5B - Actuarial Valuation Report - Police EmployeesGRS
AGENDA ITEM# 5B
MARCH 10, 2014
Gabriel Roeder Smith & Company
Consultants & Actuaries
CITY OF ATLANTIC BEACH POLICE OFFICERS' 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 22,2014
Gabriel Roeder Smith & Company
Consllltonts & r\cm~rics
The Board of Trustees
City of Atlantic Beach
Police Officers' Retirement System
Atlantic Beach, Florida
Dear Board Members:
One East Brow.ll'd Blvd.
Suite 50S
Ft, LuHlerdalc, FL .lHOI-l!l7l
lJ$4.527.1616 phone
954.525.0083 fax
www.gabridrqed~r.cotn
We are pleased to submit herein our September 30, 2013 Actuarial Valuation Repott for the City of Atlantic Beach
Police Officers' Retirement System. The contribution results apply to the City's fiscal year ending September 30,
2015.
This repott 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 repott 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 report 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 amottization period or
additional cost or contribution requirements based on the plan's funded status); and changes in plan provisions or
applicable law. The scope of an actuarial valuation does not include an analysis of the potential range of such
future measurements.
The calculations are based upon assumptions regarding future events, which may or may not materialize. They are
also based upon present and proposed 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 repott prior to
relying on information in the repott.
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. Furthermore, this report was prepared using certain
assumptions prescribed by the Board as described in Section B.
The Board of Tmstees
January 22, 2014
Page 2
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.
Gabriel, Roeder, Smith & Company will be pleased to answer questions pe1taining to the valuation and to meet
with you to review this Repmi.
Respectfully submitted,
GABRIEL, ROEDER, SMITH AND COMPANY
James J. Rizzo, ASA, MAAA
Senior Consultant & Actuary
Piotr Krekora, ASA, MAAA
Consultant & Actuary
Gabriel, Roeder, Smith and Company
STATEMENT BY ENROLLED ACTUARY
This actuarial valuation and/or cost detennination was prepared and completed by me or under my direct
supervision, and I acknowledge 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
January 22,2013
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 of Benefits and Assets
4. State Premium Tax Revenues
5. Financial Soundness
6. Actuarial Gains and Losses
7. Recent History of Valuation Results
8. Recent History of Required and Actual Contributions
9. Actuarial Assumptions and Cost Method
C PENSION FUND INFORMATION
1. Summary of Assets
2. Summary of Fund's Income and Disbursements
3. Reconciliation of DROP Accounts
4. Actuarial Value of Assets
5. Investment Rate of Return
D FINANCIAL ACCOUNTING INFORMATION
1. F ASB 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-5
B-9
B-13
B-15
B-16
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 >vritten 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 circumstances from an independent tax advisor.
GRS
SECTION A
EXECUTIVE SUMMARY
GRS
EXECUTIVE SUMMARY
Comparison of 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/State Contribution
As % of Expected Payroll
Estimated State Contribution
As % of Covered Payroll
Required Employer Contribution
(If Made in Equal Monthly Installments)
As % of Covered Payroll
Required Employer Contribution
(IfMade in Whole at the Beginning of the Year)
As % of Covered Payroll
$
$
$
$
$
$
781,449
54.16 %
100,987
7.000 %
680,462
47.16 %
91,077
6.31 %
589,385
40.85 %
564,905
39.15 %
$
$
$
$
$
$
769,681 $
47.04 %
98,175 $
6.000 %
671,506 $
41.04 %
91,077 ** $
5.57 %
580,429 $
35.47 %
543,748
34.00%
11,768
7.12 %
2,812
1.00 %
8,956
6.12 %
0
0.74 %
8,956
5.38 %
21,157
5.15 %
*Results hm'e been updated to include Actuarial Impact Statement for Ordinance Number 58-13-36.
**Results hm'e been updated to reflect higher than expected State Contribution.
Minimum Required Contribution
As illustrated in the preceding chart, the contribution necessmy from the City and State to suppmt the current
benefits for the Police Officers is $680,462 for the fiscal year ending September 30, 2015. The City may be able to
use State premium tax moneys to satisfy pmt of that requirement (assumed the same as received in 20 13), leaving
the City contribution at $589,385. However, the City may need to contribute more, should receipts from the State
fall shmt of the expected amount presented in the table above. Please note that the Required Employer
Contribution for that fiscal year is assumed to be deposited in monthly intervals throughout the year.
GRS City of Atlantic Beach Police Officers'
Retirement System
9/30/2013 Actuarial Valuation I A-1
Revisions in Benefits
The following benefit changes apply to new entrants who enter the plan on or after January I, 2013:
• Normal Retirement eligibility has been changed to the earlier of (i) Age 55 with 10 years of Credited
Service and (ii) Age 52 with 25 years of Credited Service.
• The benefit accrual rate has been lowered from 3.0% to 2.0% per year.
• The vesting schedule has been increased from a 5 year cliff to a IO year cliff.
• Employee Contribution rate has been increased to 8%.
In addition, results for the prior year have been updated to reflect the most recent actuarial impact statement for
Ordinance Number 58-13-36. Plan changes resulting from the ordinance include a gradual increase in the
employee contribution rate until it reaches 8.0% for years beginning October I, 20I4, an increase in the non-
service connected disability eligibility requirement from 5 years to 8.3333 years and a limit of 300 hours of
overtime to be included in pensionable compensation. There were no changes in benefits for retirees and vested
terminated employees as of the effective date of the ordinance.
Revisions in Actuarial Assumptions or Methods
There were no revisions in actuarial assumptions or methods for the current year, except for the assumed employee
contribution rate which is currently at 7.0% as adopted in Ordinance 58-I3-36 described above and scheduled to
increase to 8% after September 30, 20I4.
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 were higher than 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 whenever the experience of the plan matches
the actuarial assumptions used. Contribution Requirements are also level whenever actuarial losses exactly offset
actuarial gains.
GRS City of Atlantic Beach Police Officers'
Retirement System
9/30/2013 Actuarial Valuation I A-2
Analysis of Change in Employer Contribution
The components of change in the actuarially required contribution are as follows:
Contribution rate last year 35.47 %
Payment on UAAL 7.57
Experience (gain)/loss (1.89)
Change in administrative expense 0.33
Change in normal cost before expenses 0.27
Revision in benefits 0.00
Revision in assumptions/methods 0.00
Change in State Revenue (0.89)
Contribution rate this year 40.85 %
Although the plan experienced a net actuarial gain, the contribution determined in this valuation increased slightly
from last year as discussed below.
The gain was primarily due to lower than expected salary increases of 2.3% versus a 7.5% assumption. The gain
was pmiially offset by losses from an investment return of 7.5% on the actuarial value of assets when compared to
the 8.0% assumption.
Administrative expenses were more than the previous year by 0.33% of pay. The dollar amount of the State
Revenue is expected to increase slightly and due to a recent payroll reduction it will represent a larger percentage
of the projected payroll.
There was a decrease in the IO-year average payroll growth rate (from 2.62% to 1.88%). The covered payroll is
expected to grow at the rate of 4% in the long term. However, in accordance with the requirements of Ch.
II2.64 (5) (a), F.S. this assumed payroll growth used in developing the amortization payments, cannot exceed
the actual average mmual payroll growth rate based on the last I 0 years. This limit has been affecting
amortization amounts for the last three years. Due to a decrease in the I 0-year average, the ammiization
payment of the UAAL increased this year, adding to the actuarial losses described previously, which ultimately
increased the contribution. In addition, the decrease in the payroll caused the payment of the UAAL to be a greater
percent of payroll.
The remainder of this Repmi includes detailed actuarial valuation results, financial information, miscellaneous
information and statistics, and a summmy of plan provisions.
GRS City of Atlantic Beach Police Officers'
Retirement System
9/30/2013 Actuarial Valuation I A-3
SECTION B
VALUATION RESULTS
GRS
Number
Covered Annual Payroll
Average Annual Payroll
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 Police Officers'
Retirement System
$
$
$
$
$
$
$
$
22
1,360,245
61,829
39.3
9.2
30.1
16
592,341
37,021
61.0
4
74,159
18,540
56.1
4
41,865
10,466
49.9
$
$
$
$
$
$
$
$
26
1,548,109
59,543
37.9
7.9
30.0
15
544,324
36,288
60.7
4
74,159
18,540
55.1
4
41,865
10,466
48.9
9/30/2013 Actuarial Valuation I B-1
GRS
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 Am01iize
Unfunded Actuarial Liability
if Paid on the Valuation Date $ 414,495 $ 372,975
E. Employer Normal Cost
(including Administrative Expenses)
if Paid on the Valuation 189,394 222,966
F. Annual Required Contribution (ARC)
if Paid on the Valuation Date: D+E 603,889 595,941
G. ARC Adjusted for Frequency of
Payments and Interest to Required Time
of Contribution 680,462 671,506
H. Covered Payroll for Contribution Year 1,442,670 1,636,257
I. ARC as% of Expected Covered
Payroll in the Contribution Year G 7 H 47.16 % 41.04 %
J. Estimate of State Revenue in
Contribution Year** 91,077 91,077
K. Required Employer Contribution (REC)
in Contribution Year 589,385 580,429
L. REC as % of Covered Payroll in
Contribution Year: K 7 J 40.85 % 35.47 %
M. Required Employer Contribution (REC)
if Paid on the First Day of the Contribution Year 564,905 556,321
*Results have been updated to include Actuarial Impact Statement for Ordinance Number 58-13-36 and an
increase in the State Revenue.
**Chapter 185 Florida Statutes. The City contribution amount may need to be increased if the amount
received under the provisions of Chapter 185, Florida Statutes, is not szif.licient to meet the total employer
contribution requirement.
City of Atlantic Beach Police Officers'
Retirement System
9/30/2013 Actuarial Valuation I B-2
GRS
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 $5,192,002 $5,625,980
b. Vesting Benefits 411,721 433,728
c. Disability Benefits 199,745 217,796
d. Preretirement Death Benefits 43,825 47,852
e. Return of Member Contributions 75,452 96,932
f. Total 5,922,745 6,422,288
2. Inactive Members
a. Service Retirees & Beneficiaries 6,280,862 5,799,923
b. Disability Retirees 746,335 757,569
c. Terminated Vested Members 210,876 194,822
d. Total 7,238,073 6,752,314
3. Total for All Members 13,160,818 13,174,602
c. Actuarial Accrued (Past Service)
Liability per GASB No. 25 10,895,233 I 0,559,437
D. Actuarial Value of Accumulated Plan
Benefits perF ASB No. 35 9,438,659 9,068,198
E. Plan Assets
1. Market Value 7,331,629 6,934,693
2. Actuarial Value 7,428,849 6,880,124
F. Actuarial Present Value of Projected
Covered Payroll 12,024,091 13,816,592
G. Actuarial Present Value of Projected
Member Contributions 921,938 1,060,877
*Results have been updated to include Actuarial Impact Statement for Ordinance Number 58-13-36.
City of Atlantic Beach Police Officers'
Retirement System
9/30/2013 Actuarial Valuation I B-3
STATE PREMIUM TAX REVENUES
A. Accumulated Excess Premium Tax Revenues
at the Beginning of the Year
B. Chapter 185 Receipts During Fiscal
Year Ending 9/30/2013
C. Chapter 185 "Frozen" Receipts During
Fiscal Year Ending 9/30/1998
D. QualifYing Benefit Improvements
Since Chapter 99-1 Effective Date
E. Excess 185 Receipts During Fiscal
Year Ending 9/30/2013*
F. Accumulated Excess Premium Tax Revenues
as of9/30/2013 not less than beginning
of the year.
Minimum Compliance ($18,517)
A. Early retirement eligibility at 50 & 10
B. Normal retirement eligibility at 55 & 10
C. 10 year certain and life normal fmm
Year Ending 9/30/2013 Cumulative
$ 120,454 $
91,077 1,417,767
70,289 1,115,363
18,517 185,170
0
120,454
Potential Future Benefits
Extra Benefits
A. None proposed
*Note: During the Fiscal Year ended 9/30/2013, "Chapter 185 receipts" totaled $91,077. This amount is
greater than the base amount of State premium tax moneys that was available in the past to be used by the City
to satisfY pmt of the Annual Required Contribution. However, per the current interpretation of the law, subject
to an actuarial certification, the City has now access to all Chapter 185 revenue to fund contribution
requirements and consequently there was no increase in the Accumulated Excess Premium Tax Revenues
(item E above).
Note: Cumulative amounts presented in the I 0/1/2012 repmt inadvertently omitted 2011 additions. Amounts
presented above have been developed by correcting this omission.
GRS City of Atlantic Beach Police Officers'
Retirement System
9/30/2013 Actuarial Valuation I B-4
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:
1. 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
City of Atlantic Beach Police Officers'
Retirement System
405,604 $ 381,408 $ 333,818
7,238,073 6,752,314 5,999,606
1,794,982 1,934,476 2,074,844
9,438,659 9,068,198 8,408,268
7,331,629 6,934,693 6,056,405
78% 76% 72%
9/30/2013 Actuarial Valuation I B-5
GRS
$12.0
$10.0
$8.0
Ul c
§ $6.0
:;8
$4.0
$2.0
$0.0
Ratio of Market Value of Assets to
Present Value of Accrued Benefits
2010 2011 2012 2013
Actuarial Valuation Date (September 30)
llllllilllllll Market Value of Assets •-'PV Accrued Benefits --+--Ratio
150%
100%
?;J
Pl ......
5"
50%
0%
City of Atlantic Beach Police Officers'
Retirement System
9/30/2013 Actuarial Valuation I B-6
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 shott 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
9/30/03 * $ 4,373 $ 5,986 73%
9/30/04 4,534 6,405 71
9/30/05 4,775 6,997 68
9/30/06 5,175 7,034 74
9/30/07 * 5,663 7,620 74
9/30/08 5,764 8,112 71
9/30/09 * 5,922 8,689 68
9/30/10 * 6,164 9,449 65
9/30/11 6,305 10,065 63
9/30/12 * 6,880 10,559 65
9/30/13 7,429 10,895 68
*Reflects change in benefits, actuarial assumptions and/or method.
City of Atlantic Beach Police Officers'
Retirement System
9/30/20 13 Actuarial Valuation I B-7
GRS
$14.0
$12.0
$10.0
U'l $8.0 ~
f§
~
$6.0
$4.0
$2.0
$0.0
Ratio of Acttuuial Value of Assets
to Actu~uial Accrued Liability •
2007 2008 2009 2010 2011 2012 2013
Actuarial Valuation Date (September 30)
1111111111111 Actuarial Assets 1-1 Accrued Liability ---+--Ratio
150%
100%
50%
0%
City of Atlantic Beach Police Officers'
Retirement System
9/30/2013 Actuarial Valuation I B-8
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 UAAL
2. Last Year's Employer Normal Cost (mid-year)
3. Last Year's Actual City Contibution
4. Interest at the assumed rate on:
a. 1 for one year
b. 2 for half a year
c. 3 from dates paid
d. a+ b-c
5. This Year's Expected UAAL
1 + 2-3 + 4d
6. This Year's Actual UAAL (before any
changes in benefits or assumptions)
7. Net Actuarial Gain (Loss): (5)-(6)
8. Gain (Loss) due to investments
9. Gain (Loss) due to other sources
City of Atlantic Beach Police Officers'
Retirement System
$3,679,313
231,884
609,012
294,345
9,275
24,360
279,260
3,581,445
3,466,384
115,061
(39,917)
154,978
9/30/2013 Actuarial Valuation I B-9
GRS
Net actuarial gains (losses) in previous years have been as follows:
9/30/1998 95,019 95,019
9/30/1999 117,618 212,637
9/30/2000 (103,871) I 08,766
9/30/2001 1,389 110,155
9/30/2002 (128,212) (18,057)
9/30/2003 (339,563) (357,620)
9/30/2004 (207,808) (565,428)
9/30/2005 (287,225) (852,653)
9/30/2006 411,559 (441,094)
9/30/2007 (137,906) (578,999)
9/30/2008 (308,022) (887,021)
9/30/2009 (323,582) (1,210,603)
9/30/20 I 0 154,731 ( 1 ,055,872)
9/30/20 II (451,201) (1,507,073)
9/30/2012 (32,697) (1,539,770)
9/30/2013 115,061 (1,424,709)
Actuarial Gain(+) or Loss ( -)
$1
"' § $0 ~
$2
$1
"' = $0 ~
($1) ~
($2)
($1) ....____ _________________ _,__ ($3)
Plan YearEnd
111111111!11111 Gain or Loss
City of Atlantic Beach Police Officers'
Retirement System
--+-Cumulative
9/3 0/20 13 Actuarial Valuation I B-1 0
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.
9/30/2003 2.2 8.0 8.8 6.5 %
9/30/2004 2.4 8.0 11.2 6.5
9/30/2005 4.4 8.0 15.1 6.3
9/30/2006 7.8 8.0 1.5 6.7
9/30/2007 9.4 8.0 12.8 6.6
9/30/2008 4.6 8.0 2.1 6.6
9/30/2009 3.8 8.0 11.0 6.4
9/30/2010 4.7 8.0 (0.0) 6.4
9/30/2011 2.2 8.0 3.8 7.4
9/30/2012 7.9 8.0 (0.8) 7.6
9/30/2013 7.5 8.0 2.3 7.5
Average 5.1 % 6.0 %
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 Police Officers'
Retirement System
9/30/2013 Actuarial Valuation I B-11
GRS
History of Investment Return -Actuarial Value of Assets
15%
10% 10%
5% 5%
0%
-5% ~------------------------------------------------------~ -5%
0,~'?
Plan Year End
-Actual -+--Assruned
History of Salary Increases
20%
15% 15%
10% 10%
5% 5%
-5o/o ~------------------------------------------------------~ -5%
0,~'?
Plan Year End Compared to Previous Year
-Actual -Assumed
City of Atlantic Beach Police Officers'
Retirement System
9/30/2013 Actuarial Valuation I B-12
Valuation
Date
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
IJ:J
I
w
Number of Normal Cost**
Active Inactive Reported Covered Actuarial Value of
Members Members Annual Payroll Assets UAAL Amount %of Covered
(in Thousands)
22 15 $ 1,129 $ 4,373 $ 1,613 $ 182
27 16 1,360 4,534 1,871 220
26 18 1,402 4,775 2,222 228
24 19 1,254 5,175 1,859 211
25 19 1,453 5,663 1,957 200
26 19 1,476 5,764 2,348 207
27 20 1,697 5,922 2,767 244
27 21 1,639 6,164 3,285 247
26 22 1,606 6,305 3,760 260
26 23 1,548 6,880 3,679 223
22 24 1,360 7,429 3,466 189
• Reflects change in benefits, actuarial assumptions and/or method.
**For Valuations prior to 2009, Normal Cost is a mid-year amount, excluding any administrative expenses. Beginning
with 9/30/2009 valuation, Normal Cost is a beginning of the year figure, including administrative expenses. For all
years, %of Covered Payroll is Normal Cost shown expressed as a% of Covered Valuation Payroll.
Payroll
16.12 %
16.21
16.25
16.84
13.74
13.99
14.36
15.08
16.17
14.40
13.92
GRS
50
40
30
20
10
$1.8
$1.5
$1.3
$1.0
$0.8
$0.5
$0.3
$0.0
0
Recent History of Number of Members
Actuarial Valuation Date
El Active Members llllln~tive Members
Recent History of Covered Annual Payroll
Actuarial Valuation Date
City of Atlantic Beach Police Officers'
Retirement System
9/30/2013 Actuarial Valuation I B-14
GRS
End of Year To Required Contributions
Which Valuation Valuation
Applies % of Expected Actual
Amount Payroll Contributions
9/30/06 9/30/08 $ 309,841 22.80 % $ 309,842
9/30/07 9/30/09 345,280 21.93 345,280
9/30/08 9/30/10 425,823 26.62 425,823
9/30/09 9/30/11 487,032 26.49 487,032
9130/10 9/30/12 628,909 36.18 628,898
9/30/11 9/30/13 606,741 35.63 609,012
9/30/12 9/30/14 671,506 41.04
9/30/13 9/30/15 680,462 47.16
• Reflects change in benefits, actuarial assumptions and/or method.
City of Atlantic Beach Police Officers'
Retirement System
9/30/2013 Actuarial Valuation I B-15
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 portion 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 determines the unfunded actuarial accrued liability.
Financing of Unfunded Actuarial Accrued Liabilities-The unfunded actuarial accrued liability was financed
as a level percent of member payroll.
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 Police Officers'
Retirement System
9/30/2013 Actuarial Valuation I B-16
Economic Assumptions
The investment return rate assumed in the valuations is 8.00% per year, compounded annually (net of
investment expenses).
The price inflation rate assumed in this valuation was 3% 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 payroll growth rate would be 4%, except that it is limited this year due the lower actual payroll growth
rate over the last I 0 years in accordance with the requirements of Ch. 112.64 (5) (a), F.S. The rate used to
amortize the unfunded actuarial accrued liabilities is 1.88% per year.
The total rate of return is defined as earnings resulting from 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. Total rate of return is as the assumed to be 8.00% per year, net of investment-related expenses.
The rates of salary increases used in the valuation are illustrated in the following table.
GRS
Annual Rates for Salary Increase for Sample Ages
Age:
Expected Increase
City of Atlantic Beach Police Officers'
Retirement System
20 30
23.0% 9.8%
40 50 60
6.6% 5.7% 5.0%
9/30/2013 Actuarial Valuation I B-17
Demographic Assumptions
The mortality rates used were taken from the gender specific RP-2000 Combined Healthy Participant Mortality
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 and after 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 retiremeut used to measure the probability of eligible members retiring under normal and early
retirement eligibility during the next year were as follows:
GRS
Normal Retirement/DROP
Retirement
Ages
45
46
47
48
49
50
51
52-58
59
60
61-64
65
City of Atlantic Beach Police Officers'
Retirement System
Percent of Eligible
Employees Retiring
40%
10%
10%
10%
40%
50%
50%
50%
50%
50%
50%
100%
9/30/2013 Actuarial Valuation I B-18
Early Retirement/DROP
Retirement Percent of Eligible
Ages Employees Retiring
50 10%
51 10%
52 10%
53 10%
54 10%
Rates of separation from active membership 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 model the
probabilities of members remaining in employment.
Rates of Separation from Active Employment
Sample
Ages
ALL
25
30
35
40
45
50
55
60
Years of
Service
0
2
3
4
5 & Over
Assumptions
34.00%
23.00%
16.00%
12.00%
9.00%
5.88%
5.32%
4.40%
3.70%
3.20%
2.40%
1.40%
1.00%
Rates of Disability among after members
Percent Becoming Disabled
Within Next Year
Sample
Ages Men Women
20 0.14% 0.14%
25 0.15% 0.15%
30 0.18% 0.18%
35 0.23% 0.23%
40 0.30% 0.30%
45 0.51% 0.51%
50 1.00% 1.00%
55 1.55% 1.55%
60 0.00% 0.00%
The mortality table was set forward ten years for projecting disability costs.
GRS City of Atlantic Beach Police Officers'
Retirement System
9/30/2013 Actuarial Valuation I B-19
Miscellaneous and Technical Assumptions
Administrative & Investment
Expenses
Benefit Service
Decrement Operation
Decrement Timing
Eligibility Testing
Fmfeitures
Incidence of Contributions
Marriage Assumption
Normal Form of Benefit
Pay Increase Timing
Service Credit Accruals
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 mid year.
Eligibility for benefits is determined based upon the age nearest
birthday and service nearest whole year on the date the decrement is
assumed to occur.
Vested members who terminate with a benefit worth 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 with I 0 year certain.
Beginning of fiscal year. This is equivalent to assuming that reported
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 Police Officers'
Retirement System
9/30/2013 Actuarial Valuation I B-20
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
mortality 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 Police Officers'
Retirement System
9/30/2013 Actuarial Valuation I B-21
SECTION C
PENSION FUND INFORMATION
GRS
Cash and Securities-Market Value
Cash and Cash Equivalents
Short Term Investments
Treasury and Agency Bonds & Notes
Corporate Bonds
Common & Preferred Stocks
Other Fixed Income
Mutual or Pooled Bond Funds
Mutual Funds
Other Securities -Participant Directed
Total
Receivables and Accruals
Member Contribution
Additional Employer Contribution
Interest and Dividends
Total
Payables
Benefits-DROP Reserve
Lump Sum Distributions
Excess Premium Tax Liability
Other
Total
Net Assets-Market Value
City of Atlantic Beach Police Officers'
Retirement System
$
$
85,328 $ 26,902
277,547 149,346
0 2,119,032
2,754,559 1,209,542
4,306,946 3,507,733
0 24,535
0 0
0 0
199,160 68,961
7,623,540 7,106,051
0 0
0 0
27,703 18,265
27,703 18,265
199,160 69,169
0 0
120,454 120,454
0 0
319,614 189,623
7,331,629 $ 6,934,693
9/30/2013 Actuarial Valuation I C-1
GRS
Market Value at Beginning of Period
Income
Member Contributions
State Contributions
Employer Contribution
Legal Settlement
Interest and Dividends
Realized and Unrealized Gain (Loss)
Total Income
Disbursements
Monthly Benefit Payments
Lump Sum Distributions
Refund of Contributions
Increase in Excess Premium Tax Liability
Investment Related Expenses
Other Administrative Expenses
Insurance Premiums
Total Disbursements
Net Increase During Period
Market Value at End of Period
City of Atlantic Beach Police Officers'
Retirement System
$
$
$
6,934,693 $ 6,056,405
77,406 75,667
91,077 88,795
517,935 540,103
26,587 0
146,121 144,410
247,703 698,385
1,106,829 1,547,360
651,941 599,459
0 0
0 5,478
0 0
30,857 38,225
27,095 25,910
0 0
709,893 669,072
396,936 $ 878,288
7,331,629 $ 6,934,693
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 patticipating in the DROP plan. A reconciliation of the accumulated balance to
be recognized is provided in the table below.
GRS
Value at beginning of year
Payments credited to accounts
Investment Earnings credited
Withdrawals from accounts
Value at end of year
City of Atlantic Beach Police Officers'
Retirement System
$ 68,961
+ 127,403
+ 2,796
0
199,160
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 fi·action
(1/nth per year, where n equals the number of years in the smoothing period) ofthe 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 Police Officers'
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 $ 6,164,269
B. Market value beginning of prior year 6,010,957
C. Market value end of prior year 6,056,405
D. Non-investment net cash flow
[ contributions-(benefits & expenses)] 7,860
E. Investment return
I. Actual market value return net of investment
expenses: C -B -D 37,588
2. Expected return of 8.00% 481,191
3. Excess/( shortfall) to be phased-in: El -E2 (443,603)
F. Phased-in recognition of investment return
(4 Year Recognition)
I. Current year: 25% ofE3 (1 10,901)
2. 25% of excess/(shmtfall) from first prior year 38,538
3. 25% of excess/( shortfall) from second prior year 6,855
4. 25% of excess/( shortfall) from third prior year (282,636)
5. Total phased-in recognition of investment return (348,144)
G. Actuarial value end of year
I. Preliminary actuarial value end of year:
A+ D + E2 + F5 6,305,176
2. Upper corridor limit: 120% of C 7,267,686
3. Lower corridor limit: 80% ofC 4,845,124
4. Actuarial value end of year * 6,305,176
H. Difference between market value and actuarial value (248,771)
I. Ratio of Funding Value to Market Value 104%
* Offset for DROP Reserve made prior to the calculation of valuation assets.
GRS City of Atlantic Beach Police Officers'
Retirement System
2012 2013 2014
$ 6,305,176 $ 6,880,124 $ 7,428,849
6,056,405 6,934,693 7,331,629
6,934,693 7,331,629
73,718 33,969
804,570 362,967
487,461 556,134
317,109 (193,167)
79,277 (48,292)
(I 10,901) 79,277 (48,292)
38,538 (110,901) 79,277
6,855 38,538 (I 10,901)
13,769 (41,378) (79,916)
6,880,124 7,428,849
8,321,632 8,797,955
5,547,754 5,865,303
6,880,124 7,428,849
54,569 (97,220)
99% 101%
9/30/2013 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 n01mally called the Total Rate of Return.
Basis 2-Actuarial Value: Investment earnings recognized in the Actuarial Value of Assets divided by the
weighted average of the Actuarial Value of Assets during the year.
GRS
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
City of Atlantic Beach Police Officers'
Retirement System
9.5 % 2.2 %
6.7 2.4
8.5 4.4
8.8 7.8
14.2 9.4
(11.7) 4.6
8.5 3.8
10.8 4.7
1.2 2.2
13.9 7.9
5.7 7.5
7.9% 5.2%
6.4% 5.4%
9/30/2013 Actuarial Valuation I C-6
SECTION D
FINANCIAL ACCOUNTING INFORMATION
GRS
A. Valuation Date
B. Actuarial Present Value of Accumulated
Plan Benefits
I. 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: I d + 2
4. Accumulated Contributions of Active Members
C. Changes in the Actuarial Present Value of
Accumulated Plan Benefits
I. Total Value at Beginning ofYear
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 Reserve)
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*
$ 7,027,197 $ 6,557,492
210,876 194,822
2,129,095 2,188,725
9,367,168 8,941,039
71,491 127,159
9,438,659 9,068,198
405,604 381,408
9,068,198 8,408,268
0 0
0 0
1,022,402 1,264,867
(651,941) (604,937)
370,461 659,930
9,438,659 9,068,198
7,331,629 6,934,693
*Results hm1e been updated to include Actuarial Impact Statement for Ordinance Number 58-13-36.
City of Atlantic Beach Police Officers'
Retirement System
9/30/2013 Actuarial Valuation I D-1
0
I
N
9/30/2004 $ 4,534 $
9/30/2005 4,775
9/30/2006 5,175
9/30/2007 * 5,663
9/30/2008 5,764
9/30/2009 * 5,922
9/30/2010 * 6,164
9/30/2011 6,305
9/30/2012 * 6,880
9/30/2013 7,429
SCHEDULE OF FUNDING PROGRESS
(Dollar amounts in thousands)
(GASB Statement No. 25)
6,405 $ 1,871 70.8% $
6,997 2,222 68.2
7,034 1,859 73.6
7,620 1,957 74.3
8,112 2,348 71.1
8,689 2,767 68.2
9,449 3,285 65.2
10,065 3,760 62.6
10,559 3,679 65.2
10,895 3,466 68.2
• Reflects change in benefits, actuarial assumptions and/or method
1,360 137.6 %
1,402 158.5
1,254 148.2
1,453 134.7
1,476 159.1
1,697 163.1
1,639 200.4
1,606 234.1
1,548 237.7
1,360 254.8
\
GRS
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)
18.74 % $ 242,637 $ 242,637
24.31 297,361 297,361
23.76 350,161 350,160
25.70 390,494 390,494
22.80 309,841 309,842
21.93 345,280 345,280
26.62 425,823 425,823
26.49 487,032 487,032
36.18 628,909 628,898
35.63 606,741 609,012
*Reflects change in benefits, actuarial assumptions and/or method.
Note: Annual Required Contribution (if any), above, is payable by the City and
includes185/175 State Premium Tax Money up to allowable limit.
100 %
100
100
100
100
100
100
100
100
100
City of Atlantic Beach Police Officers'
Retirement System
9/30/2013 Actuarial Valuation I D-3
er 30 2013 2012 2011
A. Annual Required Contribution (ARC) $ 606,741 $ 628,909 $ 487,032
B. Interest on Net Pension Obligation (Asset)
C. Adjustment to ARC
D. Annual Pension Cost (APC): (A+ B -C) 606,741 628,909 487,032
E. Contributions made 609,012 628,898 487,032
F. Increase (decrease) in Net Pension Obligation(Asset): (D-E) (2,271)
G. Net Pension Obligation( Asset) at beginning of year
H. Net Pension Obligation( Asset) at end of year: (F+ G) (2,271)
THREE YEAR TREND INFORMATION
GRS
9/30/2011
9/30/2012
9/30/2013
$ 487,032
628,909
606,741
City of Atlantic Beach Police Officers'
Retirement System
$ 487,032
628,898
609,012
100.0%
100.0
100.4
$
(2,271)
9/30/2013 Actuarial Valuation I D-4
REQUIRED SUPPLEMENTARY INFORMATION
GASB Statement No. 25 and No. 27
The information 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
Amortization Method
Equivalent Single 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 Police Officers'
Retirement System
September 30, 2013
40.86%
7.0%
Entry Age
Closed, Level % of Pay Method
11.01 Years
See Section entitled "Actuarial
Value of Assets"
8.0%
5.0%-23.0%
3.0%
None
1.88%
9/30/2013 Actuarial Valuation I D-5
SECTION E
MISCELLANEOUS INFORMATION
GRS
1. Number Included in Last Valuation
2. New Members Included in CutTent Valuation
3. Non-Vested Employment Terminations
4. Vested Employment Terminations
5. Service Retirements
6. Disability Retirements
7. Deaths
8. DROP Retirement
9. Transfer to Another Division
10. Numberlncluded in This Valuation
2. Additions from Active Members
3. Lump Sum Payments/Withdrawals
4. Payments Commenced
5. Deaths
6. Other-Returned to Work
7. Number Included in This Valuation
2. Additions from Active Members ., Additions entering the DROP .),
4. Additions from Terminated Vested Members
5. Deaths Resulting in No Fmiher Payments
6. Deaths Resulting in New Survivor Benefits
7. End of Certain Period -No Fmiher Payments
8. Other --Lump Sum Distributions
9. Number Included in This Valuation
City of Atlantic Beach Police Officers'
Retirement System
26 26
0 2
(3) (I)
0 0
0 0
0 0
0 0
(I) (I)
0 0
22 26
0 0
0 0
0 (I)
0 0
0 0
4 4
0
I
0 1
0 0
0 0
0 0
0 0
20 19
9/30/2013 Actuarial Valuation I E-1
GRS
STATISTICAL DATA
Active Members as of September 30, 2013
0 0
0 0
0 2 0
2 5 2
0
0 2
0 0
0 0 0
0 0 0
0 0 0
5 10 4
City of Atlantic Beach Police Officers'
Retirement System
0
0
0
0
0
0
0
0
2
0 0 0
0 0 0
0 0 0 2
0 0 0 9
0 0 0 3
0 0 5
0 0 0
0 0 0 0
0 0 0 0
0 0 0 0
0 0 22
9/30/2013 Actuarial Valuation I E-2
NUMBER ADDED TO AND REMOVED FROM ACTIVE MEMBERSHIP
Year
Ended
September 30
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
5-yr. Totals
2009-2013
Expected
for 2014
Number
Added
During
Year
A E
3 6
9 4
3 4
2 4
4 3
5 4
5 4
3 3
3 4
2 2
Q 1
13 17
A Represents actual number.
Normal
Retirement
A E
0 0.1
0 0.3
2 0.6
1 1.0
1 0.2
I 0.1
I 0.1
0 0.4
2 1.0
I 1.0
! 1.0
5 3.5
0.4
E Represents expected number.
Terminations During Year
Disability Died-in Withdrawal
Retirement Service Vested Other Total
A E A E A A A E
I 0.1 0 0.0 2 3 5 1.3
0 0.0 0 0.0 2 2 4 1.1
0 0.0 0 0.0 I I 2 1.9
0 0.0 0 0.0 I 2 3 1.8
0 0.0 0 0.0 0 2 2 1.5
0 0.0 0 0.0 0 3 3 1.6
0 0.0 0 0.0 0 3 3 1.6
1* 0.0 0 0.0 1* 1 3 1.4
0 0.0 0 0.0 0 2 2 2.5
0 0.1 0 0.0 0 I I 2.5
Q 0.1 Q 0.0 Q ~ ~ 2.5
I 0.2 0 0.0 12 10.4
0.1 0.0 2.2
*Member retroactively approved for duty disability benefits (previously reported as vested terminated)
Active
Members
End of
Year
22
27
26
24
25
26
27
27
26
26
22
GRS City of Atlantic Beach Police Officers'
Retirement System
9/30/2013 Actuarial Valuation I E-3
Retired Members and Beneficiary Data
Historical Schedule**
Added Removed Net Increase
September 30 No. Pensions No. Pensions No. Pensions
2003 2 30,148 2 30,148
2004
2005 2 I 06,731 2 106,731
2006 34,521 9,796 0 24,724
2007 43,455 43,455
2008 2 63,781 2 63,781
2009
2010 6,319 * I 14,935 (8,616)
2011 2 84,469 0 2 84,469
2012 2 68,629 * 0 2 68,629
2013 1 48,017 * 0 1 48,017
Expected for
2014
* One-time adjustment correcting past undmpayments
** Includes member retroactively approved for duty disabililty
GRS City of Atlantic Beach Police Officers'
Retirement System
Expected
End ofYear Removals
No. Pensions No. Pensions
11 235,310 0.1 2,072
11 235,310 0.2 2,683
13 342,041 0.2 2,933
13 366,765 0.2 3,809
14 410,220 0.2 3,922
16 474,001 0.2 4,510
16 474,001 0.2 5,200
15 465,385 0.2 5,200
17 549,854 0.2 5,200
21 618,483 0.3 5,761
22 666,500 0.2 4,950
0.2 5,547
9/30/2013 Actuarial Valuation I E-4
SECTION F
SUMMARY OF PLAN PROVISIONS
A. Ordinances:
Plan established under the Code of Ordinances for the City of Atlantic Beach, Florida, Part II, Chapter 2,
Article VI, Division 4 and was most recently amended and restated under Ordinance No. 58-13-36 passed
and adopted on June 10, 2013. The Plan is also governed by certain provisions of Part VII, Chapter 112,
Florida Statutes (F.S.), F. S. 185 and the Internal Revenue Code.
B. Effective Date
December 22, 1975, Restated under Division 4 on July 10, 2000
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
All full time sworn City police officers, who normally work more than 1,000 hours annually and are not an
elected officials, temporary or contractual employees, or executives or departments heads who have elected
not to pmiicipate, will become members on the date of employment.
F. Credited Service
Service is measured as the total number of years and fractional parts 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, overtime pay not to
exceed 300 hours, cost of living payments, holiday and personal leave taken and incentive pay.
Compensation excludes payments of unused personal leave, uniform or equipment allowances, extra duty
or special detail pay on behalf of a second party employer, 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 Police Officers'
Retirement System
9/30/2013 Actuarial Valuation I F-1
I. Normal Retirement
Eligibility:
Benefit:
Normal Form
of Benefit:
For members hired prior to January 1, 2013
A participant may retire on the first day of the month coincident with or next following the
earlier of:
(1) 25 years of Credited Service regardless of age, or
(2) age 50 with 20 years of Credited Service, or
(3) age 55 with 10 years of Credited Service, or
( 4) age 60 with 5 years of Credited Service.
For members hired on or after January 1, 2013
A participant may retire on the first day of the month coincident with or next following the
earlier of:
(1) Age 55 with 10 years of Credited Service, or
(2) age 52 with 25 years of Credited Service.
For members hired prior to January 1, 2013
3.00% ofFAC times Credited Service. Benefit is limited to 100% ofFAC.
For members hired on or after January 1, 2013
2.00% ofFAC times Credited Service. Benefit is limited to 100% ofFAC.
10 Years Certain and Life thereafter; 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 50 with 10 years of Credited Service.
The Normal Retirement Benefit is actuarially reduced by 3% for each year by which the
member's Early Retirement date precedes the member's normal retirement age.
10 year certain and life thereafter; 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.
GRS City of Atlantic Beach Police Officers'
Retirement System
9/30/2013 Actuarial Valuation I F-2
L. Service Connected Disability
Eligibility:
Benefit:
Normal Form
of Benefit:
Any member who becomes totally and permanently disabled due to a service related injmy or
illness and is deemed unable to render useful and efficient service to the City as a police officer
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. The minimum for a service connected disability benefit is 42% ofF AC.
1 0 year ce1iain and life thereafter.
M. Non-Service Connected Disability
Eligibility:
Benefit:
Normal Form
of Benefit:
Any member with 8 1/3 or more years of Credited Service who becomes totally and
permanently disabled and is deemed unable to render useful and efficient service to the City as
a police officer 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. The minimum for a non-service connected disability benefit is 25% of F AC if the
member had at least 8 1/3 years of Credited Service.
10 year certain and life thereafter.
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
standard ten (10) year certain and life 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 an unmarried fulltime
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 an unmarried full time student.
0. Post Retirement Death
GRS
Benefit determined by the form of benefit elected upon retirement.
City of Atlantic Beach Police Officers'
Retirement System
9/30/2013 Actuarial Valuation I F-3
P. Optional Forms
In lieu of electing the Normal Form of benefit, the optional forms of benefits available to all retirees are a Life
Annuity, or 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:
Normal Form
of Benefit:
For members hired prior to January 1, 2013
A participant has earned a non-forfeitable right to Plan benefits after the completion of 5 or
more years of Credited Service.
For members hired on or after January 1, 2013
A pmiicipant has earned a non-forfeitable right to Plan benefits after the completion of 10
or more years of Credited Service
The benefit is the member's vested pmiion of the accrued Normal Retirement Benefit as of the
date of termination. Benefit begins on the Normal Retirement date.
I 0 year certain and life thereafter; other options are also available.
Member's terminating employment with less than 5 years of Credited Service will receive a refund of their own
accumulated contributions.
R. Refunds
Eligibility:
Benefit:
All non-vested members are eligible. Optionally, vested participants may also withdraw
their contributions in lieu of the deferred benefits otherwise due. Vested members may
delay withdrawal of funds for up to five years.
The member who terminates employment receives a lump-sum payment of their employee
contributions with interest.
S. Member Contributions
7% as of October I, 2013 and increasing to 8% as of October 1, 20 14.
T. Premium Tax Monies
A distribution of casualty insurance premium tax monies collected by the State pursuant to Chapter 185
Florida Statutes.
GRS City of Atlantic Beach Police Officers'
Retirement System
9/30/2013 Actuarial Valuation I F-4
U. Employer Contributions
v.
The amount determined by the actuary to pay the normal cost and an amortization of the unfunded actuarial
accrued liabilities, along with employee contributions and Chapter 185 monies. Following are contribution
rates per recent valuations:
Plan Year
Beginning City Sec 185 Member Total
10/1/2008 16.44% 5.49% 4.815% 26.75%
10/1/2009 21.07% 5.55% 4.815% 31.44%
10/1/2010 21.66% 4.83% 4.815% 31.31%
10/1/2011 31.07% 5.11% 4.815% 41.00%
10/1/2012 30.13% 5.21% 5.111% 40.45%
10/1/2013 35.47% 5.57% 6.000% 47.04%
Cost of Living Increases
The plan does not provide for automatic post-retirement cost of living adjustments (COLA) of retiree
benefits.
W. Changes from Previous Valuation
See the Discussion of Valuation Results Section of this report under the Revisions in Benefits heading.
X. Gain-sharing benefits
Not applicable.
Y. Deferred Retirement Option Plan
Eligibility:
Benefit:
Maximum
DROP Period:
Interest
Credited:
Normal Fonn
of Benefit:
Upon obtaining Normal or Early Retirement eligibility.
All members must make a written election to participate in the DROP.
The member's Credited Service and FAC 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 upon Early Retirement
eligibility will be actuarially reduced as described for Early Retirement.
60 months
Pmticipants' DROP account balances will be credited in accordance with the self-directed
options selected by the pmticipant 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 quarter.
Lump Sum or roll-over to a qualified retirement account.
GRS City of Atlantic Beach Police Officers'
Retirement System
9/30/2013 Actuarial Valuation I F-5
SECTION G
COMPARATIVE SUMMARY OF PRINCIPAL
VALUATION RESULTS
GRS
Number Included:
Actives
Service Retirees & Beneficiaries
Disability Retirees
Terminated Vested Members
Total Members and Beneficiaries
Total Annual 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 Term Investments
Treasury and Agency Bonds & Notes
Corporate Bonds
Common & Preferred Stocks
Mutual Fund Bonds
Mutual Fund Stocks
Other Securities
Net Receivables & Payables
Total
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 members
contributions of 405,604 and 381 ,408)
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 (Method Change)
(vi) Net change
(vii) Actuarial p.v. of accr. benefits at end of year
22 26
16 15
4 4
4 4
46 49
$1,360,245 $1,548,109
1,442,670 1,636,257
592,341 544,324
74,159 74,159
41,865 41,865
362,875 176,248
0 2,119,032
2,754,559 1,209,542
4,306,946 3,507,733
0 0
0 0
199,160 93,496
(291,911) (171,358)
7,331,629 6,934,693
7,428,849 6,880,124
405,604 381,408
7,027,197 6,557,492
210,876 194,822
9,367,168 8,941,039
71,491 127,159
9,438,659 9,068,198
9,068,198 8,408,268
none none
none none
1,022,402 1,264,867
(651,941) (604,937)
0 0
370,461 659,930
9,438,659 9,068,198
*Reflects changes from Actuarial Impact Statement for Ordinance Number58-13-36.
City of Atlantic Beach Police Officers'
Retirement System
9/30/2013 Actuarial Valuation I G-1
D. Liabilities-Actuarial Present Value of Future Benefits
1. Active Members
Service Retirement Benefits $5,192,002 $5,625,980
Vesting Benefits 411,721 433,728
Disability Benefits 199,745 217,796
Preretirement Death Benefits 43,825 47,852
Return of Member Contributions 75,452 96,932
Total Actives 5,922,745 6,422,288
2. Inactive Members
Service Retirees & Beneficiaries 6,280,862 5,799,923
Disability Retirees 746,335 757,569
Terminated Vested Members 210,876 194,822
Total Inactive Members 7,238,073 6,752,314
3. Total Present Value for All Members 13,160,818 13,174,602
Total Present Value of:
Future Salaries 12,024,091 13,816,592
Future Employee Contributions 921,938 1,060,877
Future Contributions from Other Sources 4,810,031 5,400,476
a. Total UAAL for Prior Valuation Date $3,679,313 $3,759,831
b. Employer Normal Cost for this period 231,884 270,003
c. Interest acccrued on (a) and (b) 303,620 311,586
d. Contributions for this period 609,012 628,898
e. Interest accrued on (d) 24,360 25,156
f. Changes due to:
Assumptions 0 0
Plan Amendment 0 (40,750)
Cost Method (Asset Method) 0 0
Actuarial (Gain) Loss (115,061) 32,697
Total Current UAAL: a+b+c-d-e+f 3,466 3,679,313
*Reflects changes from Actuarial Impact Statement for Ordinance Number58-13-36.
GRS City of Atlantic Beach Police Officers'
Retirement System
9/30/20 13 Actuarial Valuation I G-2
GRS
2
3
4
5
6
7
Gain 8
9/30/2007 Experience Loss 9
9/30/2008 Experience Loss 10
9/30/2009 Experience Loss 11
9/30/2010 Experience Gain 12
9/30/2011 13
14
Gain 15
9/30/1993 Changes 10
9/30/1994 Changes 11
9/30/1996 Changes 13
9/30/1997 Changes 14
9/30/2001 Changes 18
9/30/2003 Changes 20
9/30/2007 Benefit Changes 24
9/30/2012 Benefit Changes 29
9/30/1995 Assumption/Method Change 12
9/30/1997 Assumption/Method Change 14
9/30/2009 26
City of Atlantic Beach Police Officers'
Retirement System
(22,076)
18,349
(232)
20,379 74,845
51,425 339,563 229,589
30,043 207,808 156,572
39,690 287,225 234,816
(54,409) (411,559) (358,067)
17,455 137,906 125,814
37,344 308,022 291,268
35,979 323,582 300,698
(16,440) (154,731) (146,052)
45,377 451,201 425,666
3,260 32,697 3,061
(11,181) (115,061) (115,061)
70,263 442,232 548,025
(1,917) (12,597) (16,025)
5,023 35,914 47,122
1,193 8,892 11,745
9,246 81,627 106,073
14,130 144,006 171,703
( 4,313) (49,157) (57,343)
(2,868) (40,750) (2,552)
9/30/2013 Actuarial Valuation I G-3
GRS
E. Pension Cost
Entry Age Normal Cost for:
Service Retirement Benefits $207,692
Vesting Benefits 19,264
Disability Benefits 11,985
Preretirement Death Benefits 1,963
Return of Member Contributions 17,924
Total Actives 258,829
Administrative Expenses 26,053
Expected Member Contributions 95,488
Total Employer Normal Cost 189,394
Payment Required to Ammiize Unfunded Actuarial
Accrued Liability 414,495
Total Contribution at Valuation Date 603,889
Total Contribution Adjusted for Frequency of
Payments and Interest to Next Following Fiscal Year 680,462
%of Expected Payroll 47.I6%
Amount Expected to be Contributed by Members 100,987
%of Expected Payroll 7.000%
F. Past Contributions-For the Fiscal Years Ended September 30 of2012 and 2013:
Required Contribution Determined in the Valuation as of
by the Plan Sponsor
by Members
Actual Contribution for the Fiscal Year ended
by the Plan Sponsor
Members
G. Net experience (gain) loss during year:
September 30, 20 I I
$606,741
$82,005
September 30, 20 I3
609,012
$77
($I 15,06I)
H. I. Plan to Amortize Unfunded Actuarial Accrued Liability
20 year funding of the Original Unfunded Actuarial Accrued Liability, 15 year funding of any
Gains or Losses and 30 year of adjustments due to benefit or assumption changes.
2. Schedule Illustrating the Amortization of the Unfunded Actuarial Accrued Liability (UAAL)
2014 $3,296,034
2015 3,079,356
2016 2,856,882
2017 2,607,531
2018 2,352,960
2023 1,169,733
2029 585,485
2031 479,339
2035 297,446
2036 250,812
Contribution sufficient to contribution.
$23I,870
2I,9I3
13,456
2,233
20,307
289,779
24,913
91,726
222,966
372,975
595,941
671,506
41.04%
98,175
6.000%
September 30,2010
$628,909
$83,708
September 30, 20I2
$628,898
*Reflects changesfi'om Actuarial Impact Statement for Ordinance Number58-13-36.
City of Atlantic Beach Police Officers'
Retirement System
9/30/2013 Actuarial Valuation I G-4
GRS
I. 1. Three-Year Comparison of Actual and Assumed Salary Increases (Annualized)
9/30/2011
9/30/2012
9/30/2013
3.8%
(0.8)%
2.3%
7.4%
7.6%
7.5%
2. Three-Year Comparison of Investment Return (Actuarial Value)
9/30/2011
9/30/2012
9/30/2013
2.2%
7.9%
7.5%
8.0%
8.0%
8.0%
3. Average Annual Growth in Covered Payroll, Last Ten Years (if applicable)
9/30/2003 $1,129,034
9/30/2004 I ,360,051
9/30/2005 1,402,444
9/30/2006 1,254,264
9/30/2007 1,452,926
9/30/2008 1,476,074
9/30/2009 1,696,746
9/30/2010 1,639,155
9/30/2011 1,605,814
9/30/2012 1,548,109
9/30/2013 1,360,245
Total % Increase Last Ten Years 20.48%
Annual % Increase 1.88%
Thitty-year Forecast 4.00%
J. Benefits and Expenses ofPlan not Explicitly or Implicitly Provided in Valuation
NONE
K. Trends not taken into Account but which are likely to Result in Future Cost Increases
NONE
City of Atlantic Beach Police Officers'
Retirement System
9/3 0/20 13 Actuarial Valuation I G-5