b'Numerous variables, including pension benefit increases and actuarial losses, generate or increase the UAAL. Actuarial gains or losses arise from differences between the actual experience of a pension system and the actuarial assumptions used to project the systems funding requirements. An example would be if combined members salaries increased more than what was assumed.The gains and losses reflected in the UAAL must be amortized over a period of time in accordance with the Boards Actuarial Funding Policy and are a key component in determining the Citys required contribution to the System each year.EMPLOYER CONTRIBUTIONREQUIREMENTS CALCULATIONThe Citys General Fund, Harbor Department, and Department of Airports contri-butions to the System are composed of two parts: (1) the Entry Age Normal Cost; and (2) the contribution to amortize the unfunded liability.ENTRY AGE NORMAL COSTThe Entry Age Normal Cost contribution is the amount the employer would contrib-ute for a hypothetical new entrant into the System. This amount would theoretically be sufficient to fully fund a members retirement benefit on the date of retirement if all assumptions were realized and no benefit changes were made.AMORTIZATION OF THE UAALIn March 2011, voters approved a City Charter amendment that allows the Board to determine its funding policy, consistent with its plenary authority to administer the System.Prior to this, the amortization policy was prescribed in the City Charter. Since then, the funding policy has been revised periodically by the Board.The current actuarial funding policy may be found at lafpp.lacity.gov/policies.Underthecurrentpolicy,theentireamountoftheannualUAALcontributions required to be made by the City, Harbor Department, and Department of Airports for each tier, is determined in proportion to the covered payroll for that tier.The UAAL amortization payment rate for each employer (i.e., the City, Harbor Depart-ment, or Department of Airports) is equal to the total of all annual amounts required to amortize the UAAL for all tiers and divided by the total covered payroll for the respective employer. As Tier 1 does not have any active members, there are no UAAL contributions collected. For all other tiers, it is amortized as a level percent of payroll.Actuarial gains or losses are amortized over 20 years; changes in actuarial assumptions and cost methods are amortized over 20 years; and Plan amend-ments are amortized over 15 years. In the event of an actuarial surplus, 30-year amortization is used.With this information, the actuary computes the employer contribution require-ments for pension benefits.SECTION 5ACTUARIAL 111'