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WORCESTER REGIONAL RETIREMENT SYSTEM
INDEPENDENT AUDITORS’ REPORT ON SCHEDULES OF EMPLOYER ALLOCATIONS AND
SCHEDULES OF PENSION AMOUNTS BY EMPLOYER
FOR THE YEAR ENDED DECEMBER 31, 2015
WORCESTER REGIONAL RETIREMENT SYSTEM
INDEPENDENT AUDITORS’ REPORT ON SCHEDULES OF EMPLOYER ALLOCATIONS AND
SCHEDULES OF PENSION AMOUNTS BY EMPLOYER
FOR THE YEAR ENDED DECEMBER 31, 2015
TABLE OF CONTENTS
Page
Independent Auditors’ Report ................................................................................................................................................ 1
Schedule of Employer Allocations ......................................................................................................................................... 4
Schedule of Pension Amounts by Employer ......................................................................................................................... 8
Notes to Schedules .................................................................................................................................................................. 30
1
Independent Auditors’ Report
2
Independent Auditors’ Report To the Honorable Retirement Board Worcester Regional Retirement System Auburn, Massachusetts 01501 Report on Schedules We have audited the accompanying schedule of employer allocations of the Worcester Regional Retirement System as of and for the year ended December 31, 2015, and the related notes. We have also audited the total for all entities of the rows titled ending net pension liability, total deferred outflows of resources, total deferred inflows of resources, pension expense, and covered payroll as of and for the year ended December 31, 2015 and the beginning net pension liability, as of and for the year ended December 31, 2014 (specified row totals) included in the accompanying schedule of pension amounts by employer of the Worcester Regional Retirement System, and the related notes. Management’s Responsibility for the Schedules Management is responsible for the preparation and fair presentation of these schedules in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the schedules that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on the schedule of employer allocations and the specified row totals included in the schedule of pension amounts by employer based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the schedule of employer allocations and specified row totals included in the schedule of pension amounts by employer are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the schedule of employer allocations and specified row totals included in the schedule of pension amounts by employer. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the schedule of employer allocations and specified row totals included in the schedule of pension amounts by employer, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the schedule of employer allocations and specified row totals included in the schedule of pension amounts by employer in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the schedule of employer allocations and specified row totals included in the schedule of pension amounts by employer.
3
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Opinions
In our opinion, the schedules referred to above present fairly, in all material respects, the employer allocations and ending net pension liability, total deferred outflows of resources, total deferred inflows of resources, total pension expense and total covered payroll for the total of all participating entities for the Worcester Regional Retirement System as of and for the year ended December 31, 2015 and the beginning net pension liability for the total of all participating entities of the Worcester Regional Retirement System as of and for the year ended December 31, 2014, in accordance with accounting principles generally accepted in the United States of America.
Other Matter
We have audited, in accordance with auditing standards generally accepted in the United States of America, the financial statements of the Worcester Regional Retirement System as of and for the year ended December 31, 2015, and our report thereon, dated September 9, 2016, expressed an unmodified opinion on those financial statements.
Restriction on Use
Our report is intended solely for the information and use of the Worcester Regional Retirement System management, the Worcester Regional Retirement System Board of Retirement, the Worcester Regional Retirement System employers and their auditors and is not intended to be and should not be used by anyone other than these specified parties.
CliftonLarsonAllen LLP
Boston, Massachusetts September 9, 2016
4
Schedule of Employer Allocations
Employer
Employer Allocation
Employer Contributions Percentage
Ashburnham $ 560,104 1.245062%
Ashburnham-Westminster Regional 458,559 1.019336%
Athol 1,591,101 3.536877%
Athol Housing Authority 57,969 0.128860%
Athol-Royalston Regional 685,467 1.523733%
Auburn 2,175,190 4.835256%
Auburn Housing Authority 46,736 0.103890%
Auburn Water District 77,920 0.173209%
Barre 230,731 0.512895%
Barre Housing Authority 11,284 0.025083%
Berlin 343,849 0.764346%
Berlin-Boylston Regional 94,251 0.209512%
Blackstone 540,058 1.200501%
Blackstone Housing Authority 13,021 0.028945%
Blackstone-Millville Regional 420,503 0.934741%
Bolton 316,341 0.703198%
Boylston 434,542 0.965949%
Boylston Water District 7,265 0.016149%
Brookfield 201,170 0.447183%
Charlton 920,665 2.046557%
Cherry Valley-Rochdale Water 36,583 0.081321%
Cherry Valley Sewer District - 0.000000%
Douglas 752,764 1.673328%
Dudley 679,525 1.510524%
Dudley Housing Authority 20,521 0.045616%
Dudley-Charlton Regional 744,579 1.655133%
East Brookfield 90,263 0.200647%
Grafton 1,340,346 2.979471%
Grafton Housing Authority 42,894 0.095350%
Hardwick 177,843 0.395329%
Harvard 682,957 1.518153%
Hillcrest Water District 2,119 0.004710%
Holden 1,730,551 3.846862%
Holden Housing Authority 24,826 0.055186%
Hopedale 693,509 1.541609%
Hopedale Housing Authority 6,106 0.013573%
Hubbardston 200,440 0.445560%
Lancaster 449,938 1.000172%
Lancaster Housing Authority 7,742 0.017210%
Leicester 946,178 2.103270%
Leicester Housing Authority 32,803 0.072918%
Leicester Water District 47,745 0.106133%
Lunenburg 967,652 2.151005%
Lunenburg Housing Authority 3,622 0.008051% (continued)
WORCESTER REGIONAL RETIREMENT SYSTEM
SCHEDULE OF EMPLOYER ALLOCATIONS
FOR THE YEAR ENDED DECEMBER 31, 2015
5
Employer
Employer Allocation
Employer Contributions Percentage
WORCESTER REGIONAL RETIREMENT SYSTEM
SCHEDULE OF EMPLOYER ALLOCATIONS
FOR THE YEAR ENDED DECEMBER 31, 2015
Lunenburg Water District 42,294 0.094016%
Mendon 426,394 0.947836%
Mendon-Upton Regional 568,365 1.263425%
Millbury 1,398,084 3.107817%
Millbury Housing Authority 73,464 0.163304%
Millville 114,409 0.254321%
Narragansett Regional 313,485 0.696850%
Nashoba Regional 717,712 1.595410%
New Braintree 58,576 0.130209%
Northboro 1,485,299 3.301689%
Northboro Housing Authority 47,603 0.105817%
Northboro-Southboro Regional 257,382 0.572137%
North Brookfield 357,000 0.793580%
North Brookfield Housing Authority 13,868 0.030827%
Oakham 61,314 0.136296%
Oxford 1,655,568 3.680182%
Oxford Housing Authority 47,572 0.105748%
Oxford-Rochdale Sewer District 16,068 0.035718%
Paxton 445,087 0.989389%
Petersham 125,965 0.280009%
Phillipston 102,153 0.227077%
Princeton 299,728 0.666269%
Quabbin Regional 806,583 1.792963%
Quaboag Regional 272,775 0.606355%
Royalston 45,699 0.101585%
Rutland 400,384 0.890018%
Southboro 1,413,574 3.142250%
Southboro Housing Authority 13,125 0.029176%
Spencer 641,861 1.426800%
Spencer-East Brookfield Regional 463,038 1.029293%
Spencer Housing Authority 33,862 0.075272%
Sterling 732,508 1.628301%
Sterling Housing Authority 7,022 0.015609%
Sturbridge 985,166 2.189937%
Sutton 847,894 1.884794%
Tantasqua Regional 503,665 1.119603%
Templeton 612,557 1.361660%
Templeton Housing Authority 34,130 0.075868%
Upton 415,019 0.922551%
Uxbridge 1,405,578 3.124476%
Uxbridge Housing Authority 48,135 0.107000%
Wachusett Regional 1,359,653 3.022389%
Warren 266,452 0.592299%
Warren Water District 10,863 0.024147% (continued)
6
Employer
Employer Allocation
Employer Contributions Percentage
WORCESTER REGIONAL RETIREMENT SYSTEM
SCHEDULE OF EMPLOYER ALLOCATIONS
FOR THE YEAR ENDED DECEMBER 31, 2015
Westboro 3,007,999 6.686517%
Westboro Housing Authority 27,685 0.061541%
West Boylston 928,227 2.063367%
West Boylston Housing Authority 9,402 0.020900%
West Boylston Water District 40,655 0.090372%
West Brookfield 214,718 0.477299%
Westminster 652,087 1.449532%
Winchendon 1,220,934 2.714029%
Winchendon Housing Authority 69,168 0.153754%
Totals $ 44,986,040 100.000000%
7
8
Schedule of Pension Amounts by Employer
WORCESTER REGIONAL RETIREMENT SYSTEM
SCHEDULE OF PENSION AMOUNTS BY EMPLOYER
FOR THE YEAR ENDED DECEMBER 31, 2015
Ashburnham- Athol
Westminster Housing
Ashburnham Regional Athol Authority
Net Pension Liability
Beginning Net Pension Liability $ 8,279,760 6,395,222 - -
Ending Net Pension Liability $ 8,837,535 7,235,320 25,105,001 914,657
Deferred Outflows of Resources
Net Difference Between Expected
and Actual Experience $ - - - -
Assumption Changes $ 326,751 267,512 928,210 33,818
Net Difference Between Projected
and Actual Investment Earnings $ 436,398 357,281 1,239,687 45,166
Change in Allocated Proportion $ - - 17,504,938 637,762
Total Deferred Outflows of Resources $ 763,149 624,793 19,672,835 716,746
Deferred Inflows of Resources
Net Difference Between Expected
and Actual Experience $ - - - -
Assumption Changes $ - - - -
Change in Allocated Proportion $ 724,255 274,033 - -
Total Deferred Inflows of Resources $ 724,255 274,033 - -
Pension Expense
Proportionate Share of
Pension Expense $ 1,229,984 1,006,992 3,494,045 127,299
Net Amortization of Deferred
Amounts from Changes in Proportion $ (146,019) (55,249) 3,529,221 128,581
Total Pension Expense $ 1,083,965 951,743 7,023,266 255,880
Covered Payroll $ 3,277,706 3,488,108 4,450,742 204,915
(continued)
9
WORCESTER REGIONAL RETIREMENT SYSTEM
SCHEDULE OF PENSION AMOUNTS BY EMPLOYER
FOR THE YEAR ENDED DECEMBER 31, 2015
Net Pension Liability
Beginning Net Pension Liability
Ending Net Pension Liability
Deferred Outflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Net Difference Between Projected
and Actual Investment Earnings
Change in Allocated Proportion
Total Deferred Outflows of Resources
Deferred Inflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Change in Allocated Proportion
Total Deferred Inflows of Resources
Pension Expense
Proportionate Share of
Pension Expense
Net Amortization of Deferred
Amounts from Changes in Proportion
Total Pension Expense
Covered Payroll
Athol- Auburn Auburn
Royalston Housing Water
Regional Auburn Authority District Barre
- 29,097,672 876,948 978,965 4,109,938
10,815,561 34,320,981 737,419 1,229,452 3,640,562
- - - - -
399,885 1,268,954 27,265 45,457 134,603
534,073 1,694,773 36,414 60,710 179,771
7,541,355 - - 43,040 -
8,475,313 2,963,727 63,679 149,207 314,374
- - - - -
- - - - -
- 269,993 215,192 - 879,843
- 269,993 215,192 - 879,843
1,505,280 4,776,700 102,632 171,112 506,683
1,520,434 (54,434) (43,385) 8,677 (177,388)
3,025,714 4,722,266 59,247 179,789 329,295
2,301,246 13,395,230 190,984 518,640 1,722,298
(continued) (continued)
10
WORCESTER REGIONAL RETIREMENT SYSTEM
SCHEDULE OF PENSION AMOUNTS BY EMPLOYER
FOR THE YEAR ENDED DECEMBER 31, 2015
Net Pension Liability
Beginning Net Pension Liability
Ending Net Pension Liability
Deferred Outflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Net Difference Between Projected
and Actual Investment Earnings
Change in Allocated Proportion
Total Deferred Outflows of Resources
Deferred Inflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Change in Allocated Proportion
Total Deferred Inflows of Resources
Pension Expense
Proportionate Share of
Pension Expense
Net Amortization of Deferred
Amounts from Changes in Proportion
Total Pension Expense
Covered Payroll
Barre Berlin- Blackstone
Housing Boylston Housing
Authority Berlin Regional Blackstone Authority
136,890 4,213,746 1,435,275 9,864,829 166,960
178,043 5,425,381 1,487,128 8,521,242 205,450
- - - - -
6,583 200,593 54,984 315,057 7,596
8,792 267,906 73,435 420,780 10,145
10,290 278,318 - - 4,391
25,665 746,817 128,419 735,837 22,132
- - - - -
- - - - -
- - 156,810 2,263,118 -
- - 156,810 2,263,118 -
24,780 755,090 206,974 1,185,963 28,594
2,075 56,113 (31,615) (456,274) 885
26,855 811,203 175,359 729,689 29,479
85,645 1,758,464 641,840 3,312,372 69,978
(continued)
11
WORCESTER REGIONAL RETIREMENT SYSTEM
SCHEDULE OF PENSION AMOUNTS BY EMPLOYER
FOR THE YEAR ENDED DECEMBER 31, 2015
Net Pension Liability
Beginning Net Pension Liability
Ending Net Pension Liability
Deferred Outflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Net Difference Between Projected
and Actual Investment Earnings
Change in Allocated Proportion
Total Deferred Outflows of Resources
Deferred Inflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Change in Allocated Proportion
Total Deferred Inflows of Resources
Pension Expense
Proportionate Share of
Pension Expense
Net Amortization of Deferred
Amounts from Changes in Proportion
Total Pension Expense
Covered Payroll
Blackstone- Boylston
Millville Water
Regional Bolton Boylston District Brookfield
5,414,978 3,725,574 6,224,784 261,312 3,010,647
6,634,857 4,991,349 6,856,370 114,630 3,174,137
- - - - -
245,311 184,546 253,501 4,238 117,358
327,630 246,473 338,568 5,660 156,739
122,566 381,700 - - -
695,507 812,719 592,069 9,898 274,097
- - - - -
- - - - -
- - 396,507 137,409 290,770
- - 396,507 137,409 290,770
923,421 694,682 954,251 15,954 441,768
24,711 76,956 (79,941) (27,703) (58,623)
948,132 771,638 874,310 (11,749) 383,145
2,640,174 2,462,134 2,829,878 100,888 1,285,454
(continued)
12
WORCESTER REGIONAL RETIREMENT SYSTEM
SCHEDULE OF PENSION AMOUNTS BY EMPLOYER
FOR THE YEAR ENDED DECEMBER 31, 2015
Net Pension Liability
Beginning Net Pension Liability
Ending Net Pension Liability
Deferred Outflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Net Difference Between Projected
and Actual Investment Earnings
Change in Allocated Proportion
Total Deferred Outflows of Resources
Deferred Inflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Change in Allocated Proportion
Total Deferred Inflows of Resources
Pension Expense
Proportionate Share of
Pension Expense
Net Amortization of Deferred
Amounts from Changes in Proportion
Total Pension Expense
Covered Payroll
Cherry Valley- Cherry Valley
Rochdale Sewer
Charlton Water District Douglas
11,178,241 562,166 3,659 10,221,653
14,526,605 577,221 - 11,877,399
- - - -
537,094 21,342 - 439,145
717,325 28,503 - 586,507
831,849 - - -
2,086,268 49,845 - 1,025,652
- - - -
- - - -
- 65,083 3,043 219,753
- 65,083 3,043 219,753
2,021,773 80,336 - 1,653,064
167,711 (13,122) (614) (44,305)
2,189,484 67,214 (614) 1,608,759
5,097,467 281,253 51,425 5,729,138
(continued)
13
WORCESTER REGIONAL RETIREMENT SYSTEM
SCHEDULE OF PENSION AMOUNTS BY EMPLOYER
FOR THE YEAR ENDED DECEMBER 31, 2015
Net Pension Liability
Beginning Net Pension Liability
Ending Net Pension Liability
Deferred Outflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Net Difference Between Projected
and Actual Investment Earnings
Change in Allocated Proportion
Total Deferred Outflows of Resources
Deferred Inflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Change in Allocated Proportion
Total Deferred Inflows of Resources
Pension Expense
Proportionate Share of
Pension Expense
Net Amortization of Deferred
Amounts from Changes in Proportion
Total Pension Expense
Covered Payroll
Dudley Dudley-
Housing Charlton East
Dudley Authority Regional Brookfield Grafton
10,341,497 341,962 9,610,022 972,128 17,942,770
10,721,806 323,788 11,748,253 1,424,204 21,148,493
- - - - -
396,419 11,971 434,370 52,657 781,926
529,444 15,989 580,130 70,327 1,044,314
- - 198,899 184,520 -
925,863 27,960 1,213,399 307,504 1,826,240
- - - - -
- - - - -
1,125,188 58,647 - - 177,070
1,125,188 58,647 - - 177,070
1,492,232 45,064 1,635,090 198,217 2,943,389
(226,852) (11,824) 40,101 37,202 (35,700)
1,265,380 33,240 1,675,191 235,419 2,907,689
3,068,416 95,421 5,026,369 658,794 8,975,245
(continued)
14
WORCESTER REGIONAL RETIREMENT SYSTEM
SCHEDULE OF PENSION AMOUNTS BY EMPLOYER
FOR THE YEAR ENDED DECEMBER 31, 2015
Net Pension Liability
Beginning Net Pension Liability
Ending Net Pension Liability
Deferred Outflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Net Difference Between Projected
and Actual Investment Earnings
Change in Allocated Proportion
Total Deferred Outflows of Resources
Deferred Inflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Change in Allocated Proportion
Total Deferred Inflows of Resources
Pension Expense
Proportionate Share of
Pension Expense
Net Amortization of Deferred
Amounts from Changes in Proportion
Total Pension Expense
Covered Payroll
Grafton Hillcrest
Housing Water
Authority Hardwick Harvard District Holden
538,706 2,668,294 10,019,412 17,618 24,080,656
676,798 2,806,075 10,775,957 33,434 27,305,297
- - - - -
25,023 103,749 398,421 1,236 1,009,562
33,420 138,564 532,118 1,651 1,348,338
23,861 - - 8,660 -
82,304 242,313 930,539 11,547 2,357,900
- - - - -
- - - - -
- 262,669 819,548 - 989,088
- 262,669 819,548 - 989,088
94,195 390,542 1,499,768 4,653 3,800,276
4,811 (52,957) (165,231) 1,746 (199,413)
99,006 337,585 1,334,537 6,399 3,600,863
206,395 729,681 4,037,140 17,567 8,576,726
(continued)
15
WORCESTER REGIONAL RETIREMENT SYSTEM
SCHEDULE OF PENSION AMOUNTS BY EMPLOYER
FOR THE YEAR ENDED DECEMBER 31, 2015
Net Pension Liability
Beginning Net Pension Liability
Ending Net Pension Liability
Deferred Outflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Net Difference Between Projected
and Actual Investment Earnings
Change in Allocated Proportion
Total Deferred Outflows of Resources
Deferred Inflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Change in Allocated Proportion
Total Deferred Inflows of Resources
Pension Expense
Proportionate Share of
Pension Expense
Net Amortization of Deferred
Amounts from Changes in Proportion
Total Pension Expense
Covered Payroll
Holden Hopedale
Housing Housing
Authority Hopedale Authority Hubbardston Lancaster
299,935 10,453,798 88,223 2,278,991 6,106,249
391,714 10,942,451 96,343 3,162,619 7,099,294
- - - - -
14,483 404,577 3,562 116,932 262,483
19,343 540,339 4,757 156,170 350,564
23,669 - - 309,727 -
57,495 944,916 8,319 582,829 613,047
- - - - -
- - - - -
- 1,064,741 6,200 - 128,536
- 1,064,741 6,200 - 128,536
54,518 1,522,940 13,409 440,165 988,060
4,772 (214,666) (1,250) 62,445 (25,915)
59,290 1,308,274 12,159 502,610 962,145
118,016 4,874,617 - 1,195,841 2,608,454
(continued)
16
WORCESTER REGIONAL RETIREMENT SYSTEM
SCHEDULE OF PENSION AMOUNTS BY EMPLOYER
FOR THE YEAR ENDED DECEMBER 31, 2015
Net Pension Liability
Beginning Net Pension Liability
Ending Net Pension Liability
Deferred Outflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Net Difference Between Projected
and Actual Investment Earnings
Change in Allocated Proportion
Total Deferred Outflows of Resources
Deferred Inflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Change in Allocated Proportion
Total Deferred Inflows of Resources
Pension Expense
Proportionate Share of
Pension Expense
Net Amortization of Deferred
Amounts from Changes in Proportion
Total Pension Expense
Covered Payroll
Lancaster Leicester Leicester
Housing Housing Water
Authority Leicester Authority District Lunenburg
186,731 14,749,413 450,302 705,817 12,523,938
122,156 14,929,159 517,578 753,339 15,267,984
- - - - -
4,516 551,978 19,136 27,853 564,505
6,032 737,203 25,558 37,200 753,934
- - - - 229,555
10,548 1,289,181 44,694 65,053 1,547,994
- - - - -
- - - - -
70,132 1,857,658 13,631 61,758 -
70,132 1,857,658 13,631 61,758 -
17,001 2,077,799 72,035 104,848 2,124,956
(14,140) (374,528) (2,748) (12,451) 46,281
2,861 1,703,271 69,287 92,397 2,171,237
1,037 5,236,988 180,993 246,238 4,799,347
(continued)
17
WORCESTER REGIONAL RETIREMENT SYSTEM
SCHEDULE OF PENSION AMOUNTS BY EMPLOYER
FOR THE YEAR ENDED DECEMBER 31, 2015
Net Pension Liability
Beginning Net Pension Liability
Ending Net Pension Liability
Deferred Outflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Net Difference Between Projected
and Actual Investment Earnings
Change in Allocated Proportion
Total Deferred Outflows of Resources
Deferred Inflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Change in Allocated Proportion
Total Deferred Inflows of Resources
Pension Expense
Proportionate Share of
Pension Expense
Net Amortization of Deferred
Amounts from Changes in Proportion
Total Pension Expense
Covered Payroll
Lunenburg Lunenburg Mendon-
Housing Water Upton
Authority District Mendon Regional Millbury
69,627 706,269 5,326,047 7,059,600 20,339,317
57,149 667,331 6,727,808 8,967,881 22,059,505
- - - - -
2,113 24,673 248,748 331,571 815,609
2,822 32,953 332,220 442,835 1,089,300
- - 261,343 381,455 -
4,935 57,626 842,311 1,155,861 1,904,909
- - - - -
- - - - -
18,062 122,104 - - 1,535,092
18,062 122,104 - - 1,535,092
7,954 92,877 936,358 1,248,125 3,070,181
(3,642) (24,618) 52,690 76,906 (309,494)
4,312 68,259 989,048 1,325,031 2,760,687
57,158 399,914 2,491,075 4,576,549 7,023,153
(continued)
18
WORCESTER REGIONAL RETIREMENT SYSTEM
SCHEDULE OF PENSION AMOUNTS BY EMPLOYER
FOR THE YEAR ENDED DECEMBER 31, 2015
Net Pension Liability
Beginning Net Pension Liability
Ending Net Pension Liability
Deferred Outflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Net Difference Between Projected
and Actual Investment Earnings
Change in Allocated Proportion
Total Deferred Outflows of Resources
Deferred Inflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Change in Allocated Proportion
Total Deferred Inflows of Resources
Pension Expense
Proportionate Share of
Pension Expense
Net Amortization of Deferred
Amounts from Changes in Proportion
Total Pension Expense
Covered Payroll
Millbury
Housing Narragansett Nashoba
Authority Millville Regional Regional New Braintree
920,872 932,782 4,396,547 10,982,732 677,207
1,159,143 1,805,189 4,946,286 11,324,335 924,235
- - - - -
42,857 66,743 182,880 418,696 34,172
57,239 89,140 244,248 559,197 45,639
42,332 482,894 - - 81,198
142,428 638,777 427,128 977,893 161,009
- - - - -
- - - - -
- - 207,779 1,238,387 -
- - 207,779 1,238,387 -
161,326 251,241 688,411 1,576,090 128,632
8,535 97,358 (41,891) (249,675) 16,371
169,861 348,599 646,520 1,326,415 145,003
317,411 550,696 1,989,184 6,391,445 254,582
(continued)
19
WORCESTER REGIONAL RETIREMENT SYSTEM
SCHEDULE OF PENSION AMOUNTS BY EMPLOYER
FOR THE YEAR ENDED DECEMBER 31, 2015
Net Pension Liability
Beginning Net Pension Liability
Ending Net Pension Liability
Deferred Outflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Net Difference Between Projected
and Actual Investment Earnings
Change in Allocated Proportion
Total Deferred Outflows of Resources
Deferred Inflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Change in Allocated Proportion
Total Deferred Inflows of Resources
Pension Expense
Proportionate Share of
Pension Expense
Net Amortization of Deferred
Amounts from Changes in Proportion
Total Pension Expense
Covered Payroll
North
Northboro Northboro- Brookfield
Housing Southboro North Housing
Northboro Authority Regional Brookfield Authority
20,649,958 503,471 3,945,085 5,089,550 167,472
23,435,617 751,098 4,061,072 5,632,883 218,815
- - - - -
866,488 27,770 150,151 208,265 8,090
1,157,253 37,089 200,536 278,152 10,805
- 104,974 - - 13,284
2,023,741 169,833 350,687 486,417 32,179
- - - - -
- - - - -
833,936 - 449,525 305,417 -
833,936 - 449,525 305,417 -
3,261,705 104,536 565,209 783,969 30,454
(168,132) 21,164 (90,630) (61,576) 2,678
3,093,573 125,700 474,579 722,393 33,132
9,910,503 372,628 2,038,514 2,310,383 81,710
(continued)
20
WORCESTER REGIONAL RETIREMENT SYSTEM
SCHEDULE OF PENSION AMOUNTS BY EMPLOYER
FOR THE YEAR ENDED DECEMBER 31, 2015
Net Pension Liability
Beginning Net Pension Liability
Ending Net Pension Liability
Deferred Outflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Net Difference Between Projected
and Actual Investment Earnings
Change in Allocated Proportion
Total Deferred Outflows of Resources
Deferred Inflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Change in Allocated Proportion
Total Deferred Inflows of Resources
Pension Expense
Proportionate Share of
Pension Expense
Net Amortization of Deferred
Amounts from Changes in Proportion
Total Pension Expense
Covered Payroll
Oxford-
Oxford Rochdale
Housing Sewer
Oakham Oxford Authority District Paxton
1,055,202 23,319,110 592,402 162,729 6,258,302
967,436 26,122,186 750,609 253,527 7,022,753
- - - - -
35,769 965,819 27,752 9,374 259,653
47,772 1,289,916 37,065 12,519 346,784
- - 30,667 41,433 -
83,541 2,255,735 95,484 63,326 606,437
- - - - -
- - - - -
203,064 1,180,647 - - 308,371
203,064 1,180,647 - - 308,371
134,645 3,635,614 104,468 35,285 977,408
(40,940) (238,034) 6,183 8,353 (62,172)
93,705 3,397,580 110,651 43,638 915,236
268,162 9,457,059 323,545 145,897 2,609,663
(continued)
21
WORCESTER REGIONAL RETIREMENT SYSTEM
SCHEDULE OF PENSION AMOUNTS BY EMPLOYER
FOR THE YEAR ENDED DECEMBER 31, 2015
Net Pension Liability
Beginning Net Pension Liability
Ending Net Pension Liability
Deferred Outflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Net Difference Between Projected
and Actual Investment Earnings
Change in Allocated Proportion
Total Deferred Outflows of Resources
Deferred Inflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Change in Allocated Proportion
Total Deferred Inflows of Resources
Pension Expense
Proportionate Share of
Pension Expense
Net Amortization of Deferred
Amounts from Changes in Proportion
Total Pension Expense
Covered Payroll
Quabbin Quaboag
Petersham Phillipston Princeton Regional Regional
2,907,621 1,041,770 5,167,549 11,387,891 3,908,691
1,987,524 1,611,809 4,729,223 12,726,576 4,303,948
- - - - -
73,485 59,594 174,854 470,541 159,130
98,144 79,591 233,529 628,439 212,529
- 257,409 - - -
171,629 396,594 408,383 1,098,980 371,659
- - - - -
- - - - -
1,032,471 - 1,000,384 597,624 249,904
1,032,471 - 1,000,384 597,624 249,904
276,618 224,327 658,200 1,771,250 599,012
(208,159) 51,897 (201,690) (120,489) (50,384)
68,459 276,224 456,510 1,650,761 548,628
710,388 523,238 1,903,539 5,034,484 1,912,118
(continued)
22
WORCESTER REGIONAL RETIREMENT SYSTEM
SCHEDULE OF PENSION AMOUNTS BY EMPLOYER
FOR THE YEAR ENDED DECEMBER 31, 2015
Net Pension Liability
Beginning Net Pension Liability
Ending Net Pension Liability
Deferred Outflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Net Difference Between Projected
and Actual Investment Earnings
Change in Allocated Proportion
Total Deferred Outflows of Resources
Deferred Inflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Change in Allocated Proportion
Total Deferred Inflows of Resources
Pension Expense
Proportionate Share of
Pension Expense
Net Amortization of Deferred
Amounts from Changes in Proportion
Total Pension Expense
Covered Payroll
Southboro
Housing
Royalston Rutland Southboro Authority Spencer
381,458 6,194,743 19,222,393 218,548 9,124,681
721,056 6,317,412 22,303,912 207,091 10,127,529
- - - - -
26,660 233,574 824,645 7,657 374,446
35,606 311,954 1,101,369 10,226 500,098
185,506 - - - -
247,772 545,528 1,926,014 17,883 874,544
- - - - -
- - - - -
- 747,321 435,713 37,371 527,516
- 747,321 435,713 37,371 527,516
100,355 879,240 3,104,197 28,822 1,409,522
37,400 (150,670) (87,845) (7,534) (106,354)
137,755 728,570 3,016,352 21,288 1,303,168
253,001 2,506,523 9,430,382 56,012 3,654,010
(continued)
23
WORCESTER REGIONAL RETIREMENT SYSTEM
SCHEDULE OF PENSION AMOUNTS BY EMPLOYER
FOR THE YEAR ENDED DECEMBER 31, 2015
Net Pension Liability
Beginning Net Pension Liability
Ending Net Pension Liability
Deferred Outflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Net Difference Between Projected
and Actual Investment Earnings
Change in Allocated Proportion
Total Deferred Outflows of Resources
Deferred Inflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Change in Allocated Proportion
Total Deferred Inflows of Resources
Pension Expense
Proportionate Share of
Pension Expense
Net Amortization of Deferred
Amounts from Changes in Proportion
Total Pension Expense
Covered Payroll
Spencer- Spencer Sterling
East Brookfield Housing Housing
Regional Authority Sterling Authority Sturbridge
6,327,523 373,116 10,247,326 74,671 13,151,228
7,305,991 534,288 11,557,792 110,796 15,544,327
- - - - -
270,125 19,754 427,328 4,096 574,722
360,770 26,383 570,725 5,471 767,580
- 62,216 - 15,150 -
630,895 108,353 998,053 24,717 1,342,302
- - - - -
- - - - -
168,450 - 463,958 - 99,488
168,450 - 463,958 - 99,488
1,016,828 74,361 1,608,582 15,420 2,163,417
(33,962) 12,544 (93,540) 3,054 (20,058)
982,866 86,905 1,515,042 18,474 2,143,359
2,347,994 266,573 4,298,926 40,782 5,968,358
(continued)
24
WORCESTER REGIONAL RETIREMENT SYSTEM
SCHEDULE OF PENSION AMOUNTS BY EMPLOYER
FOR THE YEAR ENDED DECEMBER 31, 2015
Net Pension Liability
Beginning Net Pension Liability
Ending Net Pension Liability
Deferred Outflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Net Difference Between Projected
and Actual Investment Earnings
Change in Allocated Proportion
Total Deferred Outflows of Resources
Deferred Inflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Change in Allocated Proportion
Total Deferred Inflows of Resources
Pension Expense
Proportionate Share of
Pension Expense
Net Amortization of Deferred
Amounts from Changes in Proportion
Total Pension Expense
Covered Payroll
Templeton
Tantasqua Housing
Sutton Regional Templeton Authority Upton
12,865,839 6,795,006 10,271,629 592,522 6,592,509
13,378,396 7,947,019 9,665,159 538,516 6,548,329
- - - - -
494,641 293,826 357,351 19,911 242,112
660,626 392,425 477,266 26,592 323,357
- - - - -
1,155,267 686,251 834,617 46,503 565,469
- - - - -
- - - - -
1,372,361 110,293 1,803,845 117,319 917,137
1,372,361 110,293 1,803,845 117,319 917,137
1,861,969 1,106,044 1,345,170 74,949 911,378
(276,686) (22,236) (363,678) (23,653) (184,907)
1,585,283 1,083,808 981,492 51,296 726,471
6,062,691 3,790,599 3,497,074 83,738 3,377,554
(continued)
25
WORCESTER REGIONAL RETIREMENT SYSTEM
SCHEDULE OF PENSION AMOUNTS BY EMPLOYER
FOR THE YEAR ENDED DECEMBER 31, 2015
Net Pension Liability
Beginning Net Pension Liability
Ending Net Pension Liability
Deferred Outflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Net Difference Between Projected
and Actual Investment Earnings
Change in Allocated Proportion
Total Deferred Outflows of Resources
Deferred Inflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Change in Allocated Proportion
Total Deferred Inflows of Resources
Pension Expense
Proportionate Share of
Pension Expense
Net Amortization of Deferred
Amounts from Changes in Proportion
Total Pension Expense
Covered Payroll
Uxbridge Warren
Housing Wachusett Water
Uxbridge Authority Regional Warren District
19,217,213 554,607 19,556,058 3,414,616 108,852
22,177,748 759,492 21,453,126 4,204,182 171,401
- - - - -
819,981 28,081 793,189 155,442 6,337
1,095,139 37,504 1,059,357 207,603 8,464
- 68,297 - 91,460 28,979
1,915,120 133,882 1,852,546 454,505 43,780
- - - - -
- - - - -
519,374 - 1,306,455 - -
519,374 - 1,306,455 - -
3,086,638 105,704 2,985,787 585,126 23,855
(104,713) 13,770 (263,398) 18,440 5,843
2,981,925 119,474 2,722,389 603,566 29,698
7,741,396 189,421 10,975,602 1,444,447 79,121
(continued)
26
WORCESTER REGIONAL RETIREMENT SYSTEM
SCHEDULE OF PENSION AMOUNTS BY EMPLOYER
FOR THE YEAR ENDED DECEMBER 31, 2015
Net Pension Liability
Beginning Net Pension Liability
Ending Net Pension Liability
Deferred Outflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Net Difference Between Projected
and Actual Investment Earnings
Change in Allocated Proportion
Total Deferred Outflows of Resources
Deferred Inflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Change in Allocated Proportion
Total Deferred Inflows of Resources
Pension Expense
Proportionate Share of
Pension Expense
Net Amortization of Deferred
Amounts from Changes in Proportion
Total Pension Expense
Covered Payroll
West West
Westboro Boylston Boylston
Housing West Housing Water
Westboro Authority Boylston Authority District
38,333,313 361,898 13,366,720 120,567 713,888
47,461,361 436,825 14,645,921 148,348 641,470
- - - - -
1,754,800 16,151 541,506 5,485 23,717
2,343,653 21,570 723,217 7,325 31,676
1,210,969 3,589 - 3,161 -
5,309,422 41,310 1,264,723 15,971 55,393
- - - - -
- - - - -
- - 905,145 - 146,473
- - 905,145 - 146,473
6,605,545 60,796 2,038,379 20,647 89,278
244,147 724 (182,489) 637 (29,531)
6,849,692 61,520 1,855,890 21,284 59,747
17,783,460 103,892 5,301,789 82,906 309,437
(continued) (continued)
27
WORCESTER REGIONAL RETIREMENT SYSTEM
SCHEDULE OF PENSION AMOUNTS BY EMPLOYER
FOR THE YEAR ENDED DECEMBER 31, 2015
Net Pension Liability
Beginning Net Pension Liability
Ending Net Pension Liability
Deferred Outflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Net Difference Between Projected
and Actual Investment Earnings
Change in Allocated Proportion
Total Deferred Outflows of Resources
Deferred Inflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Change in Allocated Proportion
Total Deferred Inflows of Resources
Pension Expense
Proportionate Share of
Pension Expense
Net Amortization of Deferred
Amounts from Changes in Proportion
Total Pension Expense
Covered Payroll
Worcester
Winchendon Regional
West Housing Retirement
Brookfield Westminster Winchendon Authority System
3,496,380 7,800,758 16,699,512 786,752 -
3,387,903 10,288,878 19,264,364 1,091,359 -
- - - - -
125,261 380,412 712,264 40,351 -
167,295 508,066 951,276 53,891 -
- 686,115 - 106,618 -
292,556 1,574,593 1,663,540 200,860 -
- - - - -
- - - - -
545,709 - 456,779 - -
545,709 - 456,779 - -
471,519 1,431,978 2,681,161 151,892 -
(110,022) 138,330 (92,093) 21,496 -
361,497 1,570,308 2,589,068 173,388 -
1,300,074 3,542,849 6,145,760 523,803 539,242
(continued) (continued)
28
WORCESTER REGIONAL RETIREMENT SYSTEM
SCHEDULE OF PENSION AMOUNTS BY EMPLOYER
FOR THE YEAR ENDED DECEMBER 31, 2015
Net Pension Liability
Beginning Net Pension Liability
Ending Net Pension Liability
Deferred Outflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Net Difference Between Projected
and Actual Investment Earnings
Change in Allocated Proportion
Total Deferred Outflows of Resources
Deferred Inflows of Resources
Net Difference Between Expected
and Actual Experience
Assumption Changes
Change in Allocated Proportion
Total Deferred Inflows of Resources
Pension Expense
Proportionate Share of
Pension Expense
Net Amortization of Deferred
Amounts from Changes in Proportion
Total Pension Expense
Covered Payroll
Totals
595,067,810
709,806,971
-
26,243,784
35,050,331
32,494,149
93,788,264
-
-
32,494,149
32,494,149
98,788,988
-
98,788,988
269,899,678
(concluded)
29
30
Notes to Schedules
WORCESTER REGIONAL RETIREMENT SYSTEM NOTES TO SCHEDULES
FOR THE YEAR ENDED DECEMBER 31, 2015
31
NOTE 1 – DESCRIPTION OF THE ENTITY
The Worcester Regional Retirement System (System) was established to provide retirement benefits to eligible employees of its member employers. The System is governed by a five-member board comprised of the Chairman/Chief Executive Officer, who serves ex-officio and is appointed by the other members of the board; two members who are elected by the participants in or retired from the services of the System; a fourth member appointed by the member employers; and a fifth member appointed by the other members of the board. The System issued a publicly available audited financial statement for the year ended December 31, 2015. A copy may be obtained by submitting a request to the System’s Chairman/Chief Executive Officer at 23 Midstate Drive, Suite 106, Auburn, Massachusetts 01501. Plan Description The System is a cost-sharing multiple-employer public employee retirement system established in 1937, under Massachusetts General Laws (MGL), Chapter 32, and is regulated by the Massachusetts Public Employee Retirement Administration Commission (PERAC). The System is a defined benefit pension plan that covers eligible employees of its member employers. Membership Membership in the System is mandatory immediately upon the commencement of employment for all permanent full-time employees working at least 20 hours weekly, except for school teachers and school administrators who participate in the Massachusetts Teachers’ Retirement System. Benefits Benefit provisions and state law establishes contribution requirements of the System. Members of the System become vested after 10 years of creditable service. Normal retirement occurs at age 65 (age 67 if hired on or after April 2, 2012), except for certain public safety employees and other special situations. For employees hired prior to April 2, 2012, the annual amount of the retirement allowance is based on the member’s final three-year average salary multiplied by (1) the number of years and full months of creditable service at the time of retirement and (2) a percentage based on age at retirement in accordance with a schedule provided by state law. Assuming normal retirement at age 65, this percentage is 2.5%, which is reduced for individuals who retire prior to age 65 to reflect the longer pay out period. A member’s final three-year average salary is defined as the greater of the highest consecutive three-year average annual rate of regular compensation and the average annual rate of regular compensation received during the last three years of creditable service prior to retirement. For employees hired on or after April 2, 2012, the annual amount of the retirement allowance is based on the member’s final five-year average salary multiplied by (1) the number of years and full months of creditable service at the time of retirement and (2) a percentage based on age at retirement in accordance with a schedule provided by state law. Assuming normal retirement at age 67, this percentage is 2.5%. A member’s final five-year average salary is defined as the greater of the highest consecutive five-year average annual rate of regular compensation and the average annual rate of regular compensation received during the last five years of creditable service prior to retirement.
WORCESTER REGIONAL RETIREMENT SYSTEM NOTES TO SCHEDULES
FOR THE YEAR ENDED DECEMBER 31, 2015
32
Employees may elect early retirement after 20 years of service or at any time after attaining age 55 (age 60 if hired on or after April 2, 2012) with 10 years of eligible service. Plan members who become permanently and totally disabled may be eligible to receive a disability retirement allowance. The amount of benefits to be received depends on several factors, including the member’s age, compensation, veteran status, years of service and whether or not the disability is work-related. In addition, certain death benefits exist for beneficiaries of employees who die in active service. Under MGL, c.32 Section 3(8)(c), members leaving a member employer to work for other Massachusetts governmental units requires the System transfer their accumulated account balances and creditable service to the retirement system of their new employer. Other such retirement systems are in turn required to make comparable transfers to the System for employees coming to work at a member employer of the System. Per statute, the PERAC actuary shall consider length of service as well as acceptance of military service credit and salary cap provisions if applicable in calculating the liability. Contributions Chapter 32 of MGL governs the contributions of plan members and member employers. Depending on their employment date, active System members must contribute anywhere between 5%-9% of their gross regular compensation. Members hired after December 31, 1978 must contribute an additional 2% of regular compensation in excess of $30,000. Employees in Group 1 hired on or after April 2, 2012 with 30 years of creditable service or greater will pay a base contribution rate of 6%. These deductions earn interest at a rate determined by PERAC that vests based upon years of service. Employers are required to pay into the System its share of the system-wide actuarial determined contribution, in accordance with Chapter 32, Section 22D of MGL, apportioned among the employers based on annual employer normal cost and amortization payments to pay the unfunded actuarial accrued liability. Except for a portion of benefits owed due to cost-of-living adjustments (COLA’s) granted through June 30, 1998, member employers are required to contribute the remaining amounts necessary to finance benefits. Member employer contributions are determined by actuarial valuations. COLA’s granted through June 30, 1998 are reimbursed by the Commonwealth of Massachusetts (the Commonwealth). COLA’s granted subsequent to June 30, 1998 must be granted by the Board and are the responsibility of the System. COLA’s may be approved in excess of the Consumer Price Index but not to exceed 3% of the base retirement allowance. NOTE 2 – ACTUARIAL ASSUMPTIONS AND METHODS The total pension liability was determined by an actuarial valuation as of January 1, 2014, using the following actuarial assumptions, applied to all periods included in the measurement that was updated to December 31, 2015: Amortization method: Payment increases 4.0% per year, except for Early Retirement Incentive
(ERI) Programs for 2002 and 2003 (4.5%) and 2010 (level dollar) Remaining amortization period: 20 years, except for ERI for 2002 and 2003 (13 years) and 2010 (7 years) Asset valuation method: 5-year smoothed market value Inflation: Not explicitly assumed for the update to December 31, 2015 (3.5% per
year for the actuarial valuation as of January 1, 2014) Salary increases: 3.0% per year, including longevity
WORCESTER REGIONAL RETIREMENT SYSTEM NOTES TO SCHEDULES
FOR THE YEAR ENDED DECEMBER 31, 2015
33
Investment rate of return: 7.75%, net of pension plan investment expense, including inflation Mortality rates: Based on the RP-2000 Mortality Table projected to 2014 with Scale AA.
For disabled lives, the mortality rates were based on the RP-2000 Mortality Table set forward two years.
The actuarial assumptions used in the January 1, 2014 valuation were based on the results of an actuarial experience study for the period January 1, 2012 through December 31, 2013. NOTE 3 – NET PENSION LIABILITY The components of the net pension liability of the System at December 31, 2015, were as follows:
Total pension liability $ 1,279,439,605
Plan fiduciary net position (569,632,634)
Net pension liability $ 709,806,971
Plan fiduciary net position as a percentage of the total pension liability 44.52% The total pension liability is calculated by the System’s actuary and plan fiduciary net position is reported in the System’s financial statements. The net pension liability is disclosed in accordance with the requirements of Governmental Accounting Standards Board (GASB) Statement No. 67 in the System’s notes to financial statements and required supplementary information. Discount Rate The discount rate used to measure the total pension liability was 7.75 percent. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rates and that member employer contributions will be made in accordance with Sections 22D and 22F of Chapter 32 of the Massachusetts General Laws. Based on those assumptions, the System’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
WORCESTER REGIONAL RETIREMENT SYSTEM NOTES TO SCHEDULES
FOR THE YEAR ENDED DECEMBER 31, 2015
34
Long-Term Expected Rate of Return The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation as of December 31, 2015 are summarized in the following table:
Long-Term
Expected
Target Rate of
Asset Class Allocation (%) Return (%)
Global Equity 40.00 8.02
Fixed Income 23.00 5.09
Private Equity 10.00 9.50
Real Estate 10.00 6.50
Timber/Natural Resources 4.00 7.07
Hedge Funds 9.00 6.50
Other 4.00 6.18 Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability of the System calculated using the discount rate of 7.75 percent, as well as what the System’s net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.75 percent) or 1-percentage-point higher (8.75 percent) than the current rate:
1% Decrease Current Discount Rate 1% Increase
(6.75%) (7.75%) (8.75%)
Net pension liability 854,617,684 709,806,971 586,845,887 NOTE 4 – DEFERRED INFLOWS OF RESOURCES AND DEFERRED OUTFLOWS OF RESOURCES
The following schedule reflects the amortization of the balance of deferred inflows of resources and deferred outflows of resources at December 31, 2015:
Measurement Period
Ending December 31: Amount
2016 $ 14,076,038
2017 14,076,038
2018 14,076,036
2019 13,986,563
Thereafter 5,079,440
WORCESTER REGIONAL RETIREMENT SYSTEM NOTES TO SCHEDULES
FOR THE YEAR ENDED DECEMBER 31, 2015
35
NOTE 5 – EMPLOYER CONTRIBUTIONS
Employers’ proportionate shares were calculated on the basis of actual employer contributions for the year ended December 31, 2015. Although GASB Statement No. 68 encourages the use of the employer’s projected long-term contribution effort to the System, allocating on the basis of historical employer contributions is considered acceptable. NOTE 6 – ADDITIONAL FINANCIAL AND ACTUARIAL INFORMATION
Information contained in these Notes to Schedules was extracted from the audited financial statements of the System for the year ended December 31, 2015. Additional financial information supporting the preparation of the Schedules (including the unqualified audit opinion on the financial statements and required supplementary information) is located in the audited financial statements of the System for the year ended December 31, 2015. A copy may be obtained by submitting a request to the System’s Chairman/Chief Executive Officer at 23 Midstate Drive, Suite 106, Auburn, Massachusetts 01501.