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Home My WebLink About1998 04 28 Letter from Sandra R. Turner & Associates Re: CWS Defined Benefit/Floor Offset Retirement Planti ~12l]1~Y'1~ ~., 1! /GT~'lBCT ;~ 1~~~~®Clsfl¢C~ ~L~BCv ~_~ Employee Benef is Ad»einistrators and Consultants P. U Box 621 382 407-365-3490 (offrce) Oviedo, Florida 32762-1582 407-366-3154 (fax) Tuesday, February 10, 1998 1-800-618-1813(toll free) Ron McLemore City of Winter Springs 1126 East State Road 434 Winter Springs, FL 32708 Re: City of Winter Springs Defined Benefit/ Floor Offset Retirement Plan Dear Ron: Per your request, I have prepared the following schedules for your review. A. Plan Specifications with Actuarial Assumptions. This three page report outlines the plan document design and the actuarial assumptions used to produce the benefits promised and contribution requirements. Please note that (1) the Mortality Tables used now reflects the actual population of males to females as of 10/01/97, (2) the Turnover Tables is based upon the actual turnover for the previous four years and (3) the Salary Scale Increase is the cost of living increase in payroll, removing job classification changes. The interest assumption for the present value of benefits owed is 8%, the interest rate used for funding is 9%. (The money purchase pension plan has performed well above 9% over the previous four year period.) B. Schedule of Projected Liabilities and Estimated Contributions for the next 15 years. The interest assumed for assets on deposit (after liabilities are paid) is 9%. Currently, the money purchase pension plan has performed over 14% average for the past four years. The plan obligation is to pay the yearly defined benefits for those individuals eligible for retirement. (Yearly DB Benefit). The estimated contributions are shown under the benefits payable. The difference between the contributions deposited and the amounts payable are reflected under the Invested Plan Assets column. C. Schedule of Projected Liabilities and Estimated Contributions per individual eligible for retirement. (Detail of item B. above) D. Of the 436 Florida Local Government Defined Benefit Plans, 130 (29.82%) are Police Plans, 119 (27.29)% are Fire Plans, 138 (31.65%) are General Employee Plans, 12 (2.75%) are combined General, Police and Fire plans and 37 (8.49%)are combined Police and Fire plans. The defined benefit/defined contribution floor arrangement can be (and is designed to) adjusted as often as a yearly basis. Depending upon the demographics of the employee population, actual earnings, actual turnover...the percentages deposited to the defined benefit/defined contribution plans can be changed accordingly. The current plan design gives 4% of payroll to the defined benefit plan and 6% to the money purchase plan, which in my opinion, will meet the benefits obligations due for the foreseeable future. Sincerely lr' ate, Sandra R. Turner CPC QPA PLAN SPECIFICATIONS City of Winter Springs Defined Benefit Plan Page 1 FOR THE PLAN YEAR 10/01/97 THROUGH 09/30/98 TYPE OF ENTITY State or Local Government or Tax-exempt Organization. DATES Effective - 10/01/97 Valuation - 10/01/97 Eligibility 09/30/98 Year-end - 09/30/98 ELIGIBILITY Minimum age- 21 Months of service- 6 Maximum age- None Age at last birthday. Entry Age For Full Funding Limitation Calculation - as of date eligibility satisfied. HOURS REQUIRED FOR Eligibility 0 Benefit accrual 1000 Vesting 1000 PLAN ENTRY The first day of the month coincident with or following satisfaction of eligibility requirements. New participants are included in current year's valuation. RETIREMENT NORMAL - First of month coincident with or following attainment of age 65 EARLY - First of month coincident with or following attainment of age 55. and completion of 10 years of service (subsidized), or completion of 25 years of service (actuarially reduced). AVERAGE COMPENSATION -- (retrospective salaries) FUNDING - 3 Highest consecutive years. ACCRUED BENEFIT - 3 Highest consecutive years. PLAN BENEFITS RETIREMENT-- 2.OOOX of average monthly compensation multiplied by total years of service limited to 30 years. The Monthly Benefit shall be offset by the monthly benefit provided by the account balance under the defined contribution plan maintained by the Employer. 415 Limits - Percent 100.00 Dollar - 510,000 Minimum benefit - None Maximum benefit - None 2X of Pay for Each Year of Service up to 30 years Offset by 6X MPPPIan f ~ PLAN SPECIFICATIONS City of Winter Springs Defined Benefit Plan FOR THE PLAN YEAR 10/01/97 THROUGH 09/30/98 Page 2 NORMAL FORM Life Annuity. DEATH BENEFIT Present value of accrued benefits. ACCRUED BENEFIT 2.OOOX of average monthly compensation multiplied by total years of service limited to 30 years. The Accrued Benefit shall be offset by the monthly benefit provided by the account balance under the defined contribution plan maintained by the Employer. TERMINATION BENEFITS 3-7 year. Year 1 2 3 4 5 6 7 Pct 0 0 20 40 60 80 100 Service is calculated using all years of service. CONTRIBUTIONS EMPLOYEE REQUIRED •• None EMPLOYEE VOLUNTARY •• None ASSET VALUATION METHOD Market value. 2X of Pay for Each Year of Service up to 30 years Offset by 6X MPPPIan ACTUARIAL ASSUMPTIONS City of Winter Springs Defined Benefit Plan FOR THE PLAN YEAR 10/01/97 THROUGH 09/30/98 ACTUARIAL ASSUMPTIONS ACTUARIAL COST METHOD Aggregate entry age normal with frozen initial liability. PRE-RETIREMENT INTEREST ASSUMED FOR DEPOSIT-- 9.OOOX Compounded annually Page 3 MORTALITY TABLE -- 1983 GROUP ANNUITY male rates. TABLE ADJUSTED: Males: +0 Females: -2 TURNOVER/DISABILITY-- TURNOVER TABLE 8. COST OF VESTING -- Yes. SALARY SCALE -- Salaries assumed to increase at 3.OOOX per year. INTEGRATION LVL INCR- None. BACKWARD SALARY PROJ. Based on increases of average earnings POST RETIREMENT ANNUITY FACTORS BASED ON: INTEREST -- MORTALITY TABLE - TABLE ADJUSTED: EXPENSE LOAD -- COST OF LIVING -- LOAD FOR ANCILLARY BENEFITS * PVB for inactives based on PVAB assumptions. ASSUMPTIONS FOR PRESENT VALUE OF ACCRUED BENEFIT CALCULATIONS PRE-RETIREMENT: INTEREST -- MORTALITY TABLE TABLE ADJUSTED: POST-RETIREMENT: INTEREST -- MORTALITY TABLE TABLE ADJUSTED: 9.OOOX 1983 GROUP ANNUITY male rates. Males: +0 Females: -2 None None None S.000X 1983 GROUP ANNUITY male rates. Males: +0 Females: -2 a.ooox 1983 GROUP ANNUITY male rates. Males: +0 Females: -2 2X of Pay for Each Year of Service up to 30 years Offset by 6X MPPPIan PENSION PLAN COST Fiscal Year Cost Items 96/97 97/98 98/99 99mn nnm~ n~m~ m/nz nzm~ n~in~ ncma ~~~~~ ~~,~o .,~,,,., Contribution Rate 8% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% Contribution Amount 394,589 525,403 541,165 557,400 574,122 591,346 609,086 627,359 646,179 665,565 685,532 706,098 727,281 749,099 771,572 Administration Fee 4687 8,755 8,843 8,931 9,020 9,110 9,202 9,294 9,387 9,480 9,575 9,671 9,768 9,865 9,964 Actuarial Fee -0- 6,500 6,565 6,631 6,697 6,764 6,832 6,900 6,969 7,039 7,109 7,180 7,252 7,324 7,397 Cost Assumptions 3% Increase in Payroll starting FY 98/99 1% Increase in Administration Fees starting FY 98/99. 1 % Increase in Actuarial Fees starting FY 98/99 No Increase in the Contribution Rate. Budgeted Payroll was used in calculation of Contribution for FY 96/97 and FY 97/98. Contribution Rates. as a Percent of Payroll Year City Employees 1982-1992 4% -0- 1992-1996 6% -0- FY 97 7% 1 FY 98 8% 2% Notes The increase cost in administrative fees beginning FY 97/98 was attributed to a change in the allocation charges for plan members from semi-annual to quarterly. The actuarial fee beginning FY 97/98 was attributed to the establishment of a defined benefit component of the Floor Offset Pension Plan. The increase in the contribution rate beginning FY 97/98 was mandated by the city commission. City of Winter Springs Project Liabilities Payable for 15 Years and Estimated Contributions(with$135,O0O) with estimated forfeitures from Money Purchase Pension Plan Defined Ber MPP DB+MP Yearly Yearly Yearly Invested Monthly Ben Offset To tal Benefit D B Benefit MP Benerit Total Plan Assets 1997-1998 Yearly Totals S 6,910 $ 4,974 $ 11,885 $ 82,926 S 59,690 $ 142,616 $ 287,235 Estimated Contributions $ 210,161 S 315,242 $ 525,403 1998-1999 Yearly Totals S 7,895 S 5,435 $ 13,331 $ 94,746 S 65,223 $ 159,989 $ 121,720 Estimated Contributions $ 216,466 S 324,699 $ 541,165 $ 459,807 1999-2000 Yearly Totals S 8,718 S 6,042 S 14,760 $ 104,622 S 72,502 $ 177,124 $ 118,338 Estimated Contributions $ 222,960 S 334,440 $ 557,400 $ 644,528 2000-2001 Yearly Totals $ 9,136 $ 6,404 $ 15,541 S 109,638 $ 76,848 $ 188,486 $ 120,011 Estimated Contributions S 229,649 $ 344,473 $ 574,122 S 847,546 2001-2002 Yearly Totals S 10,572 $ 7,391 $ 17,964 $ 126,870 S 88,696 $ 215,566 $ 109,669 Estimated Contributions S 238,538 S 354,807 $ 591,346 S 1,058,494 2003 Yearly Totals S 12,306 S 8,736 $ 21,043 $ 147,678 S 104,832 $ 252,510 S 95,957 Estimated Contributions S 243,634 $ 365,452 $ 609,088 $ 1,274,715 2004 Yearly Totals $ 13,926 $ 9,927 $ 23,854 E 167,118 S 119,128 $ 286,246 $ 83,826 Estimated Contributions $ 250,943 $ 376,415 $ 627,359 $ 1,498,265 2005 Yearly Totals S 16,013 S 11,297 $ 27,311 $ 192,162 S 389,868 $ 660,533 S 66,310 Estimated Contributions S 258,472 $ 387,708 $ 646,179 $ 1,724,419 2006 Yearly Totals S 18,970 S 13,754 S 32,725 S 227,846 S 419,351 S 725,501 $ 38,580 Estimated Contributions S 266,226 S 399,339 $ 685,565 $ 1,943,197 2007 Yearly Totals $ 22,347 $ 16,300 $ 38,647 $ 268,170 S 449,900 $ 796,574 $ 6,043 Estimated Contributions $ 274,213 $ 411,319 $ 685,532 $ 2,149,128 2008 Yearly Totals S 24,109 E 17,951 $ 42,080 $ 289,314 S 489,710 $ 837,527 S (6,875) Estimated Contributions $ 282,439 S 423,659 $ 706,098 $ 2,360,674 2009 Yearly Totals S 29,352 S 23,184 $ 52,517 S 352,230 $ 532,273 $ 963,008 $ (61,318) Estimated Contributions S 290,912 $ 436,368 $ 727,281 S 2,536,818 2010 Yearly Totals $ 31,744 $ 25,623 S 57,368 S 380,934 S 561,780 $ 1,021,218 $ (81,294) Estimated Contributions S 299,640 $ 449,459 $ 749,099 $ 2,708,837 2011 Yearly Totals S 35,634 S 30,721 $ 68,356 S 427,614 S 622,960 $ 1,129,077 S (118,985) Estimated Contributions $ 308,629 S 462,943 $ 771,572 $ 2,858,648 2012 Yearly Totals $ 42,360 $ 39,338 S 81,698 $ 508,326 $ 726,359 $ 1,313,188 $ (190,438) Estimated Contributions S 317,888 S 476,832 $ 794,719 S 2,950,488 2013 Yearly Totals $ 49,185 $ 52,543 $ 101,729 S 590,228 $ 884,821 $ 1,553,550 $ (282,801) Estimated Contributions $ 327,424 $ 491,138 $ 818,561 $ 2,978,230 2014 Yearly Totals $ 52,083 $ 56,915 $ 108,998 S 625,002 S 937,278 $ 1,640,783 $ (287,755) Estimated Contributions S 337,247 $ 505,871 ; 843,118 $ 2,983,518 Page 1