2018 Annual Financial Report

NOTESTOTHE CONSOLIDATED CITY OF SURREY FINANCIAL STATEMENTS

For the year ended December 31, 2018 [tabular amounts in thousands of dollars]

9. 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.

2017

Accrued benefit liability: Balance, beginning of year

2018

$

26,903

$

27,053

Current service cost

1,815

1,820

Interest cost

819

768

Amortization of net actuarial loss (gain)

(244)

72

Benefits paid

(2,240)

(1,706)

Accrued benefit liability, end of year

$

27,053

$

28,007

An actuarial valuation for these benefits was performed to determine the City’s accrued benefit obligation as at December 31, 2018. The difference between the actuarially determined accrued benefit obligation of $24.6 million and the accrued benefit liability of $28.0 million as at December 31, 2018 is an unamortized actuarial gain of $3.4 million. The actuarial gain is amortized over a period equal to the employees’ average remaining service life of 11 years (2017 – 11 years).

Reconciliation of accrued benefit liability to accrued benefit obligation:

2017

2018

$

27,053

Actuarial benefit liability, end of year

$

28,007

Unamortized actuarial gain

(2,066)

(3,356)

Accrued benefit obligation, end of year

$

24,987

$

24,651

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

2017

2018

Discount rate

3.00% 1.80% 0.50%

3.20% 1.80% 0.50%

Expected future inflation rate

Expected wage and salary range increases

Employee average remaining service life (years)

11.00

11.00

61