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City of Paris, Texas <br />Notes to Financial Statements <br />September 30, 2011 <br />V. Other Information (Continued) <br />1. Employee Retirement Systems and Plans (Continued) <br />2. Firefighters' Relief and Retirement Fund (Continued) <br />Annual Pension Cost (Continued) <br />The actuarial assumptions used in the actuarial valuation performed as of January 1, 2011, <br />include a rate of return on the actuarial value of assets of 8% per year compounded annually; <br />UP 1994 Mortality Table; termination rates from the Actuary's Pension Handbook; disability <br />rates from 1985 Society of Actuaries Disability Table Study; and assumed retirement age of 55 <br />with 20 years of service or satisfied the rule of 80. Compensation increases for individual <br />members and total payroll is 4.5% compounded annually. Projected post retirement benefit <br />increases are zero. The amortization of the unfunded actuarial accrued liability was determined <br />as a level percentage of payroll. The amortization period is an open amortization period over <br />27.9 years. <br />The actuarial value of assets is smoothed market value which smoothes interest and dividends <br />as well as investment gains and losses. Calculation of the actuarial value of assets begins with <br />an "initial asset value." <br />The initial asset value is the market value of assets five years prior to the valuation date. All <br />receipts from contributions, interest, dividends, and miscellaneous income over the last five <br />years are added to the initial asset value. Likewise, all benefit payments, contribution refunds, <br />and expenses are subtracted from the initial asset value. In this manner, all such receipts and <br />disbursements are recognized immediately. <br />Actuarial Value of Assets <br />Actuarial Accrued Liability (AAL) <br />Unfunded AAL (UAAL) <br />January 1, <br />2007 2009 2011 <br />$ 6,901,424 $ 6,144,348 $ 6,736,683 <br />11,368,809 12,179,917 12,964,325 <br />$ 4,467,385 $ 6,035,569 $ 6,227,642 <br />Funded Ratio <br />Covered Payroll <br />60.7% 50.4% 52.0% <br />$ 1,781,420 $ 2,035,271 $ 2,196,182 <br />UAAL as a Percentage of Covered Payroll 250.8% 296.5% 283.6% <br />54 <br />