Item 7B- Ordinance No. 58-17-40Agenda Item 7B
April 24, 2017
ORDINANCE NO. 58-17-40
AN ORDINANCE OF THE CITY OF ATLANTIC BEACH,
AMENDING CHAPTER 2, ADMINISTRATION, ARTICLE
VI, 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 ATLANTIC
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 Male Generational Unisex Mortality Table projected by Seale AA, and an
interest rate of eight (8%) per annum equal to the investment return assumption set fmth 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 number of years and fractional parts of years of service as
a Police Officer 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 department pending the possibility of being
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 department, 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 accumulated
contributions, if one-thousand dollars ($1,000.00) or less shall be returned. If a Member who is
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Agenda Item 7B
April 24, 2017
lump sum or to rollover the lump sum ammmt on forms designated by the Board. Upon return of
a member's accumulated contnbutions, 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 accumulated contnbutions from
the :fimd, unless the Police Officer repays into the :fimd the contnbutions 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 performs "Qualified Military Service"
consisting of voluntary or involuntary "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 retmns 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, tmless
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 from time to time, the minimum standards shall apply.
fu 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 military service) as if the member had resumed
employment and then died while employed.
Beginning Janumy 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 applying the limits on annual additions under
section 415( c) of the code. This provision shall be applied to all similarly situated individuals in a
reasonably equivalent manner.
Leave conversions of unused accrued paid time off shall not be permitted to be applied
toward the accmal 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 ~hieh tim otdimmee becomes dfuetive June 10, 2013.
* * * * *
Spouse means the Ja~ful: ~:ifC 01 hm;band of a membet ot tetitee member's or retiree's spouse
under applicable law at the tin1e benefits become payable.
* * * * *
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Agenda Item 7B
April 24, 2017
SECTION 2: 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 2-301, 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, with1t1 sixty (60) days of
appointment as Police Chief upon employment as Police Chie£ notify the board and the City, in
writing, of his election to not be a member of the system Current employees of the City who are
selected to become Police Chief are not eligtble for the opt-out provided for herein. ill the event of
any such election, he shall be baned from future membership in the system and any vested aeer ued
benefit shall be retained and paid when other wise payable herein; or contributions rmde after
employment and prior to opting out shall 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. ill 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 81-100 .. 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 lUlder 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 401(a)(24) ofthe code. For this purpose, a oust includes a custodial
account or a separate tax fuvored account maintained by an insurance
company that is treated as a trust lUlder 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 group trust, such group oust is itself adopted as a part of
the system or plan.
1. Any collective or common gt·oup 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
agt·eements, and/or trust agreements with the w·oup trust's trustee.
2. The separate account maintained by the gt·oup trust for the plan
pursuant to subsection c. shall not be used for, or diverted to, any
purpose other than fur the exclusive benefit of the members and
beneficiaries of the plan.
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Agenda Item 7B
April 24, 2017
3. For purposes of valuation, the value of the separate accolll1t
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 recognjzed valuation procedures.
* * * * *
SECTION 4: 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 2-305, Benefit Amolll1ts and Eligibility, subsection (a), Normal
Retirement Date, to read as follows:
* * * * *
(a) Normal retirement age and date. For members hired befOre January 1, 2013, a
member's nornml retirement date shall be the first dcry of the month coincident with; or next
fOllowing the earlier ofthe attaitm1Cnt of age fifey (50) and the completion of twer1ey (20) years of
credited service, the attaitmrent ofage fifey-five (55) and the completion often (10) years oferedited
set vice, the completion of twenty-five (25) yems of credited set vice regardless of age, or the
attainrnent of age sixey (60) and the completion of five (5) years of credited service. For n1embers
hired on or after Jantlary 1, 20 13, a member's normalretiten1errt date shall be the first dcry of tl1e
morrth coincident with; or next following the earlier of the attainn1Cnt of age fifty-five (55) and tl1C
eornpletion of ten (10) years of credited service, or the attainm::nt of age filly-two (52) and the
completion of twenty-f.tve (25) years of credited service. A n1Cmber may retire on his nornml
retirement date or on the fnst day of any month thereafter, and each member shall become one
hundred (100) percent vested in his aeemed benefit ort the member's normal retirement date. Normal
retirement onder the system is retitemerrt fiom employment with the city on or after the normal
tetitement 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 Januaty 1, 2013, a member's nonnal retirement age
is the earlier ofthe 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
of twenty-five (25) years of credited service.
Each member shall become one hlll1dred percent (100%) vested in his accrued benefit at
normal retirement age. A member's normal retirement date shall be the first day of the month
coincident with or next following the date the member retires fi:om the city after attaining nonnal
retirement age.
* * * * *
SECTION 5: That Chapter 2, Administration, Article VI, Employee Benefits, Division 4,
Police Officers' Retirement Plan, ofthe Code of Ordinances ofthe City of Atlantic Beach, is hereby
amended by amending Section 2-310.4, MaxiniDm Pension, subsections (h) and (1)(2), and by adding
subsection (m), to read as follows:
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Agenda Item 7B
April 24, 2017
* * * * *
(h) Ten thousand dollar ($10,000) limit; less than tenyearsofservice. 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 contribution plan in which the member participated; provided,
however, that ifthe 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).
* * * * *
(1)(2) No member of the system shall be allowed to receive a retirement benefit or pension
which is in patt 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.
(m) Effect of Direct Rollover on 415 (b) Limit. If the 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, Atticle 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 ifthe 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 distributions are required to be gin to the surviving
spouse under subsection (b )(2)a. If ammity payments itTevocably commence
to the member before the member's requit·ed begitming date (or to the
member's surviving spouse before the date distnbutions are required to begin
to the surviving spouse under subsection (b )(2)a.) the date distributions are
considered to begit1 is the date distributions actually commence.
* * * * *
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Agenda Item 7B
April 24, 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~ .Q.lill.
* * * * *
SECTION 8: That Chapter 2, Administration, Alticle 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)
(b)
(1)
(2)
(3)
(4)
Definitions. As used in this Section2-310.18, 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 eamings 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 earned on investments,
including realized and unrealized gains (or losses), of the total Plan assets.
Participation.
Eligibility to Participate. In lieu of terminating his employment as a police officer,
any member who is eligtble for nonnal 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 patticipate 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 of the 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 begimring at the time his election to patticipate in the DROP first becomes
effective. Al1 election to patticipate in the DROP shall constitute an in·evocable
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 pmticipation in the DROP shall cease at the earlier of
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Agenda Item 7B
April 24, 2017
1. the end of his pennissible period of participation in the DROP as
determined under subsection (b)(3); or
2. termination ofhis employment as a police officer.
b. Upon the member's tennination of participation in the DROP, pursuant to
subsection a.1. above, all amounts provided for in subsection ( c )(2), including
monthly benefits and investment earnings and losses, shall cease to be
transferred from 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 terminates employment as a police officer.
c. A member who terminates his participation in the DROP under this
subsection (b)( 4) shall not be permitted 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 detem1ined on the date his election to participate in the DROP first
becomes effective. For purposes of determining the accrued benefit, the
member's salmy for the pmposes of calculating his average final
compensation shall include an amount equal to any lump swn payments
which would have been paid to the member and included as salary as defined
herein, had the member retired tmder nonnal retirement and not elected
DROP participation 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 contnbute to the system nor shall he be eligible 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 fi·om 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 hin1 from the
system until he terminates his employment as a police officer. Unless
otherwise specified in the systetn, amounts transferred fi·om 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 Accom1t shall consist of
amounts transfened to the DROP under subsection (c)(2), and earnings or losses on
those amounts.
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Agenda Item 7B
April 24, 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 lUlder the system had he
terminated his employment as a police officer and elected to receive monthly benefit
payments therern1der 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
Accorn1t under this subsection ( c )(2) shall be debited or credited after each
fiscal yeat qtJartcJ: with earnings, to be credited or debited to the member's
DROP accolUlt, 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 AccolUlt shall be credited or
debited at a rate equal to the net investment return realized by the system for
that quarter. ''Net investment return'' for the purpose of this paragraph is the
total return of the assets in which the Member's DROP AccolUlt is invested
by the board net of brokerage commissions, transaction costs and
management fees.
For pmposes of calculating earnings on a member's DROP accolUlt pursuant
to this subsection (c)(2)b., brokerage commissions, transaction costs, and
management fees shall be determined for each quarter by the investment
consultant pursuant to contracts with fimd managers as reported in the
custodial statement. The investment consultant shall report these quarterly
contractual fees to the board. TI1e investment consultant shall also report the
net investment retrnn 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 accolUlt value for distribution to the
member upon termination of participation in the DROP shall be the value of
the accorn1t at the end of the quarter in1111ediately preceding termination of
participation plus any monthly periodic additions made to the DROP accolUlt
subsequent to the end of the previous quarter and prior to distnbution. If a
Member fuils to te1minate employment after participating in the DROP for
the pemlissible period of DROP participation, then beginning with the
member's first month of employment following the last month of the
pemlissible period of DROP participation, the member's DROP AccolUlt will
no longer be credited or debited with earnings or losses, nor will monthly
benefits be transferred to the DROP accolUlt. All such non-transferred
amolUlts shall be forfeited and continue to be forfeited while the member is
employed by the Police Department, and no cost-ofliving adjustments shall
be applied to the member's credit drning such period of continued
employment. A member employed by the Police Department after the
pe1missible period of DROP participation will still not be eligible 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 7B
April 24, 2017
(d) Distribution of DROP Accounts on Termination of Employment.
(1) Eligibility for Benefits. A member shall receive the balance in his DROP Account
in accordance with the provisions of this subsection (d) upon his tennination 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 otherwise, distnbution of his DROP Account shall
be made in a lump sum, subject to the direct rollover provisions set fmth in
subsection (d)(6). Elections under 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 fmm as
his beneficiary may select. If no beneficiary designation is made, the DROP
Account shall be distnbuted to the member's estate.
(3) Date of Payment of Distribution. Except as otherwise provided in this subsection
(d), distnbution of a member's DROP Account shall be made as soon as
administratively practicable following the member's tennination of employment.
Distnbution of the amount in a member's DROP account will not be made unless the
member completes a wlitten request for distribution and a written election, on fonns
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 Beneficimy 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 detennination of the light of that beneficiary or other
person to receive payment shall be conclusive.
(5) Distribution Limitation. Notwithstanding any other provision of subsection (d), all
distributions from 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 distnbutions
made on or after January 1, 2002. Notwithstanding any provision ofthe DROP to the
contrary, a distnbutee may elect to have any portion of an eligtble rollover
distribution paid in a direct rollover as otherwise 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 of the board may apJ?oint from their number such subcommittees with such
powers as they shall detenmne; rna y adopt such administrative procedures and
regulations as they deem desirable for the conduct of their 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 counseL employ agents and provide for such
clericaL accmmting, actuarial and consulting services as they may require in carrying
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Agenda Item 7B
April 24, 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 returns, 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 :li"om time
to time shall establish rules for the administration of the DROP and the transaction
of its business. The Board shall have discretionary authority to construe and interpret
the DROP (including but not limited to determination of an individuafs eligtbility 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
detem1ination of the board as to the interpretation of the DROP or its determination
of any disputed questions shall be conclusive and final to the extent permitted 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 fi.mds ofthe DROP.
b. Neither the board nor any trustee of the board shall be responsible for any
repmts furnished by any expert retained or employed by the board, but they
shall be entitled to rely thereon as well as on certificates furnished 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 expe1t, accountant, actuaty 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 accrue
fhture retirement benefits in the manner provided in this section 2-310.18 for the
remainder of his employment, rather than in the normal manner provided under the
plan. Upon termination of employment, a member is entitled to a lun1p sum
distribution ofhis or her DROP account balance or may elect a rollover. The DROP
account disu·ibution 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 systems assets,
and there is no distribution available to the member until the member's tennination
1 0
Agenda Item 7B
April 24, 2017
(t 2)
(z §)
(4 ID
from the DROP. The member has no control over the investment of the DROP
account.
No emvlover discretion. The DROP benefit is determined pursuant to a specific
fonnula 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 fium 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 :fimds 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 of illness or accident or is a minor, the
board shall direct that any benefit due hin1 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. If the board cannot ascertain the whereabouts of any person
to whom a payment is due under the DROP, the Board may, no earlier than three (3)
years from 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 othe1wise due such person be canceled on the records of the system. Upon
such cancellation, the system shall have no finther 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 time and manner determined by the board under rules uniformly
applicable to all employees similarly situated. The board reserves the right
to change from tin1e to tin1e the manner for making notifications, elections
or designations by members under the DROP if it detennines after due
dehberation that such action is justified in that it in1proves the administration
of the DROP. In the event of a conflict between the provisions for making
an election, notification or designation set forth in the DROP and such new
administrative procedures, those new administrative procedures shall prevail
1 1
Agenda Item 7B
April 24, 2017
b. Each member or retiree who has a DROP Accollllt shall be responsible for
fillTrishing the Board with his current address and any subsequent changes in
his address. Any notice required to be given to a member or retiree herellllder
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, mailing of checks will be suspended lllltil such time as the member
or retiree notifies the board ofhis address.
(6-lQ) Benefits Not Guaranteed. All benefits payable to a Member from the DROP shall
be paid only from the assets of the member's DROP Accollllt and neither the City nor
the board shall have any duty or liability to fillTrish the DROP with any funds,
secmities or other assets except to the extent required by any applicable law.
(7 ill Construction.
a. The DROP shall be construed, regulated and administered lUlder the laws of
Florida, except where other applicable law controls.
b. The titles and headings of the subsections in 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) Forfeiture of Retirement Benefits. Nothing in this Section shall be construed to
remove DROP participants from the application of any forfeiture provisions
applicable to the system DROP participants shall be subject to forfeitm'e of all
retirement benefits, including DROP benefits.
(9 ,U,) Effect of DROP Participation on Employment. Participation in 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 ofthe City of Atlantic Beach, is hereby
amended by adding Section 2-310.19, Supplemental Benefit Component for Special Benefits;
Chapter 185 Share AccolUlts; 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 tl1e
benefits provided for in the previous Sections of tl1is Plan, such benefit to be funded solely and
entirely by F.S. Chapter 185, premimn tax monies for each plan year which are allocated to tllis
supplemental component as provided for in F.S. §185.35. Amollllts allocated to tills supplemental
component ("Share Plan''), if any, shall be fiuther 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 pmticipants and maintain appropriate
books and records showing the respective interest of each member or DROP pmticipant herellllder.
Each member or DROP pmticipant shall have a member share accom1t for his share of the F.S.
Chapter 185 tax revenues descnbed above, forfeitm'es and income and expense adjustments relating
1 2
Agenda Item 7B
April 24, 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 :fimd to
each account shall not be required or permitted.
ili} 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 forfeitures as provided in subsection (d), shall be used as part of future
allocations to the individual member share accounts in accordance with the formula
set forth in subsection ( c )(1 ).
{£} Allocation o[Monies to Share Accounts.
ill Allocation of Chapter 185 Contributions.
a. 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 fur 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'').
b. On each valuation date, each current actively employed member of the plan
not participating 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 temrinated vested persons)
who is othetwise elig~ble for an allocation as of the valuation date shall
receive a share allocation as follows:
c. The total :fimds 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 fi·action of the total amount, the numerator of which shall be the
individual's total years and fractional parts 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.
d. 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 o[Investment Gains and Losses. On each valuation date, each individual
member share account shall be adjusted to reflect the net eamings or losses resulting
fi·om investments during the year. The net eamings or losses allocated to the
1 3
Agenda Item 7B
April 24, 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 connnissions, 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 connnissions, 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 fund managers as
reported in the custodial statement. The investment consultant shall report these
annual contractual fees to the board. The investment consultant shall also report the
net investn];)nt return for each manager and the net investment return for the total
plan assets.
ill Allocation o( Costs, Fees and Expenses. On each valuation date, each individual
member share account shall be adjusted to allocate it1£ro rata share ofthe costs, fees
and expenses of administration of the share plan. ese 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 fund as a whole as of the same date.
ill 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 ofthe 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 account balance as of the end of 1:he plan year.
@ Forfeitures. Any member who was hired before January 1, 2013 and has less than
five (5) years of service credit, or any ll];)mber who was hired on or after January 1, 2013 and has
ten (1 0) years of service credit and who is not othe1wise 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 pmt ofthe Chapter 185 tax
revenues for future allocations to individual member share accounts on each valuation date in
accordance with the fmmula set forth in subsection (c)(l).
{§} Eligibilitv For Benefits. Any ll];)mber (or his bene:ficiary)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 ofhis 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 retirell];)nt pursuant to Section 2-305, or
ifthe ll];)mber enters the DROP, upon terminationofemployment.
b. Such payment shall be made as provided in subsection (f).
1 4
Agenda Item 7B
April 24, 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 if he 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 eligtble 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 Beneficiary as provided in
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 othetwise entitled to receive the balance in the
member's share accouut, the member's share accouut 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 htmdred fifty (150) days following
the valuation date and shall be paid in one lunm sum payment. No optional fonns of payments shall
be permitted.
(g). Benefits Not Guaranteed. All benefits payable uuder this Section 2-310.19 shall be
paid only from the assets accouuted for in individual member share accouuts. Neither the City nor
the board shall have any duty or liability to finnish any additional fin1ds, securities or otl1er assets
to fin1d share accouut 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 accouut 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 othetwise applicable to fin1d investments.
ill Notional account. The member share account is a notional accouut, used only for the
purpose of calculation of the share distribution amouut. It is not a separate accouut in the system
There is no change in the system's assets, and there is no distnbution available to the member or
DROP participant uutil the member's or DROP participant's termination fi:om employment. TI1e
member or DROP participant has no control over the investment of the share accouut.
ill No employer discretion. The share account benefit is determined pursuant to a
specific fonnula which does not involve employer discretion.
1 5
Agenda Item 7B
April 24, 2017
ill Maximum Additions. Notwithstanding any other provision of tills Section, annual
additions under tills Section shall not exceed the limitations of Section 415(c) ofthe code pursuant
to the provisions of Section 2-310.4, subsection (k).
00 IRC limit. The share account distribution, 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 codny and incorporate tills Ordinance
in the existing Code of Ordinances ofthe 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: That this Ordinance shall become effective upon its adoption
PASSED ON FIRST READING, tills ___ day of _____ , 2017.
PASSED AND ADOPTED ON SECOND READING, this
------' 2017.
MAYOR
ATTEST:
CITY CLERK
Approved as to form:
CITY ATTORNEY
dm/ab/pol/01 12 17.ord
1 6
day of
Agenda Item 7B
April 24, 2017
GRS
February 6, 2017
Gabricl Roeder Smi t h & Company
Consu lta nt s & Ac tuaries
Mr. Russell Caffey
Plan Administrator
One East Brow:1 rd 131vd .
Suite .505
Ft. L1 udc rda lc, FL 3 3301-1804
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 .16 16 phone
954.525 .0083 fax
www.g abriclrocdcr.com
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 req uested 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 mortality 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, Membetship, 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 further 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 2-31 0.5, 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 7B
April 24, 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