2015 City of Surrey Annual Report

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS City of Surrey

For the year ended December 31, 2015 [tabular amounts in thousands of dollars]

12. EMPLOYEE FUTURE BENEFITS

The City provides certain post-employment and sick leave benefits to its employees. These benefits include accumulated non-vested sick leave, post-employment service pay and post-retirement top-ups for dental, life insurance and accidental death, dismemberment insurance, vacation deferral, supplementary vacation and benefit continuation for disabled employees. The liability associated with these benefits is calculated based on the present value of expected future payments pro-rated for services, and is included in accounts payable and accrued liabilities. An actuarial valuation for these benefits was performed to determine the City’s accrued benefit obligation as at December 31, 2015. The difference between the actuarially determined accrued benefit obligation of $23.7 million and the accrued benefit liability of $25.7 million as at December 31, 2015 is an unamortized actuarial gain of $2.0 million. The actuarial gain is amortized over a period equal to the employees’ average remaining service lifetime of 11 years.

2014

2015

Accrued benefit obligation:

Balance, beginning of year

$

21,128

$

23,107

Current service cost

1,610

1,803

Interest cost

865

766

Actuarial loss (gain)

1,280

(480)

Benefits paid

(1,776)

(1,509)

Accrued benefit obligation, end of year

$

23,107

$

23,687

Reconciliation of accrued benefit obligation to accrued benefit liability:

2014

2015

$

23,107

Actuarial benefit obligation, end of year

$

23,687

Unamortized actuarial gain

1,413

1,968

Accrued benefit liability, end of year

$

24,520

$

25,655

Actuarial assumptions used to determine the City’s accrued benefit obligation are as follows:

2014

2015

Discount rate

3.20%

3.20%

Expected future inflation rate

2.50%

2.50%

Expected wage and salary range increases

0.50%

0.50%

Employee average remaining service life (years)

11.0

11.0

67