{"id":789,"date":"2011-07-11T14:57:08","date_gmt":"2011-07-11T19:57:08","guid":{"rendered":"http:\/\/pensionblog.com\/?p=789"},"modified":"2011-07-11T14:57:08","modified_gmt":"2011-07-11T19:57:08","slug":"top-reasons-to-change-your-gasb-45-valuation-schedule","status":"publish","type":"post","link":"https:\/\/viaactuarial.com\/2011\/07\/11\/top-reasons-to-change-your-gasb-45-valuation-schedule\/","title":{"rendered":"Top Reasons to Change Your GASB 45 Valuation Schedule"},"content":{"rendered":"<p><a href=\"https:\/\/vaniwaarden.com\/wp-content\/uploads\/2011\/07\/schedule.jpeg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignright size-full wp-image-791\" title=\"schedule\" src=\"https:\/\/vaniwaarden.com\/wp-content\/uploads\/2011\/07\/schedule.jpeg\" alt=\"\" width=\"158\" height=\"157\" srcset=\"https:\/\/viaactuarial.com\/wp-content\/uploads\/2011\/07\/schedule.jpeg 225w, https:\/\/viaactuarial.com\/wp-content\/uploads\/2011\/07\/schedule-150x150.jpeg 150w\" sizes=\"(max-width: 158px) 100vw, 158px\" \/><\/a>GASB 45 requires a complete actuarial valuation of public retiree health plans to be completed every 2 to 3 years (depending on number of plan members), and sponsors usually don\u2019t look forward to the administrative hassles of their next study. However, there are several situations where a new valuation could be advantageous and, likely, mandatory.<\/p>\n<p>In addition to the standard 2 or 3-year cycle, GASB 45 rules also state that:<\/p>\n<p><em><strong>\u201cA new valuation should be performed if, since the previous valuation, significant changes have occurred that affect the results of the valuation, including significant changes in benefit provisions, the size or composition of the population, &#8230; or other factors that impact long-term assumptions.\u201d<\/strong><\/em><\/p>\n<p>Below are some factors which can compel a new valuation sooner than the standard 2 or 3- year cycle:<\/p>\n<ul>\n<li><strong>Establishing an OPEB trust<\/strong>.\n<ul>\n<li>If a <strong>revocable trust<\/strong> is established, then this won\u2019t change the unfunded liability for accounting purposes, but it can affect the liability discount rate. See our previous post on the <a title=\"OPEB Trust Investment\u00a0Return\" href=\"https:\/\/vaniwaarden.com\/2010\/11\/17\/opeb-trust-investment-return\/\" target=\"_blank\" rel=\"noopener\">effect of OPEB trusts on GASB 45 discount rates<\/a>.<\/li>\n<li>If an <strong>irrevocable trust<\/strong> is established, the discount rate may be impacted <span style=\"text-decoration: underline;\">and<\/span> the assets will decrease the plan\u2019s unfunded liability. This will likely reduce the GASB 45 annual accounting expense (Annual OPEB Cost).<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul>\n<li><strong>Large change in retiree health benefits<\/strong>. This includes changes to plan coverage levels (e.g., deductibles and co-pays), premiums, or eligibility for benefits.<\/li>\n<\/ul>\n<p style=\"padding-left: 30px;\">If employment contracts are amended to scale back (or increase) the amount of retiree health benefits paid by the employer, then this can have a big impact on plan liabilities as costs are shifted to retirees. See our previous post on the <a title=\"Understanding the Leveraging Effect of GASB 45 OPEB\u00a0Liabilities\" href=\"https:\/\/vaniwaarden.com\/2011\/02\/09\/understanding-the-leveraging-effect-of-gasb-45-opeb-liabilities\/\" target=\"_blank\" rel=\"noopener\">leveraging effect of OPEB liabilities<\/a>.<\/p>\n<p style=\"padding-left: 30px;\">Plan changes will affect the per-member costs and will likely affect future assumptions about retiree participation in the plan. A new valuation should be performed to capture this liability increase (or decrease) as soon as possible for the year of change.<\/p>\n<ul>\n<li><strong>Large change in number of employees or retirees<\/strong>. If there are significant employee layoffs\/retirements or if many retirees drop coverage due to increasing costs, then a new valuation may be needed to accurately capture the effect on the plan\u2019s GASB 45 liabilities.<\/li>\n<\/ul>\n<p>There are likely many other scenarios which would require a new GASB 45 study. This is especially true in the case of a plan on the 3-year cycle where there is an increased likelihood of a significant change in the \u201coff-cycle\u201d periods.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>GASB 45 requires a complete actuarial valuation of public retiree health plans to be completed every 2 to 3 years (depending on number of plan members), and sponsors usually don\u2019t look forward to the administrative hassles of their next study. However, there are several situations where a new valuation could be advantageous and, likely, mandatory. [&#8230;]<a class=\"understrap-read-more-link\" href=\"https:\/\/viaactuarial.com\/2011\/07\/11\/top-reasons-to-change-your-gasb-45-valuation-schedule\/\">Read More&#8230;<span class=\"screen-reader-text\"> from Top Reasons to Change Your GASB 45 Valuation Schedule<\/span><\/a><\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[13,16,17],"tags":[78,15,18,19],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Top Reasons to Change Your GASB 45 Valuation Schedule - Via Actuarial Solutions<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/viaactuarial.com\/2011\/07\/11\/top-reasons-to-change-your-gasb-45-valuation-schedule\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Top Reasons to Change Your GASB 45 Valuation Schedule - Via Actuarial Solutions\" \/>\n<meta property=\"og:description\" content=\"GASB 45 requires a complete actuarial valuation of public retiree health plans to be completed every 2 to 3 years (depending on number of plan members), and sponsors usually don\u2019t look forward to the administrative hassles of their next study. 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