Exhibit 18: Page 1

WESTERN STATES OFFICE AND 

PROFESSIONAL EMPLOYEES PENSION FUND

THIRD SUSPENSION APPLICATION

Exhibit 18


Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

TABLE OF CONTENTS 

Page 

Valuation Highlights ........................................................................................................................................................................................................................ 1

Section I Discussion of Assets and Liabilities .................................................................................................................................................................... 2

Section II Actuarial Gain/(Loss) Analysis ............................................................................................................................................................................. 4

Section III Changes Since Last Valuation and Other Plan Items ......................................................................................................................................10

Section IV Projection of Employer Contributions and Costs ............................................................................................................................................11

Section V Withdrawal Liability .............................................................................................................................................................................................12

Section VI Comments and Certification ...............................................................................................................................................................................13

Section VII Appendices ...........................................................................................................................................................................................................15

Appendix A Participant Counts and Statistics .................................................................................................................................................16

Appendix B Actuarial Methods and Assumptions............................................................................................................................................21

Appendix C Summary of Principal Plan Provisions .........................................................................................................................................24

Appendix D Plan Assets ..................................................................................................................................................................................26

Appendix E Funding Standard Account (for Schedule MB) ............................................................................................................................30

Appendix F Current Liability (for Schedule MB) ..............................................................................................................................................34

Appendix G Maximum Deductible Contribution ...............................................................................................................................................35

Appendix H Auditor Information (FASB ASC 960) ..........................................................................................................................................36

Appendix I Determination of Vested Benefit Liabilities for Withdrawal Liability Purposes .............................................................................37

Appendix J Funding Standard Account (No Amortization Extension) ............................................................................................................38

Appendix K Historical Information ...................................................................................................................................................................42


Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

SECTION I DISCUSSION OF ASSETS AND LIABILITIES (CONTINUED)

3 

The financial status of the Plan provides us with the means of measuring the 

actuarial position of the Trust as of January 1, 2016. 

ASSETS

The total Market Value of Assets as of January 1, 2016 is $334,210,200. 

Information regarding assets was taken from the draft audit report provided by 

Hemming Morse, LLP. Results are not expected to change with the final audit. 

We have utilized an asset valuation method that recognizes net investment 

income on Trust assets that is more or less than 7.25% per year over a fiveyear period. The value of Trust assets based on this method is $347,859,875, 

which represents 104.1% of the Market Value of Assets. This method is 

intended to dampen the volatility associated with year to year changes in the 

market value of Trust assets, while at the same time systematically 

recognizing overall investment performance over the long term. The derivation 

of the Actuarial Value of Assets is shown in Appendix D. 

Contributions receivable from Employers for hours worked in the 2015 Plan 

Year but received after December 31, 2015 are included with net receivables. 

LIABILITIES 

The liabilities are listed separately for pensioners and for active and inactive 

benefits earned by non-retired participants. The $354,476,819 liability for 

pensioners represents the estimated amount required as of the valuation date 

to pay all benefits as they come due in the future. The Actuarial Accrued 

Liability is the sum of the separate liability amounts and is equal to 

$534,860,955. 

UNFUNDED ACCRUED LIABILITIES 

The liabilities of the Plan exceed the Actuarial Value of Assets by 

$187,001,080. This amount is known as the Unfunded Accrued Liability, 

which is amortized by the excess of contributions received over the cost of 

each future year’s accumulation of benefits. If the Market Value of Assets is 

used, the Unfunded Accrued Liability is equal to $200,650,755. As shown in 

Section IV, the current excess of contributions over benefit accruals is about 

$9.1 million and is not sufficient to pay down the Unfunded Accrued Liability 

on both an Actuarial Value of Assets basis and a Market Value of Assets 

basis assuming all future actuarial assumptions are realized. Without future 

investment return gains, Board and/or bargaining corrective action may be 

needed in the future to fund the projected Unfunded Accrued Liability over a 

reasonable period. Note that the Rehabilitation Plan was updated in 2012 to 

include reasonable measures to forestall possible insolvency. 
Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

4 

SECTION II ACTUARIAL GAIN/(LOSS) ANALYSIS 

ACTUARIAL VALUATION 

An actuarial valuation is a snapshot of asset and liability measures of the 

pension fund. It is used to estimate the amount of funds needed to 

guarantee the future payment of retirement, termination, disability and death 

benefits to Plan participants based on Plan benefits in effect on the valuation 

date. The valuation is based on the actual service rendered by these 

participants prior to the valuation date and on a set of actuarial assumptions 

and methods. These assumptions have been selected by the Actuary while 

the methods have been adopted by the Trustees upon the recommendation 

of the Actuary. Both are described in Appendix B. 

Actuarial Experience 

In the paragraphs below, we have outlined the experience over the 2015 

Plan Year and have also shown experience for the previous 4 plan years. 

This information will provide an ongoing review of the appropriateness of 

each actuarial assumption. 

Development of Gain / (Loss) 

To the extent that actual experience during the year is different than what 

was expected, gains or losses are realized. The following exhibit develops 

the total gain or loss for the Plan Year: 

A. Unfunded Accrued Liability on January 1, 2015 $ 183,962,420

B. Normal Cost 1,337,905

C. Contributions for 2015 (11,811,952)

D. Interest on A, B and C 13,006,091 

E. Expected Unfunded Accrued Liability on 

January 1, 2016 (A + B + C + D) $ 186,494,464

F. Actual Unfunded Accrued Liability on

January 1, 2016 $ 187,001,080

 

G. Net Actuarial Gain/(Loss) (E - F) $ (506,616)
Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

SECTION II ACTUARIAL GAIN/(LOSS) ANALYSIS (CONTINUED)

5 

Net Investment Return - 7.25% per annum, net of all expenses

The net investment yield on the Actuarial Value of Assets during the Plan 

Year was 6.22%. Appendix D shows the details of the actual investment 

income calculation. 

INCOME DOLLAR AMOUNT YIELD

A. Gross Investment Income $ 24,183,601 7.11 %

B. Operating Expenses (1,320,872) (0.39)

C. Investment Expenses (1,694,169) (0.50)

 

D. Net Investment Income (A + B + C) 21,168,560 $ 6.22 %

E. Expected Investment Income 24,672,354 7.25

 

F. Investment Loss (D - E) $ (3,503,794) (1.03) %

 

 

YEAR 

2011 (2.74) % 1.50 %

2012 (1.99) 11.53

2013 11.24 12.97

2014 9.07 4.47

2015 6.22 0.63

NET YIELD ON 

ACTUARIAL VALUE1 MARKET VALUE2

1 The 5-year geometric average return on the Actuarial Value of Assets is 4.20%, 

and the 10-year geometric average return is 3.71%. 

2

 The 5-year geometric average return on the Market Value of Assets is 6.10%, 

and the 10-year geometric average return is 3.39%. 
Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

SECTION II ACTUARIAL GAIN/(LOSS) ANALYSIS (CONTINUED)

6 

Mortality - 1983 GAM F Mortality Table for healthy lives, and 1983 

GAM F Mortality Table 17-year set-forward (until age 62) for disabled 

lives

We compared the mortality experienced by the Plan during the 2015 Plan 

Year with that expected according to the above tables. During the Plan Year, 

there were 131 deaths with an average age of 80.0 with 24 continuing 

beneficiaries. This compares to 128 deaths with an average age of 81.2 with 

18 continuing beneficiaries in the prior year. The liability released during the 

year was more than anticipated, resulting in a gain of $1,762,830. 

2011 $ 819,175

2012 (646,955)

2013 (21,395)

2014 665,209

2015 1,762,830

$ 2,578,864

YEAR GAIN/(LOSS) 

5-Year Total

For valuation dates on or after July 1, 2011, actuaries are required to 

separately consider an assumption for mortality improvement. Recent studies 

have shown that mortality for the general population has improved at a fairly 

consistent rate (1% per year). Whether it will continue at this rate is 

controversial. Failure to fully reflect mortality improvement will result in an 

undervaluation of the Plan’s liabilities and corrective action in the future.

We believe the current assumption (with no specific margin for future 

improvements in mortality) reasonably reflects anticipated mortality 

experience for the Plan. We will continue to monitor the appropriateness of 

this assumption on an annual basis. 
Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

SECTION II ACTUARIAL GAIN/(LOSS) ANALYSIS (CONTINUED)

7 

Turnover – Table T-7, The Actuary’s Pension Handbook (CrockerSarason-Straight)

If a participant terminates prior to acquiring vested rights in their benefits or 

prior to retirement, then all or part of the liability accumulated for their benefit 

is released. This is offset by the liability for inactives who return to active 

status. During 2015, there were 130 active terminations from vested status 

and 60 terminations from non-vested status, offset by 5 rehired participants. 

This compares to 565 active terminations from vested status and 177 

terminations from non-vested status, offset by 8 rehired participants in the 

prior year. The combined net turnover loss for the year was $227,227. 

2011 $ (183,334)

2012 (157,632)

2013 52,665

2014 (509,163)

2015 (227,227)

$ (1,024,691) 

GAIN/(LOSS) 

5-Year Total

YEAR

Retirement 

We assume that participants will retire in accordance with an explicit set of 

retirement rates as described in Appendix B. A gain to the Fund results if a 

participant delays retirement. During the 2015 Plan Year, there were 140 

healthy retirements with an average age of 64.4 and an average benefit of 

$573. This compares to 202 healthy retirements with an average age of 62.2 

and an average benefit of $634 for the prior year. The net result of this 

experience was a gain of $1,615,254. 

2011 $ 650,964

2012 1,757,478

2013 1,943,164

2014 2,462,900

2015 1,615,254

$ 8,429,760

YEAR GAIN/(LOSS) 

5-Year Total
Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

SECTION II ACTUARIAL GAIN/(LOSS) ANALYSIS (CONTINUED)

8 

Disability – 1952 Society of Actuaries Table, Period 2, Benefit 5

During the 2015 Plan Year, there were no disability retirements. The actuarial 

loss attributable to disabilities was $95,159. 

2011 $ (4,920)

2012 (127,345)

2013 (136,510)

2014 (94,877)

2015 (95,159)

$ (458,811)

GAIN/(LOSS) 

5-Year Total

YEAR

Miscellaneous 

Each year there are miscellaneous gains and losses due to data adjustments, 

corrections, new entrants and actual versus expected hours. The 

miscellaneous items in 2015 resulted in a net loss of $58,520. 

2011 $ (372,466)

2012 (407,394)

2013 (344,116)

2014 (404,437)

2015 (58,520)

$ (1,586,933) 

GAIN/(LOSS) 

5-Year Total

YEAR
Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

SECTION II ACTUARIAL GAIN/(LOSS) ANALYSIS (CONTINUED)

9 

SUMMARY OF GAINS AND LOSSES 

The following shows a summary of the gains and losses from various 

sources:

SUMMARY OF 2015 GAIN/(LOSS) AMOUNTS

SOURCE

Investment Income $ (3,503,794)

Mortality 1,762,830

Turnover (227,227)

Retirement 1,615,254

Disability (95,159)

Miscellaneous (58,520)

Total Experience Loss $ (506,616)

GAIN/(LOSS)

Fluctuations in experience for all assumptions are to be expected from year 

to year. It is the net result over a period of time that must be viewed to 

determine the validity of the assumptions used. 

YEAR 

2011 $ (40,088,460) $ 909,419 $ (39,179,041) 

2012 (33,450,978) 418,152 (33,032,826)

2013 13,070,644 1,493,808 14,564,452

2014 6,155,370 2,119,632 8,275,002

2015 (3,503,794) 2,997,178 (506,616)

5-Year Total $ (57,817,218) $ 7,938,189 $ (49,879,029) 

FIVE-YEAR SUMMARY OF GAIN/(LOSS) AMOUNTS

ASSETS LIABILITIES TOTAL 
Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

10

SECTION III CHANGES SINCE LAST VALUATION AND OTHER PLAN ITEMS 

CHANGES IN PLAN PROVISIONS 

The Board of Trustees modified the postponed retirement benefit effective for 

annuity starting dates on or after September 1, 2015. Participants who 

postpone their retirement beyond their Normal Retirement Age and do not 

continue working for a contributing employer will receive a benefit determined 

under (a) below. Participants who postpone their retirement beyond their 

Normal Retirement Age and continue working for a contributing employer will 

receive the greater of (a) or (b) below. 

(a) Normal Retirement Benefit increased at the rate of 1⁄2 of 1% for each 

full month retirement is postponed. 

(b) Accrued benefit as of the participant’s postponed retirement date.

CHANGES IN VALUATION METHODOLOGY AND 

ASSUMPTIONS

The current liability interest and mortality assumptions were updated as 

prescribed by IRS regulations. Refer to Appendix B for a description of these 

changes 

No other changes to valuation methodology and assumptions have been 

made since the prior valuation as of January 1, 2015. 

Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

12

SECTION V WITHDRAWAL LIABILITY 

Withdrawal liability assessments, if any, are based on the amount of 

“Unfunded Vested Benefits” (UVB) and an employer’s contribution history. 

For this purpose, benefits in which a participant is not immediately vested are 

excluded from the determination of vested benefits – this includes disability 

and death benefits other than the Qualified Pre-retirement Survivor Annuity 

(QPSA). Assets are based on the Market Value of Assets for withdrawal 

liability purposes. 

The simplified method was adopted to comply with the PPA’s requirement for 

Red Zone plans to disregard any reduction in protected benefits when 

determining the UVB for withdrawal liability – this includes early retirement 

subsidies, including those for the Rule of 80, and the 60-month guarantee in 

life annuity. Please refer to Appendix I for development of the Vested Benefit 

Liabilities. The resulting UVB as of December 31, 2015 is as follows: 

WITHDRAWAL LIABILITY 

A. Vested Benefit Liabilities Earned to Date $ 553,295,540

B. Market Value of Assets 334,210,200

 

C. UVB as of December 31, 2015 (A - B, not less than $0) $ 219,085,340

A positive Unfunded Vested Benefits value means that Employers who 

withdraw in the 2016 Plan Year may be subject to a withdrawal liability 

assessment. 

 
Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

13

SECTION VI COMMENTS AND CERTIFICATION 

This is to certify that we have completed an actuarial valuation of the Plan as 

of January 1, 2016 in accordance with generally accepted actuarial principles 

and practices, including Actuarial Standards of Practice (ASOP) Nos. 4, 23, 

27, 35, 41, and 44. This report has been prepared for the Board of Trustees 

of the Western States Office and Professional Employees Pension Plan to 

provide information on the Plan’s funded status, to review the recent 

experience under the Plan, and to supply figures needed by the auditor. 

This report on the results of the valuation was based on the assumption that 

the Plan is qualified under the Internal Revenue Code and on information 

supplied by the auditor with respect to contributions and assets and by the 

Plan Administrator with respect to participant data. We have not verified and 

customarily would not verify such information, but we have no reason to 

doubt its substantial accuracy. 

To the best of our knowledge, the information supplied in this actuarial 

valuation is complete and accurate and, in our opinion, the individual 

assumptions used: (a) are reasonably related to the experience of the Plan 

and to reasonable expectations; and (b) represent our best estimate of 

anticipated experience under the Plan. 

We are not aware of any events, subsequent to January 1, 2016, that would 

have a material effect on the actuarial findings presented in this report. 

Future actuarial measurements may differ significantly from the current 

measurements presented in this report due to such factors as: plan 

experience differing from that anticipated by the economic or demographic 

assumptions; changes in economic or demographic assumptions; increases 

or decreases expected as part of the natural operation of the methodology 

used for these measurements (for instance, the end of an amortization period 

or additional cost or contribution requirements based on the plan’s funded 

status); and changes in plan provisions or applicable law. Due to the limited 

scope of the assignment, we did not perform analysis of the potential range 

of such future measurements. 

In preparation of this report and the actuarial findings contained herein, there 

has been no conflict of interest between any relevant parties; no findings for 

which we, the actuaries, do not assume responsibility; and no deviation from 

ASOP Nos. 4, 23, 27, 35, 41, and 44.

Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

15

SECTION VII APPENDICES 

Appendix A Participant Counts and Statistics 

Appendix B Actuarial Methods and Assumptions 

Appendix C Summary of Principal Plan Provisions 

Appendix D Plan Assets 

Appendix E Funding Standard Account (for Schedule MB) 

Appendix F Current Liability (for Schedule MB) 

Appendix G Maximum Deductible Contribution 

Appendix H Auditor Information (FASB ASC 960) 

Appendix I Determination of Vested Benefit Liabilities for Withdrawal Liability Purposes 

Appendix J Funding Standard Account (No Amortization Extension) 

Appendix K Historical Information 
Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

16

APPENDIX A PARTICIPANT COUNTS AND STATISTICS 

PARTICIPANT STATISTICS

Percent Change

Actives: 

Number 1,000 868 (132) (13.2)% 

Averages: 

Age 48.1 48.3 0.2 0.4%

Years of Credited Service 12.2 12.4 0.2 1.6%

Hours 1,736 1,781 4 5 2.6%

Non-Vested Inactives 

Number 406 376 (30) (7.4)% 

Averages: 

Age 40.6 40.9 0.3 0.7%

Years of Credited Service 2.1 2.3 0.2 9.5%

Monthly Benefit $ 5 0 $ 5 3 3$ 6.0%

Vested Inactives: 

Number 2,957 2,939 (18) (0.6)% 

Averages: 

Age 51.6 51.8 0.2 0.4%

Years of Credited Service 11.9 11.9 0.0 0.0%

Monthly Benefit $ 538 $ 558 $ 2 0 3.7%

Retirees and Beneficiaries: 

Number: 

Healthy Retirees 3,470 3,502 3 2 0.9%

Disabled Retirees 3 5 3 1 (4) (11.4)% 

Beneficiaries1 199 211 1 2 6.0%

Total 3,704 3,744 4 0 1.1%

Averages: 

Age 71.7 72.1 0.4 0.6%

Monthly Benefit $ 869 $ 860 $ (9) (1.0)% 

January 1, 2015 January 1, 2016 Change

1 Includes 16 Alternate Payees as of January 1, 2015 and 17 Alternate Payees as of January 1, 2016.
Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

APPENDIX A PARTICIPANT COUNTS AND STATISTICS (CONTINUED) 

17

PARTICIPANT RECONCILIATION

NON-VESTED VESTED RETIREES AND 

ACTIVES INACTIVES INACTIVES BENEFICIARIES TOTAL

Total as of January 1, 2015 1,000 406 2,957 3,704 8,067

 New Entrants 72 0 0 0 72

 Vested Terminations (130) 0 130 0 0

 Non-Vested Terminations1 (60) 62 0 0 2

 Returned to Work 5 (2) (3) 0 0

 Healthy Retirements2 (17) (1) (122) 140 0

 Disabled Retirements 0 0 0 0 0

 Deaths in Year (1) 0 (8) (122) (131)

 Benefit Period Expired 0 0 0 0 0

 New Beneficiaries 0 0 3 21 24

 New Alternate Payees 0 0 0 1 1

 Lump Sum 0 0 (10) (1) (11)

 Permanent Break In Service 0 (90) 0 0 (90)

 Data Corrections (1) 1 (8) 1 (7)

 

 Net Change (132) (30) (18) 40 (140)

Total as of January 1, 2016 868 376 2,939 3,744 7,927

1

 Includes two participants who were hired and terminated in the 2015 Plan Year. 

2

 Includes 1 healthy retirement under the Special Eligibility Rule.
Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

APPENDIX A PARTICIPANT COUNTS AND STATISTICS (CONTINUED) 

18

DISTRIBUTION OF ACTIVE PARTICIPANTS BY AGE AND VESTING SERVICE (FOR 2016 SCHEDULE MB) 

YEARS OF VESTING SERVICE

AGE GROUP < 1 1 - 4 5 - 9 10 - 14 15 - 19 20 - 24 25 - 29 30 - 34 35 - 39 40 + TOTAL 

Under 25 0 13 0 0 0 0 0 0 0 0 13

25 - 29 0 42 12 0 0 0 0 0 0 0 54

30 - 34 0 38 34 8 1 0 0 0 0 0 81

35 - 39 0 25 31 10 19 0 0 0 0 0 85

40 - 44 0 20 19 17 19 5 0 0 0 0 80

45 - 49 0 21 20 19 27 13 8 2 0 0 110

50 - 54 0 15 22 24 30 16 14 6 1 0 128

55 - 59 0 22 28 19 30 18 15 7 4 1 144

60 - 64 0 8 17 27 14 21 13 5 9 2 116

65 - 69 0 6 7 10 8 8 5 5 2 1 52

70 and Over 0 1 1 1 1 1 0 0 0 0 5

 

Total 0 211 191 135 149 82 55 25 16 4 868
Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

APPENDIX A PARTICIPANT COUNTS AND STATISTICS (CONTINUED) 

19

DISTRIBUTION OF NON-RETIRED PARTICIPANTS BY AGE 

AGE GROUP 

Under 25 13 0 13 4 0 4

25 - 29 42 12 54 59 14 73

30 - 34 38 43 81 84 75 159

35 - 39 25 60 85 54 165 219

40 - 44 20 60 80 37 294 331

45 - 49 21 89 110 45 526 571

50 - 54 15 113 128 37 622 659

55 - 59 22 122 144 31 723 754

60 - 64 8 108 116 11 420 431

65 - 69 6 46 52 11 85 96

70 and Over 1 4 5 3 15 18

 

Total 211 657 868 376 2,939 3,315 

Average Age 39.8 51.1 48.3 40.9 51.8 50.6

Average Accrued Benefit $ 80 $ 1,200 $ 928 $ 53 $ 558 $ 501

ACTIVES INACTIVES 

NON-VESTED VESTED TOTAL ACTIVES NON-VESTED VESTED TOTAL INACTIVES 






Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

26

APPENDIX D PLAN ASSETS 

SUMMARY OF MARKET VALUE OF ASSETS

Assets as of December 31, 2015 Market Value Percent of Total

Cash and Cash Equivalents $ 981,358 0.3%

Partnership / Joint Venture Interests 105,255,477 31.5%

Value of Interest in Common / Collective Trusts 154,750,845 46.3%

Value of Interest in 103-12 Investment Entities 24,439,430 7.3%

Other Assets 45,166,555 13.5%

Net Receivables, Payables and Prepaid Expenses 3,616,535 1.1%

 

Total Assets $ 334,210,200 100.0%

Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

APPENDIX D PLAN ASSETS (CONTINUED) 

28

DETERMINATION OF NET INVESTMENT EARNINGS ON MARKET VALUE OF ASSETS 

1. Expected Net Investment Income 

A . Market Value of Assets $ 359,268,671

B . Contributions 11,811,952

C. Benefit Payments (39,045,991)

 

D. Expected Net Investment Income $ 25,059,745

2. Market Value Earnings 

A . Interest and Dividends $ 1,904,728

B . Realized and Unrealized Gains/(Losses) 3,246,089

C. Investment Expenses (1,694,169)

D. Operational Expenses (1,320,872)

E . Other Income 39,792 

F. Total Market Value Earnings (A + B + C + D + E) $ 2,175,568

3. Excess/(Deficit) of Market Value Earnings Over Expected Investment Earnings (2F - 1D) (22,884,177)

4. Current Year Recognition of Excess/(Deficit) Earnings (Calculated on Next Page) (3,891,185)

5. Net Investment Earnings (1D + 4) 21,168,560

6. Recognition of Assets in Excess of the Corridor 0 

7. Total Net Investment Earnings (5 + 6) $ 21,168,560
Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

APPENDIX D PLAN ASSETS (CONTINUED) 

29

DETERMINATION OF ACTUARIAL VALUE OF ASSETS 

AMOUNT OF EXCESS/(DEFICIT) EARNINGS RECOGNIZED OR TO BE RECOGNIZED

PLAN YEAR ENDED 

DECEMBER 31 

EXCESS/(DEFICIT) 

EARNINGS PRIOR YEARS CURRENT YEAR FUTURE YEARS

2015 $ (22,884,177) $ 0 $ (4,576,835) $ (18,307,342)

2014 (9,936,255) (1,987,251) (1,987,251) (5,961,753)

2013 19,488,943 7,795,578 3,897,789 7,795,576

2012 14,119,228 8,471,538 2,823,846 2,823,844

2011 (20,243,674) (16,194,940) (4,048,734) 0 

Total $ (19,455,935) $ (1,915,075) $ (3,891,185) $ (13,649,675)

 A. Market Value of Assets as of January 1, 2016 $ 334,210,200

 B. Amount of Excess/(Deficit) Earnings to be Recognized in Future Years (13,649,675)

 

 C. Preliminary Actuarial Value of Assets as of January 1, 2016 (A - B) $ 347,859,875

 D. Recognition of Assets in Excess of the 20% Corridor 0 

 E. Actuarial Value of Assets as of January 1, 2016 (C + D) $ 347,859,875
Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

30

APPENDIX E FUNDING STANDARD ACCOUNT (FOR SCHEDULE MB) 

FUNDING STANDARD ACCOUNT1

2015 2016 (Estimated) 

1. Credit Balance on January 1 $ 64,531,758 $ 50,699,080

2. Charges 

A . Normal Cost (Beginning of Year) $ 1,337,905 $ 1,432,000

B . Amortization Charges1 35,886,283 35,938,969

C. Interest on 2A and 2B 2,698,754 2,709,395

 

D. Subtotal Charges (A + B + C) $ 39,922,942 $ 40,080,364

3. Credits 

A . Employer Contributions for Year $ 11,811,952 $ 10,625,000

B . Amortization Credits 8,551,586 8,551,586

C. Interest on 1, 3A and 3B 5,726,726 4,680,830

 

D. Subtotal Credits (A + B + C) $ 26,090,264 $ 23,857,416

4. Credit Balance on December 31 (1 - 2D + 3D) $ 50,699,080 $ 34,476,132

1

 Incorporates the 5-year extension of charge bases effective January 1, 2009. 
Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

APPENDIX E FUNDING STANDARD ACCOUNT (FOR SCHEDULE MB) (CONTINUED)

31

FUNDING STANDARD ACCOUNT AMORTIZATION BASES (As of January 1, 2016)

Amortization Period Balances

Charges Date 

Established

Initial 

Period

Remaining 

Period Initial Remaining

Beginning-of-Year 

Payment

Initial Liability 1/1/1976 45.00 5.00 13,447,933 $ $ 2,840,781 $ 650,335

Actuarial Assumption 1/1/1978 43.00 5.00 1,960,033 420,443 96,252

Plan Amendment 1/1/1980 45.00 9.00 395,897 156,392 22,619

Plan Amendment 1/1/1981 45.00 10.00 3,609,259 1,575,395 211,562

Plan Amendment 1/1/1983 35.00 2.00 7,215,979 559,496 289,534

Plan Amendment 1/1/1984 35.00 3.00 3,740,561 472,385 168,603

Plan Amendment 1/1/1985 35.00 4.00 3,177,239 563,537 156,003

Plan Amendment 1/1/1986 35.00 5.00 3,832,226 877,718 200,933

Plan Amendment 1/1/1987 35.00 6.00 4,466,400 1,251,413 246,686

Plan Amendment 1/1/1988 35.00 7.00 7,521,437 2,482,913 433,319

Plan Amendment 1/1/1989 35.00 8.00 6,238,198 2,360,371 372,143

Plan Amendment 1/1/1990 35.00 9.00 1,991,358 845,349 122,268

Plan Amendment+Act Assump 1/1/1991 35.00 10.00 3,867,632 1,812,073 243,346

Plan Amendment 1/1/1992 35.00 11.00 2,315,769 1,181,854 148,790

Plan Amendment 1/1/1993 35.00 12.00 8,009,694 4,405,168 524,040

Plan Amendment+Act Assump 1/1/1994 35.00 13.00 5,816,782 3,416,976 386,626

Plan Amendment 1/1/1995 35.00 14.00 3,954,934 2,462,992 266,543

Actuarial Assumption 1/1/1996 35.00 15.00 2,334,000 1,531,193 159,236

Plan Amendment 1/1/1996 35.00 15.00 19,722,004 12,938,350 1,345,523

Plan Amendment 1/1/1997 35.00 16.00 12,051,000 8,283,032 831,144

Plan Amendment 1/1/1998 35.00 17.00 12,834,000 9,198,580 893,747

Actuarial Assumption 1/1/1998 35.00 17.00 5,651,596 4,050,694 393,572

Actuarial Assumption 1/1/1999 35.00 18.00 500,000 372,174 35,122

Plan Amendment 1/1/1999 35.00 18.00 21,615,699 16,089,326 1,518,376

Plan Amendment 1/1/2000 35.00 19.00 7,937,933 6,113,977 561,942
Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

APPENDIX E FUNDING STANDARD ACCOUNT (FOR SCHEDULE MB) (CONTINUED)

32

FUNDING STANDARD ACCOUNT AMORTIZATION BASES (As of January 1, 2016) (CONTINUED)

Amortization Period Balances

Charges Date 

Established

Initial 

Period

Remaining 

Period Initial Remaining

Beginning-of-Year 

Payment

Actuarial Assumption 1/1/2000 35.00 19.00 4,389,753 $ $ 3,381,085 $ 310,759

Plan Amendment 1/1/2001 35.00 20.00 12,746,807 10,127,202 908,708

Plan Amendment 1/1/2002 35.00 21.00 2,268,072 1,853,521 162,714

Plan Amendment 1/1/2003 35.00 22.00 2,964,980 2,486,157 213,933

Experience Loss 1/1/2003 20.00 7.00 12,151,612 5,417,832 945,524

Experience Loss 1/1/2004 20.00 8.00 23,109,456 11,804,205 1,861,090

Experience Loss 1/1/2005 20.00 9.00 12,406,469 7,109,855 1,028,346

Plan Amendment 1/1/2005 35.00 24.00 1,000,895 877,852 72,938

Actuarial Assumption 1/1/2005 35.00 24.00 1,063,519 932,771 77,502

Experience Loss 1/1/2006 20.00 10.00 6,485,444 4,102,016 550,865

Plan Amendment 1/1/2006 35.00 25.00 1,459,383 1,305,416 106,809

Plan Amendment 1/1/2007 35.00 26.00 1,475,698 1,344,061 108,429

Plan Amendment 1/1/2008 20.00 12.00 1,383,243 1,027,001 122,173

Experience Loss 1/1/2009 20.00 13.00 123,105,349 97,625,335 11,046,176

Experience Loss 1/1/2011 15.00 10.00 5,600,066 4,336,688 582,379

Experience Loss 1/1/2012 15.00 11.00 39,179,040 32,363,677 4,074,425

Experience Loss 1/1/2013 15.00 12.00 33,032,826 28,877,326 3,435,249

Experience Loss 1/1/2016 15.00 15.00 506,616 506,616 52,686

Total Charges $ 301,741,198 $ 35,938,969
Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

APPENDIX E FUNDING STANDARD ACCOUNT (FOR SCHEDULE MB) (CONTINUED)

33

FUNDING STANDARD ACCOUNT AMORTIZATION BASES (As of January 1, 2016) (CONTINUED)

Amortization Period Balances

Credits Date 

Established

Initial 

Period

Remaining 

Period Initial Remaining

Beginning-of-Year 

Payment

Experience Gain 1/1/2010 15.00 9.00 (27,345,881) $ $ (19,661,928) $ (2,843,835)

Plan Amendment 1/1/2010 15.00 9.00 (32,045,400) (23,040,921) (3,332,562)

Experience Gain 1/1/2014 15.00 13.00 (14,564,452) (13,386,199) (1,514,630)

Experience Gain 1/1/2015 15.00 14.00 (8,275,002) (7,951,990) (860,559)

Total Credits $ (64,041,038) $ (8,551,586)
Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

34

APPENDIX F CURRENT LIABILITY (FOR SCHEDULE MB) 

CURRENT LIABILITY (FOR 2016 SCHEDULE MB) 

January 1, 2016

A . Retirees and Beneficiaries $ 481,304,744

B . Vested Inactive Participants 227,659,065

C. Active Participants 

1. Non-Vested $ 1,027,549

2. Vested 105,815,526

 

3. Sub-total (1 + 2) $ 106,843,075

 

D. Total Current Liability (A + B + C3) $ 815,806,884

E . Market Value of Assets 334,210,200

F. Funded Ratio Using Market Value of Assets (E / D) 40.97%

G. Expected Increase in Current Liability $ 2,827,799

H. Expected Release from Current Liability1 41,017,738

I. Expected Disbursements1 41,017,738

J. Current Liability Interest Rate 3.28%

1

 Actual disbursements during the 2016 Plan Year will be used in the 2016 Schedule MB. 
Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

35

APPENDIX G MAXIMUM DEDUCTIBLE CONTRIBUTION 

MAXIMUM DEDUCTIBLE CONTRIBUTION 

A . Normal Cost $ 1,432,000

B . 10-Year Amortization of Unfunded Accrued Liability 25,112,596

C. Interest to End of Plan Year 1,924,483

 

D. Preliminary Max (A + B + C) $ 28,469,079

E . Full Funding Limitation 

1. ERISA $ 216,733,755

2. RPA Full Funding Limit Override 392,841,026

3. Greater of E1 or E2 392,841,026

F. Regular Maximum Deductible Contribution (lesser of D and E3) 28,469,079

G. Minimum Required Contribution, End of Year 0

H. 140% of Current Liability Basis 

1. Current Liability, Projected to End of Year $ 803,795,679

2. Actuarial Value of Assets Projected to End of Year 330,575,085

 

3. Excess of 140% of Current Liability over Actuarial Value of Assets at End of Year (140% x H1 - H2) $ 794,738,866

I . Maximum Deductible Contribution (greater of F, G and H3) $ 794,738,866
Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

36

APPENDIX H AUDITOR INFORMATION (FASB ASC 960) 

RECONCILIATION OF ACTUARIAL PRESENT VALUE OF ACCUMULATED PLAN BENEFITS 

2014 2015

Actuarial Present Value of Accumulated Plan Benefits at Beginning of Year (January 1) $ 538,956,405 $ 537,887,774

Increase/(Decrease) during the Year Attributable to: 

Benefits Accumulated and Actuarial Experience $ (303,465) $ (1,562,274)

Plan Amendments 0 0

Actuarial Assumption Changes 0 0

Increase for Interest 37,680,678 37,581,446

Benefits Paid (38,445,844) (39,045,991)

 

Net Increase/(Decrease) $ (1,068,631) $ (3,026,819)

 

Actuarial Present Value of Accumulated Plan Benefits at End of Year (December 31) $ 537,887,774 $ 534,860,955

ACTUARIAL PRESENT VALUE OF ACCUMULATED PLAN BENEFITS 

2014 2015

Actuarial Present Value of Accrued Benefits 

Vested Benefits 

Participants Currently Receiving Benefits $ 359,184,949 $ 354,476,819

Other Participants 177,945,394 179,801,794

 

Total Vested Benefits $ 537,130,343 $ 534,278,613

Non-Vested Benefits 757,431 582,342

 

Actuarial Present Value of Accumulated Plan Benefits at End of Year (December 31) $ 537,887,774 $ 534,860,955
Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

37

APPENDIX I DETERMINATION OF VESTED BENEFIT LIABILITIES FOR WITHDRAWAL 

LIABILITY PURPOSES 

DETERMINATION OF VESTED BENEFIT LIABILITIES FOR WITHDRAWAL LIABILITY PURPOSES 

December 31, 2014 December 31, 2015 

1. Vested Benefit Liabilities Earned to Date $ 537,130,343 $ 534,278,613

2. PBGC 10-3 Base1 

 20,285,206  19,016,927

3. Vested Benefit Liabilities (1 + 2) $ 557,415,549 $ 553,295,540

1

 PBGC Technical Update 10-3 describes the simplified method for plans in the Red Zone to disregard certain adjustable benefits in determining 

withdrawal liability. This involves the establishment of a base equal to the reduction in these adjustable benefits, which is then amortized over 15 

years. The PBGC 10-3 base is the outstanding balance as of the applicable date. 
Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

38

APPENDIX J FUNDING STANDARD ACCOUNT (NO AMORTIZATION EXTENSION) 

FUNDING STANDARD ACCOUNT (No Amortization Extension)1

2015 2016 (Estimated) 

1. Credit Balance on January 1 $ 24,189,702 $ 2,778,626

2. Charges 

A . Normal Cost (Beginning of Year) $ 1,337,905 $ 1,432,000

B . Amortization Charges 40,225,303 38,887,920

C. Interest on 2A and 2B 3,013,333 2,923,194

 

D. Subtotal Charges (A + B + C) $ 44,576,541 $ 43,243,114

3. Credits 

A . Employer Contributions for Year $ 11,811,952 $ 10,625,000

B . Amortization Credits 8,551,586 8,551,586

C. Interest on 1, 3A and 3B 2,801,927 1,206,597

 

D. Subtotal Credits (A + B + C) $ 23,165,465 $ 20,383,183

4. Credit Balance / (Funding Deficiency) on December 31 (1 - 2D + 3D) $ 2,778,626 $ (20,081,305)

1

 This is the Funding Standard Account used to determine if the Plan falls into the Red Zone.
Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

APPENDIX J FUNDING STANDARD ACCOUNT (NO AMORTIZATION EXTENSION) (CONTINUED) 

39

FUNDING STANDARD ACCOUNT AMORTIZATION BASES (No Amortization Extension) (As of January 1, 2016)

Amortization Period Balances

Charges Date 

Established

Initial 

Period

Remaining 

Period Initial Remaining

Beginning-of-Year 

Payment

Plan Amendment 1/1/1980 40.00 4.00 $ 395,897 $ 102,516 $ 28,380

Plan Amendment 1/1/1981 40.00 5.00 3,609,259 1,131,477 259,026

Plan Amendment 1/1/1987 30.00 1.00 4,466,400 343,733 343,733

Plan Amendment 1/1/1988 30.00 2.00 7,521,437 1,119,124 579,138

Plan Amendment 1/1/1989 30.00 3.00 6,238,198 1,346,410 480,558

Plan Amendment 1/1/1990 30.00 4.00 1,991,358 554,148 153,404

Plan Amendment+Act Assump 1/1/1991 30.00 5.00 3,867,632 1,301,464 297,941

Plan Amendment 1/1/1992 30.00 6.00 2,315,769 904,976 178,395

Plan Amendment 1/1/1993 30.00 7.00 8,009,694 3,535,527 617,024

Plan Amendment+Act Assump 1/1/1994 30.00 8.00 5,816,782 2,842,094 448,093

Plan Amendment 1/1/1995 30.00 9.00 3,954,934 2,106,430 304,667

Actuarial Assumption 1/1/1996 30.00 10.00 2,334,000 1,338,875 179,799

Plan Amendment 1/1/1996 30.00 10.00 19,722,004 11,313,299 1,519,277

Plan Amendment 1/1/1997 30.00 11.00 12,051,000 7,373,959 928,344

Plan Amendment 1/1/1998 30.00 12.00 12,834,000 8,310,880 988,662

Actuarial Assumption 1/1/1998 30.00 12.00 5,651,596 3,659,783 435,369

Actuarial Assumption 1/1/1999 30.00 13.00 500,000 340,416 38,517

Plan Amendment 1/1/1999 30.00 13.00 21,615,699 14,716,536 1,665,157

Plan Amendment 1/1/2000 30.00 14.00 7,937,933 5,650,525 611,495

Actuarial Assumption 1/1/2000 30.00 14.00 4,389,753 3,124,790 338,162

Plan Amendment 1/1/2001 30.00 15.00 12,746,807 9,442,241 981,945

Plan Amendment 1/1/2002 30.00 16.00 2,268,072 1,741,233 174,720

Plan Amendment 1/1/2003 30.00 17.00 2,964,980 2,350,790 228,407

Experience Loss 1/1/2003 15.00 2.00 12,151,612 2,441,989 1,263,707

Experience Loss 1/1/2004 15.00 3.00 23,109,456 6,733,409 2,403,269
Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

APPENDIX J FUNDING STANDARD ACCOUNT (NO AMORTIZATION EXTENSION) (CONTINUED) 

40

FUNDING STANDARD ACCOUNT AMORTIZATION BASES (No Amortization Extension) (As of January 1, 2016) (CONTINUED)

Amortization Period Balances

Charges Date 

Established

Initial 

Period

Remaining 

Period Initial Remaining

Beginning-of-Year 

Payment

Experience Loss 1/1/2005 15.00 4.00 12,406,469 $ $ 4,660,729 $ 1,290,211

Plan Amendment 1/1/2005 30.00 19.00 1,000,895 838,890 77,104

Actuarial Assumption 1/1/2005 30.00 19.00 1,063,519 891,376 81,928

Experience Loss 1/1/2006 15.00 5.00 6,485,444 2,946,135 674,454

Plan Amendment 1/1/2006 30.00 20.00 1,459,383 1,252,908 112,423

Plan Amendment 1/1/2007 30.00 21.00 1,475,698 1,294,950 113,680

Plan Amendment 1/1/2008 15.00 7.00 1,383,243 824,262 143,850

Experience Loss 1/1/2009 15.00 8.00 123,105,349 81,200,562 12,802,342

Experience Loss 1/1/2011 15.00 10.00 5,600,066 4,336,687 582,379

Experience Loss 1/1/2012 15.00 11.00 39,179,040 32,363,681 4,074,425

Experience Loss 1/1/2013 15.00 12.00 33,032,826 28,877,324 3,435,249

Experience Loss 1/1/2016 15.00 15.00 506,616 506,616 52,686

Total Charges $ 253,820,744 $ 38,887,920

 
Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

APPENDIX J FUNDING STANDARD ACCOUNT (NO AMORTIZATION EXTENSION) (CONTINUED) 

41

FUNDING STANDARD ACCOUNT AMORTIZATION BASES (No Amortization Extension) (As of January 1, 2016) (CONTINUED)

Amortization Period Balances

Credits Date 

Established

Initial 

Period

Remaining 

Period Initial Remaining

Beginning-of-Year 

Payment

Experience Gain 1/1/2010 15.00 9.00 (27,345,881) $ $ (19,661,928) $ (2,843,835)

Plan Amendment 1/1/2010 15.00 9.00 (32,045,400) (23,040,921) (3,332,562)

Experience Gain 1/1/2014 15.00 13.00 (14,564,452) (13,386,199) (1,514,630)

Experience Gain 1/1/2015 15.00 14.00 (8,275,002) (7,951,990) (860,559)

Total Credits $ (64,041,038) $ (8,551,586)
Western States Office and Professional Employees Pension Plan

Actuarial Valuation as of January 1, 2016

42

APPENDIX K HISTORICAL INFORMATION

HISTORICAL CONTRIBUTIONS AND BENEFIT PAYMENTS

Plan Year Contributions Benefit Payments

2000 $ 9,366,427 $ 18,819,097

2001 9,660,131 20,927,583

2002 9,277,458 20,835,583

2003 7,854,003 24,206,237

2004 6,935,726 26,487,895

2005 7,357,903 28,371,211

2006 7,399,605 29,919,215

2007 7,678,247 32,970,957

2008 8,277,807 32,853,989

2009 8,004,785 34,155,460

2010 8,489,009 37,136,630

2011 8,630,961 37,224,104

2012 9,797,048 37,280,366

2013 11,044,341 37,690,222

2014 10,411,438 38,445,844

2015 11,811,952 39,045,991

Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

October 19, 2017 

Board of Trustees 

Western States Office & Professional Employees Plan 

Dear Trustees: 

Following is our report on the actuarial valuation of the Pension Plan as of 

January 1, 2017. Here is a summary of the valuation results: 

1. The Plan has an Unfunded Accrued Liability of $184.6 million as of 

January 1, 2017. 

2. Net investment income was $22.9 million for an annual rate of return of 

6.84% (based on the Actuarial Value of Assets). The Market Value rate 

of return was 6.44%. Both returns are net of all expenses. 

3. The Plan experienced an actuarial loss of $1.0 million during 2016. The 

Plan’s 2016 net actuarial loss due to asset performance was $1.4 million. 

On the liability side, a gain of $0.3 million was realized during the 2016 

Plan Year. 

4. Based on the Pension Protection Act of 2006 (PPA) and the Plan’s 

interest assumption of 7.25%, the funded ratio for the 2017 Plan Year 

provided in notices to be distributed during April 2018 is 65.0%. 

5. As of January 1, 2017, the favorable credit balance in the Funding 

Standard Account was $35.3 million, a decrease of $15.4 million from the 

prior year. The credit balance reflects the 5-year amortization extension 

which was approved by the IRS in 2009. As of December 31, 2017, the 

credit balance is projected to be $17.2 million. As a result, contributions 

are expected to meet minimum funding requirements for the 2017 Plan 

Year. 

6. As of January 1, 2017, the Plan was certified under the PPA, as modified 

by the Multiemployer Pension Reform Act of 2014 (MPRA), as being in 

critical and declining status. That certification indicated that the Plan is 

projected to be insolvent by the end of the 2034 Plan Year. 

7. The projected employer contributions exceed the estimated cost of 

benefits to be earned during 2017 by about $7.7 million. Based on asset 

and liability measures on the valuation date, this excess is insufficient for 

funding the projected Unfunded Accrued Liability over a reasonable 

period. Without future investment return gains, Board and/or bargaining 

corrective action may be needed in the future to fund the projected 

unfunded liability over a reasonable period. 

8. Contributions for 2017 are projected to be fully deductible as they will fall 

within the maximum limits set by the IRS. 

9. As of December 31, 2016, there is an unfunded vested benefit liability of 

$224.1 million for withdrawal liability purposes. Pursuant to the IRC, the 

determination of the unfunded vested benefit liability disregards certain 

benefit reductions implemented as part of the Rehabilitation Plan. 

Additional information is provided in Section V. 

Sincerely, 

Paul Graf, ASA, EA, MAAA 

cc: Kim Gould 

Joe Reinhart, Esq. 

Alex Miller 
Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

TABLE OF CONTENTS 

Page 

Valuation Highlights ........................................................................................................................................................................................................................ 1

Section I Discussion of Assets and Liabilities .................................................................................................................................................................... 2

Section II Actuarial Gain/(Loss) Analysis ............................................................................................................................................................................. 4

Section III Changes Since Last Valuation and Other Plan Items ......................................................................................................................................10

Section IV Projection of Employer Contributions and Costs ............................................................................................................................................11

Section V Withdrawal Liability .............................................................................................................................................................................................12

Section VI Comments and Certification ...............................................................................................................................................................................13

Section VII Appendices ...........................................................................................................................................................................................................15

Appendix A Participant Counts and Statistics .................................................................................................................................................16

Appendix B Actuarial Methods and Assumptions............................................................................................................................................21

Appendix C Summary of Principal Plan Provisions .........................................................................................................................................25

Appendix D Plan Assets ..................................................................................................................................................................................27

Appendix E Funding Standard Account (for Schedule MB) ............................................................................................................................31

Appendix F Current Liability (for Schedule MB) ..............................................................................................................................................35

Appendix G Maximum Deductible Contribution ...............................................................................................................................................36

Appendix H Auditor Information (FASB ASC 960) ..........................................................................................................................................37

Appendix I Determination of Vested Benefit Liabilities for Withdrawal Liability Purposes .............................................................................38

Appendix J Funding Standard Account (No Amortization Extension) ............................................................................................................39

Appendix K Historical Information ...................................................................................................................................................................43


Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

SECTION I DISCUSSION OF ASSETS AND LIABILITIES (CONTINUED)

3 

The financial status of the Plan provides us with the means of measuring the 

actuarial position of the Trust as of January 1, 2017. 

ASSETS

The total Market Value of Assets as of January 1, 2017 is $326,919,954. 

Information regarding assets was taken from the final audit report provided by 

Hemming Morse, LLP. 

We have utilized an asset valuation method that recognizes net investment 

income on Trust assets that is more or less than 7.25% per year over a fiveyear period. The value of Trust assets based on this method is $342,812,133, 

which represents 104.9% of the Market Value of Assets. This method is 

intended to dampen the volatility associated with year to year changes in the 

market value of Trust assets, while at the same time systematically 

recognizing overall investment performance over the long term. The derivation 

of the Actuarial Value of Assets is shown in Appendix D. 

Contributions receivable from Employers for hours worked in the 2016 Plan 

Year but received after December 31, 2016 are included with net receivables. 

LIABILITIES 

The liabilities are listed separately for pensioners and for active and inactive 

benefits earned by non-retired participants. The $360,986,584 liability for 

pensioners represents the estimated amount required as of the valuation date 

to pay all benefits as they come due in the future. The Actuarial Accrued 

Liability is the sum of the separate liability amounts and is equal to 

$527,455,968. 

UNFUNDED ACCRUED LIABILITIES 

The liabilities of the Plan exceed the Actuarial Value of Assets by 

$184,643,835. This amount is known as the Unfunded Accrued Liability, 

which is amortized by the excess of contributions received over the cost of 

each future year’s accumulation of benefits. If the Market Value of Assets is 

used, the Unfunded Accrued Liability is equal to $200,536,014. As shown in 

Section IV, the current excess of contributions over benefit accruals is about 

$7.7 million and is not sufficient to pay down the Unfunded Accrued Liability 

on both an Actuarial Value of Assets basis and a Market Value of Assets 

basis assuming all future actuarial assumptions are realized. Without future 

investment return gains, Board and/or bargaining corrective action may be 

needed in the future to fund the projected Unfunded Accrued Liability over a 

reasonable period. Note that the Rehabilitation Plan was updated in 2012 to 

include reasonable measures to forestall possible insolvency. 
Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

4 

SECTION II ACTUARIAL GAIN/(LOSS) ANALYSIS 

ACTUARIAL VALUATION 

An actuarial valuation is a snapshot of asset and liability measures of the 

pension fund. It is used to estimate the amount of funds needed to help 

assure the future payment of retirement, termination, disability and death 

benefits to Plan participants based on Plan benefits in effect on the valuation 

date. The valuation is based on the actual service rendered by these 

participants prior to the valuation date and on a set of actuarial assumptions 

and methods. These assumptions have been selected by the Actuary while 

the methods have been adopted by the Trustees upon the recommendation 

of the Actuary. Both are described in Appendix B. 

Actuarial Experience 

In the paragraphs below, we have outlined the experience over the 2016 

Plan Year and have also shown experience for the previous 4 Plan Years. 

This information will provide an ongoing review of the appropriateness of 

each actuarial assumption. 

Development of Gain / (Loss) 

To the extent that actual experience during the year is different than what 

was expected, gains or losses are realized. The following exhibit develops 

the total gain or loss for the Plan Year: 

A. Unfunded Accrued Liability on January 1, 2016 $ 187,001,080

B. Normal Cost 1,228,069

C. Contributions for 2016 (11,250,910)

D. Interest on A, B and C 13,238,768

E. Assumption Change (6,594,691)

 

F. Expected Unfunded Accrued Liability on 

January 1, 2017 (A + B + C + D + E) $ 183,622,316

G. Actual Unfunded Accrued Liability on

January 1, 2017 $ 184,643,835

 

H. Net Actuarial Gain/(Loss) (F - G) $ (1,021,519)
Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

SECTION II ACTUARIAL GAIN/(LOSS) ANALYSIS (CONTINUED)

5 

Net Investment Return – 7.25% per annum, net of all expenses

The net investment yield on the Actuarial Value of Assets during the Plan 

Year was 6.84%. Appendix D shows the details of the actual investment 

income calculation. 

INCOME DOLLAR AMOUNT YIELD

A. Gross Investment Income $ 26,177,772 7.84 %

B. Operating Expenses (1,525,874) (0.46)

C. Investment Expenses (1,796,828) (0.54)

 

D. Net Investment Income (A + B + C) 22,855,070 $ 6.84 %

E. Expected Investment Income 24,208,364 7.25

 

F. Investment Loss (D - E) $ (1,353,294) (0.41) %

 

 

YEAR 

2012 (1.99) % 11.53 %

2013 11.24 12.97

2014 9.07 4.47

2015 6.22 0.63

2016 6.84 6.44

NET YIELD ON 

ACTUARIAL VALUE1 MARKET VALUE2

1 The 5-year geometric average return on the Actuarial Value of Assets is 6.18%, 

and the 10-year geometric average return is 3.62%. 

2

 The 5-year geometric average return on the Market Value of Assets is 7.11%, 

and the 10-year geometric average return is 2.92%. 
Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

SECTION II ACTUARIAL GAIN/(LOSS) ANALYSIS (CONTINUED)

6 

Mortality – 1983 GAM F Mortality Table for healthy lives, and 1983 F 

Mortality Table 17-year set-forward (until age 62) for 

disabled lives 

We compared the mortality experienced by the Plan during the 2016 Plan 

Year with that expected according to the above tables. During the Plan Year, 

there were 111 deaths with an average age of 80.9 and average monthly 

benefit for those in pay status of $618 with 22 continuing beneficiaries. This 

compares to 131 deaths with an average age of 79.7 and average monthly 

benefit for those in pay status of $728 with 24 continuing beneficiaries in the 

prior year. The liability released during the year was less than anticipated, 

resulting in a loss of $1,248,878. 

2012 $ (646,955)

2013 (21,395)

2014 665,209

2015 1,762,830

2016 (1,248,878)

$ 510,811

YEAR GAIN/(LOSS) 

5-Year Total

For valuation dates on or after July 1, 2011, actuaries are required to 

separately consider an assumption for mortality improvement. Recent studies 

have shown that mortality for the general population has improved at a fairly 

consistent rate (1% per year). Whether it will continue at this rate is 

controversial. Failure to fully reflect mortality improvement will result in an 

undervaluation of the Plan’s liabilities and corrective action in the future.

Effective January 1, 2017, the mortality assumptions have been updated to 

the RP-2014 Blue Collar Mortality Table for males and females, adjusted 

backward to 2006 using MP-2014, then projected forward from 2006 with 

Fully Generational Mortality Improvement under MP-2016 for healthy lives, 

and to the RP-2014 Disabled Retiree Mortality Table for males and females 

adjusted backward to 2006 using MP-2014, then projected forward from 

2006 with Fully Generational Mortality Improvement under MP-2016 for 

disabled lives. We believe these assumptions reasonably reflect anticipated 

mortality experience for the Plan. We will continue to monitor the 

appropriateness of these assumptions on an annual basis. 
Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

SECTION II ACTUARIAL GAIN/(LOSS) ANALYSIS (CONTINUED)

7 

Turnover – Table T-7, The Actuary’s Pension Handbook (CrockerSarason-Straight)

If a participant terminates prior to acquiring vested rights in their benefits or 

prior to retirement, then all or part of the liability accumulated for their benefit 

is released. This is offset by the liability for inactives who return to active 

status. During 2016, there were 53 active terminations from vested status 

and 49 terminations from non-vested status, offset by 2 rehired participants. 

This compares to 130 active terminations from vested status and 60

terminations from non-vested status, offset by 5 rehired participants in the 

prior year. The combined net turnover gain for the year was $175,220. 

2012 $ (157,632)

2013 52,665

2014 (509,163)

2015 (227,227)

2016 175,220

$ (666,137)

GAIN/(LOSS) 

5-Year Total

YEAR

Retirement 

We assume that participants will retire in accordance with an explicit set of 

retirement rates as described in Appendix B. A gain to the Fund results if a 

participant delays retirement. During the 2016 Plan Year, there were 177 

healthy retirements with an average age of 62.7 and an average monthly 

benefit of $771. This compares to 140 healthy retirements with an average 

age of 64.4 and an average monthly benefit of $573 in the prior year. The 

net result of this experience was a gain of $1,647,552. 

2012 $ 1,757,478

2013 1,943,164

2014 2,462,900

2015 1,615,254

2016 1,647,552

$ 9,426,348

YEAR GAIN/(LOSS) 

5-Year Total
Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

SECTION II ACTUARIAL GAIN/(LOSS) ANALYSIS (CONTINUED)

8 

Disability – 1952 Society of Actuaries Table, Period 2, Benefit 5

During the 2016 Plan Year, there was 1 disability retirement with an age of 

54.0 and an average monthly benefit of $1,715. This compares to no 

disability retirements in the prior year. The actuarial loss attributable to 

disabilities was $92,794. 

2012 $ (127,345)

2013 (136,510)

2014 (94,877)

2015 (95,159)

2016 (92,794)

$ (546,685)

GAIN/(LOSS) 

5-Year Total

YEAR

Miscellaneous 

Each year there are miscellaneous gains and losses due to data adjustments, 

corrections, new entrants and actual versus expected hours. The 

miscellaneous items in 2016 resulted in a net loss of $149,325. 

2012 $ (407,394)

2013 (344,116)

2014 (404,437)

2015 (58,520)

2016 (149,325)

$ (1,363,792) 

GAIN/(LOSS) 

5-Year Total

YEAR
Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

SECTION II ACTUARIAL GAIN/(LOSS) ANALYSIS (CONTINUED)

9 

SUMMARY OF GAINS AND LOSSES 

The following shows a summary of the gains and losses from various 

sources:

SUMMARY OF 2016 GAIN/(LOSS) AMOUNTS

SOURCE

Investment Income $ (1,353,294)

Mortality (1,248,878)

Turnover 175,220

Retirement 1,647,552

Disability (92,794)

Miscellaneous (149,325)

Total Experience Loss $ (1,021,519) 

GAIN/(LOSS)

Fluctuations in experience for all assumptions are to be expected from year 

to year. It is the net result over a period of time that must be viewed to 

determine the validity of the assumptions used. 

YEAR 

2012 $ (33,450,978) $ 418,152 $ (33,032,826) 

2013 13,070,644 1,493,808 14,564,452

2014 6,155,370 2,119,632 8,275,002

2015 (3,503,794) 2,997,178 (506,616)

2016 (1,353,294) 331,775 (1,021,519)

5-Year Total $ (19,082,052) $ 7,360,545 $ (11,721,507) 

FIVE-YEAR SUMMARY OF GAIN/(LOSS) AMOUNTS

ASSETS LIABILITIES TOTAL 
Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

10

SECTION III CHANGES SINCE LAST VALUATION AND OTHER PLAN ITEMS 

CHANGES IN PLAN PROVISIONS AND VALUATION 

METHODOLOGY 

No changes to Plan provisions or valuation methodology have been made 

since the prior valuation as of January 1, 2016. 

MANDATED CHANGES TO PLAN ASSUMPTIONS 

The current liability interest and mortality assumptions were updated as 

prescribed by IRS regulations. Refer to Appendix B for a description of these 

changes. 

OTHER CHANGES TO PLAN ASSUMPTIONS 

The Plan’s actuarial assumptions for mortality, retirement for vested inactives, 

form of benefit election, spousal age difference and operating expenses were 

revised to reflect historical experience and the actuary’s opinion on 

reasonable expectations for future experience. 

The following changes were made to the Plan’s assumptions:

1. Healthy Mortality: Updated from 1983 GAM (F) Mortality Table to 

RP2014 Blue Collar Mortality Table for males and females 

adjusted backward to 2006 using MP-2014, then projected 

forward from 2006 with Fully Generational Mortality 

Improvement under MP-2016. 

2. Disabled Mortality: Updated from 1983 GAM(F) Mortality Table with 

ages set forward 17 years until age 62 to RP2014 Disabled Retiree 

Mortality Table for males and females adjusted backward to 

2006 using MP-2014, then projected forward from 2006 with 

Fully Generational Mortality Improvement under MP-2016.

3. Retirement age for Vested Inactive Participants: Updated from age 

62 to a varied rate table based on age. Refer to Appendix B for 

additional details. 

4. Form of Benefit Payment Election (non-retired participants): Updated 

from 100% assumed to elect a single life annuity to 55% assumed 

to elect a single life annuity and 45% assumed to elect a 50% 

Joint and Survivor Annuity. 

5. Spousal Age Difference: Updated from spouse assumed to be the 

same age as the participant to the spouse assumed to be one 

year younger than the participant. 

6. Operating Expenses: Updated from assumed covered by investment 

earnings to $1,400,000, payable mid-year (or $1,352,681 as of the 

beginning of the year) for 2017.

The overall impact of these assumption changes was a decrease in liabilities 

of approximately $6.6 million and an increase in normal cost (including 

operating expenses) of approximately $1.2 million as of January 1, 2017. 

Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

12

SECTION V WITHDRAWAL LIABILITY 

Withdrawal liability assessments, if any, are based on the amount of 

“Unfunded Vested Benefits” (UVB) and an employer’s contribution history. 

For this purpose, benefits in which a participant is not immediately vested are 

excluded from the determination of vested benefits – this includes disability 

and death benefits other than the Qualified Pre-retirement Survivor Annuity 

(QPSA). Assets are based on the Market Value of Assets for withdrawal 

liability purposes. 

The simplified method was adopted to comply with the PPA’s requirement for 

Red Zone plans to disregard any reduction in protected benefits when 

determining the UVB for withdrawal liability – this includes early retirement 

subsidies, including those for the Rule of 80, and the 60-month guarantee in 

life annuity. Please refer to Appendix I for development of the Vested Benefit 

Liabilities. The resulting UVB as of December 31, 2016 is as follows: 

WITHDRAWAL LIABILITY 

A. Vested Benefit Liabilities Earned to Date1 $ 550,975,753

B. Market Value of Assets 326,919,954

 

C. UVB as of December 31, 2016 (A - B, not less than $0) $ 224,055,799

1 Value at December 31, 2016, which does not include the January 1, 2017 

assumption changes. These changes will be reflected in the December 31, 2017 

Vested Benefit Liabilities. 

A positive Unfunded Vested Benefits value means that Employers who 

withdraw in the 2017 Plan Year may be subject to a withdrawal liability 

assessment. 
Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

13

SECTION VI COMMENTS AND CERTIFICATION 

This is to certify that we have completed an actuarial valuation of the Plan as 

of January 1, 2017 in accordance with generally accepted actuarial principles 

and practices, including Actuarial Standards of Practice (ASOP) Nos. 4, 23, 

27, 35, 41, and 44. This report has been prepared for the Board of Trustees 

of the Western States Office & Professional Employees Plan to provide 

information on the Plan’s funded status, to review the recent experience 

under the Plan, and to supply figures needed by the auditor. 

This report on the results of the valuation was based on the assumption that 

the Plan is qualified under the Internal Revenue Code and on information 

supplied by the auditor with respect to contributions and assets and by the 

Plan Administrator with respect to participant data. We have not verified and 

customarily would not verify such information, but we have no reason to 

doubt its substantial accuracy. 

To the best of our knowledge, the information supplied in this actuarial 

valuation is complete and accurate and, in our opinion, the individual 

assumptions used: (a) are reasonably related to the experience of the Plan 

and to reasonable expectations; and (b) represent our best estimate of 

anticipated experience under the Plan. 

We are not aware of any events, subsequent to January 1, 2017, that would 

have a material effect on the actuarial findings presented in this report. 

Future actuarial measurements may differ significantly from the current 

measurements presented in this report due to such factors as: plan 

experience differing from that anticipated by the economic or demographic 

assumptions; changes in economic or demographic assumptions; increases 

or decreases expected as part of the natural operation of the methodology 

used for these measurements (for instance, the end of an amortization period 

or additional cost or contribution requirements based on the plan’s funded 

status); and changes in plan provisions or applicable law. Due to the limited 

scope of the assignment, we did not perform analysis of the potential range 

of such future measurements. 

In preparation of this report and the actuarial findings contained herein, there 

has been no conflict of interest between any relevant parties; no findings for 

which we, the actuaries, do not assume responsibility; and no deviation from 

ASOP Nos. 4, 23, 27, 35, 41, and 44.

Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

15

SECTION VII APPENDICES 

Appendix A Participant Counts and Statistics 

Appendix B Actuarial Methods and Assumptions 

Appendix C Summary of Principal Plan Provisions 

Appendix D Plan Assets 

Appendix E Funding Standard Account (for Schedule MB) 

Appendix F Current Liability (for Schedule MB) 

Appendix G Maximum Deductible Contribution 

Appendix H Auditor Information (FASB ASC 960) 

Appendix I Determination of Vested Benefit Liabilities for Withdrawal Liability Purposes

Appendix J Funding Standard Account (No Amortization Extension) 

Appendix K Historical Information 
Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

16

APPENDIX A PARTICIPANT COUNTS AND STATISTICS 

PARTICIPANT STATISTICS

Percent Change

Actives: 

Number 868 809 (59) (6.8)% 

Averages: 

Age 48.3 48.6 0.3 0.6%

Years of Credited Service 12.4 12.5 0.1 0.8%

Hours 1,781 1,628 (153) (8.6)% 

Non-Vested Inactives 

Number 376 359 (17) (4.5)% 

Averages: 

Age 40.9 41.4 0.5 1.2%

Years of Credited Service 2.3 2.1 (0.2) (8.7)% 

Accrued Benefit $ 5 3 $ 5 1 $ (2) (3.8)% 

Vested Inactives: 

Number 2,939 2,827 (112) (3.8)% 

Averages: 

Age 51.8 52.2 0.4 0.8%

Years of Credited Service 11.9 11.8 (0.1) (0.8)% 

Vested Accrued Benefit $ 558 $ 562 4$ 0.7%

Retirees and Beneficiaries: 

Number: 

Healthy Retirees 3,502 3,512 1 0 0.3%

Disabled Retirees 3 1 107 7 6 245.2%

Beneficiaries1 211 226 1 5 7.1%

Total 3,744 3,845 101 2.7%

Averages: 

Age 72.1 72.3 0.2 0.3%

Monthly Benefit $ 860 $ 860 0$ 0.0%

January 1, 2016 January 1, 2017 Change

1 Includes 17 Alternate Payees as of January 1, 2016 and 18 Alternate Payees as of January 1, 2017.
Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

APPENDIX A PARTICIPANT COUNTS AND STATISTICS (CONTINUED) 

17

PARTICIPANT RECONCILIATION

NON-VESTED VESTED RETIREES AND 

ACTIVES INACTIVES INACTIVES BENEFICIARIES TOTAL

Total as of January 1, 2016 868 376 2,939 3,744 7,927

 New Entrants 77 0 0 0 77

 Vested Terminations1 (53) 0 53 0 0

 Non-Vested Terminations (49) 49 0 0 0

 Returned to Work 2 0 (2) 0 0

 Healthy Retirements (34) 0 (143) 177 0

 Disabled Retirements (1) 0 0 1 0

 Deaths in Year (1) 0 (6) (104) (111)

 Benefit Period Expired 0 0 0 0 0

 New Beneficiaries 0 0 0 22 22

 New Alternate Payees 0 0 0 2 2

 Lump Sum 0 0 (6) 0 (6)

 Permanent Break in Service 0 (73) 0 0 (73)

 Data Corrections 0 7 (8) 3 2

 

 Net Change (59) (17) (112) 101 (87)

Total as of January 1, 2017 809 359 2,827 3,845 7,840

1 Includes one participant who was vested under Special Eligibility Rule. 
Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

APPENDIX A PARTICIPANT COUNTS AND STATISTICS (CONTINUED) 

18

DISTRIBUTION OF ACTIVE PARTICIPANTS BY AGE AND CREDITED SERVICE (FOR 2017 SCHEDULE MB) 

YEARS OF CREDITED SERVICE

AGE GROUP < 1 1 - 4 5 - 9 10 - 14 15 - 19 20 - 24 25 - 29 30 - 34 35 - 39 40 + TOTAL 

Under 25 0 12 0 0 0 0 0 0 0 0 12

25 - 29 0 39 6 1 0 0 0 0 0 0 46

30 - 34 0 33 29 9 0 0 0 0 0 0 71

35 - 39 0 34 26 12 13 0 0 0 0 0 85

40 - 44 0 17 17 16 23 6 0 0 0 0 79

45 - 49 0 20 20 15 23 9 7 0 0 0 94

50 - 54 0 14 15 24 23 17 13 10 0 0 116

55 - 59 0 20 20 16 24 22 13 8 2 0 125

60 - 64 0 12 21 25 20 15 13 7 7 4 124

65 - 69 0 4 6 11 5 10 2 4 4 1 47

70 and Over 0 2 1 1 2 2 0 1 1 0 10

 

Total 0 207 161 130 133 81 48 30 14 5 809
Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

APPENDIX A PARTICIPANT COUNTS AND STATISTICS (CONTINUED) 

19

DISTRIBUTION OF NON-RETIRED PARTICIPANTS BY AGE 

AGE GROUP 

Under 25 12 0 12 5 0 5

25 - 29 39 7 46 44 9 53

30 - 34 33 38 71 78 64 142

35 - 39 34 51 85 65 151 216

40 - 44 17 62 79 33 271 304

45 - 49 20 74 94 37 497 534

50 - 54 14 102 116 36 592 628

55 - 59 20 105 125 40 709 749

60 - 64 12 112 124 11 427 438

65 - 69 4 43 47 10 90 100

70 and Over 2 8 10 0 17 17

 

Total 207 602 809 359 2,827 3,186

Average Age 40.2 51.5 48.6 41.4 52.2 51.0

Average Accrued Benefit $ 67 $ 1,192 $ 904 $ 51 $ 562 $ 504

ACTIVES INACTIVES 

NON-VESTED VESTED TOTAL ACTIVES NON-VESTED VESTED TOTAL INACTIVES 
Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

APPENDIX A PARTICIPANT COUNTS AND STATISTICS (CONTINUED) 

20

DISTRIBUTION OF RETIREES AND BENEFICIARIES BY AGE 

CONTINUING NEW CONTINUING NEW

HEALTHY HEALTHY DISABLED DISABLED CONTINUING NEW GRAND

AGE GROUP RETIREES RETIREES RETIREES RETIREES BENEFICIARIES1 BENEFICIARIES1 TOTAL 

Under 50 0 0 5 0 10 1 16

50 - 54 0 0 6 1 5 2 14

55 - 59 76 29 12 0 7 4 128

60 - 64 357 86 31 0 20 2 496

65 - 69 858 56 24 0 24 2 964

70 - 74 839 6 12 0 31 3 891

75 - 79 541 0 3 0 36 3 583

80 - 84 316 0 4 0 25 5 350

85 and Over 348 0 9 0 44 2 403

 

Total 3,335 177 106 1 202 24 3,845

Average Age 73.0 62.7 65.9 54.0 73.8 69.5 72.3

Average Monthly Benefit $ 890 $ 771 $ 931 $ 1,715 $ 442 $ 524 $ 860

1 Includes 16 continuing Alternate Payees and 2 new Alternate Payees.






Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

27

APPENDIX D PLAN ASSETS 

SUMMARY OF MARKET VALUE OF ASSETS

Assets as of December 31, 2016 Market Value Percent of Total

Cash and Cash Equivalents $ 2,887,426 0.9%

Partnership / Joint Venture Interests 45,342,595 13.9%

Value of Interest in Common / Collective Trusts 200,652,274 61.3%

Value of Interest in 103-12 Investment Entities 48,644,555 14.9%

Value of Interest in Registered Investment Companies (e.g. mutual funds) 12,748,047 3.9%

Other Assets 13,112,303 4.0%

Net Receivables, Payables and Prepaid Expenses 3,532,754 1.1%

 

Total Assets $ 326,919,954 100.0%
Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

APPENDIX D PLAN ASSETS (CONTINUED) 

28

SUMMARY OF RECEIPTS AND DISBURSEMENTS 

Market Value Market Value Actuarial Value Actuarial Value

2015 2016 2015 2016 

Assets (Beginning of Year) $ 359,268,671 $ 334,210,200 $ 353,925,354 $ 347,859,875

Receipts During Year 

 Contributions1 $ 11,811,952 $ 11,250,910 $ 11,811,952 $ 11,250,910

 Investment Income (Net of Investment and Operating Expenses) 2,175,568 20,612,566 21,168,560 22,855,070 

 Subtotal Receipts $ 13,987,520 $ 31,863,476 $ 32,980,512 $ 34,105,980

Disbursements During Year 

 Benefit Payments $ (39,045,991) $ (39,153,722) $ (39,045,991) $ (39,153,722)

 

 Subtotal Disbursements $ (39,045,991) $ (39,153,722) $ (39,045,991) $ (39,153,722)

Assets (End of Year) $ 334,210,200 $ 326,919,954 $ 347,859,875 $ 342,812,133

Net Yield on Value of Assets 0.63 % 6.44 % 6.22 % 6.84 %

1

Includes $4,883,040 of base contributions, $3,509,909 of supplemental contributions, $81,811 of surcharge contributions and $3,337,192 of withdrawal liability 

payments in 2015, and $4,318,217 of base contributions, $3,016,465 of supplemental contributions, $43,983 of surcharge contributions and $3,872,245 of withdrawal 

liability payments in 2016. 
Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

APPENDIX D PLAN ASSETS (CONTINUED) 

29

DETERMINATION OF NET INVESTMENT EARNINGS ON MARKET VALUE OF ASSETS 

1. Expected Net Investment Income 

A . Market Value of Assets $ 334,210,200

B . Contributions 11,250,910

C. Benefit Payments (39,153,722)

 

D. Expected Net Investment Income 1 $ 23,218,763

2. Market Value Earnings 

A . Interest and Dividends $ 1,584,823

B . Realized and Unrealized Gains/(Losses) 22,339,020

C. Investment Expenses (1,796,828)

D. Operational Expenses (1,525,874)

E . Other Income 11,425 

F. Total Market Value Earnings (A + B + C + D + E) $ 20,612,566

3. Excess/(Deficit) of Market Value Earnings Over Expected Investment Earnings (2F - 1D) (2,606,197)

4. Current Year Recognition of Excess/(Deficit) Earnings (Calculated on Next Page) (363,693)

5. Net Investment Earnings (1D + 4) 22,855,070

6. Recognition of Assets in Excess of the Corridor 0 

7. Total Net Investment Earnings (5 + 6) $ 22,855,070
Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

APPENDIX D PLAN ASSETS (CONTINUED) 

30

DETERMINATION OF ACTUARIAL VALUE OF ASSETS 

AMOUNT OF EXCESS/(DEFICIT) EARNINGS RECOGNIZED OR TO BE RECOGNIZED

PLAN YEAR ENDED 

DECEMBER 31 

EXCESS/(DEFICIT) 

EARNINGS PRIOR YEARS CURRENT YEAR FUTURE YEARS

2016 $ (2,606,197) $ 0 $ (521,239) $ (2,084,958)

2015 (22,884,177) (4,576,835) (4,576,835) (13,730,507)

2014 (9,936,255) (3,974,502) (1,987,252) (3,974,501)

2013 19,488,943 11,693,367 3,897,789 3,897,787

2012 14,119,228 11,295,384 2,823,844 0 

Total $ (1,818,458) $ 14,437,414 $ (363,693) $ (15,892,179)

 A. Market Value of Assets as of January 1, 2017 $ 326,919,954

 B. Amount of Excess/(Deficit) Earnings to be Recognized in Future Years (15,892,179)

 

 C. Preliminary Actuarial Value of Assets as of January 1, 2017 (A - B) $ 342,812,133

 D. Recognition of Assets in Excess of the 20% Corridor 0 

 E. Actuarial Value of Assets as of January 1, 2017 (C + D) $ 342,812,133
Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

31

APPENDIX E FUNDING STANDARD ACCOUNT (FOR SCHEDULE MB) 

FUNDING STANDARD ACCOUNT1

2016 2017 (Estimated) 

1. Credit Balance on January 1 $ 50,699,080 $ 35,343,447

2. Charges 

A. Normal Cost (Beginning of Year) $ 1,228,069 $ 2,295,000

B. Amortization Charges 35,938,969 36,045,202

C. Interest on 2A and 2B 2,694,610 2,779,665

 

D. Subtotal Charges (A + B + C) $ 39,861,648 $ 41,119,867

3. Credits 

A. Employer Contributions for Year2 $ 11,250,910 $ 10,110,000

B. Amortization Credits 8,551,586 9,237,401

C. Interest on 1, 3A and 3B 4,703,519 3,598,599

 

D. Subtotal Credits (A + B + C) $ 24,506,015 $ 22,946,000

4. Credit Balance on December 31 (1 - 2D + 3D) $ 35,343,447 $ 17,169,580

1 Incorporates the 5-year extension of charge bases effective January 1, 2009. 

2 2017 estimated contributions reflect one quarterly payment for the 2016 withdrawn Employers. 
Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

APPENDIX E FUNDING STANDARD ACCOUNT (FOR SCHEDULE MB) (CONTINUED)

32

FUNDING STANDARD ACCOUNT AMORTIZATION BASES (As of January 1, 2017)

Amortization Period Balances

Charges

Date 

Established

Initial 

Period

Remaining 

Period Initial Remaining

Beginning-of-Year 

Payment

Initial Liability 1/1/1976 45.00 4.00 13,447,933 $ $ 2,349,253 $ 650,335

Actuarial Assumption 1/1/1978 43.00 4.00 1,960,033 347,695 96,252

Plan Amendment 1/1/1980 45.00 8.00 395,897 143,472 22,619

Plan Amendment 1/1/1981 45.00 9.00 3,609,259 1,462,711 211,562

Plan Amendment 1/1/1983 35.00 1.00 7,215,979 289,534 289,534

Plan Amendment 1/1/1984 35.00 2.00 3,740,561 325,806 168,603

Plan Amendment 1/1/1985 35.00 3.00 3,177,239 437,080 156,003

Plan Amendment 1/1/1986 35.00 4.00 3,832,226 725,852 200,933

Plan Amendment 1/1/1987 35.00 5.00 4,466,400 1,077,570 246,686

Plan Amendment 1/1/1988 35.00 6.00 7,521,437 2,198,190 433,319

Plan Amendment 1/1/1989 35.00 7.00 6,238,198 2,132,375 372,143

Plan Amendment 1/1/1990 35.00 8.00 1,991,358 775,504 122,268

Plan Amendment+Act Assump 1/1/1991 35.00 9.00 3,867,632 1,682,460 243,346

Plan Amendment 1/1/1992 35.00 10.00 2,315,769 1,107,961 148,790

Plan Amendment 1/1/1993 35.00 11.00 8,009,694 4,162,510 524,040

Plan Amendment+Act Assump 1/1/1994 35.00 12.00 5,816,782 3,250,050 386,626

Plan Amendment 1/1/1995 35.00 13.00 3,954,934 2,355,692 266,543

Actuarial Assumption 1/1/1996 35.00 14.00 2,334,000 1,471,424 159,236

Plan Amendment 1/1/1996 35.00 14.00 19,722,004 12,433,307 1,345,523

Plan Amendment 1/1/1997 35.00 15.00 12,051,000 7,992,150 831,144

Plan Amendment 1/1/1998 35.00 16.00 12,834,000 8,906,933 893,747

Actuarial Assumption 1/1/1998 35.00 16.00 5,651,596 3,922,263 393,572

Actuarial Assumption 1/1/1999 35.00 17.00 500,000 361,488 35,122

Plan Amendment 1/1/1999 35.00 17.00 21,615,699 15,627,344 1,518,376

Plan Amendment 1/1/2000 35.00 18.00 7,937,933 5,954,558 561,942
Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

APPENDIX E FUNDING STANDARD ACCOUNT (FOR SCHEDULE MB) (CONTINUED)

33

FUNDING STANDARD ACCOUNT AMORTIZATION BASES (As of January 1, 2017) (CONTINUED)

Amortization Period Balances

Charges Date 

Established

Initial 

Period

Remaining 

Period Initial Remaining

Beginning-of-Year 

Payment

Actuarial Assumption 1/1/2000 35.00 18.00 4,389,753 $ $ 3,292,925 $ 310,759

Plan Amendment 1/1/2001 35.00 19.00 12,746,807 9,886,835 908,708

Plan Amendment 1/1/2002 35.00 20.00 2,268,072 1,813,391 162,714

Plan Amendment 1/1/2003 35.00 21.00 2,964,980 2,436,960 213,933

Experience Loss 1/1/2003 20.00 6.00 12,151,612 4,796,550 945,524

Experience Loss 1/1/2004 20.00 7.00 23,109,456 10,663,991 1,861,090

Experience Loss 1/1/2005 20.00 8.00 12,406,469 6,522,418 1,028,346

Plan Amendment 1/1/2005 35.00 23.00 1,000,895 863,270 72,938

Actuarial Assumption 1/1/2005 35.00 23.00 1,063,519 917,276 77,502

Experience Loss 1/1/2006 20.00 9.00 6,485,444 3,808,609 550,865

Plan Amendment 1/1/2006 35.00 24.00 1,459,383 1,285,506 106,809

Plan Amendment 1/1/2007 35.00 25.00 1,475,698 1,325,215 108,429

Plan Amendment 1/1/2008 20.00 11.00 1,383,243 970,428 122,173

Experience Loss 1/1/2009 20.00 12.00 123,105,349 92,856,149 11,046,176

Experience Loss 1/1/2011 15.00 9.00 5,600,066 4,026,496 582,379

Experience Loss 1/1/2012 15.00 10.00 39,179,040 30,340,223 4,074,425

Experience Loss 1/1/2013 15.00 11.00 33,032,826 27,286,628 3,435,249

Experience Loss 1/1/2016 15.00 14.00 506,616 486,840 52,686

Experience Loss 1/1/2017 15.00 15.00 1,021,519 1,021,519 106,233

Total Charges $ 286,094,411 $ 36,045,202
Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

APPENDIX E FUNDING STANDARD ACCOUNT (FOR SCHEDULE MB) (CONTINUED)

34

FUNDING STANDARD ACCOUNT AMORTIZATION BASES (As of January 1, 2017) (CONTINUED)

Amortization Period Balances

Credits

Date 

Established

Initial 

Period

Remaining 

Period Initial Remaining

Beginning-of-Year 

Payment

Experience Gain 1/1/2010 15.00 8.00 (27,345,881) $ $ (18,037,405) $ (2,843,835)

Plan Amendment 1/1/2010 15.00 8.00 (32,045,400) (21,137,215) (3,332,562)

Experience Gain 1/1/2014 15.00 12.00 (14,564,452) (12,732,258) (1,514,630)

Experience Gain 1/1/2015 15.00 13.00 (8,275,002) (7,605,560) (860,559)

Assumption Change 1/1/2017 15.00 15.00 (6,594,691) (6,594,691) (685,815)

Total Credits $ (66,107,129) $ (9,237,401)
Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

35

APPENDIX F CURRENT LIABILITY (FOR SCHEDULE MB) 

CURRENT LIABILITY (FOR 2017 SCHEDULE MB) 

January 1, 2017

A . Retirees and Beneficiaries $ 498,873,239

B . Vested Inactive Participants 221,276,838

C. Active Participants 

1. Non-Vested $ 1,227,650

2. Vested 99,704,019

 

3. Sub-total (1 + 2) $ 100,931,669

 

D. Total Current Liability (A + B + C3) $ 821,081,746

E . Market Value of Assets 326,919,954

F. Funded Ratio Using Market Value of Assets (E / D) 39.82%

G. Expected Increase in Current Liability $ 1,981,554

H. Expected Release from Current Liability 41,174,289

I. Expected Disbursements1 41,174,289

J. Current Liability Interest Rate 3.05%

1

 Actual disbursements during the 2017 Plan Year will be used in the 2017 Schedule MB. 
Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

36

APPENDIX G MAXIMUM DEDUCTIBLE CONTRIBUTION 

MAXIMUM DEDUCTIBLE CONTRIBUTION 

A . Normal Cost $ 2,295,000

B . 10-Year Amortization of Unfunded Accrued Liability 24,796,039

C. Interest to End of Plan Year 1,964,100

 

D. Preliminary Max (A + B + C) $ 29,055,139

E . Full Funding Limitation 

1. ERISA $ 217,535,920

2. RPA Full Funding Limit Override 402,180,089

3. Greater of E1 or E2 402,180,089

F. Regular Maximum Deductible Contribution (lesser of D and E3) 29,055,139

G. Minimum Required Contribution, End of Year 0

H. 140% of Current Liability Basis 

1. Current Liability, Projected to End of Year $ 806,364,993

2. Actuarial Value of Assets Projected to End of Year 323,548,405

 

3. Excess of 140% of Current Liability over Actuarial Value of Assets at End of Year (140% x H1 - H2) $ 805,362,585

I . Maximum Deductible Contribution (greater of F, G and H3) $ 805,362,585

Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

38

APPENDIX I DETERMINATION OF VESTED BENEFIT LIABILITIES FOR WITHDRAWAL 

LIABILITY PURPOSES 

DETERMINATION OF VESTED BENEFIT LIABILITIES FOR WITHDRAWAL LIABILITY PURPOSES 

December 31, 2015 December 31, 2016 

1. Vested Benefit Liabilities Earned to Date $ 534,278,613 $ 533,319,056

2. PBGC 10-3 Base 19,016,9271 17,656,6971

3. Vested Benefit Liabilities (1 + 2) $ 553,295,540 $ 550,975,753

1 PBGC Technical Update 10-3 describes the simplified method for plans in the Red Zone to disregard certain adjustable benefits in determining 

withdrawal liability. This involves the establishment of a base equal to the reduction in these adjustable benefits, which is then amortized over 15 

years. The PBGC 10-3 base is the outstanding balance as of the applicable date. 
Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

39

APPENDIX J FUNDING STANDARD ACCOUNT (NO AMORTIZATION EXTENSION) 

FUNDING STANDARD ACCOUNT (No Amortization Extension)1

2016 2017 (Estimated) 

1. Credit Balance / (Funding Deficiency) on January 1 $ 2,778,626 $ (19,213,990)

2. Charges 

A . Normal Cost (Beginning of Year) $ 1,228,069 $ 2,295,000

B . Amortization Charges 38,887,920 38,650,417

C. Interest on 2A and 2B / 1, 2A and 2B 2,908,409 4,361,557

 

D. Subtotal Charges (A + B + C) $ 43,024,398 $ 45,306,974

3. Credits 

A . Employer Contributions for Year2 $ 11,250,910 $ 10,110,000

B . Amortization Credits 8,551,586 9,237,401

C. Interest on 1, 3A and 3B / 3A and 3B 1,229,286 1,036,199

 

D. Subtotal Credits (A + B + C) $ 21,031,782 $ 20,383,600

4. Funding Deficiency on December 31 (1 - 2D + 3D) $ (19,213,990) $ (44,137,364)

1

 This is the Funding Standard Account used to determine if the Plan falls into the Red Zone. 

2 2017 estimated contributions reflect one quarterly payment for the 2016 withdrawn Employers.
Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

APPENDIX J FUNDING STANDARD ACCOUNT (NO AMORTIZATION EXTENSION) (CONTINUED) 

40

FUNDING STANDARD ACCOUNT AMORTIZATION BASES (No Amortization Extension) (As of January 1, 2017)

Amortization Period Balances

Charges

Date 

Established

Initial 

Period

Remaining 

Period Initial Remaining

Beginning-of-Year 

Payment

Plan Amendment 1/1/1980 40.00 3.00 $ 395,897 $ 79,511 $ 28,380

Plan Amendment 1/1/1981 40.00 4.00 3,609,259 935,704 259,026

Plan Amendment 1/1/1988 30.00 1.00 7,521,437 579,135 579,135

Plan Amendment 1/1/1989 30.00 2.00 6,238,198 928,626 480,558

Plan Amendment 1/1/1990 30.00 3.00 1,991,358 429,798 153,404

Plan Amendment+Act Assump 1/1/1991 30.00 4.00 3,867,632 1,076,278 297,941

Plan Amendment 1/1/1992 30.00 5.00 2,315,769 779,258 178,395

Plan Amendment 1/1/1993 30.00 6.00 8,009,694 3,130,094 617,024

Plan Amendment+Act Assump 1/1/1994 30.00 7.00 5,816,782 2,567,566 448,093

Plan Amendment 1/1/1995 30.00 8.00 3,954,934 1,932,391 304,667

Actuarial Assumption 1/1/1996 30.00 9.00 2,334,000 1,243,109 179,799

Plan Amendment 1/1/1996 30.00 9.00 19,722,004 10,504,089 1,519,277

Plan Amendment 1/1/1997 30.00 10.00 12,051,000 6,912,922 928,344

Plan Amendment 1/1/1998 30.00 11.00 12,834,000 7,853,079 988,662

Actuarial Assumption 1/1/1998 30.00 11.00 5,651,596 3,458,184 435,369

Actuarial Assumption 1/1/1999 30.00 12.00 500,000 323,787 38,517

Plan Amendment 1/1/1999 30.00 12.00 21,615,699 13,997,604 1,665,157

Plan Amendment 1/1/2000 30.00 13.00 7,937,933 5,404,360 611,495

Actuarial Assumption 1/1/2000 30.00 13.00 4,389,753 2,988,659 338,162

Plan Amendment 1/1/2001 30.00 14.00 12,746,807 9,073,667 981,945

Plan Amendment 1/1/2002 30.00 15.00 2,268,072 1,680,085 174,720

Plan Amendment 1/1/2003 30.00 16.00 2,964,980 2,276,256 228,407

Experience Loss 1/1/2003 15.00 1.00 12,151,612 1,263,707 1,263,707

Experience Loss 1/1/2004 15.00 2.00 23,109,456 4,644,075 2,403,269

Experience Loss 1/1/2005 15.00 3.00 12,406,469 3,614,881 1,290,211
Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

APPENDIX J FUNDING STANDARD ACCOUNT (NO AMORTIZATION EXTENSION) (CONTINUED) 

41

FUNDING STANDARD ACCOUNT AMORTIZATION BASES (No Amortization Extension) (As of January 1, 2017) (CONTINUED)

Amortization Period Balances

Charges Date 

Established

Initial 

Period

Remaining 

Period Initial Remaining

Beginning-of-Year 

Payment

Plan Amendment 1/1/2005 30.00 18.00 1,000,895 $ $ 817,015 $ 77,104

Actuarial Assumption 1/1/2005 30.00 18.00 1,063,519 868,133 81,928

Experience Loss 1/1/2006 15.00 4.00 6,485,444 2,436,378 674,454

Plan Amendment 1/1/2006 30.00 19.00 1,459,383 1,223,170 112,423

Plan Amendment 1/1/2007 30.00 20.00 1,475,698 1,266,912 113,680

Plan Amendment 1/1/2008 15.00 6.00 1,383,243 729,742 143,850

Experience Loss 1/1/2009 15.00 7.00 123,105,349 73,357,092 12,802,342

Experience Loss 1/1/2011 15.00 9.00 5,600,066 4,026,495 582,379

Experience Loss 1/1/2012 15.00 10.00 39,179,040 30,340,228 4,074,425

Experience Loss 1/1/2013 15.00 11.00 33,032,826 27,286,625 3,435,249

Experience Loss 1/1/2016 15.00 14.00 506,616 486,840 52,686

Experience Loss 1/1/2017 15.00 15.00 1,021,519 1,021,519 106,233

Total Charges $ 231,536,974 $ 38,650,417
Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

APPENDIX J FUNDING STANDARD ACCOUNT (NO AMORTIZATION EXTENSION) (CONTINUED) 

42

FUNDING STANDARD ACCOUNT AMORTIZATION BASES (No Amortization Extension) (As of January 1, 2017) (CONTINUED)

Amortization Period Balances

Credits

Date 

Established

Initial 

Period

Remaining 

Period Initial Remaining

Beginning-of-Year 

Payment

Experience Gain 1/1/2010 15.00 8.00 (27,345,881) $ $ (18,037,405) $ (2,843,835)

Plan Amendment 1/1/2010 15.00 8.00 (32,045,400) (21,137,215) (3,332,562)

Experience Gain 1/1/2014 15.00 12.00 (14,564,452) (12,732,258) (1,514,630)

Experience Gain 1/1/2015 15.00 13.00 (8,275,002) (7,605,560) (860,559)

Assumption Change 1/1/2017 15.00 15.00 (6,594,691) (6,594,691) (685,815)

Total Credits $ (66,107,129) $ (9,237,401)
Western States Office & Professional Employees Plan

Actuarial Valuation as of January 1, 2017

43

APPENDIX K HISTORICAL INFORMATION

HISTORICAL CONTRIBUTIONS AND BENEFIT PAYMENTS

Plan Year Contributions Benefit Payments

2000 $ 9,366,427 $ 18,819,097

2001 9,660,131 20,927,583

2002 9,277,458 20,835,583

2003 7,854,003 24,206,237

2004 6,935,726 26,487,895

2005 7,357,903 28,371,211

2006 7,399,605 29,919,215

2007 7,678,247 32,970,957

2008 8,277,807 32,853,989

2009 8,004,785 34,155,460

2010 8,489,009 37,136,630

2011 8,630,961 37,224,104

2012 9,797,048 37,280,366

2013 11,044,341 37,690,222

2014 10,411,438 38,445,844

2015 11,811,952 39,045,991

2016 11,250,910 39,153,722