Canton, Massachusetts · Saved source text
Other Post Employment Benefits Report (PDF)
Saved text from 57 source pages. Transcription and OCR may contain errors; verify figures and wording against the original. Retrieved 2026-10-15.
Source page 41
Town of Canton
Other Post-Employment Benefits Valuation
as of January 1, 2013
Actuarial Methods and Assumptions
1. Actuarial Cost Method Costs are attributed between past and future service
using the Projected Unit Credit cost method. For
attribution purposes, benefits are assumed to accrue over
all employee service until decrement.
2. Interest Rate/Discount Rate 7.50% per year net of investment expenses for a funded
program.
4.00% per year net of investment expenses for an
unfunded program.
4.20% per year net of investment expenses for a
partially program.
3. Amortization Method Closed 26 year amortization (remainder of initial 30
year amortization). Uses level percentage of payroll
(3.00% annual rate of increase) for partially funded plan.
4. Asset Valuation Method Market value of assets
5. Mortality Actives: The RP-2000 Mortality Tables (Sex-distinct)
for Employees projected 18 years.
Retirees: The RP-2000 Mortality Tables (Sex-distinct)
for Healthy Annuitants projected 18 years.
Disabled: The RP-2000 Mortality Tables (Sex-distinct)
for Healthy Annuitants projected 18 years
and set forward 2 years
39Source page 42
Town of Canton
Other Post-Employment Benefits Valuation
as of January 1, 2013
Actuarial Methods and Assumptions
(Continued)
6a. Withdrawal Prior to Retirement (all except teachers). Based on years of service.
Years of Service Groups 1,2 Group 4
0 15.00% 1.50%
1 12.00% 1.50%
2 10.00% 1.50%
3 9.00% 1.50%
4 8.00% 1.50%
5 7.60% 1.50%
6 7.50% 1.50%
7 6.70% 1.50%
8 6.30% 1.50%
9 5.90% 1.50%
10 5.40% 1.50%
11 5.00% 0.00%
12 4.60% 0.00%
13 4.10% 0.00%
14 3.70% 0.00%
15 3.30% 0.00%
16 2.00% 0.00%
17 2.00% 0.00%
18 2.00% 0.00%
19 2.00% 0.00%
20 2.00% 0.00%
21 1.00% 0.00%
22 1.00% 0.00%
23 1.00% 0.00%
24 1.00% 0.00%
25 1.00% 0.00%
26 1.00% 0.00%
27 1.00% 0.00%
28 1.00% 0.00%
29 1.00% 0.00%
30+ 0.00% 0.00%
40Source page 43
Town of Canton
Other Post-Employment Benefits Valuation
as of January 1, 2013
Actuarial Methods and Assumptions
(Continued)
6b. Withdrawal Prior to Retirement for Teachers.
Male Teachers Service: 0 5 10
Age
25 12.00% 4.50% 1.00%
35 11.00 5.00 1.50
45 9.50 5.00 2.00
55 7.5 4.50 2.50
Female Teachers 25 10.00% 9.00% 5.00%
35 12.00 8.40 4.10
45 8.90 4.70 2.40
55 8.00 3.20 2.00
7. Eligibility for Vested Post- Those with 10 years of Service or more are eligible for a
Retirement Medical Benefits benefit upon reaching the eligibility age for retirement.
upon Withdrawal
41Source page 44
Town of Canton
Other Post-Employment Benefits Valuation
as of January 1, 2013
Actuarial Methods and Assumptions
(Continued)
8. Disability Prior to Retirement The rates shown at the following sample ages illustrate
the assumption regarding the incidence of disability.
Disability is assumed to be 55% ordinary and 45%
accidental for Group 1 and 10% ordinary and 90%
accidental for Group 4 and 55% ordinary and 45%
accidental for Teachers.
Rate of Disability
Age Groups 1 and 2 Group 4 Teachers
20 0.01% 0.10% 0.004%
25 0.02% 0.20% 0.005%
30 0.03% 0.30% 0.006%
35 0.06% 0.30% 0.006%
40 0.10% 0.30% 0.010%
45 0.15% 1.00% 0.030%
50 0.19% 1.25% 0.050%
55 0.24% 1.20% 0.080%
60 0.28% 0.85% 0.100%
42Source page 45
Town of Canton
Other Post-Employment Benefits Valuation
as of January 1, 2013
Actuarial Methods and Assumptions
(Continued)
9a. Rates of Retirement: Tier 1 Non-Teachers (hired before April 2, 2012)
Rates of Retirement
Age Groups 1 and Groups 1 and 2 Group 4
2 Male Female
50 1.00% 1.50% 2.00%
51 1.00% 1.50% 2.00%
52 1.00% 2.00% 2.00%
53 1.00% 2.50% 5.00%
54 2.00% 2.50% 7.50%
55 2.00% 5.50% 15.00%
56 2.50% 6.50% 10.00%
57 2.50% 6.50% 10.00%
58 5.00% 6.50% 10.00%
59 6.50% 6.50% 15.00%
60 12.00% 5.00% 20.00%
61 20.00% 13.00% 20.00%
62 30.00% 15.00% 25.00%
63 25.00% 12.50% 25.00%
64 22.00% 18.00% 30.00%
65 40.00% 15.00% 100.00%
66 25.00% 20.00% NA
67 25.00% 20.00% NA
68 30.00% 25.00% NA
69 30.00% 20.00% NA
70 100.00% 100.00% NA
43Source page 46
Town of Canton
Other Post-Employment Benefits Valuation
as of January 1, 2013
Actuarial Methods and Assumptions
(Continued)
9a. Rates of Retirement: Tier 2 Non-Teachers (hired post-April 1, 2012)
Rates of Retirement
Age Groups 1 and Groups 1 and 2 Group 4
2 Male Female
50 - -
51 - -
52 - -
53 - -
54 - -
55 - - 25.00%
56 - - 15.00%
57 - - 20.00%
58 - - 10.00%
59 - - 15.00%
60 30.00% 30.00% 20.00%
61 20.00% 10.00% 20.00%
62 15.00% 12.00% 25.00%
63 25.00% 10.00% 25.00%
64 20.00% 15.00% 30.00%
65 25.00% 13.00% 100.00%
66 20.00% 18.00% NA
67 50.00% 40.00% NA
68 30.00% 25.00% NA
69 30.00% 25.00% NA
70 100.00% 100.00% NA
44Source page 47
Town of Canton
Other Post-Employment Benefits Valuation
as of January 1, 2013
9b. Rates of Retirement: Tier 1 Male Teachers (hired before April 2, 2012)
Male Teachers
Service:
< 20 20-29 > 29
Years years years
Age
50 N/A 1.0% 2.0%
51 N/A 1.0% 2.0%
52 N/A 1.0% 2.0%
53 N/A 1.0% 2.0%
54 N/A 1.0% 2.0%
55 3.0% 3.0% 6.0%
56 8.0% 5.0% 20.0%
57 15.0% 8.0% 35.0%
58 15.0% 10.0% 50.0%
59 20.0% 20.0% 50.0%
60 15.0% 20.0% 50.0%
61 30.0% 25.0% 50.0%
62 20.0% 30.0% 40.0%
63 30.0% 30.0% 40.0%
64 40.0% 30.0% 40.0%
65 40.0% 40.0% 50.0%
66 40.0% 30.0% 50.0%
67 40.0% 30.0% 50.0%
68 40.0% 30.0% 50.0%
69 40.0% 30.0% 50.0%
70 100.0% 100.0% 100.0%
45Source page 48
Town of Canton
Other Post-Employment Benefits Valuation
as of January 1, 2013
Actuarial Methods and Assumptions
(Continued)
9b. Rates of Retirement: Tier 2 Female Teachers (hired before 4/2/2012)
Female Teachers
Service:
< 20 20-29 > 29
years years years
Age
50 0.0% 1.5% 2.0%
51 0.0% 1.5% 2.0%
52 0.0% 1.5% 2.0%
53 0.0% 1.5% 2.0%
54 0.0% 1.5% 2.0%
55 2.0% 3.0% 6.0%
56 2.0% 3.0% 15.0%
57 8.0% 7.0% 30.0%
58 10.0% 7.0% 35.0%
59 15.0% 11.0% 35.0%
60 20.0% 16.0% 35.0%
61 20.0% 20.0% 35.0%
62 25.0% 30.0% 40.0%
63 24.0% 30.0% 30.0%
64 20.0% 30.0% 35.0%
65 30.0% 30.0% 35.0%
66 30.0% 30.0% 35.0%
67 30.0% 30.0% 30.0%
68 30.0% 30.0% 30.0%
69 30.0% 30.0% 30.0%
70 100.0% 100.0% 100.0%
46Source page 49
Town of Canton
Other Post-Employment Benefits Valuation
as of January 1, 2013
Actuarial Methods and Assumptions
(Continued)
9b. Rates of Retirement: Tier 2 Male Teachers (hired after April 1, 2012)
Male Teachers
Service:
< 20 20-29 > 29
Years years years
Age
50 N/A N/A N/A
51 N/A N/A N/A
52 N/A N/A N/A
53 N/A N/A N/A
54 N/A N/A N/A
55 3.0% 0.0% 0.0%
56 8.0% 0.0% 0.0%
57 15.0% 0.0% 0.0%
58 15.0% 0.0% 0.0%
59 20.0% 0.0% 0.0%
60 25.0% 35.0% 45.0%
61 35.0% 35.0% 45.0%
62 30.0% 30.0% 45.0%
63 35.0% 30.0% 45.0%
64 40.0% 35.0% 45.0%
65 40.0% 35.0% 45.0%
66 40.0% 40.0% 45.0%
67 50.0% 45.0% 55.0%
68 50.0% 45.0% 55.0%
69 55.0% 45.0% 55.0%
70 100.0% 100.0% 100.0%
47Source page 50
Town of Canton
Other Post-Employment Benefits Valuation
as of January 1, 2013
Actuarial Methods and Assumptions
(Continued)
9b. Rates of Retirement: Tier 2 Female Teachers (hired after 4/1/2012)
Female Teachers
Service:
< 20 20-29 > 29
years years years
Age
50 0.0% 0.0% 0.0%
51 0.0% 0.0% 0.0%
52 0.0% 0.0% 0.0%
53 0.0% 0.0% 0.0%
54 0.0% 0.0% 0.0%
55 0.0% 0.0% 0.0%
56 0.0% 0.0% 0.0%
57 0.0% 0.0% 0.0%
58 0.0% 0.0% 0.0%
59 0.0% 0.0% 0.0%
60 25.0% 23.0% 45.0%
61 30.0% 30.0% 45.0%
62 25.0% 25.0% 45.0%
63 25.0% 25.0% 45.0%
64 30.0% 30.0% 45.0%
65 30.0% 30.0% 45.0%
66 30.0% 30.0% 45.0%
67 35.0% 35.0% 45.0%
68 35.0% 35.0% 45.0%
69 35.0% 35.0% 45.0%
70 100.0% 100.0% 100.0%
48Source page 51
Town of Canton
Other Post-Employment Benefits Valuation
as of January 1, 2013
Actuarial Methods and Assumptions
(Continued)
10. Individual and Blended Rates By Plan
Managed Care Managed Care
Commercial Commercial Indemnity Dental Dental
Age Individual Blended(1) Medicare Individual Blended(1)
55 $9,558.40 $17,969.42 $2,401.70 $326.64 $924.01
60 $11,407.33 $21,445.34 $2,866.27 $340.25 $962.52
65 $14,012.73 $20,178.05 $3,520.92 $354.43 $1,002.64
70 $16,244.59 $23,391.89 $4,081.71 $361.04 $1,021.33
75 $18,379.27 $26,465.78 $4,618.08 $367.77 $1,040.36
80 $20,292.19 $29,220.36 $5,098.74 $369.13 $1,044.21
85 $21,327.30 $21,327.30 $5,358.83 $369.13 $1,044.21
(1)
For Commercial Medical, blended rates below 65 are 55% Family and 45% Individual.
Blended rates 65 and higher are 27.5% Family and 72.5% Individual. Individual rates are
used for all participants 81 and higher. For Dental, blended rates at all ages are 60%
Family and 40% Individual. Individual rates are used for all participants 81 and higher.
11. Trend Rates By Plan
Calendar Commercial Medicare
Year Managed Care Indemnity Dental
2013 9.00% 9.00% 8.00%
2014 8.00% 8.00% 7.00%
2015 7.50% 7.50% 6.50%
2016 7.00% 7.00% 6.00%
2017 6.50% 6.50% 5.50%
2018 6.00% 6.00% 5.00%
2019 5.50% 6.00% 5.00%
2020 5.00% 6.00% 5.00%
2021 5.00% 6.00% 5.00%
2022+ 5.00% 6.00% 5.00%
49Source page 52
Town of Canton
Other Post-Employment Benefits Valuation
as of January 1, 2013
12. Medicare Eligibility Employees: 100% if hired March 31, 1986 or after;
85% if hired pre-March 31, 1986
Spouses:100%
13.Participation Rates Current retirees and spouses are assumed to continue the
same coverage they have as of the valuation date. No
future election of coverage is assumed for those retirees
and spouses who currently have not elected coverage.
All Retirees: 87.5% of the active Town employees
eligible for post-employment medical benefits are
assumed to elect Medical Coverage immediately upon
retirement.
87.5% of the active employees eligible for post-
employment medical benefits are assumed to elect Life
Insurance coverage immediately upon retirement.
70.0% of the active employees eligible for post-
employment medical benefits are assumed to elect
Dental Insurance coverage immediately upon retirement.
For all Retirees: Of those electing coverage, 80% are
assumed to have a covered spouse at retirement. Of this
80%, 65% are assumed to participate pre-65, while 65%
are assumed to participate post-65.
Participants with no or unknown current coverage (e.g.
active employees and/or vested inactives who do not
currently participate in Canton’s medical plans) are
assumed to elect retiree coverage at the same rates as
currently covered active employees. Medicare-eligible
retirees currently under age 65 are assumed to elect a
Medicare plan option at age 65.
50Source page 53
Town of Canton
Other Post-Employment Benefits Valuation
as of January 1, 2013
Actuarial Methods and Assumptions
(Continued)
14. Expenses Administrative expenses are included in the per capita
medical cost assumption.
15. Projections The January 1, 2013 valuation was not adjusted for
timing when determining the funding schedule. This
means that the Pay-as-you-go amount as well as the
Actuarial Valuation results have not been modified for
interest or any other timing factor in our presentation.
16. Massachusetts Teachers In this report, members of the Massachusetts Teachers
Retirement System (MTRS) Retirement System are sometimes referred to as
Teachers.
17. Section 9 ½ of Chapter 32B No current or future payments or receipts are assumed
due to past service or future service with other Chapter
32 entities.
18. Valuation Date January 1, 2013
51Source page 54
Town of Canton
Other Post-Employment Benefits Valuation
as of January 1, 2013
Principal Plan Provisions Recognized in Valuation
1. Eligibility for Benefits Current retirees, beneficiaries and spouses of Canton are
eligible for medical benefits.
Current employees or spouses who retiree with a benefit from
the Canton Retirement System or the Massachusetts
Teachers’ Retirement System.
Survivors of Canton employees and retirees are also eligible
for medical benefits.
2. Medical Benefits Various medical plans offered by Canton to its own
employees.
3. Life Insurance Canton retirees are eligible for a $5,000 life insurance benefit
offered by Canton, provided the retiree makes the required
contributions. Each employee contributes 25% of the
premium or $2.04/month for the coverage.
4. Retiree Contributions Based on data provided by Canton.
52Source page 55
Town of Canton
Other Post-Employment Benefits Valuation
as of January 1, 2013
Glossary
Actuarial Accrued Liability The portion, as determined by a particular
Actuarial Cost Method, of the present value of
benefits which is not provided for by future
Normal Costs.
Actuarial Assumptions Assumptions as to the occurrence of future
events affecting Other Post-employment
Benefits such as: mortality rates, disability
rates, withdrawal rates, and retirement rates,
the discount assumption, and the trend rates.
Actuarial Cost Method A procedure for determining the Actuarial
Present Value of Total Projected benefits and
for developing an actuarially equivalent
allocation of such value to time periods,
usually in the form of a Normal and an
Actuarial Accrued Liability.
Amortization Payment The portion of the OPEB contribution
designed to pay interest and to amortize the
Unfunded Actuarial Accrued Liability.
Annual OPEB Cost The accrual-basis measure of the periodic cost
of an employer’s participation in a defined-
benefit OPEB plan.
Annual Required Contribution (ARC) The employer’s periodic contributions to a
defined benefit OPEB plan, calculated in
accordance with the parameters defined in
GASB 45. This is defined as the sum of the
Normal Cost and the Amortization payment.
Commercial Plans Plans designed to cover the medical expenses
of those not otherwise covered by Medicare.
GASB The Governmental Accounting Standards
Board is the organization that establishes
financial reporting standards for state and
local governments.
53Source page 56
Town of Canton
Other Post-Employment Benefits Valuation
as of January 1, 2013
Glossary
(continued)
Investment Return Assumptions (Discount The rate used to adjust a series of future
Rate) benefit payments to reflect the time value of
money. Under GASB 45, this rate is related to
the degree to which the OPEB program is
funded.
Healthcare Cost Trend Rate The rate of change in per capita health claims
costs over time as a result of factors such as
medical inflation, utilization of healthcare
services, the intensity of the delivery of
services, technological developments, and
cost-shifting.
Medicare Plans Medical plans sold to those over 65 who are
also covered by Medicare. These plans are
supplemental to the Medicare plan, which is
considered primary.
Net OPEB Obligation The cumulative difference, since the effective
date of GASB 45, between the annual OPEB
cost and the employer’s contributions to the
plan.
Normal Cost The portion of the Actuarial Present value of
plan benefits that is allocated to a valuation
year by the Actuarial Cost Method.
OPEB Other Postemployment benefits other than
pensions. This does not include plans such as
severance plans or sick-time buyouts.
Pay-as-You-Go The amount of benefits paid out to plan
participants during the year.
Per Capita Claims Cost The current average annual cost of providing
postretirement health care benefits per
individual.
Unfunded Actuarial Accrued Liability The portion of the Actuarial Accrued Liability
that is not covered by plan assets. For a plan
that is completely unfunded, this amount is
equivalent to the Actuarial Accrued Liability.
Valuation Date The point from which all future plan
experience is projected and as of which all
present values are calculated.
54Source page 57
Town of Canton
Other Post-Employment Benefits Valuation
as of January 1, 2013
Acknowledgement of Qualifications
We, Lawrence Stone and Kevin Gabriel, are consultants for Stone Consulting, Inc. and are
members of the American Academy of Actuaries and meet the Qualification Standards of the
American Academy of Actuaries to render the actuarial opinion contained herein.
__________________________________
Lawrence B. Stone
Member, American Academy of Actuaries
__________________________________
Kevin K. Gabriel
Member, American Academy of Actuaries
5 West Mill Street, Suite 4
Medfield, MA 02052
Tel. (508) 359-9600
Fax. (508) 359-0190
E-mail Lstone@stoneconsult.com
55