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5A - Actuarial Valuation Report - General EmployeesGRS AGENDA ITEM# 5A MARCH 10, 2014 Gabriel Roeder Smith & Company Consultants & Actuaries CITY OF ATLANTIC BEACH GENERAL EMPLOYEES' RETIREMENT SYSTEM ACTUARIAL VALUATION REPORT SEPTEMBER 30, 2013 ANNUAL EMPLOYER CONTRIBUTION IS DETERMINED BY THIS VALUATION TO BE PAID IN THE EMPLOYER FISCAL YEAR ENDING SEPTEMBER 30, 2015 GRS January 7, 2014 Gabriel Roeder Smith & Company Consulrmns & Acmaries The Board of Trustees City of Atlantic Beach General Employee Retirement System Atlantic Beach, Florida Dear Board Members: One East Brow.ud Blvd. Suite 505 Ft.. L1uderdalc, FL .l.H01-HI71 954.527.1616 phone 95•1.525.0083 fax www.gllbriclmcdt-r.corn We are pleased to submit herein our September 30, 2013 Actuarial Valuation Repmt for the City of Atlantic Beach General Employees' Retirement System. The contribution results apply to the Plan Year ending September 30, 2014 and to the City's fiscal year ending September 30, 2015. This repmt was prepared at the request of the Board of Trustees and is intended for use by the Pension Plan and those designated or approved by the Board of Trustees. This report may be provided to parties other than the Pension Plan only in its entirety and only with the permission of the Board of Trustees. The purpose of the valuation is to measure the Plan's funding progress, to determine the employer contribution rate for the fiscal year ending September 30, 2015 and to determine the actuarial information for Governmental Accounting Standards Board (GASB) Statements No. 25 and No. 27. This repmt should not be relied on for any purpose other than the purpose described above. The developed findings included in this report consider data or other information through September 30, 2013. Future actuarial measurements may differ significantly from the current measurements presented in this repmt due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as pmt of the natural operation of the methodology used for these measurements (such as the end of an amortization period or additional cost or contribution requirements based on the plan's funded status); and changes in plan provisions or applicable law. The calculations are based upon assumptions regarding future events, which may or may not materialize. They are also based upon current plan provisions that are outlined in the report. If you have reason to believe that the assumptions that were used are unreasonable, that the plan provisions are incorrectly described, or that conditions have changed since the calculations were made, you should contact the author of this repmt prior to relying on information in the repmt. The valuation was based upon information furnished by the City, concerning Plan benefits, financial transactions, plan provisions and active members, terminated members, retirees and beneficiaries. We checked for internal and year-to-year consistency, but did not otherwise audit the data. We are not responsible for the accuracy or completeness of the information provided by the City. The undersigned actuaries are members of the American Academy of Actuaries and meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinions contained herein. The signing actuaries are independent of the plan sponsor. The Board of Trustees January 7, 2014 Page 2 This report has been prepared by actuaries who have substantial experience valuing public employee retirement systems. To the best of our knowledge the information contained in this report is accurate and fairly presents the actuarial position of the Retirement Plan as of the valuation date. All calculations have been made in conformity with generally accepted actuarial principles and practices, with the Actuarial Standards of Practice issued by the Actuarial Standards Board and with applicable statutes. Gabriel, Roeder, Smith & Company will be pleased to answer questions pertaining to the valuation and to meet with you to review this Report. Respectfully submitted, GABRIEL, ROEDER, SMITH AND COMPANY James J. Rizzo, ASA, MAAA Senior Consultant & Actuary Piotr Krekora, ASA, MAAA Senior Actuarial Analyst Gabriel, Roeder, Smith and Company STATEMENT BY ENROLLED ACTUARY This actuarial valuation and/or cost determination was prepared and completed by me or under my direct supervision, and I aclmowledge responsibility for the results. To the best of my knowledge, the results are complete and accurate. In my opinion, the techniques and assumptions used are reasonable, meet the requirements and intent of Part VII, Chapter 112, Florida Statutes, and are based on generally accepted actuarial principles and practices. There is no benefit or expense to be provided by the plan and/or paid from the plan's assets for which liabilities or current costs have not been established or otherwise taken into account in the valuation. All known events or trends which may require a material increase in plan costs or required contribution rates have been taken into account in the valuation. Signature Janumy 7, 2014 Date 11-03355 Enrollment Number GRS TABLE OF CONTENTS SECTION TITLE A EXECUTIVE SUMMARY B VALUATION RESULTS 1. Participant Data 2. Annual Required Contribution 3. Actuarial Value ofBenefits and Assets 4. Financial Soundness 5. Actuarial Gains and Losses 6. Recent Hist01y of Valuation Results 7. Recent History of Required and Actual Contributions 8. Actuarial Assumptions and Cost Method C PENSION FUND INFORMATION 1. Summaty of Assets 2. Summary of Fund's Income and Disbursements 3. Reconciliation of DROP Accounts 4. Actuarial Value of Assets 5. Investment Rate ofReturn D FINANCIAL ACCOUNTING INFORMATION 1. FASB No. 35 2. GASB No. 25 3. GASB No. 27 E MISCELLANEOUS INFORMATION F G 1. Reconciliation of Membership Data 2. Statistical Data SUMMARY OF PLAN PROVISIONS COMPARATIVE SUMMARY OF PRINCIPAL VALUATION RESULTS A-1 B-1 B-2 B-3 B-4 B-8 B-12 B-14 B-15 C-1 C-2 C-3 C-4 C-6 D-1 D-2 D-4 E-1 E-2 F-1 G-1 Circular 230 Notice: Pursuant to regulations issued by the IRS, to the extent this communication (or any attachment) concerns tax matters, it is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) marketing or recommending to another party any tax-related matter addressed within. Each taxpayer should seek advice based on the individual's circwnstances from an independent tax advisor. GRS SECTION A EXECUTIVE SUMMARY EXECUTIVE SUMMARY Closed Plan In reviewing this Repmi, it is important to keep in mind that the System was retroactively closed to new entrants as of September I, 2008. One consequence of this closure is that the annual payment on the unfunded accrued liability for the City will continue to increase as a percentage of covered payroll as such payroll decreases from year to year. Therefore, the overall cost as a percentage of covered payroll will be increasing each year in the absence of actuarial gains. Required Employer Contributions The following is a comparison of required contributions developed in this year's and the last actuarial valuations: Gross Contribution Requirement As % of Expected Payroll Expected Employee Contribution As % of Covered Payroll Required Employer Contribution (If Made in Equal Monthly Installments) As % of Covered Payroll Required Employer Contribution (If Made in Whole at the Beginning of the Year) As % of Covered Payroll $ 1,027,619 37.59 % $ 164,006 6.00 % $ 863,613 $ 31.59 % 827,745 30.28 % $ 1,146,476 $ 35.19 % $ 195,496 $ 6.00 % $ 950,980 $ 29.19 % 911,482 27.97% (118,857) 2.40 % (31,490) 0.00 % (87,367) 2.41 % (83,738) 2.31% *Results have been updated to reflect provisions ofthe Ordinance 58-13-37 as discussed in the Actuarial Impact Statement dated April15, 2013. As illustrated in the preceding chati, the City contribution necessary to support the current benefits for the General Employees is $863,613 for the fiscal year ending September 30, 2015. Please note that the Required Employer Contribution for that fiscal year is developed assuming it would be deposited in monthly intervals throughout the year. Revisions in Benefits There were no revisions in benefits for the current year. Results for the prior year have been updated to reflect the most recent actuarial impact statement results for Ordinance Number 58-13-37. Plan changes resulting from the ordinance included the transfer of active members hired on or after September 1, 2008 to a defined contribution plan along with their accumulated employee contributions plus interest and an increase in the employee contribution rate for remaining members from 5% to 6% of pay. There were no changes in benefits for retirees and vested terminated employees as ofthe effective date of the ordinance. GRS City of Atlantic Beach General Employees' Retirement System 9/30/2013 Actuarial Valuation I A-I Revisions in Actuarial Assumptions and Methods Amottization method was changed in connection with the plan amendment to amottize future gains and losses over a decreased period of I 0 years using a level dollar method to reflect the nature of a closed plan. There were no revisions in actuarial assumptions or methods for the current year. Actuarial Experience Actuarial gains occur in a year whenever the experience of the plan is better than was assumed. For example, if investment performance were better than the level being assumed in the actuarial valuation and costing process, then an actuarial gain results and would have the effect of lowering the Minimum Required Contribution for the year. Whenever more employees terminate employment than were assumed would terminate, fewer employees are then expected to actually retire from the City, resulting in an actuarial gain for the plan. Actuarial losses occur in a year whenever the experience of the plan is worse than was assumed. In the examples given above, if the reverse were to occur, then actuarial losses would result. As another example, if salaries increased in one year higher than was assumed, an actuarial loss would occur. The actuarial valuation cost method which determines the Minimum Required Contribution is designed to produce contribution requirements which remain level as a percent of payroll for an open plan whenever the experience of the plan matches the actuarial assumptions used. Contribution Requirements are also level whenever actuarial losses exactly offset actuarial gains. Analysis of Change in Employer Contribution The increase in the Employer Contribution as a percent of pay is primarily due to the plan closure resulting in a decreased payroll and a change in the amortization method to level dollar (equivalent to lowering the assumed payroll growth rate to 0%). The components of change in the actuarially required contribution are as follows: Contribution rate last year* Payment on UAAL Experience gain/loss Change in administrative expense Change in normal cost before expenses Revision in benefits Revision in assumptions/methods Contribution rate this year 29.19 % 2.72 ( 1.60) 0.33 0.95 0.00 0.00 31.59 % *Reflects the Actuarial Impact Statement for Ordinance 58-13-37. There was a net actuarial gain this year which is due to the lower than expected salmy increases (1.3% actual vs. 5.9% assumed). The actuarial gain was offset slightly by the valuation asset return being 7.6% when compared to the 8.0% assumption and by an increase in the administrative expenses. The remainder of this Repott includes detailed actuarial valuation results, financial information, miscellaneous information and statistics, and a summmy of plan provisions. GRS City of Atlantic Beach General Employees' Retirement System 9/30/2013 Actuarial Valuation I A-2 SECTIONB VALUATION RESULTS GRS Number Covered Annual Payroll (non-DROP) Average Annual Pay Average Age Average Past Service Average Age at Hire Number Annual Benefits Average Annual Benefit Average Age Number Annual Benefits Average Annual Benefit Average Age Number Annual Benefits Average Annual Benefit Average Age City of Atlantic Beach General Employees' Retirement System $ $ $ $ $ $ $ $ 56 2,733,429 48,811 52.8 13.4 39.4 52 778,025 14,962 68.1 4 56,377 14,094 61.5 II 113,275 10,298 53.0 $ $ $ $ $ $ $ $ 63 3,072,111 48,764 52.1 12.9 39.2 47 629,722 13,398 68.7 4 56,377 14,094 60.5 12 121,445 10,120 52.2 9/30/2013 Actuarial Valuation I B-1 A. Valuation Date September 30, 2013 September 30, 2012* B. ARC to Be Paid During Fiscal Year Ending 9/30/2015 9/30/2014 c. Assumed Date(s) of Employer Contrib. Monthly Monthly D. Annual Payment to Amotiize Unfunded Actuarial Liability if Paid on the Valuation Date $ 515,906 $ 570,451 E. Employer Normal Cost (including Administrative Expenses) if Paid on the Valuation Date 250,524 273,514 F. ARC if Paid on the Valuation Date: D+E 766,430 843,965 G. ARC Adjusted for Frequency of Payments and Interest to Required Time of Contribution 863,613 950,980 H. Payroll Expected for Contribution Year 2,733,429 3,258,269 I. ARC as % of Covered Payroll in Contribution Year: G + H 31.59 % 29.19 % J. Required Employer Contribution (REC) if Paid on the First Day of the Contribution Year 827,745 911,482 *Results have been updated to reflect provisions of the Ordinance 58-13-37 as discussed in the Actuarial Impact Statement dated Apri/15, 2013. GRS City of Atlantic Beach General Employees' Retirement System 9/30/2013 Actuarial Valuation I B-2 A. Valuation Date September 30,2013 September 30, 2012* B. Actuarial Present Value of All Projected Benefits for 1. Active Members a. Service Retirement Benefits $10,264,683 $11,516,775 b. Vesting Benefits 274,710 322,701 c. Disability Benefits 237,621 280,665 d. Preretirement Death Benefits 240,504 278,177 e. Return of Member Contributions 47,420 56,490 f. Total 11,064,938 12,454,808 2. Inactive Members a. Service Retirees & Beneficiaries 7,578,313 5,972,648 b. Disability Retirees 502,066 513,152 c. Terminated Vested Members 790,967 785,507 d. Total 8,871,346 7,271,307 3. Total for All Members 19,936,284 19,726,115 c. Actuarial Accrued (Past Service) Liability per GASB No. 25 17,282, I 01 16,599,282 D. Actuarial Value of Accumulated Plan Benefits per F ASB No. 3 5 15,181,382 14,156,270 E. Plan Assets 1. Market Value 13,770,711 12,646,085 2. Actuarial Value 13,815,833 12,465,289 F. Actuarial Present Value of Projected Covered Payroll 20,075,853 23,633,470 G. Actuarial Present Value of Projected Member Contributions 1,204,551 1,418,008 * Results have been updated to reflect provisions of the Ordinance 58-13-37 as discussed in the Actuarial Impact Statement dated April15, 2013. For consistency, Market Value of Assets as of 10/112012 is adjusted by (47, 742) reflecting transfer of employee contributions to a DC Plan. GRS City of Atlantic Beach General Employees' Retirement System 9/30/2013 Actuarial Valuation I B-3 FINANCIAL SOUNDNESS The purpose of this portion of the Report is to provide certain measures which indicate the financial soundness of the program. These measures relate to short term solvency and long term solvency. The various percentages listed in this Section as of a single valuation date are not that significant. What is significant, however, is the trend of the rates over a period of years. It is also important to keep in mind that each time benefits or assumptions are revised; actuarial liabilities are created or diminished. Any newly created liabilities are financed systematically over a period of future years. All actuarially computed values in this analysis are based on the actuarial assumptions utilized in the respective years' actuarial valuations. Short Term Solvency The ultimate test of financial soundness is the program's ability to pay all promised benefits when due. The program's progress in accumulating assets to pay all promised benefits can be measured by comparing the market value of assets with: I. The actuarial present value of projected benefits payable to those already receiving benefits and to vested terminations, and 2. The actuarial present value of accrued benefits payable to active participants. This amount is based on benefits earned to date without future credited service or salary increases. The total of the two items should generally be fully covered by assets. That portion of the total of the two items covered by assets should increase over time. Often assets continue to grow beyond the actuarial present value of these two items. Increases in benefits will, of course, adversely affect the trend in the years when such increases are first reflected in the actuarial values. Although different actuarial assumptions would be used in the event of a termination of the program, this test shows how much of the benefits accrued to date might be covered by assets in the event of a plan freeze using the valuation assumptions. GRS 1. Accumulated Contributions of Active Members 2. APV of Projected Benefits in Pay Status and for Vested Terminations 3. APV of Accrued Benefits for Active Participants (Employer Portion) 4. Total 5. Market Value of Assets 6. Assets as% of Total $ 1,225,604 8,871,346 5,084,432 15,181,382 13,770,711 91% $ 1,250,523 7,271,307 5,634,440 14,156,270 12,646,085 89% $ 1,211,505 6,624,399 5,513,056 13,348,960 10,448,470 78% *Reflects the Actuarial Impact Statement for Ordinance 58-13-37. For consistency with retroactive change in the Actuarial Present Value of Accumulated Plan Benefits, Market Value of Assets as of I 0/1/2012 is adjusted from $12,693,827 down to $12,646,085 to reflect transfer of employees' contributions to a DC Plan. City of Atlantic Beach General Employees' Retirement System 9/30/2013 Actuarial Valuation I B-4 GRS Ratio of Market Value of Assets to Present Value of Accrued Benefits $16.0 200% $14.0 $12.0 $10.0 "' = ;§ $8.0 100% ~ ~ :t. 0 $6.0 $4.0 $2.0 $0.0 0% 2009 2010 2011 2012 2013 Actuarial Valuation Date (September 30) 1111111111 Market Value of Assets ~ PV Accrued Benefits Ratio City of Atlantic Beach General Employees' Retirement System 9/30/2013 Actuarial Valuation I B-5 Long Term Solvency Over the longer term, the solvency of an ongoing plan can be measured by comparing the Actuarial Value of Assets to an amount known as the Actuarial Accrued Liability (AAL) under the Entry Age Actuarial Cost Method. This item has often been called the "past service liability". Its derivation differs from the short term solvency value derivation in several ways. The short term solvency liability number is based on the benefits accrued to date by the participants while the long term solvency liability number is based on what the normal costs accrued to date by the employer. In addition, the short term solvency asset number is the market value, while the long term asset number is the actuarial value of assets. As in the case of the short term solvency values, the AAL is affected immediately by any revisions in benefits or assumptions. The accumulation of assets to equal the AAL can be considered a long range funding goal. GRS 9/30/00 9/30/01 * 9/30/02 9/30/03 * 9/30/04 9/30/05 * 9/30/06 * 9/30/07 9/30/08 * 9/30/09 9/30/10 * 9/30/11 9/30/12 ** 9/30/13 5,229 5,587 5,747 5,951 6,273 6,802 7,609 8,594 9,209 9,841 10,618 11,119 12,465 13,816 6,462 6,986 7,479 8,186 9,005 9,822 10,505 11,668 12,624 13,682 15,180 16,053 16,599 17,282 81% 80 77 73 70 69 72 74 73 72 70 69 75 80 *Reflects change in benefits, actuarial assumptions and/or asset method. **Reflects the Actuarial Impact Statement for Ordinance 58-13-37. City of Atlantic Beach General Employees' Retirement System 9/30/2013 Actuarial Valuation I B-6 GRS $18.0 $16.0 $14.0 $12.0 t $10.0 $8.0 $6.0 $4.0 $2.0 Ratio of Actmuial Value of Assets to Acttuuial Accrued Liability " 150% 100% 50% $0.0 0% ~~~ ~~"-.., ~~rv ~~'"" ~r::t ~~'; ~~~o ~~f\, ~~'b ~.g, ~"-..,~ ~"-..,"-.., ~v ~0 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ Actuarial Valuation Date (September 30) -Actuarial Assets •--• Accrued Liability City of Atlantic Beach General Employees' Retirement System --Ratio 9/30/2013 Actuarial Valuation I B-7 ACTUARIAL GAINS AND LOSSES The assumptions used to anticipate mortality, employment turnover, investment income, expenses, salary increases, and other factors have been based on long range trends and expectations. Actual experience can vary from these expectations. The variance is measured by the gain and loss for the period involved. If significant long term experience reveals consistent deviation from what has been expected and that deviation is expected to continue, the assumptions should be modified. The net actuarial gain (loss) for the past year is computed as follows: GRS 1. Last Year's U AAL * $4,133,993 2. Last Year's Employer Normal Cost 284,455 3. Last Year's Actual City Contibution 1,044,392 4. Interest at the assumed rate on: a. 1 for one year 330,719 b. 2 half a year 11,3 78 c. 3 from dates paid 41,776 d. a+ b-c 300,321 5. This Year's Expected UAAL 1+2-3+4d 3,674,377 6. This Year's Actual UAAL (before any changes in benefits or assumptions) 3,466,268 7. Net Actuarial Gain (Loss): (5)-(6) 208,109 8. Gain (Loss) due to investments (21,124) 9. Gain (Loss) due to other sources 229,232 10. Amortization Payment Due to (Gain) Loss (28,717) *Reflects the Actuarial Impact Statement for Ordinance 58-13-3 7. City of Atlantic Beach General Employees' Retirement System 9/30/2013 Actuarial Valuation I B-8 GRS $3 $2 $1 ($1) ($2) Net actuarial gains in previous years have been as follows: 9/30/1994 (157,358) (157,358) 9/30/1995 447,291 289,933 9/30/1996 (162,663) 127,270 9/30/1997 252,238 379,508 9/30/1998 58,540 438,048 9/30/1999 108,195 546,243 9/30/2000 (55,470) 490,773 9/30/2001 (18,145) 472,628 9/30/2002 (280,151) 192,477 9/30/2003 (355,383) (162,906) 9/30/2004 (395,109) (558,0 15) 9/30/2005 (364,305) (922,320) 9/30/2006 131,266 (791,054) 9/30/2007 (170,383) (961,437) 9/30/2008 (178,856) (1,140,293) 9/30/2009 (482,223) (I ,622,515) 9/30/2010 (171,358) (1, 793,873) 9/30/2011 (364,563) (2,158,436) 9/30/2012 402,582 (1, 755,854) 9/30/2013 208,109 (1,547,746) Actuarial Gain(+) or Loss ( -) Plan YearEnd -Gain or Loss ---+-----Cumulative $2 $1 ~ = $0 ~ ~ ($1) ($2) City of Atlantic Beach General Employees' Retirement System 9/30/2013 Actuarial Valuation I B-9 The fund earnings and salary increase assumptions have considerable impact on the cost of the Plan so it is important that they are in line with the actual experience. The following table shows the history of actuarial fund earnings and salary increase rates compared to the assumed rates: 9/30/1999 11.0 % 8.0 % 5.6 % 5.7 % 9/30/2000 9.7 8.0 8.3 6.0 9/30/2001 5.1 8.0 4.0 6.2 9/30/2002 1.5 8.0 4.4 5.9 9/30/2003 1.7 8.0 4.5 5.9 9/30/2004 2.3 8.0 7.7 5.8 9/30/2005 4.9 8.0 10.8 5.8 9/30/2006 8.5 8.0 4.1 5.9 9/30/2007 10.0 8.0 9.8 5.9 9/30/2008 4.9 8.0 4.9 5.8 9/30/2009 4.2 8.0 6.1 5.7 9/30/2010 5.0 8.0 (0.4) 6.0 9/30/2011 2.1 8.0 0.5 6.0 9/30/2012 8.0 8.0 1.2 5.9 9/30/2013 8.0 8.0 1.3 5.9 Average 5.8 % 4.8 % The actual investment return rates shown above are based on the actuarial value of assets. The actual salary increase rates shown above are the increases received by those active members who were included in the actuarial valuations both at the beginning and the end of each year. GRS City of Atlantic Beach General Employees' Retirement System 9/30/2013 Actuarial Valuation I B-10 GRS History of Investment Return -Actuarial Value of Assets 15% 10% 10% 5% 5% -5% ~------------------------------------------------------~ -5% o,flo, Plan Year End -Actual -Asswned History of Salary Increases 15% 10% 10% 5% 5% 0% -5% ~--------------------------------------------------------L -5% o,flo, Plan Year End Compared to Previous Year -Actual -Assumed City of Atlantic Beach General Employees' Retirement System 9/30/2013 Actuarial Valuation I B-11 ~ ?On (]) -· =·~ ;;; 0 8 >-+, (]) >--:;! ...... Number of ~§" ~ s-.. Active Inactive ~ C) ~ tJj ::l (]) Valuation Members Members Pl Date C) ::r" CJ 9/30/99 70 33 $ 2,185 $ 4,650 $ 1,146 $ 199 9.10 % (]) :;! (]) 9/30/00 71 37 2,330 5,229 1,233 213 9.14 ..., e:.. tTJ 9/30/01 . 75 40 2,462 5,587 1,399 226 9.17 8 "a 9/30/02 83 40 2,768 5,747 1,732 267 9.66 0 '-<: 9/30/03 * 84 41 2,856 5,951 2,235 284 9.93 (]) (]) "'~ 9/30/04 86 42 3,051 6,273 2,732 300 9.82 9/30/05 82 45 3,182 6,802 3,020 235 7.37 9/30/06 81 48 3,195 7,609 2,896 233 7.28 9/30/07 82 51 3,476 8,594 3,074 252 7.26 9/30/08 83 52 3,727 9,209 3,415 269 7.22 \,0 ....... 9/30/09 87 50 4,019 9,841 3,841 314 7.82 w 0 w 9/30/10 84 51 3,838 10,618 4,562 364 9.49 0 w 9/30/11 83 58 3,738 11,119 4,934 367 9.82 >--9/30/12 •• C) 63 63 3,072 12,465 4,134 274 8.90 ...... ::: Pl 9/30/13 56 67 2,733 13,816 3,466 251 9.17 ..., ~ < *Reflects a change in assumptions or benefits. Pl 2" **Reflects the Actuarial impact Statement for Ordinance 58-13-37. Pl ...... s· :;! tJj I N $9 ~ GRS Recent History of Number of Members 150 125 100 75 50 25 0 r:::,o,\0,0, r:::,o,\r:::,r:::, r:::,o,\r:::,'> r:::,o,\r:::,"v r:::,o,\r:::,'? r:::,o,\r:::,~ r:::,o,\r:::,""> r:::,o,\d::J r:::,o,\r:::,'\ r:::,drr:::,"o r:::,o,\r:::,O, r:::,o,\"r:::, r:::,o,\"" r:::,o,\""v r:::,o,\"'? Actuarial Valuation Date B Active Membets li!l!nactive Membets Recent History of Covered Annual Payroll $5.0 $4.0 $3.0 $2.0 $1.0 $0.0 ~ SCI ~\0, ~\r;:s r:::, r;:s Actuarial Valuation Date City of Atlantic Beach General Employees' Retirement System 9/30/2013 Actuarial Valuation I B-13 GRS End of Year To Required Contributions Which Valuation Valuation Applies % of Expected Actual Amount Payroll 9/30/03 9/30/05 $ 464,893 15.02 9/30/04 9/30/06 480,029 16.09 9/30/05 9/30/07 482,364 13.99 9/30/06 9/30/08 456,965 13.62 9/30/07 9/30/09 528,428 14.03 9/30/08 9/30/10 599,292 14.84 9/30/09 9/30/11 722,769 16.60 9/30/10 9/30/12 998,516 24.53 9/30/11 9/30/13 1,044,392 26.34 .. 9/30/12 9/30/14 950,980 29.19 9/30/13 9/30/15 863,613 31.59 *Reflects a change in assumptions or benefits. **Reflects the Actuarial Impact Statement for Ordinance 58-13-3 7. City of Atlantic Beach General Employees' Retirement System Contributions % $ 464,893 480,029 482,363 457,005 528,426 599,292 722,769 998,516 1,044,392 9/3 0/20 13 Actuarial Valuation I B-14 ACTUARIAL ASSUMPTIONS AND COST METHOD Valuation Methods Actuarial Cost Method -The actuarial cost method is a procedure for allocating the actuarial present value of benefits and expenses to time periods. Normal cost and the allocation of benefit values between service rendered before and after the valuation date were determined using the Entry-Age Actuarial Cost Method. The entry-age actuarial cost method allocates the actuarial present value of each member's projected benefits on a level basis over the member's pensionable compensation between the entry age of the member and the estimated active status exit ages. The portion of the actuarial present value allocated to the valuation year is called the normal cost. The pmtion of the actuarial present value not provided for by the actuarial present value of future normal costs is called the actuarial accrued liability. Deducting accrued assets from the actuarial accrued liability dete1mines the unfunded actuarial accrued liability. Financing of Unfimded Actuarial Accrued Liabilities-The unfunded actuarial accrued liability was financed as a level dollar. Actuarial Value of Assets -The Actuarial Value of Assets phases in the difference between the expected and actual return on market value of assets at the rate of 25% per year. The Actuarial Value of Assets will be further adjusted to the extent necessary to fall within the corridor whose lower limit is 80% of the Market Value of plan assets and whose upper limit is 120% of the Market Value of plan assets. During periods when investment performance exceeds the assumed rate, Actuarial Value of Assets will tend to be less than Market Value. During periods when investment performance is less than assumed rate, Actuarial Value of Assets will tend to be greater than Market Value. Valuation Assumptions The actuarial assumptions used in the valuation are shown in this Section. GRS City of Atlantic Beach General Employees' Retirement System 9/30/2013 Actuarial Valuation I B-15 Economic Assumptions The investment return rate assumed in the valuation is 8.0% per year, compounded annually (net of investment expenses). The wage inflation rate assumed in this valuation was 4% per year. The Wage Inflation Rate is defined to be the portion of total pay increases for an individual that are due to macroeconomic forces including productivity, price inflation, and labor market conditions. For an ongoing plan with a constant active population, a long term payroll growth rate often converges to the assumed rate of wage inflation. The wage inflation rate does not include pay changes related to individual merit and seniority effects. The price inflation rate assumed in this valuation was 3.00% per year. The plan does not provide for automatic post-retirement cost of living adjustments (COLA) of retiree benefits. Ad-hoc COLA increases have been adopted in the past upon approval by the City. Most recently, such increases have been granted in 1987, 1996 and 2001. No assumptions are made regarding future adjustments. Any such increases will be recognized as they occur. The total rate of return is defined as earnings resulting from interest, dividends, realized gains (losses) and unrealized appreciation (depreciation) less investment-related expenses, all divided by the beginning market value of the fund, adjusted for cash flow during the year. Total rate of return is as the assumed to be 8.0% per year, net of investment-related expenses. The rates ofsalmy increases used in the valuation are illustrated in the following table (rates below include 3% price inflation). GRS Annual Rates for Salary Increase for Sample Ages Age: Expected Increase City of Atlantic Beach General Employees' Retirement System 20 14.0% 30 40 50 60 8.7% 6.5% 6.0% 5.5% 9/30/2013 Actuarial Valuation I B-16 Demographic Assumptions The mortality rates used were taken from the gender specific RP-2000 Combined Healthy Pmiicipant Mmiality Tables for males and females, with generational projections from the year 2000 Projection Scale AA. Sample mortality rates and life expectancy factors illustrated below apply to the valuation year and are projected to change in the future years. Sample Probability of Future Life Attained Dying Next Year Expectancy (years) Ages (in 2013) Men Women Men Women 50 0.17% 0.13% 34.17 35.58 55 0.28 0.24 29.05 30.61 60 0.55 0.47 24.13 25.84 65 1.06 0.91 19.53 21.35 70 1.82 1.57 15.35 17.24 75 3.15 2.53 11.58 13.52 80 5.65 4.19 8.38 10.22 This assumption is used to measure the probabilities of each benefit payment being made after retirement. For active members, the probabilities of dying before retirement were based upon the same mortality table as members dying after retirement. All deaths before retirement are assumed to be non-service connected. The rates of retirement used to measure the probability of eligible members retiring under normal and early retirement eligibility during the next year were as follows: GRS Normal or Early Reitrement/DROP Retirement Percent of Eligible Ages Employees Retiring 55 15% 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 City of Atlantic Beach General Employees' Retirement System 10% 10% 10% 10% 20% 15% 15% 15% 20% 30% 40% 50% 50% 50% 100% 9/30/2013 Actuarial Valuation I B-17 Rates of separation from active members/tip were as shown below (rates do not apply to members eligible to retire and do not include separation on account of death or disability). This assumption is used to yield the probabilities of members remaining in employment. Rates of Separation from Active Employment Sample Years of Ages Service Assumptions ALL 0 28.61% 20.78% 2 16.94% 3 11.67% 4 7.41% 25 5 & Over 3.70% 30 3.50% 35 3.20% 40 3.00% 45 2.70% 50 2.20% 55 2.00% 60 2.00% Rates of disability among active members (0% of disabilities are assumed to be service-connected). Sample Ages 20 25 30 35 40 45 50 55 60 Percent Becoming Disabled Within Next Year Men Women 0.07% 0.07% 0.09% 0.09% 0.10% 0.10% 0.14% 0.14% 0.21% 0.21% 0.32% 0.32% 0.52% 0.52% 0.92% 0.92% 1.53% 1.53% The mortality table was set forward ten years from the age at disability for projecting disability costs. GRS City of Atlantic Beach General Employees' Retirement System 9/30/2013 Actuarial Valuation I B-18 Administrative & Investment Expenses Benefit Service Decrement Operation Decrement Timing Eligibility Testing Forfeitures Incidence of Contributions Marriage Assumption Normal Form of Benefit Pay Increase Timing Service Credit Accruals Miscellaneous and Technical Assumptions Annual administrative expenses are assumed to be equal to the actual expenses paid during the preceding fiscal year. Investment expenses are offset against gross investment income. Assumed administrative expenses are added to the Normal Cost. Exact fractional service is used to determine the amount of benefit payable. Disability and mortality decrements do not operate during the first 5 years of service. Disability and separation do not operate during retirement eligibility. Decrements of all types are assumed to occur at mid-year. Eligibility for benefits is determined based upon the age nearest bi1thday and service nearest whole year on the date the decrement is assumed to occur. Vested members who terminate with a benefit wmth less than 100% of their own accumulated contributions were assumed to forfeit their vested benefit. Employer contributions are assumed to be received in 12 equal monthly installments. Member contributions are assumed to be received continuously throughout the year based upon the computed percent of payroll shown in this report, and the actual payroll payable at the time contributions are made. 80% of members are assumed to be married for purposes of death-in- service benefits. Male spouses are assumed to be three years older than female participants and female spouses are assumed to be three years younger than male participants for active member valuation purposes. The normal form of benefit is a life annuity. Beginning of fiscal year. This is equivalent to assuming that repmted pays represent the actual amount paid during the previous fiscal year. It is assumed that members accrue one year of service credit per year. GRS City of Atlantic Beach General Employees' Retirement System 9/30/2013 Actuarial Valuation I B-19 GLOSSARY OF TERMS Actuarial Accrued Liability The difference between (i) the actuarial present value of future plan benefits, and (ii) the actuarial present value of future normal cost. Sometimes referred to as "accrued liability" or "past service liability." Accrued Service The service credited under the plan which was rendered before the date of the actuarial valuation. Actuarial Assumptions Estimates of future plan experience with respect to rates of mortality, disability, turnover, retirement, rate or rates of investment income and salary increases. Decrement assumptions (rates of mortality, disability, turnover and retirement) are generally based on past experience, often modified for projected changes in conditions. Economic assumptions (salary increases and investment income) consist of an underlying rate in an inflation-free environment plus a provision for a long-term average rate of inflation. Actuarial Cost Method A mathematical budgeting procedure for allocating the dollar amount of the "actuarial present value of future plan benefits" between the actuarial present value of future normal cost and the actuarial accrued liability. Sometimes referred to as the "actuarial funding method." Actuarial Equivalent Actuarial Present Value Amortization Experience Gain (Loss) Normal Cost Reserve Account Unfunded Actuarial Accrued Liability Valuation Assets A single amount or series of amounts of equal value to another single amount or series of amounts, computed on the basis of the rate(s) of interest and mmiality tables used by the plan. The amount of funds presently required to provide a payment or series of payments in the future. It is determined by discounting the future payments at a predetermined rate of interest, taking into account the probability of payment. Paying off an interest-bearing liability by means of periodic payments of interest and principal, as opposed to paying it off with a lump sum payment. A measure of the difference between actual experience and that expected based upon a set of actuarial assumptions during the period between two actuarial valuation dates, in accordance with the actuarial cost method being used. The annual cost assigned, under the actuarial funding method, to current and subsequent plan years. Sometimes referred to as "current service cost." Any payment toward the unfunded actuarial accrued liability is not part of the normal cost. An account used to indicate that funds have been set aside for a specific purpose and is not generally available for other uses. The difference between the actuarial accrued liability and valuation assets. Sometimes referred to as "unfunded accrued liability." The value of current plan assets recognized for valuation purposes. Generally based on market value plus a portion of unrealized appreciation or depreciation. GRS City of Atlantic Beach General Employees' Retirement System 9/30/2013 Actuarial Valuation I B-20 SECTION C PENSION FUND INFORMATION GRS Cash and Securities -Market Value Cash and Cash Equivalents $ 51,245 $ 59,926 Short Term Investments 804,567 771,377 Treasury and Agency Bonds & Notes 790,293 2,090,713 Corporate Bonds 3,653,586 0 Common & Preferred Stocks 8,008,414 7,632,876 Pooled Equity Funds 0 0 Mutual or Pooled Bond Funds 426,035 2,131,912 Mutual Equity Funds 0 0 Other Securities -Participant Directed 89,120 129,591 Total 13,823,260 12,816,395 Receivables and Accruals Member Contribution 0 0 Additional Employer Contribution 0 0 Interest and Dividends 37,471 7,241 Interest Deposit for Late Contribution 0 0 Total 37,471 7,241 Payables Benefits-DROP Reserve 89,120 129,809 Lump Sum Distributions 0 0 Expenses 0 0 Other 900 0 Total 90,020 129,809 Net Assets-Market Value $ 13,770,711 $ 12,693,827 *No adjustments had been made to the Market Value of Assets as of9/30/2012 in connection with the Actuarial Impact Statementfor Ordinance 58-13-37. City of Atlantic Beach General Employees' Retirement System 9/30/20 13 Actuarial Valuation I C-1 GRS Market Value at Beginning of Period $ 12,693,827 $ 10,448,470 Income Member Contributions 180,750 186,326 State Contributions 0 0 Employer Contribution 1,044,392 998,516 Interest and Dividends 274,716 299,511 Legal Settlement 31,619 0 Realized and Unrealized Gain (Loss) 481,465 1,520,313 Total Income 2,012,942 3,004,666 Disbursements Monthly Benefit Payments 729,447 655,424 DROP Payments Held in Reserve 0 0 Lump Sum Distributions 0 0 Refund of Contributions 53,059 7,273 Investment Related Expenses 53,936 64,908 Other Administrative Expenses 34,549 31,704 Rollover of Employee Contributions to DC Plan 65,067 0 Total Disbursements 936,058 759,309 Net Increase During Period $ 1,076,884 $ 2,245,357 Market Value at End of Period $ 13,770,711 $ 12,693,827 *No adjustments had been made to the Market Value of Assets as of9/30/2012 in connection with the Actuarial impact Statementfor Ordinance 58-13-37. City of Atlantic Beach General Employees' Retirement System 9/30/2013 Actuarial Valuation I C-2 DEFERRED RETIREMENT OPTION PLAN (DROP) BENEFITS HELD IN RESERVE State Statutes require that the value of assets be offset by the total accumulated balance of DROP payments being held in reserve for those participating in the DROP plan. A reconciliation of the accumulated balance to be recognized is provided in the table below. GRS Value at beginning ofyear Payments credited to accounts Investment Earnings credited Withdrawals from accounts Value at end of year Number as of September 30,2012 Number entered DROP during the year Number exited DROP during the year Number as of September 30,2013 Average Monthly Benefit as of September 30, 20 13 City of Atlantic Beach General Employees' Retirement System $ 129,591 + 55,903 + 124 96,498 89,120 4 0 5 $2,691 9/30/2013 Actuarial Valuation I C-3 ACTUARIAL VALUE OF ASSETS As of September 30, 2013 Valuation assets are calculated using a smoothed market value over a period of four ( 4) years, as prescribed under Internal Revenue Procedure 2000-40. The asset value determined under this method will be adjusted to be no greater than 120% and no less than 80% of the fair market value. Under this method, the actuarial value of assets is equal to the market value of assets less a decreasing fraction ( 1/nth per year, where n equals the number of years in the smoothing period) of the gain or loss for each of the preceding 3 years. Under this method, a gain or loss for a year is determined by calculating the difference between the expected market value of the assets at the valuation date and the actual market value of the assets at the valuation date. The expected value of the assets for the year is the market value of the assets at the valuation date for the prior year brought forward with interest at the valuation interest rate to the valuation date for the current year plus contributions minus disbursements (i.e., benefits paid and expenses), all adjusted with interest at the valuation rate to the valuation date for the current year. If the expected value is less than the market value, the difference is a gain. Conversely, if the expected value is greater than the market value, the difference is a loss. Calculation of Valuation Assets is shown on the following page. GRS City of Atlantic Beach General Employees' Retirement System 9/30/2013 Actuarial Valuation I C-4 DEVELOPMENT OF FUNDING VALUE OF ASSETS AS OF SEPTEMBER 30 2011 A. Preliminary actuarial value from prior year $ 10,618,038 $ B. Market value beginning of prior year 10,417,807 C. Market value end of prior year 10,448,470 D. Non-investment net cash flow [contributions-(benefits & expenses)] 279,399 E. Investment retnm I. Actual market value retnrn net of investment expenses: C -B -D (248,736) 2. Expected retnm of8.00% 844,600 3. Excess/( shortfall) to be phased-in: El -E2 (1,093,336) F. Phased-in recognition of investment retnrn (4 Year Recognition) I. Current year: 25% ofE3 (273,334) 2. 25% of excess/(shmtfall) from first prior year 52,867 3. 25% of excess/(shmtfall) from second prior year 43,244 4. 25% of excess/( shortfall) from third prior year (445,351) 5. Total phased-in recognition of investment retum (622,574) G. Actnarial value end of year I. Preliminary actuarial value end of year: A+ D+ E2+ F5 11,119,463 2. Upper corridor limit: 120% of C 12,538,164 3. Lower corridor limit: 80% ofC 8,358,776 4. Adjustment to reflect retroactive plan closure 5. Actuarial value end of year* 11,119,463 H. Difference between market value and actnarial value (670,993) I. Ratio of Funding Value to Market Value 106% *Offset for DROP Reserve made prior Ia the calculation of valuation assets. GRS **Reflects the Actuarial Impact Statement for Ordinance 58-13-37. City of Atlantic Beach General Employees' Retirement System 2012** 2013 2014 II, 119,463 $ 12,465,289 $ 13,815,833 10,448,470 12,693,827 13,770,711 12,693,827 13,770,711 490,441 343,020 ** 1,754,916 733,896 855,495 1,029,227 899,421 (295,331) 224,855 (73,833) (273,334) 224,855 (73,833) 52,867 (273,334) 224,855 43,244 52,867 (273,334) 47,632 (69,445) (122,312) 12,513,031 13,815,833 15,232,592 16,524,853 10,155,062 11,016,569 (47,742) 12,465,289 13,815,833 180,796 ( 45, 122) 99% 100% 9/30/20 13 Actuarial Valuation I C-5 INVESTMENT RATE OF RETURN The investment rate of return has been calculated on the following bases: Basis 1 -Market Value: Interest, dividends, realized gains (losses) and unrealized appreciation (depreciation) divided by the beginning market value of the fund, adjusted for cash flow during the year. This figure is normally called the Total Rate of Return. Basis 2-Actuarial Value: Investment eamings recognized in the Actuarial Value of Assets divided by the weighted average of the Actuarial Value of Assets during the year. GRS 9/30/99 9/30/00 9/30/01 9/30/02 9/30/03 9/30/04 9/30/05 9/30/06 9/30/07 9/30/08 9/30/09 9/30/10 9/30/11 9/30/12 9/30/13 Average Compounded Rate of Return for 5 Years 10 Years All Years City of Atlantic Beach General Employees' Retirement System 8.0 % 11.0 % 4.3 9.7 (1.9) 5.1 (6.7) 1.5 10.1 1.7 7.2 2.3 9.4 4.9 9.7 8.5 14.7 10.0 (11.9) 4.9 9.7 4.2 9.9 5.0 (2.4) 2.1 16.4 8.0 5.7 8.0 7.7% 5.4% 6.5% 5.8% 5.2% 5.7% 9/30/2013 Actuarial Valuation I C-6 SECTIOND FINANCIAL ACCOUNTING INFORMATION A. Valuation Date B. Actuarial Present Value of Accumulated Plan Benefits 1. Vested Benefits a. Members Currently Receiving Payments b. Terminated Vested Members c. Other Members d. Total 2. Non-Vested Benefits 3. Total Actuarial Present Value of Accumulated Plan Benefits: 1d + 2 4. Accumulated Contributions of Active Members C. Changes in the Actuarial Present Value of Accumulated Plan Benefits 1. Total Value at Beginning of Year 2. Increase (Decrease) During the Period Attributable to: a. Plan Amendment b. Change in Actuarial Assumptions c. Latest Member Data, Benefits Accumulated and Decrease in the Discount Period d. Benefits Paid (Including DROP Rese1ve) e. Net Increase 3. Total Value at End of Period D. Market Value of Assets E. Actuarial Assumptions -See page entitled Actuarial Assumptions and Methods September 30, 2013 September 30, 2012* $ 8,080,379 $ 6,485,800 790,967 785,507 6,310,036 6,769,700 15,181,382 14,041,007 0 115,263 15,181,382 14,156,270 1,225,604 1,250,523 14,156,270 13,348,960 0 (125,681) 0 0 1,807,618 1,595,688 (782,506) (662,697) 1,025,112 807,310 15,181,382 14,156,270 13,770,711 12,646,085 ** *Results have been updated to include the Actuarial Impact Statement for Ordinance 58-I 3-3 7. **For consistency with retroactive change in the Actuarial Present Value of Accumulated Plan Benefits, A1arket Value of Assets as of I Oil 120/2 is adjusted fi'om $12,693,82 7 down to $/2,646,085 to reflect transfer of employees' contributions to a DC Plan. GRS City of Atlantic Beach General Employees' Retirement System 9/30/13 Actuarial Valuation I D-1 9/30/2000 $ 9/30/2001 * 9/30/2002 9/30/2003 * 9/30/2004 9/30/2005 * 9/30/2006 * 9/30/2007 9/30/2008 * 9/30/2009 9/30/2010 9/30/2011 9/30/2012 ** 9/30/2013 u I N 5,229 $ 5,587 5,747 5,951 6,273 6,802 7,609 8,594 9,209 9,841 10,618 11,119 12,465 13,816 SCHEDULE OF FUNDING PROGRESS (Dollar amounts in thousands) (GASB Statement No. 25) 6,462 $ 1,233 80.9 % $ 6,986 1,399 80.0 7,479 1,732 76.8 8,186 2,235 72.7 9,005 2,732 69.7 9,822 3,020 69.3 10,505 2,896 72.4 11,668 3,074 73.7 12,624 3,415 72.9 13,682 3,841 71.9 15,180 4,562 69.9 16,053 4,934 69.3 16,599 4,134 75.1 17,282 3,466 79.9 *Reflects a change in assumptions or benefits. **Reflects the Actuarial Impact Statement for Ordinance 58-13-37. 2,330 52.9% 2,462 56.8 2,768 62.6 2,856 78.3 3,051 89.5 3,182 94.9 3,195 90.7 3,476 88.4 3,727 91.6 4,019 95.6 3,838 118.9 3,738 132.0 3,072 134.6 2,733 126.8 GRS 9/30/2000 9/30/2001 9/30/2002 9/30/2003 9/30/2004 9/30/2005 9/30/2006 9/30/2007 9/30/2008 9/30/2009 9/30/2010 9/30/2011 9/30/2012 9/30/2013 SCHEDULE OF CONTRIBUTIONS FROM EMPLOYER (GASB Statement No. 25) 11.58 % $ 259,414 $ 259,411 11.24 266,148 266,148 11.41 288,070 288,070 11.81 * 315,106 315,106 12.72 381,518 381,518 15.02 * 464,893 464,893 16.09 480,029 480,029 13.99 * 482,364 482,363 13.62 * 456,965 457,005 14.03 528,428 528,426 14.84 599,292 599,292 16.60 722,769 722,769 24.53 998,516 998,516 26.34 1,044,392 1,044,392 • Reflects a change in assumptions or benefits. Note: Annual Required Contribution (if an;~, above, is payable by the City. 100 % 100 100 100 100 100 100 100 100 100 100 100 100 100 City of Atlantic Beach General Employees' Retirement System 9/30/2013 Actuarial Valuation I D-3 A. Annual Required Contribution (ARC) B. Interest on Net Pension Obligation (Asset) C. Adjustment to ARC D. Annual Pension Cost (APC): (A + B -C) E. Contributions made F. Increase (decrease) in Net Pension Obligation(Asset) rounded to the nearest $100: (D-E) G. Net Pension Obligation( Asset) at beginning of year H. Net Pension Obligation(Asset) at end of year: (F+ G) 2013 2012 2011 $ 1,044,392 $ 998,516 $ 722,769 1,044,392 998,516 722,769 1,044,392 998,516 722,769 THREE YEAR TREND INFORMATION GRS 9/30/2011 9/29/2012 9/30/2013 $ 722,769 998,516 1,044,392 $ 722,769 998,516 1,044,392 City of Atlantic Beach General Employees' Retirement System 100.0% 100.0 100.0 $ 9/30/2013 Actuarial Valuation I D-4 REQUIRED SUPPLEMENTARY INFORMATION GASB Statement No. 25 and No. 27 The infommtion presented in the required supplementary schedules was determined as part of the actuarial valuation at the dates indicated. Additional Information as of the latest actuarial valuation: GRS Valuation Date Contribution Rates: Employer Plan Members Actuarial Cost Method Amotiization Method Amortization Period Asset Valuation Method Actuarial Assumptions: Investment rate of return Projected salary increases Includes price inflation Cost-of-living adjustments Payroll Growth Assumption City of Atlantic Beach General Employees' Retirement System September 30, 2013 31.52% 6.00% Entry Age Closed, Level Dollar Method 10 Years See Section entitled "Actuarial Value of Assets" 8.0% 5.5%-14.0% 3.0% None None (Level Dollar Method) 9/30/2013 Actuarial Valuation I D-5 SECTIONE MISCELLANEOUS INFORMATION GRS 1. Number Included in Last Valuation 2. New Members Included in Current Valuation 3. Non-Vested Employment Terminations 4. Vested Employment Terminations 5. Service Retirements 6. Disability Retirements 7. Deaths 8. DROP Retirement 9. Transfer to the DC Plan 10. Number Included in This Valuation 2. Additions from Active Members 3. Lump Sum Payments/Withdrawals 4. Payments Commenced 5. Deaths 6. Other 7. Number Included in This Valuation 63 0 (2) 0 (1) 0 0 (4) 0 56 0 (1) 0 0 11 83 8 (2) (2) (2) 0 (1) 0 __Q!l 63 2 0 (1) 0 0 12 l'c::~,~ifi~~E.ftt~t:sl"UI~~J!ilfi~R~fit!~?s~'2il~iXett~i~rt~s"*~tnl{oJX?x~i~ ~}t~3~~~~;~;~~;1 1. Number Included in Last Valuation 51 47 2. Additions from Active Members 3. Additions entering the DROP 4. Additions from Terminated Vested Members 5. Deaths Resulting in No Further Payments 6. Deaths Resulting in New Survivor Benefits 7. End of Certain Period -No Further Payments 8. Other--New Survivor Payments for Death 9. Number Included in This Valuation *Reflects the Actuarial Impact Statement for Ordinance 58-13-37. City of Atlantic Beach General Employees' Retirement System 1 4 1 (1) 0 0 0 56 2 0 1 0 0 0 51 9/30/2013 Actuarial Valuation I E-1 GRS STATISTICAL DATA Active Members as of September 30, 2013 20-24 NO. 0 0 0 25-29 NO. 0 0 0 30-34 NO. 0 0 35-39 NO. 0 2 40-44NO. 0 5 0 45-49 NO. 0 3 50-54 NO. 0 4 3 55-59 NO. 0 7 3 0-64 NO. 0 5 3 65&UPNO. 0 0 0 OTNO. 0 26 12 City of Atlantic Beach General Employees' Retirement System 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3 0 2 0 0 7 2 0 8 0 0 9 5 0 0 16 0 0 10 0 0 2 8 5 2 3 56 9/30/2013 Actuarial Valuation I E-2 NUMBER ADDED TO AND REMOVED FROM ACTIVE MEMBERSHIP Number Added Terminations During Year Active Year Ended September 30 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013** 5-yr. Totals 2009-2013 Expected for 2014 During Year A E 12 11 12 6 14 17 7 6 9 8 7 10 12 11 12 10 10 14 10 11 8 7 7 6 6 2 4 7 6 7 8 7 Q Q 24 23 A Represents actual number. Normal Retirement A E 1 0.5 0 0.5 1 0.8 2 0.8 1 1.2 1 1.2 2 0.8 2 1.2 2 0.8 5 2.4 1 1.8 0 3.2 0 3.8 4 4.4 5 5.3 2 4.3 2 4.6 16 22.3 4.9 E Represents expected number. Disability Died-in Retirement Service A E A E 1 0.2 0 0.2 0 0.2 0 0.2 1 0.2 0 0.2 0 0.1 0 0.1 0 0.1 1 0.1 0 0.2 0 0.1 0 0.2 0 0.1 0 0.2 0 0.1 0 0.2 0 0.2 0 0.1 0 0.2 1 0.2 0 0.2 0 0.1 0 0.2 0 0.1 0 0.2 0 0.1 0 0.2 1 0.1 0 0.3 0 0.2 1 0.2 Q 0.2 Q 0.2 1 0.8 1 1.1 0.1 0.2 *Reflects the Actuarial Impact Statement for Ordinance 58-13-37. **No employees will be added following the closure of the plan. GRS City of Atlantic Beach General Employees' Retirement System Withdrawal Members Vested Other Total End of A A A E Year 2 7 9 8.2 76 0 6 6 8.3 82 0 15 15 8.3 79 0 4 4 7.5 70 1 5 6 7.6 71 2 7 9 8.1 68 0 9 9 10.8 84 1 7 8 10.0 86 1 11 12 9.4 82 0 6 6 8.5 81 1 4 5 8.1 82 1 5 6 7.8 83 1 1 2 6.9 87 0 3 3 6.8 84 1 0 1 5.7 83 2 2 4 4.8 63* Q 1 1 5.1 56 12 29.3 0.7 9/30/2013 Actuarial Valuation I E-3 Retired Members and Beneficiary Data Historical Schedule Added Removed Net Increase Year Ended Annual Annual Annual September 30 No. Pensions No. Pensions No. Pensions 1999 1 2,128 1 2,128 2000 6 78,522 3 32,513 3 46,009 2001 17,716 * I 17,716 2002 3 23,184 26,801 2 (3,617) 2003 2 32,159 5,889 26,270 2004 2 35,900 2 17,160 18,740 2005 3 47,505 5,774 2 41,730 2006 6 82,446 3 29,272 3 53,174 2007 3 51,425 3 51,425 2008 9,217 9,217 2009 2 17,424 2 5,992 11,432 2010 4 95,156 3 13,790 1 81,366 2011 9 105,409 1 14,326 8 91,083 2012 4 77,393 0 4 77,393 2013 6 160,587 1 12,284 5 148,303 Expected for 2014 * Includes a one-time 5. 0% cost-ofliving increase. GRS City of Atlantic Beach General Employees' Retirement System Expected End ofYear Removals Annual Annual No. Pensions No. Pensions 23 174,013 0.5 3,779 26 220,022 0.6 4,196 27 237,738 0.6 4,543 29 234,121 0.7 5,355 30 260,391 0.9 6,159 30 279,131 1.0 6,956 32 320,861 1.0 7,331 35 374,035 1.0 7,917 38 425,460 1.1 8,798 38 425,460 1.3 10,328 38 436,892 1.3 11,534 39 518,258 1.2 11,854 47 609,341 1.2 12,414 51 686,734 1.2 12,623 56 834,402 1.3 14,605 1.4 15,651 9/30/2013 Actuarial Valuation I E-4 SECTIONF SUMMARY OF PLAN PROVISIONS A. Ordinances: Plan established under the Code of Ordinances for the City of Atlantic Beach, Florida, Patt II, Chapter 2, Article VI, Division 3 and was most recently amended and restated under Ordinance No. 5 8-13-3 7 passed and adopted on June 10, 2013. The Plan is also governed by certain provisions ofPatt VII, Chapter 112, Florida Statutes (F.S.) and the Internal Revenue Code. B. Effective Date December 22, 1975 C. Plan Year October 1 through September 30 D. Type of Plan Qualified, governmental defined benefit retirement plan; for GASB purposes it is a sole employer plan. E. Eligibility Requirements The plan is currently closed to new entrants. Prior to closure, the plan included all City employees, other than police officers or firefighters, who normally worked more than I ,000 hours annually and who were not elected officials, temporary or contractual employees, or executives or depatiments heads that elected not to participate. They became members on the date of employment. F. Credited Service Service is measured as the total number of years and fractional pmts of years, but credited to the nearest one-twelfth (1/12) of a year. No service will be credited for any periods of employment for which the member received a refund of their employee contributions. G. Compensation Base salary or wages paid for services rendered to the City including longevity pay, ove1time pay, cost of living payments, holidays and personal leave taken. Compensation excludes payments of unused personal leave, uniform or equipment allowances, or any reimbursement of expenses. H. Final Average Compensation (FAC) Average monthly rate of Compensation during the highest 60 consecutive months of Credited Service out of the last 120 months preceding the date of termination or retirement. GRS City of Atlantic Beach General Employees' Retirement System 9/30/20 13 Actuarial Valuation I F -1 I. Normal Retirement Eligibility: Benefit: Normal Form of Benefit: A participant may retire on the first day of the month coincident with or next following age 60 with 5 or more years of Credited Service. For employees hired before April24, 2005: 2.85% ofFAC times Credited Service. Benefit is limited to 100% ofFAC. For employees hired on or after April 24, 2005: 2.50% ofF AC times Credited Service. Benefit is limited to 100% ofF AC. Life Annuity; other options are also available. J. Early Retirement Eligibility: Benefit: Normal Form of Benefit: A member may elect to retire earlier than the Normal Retirement Eligibility upon attainment of age 55 with 5 years of Credited Service. The Normal Retirement Benefit is actuarially reduced for each year by which the member's Early Retirement date precedes age 60. Life Annuity; other options are also available. K. Delayed Retirement Same as Normal Retirement taking into account compensation earned and service credited until the date of actual employment termination. L. Service Connected Disability Eligibility: Benefit: Normal Form of Benefit: Any member with 5 or more continuous years of Credited Service who becomes totally and permanently disabled and unable to render useful and efficient service to the City is eligible for a disability benefit. The benefit is calculated as if the member was eligible for Normal Retirement and is payable retroactively to the later of; the last day on payroll, or the date of application for disability benefits. Life Annuity; other options are also available. GRS City of Atlantic Beach General Employees' Retirement System 9/30/2013 Actuarial Valuation I F-2 M. Non-Service Connected Disability Eligibility: Benefit: Normal Form of Benefit: Any member with 5 or more continuous years of Credited Service who becomes totally and permanently disabled and unable to render useful and efficient service to the City is eligible for a disability benefit. The benefit is calculated as if the member was eligible for Normal Retirement and is payable retroactively to the later of; the last day on payroll, or the date of application for disability benefits. Life Annuity; other options are also available. N. Pre-Retirement Death Eligibility: Benefit: Normal Form of Benefit: Any member with 5 or more years of Credited Service is eligible for a death benefit. Upon the death of a member, the designated beneficiary shall be paid an actuarially reduced benefit based on one hundred (100) percent survivor pension notwithstanding that the member may not have satisfied the conditions for retirement. If there are no beneficiaries designated by the member, then a benefit shall be paid to the surviving spouse or, if no surviving spouse, a reduced benefit will be paid to the member's unmarried children. If spouse is receiving benefits described above, no children's benefits are payable. If spouse is not receiving benefits, children under age 19, or age 23 if a full time student, will receive equal shares of 50% of the member's Normal Retirement Benefit under the Life Annuity option based upon service and F AC as of the date of death. Payable for the life of the member's beneficiary or spouse. Children's benefits are payable until age 19 or age 23 if a full time student. 0. Post Retirement Death Benefit determined by the form of benefit elected upon retirement. P. Optional Forms In lieu of electing the Normal Form of benefit, the optional forms of benefits available to all retirees are the 50%, 66 2/3%, 75% or 100% Joint and Survivor options. A Social Security option is also available for members retiring prior to the time they are eligible for Social Security retirement benefits. Q. Vested Termination Eligibility: Benefit: A participant has earned a non-forfeitable right to Plan benefits after the completion of 5 or more years of Credited Service. The benefit is the member's vested portion of the accrued Normal Retirement Benefit as of the date of termination. Benefit begins on the Normal or Early Retirement date. GRS City of Atlantic Beach General Employees' Retirement System 9/30/2013 Actuarial Valuation I F-3 Vested Termination-Continued Normal Form of Benefit: Life Annuity; other options are also available. R. Refunds Eligibility: Benefit: Optionally, vested participants may also withdraw their contributions in lieu of the deferred benefits otherwise due. The member who terminates employment receives a lump-sum payment of their employee contributions with interest. S. Member Contributions 6% of Compensation T. Employer Contributions u. The amount determined by the actuary to pay the normal cost and an amortization of the unfunded actuarial accrued liabilities, along with employee contributions. Following are contribution rates per recent valuations: Contribution Year Beginning City Member Total 10/1/2009 14.84% 5.000% 19.84% 10/1/2010 16.60% 5.000% 21.60% 10/1/2011 24.53% 5.000% 29.53% 10/1/2012 26.34% 5.000% 31.34% I 0/112013 29.19% 6.000% 35.19% I 0/1/2014 31.59% 6.000% 37.59% Cost of Living Increases The plan does not provide for automatic post-retirement cost of living adjustments (COLA) of retiree benefits. V. Changes from Previous Valuation See the Discussion of Valuation Results Section of this report under the Revisions in Benefits heading. W. Gain-sharing benefits Not applicable. GRS City of Atlantic Beach General Employees' Retirement System 9/30/2013 Actuarial Valuation I F-4 X. Deferred Retirement Option Plan Eligibility: Benefit: Maximum Plan members are eligible for the DROP upon attainment of age 55 with 5 years of Credited Service. All members must make a written election to participate in the DROP. The member's Credited Service and F AC are frozen upon entry into the DROP. The monthly retirement benefit as described under Normal Retirement is calculated based upon the frozen Credited Service and F AC. Benefits for members entering the DROP prior to age 60 will be actuarially reduced for Early Retirement. DROP Period: 60 months Interest Credited: Normal Form of Benefit: Pmticipants' DROP account balances will be credited in accordance with the self-directed options selected by the participant who entered the program prior to July 1, 2013. For all other pmticipants, DROP account balances will be credited qumterly with interest based on Plan's net investment earnings for that qumter. Lump Sum or roll-over to a qualified retirement account. GRS City of Atlantic Beach General Employees' Retirement System 9/30/2013 Actuarial Valuation I F-5 SECTIONG COMPARATIVE SUMMARY OF PRINCIPAL VALUATION RESULTS GRS A. Participant Data Number Included: Actives Service Retirees & Beneficiaries Disability Retirees Terminated Vested Members Total Members and Beneficiaries Total Annual Payroll (Excluding DROP Participants) Annual Valuation Payroll Expected Annual Payroll in Contribution Year Total Annualized Benefits Service Retirees & Beneficiaries Disability Retirees Terminated Vested Members B. Assets (Market Value) Cash and Short Term1nvestments Treasury and Agency Bonds & Notes Common and Preferred Stocks Mutual or Pooled Bond Funds Corporate Bonds Other Securities Net Receivables & Payables Total Funding (Actuarial) Value Assets include: Accumulated active member contributions (with interest if applicable) C. Actuarial present value of accrued benefits (i) Vested accrued benefits Retired members and benefitciaries (incl DROP) Terminated members Active members (includes non-forfeitable memebrs contributions of 1,225,604 and 1,250,523) Total (ii) Non-vested accrued benefits (iii) Total actuarial p.v. of accrued benefits (iv) Actuarial p.v. of accrued benefits at begin. of year (v) Changes attributable to: Amendments* Assumption change Operation of decrements Benefit payments Other (vi) Net change (PVAB measurement Method Change) (vii) Actuarial p.v. of accr. benefits at end of year 56 63 52 47 4 4 ll 12 123 126 $2,733,429 $3,072,111 2,733,429 3,072,111 2,733,429 3,258,269 778,025 629,722 56,377 56,377 113,275 121,445 855,812 831,303 790,293 2,090,713 8,008,414 7,632,876 426,035 2,131,912 3,653,586 0 89,120 129,591 (52,549) (168,920) 13,770,711 12,647,475 13,815,833 12,465,289 1,225,604 1,250,523 8,080,379 6,485,800 790,967 785,507 6 700 15,181,382 14,041,007 0 115,263 15,181,382 14,156,270 14,156,270 13,348,960 none (125,681) none none 1,807,618 1,595,688 (782,506) (662,697) none none 1,025,112 807,310 15,181,382 14,156,270 *Results have been updated to include the Actuarial Impact Statement for Ordinance 58-13-37. City of Atlantic Beach General Employees' Retirement System 9/30/2013 Actuarial Valuation I G-1 GRS C. Liabilities-Actuarial Present Value of Future Benefits 1. Active Members Service Retirement Benefits $10,264,683 $11,516,775 Vesting Benefits 274,710 322,701 Disability Benefits 237,621 280,665 Preretirement Death Benefits 240,504 278,177 Return of Member Contributions 47,420 56,490 Total Actives 11,064,938 12,454,808 2. Inactive Members Service Retirees & Beneficiaries 7,578,313 5,972,648 Disability Retirees 502,066 513,152 Terminated Vested Members 790,967 785,507 Total Inactive Members 8,871,346 7,271,307 3. Total Present Value for All Members 19,936,284 19,726,115 Total Present Value of: Future Salaries 20,075,853 23,633,470 Future Employee Contributions 1,204,551 1,418,008 Future Contributions from Other Sources 4,915,900 5,842,818 a. Total UAAL for Prior Valuation Date $4,133,993 $4,933,603 b. Employer Normal Cost for this period 284,455 381,619 c. Interest acccrued on (a) and (b) 342,097 409,953 d. Contributions for this period (1,044,392) (998,516) e. Interest accrued on (d) (41,776) (39,941) f. Changes due to: Plan Amendment* 0 (150,143) Assumption Changes 0 0 Asset Method 0 0 Actuarial (Gain) Loss (208,109) (402,582) Total Current UAAL: a+b+c-d-e+f * Results have been updated to include the Actuarial Impact Statement for Ordinance 58-13-3 7. Ori inal and Current Unfunded Actuarial Accrued Liabilities Years Amortization Current Date Item Description Remaining Payment Original Amount Unfunded 9/30/2012 Original UAAL* 9/30/2013 Experience Gain 9 10 $544,623 (28,717) *Reflects the Actuarial impact Statement for Ordinance 58-13-3 7. City of Atlantic Beach General Employees' Retirement System $4,133,993 (208,109) $3,674,377 (208,109) 9/30/2013 Actuarial Valuation I G-2 GRS D. Pension Cost E. F. Entry Age Normal Cost for: Service Retirement Benefits Vesting Benefits Disability Benefits Preretirement Death Benefits Return of Member Contributions Total Actives Administrative Expenses Expected Member Contributions Total Employer Normal Cost Payment Required to Amortize Unfunded Actuarial Accrued Liability Total Contribution at Valuation Date Total Contribution Adjusted for Frequency of Payments and Interest to Next Following Fiscal Year % of Expected Payroll Amount Expected to be Contributed by Members Next FY % of Expected Payroll $320,754 14,272 14,819 7,588 26,775 384,208 33,220 166,904 250,524 515,906 766,430 863,613 31.59% 164,006 6.00% Past Contributions-For the Fiscal Years Ended September 30 of2012 and 2013 Required Contribution Determined in the Valuation as of September 30, 20 II by the Plan Sponsor $1,044,392 by Members $198,240 Actual Contribution for the Fiscal Year ended September 30, 20 13 by the Plan Sponsor $1,044,392 Members $1 750 Net experience (gain) loss during year: ($208,109) G. I. Plan to Amortize Unfunded Actuarial Accrued Liability I 0 year funding of the Original Unfunded Actuarial Accrued Liability, I 0 year funding of any emerging Gains or Losses, or assumption changes. $358,108 16,596 17,179 8,659 30,111 430,652 30,485 187,623 273,514 570,451 843,965 950,980 29.19% 195,496 6.00% September 30, 20 I 0 $998,516 $203,503 September 30, 2012 998,516 186,326 2. Schedule Illustrating the Amortization of the Unfunded Actuarial Accrued Liability (VAAL) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 3. Action taken since last actuarial valuation. Contribution sufficient to the total City of Atlantic Beach General Employees' Retirement System contribution. 3,466,268 3,186,389 2,884,121 2,557,672 2,205,108 1,824,338 1,413,107 968,977 489,316 (28,717) 0 9/30/2013 Actuarial Valuation I G-3 GRS *Results have been updated to include the Actuarial Impact Statement for Ordinance 58-13-37. H. 1. Three-Year Comparison of Actual and Assumed Salmy Increases (Annualized) 9/30/2013 9/30/2012 9/30/2011 1.3% 1.2% 0.5% 5.9% 5.9% 6.0% 2. Three-Year Comparison of Investment Return (Actuarial Value) 9/30/2013 9/30/2012 9/30/2011 8.0% 8.0% 2.1% 8.0% 8.0% 8.0% 3. Average Annual Growth in Payroll, Last Ten Years (if applicable) 9/30/2004 3,051,289 9/30/2005 3,182,450 9/30/2006 3,194,700 9/30/2007 3,475,757 9/30/2008 3,726,713 9/30/2009 4,018,667 9/30/2010 3,837,512 9/30/2011 3,738,277 9/30/2012 3,713,609 9/30/2013 2, 733,429 Total% Increase Last Ten Years (4.30)% Annual% Increase (0.44)% Thirty-year Forecast 0.00% I. Benefits and Expenses of Plan not Explicitly or Implicitly Provided in Valuation NONE J. Trends not taken into Account but which are likely to Result in Future Cost Increases NONE City of Atlantic Beach General Employees' Retirement System 9/30/2013 Actuarial Valuation I G-4