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Item 5B- Pension Actuarial Report- General EmployeesGRS AGENDA I TEM #58 .JUNE 13, 2016 Gabriel Roeder Smith & Company Consultants & Actuaries CITY OF A TLAN TIC BEACH GEN E RAL E MPLOYEE S' RETIREMENT SYSTEM ACTUARIAL VALUATION REPORT SEPTEMBER 3 0, 2015 ANNUAL EMPLOYER CONTRIBUTION IS DETERMINED BY THIS VALUATION TO BE PAID IN THE EMPLOYER FISCAL YEAR ENDING SEPTEMBER 30, 2017 GRS May 27,2016 Gabrie l Roeder Smith & Compn ny l.n n ~ul t.ln Is & Actlhtrit:' The Board ofTrustces C ity o f Atlantic Bea ch General Employee R etirem ent System A tlantic Beach, Florida D ear B oard Members: O ne East Browar d Blvd. Suite 505 Ft. Laud erda le, FL 3330 1-1804 95 4.527.1616 phone 95 4.S25 .008:l fax www.ga br it:! ro cder.o.;om W e al'e pleased to su bmit her ein our September 30, 20 15 Actuarial Valuation R eport for th e City of A tla ntic Beac h General Employees' Retiremertl System. The contribution r es ul ts app ly to t he C ity's fisca l yea r ending Sept ember 30 ,20 17. T h is report was prepa r ed at th e request of the Board of T r ustees and i s in tended f o r use by the Retirement Syst em an d those d esi gnated o r app ro ved by th e Board of Trustees. T his rer ort may be provided to parties other than t he Retirement Sys tem only in its entirety an d o nly with the perm iss i on of the Board of T ru stees. GR S i s no t responsible for unautho ri ze d use oft his repo rt. The purpose of th e va luati on is l o mea sure the Pl an's fund ing progress, t o det ermine the emp loyer contr i bLition rate for the fiscal year ending Septem ber 30, 20 17 and certain stal e r eporting req uirements under P.S. C h . 11 2.63. T his r eport sho uld not be r el ied on for any pu rp ose oth er th an t he purpose desc ribed above. Det ermina ti o ns of fin anci al resu lts associated with the benefi ts d esc ribed in thi s repor t, fo r purposes ot her than those identified a bove may be significa ntly d i fferent. The co mputed co ntribution rate shown on pa ge A-1 may be consi dered as a minimum co ntribution rate thut complies with th e B oard 's f unding p olicy and th e State statute. Users of this r eport should be aware t hat co ntributions made at that rate do not g uamntee benefit secu rity. Given the imp011ance of benefit sec urity t o any r eti r ement system, we sugges t t hat contributions to lhe Trust i n excess of those presented i n this r epo rt be con sidered. The contributio n r a te in this r eport is d etermined using th e ac tu ari al ass umpti ons and meth ods d i scl osed in Sec tio n cc Actuarial A ssumpti ons a11d Cos t Method" of this repo rt. T his r epo 1t does not include a r ob ust ass ess ment of the risk s of future experience not mee t ing the actuaria l ass umpti ons. Additional assess ment of ri sks wa s outside the sco pe o f thi s ass ignment. W e encourage a review and assess ment of i nvest ment and oth er signi ficant risks that may have a material effect on th e plan's fin anci al condi t ion. T h e deve loped findings incloded in this r eport cons ider data o t· other infor mation through Sep te mbet· 30, 20 15. ruture actuari al m eas urem ents may d i ffer sign ifica ntly Jl'om th e current measu rem ents pre se nted in this repo rt due to such fa ctors as the followi ng: plan exper ience differ ing from th at an ti cipate d by th e econo mic or demograph ic assu mptions; chan ges in economic o r demographic ass umptions; increases or dec reases expected as part of th e natural opera ti on of the metho dol ogy used for these meas urements (such as th e end of an amort i za ti on per i od o r additi ona l cos t or cont ri bulion requ i rem ents base d on th e plan's f und ed status); and changes in p lan provisi ons or appli ca bl e Jaw. T he sco pe of an ac t uari al va luati on does not inc l ud e an ana lys i s of the potential ran ge of such fu t ure meas urements. The Board of Trustees May 27,2016 Page2 This valuation assumed the continuing ability of the plan sponsor to make the contributions necessary to fund this plan. A determination regarding whether or not the plan sponsor is actually able to do so is outside our scope of expertise and was not perfonned. In addition, this repmt was prepared using assumptions approved by the Board as described in the section of this report entitled Actuarial Assumptions and Methods. The valuation was based upon infmmation 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 calculations are based upon assumptions regarding future events, which may or may not materialize. They are also based upon plan provisions that are outlined in this repmt. 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 infmmation in the report. James J. Rizzo and Piotr Krekora 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. This repmt 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 confmmity 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 pe1taining 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 Consultant & Actuary Gabriel, Roeder, Smith and Company STATEMENT BY ENROLLED ACTUARY This actuarial valuation and/or cost dete1mination 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 May 27,2016 Date 14-03355 Enrollment Number GRS TABLE OF CONTENTS ::;:r:;~IIQt:l TITLE ~ A EXECUTIVE SUMMARY A-I B VALUATION RESULTS 1. Part icipant Data B-1 2 . Actuariall y Determined Co ntribution B-2 3. Act uari al Valu e of Benefits and Assets B-3 4. Financ ia l Soundness B-4 5. Actuaria l Ga in s and Losses B-8 6. Recent Hi story of Va lu ation Re sult s 8-1 2 7. Rece nt ll istor y of Required and Act ual Co ntributions B-14 8. Actuaria l Assumptions and Cos t Method B-15 c PENSION FUND INFORMATION I. S umm ruy of Assets C-1 2 . Summa1y of Fu nd's In come and Dis bursements C-2 3. Recon c ili ation of DROP Accounts C-3 4. Actuaria l Value of Asse ts C-4 5. lnv cstmcnt Rate ofRetum C-6 0 MISCELLANEOUS INFORMATION I. Re co nciliation ofMcmbcrship Data D-1 2. Statistical Data D-2 E SUMMARY OF PLAN PROVISIONS E-1 F COMPARATIVE SUMMARY OF PRINCIPAL f-1 VALUATION RE SULTS GRS SECTION A EXECUTIVE SUMMARY EXECUTIVE SUMMARY Closed Plan In reviewing this Repmt, it is important to keep in mind that the System is closed to new entrants. One of the consequences 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 the number of active plan members and 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 significant actuarial gains. Required Employer Contributions The following is a comparison of required contributions developed in this year's and the last actuarial valuations: For FYE 9/30/2017 For FYE 9/30/2016 Based on 9/30/15 Based on 9/30/14 Increase Valuation Valuation (Decrease) Gross Contribution Requirement $ 1,300,048 $ 1,256,217 $ 43,831 As% of Expected Payroll 62.66 % 52.39 % 10.27 % Expected Employee Contribution $ 124,476 $ 143,873 $ (19,397) As % of Covered Payroll 6.00 % 6.00 % 0.00 % Required Employer Contribution (If Made in Equal Monthly Installments) $ 1,175,572 $ 1,112,344 $ 63,228 As % of Covered Payroll 56.66 % 46.39 % 10.27 % Required Employer Contribution (IfMade in Whole at the Beginning of the Year) $ 1,132,626 1,071,708 60,918 As % of Covered Payroll 54.59 % 44.69% 9.90% Minimum Required Contribution As illustrated in the preceding chmt, the City contribution necessary to support the current benefits for the General Employees is $1,175,572 for the fiscal year ending September 30,2017. Please note that the Required Employer Contribution for that fiscal year is developed assuming it would be deposited in monthly intervals throughout the year. For completeness, we are also presenting an amount required to be contributed if deposited in a single sum at the beginning of the contribution year in lieu of periodic installments. Revisions in Benefits There were no revisions in benefits for the current year. Revisions in Actuarial Assumptions and Methods There were no revisions in Actuarial Assumptions and Methods for the current year. GRS City of Atlantic Beach General Employees' Retirement System 9/30/2015 Actuarial Valuation I A-1 Recommendations We recommend a review of demographic assumptions including salmy scale, retirement, and termination rates. The last such study was based on plan experience for the period ending September 30, 2010. An updated study is warranted to ensure actuarial assumptions remain in line with emerging demographic trends and the assumed long term rate of return reflects revisions in the Plan's investment policy. Actuarial Experience Actuarial gains occur in a year whenever the experience of the plan is better than was assumed. For example, a gain would occur if investment performance were better than the rate being assumed in the actuarial valuation and costing process and this gain would have the effect of lowering the Minimum Required Contribution for the year. Furthermore, a gain will also occur whenever more employees terminate employment than were assumed would terminate as fewer employees are then expected to actually retire from the City. Actuarial losses occur in a year whenever the experience of the plan is worse than was assumed. In the exmnples 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 -covered payroll has been dropping faster than the employer contribution. The components of change in the actuarially required contribution are as follows: Contribution rate last year 46.39 % Payment on UAAL 6.75 Experience gain/loss 2.70 Change in administrative expense 0.78 Change in normal cost before expenses 0.04 Revision in benefits 0.00 Revision in assumptions/methods 0.00 Contribution rate this year 56.66 % There was a net actuarial loss this year which was partially due to a lower than expected recognized investment return on the actuarial value of assets (5.7% recognized, compared to the 7.0% assumed) and partially due to data adjustments and unfavorable mortality and retirement experience. These losses were partially offset by lower than expected salary increases. A small increase in the administrative expenses is also contributing to an increase in the City contribution and due to the decrease in payroll from the prior year it represents a larger percentage of the projected payroll. The remainder of this Report includes detailed actuarial valuation results, finm1cial information, miscellaneous infmmation and statistics, and a summm-y of plan provisions. GRS City of Atlantic Beach General Employees' Retirement System 9/30/2015 Actuarial Valuation I A-2 SECTIONB VALUATION RESULTS GRS PARTICIPANT DATA September 30, 2015 September 30, 2014 ACTIVE MEMBERS Number 43 Covered Annual Payroll (non-DROP) $ 2,074,607 Average Annual Pay $ 48,247 Average Age 52.6 Average Past Service 15.4 Average Age at Hire 37.2 RETIREES, BENEFICIARIES, & DROP MEMBERS Number Annual Benefits Average Annual Benefit Average Age DISABILITY RETIREES Number Annual Benefits Average Annual Benefit Average Age TERMINATED VESTED MEMBERS Number Annual Benefits Average Aruma! Benefit Average Age City of Atlantic Beach General Employees' Retirement System 61 $ 1,024,754 $ 16,799 68.3 3 $ 46,861 $ 15,620 62.7 12 $ 164,653 $ 13,721 53.8 48 $ 2,397,875 $ 49,956 52.7 14.7 38.0 55 $ 853,087 $ 15,511 67.9 4 $ 56,377 $ 14,094 62.5 12 $ 122,575 $ 10,215 53.1 9/30/2015 Actuarial Valuation I B-1 A. B. C. D. E. F. G. H. I. J. GRS ACTUARIALLY DETERMINED CONTRIBUTION (ADC) Valuation Date ADC to Be Paid During Fiscal Year Ending Assumed Date(s) of Employer Contrib. Annual Payment to Amm1ize Unfunded Actuarial Liability if Paid on the Valuation Date Employer Normal Cost (including Administrative Expenses) if Paid on the Valuation Date ADC ifPaid on the Valuation Date: D+E ADC Adjusted for Frequency of Payments and Interest to Required Time of Contribution Payroll Expected for Contribution Year ADC as % of Covered Payroll in Contribution Year: G -T-H Actuarially Determined Contribution if Paid on the First Day of the Contribution Year City of Atlantic Beach General Employees' Retirement System September 30, 2015 September 30, 2014 9/30/2017 9/30/2016 Monthly Monthly $ 799,150 $ 719,527 259,379 282,070 1,058,529 1,001,597 1,175,572 1,112,344 2,074,607 2,397,875 56.66 % 46.39 % 1,132,626 1,071,708 9/30/2015 Actuarial Valuation I B-2 I ACTUARIAL VALUE OF BENEFITS AND ASSETS I A. Valuation Date September 30,2015 September 30, 2014 B. Actuarial Present Value of All Projected Benefits for 1. Active Members a. Service Retirement Benefits $9,703,457 $11,057,889 b. Vesting Benefits 390,470 319,225 c. Disability Benefits 244,497 250,285 d. Preretirement Death Benefits 233,309 256,659 e. Return of Member Contributions 9,093 41,929 f. Total 10,580,826 11,925,987 2. Inactive Members a. Service Retirees & Beneficiaries 10,738,561 9,104,369 b. Disability Retirees 467,097 525,530 c. Terminated Vested Members 1,438,314 998,673 d. Total 12,643,972 10,628,572 3. DROP Balances* 252,720 273,114 4. Total for All Members 23,477,518 22,827,673 c. Actuarial Accrued (Past Service) Liability (Entry Age Normal)* 20,941,934 20,023,500 D. Actuarial Value of Accumulated Plan Benefits perF ASB No. 35 18,682,676 17,642,825 E. Plan Assets 1. Market Value* 15,008,338 14,919,308 2. Actuarial Value* 15,958,619 15,167,400 F. Actuarial Present Value of Projected Covered Payroll 16,233,175 18,159,759 G. Actuarial Present Value of Projected Member Contributions 973,991 1,089,585 * Beginning with September 30, 2014 Valuation DROP balances are being included in Present Value of Projected Benefits, Actuarial Accrued Liability and in Plan Assets. GRS City of Atlantic Beach General Employees' Retirement System 9/30/2015 Actuarial Valuation I B-3 FINANCIAL SOUNDNESS The purpose of this pmiion of the Report is to provide certain measures which indicate the financial soundness of the program. These measures relate to shmi term solvency and long tetm 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 pmiicipants. This amount is based on benefits eamed to date without future credited service or salary increases. The total of the two items should generally be fully covered by assets. That pmiion 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. I 1. 2. 3. 4. 5. 6. GRS I General Employees 9/30/15 9/30/14 Accumulated Contributions of Active Members $ 1,121,958 $ 1,204,929 $ APV of Projected Benefits in Pay Status and for Vested Terminations 12,896,692 1 10 901 686 1'2 ' ' APV of Accrued Benefits for Active Participants (Employer Portion) 4,664,026 5,536,210 1. Total 18,682,676 17,642,825 Market Value of Assets 15,008,338 I 14,919,308 I Assets as% of Total 80% 85% 1 DROP balances are being included in Actuarial Accrued Liability and in Plan Assets. 2 Reflects changes in actuarial assumptions. I 09/30/13 1,225,604 8,871,346 5,084,432 15,181,382 13,770,711 91% City of Atlantic Beach General Employees' Retirement System 9/30/2015 Actuarial Valuation I B-4 $20.0 $18.0 $16.0 $14 .0 $12 .0 U) = 0 ~ $10.0 $8.0 $6.0 $4 .0 $2.0 $0.0 Ratio of Market Value of Assets to Present Value of Accrued Benefits 20 10 20.11 2012 2013 2014 2015 Actuarinl Vn l uati on Date (SctJtc m bcr 30) -Market Value of Asse ts c:::J PV Accrued Benefits -•-Ratio 200% 100% ~ Q'. 0 0% Increases in be nefi ts w ill, of cou rse, adve rse ly affect the tre nd in the years when such inc reases are first refl ected in the actuarial values . Although different ac tu ari al assu mpt ions wo uld be used in the even t of a termin ati on of the program, this te st shows how much of th e benefits accrued to da te might be covered by asse ts in the event of a plan fre eze usi ng th e va lu at ion assum pti ons. GRS City of Atlantic Beac h Ge neral Employees' Retirement Sys tem 9/30/20 15 Ac tu ari a l Valuati on 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 Actumial 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 te1m 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 Actuarial Value of Actuarial Accrued %ofAAL Valuation Assets Liability Covered by Date (in Thousands) (in Thousands) Assets 9/30/00 5,229 6,462 81 % 9/30/01 * 5,587 6,986 80 9/30/02 5,747 7,479 77 9/30/03 * 5,951 8,186 73 9/30/04 6,273 9,005 70 9/30/05 * 6,802 9,822 69 9/30/06 * 7,609 10,505 72 9/30/07 8,594 11,668 74 9/30/08 * 9,209 12,624 73 9/30/09 9,841 13,682 72 9/30/10 * 10,618 15,180 70 9/30/11 11,119 16,053 69 9/30/12 ** 12,465 16,599 75 9/30/13 13,816 17,282 80 9/30/14 *,*** 15,167 20,024 76 9/30/15 *** 15,959 20,942 76 *Reflects change in benefits, actuarial assumptions and/or asset method. **Reflects the Actuarial Impact Statement for Ordinance 58-13-37. ***DROP balances are included in Actuarial Accrued Liability and in Plan Assets. City of Atlantic Beach General Employees' Retirement System 9/30/2015 Actuarial Valuation I B-6 GRS $2 0 .0 $15.0 ~ ~ $1 0.0 $5.0 $0.0 - - Ratio of Actuarial Value of Assets to Actuarial Accrued Liability - f~£ L. • • e r-• -~ • • r-• • • • ·- ~~'\:::, ~r;::::,' ~r;::::,"v ~'\:::,"" ~~ ~'\:::,~ ~r;::::,Ca ~'\:::," ~r;::::,'b ~r§J ~ ...... '\:::, ~"' ~~ ~" ~~ ~ .... ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ Act uar ial Va lu at ion Date (Sep tember 30) -Ach~1rial Assets c:::::::l Acc ru ed Liability -•-Rat io 300% 25 0% 200% 1 50%~ 8· 100% SO% 0% C ity o f A tl antic Beac h Ge neral Employees ' Ret irement Syste m 9/30/20 IS Actua ri a l Va lu ati on I B-7 ACTUARIAL GAINS AND LOSSES The assumptions used to anticipate mortality, employment tumover, investment income, expenses, salmy increases, and other factors have been based on long range trends and expectations. Actual experience can vmy from these expectations. The variance is measured by the gain and loss for the period involved. If significant long tenn 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 Derivation of Experience Gain (Loss) 1. Last Year's UAAL 2. Last Year's Employer Normal Cost 3. Last Year's Actual City Contibution 4. Interest at the assumed rate on: a. 1 for one year b. 2 for one 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 10. Amortization Payment Due to (Gain) Loss City of Atlantic Beach General Employees' Retirement System $4,856,100 282,070 863,613 339,927 19,745 30,226 329,446 4,604,003 4,983,315 (379,312) (177,271) (202,041) 50,472 9/30/2015 Actuarial Valuation I B-8 GRS Net act uari al ga in s in previ ous years have been as follows: C umul ative Gnin Year Enclcrl Ac tnnrh•l Gain (Loss) (Loss) 9/30/1994 (.157,358) ( 157,358) 9/30/1995 447,29 1 289,933 9/30/!996 (162,663) 127,270 9/3 0/1997 252,2 3& 379,5 08 9/3 0/1998 58,540 438,04 1! 9/30/1999 108,195 546,243 9/3 0/2000 (55 ,470) 490,773 9/30/2001 (18,145) 1)72,628 9/30/2002 (21!0, 151) 192,477 9/30/2003 (355,3 &3) ( 162,906) 9/30/2004 (395, 109) (558,0 15) 9/30/2005 (364,305) (922,320) 9/30/2006 13 1,266 (79 1,054) 9/30/2007 ( 170,383) (96 1,437) 9/30/2008 {178,856) (1,14 0,293) 9130/2009 (482,223) (I ,622,5 15) 9/30/20 10 (17 1,358) ( 1,793,873 ) 9/30/2 0 11 {364,563) {2, 158,436) 9/30/2 0 12 402,582 (I ,755,8511} 9/30/20 13 208,109 ( 1,5 47 ,746) 9/30/2014 (13, 100) (I ,560,846) 9/30/2015 (379,3 12) (I ,940,158) Actuarial Gain(+) or Loss ( -) $3 $3 $2 $2 $1 $1 ($1) ($2) ($2) Plan Yea r E nd -Gni n or l.oss -c umulnl ive City of Atlant i c B eac h Ge neral Em pl oyees' Reti rement System 9/30/20 15 Actuarial Va l uat ion I B-9 The fund eamings and salmy 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 eamings and salary increase rates compared to the assumed rates: Investment Return (AVA) Salary Increases Year Ending Actual Assumed Actual Assumed 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 9/30/2014 6.3 8.0 4.8 5.9 9/30/2015 5.7 7.0 3.3 5.4 Average 5.8 % ---4.7 % --- The actual investment retum rates shown above are based on the actuarial value of assets. The actual salmy 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 9/30/2015 Actuarial Valuation I B-10 History oflnvestment Return-Actual'i a l Value of Assets -5~ -S~o $#~###~###~#~#~~# Plan Yea r End --Actua l -+--Ass1uncd History of Salary Increases -5% -5% GRS $#~#~$~###~~~#~~# Plan Yea r End Compa red to Previo us Yea r -Actua l -Ass umed City of A tl ant ic Beac h Ge neral Emp loyees' Retirement Sys tem 9/30/20 15 Actu ar i al V aluati on I B-11 RECENT ffiSTORY OF VALUATION RESULTS Number of Employe1· Normal Cost Active Inactive Reported Annual Actuadal Value of Valuation ]\'!embers Members Payroll Assets UAAL Amount Date (in Thousands) (in Thousands) (in Thousands) (in Thousands) % ofPayroll 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 9/30/01 . 75 40 2,462 5,587 1,399 226 9.17 9/30/02 83 40 2,768 5,747 1,732 267 9.66 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 9/30/09 87 50 4,019 9,841 3,841 314 7.82 9/30/10 • 84 51 3,838 10,618 4,562 364 9.49 9/30/11 83 58 3,738 11,119 4,934 367 9.82 9/30/12 .. 63 63 3,072 12,465 4,134 274 8.90 9/30/13 56 67 2,733 13,816 3,466 251 9.17 9/30/14 . 48 71 2,398 15,167 4,856 282 11.76 9/30/15 43 77 2,075 15,959 4,983 259 12.50 *Reflects a change in assumptions or benefits. **Reflects the Actuarial Impact Statement for Ordinance 58-13-37. ~ 0 ~ GRS Recent His to ry of N umber of Members ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 0 ~ ~ '~ ~ ~o,\' ~o,\" ~d;-" ~o,\" ~d;-" ~d;-" ~o,\" ~o,\" ~d;-" ~d;-" ~o,\" ~o,\' ~o,\' r:::,o,\ r:::,o,\' r:::,d;-> r:::,ot\ Ac tua ri~ll Va lu atio n Date c Ac li ve Members • I na cli ve Members Recent Histo ry of Covered Ann ua l Payro ll $5.0 ; - $4.0 -,. ,. -,. ,. $3.0 ,. ,. .. ---,. $2.0 ,. -,. ,. $1.0 $0 .0 1-,_ -1-, 1-,_ ,_ Actuarial Valu a tion Date ,. 1;;. City of At lant ic Beac h General Emp loyees' Retirem ent System 9/30/20 15 Actuarial Va luati on I B-13 GRS RECENT HISTORY OF REQUIRED AND ACTUAL CONTRIBUTIONS End of Year To Required Contributions Which Valuation Valuation Applies % of Expected Actual Amount Payroll Contributions * 9/30/03 9/30/05 $ 464,893 15.02 % $ 464,893 9/30/04 9/30/06 480,029 16.09 480,029 * 9/30/05 9/30/07 482,364 13.99 482,363 * 9/30/06 9/30/08 456,965 13.62 457,005 9/30/07 9/30/09 528,428 14.03 528,426 * 9/30/08 9/30/10 599,292 14.84 599,292 9/30/09 9/30/11 722,769 16.60 722,769 * 9/30/10 9/30/12 998,516 24.53 998,516 9/30/11 9/30/13 1,044,392 26.34 1,044,392 ** 9/30/12 9/30/14 950,980 29.19 950,980 9/30/13 9/30/15 863,613 31.59 863,613 * 9/30/14 9/30/16 1,112,344 46.39 --- 9/30/15 9/30/17 1,175,572 56.66 --- *Reflects a change in assumptions or benefits. **Reflects the Actuarial Impact Statement for Ordinance 58-13-37. City of Atlantic Beach General Employees' Retirement System 9/30/2015 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 detennined 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 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. Economic Assumptions The price inflation rate assumed in this valuation was 2.50% 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 assumed to be 7.0% per year, net of investment-related expenses. The rates of salary increases used in the valuation are illustrated in the following table (rates below include 2.5% price inflation). Annual Rates for Salary Increase for Sample Ages Age: 20 30 40 50 60 Expected Increase 13.5% 8.2% 6.0% 5.5% 5.0% GRS City of Atlantic Beach General Employees' Retirement System 9/30/2015 Actuarial Valuation I B-15 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. The mortality table was set forward ten years for projecting the expected mortality of disabled lives. 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 2015) Men Women Men Women 50 0.16% 0.13% 34.35 35.68 55 0.27 0.24 29.23 30.71 60 0.53 0.47 24.29 25.93 65 1.03 0.90 19.68 21.44 70 1.77 1.55 15.48 17.32 75 3.06 2.49 11.68 13.59 80 5.54 4.13 8.45 10.28 Rates of disability among active members (0% of disabilities are assumed to be service-connected). GRS 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% City of Atlantic Beach General Employees' Retirement System 9/30/2015 Actuarial Valuation I B-16 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: 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 10% 10% 10% 10% 20% 15% 15% 15% 20% 30% 40% 50% 50% 50% 100% 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 yield the probabilities of members remaining in employment. GRS Rates of Separation from Active Employment Sample Years of Ages Service ALL 0 1 2 3 4 25 5 & Over 30 35 40 45 50 55 60 City of Atlantic Beach General Employees' Retirement System Assumptions 28.61% 20.78% 16.94% 11.67% 7.41% 3.70% 3.50% 3.20% 3.00% 2.70% 2.20% 2.00% 2.00% 9/30/2015 Actuarial Valuation I B-17 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 detennined 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 pmiicipants 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 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 General Employees' Retirement System 9/30/2015 Actuarial Valuation! B-18 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 mmtality, disability, turnover, retirement, rate or rates of investment income and salary increases. Decrement assumptions (rates of mmtality, 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 mmtality tables used by the plan. The amount of funds presently required to provide a payment or series of payments in the future. It is detennined 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 9/30/2015 Actuarial Valuation I B-19 SECTIONC PENSION FUND INFORMATION SUMMARY OF ASSETS 9/30/2015 9/30/2014 Cash and Securities-Market Value Cash and Cash Equivalents $ 68,735 $ 27,899 ShoJi Term Investments 4,846,615 4,701,667 Treasury and Agency Bonds & Notes 96,412 251,173 Corporate Bonds 622,887 4,994,776 Common & Preferred Stocks 9,339,085 4,758,558 Pooled Equity Funds 0 0 Mutual or Pooled Bond Funds 0 0 Mutual Equity Funds 0 0 Other Securities-Pmticipant Directed 29,039 144,640 Total 15,002,773 14,878,713 Receivables and Accruals Member Contribution 0 0 Additional Employer Contribution 0 0 Interest and Dividends 5,565 40,709 Interest Deposit for Late Contribution 0 0 Total 5,565 40,709 Payables Benefits-DROP Reserve 0 0 * Lump Sum Distributions 0 0 Expenses 0 0 Other 0 114 Total 0 114 Net Assets-Market Value $ 15,008,338 $ 14,919,308 * Beginning with 9/30/2014 valuation DROP balances are being included in Plan Assets for consistency with GASB Statements 67 and 68. GRS City of Atlantic Beach General Employees' Retirement System 9/30/2015 Actuarial Valuation I C-1 PENSION FUND INCOME AND DISBURSEMENTS Year Ending Year Ending 9/30/2015 9/30/2014 Market Value at Beginning of Period $ 14,919,308 $ 13,770,711 Income Member Contributions 136,191 157,383 State Contributions 0 0 Employer Contribution 863,613 950,980 Interest and Dividends 88,632 286,651 Legal Settlement 0 0 Realized and Unrealized Gain (Loss) 152,159 468,942 Total Income 1,240,595 1,863,956 Disbursements Monthly Benefit Payments 869,484 697,702 DROP Payments Held in Reserve 0 0 Lump Sum Distributions (from DROP) 161,707 0 Refund of Contributions 0 9,516 Investment Related Expenses 78,465 65,732 Other Administrative Expenses 41,909 31,529 Rollover of Employee Contributions to DC Plan 0 0 Total Disbursements 1' 151,565 804,479 Adjustment for Adopting New Accounting Principle* $ 0 89,120 Net Increase During Period $ 89,030 $ 1' 148,597 Market Value at End of Period $ 15,008,338 $ 14,919,308 * For consistency with GASB Statements 67 and 68 DROP balances are now being included in Plan Assets. GRS City of Atlantic Beach General Employees' Retirement System 9/30/2015 Actuarial Valuation I C-2 DEFERRED RETIREMENT OPTION PLAN (DROP) BENEFITS HELD IN RESERVE A reconciliation of the accumulated DROP account balances is provided in the table below. GRS RECONCILIATION OF DROP ACCOUNTS Value at beginning ofyear Payments credited to accounts Investment Earnings credited Withdrawals from accounts Value at end of year DROP PARTICIPATION ACTIVITY Number as of September 30, 20 14 Number entered DROP during the year Number exited DROP during the year Number as of September 30,2015 Average Monthly Benefit as of September 30, 20 15 City of Atlantic Beach General Employees' Retirement System $ 273,114 + 138,074 + 3,239 161,707 252,720 6 0 (3) 3 $3,230 9/30/2015 Actuarial Valuation I C-3 ACTUARIAL VALUE OF ASSETS As of September 30, 2015 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 9/30/2015 Actuarial Valuation I C-4 DEVELOPMENT OF FUNDING VALUE OF ASSETS AS OF SEPTEMBER 30 2013 A. Preliminaty actuarial value from prior year $ 12,465,289 B. Market value beginning of prior year 12,693,827 C. Market value end of prior year 13,770,711 D. Non-investment net cash flow [ contributions-(benefits & expenses)] 343,020** E. Investment return 1. Actual mm·ket value return net of investment expenses: C-B - D 733,896 2. Expected return of7.00% (8.00% before 20 15) 1,029.227 3. Excess/(shortfall) to be phased-in: El -E2 (295,331) F. Phased-in recognition of investment return (4 Year Recognition) 1. Cu11'ent yeat": 25% ofE3 (73,833) 2. 25% of excess/( shortfall) fi·om first prior yem· 224,855 3. 25% of excess/( shortfall) from second prior year (273,334) 4. 25% of excess/(shortfall) from third prior year 52,867 5. Total phased-in recognition of investment return (69,445) G. Actuarial value end ofyem· 1. Preliminary actuarial value end of year: A+ D+ E2+ F5 13,815,833 2. Upper corridor limit: 120% of C 16,524,853 3. Lower corridor limit: 80% ofC 11,016,569 4. Adjustment to reflect retroactive plan closure 0 5. Actuarial value end ofyem· 13,815,833* H. Difference between market value and actum·ial value (45,122) I. Ratio of Funding Value to Mm·ket Value 100% *Offietfor DROP Rese1w made prior to the calculation of valuation assets **Reflects the Actuarial Impact Statement for Ordinance 58-13-3 7 ***Includes adjustment for adopting new Accounting Principle. GRS City of Atlantic Beach General Employees' Retirement System 2014 2015 2016 $ 13,815,833 $ 15,167,400 $ 15,958,619 13,770,711 14,919,308 15,008,338 14,919,308 15,008,338 458,736*** (73,296) 689,861 162,326 1,123,571 1,041,786 (433,710) (879,460) (108,428) (219,865) (73,833) (108,428) (219,865) 224,855 (73,833) (108,428) (273,334) 224,855 (73,833) (230,740) (177,271) (402,126) 15,167,400 15,958,619 17,903,170 18,010,006 11,935,446 12,006,670 0 0 15,167,400 15,958,619 (248,092) (950,281) 102% 106% 9/30/2015 Actuarial Valuation I C-5 INVESTMENT RATE OF RETURN The investment rate ofretum 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 nmmally called the Total Rate ofRetum. 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 Investment Rate of Return Year Ended Marl{et Value Actuarial Value 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 9/30/14 9/30/15 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 4.9 6.3 1.1 5.7 5.0% 6.0% 5.5% 6.2% 4.9% 5.8% 9/30/2015 Actuarial Valuation I C-6 SECTIOND MISCELLANEOUS INFORMATION GRS RECONCILIATION OF MEMBERSHIP DATA From9/30/141 From9/30/13 To 10/01/15 To 9/30/14 I A Active Members 1. Number Included in Last Valuation 48 56 2. New Members Included in CuiTent Valuation 0 0 3. Non-Vested Employment Terminations 0 (I) 4. Vested Employment Terminations (1) (1) 5. Service Retirements (4) (4) 6. Disability Retirements 0 0 7. Deaths 0 (I) 8. DROP Retirement 0 (I) 9. Transfer to the DC Plan 0 0 -- --10. Number Included in This Valuation 43 48 I B. Terminated Vested Membe1·s I. Number Included in Last Valuation 12 11 2. Additions from Active Members I 1 3. Lump Sum Payments/Withdrawals 0 0 4. Payments Commenced (1) 0 5. Deaths 0 0 6. Other 0 0 -- --7. Number Included in This Valuation 12 12 I C. Service Retirees, Disability Retirees, Beneficiaries & DROP I. Number Included in Last Valuation 2. Additions from Active Members 3. Additions entering the DROP 4. Additions from Tem1inated 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 City of Atlantic Beach General Employees' Retirement System 59 56 4 4 0 I I 0 0 (2) (2) (1) 0 0 2 I ----64 59 9/30/2015 Actuarial Valuation I D-1 GRS STATISTICAL DATA Active Members as of September 30, 2015 Age Group 0-4 5-9 10-14 15-19 20-24 NO. 0 0 0 0 25-29NO. 0 0 0 0 30-34 NO. 0 1 0 0 35-39 NO. 0 0 0 0 40-44 NO. 0 3 2 0 45-49NO. 0 3 3 0 50-54 NO. 0 1 1 1 55-59 NO. 0 2 4 3 60-64 NO. 0 3 3 1 65&UPNO. 0 1 0 0 ---- -- TOT NO. 0 14 13 City of Atlantic Beach General Employees' Retirement System 5 I I 20-24 25-29 30& Up Total 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 1 0 0 6 1 2 0 9 1 0 1 5 1 0 2 12 1 1 0 9 0 0 0 1 -- ----- 5 3 3 43 9/30/2015 Actuarial Valuation I D-2 NUMBER ADDED TO AND REMOVED FROM ACTIVE MEMBERSHIP Number Added Terminations During Year Active Year Ended September 30 1997 1998 I999 2000 200I 2002 2003 2004 2005 2006 2007 2008 2009 20IO 20II 2012 2013 * 2014 * 2015 * 5-yr. Totals 2011-2015 Expected 20I6 During Year A E 12 11 12 6 I4 I7 7 6 9 8 7 10 I2 II 12 10 IO I4 IO II 8 7 7 6 6 2 4 7 6 7 8 7 0 0 0 0 Q Q 14 I4 A Represents actual number. Service 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 5 4.6 5 4.9 .1 3.9 2I 23.0 3.4 E Represents expected number. Disability Retirement A E 1 0.2 0 0.2 I 0.2 0 0.1 0 0.1 0 0.2 0 0.2 0 0.2 0 0.2 0 O.I 1 0.2 0 0.1 0 0.1 0 0.1 1 O.I 0 0.2 0 0.2 0 0.1 Q 0.1 I 0.8 O.I *No employees will be added following the closure of the plan. GRS City of Atlantic Beach General Employees' Retirement System Died-in Withdrawal Members Service Vested Other Total End of A E A A A E Year 0 0.2 2 7 9 8.2 76 0 0.2 0 6 6 8.3 82 0 0.2 0 15 15 8.3 79 0 0.1 0 4 4 7.5 70 1 0.1 1 5 6 7.6 71 0 0.1 2 7 9 8.1 68 0 0.1 0 9 9 10.8 84 0 0.1 1 7 8 10.0 86 0 0.2 1 1I 12 9.4 82 0 0.2 0 6 6 8.5 81 0 0.2 1 4 5 8.1 82 0 0.2 1 5 6 7.8 83 0 0.2 I 1 2 6.9 87 0 0.2 0 3 3 6.8 84 0 0.3 1 0 1 5.7 83 1 0.2 2 2 4 4.8 63 0 0.2 0 2 2 S.I 56 I 0.2 I I 2 0.7 48 Q 0.1 ! Q ! 0.6 43 2 1.0 10 I6.9 O.I 0.6 9/30/2015 Actuarial Valuation I D-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 2001 6 78,522 3 32,513 3 46,009 2002 17,716 * I 17,716 2003 3 23,184 26,801 2 (3,617) 2004 2 32,159 5,889 26,270 2005 2 35,900 2 17,160 18,740 2006 3 47,505 5,774 2 41,730 2007 6 82,446 3 29,272 3 53,174 2008 3 51,425 3 51,425 2009 9,217 9,217 2010 2 17,424 2 5,992 11,432 2011 4 95,156 3 13,790 81,366 2012 9 105,409 1 14,326 8 91,083 2013 4 77,393 0 4 77,393 2014 6 160,587 12,284 5 148,303 2014 5 91,970 2 16,908 3 75,062 2015 5 162,151 0 5 162,151 Expected for 2016 * 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 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 59 909,464 1.3 15,651 64 1,071,615 1.3 15,644 1.4 18,241 9/30/2015 Actuarial Valuation I D-4 SECTION£ 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 3 and was most recently amended and restated under Ordinance No. 58-13-37 passed and adopted on June 10, 2013. The Plan is also governed by certain provisions of Part 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 1,000 hours annually and who were not elected officials, temporary or contractual employees, or executives or departments 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 parts of years. 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, cost of living payments, holidays and personal leave taken. Compensation excludes payments of unused personal leave, unifmm 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 9/30/2015 Actuarial Valuation I E-1 I. Normal Retirement Eligibility: Benefit: Nonnal Form of Benefit: A pmticipant 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 April 24, 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: Nmmal Form of Benefit: A member may elect to retire earlier than the Nmmal Retirement Eligibility upon attainment of age 55 with 5 years of Credited Service. The Normal Retirement Benefit is actuarially reduced (at 6% per year) 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 yem·s of Credited Service who becomes totally and pennanently 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 Nmmal 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 9/30/2015 Actuarial Valuation I E-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 (1 00) 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 fonns 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 pmticipant has eamed 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 Nonnal Retirement Benefit as of the date of termination. Benefit begins on the Nonnal or Early Retirement date. GRS City of Atlantic Beach General Employees' Retirement System 9/30/2015 Actuarial Valuation I E-3 Vested Termination-Continued Nonnal 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% 1011/2010 16.60% 5.000% 21.60% 1011/2011 24.53% 5.000% 29.53% 1011/2012 26.34% 5.000% 31.34% 10/1/2013 29.19% 6.000% 35.19% 1011/2014 31.59% 6.000% 37.59% 10/1/2015 46.39% 6.000% 52.39% 1011/2016 56.66% 6.000% 62.66% 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 9/30/2015 Actuarial Valuation I E-4 X. Deferred Retirement Option Plan Eligibility: Benefit: Maximum Plan members are eligible for the DROP upon attaimnent 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 FAC are fi·ozen upon ently into the DROP. The monthly retirement benefit as described under Nonnal 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: Participants' 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 participants, DROP account balances will be credited or debited quarterly with interest based on Plan's net investment eamings or losses for that quarter. Lump Sum or roll-over to a qualified retirement account. GRS City of Atlantic Beach General Employees' Retirement System 9/30/2015 Actuarial Valuation I E-5 SECTIONF COMPARATIVE SUMMARY OF PRINCIPAL VALUATION RESULTS COMPARATIVE SUMMARY OF PRINCIPAL VALUATION RESULTS September 30, 2015 September 30, 2014 A. Participant Data Number Included: Actives 43 48 Service Retirees & Beneficiaries 61 55 Disability Retirees 3 4 Terminated Vested Members 12 12 Total Members and Beneficiaries 119 119 Total Annual Payroll (Excluding DROP Participants) $2,074,607 $2,397,875 Annual Valuation Payroll 2,074,607 2,397,875 Expected Annual Payroll in Contribution Year 2,074,607 2,397,875 Total Annualized Benefits Service Retirees & Beneficiaries 1,024,754 853,087 Disability Retirees 46,861 56,377 Terminated Vested Members 164,653 122,575 B. Assets (Market Value)* Cash and Short Term Investments 4,915,350 4,729,566 Treasury and Agency Bonds & Notes 96,412 251,173 Common and Preferred Stocks 9,339,085 4,758,558 Mutual or Pooled Bond Funds 0 0 Corporate Bonds 622,887 4,994,776 Other Securities 29,039 144,640 Net Receivables & Payables 5,565 40,595 Total 15,008,338 14,919,308 Funding (Actuarial) Value !5,958,619 15,167,400 Assets include: Accumulated active member contributions 1,121,958 1,204,929 (with interest if applicable) c. Actuarial present value of accrued benefits (i) Vested accrued benefits Retired members and benefitciaries (excl DROP balances) 11,205,658 9,629,899 Terminated members I ,438,314 998,673 DROP Balances 252,720 273,114 Active members (includes non-forfeitable members contributions of 1,121,958 and 1,204,929) 5,785,984 6,741,139 Total 18,682,676 17,642,825 (ii) Non-vested accrued benefits 0 0 (iii) Total actuarial p.v. of accrued benefits 18,682,676 17,642,825 (iv) Actuarial p.v. of accrued benefits at begin. of year 17,642,825 15,181,382 (v) Changes attributable to: Amendments none none Method change (DROP treatment) 0 273,1 !4 Assumptions 0 1,675,679 Operation of decrements 2,071,042 1,219,868 Benefit payments (1,031,191) (707,218) Other none none (vi) Net change (PV AB measurement Method Change) 1,039,851 2,461,443 (vii) Actuarial p.v. of accr. beneftts at end of year 18,682,676 17,642,825 *DROP balances are included in Plan Assets beginning with 9/30/2014 valuation. GRS City of Atlantic Beach General Employees' Retirement System 9/30/2015 Actuarial Valuation I F-1 GRS COMPARATIVE SUMMARY OF PRINCIPAL VALUATION RESULTS September 30,2015 September 30,2014 D. Liabilities-Actuarial Present Value of Future Benefits 1. Active Members Service Retirement Benefits Vesting Benefits Disability Benefits Preretirement Death Benefits Return of Member Contributions Total Actives 2. Inactive Members Service Retirees & Beneficiaries Disability Retirees Terminated Vested Members Total Inactive Members 3. DROP Balances 3. Total Present Value for All Members Total Present Value of: Future Salaries Future Employee Contributions Future Contributions from Other Sources Derivation of Current Employet· Unfunded Actuarial Accrued Liability (UAA.L) a. Total UAAL for Prior Valuation Date b. Employer Normal Cost for this period c. Interest acccrued on (a) and (b) d. Contributions for this period e. Interest accrued on (d) f. Changes due to: Plan Amendment Assumption Changes Asset Method Actuarial (Gain) Loss g. Total Current UAAL: a+b+c+d+e+f $9,703,457 $I I ,057,889 390,470 319,225 244,497 250,285 233,309 256,659 9,093 41,929 10,580,826 I 1,925,987 10,738,561 9,104,369 467,097 525,530 1,438,314 998,673 12,643,972 10,628,572 252,720 273,II4 23,477,518 22,827,673 16,233,175 18,159,759 973,991 1,089,585 6,544,908 6,570,688 $4,856,100 $3,466,268 282,070 260,545 359,672 287,723 (863,613) (950,980) (30,226) (38,039) 0 0 0 1,817,483 0 0 379,312 13,100 4,983,315 4,856 100 Original and Current Unfunded Actuarial Accmed Liabilities Date Item Description 9/30/2012 Original UAAL * 9/30/20!3 Experience Gain 9/30/2014 Experience Loss 9/30/2014 Assumption Changes 9/30/2015 Experience Loss TOTAL Years Remaining 7 8 9 9 10 Amortization Payment $523,991 (27,533) 1,805 250,4 I 5 50,472 $799,150 *Reflects the Actuarial Impact Statement for Ordinance 58-13-37. City of Atlantic Beach General Employees' Retirement System Original Current Amount Unfunded $4,133,993 $3,021,6!3 (208,1 09) (!75,914) 13, I 00 12,583 1,817,483 1,745,721 379,312 379,312 $6,135,779 $4,983,315 9/30/2015 Actuarial Valuation I F-2 COMPARATIVE SUMMARY OF September 30, 2014 PRINCIPAL VALUATION RESULTS September 30, 2015 E. Pension Cost Entry Age Normal Cost for: Service Retirement Benefits $281,209 $334,107 Vesting Benefits 30,867 18,599 Disability Benefits 15,794 17,127 Preretirement Death Benefits 6,763 7,980 Return of Member Contributions 13,971 24,280 Total Actives 348,604 402,093 Administrative Expenses 41,909 31,529 Expected Member Contributions 131,134 151,552 Total Employer Normal Cost 259,379 282,070 Payment Required to Amortize Unfunded Actuarial Accrued Liability 799,150 719,527 Total Contribution at Valuation Date 1,058,529 1,001,597 Total Contribution Adjusted for Frequency of Payments and Interest to Next Following Fiscal Year 1,175,572 1,112,344 %of Expected Payroll 56.66% 46.39% Amount Expected to be Contributed by Members Next FY 124,476 143,873 %of Expected Payroll 6.00% 6.00% F. Past Contributions-For the Fiscal Years Ended September 30 of2014 and 2015 Required Contribution Determined in the Valuation as of September 30, 2013 September 30, 20 12 for the Fiscal Year Ending September 30,2015 September 30, 2014 by the Plan Sponsor $863,613 $950,980 by Members $164,006 $195,496 Actual Contribution for the Fiscal Year ended September 30, 2015 September 30, 2014 by the Plan Sponsor $863,613 950,980 by Members $136,191 157,383 $379,312 $13,100 H. I. Plan to Amortize Unfunded Actuarial Accrued Liability 10 year funding of the Original Unfunded Actuarial Accrued Liability, I 0 year funding of any emerging Gains or Losses, or assumption changes. 2. Schedule Illustrating the Am01tization of the Unfunded Actuarial Accrued Liability (UAAL) Year Projected UAAL 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 3. Action taken since last actuarial valuation. GRS Contribution sufficient to satisfY the total required contribution. City of Atlantic Beach General Employees' Retirement System 4,983,315 4,477,049 3,935,352 3,355,736 2,735,548 2,071,945 1,361,891 602,133 349,862 50,472 0 9/30/2015 Actuarial Valuation I F-3 COMPARATIVE SUMMARY OF PRINCIPAL VALUATION RESULTS I. 1. Three-Year Comparison of Actual and Assumed Salary Increases (Annualized) VearEnded 9/30/2013 9/30/2014 9/30/2015 Actual 1.3% 4.8% 3.3% Ass 5.9% 5.9% 5.4% 2. Three-Year Comparison oflnvestment Retum (Actuarial Value) Year Ended 9/30/2013 9/30/2014 9/30/2015 Actual I Assumed I 8.0% 8.0% 6.3% 5.7% 8.0% 7.0% 3. Average Annual Growth in Payroll, Last Ten Years (if applicable) Valuation Date 9/30/2005 9/30/2006 9/30/2007 9/30/2008 9/30/2009 Total Payroll 3,182,450 3,194,700 3,475,757 3,726,713 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 9/30/2014 2,397,875 9/30/2015 2,074,607 Total %Increase Last Ten Years (34.81 )% Annual % Increase ( 4.19)% Thirty-year Forecast 0.00% J. Benefits and Expenses of Plan not Explicitly or Implicitly Provided in Valuation NONE K. Trends not taken into Account but which are likely to Result in Future Cost Increases GRS NONE City of Atlantic Beach General Employees' Retirement System 9/30/2015 Actuarial Valuation I F-4