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<br />~ <br /> <br />e' <br /> <br />. <br /> <br />We have determined that the normal cost of present benefits for each <br />plan participant is $27 per year. The normal cost is the dollar <br />amount required to be paid on behalf of each fireman from his date of <br />tit employment to his retirement date in order to accumulate the amount <br />needed to provide the plan benefits. <br /> <br />e <br /> <br />- <br /> <br />Since the $5 contributed on behalf of each fireman is much less than <br />his $27 normal cost, the deficit is causing the plan"s unfunded liabil- <br />ity to increase. As a result, it' is impossible to pay full pensions <br />to those firemep and widows currently entitled to receive benefits <br />without relying on both the Emergency Reserve Fund warrant from the <br />State of Texas ($300.00 in 1975) and the special city contribution <br />($3,054.94 in 1975). <br /> <br />In order for the plan to be considered actuarially sound, we feel that <br />annual contributions should be made that are adequate to satisfy the <br />following two obje~tives: <br />1. pay for the plan's normal cost and amortize the plan's <br />unfunded liability within a reasonable period (20 years or <br />less), and <br />2. pay the full amount due to current pensioners and the full <br />amount that will be due to firemen who retire in future <br /> <br />years. <br /> <br />Since the contributions you are now paying of $5 per firman per year <br /> <br />are not adequate to meet either of the above two objectives, we con- <br /> <br />sider your plan, based on present levels of benefits and contributions, <br /> <br />to be actuarially unsound. In order to place the fund in an actuar- <br /> <br />ially sound position, we recommen~ that a contribution of $27 for each <br /> <br />- 4 - <br />