As of August 2020, Transit Windsor has funded the monthly current service cost of $8,333 (total amount of $66,664 for the eight months) based on the estimated payment requirements from the 2018 valuation. Due to the 2019 valuation results which identified that the solvency ratio is over 105%, a contribution holiday can be taken which allows for no service cost payments. This holiday takes effect July 2020 until June 2021 where the 2020 valuation will provide details on payment requirements for 2021. Since the July and August $8,333 payments have already been paid, these cash payments will be included in the 2020 valuation.
In 2018, the Letter of Credit was established for $229,931 more than the Plan required. In 2019, $76,000 of this excess LOC was added to the face value of the LOC for the pension plan to meet the required special payments. The 2019 Actuarial Valuation has resulted in a $0 special payment requirement for 2019 and therefore no allocation of the LOC is required, leaving a surplus established LOC of $153,931. Since this excess is not allocated to the face value of the LOC for the pension, administration is recommending to reduce the LOC by this excess amount in order to save in interest costs and bank fees charged on the total value of the established LOC.
Transit Windsor’s operating budget has been established with $155,956 to fund plan payments as well as other LOC administrative costs. The surplus in this account due to the contribution holiday will be reported in the year end variance report to City Council.
Planned contributions for 2020 will be based upon the 2019 funding requirements until such time as the valuation report for December 31, 2020 is completed. Consistent with previous years, a preliminary valuation will be received in early 2021 and later confirmed in June 2021. Transit Windsor will continue to take the contribution holiday until June 2021 when the 2020 valuation is presented.
No draws on the LOC is required at this time. Administration is recommending a reduction in the LOC for the surplus amount not included in the face value of the LOC for the pension.
| Year LOC Established | Established LOC Amount | LOC drawn on and included in Face Value of Pension Plan to fund Solvency Deficit |
|---|---|---|
| 2011 | $728,796 | $728,796 |
| 2012 | $1,025,232 | $1,025,232 |
| 2013 | $1,323,612 | $1,323,612 |
| 2014 | $772,360 | $772,360 |