MASSACHUSETTS WATER RESOURCES AUTHORITY OTHER POSTEMPLOYMENT

MASSACHUSETTS WATER RESOURCES AUTHORITY

OTHER POSTEMPLOYMENT BENEFITS PROGRAM

Associate, Society of Actuaries

ACTUARIAL VALUATION

Prepared by:

Christopher E. Bean, ASA, MAAA

January 1, 2012

Linda L. Bournival, FSA, EA, MAAA

February 21, 2013

Member, American Academy of Actuaries

DBR Group, Inc.

KMS Actuaries, LLC

Enrolled Actuary


and

Fellow, Society of Actuaries

ACTUARIAL CERTIFICATION 1

SECTION 1 - SUMMARY 2

SECTION 2 - PRINCIPAL VALUATION RESULTS 6

TABLE 2.1 - OPEB TRUST ASSETS

TABLE 2.2 - ACTUARIAL PRESENT VALUE OF FUTURE BENEFITS

TABLE 2.3 - ACTUARIAL ACCRUED LIABILITY

TABLE 2.4 - NORMAL COST

TABLE 2.5 - ANNUAL REQUIRED CONTRIBUTION

SECTION 3 - GASB 45 ACCOUNTING DISCLOSURE 11

SECTION 4 - FORECASTS 12

TABLE 4.1 - UNFUNDED PROGRAM

TABLE 4.2 - FULLY FUNDED PROGRAM

TABLE 4.3 - 10-YEAR FORECAST OF ANNUAL OPEB COST

AND NET OPEB OBLIGATION

SECTION 5 - SENSITIVITY TO TREND RATE & DISCOUNT RATE 16

TABLE 5.1 - CHANGE IN TREND RATE - ACTUARIAL ACCRUED LIABILITY

TABLE 5.2 - CHANGE IN TREND RATE - NORMAL COST

TABLE 5.3 - CHANGE IN DISCOUNT RATE - ACTUARIAL ACCRUED LIABILITY

TABLE 5.4 - CHANGE IN DISCOUNT RATE - NORMAL COST

SECTION 6 - PLAN PROVISIONS 20

SECTION 7 - ACTUARIAL ASSUMPTIONS AND METHODS 22

SECTION 8 - PLAN MEMBER INFORMATION 25

TABLE 8.1 - ACTIVE EMPLOYEES BY AGE and YEARS OF SERVICE

TABLE 8.2 - RETIRED PLAN PARTICIPANTS and SURVIVORS

SECTION 9 - GOVERNMENTAL ACCOUNTING STANDARDS BOARD 28

STATEMENT NO. 45 GLOSSARY OF TERMS

SECTION 10 - RESULTS BY SUBGROUP 30

TABLE OF CONTENTS

Massachusetts Water Resources Authority Postemployment Benefits Other Than Pensions

Actuarial Valuation as of January 1, 2012

Respectfully submitted,

603-792-9494

Christopher E. Bean, ASA, MAAA


508-628-9022

Linda L. Bournival, FSA, EA, MAAA


This report is intended for the sole use of the Massachusetts Water Resources Authority and is intended to

provide information to comply with the stated purpose of the report. It may not be appropriate for other

purposes.

The undersigned credentialed actuaries are Members of the American Academy of Actuaries and together

meet the Qualification Standards of the American Academy of Actuaries necessary to render the actuarial

opinion contained herein. They are available to answer any questions with regard to this report.

This valuation was performed using employee data and financial information provided to us by the Authority.

Although we did not audit the data used in the valuation, we believe that the information is complete and

reliable.

ACTUARIAL CERTIFICATION

This report presents the results of the Actuarial Valuation for the Massachusetts Water Resources Authority

Postemployment Benefits Other Than Pensions as of January 1, 2012. The report presents the accounting

and financial reporting information in accordance with Statement Number 45 of the Governmental

Accounting Standards Board (GASB 45).

This report was completed in accordance with generally accepted actuarial standards and procedures, and

conforms to the Code of Professional Conduct of the American Academy of Actuaries. The actuarial

assumptions other than those explicitly applicable to the postemployment benefit plans are consistent with

those used by the Massachusetts Water Resources Authority Retirement System's actuaries for the

Retirement System pension valuations.

Page 1



after attaining age 55 with 10 or more years of service or any age with 20 or more years of service

for Group 1 employees hired before April 2, 2012.

after attaining age 60 with 10 or more years of service for Group 1 employees hired on or after April

2, 2012.

Medical coverage is available in the future to employees who terminate employment with at least ten years of

service and have accumulated contributions in the MWRA Retirement System. Further, medical coverage

continues to the spouse after the death of the retiree provided the spouse makes the required contributions.

SECTION 1 - SUMMARY

ACTUARIAL VALUATION

As of January 1, 2012, there are 1,149 active employees who may be eligible for benefits in the future, 478

retired employees, covered spouses and survivors who are currently receiving benefits and 51 terminated

vested employees eligible to receive benefits in the future. Coverage is for individuals and families or

individuals and spouses depending on the coverage selected.

The Governmental Accounting Standards Board (GASB) is responsible for establishing accounting standards

for governmental entities. Calculations developed in accordance with GASB standards are required when

providing financial statements.

GASB believes that postemployment benefits are a form of deferred compensation whose cost should be

recognized while the employee actually renders services rather than when the actual benefits are paid, many

years later. Ideally under the GASB standard the entire postemployment liability is recognized by the time an

active participant begins to receive postemployment benefits. GASB 45’s focus is on postemployment

benefits other than pensions, such as medical, dental and life insurance benefits. Unlike pensions where

sponsors are pre-funding for benefits due in the future, the impact of GASB 45 will be to significantly increase

cash pay-as-you-go expense.

The effective date for GASB 45 is a function of the Authority's total annual revenues in the first fiscal year

ending after June 15, 1999. We understand that this is your fiscal year that ended June 30, 1999, and that

your related revenues were greater than $100 million. As a result, the Authority was required to comply with

GASB 45 for the fiscal year ending June 30, 2008.

BACKGROUND

GASB 45

The Massachusetts Water Resources Authority provides postemployment medical benefits to Authority

retirees and their covered dependents. The Authority provides benefits for any employee who retires:

Page 2



SECTION 1 - SUMMARY

Valuation Date January 1, 2012 January 1, 2010*

Summary of Member Data

Active Members 1,149 1,105

Average Age 52.0 N/A

Average Service 18.2 N/A

Retired Members and Survivors 324 368

Average Age 67.1 N/A

Covered Spouses of Retired Members 154 included above

Terminated Vested Members 51 49

Discount rate 4.25% 4.25%

Actuarial Accrued Liability $197,190,748 $192,096,039

Normal Cost $7,547,386 $9,391,532

Assets $0 $0

Unfunded Actuarial Accrued Liability $197,190,748 $192,096,039

Annual Required Contribution $15,720,379 $17,433,262

Net OPEB Obligation/(Asset) - EOY $88,482,546 $60,241,123

* From the January 1, 2010 valuation report prepared by Stone Consulting, Inc.

SUMMARY OF PRINCIPAL RESULTS

It is important to understand that even though the Authority charges participants for coverage based on the

individual or family premium schedule presented in our report, in developing a liability for the Authority, GASB

requires that these premiums be adjusted as noted above. The plan premium represents less than 100% of

the actual cost that is required to be recognized under the GASB standard.

Prior to GASB 45, the annual cost recognized was the annual premiums or benefits paid plus administrative

expenses less any participant contributions paid towards the coverage. Under GASB 45, an annual cost for

postemployment coverage is developed for any person who is currently receiving or who is currently actively

employed or terminated with vested rights and may be eligible to receive benefits in the future. In developing

the GASB 45 cost for the Massachusetts Water Resources Authority, the payment of future benefits is

determined using the current schedule of premiums under the plans provided by the Group Insurance

Commission modified to reflect the population and the fact that actual healthcare expenses are higher as

individuals age. These age-adjusted costs are increased in the future under the annual healthcare cost trend

rate assumptions. The age-adjusted per capita costs utilized in this valuation are detailed in Section 7,

Actuarial Assumptions and Methods.

Page 3



SECTION 1 - SUMMARY

Actives: $146,174,645

51,016,103

Total: $197,190,748

We have provided results based on a discount rate of 4.25%. As shown in Table 4.3 of Section 4, the Annual

OPEB Cost for the fiscal year ending June 30, 2013 under GASB 45 is $16,044,411 and the estimated

Annual OPEB Cost for the fiscal year ending June 30, 2014 under GASB 45 is $17,235,839.

The accumulated Net OPEB Obligation as of June 30, 2013 is $88,482,546 and the estimated Net OPEB

Obligation as of June 30, 2014 is $102,003,505.

The Actuarial Accrued Liability (AAL) as of January 1, 2012 is $197,190,748. The AAL by status breakdown

is shown below:

Retirees, Beneficiaries and Surviving Spouses and Term Vesteds:

ACTUARIAL ASSUMPTIONS

The most important assumption for GASB 45 is the discount rate, which is used to discount future benefits to

current age. GASB 45 requires that the discount rate accurately reflects the rate of return on assets

dedicated to paying the retiree medical benefits. This means that a traditional pay-as-you-go system, which

pays benefits from the Authority's annual budget and not a dedicated trust, must use a discount rate close to

the rate of return on cash. Full pre-funding by use of a dedicated trust with a mixture of stocks and bonds

can employ a higher discount rate that accurately reflects the expected return on trust assets dedicated to

pay retiree medical benefits. For the Massachusetts Water Resources Authority, we selected a 4.25%

discount rate to reflect a pay-as-you-go system with an expected return close to the rate of return on cash.

CHANGES

RESULTS

The assumption for mortality used in this valuation has changed from that used in the January 1, 2010

valuation. All other assumptions remained the same and are outlined in Section 7.

the mortality table was changed from the RP-2000 Mortality projected to 2010 using Scale AA to the RP-

2000 Mortality Table projected to 2012 using Scale AA.

Page 4



SECTION 1 - SUMMARY

12/31/2010 12/31/2011

1. $192,096,039 $206,687,496

2. 9,391,532 9,790,672

3. (3,293,314) (3,985,758)

4. 8,493,239 9,115,625

5. $206,687,496 $221,608,035

6. $197,190,748

7. $24,417,287

1

2

3

Interest equals 4.25% times (1. plus 2. plus 1/2 times 3.)

The Gain over the two-year period January 1, 2010 through December 31, 2011 is the difference

between the Expected Actuarial Accrued Liability as of December 31, 2011 and the Actual Actuarial

Accrued Liability as of this valuation.

Projection of Actuarial Accrued Liability as of

Entries shown for December 31, 2010 (and expected benefit payments shown for December 31, 2011)

are from the January 1, 2010 actuarial valuation.

Whenever the service of a retired employee is attributable to service in more than one governmental unit and

the retired employee receives a healthcare premium contribution, Section 9A1/2 of M.G.L. Section 32B

provides for reimbursement by other governmental units for the portion of healthcare premium contributions

that corresponds to the percentage of the retiree's creditable service that is attributable for each

governmental unit. The other governmental units shall be charged based on the Massachusetts Water

Resources Authority's contribution rate or the contribution rate of the first employer, whichever is lower.

Normal Cost, prior valuation1

Expected Benefit Payments1

Interest2

Expected Actuarial Accrued Liability = 1. + 2. - 3. + 4.

Actual Actuarial Accrued Liability

Gain/(Loss)3 = 5. - 6.

The actuarial gain of $24,417,287 was mainly the result of the reduction in the implicit rate subsidy.

For purposes of this valuation, we have not taken into account any prior service rendered at other

Massachusetts entities for current or future retirees for the Massachusetts Water Resources Authority nor

have we taken into account any service rendered by former Massachusetts Water Resources Authority

employees currently working at or retired from other Massachusetts entities that may notify the

Massachusetts Water Resources Authority of reimbursement due for former Massachusetts Water Resources

Authority employees.

In performing the actuarial valuation, various assumptions are made regarding future premium rates,

mortality, retirement and withdrawal rates as well as investment returns. A comparison of the results of the

current valuation and the prior valuation is made to determine how closely actual experience relates to

expected. Below is the development of the Actuarial Gain/(Loss) for the current period:

Actuarial Accrued Liability, prior valuation1

ACTUARIAL GAIN/LOSS ANALYSIS

REIMBURSEMENT FOR HEALTHCARE PREMIUM CONTRIBUTIONS

Page 5



Market Value of Assets

Fiscal Year Ending June 30, 2012

Assets as of July 1, 2011 $0

Contribution Receivable $0

Adjusted Assets, July 1 $0

Employer Contributions

Paid Premiums $2,318,652

OPEB Trust Deposits 0

Total Employer Contributions $2,318,652

Benefits Paid (2,318,652)

Expenses 0

Investment Earnings 0

Assets as of June 30, 2012 $0

Contribution appropriated and made 0

Assets as of June 30, 2012 0

SECTION 2 - PRINCIPAL VALUATION RESULTS

The Actuarial Value of Plan Assets is equal to the market value. The asset activity during the current fiscal

year is as follows:

TABLE 2.1 - OPEB TRUST ASSETS

Section 20 of M.G.L. Chapter 32 allows municipal entities to establish an OPEB trust for purposes of

accumulating assets to prefund the OPEB liabilities. We understand that as of the valuation date,

the Massachusetts Water Resources Authority has not established an irrevocable trust for the

purposes of prefunding OPEB liabilities.

Page 6




Pay-As-You-Go Full Pre-Funding

Discount Rate 4.25% 7.75%

Current Active Employees

Pre-Medicare Gross Benefit $81,654,194 $53,961,486

Pre-Medicare Participant Contributions (12,104,573) (8,030,379)

Net Pre-Medicare Benefit $69,549,621 $45,931,107

Post - Medicare Gross Benefit $184,846,414 $81,599,870

Post - Medicare Participant Contributions (33,800,837) (15,253,180)

Net Post - Medicare Benefit $151,045,577 $66,346,690

Total Current Active Employees $220,595,198 $112,277,797

Current Retirees and Term Vesteds







Total Current Retirees and Term Vested $51,016,103 $33,216,511

Total Actuarial Present Value of Future Benefits $271,611,301 $145,494,308

The Actuarial Present Value of Future Benefits is the present value of the cost to finance benefits payable in

the future. Below is the Actuarial Present Value of Future Benefits assuming a discount rate of 4.25%, the

rate of return on cash, and 7.75%, the rate of return on a dedicated trust if the Authority were to fully pre-

fund benefits:

TABLE 2.2 - ACTUARIAL PRESENT VALUE OF FUTURE BENEFITS

Page 7





















Total Current Retirees and Term Vesteds $51,016,103 $33,216,511

Total Actuarial Accrued Liability (AAL) $197,190,748 $112,521,263

The Actuarial Accrued Liability is the portion of the Actuarial Present Value of Future Benefits which is

allocated to all periods prior to a valuation year and therefore is not provided for by future Normal Costs.

Below is the Actuarial Accrued Liability assuming a discount rate of 4.25%, the rate of return on cash, and

7.75%, the rate of return on a dedicated trust if the Authority were to fully pre-fund benefits:

TABLE 2.3 - ACTUARIAL ACCRUED LIABILITY

Page 8








Pre-Medicare Participant Contributions (422,840) (282,775)



Post - Medicare Participant Contributions (1,145,343) (523,491)




Pre-Medicare Gross Benefit $0 $0

Pre-Medicare Participant Contributions 0 0

Net Pre-Medicare Benefit $0 $0

Post - Medicare Gross Benefit $0 $0

Post - Medicare Participant Contributions 0 0

Net Post - Medicare Benefit $0 $0

Total Current Retirees and Term Vesteds $0 $0

Total Normal Cost (NC) $7,547,386 $3,893,827

TABLE 2.4 - NORMAL COST

The Normal Cost is the portion of the Actuarial Present Value of Future Benefits which is attributed to

services rendered by active employees in the current year. Below is the Normal Cost assuming a discount

rate of 4.25%, the rate of return on cash, and 7.75%, the rate of return on a dedicated trust if the Authority

were to fully pre-fund benefits:

Page 9





4.25% 7.75%

1. Normal Cost

a. Normal Cost, beginning of year $7,547,386 $3,893,827

b. Interest on 1.a. at the Discount Rate 320,764 301,772

c. Normal Cost, end of year $7,868,150 $4,195,599

2. Unfunded Actuarial Accrued Liability

a. Actuarial Accrued Liability $197,190,748 $112,521,263

b. Actuarial Value of Plan Assets 0 0

c. Unfunded Actuarial Accrued Liability $197,190,748 $112,521,263

3. Amortization of Unfunded Actuarial

Accrued Liability

a. Unfunded Actuarial Accrued Liability $197,190,748 $112,521,263

b. Amortization Period in years 30 30

c. Factor Increasing Rate 3.25% 3.25%

d. Amortization Factor 26.18 17.29

e. Amortization Amount (3.a. / 3.d.) $7,532,114 $6,507,881

f. Interest on 3.e. at the Discount Rate 320,115 504,361

g. Amortization Amount, end of year $7,852,229 $7,012,242

5. Annual Required Contribution (1.c. + 3.f.) $15,720,379 $11,207,841

6. $75,359,601 N/A

7. $3,202,783 N/A

8. ($2,878,751) N/A

9. $16,044,411 N/A

*Net OPEB Obligation as of June 30, 2012, as developed in the January 1, 2010 valuation and

disclosed in the MWRA June 30, 2012 Financial Statements.

Net OPEB Obligation/(Asset), beginning of year*

Interest on Net OPEB Obligation at 4.25%

Adjustment to Annual Required Contribution at 4.25%

Annual OPEB Cost (5. + 7. + 8.)

Under GASB 45, the Annual Required Contribution (ARC) of the employer equals the Normal Cost plus a

provision for amortizing the Unfunded Actuarial Accrued Liability. We have assumed increasing dollar

amortization over the maximum acceptable amortization period of 30 years. For the period beginning

January 1, 2012, the ARC, calculated under the parameters of this actuarial valuation, would be:

Discount Rate

TABLE 2.5 - ANNUAL REQUIRED CONTRIBUTION

Page 10



Fiscal Year Ending 6/30/2013 6/30/2012* 6/30/2011*

Discount rate 4.25% 4.25% 4.25%

1. Annual Required Contribution $15,720,379 $19,150,806 $17,433,262

2. Interest on Net OPEB Obligation 3,202,783 2,560,248 1,958,053

3. Adjustment to annual required contribution (2,878,751) (2,606,818) (1,928,708)

4. Annual OPEB cost/(expense) $16,044,411 $19,104,236 $17,462,607

5. Employer contributions (including subsidy) (2,921,466) (3,985,758) (3,293,314)

6. Change in Net OPEB Obligation $13,122,945 $15,118,478 $14,169,293

7. Net OPEB Obligation (Asset) - beginning of year $75,359,601 $60,241,123 $46,071,830

8. Net OPEB Obligation (Asset) - end of year $88,482,546 $75,359,601 $60,241,123

Fiscal Year

Ended

Annual OPEB

Cost

Percentage of

Annual OPEB

Cost

Contributed

Net OPEB

Obligation

6/30/2013 16,044,411 18.2% 88,482,546

6/30/2012* 19,104,236 20.9% 75,359,601

6/30/2011* 17,462,607 18.9% 60,241,123

Actuarial

Valuation

Date

Actuarial

Value of

Assets

(a)

Actuarial

Accrued

Liability

(b)

Unfunded

AAL (UAAL)

(b-a)

Funded

Ratio

(a/b)

Covered

Payroll

(c)

UAAL as a

Percentage

of Covered

Payroll

((b-a) / c)

1/1/2012 0 197,191 197,191 0.00% 82,679 238.5%

1/1/2010 * 0 192,096 192,096 0.00% 81,372 236.1%

1/1/2008 * 0 180,833 180,833 0.00% 79,298 228.0%

1/1/2006 * 0 154,449 154,449 0.00% 72,476 213.1%

* From January 1, 2010 actuarial valuation as disclosed in MWRA Financial Statements as of June 30, 2012.

SECTION 3 - GASB 45 ACCOUNTING DISCLOSURE

GASB 45 requires disclosure of the annual OPEB cost, the Net OPEB Obligation and the Schedule of Funding Progress. In

addition, information about the Actuarial Methods and Assumptions used in the valuation and a summary of the

Substantive Plan Provisions are disclosed, which are provided in Section 6 and Section 7, respectively.

Schedule of Funding Progress (Dollars in Thousands)

Plan History

Annual OPEB Cost and Net OPEB Obligation

Page 11



Unfunded Actuarial Accrued Liability (UAAL) equals the AAL less Assets.

the Annual Required Contribution (ARC) is the sum of the Normal Cost with Interest and the Amortization

Amount with Interest.

The assumed discount rate is 4.25%.

No additional funding is made as contributions are made to fund the expected benefit payments only.

Table 4.1 is based on funding the expected benefit payments on a pay-as-you go basis.

Assets are assumed to grow annually at the selected discount rate plus Additional Funding amounts

made at the end of each fiscal year.

Actuarial Accrued Liability (AAL), end of year, equals AAL, beginning of year, plus Normal Cost less

Expected Benefit Payments plus interest on these items.

Amortization Amount with Interest is the amount necessary to amortize the Unfunded Actuarial Accrued

Liability over 30 years at a discount rate of 7.75% on a closed amortization basis. The closed

amortization period is 30 years at year one declining to zero after 30 years.

Assumes Additional Funding of the excess of the ARC over the Expected Benefit Payments.

Table 4.2 is based on fully funding the Annual Required Contribution (ARC) each year.

The assumed discount rate is 7.75%.

Amortization Amount with Interest is the amount necessary to amortize the Unfunded Actuarial Accrued

Liability over 30 years at a discount rate of 4.25% on a closed amortization basis. The closed

amortization period is 30 years at year one declining to zero after 30 years.

Amortization payments are assumed to increase by 3.25% per year.

Amortization payments are assumed to increase by 3.25% per year.

SECTION 4 - FORECASTS

OVERVIEW

In Section 4, we have provided 30-year forecasts of the annual funding requirements, accrued liability,

assets and unfunded actuarial accrued liability under various funding scenarios. Tables 4.1 and 4.2 are

based on the assumptions stated below:

Expected benefit payments are developed in the actuarial valuation and are based on the assumptions

detailed in Section 7.

Normal Cost with interest is assumed to increase annually by the selected discount rate.

Page 12



(1)

FYE June

30

(2)

Expected

Benefit

Payments

(3)

AAL at Beginning

of Year

(4)

Assets at

Beginning of

Year

(5)

Normal Cost

with Interest

(6)

Amortization

Amount

with Interest

(7)

ARC

(5) + (6)

(8)

Additional

Funding

(7) - (2)

(9)

Assets at End

of Year

(10)

AAL at End of

Year

(11)

UAAL at End of

Year

(10) - (9)

2013 2,921,466 197,190,748 - 7,868,150 7,852,229 15,720,379 - - 213,439,505 213,439,505

2014 3,714,880 213,439,505 - 8,202,546 8,753,371 16,955,917 - - 230,713,230 230,713,230

2015 4,523,421 230,713,230 - 8,551,154 9,753,388 18,304,542 - - 249,069,697 249,069,697

2016 5,315,323 249,069,697 - 8,914,579 10,868,780 19,783,359 - - 268,569,737 268,569,737

2017 6,126,040 268,569,737 - 9,293,448 12,115,273 21,408,721 - - 289,277,399 289,277,399

2018 6,826,241 289,277,399 - 9,688,420 13,511,276 23,199,696 - - 311,260,109 311,260,109

2019 7,622,596 311,260,109 - 10,100,178 15,071,466 25,171,644 - - 334,588,841 334,588,841

2020 8,416,253 334,588,841 - 10,529,435 16,826,284 27,355,719 - - 359,338,301 359,338,301

2021 8,957,856 359,338,301 - 10,976,936 18,805,732 29,782,668 - - 385,587,115 385,587,115

2022 9,511,805 385,587,115 - 11,443,456 21,045,789 32,489,245 - - 413,418,024 413,418,024

2023 10,060,102 413,418,024 - 11,929,803 23,577,040 35,506,843 - - 442,918,092 442,918,092

2024 10,628,306 442,918,092 - 12,436,819 26,460,866 38,897,685 - - 474,178,931 474,178,931

2025 11,138,153 474,178,931 - 12,965,384 29,779,008 42,744,392 - - 507,296,919 507,296,919

2026 11,702,345 507,296,919 - 13,516,413 33,556,919 47,073,332 - - 542,373,451 542,373,451

2027 12,112,848 542,373,451 - 14,090,861 37,947,941 52,038,802 - - 579,515,184 579,515,184

2028 12,402,748 579,515,184 - 14,689,722 43,060,911 57,750,633 - - 618,834,301 618,834,301

2029 12,848,990 618,834,301 - 15,314,035 49,022,398 64,336,433 - - 660,448,794 660,448,794

2030 13,021,773 660,448,794 - 15,964,882 56,068,230 72,033,112 - - 704,482,750 704,482,750

2031 13,043,272 704,482,750 - 16,643,389 64,479,655 81,123,044 - - 751,066,656 751,066,656

2032 13,202,975 751,066,656 - 17,350,733 74,641,276 91,992,010 - - 800,337,722 800,337,722

2033 13,313,024 800,337,722 - 18,088,139 87,093,118 105,181,258 - - 852,440,215 852,440,215

2034 13,288,435 852,440,215 - 18,856,885 102,617,659 121,474,544 - - 907,525,809 907,525,809

2035 13,256,814 907,525,809 - 19,658,303 122,234,581 141,892,884 - - 965,753,959 965,753,959

2036 13,170,728 965,753,959 - 20,493,781 148,058,603 168,552,384 - - 1,027,292,283 1,027,292,283

2037 13,170,741 1,027,292,283 - 21,364,767 182,756,349 204,121,116 - - 1,092,316,972 1,092,316,972

2038 13,086,280 1,092,316,972 - 22,272,769 232,396,009 254,668,778 - - 1,161,013,212 1,161,013,212

2039 12,967,886 1,161,013,212 - 23,219,362 307,197,024 330,416,386 - - 1,233,575,636 1,233,575,636

2040 12,798,284 1,233,575,636 - 24,206,185 432,997,509 457,203,693 - - 1,310,208,785 1,310,208,785

2041 12,675,923 1,310,208,785 - 25,234,948 686,378,220 711,613,168 - - 1,391,127,606 1,391,127,606

2042 12,485,938 1,391,127,606 - 26,307,433 1,450,250,529 1,476,557,962 - - 1,476,557,962 1,476,557,962

2043 12,226,022 1,476,557,962 - 27,425,499 1,539,311,676 1,566,737,174 - - 1,554,254,053 1,554,254,053


TABLE 4.1 - Unfunded Program - Increasing Dollar Amount30-Years Closed, 4.25% Discount Rate

Amortization Payments Increasing at 3.25% Per Year

Page 13



(1)

FYE June

30

(2)

Expected

Benefit

Payments

(3)

AAL at Beginning

of Year

(4)

Assets at

Beginning of

Year

(5)

Normal Cost

with Interest

(6)

Amortization

Amount

with Interest

(7)

ARC

(5) + (6)

(8)

Additional

Funding

(7) - (2)

(9)

Assets at End of

Year

(10)

AAL at End of

Year

(11)

UAAL at End of

Year

(10) - (9)

2013 2,921,466 112,521,263 - 4,195,599 7,012,242 11,207,840 8,286,374 8,175,280 122,404,699 114,229,419

2014 3,714,880 122,404,699 8,175,280 4,520,757 7,240,129 11,760,887 8,046,007 16,713,605 132,555,675 115,842,070

2015 4,523,421 132,555,675 16,713,605 4,871,116 7,478,720 12,349,836 7,826,415 25,663,313 143,004,423 117,341,110

2016 5,315,323 143,004,423 25,663,313 5,248,628 7,718,867 12,967,495 7,652,172 35,102,266 153,818,445 118,716,179

2017 6,126,040 153,818,445 35,102,266 5,655,396 7,969,887 13,625,283 7,499,243 45,088,980 165,035,776 119,946,796

2018 6,826,241 165,035,776 45,088,980 6,093,690 8,232,017 14,325,707 7,499,466 55,823,260 176,833,916 121,010,656

2019 7,622,596 176,833,916 55,823,260 6,565,950 8,499,934 15,065,884 7,443,288 67,302,987 189,192,035 121,889,048

2020 8,416,253 189,192,035 67,302,987 7,074,812 8,773,243 15,848,055 7,431,802 79,630,726 202,192,932 122,562,206

2021 8,957,856 202,192,932 79,630,726 7,623,110 9,057,666 16,680,776 7,722,920 93,184,387 216,187,498 123,003,111

2022 9,511,805 216,187,498 93,184,387 8,213,901 9,353,271 17,567,172 8,055,367 108,099,838 231,282,419 123,182,580

2023 10,060,102 231,282,419 108,099,838 8,850,478 9,660,060 18,510,538 8,450,437 124,545,457 247,614,627 123,069,170

2024 10,628,306 247,614,627 124,545,457 9,536,390 9,970,453 19,506,843 8,878,537 142,672,105 265,308,682 122,636,577

2025 11,138,153 265,308,682 142,672,105 10,275,460 10,299,370 20,574,830 9,436,677 162,742,319 284,583,862 121,841,542

2026 11,702,345 284,583,862 162,742,319 11,071,808 10,630,305 21,702,113 9,999,768 184,909,613 305,563,570 120,653,957

2027 12,112,848 305,563,570 184,909,613 11,929,873 10,980,122 22,909,995 10,797,147 209,576,640 328,601,157 119,024,517

2028 12,402,748 328,601,157 209,576,640 12,854,439 11,329,410 24,183,848 11,781,100 237,128,290 354,047,798 116,919,508

2029 12,848,990 354,047,798 237,128,290 13,850,658 11,697,379 25,548,036 12,699,047 267,716,171 381,999,562 114,283,391

2030 13,021,773 381,999,562 267,716,171 14,924,084 12,084,431 27,008,515 13,986,742 301,955,737 413,011,660 111,055,923

2031 13,043,272 413,011,660 301,955,737 16,080,700 12,477,868 28,558,568 15,515,297 340,376,607 447,561,496 107,184,888

2032 13,202,975 447,561,496 340,376,607 17,326,954 12,875,331 30,202,285 16,999,310 383,253,035 485,869,421 102,616,386

2033 13,313,024 485,869,421 383,253,035 18,669,793 13,289,562 31,959,355 18,646,332 431,095,223 528,374,817 97,279,594

2034 13,288,435 528,374,817 431,095,223 20,116,702 13,737,715 33,854,417 20,565,982 484,565,766 575,646,814 91,081,048

2035 13,256,814 575,646,814 484,565,766 21,675,747 14,182,056 35,857,803 22,600,989 544,216,485 628,174,258 83,957,773

2036 13,170,728 628,174,258 544,216,485 23,355,617 14,638,269 37,993,886 24,823,157 610,715,577 686,541,809 75,826,232

2037 13,170,741 686,541,809 610,715,577 25,165,677 15,102,175 40,267,852 27,097,111 684,642,301 751,242,892 66,600,590

2038 13,086,280 751,242,892 684,642,301 27,116,017 15,600,464 42,716,482 29,630,201 766,834,650 822,996,321 56,161,672

2039 12,967,886 822,996,321 766,834,650 29,217,509 16,094,202 45,311,711 32,343,825 858,115,030 902,535,029 44,419,999

2040 12,798,284 902,535,029 858,115,030 31,481,866 16,618,940 48,100,806 35,302,522 959,434,787 990,678,395 31,243,608

2041 12,675,923 990,678,395 959,434,787 33,921,710 17,176,014 51,097,724 38,421,801 1,071,730,757 1,088,219,730 16,488,974

2042 12,485,938 1,088,219,730 1,071,730,757 36,550,643 17,766,869 54,317,512 41,831,574 1,196,146,662 1,196,146,662 -

2043 12,226,022 1,196,146,662 1,196,146,662 39,383,317 - 39,383,317 27,157,296 1,315,540,405 1,315,540,405 -


TABLE 4.2 - Fully Funded Program - Increasing Dollar Amount30-Years Closed, 7.75% Discount Rate

Amortization Payments Increasing at 3.25% Per Year

Page 14



(1)

FYE June

30 ARC

Interest on

Net OPEB

Obligation

ARC

Adjustment

Amortization

Factor

Annual

OPEB Cost Contributions

Change in Net

OPEB

Obligation

Net OPEB

Obligation

Balance

75,359,601

2013 15,720,379 3,202,783 2,878,751 26.18 16,044,411 2,921,466 13,122,945 88,482,546

2014 16,955,917 3,760,508 3,480,586 25.42 17,235,839 3,714,880 13,520,959 102,003,505

2015 18,304,542 4,335,149 4,136,686 24.66 18,503,005 4,523,421 13,979,584 115,983,089

2016 19,783,359 4,929,281 4,855,408 23.89 19,857,232 5,315,323 14,541,909 130,524,998

2017 21,408,721 5,547,312 5,648,215 23.11 21,307,818 6,126,040 15,181,778 145,706,776

2018 23,199,696 6,192,538 6,527,145 22.32 22,865,089 6,826,241 16,038,848 161,745,624

2019 25,171,644 6,874,189 7,512,667 21.53 24,533,166 7,622,596 16,910,570 178,656,194

2020 27,355,719 7,592,888 8,618,844 20.73 26,329,763 8,416,253 17,913,510 196,569,704

2021 29,782,668 8,354,212 9,868,139 19.92 28,268,741 8,957,856 19,310,885 215,880,589

2022 32,489,245 9,174,925 11,300,948 19.10 30,363,222 9,511,805 20,851,417 236,732,006

Notes:

1. ARC and Contributions are from 30-Year Forecast of Annual Required Contribution (Table 4.1).

2.

3. ARC Adjustment is the prior year Net OPEB Obligation Balance amortized over 30 years, declining by one year each year.

4. OPEB Cost is the ARC plus Interest on Net OPEB Obligation less ARC Adjustment.

5. Change in Net OPEB Obligation is the difference between the OPEB Cost and Contributions.

6. Net OPEB Obligation is the prior year Net OPEB Obligation Balance plus Change in Net OPEB Obligation.

7. Year one Interest on Net OPEB Obligation and ARC Adjustment computed at prior discount rate of 4.25%.

8. Subsequent years' Interest on Net OPEB Obligation and ARC Adjustment computed at current discount rate of 4.25%.

Interest on Net OPEB Obligation is computed on the prior year Net OPEB Obligation Balance.

TABLE 4.3 - ANNUAL OPEB COST and NET OPEB OBLIGATION


Page 15



Assumed Trend Trend +1% Trend -1%

Trend Rate - Year 1 9.50% 10.50% 8.50%

Trend Rate - Ultimate 5.50% 6.50% 4.50%


Pre-Medicare Gross Benefit $54,761,328 $60,712,576 $49,518,910

Pre-Medicare Participant Contributions (8,132,862) (9,006,404) (7,362,605)

Net Pre-Medicare Benefit $46,628,466 $51,706,172 $42,156,305

Post - Medicare Gross Benefit $121,824,183 $153,637,214 $97,468,590

Post - Medicare Participant Contributions (22,278,004) (27,885,213) (17,949,706)

Net Post - Medicare Benefit $99,546,179 $125,752,001 $79,518,884

Total Current Active Employees $146,174,645 $177,458,173 $121,675,189








Total Current Retirees and Term Vesteds $51,016,103 $58,622,930 $44,840,376

Total Actuarial Accrued Liability (AAL) $197,190,748 $236,081,103 $166,515,565

SECTION 5 - SENSITIVITY TO TREND RATE and DISCOUNT RATE

Below we illustrate the sensitivity of Actuarial Accrued Liability to a one percentage increase and decrease in

health care cost trend assumption for each future year:

TABLE 5.1 - CHANGE IN TREND RATE - ACTUARIAL ACCRUED LIABILITY

Page 16




Assumed Trend Trend +1% Trend -1%

Trend Rate - Year 1 9.50% 10.50% 8.50%

Trend Rate - Ultimate 5.50% 6.50% 4.50%



Pre-Medicare Participant Contributions (422,840) (475,570) (377,119)



Post - Medicare Participant Contributions (1,145,343) (1,456,689) (908,557)




Pre-Medicare Gross Benefit $0 $0 $0

Pre-Medicare Participant Contributions 0 0 0

Net Pre-Medicare Benefit $0 $0 $0

Post - Medicare Gross Benefit $0 $0 $0

Post - Medicare Participant Contributions 0 0 0

Net Post - Medicare Benefit $0 $0 $0

Total Current Retirees and Term Vesteds $0 $0 $0

Total Normal Cost $7,547,386 $9,306,547 $6,188,306

Below we illustrate the sensitivity of Normal Cost to a one percentage increase and decrease in health care

cost trend assumption for each future year:

TABLE 5.2 - CHANGE IN TREND RATE - NORMAL COST

Page 17




Discount Rate 4.25% 4.75% 3.75%
















Total Current Retirees and Term Vesteds $51,016,103 $47,594,555 $54,859,426

Total Actuarial Accrued Liability (AAL) $197,190,748 $180,256,230 $216,504,939

Below we illustrate the sensitivity of Actuarial Accrued Liability to a one-half percentage increase and

decrease in the discount rate assumption for each future year:

TABLE 5.3 - CHANGE IN DISCOUNT RATE - ACTUARIAL ACCRUED LIABILITY

Page 18




Discount Rate 4.25% 4.75% 3.75%



Pre-Medicare Participant Contributions (422,840) (397,726) (450,155)







Pre-Medicare Gross Benefit $0 $0 $0

Pre-Medicare Participant Contributions 0 0 0

Net Pre-Medicare Benefit $0 $0 $0

Post - Medicare Gross Benefit $0 $0 $0

Post - Medicare Participant Contributions 0 0 0

Net Post - Medicare Benefit $0 $0 $0

Total Current Retirees and Term Vesteds $0 $0 $0

Total Normal Cost $7,547,386 $6,797,319 $8,412,124

Discount Rate 4.25% 4.75% 3.75%

Annual Required Contribution $15,720,379 $14,817,640 $16,752,726

Below we illustrate the sensitivity of Normal Cost to a one-half percentage increase and decrease in the

discount rate assumption for each future year:

TABLE 5.4 - CHANGE IN DISCOUNT RATE - NORMAL COST

Below we illustrate the sensitivity of Annual Required Contribution to a one-half percentage increase and

decrease in the discount rate assumption for each future year:

Page 19



Eligibility:

Medical Premium Rates:

Individual Family

1 $458.50 $1,091.70

2 $576.80 $1,375.60

3 $657.60 $1,595.50

4 $527.30 $1,277.60

5 Health New England $449.20 $1,104.40

6 NHP Care $479.80 $1,261.00

7 $603.70 $1,463.00

8 $482.30 $1,167.10

9 $894.84 $2,081.06

10 $854.20 $1,986.80

11 $427.90 $1,018.00

12 $581.20 $1,378.60

Per Person

21 $269.50

22 $391.80

23 $364.10

24 $395.30

25 $248.30

26 $377.96

27 $367.30

SECTION 6 - PLAN PROVISIONS

Retirement after attaining age 55 with 10 or more years of service or any age

with 20 or more years of service for Group 1 employees hired before April 2,

2012.

The total monthly cost by plan as of July 1, 2012 are shown below:

Non-Medicare Plans

Fallon Direct Care

Retirement after attaining age 60 with 10 or more years of service for Group

1 employees hired on or after April 2, 2012.

Medicare Plans

Fallon Senior Plan

Harvard Pilgrim Medicare Enhance

Health New England MedPlus

UniCare State Indemnity OME w/o CIC

Fallon Select Care

UniCare State Indemnity Plus

Tufts Medicare Complement

Tufts Medicare Preferred

UniCare State Indemnity OME w/CIC

Harvard Pilgrim Independence

Harvard Pilgrim Primary Choice

UniCare State Indemnity Choice

Tufts Health Plan Navigator

Tufts Health Plan Spirit

UniCare State Indemnity Basic w/ CIC

UniCare State Indemnity Basic w/o CIC

Page 20



SECTION 6 - PLAN PROVISIONS

Participant Contributions:

10%

15%

15%

20%

$40.64

$94.26

$10.66

Continuation of Coverage to

Spouse After Death of Retiree:

Life Insurance Benefit:

Life Insurance Premium:

Life Insurance Contributions: Retirees contribute the same percentage of the life insurance premium as for

medical coverage, as shown above.

Retirees are eligible for a $5,000 life insurance benefit.

The total monthly cost is $6.30.

Surviving spouse may continue coverage for lifetime by paying 10% of the

required medical premium rates.

Retired employees contribute a percentage of the total premium cost, as

follows:

Retirees electing coverage under the UniCare State

Indemnity plan w/CIC contribute 100% of the CIC-portion of

the premium as follows:

Individual coverage, non-Medicare

Family coverage, non-Medicare

Per person coverage, Medicare

Retired on or before July 1, 1994

Retired after July 1, 1994 and filed for retirement before

August 10, 2009

Retired after July 1, 1994 and filed for retirement on or after

August 10, 2009 and on or before October 1, 2009 with a

retirement date on or before January 31, 2010

Filed for retirement after October 1, 2009

Page 21



Valuation Date:

Discount Rates:

Amortization Method:

Health Care Cost Trend Rates:

Trend Prior

9.50% 9.00%

9.00% 8.25%

8.50% 7.50%

8.00% 6.75%

7.50% 6.00%

7.00% 5.25%

6.50%

6.00%

5.50%

Mortality Table:

Turnover Rates:

Service Rate Service Rate

0 15.00% 0 1.50%

1 12.00% 1 1.50%

2 10.00% 2 1.50%

3 9.00% 3 1.50%

4 8.00% 4 1.50%

5-9 7.60% 5 1.50%

10-14 5.40% 6 1.50%

15 3.70% 7 1.50%

16-21 2.00% 8 1.50%

22-29 1.00% 9 1.50%

30+ 0.00% 10 1.50%

11+ 0.00%

1

SECTION 7 - ACTUARIAL ASSUMPTIONS AND METHODS

Year

2

RP-2000 Mortality Table, projected to 2012, using Scale AA.

January 1, 2012

4.25% pay-as-you-go.

Increasing at 3.25% over thirty (30) years on a closed amortization period

for pay-as-you-go.

7.75% full pre-funding.

Increasing at 3.25% over thirty (30) years on a closed amortization period

for full pre-funding.

Group 4

3

4

5

6

7

8

Ultimate

Groups 1 and 2

Page 22




Disability Rates:

Retirement Rates:

Group 4

Age Male Female All

50-51 1.00% 1.50% 1.00%

52 1.00% 2.00% 2.00%

53 1.00% 2.50% 15.00%

54 2.00% 2.50% 20.00%

55 2.00% 5.50% 25.00%

56-57 2.50% 6.50% 100.00%

58 5.00% 6.50%

59 6.50% 6.50%

60 12.00% 5.00%

61 20.00% 13.00%

62 30.00% 15.00%

63 25.00% 12.50%

64 22.00% 18.00%

65 40.00% 15.00%

66-67 25.00% 20.00%

68-69 30.00% 25.00%

70 100.00% 100.00%

Medical Plan Participation:

Life Insurance Participation:

Dependent Status:

80% of employees are assumed to retire with a covered spouse.

Male spouses are assumed to be three years older and female spouses are

assumed to be three years younger than the retired employee.

85% of eligible retirees will elect to participate.

80% of eligible retirees will elect to participate.

None.

Active Employees:

Groups 1 and 2

Terminated Vested Employees:

100% of terminated employees with at least ten years of service with

accumulated contributions remaining in the MWRA Retirement System are

assumed to retire at age 65.

Page 23




Medical Per Capita Costs:

Age Group 1 Group 2

50-54 $8,937 $8,937

55-59 $10,604 $10,604

60-64 $12,877 $12,877

65-69 $4,311 $15,278

70-74 $4,311 $17,454

75-79 $4,311 $19,460

80-84 $4,311 $20,860

85-89 $4,311 $21,600

90+ $4,311 $21,817

Retiree Contributions:

Contribution Rate Group 1 Group 2

Pre-65: 9163.79 9163.79

10% $916 $916

15% $1,375 $1,375

20% $1,833 $1,833

65+: 4310.96 9163.79

10% $431 $916

15% $647 $1,375

20% $862 $1,833

Actuarial Cost Method:

Employee Data:

Four employees provided in both the active employee data and

retiree data were assumed retired.

An employee record was deleted for an active employee with two

records.

Employee and retiree data were submitted by the Authority. We made

reasonable adjustments for missing or invalid data.

Annual per capita participant contributions for the period beginning January

1, 2012 are as follows:

Projected Unit Credit. The costs of each employee's postemployment

benefits are allocated on a pro rata basis from the employee's date of hire

to the date the employee retires.

Annual per capita costs for the period beginning January 1, 2012 are as

follows:

Group 1 - Future retirees and current retirees not in Group 2.

Group 2 - Current retirees over age 65 enrolled in non-Medicare plans.

Page 24



Age 0 to 4 5 to 9 10 to 14 15 to 19 20 to 24 25 to 29 30 to 34 35 to 39 40 & up Total Percent

Under 25 2 0 0 0 0 0 0 0 0 2 0%

25 to 29 13 3 0 0 0 0 0 0 0 16 1%

30 to 34 11 8 4 0 0 0 0 0 0 23 2%

35 to 39 17 13 14 15 0 0 0 0 0 59 5%

40 to 44 18 12 23 49 28 0 0 0 0 130 11%

45 to 49 14 18 17 48 98 25 1 0 0 221 19%

50 to 54 16 13 19 47 108 32 8 2 0 245 22%

55 to 59 5 22 25 52 89 24 15 5 1 238 22%

60 to 64 6 7 13 30 63 20 7 6 2 154 13%

65 to 69 0 4 4 14 20 3 2 1 0 48 4%

70 & up 0 1 2 4 4 0 0 1 1 13 1%

Total 102 101 121 259 410 104 33 15 4 1,149

Percent 9% 9% 11% 23% 35% 9% 3% 1% 0% 100%

Average Age: 52.0 Average Service: 18.2

TABLE 8.1 - ACTIVE EMPLOYEES BY AGE and YEARS OF SERVICE AS OF JANUARY 1, 2012

Years of Service

SECTION 8 - PLAN MEMBER INFORMATION

In addition, there are 51 terminated vested employees eligible to receive retiree medical benefits in the future.

Page 25



Age

Fallon

Select

Care

Harvard

Pilgrim

Independence NHP Care

Tufts

Health Plan

Navigator

UniCare

State

Indemnity

Basic w/

CIC

UniCare

State

Indemnity

Basic w/o

CIC

UniCare

State

Indemnity

Choice

UniCare

State

Indemnity

Plus Total

Under 40 0 0 0 0 0 0 0 0 0

40 to 44 0 0 0 1 0 1 0 0 2

45 to 49 0 3 1 3 0 1 0 2 10

50 to 54 0 2 0 6 1 0 0 0 9

55 to 59 0 7 0 6 4 5 0 3 25

60 to 64 0 9 1 5 14 4 1 3 37

65 to 69 1 1 0 3 5 3 0 1 14

70 to 74 0 0 0 0 0 0 0 0 0

75 to 79 0 0 0 1 0 0 0 0 1

80 to 84 0 0 0 0 0 0 0 0 0

85 to 89 0 0 0 0 1 0 0 0 1

90+ 0 0 0 0 0 0 0 0 0

Total 1 22 2 25 25 14 1 9 99

Covered

Spouses 0 11 1 13 5 14 1 5 50

TABLE 8.2 - RETIRED PLAN PARTICIPANTS and SURVIVORS AS OF JANUARY 1, 2012


Non-Medicare Plans:

In addition, there are 42 retired employees with life insurance coverage only.

Page 26



TABLE 8.2 - RETIRED PLAN PARTICIPANTS and SURVIVORS AS OF JANUARY 1, 2012


Age

Fallon

Senior

Plan

Harvard

Pilgrim

Medicare

Enhance

Tufts

Medicare

Complement

UniCare

State

Indemnity

OME w/CIC #N/A #N/A #N/A #N/A Total

Under 40 0 0 0 0 0 0 0 0 0

40 to 44 0 0 0 0 0 0 0 0 0

45 to 49 0 0 0 0 0 0 0 0 0

50 to 54 0 0 0 0 0 0 0 0 0

55 to 59 0 0 0 2 0 0 0 0 2

60 to 64 1 2 3 6 0 0 0 0 12

65 to 69 0 11 16 42 0 0 0 0 69

70 to 74 0 2 10 45 0 0 0 0 57

75 to 79 1 1 3 24 0 0 0 0 29

80 to 84 0 0 0 12 0 0 0 0 12

85 to 89 0 0 1 1 0 0 0 0 2

90+ 0 0 0 0 0 0 0 0 0

Total 2 16 33 132 0 0 0 0 183

Covered

Spouses 1 12 19 72 0 0 0 0 104

Medicare Plans:

Page 27



SECTION 9 - GASB 45 GLOSSARY OF TERMS

Explicit Subsidy – The difference between (a) the blended rates based on combined active and retired

member experience and (b) actual cash contributions made by the employer.

Annual Required Contribution (ARC) – Includes the employer's Normal Cost and a provision for amortizing

the Unfunded Actuarial Accrued Liability.

Annual OPEB Cost - The accrual basis annual cost for the OPEB plan sponsored by the employer. In the

year of implementation of GASB 45, the Annual OPEB Cost equals the ARC. In subsequent years, if an

employer has a Net OPEB Obligation, Annual OPEB Cost equals the ARC plus one year's interest on the Net

OPEB Obligation plus an adjustment to the ARC.

Funded Ratio – The Actuarial Value of Assets expressed as a percentage of the Actuarial Accrued Liability.

Health Cost Trend Rate – The rate of change in per capita health claims cost over time as a result of factors

such as medical inflation, utilization of healthcare services, plan design, and technological developments.

Implicit Subsidy – In an experience-rated healthcare plan that includes both active employees and retirees

with blended premium rates for all plan members, the difference between (a) the age-adjusted premiums

approximating claim costs for retirees in the group and (b) the blended rates based on combined active and

retired member experience.

Actuarial Accrued Liability – The portion of the Actuarial Present Value of future benefits which is allocated

to all periods prior to a valuation year and therefore is not provided by future Normal Costs.

Actuarial Assumptions – Assumptions as to the occurrence of future events affecting OPEB costs, such as

mortality, withdrawal, disablement and retirement; changes in compensation and Government provided

pension benefits; rates of investment earnings and asset appreciation or depreciation; procedures used to

determine the Actuarial Value of Assets; characteristics of future entrants for Open Group Actuarial Cost

Methods; and other relevant items.

Actuarial Value of Assets – The value of plan assets used in an actuarial valuation. The Actuarial Value of

Assets may reflect smoothing techniques intended to dampen year-to-year fluctuations in the market value

of assets.

Actuarial Present Value of Future Benefits – The present value of the cost to finance all benefits payable in

the future, discounted to reflect the probability of payment and the time value of money.

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 an OPEB plan.

Page 28



SECTION 9 - GASB 45 GLOSSARY OF TERMS

•

•

•

Projected Unit Credit Actuarial Cost Method – A method under which the projected benefits of each

individual included in an Actuarial Valuation are allocated by a consistent formula to valuation years.

Projected Unit Credit is one of the actuarial cost methods allowed and most often used for developing

liabilities under GASB 45.

Plan Assets – Investments segregated and restricted in a trust or similar arrangement under which:

Pay-As-You-Go – A method of financing an OPEB plan under which the contributions to the plan are

generally made at about the same time and in about the same amount as benefit payments and expenses

becoming due.

assets are legally protected from creditors.

employer contributions to the trust are irrevocable,

Substantive Plan – The terms of an OPEB plan as understood by the employer and plan members.

Unfunded Actuarial Accrued Liability – The excess of Actuarial Accrued Liability over the Actuarial Value of

Assets.

OPEB – Other Postemployment Benefits including medical, dental, vision, hearing and life insurance

benefits.

Present Value of Future Benefits – The actuarial present value of the cost to finance benefits payable in the

future, discounted to reflect the expected effects of the time value of money and the probabilities of

payment.

assets are dedicated to providing plan benefits, and

Net OPEB Obligation – The cumulative excess since adoption of GASB 45 of Annual OPEB Cost over the

employer's contributions to the plan.

Normal Cost – The portion of the Actuarial Present Value of Future Benefits which is allocated to a valuation

year.

Page 29



Documents

MASSACHUSETTS WATER RESOURCES AUTHORITY OTHER POSTEMPLOYMENT