(6) Pension Plan

(a) Plan Description

The City contributes to the Revere Retirement System ("System"), a single-employer, public employee retirement system that acts as the investment and administrative agent for the City. The City's payroll for employees covered by the System for the year ended June 30, 1994, was $12,739,723. Public school teachers are covered by the Commonwealth of Massachusetts Teachers' Retirement System (TRS) to which the City of Revere does not contribute. The City's payroll covered by TRS was $15,464,657 in 1994. Total payroll for the City was $28,204,380.

 

The System and the TRS are contributory defined benefit plans covering all City employees and teachers deemed eligible.

 

Instituted in 1940, the System is a member of the Massachusetts Contributory System and is governed by Chapter 32 of the Massachusetts General Laws. Membership in the System is mandatory immediately upon the commencement of employment for all permanent, full-time employees. At January 1, 1994 (the latest date such information is available) membership in the System consists of:

		Number of Employees
Retirees and beneficiaries currently receiving benefits		547
Active employees		453
Inactive members		25
		1,025

Both systems provide for retirement allowance benefits up to a maximum of 80% of a member's highest three-year average annual rate of regular compensation. Benefit payments are based upon a member's age, length of creditable service, level of compensation and group classification. Members joining the System after January 1, 1979, were subject to a cap of $30,000 on the level of compensation upon which their benefits are calculated. Effective December 21, 1990, the $30,000 cap was removed.

Members of both systems become vested after 10 years of creditable service. A retirement allowance may be received upon reaching age 65 or upon attaining 20 years of service. The Systems also provides for early retirement at age 55 if a Participant (1) has a record of 10 years of creditable service, (2) was on the City payroll on January 1, 1978, (3) voluntarily left City employment on or after that date, and (4) left accumulated annuity deductions in the fund. Active members contribute either 5, 7 or 8% of their gross regular compensation depending on the date upon which their membership began. Employees hired after January 1, 1979 contribute 10% of their compensation over $30,000.

The systems also provide death and disability benefits.

(b) Significant Accounting Policies and System Assets

The accounting records of the System are maintained on a calendar year basis in accordance with the standards and procedures established by the Commissioner of the Public Employee Retirement Administration (PERA).

The investments of the System are valued as follows:

Bonds are valued at amortized cost which is the original cost of the investment plus or minus any bond discount or bond premium calculated ratably to maturity.

Stocks are reflected at their quoted market value.

Cash and investments of the System at December 31, 1993, are summarized as follows:

(c) Funding Status and Progress

The amount shown below as the "Pension Benefit Obligation" is a standard disclosure measure of the present value of pension benefits, adjusted for the effects of projected salary increases estimated to be payable in the future as a result of employee service to date. The measure is intended to help users assess the funding status of the System on a going-concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among systems.

The Pension Benefit Obligation was computed as part of an actuarial valuation performed as of January 1, 1992. This valuation reflects the effects of the removal of the $30,000 compensation cap and other changes resulting from the adoption of Chapter 32, Section 22D of the Massachusetts General Laws. Significant actuarial assumptions used in the valuation include (a) a rate of return on the investment of present and future assets of 8% a year compounded annually, (b) projected salary increases of 5% a year compounded annually, (c) mortality in accordance with the 1971 Group Annuity Mortality Table, set back six years for females, (d) disability in accordance with the 1972 OASDI incidence, (e) terminations in accordance with Table T-5 of Actuary's Pension Handbook based on moderate turnover (no terminations for police), (f) retirements in accordance with recent experience of the System, and (g) that the Commonwealth will continue the current practice of reimbursing the system for annual cost-of-living increases.

Total unfunded pension benefit obligation applicable to the System was $38,893,000 at January 1, 1992, as follows:

(d) Contribution Requirements and Contribution Made

The System's funding policy is governed by Section 22D of Chapter 32 of the Massachusetts General Laws. Accordingly, the City of Revere is required to fund each year the actuarially determined normal cost plus an amount to amortize the unfunded liability for retirees and active employees by June 30, 2007 and June 30, 2024, respectively. The Commonwealth of Massachusetts currently reimburses the System on a quarterly basis for the portion of benefit payments owing to cost-of-living increases granted after the implementation of Proposition 2-1/2.

The City's contribution to the System for the calendar year December 31, 1993 of $5,859,244 was made in accordance with the funding policy described above and was funded as follows: The City contributed $4,890,148 (38% of current covered payroll); employees contributed $969,096 (8% of current covered payroll).

(e) Trend Information

Trend information showing the System's progress in accumulating sufficient assets to pay benefits when due is presented in the System's separately issued financial statements.

(f) Post-Retirement Benefits

All retired employees eligible for pension benefits as well as teachers covered under the TRS receive certain post-retirement benefits including major health and life insurance. Benefits received and costs borne by retirees are consistent with those of active employees. The City's cost of these post-retirement benefits for fiscal 1994 was approximately $989,000, which was accounted for on a pay-as-you-go basis.