SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM A Pension Trust Fund of the City of Seattle ANNUAL REPORT For the Year Ended December 31, 2016 Prepared by: Seattle City Employees’ Retirement System Staff 720 Third Avenue, Suite 900 Seattle, WA 98104-1852 (206) 386-1293 (206) 386-1506 fax http://www.seattle.gov/retirement 2016 Organizational Chart Board of Administration Mr. Tim Burgess, Chair Mr. Glen Lee, Treasurer Ms. Susan Coskey, Secretary Mr. Lou Walter, Retired Member Ms. Jean Becker, Employee Member Ms. Sherri Crawford, Employee Member Mr. Robert Harvey Jr, Member Selected from Community Interim Executive Director Kenneth J. Nakatsu Chief Investment Officer Chief Financial/Operating Officer Office Administrator Jason Malinowski Jeff Davis Nina Melencio Deputy Chief Investment Officer Senior Business Analyst Anthony Smith Lindsay Reid Information Technology Manager Claire Foster Investment Strategic Advisor Systems Analyst Jill Johnson Janet Donlon Kathy Weitz Investment Analyst Cecelia Chen Member Services Manager Principal Accountant Cynthia Scheiderer Deontrae Sherrard Retirement Specialist Kate Azer Lee Brunk Ronda Iriarte Erica Ramsey Doug Noble Accountant Phuong Nguyen Selam Teklemariam Michiko Togashi Medical Specialist Member Services Representatives Tomeka Williams Frankie Graziani Amina Kedir ii To the Honorable Mayor and Seattle City Council Seattle, Washington I am pleased to transmit the 2016 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, 2016, concludes our 89th 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 2016 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 EMPLOYEES’ RETIREMENT SYSTEM Jeffrey S. Davis Executive Director iii TABLE OF CONTENTS INTRODUCTORY SECTION Organization Chart ................................................................................................................................................ Letter of Transmittal ............................................................................................................................................. Table of Contents .................................................................................................................................................. FINANCIAL SECTION CliftonLarsonAllen Independent Auditors’ Report .............................................................................................................. 5 Management Discussion & Analysis ..................................................................................................... 7 Financial Statements Statement of Fiduciary Net Position ......................................................................................... Notes to Financial Statements .................................................................................................. 15 16 Required Supplementary Information Schedule of Changes in Net Pension Liability and Related Ratios............................................. Schedule of Employer Contributions......................................................................................... Schedule of Investment Returns ............................................................................................... 35 36 37 Additional Information Schedule of Administrative Expenses ....................................................................................... Schedule of Investment Expenses ............................................................................................. 39 40 ACTUARIAL SECTION Milliman Section 1 Table 1 Graph 1 Graph 2 Summary of the Findings ................................................................................................ Summary of Results ........................................................................................................ Historical Asset & Liability Comparison .......................................................................... Historical Funding Ratios ................................................................................................ 49 54 55 55 Section 2 Scope of the Report........................................................................................................ 57 Section 3 Table 2 Table 3 Table 4 Assets ............................................................................................................................. Calculation of Value of Assets ........................................................................................ Summary of Plan Net Assets .......................................................................................... Summary of Changes in Plan Net Assets ........................................................................ 59 60 61 62 Section 4 Table 5 Table 6 Table 7 Actuarial Liabilities ......................................................................................................... Actuarial Present Values ................................................................................................ Normal Cost Contribution Rates .................................................................................... Unfunded Actuarial Accrued Liability ............................................................................. 63 65 66 67 Section 5 Table 8 Table 9 Employer Contributions ................................................................................................. Contribution Rates as Percentage of Salary ................................................................... Amortization of Unfunded Actuarial Accrued Liability ................................................... 69 71 72 Section 6 Table 10 Table 11 Additional Actuarial Information.................................................................................... GASB Statement No 27 Annual Pension Cost and Net Pension Obligation .................... Solvency Test .................................................................................................................. 73 74 75 iv ii iii iv Section 7 Table 12 Actuarial Gains or Losses ................................................................................................ Analysis of Actuarial Gains or Losses .............................................................................. 77 78 Section 8 Table 13 Contribution Rate Projections and Increases ................................................................ Projected Total Contribution Rates ............................................................................... 79 80 Section 9 Table 14 Projection of Benefit Payments ..................................................................................... 10-YearProjection of Benefit Payments ........................................................................ 83 84 Appendix A Table A-1 Table A-2 Table A-3 Table A-4 Table A-5 Table A-6 Table A-7 Actuarial Procedures and Assumptions.......................................................................... Summary of Valuation Assumptions .............................................................................. Future Salaries ................................................................................................................ Retirement ..................................................................................................................... Disability ......................................................................................................................... Mortality......................................................................................................................... Other Terminations of Employment Among Members Not Eligible to Retire ............... Probability of Refund...................................................................................................... 85 88 89 90 91 92 93 94 Appendix B Provisions of Governing Law .......................................................................................... 95 Appendix C Table C-1 Table C-2 Table C-3 Table C-4 Table C-5 Table C-6 Valuation Data ................................................................................................................ Summary of Membership Data ...................................................................................... Members Receiving Service Retirement Benefits as of January 1, 2016-Inactive Lives . Members Receiving Disability Retirement Benefits as of January 1, 2016-Inactive ..... Survivors Receiving Retirement Benefits as of January 1, 2016-Inctive Lives ................ Distribution of Employees and Salaries as of January 1, 2016-Active Lives ................... Distribution of Employees and Salaries as of January 1, 2016-Active Lives ................... 99 100 101 102 103 104 106 Appendix D Glossary .......................................................................................................................... 109 Appendices STATISTICAL SECTION 2016 YE Investment Portfolio Composition and 2016 Fund Performance…. ...................................................... Revenues by Source ............................................................................................................................................ Expenses by Type ................................................................................................................................................ Benefit Expense by Type ..................................................................................................................................... Revenue Ratios by Source ................................................................................................................................... Investments Results ............................................................................................................................................ Age Distribution of Pensioners............................................................................................................................ Retirement Allowance Distribution..................................................................................................................... Active Membership Experience .......................................................................................................................... Retiree Membership Experience ......................................................................................................................... Miscellaneous Retired Information..................................................................................................................... Average Benefit Payments .................................................................................................................................. New Active Members - by Department .............................................................................................................. Service Retirements Granted in 2016 ................................................................................................................. Retired Members Deceased in 2016 ................................................................................................................... Deaths in Active Service in 2016 ......................................................................................................................... Death Benefit System .......................................................................................................................................... Retirement Estimate Information ....................................................................................................................... v 113 114 115 116 117 118 119 120 121 122 123 124 126 127 134 138 139 140 FINANCIAL Independent Auditors Report SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  Report of Independent Auditors  and Financial Statements with  Required Supplementary Information  and Additional Information  December 31, 2016 and 2015  3 CONTENTS  PAGE  REPORT OF INDEPENDENT AUDITORS  5  MANAGEMENT’S DISCUSSION AND ANALYSIS  7  FINANCIAL STATEMENTS  Statements of Fiduciary Net Position  Notes to  Financial Statements  15  16  REQUIRED SUPPLEMENTARY INFORMATION  Schedule of Changes in Net Pension Liability and Related Ratios  Schedule of Employer Contributions  Schedule of Investment Returns  35  36  37  ADDITIONAL INFORMATION  Schedule of Administrative Expenses  Schedule of Investment Expenses  39  40  4 CliftonLarsonAllen LLP CLAconnect.com INDEPENDENT AUDITORS' REPORT Board of Administration Seattle City Employees’ Retirement System Seattle, Washington Report on the Financial Statements We have audited the accompanying financial statements of the Seattle City Employees’ Retirement System (SCERS), which comprise the statements of fiduciary net position as of December 31, 2016 and 2015, and the related statements of changes in fiduciary net position for the years then ended, and the related notes to the financial statements. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial 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. Auditors’ Responsibility Our responsibility is to express an opinion on these financial 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 financial 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 financial 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 financial 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’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.   5 Board of Administration Seattle City Employees’ Retirement System Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of SCERS as of December 31, 2016 and 2015, and the results of its operations for the years then ended in accordance with accounting principles generally accepted in the United States of America. 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 be presented to supplement the basic financial statements. Such information, although not a part of the financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial 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 financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient 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 financial 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 financial statements. The information has been subjected to the auditing procedures applied in the audits of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial 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. a CliftonLarsonAllen LLP Baltimore, Maryland July 7, 2017 6 SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  MANAGEMENT’S DISCUSSION AND ANALYSIS  Years Ended December 31, 2016 and 2015  This section presents management’s discussion and analysis of the Seattle City Employees’ Retirement System’s  (SCERS or the System) financial performance during the years ended December 31, 2016 and 2015. Please read it  in conjunction with the accompanying financial 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  financial  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  financed 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 Fiduciary Net Position b. Statements of Changes in Fiduciary 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 financial statements are described as follows:   The Statement of Fiduciary Net Position shows the account balances at year‐end and includes the net position available  for  future  benefit  payments.  The  liabilities  for  future  benefit  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. 7   SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  MANAGEMENT’S DISCUSSION AND ANALYSIS  Years Ended December 31, 2016 and 2015   The Statement of Changes in Fiduciary 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 financial statements and include additional detailed information and schedules to provide a better understanding of the financial statements. The  required  supplementary  information  provides  historical  trends  that  help  to  reflect  the  ongoing  plan  perspective and the long‐term nature of the defined benefit 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.  The Schedule of Investment Returns contains the investment returns realized on the total portfolio for the years since 2014. Financial Highlights   Net position increased by $175 million (7.6%) during 2016. The primary driver was net investment income of $190 million.  Net position decreased by $10 million (‐0.4%) during 2015.  The primary driver was realizing only a $7 million increase in investment income.  Revenue  additions  to  net  position  for  2016  were  $370  million  which  includes  member  and  employer contributions of $180 million and revenue from investment activity totaling $190 million.  Revenue additions to net position for 2015 were $174 million which includes member and employer contributions of $167 million and revenue from investment activity totaling $7 million.  Expenses (deductions from net position) for 2016 increased by $11.0 million (6.0%) from 2015. This can be primarily attributed to a $9.6 million increase in retiree benefits.  In 2016, the net increase in the number of retirees receiving benefits was 2.6%.  Expenses for 2015 increased by $13.0 million (7.6%) from 2014.  This can be primarily attributed to an $9.1 million increase in retiree benefits.  In 2016, the net increase in the number of retirees receiving benefits was 3.4%. 8   SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  MANAGEMENT’S DISCUSSION AND ANALYSIS  Years Ended December 31, 2016 and 2015  Fiduciary Net Position  The table below provides a summary of assets and current liabilities for the years ended December 31:  Cash, short‐term investments and receivables Investments at fair value Securities lending collateral Total assets 2016 2015 2014 $       443,140,843       2,351,299,369         11,130,677 $      170,672,072   2,154,482,878   50,952,037 $      128,978,368   2,226,745,449   25,231,591   2,805,570,889   2,376,106,987   2,380,955,408   11,125,376   305,947,349   53,633,431   9,452,393   28,228,622   30,023,091   317,072,725   63,085,824   58,251,713 $    2,488,498,164 $    2,313,021,163 $    2,322,703,695 Securities lending payable Other payables Total liabilities Total net position Changes in Fiduciary 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:  Additions: Employer contributions Member contributions Net investment income and other income 2016 2015 $       108,454,496         71,755,857           189,941,169 $      101,153,403   65,779,216   7,083,633   370,151,522   174,016,252   276,468,597   168,967,298   16,456,570   9,250,653   159,349,807   16,137,840   8,211,137   150,239,008   15,103,615   5,330,764   194,674,521   183,698,784   170,673,387 Total additions Deductions: Retiree benefits Refunds of contributions Administrative expenses Total deductions Net increase (decrease) $       175,477,001 $   2014 $     89,988,898   63,969,504   122,510,195    (9,682,532) $      105,795,210 Revenues ‐ Additions to Fiduciary Net Position   In  2016,  employer  contributions  increased  by  $7.3  million  (7.2%)  compared  to  2015.    In  2015,  employer contributions increased by $11.2 million (12.4%) compared to 2014.  Member contributions increased by $6.0 million (9.1%) compared to 2015. In 2015, member contributions increased by $1.8 million (2.8%) compared to 2014.  Net investment income was $189.9 million in 2016 compared to $7.1 million in 2015 and $122.5 million in 2014. 9 SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  MANAGEMENT’S DISCUSSION AND ANALYSIS  Years Ended December 31, 2016 and 2015  Expenses ‐ Deductions from Fiduciary Net Position   Retiree benefits increased in 2016 by $9.6 million (6.0%) compared to 2015, 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 benefits increased $9.1 million (6.1%) in 2015.  Refunds of contributions increased in 2016 by $0.3 million (2.0%) compared to amounts paid in 2015. In 2015, refunds increased by $1.0 million (6.8%) compared to amounts paid in 2014. Changes in Plan Membership  The table below reflects the active membership and retiree changes for the years ended December 31:  2016 Retirees and beneficiaries receiving benefits Current and terminated employees: Current employee members Terminated members entitled to, but not yet receiving benefits, Vested Terminated members not entitled to benefits beyond contributions and accumulated interest, Non‐Vested Total 10 2015 Change   6,382   6,223 2.6%   9,151   1,257   8,882   1,220 3.0% 3.0%   1,095   977   11,503   11,079 12.1% 3.8% SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  MANAGEMENT’S DISCUSSION AND ANALYSIS  Years Ended December 31, 2016 and 2015  Funding Status  Schedule of Funding Progress  Funding Ratio  As of January 1st Valuation Date  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 reflects that  change.  Prior to January 1, 2011, all funding ratios were reported on a 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 financially sound retirement system. In 2016,  most active members contributed 10.03% of their salaries to the retirement fund and the City contributed 15.23%.  The graph above refers to the results of actuarial valuations prepared for funding purposes in accordance with  Actuarial Standards of Practice (ASOPs).  However, GASB 67 requires a separate actuarial valuation for accounting  purposes.  The primary purpose of the valuation for accounting purposes is to provide consistent, standardized  methodology that allows comparability of amounts and increased transparency of the pension liability across U.S.  pension  plans  complying  with  GASB  67.    When  reporting  in  accordance  with  GASB  67,  the  Plan  Fiduciary  Net  Position as a Percentage of the Total Pension Liability was 65.6% as of December 31, 2016.  11 SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  MANAGEMENT’S DISCUSSION AND ANALYSIS  Years Ended December 31, 2016 and 2015  Investment Activities  One‐year returns on asset classes (gross of fees) and comparative benchmarks are presented in the table below  for the years ended December 31.  These returns are calculated on a time‐weighted rate of return basis:  2016 Investment Performance  Total Portfolio   8.6%  Domestic Equities    Benchmark:  Russell 3000 Index (Blend)   13.2%   12.7%  International Equities    Benchmark:  MSCI ACWI ex US IM/ND   5.2%   4.4%  Broad Fixed Income    Benchmark:  Barclays U.S. Universal Index  4.3%  3.9%  Private Equity    Benchmark:  ASP Custom Private Equity Index   6.5%   0.4%  Real Estate    Benchmark:  Russell NCREIF Property Index  9.7%  9.1%  Diversifying Strategies    Benchmark:  HFRI Fund of Funds Comp. Index  0.0%  0.5%  Cash    Benchmark:  Citigroup 3‐Month T‐Bills  0.0%  0.3%  12   SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  MANAGEMENT’S DISCUSSION AND ANALYSIS  Years Ended December 31, 2016 and 2015  2015 Investment Performance  Total Portfolio  0.3%  Domestic Equities    Benchmark:  Russell 3000 Index (Blend)  1.5%  1.2%  International Equities    Benchmark:  MSCI ACWI ex US IM/ND  (3.9%)  (4.6%)  Broad Fixed Income    Benchmark:  Barclays U.S. Universal Index  0.3%  0.4%  Private Equity    Benchmark:  ASP Custom Private Equity Index  2.6%  3.5%  Real Estate    Benchmark:  Russell NCREIF Property Index  13.5%  13.9%  Diversifying Strategies    Benchmark:  Russell NCREIF Property Index  0.2%  (0.3%)  Cash    Benchmark:  Citigroup 3‐Month T‐Bills  0.7%  0.0%  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  diversified  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: retirecity@seattle.gov or you may mail your questions to:  Seattle City Employees’ Retirement System  720 Third Avenue, Suite 900  Seattle, WA 98104  13   FINANCIAL STATEMENTS 14 SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  STATEMENTS OF FIDUCIARY NET POSITION  Years Ended December 31, 2016 and 2015  2016 Assets: Cash Short‐term investments $     6,302,934   336,427,114 2015 $     8,943,035   143,820,761   342,730,048   152,763,796   3,434,870   6,143,927   3,486,918   87,345,080   3,496,137   4,787,895   3,449,203   6,175,041 Total receivables   100,410,795   17,908,276 Investments, at fair value: Fixed income Equity Real estate Alternative investments   539,527,403   1,350,196,766   287,996,774   173,578,426   604,985,207   1,163,805,377   270,796,297   114,895,997   2,351,299,369   2,154,482,878   11,130,677   50,952,037   2,805,570,889   2,376,106,987   1,370,010   11,125,376   304,577,339   2,004,637   53,633,431   7,447,756   317,072,725   63,085,824 $    2,488,498,164 $    2,313,021,163 Total cash and short‐term investments Receivables: Members Employer Interest and dividends Sales proceeds receivable Total investments, at fair value Securities lending collateral Total assets Liabilities: Pensions payable and other Obligations under securities lending Investment commitments payable Total liabilities Fiduciary net position held in trust for pension benefits The accompanying notes are an integral part of these financial statements.  15 SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  NOTES TO FINANCIAL STATEMENTS  Years Ended December 31, 2016 and 2015 Additions: Contributions: Employer Member Total contributions Investment activities: Investment income: Net change in fair value of investments Interest Dividends Net investment income Securities lending activities: Securities lending income Borrowing rebates Total securities lending income Securities lending management fees Net income from securities lending Investment activity expenses: Investment management fees Investment consultant fees Investment custodial fees Total investment activity expenses Net income from investment activities Total additions Deductions: Benefits Refunds of contributions Administrative expenses Total deductions Net change 2016 2015 $       108,454,496         71,755,857 $      101,153,403   65,779,216   180,210,353   166,932,619   163,299,357   10,569,831   24,780,531    (22,933,464)   11,377,655   27,836,456   198,649,719   16,280,647   100,217   165,375   56,694   674,010   265,592    (66,376)   730,704   (182,660)   199,216   548,044    (8,186,323)   (295,000)   (426,443)    (9,096,421)   (295,000)   (353,637)    (8,907,766)    (9,745,058)   189,941,169   7,083,633   370,151,522   174,016,252   168,967,298   16,456,570   9,250,653   159,349,807   16,137,840   8,211,137   194,674,521   183,698,784   175,477,001 Fiduciary net position held in trust for pension benefits Beginning of year End of year 16    (9,682,532)   2,313,021,163   2,322,703,695 $    2,488,498,164 $    2,313,021,163   SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  NOTES TO FINANCIAL STATEMENTS  Years Ended December 31, 2016 and 2015 Note 1 ‐ Plan Description  The Seattle City Employees’ Retirement System (the System) is a multiple employer defined benefit 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 fire 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  6,382  retirees  and  beneficiaries  receiving  benefits,  and  9,151  active  members  of  the  System.  There  are  1,257 terminated, vested employees entitled to future benefits.  The System provides retirement, death, and disability benefits. Retirement benefits vest after five years of  credited service, while death and disability benefits vest after ten years of service. Retirement benefits are  calculated as 2% multiplied by years of creditable service, multiplied by average salary, based on the highest  24 consecutive months. The benefit is actuarially reduced for early retirement.  The System provides post‐ retirement benefit increase including an automatic 1.5% annual COLA increase and a 65% restoration of  purchasing power benefit.  The City of Seattle adopted a second tier for the System in 2016.  Starting January 1, 2017, new eligible  employees will join this second tier.  The tier is a defined benefit plan much like the original tier but has a  lower contribution rate for members and calculates final average salary based on the highest 60 consecutive  months of service.  Other changes related to the new tier can be found in the Seattle Municipal Code 4.36.  Note 2 ‐ Summary of Significant 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.  Use of Estimates in Preparing Financial Statements ‐ The preparation of financial statements in conformity  with accounting principles generally accepted in the United States of America requires the System 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 financial statements and during the reporting period.  Actual results could differ from those  estimates.  17   SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  NOTES TO FINANCIAL STATEMENTS  Years Ended December 31, 2016 and 2015 Note 2 ‐ Summary of Significant Accounting Policies and Plan Asset Matters (Continued)  Cash and Short Term Investments ‐ The System classifies cash on deposit in financial 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 defined as  the  amount  at  which  an  investment  could  be  exchanged  in  a  current  arm’s  length  transaction  between  willing parties in which the parties each act knowledgeably and prudently.  All investments are valued based  on objective, observable, unadjusted quoted market prices in an active market on the measurement date,  if available.  In the absence of such data, valuations are based upon those of comparable securities in active  markets.  For illiquid or hard to value investments such as real estate, private equity, and other private  investments,  valuations  are  based  upon  data  provided  by  the  respective  investment  managers.    These  private asset valuations are generally based upon estimated current values and/or independent appraisals.  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  reflected in the financial statements on a trade‐date basis. Investments are made in accordance with the  Prudent Person Rule as defined by the State of Washington RCW 35.39.060.  Federal Income Tax Status ‐ The System is a qualified plan under section 401(a) 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 ‐ Benefits and refunds of contributions are recognized when due  and payable in accordance with the System’s policy.  18   SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  NOTES TO FINANCIAL STATEMENTS  Years Ended December 31, 2016 and 2015 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  identified  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  benefits  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 2016 and 2015 and 15.23%  and  15.73%  for  the  employers  in  2016  and  2015.  There  are  no  long‐term  contracts  for  contributions  outstanding  and  currently  no  legally  required  reserves.    See  Note  8  for  additional  information  on  assumptions used in calculating the actuarially determined contribution rates.  Note 4 ‐ Cash  SCERS’ 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 diversification 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, 2016:  Target  Allocation  Asset Class  Equity Public Equity Private Equity Fixed Income Broad Fixed Income Credit Fixed Income Real Assets Real Estate Infrastructure Diversifying Strategies Total 48.0% 9.0% 18.0% 5.0% 12.0% 3.0% 5.0% 100.0%   19 SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  NOTES TO FINANCIAL STATEMENTS  Years Ended December 31, 2016 and 2015 Note 5 – Investments (Continued)  Money‐weighted rate of return – As of December 31, 2016, the return for the System, based on a money‐ weighted rate of return methodology, was 8.62%.  As of December 31, 2015, the return for the System,  based on a money‐weighted rate of return methodology, was 0.28%  Short Term Investments ‐ 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.   Commingled Funds – The System invests in various commingled funds where it has an ownership interest  in a pool of securities alongside other fund holders. For those commingled funds that are anticipated to be  held by the System on a long‐term basis, the following tables in this Section reflect the System’s pro rata  net  asset  value  in  these  commingled  funds.  The  System’s  investments  in  commingled  funds  that  are  anticipated to be held on a temporary basis are not reflected in this manner.  Custodial Credit Risk – For investments, custodial credit risk is the risk that in the event of the failure of a  financial 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 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. The Retirement Board provides each of the System’s Broad Fixed Income investment managers  with a set of investment guidelines. These guidelines specify eligible investments, minimum diversification  standards, and applicable investment restrictions necessary for diversification 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 fixed 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. The Retirement Board provides each of the System’s Broad  Fixed Income investment managers with a set of investment guidelines. These guidelines specify eligible  investments,  minimum  diversification  standards,  and  applicable  investment  restrictions  necessary  for  diversification 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.  20 SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  NOTES TO FINANCIAL STATEMENTS  Years Ended December 31, 2016 and 2015 Note 5 – Investments (Continued)  Interest Rate Risk ‐ Interest rate risk is the risk that changes in interest rates 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.  The  Retirement  Board  provides  each  of  the  System’s  Broad  Fixed  Income  investment  managers  with  a  set  of  investment  guidelines.  These  guidelines  specify  eligible  investments,  minimum  diversification  standards,  and  applicable  investment  restrictions  necessary  for  diversification  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 fixed  income investments is provided on pages 20 and 21.  The fixed income portfolio is primarily managed by four external money management firms. 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‐U.S. equity and fixed income investment holdings. The System expects these managers to  maintain adequately diversified portfolios to limit foreign currency and security risk.   21 SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  NOTES TO FINANCIAL STATEMENTS  Years Ended December 31, 2016 and 2015 Note 5 – Investments (Continued)  The System’s exposure to foreign currency risk in U.S. dollars as of December 31, 2016, is summarized in  the following table.  Currency Type Equity Fixed Income Derivatives Cash Total Australian Dollar Canadian Dollar Swiss Franc Danish Krone Euro Currency Unit Pound Sterling Hong Kong Dollar Israeli Shekel Japanese Yen Norwegian Krone New Zealand Dollar Polish Zloty Swedish Krona Singapore Dollar $      3,100,873    4,119,689    3,643,597   676,323    12,804,253    7,535,544    1,257,177    86,014    9,978,529   324,414    81,293    ‐    1,163,964   474,219 $      ‐    ‐    ‐    ‐    ‐    ‐    ‐    ‐    ‐    ‐    ‐    ‐    ‐    ‐ $     33,999    22,374    20,659    12,509   108,622    69,738    1,041    ‐    28,389    6,956    ‐    10,362    ‐    1,396 $     22,467    14,998    1,523    2,731    7,921    60,144    4,820    1,394    44,458    7,206    1,857    ‐    25,638    12,769 $      3,157,339    4,157,061    3,665,779   691,563    12,920,796    7,665,426    1,263,038    87,408    10,051,376   338,576    83,150    10,362    1,189,602   488,384 Total $    45,245,889 $      ‐ $     316,045 $     207,926 $    45,769,860 The System’s exposure to foreign currency risk in U.S. dollars as of December 31, 2015, is summarized in  the following table.  Currency Type Equity Fixed Income Derivatives Australian Dollar Canadian Dollar Chinese Yuan Renminbi Danish Krone Euro Currency Unit Japanese Yen Mexican Peso Norwegian Krone Polish Zloty Pound Sterling Swedish Krona Swiss Franc $      ‐    ‐    ‐    ‐    ‐    ‐    ‐    ‐    ‐    ‐    ‐    ‐ $      ‐    ‐   452,800    ‐   146    ‐    2,452,170    ‐    1,211,098    ‐    ‐    ‐ $   Total $      ‐ $      4,116,214 $   22 Cash    (14,258) $      2,243,101    (654,510)    10,484   (5,029,941)    ‐    3,896,662    5,649    27,674    ‐    14,893    22,757   522,511 $   Total    ‐    ‐    ‐    ‐   349,472    27,896    83,431    ‐    ‐    1,530    23,999   127,973 $      (14,258)    2,243,101    (201,710)    10,484   (4,680,323)    27,896    6,432,263    5,649    1,238,772    1,530    38,892   150,730   614,301 $      5,253,026 SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  NOTES TO FINANCIAL STATEMENTS  Years Ended December 31, 2016 and 2015 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 forward contracts are  valued at the price at which the transaction could be settled by offsets in the forward markets.  The System’s derivative transactions as of December 31, 2016 are summarized in the following table.  Currency Type Unrealized Gain/Loss Purchases Unrealized Gain/Loss Sells Australian Dollar Canadian Dollar Swiss Franc Danish Krone Euro Currency Unit Pound Sterling Hong Kong Dollar Japanese Yen Norwegian Krone Polish Zloty Singapore Dollar $      ‐    ‐    ‐    ‐    ‐    ‐    ‐    ‐    ‐    ‐    ‐ $     ‐   ‐   ‐   ‐   ‐   ‐   ‐   ‐   ‐   ‐   ‐ $     35,642   22,589   21,803   14,763   132,167   71,738    1,040   29,993   11,712   11,695    1,393 $      (1,642)  (215)    (1,144)    (2,253)    (23,542)    (1,999)    ‐    (1,604)    (4,756)    (1,333)    2 Total $      ‐ $     ‐ $     354,535 $      (38,486) $   23 Total Unrealized Gain/Loss    (1,642)  (215)  (1,144)  (2,253)    (23,542)    (1,999)    ‐    (1,604)    (4,756)    (1,333)    2   (38,486) SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  NOTES TO FINANCIAL STATEMENTS  Years Ended December 31, 2016 and 2015 Note 5 – Investments (Continued)  The System’s derivative transactions as of December 31, 2015 are summarized in the following table.  Currency Type Unrealized Gain/Loss Purchases Unrealized Gain/Loss Sells Total Unrealized Gain/Loss Australian Dollar Canadian Dollar Chinese Yuan Renminbi Danish Krone Euro Currency Unit Mexican New Peso Norwegian Krone Polish Zloty Swedish Krona Swiss Franc $     1,280,126    ‐   665,480    ‐    9,697,048   337,557    ‐    ‐    ‐    ‐ $      538   ‐    9,639   ‐   486,264   10,934   ‐   ‐   ‐   ‐ $     1,284,051    2,429,638    1,341   12,251    4,276,003    4,282,092   10,669   28,831   15,148   23,457 $      (18,722) $      (186,537)  (8)    (1,768)    (95,160)    (58,807)    (5,020)    (1,158)  (255)  (700)   (18,184)    (186,537)  9,631  (1,768)   391,104    (47,873)    (5,020)    (1,158)  (255)  (700) Total $     11,980,211 $     507,375 $     12,363,481 $     (368,135) $      139,240 24 SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  NOTES TO FINANCIAL STATEMENTS  Years Ended December 31, 2016 and 2015 Note 5 ‐ Investments (Continued)  As of December 31, 2016, the fixed income portfolio of the System had the following investment maturities:  Investment Maturities (in years) Investment Fixed income Agencies Asset Backed Security Commingled Funds Corporate Debt Derivatives Foreign Sovereign Mortgage Backed Security Municipal Treasury Notes and Bonds Total Fixed Income Fair Value $   <1   3,384,578     18,417,402     35,149,819   236,226,048       1,761,087       1,503,600   176,024,872       5,443,906     61,616,091 $     539,527,403 $      10,411,609 1 ‐ 5   ‐ $      1,951,858     ‐   8,988,044     ‐   ‐   1,620,730    52,011,703   (30,617)   1,991,620     ‐   ‐     ‐   ‐     ‐    196,728   8,821,496    18,628,819 $      83,768,772 * Note ‐ Amounts primarily relate to commingled funds and therefore a weighted average was not available. 25 6 ‐ 10 >10 $      1,432,720   8,981,776         ‐    146,404,165   ‐       1,503,600       4,540,822       1,187,943    22,791,357 $   $    186,842,383 $    216,841,390 N/A *    ‐ $      447,582   ‐    29,676,020   (199,916)   ‐    171,484,050   4,059,235    11,374,419 $     ‐    ‐   35,149,819    6,513,430    ‐    ‐    ‐    ‐    ‐   41,663,249 SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  NOTES TO FINANCIAL STATEMENTS  Years Ended December 31, 2016 and 2015 Note 5 ‐ Investments (Continued)  As of December 31, 2015, the fixed income portfolio of the System had the following investment maturities:  Investment Maturities (in years) Investment Fixed income Agencies Asset Backed Security Commingled Funds Corporate Debt Derivatives Foreign Sovereign Mortgage Backed Security Municipal Treasury Notes and Bonds Total Fixed Income Fair Value $   <1   5,910,966 $       24,438,890   117,905,090   159,045,389    (2,988,640)     22,840,121   135,151,524       4,913,533   137,768,334   604,985,207 1 ‐ 5    7,220 $      3,942,888     ‐   6,663,897     ‐   ‐   4,141,202    61,694,195  (906)  ‐   2,724,751  4,736,830  8,895,336    65,541     ‐    309,543   4,312,083    43,277,402 $      11,249,891 $     129,520,091 * Note ‐ Amounts primarily relate to commingled funds and therefore a weighted average was not available. 26 6 ‐ 10 $      8,067   7,660,687   ‐    53,989,273    99,093    11,777,424   6,443,401    553,242    55,348,603 $    135,879,790 >10 N/A * $        1,952,791 $      10,114,306              ‐    30,427,091   (29,802)         3,601,116    119,747,246         4,050,747      34,830,246   ‐    ‐   117,905,090    8,793,629    (3,057,025)    ‐    ‐    ‐    ‐ $    204,693,741  123,641,694 $   SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  NOTES TO FINANCIAL STATEMENTS  Years Ended December 31, 2016 and 2015 Note 5 ‐ Investments (Continued)  As of December 31, 2016, the fixed income portfolio of the System had the following investment ratings:  Ratings Investment Fi xed i ncome Agenci es As s et Ba cked Securi ty Commi ngl ed Funds Corpora te Debt Deri va ti ves Fair Value $       3,384,578   18,417,402 AAA $     ‐   13,720,413 AA $      3,382,492    315,854 A $   BBB   ‐   ‐ $   BB   ‐   ‐ Forei gn Soverei gn   35,149,819   236,226,048   1,761,087   1,503,600   ‐   1,283,302   ‐   ‐    ‐   5,897,549    ‐    ‐   ‐   28,201,323   ‐   ‐   ‐   76,234,613   ‐     1,503,600 Mortga ge Ba cked Securi ty Muni ci pa l Trea s ury Notes  a nd Bonds   176,024,872   5,443,906    61,616,091   1,959,137   1,695,605   ‐   66,487,270   1,230,246   61,616,091   1,010,059   2,518,054   ‐   848,978   ‐   ‐ $    539,527,403 $    18,658,457 $     138,929,502 $    31,729,436 $    78,587,191 Total Fixed Income 27 $   B   ‐    ‐    ‐   44,649,385    ‐    ‐    ‐    ‐    ‐ $   44,649,385 $   CCC& Below   ‐   ‐   ‐   43,049,133   ‐   ‐   ‐   ‐   ‐ $    43,049,133 $     ‐   447,582   ‐   4,668,682   ‐   ‐   ‐   ‐   ‐ $    5,116,264 Not Rated $       2,086    3,933,553   35,149,819   32,242,061    1,761,087    ‐    105,719,429    ‐    ‐ $   178,808,035 SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  NOTES TO FINANCIAL STATEMENTS  Years Ended December 31, 2016 and 2015 Note 5 ‐ Investments (Continued)  As of December 31, 2015, the fixed income portfolio of the System had the following investment ratings:  Ratings Investment Fi xed i ncome Agenci es As s et Ba cked Securi ty Commi ngl ed Funds Corpora te Debt Deri va ti ves Forei gn Soverei gn Mortga ge Ba cked Securi ty Muni ci pa l Trea s ury Notes  a nd Bonds Total Fixed Income Fair Value AAA AA A $        5,910,966     24,438,890   117,905,090   159,045,389 $                 ‐     9,737,931                ‐     1,793,786 $         5,732,622      6,415,989                ‐      7,904,086 $                 ‐           570,546    ‐      35,848,805      (2,988,640)     22,840,121   135,151,524                ‐        395,542        971,077                ‐      2,100,040    81,410,052       4,913,533   137,768,334     1,222,011                ‐ $    604,985,207 $    14,120,347 BB B CCC& Below Not Rated  ‐         248,212  ‐    68,236,628 $               ‐      851,345             ‐      21,778,238 $                 ‐        762,242                ‐     8,690,011 $               ‐       2,244,988            ‐       3,067,961 $          178,344          3,607,637      117,905,090        11,725,875    ‐        8,273,928        3,413,491  ‐      3,289,691      2,181,159             ‐   2,726,452      664,631                ‐                ‐     1,819,896            ‐    161,990       3,603,369         (2,988,641)          5,892,477        41,087,850      2,096,458        137,766,313        1,106,790    ‐         130,405  ‐        14,262             ‐          57,560                ‐            ‐            ‐             286,047  2,021 $     243,425,560 $    49,213,560 $    74,086,095 $   26,034,928 $    11,329,709 $    9,078,308 $   177,696,700 28 BBB $  SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  NOTES TO FINANCIAL STATEMENTS  Years Ended December 31, 2016 and 2015 Note 6 ‐ Fair Value Measurements  Fair value measurements are categorized within the fair value hierarchy established by generally  accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair  value of the asset:   Level 1: unadjusted quoted prices for identical instruments in active markets  Level 2: quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model‐derived valuations in which all significant inputs are observable  Level 3: significant inputs are unobservable The following schedule presents investments categorized according to the fair value hierarchy, and is  proceeded with additional information regarding investments measured at the net asset value as of  December 31, 2016:  Investments by fair value level 12/31/2016 Equity $ Fixed Income Total investments by fair value level Investments measured at the net asset value (NAV) Equity Fixed Income Real Estate Alternative Investments Total investments measured at the NAV Total investments Securities lending collateral Investment Equity Fixed Income Real Estate Alternative Investments Total investments measured at the NAV $ Fair Value Measurements Using Quoted Prices in Active Markets Significant Other Significant Identical Assets Observable Unobservable (Level 1) Inputs (Level 2) Inputs (Level 3) 639,807,625 $ 636,258,397 $ 3,533,147 $ 16,081 413,737,686 96,765,911 316,971,775 - 1,053,545,311 733,024,308 320,504,922 16,081 710,389,141 125,789,717 287,996,774 173,578,426 1,297,754,058 $ 2,351,299,369 $ 11,130,677 Fair Value 710,389,141 $ 125,789,717 287,996,774 173,578,426 1,297,754,058 29 Unfunded Commitments 9,444,262 242,114,969 251,559,231 Redemption Frequency (if Redemption Notice Currently Eligible) Period Daily, Monthly 1 - 30 Days Monthly 30 Days N/A N/A N/A N/A SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  NOTES TO FINANCIAL STATEMENTS  Years Ended December 31, 2016 and 2015 Note 6 ‐ Fair Value Measurements (Continued)  The following schedule presents investments categorized according to the fair value hierarchy, and is  proceeded with additional information regarding investments measured at the net asset value as of  December 31, 2015:  Investments by fair value level 12/31/2015 Equity $ Fixed Income Total investments by fair value level Investments measured at the net asset value (NAV) Equity Fixed Income Real Estate Alternative Investments Total investments measured at the NAV Total investments Securities lending collateral Investment Equity Fixed Income Real Estate Alternative Investments Total investments measured at the NAV $ Fair Value Measurements Using Quoted Prices in Significant Active Markets Significant Other Unobservable Observable Identical Assets Inputs (Level 3) Inputs (Level 2) (Level 1) 531,763,082 $ 527,982,353 $ 3,780,512 $ 217 453,126,946 215,421,253 237,705,693 - 984,890,028 743,403,606 241,486,205 217 632,042,295 151,858,261 270,796,297 114,895,997 1,169,592,850 $ 2,154,482,878 $ 50,952,037 Fair Value 632,042,295 $ 151,858,261 270,796,297 114,895,997 1,169,592,850 Unfunded Commitments 680,441 308,779,918 309,460,359 Redemption Frequency (if Redemption Notice Currently Eligible) Period Daily, Monthly 1 - 30 Days Monthly 30 Days N/A N/A N/A N/A Alternative Investments – These investments are structured as limited partnerships or limited liability  companies. Strategies include private equity, private credit, infrastructure and diversifying strategies.  These investments include those with a perpetual life and the ability to redeem as well as investments  with an approximate life of 10 years where redemptions are restricted. There are no plans to liquidate  the total portfolio.  Equity – These investments are structured as mutual funds, trusts, limited partnerships or limited  liability companies. The funds have a perpetual life. Redemption frequencies range from daily to  monthly. There are no plans to liquidate the portfolio.  Fixed Income – These investments are structured as limited partnerships. The funds have a perpetual  life. The redemption frequency is monthly. There are no plans to liquidate the portfolio.  30 SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  NOTES TO FINANCIAL STATEMENTS  Years Ended December 31, 2016 and 2015 Note 6 ‐ Fair Value Measurements (Continued)  Real Estate – These investments are structured as trusts, limited partnerships or limited liability  companies. These investments include those with a perpetual life and the ability to redeem as well as  investments with an approximate life of 10 years where redemptions are restricted. There are no plans  to liquidate the total portfolio.  Note 7 – 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  define  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  financial 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  indemnification  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, 2016, the fair value of securities on loan was $10,791,203.  Associated cash collateral  totaling $11,125,376 was received.  The fair market value of the reinvested collateral was $11,130,677 at  December 31, 2015, which includes an unrealized gain totaling $5,301.  As of December 31, 2015, the fair value of securities on loan was $52,498,078.  Associated cash collateral  totaling $53,702,631 was received.  The fair market value of the reinvested collateral was $50,952,037 at  December 31, 2014, which includes an unrealized loss totaling $2,681,394.  Note 8 – Commitments  The  System  has  entered  into  capital  commitments  to  fund  partnership  interests  in  certain  alternative  investments.  At  December  31,  2016,  the  System  has  unfunded  commitments  of  $251,559,231  to  these  partnerships.  31 SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  NOTES TO FINANCIAL STATEMENTS  Years Ended December 31, 2016 and 2015 Note 9 – Net Pension Liability  The components of the net pension liability as of December 31, 2016 were as follows:  Total Pension Liability   Plan Fiduciary Net Position    Net Pension Liability $3,793,551,233    2,488,498,164  $1,305,053,069  Plan Fiduciary Net Position as a Percentage of the Total Pension Liability    65.6%  Actuarial assumptions  The total  pension liability was determined by an actuarial valuation as of December 31, 2016, using the  following actuarial assumptions, applied to all periods including the measurement period:  Investment Rate of Return: Salary Increases:  7.50% compounded annually, net of expenses  4.00%  * The  actuarial  assumptions  used  in  the  January  1,  2016  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 inflation) 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 inflation.  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, 2016 (see discussion of pension plan’s investment policy) are  summarized in the following table:  Long‐Term Expected Real  Rate of Return Asset Class  Equity Public Equity Private Equity Fixed Income Broad Fixed Income Credit Fixed Income Real Assets Real Estate Infrastructure Diversifying Strategies 4.99% 6.25% 0.62% 3.79% 3.25% 2.75% 3.25% 32 SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  NOTES TO FINANCIAL STATEMENTS  Years Ended December 31, 2016 and 2015 NOTE 9 – 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 fiduciary net position was projected to be available to  make all projected future benefit payments of current plan members.  Therefore, the long‐term expected  rate of return on pension plan investments was applied to all periods on projected benefit 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% Decrease  (6.50%) $1,766,195,608 Current Discount Rate (7.50%) $1,305,053,069 33 1% Increase (8.50%) $917,301,479 REQUIRED SUPPLEMENTARY INFORMATION 34 SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS  December 31, 2016 December 31, 2015 December 31, 2014 Total pension liability Service Cost Interest Benefit changes Difference between expected and actual experience Changes of assumptions Benefits payments Refunds of contributions Net change in total pension liability $          106,450,550 $          100,415,811 $       94,017,562       268,005,035   254,539,867     241,885,785        ‐   ‐     ‐     (7,653,756)        1,983,005     ‐        ‐         ‐     ‐      (168,967,298)        (159,349,807)    (150,239,208)   (16,456,570)    (16,137,840)      (15,103,615)       181,377,961   181,451,036     170,560,524 Total pension liability ‐ beginning Total pension liability ‐ ending (a)     3,612,173,272    3,793,551,233      3,430,722,236      3,612,173,272 Plan net position Contributions ‐ employer Contributions ‐ member Net investment income Benefits payments Administrative expense Refunds of contributions Other  Net change in plan net position       108,454,496    71,755,857       189,941,169      (168,967,298)     (9,250,653)   (16,456,570)        ‐       175,477,001   101,153,403     65,779,216        7,083,633        (159,349,807)      (8,211,137)    (16,137,840)   ‐      (9,682,532) Plan net position ‐ beginning Plan net position ‐ ending (b)    2,313,021,163    2,488,498,164      2,322,703,695      2,313,021,163       2,216,908,485       2,322,703,695 $      1,305,053,069 $      1,299,152,109 $      1,108,018,541 Net pension liability ‐ ending (a) ‐ (b) Ratio of plan net position to total pension liability ‐‐ (b) / (a)  65.60% Covered employee payroll $          708,600,000 184.17% Net pension liability as a percentage of covered‐employee payroll 64.03% $          641,700,000 202.45%       3,260,161,712       3,430,722,236       89,988,898       63,969,504     122,510,395    (150,239,208)        (5,330,764)      (15,103,615)     ‐     105,795,210 67.70% $          630,900,000 175.63%   Note: Schedule is intended to show information for 10 years. Additional years will be displayed as they become  available.  35   SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  SCHEDULE OF EMPLOYER CONTRIBUTIONS  (Dollars in Millions)  2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 $107.9 $100.9 $90.3 $77.1 $62.5 $72.3 $93.9 $46.9 $46.2 $40.1 108.5 101.2 90.0 77.1 62.5 50.3 45.2 46.7 46.0 40.3 Annual contribution  deficiency (excess) Covered‐employee payroll (0.6) 708.6 (0.3) 641.7 0.3 630.9 0.0 597.9 0.0 567.8 22.0 557.0 48.7 563.2 0.2 580.9 0.2 572.4 (0.2) 501.9 Actual contributions as a  percentage of covered‐ employee payroll 15.31% 15.77% 14.27% 12.90% 11.01% 9.03% 8.03% 8.04% 8.04% 8.03% Actuarially determined  employer contribution Actual employer  contributions Notes to Schedule: Valuation Date:  Actuarially determined contribution rates are calculated as of January 1, one year prior to the fiscal year in which the contributions will apply. Methods and Assumptions used to determine contribution rates for fiscal year 2016 are: Actuarial cost method Individual Entry Age Normal Amortization method Level percent Remaining amortization period Closed 30 years as of January 1, 2013 Valuation Asset valuation method 5 years smoothed, Non‐asymptotic Inflation 3.25% Salary increases 4.00%, differs slightly from actuarial valuation due to exclusion of 0.50% active membership growth assumption for GASB calculations. Investment rate of return 7.50%, net of pension plan investment expense, and gross of administrative expenses Cost of Living Adjustments As noted in the January 1, 2014 actuarial valuation. 36 SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  SCHEDULE OF INVESTMENT RETURNS  Total Portfolio  2016 2015 2014 8.62% 0.28% 5.67% Note: These returns are calculated on a money‐weighted rate of return basis. The schedule is intended to show  information for 10 years. Additional years will be displayed as they become available.  37 ADDITIONAL INFORMATION 38 SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  SCHEDULE OF ADMINISTRATIVE EXPENSES  Years Ended December 31, 2016 and 2015  Actual Expense Budget 2016 2016 Personnel Services Salaries Benefits $   Total Personnel Services   2,575,798   812,160 $     4,301,926   248,851   1,838,338   267,309   59,047   61,884   19,618 Total Maintenance and Operations $   39   10,184,931   3,232,194   246,358   1,326,362   301,260     51,950     55,807    9,997   5,486,881 $     9,250,653   2,225,744   761,465   2,987,209 3,226,834 341,023 1,467,775 325,214 44,915 65,576   15,544   6,796,973 Total Administrative Expenses $     3,763,772   3,387,958 Maintenance and Operations Professional Services Office rent Data processing and central costs Office supplies and other expenses Postage and telephone Travel Training   2,849,584   914,188 2015   5,223,928 $     8,211,137 SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM  SCHEDULE OF INVESTMENT EXPENSES  Year Ended December 31, 2016  Investment Management Fees: Adams Street AEW Core Property Trust AQR Ares Babson Tower Square BlackRock Bluebay Brookfield Capital Point Partners Carlyle Realty DFA International Dover Street Global Infrastructure Heitman American JP Morgan Nogales Investors Oaktree Parametric Delta Shift PCCP PIMCO Pugh Q‐BLK Strategic Partners Reams RhumbLine Russell Stonepeak Smith Whiley TA Realty Associates  TCW Crescent Western Asset Total Investment Management Fees $        516,027   619,586    70,057   128,417    9,642   244,917    72,834   483,123    42,513    59,109   414,121    69,325   177,613   569,443    1,862,067    18,212    12,666   351,470    45,173   874,101   197,329   127,160   233,873    99,662   234,322    36,626    59,079   138,976    17,413   401,467    8,186,323 Performance Measurement: NEPC LLC   295,000 Custodial Services: Bank of New York Mellon   426,443 Total Investment Expenses    8,907,766 Securities Lending Services: Bank of New York Mellon $     66,376 40 ACTUARIAL Actuarial Valuation 42 Milliman Actuarial Valuation Seattle City Employees’ Retirement System January 1, 2017 Actuarial Valuation Prepared by: Nick J. Collier, ASA, EA, MAAA Consulting Actuary Daniel R. Wade, FSA, EA, MAAA Consulting Actuary Julie D. Smith, FSA, EA, MAAA Actuary Milliman, Inc. 1301 Fifth Avenue, Suite 3800 Seattle, WA 98101-2605 Tel +1 206 624 7940 milliman.com Issued June 30, 2017 43 1301 Fifth Avenue Suite 3800 Seattle, WA 98101-2605 USA Tel +1 206 624 7940 Fax +1 206 623 3485 milliman.com June 30, 2017 Retirement Board Seattle City Employees' Retirement System 720 Third Avenue, 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, 2017. This report reflects the benefit provisions and contribution rates in effect as of January 1, 2017. 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 financial 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 final 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. Further, in our opinion, each actuarial assumption used is reasonably related to the experience of the Plan and to reasonable expectations which, in combination, represent our best estimate of anticipated experience under 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 financial soundness. Actuarial valuations do not affect the ultimate cost of System benefits, 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 scope 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 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 professional when reviewing the Milliman work product. sera0304.docx 003 SER 38/003.SER.10.2017 / NJC/DRW/JDS/nlo Offices in Principal Cities Worldwide 44 Retirement Board Seattle City Employees’ Retirement System June 30, 2017 Page 2 analysis of the potential range of future measurements. The 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 presented for financial reporting in a separate report under GASB Statements No. 67 and 68 are for purposes of assisting SCERS and participating employers in fulfilling their 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 SCERS’ 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 confidentiality 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 qualified 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 qualified 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 Qualification 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 third parties be aided by their own actuary or other qualified professional when reviewing the Milliman work product. sera0304.docx 003 SER 38/003.SER.10.2017 / NJC/DRW/JDS/nlo 45 Retirement Board Seattle City Employees’ Retirement System June 30, 2017 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, MAAA Principal and Consulting Actuary Daniel R. Wade, FSA, EA, MAAA Principal and Consulting Actuary Julie D. Smith, FSA, EA, MAAA Actuary NJC/DRW/JDS/nlo 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 professional when reviewing the Milliman work product. sera0304.docx 003 SER 38/003.SER.10.2017 / NJC/DRW/JDS/nlo 46 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Table of Contents Page Section 1 Table 1 Graph 1 Graph 2 Summary of the Findings ........................................................................................................ 49 Summary of Results ....................................................................................................................54 Historical Asset and Liability Comparison ...................................................................................55 Historical Funding Ratios ............................................................................................................55 Section 2 Scope of the Report ..................................................................................................................57 Section 3 Table 2 Table 3 Table 4 Assets ......................................................................................................................................... 59 Calculation of Actuarial Value of Assets at January 1, 2017 ...................................................... 60 Summary of Plan Net Assets (at Market Value)....................................................................... ... 61 Summary of Changes in Plan Net Assets (at Market Value) ...................................................... 62 Section 4 Table 5 Table 6 Table 7 Actuarial Liabilities ................................................................................................................... 63 Actuarial Present Value of Future Benefits ................................................................................. 65 Normal Cost Contribution Rates as Percentages of Salary ........................................................ 66 Unfunded Actuarial Accrued Liability .......................................................................................... 67 Section 5 Table 8 Table 9 City Contributions ..................................................................................................................... 69 Contribution Rates as Percentages of Salary ............................................................................. 71 Amortization of Unfunded Actuarial Accrued Liability ................................................................. 72 Section 6 Table 10 Table 11 Additional Actuarial Information ............................................................................................. 73 Schedule of Funding Progress .................................................................................................... 74 Solvency Test .............................................................................................................................. 75 Section 7 Table 12 Actuarial Gains or Losses ........................................................................................................ 77 Analysis of Actuarial Gains or Losses ......................................................................................... 78 Section 8 Table 13 Contribution Rate Projections and Increases ........................................................................ 79 Projected Total Contribution Rates ............................................................................................. 80 Section 9 Table 14 Projection of Benefit Payments and Contribution Dollars .................................................... 83 10-Year Projection of Benefit Payments and Contributions ........................................................ 84 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 professional when reviewing the Milliman work product. sera0304.docx 47 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Table of Contents (continued) Appendix A Table A-1 Table A-2 Table A-3 Table A-4 Table A-5 Table A-6 Table A-7 Actuarial Procedures and Assumptions ............................................................................... 85 Summary of Valuation Assumptions ......................................................................................... 88 Future Salaries .......................................................................................................................... 89 Retirement ................................................................................................................................. 90 Disability .................................................................................................................................... 91 Mortality ..................................................................................................................................... 92 Other Terminations of Employment Among Members Not Eligible to Retire ............................ 93 Probability of Refund ............................................................................................................... 94 Appendix B Provisions of Governing Law ................................................................................................ 95 Appendix C Table C-1 Table C-2 Table C-3 Table C-4 Table C-5 Table C-6 Valuation Data ......................................................................................................................... 99 Summary of Membership Data ................................................................................................. 100 Members Receiving Service Retirement Benefits as of January 1, 2016 – Inactive Lives ....... 101 Members Receiving Disability Retirement Benefits as of January 1, 2016 – Inactive Lives .... 102 Survivors Receiving Retirement Benefits as of January 1, 2016 – Inactive Lives .................... 103 Distribution of Employees and Salaries as of January 1, 2016 – Active Lives ......................... 104 Distribution of Employees and Salaries as of January 1, 2016 – Active Lives ......................... 106 Appendix D Glossary ................................................................................................................................... 109 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 professional when reviewing the Milliman work product. sera0304.docx 48 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Section 1 Summary of the Findings January 1, 2017 Total Actuarial Contribution Rate Funding Ratio Overview January 1, 2016 25.00% 25.32% 68.1% 66.5% We are pleased to present the results of the January 1, 2017 actuarial valuation. This valuation determines the minimum actuarially required employer contribution rate payable beginning January 1, 2018 based on the Board’s funding policy. Several key points of the valuation are summarized as follows: ■ Investment Returns: For the year ending December 31, 2016, the SCERS assets returned around 8.4% on a market value basis (net of investment expenses) and 7.6% on an actuarial value basis. These rates of return were greater than the assumed rate. From January 1, 2016 to December 31, 2016, the SCERS assets were assumed to earn 7.50%. The result is an actuarial gain on assets for the 2016 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 loss is being deferred in the AVA; this implies that, if all actuarial assumptions are met in future years, the minimum actuarially required contribution rate is expected to increase in future years. ■ City Contribution Rate: The minimum actuarially required contribution rate has decreased from the prior valuation, from 25.32% to 25.00% of payroll. Since the employees contribute a fixed 10.03% of pay, the minimum actuarially required employer contribution rate has decreased from 15.29% of pay to 14.97%. We suggest the Board consider recommending that the City Council maintain the current 15.29% employer contribution rate, as rates are projected to increase in the future. This approach should result in a smaller increase in future years. We can discuss this at the August Board meeting. ■ Funding Progress: On the basis of the January 1, 2016 actuarial valuation, the Funding Ratio (which is measured as the AVA divided by the Actuarial Accrued liability) was 66.5%. Based on the January 1, 2017 valuation, the Funding Ratio has increased to 68.1%.The most significant factor causing this increase was the amortization payment made by the City during the prior year. Note that these Funding Ratios are calculated using the AVA; Funding Ratio results based on the Market Value of Assets (MVA) are shown in Table 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 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 of the January 1, 2017 valuation calculation, a 26-year remaining closed period is in effect. 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 professional when reviewing the Milliman work product. sera0304.docx 49 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Overview (continued) ■ Summary of the Findings SCERS Plan 2: New members entering SCERS January 1, 2017 and later will join Plan 2. This valuation only includes Plan 1 members, so we will not reflect the impact of Plan 2 until next valuation. The effect of closing the UAAL amortization period is that the total SCERS UAAL is projected to be fully paid off over the next 26 years from the January 1, 2017 valuation date. Minimum Actuarially Required Contribution Rate Based on the actuarial valuation of the benefits in effect under the SCERS as of January 1, 2017, the total minimum actuarially required contribution rate decreased from 25.32% to 25.00% for the year beginning January 1, 2018. The current contribution rates for the death benefit program are projected to be sufficient to finance the $2,000 death benefit. Based on a fixed member contribution rate of 10.03%, the City’s contribution rate may be decreased from 15.29% to 14.97% effective January 1, 2018. This reflects the City’s commitment to fund at least the minimum actuarially required contribution rate, which is based on a 26-year amortization of the UAAL beginning January 1, 2017. A greater City contribution rate would result in a shorter amortization of the UAAL, if all actuarial assumptions are met. It should be noted that the contribution rate of 25.00% of pay is calculated based on the AVA; see Section 3 of this report for details. This AVA is currently deferring a net actuarial asset loss of $75.6 million under the asset smoothing method. This means that if no actuarial gains or losses occur in the future, the minimum actuarially required contribution rate would increase over the next several years as the deferred asset losses are phased into the AVA. We have performed a five-year projection of the contribution rates if 7.50% was returned on the Market Value of Assets in each future year (and assuming that no other actuarial gains or losses occur and there are no other changes to assumptions or benefit provisions). This projection shows the expected impact of recognizing the currently deferred asset gains and losses over time. The result is ultimately an increase in the contribution rate over the next several 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 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. sera0304.docx 50 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Minimum Actuarially Required Contribution Rate (continued) Summary of the Findings 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 5th and 95th percentile expected returns (thereby yielding a 90% asset-return-based confidence interval for the specified rates). These projections are shown in the table below. Projected Total Actuarial Required Contribution Rate Contribution Year* Assuming 7.50% Future Returns 2018 2019 2020 2021 2022 2023 25.00% 25.08% 25.41% 25.67% 25.63% 25.63% 90% Asset Return Confidence Interval 25.00% 24.35% 23.86% 23.10% 21.86% 20.45% - 25.00% 25.82% 27.05% 28.47% 29.85% 31.52% * Contribution year lags valuation year by one year. For example: Contribution Year 2018 is based on the 2017 valuation results, amortized over 26 years beginning in 2017, if the increase takes place in 2017. Compounded Average Return for Period Percentile 95th 5th 1-Year Period -11.3% 26.0% 2-Year Period -6.6% 19.7% 3-Year Period -4.4% 17.0% 4-Year Period -3.1% 15.4% 5-Year Period -2.2% 14.4% The 90% confidence interval results are based on the 5th and 95th percentile compounded returns for one-, two-, three-, four- and five-year periods. Since actuarial assets are used to calculate contribution rates, deferred gains or losses would continue to decrease or increase the minimum actuarially required contribution rate after these dates. See Section 8 of this report for a detailed discussion of the projected contribution rates. Funding Valuation This report provides information relevant to the funding of SCERS. Information for financial reporting purposes will be provided in a separate GASB 67 and 68 Disclosure report. Funding Progress On the basis of the January 1, 2016 actuarial valuation, the Funding Ratio was 66.5%. Based on the January 1, 2017 valuation, the Funding Ratio is 68.1%. The increase in the Funding Ratio is due mainly to the UAAL payment made by the City in 2016. See Section 3 of this report for a full discussion. See the following section 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 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. sera0304.docx 51 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Analysis of Change Summary of the Findings The following table shows the sources of change in the actuarial contribution rate and the funding ratio between the prior and current actuarial valuations. Actuarial Contrib. Rate Sources of Change January 1, 2016 Actuarial Valuation 25.32 % 66.5 % (0.02)% (0.22)% (0.08)% 1.1 % 0.3 % 0.2 % Total Change (0.32)% 1.6 % January 1, 2017 Actuarial Valuation 25.00 % 68.1 % Expected Valuation-to-Valuation Change Asset Gain/Loss on Actuarial Value Salary/Membership Growth Different Than Expected Changes in Assumptions Other Contingent COLA Benefits Funding Ratio The Seattle Municipal Code allows for an increase in the cost-of-living 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 benefit changes (i.e., the increase in the ROPP COLA to the 70% level) in this valuation. See Appendix A of this report for further details. SCERS Plan 2 SCERS Plan 2 plan provides a somewhat lower level of benefits than the current plan and is therefore expected to have a lower Normal Cost rate. We have not reflected the impact of the new plan in this valuation as no current employees are members of this plan as of the valuation date. We will reflect the lower costs of Plan 2 in the contribution rate in future valuations as Plan 2 members join SCERS. We have assumed that future UAAL contributions will be made on the combined SCERS Plan 1 and Plan 2 payroll. If contributions were only made on the Plan 1 payroll, this would materially affect our calculations. Membership Information Total valuation payroll has increased by 5.7% since the 2016 valuation, and active membership has increased by 3.0% during this same period. As of January 1, 2017, the annualized payroll is $726 million for 9,151 active members. Membership Count 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 1996 1999 2002 2006 Active 2010 2012 2014 2016 Retired 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 professional when reviewing the Milliman work product. sera0304.docx 52 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Membership Information (continued) Summary of the Findings Retired member counts and average retirement benefit amounts continue to increase steadily. As of January 1, 2017, there were 6,382 retired members and beneficiaries with an average benefit of $2,285 per month. This represents a 2.6% increase in count and a 2.9% increase in average benefit amount. Average Monthly Retirement Benefit $2,500 $2,000 $1,500 $1,000 $500 $0 1996 1999 2002 2006 2010 2012 2014 2016 Annuitants Analysis of Change in Member Population The following table summarizes the year-to-year change in member population. Deferred Members* Actives January 1, 2016 Valuation 8,882 Termination with Refund / Death Retirees/ Beneficiaries 2,197 6,223 (144) (72) Termination without Refund (246) 246 - Service Retirement (270) (43) 313 - - Disability Retirement 0 Rehires (237) 24 (24) New Entrants / Beneficiaries 905 48 Data Corrections - - - 9,151 2,352 6,382 January 1, 2017 Valuation 83 * Counts include non-vested terminated 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, 2016 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 five-year period; however, we have also shown key measures using the Market Value of Assets. Graphs 1 and 2 and the associated data table show historical asset and liability information, including the Present Value of Future Benefits (PVFB) and Present Value of Future Normal Costs (PVFNC), at previous valuation dates. 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 professional when reviewing the Milliman work product. sera0304.docx 53 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Summary of the Findings Seattle City Employees' Retirement System Actuarial Valuation Table 1 Summary of Results Valuation January 1, 2017 I. Percentage Change Total Membership A. Active Members B. Retired Members & Beneficiaries C. Vested Terminated Members* D. Total II. Valuation January 1, 2016 9,151 6,382 2,352 17,885 8,882 6,223 2,197 17,302 3.0% 2.6% 7.1% 3.4% Pay as of Valuation Date A. Annual Total ($millions) B. Annual Average $ $ 725.6 79,288 $ $ 686.7 77,317 5.7% 2.5% A. Service Retirement B. Disability Retirement C. Surviving Spouse and Dependents $ 2,417 1,351 1,405 $ 2,356 1,315 1,357 2.6% 2.8% 3.6% D. Total $ 2,285 $ 2,221 2.9% A. Active Members B. Retired Members C. Vested Terminated Members $ 1,791.3 1,783.6 191.5 $ 1,730.0 1,694.2 180.9 3.5% 5.3% 5.9% D. Total $ 3,766.4 $ 3,605.1 4.5% $ 2,564.1 $ 2,397.1 7.0% $ 1,202.3 $ 1,208.0 (0.5)% III. Average Monthly Benefit Paid to Current Retirees and Beneficiaries IV. Actuarial Accrued Liability ($millions) V. Assets A. Actuarial Value of Assets ($millions) VI. Unfunded Actuarial Accrued Liability or Surplus Funding ($millions) VII. Amortization of UAAL Total Contribution Rate Needed for 26-Year** Amortization (as a % of Payroll) 25.00% 25.32% (1.3)% VIII. Funding Ratio 68.1% 66.5% 2.4% IX. Normal Cost as a Percent of Salary 15.83% 15.80% 0.2% Market Value of Assets (MVA) -- For Informational Purposes Only X. Assets Based on MVA A. Market Value of Assets ($millions) $ XI. Amortization of UAAL Based on MVA A. Total Contribution Rate Needed for 26-Year** Amortization (as a % of Payroll) XII. Funding Ratio Based on MVA 2,488.5 $ 2,313.0 7.6% 25.61% 26.02% (1.6)% 66.1% 64.2% 3.0% * Includes non-vested terminated members whose contributions are still on deposit with SCERS as of valuation date. ** Amortization method is closed 30-year beginning with January 1, 2013 valuation. 2017 values shown are over 26 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 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. sera0304.docx 54 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Graph 1 Summary of the Findings Historical Asset and Liability Comparison $5,000 $4,000 $3,000 $2,000 $1,000 $0 ($1,000) Actuarial Value of Assets Graph 2 Future Normal Costs Unfunded Actuarial Liability Funding Excess Historical Funding Ratios 120% 100% 80% 60% 40% 20% 0% Year 2006 2008 2010 2011 2012 PVFB $ 2,448.5 2,825.8 3,328.7 3,379.6 3,494.1 Assets $ 1,791.8 2,119.4 1,645.3 2,013.7 1,954.3 PVFNC $ 431.0 531.2 674.9 670.6 634.8 UAAL $ 225.8 175.2 1,008.5 695.4 905.0 Funding Ratio 88.8% 92.4% 62.0% 74.3% 68.3% 2013 2014 2015 2016 2017 3,679.8 4,007.3 4,231.3 4,458.1 4,672.6 1,920.1 2,094.3 2,266.7 2,397.1 2,564.1 654.5 747.2 798.7 853.0 906.2 1,105.2 1,165.8 1,165.9 1,208.0 1,202.3 63.5% 64.2% 66.0% 66.5% 68.1% (in $Millions) 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 professional when reviewing the Milliman work product. sera0304.docx 55 This page intentionally left blank. 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 professional when reviewing the Milliman work product. sera0304.docx 56 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Section 2 Scope of the Report This report presents the actuarial valuation of the Seattle City Employees’ Retirement System as of January 1, 2017. 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 additional historical information. 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. Section 9 shows projections of SCERS benefit payments and dollar contributions over a 10-year period following the actuarial valuation. Appendix A is a summary of the actuarial procedures and assumptions used to compute the liabilities and contributions shown in this report. The current benefit structure, as determined by the provisions of the governing law on January 1, 2017, 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 C. Comparative statistics are presented on the System’s membership and contribution rates. Appendix D 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 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. sera0304.docx 57 This page intentionally left blank. 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 professional when reviewing the Milliman work product. sera0304.docx 58 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Section 3 Assets 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, 2017. 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. Financial Exhibits Table 2 shows the calculation of the Actuarial Value of Assets as of January 1, 2017. Note that a net loss is currently being deferred. This means that, if the system earns 7.50% in the future, the AVA will experience an actuarial loss over upcoming years as the remaining portions of deferred losses are recognized. In both the Executive Summary and Section 8 of this report, we discuss projections of the minimum actuarially required contribution rates resulting from this projected actuarial loss on the AVA. Tables 3 and 4 summarize the financial resources of the System on January 1, 2017 on a Market Value basis. Table 3 shows the Market Value of Assets at January 1, 2017 and January 1, 2016. Table 4 shows the changes in Market Value of Assets during the year ending January 1, 2016 and the year ending January 1, 2017. 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. Actuarial Asset Method 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 five-year period. The following graph shows a historical comparison of the actuarial and market assets used for valuation purposes. Note that prior to 2011 the AVA was equal to the MVA. Applicable Valuation Assets* $3,000 (in $Millions) $2,500 $2,000 $1,500 $1,000 $500 $0 2004 2006 2008 2010 2011 2012 2013 2014 2015 2016 2017 Market Value Actuarial Value * Prior 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 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. sera0304.docx 59 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Table 2 Assets Calculation of Actuarial Value of Assets at January 1, 2017 (All dollar amounts in millions) Five-Year Asset Smoothing Year Ended December 31, December 31, December 31, December 31, December 31, 2012 2013 2014 2015 2016 Market Value at Total Beginning of Year Contributions $ 1,753.5 $ 119.6 1,951.4 137.4 2,216.9 154.0 2,322.7 166.9 2,313.0 180.2 Benefit Payments Expected Market Value of Assets Plus Admin. Expenses Investment Return Expected* Actual $ 152.4 $ 134.6 $ 1,855.3 $ 1,951.4 161.8 150.3 2,077.3 2,216.9 170.7 165.7 2,365.9 2,322.7 183.7 173.6 2,479.5 2,313.0 194.7 172.9 2,471.4 2,488.5 Asset Gain/(Loss) $ 96.1 139.6 (43.2) (166.5) 17.1 Current Phase Out 0% 20% 40% 60% 80% Deferred Amount $ 27.9 (17.3) (99.9) 13.7 Total Deferred at Jan. 1, 2017: (75.6) Market Value of Assets at Jan. 1, 2017: Less Total Deferred at Jan. 1, 2017: Actuarial Value of Assets at Jan. 1, 2017: 2,488.5 (75.6) $ 2,564.1 * Expected Market Value of Assets based on the actuarial investment return assumption for the prior year, taking into account actual cash flows during year. 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 professional when reviewing the Milliman work product. sera0304.docx 60 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Table 3 Assets Summary of Plan Net Assets (at Market Value) January 1, 2017 Market Value Distribution Assets Cash and short-term investments Securities lending collateral $ 342,730,048 11,130,677 13.8% 0.4% January 1, 2016 Market Value Distribution $ 195,572,787 50,952,037 8.5% 2.2% $ 3,496,137 4,787,895 3,449,203 6,175,041 17,908,276 0.2% 0.2% 0.1% 0.3% 0.8% Receivables Employee Employer Interest and Dividends Sales Proceeds Receivable Total Receivables 3,434,870 6,143,927 3,486,918 87,345,080 $ 100,410,795 0.1% 0.2% 0.1% 3.5% 4.0% Investments at fair value Fixed Income Equity Real estate Alternative Total investments $ 539,527,403 1,350,196,766 287,996,774 173,578,426 $ 2,351,299,369 21.7% 54.3% 11.6% 7.0% 94.5% $ 599,493,556 1,126,488,036 270,796,297 114,895,997 $ 2,111,673,886 25.9% 48.7% 11.7% 5.0% 91.3% Total assets $ 2,805,570,889 112.7% $ 2,376,106,986 102.7% $ 1,370,010 11,125,376 304,577,339 $ 317,072,725 -0.1% -0.4% -12.2% -12.7% $ 2,004,636 53,633,431 7,447,756 63,085,823 -0.1% -2.3% -0.3% -2.7% $ 2,488,498,164 100.0% $ 2,313,021,163 100.0% Liabilities Pension & Other payables Securities lending obligation Investment commitments payable Total Liabilities Market Value of Net Assets Held in Trust For Pension Benefits $ $ $ 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 professional when reviewing the Milliman work product. sera0304.docx 61 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Table 4 Assets Summary of Changes in Plan Net Assets (at Market Value) January 1, 2017 Market Value January 1, 2016 Market Value Additions Contributions Employer Employee Total contributions $ 108,454,496 71,755,857 $ 180,210,353 $ 101,153,403 65,779,216 $ 166,932,619 Investment activities Investment income (loss) Net change in fair value of investments Interest Dividends Net investment income (loss) $ 163,299,357 10,569,831 24,780,531 $ 198,649,719 $ $ $ Securities lending activities Securities lending income Borrowing rebates Total securities lending income Securities lending management fees Net income from securities lending $ $ 100,217 165,375 265,592 (66,376) 199,216 $ $ $ (22,933,464) 11,377,655 27,836,456 16,280,647 56,694 674,010 730,704 (182,660) 548,044 Investment activity expenses Investment management fees Investment consultant fees Investment custodial fees Total investment activity expenses $ Total additions $ 370,151,522 $ 174,016,252 Deductions Benefits Refunds of contributions Administrative expenses Total deductions $ 168,967,298 16,456,570 9,250,653 $ 194,674,521 $ 159,349,807 16,137,840 8,211,137 $ 183,698,784 Net Increase/(Decrease) $ 175,477,001 $ $ (8,186,323) (295,000) (426,443) (8,907,766) Net position held in trust for pension benefits Beginning of Year $ 2,313,021,163 End of Year $ 2,488,498,164 $ $ (9,096,421) (295,000) (353,637) (9,745,058) (9,682,532) $ 2,322,703,695 $ 2,313,021,163 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 professional when reviewing the Milliman work product. sera0304.docx 62 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Section 4 Actuarial Liabilities 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, 2017. 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 deficiency in an orderly fashion. The determination of the level of future contributions needed is discussed in the next section (Section 5) of this report. Actuarial Present Value of Future Benefits 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 benefits 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 the January 1, 2014 actuarial valuation. See Appendix A of this report for details. Actuarial Cost Method 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 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. sera0304.docx 63 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Normal Cost and Actuarial Accrued Liability Actuarial Liabilities The normal cost under the EANC method is developed so that benefits 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 benefit 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 benefit accruals. The annual normal cost rate may be considered the ongoing cost of benefit accruals for any given plan year. When the present value of all future normal costs is subtracted from the present value of total benefits, 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 benefits 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 calculates the UAAL, if any, for the current and prior valuations. Note that currently, a UAAL exists for SCERS; 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 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. sera0304.docx 64 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Table 5 Actuarial Liabilities Actuarial Present Value of Future Benefits (PVFB) (All dollar amounts in millions) January 1, 2017 A. Active Members Service Retirement $ Vested Retirement $ 2,444.9 65.6 7.7 7.3 Survivor Benefits 23.3 22.7 Refund of Member Contributions 46.6 42.5 Total $ 2,697.5 $ 2,583.0 $ 1,670.0 $ 1,585.3 Inactive Members and Annuitants Service Retirement Disability Retirement C. 2,550.0 69.9 Disability Retirement B. January 1, 2016 10.1 10.5 Beneficiaries 103.5 98.4 Inactive Members 191.5 180.9 Total $ 1,975.1 $ 1,875.1 Grand Total PVFB $ 4,672.6 $ 4,458.1 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 professional when reviewing the Milliman work product. sera0304.docx 65 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Table 6 Actuarial Liabilities Normal Cost Contribution Rates as Percentages of Salary January 1, 2017 Service Retirement 12.59 % January 1, 2016 12.55 % Vested Retirement 1.21 1.22 Disability Retirement 0.07 0.07 Survivor Benefits 0.17 0.17 Refund of Member Contributions 1.19 1.19 Administrative Expenses 0.60 0.60 15.83 % 15.80 % Total 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 professional when reviewing the Milliman work product. sera0304.docx 66 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Table 7 Actuarial Liabilities Unfunded Actuarial Accrued Liability (UAAL) (All dollar amounts in millions) January 1, 2017 A. B. Actuarial present value of all future benefits for present and former members and their survivors (Table 3) Less actuarial present value of total future normal costs for present members C. Actuarial accrued liability* [A - B] D. Less actuarial value of assets available for benefits (Table 2) E. F. $ 3,766.4 1,202.3 4,458.1 853.0 $ 2,564.1 $ Funding Ratio [D ÷ C] $ 906.2 $ Unfunded actuarial accrued liability (Funding Excess, if negative) [C - D] 4,672.6 January 1, 2016 3,605.1 2,397.1 $ 68.1% 1,208.0 66.5% * The actuarial accrued liability as of January 1, 2018 is projected to be $3,961.6 million. 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 professional when reviewing the Milliman work product. sera0304.docx 67 This page intentionally left blank. 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 professional when reviewing the Milliman work product. sera0304.docx 68 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Section 5 City Contributions 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, 2017 valuation, a UAAL exists for SCERS. Because a UAAL exists, the total calculated minimum actuarially required contribution rate will consist of two components: 1. The normal cost contribution rate as of January 1, 2017 2. An amortization payment intended to pay off the UAAL in accordance with the SCERS funding policy Funding 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, 2017 valuation, the amortization contribution rate must pay off the current UAAL over a 26-year period. Actuarial Gains and Losses When experience is different from actuarial expectation, an actuarial gain or loss occurs. Ongoing actuarial gains and losses decrease and increase the UAAL. Section 7 of this report illustrates the historical actuarial gains and losses on the UAAL by source. Amortization of UAAL Table 8 details the components of the minimum actuarially required contribution rate of 25.00% 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, 2017 valuation, the minimum actuarially required contribution rate for the employer has decreased to 14.97% beginning January 1, 2018. This is mainly due to the less than expected increase in average salaries. The total contribution rate of 25.32% being paid in 2017 was calculated in order to amortize the January 1, 2016 UAAL over a 27-year period; however, this rate is not projected to perfectly amortize the January 1, 2017 UAAL over 26 years due to gains that have occurred during 2016. Table 9 details the expected amortization of the UAAL over the 26-year closed period beginning January 1, 2017. 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 professional when reviewing the Milliman work product. sera0304.docx 69 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Amortization of UAAL (continued) City Contributions The total contribution rate can be immediately (i.e., as of the beginning of the next calendar year) decreased from 25.32% of pay to 25.00% of pay to be projected to amortize the UAAL over the scheduled 26 years from January 1, 2017. If the contribution rate is not decreased, the UAAL would be projected to be amortized over a shorter period than 26 years. Because this figure is based on an Actuarial Value of Assets that is currently deferring a net loss, this 25.00% is projected to increase over the next several years (after next year) 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 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. sera0304.docx 70 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Table 8 City Contributions Contribution Rates as Percentages of Salary Actuarial Required Contribution Beginning January 1, 2017 15.83 % January 1, 2016 A. Total normal cost rate B. UAAL amortization rate C. Actuarial required contribution rate 25.00 % 25.32 % D. Member contribution rate 10.03 10.03 E. Allocation of employer contribution rate* 9.17 15.80 % 9.52 Normal cost 5.80 % 5.77 % Amortization payment 9.17 9.52 Total employer contribution rate 14.97 % 15.29 % * 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 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. sera0304.docx 71 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Table 9 City Contributions Amortization of Unfunded Actuarial Accrued Liability (UAAL)* (All dollar amounts in millions) UAAL Year 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 Total Contribution Normal Rate Cost Rate Payroll $ 726 758 792 828 865 904 945 988 1033 1080 1129 1180 1233 1289 1347 1408 1472 1539 1609 1682 1758 1837 1920 2007 2098 2193 25.32% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 15.83% 15.83% 15.83% 15.83% 15.83% 15.83% 15.83% 15.83% 15.83% 15.83% 15.83% 15.83% 15.83% 15.83% 15.83% 15.83% 15.83% 15.83% 15.83% 15.83% 15.83% 15.83% 15.83% 15.83% 15.83% 15.83% UAAL Rate 9.49% 9.17% 9.17% 9.17% 9.17% 9.17% 9.17% 9.17% 9.17% 9.17% 9.17% 9.17% 9.17% 9.17% 9.17% 9.17% 9.17% 9.17% 9.17% 9.17% 9.17% 9.17% 9.17% 9.17% 9.17% 9.17% Beginning Balance $ 1,202.3 1,221.1 1,240.6 1,258.4 1,274.0 1,287.3 1,298.0 1,305.5 1,309.4 1,309.5 1,305.0 1,295.5 1,280.5 1,259.4 1,231.3 1,195.6 1,151.4 1,097.8 1,033.8 958.4 870.4 768.5 651.5 517.9 365.9 193.9 Amortization Payment $ Ending Balance Interest 68.9 $ 69.5 72.6 75.9 79.3 82.9 86.6 90.6 94.7 99.0 103.5 108.2 113.1 118.2 123.5 129.1 135.0 141.1 147.5 154.2 161.2 168.4 176.0 184.0 192.4 201.1 87.6 89.0 90.4 91.6 92.6 93.5 94.2 94.6 94.7 94.6 94.1 93.2 91.9 90.1 87.8 84.9 81.4 77.1 72.1 66.2 59.3 51.4 42.4 32.1 20.4 7.1 $ 1,221.1 1,240.6 1,258.4 1,274.0 1,287.3 1,298.0 1,305.5 1,309.4 1,309.5 1,305.0 1,295.5 1,280.5 1,259.4 1,231.3 1,195.6 1,151.4 1,097.8 1,033.8 958.4 870.4 768.5 651.5 517.9 365.9 193.9 (0.0) * Amortization shown does not include the projected impact 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 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. sera0304.docx 72 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Section 6 Additional Actuarial Information The schedule of funding progress is shown in Table 10 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 benefit enhancements triggered in 2007 (i.e., 65% Floor COLA and the 1.5% COLA for all retirees). Exhibit 11 compares the Actuarial Value of Valuation Assets to the types of Actuarial Accrued Liabilities, applying them first to Active Member contributions, then to retirees and beneficiaries, and then the remaining amount to the Active Members benefits. This is referred to as the Solvency Test. Although not required under GASB, this test is part of the CAFR guidelines specified by the Government Finance Officers Association (GFOA). 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 professional when reviewing the Milliman work product. sera0304.docx 73 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Table 10 Additional Actuarial Information Schedule of Funding Progress (All dollar amounts in millions) Actuarial Valuation Date January 1 1986 1988 1990 1992 1994 Actuarial Value of Assets $ 395.7 445.4 558.8 660.0 781.8 Actuarial Accrued Liabilities (AAL) $ 561.3 595.3 737.9 810.5 926.2 Unfunded Actuarial Accrued Liabilities (UAAL) $ Funded Ratio 165.6 149.9 179.1 150.5 144.4 39.5 (7.5) 42.1 (48.4) (179.6) 70.5% 74.8 75.7 81.4 84.4 Covered Payroll* $ UAAL as a Percentage of Covered Payroll 182.0 199.0 212.3 239.4 291.8 91.0% 75.3 84.4 62.9 49.5 96.1 100.7 96.7 103.6 112.8 310.6 316.9 341.5 370.4 383.6 12.7 (2.4) 12.3 (13.1) (46.5) 1996 1997 1998 ** 1999 2000 980.2 1,094.8 1,224.6 1,375.0 1,582.7 1,019.7 1,087.3 1,266.7 1,326.6 1,403.1 2002 2004 2006 2008 2010 1,383.7 1,527.5 1,791.8 2,119.4 1,645.3 1,581.4 1,778.9 2,017.5 2,294.6 2,653.8 197.7 251.4 225.8 175.2 1,008.5 87.5 85.9 88.8 92.4 62.0 405.1 424.7 447.0 501.9 580.9 48.8 59.2 50.5 34.9 173.6 2011 2012 2013 2014 2015 2,013.7 1,954.3 1,920.1 2,094.3 2,266.7 2,709.0 2,859.3 3,025.3 3,260.1 3,432.6 695.4 905.0 1,105.2 1,165.8 1,165.9 74.3 68.3 63.5 64.2 66.0 563.2 557.0 567.8 597.9 630.9 123.5 162.5 194.6 195.0 184.8 2016 2017 2,397.1 2,564.1 3,605.1 3,766.4 1,208.0 1,202.3 66.5 68.1 641.7 708.6 188.3 169.7 * 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 1, which is an annualized compensation of only those members who were active on the actuarial valuation date. ** Reflects increased COLA benefits 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 professional when reviewing the Milliman work product. sera0304.docx 74 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Table 11 Additional Actuarial Information Solvency Test (All dollar amounts in millions) (A) Actuarial Valuation Date January 1 1986 1988 1990 1992 1994 Actuarial Value of Valuation Assets $ 395.7 445.4 558.8 660.0 781.8 Active Member Contributions $ 110.7 136.0 164.0 202.6 248.4 Actuarial Accrued Liabilities for (B) (C) Active Members Inactives, (Employer Retirees and Financed Beneficiaries Portion) $ 263.1 303.6 332.8 357.9 383.1 $ 187.5 155.7 241.1 250.0 294.7 (D) Portion of Actuarial Accrued Liabilities Covered by Assets Total $ 561.3 595.3 737.9 810.5 926.2 (A) (B) (C) (D) 100.0% 100.0 100.0 100.0 100.0 100.0% 100.0 100.0 100.0 100.0 11.7% 3.7 25.7 39.8 51.0 70.5% 74.8 75.7 81.4 84.4 1996 1997 1998 * 1999 2000 980.2 1,094.8 1,224.6 1,375.0 1,582.7 294.1 313.1 337.3 358.4 385.2 409.3 449.8 551.8 577.6 599.4 316.3 324.4 377.6 390.6 418.5 1,019.7 1,087.3 1,266.7 1,326.6 1,403.1 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 87.5 100.0 88.9 100.0 100.0 96.1 100.7 96.7 103.6 112.8 2002 2004 2006 2008 2010 1,383.7 1,527.5 1,791.8 2,119.4 1,645.3 434.3 482.5 539.7 590.1 684.7 675.6 758.9 902.2 1,084.9 1,176.4 471.5 537.5 575.6 619.6 792.7 1,581.4 1,778.9 2,017.5 2,294.6 2,653.8 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 81.7 58.1 53.2 60.8 71.7 0.0 87.5 85.9 88.8 92.4 62.0 2011 2012 2013 2014 2015 2,013.7 1,954.3 1,920.1 2,094.3 2,266.7 683.7 730.9 757.3 792.4 829.7 1,290.9 1,393.7 1,513.4 1,657.0 1,753.5 734.4 734.7 754.6 810.7 849.4 2,709.0 2,859.3 3,025.3 3,260.1 3,432.6 100.0 100.0 100.0 100.0 100.0 100.0 87.8 76.8 78.6 82.0 5.3 0.0 0.0 0.0 0.0 74.3 68.3 63.5 64.2 66.0 2016 2017 2,397.1 2,564.1 851.2 888.1 1,875.1 1,975.1 878.8 903.2 3,605.1 3,766.4 100.0 100.0 82.4 84.9 0.0 0.0 66.5 68.1 * Reflects increased COLA benefits 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 professional when reviewing the Milliman work product. sera0304.docx 75 This page intentionally left blank. 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 professional when reviewing the Milliman work product. sera0304.docx 76 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Section 7 Actuarial Gains or Losses An analysis of actuarial gains or losses was performed in conjunction with the January 1, 2015, January 1, 2016, and January 1, 2017 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 12. 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. 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 professional when reviewing the Milliman work product. sera0304.docx 77 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Table 12 Actuarial Gains or Losses Analysis of Actuarial Gains or Losses* (All dollar amounts in millions) Gain/(Loss) For Period 2016 Investment Income Investment income on AVA was greater (less) than assumed. $ 2014 2015 2.3 $ (22.1) $ 32.6 Pay Increases Pay increases were less (greater) than expected. 14.5 (7.3) (3.9) Age and Service Retirements Members retired at older (younger) ages or with less (greater) final average pay than expected. 20.9 17.2 13.0 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. (18.9) (24.0) (25.4) Death after Retirement Retirees died younger (lived longer) than expected. (1.0) 9.0 5.6 Total Gain or (Loss) during Period from Financial Experience $ 17.7 $ (27.3) $ 21.7 Non-Recurring Items: Changes in actuarial assumptions and plan amendments caused a gain (loss). - - Data revisions - - - N/A N/A N/A Change in actuarial asset valuation method caused a gain (loss). Composite Gain (Loss) During Period $ 17.7 $ (27.3) $ 21.7 * 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 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. sera0304.docx 78 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Section 8 Contribution Rate Projections and Increases This section of the January 1, 2017 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 loss. As a result, if no actuarial asset gains or losses were to occur over the next several years (i.e., the market return equals 7.50%), the minimum actuarially required contribution rate would be projected to increase slightly (and the Funding Ratio would be projected to decrease) as the remaining deferred losses are fully phased in. 2. Currently, the City is expected to contribute a total rate of 25.00% of payroll (employer and member) beginning January 1, 2018, on the basis of the current valuation report. 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. Projection of Minimum Actuarially Required Contribution Rate We have performed a five-year projection of the minimum actuarially required contribution rate under three different scenarios: 1. Assuming that the investment return assumption of 7.50% is met in each future year. 2. Assuming that the assets return at the 5th percentile. 3. Assuming that the assets return at the 95th 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 minimum actuarially required contribution rate each year in the future. This rate is based on a 26-year closed amortization period as of January 1, 2017 and includes a 0.50% population growth assumption. Future returns at the 5th and 95th percentile are based on Milliman’s capital market assumptions and SCERS’s target asset allocation as of January 1, 2017. Table 13 provides the results of these projections. 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 professional when reviewing the Milliman work product. sera0304.docx 79 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Table 13 Contribution Rate Projections and Increases Projected Total Contribution Rates Projected Total Minimum Actuarially Required Contribution Rate 34% 32% Percent of Payroll 30% 28% 26% 24% 22% 20% 18% 16% 2018 2019 2020 2021 2022 2023 Fiscal Year of Contribution* Expected Return Pessimistic Scenario (95th Percentile) Optimistic Scenario (5th Percentile) Projected Minimum Actuarially Required Total Contribution Rate Contribution Year* 2018 2019 2020 2021 2022 2023 If Asset Return at 95th Percentile 25.00% 25.82% 27.05% 28.47% 29.85% 31.52% Assuming 7.50% Future Returns If Asset Return at 5th Percentile 25.00% 25.08% 25.41% 25.67% 25.63% 25.63% 25.00% 24.35% 23.86% 23.10% 21.86% 20.45% * Contribution year lags calculation year by one year. For example: Contribution Year 2018 is based on the 2017 valuation results, amortized over 26 years beginning in 2017, if the increase takes place in 2018. 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 professional when reviewing the Milliman work product. sera0304.docx 80 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Assumed Returns for Projection Contribution Rate Projections and Increases The projection above uses the 5th and 95th percentile returns based on SCERS’ target asset allocation and Milliman’s January 1, 2017 capital market assumptions. These percentile returns vary by the number of years of return; for example, the Contribution Year 2018 number assumes one year of return at the one-year 5th or 95th percentile rate; the Contribution Year 2019 number assumes two years of return at the two-year 5th or 95th percentile rate. The percentile rates assumed for this analysis are shown in the table below: Compounded Average Return for Period Percentile 95th Contribution Decreases 5th 1-Year Period -11.3% 26.0% 2-Year Period -6.6% 19.7% 3-Year Period -4.4% 17.0% 4-Year Period -3.1% 15.4% 5-Year Period -2.2% 14.4% As of January 1, 2017, a minimum actuarially required contribution rate of 25.00% is projected to be needed in order to amortize the UAAL over a 26-year period beginning January 1, 2017. This represents a decrease of 0.32% of pay compared with the current 25.32% of pay being contributed (by the employer and members combined) based on a target of a 100% Funding Ratio by January 1, 2043. Note that due to the future recognition of deferred asset losses, the contribution rate is expected to increase 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 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. sera0304.docx 81 This page intentionally left blank. 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 professional when reviewing the Milliman work product. sera0304.docx 82 34 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Section 9 Projection of Benefit Payments and Contribution Dollars This section of the January 1, 2017 actuarial valuation illustrates projected SCERS benefit payments and dollar contributions over a 10-year period following the actuarial valuation. Projection of Benefit Payments and Contribution Dollars These projections assume all actuarial assumptions, including 7.50% investment returns (on a market basis) in each future year, are met in the future. The projection of contribution dollars makes the following three 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 minimum 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 14 shows the results of these projections. 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 professional when reviewing the Milliman work product. sera0304.docx 83 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Table 14 Year 2018 $ 2019 2020 2021 2022 2023 2024 2025 2026 2027 Projection of Benefit Payments and Contribution Dollars 10-Year Projection of Benefit Payments and Contributions* Projected Admin. Expenses Projected Payroll 758.4 792.7 828.5 866.0 905.1 946.0 988.8 1,033.5 1,080.2 1,129.0 $ 4.6 4.8 5.0 5.2 5.4 5.7 5.9 6.2 6.5 6.8 Projected Benefit Payments $ 213.4 228.9 244.1 258.4 272.4 286.5 300.7 314.6 328.6 342.6 Projected Total Cash Outflow $ 218.0 233.7 249.1 263.6 277.8 292.2 306.6 320.8 335.1 349.4 Projected Total Contributions $ 189.6 198.8 210.5 222.3 232.0 Projected Net Cash Flow $ 242.5 253.4 264.9 276.8 289.4 (28.4) (34.9) (38.5) (41.3) (45.9) (49.7) (53.2) (55.9) (58.2) (60.0) * Benefit payments do not include administrative expenses. Contributions include employer and member contributions. 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 professional when reviewing the Milliman work product. sera0304.docx 84 Milliman January 1, 2017 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. They are based on Milliman’s Investigation of Experience for the period ending December 31, 2013. Further discussion and the rationale for the assumptions are shown in that report. 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, disability, mortality, and other terminations of employment. Table A-7 shows probabilities of refund 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 (a) the actuarial value of the assets, and (b) 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 Terminated Members The ages at entry and distribution by sex of future members are 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. 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 sufficient 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. 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 professional when reviewing the Milliman work product. sera0304.docx 85 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Appendix A Actuarial Procedures and Assumptions Administrative Expense The annual contribution assumed to be necessary to meet general administrative expenses of the system, excluding investment expenses, is 0.60% of members’ salaries. This figure 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 Increases Postretirement benefit increases include:  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. Valuation Services The projected salary for the valuation year is equal to the member’s hourly pay rate multiplied by 2088 with the following adjustments:  Annualized pay for members who entered in year preceding valuation year.  Multiplied hourly pay rate by minimum of 1,040 and actual hours worked in prior year for part-time employees. Future Salaries Table A-2 illustrates the rates of future (after the valuation year) 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 first year a member is eligible for service retirement. Disability 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. Mortality The mortality rates used in this valuation are illustrated in Table A-5. A written description of each table used is included in Table A-1. 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 professional when reviewing the Milliman work product. sera0304.docx 86 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Appendix A Actuarial Procedures and Assumptions Other Terminations of Employment 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. Probability of Refund 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 benefit. 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 benefit and are not yet eligible for retirement. Interest on Member Contributions 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%. Portability The cost of portability with other public retirement systems is not included in this valuation. Probability of Marriage We assumed 60% of the active members are married or have a registered domestic partner. Commencement for Terminated Vested Members 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 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. sera0304.docx 87 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Table A-1 Appendix A Actuarial Procedures and Assumptions Summary of Valuation Assumptions January 1, 2017 I. II. Economic assumptions A. Price inflation 3.25% B. General wage increases 4.00 C. Investment return 7.50 D. Increase in membership 0.50 E. Interest on member accounts 5.75/4.75* 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 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. Table A-5 E. Mortality** among service retired members and beneficiaries Men RP2000 Combined Healthy Males, with ages set back two years. Women RP2000 Combined Healthy Females, with ages set back one year. Table A-5 F. Mortality** among disabled members Men RP2000 Disabled Males, with ages set back four years. Women RP2000 Disabled Females, with ages set back four years. Table A-5 G. Other terminations of employment Table A-6 H. Probabilities of vesting on termination Table A-7 * Member contributions made prior to January 1, 2012 are assumed to accrue interest at 5.75%; contributions made on or after that date are assumed to accrue at 4.75%. ** All mortality tables are generational using Projection Scale AA to reflect expected future mortality improvement. 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 professional when reviewing the Milliman work product. sera0304.docx 88 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Table A-2 Appendix A Actuarial Procedures and Assumptions Future Salaries Annual Rate of Increase Years of Service Promotion and Longevity Total* 0 to 1 1 to 2 2 to 3 3 to 4 4 to 5 4.50% 3.50 2.75 2.00 1.50 8.68% 7.64 6.86 6.08 5.56 9 to 10 14 to 15 19 to 20 24 to 25 29 to 30 0.80 0.45 0.29 0.25 0.25 4.83 4.47 4.30 4.26 4.26 35 or more 0.25 4.26 * Total rate shown reflects compounded effect of merit 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 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. sera0304.docx 89 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Table A-3 Appendix A Actuarial Procedures and Assumptions Retirement Annual Probability Men Women Eligible for Full Benefits Age Less than 50 Eligible for Reduced Benefits Less than 30 years of service 0.0% 8.0% 50 51 52 53 54 5.0 5.0 5.0 3.0 3.0 8.0 8.0 8.0 8.0 8.0 55 56 57 58 59 6.0 5.0 5.0 5.0 5.0 60 61 62 63 64 6.0 9.0 15.0 12.0 9.5 30 years or more of service Eligible for Full Benefits Eligible for Reduced Benefits 8.0% Less than 30 years of service 30 years or more of service 0.0% 10.0% 10.0% 10.0 10.0 12.0 12.0 12.0 5.0 5.0 5.0 3.0 3.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 12.0 12.0 12.0 8.0 8.0 8.0 8.0 8.0 12.0 12.0 12.0 12.0 15.0 6.0 5.0 5.0 5.0 8.0 10.0 10.0 13.0 13.0 13.0 12.0 12.0 12.0 12.0 15.0 14.0 12.0 20.0 18.0 18.0 15.0 15.0 30.0 22.0 22.0 8.0 12.0 15.0 12.0 13.0 15.0 13.0 20.0 18.0 18.0 15.0 15.0 26.5 20.0 20.0 65 66 67 68 69 40.0 40.0 40.0 30.0 30.0 32.0 32.0 32.0 26.0 26.0 40.0 40.0 40.0 33.0 33.0 30.0 38.0 38.0 32.0 32.0 70 * * * * * 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 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. sera0304.docx 90 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Table A-4 Appendix A Actuarial Procedures and Assumptions Disability* Annual Rates Age Men Women 20 25 30 35 40 .00% .00 .02 .02 .03 .00% .00 .02 .02 .03 45 50 55 60 65 .03 .04 .04 .04 .00 .03 .04 .04 .04 .00 * It is 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 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. sera0304.docx 91 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Table A-5 Age Appendix A Actuarial Procedures and Assumptions Mortality Contributing Members Men Women Annual Probability* Members Retired for Service and Beneficiaries of Members Men Women Disabled Members Men Women 22 27 32 37 42 0.03 % 0.04 0.04 0.05 0.08 0.02 % 0.02 0.02 0.03 0.05 0.03 % 0.04 0.04 0.08 0.11 0.02 % 0.02 0.03 0.05 0.08 2.26 % 2.26 2.26 2.26 2.26 0.74 % 0.74 0.74 0.74 0.74 47 52 57 62 67 0.11 0.16 0.23 0.33 0.54 0.08 0.12 0.18 0.28 0.43 0.15 0.21 0.36 0.67 1.27 0.12 0.19 0.31 0.58 1.10 2.26 2.64 3.29 3.93 4.66 0.74 0.98 1.45 1.97 2.53 72 77 82 87 92 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 2.22 3.78 6.44 11.08 18.34 1.86 3.10 5.08 8.64 14.46 5.69 7.33 9.76 12.83 16.22 3.32 4.58 6.35 8.78 12.25 *The mortality rates shown above are generationally projected on an individual 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 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. sera0304.docx 92 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Table A-6 Appendix A Actuarial Procedures and Assumptions Other Terminations of Employment Among Members Not Eligible to Retire Years of Service Annual Rates for Men Annual Rates for Women 0 to 1 1 to 2 2 to 3 3 to 4 4 to 5 6.5% 5.8 5.3 4.8 4.4 8.5% 8.3 8.0 7.8 7.5 5 to 6 6 to 7 7 to 8 8 to 9 9 to 10 4.1 3.8 3.5 3.2 2.9 7.0 6.3 5.7 5.1 4.5 10 to 11 11 to 12 12 to 13 13 to 14 14 to 15 2.6 2.3 2.1 1.9 1.7 4.1 3.8 3.4 3.1 2.7 15 to 16 16 to 17 17 to 18 18 to 19 19 to 20 1.5 1.4 1.2 1.1 1.0 2.4 2.0 1.7 1.4 1.2 20 to 21 21 to 22 22 to 23 23 to 24 24 to 25 0.9 0.8 0.8 0.7 0.7 1.1 1.0 0.9 0.8 0.8 25 to 26 26 to 27 27 to 28 28 to 29 29 to 30 30 or more 0.6 0.6 0.5 0.5 0.4 0.5 0.7 0.7 0.6 0.6 0.5 0.5 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 professional when reviewing the Milliman work product. sera0304.docx 93 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Table A-7 Appendix A Actuarial Procedures and Assumptions Probability of Refund Age Probabilities of Refund upon Termination* 25 30 35 40 70.0% 65.0 55.0 48.0 45 50 55 60 43.0 38.0 36.0 40.0 * If service is 20 or more years at termination, 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 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. sera0304.docx 94 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Appendix B Provisions of Governing Law 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 benefit and contribution provisions are summarized briefly 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. We have not valued any benefit changes applicable to members hired after December 31, 2016. Effective Date The effective date of the retirement system was July 1, 1929. (Section 4.36.080) Members’ Contribution Rate 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 4.36.540A) City Contribution Rate 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. (Section 4.36.545) Final Compensation Final compensation is based on highest average compensation (excluding overtime) during any consecutive 24 months. (Sections 4.36.040 and 4.36.050) Service Retirement 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. Normal Form Straight life benefit. Optional Forms Actuarial equivalent according to the mortality 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 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. sera0304.docx 95 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Service Retirement (continued) Appendix B Provisions of Governing Law Amount of Allowance The total monthly 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: (a) Any age with 30 years of service. (b) Age 51-59, providing the member’s age and years of service total 80 or more. (c) Age 60 or older with 20 years of service. (d) Age 65 or older with five 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 final compensation, except where the minimum allowance described below applies. Minimum Allowance A monthly benefit based on twice the actuarial value of accumulated member contributions. This is not subject to the 60% of final compensation maximum. (Sections 4.36.600, 4.36.605, 4.36.610 and 4.36.640) Note: Effective January 1, 2011, the conversion of the contributions to an annuity benefit in the minimum allowance reflects 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 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. sera0304.docx 96 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Disability Retirement Appendix B Provisions of Governing Law 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 Modified cash refund annuity. An optional survivor’s benefit is available if the spouse is the beneficiary. Amount of Allowance The total monthly disability allowance is the greater of: (a) 1.5% times final compensation times completed years of creditable service. (b) 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 final compensation. Maximum Allowance The maximum disability allowance is 60% of final compensation. Minimum Allowance The minimum disability allowance is $140 per month. (Sections 4.36.645 and 4.36.650) Death Benefits Retired Members Death benefits to retired members are payable according to the form of retirement allowance elected. Active Members (a) Payment to the beneficiary of accumulated contributions, including interest; or (b) 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 (a) above, either: (1) A monthly allowance for life equal to the benefit the spouse would have received had the member just 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 4.36.680) Withdrawal Benefits Form Payment of accumulated contributions, with interest. (Section 4.36.665A) 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 professional when reviewing the Milliman work product. sera0304.docx 97 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Vested Withdrawal Benefits Appendix B Provisions of Governing Law 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 4.36.665) Postretirement Benefit Increases 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%. (Section 4.36.615) Death Benefit System Eligibility Mandatory for all active members; optional for retired members. Benefits $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 4.36.690 and 4.36.695) Additional Contributions Provisions Members may voluntarily make contributions in excess of the regular rate; these are make-up contributions that apply only in specific situations. Retirement Benefit A monthly 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 4.36.540A) 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 professional when reviewing the Milliman work product. sera0304.docx 98 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Appendix C Valuation Data This valuation is based upon the membership of the system as of January 1, 2017. 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 C-1. Tables C-2 through C-4 present distributions of members receiving service retirement benefits, members receiving disability retirement benefits, and survivors receiving benefits. Shown in the tables are the numbers of persons receiving benefits, the total annual benefits received (including payments for the annual bonus), and the average annual benefit per recipient. Table C-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 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. sera0304.docx 99 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Table C-1 Appendix C Valuation Data Summary of Membership Data Number Contributing Members Annual Salaries ($1,000) Average Annual Salaries Number Males Females 5,134 4,017 419,232 306,348 81,658 76,263 3,231 3,151 January 1, 2017 9,151 79,288 6,382 January 1, 2016 8,882 686,748 77,317 6,223 165,836 26,650 January 1, 2015 8,746 647,800 74,068 6,019 155,597 25,852 January 1, 2014 8,603 606,888 70,548 5,880 147,145 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 $ 725,580 $ Annuitants Annual Benefits ($1,000) Average Annual Benefits 98,141 76,791 $ 174,933 30,375 24,370 $ 27,411 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 professional when reviewing the Milliman work product. sera0304.docx 100 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Table C-2 Appendix C Valuation Data Members Receiving Service Retirement Benefits as of January 1, 2017 – Inactive Lives <50 Number of Persons Male 1 Female 0 Total Annual Benefits in Thousands Male $ Female Total Average Annual Benefits Male $ Female Total 1 *$ 0 * 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85-89 10 10 107 130 347 372 771 710 779 577 468 250 302 156 172 114 163 116 3,120 2,435 20 237 719 1,481 1,356 718 458 286 279 5,555 7,615 $ 3,072 3,987 $ 1,832 3,765 $ 1,397 96,620 64,472 5,819 5,162 415 $ 457 4,213 $ 13,271 $ 25,651 $ 23,978 $ 13,725 $ 5,165 12,531 20,085 14,604 5,329 872 9,378 25,802 45,736 38,582 19,054 10,687 90+ * $ 41,500 $ 39,374 $ 38,245 $ 33,270 $ 30,780 $ 29,327 $ 25,215 $ 23,180 $ 23,098 $ 0 45,700 39,731 33,685 28,289 25,310 21,316 19,692 16,070 12,043 * 43,600 39,570 35,886 30,882 28,453 26,538 23,334 20,346 18,502 Totals 161,092 30,968 26,477 28,999 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 professional when reviewing the Milliman work product. sera0304.docx 101 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Table C-3 Appendix C Valuation Data Members Receiving Disability Retirement Benefits as of January 1, 2017 – Inactive Lives <50 Number of Persons Male 1 2 Female Total 3 Annual Benefits in Thousands Male $ Female Total 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85-89 3 1 3 6 4 10 3 4 4 1 4 3 3 2 1 0 0 0 26 29 4 9 14 7 5 7 5 1 0 55 *$ 0 0 $ 0 381 441 0 822 *$ 33 58 $ * 58 $ 103 71 $ 179 33 58 161 250 47 $ 73 120 54 $ * 55 $ 29 38 $ 24 54 84 62 Average Annual Benefits Male $ * $ 19,333 $ 19,333 $ 17,750 $ 15,667 $ 13,500 $ 13,750 $ 12,667 $ Female 16,500 * 17,167 17,900 18,250 * 9,667 12,000 Total 11,000 14,500 17,889 17,857 17,143 10,800 12,000 12,400 90+ * *$ 0 * Totals 0 $ 14,654 0 15,207 0 14,931 * Benefit 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 qualified professional when reviewing the Milliman work product. sera0304.docx 102 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Table C-4 Appendix C Valuation Data Survivors Receiving Retirement Benefits as of January 1, 2017 – Inactive Lives <50 Number of Persons Male 0 Female 6 Total Annual Benefits in Thousands Male $ Female Total 6 50-54 60-64 65-69 70-74 75-79 80-84 85-89 90+ Totals 0 9 3 22 10 39 7 64 7 76 8 67 5 72 6 100 4 173 50 628 9 25 49 71 83 75 77 106 177 678 0 $ 95 0 $ 175 50 $ 439 175 $ 791 70 $ 1,219 145 $ 1,539 82 $ 1,208 76 $ 1,244 51 $ 1,751 24 $ 673 2,398 10,859 95 175 489 966 1,289 1,684 1,290 1,320 1,802 2,422 Average Annual Benefits Male $ 0 $ 0 $ Female 15,833 19,444 Total 55-59 15,833 19,444 11,532 16,667 $ 17,500 $ 10,000 $ 20,714 $ 10,250 $ 15,200 $ 8,500 $ 6,000 $ 13,460 19,955 20,282 19,047 20,250 18,030 17,278 17,510 13,861 17,291 19,560 19,714 18,155 20,289 17,200 17,143 17,000 13,684 17,009 Note: In addition, 35 male survivors are receiving $467,376 and 59 female survivors are receiving $1,019,355 in Option B or Option C for a certain period only. 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 professional when reviewing the Milliman work product. sera0304.docx 103 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Table C-5 Appendix C Valuation Data Distribution of Employees and Salaries as of January 1, 2017 – Active Lives Number of Employees - By Age Group - Males Nearest Year of Service 0 1 2 3-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40+ Totals <20 20-24 10 16 15 7 1 1 48 25-29 27 63 32 54 31 4 211 30-34 49 83 53 92 106 47 1 431 35-39 33 72 71 112 135 129 29 581 40-44 27 60 50 83 137 154 83 8 602 45-49 39 49 43 83 134 144 146 66 19 723 50-54 20 29 34 56 116 127 160 82 77 10 1 712 55-59 15 47 28 50 110 133 159 89 106 51 30 1 819 60-64 5 19 22 49 66 107 128 58 83 61 50 15 663 65-69 2 3 2 11 31 38 56 22 41 31 15 16 268 70+ Totals 227 442 351 601 873 892 778 333 338 158 101 40 5,134 1 4 7 9 16 8 12 5 5 8 75 Monthly Salaries in Thousands - By Age Group - Males Nearest Year of Service 0 $ 1 2 3-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40+ Totals <20 $ 2 2 20-24 25-29 30-34 35-39 37 $ 142 $ 280 $ 204 $ 58 296 465 442 54 159 355 475 25 279 577 780 156 639 949 24 275 853 5 175 174 1,056 2,596 3,878 40-44 153 $ 385 368 580 1,008 1,048 604 52 4,198 45-49 238 $ 328 298 610 919 1,013 1,034 498 140 5,078 50-54 149 $ 181 234 387 826 831 1,166 585 596 75 9 5,039 55-59 92 $ 312 163 390 782 921 1,185 649 759 399 232 7 5,891 60-64 36 $ 158 136 356 465 664 878 411 626 464 421 111 4,726 65-69 9 $ 19 14 73 216 224 378 152 296 230 118 115 1,844 70+ $ 10 26 41 43 100 42 82 37 29 44 454 Totals 1,340 2,646 2,266 4,083 6,001 5,896 5,525 2,389 2,499 1,205 809 277 34,936 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 professional when reviewing the Milliman work product. sera0304.docx 104 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Table C-5 Appendix C Valuation Data Distribution of Employees and Salaries as of January 1, 2017 – Active Lives (continued) Average Monthly Salaries - By Age Group - Males Nearest Year of Service 0 $ 1 2 3-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40+ Totals <20 $ 2,000 2,000 20-24 25-29 30-34 35-39 3,700 $ 5,259 $ 5,714 $ 6,182 $ 3,625 4,698 5,602 6,139 3,600 4,969 6,698 6,690 3,571 5,167 6,272 6,964 5,032 6,028 7,030 6,000 5,851 6,612 5,000 6,034 3,625 5,005 6,023 6,675 40-44 5,667 $ 6,417 7,360 6,988 7,358 6,805 7,277 6,500 6,973 45-49 6,103 $ 6,694 6,930 7,349 6,858 7,035 7,082 7,545 7,368 7,024 50-54 7,450 $ 6,241 6,882 6,911 7,121 6,543 7,288 7,134 7,740 7,500 9,000 7,077 55-59 6,133 $ 6,638 5,821 7,800 7,109 6,925 7,453 7,292 7,160 7,824 7,733 7,000 7,193 60-64 7,200 $ 8,316 6,182 7,265 7,045 6,206 6,859 7,086 7,542 7,607 8,420 7,400 7,128 65-69 4,500 $ 6,333 7,000 6,636 6,968 5,895 6,750 6,909 7,220 7,419 7,867 7,188 6,881 70+ $ 10,000 6,500 5,857 4,778 6,250 5,250 6,833 7,400 5,800 5,500 6,053 Totals 5,903 5,986 6,456 6,794 6,874 6,610 7,102 7,174 7,393 7,627 8,010 6,925 6,805 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 professional when reviewing the Milliman work product. sera0304.docx 105 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Table C-6 Appendix C Valuation Data Distribution of Employees and Salaries as of January 1, 2017 – Active Lives Number of Employees - By Age Group - Females Nearest Year of Service 0 1 2 3-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40+ Totals <20 20-24 9 17 11 4 0 41 25-29 35 52 39 45 29 1 201 30-34 40 71 52 75 66 43 1 348 35-39 34 60 54 89 110 91 29 467 40-44 19 36 39 56 103 98 73 13 2 439 45-49 11 37 33 56 72 114 113 60 23 519 50-54 19 36 26 49 90 110 119 52 97 12 610 55-59 10 29 23 42 57 90 112 64 108 55 26 1 617 60-64 8 13 14 26 50 67 78 51 81 55 41 15 499 65-69 1 3 1 4 20 26 28 24 45 27 25 19 223 70+ Totals 186 354 292 447 600 651 570 267 361 152 97 40 4,017 1 3 11 17 3 5 3 5 5 53 Monthly Salaries in Thousands - By Age Group - Females Nearest Year of Service 0 $ 1 2 3-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40+ Totals <20 $ 0 20-24 25-29 30-34 35-39 32 $ 170 $ 216 $ 206 $ 58 255 402 380 37 191 293 370 13 223 455 552 118 369 675 7 208 551 3 142 140 964 1,946 2,876 40-44 100 $ 212 252 365 675 652 503 86 13 2,858 45-49 72 $ 257 211 379 455 796 774 374 141 3,459 50-54 121 $ 245 172 321 553 726 872 348 694 69 4,121 55-59 79 $ 174 143 302 408 570 755 426 706 395 190 6 4,154 60-64 37 $ 95 105 183 335 430 503 363 554 411 265 91 3,372 65-69 4 $ 19 8 24 116 173 150 138 283 192 175 110 1,392 70+ $ 9 11 50 52 7 30 23 33 32 247 Totals 1,037 2,097 1,782 2,826 3,715 4,163 3,754 1,742 2,421 1,090 663 239 25,529 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 professional when reviewing the Milliman work product. sera0304.docx 106 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Table C-6 Appendix C Valuation Data Distribution of Employees and Salaries as of January 1, 2017 – Active Lives (continued) Average Monthly Salaries - By Age Group - Females Nearest Year of Service 0 $ 1 2 3-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40+ Totals <20 $ 20-24 25-29 30-34 35-39 3,556 $ 4,857 $ 5,400 $ 6,059 $ 3,412 4,904 5,662 6,333 3,364 4,897 5,635 6,852 3,250 4,956 6,067 6,202 4,069 5,591 6,136 7,000 4,837 6,055 3,000 4,897 3,415 4,796 5,592 6,158 40-44 5,263 $ 5,889 6,462 6,518 6,553 6,653 6,890 6,615 6,500 6,510 45-49 6,545 $ 6,946 6,394 6,768 6,319 6,982 6,850 6,233 6,130 6,665 50-54 6,368 $ 6,806 6,615 6,551 6,144 6,600 7,328 6,692 7,155 5,750 6,756 55-59 7,900 $ 6,000 6,217 7,190 7,158 6,333 6,741 6,656 6,537 7,182 7,308 6,000 6,733 60-64 4,625 $ 7,308 7,500 7,038 6,700 6,418 6,449 7,118 6,840 7,473 6,463 6,067 6,758 65-69 4,000 $ 6,333 8,000 6,000 5,800 6,654 5,357 5,750 6,289 7,111 7,000 5,789 6,242 70+ $ 9,000 3,667 4,545 3,059 2,333 6,000 7,667 6,600 6,400 4,660 Totals 5,575 5,924 6,103 6,322 6,192 6,395 6,586 6,524 6,706 7,171 6,835 5,975 6,355 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 professional when reviewing the Milliman work product. sera0304.docx 107 This page intentionally left blank. 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 professional when reviewing the Milliman work product. sera0304.docx 108 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Appendix D Glossary The following definitions are largely excerpts from a list adopted in 1981 by the major actuarial organizations in the United States. In some cases the definitions have been modified for specific applicability to the Seattle City Employees’ Retirement System. Defined terms are capitalized throughout this Appendix. Accrued Benefit The amount of an individual’s benefit (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. Actuarial Accrued Liability 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. Actuarial Assumptions Assumptions as to the occurrence of future events affecting pension costs, such as: mortality, withdrawal, disability, 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. Actuarial Cost Method 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. Actuarial Gain (Loss) 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 particular Actuarial Cost Method. Actuarial Present Value 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. Actuarial Valuation 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. Actuarial Value of Assets 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. Actuarially Equivalent Of equal Actuarial Present Value, determined as of a given date with each value based on the same set of Actuarial Assumptions. Amortization Payment That portion of the pension plan contribution that is designed to pay interest on and to amortize the Unfunded Actuarial Accrued Liability (UAAL). 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 professional when reviewing the Milliman work product. sera0304.docx 109 Milliman January 1, 2017 Actuarial Valuation Seattle City Employees’ Retirement System Appendix D Glossary Entry Age Actuarial Cost Method A method under which the Actuarial Present Value of the Projected Benefits 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. Funding Ratio 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. Normal Cost That portion of the Actuarial Present Value of pension plan benefits and expenses which is allocated to a valuation year by the Actuarial Cost Method. Projected Benefits 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. Surplus Funding The excess of the Actuarial Value of Assets over the Actuarial Accrued Liability. Unaccrued Benefit The excess of an individual’s Projected Benefits over the Accrued Benefits as of a specified date. Unfunded Actuarial Accrued Liability 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 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. sera0304.docx 110 STATISTICAL 112 Seattle City Employees’ Retirement System Statistical Section 2016 YE Investment Portfolio Composition Fixed Income 20.1% Short-term 12.5% Equity 50.2% Alternatives 6.5% Real Estate 10.7% 2016 Fund Performance 14.0% 13.2% Percentage Gain or Loss 12.0% 9.7% 10.0% 8.6% 8.0% 6.5% 6.0% 5.2% 4.3% 4.0% 2.0% 0.0% 0.0% Cash 0.0% Domestic Equity Internat'l Equity Fixed Income Returns provided by NEPC as of 12/31/16 113 Diversifying Strategies Private Equity Real Estate Total Fund Seattle City Employees’ Retirement System Statistical Section SEATTLE CITY EMPLOYEES' RETIREMENT SYSTEM SCHEDULE OF REVENUES BY SOURCE Employee Employer Contribution Contribution % * % ** 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03 9.03 10.03 10.03 10.03 10.03 10.03 7.91 8.54 8.54 8.54 8.91 8.91 8.91 8.91 8.91 8.91 8.91 8.91 8.91 8.91 8.91 8.91 8.91 8.91 8.91 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03 9.03 11.01 12.89 14.31 15.73 15.23 Fiscal Year 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Member Contributions $ 9,166,162 11,845,089 12,465,220 12,926,545 14,076,607 14,399,465 15,164,105 16,088,280 16,701,142 17,246,117 20,405,149 21,111,940 21,564,881 23,473,485 24,764,862 26,069,124 25,835,147 25,571,634 27,311,815 29,201,844 30,962,052 32,602,859 39,388,249 36,243,490 37,192,591 35,962,449 38,228,475 40,533,554 45,986,139 46,613,886 45,364,624 50,415,119 57,086,346 60,342,581 63,969,504 65,779,216 71,755,857 Employer Contribution $ 10,470,335 13,309,388 14,790,039 14,265,554 15,961,211 16,280,464 16,758,439 17,799,789 18,521,365 18,983,634 21,810,612 21,458,952 25,117,924 26,139,925 26,704,211 27,816,819 28,372,760 28,310,353 30,554,650 29,898,474 30,956,217 32,667,381 36,599,830 34,200,693 36,819,271 35,897,345 38,077,976 40,299,506 45,961,040 46,650,169 45,224,787 50,301,263 62,515,432 77,073,667 89,988,898 101,153,403 108,454,496 * Investment Income $ Miscellaneous Income 16,284,473 $ 846 18,488,195 2,311 21,106,414 27,224,215 5,050 30,543,443 67 25,317,826 33,081,706 46,029,652 410 36,397,481 41,803,863 545 27,725,284 37,758,671 41,792,730 100,705,007 *** 3,670,356 *** 181,470,912 118,399,056 143,719,597 168,477,507 240,904,299 (79,832,672) (93,021,798) (116,907,340) 296,239,050 177,211,711 139,866,897 251,934,917 149,708,740 (612,803,880) 198,417,995 216,839,059 (8,233,151) 237,789,669 298,149,888 130,807,611 16,280,647 198,649,719 Total $ 35,921,816 43,644,983 48,361,673 54,421,364 60,581,328 55,997,755 65,004,250 79,918,131 71,619,988 78,034,159 69,941,045 80,329,563 88,475,535 150,318,417 55,139,429 235,356,855 172,606,963 197,601,584 226,343,972 300,004,617 (17,914,403) (27,751,558) (40,919,261) 366,683,233 251,223,573 211,726,691 328,241,368 230,541,800 (520,856,701) 291,682,050 307,428,470 92,483,231 357,391,447 435,566,136 284,766,013 183,213,266 378,860,072 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 slightly 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. 114 Seattle City Employees’ Retirement System Statistical Section SEATTLE CITY EMPLOYEES' RETIREMENT SYSTEM SCHEDULE OF EXPENSES BY TYPE Year Benefits Refunds 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 $ 17,584,611 19,114,992 21,358,214 23,029,611 25,175,469 27,090,615 28,777,844 30,499,027 32,093,902 34,121,917 36,431,265 37,862,028 38,884,790 40,131,325 42,420,358 44,352,180 46,257,605 50,349,474 56,247,811 58,704,086 62,844,355 65,553,605 68,825,558 73,559,728 77,289,288 82,268,449 87,583,509 98,391,533 102,703,230 108,138,820 113,650,795 124,061,630 134,135,553 141,424,206 150,239,008 159,349,807 168,967,298 $ 1,786,654 2,074,078 2,151,528 2,086,102 3,366,999 2,753,418 3,212,415 3,141,868 3,293,088 3,257,432 3,592,483 3,731,762 3,585,672 2,944,003 3,412,882 3,874,980 3,888,043 5,463,464 7,502,444 9,730,803 11,641,902 8,785,879 12,019,852 13,218,137 9,791,692 10,385,215 10,553,067 11,525,660 10,223,415 9,742,692 14,715,000 16,677,022 14,913,574 15,278,136 15,103,615 16,137,840 16,456,570 115 Administrative & Investment $ 331,600 419,568 458,261 538,059 737,445 1,076,324 1,340,874 1,494,189 1,408,946 1,538,544 1,636,911 1,870,922 2,109,340 2,525,620 2,639,538 7,217,337 7,989,200 11,875,158 12,145,939 10,447,151 10,634,557 7,293,821 7,250,214 7,081,030 7,188,848 11,773,914 10,715,425 12,380,123 8,188,287 5,929,667 11,605,536 10,974,855 10,431,260 13,466,311 13,868,184 18,138,855 18,224,795 Total $ 19,702,865 21,608,638 23,968,003 25,653,772 29,279,913 30,920,357 33,331,133 35,135,084 36,795,936 38,917,893 41,660,659 43,464,712 44,579,802 45,600,948 48,472,778 55,444,497 58,134,848 67,688,096 75,896,194 78,882,040 85,120,814 81,633,305 88,095,624 93,858,895 94,269,828 104,427,578 108,852,001 122,297,316 121,114,932 123,811,179 139,971,331 151,713,507 159,480,387 170,168,653 179,210,807 193,626,502 203,648,663 Seattle City Employees’ Retirement System Statistical Section SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM BENEFIT EXPENSE BY TYPE Twenty Years Ending December 31, 2016 Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Age & Service Benefits Retirants Survivors 44,350,246 48,684,577 50,902,672 54,518,311 57,122,024 59,991,882 64,301,813 67,794,624 72,390,702 77,320,260 87,019,040 91,265,085 95,951,625 101,965,821 112,072,113 122,076,194 129,360,508 137,887,118 146,991,429 156,661,906 4,996,325 6,500,622 6,821,887 7,260,855 7,486,988 7,821,555 8,215,109 8,486,860 8,754,471 9,180,292 10,230,265 10,282,919 11,022,403 10,526,966 10,804,171 10,904,912 10,845,604 11,175,718 11,232,712 11,237,234 Disability Retirants Benefits 612,903 714,624 698,527 714,799 672,593 686,121 714,806 711,804 785,276 814,957 864,228 885,227 886,684 918,009 919,345 924,447 914,094 896,172 913,166 902,858 116 Death Refunds Total Benefit 390,000 347,988 281,000 350,390 272,000 326,000 328,000 296,000 338,000 268,000 278,000 270,000 278,108 240,000 266,000 230,000 304,000 280,000 212,500 165,300 5,463,464 7,502,444 9,730,803 11,641,902 8,785,879 12,019,852 13,218,137 9,791,692 10,351,215 10,553,067 11,525,660 10,223,415 9,742,692 14,714,999 16,677,022 14,913,574 15,278,136 15,103,615 16,137,840 16,456,570 55,812,938 63,750,255 68,434,889 74,486,257 74,339,484 80,845,410 86,777,865 87,080,980 92,653,664 98,136,576 109,917,193 112,926,645 117,881,512 128,365,795 140,738,651 149,049,127 156,702,342 165,342,623 175,487,647 185,423,868 Seattle City Employees’ Retirement System Statistical Section REVENUE RATIOS BY SOURCE 1975 Through 2016 Year 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 * ** * * ** ** Member Contributions % 26 26 25 25 27 26 27 25 24 23 26 24 20 23 22 29 26 25 16 45 11 15 13 12 10 Employer Contributions % 31 31 29 29 30 29 31 31 26 26 29 26 22 26 24 31 27 28 17 48 12 16 14 14 10 10 15 17 12 18 9 15 17 12 18 16 15 16 15 16 14 23 36 19 17 18 33 55 29 Investment Income % 43 43 46 46 43 45 42 44 50 51 45 50 58 51 54 40 47 47 67 7 77 69 73 74 80 Net Loss Net Loss Net Loss 81 70 66 76 64 Net Loss 68 70 Net Loss 67 68 44 9 52 Total Revenue % 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 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. 117 Seattle City Employees’ Retirement System Statistical Section SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM SCHEDULE OF INVESTMENT RESULTS Ten Years Ending December 31, 2016 Year * Investment Income * Investments Market Value Securities Lending Collateral Return on Market Value 2007 149,708,740 2,106,345,982 103,323,467 7.3% 2008 (612,803,880) 1,467,556,416 69,838,616 (26.8)% 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 (0.0)% 2012 237,789,669 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% 2015 17,011,351 2,297,798,733 50,952,037 0.3% 2016 198,915,311 2,473,986,443 11,130,677 8.6% Investment Income includes market gains and losses, and gross income from Securities Lending. 118 Seattle City Employees’ Retirement System Statistical Section SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM SERVICE AND DISABILITY PENSIONERS BY AGE As of December 31, 2016 119 Seattle City Employees’ Retirement System Statistical Section SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM RETIREMENT ALLOWANCE DISTRIBUTION As of December 31, 2016 120 Seattle City Employees’ Retirement System Statistical Section SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM ACTIVE MEMBERSHIP EXPERIENCE For the Last Thirty Years Year 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Members at End of Period 7,196 7,252 7,544 7,813 8,037 8,171 8,317 8,553 8,741 8,584 8,572 8,743 9,576 9,836 10,111 9,737 9,964 10,222 10,387 10,493 10,892 10,831 11,077 10,597 10,477 10,075 10,627 10,894 11,165 11,595 New Members During Period 622 542 672 872 681 463 537 512 477 339 435 557 1,289 876 706 426 628 636 635 710 948 833 347 273 317 405 786 785 853 958 Withdrawals During Period 312 361 251 454 354 220 279 201 284 270 287 236 238 393 241 503 202 123 212 325 292 340 313 397 239 219 235 208 228 194 121 Re-entering & Re-depositing 72 45 51 45 43 32 39 133 136 13 36 29 14 17 25 16 5 4 3 15 37 83 122 17 16 15 28 31 34 17 Deaths During Period 16 10 12 12 13 17 15 16 12 12 18 9 17 13 18 12 14 8 11 16 8 9 16 15 12 9 12 11 10 18 Pensions Granted During Period 190 160 168 182 133 124 136 192 153 227 178 170 215 227 197 301 190 251 247 278 286 187 221 355 321 351 331 320 377 307 Seattle City Employees’ Retirement System Statistical Section SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM COMPARATIVE STATEMENT OF EXPERIENCE OF SERVICE AND DISABILITY RETIREMENT PAYROLLS From Inception in 1929, Through 2016 1929 - 1982 Inclusive December 31, 1983 December 31, 1984 December 31, 1985 December 31, 1986 December 31, 1987 December 31, 1988 December 31, 1989 December 31, 1990 December 31, 1991 December 31, 1992 December 31, 1993 December 31, 1994 December 31, 1995 December 31, 1996 December 31, 1997 December 31, 1998 December 31, 1999 December 31, 2000 December 31, 2001 December 31, 2002 December 31, 2003 December 31, 2004 December 31, 2005 December 31, 2006 December 31, 2007 December 31, 2008 Service 6,486 248 206 202 175 184 158 163 181 129 121 133 181 148 225 170 166 208 222 192 290 189 243 235 270 277 192 Number Retired During Period Sec. 19-b Disability 431 938 12 5 9 4 4 7 10 4 6 7 2 3 8 5 10 1 4 3 6 3 10 1 5 2 3 1 9 1 2 2 5 2 4 1 4 1 5 6 6 1 2 6 6 6 6 2 6 2 5 1 Figures Quoted as of the End of Each Fiscal Period Number Deceased During Period Service Disability 3,297 647 137 10 135 14 115 18 140 9 132 16 120 9 141 12 128 16 158 12 161 4 157 6 159 10 162 5 173 8 186 9 170 9 167 5 142 4 152 8 170 5 163 5 172 6 164 3 151 6 155 2 158 2 Pensions Discontinued Service 3 1 Beneficiary 380 29 28 19 13 6 25 5 7 31 32 42 53 54 44 75 45 67 46 53 49 67 61 66 72 70 72 Disability 84 1 Benefit Cont’ to Beneficiary Service Number on Payroll at End of Period Service Beneficiary Disability 592 55 51 48 20 16 37 43 44 70 50 45 55 38 49 69 51 51 43 33 48 57 39 70 33 59 51 3,108 3,344 3,415 3,505 3,540 3,592 3,627 3,660 3,695 3,665 3,625 3,601 3,608 3,591 3,659 3,622 3,614 3,662 3,699 3,733 3,836 3,858 3,924 3,993 4,113 4,231 4,295 583 684 716 743 760 776 790 780 827 866 884 894 922 914 907 931 942 931 933 924 945 945 930 942 908 897 875 214 202 192 183 178 169 163 154 140 132 131 127 117 114 106 98 91 88 84 76 77 73 73 76 72 72 77 December 31, 2009 December 31, 2010 221 355 16 5 1 0 144 159 4 0 60 68 47 41 4,345 4,546 885 808 75 74 December 31, 2011 321 4 1 136 2 76 50 4,712 802 66 December 31, 2012 351 6 2 155 5 66 36 4,844 779 62 December 31, 2013 328 1 214 7 4 12 53 5,025 758 58 December 31, 2014 317 3 157 55 36 5,209 755 62 December 31, 2015 371 2 6 136 6 3 67 27 5,494 713 61 December 31, 2016 307 0 0 153 4 2 62 5,576 703 0 41 2015 Grand Total 122 55 6,334 Seattle City Employees’ Retirement System Statistical Section SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM EXPERIENCE IN MISCELLANEOUS AVERAGES For the Last Thirty Years 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 * * AVERAGE SERVICE RETIREMENT ALLOWANCE AVERAGE AGE OF SERVICE PENSIONERS AVERAGE DISABILITY RETIREMENT ALLOWANCE AVERAGE AGE OF DISABILITY PENSIONERS 608.43 655.62 664.36 697.54 757.07 749.31 775.72 811.55 850.50 904.11 961.30 1,063.66 1,114.34 1,167.60 1,222.42 1,289.77 1,338.49 1,404.86 1,477.58 1,552.57 1,768.13 1,822.44 1,873.39 1,965.36 2,043.56 2,152.85 2,206.86 2,268.70 2,332.94 2,392.64 70.80 70.02 71.45 71.72 72.19 72.44 73.42 73.28 73.45 73.43 73.29 73.30 73.10 72.88 72.70 72.16 72.14 71.93 71.78 71.53 71.42 71.92 71.51 71.32 71.29 71.21 71.60 71.26 71.30 71.55 314.43 357.61 343.74 352.75 378.41 366.23 394.13 407.60 431.19 423.86 448.15 594.09 609.19 622.66 654.53 703.83 734.85 788.94 827.46 877.96 1,010.15 1,038.93 1,077.33 1,110.10 1,144.88 1,203.52 1,220.27 1,257.92 1,296.45 1,331.95 66.60 66.40 66.53 65.88 66.61 66.30 67.80 67.52 67.78 68.88 68.12 68.13 68.25 68.69 67.84 67.25 66.78 65.40 65.15 64.75 65.53 65.49 64.15 65.84 65.61 66.08 65.97 65.33 64.27 64.46 ACTIVE MEMBERS DECEASED # OF AVERAGE DEATHS AGE 16 14 12 12 13 17 15 16 12 12 18 9 17 13 18 12 14 8 11 16 8 9 16 15 12 9 12 11 10 18 49.13 49.93 49.17 47.67 57.77 50.94 53.00 55.00 53.67 44.92 54.72 56.11 55.24 50.77 51.39 54.33 53.14 50.62 53.18 51.94 53.13 52.33 58.00 55.73 54.00 57.67 59.90 53.27 57.30 56.33 Beginning in 1998 the average retirement allowance numbers include the monthly COLA amounts. 123 Seattle City Employees’ Retirement System Statistical Section SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM SCHEDULE OF AVERAGE BENEFIT PAYMENTS Retirement Effective Dates Years Credited Service Jan. 1, 2007 to Dec. 31, 2016 0-10 11-15 16-20 21-25 26-30 31 + Period 1/1/07 to 12/31/07 Average Monthly Benefit $ 658.92 1,406.25 1,650.87 2,132.89 2,814.90 3,129.50 Average Final Salary $ 5,017.90 5,992.08 4,865.08 5,096.68 5,414.43 5,412.96 53 36 37 54 61 44 Number of Active Retirees Period 1/1/08 to 12/31/08 Average Monthly Benefit $ 693.96 1,307.50 1,683.04 2,237.23 3,032.86 3,467.66 Average Final Salary $ 5,616.72 5,133.11 5,029.50 5,470.66 5,896.14 5,682.79 25 18 20 37 41 46 Number of Active Retirees Period 1/1/09 to 12/31/09 Average Monthly Benefit $ 725.01 1,200.14 1,633.91 2,191.40 2,895.97 3,517.60 Average Final Salary $ 6,221.46 5,346.25 5,391.47 5,637.85 5,937.71 6,298.57 35 36 26 34 33 57 Number of Active Retirees Period 1/1/10 to 12/31/10 Average Monthly Benefit $ 743.52 1,230.93 1,819.18 2,553.58 3,152.03 3,738.60 Average Final Salary $ 4,657.13 5,098.76 5,424.67 6,829.01 6,418.87 6,161.06 35 32 59 57 90 82 Number of Active Retirees Period 1/1/11 to 12/31/11 Average Monthly Benefit $ 770.06 1,387.07 1,986.83 2,439.29 3,370.92 3,912.57 Average Final Salary $ 5,937.02 5,547.89 6,190.33 6,320.57 6,492.13 6,399.97 41 39 31 64 58 90 Number of Active Retirees Period 1/1/12 to 12/31/12 Average Monthly Benefit $ 846.84 1,988.33 2,004.20 2,942.30 3,331.36 3,859.10 Average Final Salary $ 5,698.96 6,197.59 5,938.01 6,511.90 6,562.86 6,479.21 59 36 45 57 74 80 Number of Active Retirees 124 Seattle City Employees’ Retirement System Statistical Section Retirement Effective Dates Years Credited Service Jan. 1, 2007 to Dec. 31, 2016 0-10 11-15 16-20 21-25 26-30 31 + Period 1/1/13 to 12/31/13 Average Monthly Benefit $ 956.90 1,698.31 2,270.52 2,859.90 3,432.76 4,014.78 Average Final Salary $ 5,910.57 6,526.74 6,126.15 6,900.96 6,775.70 6,667.11 45 43 34 58 63 85 Number of Active Retirees Period 1/1/14 to 12/31/14 Average Monthly Benefit $ 933.87 1,709.96 2,209.50 2,659.54 3,684.43 4,461.46 Average Final Salary $ 6,141.78 6,444.04 6,814.88 6,012.59 7,017.93 6,692,68 69 32 42 48 71 55 Number of Active Retirees Period 1/1/15 to 12/31/15 Average Monthly Benefit $ 906.17 1,720.51 2,010.67 3,050.66 3,542.68 4,301.93 Average Final Salary $ 6,402.57 6,829.11 6,313.27 6,822.33 6,512.09 6,887.75 66 48 41 69 66 78 Number of Active Retirees Period 1/1/16 to 12/31/156 Average Monthly Benefit $ 980.70 1,698.99 2,330.34 3,175.59 3,531.85 4,836.48 Average Final Salary $ 6,453.25 6,407.79 6,432.5 7,121.27 6,809.85 7,176.18 57 48 41 53 55 67 Number of Active Retirees Period 1/1/07 to 12/31/16 Average Monthly Benefit $ 821.6 1,534.80 1,959.91 2,624.24 3,278.98 3,923.97 Average Final Salary $ 5,805.74 5,952.34 5,852.59 6,272.38 6,383.77 6,385.83 49 37 38 53 61 68 Average Number of Retirees 125 Seattle City Employees’ Retirement System Statistical Section NEW MEMBERS IN THE RETIREMENT SYSTEM IN 2016 BY DEPARTMENT Department Name Arts and Culture City Budget Office City Employees Retirement Syst City Light Dept of Education & Early Lrng Dept of Finance & Admn Svc Executive Departments Fire Department Human Services Law Department Legislative-City Council Municipal Court Neighborhoods Department Parks Department Police Department SDHR-Temporary Emp Svcs Seattle Center Seattle Dept of Const and Insp Seattle Dept of HumanResources Seattle Dept of Transportation Seattle Information Technology Seattle Public Library Seattle Public Utilities Count 3 4 3 119 8 65 34 8 56 17 22 21 6 99 49 7 28 50 24 119 51 44 121 958 Total RETURNING MEMBERS IN THE RETIREMENT SYSTEM IN 2016 BY DEPARTMENT Redepositing City Of Seattle Dept of Finance & Admn Svc Fire Department Seattle Dept of Transportation Seattle Information Technology Count 1 1 1 1 1 5 Total Re-entering City Light Dept of Finance & Admn Svc Human Services Municipal Court Parks Department Seattle Center Seattle Dept of Const and Insp Seattle Dept of Transportation Seattle Information Technology Seattle Public Utilities Count Total 126 2 2 2 1 3 2 1 2 2 1 18 Seattle City Employees’ Retirement System Statistical Section SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM SERVICE RETIREMENTS GRANTED IN 2016 Retiree Aana,Leialoha M Abuan,Julius B Adams,Darlene Marie Addington,Ruby A Adler,Robert J Aho,Walter A Ambion,Eloida R Andersen,Cathleen J Anderson,Cynthia S Anderson,Jacqueliene P Anderson,Kathleen B Anderson,Kenneth L Anderson,Sharon A Andrews,Denise M Aubrey,Jack L Balcos,Evelyn J Banks,Teresa Ann Barnes,Dean E Barton,Peter T Batayola,Felipe V Bath,Russell R Baxendale,Eleanore S Beaty,Keith E Beaumont,Victoria G Becker,Bart Behrndt,David Bennett,Stephanie J Berry,James Arthur Berry,L. N Berry,Susan J Bethea,Regena Lynn BILLINGSLEY, DAWN Bills,Lane E Bjorkman,Hal R Blanchard,Kathleen Mora Blythe,Giselle G Booth,Robin A Boyd,George William Bradish,Thomas M BRADY, DONALD L. Brant,Gregory S Department Name Police Parks Dept FAS City Light Library Vested Member Seattle Public Utili Parks Dept Seattle City Light FAS SeaTech FAS King County Vested SDOT Seattle Police Depar SeaTech Vested City Light City Light Department of Planni Exec Dept Sea Center PublicUtil Vested Member FAS Law Dept SDOT SeaTech Vested SDOT Vested FAS SDOT Parks Dept Parks Dept Seattle Police Depar Vested City Light Vested Vested Member 127 Position Pol Comms Dispatcher I Maint Laborer Admin Support Asst-BU Actg Tech II-BU Bldg Maint Wkr Line C CC Mgmt Systs Anlyst,Sr Manager2,Human Svcs Elctn-Con-(OI) Accountant,Prin Info Technol Prof A,Exempt Auto Mechanic Health Manager2,Utils Truck Drvr Parking Enf Ofcr Info Technol Techl Support Executive2 Civil Engr,Sr Elctn-Con CC Elecl Inspector,Sr(Expert) Asst City Attorney Stage Tech,Lead StratAdvsr2,General Govt Plng&Dev Spec,Sr Manager1,Fin,Bud,&Actg Admin Spec II Maint Laborer,Sr-Traffic Info Technol Prof B-BU Admin Staff Anlyst #N/A Auto Mechanic Constr&Maint Equip Op Gardener,Sr Gardener Parking Enf Ofcr Maint Laborer Rights-Of-Way Maint Wkr #N/A StratAdvsr2,Info Technol Yrs Days 25 226 25 196 34 309 17 350 15 30 37 316 37 69 24 190 22 24 10 337 9 20 25 73 28 270 11 327 28 261 43 72 12 362 8 4 10 44 27 316 32 151 15 95 28 211 36 182 11 238 30 195 8 329 24 143 10 259 9 1 22 277 8 350 15 255 31 171 26 83 20 343 19 264 20 354 29 364 47 16 1 85 Age 56 65 62 71 64 59 62 63 62 66 63 62 61 57 65 68 63 66 64 66 66 66 59 61 66 63 70 67 69 59 61 62 64 63 60 64 66 54 63 73 59 Seattle City Employees’ Retirement System Brautigam,Jack A. Brice,Michael A Bruk,Elena Burman,Julie R Burns,William D Calderon,Arlene C Campau,Daniel N Carr,Michelle L Carver,Gary Dale Chagzoetsang,Doma L Choi,Sarah Christian,Clint A Clark,Marjorie Clausen,Diane C Cline,Robert Scott Cobb,Jeffrey L Cole,Rochelle Denise Collier,Sydney Connors,Susan Cooper,Rory K Coto,Jose R Croll,Timothy C Culleton,Roger S CURRY, STEPHEN C CURTIS, ANNE T. Dadashi,Steven Hadi Davies,Lawrence Michael Davis,Sharon G de Haan,Sibyl DeLong,Danny Glenn Dereszynski,Karen Devine,Robert E DeVries,Candace Anne Dexter,Sara E Dickinson,James Scott Dinehart,Karen M Dively,Dwight D Dong,Raymond G Donnelly,Michael S Downey,Brett W Drain,Dianne M Dunlap,Margaret Jean Edwards,Earl H Entwisle,Loretta Escarez,Teofila Mendez Statistical Section City Light City Light Human Svcs Seattle Public Utili Department of Parks Seattle Police Depar Parks Dept Police Seattle City Light City Light Human Svcs City Light LegCtyCncl PublicUtil LegCtyCncl Parks Dept SeaTech FAS Library Seattle Public Libra Parks Dept PublicUtil City Light King County King County City Light PublicUtil Seattle Public Libra Library Vested Library City Light Seattle Public Utili Vested City Light Seattle City Light Vested Member Library Sea Center Public Health - Seat Vested Vested Vested Police City Light Plng&Dev Spec,Sr Jrnywkr In Chg Counslr StratAdvsr1,Utils Pool Maint Wkr Parking Enf Ofcr Maint Laborer Identification Data Spec Elctn-Con Util Acts Supv Counslr Jrnywkr In Chg Admin Spec II StratAdvsr3 * StratAdvsr-Legislative Truck Drvr Info Technol Prof B Auto Mechanic Dev Ofc Admin Asst Library Assoc IV Laborer Executive2 Civil Engrng Spec Supv Health & Envir Invest CPR/AED Program Manager Pwr Marketer Info Technol Prof A,Exempt Dev Ofcr Librn #N/A Library Assoc IV Admin Support Supv-BU Wtr Treatment CC Cook Mat Suplr-Asg Leo/Pdm/Hb Envrnmtl Anlyst,Sr Executive4 Asst Mgr-Library Lock Tech * Parking Enf Ofcr Rec Cntr Coord Com Dev Spec Admin Spec II-BU Cust Svc Rep 128 16 29 16 6 38 24 37 15 7 30 14 43 9 28 31 34 8 15 16 21 10 36 13 46 23 25 11 13 39 4 21 29 21 14 22 15 22 42 19 24 22 10 13 24 30 254 118 198 344 283 155 77 296 1 255 268 152 338 129 96 346 64 79 278 220 76 75 70 101 294 20 292 28 45 86 248 109 110 35 143 221 281 104 131 219 237 12 13 8 168 65 61 70 65 62 61 64 72 62 57 65 75 66 57 66 61 62 68 62 66 64 62 62 73 59 67 60 62 66 64 65 62 65 60 62 58 58 62 69 65 58 66 71 67 66 Seattle City Employees’ Retirement System Esterly,Janice M Etter,Rita A Farmer,Steven M Fields,Shelia A Fleeks,Barbara A Flores,Larry R Forch Jr,Bobby Taliferro Fox,Frankie L Furman,Stephen D Garrett,Roseanne M Gibbons,Gary L Gil,Ernesto Gilbertson,David Glen Goldman,Herbert O Goodlett,Martha Gordon,Karen Sue Gravemaker,Jan E Grayson,Philip A Grohs,Kenneth Alvin Groshong,Kathleen K Guieb-Coe,Faye M Guise,Eric S Hairston,Patricia A Hampton,Preston Leon Hanson,Linda S Harris,Donald M Harris,Randy Harvey,John Michael Harvey,Kenneth A Hedley,Anne P HEINDSMANN, RENEE J Hemenway,Elise Jean Hennings,Richard Bruce Heppner,Dale C Heyman Jr,Walter H Higashi,Christine Miller Hightower,Judith Hildahl,David R Hill,Lynn Yvonne Hobson,Kevin R Hoffer,Dennis W Hoffman,Raymond F Holman,James R Holt,Peggy L Horiuchi,Timothy P Statistical Section Muni Court Police Library Muni Court Muni Court SDOT Vested FIRE City Light SDCI Parks Dept SDOT Parks Dept Vested Vested NeighbDept Vested City Light City Light Human Svcs Police Human Svcs NeighbDept City Light PublicUtil Parks Dept Vested Member City Light Seattle Department o City Light Vested City Light FAS SDOT FAS Library Seattle Municipal Co PublicUtil Vested Police PublicUtil PublicUtil Parks Dept FIRE City Light Prob Counslr-Asg Pers Recog Tenprint Supv Bldg Maint Svcs Supv Court Clerk Admin Spec II-MC Personnel Spec,Sr Manager2,Engrng&Plans Rev Admin Spec III-BU Comms Elctn II Admin Staff Asst Capital Prjts Coord,Sr Truck Drvr,Heavy Manager1,Parks&Rec Rights-Of-Way Maint Lead Wkr Plng&Dev Spec II Manager2,General Govt Line C CC Info Technol Prof A,Exempt Plng&Dev Spec II Admin Spec I-BU Trng&Ed Coord StratAdvsr1,General Govt Info Technol Prof B-BU Util Act Rep I Manager2,Exempt Drainage&Wstwtr Coll Wkr Elecl Svc Rep,Sr Radio Dispatcher Elecl Engrng Spec, Asst II #N/A Gardener StratAdvsr2,General Govt Bridge Op Manager1,P&FM Publc Svc Prgms&Events Mgr Muni Judge Civil Engrng Spec,Assoc Civil Engr,Assoc Pol Comms Dispatcher II Forest Maint Wkr,Sr Executive4 Laborer Admin Spec III-BU Mat Suplr,Elec-Asg Phd/Cw/D 129 10 32 20 35 24 29 24 34 34 17 24 26 35 15 9 32 1 36 19 23 29 23 8 19 22 46 12 20 31 40 13 30 19 44 26 23 25 24 18 30 10 25 26 16 25 87 118 20 103 163 142 179 191 184 181 289 36 15 110 87 173 362 129 355 263 226 354 45 338 103 236 338 14 232 63 288 76 89 53 104 210 80 31 120 336 179 358 266 114 255 71 60 59 66 61 69 60 58 62 65 57 52 65 65 58 60 65 63 62 61 65 69 68 66 62 67 57 67 65 69 62 62 64 69 62 65 67 53 57 56 62 60 56 62 55 Seattle City Employees’ Retirement System Horne,Tom Huggins,Larry R Hume,Richard Baxter Igo,Sandra Lynn JACKSON, LAURA Jacobs,Martha W Jacobson Jr,Frank A James,Linda M Javidando,Ella C Jessen,Larry W Jewell,Steven Johanson,Thomas C Johnsen,Kathleen G Johnson,Carol A Johnson,Daniel Johnson,Robert R Kaiser,Barry H Keese,Gary E Keiper,Bruce Gerald Kelly,Cheryl M Kennedy,Beverly A Kerschner,Jeffrey Morgan Keys,Lorrie C Kieval,Patricia W Kimbrough-Johnson,Donna King,Sherri L Ko,Curtis J Kortz,Jane F Kuhnly,Steven W Kukahiko,Edward N Kulzer,Louise R Kuris,Leslie E Kuwamoto,JoEllen Laird,Robert J Langlois,Jerry R Launceford,John E Lea,Richard G Leaf,Jen Lee,Oliver D Lenss,Diane K Leong,Alan G Lewis,Douglas Lightfoot,Kevin D Llarenas,Teresita Lo,Sara C Statistical Section Library SDOT Muni Court Exec Dept King County Vested PublicUtil Police Muni Court SDCI Human Resources PublicUtil Seattle City Light Vested Parks Dept SDCI City Light VarDept City Light Vested SDCI City Light SDCI Vested Vested Vested FAS CtyEmpRetr City Light PublicUtil PublicUtil SDOT CBO SDCI Seattle Public Utili Parks Dept PublicUtil City Light Parks Dept Police Department of Inform SDOT SDOT Vested Vested Member Head of Techl&Coll Svcs Manager3,P&FM Manager1,Exempt Com Dev Spec Health Plng&Dev Spec II * Auto Engr,Sr * Parking Enf Ofcr Court Clerk Elecl Inspector,Sr(Expert) StratAdvsr3,General Govt Civil Engrng Spec,Sr Line C CC Camp Svc Aide,Sr Executive2 Elecl Plans Examiner Line C CC StratAdvsr1,Exempt Capital Prjts Coord,Sr Usher * Info Technol Prof B-BU Generation Supv-BU Actg Tech II-BU Personnel Spec Mgmt Systs Anlyst Shop Opns Supv Info Technol Prof B * Cblspl CC-Asg C Coord Wtr Pipe Wkr,Sr Manager3,Engrng&Plans Rev Trng&Ed Coord StratAdvsr2 * Executive2 Constr&Maint Equip Op Constr&Maint Equip Op Truck Drvr,Heavy Mgmt Systs Anlyst,Asst Maint Laborer Admin Support Supv-BU Info Technol Prof A,Exempt Cement Finisher Street Maint CC Util Act Rep I Librn 130 24 13 29 7 27 1 44 11 35 39 14 46 28 9 26 8 31 17 21 0 7 24 26 2 4 16 33 26 37 30 13 8 30 25 27 33 10 14 10 11 31 29 18 25 12 211 11 360 193 270 73 205 330 131 177 211 180 241 360 48 338 354 288 91 235 42 15 85 61 166 2 148 102 353 116 152 229 286 132 211 33 277 223 316 221 65 305 55 318 150 62 69 62 66 61 66 66 66 57 70 57 69 52 62 59 63 62 65 63 65 62 57 56 65 67 62 59 67 62 61 69 68 59 56 61 61 62 62 60 62 53 61 61 60 64 Seattle City Employees’ Retirement System Logan,Jerry Lupton,Rick N Lyles,Dwayne A MacKenzie,Ward R Mackey,Michael Elof Macri,Janet I Malgren,John A Manhas,Rajinder S Maraire,Mazvita Allen Marple,Teresa M Marsten,Curtis L Marsten,Vicki T Martin,Ernesto Martin,Jon R Mateo,Joselito V Mathews,Marcie Maxwell,Patricia L Mazzella,Anthony J McBroom,Joyce Ann McClister,Michael Thomas Medina, Antelia Soraida Mercer,Rosa Meredith,Richard L Milbourn,Virginia L Miller,Donna M Minato,Marilyn J Miramontez,Johnny A Mitchell,Katie A Modrell,Patrick H Monaghan,Suellen Morrison,Michael D Moscou,Jacqueline D Moses,Miriam Israel Mueller,Karen J Munger,Lorie J Nguyen,Vien T Niehaus,Lisa K Nishi,Rick L O'Brien,Marion Ruth O'Brien,Patricia M Oesterreicher,Brian Oiye,Alan Y Oliver,Steven F Omoto,Craig Masayoshi Pageler,Margaret A Statistical Section SDOT SDCI Department of Parks Seattle City Light Seattle City Light Department of Parks Muni Court Vested Parks Dept Police Seattle Department o Seattle Public Utili Seattle Public Utili Parks Dept PublicUtil Seattle Police Depar Parks Dept SDOT Seattle Police Depar City Light Public Health - Seat Muni Court Vested PublicUtil Vested FAS PublicUtil Parks Dept City Light FAS Seattle City Light Vested Vested PublicUtil SDOT Library Vested Member Parks Dept Vested PublicUtil Police Department of Planni PublicUtil PublicUtil Vested Maint Laborer StratAdvsr2,Engrng&Plans Rev Maint Laborer Exec Asst Meter Reader Admin Staff Asst Info Technol Prof B-BU Executive3 Rec Prgm Spec,Sr Pol Comms Dispatcher II Civil Engrng Spec,Assoc Civil Engr,Assoc Prjt Fund&Agreemts Coord,Sr Parks Maint CC Wtr Quality Anlyst Parking Enf Ofcr Rec Cntr Coord Manager2,General Govt Parking Enf Ofcr Meter Reader,Sr Court Clerk Manager3,Engrng&Plans Rev Admin Spec III-BU Admin Spec III-BU Treasury Cashier,Sr Pmp Stat Maint Leadwkr Carpenter,Sr Prot&Cntrl Elctn II Actg Tech I-BU Auto Engr,Sr Publc/Cultural Prgms Spec,Sr StratAdvsr2,Exempt Info Technol Prof C-BU Manager2,Engrng&Plans Rev Janitor-Library Gardener Manager3,Engrng&Plans Rev #N/A StratAdvsr2,General Govt Pol Comms Dispatcher,Chief Land Use Plnr IV Util Act Rep Supv II Manager3,Fin,Bud,&Actg Councilmember 131 18 32 14 9 9 13 39 8 20 19 29 32 34 30 24 28 26 16 18 8 30 5 19 25 36 31 29 34 28 11 23 13 7 27 34 11 10 30 10 24 30 39 10 10 11 205 188 119 143 201 112 289 52 228 358 4 183 245 200 215 297 312 116 56 273 91 357 4 362 94 124 271 305 238 136 92 75 119 98 155 197 121 55 354 262 93 96 153 12 184 62 65 58 65 65 58 63 68 54 61 62 56 68 65 65 53 69 66 66 65 57 63 55 70 67 64 61 68 67 71 57 64 65 64 55 65 60 58 65 66 52 70 62 60 75 Seattle City Employees’ Retirement System Paige,Dwayne K Park,Nelson S Parker,Warren C Peda,Erma Rose Peterson,Joan Pfeiffer,Steven D Phan,Slade Philips,Christine Phillips,Duane R Plumb,Terrance Michael Ponath,Jacqueline Marie Price,Brenda L Prieto,Manuel P Pulford,Alvin Thomas Puloka,Madelene Louise Quinn,Joanne T Radliff,Rick L Ray,Morris C Redford Jr,Donald G Reid,Craig D Rivera,Manolo Rmah,Blot ROBERSON, CAROLYN M Roberts,Kevin D Roberts,Paul C Rodol,Ali M Rollen,Donna Carol Rood,Timothy W Saclo Jr,Bernardino C Scannell,Joel Francis Schilling,Elizabeth G Schmidt,David B Schuh,John J Schwedas,Daniela M Sears,Mark F Seifert,Thomas W Sinclair,Nina J Smit,Thomas Smith,Elora Annabel Smith,James W Smith,Mary E Soden,Andrew K Sorensen,Marc A Specker,Christopher G Spexarth,Kristen C Statistical Section PublicUtil Seattle City Light Vested Member Vested Arts&Cult SDCI Parks Dept PublicUtil Sea Center SDOT Vested Member Muni Court Sea Center City Light PublicUtil Exec Dept SDCI Police Seattle Public Utili Seattle City Light City Light City Light Vested FAS SDOT City Light Seattle Public Utili SDOT Electrical Inspectio Library VESTED Parks Dept City Light PublicUtil Department of Parks FIRE Parks Dept SDCI Parks Dept PublicUtil Vested Member Vested Member PublicUtil City Light Parks Dept Plng&Dev Spec,Supvsng StratAdvsr1-BU * Bldg Inspector,Sr(Expert) Librn Arts Prgm Spec StratAdvsr2,Engrng&Plans Rev Laborer Mgmt Systs Anlyst,Sr Security Ofcr Capital Prjts Coord,Asst Warehouser-BU Admin Support Supv-MC Carpenter Capital Prjts Coord,Sr Drainage&Wstwtr Coll CC Com Dev Spec,Sr Housing/Zoning Tech,Sr Parking Enf Ofcr Constr&Maint Equip Op Lnwkr Actg Tech II-BU Meter Elctn Working CC Parking Meter Collector Civil Engrng Spec,Assoc * Pwr Marketer Admin Spec II Transp Plnr,Assoc Elecl Inspector,Sr(Expert) Library Assoc II Carpenter Lnwkr Admin Staff Asst Pool Maint Wkr Fire Protection Engr,Sr Envrnmtl Anlyst,Sr Elecl Inspector,Sr(Expert) Carpenter Actg Tech II-BU Volunteer Prgms Coord Civil Engrng Spec,Sr Elecl Engr,Assoc Gardener 132 26 40 19 6 19 31 10 32 19 15 22 15 15 23 30 14 22 23 30 35 36 35 7 19 30 31 13 19 27 14 10 20 22 15 39 15 22 18 30 27 3 7 20 25 11 236 208 250 272 175 188 43 187 120 336 248 96 271 234 128 173 146 52 37 302 256 309 304 4 4 4 328 20 95 234 10 96 232 63 106 217 291 140 84 243 255 351 175 306 243 65 68 60 62 63 65 68 62 62 68 52 67 60 65 50 61 57 64 66 63 68 62 63 62 56 61 68 66 64 67 63 58 67 67 63 62 65 82 67 62 65 60 60 55 68 Seattle City Employees’ Retirement System Sprinkle,Helen Spromberg,Linda C Stewart,Thomas Leighton Sugimura,Diane M Surel,Almario Lopena Symonds,Katherine M Tacardon,Charlie A Taylor,Dennis Thomas,Don A Thompson,Bonnie Eileen Thompson,Lester Purdell Thomson,Jennifer E Tonkyn,Christine Ann Traxler,Maureen A Troisi,Victoria M Trolio,Thomas J Tuifua,Kilisitina M Turner,Mary Elizabeth Turrell,James F Valentin,Charles Van Dan Acker,David J Ventoza,Linda Jean Waldron,Leslie Elaine Warner,Thomas W Watanabe,Anne J Webb,Kim J Wenderoth,Catherine A Wenrick,Ricky A West,Philip W Wheeler,Ronald W Whiteford,Marylou Whittemore,Ronald J Wicklund,Jeanne Marie Wilkens,Robert Lee Williamson,David A Willis,Darren L Wilson,Richard F Wong,Nelson Y Wood,Carol A Yeuroukis,Sher Ann Young,Jeffrey R Statistical Section PublicUtil Seattle Police Depar City Light Exec Dept Finance and Administ Muni Court SeaTech City Light City Light Parks Dept Vested Member Parks Dept City Light SDCI SDOT Human Svcs PublicUtil SDOT City Light City Light FAS Police Seattle Department o Human Svcs Office of Hearing Ex FAS Police City Light City Light Vested Parks Dept Vested Police Parks Dept City Light Department of Inform PublicUtil PublicUtil PublicUtil City Light City Light Util Act Rep II Pol Comms Anlyst Plng&Dev Spec II Executive3 * Warehouser,Sr-BU Prob Counslr I Telecom Syst Installer,Sr Jrnywkr In Chg Elctn-Con-Wkg CC Personnel Spec,Asst Truck Drvr,Heavy Admin Support Asst-BU Strucl Pntr CC StratAdvsr2,Engrng&Plans Rev Admin Staff Anlyst Human Svcs Prgm Supv,Sr Pmp Stat Maint Leadwkr Publc Relations Supv Lnwrkr-Asg Locator Enrgy Mgmt Anlyst,Asst Auto Mechanic Parking Enf Ofcr Admin Staff Anlyst Counslr Hearing Examiner,Dep Spay&Neuter Tech StratAdvsr1 * Passenger & Tugboat Op,Sr Electric Util Exec 3,Ofcr Vested Real Property Agent,Sr Civil Engrng Spec Supv Admin Spec I-BU Rec Cntr Coord Cblspl-Net Area Info Technol Prof B-BU Civil Engrng Spec,Asst III Drainage&Wstwtr Lead Wkr CII Admin Spec II-BU Elecl Engrng Spec,Asst III Strucl Pntr Total Service Retirements 133 26 41 18 37 34 37 25 47 28 7 15 9 30 26 24 19 25 37 30 36 32 34 7 21 21 26 33 37 6 12 24 14 5 32 35 27 15 18 25 22 20 307 360 193 245 119 209 313 267 214 253 321 309 69 0 186 337 183 345 240 105 135 103 242 86 262 214 164 275 267 241 243 77 228 280 40 345 5 218 341 164 172 190 56 67 65 69 65 66 53 72 67 67 64 66 58 63 61 66 68 65 62 58 65 71 64 63 61 61 56 59 62 62 69 66 61 58 66 53 68 64 67 67 56 Seattle City Employees’ Retirement System Statistical Section SEATTLE CITY EMPLOYEES’ RETIREMENT SYSTEM RETIRED MEMBERS DECEASED IN 2016 Name Akers,Timothy W Alvarez,Fidel Anderson, Richard L. Anderson, Rita M. Baglien,Raymond C Baker, Michael A Ballew, Gary W. Bell,Maurice M Boccamazzo, Frank Ralph Boden,James H Born, Brian Michael Bossert,Burt F. Bray,Oscar C Burns,Byron L Calico,Franklin A Cameron,Doris E CARLSON,KURTIS F. Chapman,Evelyn J Chesterman,Paul W Childress,Royce A Christensen,Steven A Christy,Teresa J Clark,Beverly B Clark,Charles R Clay,Iris Colacarro,Florence A Conrad,Frank A Couch,Jake E Daniel,James C Daum,Junella M Dean,Clarence L Demello, Judith L. Dennis, Robert M. Diggs,William D Dimaunahan,Ray Dobbs, Gary G. Donnor,Paul L Draper,Wallace M Dudman,Jack A Edgecombe,Melinda J Department Name SDOT K.C. Health SPU City Light Parks Police DPD PublicUtil City Light Fleets & Facilities City Light City Light Human Services SPU ESD Parks Dept SPU KC Health City Light Muni-Court Police DCLU Dual Member City Light Sea Center FAS Retired For Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Disability Service Service Disability Service Service Service Disability Service Service Service Service Service Service Service Service Service Service Service Service 134 Date Retired 8/1/1983 5/7/2011 1/1/2004 9/25/2002 5/1/1981 2/6/2010 5/2/2007 1/2/1998 10/14/2009 5/2/2014 1/9/2008 4/6/2005 2/1/1982 3/20/2012 1/1/1982 8/1/1981 1/5/2000 1/6/2006 11/25/2011 6/3/1997 6/17/2015 8/3/2004 1/1/1987 1/1/1976 9/15/2012 6/1/1979 6/1/1987 10/1/1973 8/1/1986 8/1/1981 5/22/2001 1/14/2004 7/11/2007 8/1/1989 9/10/1996 5/1/2003 1/23/1998 11/1/1980 7/1/1980 9/11/2013 Date of Death 10/16/2016 11/14/2016 7/16/2016 8/17/2016 12/20/2016 5/25/2016 12/15/2016 7/26/2016 11/1/2016 10/24/2016 5/5/2016 11/1/2016 6/25/2016 2/9/2016 8/1/2016 6/20/2016 5/25/2016 11/19/2016 3/7/2016 12/1/2016 2/7/2016 6/6/2016 12/4/2016 10/1/2016 12/3/2016 3/21/2016 7/30/2016 4/2/2016 12/23/2016 8/12/2016 4/30/2016 7/24/2016 3/27/2016 10/1/2016 9/13/2016 7/5/2016 6/19/2016 5/9/2016 1/5/2016 12/1/2016 Age at Death 88 71 81 93 97 70 72 83 72 64 70 67 97 57 93 97 72 80 56 86 58 68 91 91 58 100 84 83 96 93 76 74 75 89 79 69 86 91 98 65 Seattle City Employees’ Retirement System Elenich,Frank A Evens,Loyd C Fenker, Lois A Fischer,Bernard A Foster, Jane A. Freeman,John Freimund,Robert E FRYE,WILBERDEL Gallipeau,Guy H Garman,Gerald R Getchman,Geoffrey H Gordon,Donald Gotidoc, Edgardo L Gran,William D Groncznack, Robert P. Gwilym,Edward T Hall,Shirley C Hanna, Barbara A. Hardin,Stevaunt S Harewood-Potter,Angela B Harris,John P Hedley,Anne P HENDERSON,ROBERT R Hill,Eino H Hoffmeister,Martha 92405059 Howe, Colleen Huchala,Beverly L Hulbert, Jack E Iams,Shirley A Jacoby,Terrance E Jarvis,Cecil E 97002042 Jenkins,Ralph A Johnson,Randall K Johnson-Holt,Pauline Karmil,Robert J Kelly, Thomas D. Kemmerer,Harold W Kennard,Daniel B. Kijima,Kiku Kimbrough, Jerry L. Kuhnly,Herbert W Lasko,Kerry A Lasser,Robert E Laughlin,Jay B Library SDOT DCLU City Light Municipal Courts Police Municipal Courts Vested Light City Light Municipal Courts Parks Dept City Light SPU Light City Light Library ESD FAS City Light SPU City Light Parks City Light Parks Park SPU Statistical Section Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service 8/1/1983 10/1/1981 8/4/2009 5/1/1994 9/18/2002 9/6/2001 6/1/1979 9/8/1999 4/1/1994 10/1/1992 2/28/2011 11/1/1993 2/4/2009 7/1/1988 10/12/2007 8/1/1994 3/15/2011 6/5/2002 1/1/1994 7/7/2015 6/1/1982 2/10/2016 6/5/1999 12/1/1972 11/1/2016 8/30/2016 2/10/2016 7/4/2016 3/18/2016 4/21/2016 3/22/2016 2/1/2016 9/16/2016 6/15/2016 4/2/2016 4/19/2016 9/1/2016 5/28/2016 12/1/2016 5/27/2016 10/17/2016 8/2/2016 3/1/2016 7/6/2016 6/7/2016 2/12/2016 1/29/2016 9/4/2016 89 88 67 79 75 74 94 78 87 78 69 84 69 92 71 83 88 85 78 63 86 69 78 99 Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service 3/1/1983 4/1/1996 6/1/1985 5/28/2010 7/1/1989 3/1/1990 3/1/1986 3/1/1990 6/2/1998 3/1/1980 2/1/1994 2/12/2004 8/1/1987 6/23/1999 4/1/1989 10/1/2002 10/1/1984 7/13/2005 3/19/1997 11/6/2010 6/21/2016 6/13/2016 8/15/2016 5/13/2016 10/6/2016 11/23/2016 8/28/2016 2/9/2016 10/21/2016 3/16/2016 2/20/2016 3/26/2016 6/1/2016 5/1/2016 1/1/2016 11/10/2016 8/14/2016 5/26/2016 11/19/2016 5/28/2016 90 82 84 70 89 88 95 85 71 97 84 73 87 74 96 73 84 67 86 65 135 Seattle City Employees’ Retirement System Lehman,John D Lindblom,Michael H. Lowe,Sharon P Luoma,Robert J Lynch, Timothy J. Maltby,Nancy E Marshall,Kevin W Martos, James R. C. Masunaga,Marie K. Matheson,Joan P Mayes, Jean S McAlerney,John K Mcfarlane,John G Meyer,Allen L Miller,Avis D Moffitt,Michael Moimoi,Kalolaine A Moore,Loretta R Mount,D'Anne Neely,James G Nelson, Frank R Nelson,Barbara A Nelson,Warren J Nemesio, Ordonez O'brien,Patricia J Orsi,Catherine A Pan,Ellen C Patterson,Marion PAVEK,MARY E. Pedrin,Arlette G Person, Mel Ponshock,Richard E Pumphrey Jr., Donald H Putnam,R Douglas Russell, Douglas G. Rustia, Agueda Sakazaki,Florence T Salley,Sylvester T Selles,Robert D Shanafelt,William C Shannafelt,Deane K Shell, Charles W. Shew,Harold Shreve,John 08324378 Smith, Michael A Finance Library City Light City Light Seattle Center SDHR Info Tech Health Light City Light Library Personnel DoIT SDOT KC Health Library Vested K.C. Health Library City Light SPU SDOT SPU Sea Center City Light SDOT Vested Fleets & Facilities Statistical Section Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Disability Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service 136 5/1/1987 12/1/1995 6/29/2013 4/1/1992 5/28/2003 8/1/1978 12/30/2015 6/11/2008 10/3/1997 4/3/2015 4/15/2009 6/3/1998 5/1/1994 7/1/1986 3/1/1978 9/9/2000 6/16/2004 7/1/1993 12/29/2012 2/1/1988 9/16/2009 3/1/1990 2/1/1985 2/14/2004 12/1/1991 3/9/2015 1/1/1992 9/10/1996 1/1/2000 4/1/1994 5/3/2003 3/1/1993 1/6/2010 3/1/1989 4/4/2007 10/1/2002 8/1/1995 7/16/2014 6/1/1985 1/23/1998 5/1/1995 8/15/2008 1/3/1976 1/1/1981 9/10/2010 2/2/2016 5/10/2016 8/3/2016 6/20/2016 9/3/2016 5/19/2016 12/1/2016 9/27/2016 5/6/2016 5/31/2016 12/1/2016 4/4/2016 5/31/2016 2/9/2016 5/14/2016 5/5/2016 10/26/2016 1/30/2016 12/5/2016 12/24/2016 8/13/2016 7/3/2016 12/29/2016 3/30/2016 2/23/2016 3/14/2016 6/4/2016 2/13/2016 5/31/2016 3/8/2016 10/23/2016 10/6/2016 1/28/2016 12/17/2016 4/28/2016 2/1/2016 9/1/2016 7/1/2016 4/24/2016 11/24/2016 12/30/2016 10/17/2016 6/16/2016 10/11/2016 4/6/2016 91 76 69 90 77 89 59 75 83 64 74 82 80 94 102 73 67 99 68 84 69 76 94 79 89 58 86 81 75 87 75 89 74 92 87 92 88 58 94 88 87 73 89 97 71 Seattle City Employees’ Retirement System Smith,Gerald V Smith,Orville V Smith,Sherri F Soliman,Theresa M Soria,Fil D. Spore,Harold A Sterling, Barbara Stripling,Marie M 012550 Sund,Dolores G Taplin Jr,Irving Thomson,William David Thostenson,Alton Van Inwegen,Robert L Van Leeuwen,Edward P. Van Tuyl, Joyce B Veach,Ronald L. Warth,John F Watts,George B Welch,James I Wilder,Robert L Wilkinson,Maurice W Williams,Jonnie M Williams,Robert I Wirth,Gale F Woodhouse, Philip R Zelk,Allen I Zenk,Norman H 95302279 Ziegler,Joseph F Police Seattle Center City Light PublicUtil Police Library Municipal Courts Sea Center FAS SPU Statistical Section Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Service Average Age of Deceased Service Pensioner 82 Average Age of Deceased Disability Pensioner 79 Number of Service Pensioners Deceased 153 Number of Disability Pensioners Deceased Death Benefits for Deceased Active and Retired 4 165,300 Refunds Under Option “A” 4 Refunds Under Disability 0 137 7/1/1994 4/1/1987 9/10/2010 6/19/2006 11/4/1997 10/6/2004 1/1/1996 10/1/1978 3/1/1992 7/1/1995 9/1/1988 6/1/1974 1/1/1989 5/2/2000 7/1/2008 2/1/2007 3/1/1984 5/1/1984 3/1/1993 7/1/1994 8/1/1980 6/1/1990 5/1/1985 2/1/1987 1/5/2011 7/1/1990 1/14/1987 3/1/1989 10/1/2016 7/3/2016 5/1/2016 8/28/2016 11/28/2016 6/28/2016 12/2/2016 1/17/2016 9/1/2016 8/1/2016 9/23/2016 12/25/2016 11/22/2016 3/5/2016 3/26/2016 9/23/2016 10/11/2016 3/5/2016 11/27/2016 10/1/2016 5/16/2016 1/30/2016 10/1/2016 10/9/2016 1/12/2016 4/12/2016 11/16/2016 4/16/2016 COUNT 84 91 58 62 81 77 96 96 90 83 89 94 90 77 90 75 94 95 86 82 97 93 92 88 77 90 95 89 157 Seattle City Employees’ Retirement System Statistical Section DEATHS IN ACTIVE SERVICE DURING 2016 Member Aldridge,Andrea Marie Allen,Kendrick B Botz,Roxane M Carter,Dalrimple C Combs,Bradley D Daniel,Jimmie Fatuga,Adetokunbo Abiola Griffith,Nicholas Erling Guinasso,Joseph C Hess, Denise Jordan,Donald Edward McGill,Jayla J Pham,Kien Trung Robel,Janet N Rudolph,Elisabeth R Taylor,Frederick R Williams,Jeffrey D Yokoyama,Margaret Mary Position Admin Spec II Elevator Inspector(J) Grants&Contracts Spec,Sr Rec Attendant * StratAdvsr2,Utils-BU Rec Attendant Civil Engrng Spec,Sr Lnwkr Aprn Fin Anlyst Supv King County Executive2 Rec Attendant Maint Laborer Admin Spec I Admin Spec II Laborer Drainage&Wstwtr Coll Wkr Cl Usher 138 Department Dept of Const and Insp Dept of Const and Insp Human Services Parks Light Parks Seattle Public Utilities Light Finance King County Seattle Animal Shelter Parks Seattle Public Utilities Law Department Fire Department Parks Seattle Public Utilities Seattle Center Age 56 62 65 74 57 65 38 23 49 57 49 66 53 65 50 67 45 73 Count 18 Average Age 56 Seattle City Employees’ Retirement System Statistical Section DEATH BENEFIT SYSTEM For The Year Ended December 31, 2016 All active members and those retired members who so elect are covered by the Death Benefit System. The Death Benefit System is similar to a life insurance policy and pays $2,000 to the beneficiary of an active or retired member. The annual premium for each member is $12, with the City matching this amount. Any additional funds needed to fund the Death Benefit System come from the undistributed earnings of the Retirement System. There were 18 payouts for deaths in active service and 157 claims from retired employees - a total of 175 claims. This compares with 10 deaths in active service in 2015, and 142 claims from retired employees - a total of 152. The claims totaled $280,000 in 2014 and $212,500 in 2015. Income from Active and Retired Employees: $ 153,698 Total from Employer Funds $ 153,698 Total paid into Death Benefit Reserve $ 307,395 Less: Death Benefit Claims – 2015 $ 165,300 Total 2015 Addition to Operating Fund Balance $ 142,095 Income from Employers: Seattle City Light $ 33,358 General Fund 33,228 Seattle Public Utilities 22,146 Seattle Parks Department 15,933 Transportation 13,374 9,732 Library 10,806 Administrative Services Seattle Center 5,334 Planning and Development 6,126 King County/Metro 3,264 396 Employees’ Retirement System 139 Benefit Calculation In accordance with the Seattle Municipal Code, the retirement benefit is the higher of the results of the two formulas shown below: Service Retirement Formula: (years of City service) x (yearly percentage factor) x (average of the highest 52 consecutive pay periods of pay). The maximum years of service used by the formula is 30. Contribution-Based Formula (2 Times Match): The employee contribution plus interest multiplied by two, used to purchase a lifetime annuity. These calculations determine the “straight” or unmodified benefit. There are retirement options that offer a lower benefit amount in exchange for different kinds of guaranteed payments. See the retirement handbook at www.seattle.gov/retirement for more information. Note that there are two kinds of service used in the above calculations: City service is the retirement-eligible hours you earn during your employment with the City. This includes all regular hours and excludes overtime. City service is used in the Service Retirement Formula. Eligibility service is your City service together with any service you have earned from a system that has portability with SCERS. Portable systems include the cities of Spokane and Tacoma, and most systems operated by the Washington State Department of Retirement Systems. Eligibility service is used to determine the percentage factor for the service retirement formula. The table below shows how the yearly percentage factor in the Service Retirement Formula is determined based on the number of years of retirement eligibility service credit and age at retirement. Years of Retirement Eligibility Service Credit 30 or more 29 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 Yearly Percentage Factors used in the Service Retirement Formula Any 2.0 52 2.0 2.0 2.0 1.9 1.8 1.7 1.6 1.5 1.4 1.3 1.2 Age at Retirement 55 56 57 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 1.9 2.0 2.0 1.8 1.9 2.0 1.7 1.8 1.9 1.6 1.7 1.8 1.5 1.6 1.7 1.52 1.52 1.52 1.52 1.52 1.52 1.52 Not Eligible To Retire 1.52 1.52 1.52 53 2.0 2.0 2.0 2.0 1.9 1.8 1.7 1.6 1.5 1.4 1.3 54 2.0 2.0 2.0 2.0 2.0 1.9 1.8 1.7 1.6 1.5 1.4 58 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 1.9 1.8 1.58 1.58 1.58 1.58 1.58 1.58 1.58 1.58 1.58 1.58 140 59 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 1.9 1.64 1.64 1.64 1.64 1.64 1.64 1.64 1.64 1.64 1.64 60 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 61 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 1.76 1.76 1.76 1.76 1.76 1.76 1.76 1.76 1.76 1.76 62 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 1.82 1.82 1.82 1.82 1.82 1.82 1.82 1.82 1.82 1.82 1.82 1.82 1.82 1.82 1.82 63 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 1.88 1.88 1.88 1.88 1.88 1.88 1.88 1.88 1.88 1.88 1.88 1.88 1.88 1.88 1.88 64 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 1.94 1.94 1.94 1.94 1.94 1.94 1.94 1.94 1.94 1.94 1.94 1.94 1.94 1.94 1.94 65 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 Years of Retirement Eligibility Service Credit 30 or more 29 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5