Financial Annual Report 2016

NOTESTOTHE CONSOLIDATED FINANCIAL STATEMENTS  CITY OF SURREY

For the year ended December 31, 2016 [tabular amounts in thousands of dollars]

11. 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, 2016. The difference between the actuarially determined accrued benefit obligation of $25.4 million and the accrued benefit liability of $26.9 million as at December 31, 2016 is an unamortized actuarial gain of $1.5 million. The actuarial gain is amortized over a period equal to the employees’ average remaining service lifetime of 11 years.

2015

Accrued benefit obligation: Balance, beginning of year

2016

$

23,107

$

23,687

Current service cost

1,803

1,901

Interest cost

766

789 304

Actuarial loss (gain)

(480)

Benefits paid

(1,509)

(1,317)

Accrued benefit obligation, end of year

$

23,687

$

25,364

Reconciliation of accrued benefit obligation to accrued benefit liability:

2015

2016

$

23,687

Actuarial benefit obligation, end of year

$

25,364

Unamortized actuarial gain

1,968

1,539

Accrued benefit liability, end of year

$

25,655

$

26,903

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

2015

2016

Discount rate

3.20% 2.50% 0.50%

3.20% 1.80% 0.50%

Expected future inflation rate

Expected wage and salary range increases Employee average remaining service life (years)

11.0

11.0

56