California Public Employees Retirement System

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California Public Employees Retirement System
OPEB Pre-funding through CalPERS Ken
Marzion Assistant Executive Officer Actuarial and
Employer Services
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Discussion Overview

• New law
• Why pre-fund?
• What is CalPERS providing?
• Trust fund elements
• Summary

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New Law

• AB 554 allows ALL California government agencies
  to participate in the California Employers
  Retiree Benefits Trust, the CalPERS OPEB fund.
• Became law on Jan 1, 2008
• Permissive legislation agencies elect to join

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Why Pre-fund OPEB Liabilities

• Pre-funding minimizes future cost impacts
• Agencies that pre-fund use higher discount rate
  lower liabilities and ARC
• Investment returns pay 75 of CalPERS pension
  benefits
• Bond rating agencies expect an OPEB plan

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State of California Valuation Results
Relies on CalPERS OPEB Actuarial Assumption
Model ARC based on 30 year amortization
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CalPERS Investment Performance
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California Employers Retiree Benefit Trust Fund
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California Employers Retiree Benefit Trust Fund
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Contracting Process Time
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Why Pre-fund OPEB Liabilities?

• Pre-funding minimizes future cost impacts
• Agencies that pre-fund use higher discount rate
  lower liabilities and ARC
• Investment returns pay 75 of CalPERS pension
  benefits
• Bond rating agencies expect an OPEB plan

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Questions?
Contact the CalPERS CERBT program E-mail to
core4u_at_calpers.ca.gov
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Employer Advisory Group

• 20th District Agricultural Association
• Administrative Office of the Courts
• Bay Area Rapid Transit
• City of Brea
• City of Costa Mesa
• City of Fremont
• City of Glendale
• City of Hermosa Beach
• City of Lincoln
• City of Mission Viejo
• City of Sacramento
• City of San Mateo
• City of Santa Ana
• City of South Pasadena

• City of Sunnyvale
• County of Riverside
• County of Santa Clara
• CSU Chancellor's Office
• Las Virgenes Municipal Water District
• Los Angeles County Office of Education
• Northern California Special Districts Insurance
  Authority
• Orange County Schools
• Sacramento County Schools
• San Bernardino County Schools
• San Ramon Valley Unified School District

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CalPERS IT Project

• Project to develop a new pension and health
  information system (turned on in late 2009)
• Improves Employers and Members ability to
  interact with CalPERS over the Internet
• Provides faster more reliable cost effective
  service
• Requires employer business process changes

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Project Benefits

• Improved functionality for reporting, correcting
  and monitoring data
• Faster posting of information
• Immediate upfront notification of errors for
  correction
• Easier ability to make adjustments via
  self-service
• Ability to submit information 24/7

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Project Benefits

• Expanded self service functionality on the web
• Anytime access to information
• Request contract amendment valuations
• Perform contract amendment process
• Track status of various requests (i.e. contract
  amendment process)
• Receive notifications regarding changes to your
  employees and retirees

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Project Benefits

• Expanded set of functionality on the Web
• Retirement planning tools using current data
• Anytime access to view contributions, service,
  service purchase payments
• Make service credit purchase elections
• Monitor status of requests

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Project Benefits

• More accurate benefit payments at inception
• Online form processing reducing dependence on
  paper
• Proactive notifications to retirees of health
  care coverage changes

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Timeline

• December 2007 Data sheet for budget preparation
• May 2008 Communicate specific changes necessary
  to interact with CalPERS (e.g. file formats)
• October 2008 Conduct demonstrations and present
  implementation plan at CalPERS Educational Forum
• Winter and Spring 2009 testing
• Summer and Fall 2009 training
• Fall 2009 implementation