# LCMS Convention Workbook_St. Louis Missouri_1983_S161 # Machine transcription, uncorrected — CHI Digital Archive (demonstration) ADMINISTRATION AND PROGRAM IMPLEMENTATION 161 NOTE C--ACTUARIAL PRESENT VALUE OF ACCUMULATED PLAN BENEFITS Accumulated plan benefits are the actuarial present value of future payments attributable under the Plan's provisions to services rendered by members as of January 1, 1982. This amount results from applying actuarial assumptions which reflect the time value of money (through discounts for interest) and the probability of payment (by means of decrements such as for death, disability, withdrawal, or retirement) between the valuation date and the expected date of payment. Accumulated plan benefits include benefits expected to be paid to retired or terminated members and present members. Benefits for retired or terminated members are based on the members’ creditable service and their compensation using the highest-paid 60 consecutive months during the final 240 months of creditable service. Benefits payable under all circumstances--retirement, death, and termination of membership are included, to the extent deemed attributable to service rendered to January 1, 1982, EXHIBIT C NOTES TO FINANCIAL STATEMENTS--Continued Page 6 CONCORDIA RETIREMENT PLAN NOTE C-~ACTUARIAL PRESENT VALUE OF ACCLNLLATED PLAN BENEFITS--Concinued The accumulated plan benefit information as determined by Tillinghast, Nelson & Warren, Inc., as of January 1, 1982 and 1981 is as follows: January 1, 1982 1981 Actuarial present value of accusulated plan benefits: Vested benefits: Members currently receiving payments § 32,747,720 $29,851,749 Other menbers 84,561,468 53,284,772 117,309,188 74,136,521 Nonvested benefits 3,800,731 4,789,754 $121,109,919 $7&,926,275 Significant assumptions underlying the actuarial computations are: Assuned rate of return on investments 8%, including a reduction to reflect anticipated adninis- trative expenses associated with providing benefits. Retirement Rates by employee type, based upon a study of Concordia Retirement Plan experience. Social Security Benefits Social Security primary insurance amounts are estimated by apply- ing ratios to projected final earnings. These ratios are developed using the Social Security Law as amended through 1977, with wage base increases of 5% per year compounded after 1981 and 4% per year compounded increases in the Consumer Price Index. EXHIBIT C Page 7 NOTES TO FINANCIAL STATEMENTS--Continued CONCORDIA RETIREMENT PLAN NOTE C--ACTUARIAL PRESENT VALUE OF ACCLIVLATED PLAN BENEFITS~-Continued Mortality Active and Retired Lives 1971 Group Annuity Mortality Table, projected by Scale D to 1985. Disabled lives 1965 Railroad Retirement Board totally disabled annuitants mortality table. The Plan's consulting actuaries have estimated that approximately $28,100,000 of the increase in the present value of accunulated plan benefits is attributable to plan amendments effective January 1, 1982. The approximate increase due to each of these plan amendments is as follows: $20,700,000 due to the addition of post-retirement death benefits, $5,800,000 due to formula changes in computing retirement benefits, and $1,600,000 due to increased benefits of up to 10% for tetired members currently receiving benefits. There have been no significant changes in actuarial assumptions used. Actuarial assumptions used in the above calculation of accumulated plan benefits are not the same actuarial assumptions used in the valuation of the Plan for purposes of funding or determination of contribution rates. Funding determinations and contribution rates are determined based on benefits expected to be paid in the future, whereas accumulated benefits are only those expected future benefits associated with members’ service and salaries to date. Since the plan bases benefits on salaries of the five highest paid consecutive vears prior to retirement, future salaries are projected for purposes of funding the plan. If projected salary increases of 7% annually were considered, the actuarial present value of accumulated plan benefits at January 1, 1982 and 1981 would be approxi- mately $216,500,000 and $144,900,000, respectively. However, for deter- mination of accugulated benefits as of the valuation date for financial reporting purposes, future salary increases are not considered. NOTE D--INVESTMENTS The market value of investments that represent 5% ($12,931,254 in 1982 and $8,803,121 in 1981) or wore of the Plan's net assets are as follows EXHIBIT ¢ NOTES TO FINANCIAL STATEMENTS—-Contined Page 8 CONCORDIA RETIREMENT PLAN NOTE D-~-INVESTMENTS--Continued December 31, 1982 198) U.S. Treasury Bond, 13.875% principal amount $11,075,000, due May 15, 2006 through May 15, 2011 Commingled Funds of Morgan Guaranty Trust Company: Special Situation Investments-- Convertibles 24,186,245 17,491,431 Technology and Machinery Sector 9,962,261 Natural Resources and Processing Sector 10,187,209 Guaranteed Investment Contracts: New England Mutual Life Insurance Company 10,407,911 John Hancock Mutual Life Insurance Company 10,410,822 $13,836,773 § During 1982 and 1981 the Plan's investments (including investment bought, sold, as well as held during the year) appreciated (depreciated) in fair value, as determined by quoted market prices, by $23,564,503 and ($9,831,543) as follows: Net Appreciation (Depreciation) in Fair Value at Fair Value During Year End of Year Year Ended December 31, 1982 Shore term investments $ 14,118 § 20,036,884 Bonds, notes and debentures 10,398,767 83,595,826 Common stock 10,325,878 67,380,042 Preferred stock (6,229) 784,888 Equity commingled funds (497,695) 20,048,035 Fixed commingled funds 3,329,664 26,505,245 $23,564,503 $218, 350,920 Year Ended December 31, 1981 Short term investments $ § 2,193,000 Bonds, notes and debentures (422,470) 26,969,189 Common stock (286,513) 4,231,348 Preferred stock (30,514) 677,197 Equity commingled funds (5,586,287) 57,886,280 Fixed commingled funds (3,505,759) 55,756,497 $ (9,831,543) $147,713,511 EXRIBIT C Page 9 NOTES TO FINANCIAL STATEMENTS--Continued CONCORDIA RETIREMENT PLAN NOTE E--INCOME TAX STATUS The Internal Revenue service has ruled (September 17, 1982) that the Plan, as amended at January 1, 1982, qualifies under Section 401 (a) of the Internal Revenue Code (IRC) and is, therefore, not subject to tax under present income tax law. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. NOTE F--GUARANTEED INVESTMENT CONTRACTS In 1981, the Plan invested $20 million in guaranteed investment con-