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§ 47-20-10 - Minimum annual employer contribution

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O.C.G.A.47-20-10 (2010) 47-20-10.Minimum annual employer contribution (a)Inorder to assure the actuarial soundness of each retirement system, theminimum annual employer contribution for each retirement system, unlessexcepted by Code Section 47-20-13, shall be the sum of the amountsdetermined under paragraphs (1), (2), and (3) of this subsection minusthe amount determined under paragraph (4) of this subsection; provided,however, that under no circumstances shall the minimum annual employercontribution be less than zero or result in a contribution credit for asubsequent year, as follows:(1)The normal cost of the retirement system for the year; plus(2)The amounts necessary to amortize:(A)Theunfunded actuarial accrued liability over a period of 40 years in thecase of a retirement system in existence on January 1, 1983, based onthe first actuarial valuation of the retirement system which is made onor after January 1, 1984; or(B)Theunfunded actuarial accrued liability over a period of 30 years in thecase of a retirement system which is created or established afterJanuary 1, 1983, based on the first actuarial valuation of theretirement system; plus(C)Theincrease, if any, in unfunded actuarial accrued liability over a periodof 20 years for any such increase which occurs after January 1, 1984,during any year as a result of changes made in the provisions of theretirement system affecting active employees; plus(D)Theincrease, if any, in unfunded actuarial accrued liability over a periodof 15 years for any such increase which occurs from experience underthe actuarial assumptions applicable to the retirement system; plus(E)Theincrease, if any, in unfunded actuarial accrued liability over a periodof 30 years for any such increase resulting from changes in actuarialassumptions applicable to the retirement system; plus(3)If not otherwise included in the calculations under paragraph (1) or (2) or paragraphs (1) and (2) of this subsection:(A)Theamount necessary to amortize over a period of ten years in equal annualinstallments the increase, if any, in unfunded actuarial accruedliability resulting from benefit increases granted during the year tobeneficiaries under the retirement system; or(B)Theamount necessary to pay the amount of increase in benefits grantedduring the year to beneficiaries under the retirement system on acurrent disbursement or pay-as-you-go basis; minus(4)The amount:(A)Necessaryto amortize the decrease, if any, in unfunded actuarial accruedliability over a period of 20 years for any such decrease which occursafter January 1, 1984, during any year as a result of changes made inthe provisions of the retirement system; plus(B)Necessaryto amortize the decrease in unfunded actuarial accrued liability, ifany, over a period of 15 years for any such decrease which occurs fromexperience under the actuarial assumptions applicable to the retirementsystem; plus(C)Necessary toamortize the decrease in unfunded actuarial accrued liability, if any,over a period of 30 years for any such decrease resulting from changesin the actuarial assumptions applicable to the retirement system; plus(D)Inexcess of the minimum annual employer contribution required by thisCode section which accumulates after January 1, 1984; plus(E)Employee contributions for the year.(b)Inthe case of a retirement system which uses a formula related to thecompensation of the members of the retirement system as a basis for thecalculation of benefits under the retirement system, the amortizationamounts required by subsection (a) of this Code section, except for theamount determined under paragraph (3) of subsection (a) of this Codesection, may be determined as a level percentage of future compensation.If such level percentage amortization is used, the actuarial assumptionfor future annual payroll growth shall not exceed the actuarial assumedvaluation interest rate of the retirement system less 2 1/2 percent.The minimum standards provided by subsection (a) of this Code sectionare deemed to have been met if such level percentage amortization isused and the employer contribution is equal to or greater than theannual required contribution as is determined in accordance with theprovisions of Governmental Accounting Standards Board Statements No. 25and No. 27.(c)In the case of a retirementsystem which does not use a formula related to the compensation of themembers of such retirement system as a basis for the calculation ofbenefits under such retirement system, the minimum funding standardsprovided for in subsection (a) of this Code section shall be deemed tohave been met if the employer contribution is equal to or greater thanthe annual contribution as determined in accordance with the provisionsof Governmental Accounting Standards Board Statements No. 25 and No. 27.(d)(1)Theminimum funding standards provided for in subsection (a) of this Codesection shall be deemed to have been met if as of the latest actuarialvaluation a retirement system has a negative unfunded actuarial accruedliability and the employer contribution is equal to or greater than theannual required contribution as determined in accordance with theprovisions of Governmental Accounting Standards Board Statements No. 25and No. 27; provided, however, that in no case shall the negativeunfunded actuarial accrued liability be amortized over a period of lessthan ten years. If a retirement system has such a negative unfundedactuarial accrued liability, the amounts necessary to amortize underparagraphs (2), (3), and (4) of subsection (a) of this Code sectionestablished prior to the current actuarial valuation date will beconsidered to be fully amortized under the minimum funding standardsprovided by subsection (a) of this Code section.(2)Inany actuarial valuation subsequent to the valuation in which aretirement system is found to have complied with the provisions ofparagraph (1) of this subsection, if the retirement system still has anegative unfunded actuarial accrued liability, the only amortizationrequired under such minimum funding standards will be an amortization ofthe negative unfunded actuarial accrued liability over a period of notless than ten years of the actuarial accrued liability. For any suchsubsequent actuarial valuations, whenever the retirement system againhas an unfunded actuarial accrued liability, the minimum standardsprovided by subsection (a) of this Code section shall apply with newamounts necessary to amortize the newly created unfunded actuarialaccrued liability.(e)In determining the minimum annual employer contribution under subsection (a) of this Code section:(1)Allbenefits which it is reasonable to anticipate will be paid from theretirement system because of the current active members and payments tobeneficiaries shall be taken into account; and(2)Allcosts, liabilities, and other factors under the retirement system shallbe determined by an actuary on the basis of an actuarial cost methodand actuarial assumptions which, in the aggregate, are reasonable,considering the experience of the retirement system and reasonableexpectations, and which, in combination, offer the actuary's bestestimate of anticipated experience under the retirement system.(f)Uponcompletion of the first actuarial investigation of a retirement systemafter January 1, 1984, and for each subsequent actuarial investigation,the minimum annual employer contribution required by this Code sectionshall be increased by an amount equivalent to the interest earned onsuch minimum annual employer contribution, based on the actuarialassumed valuation interest rate applicable to the retirement system,from the date of such actuarial investigation until the date the minimumannual employer contribution is made to the retirement system. Thissubsection shall not apply to a retirement system to which annualemployer contributions are being made in excess of the minimum annualemployer contribution required by this Code section.(g)Inno event will employee contributions of active members of a retirementsystem be used to pay benefits to beneficiaries under the retirementsystem.(h)The minimum fundingrequirements of this Code section shall not apply to prefunding, inwhole or in part, of anticipated future costs of providing otherpost-employment benefits as defined by Governmental Accounting StandardsBoard Statements Number 43 and Number 45 for retired employees of apolitical subdivision including those presently retired and thoseanticipated to retire in the future, as provided in Code Section47-20-10.1. Such prefunding may be maintained as part of the sameinvestment pool as the fund receiving employer and employeecontributions to pay the cost of providing retirement benefits under anyretirement system maintained by the political subdivision for itsemployees so long as such funds are separately accounted for andseparate records are maintained with respect to each fund. Fundsmaintained by a political subdivision for the purpose of prefundingother post-employment benefits for retired employees may be invested andreinvested in accordance with the provisions of Code Section 47-1-12,or Article 7 of Chapter 20 of this title, as applicable, and, for thepurposes of that Code section or article and the home rule provisions ofthe laws and the Constitution of the State of Georgia only, such fundsshall be treated in the same manner as retirement funds.
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  • O.C.G.A. 47-20-10 (2010)
    47-20-10. Minimum annual employer contribution


    (a) In order to assure the actuarial soundness of each retirement system, the minimum annual employer contribution for each retirement system, unless excepted by Code Section 47-20-13, shall be the sum of the amounts determined under paragraphs (1), (2), and (3) of this subsection minus the amount determined under paragraph (4) of this subsection; provided, however, that under no circumstances shall the minimum annual employer contribution be less than zero or result in a contribution credit for a subsequent year, as follows:

    (1) The normal cost of the retirement system for the year; plus

    (2) The amounts necessary to amortize:

    (A) The unfunded actuarial accrued liability over a period of 40 years in the case of a retirement system in existence on January 1, 1983, based on the first actuarial valuation of the retirement system which is made on or after January 1, 1984; or

    (B) The unfunded actuarial accrued liability over a period of 30 years in the case of a retirement system which is created or established after January 1, 1983, based on the first actuarial valuation of the retirement system; plus

    (C) The increase, if any, in unfunded actuarial accrued liability over a period of 20 years for any such increase which occurs after January 1, 1984, during any year as a result of changes made in the provisions of the retirement system affecting active employees; plus

    (D) The increase, if any, in unfunded actuarial accrued liability over a period of 15 years for any such increase which occurs from experience under the actuarial assumptions applicable to the retirement system; plus

    (E) The increase, if any, in unfunded actuarial accrued liability over a period of 30 years for any such increase resulting from changes in actuarial assumptions applicable to the retirement system; plus

    (3) If not otherwise included in the calculations under paragraph (1) or (2) or paragraphs (1) and (2) of this subsection:

    (A) The amount necessary to amortize over a period of ten years in equal annual installments the increase, if any, in unfunded actuarial accrued liability resulting from benefit increases granted during the year to beneficiaries under the retirement system; or

    (B) The amount necessary to pay the amount of increase in benefits granted during the year to beneficiaries under the retirement system on a current disbursement or pay-as-you-go basis; minus

    (4) The amount:

    (A) Necessary to amortize the decrease, if any, in unfunded actuarial accrued liability over a period of 20 years for any such decrease which occurs after January 1, 1984, during any year as a result of changes made in the provisions of the retirement system; plus

    (B) Necessary to amortize the decrease in unfunded actuarial accrued liability, if any, over a period of 15 years for any such decrease which occurs from experience under the actuarial assumptions applicable to the retirement system; plus

    (C) Necessary to amortize the decrease in unfunded actuarial accrued liability, if any, over a period of 30 years for any such decrease resulting from changes in the actuarial assumptions applicable to the retirement system; plus

    (D) In excess of the minimum annual employer contribution required by this Code section which accumulates after January 1, 1984; plus

    (E) Employee contributions for the year.

    (b) In the case of a retirement system which uses a formula related to the compensation of the members of the retirement system as a basis for the calculation of benefits under the retirement system, the amortization amounts required by subsection (a) of this Code section, except for the amount determined under paragraph (3) of subsection (a) of this Code section, may be determined as a level percentage of future compensation. If such level percentage amortization is used, the actuarial assumption for future annual payroll growth shall not exceed the actuarial assumed valuation interest rate of the retirement system less 2 1/2 percent. The minimum standards provided by subsection (a) of this Code section are deemed to have been met if such level percentage amortization is used and the employer contribution is equal to or greater than the annual required contribution as is determined in accordance with the provisions of Governmental Accounting Standards Board Statements No. 25 and No. 27.

    (c) In the case of a retirement system which does not use a formula related to the compensation of the members of such retirement system as a basis for the calculation of benefits under such retirement system, the minimum funding standards provided for in subsection (a) of this Code section shall be deemed to have been met if the employer contribution is equal to or greater than the annual contribution as determined in accordance with the provisions of Governmental Accounting Standards Board Statements No. 25 and No. 27.
    (d)(1) The minimum funding standards provided for in subsection (a) of this Code section shall be deemed to have been met if as of the latest actuarial valuation a retirement system has a negative unfunded actuarial accrued liability and the employer contribution is equal to or greater than the annual required contribution as determined in accordance with the provisions of Governmental Accounting Standards Board Statements No. 25 and No. 27; provided, however, that in no case shall the negative unfunded actuarial accrued liability be amortized over a period of less than ten years. If a retirement system has such a negative unfunded actuarial accrued liability, the amounts necessary to amortize under paragraphs (2), (3), and (4) of subsection (a) of this Code section established prior to the current actuarial valuation date will be considered to be fully amortized under the minimum funding standards provided by subsection (a) of this Code section.

    (2) In any actuarial valuation subsequent to the valuation in which a retirement system is found to have complied with the provisions of paragraph (1) of this subsection, if the retirement system still has a negative unfunded actuarial accrued liability, the only amortization required under such minimum funding standards will be an amortization of the negative unfunded actuarial accrued liability over a period of not less than ten years of the actuarial accrued liability. For any such subsequent actuarial valuations, whenever the retirement system again has an unfunded actuarial accrued liability, the minimum standards provided by subsection (a) of this Code section shall apply with new amounts necessary to amortize the newly created unfunded actuarial accrued liability.

    (e) In determining the minimum annual employer contribution under subsection (a) of this Code section:

    (1) All benefits which it is reasonable to anticipate will be paid from the retirement system because of the current active members and payments to beneficiaries shall be taken into account; and

    (2) All costs, liabilities, and other factors under the retirement system shall be determined by an actuary on the basis of an actuarial cost method and actuarial assumptions which, in the aggregate, are reasonable, considering the experience of the retirement system and reasonable expectations, and which, in combination, offer the actuary's best estimate of anticipated experience under the retirement system.

    (f) Upon completion of the first actuarial investigation of a retirement system after January 1, 1984, and for each subsequent actuarial investigation, the minimum annual employer contribution required by this Code section shall be increased by an amount equivalent to the interest earned on such minimum annual employer contribution, based on the actuarial assumed valuation interest rate applicable to the retirement system, from the date of such actuarial investigation until the date the minimum annual employer contribution is made to the retirement system. This subsection shall not apply to a retirement system to which annual employer contributions are being made in excess of the minimum annual employer contribution required by this Code section.

    (g) In no event will employee contributions of active members of a retirement system be used to pay benefits to beneficiaries under the retirement system.

    (h) The minimum funding requirements of this Code section shall not apply to prefunding, in whole or in part, of anticipated future costs of providing other post-employment benefits as defined by Governmental Accounting Standards Board Statements Number 43 and Number 45 for retired employees of a political subdivision including those presently retired and those anticipated to retire in the future, as provided in Code Section 47-20-10.1. Such prefunding may be maintained as part of the same investment pool as the fund receiving employer and employee contributions to pay the cost of providing retirement benefits under any retirement system maintained by the political subdivision for its employees so long as such funds are separately accounted for and separate records are maintained with respect to each fund. Funds maintained by a political subdivision for the purpose of prefunding other post-employment benefits for retired employees may be invested and reinvested in accordance with the provisions of Code Section 47-1-12, or Article 7 of Chapter 20 of this title, as applicable, and, for the purposes of that Code section or article and the home rule provisions of the laws and the Constitution of the State of Georgia only, such funds shall be treated in the same manner as retirement funds.

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