Item 8E- Police Pension OrdinanceORDINANCE NO.
AN ORDINANCE OF THE CITY OF ATLANTIC BEACH,
AMENDINGCHAPfER2,ADMINISTRATION,ARTICLEVI,
EMPLOYEE BENEFITS, DIVISION 4, POLICE OFFICERS'
RETIREMENT SYSTEM, OF THE CODE OF ORDINANCES
OF THE CITY OF ATLANTIC BEACH; AMENDING
SECTION 2-300,DEFINITIONS; AMENDING SECTION 2-301,
MEMBERSHIP; AMENDING SECTION 2-303, FINANCES
AND FUND MANAGEMENT; AMENDING SECTION 2-305,
BENEFIT AMOUNTS AND ELIGIBILITY; AMENDING
SECTION 2-310.4, MAXIMUM PENSION; AMENDING
SECTION 2-310.5, MINIMUM DISTRIBUTION OF
BENEFITS; AMENDING SECTION 2-310.16, PRIOR POLICE
SERVICE; AMENDING SECTION 2-310.18, DEFERRED
RETIREMENT OPTION PLAN; ADDING SECTION 2-310.19,
SUPPLEMENTAL BENEFIT COMPONENT FOR SPECIAL
BENEFITS; CHAPTER 185 SHARE ACCOUNTS;
PROVIDING FOR CODIFICATION; PROVIDING FOR
SEVERABILITY OF PROVISIONS; REPEALING ALL
ORDINANCES IN CONFLICT HEREWITH AND PROVIDING
AN EFFECTIVE DATE.
BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY OF A1LANTIC
BEACH, FLORIDA:
SECTION 1: That Chapter 2, Administration, Article VI, Employee Benefits, Division 4,
Police Officers' Retirement Plan, of the Code of Ordinances of the City of Atlantic Beach, is hereby
amended by amending Section 2-300, Definitions, to amend the definitions of "Actuarial
Equivalent", "Credited Service", ''Effective Date", and "Spouse", to read as follows:
* * * * *
Actuarial equivalent means a benefit or amount of equal value, based upon the RP-2000
Combined Healthy Unisex (50/50 mix) Male Generational Mortality Table projected by Scale AA,
and an interest rate of eight (8%) per arn1tnn equal to the investment return assumption set forth in
the last actuarial valuation approved by the board. This definition may only be amended by the city
pursuant to the recommendation of the board using assumptions adopted by the board with the
advice of the plan's actuary, such that actuarial assumptions are not subject to city discretion.
* * * * *
Credited service means the total nmnber of years and fractional parts of years of service as
a Police 0 :fficer with member contributions, when required, omitting intervening years or fractional
parts of years when such member was not employed by the city as a Police Officer. A member may
voluntarily leave his accumulated contributions in the fund for a period of five (5) years after leaving
the employ of the Police depa1iment pending the possibility ofbeing reemployed as a Police Officer,
without losing credit for the time that he was a member of the system If a vested member leaves
the employ of the Police depmiment, his accumulated contributions will be returned only upon his
written request. If a member who is not vested is not reemployed as a Police Officer with the Police
department within five (5) years, his accUlllulated contributions, if one-thousand dollars ($1,000.00)
or less shall be retmned. If a Member who is not vested is not reemployed within five (5) years, his
Accumulated Contnbutions, if more than one-thousand dollars ($1,000.00), will be returned only
upon the written request of the Member and upon completion of a written election to receive a cash
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Agenda Item 8E
March 27, 2017
1rnnp Slll11 or to rollover the 1rnnp Slll11 amount on fonrn designated by the Board. Upon rettnn of
a member's accumulated contributions, all of his rights and benefits under the system are forfeited
and terminated. Upon any reemployment, a Police Officer shall not receive credit for the years and
fractional parts of years of service for which he has withdrawn his acclU11ulated contributions from
the fund, unless the Police Officer repays into the fund the contributions he has withdrawn, with
interest, as determined by the board, within ninety (90) days after his reemployment.
The years or fractional parts of a year that a member perfonrn "Qualified Military Service"
consisting of voltllltary or invollllltary "service in the uniformed services" as defined in the
Uniformed Services Employment and Reemployment Rights Act (USERRA) (P.L.103-353), after
separation from employment as a Police Officer with the city to perform training or service, shall be
added to his years of credited service for all purposes, including vesting, provided that:
(1) The member is entitled to reemployment under the provisions ofUSERRA.
(2) The member returns to his employment as a Police Officer within one year from the
earlier of the date of his militmy discharge or his release from active service, unless
otherwise required by USERRA.
(3) The maximum credit for military service pursuant to this paragraph shall be five (5)
years.
(4) This paragraph is intended to satisfY the minimum requirements ofUSERRA. To the
extent that this paragraph does not meet the minimum standards ofUSERRA, as it
may be amended :fimn time to time, the minimlll11 standards shall app]y.
In the event a member dies on or after January 1, 2007, while performing USERRA Qualified
Military Service, the beneficiaries of the member are entitled to any benefits (other than benefit
accruals relating to the period of qualified militmy service) as if the member had resumed
employment and then died while employed.
Beginning January 1, 2009, to the extent required by section 414(u)(12) of the code, an
individual receiving differential wage payments (as defined under section 3401(h)(2) of the code)
from an employer shall be treated as employed by that employer, and the differential wage payment
shall be treated as compensation for purposes of app]ying the limits on annual additions under
section 415(c) ofthe code. This provision shall be applied to all similar]y situated individuals in a
reasonably equivalent manner.
Leave conversions of unused accrued paid time off shall not be petmitted to be applied
toward the accrual of credited service either during each plan year of a member's employment with
the City or in the plan year in which the member terminates employment.
Effective date means the date on which thi5 01dinanee beeome5 di:etive June 10, 2013.
* * * * *
Spouse means the law:ful wifu ot htJ5band of a membet ot tetitee member's or retiree's spouse
under applicable law at the time benefits become payable.
* * * * *
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Agenda Item 8E
March 27, 2017
SECTION 2: That Chapter 2, Adn:rinistration, Article VI, Employee Benefits, Division 4,
Police Officers' Retirement Plan, of the Code of Ordinances of the City of Atlantic Beach, is hereby
amended by amending Section 2-301, Membership, to read as follows:
Sec. 2-301. Membership.
Conditions of eligibility. All police officers as of the effective date, and all future new police
officers, shall become members of this system as a condition of employment. Notwithstanding the
previous sentence, a new employee who is hired as the Police Chief may, within sixty (60) days of
appointment as Police Chief upon employment as Police Chief; notifY the board and the City, in
writing, of his election to not be a member of the system CtUTent employees of the City who are
selected to become Police Chief are not eligtble for the opt-out provided for herein. In the event of
any such election, he shall be barred from future membership in the system and any vested aeenred
benefit shaH be retained and paid when other wise payable lrerein; or eontribtttiom made after
employment and prior to opting ottt shaH be refunded. Thereafter, contributions to the plan in
accordance with §2-304 shall not be required, he shall not be eligible to be elected as a member
trustee on the board or vote for a member trustee and shall not be eligtble for any other benefits from
the plan
SECTION 3: That Chapter 2, Administration, Article VI, Employee Benefits, Division 4,
Police Officers' Retirement Plan, of the Code of Ordinances of the City of Atlantic Beach, is hereby
amended by amending Section 2-303, Finances and Fund Management, subsection (f)(2)c., to read
as follows:
* * * * *
c. In addition, the board may, upon recommendation by the board's investment
consultant, make investments in group trusts meeting the requirements of
Internal Revenue Service Revenue Ruling 81-1 00 .. and Revenue Ruling 2011-
1, IRS Notice 2012-6 and Revenue Ruling 2014-21 or successor rulings or
guidance of similar import, and operated or maintained exclusively for the
commingling and collective investment of monies, provided that the funds in
the gt·oup trust consist exclusively of trust assets held under plans qualified
under section 401(a) of the code, individual retirement accounts that are
exempt under section 408( e) of the code, eligtble governmental plans that
meet the requirements of section 457 (b) of the code, and governmental plans
under 40 1 (a )(24) of the code. For tllis purpose, a trust includes a custodial
account or a separate tax fuvored account maintained by an insurance
company that is treated as a trust under section 401(f) or under section
457(g)(3) of the code. While any portion of the assets of the fund are
invested in such a gt·oup trust, such group trust is itself adopted as a part of
the system or plan.
1. Any collective or common group trust to which assets of the fund are
transfened pursuant to subsection c. shall be adopted by the board as
part of the plan by executing appropriate participation, adoption
agreements, and/or trust agt·eements with the group trust's trustee.
2. The separate account maintained by the group trust for the plan
pursuant to subsection c. shall not be used for, or diverted to, any
purpose other tlmn for the exclusive benefit of the members and
beneficiaries of the plan.
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Agenda Item 8E
March 27, 2017
~ For purposes of valuation, the value of the separate accmmt
maintained by the group trust for the plan shall be the fuir market
value of the portion of the group trust held for the plan, determined
in accordance with generally recognized valuation procedures.
* * * * *
SECTION 4: That Chapter 2, Administration, Article VI, Employee Benefits, Division 4,
Police Officers' Retirement Plan, ofthe Code of Ordinances of the City of Atlantic Beach, is hereby
amended by amending Section 2-305, Benefit AmolUlts and Eligibility, subsection (a), Normal
Retirement Date, to read as follows:
* * * * *
(a) Normal retirement age and date. F01 members hired befure January 1, 2013, a
member's normal ret:iternent date shall be the :fitst day of the month coincident ~ith; 01 next
fullo ~:it1g the earlier of the attamrnent of age fifty (50) and the completion of twenty (20) years of
credited seniee, the attainment ofage fifty-me (55) and the completion oftetl (10) years ofetedited
service, the completion of twenty-me (25) years of credited service regardless of age, or the
attaimn::nt of age sixty (60) and the completion of me (5) years of credited set vice. For members
h:ited on or after Jatmary 1, 20 13, a member's normal retirement date shall be the :fitst day of the
month co:it1eident ~ith; 01 next follo ~ ing the earlier of the attainment of age fifty-me (55) and the
completion of ten (1 0) years of credited set vice, or the attairm:tent of age :fifty-two (52) and the
completion of twenty-five (25) years of credited set vice. A member may ret:ite on his normal
tet:iternent date or on the fust day of any month thereafter, and each member shall become one
htmdred (1 00) percent vested itt his accmed benefit on the member's n01malret:itement date. Normal
ret:itement tttlder the system is ret:itement fi:om employment ~ith the city on or after the normal
ret:itement date.
ill For members hired before January 1, 2013, a member's normal retirement age is the
earlier of the attainment of age fifty (50) and the completion of twenty (20) years of
credited service, the attainment of age fifty-five (55) and the completion often (10)
years of credited service, the completion of twenty-five (25) years of credited service,
regardless of age, or the attainment of age sixty (60) and the completion of five (5)
years of credited service.
ill For members hired on or after January 1, 2013, a member's normal retirement age
is the earlier of the attainment of age fifty-five (55) and the completion often (10)
years of credited service, or the attainment of age fifty-two (52) and the completion
oftwenty-five (25) years of credited service.
Each member shall become one htmdred percent (100%) vested in his accrued benefit at
normal retirement age. A member's nomml retirement date shall be the first day of the month
coincident with or next following the date the member retires from the city after attaining normal
retirement age.
* * * * *
SECTION 5: That Chapter 2, Administration, Article VI, Employee Benefits, Division 4,
Police Officers' Retirement Plan, of the Code of Ordinances ofthe City of Atlantic Beach, is hereby
amended by amending Section 2-310.4, Maximum Pension, subsections (h) and (Q(2), and by adding
subsection (m), to read as follows:
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Agenda Item 8E
March 27, 2017
* * * * *
(h) Ten thousand dollar ($10,000) limit; less than ten years of service. Notwithstanding
anything in this section 2-310.4, the retirement benefit payable with respect to a member shall be
deemed not to exceed the limit set forth in this subsection (h) of section 2-310.4 if the benefits
payable, with respect to such member under this system and under all other qualified defmed benefit
pension plans to which the City contributes, do not exceed ten thousand dollars ($10,000) for the
applicable limitation year and or for any prior limitation yearl. and the City has not at any time
maintained a qualified defined contnbution plan in which the member participated; provided,
however, that if the member has completed less than ten (10) years of credited service with the City,
the limit under this subsection (h) of section 2-310.4 shall be a reduced limit equal to ten thousand
dollars ($10,000) multiplied by a fraction, the numerator of which is the number of the member's
years of credited service and the denominator of which is ten (1 0).
* * * * *
(D(2) No member of the system shall be allowed to receive a retirement benefit or pension
which is in part or in whole based upon any service with respect to which the
member is already receiving, or will receive in the future, a retirement benefit or
pension from a different employer's retirement system or plan. This restriction does
not apply to social security benefits or federal benefits under Chapter 69-1223, Title
10, U.S. Code .
.(!ill Effect o[Direct Rollover on 415(b) Limit. Ifthe plan accepts a direct rollover of an
employee's or former employee's benefit from a defined contribution plan qualified under Code
Section 401(a) which is maintained by the employer, any annuity resulting from the rollover amount
that is determined using a more fuvorable actuarial basis than required under Code Section 417(e)
shall be included in the annual benefit for purposes of the limit under Code Section 415(b).
SECTION 6: That Chapter 2, Administration, Article VI, Employee Benefits, Division 4,
Police Officers' Retirement Plan, of the Code of Ordinances of the City of Atlantic Beach, is hereby
amended by amending Section 2-310.5, Minimum Distnbution of Benefits, subsection (b )(2)d., to
read as follows:
(b)(2) d.
* * * * *
If the member's surviving spouse is the member's sole designated beneficiary
and the surviving spouse dies after the member but before distributions to the
surviving spouse begin, this subsection (b )(2), other than subsection (b )(2)a.,
will apply as if the surviving spouse were the member.
For purposes of this subsection (b )(2). and sttbseetion (e), distributions are
considered to begin on the member's required beginning date or, if subsection
(b )(2)d. applies, the date of distnbutions are required to begin to the surviving
spouse under subsection (b )(2)a. If annuity payments irrevocably commence
to the member before the member's required beginning date (or to the
member's surviving spouse before the date distributions are required to begin
to the surviving spouse under subsection (b )(2)a.) the date distributions are
considered to begin is the date distributions actually conm1ence.
* * * * *
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Agenda Item 8E
March 27, 2017
SECTION 7: That Chapter 2, Administration, Article VI, Employee Benefits, Division 4,
Police Officers' Retirement Plan, of the Code of Ordinances of the City of Atlantic Beach, is hereby
amended by amending Section2-310.16, Prior Police Service, subsection (5), to read as follows:
* * * * *
(5) In no event, however, may credited service be purchased pursuant to this section for
prior service with any other municipal, county or state law enforcement department,
if such prior service forms or will form the basis of a retirement benefit or pension
from a different employer's retirement system or plan as set forth in section 2-310.4,
subsection~ ffiill.
* * * * *
SECTION 8: That Chapter 2, Administration, Article VI, Employee Benefits, Division 4,
Police Officers' Retirement Plan, of the Code of Ordinances of the City of Atlantic Beach, is hereby
amended by amending Section 2-310.18, Defened Retirement Option Plan, to read as follows:
Sec. 2-310.18. Deferred retirement option plan.
(a)
(1)
(2)
ill
(b)
(1)
(2)
(3)
(4)
Definitions. As used in this Section 2-310.18, the following definitions apply:"
''DROP" --The City of Atlantic Beach Police Officers' Retirement System Defened
Retirement Option Plan.
''DROP Account" --The account established for each DROP participant under
subsection (c).
"Total return of the assets" --For purposes of calculating earnings on a member's
DROP account pursuant to subsection (c)(2)b., for each fiscal year quarter, the
percentage increase (or decrease) in the interest and dividends eamed on investments,
including realized and unrealized gains (or losses), ofthe total Plan assets.
Participation.
Eligibility to Participate. In lieu of terminating his employment as a police officer,
any member who is eligtble for normal or early retirement under the system may elect
to defer receipt of such service retirement pension and to participate in the DROP.
Election to Participate. A member's election to participate in the DROP must be
made in writing in a time and manner determined by the board and shall be effective
on the first day ofthe first calendar month which is at least fifteen (15) business days
after it is received by the board.
Period of Participation. A member who elects to participate in the DROP under
subsection (b )(2), shall participate in the DROP for a period not to exceed sixty ( 60)
months beginning at the time his election to participate in the DROP first becomes
effective. An election to participate in the DROP shall constitute an inevocable
election to resign :fi·om the service of the City not later than the date provided for in
the previous sentence. A member may participate only once.
Termination of Participation.
a. A member's participation in the DROP shall cease at the earlier of
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Agenda Item 8E
March 27, 2017
1. the end of his permissible period of participation in the DROP as
detennined under subsection (b )(3); or
2. tennination ofhis employment as a police officer.
b. Upon the member's tennination of participation in the DROP, pursuant to
subsection a. I. above, all amounts provided for in subsection ( c )(2), including
monthly benefits and investment earnings and losses, shall cease to be
transferred 1i'om the system to his DROP Account. Any amounts remaining
in his DROP Account shall be paid to him in accordance with the provisions
of subsection (d) when he tenninates employment as a police officer.
c. A member who terminates his participation in the DROP under this
subsection (b)( 4) shall not be pennitted to again become a participant in the
DROP.
(5) Effect of DROP Participation on the System.
a. A member's credited service and his accrued benefit under the system shall
be determined on the date his election to participate in the DROP first
becomes effective. For purposes of detennining the accrued benefit, the
member's salary for the purposes of calculating his average fual
compensation shall include an amount equal to any lump sum payments
which would have been paid to the member and included as salary as defined
herein, had the member retired under normal retirement and not elected
DROP participatioiL Member contributions attributable to any lump sums
used in the benefit calculation and not actually received by the member shall
be deducted from the first payments to the member's DROP Account. The
member shall not accrue any additional credited service or any additional
benefits under the system (except for any supplemental benefit payable to
DROP participants or any additional benefits provided under any cost-of-
living adjustment for retirees in the system) while he is a participant in the
DROP. After a member commences participation, he shall not be permitted
to again contribute to the system nor shall he be eligtble for disability or pre-
retirement death benefits, except as provided for in Section 2-310.17,
Reemployment After Retirement.
b. No amounts shall be paid to a member from the system while the member is
a participant in the DROP. Unless othetwise specified in the system, if a
member's participation in the DROP is tetminated other than by terminating
his employment as a police officer, no amounts shall be paid to him from the
system until he terminates his employment as a police officer. Unless
otherwise specified in the system, amounts transferr-ed from the system to the
member's DROP Account shall be paid directly to the member only on the
termination ofhis employment as a police officer.
(c) Funding.
(1) Establishment of DROP Account. A DROP Account shall be established for each
member participating in the DROP. A member's DROP Account shall consist of
amounts transferred to the DROP under subsection (c)(2), and eamings or losses on
those amounts.
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Agenda Item 8E
March 27, 2017
(2) Transfers From Retirement System.
a. As ofthe first day of each month of a member's period ofparticipation in the DROP,
the monthly retirement benefit he would have received under the system had he
terminated his employment as a police officer and elected to receive monthly benefit
payments thereunder shall be transferred to his DROP Account, except as otherwise
provided for in subsection (b)(4)b. A member's period of participation in the DROP
shall be determined in accordance with the provisions of subsections (b )(3) and
(b)(4), but in no event shall it continue past the date he terminates his employment
as a police officer.
b. Except as otherwise provided in subsection (b)(4)b., a member's DROP
Account under this subsection (c)(2) shall be debited or credited after each
fiscal year quarter with earnings, to be credited or debited to the member's
DROP account, determined as of the last business day of each fiscal year
quarter and debited or credited as of such date, determined as follows:
The average daily balance in a member's DROP Account shall be credited or
debited at a rate equal to the net investment retum realized by the system for
that quarter. ''Net investment return'' for the pmpose of this paragraph is the
total return of the assets in which the Member's DROP Account is invested
by the board net of brokerage commissions, transaction costs and
management fees.
For purposes of calculating eamings on a member's DROP account pmsuant
to this subsection (c)(2)b., brokerage commissions, transaction costs, and
management fees shall be determined for each qua1ier by the investment
consultant pmsuant to contracts with fund managers as reported in the
custodial statement. The investment consultant shall report these quarterly
contractual fees to the board. The investment consultant shall also report the
net investment retum for each manager and the net investment return for the
total plan assets.
c. A member's DROP Account shall only be credited or debited with eamings
or losses and monthly benefits while the member is a participant in the
DROP. A member's final DROP account value for distribution to the
member upon tem1ination of pa1ticipation in the DROP shall be the value of
the account at the end of the qumier in1mediately preceding tennination of
participation plus any monthly periodic additions made to the DROP account
subsequent to the end of the previous quarter and prior to distnbution. If a
Member fuils to tenninate employment after participating in the DROP for
the permissible period of DROP participation, then beginning with the
member's first month of employment following the last month of the
pem1issible period of DROP pa1iicipation, the member's DROP Account will
no longer be credited or debited with eamings or losses, nor will monthly
benefits be transferred to the DROP accmmt. All such non-transferred
amounts shall be forfeited and continue to be forfeited while the member is
employed by the Police Department, and no cost-of-living adjustments shall
be applied to the member's credit dming such period of continued
employment. A member employed by the Police Department after the
pem1issible period of DROP pmiicipation will still not be eligtble for pre-
retirement death and disability benefits, and will not accrue additional
Credited Service except as provided for in Section 2-310.17, Reemployment
After Retirement.
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Agenda Item 8E
March 27, 2017
(d) Distribution of DROP Accounts on Termination of Employment.
(1) Eligibility for Benefits. A member shall receive the balance in his DROP Accmmt
in accordance with the provisions of this subsection (d) upon his termination of
employment as a police officer. Except as provided in subsection (d)(5), no amounts
shall be paid to a member from the DROP prior to his termination of employment as
a police officer.
(2) Form of Distribution.
a. Unless the member elects othetwise, distribution of his DROP Account shall
be made in a lump sum, subject to the direct rollover provisions set fmth in
subsection (d)(6). Elections tmder this paragraph shall be in writing and shall
be made in such time or manner as the board shall determine.
b. Notwithstanding the preceding, if a member dies before his benefit is paid,
his DROP Account shall be paid to his beneficiary in such optional form as
his beneficiary may select. If no beneficiary designation is made, the DROP
Account shall be distributed to the member's estate.
(3) Date of Payment of Distribution. Except as otherwise provided in this subsection
(d), distribution of a member's DROP Account shall be made as soon as
administratively practicable following the membe1Js termination of employment.
Distribution of the amount in a member's DROP account will not be made unless the
member completes a written request for distribution and a written election, on forms
designated by the board, to either receive a cash lump sum or a rollover of the lump
sum amount.
(4) Proof of Death and Right of Beneficiary or Other Person. The board may require
and rely upon such proof of death and such evidence of the right of any beneficiary
or other person to receive the value of a deceased member's DROP Account as the
board may deem proper and its determination of the right of that beneficiary or other
person to receive payment shall be conclusive.
(5) Distribution Limitation. Notwithstanding any other provision of subsection (d), all
distributions fi·om the DROP shall conform to the ''Minimum Distribution Of
Benefits" provisions as provided for herein.
(6) Direct Rollover of Certain Distributions. This subsection applies to distributions
made on or after January 1, 2002. Notwithstanding any provision of the DROP to the
contrary, a distributee may elect to have any portion of an eligtble rollover
distribution paid in a direct rollover as othetwise provided under the System in
Section 2-310.13.
(e) Administration of DROP.
(1) Board Administers the DROP. The general administration of the DROP, the
responsibility for carrying out the provisions of the DROP and the responsibility of
overseeing the investment of the DROP's assets shall be placed in the board. The
members ofthe board may appoint from their number such subco111111ittees with such
powers as they shall determine; rna y adopt such administrative procedures and
regulations as they deem desirable for the conduct oftheir affuirs; may authorize one
or more of their number or any agent to execute or deliver any instrument or make
any payment on their behalf, may retain cmmse~ employ agents and provide for such
clerica~ accounting, actuarial and consulting services as they may require in carrying
9
Agenda Item 8E
March 27, 2017
out the provisions of the DROP; and may allocate among themselves or delegate to
other persons all or such portion of their duties under the DROP, other than those
granted to them as trustee under any trust agreement adopted for use in implementing
the DROP, as they, in their sole discretion, shall decide. A trustee shall not vote on
any question relating exclusively to himself
(2) Individual Accounts, Records and Reports. The board shall maintain records
showing the operation and condition of the DROP, including records showing the
individual balances in each member's DROP Account, and the board shall keep in
convenient form such data as may be necessary for the valuation of the assets and
liabilities of the DROP. The board shall prepare and distribute to members
participating in the DROP and other individuals or file with the appropriate
governmental agencies, as the case may be, all necessary descriptions, reports,
information retums, and data required to be distributed or filed for the DROP
pursuant to the IRC and any other applicable laws.
(3) Establishment of Rules. Subject to the limitations ofthe DROP, the board from time
to time shall establish mles for the administration of the DROP and the transaction
of its business. The Board shall have discretionaty authority to construe and interpret
the DROP (including but not limited to determination of an individuars eligibility for
DROP participation, the right and amount of any benefit payable under the DROP
and the date on which any individual ceases to be a participant in the DROP). The
determination of the board as to the interpretation of the DROP or its detern1ination
of any disputed questions shall be conclusive and final to the extent pennitted by
applicable law.
(4) Limitation of Liability.
a. The trustees shall not incur any liability individually or on behalf of any other
individuals for any act or fuilure to act, made in good fuith in relation to the
DROP or the funds of the DROP.
b. Neither the board nor any trustee of the board shall be responsible for any
repmis furnished by any expert retained or employed by the board, but they
shall be entitled to rely thereon as well as on certificates fi.unished by an
accountant or an actuary, and on all opinions of counsel. The board shall be
fully protected with respect to any action taken or suffered by it in good fuith
in reliance upon such expert, accountant, actua1y or counseL and all actions
taken or suffered in such reliance shall be conclusive upon any person with
any interest in the DROP.
(f) General Provisions.
ill The DROP is not a separate retirement plan. Instead, it is a program under which
a member who is eligtble for normal retirement under the system may elect to accme
future retirement benefits in the mmmer provided in this section 2-310.18 for the
remainder of his employment, rather than in the normal mam1er provided under the
plan. Upon termination of employment, a member is entitled to a lump sun1
dish1bution ofhis or her DROP account balance or may elect a rollover. The DROP
account distribution is in addition to the member's monthly benefit.
ill Notional account. The DROP account established for such a member is a notional
account, used only for the purpose of calculation of the DROP distribution amount.
It is not a separate account in the system. There is no change in the system's assets,
and there is no distribution available to the member until the member's termination
1 0
Agenda Item 8E
March 27, 2017
(t 2)
(:2-2)
(4 1i)
from the DROP. The member has no control over the investment of the DROP
account.
No emvlover discretion. The DROP benefit is detennined pursuant to a specific
fmmula which does not involve employer discretion.
IRC limit. The DROP account distnbution, along with other benefits payable from
the system, is subject to limitation under Internal Revenue Code Section 415(b ).
Amendment of DROP. The DROP may be amended by an ordinance of the City at
any time and from time to time, and retroactively if deemed necessary or appropriate,
to amend in whole or in part any or all of the provisions of the DROP. However,
except as otherwise provided by law, no amendment shall make it possible for any
part of the DROP's fi.mds to be used for, or diverted to, purposes other than for the
exclusive benefit of persons entitled to benefits under the DROP. No amendment
shall be made which has the effect of decreasing the balance of the DROP Account
of any member.
Facility of Payment. If a member or other person entitled to a benefit under the
DROP is unable to care for his affuirs because ofilh1ess or accident or is a minor, the
board shall direct that any benefit due him shall be made only to a duly appointed
legal representative. Any payment so made shall be a complete discharge of the
liabilities ofthe DROP for that benefit.
Information. Each member, beneficiary or other person entitled to a benefit, before
any benefit shall be payable to him or on his account under the DROP, shall file with
the Board the information that it shall require to establish his rights and benefits
under the DROP.
Prevention of Escheat. Ifthe board carmot ascertairt the whereabouts of any person
to whom a payment is due under the DROP, the Board may, no earlier than three (3)
years fi·om the date such payment is due, mail a notice of such due and owing
payment to the last known address of such person, as shown on the records of the
board or the City. If such person has not made written claim therefor within three (3)
months of the date of the mailing, the board may, if it so elects and upon receiving
advice :fi'om counsel to the system, direct that such payment and all remaining
payments otherwise due such person be canceled on the records of the system Upon
such cancellation, the system shall have no further liability therefor except that, in the
event such person or his beneficiary later notifies the board of his whereabouts and
requests the payment or payments due to him under the DROP, the amount so applied
shall be paid to him in accordance with the provisions of the DROP.
Written Elections, Notification.
a. Any elections, notifications or designations made by a member pursuant to
the provisions ofthe DROP shall be made in writing and filed with the board
in a tin1e and manner determined by the board under rules uniformly
applicable to all employees similarly situated. The board reserves the right
to change fi·om tirt1e to tin1e tl1e manner for making notifications, elections
or designations by members under the DROP if it determines after due
dehberation that such action is justified in that it improves the ad:rrrinistration
of the DROP. h1 the event of a conflict between the provisions for making
an election, notification or designation set forth in the DROP and such new
admirtistrative procedures, those new administrative procedures shall prevail
1 1
Agenda Item 8E
March 27, 2017
b. Each member or retiree who has a DROP Accmmt shall be responsible for
furnishing the Board with his current address and any subsequent changes ill
his address. Any notice required to be given to a member or retiree hereunder
shall be deemed given if directed to him at the last such address given to the
board and mailed by registered or certified United States mail If any check
mailed by registered or certified United States mail to such address is
returned, mail.ing of checks will be suspended until such time as the member
or retiree notifies the board ofhis address.
(61Q) Benefits Not Guaranteed. All benefits payable to a Member from the DROP shall
be paid only :fi'om the assets of the member's DROP Accmmt and neither the City nor
the board shall have any duty or liability to furnish the DROP with any funds,
securities or other assets except to the extent required by any applicable law.
(9-ll) Construction.
a. The DROP shall be construed, regulated and administered under the laws of
Florida, except where other applicable law controls.
b. The titles and headmgs of the subsections ill this Section 2-310.18 are for
convenience only. In the case of ambiguity or .inconsistency, the text rather
than the titles or headings shall control
(8 12) Fo7feiture of Retirement Benefits. Nothing ill this Section shall be construed to
remove DROP participants :fi'om the application of any forfeiture provisions
applicable to the system DROP participants shall be subject to forfeiture of all
retirement benefits, .including DROP benefits.
(9 .U) Effect of DROP Participation on Employment. Participation ill the DROP is not a
guarantee of employment and DROP participants shall be subject to the same
employment standards and policies that are applicable to employees who are not
DROP participants.
SECTION 9: That Chapter 2, Administration, Article VI, Employee Benefits, Division 4,
Police Officers' Retirement Plan, of the Code of Ordinances of the City of Atlantic Beach, is hereby
amended by adding Section 2-310.19, Supplemental Benefit Component for Special Benefits;
Chapter 185 Share Accounts; to read as follows:
Sec. 2-310.19. Supplemental benefit component for special benefits; Chapter 185 share
accounts.
There is hereby established an additional plan component to provide special benefits in the
fmm of a supplemental retirement, termination, death and disability benefits to be in addition to the
benefits provided for in the previous Sections of this Plan, such benefit to be funded solely and
entirely by F.S. Chapter 185, premium tax monies for each plan year which are allocated to this
supplemental component as provided for in F.S. §185.35. Amounts allocated to this supplemental
component ("Share Plan"), if any, shall be further allocated to the members and DROP participants
as follows:
ill} Individual Member Share Accounts. The board shall create .individual ''member share
accounts" for all actively employed plan members and DROP participants and maintain appropriate
books and records showing the respective interest of each member or DROP participant hereunder.
Each member or DROP participant shall have a member share account for his share of the F.S.
Chapter 185 tax revenues described above, forfeitures and income and expense adjustments relating
1 2
Agenda Item 8E
March 27, 2017
thereto. The board shall maintain separate member share accounts, however, the maintenance of
separate accounts is for accounting purposes only and a segregation of the assets of the trust fi.md to
each account shall not be required or permitted .
.(Q} Share Account Funding.
ill Individual member share accounts shall be established as of September 30, 2015 for
all members and DROP participants who were actively employed as of October 1,
2014. Individual member share accounts shall be credited with an allocation as
provided for in the following subsection (c) of any premium tax monies which have
been allocated to the share plan for that plan year, beginning with the plan year
ending September 30, 2015.
ill Any forfeitmes as provided in subsection (d), shall be used as part of futme
allocations to the individual member share accounts in accordance with the formula
set f01th in subsection (c)(l).
.(fl Allocation o(Monies to Share Accounts.
ill Allocation of Chapter 185 Contributions.
a.
b.
c.
d.
Effective as of September 30, 2015, the amount of any premium tax monies
allocated to the share plan shall be allocated to individual member share
accounts as provided for in this subsection. Members retiring on or after
October 1, 2014 and prior to September 30, 2015 shall receive an allocation.
In addition, all premium tax monies allocated to the share plan in any
subsequent plan year shall also be allocated as provided for in this subsection.
Available premium tax monies shall be allocated to individual member share
accounts at the end of each plan year on September 30 (a ''valuation date").
On each valuation date, each current actively employed member of the plan
not pmticipating in the DROP, each DROP participant and each retiree who
retires or DROP participant who has terminated DROP participation in the
plan year ending on the valuation date (including each disability retiree), or
beneficiary of a deceased member(not including terminated vested persons)
who is othetwise eligtble for an allocation as of the valuation date shall
receive a share allocation as follows:
The total fi.mds subject to allocation on each valuation date shall be allocated
to each member share account of those eligible for an allocation in an amount
equal to a fraction of the total amount, the numerator of which shall be the
individual's total years and fi·actiona1 pmis of years of credited service as of
the valuation date, and the denominator of which shall be the sum of the total
years and :fi·actional patis of years of credited service as of the valuation date
of all individuals to whom allocations are being made. Beneficiaries shall
receive an allocation based on the years of credited service of the deceased
member or DROP participant.
Re-employed retirees shall be deemed new employees and shall receive an
allocation based solely on the credited service in the reemployment period.
ill Allocation oflnvestment Gains and Losses. On each valuation date, each individual
member share account shall be adjusted to reflect the net earnings or losses resulting
:fi·om investments during the year. The net earnings or losses allocated to the
1 3
Agenda Item 8E
March 27, 2017
individual member share accounts shall be the same percentage which is earned or
lost by the total plan investments, including realized and unrealized gains or losses,
net ofbrokerage commissions, transaction costs and management fees.
Net earnings or losses are determined as of the last business day of the fiscal year,
which is the valuation date, and are debited or credited as of such date.
For purposes of calculating net earnings or losses on a member's share account
pursuant to this subsection, brokerage commissions, transaction costs, and
management fees for the immediately preceding fiscal year shall be determined for
each year by the investment consultant pursuant to contracts with fimd managers as
reported in the custodial statement. The investment consultant shall repmt these
annual contractual fees to the board. The investment consultant shall also report the
net investment return for each manager and the net investment return for the total
plan assets.
ill Allocation of Costs. Fees and Expenses. On each valuation date, each individual
member share account shall be adjusted to allocate its pro rata share ofthe costs, fees
and expenses of administration of the share plan. These fees shall be allocated to
each individual member share account on a proportionate basis taking the costs, fees
and expenses of administration of the share plan as a whole multiplied by a fraction,
the numerator of which is the total assets in each individual member share account
(after adding the annual investment gain or loss) and the denominator of which is the
total assets of the fimd as a whole as of the same date.
ffi No Right to Allocation. The fuct of allocation or credit of an allocation to a member's
share account by the board shall not vest in any member, any right, title, or interest
in the assets of the trust or in the Chapter 185 tax revenues except at the time or
times, to the extent, and subject to the terms and conditions provided in this Section.
ill Members and DROP participants shall be provided annual statements setting fmth
their share accmmt balance as ofthe end of the plan year.
@ Forfeitures. Any member who was hired before January 1, 2013 and has less than
five (5) years of service credit, or any member who was hired on or after January 1, 2013 and has
ten (1 0) years of service credit and who is not otherwise eligtble for payment of benefits after
termination of employment with the city as provided for in subsection (e) shall forfeit his individual
member share account. Fmfeited amounts shall be included and used as part ofthe Chapter 185 tax
revenues for future allocations to individual member share accounts on each valuation date in
accordance with the fmmula set fmth in subsection (c)(l).
llD_ Eligibilitv For Benefits. Any member (or his beneficia1y)who temrinates employment
as a police officer with the city or who dies, upon application filed with the board, shall be entitled
to be paid the value of his individual member share account, subject to the following criteria:
ill Retirement Benefit.
a. A member shall be entitled to one hundred percent (100%) ofthe value ofhis
share account upon normal or early retirement pursuant to Section 2-305, or
ifthe member enters the DROP, upon terminationofemployment.
b. Such payment shall be made as provided in subsection (f).
1 4
Agenda Item 8E
March 27, 2017
ill Termination Benefit.
a. In the event that a member's employment as a police officer is terminated by
reason other than retirement, death or disability, he shall be entitled to receive
the value ofhis share account only ifhe is vested in accordance with Section
2-308.
b. Such payment shall be made as provided in subsection (f).
ill Disability Benefit.
a. In the event that a member is determined to be elimble for either an in-line of
duty disability benefit pursuant to Section 2-307, subsection (a) or a not-in-
line of duty disability benefit pursuant to Section 2-307, subsection (c), he
shall be entitled to one hundred percent (100%) of the value of his share
account.
b. Such payment shall be made as provided in subsection (f).
ill Death Benefit.
a. In the event that a member or DROP participant dies while actively employed
as a police officer, one hundred percent (100%) of the value of his member
share account shall be paid to his designated Beneficimy as provided m
Section2-306.
b. Such payment shall be made as provided in subsection (f).
ill Payment of Benefits. If a member or DROP participant terminates employment for
any reason or dies and he or his beneficiary is otherwise entitled to receive the balance in the
member's share account, the member's share account shall be valued by the plan's actuary on the next
valuation date as provided for in subsection (c) above, following termination of employment.
Payment of the calculated share account balance shall be payable as soon as administratively
practicable following the valuation date, but not later than one hundred fifty (150) days following
the valuation date and shall be paid in one lun1p sum payment. No optional fonns of payments shall
be permitted .
.(g). Benefits Not Guaranteed. All benefits payable under tllis Section 2-310.19 shall be
paid only fi·om the assets accounted for in individual member share accounts. Neitl1er the City nor
the board shall have any duty or liability to furnish any additional :limds, securities or other assets
to fund share account benefits. Neither the board nor any trustee shall be liable for the making,
retention, or sale of any investment or reinvestment made as herein provided, nor for any loss or
diminishment of the member share accotmt balances, except due to his or its own negligence, willful
misconduct or lack of good fuith. All investments shall be made by the board subject to the
restrictions otherwise applicable to :limd investments.
ili} Notional account. The member share account is a notional account. used only for the
purpose of calculation of the share distribution amount. It is not a separate account in the system.
There is no change in the system's assets, and there is no distnbution available to the member or
DROP participant until the member's or DROP participant's termination from employment. The
member or DROP participant has no control over the investtnent ofthe share account.
ill No emvlover discretion. TI1e share account benefit is determined pursuant to a
specific f01mula which does not involve employer discretion.
1 5
Agenda Item 8E
March 27, 2017
ill Maximum Additions. Notwithstanding any other provision of this Section, annual
additions under this Section shall not exceed the limitations of Section 415( c) of the code pursuant
to the provisions ofSection2-310.4, subsection(k) .
.(k} IRC limit. The share account distnbution, along with other benefits payable from the
system, is subject to limitation under Internal Revenue Code Section 415(b ).
SECTION 10: Specific authority is hereby granted to codifY and incorporate this Ordinance
in the existing Code of Ordinances of the City of Atlantic Beach.
SECTION 11: All Ordinances or parts of Ordinances in conflict herewith be and the same
are hereby repealed.
SECTION 12: If any section, subsection, sentence, clause, phrase of this ordinance, or the
particular application thereof shall be held invalid by any court, administrative agency, or other body
with appropriate jurisdiction, the remaining section, subsection, sentences, clauses, or phrases under
application shall not be affected thereby.
SECTION 13: l11at this Ordinance shall become effective upon its adoption
PASSED ON FIRST READING, this ___ dayof _____ , 2017.
PASSED AND ADOPTED ON SECOND READING, this
______ ,2017.
MAYOR
ATTEST:
CITY CLERK
Approved as to fomr
CITY ATTORNEY
dm/ab/pol/01 12 17.ord
1 6
day of
Agenda Item 8E
March 27, 2017
GRS
February 6, 2017
Gabriel Roeder Sm ith & Company
Consu ltan ts & Actuaries
Mr. Russell Caffey
Plan Administrator
One East Broward Blvd .
Suire 505
Fr. La ud e rda le, FL 333 0 1-1 804
City of Atlantic Beach Police Officers' Retirement System
800 Seminole Road
Atlantic Beach, Florida 32233-5445
RE: City of Atlantic Beach Police Officers' Retirement System
Actuarial Impact Statement
Dear Russell:
954 .527 .1616 p hone
954.525.0083 fax
\vww.gabrie lroedc r.<.:om
As requested by Scott Christiansen in his letter of May 23, 2016, please find enclosed an Actuarial
Impact Statement for the proposed ordinance (also enclosed). We have reviewed the proposed
ordinance from an actuarial perspective. We were not requested to, nor did we review the ordinance
from a legal or compliance perspective. The proposed ordinance would amend the City of Atlantic
Beach Police Officers' Retirement System as follows:
•. Amend Section 2-300, Definitions, for IRC changes and requirements, to amend the
definitions of:
a. Actuarial Equivalent -to refer to the investment return used in the last actuarial
valuation approved by the board and to specify the mottality table unisex mix
b. Credited Service -to clarify IRC regulations on leave conversions
c. Effective Date -to clearly state the effective date
d. Spouse-To clarify the definition in accordance with a recent US Supreme Court ruling
• Amend Section 2-301, Membership, to limit those individuals eligible to opt-out of the
system, to comply with recent IRC Treasury Regulation requirements.
• Amend Section 2-303, Finances and Fund Management, to fmther incorporate recent IRC
requirements with regard to investments in commingled funds.
• Amend Section 2-305, Benefit amounts and eligibility, to change the Normal Retirement
Date to include IRC required language regarding Normal Retirement Age and Normal
Retirement Date.
• Amend Section 2-310.4, Maximum Pension, to comply with IRC changes.
• Amend Section 2-310.5, Minimum Distribution of Benefits, for a reference clarification in
subsection (b )(2)( d)
• Amend Section 2-310.16, Prior Police Service, subsection (5), to correct a reference.
• Amend Section 2-310.18, Deferred Retirement Option Plan, in accordance with recent
direction from the IRS in connection with the issuance of several recent Favorable
Determination Letters to: i) clarify investment returns on DROP accounts, ii) clarify when
earnings are calculated and paid, and iii) add several sections clarifying the DROP
provisions as required by the IRS.
Agenda Item 8E
March 27, 2017
Mr. Russell Caffey
February 6, 2017
Page 2
• Add Section 2-310.19, Supplemental Benefit Component for Special Benefits; Chapter 185
Share Accounts. This Section creates a 'Share Plan', or defined contribution component, and
the addition of a share plan is a requirement of recently adopted Chapter 2015-39, Laws of
Florida, for all pension plans that are subject to the provisions of Chapters 175 and 185,
Florida Statutes. Per the latest collective bargaining agreement, no excess premium tax
revenues will be allocated to the Share Plan until the Police Officers' Retirement System is
fully funded.
It is our understanding that the purpose of this ordinance is to conform with IRS regulations and
recent changes in Florida Statutes, and/or to clarify the definitions above. We have determined that
the plan provisions in the ordinance would have no significant measurable cost effect to the plan
benefits.
Please sign the Actuarial Impact Statement as the Plan Administrator and forward the original, and
one copy, along with a copy of the ordinance to the address below. Please file the Actuarial Impact
statement prior to the second reading ..
Division of Retirement
Bureau of Local Retirement Systems
Post Office Box 9000
Tallahassee, Florida 32315-9000
If you should have any questions, please give us a call.
Sincerely,
Piotr Krekora, ASA, MAAA
Consultant & Actuary
Enclosure
cc: Mr. Scott R. Christiansen
Gabriel Roeder Smith & Company
Agenda Item 8E
March 27, 2017