International Association of Machinists Motor City Pension Fund

EIN/Plan #: 38-6237143/001 

Checklist Item #6 – 3.01 Actuarial Assumptions and Methods used in Actuarial Certification of 

Plan Status as of July 1, 2016 

Does the application describe the assumptions used, including the new entrant profile, the total 

contribution base units, and the average contribution rates? See section 3.01. 

Document 6.1 describes the assumptions used by the Pension Plan’s actuary. Document 6.2 

provides a supplemental report that provides the actuary’s rationale for the major assumptions 

made and is based on the actuary’s interpretation of the requirements under Revenue 

Procedure 2016-27, Section 3.01. 
International Association of Machinists Motor City Pension Fund

EIN/Plan #: 38-6237143/001 

Checklist Item #6 – 3.01 Actuarial Assumptions and Methods used in Actuarial Certification of 

Plan Status as of July 1, 2016 

6.1 

Document 6.1 

The following outlines the assumptions and methods used by the Plan’s Actuary in making the 

determination of Critical and Declining status as of July 1, 2016. Pages 2 and 3 of the July 1, 

2016 actuarial certification included in Document 5.1 outline additional assumption updates 

utilized. 

______________________________________________________________________________ 

Assumptions 

ERISA rate of return used 

to value liabilities 7.50% per year after investment expenses

Short-term asset return 6.75% for the plan years ending in 2016 through 2025

Operational expenses $240,000 per year excluding investment expenses

Pop-up load Liabilities for retirees and disabled participants with joint and 

survivor option who retired before January 1, 2009 with 

contributions after May 1, 1998 are loaded 2.3%.

Mortality

Assumed plan mortality RP 2014 Generational Blue Collar Mortality Tables for 

employees and healthy annuitants projected using the MP-2014 

projection scale, set forward 2 years for males and females. 

Post-disablement 

mortality

RP 2014 Generational Blue Collar Mortality Tables for disabled 

annuitants projected using the MP-2014 projection scale, set 

forward 2 years for males and females. 

Withdrawal T-3 Turnover Table from The Actuary’s Pension Handbook (less 

GAM 51 mortality) – specimen rates shown below:

Withdrawal

Age Rate

25 .0527

30 .0483

35 .0447

40 .0384

45 .0321

50 .0152
International Association of Machinists Motor City Pension Fund

EIN/Plan #: 38-6237143/001 

Checklist Item #6 – 3.01 Actuarial Assumptions and Methods used in Actuarial Certification of 

Plan Status as of July 1, 2016 

6.2 

Select rates for the first 3 years of employment are 

shown below:

Select

Withdrawal

Year Rate

First .15

Second .15

Third .15

Future retirement rates

Active lives According to the following schedule:

Age

Participants not 

Grandfathered

Grandfathered with

25 years of

credited service

as of

June 30, 2009*

46-51 .00 .08

52-60 .01 .08

61 .15 .15

62 .40 .40

63-64 .25 .25

65 .85 .85

66 .42 .42

67 .71 .71

68 .80 .80

69 .90 .90

70 1.00 1.00

*First year eligible with 25 years of service assumes at 

least a 50% retirement rate.

Inactive vested lives Age 60, or current age if older (earliest unreduced 

retirement age if grandfathered)

Future annual weeks Same number of weeks as previous plan year.

Future weekly contribution 

rate

Average negotiated weekly rate for current plan year.

Age of participants with 

unrecorded birth dates

Based on average entry age of participants with recorded birth 

dates and same vesting status.
International Association of Machinists Motor City Pension Fund

EIN/Plan #: 38-6237143/001 

Checklist Item #6 – 3.01 Actuarial Assumptions and Methods used in Actuarial Certification of 

Plan Status as of July 1, 2016 

6.3 

Marriage assumptions 80% assumed married with the male spouse 3 years older than 

his wife

Inactive vested lives over 

age 70

Continuing inactive vested participants over age 70 are 

assumed deceased and are not valued.

QDRO benefits Benefits to alternate payee included with participant’s 

benefit until payment commences

Section 415 limit 

assumptions

Dollar limit $210,000 per year

Assumed form of 

payment for those 

limited by Section 415

Qualified joint and 75% survivor annuity

Benefits not valued None

Projection Assumptions 

Assumed return on fund 

assets

6.75% for the first 10 years (7/1/2015-6/30/2025)

7.50% thereafter

Future total weeks worked 5,962 weeks annually

Contribution Rate Increases None

Plan Changes None

Contributions from 

Withdrawn Employers

Any future reasonably collectible contributions are 

included.

New Entrant Profile No open group projections or specific new entrant 

profiles are used. The projection methodology uses 

implicit assumptions for future benefit payments. New 

actives are assumed to keep normal cost level. These new 

entrants then join other actives with assumed annual 

migration to retired status and benefit payments 

proportional to liabilities. Since the current benefit 

formula does not provide large benefits, the impact on 
International Association of Machinists Motor City Pension Fund

EIN/Plan #: 38-6237143/001 

Checklist Item #6 – 3.01 Actuarial Assumptions and Methods used in Actuarial Certification of 

Plan Status as of July 1, 2016 

6.4 

cashflows is not material. This can be seen in comparing 

the exhibits for this purpose with other exhibits using 

open group projections.

Methods 

Funding method Traditional Unit Credit method (effective July 1, 2007)

Population valued

Actives Eligible employees with at least one week worked during the 

preceding plan year.

Inactive vested Vested participants with no weeks reported during the 

preceding plan year.

Retirees Participants and beneficiaries in pay status as of the valuation 

date.

Asset valuation method Smoothed market value without phase-in effective July 1, 2006. 

Gains and Losses are amortized over a period of 5 years. The 

actuarial value is limited to not less than 80% and not more 

than 120% of the actual market value of assets in any plan year.

Pension Relief Act of 2010  10-year smoothing was elected with respect to the loss 

incurred during the plan year ended in 2009.

 The 130% cap on actuarial value of assets was elected for 

the plan years beginning in 2009 and 2010.
International Association of Machinists Motor City Pension Fund

EIN/Plan #: 38-6237143/001 

Checklist Item #6 – 3.01 Actuarial Assumptions and Methods used in Actuarial Certification of 

Plan Status as of July 1, 2016 

6.5 

Document 6.2 

The following provides the Plan Actuary’s justification for utilizing the main actuarial 

assumptions summarized above in Document 6.1. The non-prescribed actuarial assumptions 

were selected to provide a reasonable long term estimate of developing experience. The 

assumptions are reviewed annually, including a comparison to actual experience. The following 

describes the Plan’s Actuary’s rationale for the selection of each non-prescribed assumption 

that has a significant effect on the valuation results. 

____________________________________________________________________________ 

ERISA rate of return used 

to value liabilities

Future rates of return were modeled based on the Plan’s current 

investment policy asset allocation and composite, long-term 

capital market assumptions taken from Horizon Actuarial’s 2015 

survey of investment consultants. 

Based on this analysis, we selected a final assumed rate of 

7.50%, which we feel is reasonable. This rate may not be 

appropriate for other purposes such as settlement of liabilities.

Mortality The RP 2014 Generational Blue Collar Mortality Tables for 

employees and healthy annuitants projected using the MP-2014 

projection scale was chosen as the base table for this population. 

The blue collar table was chosen based on the industry of plan 

participants. 

Finally, a 2-year set forward was applied in order to more closely 

match projected deaths for the coming plan year to extrapolated 

deaths derived from a study of retiree deaths from July 1, 2010 

through June 30, 2015.

Retirement Actual rates of retirement by age were last studied for this plan 

from July 1, 2011 through June 30, 2014. The assumed future 

rates of retirement were selected based on the results of this 

study. 

Withdrawal Actual rates of withdrawal by age were last studied for this plan 

from July 1, 2010 through June 30, 2015. The study excluded 

experience from employers that have completely withdrawn. 

The assumed future rates of withdrawal were selected based on 

the results of this study. 

Future weeks worked Based on review of recent plan experience adjusted for 

anticipated future changes in workforce.