07 CAFR cover FINAL.p65 - WMATA.com

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Washington Metropolitan Area Transit AuthorityFY 2007 Comprehensive Annual Financial ReportNotes to Basic Financial StatementsJune 30, 2007 and 2006(8) Pension Plans (Continued)(ii) Transit Police Plan (Continued)disability benefits. Employees are required to contribute 7.27 percent of compensation beginning October1, 2003. The Authority is responsible for contributions required in excess of the employee contributionlevel. The Authority may limit the amount of contribution to 17.05 percent of gross earnings in any planyear and defer any balance. This deferral can be for no more than three consecutive plan years or for nomore than four plan years out of any consecutive seven years. The benefit provisions and employeecontribution obligations are established pursuant to a collective bargaining agreement between theAuthority and the Fraternal Order of Police. The vesting requirement is 10 years.(iii) Union Local 689 PlanAny regular full-time or part-time Authority employee, who is a member of Union Local 689 of theAmalgamated Transit Union (Local 689), after a 90-day probationary period is eligible to participate in theUnion Local 689 Plan. The plan is governed by the terms of the employees’ collective bargainingagreement. Employees are eligible for the normal retirement allowance upon either attainment of age 70;attainment of age 65 and the completion of 10 years of continuous service; upon completion of 27 yearsof continuous service regardless of age; or after the sum of years of service plus attained age is 83 ormore. The normal retirement monthly pension is 1.85 percent of the highest 4-year average monthly totalcompensation times the number of years of continuous service up to 27 years. Additionally, forparticipants whose benefits commence on or after July 1, 2006, the normal retirement monthly pension is1.95 percent of average compensation times the number of years of continuous service in excess of 27years. The minimum benefit is $600 monthly. Employees participating in the plan are not required tocontribute to the plan. For each fiscal year, the Authority shall contribute that percentage of total coveredpayroll determined necessary to pay the normal cost of the plan as determined by the plan actuary. Thepension plan also provides pre-retirement death and disability benefits. The vesting requirement is 10years.(iv) Union Local 922 PlanAll regular full-time and part-time employees, who are members of Union Local 922, after a 90-dayprobationary period, are eligible to participate in the Union Local 922 Plan. The plan is governed by theterms of the employees’ collective bargaining agreement. Employees are eligible for the normal pensionbenefits after attaining age 65 and 10 years of service; upon completion of 27 years of service regardlessof age; or after the sum of years of service plus attained age is not less than 83. The normal retirementmonthly pension is the sum of 1.0 percent for years of service prior to May 1, 1973 plus 1.85 percent foryears of service after May 1, 1973 of the highest 4-year average earnings with a minimum benefit of $175monthly. The pension plan also provides death and disability benefits. The Authority contributes thatamount required to fund the normal cost of the plan plus an additional amount necessary to amortize theunfunded actuarial accrued liability as required by the collective bargaining agreement between theAuthority and Union Local 922. The vesting requirement is 10 years.41
Washington Metropolitan Area Transit AuthorityFY 2007 Comprehensive Annual Financial ReportNotes to Basic Financial StatementsJune 30, 2007 and 2006(8) Pension Plans (Continued)(v) Union Local 2 PlanAll full-time employees covered by the Local 2 bargaining agreement hired prior to January 1, 1999 areeligible to participate in the Local 2 Plan. The plan is governed by the Authority’s Board of Directors withconsideration of both the applicable union agreements and Authority personnel practices. The normalretirement age is 65, and such retirees are entitled to annual retirement benefits equal to 1.6 percent offinal average compensation multiplied by years of credited services, plus 0.9 percent of final averagecompensation in excess of the Social Security breakpoint multiplied by years of credited service not inexcess of 20 years. Unreduced retirement benefits are available upon reaching age 55 and meeting the“Rule of 83" with years of service and age. The maximum normal retirement benefit is not to exceed 80percent of final average compensation. The plan provides retired participants annual cost-of-livingincreases, permits both early and later retirement, and provides for benefits in the event of death,disability, and terminated employment. The Authority contributes the total cost of the plan. The vestingrequirement is 5 years.(b) Funding Status and Annual Pension Cost(i) Salaried Personnel PlanThe Salaried Personnel Plan’s funding policy, as approved by the Board of Directors, provides forperiodic employer contributions at actuarially determined rates that, expressed as percentages of annualcovered payroll, are sufficient to accumulate assets to pay benefits when due. The actuarial cost methodis the individual entry age normal cost method. The surplus at July 1, 2003 is amortized over 15 years.Subsequent gains or losses will also be amortized over 15 years.(ii) Transit Police PlanThe Transit Police Plan’s funding policy, as set forth in the collective bargaining agreement, provides forperiodic employer contributions at actuarially determined rates that, expressed as percentages of annualcovered payroll, are sufficient to fund the current year's normal cost. The percentage of payroll that theAuthority contributes is actuarially determined using the aggregate cost funding method.(iii) Union Local 689 PlanThe Union Local 689 Plan’s funding policy, as set forth in the collective bargaining agreement, providesfor periodic employer contributions at actuarially determined rates that, expressed as percentages ofannual covered payroll, are sufficient to fund the normal cost of the plan. The actuarial funding methodused to compute the contribution requirements is the aggregate cost method.(iv) Union Local 922 Plan(The Union Local 922 Plan’s funding policy, as set forth in the collective bargaining agreement, providesfor periodic contributions, expressed both in dollar amounts and as a percentage of covered payroll,sufficient to cover normal costs and amortize any unfunded actuarial accrued liability over the 30-yearperiod that began on the valuation date. The actuarial method used to compute the contributionrequirements is the entry age normal cost method.42
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