2017_Port-Au-Prince_Actuarial_Assessment_Final_(3).pdf

TO:

MR. CHRISTOPHER KANE

Human Resources Officer

U.S Embassy in Port-Au Prince

Boulevard du 15 Octobre Port-au-Prince, Haiti

Re: March 1, 2016 Valuation of the U.S. Embassy in Port-au-Prince, Haiti Pension Plan

Dear Mr. Kane:

As requested we have completed the March 1, 2016 valuation of the U.S. Embassy’s defined benefit pension plan for local staff in Port-au-Prince, Haiti. This is a revision of the report that we supplied to you on May 11, 2017, reflecting updated calculations of the Projected Benefit Obligation. The letter-survey report summarizes our results and is separated into the following sections.

I. Actuarial Assumptions

II. Projected Benefit Obligation Calculation

III. Actuarial Gains and Losses

IV. Financial Audit

V. Analysis of Investment Performance

VI. Sensitivity Analysis of the Assumptions

VII. Financial Situation of the Fund

VIII. Recommendations to maintain a financially sustainable retirement system

IX. Financial situation of the company

X. Deviations within this plan from applicable legislation or regulations concerning defined benefit plans in Haiti

XI. Changes in local law or practice that may have a bearing on the Embassy’s retirement plan.

Based on our review, we want to highlight the following items:

• The valuation used the projected unit credit actuarial cost method.

• Based on the contribution report, the employee contribution is not the expected 7% of payroll. One potential explanation is that there are employees that have been with the company for more than 30 years who are not expected to contribute beyond that time. Therefore, for conservatism, the assumption that is made as to the employee contribution is the lesser of 7% times the expected payroll and the employee contribution.

DATE: JUNE 26, 2017

Additional assumptions and estimations to complete the valuation include:

• All employees work full time and earn a year of service credit for each plan year.

• The attained age changes on the anniversary of the valuation date.

• For those retirees that are missing the date of the first payment, it is assumed that the date of the first payment is equal to the retirement date.

• For each employee age 65 and over that is still employed by the Embassy, the retirement date is exactly one year after the valuation date.

• Each employee that has a pending retirement benefit on the valuation date, the first retirement benefit is received exactly one year after that date.

In preparing this report, we utilized both verbal and written information supplied by the assigned Embassy staff. This information includes, but is not limited to plan provisions and employee data. Since the valuation results are dependent on the integrity of the data supplied, the results can be expected to differ if the underlying data is incomplete or missing. It should be noted that if any data or other information is inaccurate or incomplete, calculations may need to be revised.

We hereby certify that, to the best of our knowledge, this report is complete and accurate and has been prepared in accordance with generally recognized and accepted actuarial principles and practices which are consistent with the Actuarial Standards of Practice transmitted by the applicable Guides to Professional Conduct.

Future actuarial measurements may differ significantly from the current measurements presented in this report due to plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements; and changes in plan provisions or applicable law.

The calculations presented in this report have been made on a basis consistent with our understanding of the plan’s benefit and eligibility provisions. Determinations for other purposes may be significantly different from the results contained in this report. Accordingly, additional determinations may be needed for other purposes.

Dynamo Technologies’ work product was prepared exclusively for the U.S. Embassy in Port-au-Prince, Haiti for a specific and limited purpose. It is a complex, technical analysis that assumes a high level of knowledge concerning the plan’s operations, and uses Embassy data, which Dynamo Technologies has not audited. It is not for the use or benefit of any third party for any purpose. Any third party recipient of Dynamo Technologies’ work product who desires professional guidance should not rely upon Dynamo Technologies’ work product, but should engage qualified professionals for advice appropriate to its own specific needs.

We respectfully submit the following report, and we look forward to discussing it with you. I, Peter Brot, am an actuarial audit analyst for Dynamo Technologies. I am an Associate of the Society of Actuaries and a Member of the Academy of Actuaries and meet the Qualification Standards of the American Academy of Actuaries to provide the actuarial opinion contained in this document.

Please call us at your convenience with any questions you have about this letter or to discuss the results.

Sincerely, Dynamo Technologies

Chris Sheng Chi Kapoor, CPA, MBA Peter A. Brot, ASA, MAAA, FLMI, ACS Actuarial Audit Analyst

Valuation of the U.S. Embassy in Port-Au-Prince Pension Plan As of March 1, 2016

INDEPENDENT

ACTUARIAL

STUDY

U.S Embassy in Port-Au Prince Boulevard du 15 Octobre

Port-au-Prince, Haiti

TABLE OF CONTENTS

Actuarial Assumptions

Projected Benefit Obligation Calculation

Actuarial Gains and Losses

Financial Audit

Analysis of Investment Performance

Sensitivity Analysis of the Assumptions

Financial Situation of the Fund

Recommendations to maintain a financially sustainable retirement system

Financial situation of the company

Deviations within this plan from applicable legislation or regulations concerning defined benefit plans in Haiti

Changes in local law or practice that may have a bearing on the Embassy’s retirement plan.

Valuation of the U.S. Embassy in Port-Au-Prince Pension Plan 3

EXECUTIVE SUMMARY

Purpose

The United States Government, through the United States Embassy in Port-Au-Prince, has a requirement for an independent valuation and audit of the Defined Benefit Pension Plan it maintains for its Locally Employed staff (LES). The Plan is funded and administered by MetLife. The plan was last evaluated by an independent actuary in March 2007. As part of closure to new enrollment, the Department mandates that an annual actuarial study using generally accepted actuarial principles and standards be performed on the plan by an independent firm (i.e., one other than the firm administering and/or providing the plan). Dynamo Technologies has been hired to perform this study, and has presented a summary of its findings below with greater detail.

Summary of Findings I. Actuarial assumptions:

The assumptions that are used include the effective date of the plan, valuation date, pensionable service, vesting benefit amount, pensionable salary, normal retirement benefit, early retirement benefit, late retirement benefit, disability retirement benefit, termination benefit, death benefit, mortality rate, termination rate, discount rate, investment rate earned on the assets, employee contribution rate, U.S. Embassy contribution rate, interest rate on employee contributions, expenses, investment return rate, estimated administration charge, length of time the retired employees are paid the retired benefit, and salary increases.

II. Actuarial Valuation and Plan’s Projected Benefit Obligation (PBO) Calculation:

The Projected Benefit Obligation are the benefits that are expected to be paid out in the future to the active and retired employees. The current assets of the fund and the current contribution levels are insufficient to meet the current and expected future outflows because the Projected Benefit Obligation is greater than the Total Assets.

Therefore, the Unfunded Projected Benefit Obligation is positive. The Projected Benefit Obligation, Total Assets, and Unfunded Projected Benefit Obligation for March 1, 2016 is $17,557,838.85, $11,781,660.59, and $5,776,178.26, respectively. The Projected Benefit Obligation, Total Assets, and Unfunded Projected Obligation for March 1, 2017 is $18,026,607.25, $11,520,292.46, and $6,506,314.79, respectively.

III. Actuarial Gains and Losses

The Actuarial Gain for the period from March 1, 2016 to March 1, 2017 is $646,138.61. This is equal to the Expected Unfunded Projected Benefit Obligation as of March 1, 2017 - the Actual Unfunded Projected Benefit Obligation as of March 1, 2017.

IV. Financial audit on Cash Inflows and Outflows:

Cash inflows and outflows are properly credited and in terms of the plan.

V. Investment performance of the plan:

The investment performance for the period from March 1, 2015 to March 1, 2016 is over performing the average US inflation rate, average federal rate, change in Standard and Poor’s 500 (S&P 500) index, and change in Dow Jones Industrial Average (Dow). However, it is under-performing the average Haitian inflation rate. The investment performance for the period from March 1, 2016 to March 1, 2017 is under-performing the average US inflation rate, average federal rate, change in Standard and Poor’s 500 index, change in Dow Jones Industrial Average, and the average Haitian inflation rate.

Valuation of the U.S. Embassy in Port-Au-Prince Pension Plan 4

VI. Sensitivity analysis on assumptions impacting future costs:

Assumptions that were assessed when performing the sensitivity analysis were the mortality rate, salary increase, administration charge, loading assumption on the mortality rate, discount rate, and investment return rate.

VII. Conclusions as to the financial situation of the fund (deficit or surplus):

The fund is running a deficit of $5,776,178.26 for the March 1, 2016 valuation and $6,506,314.79 for the March 1, 2017 valuation. This is based on the positive value of the Unfunded Projected Benefit Obligation. This is because benefits that are expected to be paid out in the future to the active and retired employees are greater than the current assets.

VIII. Recommendations on appropriateness of actuarial assumptions:

The following recommendations would help make the pension fund financially sustainable:

• Salary increases are cut.

• Increasing the normal retirement age (currently 65 years of age).

• Decrease the benefits for new hires.

• Invest the assets with a higher rate of return.

• Increase the amount of employment time until the pension benefit is fully vested from 10 years.

• Decrease the maximum number of years of service in the Projected Benefit Obligation formula calculation, which will decrease the maximum retirement benefit an employee can receive.

• Increase the loading on the GAM Mortality table.

IX. Financial situation of the company:

MetLife acquired American Life Insurance Company. The financial condition of MetLife is solid overall for both the short-term and the long-term.

X. Deviations within this plan from applicable legislation or regulations concerning defined benefit retirement plans in Haiti:

The deviations within this plan are the length of time a person has been working in the public sector (15 years) and the contributions for employees and employers.

XI. Anticipated changes in local law or practice that may have a bearing on the Embassy’s retirement plan:

There are no anticipated changes in local law in the near future that would have an effect on the retirement plan.

Valuation of the U.S. Embassy in Port-Au-Prince Pension Plan 5

INDEPENDENT ACTUARIAL STUDY

I. Actuarial Assumptions1

a. Effective Date of the plan

March 1, 1989

b. Valuation Date

March 1, 2016

c. Pensionable Service

Pensionable service is the number of completed years since the start of employment. Any years of participation as a part-time employee shall be prorated (reduced) on the scheduled workweek. Forty hours shall be considered a full-time workweek.

d. Vesting Benefit

Benefit is fully vested if, at least, 10 years of service is completed. Otherwise, the benefit is not vested at all.

e. Pensionable Salary

Pensionable Salary is the average of a Participant’s annual basic salary over the last 5 years prior to his or her retirement or termination of employment. For participants who are employed on a part-time basis for all or any part of the last 5 years prior to retirement or termination of employment, the average of the applicable annual basic salary for a full-time (40 hour) workweek at the participant’s grade will be used in computing benefits.

f. Normal Retirement Benefit

Benefit is payable upon normal retirement date which is equal to 2% of the pensionable salary for each year of pensionable service, up to a maximum of 30 years. The normal retirement date is the anniversary of the date of valuation coinciding with or next following the attainment of age 65.

g. Early Retirement Benefit

Early retirement is at, or after, age 55 with 10 or more years of pensionable service. The benefit is actuarially reduced and will commence on the anniversary of the valuation date following receipt of written notice to the insurance company.

h. Late Retirement Benefit

Based on pensionable salary and pensionable service at the normal retirement date. The late retirement benefit will be actuarially increased and will commence on the anniversary of the valuation date following receipt of written notice to the insurance company that the participant is to retire, or after the maximum deferment period, whichever is earlier. No further participant contributions are required or permitted after the normal retirement date. This is immaterial to the calculation of the PBO.

i. Disability Retirement Benefit

Disability retirement benefit is paid upon total and permanent disability of an employee with 10 or more years of pensionable service regardless of age. It is an early retirement benefit and is equal to 2% of pensionable salary for each year of pensionable service, up to a maximum of 30 years. This is immaterial to the calculation of the Projected Benefit Obligation.

1 All assumptions were provided by MetLife and the U.S. Embassy in Port-Au-Prince over the course of the study.

Valuation of the U.S. Embassy in Port-Au-Prince Pension Plan 6

j. Termination Benefit

If the employer terminates or the employee resigns with less than 10 years of pensionable service, the employee receives a refund of contributions and interest. The interest is only included for the time from the prior valuation date to the date of termination. Otherwise, the interest is immaterial to the calculation of the Projected Benefit Obligation. If at the date of termination, the employee has 10 or more years of pensionable service, the employee can elect a deferred retirement benefit.

k. Death Benefit

If the employee dies before the benefit commencement date, the beneficiary will receive a refund of contributions and interest. If the employee dies after the benefit commencement date, the beneficiary will receive a refund of the employee contributions with interest reduced by the sum of benefit payments prior to the employee’s death.

The interest is only included for the time from the prior valuation date to the date of death if the participant actually dies in both instances. The Death Benefit is immaterial to the calculation of the PBO.

l. Mortality

1983 Group Annuity Mortality (GAM) Table plus 15% load.

m. Termination

T-1 (Crocker Sarason Straight) Withdrawal Table

n. Discount Rate

3% growing incrementally every year to 4% for 15 years starting on March 1, 2016.

o. Investment Rate earned on the Assets

3% growing incrementally every year to 4% for 15 years starting on March 1, 2016.

p. Employee contribution rate

The lesser of 7% of salary and the actual employee contributions.

q. US Embassy contribution rate

3.54% of salary

r. Interest rate on employee contributions

4%

s. Expenses:

Annual expense charge of $12,777.89

t. Investment Return Rate

0.73%

u. Estimated Administration Charge

Equal to the prior year expense charge.

v. Length of the of time the retired employees are paid the retired benefits

Annuity Benefit is paid yearly until death in the Projected Benefit Obligation calculation.

w. Salary Increases:

2.5%

Valuation of the U.S. Embassy in Port-Au-Prince Pension Plan 7

II. Projected Benefit Obligation Calculation The Projected Benefit Obligation as of March 1, 2016 is the sum of the Accrued Actuarial Liability for years earned to the valuation date for all the employees. The accrued actuarial liability is equal to the sum of the present value of the retirement benefit for each active employee + the sum of the present value of the vested termination benefit for each active employee + the sum of the present value of the non-vested termination benefit for each active employee + the sum of the present value of the retirement benefit for each retired employee.

Projected Benefit Obligation Calculation as of March 1, 2016 2

Present Value of Retirement Benefit for Active Employees as of Date of Valuation as of March 1, 2016

$17,013,121.57

Present Value of Vested Termination Benefit for Active Employees as of Date of Valuation as of March 1, 2016

$299,430.90

Present Value of Non Vested Termination Benefit for Active Employees as of Date of Valuation as of March 1, 2016

$163,020.46

Present Value of Retirement Benefit for Retired Employees as of Date of Valuation as of March 1, 2016

$82,265.91

Total Projected Benefit Obligation as of March 1, 2016 $17,557,838.85 2

The Projected Benefit Obligation as of March 1, 2017 is the sum of the Accrued Actuarial Liability for years earned to the valuation date for all the employees. The accrued actuarial liability is equal the sum of the present value of the retirement benefit for each active employee + the sum of the present value of the vested termination benefit for each active employee + the sum of the present value of the non-vested termination benefit for each active employee + the sum of the present value of the retirement benefit for each retired employee + the sum of the present value of the pending retirement benefit for each retired employee.

Projected Benefit Obligation Calculation as of March 1, 2017

Present Value of Retirement Benefit for Active Employees as of Date of Valuation as of March 1, 2017

$17,437,269.52

Present Value of Vested Termination Benefit for Active Employees as of Date of Valuation as of March 1, 2017

$301,886.25

Present Value of Non Vested Termination Benefit for Active Employees as of Date of Valuation as of March 1, 2017

$125,572.96

2 All numbers except for the interest crediting rate have been rounded to two decimal places for presentation purposes. As a result, calculations may be slightly off as the numbers have been imported from spreadsheets where no rounding occurred.

Valuation of the U.S. Embassy in Port-Au-Prince Pension Plan 8

Present Value of Retirement Benefit for Retired Employees as of Date of Valuation as of March 1, 2017

$146,304.28

Present Value of Retirement Benefit for Pending Retired Employees as of Date of Valuation as of March 1, 2017

$15,574.24

Projected Benefit Obligation as of March 1, 2017 $18,026,607.25

This is calculated using the Projected Unit Credit Method which is based on the projection of the average salary of the employee’s last 5 years of employment at the U.S. Embassy in Port-Au-Prince. For the pending retired benefits for the retired employee, the assumption is that the date of the first payment of the retirement benefit is one year after the valuation date. The service cost represents the portion of the projected benefits allocated to the upcoming plan year after the date of valuation. For the retired employees that retired before March 1, 2016, a 3% discount is assumed.

The calculation for the Unfunded Projected Benefit Obligation is equal to the Projected Benefit Obligation - the Total Assets. The Unfunded Projected Benefit Obligation is equal to the Projected Benefit Obligation - the Total Assets.

Unfunded Projected Benefit Obligation Calculation as of March 1, 2016

Total Assets as of March 1, 2016 $11,781,660.59

Projected Benefit Obligation as of March 1, 2016 $17,557,838.85

Unfunded Projected Benefit Obligation as of March 1, 2016 $5,776,178.26

Unfunded Projected Benefit Obligation Calculation as of March 1, 2017

Total Assets as of March 1, 2017 $11,520,292.46

Projected Benefit Obligation as of March 1, 2017 $18,026,607.25

Unfunded Projected Benefit Obligation as of March 1, 2017 $6,506,314.79

Valuation of the U.S. Embassy in Port-Au-Prince Pension Plan 9

The Interest Cost on the Projected Benefit Obligation is equal to the Discount Rate x Projected Benefit Obligation.

Interest Cost on the Projected Benefit Obligation as of March 1, 2016

Discount Rate as of March 1, 2016 3%

Projected Benefit Obligation as of March 1, 2016 $17,557,838.85

Interest Cost on PBO as of March 1, 2016 $526,735.17

Interest Cost on the Projected Benefit Obligation as of March 1, 2017

Discount Rate as of March 1, 2017 3.07%

Projected Benefit Obligation as of March 1, 2017 $18,026,607.25

Interest Cost on PBO as of March 1, 2017 $552,815.96

The Interest Earned on the Assets is equal to the Investment Return Rate xAmount of Total Assets.

Interest Earned on the Assets as of March 1, 2016

Starting Investment Return Rate on Assets as of March 1, 2016 3%

Total Assets as of March 1, 2016 $11,781,660.59

Interest Earned on the Assets as of March 1, 2016 $353,449.82

Interest Earned on the Assets as of March 1, 2017

Starting Investment Return Rate on Assets as of March 1, 2017 3.07%

Total Assets as of March 1, 2017 $11,520,292.46

Interest Earned on the Assets as March 1, 2017 $353,288.97

Valuation of the U.S. Embassy in Port-Au-Prince Pension Plan 10

The Net Interest Cost is equal to Interest Cost on Projected Benefit Obligation – Interest Earned on the Assets.

Net Interest Cost as of March 1, 2016

Interest Cost on PBO as of March 1, 2016 $526,735.17

Interest Earned on the Assets as of March 1, 2016 $353,449.82

Net Interest Cost as of March 1, 2016 $173,285.35

Net Interest Cost as of March 1, 2017

Interest Cost on PBO as of March 1, 2017 $552,815.96

Interest Earned on the Assets as March 1, 2017 $353,288.97

Net Interest Cost as of March 1, 2017 $199,526.99

The Suggested Employer Deposit is equal to (Unfunded Projected Benefit Obligation / Average Future Service) + Service Cost + Net Interest Cost + Estimated Administration Charge – Estimated Employee Contributions.

Suggested Employer Deposit as of March 1, 2016

Unfunded Projected Benefit Obligation as of March 1, 2016 $5,776,178.26

Average Future Service as of March 1, 2016 24.20

Unfunded Projected Benefit Obligation / Average Future Service as of March 1, 2016

$238,719.69

Service Cost as of March 1, 2016 $1,634,696.62

Net Interest Cost as of March 1, 2016 $173,285.35

Estimated Employee Contributions for Current Year as of March 1, 2016 $886,403.61

Estimated Administration Charge as of March 1, 2016 $12,098.16

Suggested Employer Deposit as March 1, 2016 $1,172,396.21

Valuation of the U.S. Embassy in Port-Au-Prince Pension Plan 11

Suggested Employer Deposit as of March 1, 2017

Unfunded Projected Benefit Obligation as of March 1, 2017 $6,506,314.79

Average Future Service as of March 1, 2017 23.81

Unfunded Projected Benefit Obligation / Average Future Service as March 1, $273,297.29

Service Cost as March 1, 2017 $1,580,291.28

Net Interest Cost as of March 1, 2017 $199,526.99

Estimated Employee Contributions for Current Year as of March 1, 2017 $797,887.08

Estimated Administration Charge as of March 1, 2017 $11,534.96

Suggested Employer Deposit as March 1, 2017 $1,266,763.44

The Total Suggested Deposit for the Employee and Employer is equal to (Unfunded Projected Benefit Obligation / Average Future Service) + Service Cost + Net Interest Cost + Estimated Administration Charge.

Total Suggested Deposit for Employee and Employer as of March 1, 2016

Unfunded Projected Benefit Obligation as of March 1, 2016 $5,776,178.26

Average Future Service as of March 1, 2016 24.20

Unfunded Projected Benefit Obligation / Average Future Service as of March 1, 2016

$238,719.69

Service Cost as of March 1, 2016 $1,634,696.62

Net Interest Cost as of March 1, 2016 $173,285.35

Total Suggested Deposit as March 1, 2016 $2,058,799.82

Valuation of the U.S. Embassy in Port-Au-Prince Pension Plan 12

Total Suggested Deposit for Employee and Employer as of March 1, 2017

Unfunded Projected Benefit Obligation as of March 1, 2017 $6,506,314.79

Average Future Service as of March 1, 2017 23.81

Unfunded Projected Benefit Obligation / Average Future Service as March 1, $273,297.29

Service Cost as March 1, 2017 $1,580,291.28

Net Interest Cost as of March 1, 2017 $199,526.99

Estimated Administration Charge as of March 1, 2017 $11,534.96

Total Suggested Deposit as March 1, 2017 $2,064,650.528

Valuation of the U.S. Embassy in Port-Au-Prince Pension Plan 13

III. Actuarial Gains and Losses The Expected Unfunded Projected Benefit Obligation as of March 1, 2017 is equal to (Unfunded Projected Benefit Obligation as of March 1, 2016 + Service Cost as of March 1, 2016) x (1 + Discount Rate) – Actual Employer Contribution Rate x Expected Annual Payroll as of March 1, 2016 x (1 + Investment Return on Assets) = (Unfunded Projected Benefit Obligation as of March 1, 2016 + Service Cost as of March 1, 2016) x (1 + Discount Rate) – Employer Contributions as of March 1, 2016 x (1 + Investment Return on Assets).

Expected Unfunded Projected Benefit Obligation as of March 1, 2017

Discount Rate as of March 1, 2016 3%

Starting Investment Return Rate on Assets as of March 1, 2016 3%

Unfunded Projected Benefit Obligation as of March 1, 2016 $5,776,178.26

Service Cost as of March 1, 2016 $1,634,696.62

Employer Contribution Rate 3.54%

Expected Annual Payroll as of March 1, 2016 $13,184,897.30

Employer Contributions as of March 1, 2016 $466,745.36

Expected Unfunded Projected Benefit Obligation as of March 1, 2017 $7,152,453.40

The Actuarial Gain/Loss for the period between March 1, 2016 and March 1, 2017 is equal to Expected Unfunded Projected Benefit Obligation as of March 1, 2017 - Actual Unfunded Projected Benefit Obligation as of March 1, 2017 which is a gain of $725,315.68. The gain can be partially explained by the fact that the Projected Benefit Obligation is expected to grow by 3% for that period and is currently not growing as expected. Further contributing to the gain is that the total salaries for March 1, 2017 is less than the total salaries for March 1, 2016.

Calculation of the Actuarial Gain/Loss for the period between March 1, 2016 and March 1, 2017

Expected Unfunded Projected Benefit Obligation as of March 1, 2017 $7,152,453.40

Actual Unfunded Projected Benefit Obligation as of March 1, 2017 $6,506,314.79

Actuarial Gain/Loss for Period from March 1, 2016 to March 1, 2017 $646,138.61

Valuation of the U.S. Embassy in Port-Au-Prince Pension Plan 14

IV. Financial Audit The financial audit was performed for the March 1, 2016 and March 1, 2017 Valuation Reports, to see if the amounts in each of the reports are calculated correctly.

The beginning balance on the Total Asset Report for March 1, 2016 of $11,091,018.29 matches the ending balance on the Total Asset Report for March 1, 2015.

The total deposits in the Asset Report for March 1, 2016 of $1,379,633.00 matches the total deposits in the Deposit Administration Report for March 1, 2016. The deposits are supposed to be made every two weeks on Friday. However, on occasion, the deposits were made on Thursdays and Saturdays. One deposit made on October 24, 2015 of $54,700.04, was actually made on a Saturday. This amount should either have been shown to be deposited on Friday, October 23, 2015 or Monday, October 26, 2015. The payment of $51,749.31 on Thursday, May 28, 2015, appears to be an extra payment.

However, this was compensated by not having a deposit made on Friday, August 28, 2015. Therefore, there were 26 deposits in the period from March 1, 2015 to February 29, 2016 which were correct, but the interest is slightly impacted in that it appears that there will be more interest earned on the deposits since they were deposited earlier in the period of time.

In the Interest Report for March 1, 2016, the rollover interest is equal to (asset balance for March 1, 2015 - generation balance for 2011 tranche - generation balance for 2012 tranche - generation balance for 2013 tranche - generation for 2014 tranche) x 2015 interest rate on the March 1, 2016 Asset Report.

Calculation of Rollover Interest as of March 1, 2016

Asset Balance as of March 1, 2015 $11,091,018.29

Generation Balance for 2011 $1,751,253.25

Generation Balance for 2012 $1,993,176.82

Generation Balance for 2013 $1,918,129.97

Generation Balance for 2014 $3,311,617.18

2015 Interest Crediting Rate 0.908%

Rollover Interest Amount as of March 1, 2016 $19,220.92

The deposit interest amount is calculated for each of the deposits, accumulating with a simple daily interest rate of 0.908% for the 2015 tranche. From the time of each of the deposits until March 1, 2016 equals $6,394.86. The withdrawal interest amount is calculated for each of the withdrawals accumulating with a simple daily interest rate of 0.908% for the 2015 tranche. From the time of each of the withdrawals until March 1, 2016 equals $3,119.37. The total net interest amount for the 2015 tranche is calculated as the rollover interest amount + the deposit interest amount - the withdrawal interest amount, equaling $22,496.40.

Valuation of the U.S. Embassy in Port-Au-Prince Pension Plan 15

Calculation of Net Interest Amount of the 2015 Tranche

Deposit Interest Amount = $6,394.86

Withdrawal Interest Amount = $3,119.37

Rollover Interest Amount = $19,220.92

Total Net Interest Amount = $22,496.40

The total amount of the interest for the period from March 1, 2015 to March 1, 2016 is the generation balance for 2011 tranche x crediting rate for 2011 tranche + generation balance for 2012 tranche x crediting rate for 2012 tranche + generation balance for 2013 tranche x crediting rate for 2013 tranche + generation balance for 2014 tranche x crediting rate for 2014 tranche + net interest for 2015 tranche.

Calculation of Total Interest Amount for the period from March 1, 2015 to March 1, 2016

Year Generation Balance Crediting Rate Interest

2011 $1,751,253.25 0.901% $15,778.79

2012 $1,993,176.82 0.571% $11,381.04

2013 $1,918,129.97 0.563% $10,799.07

2014 $3,311,617.18 0.676% $22,386.53

2015 $22,496.40

Total $82,841.83

The total withdrawals on the Total Asset Report for March 1, 2016 of $759,734.37 matches exactly what is shown for the total withdrawals in the Withdrawals Report for March 1, 2016.

In the Expenses Report for March 1, 2016, the Expenses are calculated in two parts:

(1) a flat fee of $500

(2) An additional flat fee of $500 + a schedule of fees for the deposits for the year where the first $10,000 is multiplied by 5%, the next $40,000 is multiplied by 3%, the next $50,000 is multiplied by 2%, the next $400,000 is multiplied by 1%, and any amount over $500,000 is multiplied by 0.5%.

Valuation of the U.S. Embassy in Port-Au-Prince Pension Plan 16

Therefore, the expenses equal $12,098.17. The total amount of the expenses on the Expense Report for March 1, 2016 is $12,098.16, which matches what is on the Total Asset Reports for March 1, 2016. This is off by $0.01 which is immaterial due to rounding.

Calculation of Expenses as of March 1, 2016

Flat Fee $500.00

Fee + %Deposit Charge

( Flat Fee) $500.00

$10,000.00 x 0.0500 ( Deposit Fee) $500.00

$40,000.00 x 0.0300 ( Deposit Fee) $1,200.00

$50,000.00 x 0.0200 ( Deposit Fee) $1,000.00

$400,000.00 x 0.0100 ( Deposit Fee) $4,000.00

$879,633.00 x 0.0050 ( Deposit Fee) $4,398.17

Total Expense Charges

$12,098.17

On the Total Assets Report for March 1, 2016, the fund balance as of February 29, 2016 is equal to the beginning balance as of March 1, 2015 + deposits + interest credit - withdrawals - expense charges.

Calculation of the Fund Balance as of February 29, 2016

Beginning Balance as of March 1, 2015 $11,091,018.29

Deposits $1,379,633.00

Interest Credited $82,841.83

Withdrawals $759,734.37

Expense Charges $12,098.16

Fund Balance as of February 29, 2016 $11,781,660.59

Valuation of the U.S. Embassy in Port-Au-Prince Pension Plan 17

The beginning balance on the Total Asset Report for March 1, 2017 of $11,781,660.59 matches exactly with what is in the ending balance in the Total Asset Report for March 1, 2016.

The total deposits on the Asset Report for March 1, 2017 of $1,266,992.31 matches the total deposits in the Deposit Administration Report for March 1, 2017. The deposits are supposed to be made every two weeks on Friday. However, on occasion, deposits are made on Thursday. The deposit made on April 23, 2016 of $48,084.53, was actually made on a Saturday which is not a weekday. That amount should either have been shown to have been deposited on Friday, April 22, 2016 or Monday, April 25, 2016.

In the Interest Report for March 1, 2017, the rollover interest amount as of March 1, 2017 is equal to (asset balance for March 1, 2016 - generation balance for 2012 tranche - generation balance for 2013 tranche - generation balance for 2014 tranche – generation balance for 2015 tranche) x 2016 interest rate on the March 1, 2017 Asset Report.

Calculation of Rollover Interest as of March 1, 2017

Asset Balance as of March 1, 2016 $11,781,660.59

Generation Balance for 2012 $1,993,176.82

Generation Balance for 2013 $1,918,129.97

Generation Balance for 2014 $3,311,617.18

Generation Balance for 2015 $2,736,739.70

2016 Interest Crediting Rate 0.944%

Rollover Interest Amount as of March 1, 2017 $17,199.65

The deposit interest amount is calculated for each of the deposits accumulating with a simple interest rate of 0.944% on a daily basis for the 2016 tranche from the time of each of the deposits until March 1, 2017 which is equal to $5,874.84. The withdrawal interest amount is calculated for each of the withdrawals accumulating with a simple interest rate of 0.944% on a daily basis for the 2016 tranche from the time of each of the withdrawals until March 1, 2017 which is equal to $8,717.40.

The total net interest amount for the 2016 tranche is calculated as the rollover interest amount + the deposit interest amount - the withdrawal interest amount, equaling $14,357.09.

Calculation of Net Interest Amount of the 2016 Tranche

Deposit Interest Amount = $5,874.84

Withdrawal Interest Amount = $8,717.40

Rollover Interest Amount = $17,199.65

Total Net Interest Amount = $14,357.09

Valuation of the U.S. Embassy in Port-Au-Prince Pension Plan 18

The total amount of the interest overall is the generation balance for 2012 tranche x crediting rate for 2012 tranche + generation balance for 2013 tranche x crediting rate for 2013 tranche + generation balance for 2014 tranche x crediting rate for 2014 tranche + generation balance for 2015 tranche x crediting rate for 2015 tranche + net interest for 2016 tranche.

Calculation of Total Interest Amount for the period from March 1, 2016 to March 1, 2017

Year Generation Balance Crediting Rate Interest

2012 1,993,176.82 0.571% $11,381.04

2013 1,918,129.97 0.563% $10,799.07

2014 3,311,617.18 0.676% $22,386.53

2015 2,736,739.70 0.908% $24,849.60

2016 $14,357.09

Total $83,773.33

The total withdrawals on the Total Asset Report for March 1, 2017 of $1,600,598.81 matches exactly what is shown for the total withdrawals in the Withdrawals Report for March 1, 2017.

In the Expenses Report for March 1, 2017, the expenses are calculated in two parts:

(1) a flat fee of $500

(2) an additional flat fee of $500 + a schedule of fees for the deposits for the year where the first $10,000 is multiplied by 5%, the next $40,000 is multiplied by 3%, the next $50,000 is multiplied by 2%, the next $400,000 is multiplied by 1%, and any amount over $500,000 is multiplied by 0.5%.

Therefore, the expenses are equal to $11,534.96. This amount matches both the total amount of the expenses showing up on the Expenses report for March 1, 2017 and the Total Asset Reports for March 1, 2017.

Calculation of Expenses as of March 1, 2017

Flat Fee $500.00

Fee + %Deposit Charge

( Flat Fee) $500.00

$10,000.00 x 0.0500 ( Deposit Fee) $500.00

Valuation of the U.S. Embassy in Port-Au-Prince Pension Plan 19

$40,000.00 x 0.0300 ( Deposit Fee) $1,200.00

$50,000.00 x 0.0200 ( Deposit Fee) $1,000.00

$400,000.00 x 0.0100 ( Deposit Fee) $4,000.00

$766,992.31 x 0.0050 ( Deposit Fee) $3,834.96

Total Expense Charges

$11,534.96

On the Total Assets Report for March 1, 2017, the fund balance as of February 28, 2017 is equal to the Beginning Balance as of March 1, 2016 + deposits + interest credited - withdrawals - expense charges.

Calculation of the Fund Balance as of February 28, 2017

Beginning Balance as of March 1, 2016 $11,781,660.59

Deposits $1,266,992.31

Interest Credited $83,773.33

Withdrawals $1,600,598.81

Expense Charges $11,534.96

Fund Balance as of February 28, 2017 $11,520,292.46

Valuation of the U.S. Embassy in Port-Au-Prince Pension Plan 20

V. Analysis of Investment Performance The following is a comparison of the crediting rate for both the March 1, 2015 to March 1, 2016 and March 1, 2016 to March 1, 2017 periods with the average US inflation rate, average federal rate, change in Standard and Poor’s 500 Index, and change in Dow Jones Industrial Average. This is shown in the table below.

Comparison of the different rates

Period Crediting Rate

Average

US

Inflation Rate

Average Haitian Inflation Rate

Average Federal Rate

Change in Standard and Poor’s 500 Index

Change in Dow Jones Industrial Average

March 1, 2015 to March 1, 0.73% 0.33% 10.18% 0.30% (6.57%) (8.76%)

March 1, 2016 to March 1, 0.73% 1.50% 12.28% 0.55% 21.11% 26.66%

The investment rate of return on the assets from the period between March 1, 2015 and March 1, 2016 averaged 0.73%.

This is calculated by a weighted average for the 5 most recent tranche years which equals (generation balance for 2011 tranche x crediting rate for 2011 tranche + generation balance for 2012 tranche x crediting rate for 2012 tranche + generation balance for 2013 tranche x crediting rate for 2013 tranche + generation balance for 2014 tranche x crediting rate for 2014 tranche + generation balance for 2015 tranche x crediting rate for 2015 tranche) / (generation balance for 2011 tranche + generation balance for 2012 tranche + generation balance for 2013 tranche + generation balance for 2014 tranche + generation balance for 2015 tranche).

Calculation of the Investment Rate of Return on the Assets between March 1, 2015 and March 1, 2016

Year Crediting Rate Ending Balance

2011 0.901% $1,751,253.25

2012 0.571% $1,993,176.82

2013 0.563% $1,918,129.97

2014 0.676% $3,311,617.18

Valuation of the U.S. Embassy in Port-Au-Prince Pension Plan 21

2015 0.908% $2,736,739.70

Crediting Rate for the Period from March 1, 2015 to February 29, 2016

0.73%

The investment rate of return on assets outperforms the average US inflation rate for the period between March 1, 2015 and March 1, 2016 of 0.33%. However, this return significantly underperforms the average Haitian inflation rate of10.18%.

The federal interest rate for this period is 0.25% from December 16, 2008 to December 17, 2015 and 0.50% from December 17, 2015 to December 15, 2016. The average federal fund rate for the period between March 1, 2015 and March 1, 2016 is a weighted average of 0.30%.

Calculation of the Average Federal Fund Rate for the period between March 1, 2015 and March 1, 2016

Start Date 3/1/2015

End Date 3/1/2016

Number of Days between Start and End Date

Begin Date End Date Interest Rate Number of Days in Period between March 1, 2015 and March 1, 2016

12/16/2008 12/17/2015 0.25% 291

12/17/2015 12/15/2016 0.50% 75

Average Federal Funds Rate for the Period from March 1, 2015 to March 1, 2016

0.30%

Valuation of the U.S. Embassy in Port-Au-Prince Pension Plan 22

The crediting rate is outperforming the federal interest rate for the period between March 1, 2015 and March 1, 2016. There was a decrease of 6.57% in the Standard & Poor’s 500 Index for the period from March 1, 2015 to March 1, 2016. Therefore, the investment performance in the plan significantly outperformed the Standard & Poor’s 500 Index for this period. There was a decrease of 8.76% in the Dow Jones Industrial Average for the period from March 2, 2015 (March 1, 2015 fell on a Sunday and therefore the March 2, 2015 index value is used) to March 1, 2016. Therefore, the investment performance in the plan also significantly outperformed the Dow Jones Industrial Average for this period.

The investment rate return on the assets from the period between March 1, 2016 and March 1, 2017 which averaged to be 0.73% is calculated by a weighted average for the 5 most recent tranche years which is equal to (generation balance for 2012 tranche x crediting rate for 2012 tranche + generation balance for 2013 tranche x crediting rate for 2013 tranche + generation balance for 2014 tranche x crediting rate for 2014 tranche + generation balance for 2015 tranche x crediting rate for 2015 tranche + generation balance for 2016 tranche x crediting rate for 2016 tranche) / (generation balance for 2012 tranche + generation balance for 2013 tranche + generation balance for 2014 tranche + generation balance for 2015 tranche + generation balance for 2016 tranche).

Calculation of the Investment Rate of Return on the Assets between March 1, 2016 and March 1, 2017

Year Crediting Rate Ending Balance

2012 0.571% $1,993,176.82

2013 0.563% $1,918,129.97

2014 0.676% $3,311,617.18

2015 0.908% $2,736,739.70

2016 0.944% $1,488,390.42

Crediting Rate for the Period from March 1, 2016 to February 28, 2017

0.73%

The investment rate of return on assets underperforms the average US inflation rate for the period between March 1, 2016 and March 1, 2017 which is 1.50% and it significantly underperforms the average Haitian inflation rate of 12.28%. This will erode the time value of the money if assets are invested at the current rate of 0.73%. The federal interest rates overlapping for this period is 0.50% from December 17, 2015 to December 15, 2016 and 0.75% from December 15, 2016 to March 17, 2017. The average federal fund rate for the period between March 1, 2016 and March 1, 2017 is a weighted average of 0.55%.

Valuation of the U.S. Embassy in Port-Au-Prince Pension Plan 23

Calculation of the Average Federal Fund Rate for the period between March 1, 2016 and March 1, 2017

Start Date 3/1/2016

End Date 3/1/2017

Number of Days between Start and End Date

Begin Date End Date Interest Rate Number of Days in Period between March 1, 2016 and March 1, 2017

12/17/2015 12/15/2016 0.50% 289

12/15/2016 3/17/2017 0.75% 76

Average Federal Funds Rate for the Period from March 1, 2016 to March 1, 2017

0.55%

Therefore, the investment rate of return on assets is still slightly outperforming the federal interest rate for the period between March 1, 2016 and March 1, 2017. There was an increase of 21.11% in the Standard & Poor’s 500 Index for the period from March 1, 2016 to March 1, 2017. Therefore, the investment performance in the plan significantly underperformed the Standard & Poor’s 500 Index for this period. There was an increase of 26.66% in the Dow Jones Industrial Average for the period from March 1, 2016 to March 1, 2017. Therefore, the investment performance in the plan also significantly underperformed the Dow Jones Industrial Average for this period.

Since the US inflation rate looks like it is increasing again (the US inflation rate for February 2017 is 2.7%), and the Haitian inflation rate looks like it is remaining high, investing the assets at the current rate of return would erode the time value of money. There is also conversation that the Fed will raise interest rates again three more times in 2017 3.1The original rate of return assumption for the assets that are used for the valuation is 3% for the period between March 1, 2016 and March 1, 2017 which overestimates the actual rate of return on the assets for this period which was 0.73%. This will result in an actuarial loss of $260,642.87 related to the financial assets which is equal to the actual value of the assets as of March 1, 2017 - the expected value of the assets as of March 1, 2017.

3 Greg Robb “Fed’s Williams says central bank may raise rates three more times this year”, MarketWatch. http://www.marketwatch.com/story/feds-williams-says-central-bank-may-raise-rates-three-more-times-this-year-2017-03-23

Valuation of the U.S. Embassy in Port-Au-Prince Pension Plan 24

Calculation of the Actuarial Gain/Loss on the Assets for the period between March 1, 2016 and March 1, 2017

Expected Total Assets on March 1, 2017 $11,780,935.33

Actual Total Assets on March 1, 2017 $11,520,292.46

Actuarial Gain/Loss for the Period March 1, 2016 to February 28, 2017 on the Assets

($260,642.87)

I would recommend investing the assets differently than they are presently. The assets are all currently invested in the general account with MetLife. However, since the investment rate of return underperformed both the Standard & Poor’s 500 Index and the Dow Jones Industrial Average for the period between March 1, 2015 and March 1, 2016 and outperformed the period between March 1, 2016 and March 1, 2017, I would not put all the assets in stocks since that could be risky with a large variance. I would recommend diversifying the assets in different stocks, bonds, mutual funds, and leaving some in cash. I believe that this would increase the rate of return of assets from where it is now.

Valuation of the U.S. Embassy in Port-Au-Prince Pension Plan 25

VI. Sensitivity Analysis on the Assumptions The current Projected Benefit Obligation, Unfunded Projected Benefit Obligation, the suggested employer contribution amount, and the suggested amount that both the employer and employee would need to contribute for the March 1, 2016 valuation is $17,557,838.85, $5,776,178.26, $1,172,396.21 and $2,058,799.82 respectively using the current assumptions as shown in Section I above.

Calculations of the current Projected Benefit Obligation, Unfunded Projected Benefit Obligation, the suggested amount that the employer would need to contribute, and the suggested amount that both the employer and employee would need to contribute for the March 1, 2016 valuation if there are no changes

Annual Salary Increases 2.5%

Employee Contribution Rate 7%

Number of Years until the benefit is fully vested 10

GAM Table Used 1983

Loading on the 1983 GAM Table 15.0%

Date of Valuation for March 1, 2016 3/1/2016

Normal Retirement Age 65

Haitian Currency to US Dollars as of March 1, 2016 61.3603

Discount Rate as of March 1, 2016 3%

Amount of Increment in the Increase in the Discount Rate per year 0.07%

Starting Investment Return Rate on Assets as of March 1, 2016 3%

Amount of Increment in the Increase in the Investment Return Rate on Assets as of March 1, 2016

0.07%

Number of Years the Discount Rate Increases as of March 1, 2016 15

Total Assets as of March 1, 2016 $11,781,660.59

Maximum Number of years of Pensionable Service 30

Expected Annual Payroll as of March 1, 2016 $13,184,897.30

Present Value of Retirement Benefit for Active Employees as of Date of Valuation as of March 1, 2016

$17,013,121.57

Present Value of Vested Termination Benefit for Active Employees as of Date of Valuation as of March 1, 2016

$299,430.90

Valuation of the U.S. Embassy in Port-Au-Prince Pension Plan 26

Present Value of Non Vested Termination Benefit for Active Employees as of Date of Valuation as of March 1, 2016

$163,020.46

Present Value of Retirement Benefit for Retired Employees as of Date of Valuation as of March 1, 2016

$82,265.91

Projected Benefit Obligation as of March 1, 2016 $17,557,838.85

Unfunded Projected Benefit Obligation as of March 1, 2016 $5,776,178.26

Average Future Service as of March 1, 2016 24.20

Unfunded Projected Benefit Obligation / Average Future Service as of March 1, 2016

$238,719.69

Service Cost as of March 1, 2016 $1,634,696.62

Interest Cost on PBO as of March 1, 2016 $526,735.17

Interest Earned on the Assets as of March 1, 2016 $353,449.82

Net Interest Cost as of March 1, 2016 $173,285.35

Estimated Employee Contributions for Current Year as of March 1, 2016 $886,403.61

Estimated Administration Charge as of March 1, 2016 $12,098.16

Suggested Employer Deposit as March 1, 2016 $1,172,396.21

Suggested Employer Deposit as a Percentage of Payroll as March 1, 8.8920%

Total Suggested Deposit as March 1, 2016 $2,058,799.82

Total Suggested Deposit as a Percentage of Payroll of March 1, 2016 15.6148%

If using the 1994 GAM Mortality Table rather than the 1983 GAM Mortality Table and leaving the other assumptions unchanged, then the Projected Benefit Obligation, Unfunded Projected Benefit Obligation, suggested employer contribution amount, and the suggested amount that both the employer and employee would need to contribute for the March 1, 2016 valuation will increase to $18,142,570.69, $6,360,910.10, $1,278,416.17, and $2,164,819.78 respectively.

Valuation of the U.S. Embassy in Port-Au-Prince Pension Plan 27

Calculations of the current Projected Benefit Obligation, Unfunded Projected Benefit Obligation, the suggested employer contribution amount, and the suggested amount that both the employer and employee would need to contribute for the March 1, 2016 valuation if using 1994 GAM Mortality Table

Annual Salary Increases 2.5%

Employee Contribution Rate 7%

Number of Years until the benefit is fully vested 10

GAM Table Used 1994

Loading on the 1994 GAM Table 15.0%

Date of Valuation for March 1, 2016 3/1/2016

Normal Retirement Age 65

Haitian Currency to US Dollars as of March 1, 2016 61.3603

Discount Rate as of March 1, 2016 3%

Amount of Increment in the Increase in the Discount Rate per year 0.07%

Starting Investment Return Rate on Assets as of March 1, 2016 3%

Amount of Increment in the Increase in the Investment Return Rate on Assets as of March 1, 2016

0.07%

Number of Years the Discount Rate Increases as of March 1, 2016 15

Total Assets as of March 1, 2016 $11,781,660.59

Maximum Number of years of Pensionable Service 30

Expected Annual Payroll as of March 1, 2016 $13,184,897.30

Present Value of Retirement Benefit for Active Employees as of Date of Valuation as of March 1, 2016

$17,593,242.81

Present Value of Vested Termination Benefit for Active Employees as of Date of…