10-01-2018 Atlantic Beach Police Valuation Report
CITY
OFF
ANNU
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TUARIAL
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VALUAT
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OBER 1, 2018
ANNUAL EMPLOYER CONTRIBUTION
IS DETERMINED BY THIS VALUATION
TO BE PAID IN THE EMPLOYER FISCAL YEAR ENDING
SEPTEMBER 30, 2020
May 8, 2019
Board of Tru
City of Atlan
Police Office
Atlantic Bea
Re: City of
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May 8, 2019
Page 2
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Statutes and
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Nicolas Laha
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Gabriel, Roe
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Respectfully
GABRIEL, RO
By ________
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Table of contents
Section Title Page
A Executive Summary
1. Executive Summary A‐1
2. Risks Associated With Measuring The Accrued Liability and
Actuarially Determined Contribution
A‐4
B Valuation Results
1. Participant Data B‐1
2. Actuarially Determined Contribution B‐2
3. Actuarial Value of Benefits and Assets B‐3
4. State Premium Tax Revenues B‐4
5. Financial Soundness B‐5
6. Actuarial Gains and Losses B‐9
7. Recent History of Valuation Results B‐13
8. Recent History of Required and Actual Contributions B‐15
9. Actuarial Assumptions and Cost Method B‐16
C Pension Fund Information
1. Summary of Assets C‐1
2. Summary of Fund's Income and Disbursements C‐2
3. Reconciliation of DROP Accounts C‐3
4. Actuarial Value of Assets C‐4
5. Investment Rate of Return C‐6
D Miscellaneous Information
1. Reconciliation of Membership Data D‐1
2. Statistical Data D‐2
E Summary of Plan Provisions E‐1
F Comparative Summary of Principal Valuation Results F‐1
SECTION A
EXECUTIVE SUMMARY
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
A‐1
GRS RetirementConsulting
EXECUTIVE SUMMARY
Comparison of Required Employer Contributions
The following is a comparison of required contributions developed in this year's and the last actuarial
valuations:
Gross Contribution Requirement $ 800,044 $ 959,539 $ (159,495)
As % of Expected Payroll 48.50 % 57.79 % (9.29) %
Expected Employee Contribution $ 131,954 $ 132,834 $ (880)
As % of Covered Payroll 8.00 % 8.00 % 0.00 %
Required Employer/State Contribution $ 668,090 $ 826,705 $ (158,615)
As % of Expected Payroll 40.50 % 49.79 % (9.29) %
Estimated State Contribution $ 123,068 $ 123,068 * $ 0
As % of Covered Payroll 7.46 % 7.41 % 0.05 %
Required Employer Contribution
(If Made in Equal Monthly Installments) $ 545,022 $ 703,637 * $ (158,615)
As % of Covered Payroll 33.04 % 42.38 % (9.34) %
Required Employer Contribution
(If Made in Whole at the Beginning of the Year) $ 525,797 $ 678,818 * (153,021)
As % of Covered Payroll 31.88 % 40.88 % (9.00) %
Based on 10/1/2018
(Decrease)Valuation Valuation
IncreaseBased on 10/1/2017
For FYE 9/30/2020 For FYE 9/30/2019
* Results have been updated to reflect a higher than expected State Contribution.
Minimum Required Contribution
As illustrated in the preceding chart, the contribution necessary from the City and State to support the
current benefits for the Police Officers is $668,090 for the fiscal year ending September 30, 2020. The City
can use the State premium tax moneys to satisfy part of that requirement, leaving the City contribution at
$545,022 (assuming receipts of $123,068 from the State). However, the City may need to contribute more,
should receipts from the State fall short of the expected amount. Please note that the Required Employer
Contribution for that fiscal year is assumed to be deposited in monthly intervals throughout the year. For
completeness, we are also presenting an amount required to be contributed if deposited in a single sum at
the beginning of the contribution year in lieu of periodic installments.
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
A‐2
GRS RetirementConsulting
Revisions in Benefits
There were no revisions in benefits for the current year.
Revisions in Actuarial Assumptions or Methods
There were no revisions in assumptions or methods for the current year.
Actuarial Experience
There was a net actuarial gain of $380,936 this year which means that actual experience was more favorable
than expected. The actuarial gain was primarily due to lower salary increases than expected. There was also
a modest investment gain due to a higher than expected recognized investment return on the actuarial
value of assets (7.0% recognized, compared to the 6.75% assumed). The investment return on the market
value of assets was 7.7% for the year. The net actuarial gain decreased the total required contribution by
2.50% of covered payroll.
Funded Ratio
The funded ratio, one measure of the Plan’s financial health, is equal to the actuarial value of assets divided
by the actuarial accrued (past service) liability. The funded ratio is 78.7% this year compared to 71.8% last
year.
Analysis of Change in Employer Contribution
The components of change in the actuarially required contribution are as follows:
Contribution rate last year 42.38 %
Payment on UAAL (4.96)
Experience (gain)/loss (2.50)
Change in administrative expense (1.74)
Change in normal cost before expenses (0.09)
Revision in benefits 0.00
Revision in assumptions/methods 0.00
Change in State Revenue (0.05)
Contribution rate this year 33.04 %
Higher City and State contributions than required and the expiration of an experience loss base from 2003
helped reduce the UAAL payment compared to last year. In addition, favorable plan experience during the
year, lower administrative expenses, and a small employer normal cost rate drop (due to new employees
earning benefits at the lower multiplier) also helped to lower the Employer contribution rate for the year.
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
A‐3
GRS RetirementConsulting
Relationship to Market Value
The market value of assets exceeds the actuarial value of assets by $268,724 as of the valuation date (see
Section C). This difference will be gradually recognized over the next three years causing the required
contribution to decrease, in the absence of offsetting losses.
If the market value of assets had been used in the valuation instead of the actuarial value of assets, the City
contribution rate would have been 31.28% (assuming payment is made in equal monthly installments
throughout the year) and the funded ratio would have been 80.5%. The funded ratio based on the market
value of assets was 73.0% last year.
In the absence of other gains and losses or assumption changes, the City contribution rate would be
expected to decrease to approximately 31.28% over the next three years.
Conclusion
The remainder of this Report includes detailed actuarial valuation results, financial information,
miscellaneous information and statistics, and a summary of plan provisions.
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
A‐4
GRS RetirementConsulting
RISKS ASSOCIATED WITH MEASURING THE ACCRUED LIABILITY
AND ACTUARIALLY DETERMINED CONTRIBUTION
The determination of the accrued liability and the actuarially determined contribution requires the use of
assumptions regarding future economic and demographic experience. Risk measures, as illustrated in this
report, are intended to aid in the understanding of the effects of future experience differing from the
assumptions used in the course of the actuarial valuation. Risk measures may also help with illustrating the
potential volatility in the accrued liability and the actuarially determined contribution that result from the
differences between actual experience and the actuarial assumptions.
Future actuarial measurements may differ significantly from the current measurements presented in this
report due to such factors as the following: plan experience differing from that anticipated by the economic
or demographic assumptions; changes in economic or demographic assumptions due to changing
conditions; increases or decreases expected as part of the natural operation of the methodology used for
these measurements (such as the end of an amortization period, or additional cost or contribution
requirements based on the Plan’s funded status); and changes in plan provisions or applicable law. The
scope of an actuarial valuation does not include an analysis of the potential range of such future
measurements.
Examples of risk that may reasonably be anticipated to significantly affect the plan’s future financial
condition include:
1. Investment risk – actual investment returns may differ from the expected returns;
2. Contribution risk – actual contributions may differ from expected future contributions. For example,
actual contributions may not be made in accordance with the plan’s funding policy or material
changes may occur in the anticipated number of covered employees, covered payroll, or other
relevant contribution base;
3. Salary and Payroll risk – actual salaries and total payroll may differ from expected, resulting in actual
future accrued liability and contributions differing from expected;
4. Longevity risk – members may live longer or shorter than expected and receive pensions for a period
of time other than assumed;
5. Other demographic risks – members may terminate, retire or become disabled at times or with
benefits other than assumed resulting in actual future accrued liability and contributions differing
from expected.
The effects of certain trends in experience can generally be anticipated. For example if the investment
return since the most recent actuarial valuation is less (or more) than the assumed rate, the cost of the plan
can be expected to increase (or decrease). Likewise if longevity is improving (or worsening), increases (or
decreases) in cost can be anticipated.
The computed contribution shown on page 1 may be considered as a minimum contribution that complies
with the Board’s funding policy. The timely receipt of the actuarially determined contributions is critical to
support the financial health of the plan. Users of this report should be aware that contributions made at the
actuarially determined rate do not necessarily guarantee benefit security.
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
A‐5
GRS RetirementConsulting
Plan Maturity Measures
Risks facing a pension plan evolve over time. A young plan with virtually no investments and paying few
benefits may experience little investment risk. An older plan with a large number of members in pay status
and a significant trust may be much more exposed to investment risk. Generally accepted plan maturity
measures include the following:
2018 2017
Ratio of the market value of assets to total payrol 7.8 6.9
Ratio of actuarial accrued liability to payroll 9.7 9.4
Ratio of actives to retirees and beneficiares 1.1 1.0
Ratio of net cash flow to market value of assets 4.2% 3.5%
Duration of the actuarial accrued liability 12.0 12.3
Ratio of Market Value of Assets to Payroll
The relationship between assets and payroll is a useful indicator of the potential volatility of contributions.
For example, if the market value of assets is 2.0 times the payroll, a return on assets 5% different than
assumed would equal 10% of payroll. A higher (lower) or increasing (decreasing) level of this maturity
measure generally indicates a higher (lower) or increasing (decreasing) volatility in plan sponsor
contributions as a percentage of payroll.
Ratio of Actuarial Accrued Liability to Payroll
The relationship between actuarial accrued liability and payroll is a useful indicator of the potential volatility
of contributions for a fully funded plan. A funding policy that targets a funded ratio of 100% is expected to
result in the ratio of assets to payroll and the ratio of liability to payroll converging over time.
The ratio of liability to payroll may also be used as a measure of sensitivity of the liability itself. For example,
if the actuarial accrued liability is 2.5 times the payroll, a change in liability 2% other than assumed would
equal 5% of payroll. A higher (lower) or increasing (decreasing) level of this maturity measure generally
indicates a higher (lower) or increasing (decreasing) volatility in liability (and also plan sponsor contributions)
as a percentage of payroll.
Ratio of Actives to Retirees and Beneficiaries
A young plan with many active members and few retirees will have a high ratio of active to retirees. A
mature open plan may have close to the same number of actives to retirees resulting in a ratio near 1.0. A
super‐mature or closed plan may have significantly more retirees than actives resulting in a ratio below 1.0.
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
A‐6
GRS RetirementConsulting
Ratio of Net Cash Flow to Market Value of Assets
A positive net cash flow means contributions exceed benefits and expenses. A negative cash flow means
existing funds are being used to make payments. A certain amount of negative net cash flow is generally
expected to occur when benefits are prefunded through a qualified trust. Large negative net cash flows as a
percent of assets may indicate a super‐mature plan or a need for additional contributions.
Duration of Actuarial Accrued Liability
The duration of the actuarial accrued liability may be used to approximate the sensitivity to a 1% change
in the assumed rate of return. For example, duration of 10 indicates that the liability would increase
approximately 10% if the assumed rate of return were lowered 1%.
Additional Risk Assessment
Additional risk assessment is outside the scope of the annual actuarial valuation. Additional assessment
may include scenario tests, sensitivity tests, stochastic modeling, stress tests, and a comparison of the
present value of accrued benefits at low‐risk discount rates with the actuarial accrued liability.
SECTION B
VALUATION RESULTS
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
B‐1
GRS RetirementConsulting
ACTIVE MEMBERS
Number 24 23
Covered Annual Payroll $ 1,566,471 $ 1,576,914
Average Annual Payroll $ 65,270 $ 68,561
Average Age 38.8 37.2
Average Past Service 9.7 9.7
Average Age at Hire 29.1 27.6
RETIREES, BENEFICIARIES, & DROP MEMBERS
Number 18 18
Annual Benefits $ 622,206 $ 622,206
Average Annual Benefit $ 34,567 $ 34,567
Average Age 65.4 64.4
DISABILITY RETIREES
Number 4 4
Annual Benefits $ 74,159 $ 74,159
Average Annual Benefit $ 18,540 $ 18,540
Average Age 61.1 60.1
TERMINATED VESTED MEMBERS
Number 4 4
Annual Benefits $ 70,621 $ 70,621
Average Annual Benefit $ 17,655 $ 17,655
Average Age 50.2 49.2
PARTICIPANT DATA
October 1, 2018 October 1, 2017
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
B‐2
GRS RetirementConsulting
A. Valuation Date
B. ADC to Be Paid During
Fiscal Year Ending 9/30/2020 9/30/2019
C. Assumed Date(s) of Employer Contribution Monthly Monthly
D. Annual Payment to Amortize
Unfunded Actuarial Liability
if Paid on the Valuation Date $ 370,655 $ 485,000
E. Employer Normal Cost
(including Administrative Expenses)
if Paid on the Valuation 233,115 262,115
F. Actuarially Determined Contribution (ADC)
if Paid on the Valuation Date: D + E 603,770 747,115
G. ADC Adjusted for Frequency of
Payments and Interest to Required Time
of Contribution 668,090 826,705
H. Covered Payroll for Contribution Year 1,649,426 1,660,422
I. ADC as % of Expected Covered
Payroll in the Contribution Year G ÷ H 40.50 % 49.79 %
J. Estimate of State Revenue in
Contribution Year* 123,068 113,703
K. Actuarially Determined Contribution
in Contribution Year 545,022 713,002
L. ADEC as % of Covered Payroll in
Contribution Year: K ÷ J 33.04 % 42.94 %
M. Actuarially Determined Contribution
if Paid on the First Day of the Contribution Year 525,797 687,853
ACTUARIALLY DETERMINED CONTRIBUTION (ADC)
October 1, 2018 October 1, 2017
*Chapter 185 Florida Statutes. The City contribution amount may need to be increased if the amount received under
the provisions of Chapter 185, Florida Statutes, is not sufficient to meet the total employer contribution requirement.
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
B‐3
GRS RetirementConsulting
A. Valuation Date
B. Actuarial Present Value of All Projected
Benefits for
1. Active Members
a. Service Retirement Benefits $7,783,207 $7,604,979
b. Vesting Benefits 642,018 699,267
c. Disability Benefits 189,217 196,266
d. Preretirement Death Benefits 78,982 75,727
e. Return of Member Contributions 64,329 68,949
f. Total 8,757,753 8,645,188
2. Inactive Members
a. Service Retirees & Beneficiaries 6,894,440 6,999,833
b. Disability Retirees 821,492 832,224
c. Terminated Vested Members 444,943 414,578
d. Total 8,160,875 8,246,635
3. DROP Balances* 569,643 537,335
4. Total for All Members 17,488,271 17,429,158
C. Actuarial Accrued (EAN Past Service)
Liability (including reserves)* 15,116,672 14,799,997
D. Actuarial Value of Accumulated Plan
Benefits* 13,430,246 12,850,749
E. Plan Assets (including reserves)*
1. Market Value 12,164,644 10,803,540
2. Actuarial Value 11,895,920 10,631,124
F. Unfunded Actuarial Accrued Liability
(C ‐ E2) 3,220,752 4,168,873
G. Actuarial Present Value of Projected
Covered Payroll 11,663,646 13,095,824
H. Actuarial Present Value of Projected
Member Contributions 933,092 1,047,666
ACTUARIAL VALUE OF BENEFITS AND ASSETS
October 1, 2018 October 1, 2017
* Includes DROP balances.
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
B‐4
GRS RetirementConsulting
State Premium Tax Revenues
1. Accumulated Excess at Beginning of Previous Year 0
2. Amount Received for Previous Plan Year 236,772
3. Amount Used in Previous Plan Year* 236,772
4. Accumulated Excess as of Valuation Date
(Held in Reserve for Benefit Improvements): (1) + (2) ‐ (3) 0
5. Expected Amount to be Received This Plan Year: 123,068
Actuarial Confirmation of the Use of State Chapter Money
*Pursuant to the agreement between the City and the Police Benevolent Association, the City has access
to all Chapter 185 revenue to fund the Unfunded Actuarial Accrued Liability, subject to an actuarial
certification, and consequently there was no increase in the Accumulated Excess Premium Tax
Revenues.
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
B‐5
GRS RetirementConsulting
FINANCIAL SOUNDNESS
The purpose of this portion of the Report is to provide certain measures which indicate the financial
soundness of the program. These measures relate to short term solvency and long term solvency.
The various percentages listed in this Section as of a single valuation date are not that significant. What is
significant, however, is the trend of the rates over a period of years. It is also important to keep in mind that
each time benefits or assumptions are revised; actuarial liabilities are created or diminished. Any newly
created liabilities are financed systematically over a period of future years. All actuarially computed values
in this analysis are based on the actuarial assumptions utilized in the respective years' actuarial valuations.
Short Term Solvency
The ultimate test of financial soundness is the program's ability to pay all promised benefits when due. The
program's progress in accumulating assets to pay all promised benefits can be measured by comparing the
market value of assets with:
1. The actuarial present value of projected benefits payable to those already receiving benefits and to
vested terminations, and
2. The actuarial present value of accrued benefits payable to active participants. This amount is based
on benefits earned to date without future credited service or salary increases.
The total of the two items should generally be fully covered by assets. That portion of the total of the two
items covered by assets should increase over time. Often assets continue to grow beyond the actuarial
present value of these two items.
1. Accumulated Contributions
of Active Members $ 756,326 $ 676,922 $ 584,757
2. APV of Projected Benefits in
Pay Status and for Vested
Terminations* 8,730,518 8,783,970 8,630,516
3. APV of Accrued Benefits for
Active Participants
(Employer Portion) 3,943,402 3,389,857 2,787,593
4. Total 13,430,246 12,850,749 12,002,866
5. Market Value of Assets* 12,164,644 10,803,540 9,473,354
6. Assets as % of Total 91% 84% 79%
Police Officers
10/1/2018 10/1/2017 9/30/2016
* DROP balances and Excess Premium Tax Liability are included.
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
B‐6
GRS RetirementConsulting
0%
50%
100%
150%
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
R
a
t
i
o
Mil
l
i
o
n
s
Actuarial Valuation Date
Ratio of Market Value of Assets to
Present Value of Accrued Benefits
Market Value of Assets PV Accrued Benefits Ratio
Increases in benefits will, of course, adversely affect the trend in the years when such increases are first
reflected in the actuarial values. Although different actuarial assumptions would be used in the event of a
termination of the program, this test shows how much of the benefits accrued to date might be covered by
assets in the event of a plan freeze using the valuation assumptions.
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
B‐7
GRS RetirementConsulting
Long Term Solvency
Over the longer term, the solvency of an ongoing plan can be measured by comparing the Actuarial Value of
Assets to an amount known as the Actuarial Accrued Liability (AAL) under the Entry Age Actuarial Cost
Method. This item has often been called the "past service liability". Its derivation differs from the short
term solvency value derivation in several ways. The short term solvency liability number is based on the
benefits accrued to date by the participants while the long term solvency liability number is based on what
the normal costs accrued to date by the employer. In addition, the short term solvency asset number is the
market value, while the long term asset number is the actuarial value of assets. As in the case of the short
term solvency values, the AAL is affected immediately by any revisions in benefits or assumptions. The
accumulation of assets to equal the AAL can be considered a long range funding goal.
9/30/03 * $ 4,373 $ 5,986 73 %
9/30/04 4,534 6,405 71
9/30/05 4,775 6,997 68
9/30/06 5,175 7,034 74
9/30/07 * 5,663 7,620 74
9/30/08 5,764 8,112 71
9/30/09 * 5,922 8,689 68
9/30/10 * 6,164 9,449 65
9/30/11 6,305 10,065 63
9/30/12 * 6,880 10,559 65
9/30/13 7,429 10,895 68
9/30/14 *,** 8,270 12,656 65
9/30/15 ** 9,030 13,400 67
9/30/16 *,** 9,632 13,999 69
10/1/17 *,** 10,631 14,800 72
10/1/18 ** 11,896 15,117 79
Valuation
Date
Actuarial Value of
Assets
(in Thousands)
Actuarial Accrued
Liability
(in Thousands)
% of AAL Covered
by Assets
* Reflects change in benefits, actuarial assumptions and/or method.
** DROP balances are being included in Actuarial Accrued Liability and in Plan Assets
beginning with the September 30, 2014 Valuation. The Excess Premium Tax Liability (if any) is
being included in Actuarial Accrued Liability and in Plan Assets beginning with the September
30, 2015 Valuation.
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
B‐8
GRS RetirementConsulting
0%
50%
100%
150%
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
$16.0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
R
a
t
i
o
Mi
l
l
i
o
n
s
Actuarial Valuation Date
Actuarial Assets Accrued Liability Ratio
Ratio of Actuarial Value of Assets to Actuarial
Accrued Liability
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
B‐9
GRS RetirementConsulting
ACTUARIAL GAINS AND LOSSES
The assumptions used to anticipate mortality, employment turnover, investment income, expenses, salary
increases, and other factors have been based on long range trends and expectations. Actual experience can
vary from these expectations. The variance is measured by the gain and loss for the period involved. If
significant long term experience reveals consistent deviation from what has been expected and that
deviation is expected to continue, the assumptions should be modified. The net actuarial gain (loss) for the
past year is computed as follows:
1.Last Year's UAAL $4,168,873
2.Last Year's Employer Normal Cost 262,115
3. Last Year's Actual City and State Contributions 1,091,552
4.Interest at the assumed rate on:
a. 1 for one year 281,399
b. 2 for one year 17,693
c. 3 from dates paid 36,840
d. a + b ‐ c 262,252
5. This Year's Expected UAAL
1 + 2 ‐ 3 + 4d 3,601,688
6. This Year's Actual UAAL (before any
changes in benefits or assumptions) 3,220,752
7. Net Actuarial Gain (Loss): (5) ‐ (6) 380,936
8. Gain (Loss) due to investments 11,229
9. Gain (Loss) due to other sources 369,707
Derivation of Experience Gain (Loss)
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
B‐10
GRS RetirementConsulting
Net actuarial gains (losses) in previous years have been as follows:
Year Ended
9/30/1998 95,019 95,019
9/30/1999 117,618 212,637
9/30/2000 (103,871) 108,766
9/30/2001 1,389 110,155
9/30/2002 (128,212) (18,057)
9/30/2003 (339,563) (357,620)
9/30/2004 (207,808) (565,428)
9/30/2005 (287,225) (852,653)
9/30/2006 411,559 (441,094)
9/30/2007 (137,906) (578,999)
9/30/2008 (308,022) (887,021)
9/30/2009 (323,582) (1,210,603)
9/30/2010 154,731 (1,055,872)
9/30/2011 (451,201) (1,507,073)
9/30/2012 (32,697) (1,539,770)
9/30/2013 115,061 (1,424,709)
9/30/2014 95,416 (1,329,292)
9/30/2015 (154,573) (1,483,865)
9/30/2016 (366,146) (1,850,011)
9/30/2017 106,084 (1,743,927)
9/30/2018 380,936 (1,362,991)
Actuarial Gain
(Loss)
Cumulative Gain
(Loss)
($2)
($1)
$0
$1
$2
($2)
($1)
$0
$1
$2
Mi
l
l
i
o
n
s
Mi
l
l
i
o
n
s
Plan Year End
Actuarial Gain (+) or Loss (‐)
Gain or Loss Cumulative
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
B‐11
GRS RetirementConsulting
The fund earnings and salary increase assumptions have considerable impact on the cost of the Plan so it is
important that they are in line with the actual experience. The following table shows the history of actuarial
fund earnings and salary increase rates compared to the assumed rates.
9/30/2003 2.2 8.0 8.8 6.5 %
9/30/2004 2.4 8.0 11.2 6.5
9/30/2005 4.4 8.0 15.1 6.3
9/30/2006 7.8 8.0 1.5 6.7
9/30/2007 9.4 8.0 12.8 6.6
9/30/2008 4.6 8.0 2.1 6.6
9/30/2009 3.8 8.0 11.0 6.4
9/30/2010 4.7 8.0 (0.0) 6.4
9/30/2011 2.2 8.0 3.8 7.4
9/30/2012 7.9 8.0 (0.8) 7.6
9/30/2013 7.5 8.0 2.3 7.5
9/30/2014 6.3 8.0 7.8 7.5
9/30/2015 5.3 7.0 8.6 7.5
9/30/2016 4.7 7.0 10.5 7.3
9/30/2017 6.3 7.0 5.3 7.8
9/30/2018 7.0 6.75 (0.2) 6.7
Average 5.4 %‐‐‐6.1 %‐‐‐
Salary Increases
Actual
Investment Return (AVA)
Year Ending Actual Assumed Assumed
The actual investment return rates shown above are based on the actuarial value of assets. The actual
salary increase rates shown above are the increases received by those active members who were included
in the actuarial valuations both at the beginning and the end of each year.
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
B‐12
GRS RetirementConsulting
‐5%
0%
5%
10%
15%
‐5%
0%
5%
10%
15%
Plan Year End
History of Investment Return ‐Actuarial Value of Assets
Actual Assumed
‐5%
0%
5%
10%
15%
20%
‐5%
0%
5%
10%
15%
20%
Plan Year End Compared to Previous Year
History of Salary Increases
Actual Assumed
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City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
B‐14
GRS RetirementConsulting
0
10
20
30
40
50
Actuarial Valuation Date
Recent History of Number of Members
Active Members Inactive Members
$0.0
$0.3
$0.5
$0.8
$1.0
$1.3
$1.5
$1.8
Mi
l
l
i
o
n
s
Actuarial Valuation Date
Recent History of Covered Annual Payroll
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
B‐15
GRS RetirementConsulting
9/30/06 9/30/08 $ 309,841 22.80 % $ 309,842
9/30/07 *9/30/09 345,280 21.93 345,280
9/30/08 9/30/10 425,823 26.62 425,823
9/30/09 *9/30/11 487,032 26.49 487,032
9/30/10 *9/30/12 628,909 36.18 628,898
9/30/11 9/30/13 606,741 35.63 609,012
9/30/12 *9/30/14 654,280 39.99 659,420
9/30/13 9/30/15 665,091 46.10 677,542
9/30/14 *9/30/16 825,700 60.14 842,455
9/30/15 9/30/17 849,061 64.68 945,540
9/30/16 *9/30/18 841,726 52.12 1,091,552
10/1/17 *9/30/19 826,705 49.79 ‐‐‐‐
10/1/18 9/30/20 668,090 40.50 ‐‐‐‐
RECENT HISTORY OF REQUIRED AND ACTUAL CONTRIBUTIONS
Required Employer/State
Contributions Actual
Employer/State
Contributions
Valuation
End of Year To
Which
Valuation
Applies
Amount
% of Expected
Payroll
* Reflects change in benefits, actuarial assumptions and/or method.
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
B‐16
GRS RetirementConsulting
ACTUARIAL ASSUMPTIONS AND COST METHOD
Valuation Methods
Actuarial Cost Method ‐ The actuarial cost method is a procedure for allocating the actuarial present
value of benefits and expenses to time periods. Normal cost and the allocation of benefit values between
service rendered before and after the valuation date were determined using the Entry‐Age Actuarial Cost
Method. The entry‐age actuarial cost method allocates the actuarial present value of each member's
projected benefits on a level basis over the member's pensionable compensation between the entry age
of the member and the estimated active status exit ages. The portion of the actuarial present value
allocated to the valuation year is called the normal cost. The portion of the actuarial present value not
provided for by the actuarial present value of future normal costs is called the actuarial accrued liability.
Deducting accrued assets from the actuarial accrued liability determines the unfunded actuarial accrued
liability.
Financing of Unfunded Actuarial Accrued Liabilities ‐ The unfunded actuarial accrued liability was
financed as a level percent of member payroll.
Actuarial Value of Assets ‐ The Actuarial Value of Assets phases in the difference between the expected
and actual return on market value of assets at the rate of 25% per year. The Actuarial Value of Assets will
be further adjusted to the extent necessary to fall within the corridor whose lower limit is 80% of the
Market Value of plan assets and whose upper limit is 120% of the Market Value of plan assets. During
periods when investment performance exceeds the assumed rate, Actuarial Value of Assets will tend to
be less than Market Value. During periods when investment performance is less than assumed rate,
Actuarial Value of Assets will tend to be greater than Market Value.
Valuation Assumptions
The actuarial assumptions used in the valuation are shown in this Section. With the exception of the
mortality assumption, which is prescribed by Florida Statutes, all assumptions listed herein were
established following the Assumption Study and Experience Review for the Seven Years Ended September
30, 2016, dated August 9, 2017.
Economic Assumptions
The investment return rate assumed in the valuations is 6.75% per year, compounded annually (net of
investment expenses).
The price inflation rate assumed in this valuation was 2.5% per year.
The plan does not provide for automatic post‐retirement cost of living adjustments (COLA) of retiree
benefits. Ad‐hoc COLA increases have been adopted in the past upon approval by the City. Most
recently, such increases have been granted in 1987, 1996 and 2001. No assumptions are made regarding
future adjustments. Any such increases will be recognized as they occur.
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
B‐17
GRS RetirementConsulting
The payroll growth rate would be 3.5%, except that it is limited this year due to the lower actual payroll
growth rate over the last 10 years in accordance with the requirements of Ch. 112.64 (5) (a), F.S. The rate
used to amortize the unfunded actuarial accrued liabilities is 0.60% per year.
The total rate of return is defined as earnings resulting from interest, dividends, realized gains (losses)
and unrealized appreciation (depreciation) divided by the beginning market value of the fund, adjusted
for cash flow during the year. The total rate of return is assumed to be 6.75% per year, net of investment‐
related expenses.
The rates of salary increases used in the valuation are illustrated in the following table. These rates
include price inflation of 2.5%.
Annual Rates for Salary Increase for Sample Ages
Age: 20 30 40 50 60
Expected Increase 18.5% 9.3% 5.9% 5.1% 4.5%
Demographic Assumptions
The mortality table for healthy lives is the RP‐2000 Combined Healthy Participant Mortality Tables (for
pre‐retirement mortality) and the RP‐2000 Mortality Table for Annuitants (for post‐retirement mortality),
with mortality improvements projected to all future years after 2000 using Scale BB. For males, the base
mortality rates include a 90% blue collar adjustment and a 10% white collar adjustment. For females, the
base mortality rates include a 100% white collar adjustment. These are the same rates currently being
used for Special Risk Class members of the Florida Retirement System (FRS), as mandated by Ch. 112.63
F.S.
FRS Healthy Post‐Retirement Mortality for Special Risk Class Members
Sample
Attained
Ages (in 2018) Men Women Men Women
50 0.53 % 0.23 % 34.01 38.40
55 0.67 0.32 29.37 33.39
60 0.90 0.47 24.80 28.48
65 1.29 0.73 20.40 23.74
70 1.98 1.22 16.26 19.27
75 3.21 2.07 12.52 15.19
80 5.29 3.47 9.30 11.56
Probability of Future Life
Dying Next Year Expectancy (years)
This assumption is used to measure the probabilities of each benefit payment being made after
retirement.
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
B‐18
GRS RetirementConsulting
FRS Healthy Pre‐Retirement Mortality for Special Risk Class Members
Sample
Attained
Ages (in 2018) Men Women Men Women
50 0.22 % 0.15 % 35.00 38.75
55 0.39 0.24 29.88 33.61
60 0.71 0.39 25.00 28.59
65 1.21 0.70 20.44 23.76
70 1.98 1.22 16.26 19.27
75 3.21 2.07 12.52 15.19
80 5.29 3.47 9.30 11.56
Probability of Future Life
Dying Next Year Expectancy (years)
This assumption is used to measure the probabilities of active members dying prior to retirement.
For disabled retirees, the mortality table used was the 60% of the RP‐2000 for Disabled Annuitants with
ages set back 4 years for males and set forward 2 years for females, and 40% of the RP‐2000 Annuitant
Mortality Table with a White Collar adjustment with no age setback, both with no provision being made
for future mortality improvements. These are the same rates currently used for Special Risk Class
members of the Florida Retirement System (FRS), as mandated by Ch. 112.63 F.S.
FRS Disabled Mortality for Special Risk Class Members
Sample
Attained
Ages (in 2018) Men Women Men Women
50 1.67 % 0.91 % 23.74 27.06
55 2.03 1.26 20.77 23.37
60 2.47 1.67 17.91 19.90
65 3.07 2.24 15.15 16.62
70 3.90 3.18 12.52 13.58
75 5.30 4.60 10.02 10.86
80 7.59 6.66 7.80 8.48
Probability of Future Life
Dying Next Year Expectancy (years)
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
B‐19
GRS RetirementConsulting
The rates of retirement used to measure the probability of eligible members retiring under normal and
early retirement eligibility were as shown below.
Year of Percent of Eligible
Eligibility Employees Retiring
150%
230%
310%
410%
540%
6 ‐ 950%
10 and over 100%
Normal Retirement/DROP
Additionally, the rate of retirement is assumed to be 100% upon attainment of age 60 and completion of
5 years of service (applies only to members hired before January 1, 2013).
Retirement Percent of Eligible
Ages Employees Retiring
50 10%
51 10%
52 10%
53 10%
54 10%
Early Retirement/DROP
Rates of Disability among active members (67% of disability incidences are assumed to be service‐
connected)
Sample
Ages Men Women
20 0.14% 0.14%
25 0.15% 0.15%
30 0.18% 0.18%
35 0.23% 0.23%
40 0.30% 0.30%
45 0.51% 0.51%
50 1.00% 1.00%
55 1.55% 1.55%
60 0.00% 0.00%
Percent Becoming Disabled
Within Next Year
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
B‐20
GRS RetirementConsulting
Rates of separation from active membership are as shown below (rates do not apply to members eligible
to retire and do not include separation on account of death or disability).
Sample Years of
Ages Service Assumptions
ALL 0 37.0%
1 24.0%
2 15.0%
3 12.0%
4 10.0%
25 5 & Over 5.5%
30 5.0%
35 4.5%
40 3.9%
45 3.3%
50 2.4%
55 1.4%
60 1.0%
Rates of Separation from Active Employment
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
B‐21
GRS RetirementConsulting
Miscellaneous and Technical Assumptions
Administrative & Investment
Expenses
Annual administrative expenses are assumed to be equal to the
actual expenses paid during the preceding fiscal year. Investment
expenses are offset against gross investment income. Assumed
administrative expenses are added to the Normal Cost.
Benefit Service Exact fractional service is used to determine the amount of benefit
payable.
Decrement Operation Disability and mortality decrements do not operate during the first
5 years of service. Disability and separation do not operate during
retirement eligibility.
Decrement Timing Decrements of all types are assumed to occur mid‐year.
Eligibility Testing Eligibility for benefits is determined based upon the age nearest
birthday and service nearest whole year on the date the
decrement is assumed to occur.
Forfeitures Vested members who terminate with a benefit worth less than
100% of their own accumulated contributions were assumed to
forfeit their vested benefit.
Incidence of Contributions Employer contributions are assumed to be received in 12 equal
monthly installments. Member contributions are assumed to be
received continuously throughout the year based upon the
computed percent of payroll shown in this report, and the actual
payroll payable at the time contributions are made.
Marriage Assumption 80% of members are assumed to be married for purposes of
death‐in‐service benefits. Male spouses are assumed to be three
years older than female participants and female spouses are
assumed to be three years younger than male participants for
active member valuation purposes.
Normal Form of Benefit The normal form of benefit is a life annuity with 10 year certain.
Pay Increase Timing Beginning of fiscal year. This is equivalent to assuming that
reported pays represent the actual amount paid during the
previous fiscal year.
Service Credit Accruals It is assumed that members accrue one year of service credit per
year.
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
B‐22
GRS RetirementConsulting
GLOSSARY OF TERMS
Actuarial Accrued Liability The difference between (i) the actuarial present value of future plan
benefits, and (ii) the actuarial present value of future normal cost.
Sometimes referred to as “accrued liability” or “past service liability.”
Accrued Service The service credited under the plan which was rendered before the date of
the actuarial valuation.
Actuarial Assumptions Estimates of future plan experience with respect to rates of mortality,
disability, turnover, retirement, rate or rates of investment income and
salary increases. Decrement assumptions (rates of mortality, disability,
turnover and retirement) are generally based on past experience, often
modified for projected changes in conditions. Economic assumptions
(salary increases and investment income) consist of an underlying rate in
an inflation‐free environment plus a provision for a long‐term average rate
of inflation.
Actuarial Cost Method A mathematical budgeting procedure for allocating the dollar amount of
the “actuarial present value of future plan benefits” between the actuarial
present value of future normal cost and the actuarial accrued liability.
Sometimes referred to as the “actuarial funding method.”
Actuarial Equivalent A single amount or series of amounts of equal value to another single
amount or series of amounts, computed on the basis of the rate(s) of
interest and mortality tables used by the plan.
Actuarial Present Value The amount of funds presently required to provide a payment or series of
payments in the future. It is determined by discounting the future
payments at a predetermined rate of interest, taking into account the
probability of payment.
Amortization Paying off an interest‐bearing liability by means of periodic payments of
interest and principal, as opposed to paying it off with a lump sum
payment.
Experience Gain (Loss) A measure of the difference between actual experience and that expected
based upon a set of actuarial assumptions during the period between two
actuarial valuation dates, in accordance with the actuarial cost method
being used.
Normal Cost The annual cost assigned, under the actuarial funding method, to current
and subsequent plan years. Sometimes referred to as “current service
cost.” Any payment toward the unfunded actuarial accrued liability is not
part of the normal cost.
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
B‐23
GRS RetirementConsulting
Reserve Account An account used to indicate that funds have been set aside for a specific
purpose and is not generally available for other uses.
Unfunded Actuarial
Accrued Liability
The difference between the actuarial accrued liability and valuation assets.
Sometimes referred to as “unfunded accrued liability.”
Valuation Assets The value of current plan assets recognized for valuation purposes.
Generally based on market value plus a portion of unrealized appreciation
or depreciation.
SECTION C
PENSION FUND INFORMATION
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
C‐1
GRS RetirementConsulting
Cash and Securities ‐ Market Value
Cash and Cash Equivalents $ 1,029,812 $ 468,175
Short Term Investments 0 804,121
Treasury and Agency Bonds & Notes 566,396 693,744
Corporate Bonds 1,245,515 1,236,653
Common & Preferred Stocks 5,848,556 5,369,624
Other Fixed Income 0 0
Mutual or Pooled Bond Funds 0 0
Mutual Funds 2,845,120 1,752,316
Other Securities ‐ Participant Directed 494,654 487,791
Total 12,030,053 10,812,424
Receivables and Accruals
State Contribution 123,068 0
Member Contribution 0 0
Employer Contribution 0 0
Interest and Dividends 11,523 9,830
Total 134,591 9,830
Payables
Benefits‐DROP Reserve *0 0
Lump Sum Distributions 0 0
Other 0 18,714
Total 0 18,714
Net Assets ‐ Market Value $ 12,164,644 $ 10,803,540
SUMMARY OF ASSETS
9/30/2018 9/30/2017
Year Ending Year Ending
* DROP balances are included for consistency with GASB Statements 67 and 68.
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
C‐2
GRS RetirementConsulting
Market Value at Beginning of Period $ 10,803,540 $ 9,473,354
Income
Member Contributions 131,498 129,552
State Contributions 236,772 0
Employer Contribution 854,780 945,540
Interest, Dividends, and Other Income 212,923 180,852
Realized and Unrealized Gain (Loss) 675,093 804,502
Total Income 2,111,066 2,060,446
Disbursements
Monthly Benefit Payments 675,968 630,777
Lump Sum Distributions 0 0
Refund of Contributions 14,720 13,095
Investment Related Expenses 34,122 34,907
Other Administrative Expenses 25,152 51,481
Insurance Premiums 0 0
Total Disbursements 749,962 730,260
Net Increase During Period $ 1,361,104 $ 1,330,186
Market Value at End of Period $ 12,164,644 $ 10,803,540
PENSION FUND INCOME AND DISBURSEMENTS*
* DROP balances are included for consistency with GASB Statements 67 and 68.
Year Ending
9/30/2017
Year Ending
9/30/2018
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
C‐3
GRS RetirementConsulting
DEFERRED RETIREMENT OPTION PLAN (DROP)
BENEFITS HELD IN RESERVE
A reconciliation of the accumulated DROP account balances is provided in the table below.
$
+
+
‐
Value at end of year
Value at beginning of year
RECONCILIATION OF DROP ACCOUNTS
Payments credited to accounts
Investment Earnings credited
Withdrawals from accounts
537,335
20,397
11,911
0
569,643
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
C‐4
GRS RetirementConsulting
ACTUARIAL VALUE OF ASSETS
As of September 30, 2018
Valuation assets are calculated using a smoothed market value over a period of four (4) years, as
prescribed under Internal Revenue Procedure 2000‐40. The asset value determined under this method
will be adjusted to be no greater than 120% and no less than 80% of the fair market value.
Under this method, the actuarial value of assets is equal to the market value of assets less a decreasing
fraction (1/nth per year, where n equals the number of years in the smoothing period) of the gain or loss
for each of the preceding 3 years.
Under this method, a gain or loss for a year is determined by calculating the difference between the
expected market value of the assets at the valuation date and the actual market value of the assets at the
valuation date. The expected value of the assets for the year is the market value of the assets at the
valuation date for the prior year brought forward with interest at the valuation interest rate to the
valuation date for the current year plus contributions minus disbursements (i.e., benefits paid and
expenses), all adjusted with interest at the valuation rate to the valuation date for the current year. If the
expected value is less than the market value, the difference is a gain. Conversely, if the expected value is
greater than the market value, the difference is a loss.
Calculation of Valuation Assets is shown on the following page.
Ci
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Actuarial Valuation C ‐5
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11
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$
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1.
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7
.
0
0
%
6
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6
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3.
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6
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4.
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/
(
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:
E1
‐
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0
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F.
P
h
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of
in
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a
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:
25
%
of
E4
6
8
,
5
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5
2
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,
8
8
4
2.
2
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%
of
ex
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(
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1
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2
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8
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3.
2
5
%
of
ex
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/
(
s
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(
1
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2
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7
)
5
1
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6
2
6
8
,
5
0
5
2
6
,
8
8
4
4.
2
5
%
of
ex
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s
s
/
(
s
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(
4
1
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(
1
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)
5
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6
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2
6
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5.
T
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a
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‐in
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(
5
6
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9
8
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1
1
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1
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G.
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1.
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d
of
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a
r
:
A + D + E3
+ F5
1
0
,
6
3
1
,
1
2
4
1
1
,
8
9
5
,
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2.
U
p
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co
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li
m
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:
12
0
%
of
C
1
2
,
9
6
4
,
2
4
8
1
4
,
5
9
7
,
5
7
3
3.
L
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r
co
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d
o
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m
i
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:
80
%
of
C
8
,
6
4
2
,
8
3
2
9
,
7
3
1
,
7
1
5
4.
A
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a
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of
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a
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10
,
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H.
D
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an
d
ac
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1
7
2
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4
1
6
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7
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I.
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Fu
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Va
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to
Ma
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Va
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u
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9
8
%
9
8
%
DE
V
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L
O
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T
OF
FU
N
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AS
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R
30
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
C‐6
GRS RetirementConsulting
INVESTMENT RATE OF RETURN
The investment rate of return has been calculated on the following bases:
Basis 1 ‐ Market Value: Interest, dividends, realized gains (losses) and unrealized appreciation
(depreciation) divided by the beginning market value of the fund, adjusted for cash flow during
the year. This figure is normally called the Total Rate of Return.
Basis 2 ‐ Actuarial Value: Investment earnings recognized in the Actuarial Value of Assets divided by the
weighted average of the Actuarial Value of Assets during the year.
9/30/03 9.5 %2.2 %
9/30/04 6.7 2.4
9/30/05 8.5 4.4
9/30/06 8.8 7.8
9/30/07 14.2 9.4
9/30/08 (11.7) 4.6
9/30/09 8.5 3.8
9/30/10 10.8 4.7
9/30/11 1.2 2.2
9/30/12 13.9 7.9
9/30/13 5.7 7.5
9/30/14 5.8 6.3
9/30/15 0.5 5.3
9/30/16 9.4 4.7
9/30/17 9.8 6.3
9/30/18 7.7 7.0
6.6 % 5.9 %
7.3 % 5.5 %
Actuarial ValueYear Ended
Investment Rate of Return
Average Compounded
Rate of Return for
5 Years
10 Years
Market Value
SECTION D
MISCELLANEOUS INFORMATION
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
D‐1
GRS RetirementConsulting
A.
1. Number Included in Last Valuation 23 23
2. New Members Included in Current Valuation 5 1
3. Non‐Vested Employment Terminations (4) 0
4. Vested Employment Terminations 0 (1)
5. Service Retirements 0 0
6. Disability Retirements 0 0
7. Deaths 0 0
8. DROP Retirement 0 0
9. Vested Employment Terminations‐Refunded 0 0
10. Number Included in This Valuation 24 23
B.
1. Number Included in Last Valuation 4 5
2. Additions from Active Members 0 1
3. Lump Sum Payments/Withdrawals 0 (1)
4. Payments Commenced 0 (1)
5. Deaths 0 0
6. Other‐Returned to Work 0 0
7. Number Included in This Valuation 44
C.
1. Number Included in Last Valuation 22 21
2. Additions from Active Members 0 0
3. Additions entering the DROP 00
4. Additions from Terminated Vested Members 0 1
5. Deaths Resulting in No Further Payments 0 0
6. Deaths Resulting in New Survivor Benefits 0 0
7. End of Certain Period ‐ No Further Payments 0 0
8. Other ‐‐ Lump Sum Distributions 0 0
9. Number Included in This Valuation 22 22
RECONCILIATION OF MEMBERSHIP DATA
Active Members
Service Retirees, Disability Retirees, Beneficiaries & DROP
Terminated Vested Members
From 9/30/16From 10/01/17
To 10/1/17To 10/1/18
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
D‐2
GRS RetirementConsulting
STATISTICAL DATA
Active Members as of October 1, 2018
Age Group 0‐4 5‐9 10‐14 15‐19 20‐24 25‐29 30 & Up Totals Avg. Pay
20‐24 NO.3000000344,418
25‐29 NO.1100000249,954
30‐34 NO.4000000448,471
35‐39 NO.0010000167,710
40‐44 NO.1132000768,470
45‐49 NO.0001100293,564
50‐54 NO.1011110581,059
55‐59 NO.00000000 0
60‐64 NO.00000000 0
65&UP NO.00000000 0
TOT NO.102542102465,270
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
D‐3
GRS RetirementConsulting
Active
Year Members
Ended Vested Other End of
September 30 A E A E A E A E A A A E Year
2003 3 6 0 0.1 1 0.1 0 0.0 2 3 5 1.3 22
2004 9 4 0 0.3 0 0.0 0 0.0 2 2 4 1.1 27
2005 3 4 2 0.6 0 0.0 0 0.0 1 1 2 1.9 26
2006 2 4 1 1.0 0 0.0 0 0.0 1 2 3 1.8 24
2007 4 3 1 0.2 0 0.0 0 0.0 0 2 2 1.5 25
2008 5 4 1 0.1 0 0.0 0 0.0 0 3 3 1.6 26
2009 5 4 1 0.1 0 0.0 0 0.0 0 3 3 1.6 27
2010 3 3 0 0.4 1* 0.0 0 0.0 1* 1 3 1.4 27
2011 3 4 2 1.0 0 0.0 0 0.0 0 2 2 2.5 26
2012 2 2 1 1.0 0 0.1 0 0.0 0 1 1 2.5 26
2013 0 4 1 1.0 0 0.1 0 0.0 0 3 3 2.5 22
2014 2 3 0 0.4 0 0.1 0 0.0 3 0 3 2.2 21
2015 2 4 1 0.5 0 0.1 0 0.0 2 1 3 1.5 19
2016 5 1 0 0.5 0 0.0 0 0.0 0 1 1 1.5 23
2017 1 1 0 0.2 0 0.1 0 0.0 1 0 1 2.7 23
2018 5 4 0 0.8 0 0.0 0 0.0 0 4 4 2.1 24
5‐yr. Totals
2014‐2018 15 13 1 2.4 0 0.3 0 0.0 12 10.0
Expected
for 2019 1.0 0.0 0.0 2.7
A Represents actual number.
E Represents expected number.
* Member retroactively approved for duty disability benefits (previously reported as vested terminated)
NUMBER ADDED TO AND REMOVED FROM ACTIVE MEMBERSHIP
Number
Added Terminations During Year
Year Retirement Retirement Service Total
During Service Disability Died‐in Withdrawal
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
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Year Ended No. Annual No. Annual No. Annual No. Annual No. Annual
2003 2 30,148 2 30,148 11 235,310 0.1 2,072
2004 11 235,310 0.2 2,683
2005 2 106,731 2 106,731 13 342,041 0.2 2,933
2006 1 34,521 1 9,796 0 24,724 13 366,765 0.2 3,809
2007 1 43,455 1 43,455 14 410,220 0.2 3,922
2008 2 63,781 2 63,781 16 474,001 0.2 4,510
2009 16 474,001 0.2 5,200
2010 6,319 * 1 14,935 (8,616) 15 465,385 0.2 5,200
2011 2 84,469 0 2 84,469 17 549,854 0.2 5,200
2012 2 68,629 0 2 68,629 19 618,483 0.3 5,761
2013 1 48,017 0 1 48,017 20 666,500 0.2 4,950
2014 0 0 0 0 ‐ 20 666,500 0.2 5,547
2015 1 20,397 0 1 20,397 21 686,897 0.2 6,119
2016 0 0 0 0 ‐ 21 686,897 0.3 6,815
2017 1 9,468 0 1 9,468 22 696,365 0.3 9,139
2018 0 0 0 0 ‐ 22 696,365 0.4 9,846
Expected for
2019 0.4 10,886
*
**Includes member retroactively approved for duty disabililty
One-time adjustment correcting past underpayments
Retired Members and Beneficiary Data
Historical Schedule**
Expected
Added Removed Net Increase End of Year Removals
SECTION E
SUMMARY OF PLAN PROVISIONS
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
E‐1
GRS RetirementConsulting
A. Ordinances:
Plan established under the Code of Ordinances for the City of Atlantic Beach, Florida, Part II, Chapter
2, Article VI, Division 4 and was most recently amended and restated under Ordinance No. 58‐13‐36
passed and adopted on June 10, 2013. The Plan is also governed by certain provisions of Part VII,
Chapter 112, Florida Statutes (F.S.), F. S. 185 and the Internal Revenue Code.
B. Effective Date
December 22, 1975, Restated under Division 4 on July 10, 2000
C. Plan Year
October 1 through September 30
D. Type of Plan
Qualified, governmental defined benefit retirement plan; for GASB purposes it is a sole employer plan.
E. Eligibility Requirements
All full time sworn City police officers, who normally work more than 1,000 hours annually and are not
an elected officials, temporary or contractual employees, or executives or departments heads who
have elected not to participate, will become members on the date of employment.
F. Credited Service
Service is measured as the total number of years and fractional parts of years, but credited to the
nearest one‐twelfth (1/12) of a year. No service will be credited for any periods of employment for
which the member received a refund of their employee contributions.
G. Compensation
Base salary or wages paid for services rendered to the City including longevity pay, overtime pay not
to exceed 300 hours, cost of living payments, holiday and personal leave taken and incentive pay.
Compensation excludes payments of unused personal leave, uniform or equipment allowances, extra
duty or special detail pay on behalf of a second party employer, or any reimbursement of expenses.
H. Final Average Compensation (FAC)
Average monthly rate of Compensation during the highest 60 consecutive months of Credited Service
out of the last 120 months preceding the date of termination or retirement.
City of Atlantic Beach Police Officers’ Retirement System
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I. Normal Retirement
Eligibility: For members hired prior to January 1, 2013
A participant may retire on the first day of the month coincident with or next following
the earlier of:
(1) 25 years of Credited Service regardless of age, or
(2) age 50 with 20 years of Credited Service, or
(3) age 55 with 10 years of Credited Service, or
(4) age 60 with 5 years of Credited Service.
For members hired on or after January 1, 2013
A participant may retire on the first day of the month coincident with or next following
the earlier of:
(1) Age 55 with 10 years of Credited Service, or
(2) age 52 with 25 years of Credited Service.
Benefit: For members hired prior to January 1, 2013
3.00% of FAC times Credited Service. Benefit is limited to 100% of FAC.
For members hired on or after January 1, 2013
2.00% of FAC times Credited Service. Benefit is limited to 100% of FAC.
Normal Form
of Benefit: 10 Years Certain and Life thereafter; other options are also available.
J. Early Retirement
Eligibility: A member may elect to retire earlier than the Normal Retirement Eligibility upon
attainment of age 50 with 10 years of Credited Service.
Benefit: The Normal Retirement Benefit is actuarially reduced by 3% for each year by which the
member’s Early Retirement date precedes the member’s normal retirement age.
Normal Form
of Benefit: 10 year certain and life thereafter; other options are also available.
K. Delayed Retirement
Same as Normal Retirement taking into account compensation earned and service credited until the
date of actual employment termination.
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
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L. Service Connected Disability
Eligibility: Any member who becomes totally and permanently disabled due to a service related
injury or illness and is deemed unable to render useful and efficient service to the City as
a police officer is eligible for a disability benefit.
Benefit: The benefit is calculated as if the member was eligible for Normal Retirement and is
payable retroactively to the later of; the last day on payroll, or the date of application
for disability benefits. The minimum for a service connected disability benefit is 42% of
FAC.
Normal Form
of Benefit: 10 year certain and life thereafter.
M. Non‐Service Connected Disability
Eligibility: Any member with 8 1/3 or more years of Credited Service who becomes totally and
permanently disabled and is deemed unable to render useful and efficient service to the
City as a police officer is eligible for a disability benefit.
Benefit: The benefit is calculated as if the member was eligible for Normal Retirement and is
payable retroactively to the later of; the last day on payroll, or the date of application
for disability benefits. The minimum for a non‐service connected disability benefit is
25% of FAC if the member had at least 8 1/3 years of Credited Service.
Normal Form
of Benefit: 10 year certain and life thereafter.
N. Pre‐Retirement Death
Eligibility: Any member with 5 or more years of Credited Service is eligible for a death benefit.
Benefit: Upon the death of a member, the designated beneficiary shall be paid an actuarially
reduced standard ten (10) year certain and life survivor pension notwithstanding that
the member may not have satisfied the conditions for retirement. If there are no
beneficiaries designated by the member, then a benefit shall be paid to the surviving
spouse or, if no surviving spouse, a reduced benefit will be paid to the member’s
unmarried children.
If spouse is receiving benefits described above, no children’s benefits are payable.
If spouse is not receiving benefits, children under age 19, or age 23 if an unmarried
fulltime student, will receive equal shares of 50% of the member’s Normal Retirement
Benefit under the Life Annuity option based upon service and FAC as of the date of
death.
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
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Normal Form
of Benefit: Payable for the life of the member’s beneficiary or spouse. Children’s benefits are
payable until age 19 or age 23 if an unmarried fulltime student.
O. Post Retirement Death
Benefit determined by the form of benefit elected upon retirement.
P. Optional Forms
In lieu of electing the Normal Form of benefit, the optional forms of benefits available to all retirees are
a Life Annuity, or the 50%, 66 2/3%, 75% or 100% Joint and Survivor options. A Social Security option is
also available for members retiring prior to the time they are eligible for Social Security retirement
benefits.
Q. Vested Termination
Eligibility: For members hired prior to January 1, 2013
A participant has earned a non‐forfeitable right to Plan benefits after the completion of
5 or more years of Credited Service.
For members hired on or after January 1, 2013
A participant has earned a non‐forfeitable right to Plan benefits after the completion of
10 or more years of Credited Service
Benefit: The benefit is the member’s vested portion of the accrued Normal Retirement Benefit as
of the date of termination. Benefit begins on the Normal Retirement date.
Normal Form
of Benefit: 10 year certain and life thereafter; other options are also available.
Member’s terminating employment with less than 5 years of Credited Service will receive a refund of
their own accumulated contributions.
R. Refunds
Eligibility: All non‐vested members are eligible. Optionally, vested participants may also withdraw
their contributions in lieu of the deferred benefits otherwise due. Vested members
may delay withdrawal of funds for up to five years.
Benefit: The member who terminates employment receives a lump‐sum payment of their
employee contributions with interest.
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
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S. Member Contributions
8.0%
T. Premium Tax Monies
A distribution of casualty insurance premium tax monies collected by the State pursuant to Chapter
185 Florida Statutes.
U. Employer Contributions
The amount determined by the actuary to pay the normal cost and an amortization of the unfunded
actuarial accrued liabilities, along with employee contributions and Chapter 185 monies. Following
are assumed contribution rates per recent valuations:
Contribution
Year Beginning City
State
Sec 185 Member Total
10/1/2009 21.07% 5.55% 4.815% 31.44%
10/1/2010 21.66% 4.83% 4.815% 31.31%
10/1/2011 31.07% 5.11% 4.815% 41.00%
10/1/2012 30.13% 5.21% 5.111% 40.45%
10/1/2013 34.42% 5.57% 7.000% 46.99%
10/1/2014 39.43% 6.67% 8.000% 54.10%
10/1/2015 52.60% 7.54% 8.000% 68.14%
10/1/2016 56.08% 8.61% 8.000% 72.69%
10/1/2017 38.04% 14.08% 8.000% 60.12%
10/1/2018 42.38% 7.41% 8.000% 57.79%
10/1/2019 33.04% 7.46% 8.000% 48.50%
Note: No State premium tax money was received for the contribution year beginning 10/1/2016.
Therefore, two years’ worth of State money was received for the contribution year beginning
10/1/2017.
V. Cost of Living Increases
The plan does not provide for automatic post‐retirement cost of living adjustments (COLA) of retiree
benefits.
W. Changes from Previous Valuation
See the Discussion of Valuation Results Section of this report under the Revisions in Benefits heading.
X. Gain‐sharing benefits
Not applicable.
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
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Y. Deferred Retirement Option Plan
Eligibility: Upon obtaining Normal or Early Retirement eligibility.
All members must make a written election to participate in the DROP.
Benefit: The member’s Credited Service and FAC are frozen upon entry into the DROP. The
monthly retirement benefit as described under Normal Retirement is calculated based
upon the frozen Credited Service and FAC. Benefits for members entering the DROP upon
Early Retirement eligibility will be actuarially reduced as described for Early Retirement.
Maximum
DROP Period: 60 months
Interest
Credited: Participants’ DROP account balances will be credited in accordance with the self‐directed
options selected by the participant who entered the program prior to July 1, 2013. For all
other participants, DROP account balances will be credited or debited quarterly with
interest based on Plan’s net investment earnings or losses for that quarter.
Normal Form
of Benefit: Lump Sum or roll‐over to a qualified retirement account.
SECTION F
COMPARATIVE SUMMARY OF PRINCIPAL VALUATION RESULTS
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
F‐1
GRS RetirementConsulting
A. Participant Data
Number Included:
Actives 24 23
Service Retirees & Beneficiaries 18 18
Disability Retirees 4 4
Terminated Vested Members 4 4
Total Members and Beneficiaries 50 49
Total Annual Payroll $1,566,471 $1,576,914
Expected Annual Payroll in Contribution Year 1,649,426 1,660,422
Total Annualized Benefits
Service Retirees & Beneficiaries 622,206 622,206
Disability Retirees 74,159 74,159
Terminated Vested Members 70,621 70,621
B. Assets (Market Value)*
Cash and Short Term Investments 1,029,812 1,272,296
Treasury and Agency Bonds & Notes 566,396 693,744
Corporate Bonds 1,245,515 1,236,653
Common & Preferred Stocks 5,848,556 5,369,624
Mutual Fund Bonds 0 0
Mutual Fund Stocks 2,845,120 1,752,316
Other Securities 494,654 487,791
Net Receivables & Payables 134,591 (8,884)
Total 12,164,644 10,803,540
Actuarial Value 11,895,920 10,631,124
Assets include:
Accumulated active member contributions 756,326 676,922
(with interest if applicable)
C. Actuarial present value of accrued benefits
(i) Vested accrued benefits
Retired members and benefitciaries 7,715,932 7,832,057
Terminated members 444,943 414,578
DROP Balances* 569,643 537,335
Excess Premium Tax Liability* 0 0
Active members (includes non‐forfeitable
members contributions of 756,326 and 676,922) 4,687,199 4,060,854
Total 13,417,717 12,844,824
(ii) Non‐vested accrued benefits 12,529 5,925
(iii) Total actuarial p.v. of accrued benefits 13,430,246 12,850,749
(iv) Actuarial p.v. of accrued benefits at begin. of year 12,850,749 12,002,866
(v) Changes attributable to:
Amendments none none
Assumption change 0 477,510
Operation of decrements 1,270,185 1,014,245
Benefit payments (690,688) (643,872)
Other (Method Change) 0 0
(vi) Net change 579,497 847,883
(vii) Actuarial p.v. of accr. benefits at end of year 13,430,246 12,850,749
COMPARATIVE SUMMARY OF
PRINCIPLE VALUATION RESULTS October 1, 2017October 1, 2018
* DROP balances and Excess Premium Tax Liability are included.
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
F‐2
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D. Liabilities‐ Actuarial Present Value of Future Benefits
1. Active Members
Service Retirement Benefits $7,783,207 $7,604,979
Vesting Benefits 642,018 699,267
Disability Benefits 189,217 196,266
Preretirement Death Benefits 78,982 75,727
Return of Member Contributions 64,329 68,949
Total Actives 8,757,753 8,645,188
2. Inactive Members
Service Retirees & Beneficiaries 6,894,440 6,999,833
Disability Retirees 821,492 832,224
Terminated Vested Members 444,943 414,578
Total Inactive Members 8,160,875 8,246,635
3. DROP Balances 569,643 537,335
4. Excess Premium Tax Liability 0 0
5. Total Present Value for All Members 17,488,271 17,429,158
Total Present Value of:
Future Salaries 11,663,646 13,095,824
Future Employee Contributions 933,092 1,047,666
Future Contributions from Other Sources 4,659,259 5,750,368
Derivation of Current Employer
Unfunded Actuarial Accrued Liability (UAAL)
a. Total UAAL for Prior Valuation Date $4,168,873 $4,366,879
b. Employer Normal Cost for this period 262,115 233,986
c. Interest acccrued on (a) and (b) 299,092 322,061
d. Contributions for this period 1,091,552 945,540
e. Interest accrued on (d) 36,840 33,094
f. Accumulated Excess Premium Tax Reserve Use 0 120,454
g. Changes due to:
Assumptions 0 451,119
Plan Amendment 0 0
Cost Method (Asset Method) 0 0
Actuarial (Gain) Loss (380,936) (106,084)
h. Total Current UAAL: a+b+c‐d‐e‐f+g 3,220,752 4,168,873
COMPARATIVE SUMMARY OF
PRINCIPAL VALUATION RESULTS October 1, 2018 October 1, 2017
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
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Date
Years
Remaining
Amortization
Payment
9/30/2004 Experience Loss 1 6,446 207,808
9/30/2005 Experience Loss 2 21,135 287,225
9/30/2006 Experience Gain 3 (36,233) (411,559)
9/30/2007 Experience Loss 4 12,933 137,906
9/30/2008 Experience Loss 5 29,477 308,022
9/30/2009 Experience Loss 6 29,618 323,582
9/30/2010 Experience Gain 7 (13,945) (154,731)
9/30/2011 Experience Loss 8 39,366 451,201
9/30/2012 Experience Loss 9 2,878 32,697
9/30/2013 Experience Gain 10 (10,010) (115,061)
9/30/2014 Experience Gain 11 (8,330) (95,416)
9/30/2015 Experience Loss 12 13,326 154,573
9/30/2016 Experience Loss 13 32,056 366,146
10/1/2017 Experience Gain 14 (9,698) (106,084)
10/1/2018 Experience Gain 15 (37,237) (380,936)
9/30/1993 Benefit Changes 5 55,461 442,232
9/30/1994 Benefit Changes 6 (1,578) (12,597)
9/30/1996 Benefit Changes 8 4,358 35,914
9/30/1997 Benefit Changes 9 1,052 8,892
9/30/2001 Benefit Changes 13 8,523 81,627
9/30/2003 Benefit Changes 15 13,195 144,006
9/30/2007 Benefit Changes 19 (4,100) (49,157)
9/30/2012 Benefit Changes 24 (2,763) (40,750)
9/30/1995 Assumption/Method Change 7 40,056 323,633
9/30/1997 Assumption/Method Change 9 27,441 231,795
9/30/2009 Assumption/Method Change 21 3,054 40,694
9/30/2010 Assumption/Method Change 22 45,343 630,507
9/30/2014 Assumption/Method Change 26 80,989 1,234,336
9/30/2016 Assumption/Method Change 28 (2,122) (32,567)
10/1/2017 Assumption/Method Change 29 29,964 451,119
TOTAL $370,655 $4,495,056
6,446
7,559
(102,556)
(380,936)
247,143
(8,207)
28,588
47,432
236,327
$3,220,752
131,354
258,242
427,052
1,105,241
197,083
(82,273)
573,719
37,765
(77,764)
(69,310)
(36,419)
(48,112)
134,983
79,540
(29,844)
117,821
299,145
(94,985)
Original and Current Unfunded Actuarial Accrued Liabilities
Original Amount Current Unfunded
20,670
41,053
153,995
Item Description
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
F‐4
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E. Pension Cost
Entry Age Normal Cost for:
Service Retirement Benefits $248,315 $251,993
Vesting Benefits 48,696 50,912
Disability Benefits 14,736 14,440
Preretirement Death Benefits 4,156 4,035
Return of Member Contributions 16,516 16,535
Total Actives 332,419 337,915
Administrative Expenses 25,152 51,481
Expected Member Contributions 124,456 127,281
(Assuming employee contrib rate applicable to the contrib year)
Total Employer Normal Cost 233,115 262,115
Payment Required to Amortize Unfunded Actuarial
Accrued Liability 370,655 485,000
Total Contribution at Valuation Date 603,770 747,115
Total Contribution Adjusted for Frequency of
Payments and Interest to Next Following Fiscal Year 668,090 826,705
% of Expected Payroll 40.50% 49.79%
Amount Expected to be Contributed by Members 131,954 132,834
% of Expected Payroll 8.000% 8.000%
F. Past Contributions‐ For the Fiscal Years Ended September 30 of 2017 and 2018:
Required Contribution Determined in the Valuation as of September 30, 2016 September 30, 2015
For the Year Ending: September 30, 2018 September 30, 2017
by the Plan Sponsor (Including Expected Premium Tax Revenues) $841,726 $849,061
by the Plan Sponsor (Excluding Expected Premium Tax Revenues) $728,754 $736,089
Expected Premium Tax Revenues $112,972 $112,972
by Members $129,204 $105,011
Actual Contribution for the Fiscal Year ended September 30, 2018 September 30, 2017
by the Plan Sponsor $854,780 $945,540
Premium Tax Revenues $236,772 $0
by Members $131,498 $129,552
G. Net experience (gain) loss during year: ($380,936) ($106,084)
COMPARATIVE SUMMARY OF
PRINCIPAL VALUATION RESULTS October 1, 2017October 1, 2018
H. 1. Plan to Amortize Unfunded Actuarial Accrued Liability
20 year funding of the Original Unfunded Actuarial Accrued Liability, 15 year funding of any
Gains or Losses and 30 year of adjustments due to benefit or assumption changes.
2. Schedule Illustrating the Amortization of the Unfunded Actuarial Accrued Liability (UAAL)
Year Projected UAAL
2018 $3,220,752
2019 $3,042,462
2020 2,856,702
2021 2,678,890
2022 2,447,473
2023 2,212,102
2028 1,644,253
2033 1,308,368
2038 792,765
2043 214,696
2047 0
3. Action taken since last actuarial valuation.
Contribution sufficient to satisfy the total required contribution.
City of Atlantic Beach Police Officers’ Retirement System
10/1/2018 Actuarial Valuation
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I. 1. Three‐Year Comparison of Actual and Assumed Salary Increases (Annualized)
Actual Assumed
10.5 % 7.3%
5.3 % 7.8%
(0.2)% 6.7%
2. Three‐Year Comparison of Investment Return (Actuarial Value)
Actual Assumed
4.7% 7.0%
6.3% 7.0%
7.0% 6.75%
3. Average Annual Growth in Covered Payroll, Last Ten Years (if applicable)
Total % Increase Last Ten Years 6.12 %
Annual % Increase 0.60 %
Thirty‐year Forecast 3.50 %
J. Benefits and Expenses of Plan not Explicitly or Implicitly Provided in Valuation
NONE
K. Trends not taken into Account but which are likely to Result in Future Cost Increases
NONE
9/30/2008
9/30/2009
1,548,109
9/30/2010
9/30/2012
9/30/2011 1,605,814
1,639,155
1,294,600
1,246,622
1,566,471
1,696,746
10/1/2017 1,576,914
10/1/2018
9/30/2013
9/30/2016 1,533,818
9/30/2014
9/30/2015
1,360,245
1,476,074
COMPARATIVE SUMMARY OF PRINCIPAL VALUATION RESULTS
Year Ended
Total Covered PayrollValuation Date
9/30/2016
9/30/2017
9/30/2018
Year Ended
9/30/2016
9/30/2017
9/30/2018