Request for Proposal for Actuarial Services

Questions from Interested Firms and Answers

November 1, 2024

Why is the Commission issuing an RFP for actuarial services at this time? Has the most recent contract and all permissible extensions reached the end of its term?

The Commission’s contract with its current actuary, VIA Actuarial Solutions, expires on January 21, 2025. This expiration date is the end of a two-year extension of a three-year contract entered into effective January 21, 2020. Minnesota Statutes, section 3.225, subdivision 2, limits the term of contracts for professional services, including extensions, to five years.

Has the most recently contracted actuary been invited to respond to the RFP?

Yes

Are there any services requested in this RFP that are not covered in the most recent contract?

• The current contract, as amended and extended for an additional two years, requires replication of all the pension plans listed in Exhibit 1 of the RFP, except the Judges Plan. The RFP adds the Judges Plan to the list of pension plans for which a replication is required.
• The current contact, as amended and extended for an additional two years, requires review of experience studies for only the MSRS General Plan, PERA General Plan, and Teachers Retirement Association. The RFP adds review of experience studies for 6 additional pension plans: MSRS and PERA Correctional Plans, State Patrol Plan, Police and Fire Plan, St. Paul Teachers Retirement Fund Association, and Judges Plan.
• Work required under the RFP does not include (1) annual reviews of actuarial valuations and (2) review of the Standards for Actuarial Work. These were included in the current contract.

How many Commission meetings did the most recently contracted actuary attend over the during the term of their contract?

• FY 2025 (7/1/2024-9/30/2024): The Commission did not meet during this period.
• FY 2024: 9 meetings
• FY 2023: 14 meetings
• FY 2022: 7 meetings
• FY 2021: 5 meetings
• FY 2020 (1/21/2020-6/30/2020): We have no documentation on specific meetings attended, but the actuary likely attended several meetings.

"FY" is July 1 to June 30, except as noted.

How often are the factor tables updated and how many tables need to be reviewed?

Factor tables are updated by the pension plans infrequently, typically only after actuarial assumptions have been changed. We have no documentation on having requested review of factor tables during the term of the current contract.

How many legislative cost estimates were reviewed or replicated each of the years under the most recent contract?

• FY 2025 (7/1/2024-9/30/2024): None
• FY 2024: Cost estimates were prepared for 2 bills. One of the cost estimates required several iterations to take into account proposed changes to the bill.
• FY 2023: A series of cost estimates were prepared for several different proposals of benefit changes to one of the largest statewide plans.
• FY 2022, FY 2021, FY 2020 (1/21/2020-6/30/2020): None

"FY" is July 1 to June 30, except as noted.

What actuarial fees have been charged for each year of the most recent contract?

Fees for each year are detailed in the attached spreadsheets. One of the spreadsheets (FY20-FY24 LCPR Actuary Expenses PRC) shows expenditures for typical recurring LCPR actuarial services (“PRC”) and the other spreadsheet (FY20-FY24 LCPR Actuary Expenses ACT) shows expenditures from a special account funded with a one-time appropriation to pay for actuarial cost estimates for proposed legislation (“ACT”).

If fees have been charged separately, what actuarial fees were charged each of the last four years for:

• Review standards for actuarial work
• Review of annual actuarial valuations
• Replication of annual actuarial valuations
• Review quadrennial experience studies
• Actuarial cost estimates for proposed legislation
• Review of factor tables
• Presentations to the Commission
• Advice
• Special projects

Fees charged by category of project or work – Fixed Fee

Fees charged by category of project or work – Hourly Fee

Can you provide copies of previous actuarial review reports?

• The Commission did not require reviews by the Commission actuary of pension plan actuarial valuations in FY 2023 or FY 2024. Reviews done in prior fiscal years can be found in the Minnesota Pension Plan Actuarial Valuation Archives. Look for documents at the links labeled "Van Iwaarden Review of the July 1, 20__, Actuarial Valuation Reports."
• A replication valuation was done every year of at least one pension plan. For FY 2023 and FY 2024, the replication valuations can be found on the webpage at Minnesota Pension Plan Actuarial, GASB*, and Financial Reporting. Look for the documents at the links labeled "VIA Valuation Replication." For replications done in prior fiscal years, see the Actuarial valuation reviews archives. Look for documents at the links labeled “VIA Valuation Replication” or "Van Iwaarden Valuation Replication."
• Reviews of experience studies can be found at Minnesota Pension Plan Actuarial Reporting - Experience Studies. Look for documents at the links labeled "VIA Review of the … Experience Study…."

The requirements in RFP section 5.1 indicate that the Retained Actuary will perform a valuation using the same demographic data provided to the plan’s actuary. If the plan’s actuary makes adjustments to the demographic data in order to comply with Actuarial Standards of Practice 23 (Data Quality), will the final adjusted data be provided to the retained Actuary and will the adjusted data be used for purposes of the Retained Actuary’s valuation?

Yes, the Commission’s actuary receives copies of the adjusted valuation census files from each of the retirement systems’ actuaries. These files are used to prepare the liability replications. The actuary also receives copies of the unadjusted census files from each retirement system and compares those to the adjusted census files provided by the systems’ actuaries for reasonability.

Please provide total hours and hourly rates for the past five years for services that have fallen outside of the fixed fee retainer for replication actuarial services.

Is the Evaluation Criteria listed in section 7.2 weighted in any particular order?

No. We will have a subcommittee reviewing the proposals and each member may weight criteria differently. Commission staff will provide input to the subcommittee and staff focus will be on availability, public pension plan experience, and quality of work product.

Are there any specific areas of the replication valuations and/or overall process that LCPR would like the vendor to address in the proposal?

Nothing specifically related to the replication valuations need be addressed. At a minimum, a comprehensive submission should address the "Requirements applicable to all Work," detailed in Section 4 of the RFP, and each item in Section 8 of the RFP ("Contents of Proposals").

Section 7.5 of Appendix D requires that the actuary provide certification that they comply with Minnesota Statutes chapter 3, including the non-discrimination provisions of Minnesota Statues section 3.226. Can you please confirm our understanding that this is a self-certification and not a formal certification process?

This is a self-certification, as there is no process in place for a certification by a third party. It is possible that the certification requirement in Minnesota Statutes, section 3.227, is only with respect to the chapter as it appeared in the 2017 session laws and not all of Chapter 3. See Minnesota Session Laws 2017, Chapter 21. Chapter 21 added sections 3.226 and 3.227 in 2017. Chapter 3 is a lengthy chapter that governs all aspects of the legislature, including many aspects that the Commission actuary could not be expected to certify as having been complied with. The Commission Executive Director will consult with the Revisor and clarify this certification requirement by the time the Actuarial Services Agreement is finalized.

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Please submit any follow-up questions or requests for clarification to Susan Lenczewski, susan.lenczewski@lcpr.mn.gov, with a copy to Lisa Diesslin, lisa.diesslin@lcpr.mn.gov. Proposals are due to the Commission on Monday, November 18, 2024, at 3 p.m.

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