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Home My WebLink About2011 04 12 Other Regular 600 Document Reviewed By Larry Wilson Date: April 12, 2011 This document was reviewed by Mr. Larry Wilson at the April 12, 2011 City Commission Workshop during Regular Agenda Item "600". w H w O A w w W A C� W H w W W M 0 w u U w w c� O W" u O N /1 e m C, 6 0 V N IA � 6 m b GJ G b DJ ... bo � 0 3 L3 c� P4 Qm7 1 0, 1 0 Phase I - Benchmarking • Compare Winter Springs ►Florida Local Law Plans • General Employee Plans • Police and Firefighter Plans Plan Benefits To: No-Florida Retirement System (FRS) GRS Phase I - Benchmarking • Benefits Reviewed: Normal Retirement Eligibility Early Retirement Eligibility Benefit Accrual Rate ►Final Average Pay Period ►Member Contributions • Plan Freeze • Plan Termination RS Phase I - Benchmarkin g • Normal Retirement Eligibility Current Plan •Age 65 • Unreduced Early: Age 55 and 10 Years of Service Local Law Plans • General Employees: — Most Common: 30 Years of Service — Least Restrictive: Age 50 and 5 Years of Service • Special Risk (Police Officers and Firefighters): — Most Common: Age 55 and 10 Years of Service — Least Restrictive: 20 Years of Service 4 MUM Phase I - Benchmarkin g t Normal Retirement Eligibility (cont) Current Plan • Age 65 • Unreduced Early: Age 55 and 10 Years of Service ► FRS • General Employees: — Earliest of: » Age 62 and 6 Years of Service » 30 Years of Service • Special Risk (Police Officers and Firefighters): — Earliest of: » Age 55 and 6 Years of Service » 25 Years of Service 5 Phase I - Benchmarkin g • Early Retirement Eligibility 0- Current Plan • 25 Years of Service • Unreduced Early: Age 55 and 10 Years of Service ►Local Law Plans • General Employees: — Most Common: Age 55 and 10 Years of Service — Least Restrictive: Age 42 and 5 Years of Service • Special Risk (Police Officers and Firefighters): — Most Common: Age 50 and 10 Years of Service — Least Restrictive: Age 40 and 10 Years of Service � Phase I - Benchmarkin g 0 *Early Retirement Eligibility (cont) 0- Current Plan • 25 Years of Service • Unreduced Early: Age 55 and 10 Years of Service ►FRS • All Employees: — 6 Years of Service GRS Phase I - Benchmarkin g • Benefit Accrual Rate Current Plan • 3 <� ►Local Law Plans • General Employees: - Median: 2.5% - Most Common: 3% • Special Risk (Police Officers and Firefighters): - Median: 3% - Most Common: 3% GRS Phase I - Benchmarkin g • Benefit Accrual Rate (cont) Current Plan o 3 0 /0 FRS • General Employees: - 1.6% (1.8 %) • Special Risk (Police Officers and Firefighters): - 3% RS Phase I - Benchmarkin g • Final Average Pay Period Current Plan • 3 Consecutive Years ►Local Law Plans • General Employees: — Median: 5 Years — Most Common: 5 Years • Special Risk (Police Officers and Firefighters): — Median: 5 Years — Most Common: 5 Years 10 GRS Phase I - Benchmarking MP •Final Average Pay Period (cont) Current Plan • 3 Consecutive Years FRS • General Employees: — 5 Highest Years • Special Risk (Police Officers and Firefighters): — 5 Highest Years 11 RS Phase I - Benchmarkin g • Member Contributions Current Plan • 30/ 0 ►Local Law Plans • General Employees: - Median: 5% - Most Common: None • Special Risk (Police Officers and Firefighters): - Median: 6% - Most Common: 5% 12 GRS * Phase I - Benchmarkin g io - •Member Contributions (cont) 0- Current Plan o 3 <> ►FRS • All Employees: - None - Proposed Legislation �: GRS 1 0, 1 0 Phase I - Benchmarking •Plan Freeze ►No New Members ►Current Members Retain Current Benefits • Future Benefits May Be Modified • Plan Termination ►No New Members ►Current Members Benefits Frozen 14 GRS Phase 2 - Financial Projections (10/1/2009) • Current Plan ► Net City and County Cost (8% Return) • One Year = $2,746,000 (24.8% of Covered Pay) • Ten Year = $31,806,000 (25.3% of Covered Pay) ► Net City and County Cost (9% Return) • One Year = $2,743,000 (24.7% of Covered Pay) - Reduction= $3,000 (0.1 %) • Ten Year = $30,799,000 (24.5% of Covered Pay) - Reduction= $1,007,000 (0.8 %) ► Net City and County Cost (7% Return) • One Year = $2,749,000 (24.8% of Covered Pay) - Increase = $3,000 (0.0 %) • Ten Year = $32,768,000 (26.1% of Covered Pay) - Increase = $962,000 (0.8 %) 15 �r Phase 2 - Financial Projections (10/1/2009) • 2.5% Benefit Accrual Rate ► Net City and County Cost (8% Return) • One Year = $2,510,000 (22.6% of Covered Pay) - Reduction = $236,000 (2.2 %) • Ten Year = $28,882,000 (23.0% of Covered Pay) - Reduction = $2,924,000 (2.3 %) • 5 Year Final Average Base Salary ► Net City and County Cost (8% Return) • One Year = $2,381,000 (23.4% of Base Pay) - Reduction = $365,000 (3.6 %) • Ten Year = $27,982,000 (24.0% of Base Pay) - Reduction = $3,824,000 (3.3 %) 16 RS Phase 2 - Financial Projections (10/1/2009) • Current Plan Vesting 20% after 3 Years, Increasing 20% Per Year, 100% after 7 Years • 7 Year Cliff Vesting 0-0% 0 -6 Years, 100% 7 Years ►Net City and County Cost (8% Return) • One Year = $2,744,000 (24.8 of Covered Pay) - Reduction = $2,000 (0.0 %) Ten Year = $31,773,000 (25.3 of Covered Pay) - Reduction = $33,000 (0.0 %) 17 RS Phase 2 - Financial Projections (10/1/2009) • Early Retirement Unreduced • General Employees: Age 55 and 15 Years of Service • Police Officers /Firefighters: 30 Years of Service Net City and County Cost (8% Return) • One Year = $2,588,000 (23.3 of Covered Pay) - Reduction = $158,000 (1.4 %) • Ten Year = $29,938,000 (23.7 of Covered Pay) - Reduction = $1,868,000 (1.5 %) is GRS 10 1 0 Phase 2 - Financial Projections 10/1/2009 0 - • Early Retirement ►Unreduced • All Employees: Age 55 and 15 Years of Service ►Net City and County Cost (8% Return) • One Year = $2,700,000 (24.3 of Covered Pay) - Reduction = $46,000 (0.4 %) • Ten Year = $31,286,000 (24.7% of Covered Pay) - Reduction = $520,000 (0.4 %) 19 GRS W� Phase 2 - Financial Projections (10/1/2009) • Early Retirement ► Unreduced • General Employees: Age 55 and 15 Years of Service • Police Officers /Firefighters: - Earliest of: Age 55 and 15 Years of Service 30 Years of Service ► Net City and County Cost (8% Return) • One Year = $2,715,000 (24.5% of Covered Pay) - Reduction = $31,000 (0.3 %) • Ten Year = $31,449,000 (24.9% of Covered Pay) - Reduction= $357,000 (0.3 %) zo Phase 2 •Combined - Financial Projections (10/1/2009) Unreduced Early Retirement • General Employees: Age 55 and 15 Years of Service • Police Officers /Firefighters: 30 Years of Service Net City and County Cost (8% Return) • One Year = $2,052,000 (20.1 % of Base Pay) - Reduction = $694,000 (6.8 %) • Ten Year = $23 (20.5% of Base Pay) - Reduction = $7,821,000 (6.7 %) 21 RS Phase 2 - Financial Projections (10/1/2009) •Combined Unreduced Early Retirement - All Employees: Age 55 and 15 Years of Service Net City and County Cost (8% Return) • One Year = $2,108,000 (20.7 of Base Pay) - Reduction = $638,000 (6.3 %) • Ten Year = $24 (21.1 % of Base Pay) - Reduction = $7,118,000 (6.1 %) 2222 RS Phase 2 - Financial Projections (10/1/2009) • Combined - Unreduced Early Retirement • General Employees: Age 55 and 15 Years of Service • Police Officers /Firefighters: — Earliest of: » Age 55 and 15 Years of Service » 30 Years of Service Net City and County Cost (8% Return) • One Year = $2,118,000 (20.8% of Base Pay) - Reduction = $628,000 (6.2 %) • Ten Year = $24,799,000 (21.2% of Base Pay) - Reduction = $7,007,000 (6.0 %) 23 %r to - 0 1 0 Phase 2 - Financial Projections (10/1/2009) Plan Freeze ► Net City and County Cost (8 0 /0 Return) • One Year = $2,667,000 (25.8% of Covered Pay) - Reduction= $79,000 (0.8 %) • Ten Year = $28,096,000 (31.1% of Covered Pay) - Reduction= $3,710,000 (4.1 %) • Plan Termination Net City and County Cost (8% Return) • One Year = $1,068,000 (10.3% of Covered Pay) - Reduction= $1,678,000 (16.3 %) • Ten Year = $12,172,000 (13.5% of Covered Pay) - Reduction = $19,634,000 (21.7 %) 24 Phase 3 - Financial Projections (10/1/2009) • 5 Year Final Average Base Salary (Phase 2) ► Net City and County Cost (8 0 /0 Return) • One Year = $2,381,000 (23.4% of Base Pay) - Reduction = $ 365,000 (3.6 %) • Ten Year = $27,982,000 (24.0% of Base Pay) - Reduction = $ 3,824,000 (3.3 %) • 7 Year Cliff Vesting (Phase 2) Net City and County Cost (8% Return) • One Year = $2,744,000 (24.8% of Covered Pay) - Reduction = $ 2,000 (0.0 %) • Ten Year = $31,773,000 (25.3% of Covered Pay) - Reduction = $ 33,000 (0.0 %) 25 RS �r Phase 3 - Financial Projections (10/1/2009) • 2.5% Benefit Accrual Rate (General Employees) ► Net City and County Cost (8% Return) • One Year = $2,622,000 (23.7% of Covered Pay) - Reduction= $124,000 (1.1 %) • Ten Year = $30,212,000 (24.0% of Covered Pay) - Reduction = $1,594,000 (1.3 %) • Unreduced Early Retirement (62 & 15 - Newly Hired Police Officers) ► Net City and County Cost (8% Return) • One Year = $2,738,000 (24.7% of Covered Pay) - Reduction= $8,000 (0.1 %) • Ten Year = $31,354,000 (25.0% of Covered Pay) - Reduction = $452,000 (0.4 %) 26 GRS Phase 3 - Financial Projections (10/1/2009) • 5% DC Plan (All Newly Hired Employees) ► Net City and County Cost (8 0 /0 Return) • One Year = $2,704,000 (24.5% of Covered Pay) - Reduction = $42,000 (0.4 %) • Ten Year = $29,783,000 (24.0% of Covered Pay) - Reduction = $2,023,000 (1.6 %) • 5% DC Plan (All Newly Hired General Employees) 27 ► Net City and County Cost (8% Return) • One Year = $2,711,000 (24.5% of Covered Pay) - Reduction = $35,000 (0.3 %) • Ten Year = $30,221,000 (24.2% of Covered Pay) - Reduction = $1,585,000 (1.3 %) Phase 3 - Financial Projections (10/1/2009) •Combined 5 Year FAS, 7 Year Vesting, 5% DC for All Newly Hired Employees Net City and County Cost (8% Return) • One Year = $2,341,000 (23.0 of Base Pay) - Reduction = $405,000 (4.0 %) • Ten Year = $26,103 (22.4 of Base Pay) - Reduction = $5,703,000 (4.9 %) 78 RS 01.0 Phase 3 •Combined - Financial Projections (10/1/2009) 0-5 Year FAS, 7 Year Vesting, 2.5% Accrual (General), Unreduced Early (62 & 15 for Newly Hired Police), 5% DC for Newly Hired General Employees ►Net City and County Cost (8% Return) • One Year = $2,238,000 (22.0 of Base Pay) - Reduction = $508,000 (5.0 %) • Ten Year = $25,213,000 (21.6 of Base Pay) - Reduction = $6,593,000 (5.7 %) 29 GRS 0 .0 Lawrence F . Wilson Larry Wilson is a Senior Consultant and Actuary with Gabriel, Roeder, Smith & Company. Prior to joining GRS, Larry worked as a Consulting Actuary and Director of Public Plan Practice in the Boca Raton, Florida, office of a national consulting firm. Mr. Wilson has over 25 years of employee benefits consulting experience for public pension retirement systems, corporations and tax - exempt organizations. His responsibilities have included valuations for funding and accounting purposes, cost analyses of proposed plan changes, experience studies, actuarial audits, stochastic projections, ERISA reporting and disclosure and defined contribution plan allocations. Mr. Wilson is an Associate of the Society of Actuaries (A.S.A.), a Member of the American Academy of Actuaries (M.A.A.A.), a Fellow of the Conference of Consulting Actuaries (F.C.A.) and an Enrolled Actuary (E.A.) under ERISA. Larry is a Member (and former Chair) of the Public Plans Subcommittee of the American Academy of Actuaries and a founding Member of the Public Plans Committee of the Conference of Consulting Actuaries. He is a frequent guest speaker at meetings of employee benefit professionals, including the Enrolled Actuaries Meeting and the Florida Public Pension Trustees Association. He recently spoke at the 41 Annual Police Officers' and Firefighters' Pension Conference sponsored by the State of Florida Department of Management Services — Division of Retirement. Larry is active in the community, serving as a frequent volunteer and a member of the Youth Automotive Training Center Advisory Board. In the past, his community commitments have included serving as Director for the Project MEGSSS Program for secondary mathematics education in Broward County. Larry holds a Bachelor of Arts degree in mathematics from the State University of New York, Binghamton (Binghamton University). 30 r� City of Winter Springs Defined Benefit Plan t Circular 230 Notice: Pursuant to regulations issued by the IRS, to the extent this presentation concerns tax matters, it is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax - related penalties under the Internal Revenue Code or (ii) marketing or recommending to another party any tax - related matter addressed within. Each taxpayer should seek advice based on the individual's circumstances from an independent tax advisor. t This presentation shall not be construed to provide tax advice, legal advice or investment advice. t Readers are cautioned to examine original consult with subject matter experts before to the subject matter of this presentation. 31 source materials and to making decisions related W DMA MOMM