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Nvek <br /> PROCESS �OR1O` <br /> Part 2 <br /> Investment Discount Rate <br /> GASB Statement No. 45 sets forth standards for determining the interest discount rate. It states <br /> that the rate selected by the employer to value the costs and liabilities of such an OPEB plan <br /> "should be the estimated long-term investment yield on the investments that are expected to be <br /> used to finance the payment of benefits, with consideration given to the nature and mix of <br /> current and expected investments . . . " <br /> For an unfunded OPEB plan, the pool of assets used to determine the discount rate is usually all <br /> unrestricted assets of the employer, except for unusual circumstances . <br /> Post Retirement Benefit Changes <br /> Changes in the underlying benefits will be reflected in the valuation . The OPEB liabilities will <br /> be changed (either reduced or increased) to reflect changes in the underlying benefit design of <br /> the plan. <br /> Actuarial Assumptions Associated with the Method <br /> Whether the amortization is level dollar or percent of pay and whether it is open or closed, are <br /> decisions ultimately made by the County. GRS will discuss the issues generally with County <br /> officials and provide results according to their decisions . <br /> ANALYSIS OF METHODS <br /> Provide an analysis of allowed actuarial and amortization methods with the pros and cons of each <br /> method and recommend the most appropriate or commonly used one or two methods for this type of <br /> study. <br /> Determination of Cost Method <br /> Entry Age Normal Cost Method is the most commonly used cost method in pensions and <br /> OPEBs . But, the true cost of any plan is the ultimate benefits paid. A cost method merely <br /> creates the pattern for the contributions that will accumulate to ultimately pay for those benefits. <br /> Thus, the most desired actuarial cost method is the one that most closely matches the funding <br /> policy of Indian River County. For contributions to be most stable as a dollar amount, we would <br /> look at entry age normal, level dollar cost. If Indian River County is looking for contributions <br /> that are stable as a percent-of-pay, we would look at entry-age normal, level-percent-of-pay. <br /> Perhaps Indian River County would like contributions to be low in these early years and then <br /> grow more quickly later. Each cost method develops costs differently and can be chosen to suit <br /> the financial objectives of Indian River County. <br /> G `' Gabriel Roeder Smith & Company 37 <br />