City of Surrey 2019 Annual Financial Report

NOTESTOTHE CONSOLIDATED CITY OF SURREY  FINANCIAL STATEMENTS

For the year ended December 31, 2019 [tabular amounts in thousands of dollars]

10. 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.

Accrued benefit liability:

2019

2018

$

28,007

Balance, beginning of year

$

27,053

1,834

Current service cost

1,820

814

Interest cost

768

(494)

Amortization of net actuarial loss (gain)

72

(1,498)

Benefits paid

(1,706)

$

28,663

Accrued benefit liability, end of year

$

28,007

An actuarial valuation for these benefits was performed to determine the City’s accrued benefit obligation as at December 31, 2019. The difference between the actuarially determined accrued benefit obligation of $28.3 million and the accrued benefit liability of $28.7 million as at December 31, 2019 is an unamortized actuarial gain of $0.4 million. The actuarial gain is amortized over a period equal to the employees’ average remaining service life of 12 years (2018 – 11 years).

Reconciliation of accrued benefit liability to accrued benefit obligation:

2019

2018

Actuarial benefit liability, end of year

$

28,663

$

28,007

(358)

Unamortized actuarial gain

(3,356)

$

28,305

Accrued benefit obligation, end of year

$

24,651

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

2019

2018

2.70% 1.80%

Discount rate

3.20% 1.80%

Expected future inflation rate

12.00

Employee average remaining service life (years)

11.00

61