LCMS Convention Workbook St. Louis, Missouri — 1983, Page 161

Transcription machine transcription, uncorrected

⤓ Download .txt · copy text

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-