Exh 5AAGENDA ITEM 5A
FEBRUARY 24, 2003
CITY OF ATLANTIC BEACH
CITY COMMISSIONER MEETING
STAFF REPORT
AGENDA ITEM: General Employee's Pension Plan Board's Report.
SUBMITTED BY: George Foster, Human Resource Manager
DATE: February 18, 2003
BACKGROUND: As of the last evaluation report dated 09/30/01, there were 75
active members, 23 normal retirees, 2 beneficiaries, 2 disability
retirees, and 13 vested.
Effective 10/01/02, the City's contribution rate increased, as a
percent of total payroll, by 0.4%, from 11.41% ($288,070) to
11.81 % ($31.5,106). General changes to membership
demographics contributed +.14%, investment losses of $18,145
contributed +.06% and a 5% COLA provided to retirees effective
10/O1/O1 contributed + .2%.
Pension plan funding and changes are included within attachment
3.
The December 31, 2002 status of the pension plan investments is
included within the attachment 4.
RECOMMENDATION: None. This Staff Report for information only.
ATTACHMENTS: 1. Pension board members and professional services
2. Summary of Benefit Provision
3. Overall funding and history
4. Merrill Lynch December 31, 2002 Summary Report
CITY MANAGER:
AGENDA ITEM SA
FEBRUARY 24, 2003
CITY OF ATLANTIC BEACH
PENSION BOARDS
GENERAL EMPLOYEE'S PENSION BOARD OF TRUSTEES:
Timothy Townsend (Tim) Chair
J. Tom Wells Chair Pro-Tem
Tony F. Downing Secretary
Harry E. McNally Member
Edward L. Lipscomb Member
POLICE EMPLOYEE'S PENSION BOARD OF TRUSTEES:
Henry Bartle Chair
B. Dale Hatfield Chair Pro-Tem
Tony F. Downing Secretary
Harry E. McNally Member
Edward (ED) L. Lipscomb Member
PROFESSIONAL SERVICES -BOTH BOARDS:
Consultants & Actuaries
Gabriel, Roeder, Smith & Company
Legal
Sugarman & Susskind
Investment Managers
TRUSCO Capital Management
EuroPacific
Investment Advisor
Merrill Lynch Consulting Services
ATCH 1
AGENDA ITEM SA
FEBRUARY 24, 2003
GENERAL EMPLOYEE PENSION PLAN
Summary of Benefit Provisions
(September 30, 2001)
Normal Retirement (no reduction factor for age):
Eligibility
Age 60 with 5 or more years of service.
Annual Pension
Total service times 2.85% of final average compensation
Total pension cannot exceed 100% of final average compensation. The normal form of pension
is payable for life. optional forms are available on an actuarial equivalent basis.
Final Average Salary :one-sixtieth (1/60} of the aggregate amount of compensation paid a
_ _ __ member during the period of si:cty (60) consecutive. months of the member's credited service in
which the aggregate amount of compensation paid is greatest. The sixty (60) months of credited
service must be contained within the member's last one hundred twenty (120) months of credited
service. If a member has less than sixty (60) months of credited service, final average
compensation means the aggregate amount of compensation paid the member divided by the
the member's months of credited service.
Deferred Retirement (vested benefit):
1 Eligibility - 5 or more years of service. Pension begins at normal retirement eligibility.
Annual Pension -Computed as a normal retirement pension but based upon service and final
average salary at time of termination of employment: -
Disability Retirement:
Eli; ibility - 5 or more continuous years of service.
Annual Pension -Computed as a normal. retirement pension.
- Death Before Retirement:
- Eligibility - 5 or more years of service.
Annual Pension -.Computed as a normal retirement pension.
Member Contributions:
2.0% of salary
City Contributions: Actuarially determined amounts which are sufficient to cover the
requirements of the financial objective stated on page A-l. f
Forfeiture of Retirement Benefits: Retirement benefits granted 'by the .Retirement System are
subject to forfeiture if an employee is convicted of an offense specified in Section 112.3173,
Florida Statutes, pursuant to the procedures set forth in the cited statute.
~ rr~u ~
AGENDA ITEM SA
FEBRUARY 24, 2003
PENSION PLANS
UNFUNDED ACTUARIAL ACCRUED
LIABILITY
FUNDED RATIO
General:
Analysis of the dollar amounts of actuarial value of assets, actuarial accrued liability, or
unfunded actuarial accrued liability in isolation can be misleading. Expressing the actuarial
value of assets as a percentage of the actuarial accrued liability provids one indication of the
system's funded status on agoing-concern basis. Analysis of this percentage over time indicates
whether the system is becoming financially stronger or weaker. Generally, the greater the
funded ratio, the stronger the plan. The unfunded actuarial accrued liability and annual covered
payroll are both affected by inflation. Expressing the UAAL as a percentage of covered payroll
approximately adjusts for the effects of inflation and aids analysis of the progress being made in
accumulating sufficient assets to pay benefits when due. Generally, the smaller the UAAL, the
stronger the plan.
Unfunded Actuarial Accrued Liability (UAAL):
The Unfunded Actuarial Accrued Liability (UAAL) is the actuarial costs not covered by present
assets or the Actuarial Accrued Liability minus the actuarial value of the assets and includes
current and anticipated future costs allocated to current pension plan members. Most retirement
systems have UAAL. An amount arises each time new benefits are added and each time an
experience loss occurs. The existence of UAAL is not in itself bad, any more than a mortgage on
a house is bad. UAAL does not represent a debt that is payable today. What is important is the
ability to control the amount of UAAL and the trend in the amount (after due allowance for
devaluation of the dollar).
Funded Ratio:
The Funded Ratio is the actuarial value of the assets divided by the actuarial accrued liability.
AGENDA ITEM SA
FEBRUARY 24, 2003
09/30/02 Unfunded Actuarial Accrued Liability (UAAL) will be received in 2003
Funding ratio will be received in 2003
Five Percent (5%) COLA provided to retirees who had retired on/prior to December
2000 effective October 2001.
09/30/01 General 56.8 Unfunded Actuarial Accrued Liability (UAAL)
80.0 funded ratio
Police 82.1 Unfunded Actuarial Accrued Liability (UAAL)
81.1 funded ratio
09/30/00 General 52.9 Unfunded Actuarial Accrued Liability (UAAL)
80.9 funded ratio
Police 67.9 Unfunded Actuarial Accrued Liability (UAAL)
81.1 funded ratio
09/30/99 General
Police
09/30/98 Gen & Pol w/o Fire
Gen & Pol & Fire
52.4 Unfunded Actuarial Accrued Liability (UAAL)
80.2 funded ratio
68.4 Unfunded Actuarial Accrued Liability (UAAL)
83.0 funded ratio
67.1 Unfunded Actuarial Accrued Liability (UAAL)
77.9 funded ratio
53.9 Unfunded Actuarial Accrued Liability (UAAL)
81.3 funded ratio
10/01/97 -- Police union employees contribution rate changed from 2.315% to 1.00%.
09/30/97 Gen & Pol & Fire 55.7 Unfudded Actuarial Accrued Liability (UAAL)
80.2 funded ratio
01/01/97 -- 3% one-time COLA provided to retirees.
10/01/96 -- Police union employees contribution rate changed from 4.815% to 2.315%.
09/30/96 Gen & Pol & Fire 57.1 Unfunded Actuarial Accrued Liability (UAAL)
78.6 funded ratio
09/30/95 Gen & Pol & Fire 54.2 Unfunded Actuarial Accrued Liability (UAAL)
77.0 funded ratio
The 09/30/95 report adopted an increased member termination assumption.
09/30/94 Gen & Pol & Fire 75.1 funded ratio
49.3 Unfunded Actuarial Accrued Liability (UAAL)
State mandated, for future actuarial valuations, use of mortality rates not less
than those of the 1983 Group Annuity Mortality Table. Implementation of
this mandate increased the contribution requirement and decreased the funded
percent as the mortality rates in the 1983 table were lower than in the table
being utilized.
AGENDA ITEM SA
FEBRUARY 24, 2003
09/30/93 Gen & Pol & Fire 83.4 funded ratio
29.0 Unfunded Actuarial Accrued Liability (UAAL)
Benefits were changed, effective October 25, 1993, as follows:
1) General benefit factor increased from 2.25% to 2.85% for active and
retired members and some vested terminated members (from 2.0% to
2.85% for the remaining vested terminated members).
2) Police/Fire benefit factors changed from 2.4% to 3.0% for active and
retired members and some vested terminated members (from 2.0% to 3.0%
for the remaining vested terminated members).
3) Voluntary retirement for Police was changed to any age with 25 or more
years of credited service or at age 50 with 20 or more years of credited
service. Previous eligibility was age 55 with 20 or more years of credited
service. Eligibility at age 60 with 5 years of credited service remained
unchanged.
4) Police/Fire eligibility requirement for disability in the line of duty changed
from 5 years to 0 years.
5) Retired General employee had their retired pay re-computed with the
2.85% factor.
6) Retired Police employees had their retired pay re-computed with the
3.00% factor.
7) General employee contribution rate increased from 1% to 2%.
8) Police union employee contribution rate increased from 1% to 4.815%
Reference Ord. Nr. 58-93-19A
09/30/92 Gen & Pol & Fire 95.1 funded ratio
6.8 Unfunded Actuarial Accrued Liability (UAAL)
09/30/91 Gen & Pol & Fire 91.1 funded ratio
12.0 Unfunded Actuarial Accrued Liability (UAAL)
09/30/90 Gen & Pol & Fire 96.2 funded ratio
09/30/89 Gen & Pol & Fire 104.3 funded ratio
09/30/88 Gen & Pol & Fire 98.5 funded ratio
10/26/87 -- Changed vesting from 10 years to 5 years.
Benefit factor for General changed from 2% to 2.25%.
Benefit factor for Police changed from 2% to 2.40%.
Police member contributions shall be no less than 1 %.
General member contributions shall be no less than 1
Note: Retirees were provided with the 12.5% COLA and did not have their
retirement pay re-computed with the increased factors.
Reference Ord Nr. 58-87-8
10/26/87 -- One time 12.5 % COLA provided to all retirees October 1, 1987.
Reference Ord Nr. 58-87-9.
09/30/87 Gen & Pol & Fire 99.5 funded ratio
09/30/86 Gen & Pol & Fire 113.3 funded ratio
09/30/85 Gen & Pol & Fire 109.9 funded ratio
09/30/84 Gen & Pol & Fire Not available
09/30/83 Gen & Pol & Fire 101.1 funded ratio
09/30/82 Gen & Pol & Fire 96.1 funded ratio
AGENDA ITEM 5A
FEBRUARY 24, 2003
09/30/81 Gen & Pol & Fire 82.2 funded ratio
09/30/80 Gen & Pol & Fire 68.4 funded ratio
09/30/79 Gen & Pol & Fire 66.9 funded ratio
09/30/78 Gen & Pol & Fire 60.2 funded ratio
09/30/77 Gen & Pol & Fire 44.7 funded ratio
09/30/76 Gen & Pol & Fire 26.5 funded ratio
09/30/75 Gen & Pol & Fire 12.4 funded ratio
Initial Plan
Benefit factor of 2% for Police and 2% for General.
There were no empl oyee contributions to the plan.