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137.00.1-11. Asset Valuation Method

AR ADC 137.00.1-11Arkansas Administrative Code

West's Arkansas Administrative Code
Title 137. Lopfi-Local Police and Fire Retirement System
Division 00.
Rule 1. Arkansas Fire & Police Pension Review Board Rules and Regulations
Ark. Admin. Code 137.00.1-11
137.00.1-11. Asset Valuation Method
Currentness
Act 1293 of 1999 amended A.C.A. 24-11-207. This Act states that the assets will be valued on the asset valuation method determined by the PRB in consultation with their actuary. The asset valuation method is the method used to value the assets of a Local Plan. This value of assets will be used for all calculation purposes; including, the annual actuarial valuation, any benefit increase proposal, and DROP interest rate calculations.
Actuarial Value of Assets
The value of assets determined by the method defined by this rule will be called the Actuarial Value of the assets.
Book Value of Assets
The Book Value of assets will be the cost value of the asset, that is, the amount paid for the asset. If the asset has an amortized cost basis, such as a bond, the book value of the asset will be the amortized cost basis.
Local Plans with over $5,000,000 Book Value
Local Plans with a book value of assets equal to or greater than $5 million will use the method in this paragraph to determine the actuarial value of assets. This method is a 5-year smoothing method. The actuarial value of assets will be determined using the following steps:
1. The total market return is calculated (including realized and unrealized appreciation).
2. The assumed actuarial rate of return is credited to the previous year's actuarial value of assets.
3. The difference between steps 1 and 2 is the portion that will be added to the assets over 5 years. Take step 1 minus step 2 and divide by 5.
4. Add the amount in step 3 to the value of assets from step 2.
5. Add the “step 3” amount from the previous 4 years to the amount from step 4.
Local Plans with less than $5,000,000 Book Value
The actuarial value of assets for Local Plans with less than $5 million of book value of assets will be the book value as defined in this rule.
Effective Dates
This asset valuation method will be used for all calculations made as of December 31, 1999, and later. The first actuarial valuation using this method will be the January 1, 2000 valuation. The DROP interest rate for 1999 based on December 31, 1999 assets will use this method.

Credits

Adopted Dec. 8, 1983. Amended Jan. 1, 2015.
Current with amendments received through February 15, 2024. Some sections may be more current, see credit for details.
Ark. Admin. Code 137.00.1-11, AR ADC 137.00.1-11
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