SECTION 1. As used in this act, the following words shall have the following meanings:

a.        "Normal cost of post retirement benefits", that portion of the actuarial present value of premium costs and or claim costs payable by the town on behalf of or direct payments payable by the town to retired employees, including school teachers, of the town and the eligible surviving spouses or dependents of deceased employees, including school teachers, of the town, pursuant to this act which is allocable to a particular fiscal year, as determined by an actuary pursuant to section 3.

b.        "Post retirement benefit liability", the present value of the town's obligation for premium payments and or claim costs on behalf of or direct payments to retired and prospective retired employees of the town and the eligible surviving spouses or dependents of deceased and prospectively deceased employees of the town, pursuant to this act as determined by the actuary, pursuant to section 3.

c.        "Unfunded post-retirement benefit liability", the difference between the post­retirement benefit liability on a given date and the actuarial value of the assets of the group insurance liability fund on the same date, as determined by the actuary, pursuant to section 3.

d.        "Unfunded post-retirement benefit liability amortization payments", the amount which, when paid into the post-retirement benefit fund annually over a period of years, together with the normal cost of post-retirement benefits for year of said period of years, will reduce to zero at the end of said period the unfunded post­retirement benefit liability in existence as of the beginning of said period, as determined by the actuary.

SECTION 2.  There shall be a fund to be known as the group insurance liability fund, which shall be under the supervision and management of the town's finance director in consultation with the town administrator. The town treasurer shall be the custodian of the fund or may employ an outside custodial service. Such fund shall be credited with all amounts appropriated or otherwise made available by the town for the purposes of meeting the current and future cost of premiums payable by the town on behalf of or direct payments payable by the town to retired employees of the town and the eligible surviving spouses or dependents of deceased employees of the town pursuant to this act.  Amounts in said fund including any earnings or interest accruing from the investment of such amounts shall be expended only for the payment of such premiums or direct payments, except as otherwise provided in this act, and only in accordance with a schedule of such payments developed by the actuary in consultation with the town's retirement board. Subject in each instance to the approval of the town's contributory retirement board, the town treasurer shall invest and reinvest the amounts in said fund not needed for current disbursement consistent with sound investment policy; provided however, that no funds are to be invested directly in mortgages or in collateral loans. The town may employ any qualified bank, trust company, corporation, firm or person to advise it on the investment of the fund and may pay for such advice and such other services as determined by the town's fmance director in consultation with the town administrator.

SECTION 3.

a.         The actuary shall determine, as of January 1, 2009, and no less frequently than every second year thereafter, the normal cost of post-retirement benefits, the post-retirement benefit liability, and the unfunded post-retirement benefit liability. All such determinations shall be made in accordance with generally accepted actuarial standards, and the actuary shall make a report of such determinations. Said report shall, without limitation, detail the demographic and economic actuarial assumptions used in making such determinations, and each report subsequent to the first report shall also include an explanation of the changes, if any, in the demographic and economic actuarial assumptions employed and the reasons for any such changes, and shall also include a comparison of the actual expenses by the town for premium or direct payments constituting the post-retirement benefit liability during the period since the last such determination, and the amount of such expenditures which were predicted pursuant to the previous such report for the said period.

b.        The actuary, in consultation with the town's finance director and executive secretary, shall establish a schedule of annual payments to be made to the group insurance liability fund designed to reduce to zero the unfunded post-retirement benefit liability.  Each such annual payment shall be equal to the sum of the unfunded post-retirement benefit amortization payment required for such year and the payments required to meet the normal cost of post-retirement benefits for such fiscal year.

c.        All payments for the purposes of meeting the town's share of premium costs for direct payments to retired employees of the town and the surviving spouses or dependents of deceased employees of the town pursuant to this act shall be made from the group insurance liability fund in accordance with a schedule of disbursements established by the actuary.

SECTION 4.  This act shall take effect upon its passage.