7.1. SR 02-19-2008 - Laserfiche WebLink

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called the actuarial accrued liability (AAL). OPEB Assets. If an OPEB plan has cash, investments, and other resources, these may be applied to fund the actuarial accrued liability. The value of these resources is referred to as the actuarial value of assets. The actuarial value of assets is not the same as fair value, which is used to report a government's investments in its statements of net assets and balance sheet. Fair values can be volatile in the short term, with gains one year and losses the next. Postemployment benefits, however, are long-term transactions-assets are being set aside today to pay for benefits well into the future. Although there may be sharp changes in asset value in the short run, over the long run the change in asset value tends to be steadier. For financial reporting purposes, gains or losses in plan assets are averaged over several years (usually three to five), producing an actuarial value of assets that is more stable over time than fair value. The Unfunded Liability. The excess of the AAL over the actuarial value of assets is the unfunded actuarial accrued liability (UAAL or unfunded liability). The unfunded liability would be amortized (spread) over a period of up to thirty years (approximately equal to a typical public employee's term of employment), either in level dollar amounts or as a level percentage of projected payroll...... OPEB Contributions. The normal cost and the portion of the UAAL to be amortized in the current period together make up the annual required contribution (ARC) of the employer for the period. The ARC is an amount that is actuarially determined in accordance with the requirements of Statements 43 and 45 so that, if paid on an ongoing basis, it would be expected to provide sufficient resources to fund both the normal cost for each year and the amortized unfunded liability. Employer contributions consist of payments directly to or on behalf of a retiree or beneficiary, premium payments to insurers, or irrevocably transferred assets to a trust (or equivalent arrangement) in which plan assets are dedicated to providing benefits to retirees and beneficiaries in accordance with the terms of the plan and are legally protected from creditors of the employer and plan administrator. OPEB Expenses, Expenditures, and the Net Obligations. For a government in a single- employer or agent multiple-employer plan, the annual OPEB cost equals the ARC plus or minus certain adjustments if the employer's actual contributions in prior years differed from the ARC. The annual OPEB cost is the OPEB expense that a government would report in its accrual- based financial statements-the government-wide statements and the proprietary fund statements. Generally, the cumulative sum of differences between an employer's annual OPEB cost and the amounts actually contributed to the plan since the effective date of the standards makes up a liability (or asset) called the net OPEB obligation...... WHAT ADDITIONAL OPEB INFORMATION SHOULD A GOVERNMENT EMPLOYER PRESENT IN ITS FINANCIAL REPORT? Notes to the Financial Statements Plan Description. Disclosures describing the plan contain the following basic information about the types of OPEB offered and how they are administered. a. Name of the plan, identification of the public employee retirement system or other entity that administers the plan, and identification of the plan as a singleemployer, agent multiple- employer, or cost-sharing multiple-employer defined benefit OPEB plan. b. Brief description of the types of benefits and the authority under which benefit provisions are established or may be amended. For example, the disclosure might reveal that a plan provides retirement, disability, and death benefits to plan members and their beneficiaries, and that a specific section of state law regulates the changing of benefit provisions. c. Whether the OPEB plan issues astand-alone financial report or is included in the report of a City of Elk River, MN Page 7