Fort Walton Beach Council agenda — 04-26-11 regular — reading text

0.08 0. 05 45 0. 15 0. 11 55 0. 36 0. 27 65 1. 27 0. 97 4. Termination Rates: Probability of Terminating Service for reasons other than death, disability or retirement) Within One Year Awe After Attaining Age Shown 25 7. 7% 35 6. 9 45 5. 2 55 4.4 Con._.'  APPENDIX B -2 5. Disability Rates: Probability of Disability Within One Year After Attaining Age Shown Age Male Female 25 0. 15% 0. 09% 35 0. 26 0. 26 45 0. 62 0. 58 55 1. 82 1. 53 Assumed 100% in line of duty. 6. Disability Mortality Rates: Social Security Study #74 Mortality Table Probability of Death Within One Year After Attaining Age Shown Awe Male Female 25 2. 62% 1. 34% 35 2. 84 2.22 45 3.50 2. 25 55 5. 25 2. 99 65 7.35 3. 83 7. Early Retirement Rates: Probability of Early Retirement Within One Year Age After Attaining Age Shown 50 4.3% 52 4.2 55 4.4 57 4. 7 8. Normal Retirement Age: Age 62 and 10 years of service. 9. Marital Status and Spouse' s Age: 100% of employees assumed married. Male spouses assumed three years older than female employees, and female spouses assumed three years younger than male employees. 10. Actuarial Value of Assets: The actuarial value of assets is determined by adjusting the expected value of assets as of the valuation date by a portion of the cumulative differences of the market value of assets and the expected value of assets as of the previous Concd  APPENDIX B -3 four valuation dates. Each difference is fully recognized over a period not to exceed five years. The expected value of assets as of any valuation date is determined by applying actual Plan contributions and disbursements and the assumed investment yield to the previous year' s expected value of assets adjusted for any fully recognized cumulative differences. The adjustment is further modified, if necessary, by an amount sufficient to ensure that the actuarial value of assets is not less than 80% nor more than 120% of market value. 11. Plan Expenses: Actual expenses incurred for the previous plan year. 12. Cost -of- Living Adjustment: 3. 0% per annum ( does not apply to disability benefits). 13. Payroll Growth Rate: 3. 0% per year; used to project normal cost requirements to applicable fiscal year. Actuarial Cost Method To determine the Plan' s contribution requirements, the Individual Entry Age Actuarial Cost Method was used. Under this method, the cost of each member' s projected retirement benefit is funded through a series of annual payments, determined as a level percentage of each year' s earnings from age at hire to assumed exit age. This level percentage, known as normal cost, is thus computed as though the Plan had always been in effect. A yearly normal cost for each member is individually determined by multiplying each member' s level percentage by the applicable yearly earnings, then adding together to obtain the normal cost amount for the Plan for that year. The accrued value of normal cost payments due prior to the valuation date is termed the actuarial accrued liability (AAL). This amount minus the actuarial value of assets is known as the unfunded actuarial accrued liability (UAAL). The annual cost of a plan consists of two components: normal cost and an amortization payment, which may vary between prescribed limits, toward the UAAL.  APPENDIX B -4 An actuarial gain ( or loss), a measurement of the difference between actual experience and that expected based upon the actuarial assumptions during the period between two actuarial valuation dates, reduces ( or increases) the UAAL. UAAL bases established on or after October 1, 1994, will be amortized as a series of level dollar payments over 15 years from inception. Each year' s UAAL base can be either positive or negative, with amortization credits occurring if negative. Miscellaneous Valuation Procedures 1. Projected retirement benefits were limited to IRC Section 415 benefit limits applicable to the current plan year (for 2010, $ 195, 000), payable as a life annuity, beginning at or after age 62, reduced as applicable for earlier benefit commencement with assumed increases equal to the assumed long -term rate of inflation. 2. Projected earnings were limited to IRC Section 401( a)( 17) compensation limits applicable to the current plan year ( for 2010, $ 245, 000) with assumed increases equal to the assumed long -term rate of inflation. 3. Annual covered payroll is the amount of total pensionable earnings paid during the prior fiscal year for employees who are currently active members in the Plan. Valuation payroll is payroll expected to be paid during the current fiscal year, determined using prior -year covered payroll and the salary increase assumption by individual member. Contribution requirements for the next fiscal year are based on valuation payroll for the current fiscal year projected for one year using the payroll growth assumption. 4. Member information is current as of October 1, 2010. 5. It was assumed that 100% of future disablements would be service connected. 6. No liability was recognized in the valuation for nonvested employees who have terminated, whether or not a break in service has occurred as of the valuation date, since any potential liability for this group is not significant. Note that upon  APPENDIX B -5 rehire, any applicable prior employment service credits will be fully recognized in the valuation. 7. The effect of member contributions on the funding of normal cost requirements has been recognized through subtracting the member contribution rate from the total Plan normal cost rate to determine the net City portion. 8. The contribution requirement includes an amount to recognize the Plan' s anticipated administrative expenses based on actual prior experience ( see assumptions). This amount is reflected in the required normal cost. 9. The reason why the outstanding bases minus the excess contributions does not equal the UAAL is that the plan prior to 2004 was in a surplus position, also having paid more in contributions than required. The past excess contribution balance as of 10/ 01/ 2004 was $1, 076, 631 while the unfunded was only $254,504. A positive base was established as of 10/ 01/ 2002 of $2,202, 652 ( while in surplus When and if the City chooses to use the past excess contributions to position). meet current contribution requirements, some of that prior base previously discharged will need to be reinstated.  APPENDIX C -1 CITY OF FORT WALTON BEACH GENERAL EMPLOYEES' RETIREMENT FUND TRUST FUND BALANCE AS OF 9/ 30/ 10 Market Value Cash $ 1, 423, 372 Short Term Investments - Fixed Income 10, 587,845 Mutual Funds - 17,975, 381 Equity Accrued Income - Accrued Expenses - Accrued from Brokers - Accrued from Employees - Receivable from Fire Plan - Total Assets* $ 29,986, 598 Actuarial Value of Assets 34,351, 948 Includes accumulated member contributions with interest of $2, 367,590.  APPENDIX C -2 CITY OF FORT WALTON BEACH GENERAL EMPLOYEES' RETIREMENT FUND ANALYSIS OF CHANGES IN ACTUARIAL VALUE OF ASSETS Actuarial Value of Assets (AVA) as of 9/ 30/ 09 $ 33, 336, 278 City Contributions 1, 477,777 Member Contributions 3221527 Realized Gains ( Losses) 245, 490 Unrealized Gains (Losses) 1, 636, 205 Interest and Dividends 796, 300 Net Appreciation/ ( Depreciation) due to AVA Update ( 1, 190,696) Total Additions $ 3, 287,603 Deduct: