spouse is the beneficiary. Amount of Allowance The total disability allowance is the greater of: 1.5% times final compensation times completed years of creditable service. 1.5% times final compensation times total years of creditable service that could have been earned to age 62, but not to exceed one?third of ?nal compensation. Maximum Allowance The maximum disability allowance is 60% of final compensation. Minimum Allowance The minimum disability allowance is $140 per month. (Sections 4.36.220 and 4.36.230) Retired Members Death bene?ts to retired members are payable according to the form of retirement allowance elected. Active Members Payment to the beneficiary of accumulated contributions, including interest; or if the member had completed 10 years of service at the time of death, a surviving spouse or a registered domestic partner may elect to receive, in place of above, either: (1) A allowance for life equal to the bene?t the spouse would have received had the memberjust retired with a 100% contingent annuitant option in force; or (2) A cash payment of no more than one-half of the member's accumulated contributions, along with a correspondingly reduced retirement allowance. (Section 4.36.270) Form Payment of accumulated contributions, with interest. (Section 4.36.190) This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate Milliman to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who receive this work. Milliman recommends that third parties be aided by their own actuary or other quali?ed professional when reviewing the Milliman work product. sera0270.docx 20 003 SER Milliman January 1, 2014 Actuarial Valuation Seattle City Employees? Retirement System Appendix Provisions of Governing Law Vested Withdrawal Benefits Postretirement Benefit Increases Death Benefit System Additional Contributions Eligibility Five years of service. Amount of Allowance Same as service retirement benefit. Benefits Commence Age 52. if 20 or more years of service; Age 57, if 10-19 years of service; or Age 62, regardless of years of service. (Section 4.36.200) Provisions Effective January 1, 2007, the City Council adopted a 65% Restoration of Purchasing Power benefit and an automatic 1.5% annual COLA to all members. If the System reaches a 100% Funding Ratio, the restoration amount increases to 70%. (Sections 436.155 and 4.36.215) Eligibility Mandatory for all active members; optional for retired members. Bene?ts $2.000 upon the death of an active member or a participating retired member. Assessment Members pay an assessment of $12 per year; the City pays a matching amount. If these assessments are not adequate, additional amounts may be transferred from the interest earnings in the retirement fund. (Sections 4.36.320 and 4.36.330) Provisions Members may voluntarily make contributions in excess of the regular rate; these are make-up contributions that apply only in speci?c situations. Retirement Benefit A annuity which is the actuarial equivalent of accumulated additional contributions with interest. Other Benefits Accumulated additional contributions, with interest. generally become payable upon termination other than retirement. (Sections 4.36.030 and 4.36.210) This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate I - to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who I lman receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when reviewing the Milliman work product. sera0270.docx 20 003 SER January 1, 2014 Actuarial Valuation Seattle City Employees' Retirement System Appendix Valuation Data This valuation is based upon the membership of the system as of January 1, 2014. Membership data were supplied by the System and accepted for valuation purposes without audit. However, extensive tests were performed to ensure that the data are sufficiently accurate for valuation purposes. The data for all contributing members, former contributing members, and their survivors are summarized in Table 0-1. Tables 0-2 through present distributions of members receiving service retirement benefits, members receiving disability retirement benefits, and survivors receiving bene?ts. Shown in the tables are the numbers of persons receiving bene?ts. the total annual benefits received (including payments for the annual bonus), and the average annual bene?t per recipient. Table 0-5 contains summaries of the data for contributing members. Values shown in the tables are the numbers of members and their total and average annual salaries. The valuation also includes liabilities attributable to members who have terminated employment but have neither retired nor withdrawn their contributions. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate Milliman to use for other purposes Milliman does not intend to bene?t and assumes no duty or liability to other parties who receive this work. Milliman recommends that third parties be aided by their own actuary or other quali?ed professional when reviewing the Milliman work product. seraOZYOdocx 20 003 SER Milliman January 1, 2014 Actuarial Valuation Seattle City Employees? Retirement System Appendix Valuation Data Table 6-1 Summary of Membership Data Contributinglnembers Annuitants Annual Average Annual Average Salaries Annual Bene?ts Annual Number ($1,000) Salaries Number ($1,000) Bene?ts January 1, 2014 8,603 606,888 70,548 5,880 35 147,145 5 25,026 January 1. 2013 8,465 579,396 68,449 5,742 137,836 24,006 January 1, 2012 8,430 560,412 66,476 5,580 128,645 23,056 January 1, 2011 8,599 569,472 66,225 5,428 118,920 21,909 January 1, 2010 9,071 596,892 65,802 5,304 108,886 20,529 January 1, 2008 8,842 529,062 59,835 5,201 102,772 19,760 January 1, 2006 8.521 468,096 54,934 5,011 83,988 16,761 January 1, 2004 8,382 441,562 52,680 4,876 74,341 15,246 January 1, 2002 8,758 418,908 47,831 4,733 61,801 13,058 January 1, 2000 8,669 382,620 44,137 4,681 55,542 11,865 January 1, 1999 7,779 333,984 42,934 4,644 52,482 11,301 January 1, 1998 7,926 329,028 41,512 4,649 50,394 10,840 January 1, 1996 8,078 314,448 38,926 4,619 44,271 9,585 . This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to Milliman bene?t and assumes no duty or liability to other parties who receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified 0-2 professional when reviewing the Milliman work product. seraOZi'Odocx 20 003 SER 3620.003.SER.10.2U14 Milliman January 1l 2014 Actuarial Valuation Seattle City Employees? Retirement System Appendix Valuation Data Inactive Lives Table C-2 Members Receiving Service Retirement Benefits as of January 1, 2014 <50 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85-89 90+ Totals Number of Persons Male 0 15 110 392 760 627 399 253 204 147 2,907 Female 1 22 138 409 604 353 211 134 125 111 2,108 Total 1 37 248 801 1.364 980 610 387 329 258 5.015 Annual Bene?ts in Thousands Male 0 659 4.117 14.198 22.525 17.919 9.986 6.021 4.604 2,805 82.834 Female 872 4.901 12.854 15.301 7.775 4.078 2.321 1.805 1.227 51.134 Total 0 1.531 9.018 27.052 37.826 25.694 14.064 8.342 6.409 4.032 133.968 Average Annual Bene?ts Male 0 43.933 37,427 36,219 29,638 28,579 25.028 23,798 22.569 19.082 3 28.495 Female 39.636 35.514 31.428 25.333 22,025 19.327 17.321 14.440 11.054 24,257 Total 0 41.378 36.363 33.773 27.732 26.218 23.056 21.556 19.480 15.628 26.713 Bene?t amounts for groups with only one member not shown. . This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate to use for other purposes. Miliiman does not intend to benefit and assumes no duty or liability to other parties who receive this work. Milliman recommends that third parties be aided by their own actuary or other quali?ed 0-3 professional when reviewing the Milliman Work product seraOZTOdocx 20 003 SER Milliman January 1, 2014 Actuarial Valuation Seattle City Employees? Retirement System Appendix Valuation Data Inactive Lives Table C-3 Members Receiving Disability Retirement Benefits as of January 1, 2014 <50 50-54 55-59 60-64 65?69 70-74 75-79 80-84 85?89 90+ Totals Number of Persons Male 0 2 4 4 2 29 Female ?51" Total Annual Benefits in Thousands Male 393 Female 418 Total 811 Average Annual Bene?ts Male 0 17,500 16,750 16,500 13,250 11,333 12,400 13,750 10,500 13,552 Female 17,800 19,000 15,667 10,667 10,667 0 0 0 14,929 Total 0 17,714 18,308 16,000 10,600 11.000 11.750 13,750 10,500 0 14.214 Bene?t amounts for groups with only one member not shown - This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. Milliman recommends that third parties be aided by their own actuary or other quali?ed 0-4 professional when reviewing the Milliman work product. sera0270.docx 20 003 SER I Milliman January 1, 2014 Actuarial Valuation Seattle City Employees' Retirement System Appendix Valuation Data Inactive Lives Table C-4 Survivors Receiving Retirement Benefits as of January 1, 2014* <50 50-54 55-59 60-64 65-69 70?74 75-79 80-84 85-89 90+ Totals Number of Persons Male Female Total 101 142 173 721 Annual Bene?ts in Thousands Male 509 Female 116 110 408 827 1,198 972 1,117 1,436 2,011 2,294 10,489 Total 116 110 534 887 1,314 1,029 1,174 1,493 2,037 2,304 10,998 Average Annual Bene?ts Male 6 0 21,000 8,571 19,333 8,143 14,250 8,143 6,500 5.000 11.568 Female 14,500 18,333 17,739 18,378 17,618 17,053 16,672 15,277 14,572 13,415 15,493 Total 14,500 15,714 18,414 17,058 17,757 16,078 16,535 14,782 14,345 13,318 15,254 Bene?t amounts for groups with oniy one member not shown. Note: in addition, 26 male survivors are receiving $359, 844 and 61 femaie survivors are receiving 007, 911 in Option or Option bene?ts for a certain period oniy. I This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who receive this work. Milliman recommends that third parties be aided by their own actuary or other quali?ed professional when reviewing the Milliman work product. sera0270.docx 20 003 SER 33720.003.SER.10.2014 i Milliman January 1, 2014 Actuarial Valuation Seattle City Employees? Retirement System Appendix Valuation Data Active Lives Table 0-5 Distribution of Employees and Salaries as of January 1, 2014 Number of Employees - By Age Group - Males Nearest Year of Service <20 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60?64 65-69 70+ Totals 1,261 10-835 15?634 20-468 25?29 13 71 88 96 25 298 30-34 27 67 64 19 177 35-Totals 4,771 1003030710 mmeh-ln Salaries in Thousands - By Age Group - Males Nearest Year of Service <20 20-24 25-29 30-34 35-39 40?44 45-49 50-54 55?59 60-64 65?69 70+ Totals 111$ 15 1,010 1,752 1,291 31.433 5-9 1 311 905 1,308 1,247 1,086 929 854 519 210 15 7,385 10-5,199 15-3,963 20?3,098 25-2,058 30-34 177 494 449 136 1,256 35-266 Totals 4 142 345 1.948 2,891 3.450 4.235 4.762 5,218 4,061 1,476 303 29,345 I This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. Milliman recommends that third parties be aided by their own actuary or other quali?ed 0-6 professional when reviewing the Milliman work product ser30270.doox 20 003 SER I Milliman January 1. 2014 Actuarial Valuation Seattle City Employees? Retirement System Appendix Valuation Data Active Lives Table C-5 Distribution of Employees and Salaries as of January 1, 2014 Average Salaries - By Age Group - Males Nearest Year of Service <20 20-24 25-29 30?34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70+ Totals 0 4.000 2.625 4.692 4.733 4.949 5.613 6.000 6.750 5.842 3.750 5.075 1 3.154 4.214 5.328 5.545 6.109 6.290 6.074 6.917 7.417 6.000 12.000 5.652 2 3.125 4.520 5.889 5.905 6.038 6.167 6.737 8,000 8.556 7.667 6.090 3-4 3.667 4,773 5.774 5.935 7.258 6.262 5.760 5,762 6.313 7.111 4.667 5.971 5?9 1.000 4,785 5.355 6.028 6.266 6.136 5.917 6,014 5.767 5.385 3,000 5,856 10-14 3.400 5.571 5.798 6.357 6.193 6,490 6.466 6.173 6.400 5.625 6.226 15-19 6.500 5.842 6.107 6.420 6,241 6.132 6.284 6.400 6.600 6.251 20?24 6.158 6.831 6.608 6.813 6.660 5.885 4.714 6.620 25-29 6.538 7,127 6.886 6.646 7.440 7.400 6.906 30-34 6,556 7.373 7.016 7.158 7.096 35-39 10,000 6,704 6.600 6.455 4.000 6.604 40+ 6.000 7.182 6.444 5.909 6.488 Totals 4.000 3.021 4.568 5.411 5.829 6.257 6.302 6.383 6.531 6.456 6.390 5.827 6.151 . This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate to use for other purposes, Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified 0-7 professional when reviewing the Milliman Work product. sera0270.docx 20 003 SER Milliman January 1. 2014 Actuarial Valuation Seattle City Employees? Retirement System Appendix 0 Valuation Data Active Lives Table 0-5 Distribution of Employees and Salaries as of January 1. 2014 Number of Employees - By Age Group - Females Nearest Year of Service <20 20?24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70+ Totals 928 10~638 15-444 20-441 25-29 25 89 121 78 34 348 30-34 15 54 54 16 143 35-Totals 3.832 Salaries in Thousands - By Age Group - Females Nearest Year of Service ?20 20-24 25-29 30-34 35?39 40-44 45-49 50-54 55-59 60-64 65-69 70+ Totals 0 38$ 140$ 97$ 129$ 117$ 82$ 1381.287 4.970 10-3.682 15-2.505 20-2.563 25-2.103 30-34 105 344 319 97 18 883 35-108 Totals 0 132 583 1.437 2.083 2.496 2.950 3.674 3.970 2.787 974 143 21.229 I This work product was prepared solely for SCERS for the purposes descn?bed herein and may not be appropriate to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who receive this work. Milliman recommends that third parties be aided by their own actuary or other quali?ed 0-8 professional when reviewing the Milliman work product sera0270.docx 20 003 SER I Milliman January 1, 2014 Actuarial Valuation Seattle City Employees' Retirement System Appendix Valuation Data Active Lives Table 0-5 Distribution of Employees and Salaries as of January 1. 2014 Average Salaries - By Age Group - Females Nearest Year of Service <20 20-24 25-29 30-34 35-39 40-44 45?49 50?54 55?59 60?64 65-69 70+ Totals 0 2,714 4.118 4,409 5.160 5.318 3,905 5.750 6.667 5.000 55 2.500 4.700 1 3,071 4.229 5,042 5.130 5.789 5,793 5.391 4,385 5.750 1.500 5,027 2 3,000 4.053 5,143 5.067 6.471 4.733 6,111 6.538 4,750 5,000 8,000 5.158 3?4 2,500 4.050 5.097 4.750 5.870 5.727 6.143 6.739 4.909 4,000 4,333 5.221 5?9 2,000 3.579 4,574 5,671 5.570 5.488 5,689 5.843 5.726 4,478 2,250 5.356 10-14 1,000 4,594 5.373 5.954 6.376 6.026 6.126 5.609 5,370 2.467 5,771 15-19 4,000 4,885 6.098 6,041 5.650 5.965 4.915 4,615 2,667 5,642 20-24 5,000 5.222 5.883 5.831 5.989 6,047 5,484 2,833 5.812 25-29 5,560 5,719 6.223 5.987 6,794 4.000 6,043 30?34 7.000 6.370 5.907 6,063 4,500 6,175 35?39 5,750 5.926 5.152 5.737 8,000 5.536 40+ 5.308 4,857 5.000 5.143 Totals 2,809 3.966 4.743 5.341 5,778 5.773 5,813 6.070 5.653 5.472 3,178 5.540 I This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified C-g professional when reviewing the Milliman work product 5er30270doex 20 003 SER 38720003.SER.10.2014 I Milliman January 1, 2014 Actuarial Valuation Seattle City Employees' Retirement System Appendix Glossary Accrued Benefit Actuarial Accrued Liability Actuarial Assumptions Actuarial Cost Method Actuarial Gain (Loss) Actuarial Present Value Actuarial Valuation Actuarial Value of Assets The following de?nitions are largely excerpts from a list adopted in 1981 by the major actuarial organizations in the United States. In some cases the de?nitions have been modi?ed for speci?c applicability to the Seattle City Employees? Retirement System. De?ned terms are capitalized throughout this Appendix. The amount of an individuals bene?t (whether or not vested) as of a specific date, determined in accordance with the terms of a pension plan and based on compensation and service to that date. That portion, as determined by a particular Actuarial Cost Method, of the Actuarial Present Value of pension plan benefits and expenses which is not provided for by future Normal Costs. Assumptions as to the occurrence of future events affecting pension costs, such as: mortality. withdrawal, disablement. and retirement; changes in compensation, rates of investment earnings, and asset appreciation or depreciation; procedures used to determine the Actuarial Value of Assets; and other relevant items. A procedure for determining the Actuarial Present Value of pension plan benefits and expenses and for developing an actuarially equivalent allocation of such value to time periods, usually in the form of a Normal Cost and an Actuarial Accrued Liability. A measure of the difference between actual experience and that expected based upon a set of Actuarial Assumptions during the period between two Actuarial Valuation dates. as determined in accordance with a particularActuarial Cost Method. The value of an amount or series of amounts payable or receivable at various times. determined as of a given date by the application of a particular set of Actuarial Assumptions. The determination, as of a valuation date. of the Normal Cost. Actuarial Accrued Liability. Actuarial Value of Assets. and related Actuarial Present Values for a pension plan. The value of cash, investments and other property belonging to a pension plan, as used by the actuary for the purpose of an Actuarial Valuation. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate I Mo I I - to use for other purposes. Milliman does not intend to bene?t and assumes no duty or liability to other parties who I receive this work. Milliman recommends that third parties be aided by their own actuary or other quali?ed professional when reviewing the Milliman work product. sera0270.docx 20 003 SER I Milliman January 1. 2014 Actuarial Valuation Seattle City Employees? Retirement System Appendix Glossary Actuarially Equivalent AmOrtization Payment Entry Age Actuarial Cost Method Funding Ratio Normal Cost Projected Benefits Surplus Funding Unaccrued Benefit Unfunded Actuarial Accrued Liability Of equal Actuarial Present Value, determined as of a given date with . each value based on the same set of Actuarial Assumptions. That portion of the pension plan contribution that is designed to pay interest on and to amortize the Unfunded Actuarial Accrued Liability (UAAL). A method under which the Actuarial Present Value of the Projected Bene?ts of each individual included in an Actuarial Valuation is allocated on a level basis over the earnings of the individual between entry age and assumed exit ages. The portion of this Actuarial Present Value allocated to a valuation year is called the Normal Cost. The portion of this Actuarial Present Value not provided for at a valuation date by the Actuarial Present Value of future Normal Costs is called the Actuarial Accrued Liability. The Actuarial Value of Assets divided by the Actuarial Accrued Liability. May also be calculated as the Market Value of Assets divided by the Actuarial Accrued Liability, in which case it is indicated that the Funding Ratio is shown on a Market Value basis. That portion of the Actuarial Present Value of pension plan bene?ts and expenses which is allocated to a valuation year by the Actuarial Cost Method. Those pension plan benefit amounts which are expected to be paid at various future times under a particular set of Actuarial Assumptions. taking into account such items as the effect of advancement in age and past and anticipated future compensation and service credits. The excess of the Actuarial Value of Assets over the Actuarial Accrued Liability. The excess of an individual's Projected Bene?ts over the Accrued Benefits as of a speci?ed date. The excess of the Actuarial Accrued Liability over the Actuarial Value of Assets. This work product was prepared solely for SCERS for the purposes described herein and may not be appropriate M- I I - to use for other purposes. Miliiman does not intend to bene?t and assumes no duty or liability to other parties who receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when reviewing the Milliman work product. sera0270_docx 20 003 SER I This page left intentionally blank STATISTICAL This page left intentionally blank Seattle City Employees' Retirement System Statistical Section 2014 YE Investment Portfolio CompOSItIon . Cash Fixed Income 5 09, 23.0% Equity 25.3% Real Estate 10.4% Alternatives 4.6% 2014 Fund Performance 15.0% 13.1% 11.2% 10.0% - 7.6% 5.8% 5.6% 5.7% '5 5.6.3% -10.0% Cash Domestic Internat'l Fixed Real Return Private Real Estate Total Fund Equity Equity Income Equity Returns provided by Pension Consulting Alliance as of 12/31/14 ST- 1 Seattle City Employees? Retirement System Statistical Section SEATTLE CITY RETIREMENT SYSTEM SCHEDULE OF REVENUES BY SOURCE Employee Employer Fiscal Member Employer Investment Miscel- Total Contributlon Contribution Year Contributions Contribution Income laneous 96 96 Income 8.03 7.91 1980 9,166,162 5 10,470,335 16,284,473 5 846 5 35,921,816 8.03 8.54 1981 11,845,089 13,309,388 18,488,195 2,311 43,644,983 8.03 8.54 1982 12,465,220 14,790,039 21,106,414 48,361,673 8.03 8.54 1983 12,926,545 14,265,554 27,224,215 5,050 54,421,364 8.03 8.91 1984 14,076,607 15,961,211 30,543,443 67 60,581,328 8.03 8.91 1985 14,399,465 16,280,464 25,317,826 55,997,755 8.03 8.91 1986 15,164,105 16,758,439 33,081,706 65,004,250 8.03 8.91 1987 16,088,280 17,799,789 46,029,652 410 79,918,131 8.03 8.91 1988 16,701,142 18,521,365 36,397,481 71,619,988 8.03 8.91 1989 17,246,117 18,983,634 41,803,863 545 78,034,159 8.03 8.91 1990 20,405,149 21,810,612 27,725,284 69,941,045 8.03 8.91 1991 21,111,940 21,458,952 37,758,671 80,329,563 8.03 8.91 1992 21,564,881 25,117,924 41,792,730 88,475,535 8.03 8.91 1993 23,473,485 26,139,925 100,705,007 150,318,417 8.03 8.91 1994 24,764,862 26,704,211 3,670,356 55,139,429 8.03 8.91 1995 26,069,124 27,816,819 181,470,912 235,356,855 8.03 8.91 1996 25,835,147 28,372,760 118,399,056 172,606,963 8.03 8.91 1997 25,571,634 28,310,353 143,719,597 197,601,584 8.03 8.91 1998 27,311,815 30,554,650 168,477,507 226,343,972 8.03 8.03 1999 29,201,844 29,898,474 240,904,299 300,004,617 8.03 8.03 2000 30,962,052 30,956,217 (79,832,672) (17,914,403) 8.03 8.03 2001 32,602,859 32,667,381 (93,021,798) (27,751,558) 8.03 8.03 2002 39,388,249 36,599,830 (116,907,340) (40,919,261) 8.03 8.03 2003 36,243,490 34,200,693 296,239,050 366,683,233 8.03 3.03 2004 37,192,591 36,819,271 177,211,711 251,223,573 8.03 8.03 2005 35,962,449 35,897,345 139,866,897 211,726,691 8.03 8.03 2006 38,228,475 38,077,976 251,934,917 328,241,368 8.03 8.03 2007 40,533,554 40,299,506 149,708,740 230,541,800 8.03 8.03 2008 45,986,139 45,961,040 (612,803,880) (520,856,701) 8.03 8.03 2009 46,613,886 46,650,169 198,417,995 291,682,050 8.03 8.03 2010 45,364,624 45,224,787 216,839,059 307,428,470 9.03 9.03 2011 50,415,119 50,301,263 (8,233,151) 92,483,23 1 10.03 11.01 2012 57,086,346 62,515,432 237,789,669 357,391,447 10.03 12.89 2013 60,342,581 77,073,667 298,149,888 435,566,136 10.03 14.31 2014 63,969,504 89,988,898 130,807,611 284,766,013 Employee Contributions reflected above are representative for the overall majority of active members. There are a small percentage of active members whose employee contribution rate is ?grandfathered? at a lower rate. Employer Contributions reflected as a percentage of covered payroll. Beginning with 1993, the investment income reflects unrealized gains (losses) required by GASB 25. Seattle City Employees? Retirement System Statistical Section SCHEDULE OF EXPENSES BY TYPE SEATTLE CITY RETIREMENT SYSTEM Year Benefits Refunds Administrative Total 8: invesunent 1980 5 17,584,611 5 1,786,654 331,600 19,702,865 1981 19,114,992 2,074,078 419,568 21,608,638 1982 21,358,214 2,151,528 458,261 23,968,003 1983 23,029,611 2,086,102 538,059 25,653,772 1984 25,175,469 3,366,999 737,445 29,279,913 1985 27,090,615 2,753,418 1,076,324 30,920,357 1986 28,777,844 3,212,415 1,340,874 33,331,133 1987 30,499,027 3,141,868 1,494,189 35,135,084 1988 32,093,902 3,293,088 1,408,946 36,795,936 1989 34,121,917 3,257,432 1,538,544 38,917,893 1990 36,431,265 3,592,483 1,636,911 41,660,659 1991 37,862,028 3,731,762 1,870,922 43,464,712 1992 38,884,790 3,585,672 2,109,340 44,579,802 1993 40,131,325 2,944,003 2,525,620 45,600,948 1994 42,420,358 3,412,882 2,639,538 48,472,778 1995 44,352,180 3,874,980 7,217,337 55,444,497 1996 46,257,605 3,888,043 7,989,200 58,134,848 1997 50,349,474 5,463,464 11,875,158 67,688,096 1998 56,247,811 7,502,444 12,145,939 75,896,194 1999 58,704,086 9,730,803 10,447,151 78,882,040 2000 62,844,355 11,641,902 10,634,557 85,120,814 2001 65,553,605 8,785,879 7,293,821 81,633,305 2002 68,825,558 12,019,852 7,250,214 88,095,624 2003 73,559,728 13,218,137 7,081,030 93,858,895 2004 77,289,288 9,791,692 7,188,848 94,269,828 2005 82,268,449 10,385,215 11,773,914 104,427,578 2006 87,583,509 10,553,067 10,715,425 108,852,001 2007 98,391,533 11,525,660 12,380,123 122,297,316 2008 102,703,230 10,223,415 8,188,287 121,114,932 2009 108,138,820 9,742,692 5,929,667 123,811,179 2010 113,650,795 14,715,000 11,605,536 139,971,331 2011 124,061,630 16,677,022 10,974,855 151,713,507 2012 134,135,553 14,913,574 10,431,260 159,480,387 2013 141,424,206 15,278,136 13,466,311 170,168,653 2014 150,239,008 15,103,615 13,868,184 179,210,807 3 Seattle City Employees? Retirement System Statistical Saction BENEFIT EXPENSE BY TYPE Twenty Years Ending December 31, 2013 SEATTLE CITY RETIREMENT SYSTEM Year Age&5ervlce Bene?ts Dom Refunds Total Retlrants Survivors Bene?t 1994 37,177,394 4,240,343 654,621 348,000 3,412,882 45,833,240 1995 38,909,838 4,469,103 645,239 328,000 3,874,980 48,227,160 1996 40,783,384 4,530,161 618,060 326,000 3,888,043 50,145,648 1997 44,350,246 4,996,325 612,903 390,000 5,463,464 55,812,938 1998 48,684,577 6,500,622 714,624 347,988 7,502,444 63,750,255 1999 50,902,672 6,821,887 698,527 281,000 9,730,803 68,434,889 2000 54,518,311 7,260,855 714,799 350,390 11,641,902 74,486,257 2001 57,122,024 7,486,988 672,593 272,000 8,785,879 74,339,484 2002 59,991,882 I 7,821,555 686,121 326,000 12,019,852 80,845,410 2003 64,301,813 8,215,109 714,806 328,000 13,218,137 86,777,865 2004 67,794,624 8,486,860 711,804 296,000 9,791,692 87,080,980 2005 72,390,702 8,754,471 785,276 338,000 10,351,215 92,653,664 2006 77,320,260 9,180,292 814,957 268,000 10,553,067 98,136,576 2007 87,019,040 10,230,265 864,228 278,000 11,525,660 109,917,193 2008 91,265,085 10,282,919 885,227 270,000 10,223,415 112,926,645 2009 95,951,625 11,022,403 886,684 278,108 9,742,692 117,881,512 2010 101,965,821 10,526,966 918,009 240,000 14,714,999 128,365,795 2011 112,072,113 10,804,171 919,345 266,000 16,677,022 140,738,651 2012 122,076,194 10,904,912 924,447 230,000 14,913,574 149,049,127 2013 129,360,508 10,845,604 914,094 304,000 15,278,136 156,702,342 2014 137,887,118 11,175,718 896,172 280,000 15,103,615 165,342,623 4 Seattle City Employees? Retirement System Statistical Section REVENUE RATIOS BY SOURCE 1973 Through 2013 Year Member Employer Investment Total Contributions Contributions Income Revenue $6 56 9? 96 1973 26 32 42 100 1974 26 31 43 100 1975 26 31 43 100 1976 26 31 43 100 1977 25 29 46 100 1978 25 29 46 100 1979 27 30 43 100 1980 26 29 45 100 1981 27 31 42 100 1982 25 31 44 100 1983 24 26 50 100 1984 23 26 51 100 1985 26 29 45 100 1986 24 26 50 100 1987 20 22 58 100 1988 23 26 51 100 1989 22 24 54 100 1990 29 31 40 100 1991 26 27 47 100 1992 25 28 47 100 1993 16 17 67 100 1994 45 48 7 100 1995 11 12 77 100 1996 15 16 69 100 1997 13 14 73 100 1998 12 14 74 100 1999 10 10 80 100 2000 Net Loss 2001 Net Loss 2002 Net 1055 2003 10 9 81 100 2004 15 15 70 100 2005 17 17 66 100 2006 12 12 76 100 2007 18 18 64 100 2008 Net Loss 2009 16 16 68 100 2010 15 15 70 100 2011 Net Loss 100 2012 16 17 67 100 2013 14 18 68 100 2014 23 33 44 100 Beginning with 1993, the investment income reflects unrealized gains (losses) required by GASB 25. Beginning with 1996 (and 1995 has been restated) investment income includes the gross income from Securities Lending as required by GASB 28. ST- 5 Seattle City Employees? Retirement System Statistical Section SEATTLE CITY RETIREMENT SYSTEM SCHEDULE OF INVESTMENT RESULTS Ten Years Ending December 31, 2013 Year Investment Investment: Securities Return on Income Market Value Collateral Market Value 2004 177,211,711 1,664,178,577 239,087,447 11.5% 2005 139,866,897 1,777,219,827 122,862,720 8.1% 2006 251,934,917 1,986,714,717 145,097,240 13.9% 2007 149,708,740 2,106,345,982 103,323,467 7.3% 2008 (612,803,880) 1,467,556,416 69,838,616 2009 198,417,995 1,635,993,047 36,491,886 10.8% 2010 216,839,059 1,809,331,365 33,896,148 13.2% 2011 (8,233,150) 1,750,742,911 3,489,721 2012 237,789,659 1,944,976,344 10,154,781 14.0% 2013 298,225,616 2,213,014,808 13,595,048 15.5% 2014 131,047,615 2,315,159,044 25,231,590 5.7% Investment Income includes market gains and losses, and gross income from Securities Lending. Note Investment Income for 2013 has been re-stated to reflect gross income from Securities Lending. ST- 6 Seattle City Employees? Retirement System Statistical Section SEATTLE CITY RETIREMENT SYSTEM SERVICE AND DISABILITY PENSIONERS BY AGE As of December 31, 2014 Retirees by Current Age 2mnentAge Number of RetiIees 57-7 osram I Seattle City Employees? Retirement System PC ?I?m Amount Statistical Section SEATTLE CITY RETIREMENT SYSTEM - RETIREMENT ALLOWANCE DISTRIBUTION As of December 31, 2014 Retirement Allowance Distribution :SEATTLE CITY RETIREMENT SYSTEM ACTIVE MEMBERSHIP EXPERIENCE For the Last Thirty Years Year Mamba-sat Endofh?od fem-Mamba: Wren-lad Withdrawals Dam; Fahd Rte-entering tie-depositing During Period 99mm 0:111qu 1985 6,946 628 244 72 11 209 1986 7,020 570 382 77 11 180 1987 7,196 622 312 72 16 190 1988 7,252 542 361 45 10 160 1989 7,544 672 251 51 12 168 1990 7,813 872 454 45 12 182 1991 8,037 681 354 43 13 133 1992 8,171 463 220 32 17 124 1993 8,317 537 279 39 15 136 1994 8,553 512 201 133 16 192 1995 8,741 477 284 136 12 153 1996 8,584 339 270 13 12 227 1997 8,572 435 287 36 18 178 1998 8,743 557 236 29 170 1999 9,576 1,289 238 14 17 215 2000 9,836 876 393 17 13 227 2001 10,111 706 241 25 18 197 2002 9,737 426 503 16 12 301 2003 9,964 628 202 14 190 2004 10,222 636 123 251 2005 10,387 635 212 11 247 2006 10,493 710 325 15 16 278 2007 10,892 948 292 37 286 2008 10,831 833 340 83 187 2009 11,077 347 313 122 16 221 2010 10,597 273 397 17 15 355 2011 10,477 317 239 16 12 321 2012 10,075 405 219 15 351 2013 10,627 786 235 28 12 331 2014 10,894 785 208 31 11 320 ST- 9 CITY RETIREMENT SYSTEM COMPARATIVE STATEMENT OF EXPERIENCE OF SERVICE AND DISABILITY RETIREMENT PAYROLLS From Inception in 1929, Through 2014 Figures Quoted as of the End of Each Fiscal Period Mom's Wm Dame Mod umber-neared 0mm atde Service seem .m 1929 - 1980 Inclusive 6,009 412 926 3,083 609 3 317 84 518 2,970 616 233 December 31, 1981 223 94 15 25 33 3,099 631 225 December 31, 1982 254 120 23 38 41 3,233 646 207 December 31, 1983 248 137 10 29 55 3,344 684 202 December 31, 1984 206 135 14 28 51 3,415 716 192 December 31, 1985 202 115 18 19 1 48 3,505 743 183 December 31, 1986 175 140 9 1 3 20 3,540 760 178 December 31, 1987 184 132 16 6 16 3.592 776 169 December 31, 1988 158 120 9 25 37 3,627 790 163 December 31, 1989 163 141 12 5 43 3,660 780 154 December 31, 1990 181 128 16 7 44 3,695 827 140 December 31, 1991 129 158 12 31 70 3,665 866 132 December 31, 1992 121 161 4 32 50 3.625 884 131 December 31, 1993 133 157 42 45 LB 3.601 894 127 December 31, 1994 181 159 53 55 C) 3.608 922 117 December 31, 1995 148 162 54 38 3.591 914 114 December 31, 1995 225 173 44 49 3,659 907 106 December 31, 1997 170 186 75 69 3,622 931 98 December 31, 1998 166 170 1 45 51 3,614 942 91 December 31, 1999 208 167 67 51 3.662 931 88 December 31, 2000 222 142 46 43 3.699 933 84 December 31, 2001 192 152 53 33 3,733 924 76 December 31, 2002 290 170 49 48 3,836 945 77 December 31, 2003 189 163 67 57 3.858 945 73 December 31, 2004 243 172 61 39 3,924 930 73 December 31, 2005 235 164 66 70 3,993 942 76 December 31, 2006 270 151 72 33 4,113 908 72 December 31, 2007 277 155 70 59 4,231 897 72 December 31, 2008 192 158 72 51 4,295 875 77 December 31, 2009 221 ID 144 60 47 4,345 885 75 December 31, 2010 355 159 68 41 4,546 808 74 December 31, 2011 321 136 76 50 4,712 802 66 December 31, 2012 351 155 66 36 4,844 779 62 December 31, 2013 328 Lnva 214 4 12 53 5,025 758 58 December 31, 2014 317 3 157 55 36 5,209 755 62 2014 Grand Total 6,026 ST- 10 Seattle City Employees? Retirement System Statistical Section SEATTLE CITY RETIREMENT SYSTEM EXPERIENCE IN MISCELLANEOUS AVERAGES For the Last Thirty Years AVERAGE AVERAGE AVERAGE AVERAGE AGE ACTIVE MEMBERS SERVICE AGE OF DISABILITY OF DECEASED RETIREMENT SERVICE RETIREMENT DISABILITY OF AVERAGE ALLOWANCE PENSIONERS ALLOWANCE PENSIONERS DEATHS AGE 1985 556.72 70.26 290.71 66.22 11 53.66 1986 582.18 70.57 296.27 66.70 11 48.18 1987 608.43 70.80 314.43 66.60 16 49.13 1988 655.62 70.02 357.61 66.40 14 49.93 1989 664.36 71.45 343.74 66.53 12 49.17 1990 697.54 71.72 352.75 65.88 12 47.67 1991 757.07 72.19 378.41 66.61 13 57.77 1992 749.31 72.44 366.23 66.30 17 50.94 1993 775.72 73.42 394.13 67.80 15 53.00 1994 811.55 73.28 407-60 67.52 16 55.00 1995 850.50 73.45 431.19 67.78 12 53.67 1996 904.11 73.43 423.86 68.88 12 44.92 1997 961.30 73.29 448.15 68.12 18 54.72 1998 1,063.66 73.30 594.09 68.13 9 56.11 1999 1,114.34 73.10 609.19 68.25 17 55.24 2000 1,167.60 72.88 622.66 68.69 13 50.77 2001 1,222.42 72.70 654.53 67.84 18 51.39 2002 1,289.77 72.16 703.83 67.25 12 54.33 2003 1,338.49 72.14 734.85 66.78 14 53.14 2004 1,404.86 71.93 788.94 65.40 8 50.62 2005 1,477.58 71.78 827.46 65.15 11 53.18 2006 1,552.57 71.53 877.96 64.75 16 51.94 2007 1,768.13 71.42 1,010.15 65.53 53.13 2008 1,822.44 71.92 1,038.93 65.49 52.33 2009 1,873.39 71.51 1,077.33 64.15 16 58.00 2010 1,965.36 71.32 1,110.10 65.84 15 55.73 2011 2,043.56 71.29 1,144.88 65.61 12 54.00 2012 2,152.85 71.21 1,203.52 66.08 9 57.67 2013 2,206.86 71.60 1,220.27 65.97 12 59.90 2014 2,268.70 71.26 1,257.92 65.33 11 53.27 Beginning in 1998 the average retirement allowance numbers include the COLA amounts. ST- 11 Seattle City Employees' Retirement System Statistical Section SEATTLE CITY RETIREMENT SYSTEM SCHEDULE OF AVERAGE BENEFIT PAYMENTS Retirement Effective Dates Years Credited Service Jan. 1. 2005 to Dec. 31, 2014 0-10 11-15 16-20 21-25 26-30 31 Period 1/1/05 to 12/31/05 Average Benefit 5 674.26 1,137.59 1,706.94 2,270.53 2,653.34 2,807.79 Average Final Salary 5 4,928.96 4,733.59 4,915.39 5,423.36 5,164.89 4,973.41 Number of Active Retirees 30 27 33 55 65 37 Period 1/1/06 to 12/31/06 Average Benefit 5 656.56 1,124.37 1,662.58 2,196.45 2,831.74 3,053.19 Average Final Salary 5 4,902.33 4,671.23 4,823.60 5,170.19 5,313.48 5,472.54 Number of Active Retirees 37 42 38 50 55 56 Period 1/1/07 to 12/31/07 Average Bene?t 5 658.92 1,406.25 1,650.87 2,132.89 2,814.90 3,129.50 Average FinalSalary 5 5,017.90 5,992.03 4,865.08 5,096.68 5,414.43? 5,412.95 Number of Active Retirees 53 36 37 54 61 44 Period 1/1/08 to 12/31/08 Average Benefit 5 693.96 1,307.50 1,683.04 2,237.23 3,032.86 3,467.66 Average Final Salary 5 5,616.72 5,133.11 5,029.50 5,470.66 5,896.14 5,682.79 Number of Active Retirees 25 18 20 37 41 46 Period 1/1/09 to 12/31/09 Average Benefit 5 725.01 1,200.14 1,633.91 2,191.40 2,895.97 3,517.60 Average Final Salary 5 6,221.46 5,346.25 5,391.47 5,637.85 5,937.71 6,298.57 Number of Active Retirees 35 36 26 34 33 57 Period 1/1/10 to 12/31/10 Average Benefit 5 743.52 1,230.93 1,819.18 2,553.58 3,152.03 3,738.60 Average Final Salary 5 4,657.13 5,098.76 5,424.67 6,829.01 6,418.87 6,161.06 Number of Active Retirees 35 32 59 57 90 82 sr-12 Seattle City Employees' Retirement System Statistical Section Retirement Effective Dates Jan. 1, 2005 to Dec. 31, 2014 Period 1/1/11 to 12/31/11 Average Benefit Average Final Salary Number of Active Retirees Period 1/1/12 to 12/31/12 Average Benefit Average Final Salary Number of Active Retirees Period 1/1/13 to 12/31/13 Average Benefit Average Final Salary Number of Active Retirees Period 1/1/14 to 12/31/14 Average Benefit Average Final Salary Number of Active Retirees Period 1/1/05 to 12/31/14 Average Bene?t Average Final Salary Average Number of Retirees 770 .06 5,937.02 41 846.84 5,698.96 59 956.90 5,910.57 45 933.87 6,141.78 69 765.99 5,503.28 43 Years Credited Service 11-15 1,387.07 5,547.89 39 1,988.33 6,197.59 36 1,698.31 6,5 26.74 43 1,709.96 6,444.04 32 1,419.05 5,560.13 34 16?20 1,986.83 6,190.33 31 2,004.20 5,938.01 45 2,270.52 6,126.15 34 2,209.50 6,814.88 42 1,862.76 5,551.91 37 ST- 13 21-25 2,439.29 6,3 20.57 64 2,942.30 6,511.90 57 2,859.90 6,900.96 58 2,659.54 6,012.59 48 2,448 .3 1 5,937.38 51 3,370.92 6,492.13 58 3,331.36 6,562.86 74 3,432.76 6,775.70 63 3,684.43 7,017.93 71 3,120.03 6,099.41 61 I..- 3,912.57 6,399.97 90 3,859.10 6,479.21 80 4,014.78 6,667.11 85 4,461.46 6,692,68 55 3,596.23 6,024.03 63 Seattle City Employees? Retirement System Statistical Section NEW MEMBERS IN THE RETIREMENT SYSTEM IN 2014 BY DEPARTMENT Department Name Count Arts and Culture 2 City Budget Office 3 City Employees Retirement 2 City Light 148 Department of Planning 8L Dev 45 Dept of Education 8: Early 4 Dept of Finance 8: Admn 70 Executive Departments 27 Fire Department 6 Human Services 46 Information Technology Dept 14 Law Department 23 Legislative-City Council 15 Municipal Court 25 Neighborhoods Department 1 Parks Department 60 Police Department 41 SDHR-Temporary Emp 7 Seattle Center 26 Seattle Dept of Human Resources 11 Seattle Dept of Transportation 90 Seattle Public Library 42 Seattle Public Utilities 77 Total 785 RETURNING MEMBERS IN THE RETIREMENT SYSTEM IN 2014 BY DEPARTMENT Redepositing Count City Of Seattle Department of Planning 8: Dev Dept of Finance Admn Seattle Center Seattle Public Library Seattle Public Utilities Total lie-entering Count City Light Dept of Finance 8: Admn Human Services Legislative-City Council Municipal Court Parks Department Police Department SDHR-Temporary Emp Seattle Center Seattle Dept of Transportation Seattle Public Library Seattle Public Utilities wI?tl?nbmi?IHi?IHI?nmw Total 14 Seattle City Employees? Retirement System Statistical Section SEATTLE CITY RETIREMENT SYSTEM SERVICE RETIREMENTS GRANTED IN 2014 Retiree Department Name Position Days Age Adams,Virginia Vested Vested 8 247 65 Alberg,Catherine Police Parking Enfor 21 186 62 Albertson,Ann Amelia City Light Elect Rep, 39 291 66 Alderete,Mary Parks Dept Admin Staff 27 21 67 AlexanderMabel PublicUtil Senior Exec Asst 25 193 64 Amaro Jr,Frank Vested 29 274 64 Anderson,Carol SDOT Assoc. Civil Eng 23 348 62 Anderson,Wayne SDOT Truck Driver 30 235 53 Artman,Edward lnfoTech Info Tech Prof A 12 171 68 Averill,Richard PublicUtil Civil Spec Supv 23 55 57 Baker,Donald Morrow FAS Vested 13 349 58 Bakerdennifer 5 Library Libarn 16 320 60 Banda,Shirley Marie Vested 13 272 44 Barber,David City Light Manager 2 4O 11 69 BarnettJohn City Light Exec 2 8 246 68 Bartleson,Peggy Parks Dept Assoc Civil Engr Spec 28 80 57 Bautista,Alan City Light Carpenter 16 156 63 Beach,Vernon Glenn DPD Manager 2 30 250 68 BEHAR, DAVID 5 City Light Vested 9 206 57 BELEFORD, JUNE KC Health 24 47 65 Bell,Patricia Human Volunteer Program Coordinator 11 315 67 Bellin,DorothyJ City Light Admin Spec ill 34 288 65 Bennett, Dennis City Light Electn - Con 44 236 74 Berard Jr, Donald Police Supervising Systems Analyst 14 145 63 Berg, Patricia Ann City Light Graphic Art Designer 7 320 62 Bernstein,Margaret Parks Dept Vested 9 57 62 Birkland,lla Police Admin Spec ll - BU 47 146 68 BISHOP, GREGORY A KC Health Investigator IV 40 89 64 Bock,Karla Vested Vested 10 186 57 Bodendames Herbert PublicUtil Facilities Maint Worker 23 15 62 Bohlman,Alice Human Vested 17 119 66 Bondeson,Eric 5 Parks Dept Rec Attendant 30 122 66 Boone,Doris Police Parking Enforcement Officer 33 163 60 Borthwick lil,Thomas 6 City Light Comms Elctn ll 34 90 66 Bos-Welton,Martha DPD IT Prof 25 230 55 Boyce,Cindy A Parks Dept Admin Spec ll-BU 33 203 58 Bradshaw,Althea SDOT Associate Civil Engineer 16 75 57 Brandt, Kandy Vested Vested 10 201 70 Braxton?obert Muni Court Admin Spec II 29 162 68 Brazel,E eonore City Light Exec Assistant 26 364 67 BRUCKER, JAN E. Personnel Vested 5 273 65 Bryant,SallyJ Police Parking Enforcement Offcr 26 364 55 Burk,Sharon Police Dispatch Supvr 24 215 69 BURKE, STEVEN KC Health 35 77 62 Bush,Norma Vested 11 353 65 Buskirk,Kenneth PublicUtil Equip Maint CC 32 315 62 Buster,Lloyd PublicUtil Watershed inspector 34 253 64 Butlerdohn Muni Court Court Cashier Supervisor 16 60 68 Byers,Thomas Judson Vested Vested 7 124 66 Callahan,Ellen Louise Vested Vested 6 9 60 CANIZZARO, VERL L. KC Health Social Worker 23 331 70 Carlquist,Brad Vested Vested 8 179 62 Ca rriere,Roland Parks Dept Maint Aide 5 3 68 Cetinkaya,Nancy Jean Lee Muni Court Admin Spec Ii 26 308 64 Chan,Paul Wah FAS Vested 4 19 65 Chandler,Jessica Library HR Generalist 6 364 64 Chandler?obert SDOT Strategic Advisor Ill 46 20 66 ST-15 Seattle City Employees? Retirement System Statistical Section Retiree Department Name Position Days Age Chapa,0mar PublicUtii Personnel Spec, Sr 6 301 65 Chapman,David Parks Dept Admin Staff Asst 40 3 66 Chapman,Dennis DPD Sr. Electrical Inspector 7 9 62 Chaveer?'D Pohce h?anagerZ 32 352 66 Cheng,Lennon SDOT Sr. Civil Engineer 16 65 Chiu,Shannon 5 Police Admin Supp 31 93 55 Christie nsen,Jeffrey A Parks Dept Aquarium Biologist 3 32 256 57 Claxton,Addison PublicUtil IT Prof 27 194 57 Cofer,Wi iam City Light Structs Mech CC 38 221 64 Conlin,Richard Council Member 16 0 65 Corado,Ana Parks Dept Cashier, Sr. 12 361 66 Costello,Richard A Parks Dept Maint Laborer 8 36 65 Cox,CharIes PublicUtil Manager 2, Info Tech 31 105 55 Daiiey,James Carroll Parks Dept lT Systems Analyst 28 268 54 Daly-White,Rita Muni Court Court Clerk 9 255 58 Daoud,Shadia City Light Admin Specialist II 20 72 67 Davison,Shena SDOT Vested 22 197 52 De Grieck,Jerry EXEC DEPTS Strat Advsr 3 13 87 63 DeBoldt,Linda PublicUtil Exec 3 27 251 53 Demick,Judy A City Light Ofc Equip Op 21 271 70 Dierich,Peter Parks Department 25 86 52 Diga,E mer Parks Dept Maintenance Laborer 22 335 54 Dobrovolny,Peter EXEC DEPTS Sr Planning Dev Spec 13 191 71 Dokes,Annette City Light Manager 3 30 343 54 Donnelly,Shei a FAS Carpenter 9 127 60 Drappelman,Na ncy Parks Dept Assistant Personnel Specialist 22 53 59 Dyer,Kenneth Parks Dept Safety 8: Health Supervisor 17 288 66 Eagan,Michael PublicUtiI Sr Public Relations Spec 6 7 66 Edwards,Mae City Light Strucl 29 348 65 EIder,Regina Vested Vested 16 149 63 ErnsdorFf,Corrie 5 Parks Dept Actg Tech - BU 30 33 65 Farrell,Susan Hansen Vested Vested 17 282 63 Park Vested Vested 7 247 62 Ferrerir,Eddie EXEC DEPTS info Technol Aniyst 11 231 60 Fischer,Michael Vested Vested 26 191 52 Fox,Thomas PublicUtil Manager 3 8 37 67 Frank,Diane Elizabeth PublicUtil Info Tech Prof 7 316 66 Frazier,BettyJ Police Admin Spec l -8U 36 118 66 Fridriksson,Petur Vested Vested 23 159 59 Frith,Richard Sheldon Parks Dept Sr Real Prop Agent 21 62 63 Fruehling,Sandra Human Admin Support Supv - BU 10 46 66 Furutani,Sharon PublicUtil Acct Tech il 33 354 64 Garner,Armie FAS Customer Service Rep 6 267 62 Garske,Toni SDOT Assoc Civil Engineering Spec 34 148 62 Gervelis,Gary PublicUtil Manager 2 11 245 62 Gihring,Eugene City Light Electrician CC 25 238 67 GHHanLBeve?yJ Ve?rd 16 18 60 Greer,Mitchell Steven lnfoTech 20 156 62 Hamiltoanabel A Parks Dept Concss Coordin 17 128 73 Hammerbeck,Rodney Parks Dept Sr. Carpenter 24 286 68 Hargrave,Margarite Parks Dept Special Events Scheduler 15 165 63 Harri5,Grace A PublicUtil Strat Advr 2 12 175 66 Harris,Peter Kennett Legist Strat Advr 29 60 65 Harris,Sa Iy Police Vested 8 10 62 Harwood,John PublicUtil Sr Constr 81 Maint Equip Op 30 363 63 Hassinger,Virginia Parks Dept Sr Capital Proj Coord 29 342 58 Hendrix,Linda SDOT Radio Dispatcher 32 215 57 Herrick,John PublicUtil Solid Supvr 26 50 67 Hess,Dennis PublicUtil Supervising Civil Engineer 15 95 60 Hill,MeIissa Jo PublicUtil Sr. Civil Engring Specialist 27 337 65 Hilmoe,David PublicUtil Executive 2 30 297 59 ST- 16 Seattle City Employees? Retirement System Statistical Section Retiree Department Name Position Days Age Hinman,l