Contribution Stabilization Program
Resources
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Calculating the Maximum Amount Eligible for Amortization
First, the System’s actuary determines the System’s average and graded rates.
For fiscal year 2013:
- The average rate is 18.9 percent for ERS (including 0.4 percent GLIP) and 25.8 percent for PFRS (including 0.1 percent GLIP).
- The graded rate is 11.5 percent for ERS and 19.5 percent for PFRS.
For fiscal year 2014:
- The average rate is 20.9 percent for ERS (including 0.4 percent GLIP) and 28.9 percent for PFRS (no GLIP rate this year).
- The graded rate is 12.5 percent for ERS and 20.5 percent for PFRS.
Then, the actuary:
Determines the employer’s normal contribution
Subtracts the value of Group Term Life Insurance (0.4 percent for most ERS and 0.1 percent for PFRS and ERS special plans) from employer’s invoiced contribution (not including payments for deficiency, previous amortizations, incentive costs or prior year’s adjustments).
Determines the employer’s average rate
Divides the normal contribution by the projected salary.
Determines the employer’s graded rate
Compares the employer’s average rate to the System’s average rate. If the employer’s average rate is ≥ 75 percent of the System’s average rate, the employer’s graded rate equals the System’s graded rate.
Determines the employer’s graded contribution
Multiplies the employer’s projected salary by the employer’s graded rate.
Determines the maximum amortization amount
Subtracts the employer’s graded contribution from the normal contribution.
Example of Amortization Calculation
| Employer’s projected salary | $122,143,450 |
| Employer’s normal annual contribution (invoiced contribution based on retirement plans offered and normal contribution rates minus the value of GTLI) | 20,764,387* |
| Employer’s average rate (employer’s normal contribution divided by employer’s projected salary) | 17.0% |
| Employer’s graded rate (since employer’s average rate is ≥ System’s graded rate, employer’s graded rate equals System’s graded rate) | 11.5% |
| Employer’s graded contribution (employer’s projected salary multiplied by employer’s graded rate) | 14,046,496 |
| Maximum amortization amount (difference between the employer’s normal contribution and graded contribution) | 6,717,891** |
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*Does not include payments for deficiency, previous amortizations, incentive costs and prior year’s adjustments. **Lesser amounts can be amortized and employers are not required to amortize each year. |
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