HomeMy WebLinkAboutRegular 601 Presentation Of The Actuarial Report From Gabriel, Roeder, SmithDate: May 26, 2010
The attached documents were provided by Larry
Wilson, Senior Consultant and Actuary of
Gabriel, Roeder, Smith & Company to the
Winter Springs Board of Trustees and then
discussed during Regular Agenda Item "601" at
the May 26, 2010 rescheduled Regular Meeting.
GRS Gabriel Roeder Smith & Company
Consultants & Actuaries
WINTER SPRINGS DEFINED BENEFIT PLAN
PRELIMINARY RESULTS OF THE OCTOBER 1, 2008 ACTUARIAL VALUATION
May 26, 2010
Table II
City of Winter Springs
Defined Benefit Plan
Comparison of Cost Data of October 1, 2007 and October 1, 2008 Valuations
Prior Method / Prior Plan / Current Method / Current Plan /
Prior Assumptions Current Assumptions
October 1, 2007 October 1, 2008 October 1, 2008
A. Participants
1. Active Employees
2. Terminated Vested
3. Receiving Benefits
4. Total Annual Payroll of Active Employees
B. Total Normal Costs
C. Actuarial Accrued Liability
(Entry Age Normal)
D. Present Value of Future Benefits
E. Actuarial Value of Assets
F. Market Value of Assets
G. Frozen Initial Liability Remaining Unfunded
H. Unfunded Actuarial Accrued Liability (EAN)
L City Minimum Funding Payment
J. Vested Benefit Security Ratio
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Gabricl Rocdcr Smith & Company
Cost
% of
Cost
% of
Cost
% of
Data
Compensation
Data
Compensation
Data
Compensation
259
N/A
231
N/A
231
N/A
86
N/A
84
N/A
84
N/A
26
N/A
31
N/A
31
N/A
$
11,190,013
100.0%
$
10,767,596
100.0%
$
10
100.0%
$
1,445,568
12.9%
$
1
17.3%
$
1,398,050
13.0%
$
20,113,926
179.7%
$
29,556,645
274.5%
$
33
306.7%
$
29,526,958
263.9%
$
35,538
330.0%
$
45,098,513
418.8%
$
15,526,572
138.8%
$
18,746
174.1%
$
18,746,975
174.1%
$
16,985,582
151.8%
$
15,622
145.1%
$
15,622,479
145.1%
$
4,5 87,3 54
41.0%
$
4,422,490
41.1%
N/A
N/A
N/A
N/A
N/A
N/A
$
14
132.6%
$
1,669,400
14.9%
$
2
18.8%
$
2,394,782
22.2%
100.3%
N/A
69.6%
N/A
64.3%
N/A
-9-
Gabricl Rocdcr Smith & Company
Table IV
City of Winter Springs
Defined Benefit Plan
Statement of Assets as of October 1, 2008
A. Cash and Cash Equivalents $ 675,224
B. General Investments
1. Common Stocks $ 9,701,005
2. Bonds 5,164,518
C. Receivables
1. Accrued Interest $ 0
2. Member Contributions Receivable 81,732
3. Accounts Receivable 0
D. Payable.
1. Accounts Payable $ 0
2. Due to Broker 0
E. Plan Assets
(A + B + C - D.) $ 15,622,479
-8-
Gabriel Roeder Smith & Company
Table V
City of Winter Springs
Defined Benefit Plan
Reconciliation of Plan Assets
A. Preliminary Market Value of Assets as of October 1, 2007
Adjustment to Market Value of Assets as of October 1, 2007
Total Market Value of Assets as of October 1, 2007
B. Receipts During Period
1. Contributions
a. Member
b. city
c. Total
2. Investment Income
a. Interest and dividends
b. Net realized and unrealized gains
c. Net investment income
3. Total receipts during period
C. Disbursements During Period
1. Pension payments
2. Contribution refunds
3. Administrative expenses
4. Total disbursements during period
D. Total Market Value of Net Assets as of September 30, 2008
$ 365,288
1,663,951
$ 2,029,239
$ 255,946
(3,254,961)
$ (2,999,015)
384,482
0
70,423
$ 16,985,582
61,578
$ 17,047,160
( 969776 )
$ 454,905
$ 15,622,479
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Gabriel Roeder Smith & Company
Table VI
City of Winter Springs
Defined Benefit Plan
Development of Actuarial Value of Assets as of September 30
A. Preliminary total actuarial value from prior year
B. Market value beginning of year*
C. Market value end of year
D. Non - investment net cash flow
E. Investment return
1. Total market value return: C. - B. - D.
2. Amount for immediate recognition (8 %)
3. Amount for phased -in recognition: E.1. - E.2.
F. Phased -in recognition of investment return:
1. Current year: 20% of E.3.
2. First prior year
3. Second prior year
4. Third prior year
5. Fourth prior year
6. Total phased -in recognition of investment return
G. Total actuarial value end of year
1. Preliminary total actuarial value end of year:
A. + D. + E.2. + F.5.
2. Upper corridor limit: 120% of C.
3. Lower corridor limit: 80% of C.
4. Total actuarial value end of year:
G.1., not more than G.2., nor less than G.3.
H. Difference between total market value and total actuarial value
I. Actuarial value rate of return
J. Market value rate of return
* Adjusted Market Value as of October 1, 2008
2008 2009 2010
$ 15,526,572 $ 18,759,317
17,047,160 15,622,479
15,622,479
1,574,334
(2,999,015)
1,426,746
(4,425,761)
(885,152)
480,905
(885,152)
346,980
480,905 (885,152)
241,333
346,980 480
47,599
241,334 346,984
231,665
18,759,317
18,746,975
12,497,983
18,746,975
(3,124,496)
10.09%
(16.82 %)
-10-
184,067 (57,263)
2011
2012
(885,152)
480,907 (885,153)
(404,245) (885,153)
Gabriel Roeder mi th & Company
Table X
City of Winter Springs
Defined Benefit Plan
Outline of Principal Provisions of the Retirement Plan
A. Effective Date:
Plan adopted as a Money Purchase Floor Offset plan on October 1, 1997. Plan amended and
restated as a Defined Benefit Plan effective October 1, 2000. Plan most recently amended by
Resolution 2007 -20 effective April 23, 2007.
B. Eligibility Requirements:
Employees working 30 or more hours per week are eligible to join the Plan on the first day of the
month following completion of six (6) months of service.
C. Accrual Service:
Years of Accrual Service are any Plan Year during which an Employee completes at least 1,000
hours of service, including years of service completed prior to participation in the Plan.
D. Final Average Compensation
Average earnings during the three (3) highest consecutive compensation periods during
employment with the City.
E. Normal Retirement:
1. Eligibility:
(a) Attainment of age 65; or
(b) Completion of 30 years of service and determined to be disabled under the City's long term
disability insurance policy.
2. Benefit:
3.00% times Final Average Compensation multiplied by Accrual Service, up to a maximum of
30 years.
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Gabriel Roeder Smith & Company
Table X
(Cont'd)
City of Winter Springs
Defined Benefit Plan
Outline of Principal Provisions of the Retirement Plan
F. Early Retirement:
1. Eligibility:
(a) Attainment of age 55 and completion often (10) years of service; or
(b) Completion of 25 years of service.
2. Benefit:
Benefit accrued to date of early retirement, actuarially reduced for each year early retirement
benefit commencement precedes age 55.
G. Late Retirement:
1. Eligibility:
Continued employment beyond Normal Retirement Date.
2. Benefit:
Greater of (a) and (b):
(a) Accrued benefit calculated as for Normal Retirement based upon service and pay at Late
Retirement Date.
(b) Actuarially increased benefit as of Late Retirement Date.
H. Disability Retirement:
Plan does not provide for disability benefits. Disability benefits are provided under the City's long-
term disability plan.
I. Death Benefit:
Beneficiary entitled to a monthly benefit supported by the present value of the non - forfeitable
accrued benefit at the time of the participant's death. If death occurs after actual retirement, the
beneficiary receives whatever is payable under the form of benefit option elected.
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Gabriel Roeder Smith & Company
Table X
(Cont'd)
City of Winter Springs
Defined Benefit Plan
Outline of Principal Provisions of the Retirement Plan
J. Participant Contributions:
Three percent (3 %) of compensation.
K. Vested Benefit Upon Termination:
100% vested in required participant contributions. Participant contributions made after October 1,
2000 are included in the deferred vested benefit payable at normal or early retirement date.
Upon termination of service prior to normal or early retirement date a participant shall be entitled
to a benefit payable at normal or early retirement date calculated as for normal retirement. Based
on pay and service at date of termination multiplied by a percentage from the following table.
Years of Service Vested Percentage
Less Than 3 0%
3 20%
4 40%
5 60%
6 80%
7 100%
L. Normal Form of Payment of Retirement Income:
Monthly benefit payable for life.
Other Options:
Actuarially equivalent joint and survivor at 5 0 %, 75 %, 100 %; or ten (10) years certain and life.
M. Changes Since Previous Valuation
Normal retirement benefit was the sum of (a) and (b) but for years not more than (c) below:
(a) 2.75% times Average Compensation multiplied by credited service prior to October 1, 2000.
(b) 3.00% times Average Compensation multiplied by credited service after October 1, 2000.
(c) The maximum number of years of credited service for determining benefits is the first 30
years.
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Gabriel Roeder Smith & Company
Table XI
City of Winter Springs
Defined Benefit Plan
Actuarial Assumptions and Actuarial Cost Methods
Used in the Valuation
A. Mortality
For healthy General Employee participants, the RP -2000 Combined Mortality Table was used with
separate rates for males and females and fully generational mortality improvements projected to each
future decrement date.
For healthy Firefighter and Police Officer participants, the RP -2000 Combined Mortality Table with
Blue Collar Adjustment was used with separate rates for males and females and fully generational
mortality improvements projected to each future decrement date.
For disabled participants, the RP -2000 Combined Disabled Mortality Table was used with separate rates
for males and females and fully generational mortality improvements projected to each future decrement
date.
B. Investment Return
8.0 %, compounded annually.
C. Allowances for Expenses or Contingencies
None. It is assumed the City will reimburse the Fund for actual expenses paid.
D. Salary Increase Factors
Current salary is assumed to increase at a rate based on the table below per year until retirement.
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Gabriel Roeder Smith ornp an y-
General
Firefighters and
Service
Employ
Police Officers
Less than 5 years
7.0%
8.0%
5 - 9 years
6.0%
6.0%
10 - 14 years
5.0%
6.0%
15+ years
3.5%
4.0%
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Gabriel Roeder Smith ornp an y-
Table XI
City of Winter Springs
Defined Benefit Plan
Actuarial Assumptions and Actuarial Cost Methods
Used in the Valuation
E. Employee Withdrawal Rates
1. Withdrawal rates for male General Employees were used in accordance with the following illustrative example:
2. Withdrawal rates for female General Employees were used in accordance with the following illustrative example:
Withdrawal Rates per 100 Employees
Service
Awe
0
1
2
3
4
5
6
7
8
9
10+
20
32.8
25.4
22.7
18.4
15.8
11.7
11.1
11.1
11.0
10.0
9.8
25
27.2
18.5
17.2
14.6
12.7
9.7
8.5
8.4
7.7
6.3
6.2
30
25.8
15.4
14.0
13.2
11.8
8.8
7.8
7.1
6.4
5.5
4.7
35
25.8
14.3
12.8
12.6
10.9
8.5
7.5
6.8
6.2
5.3
4.2
40
24.4
12.6
12.0
10.7
9.0
7.4
6.7
6.2
5.8
5.3
3.0
45
24.4
12.5
11.6
10.3
8.8
6.8
6.5
6.0
5.1
5.1
2.7
50
23.4
12.2
10.7
9.4
7.9
6.0
5.5
5.3
4.6
4.6
3.0
55
27.4
12.2
10.7
9.3
7.8
6.8
5.4
5.2
4.4
4.3
4.5
60
27.4
12.2
10.7
9.3
7.8
6.8
5.4
5.1
4.3
4.2
5.3
65
27.4
12.2
10.7
9.3
7.8
6.8
5.4
5.1
4.3
4.2
3.7
2. Withdrawal rates for female General Employees were used in accordance with the following illustrative example:
The withdrawal assumptions are the withdrawal assumptions used in the July 1, 2009 Florida Retirement System (FRS)
Actuarial Valuation.
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ahriel Roeder Smith & Company
Withdrawal Rates per 100 Employ
Service
Awe
0
1
2
3
4
5
6
7
8
9
10+
20
30.3
25.8
22.1
17.4
15.4
13.5
11.4
11.3
10.5
10.2
11.6
25
26.6
19.8
17.1
13.0
12.9
10.7
9.7
9.2
7.8
7.1
5.3
30
25.4
16.9
14.5
11.6
11.3
9.4
8.7
8.1
7.1
6.5
5.4
35
25.4
15.9
13.5
11.2
10.9
9.0
8.0
7.8
6.8
6.2
4.6
40
24.4
14.0
12.1
10.0
9.1
7.0
6.5
6.3
6.1
5.0
3.3
45
24.4
13.9
11.9
9.8
8.8
6.7
6.5
6.1
5.8
4.7
3.0
50
23.2
13.4
11.0
8.8
8.4
6.2
5.9
5.5
5.5
4.6
3.0
55
2 3. 2
13.4
11.0
8.7
8.3
6.1
5.8
5.4
5.4
4.5
3.0
60
23.2
13.4
11.0
8.7
8.3
6.1
5.8
5.4
5.4
4.5
3.0
65
23.2
13.4
11.0
8.7
8.3
6.1
5.8
5.4
5.4
4.5
3.0
The withdrawal assumptions are the withdrawal assumptions used in the July 1, 2009 Florida Retirement System (FRS)
Actuarial Valuation.
-25-
ahriel Roeder Smith & Company
Table XI
City of Winter Springs
Defined Benefit Plan
Actuarial Assumptions and Actuarial Cost Methods
Used in the Valuation
E. Employee Withdrawal Rates (continued
). Withdrawal rates for male Firefighters and Police Officers were used in accordance with the following illustrative example:
4. Withdrawal rates for female Firefighters and Police Officers were used in accordance with the following illustrative example:
Withdrawal Rates per 100 Employees
Service
Awe
0
1
2
3
4
5
6
7
8
9
10+
20
21.4
10.3
8.6
8.4
7.5
5.3
5.2
3.1
2.9
2.6
2.3
25
20.6
9.8
8.1
7.9
7.0
5.3
5.2
3.1
2.9
2.6
2.3
30
20.6
9.5
7.7
7.5
6.7
5.3
5.2
3.1
2.9
2.6
2.1
35
20.6
8.8
7.4
7.2
6.5
5.3
5.1
3.1
2.9
2.6
2.0
40
20.6
8.0
6.8
6.7
6.0
4.8
4.6
3.1
2.9
2.6
1.9
45
20.6
7.3
6.0
6.0
5.5
4.3
4.1
3.1
2.9
2.6
1.8
50
20.6
6.5
5.3
5.3
5.0
3.8
3.6
3.1
2.9
2.6
1.8
55
20.6
5.8
4.7
4.7
4.6
3.3
3.2
3.1
2.9
2.6
1.8
60
20.6
5.3
4.7
4.7
4.6
3.3
3.2
3.1
2.9
2.6
1.8
65
20.6
5.3
4.7
4.7
4.6
3.3
3.2
3.1
2.9
2.6
1.8
4. Withdrawal rates for female Firefighters and Police Officers were used in accordance with the following illustrative example:
The withdrawal assumptions are the withdrawal assumptions used in the July 1, 2009 FRS Actuarial Valuation.
-26-
Grahriel Roeder Smith & Company
Withdrawal Rates per 100 Employ
Service
Awe
0
1
2
3
4
5
6
7
8
9
10+
20
21.3
15.5
12.3
10.3
9.7
6.1
5.9
5.0
4.2
4.2
1.9
25
21.3
14.2
11.6
9.8
9.2
6.1
5.9
5.0
4.2
4.2
1.9
30
21.3
13.2
10.6
9.3
8.7
6.1
5.9
5.0
4.2
4.2
1.7
35
21.3
12.2
9.6
8.8
8.4
6.1
5.9
5.0
4.2
4.1
1.5
40
21.3
11.2
8.6
8.3
7.6
6.1
5.9
5.0
4.1
4.1
2.5
45
21.3
10.2
7.6
7.6
7.0
6.1
5.9
5.0
4.1
4.1
2.5
50
21.3
9.2
6.6
6.6
6.4
6.1
5.9
5.0
4.1
4.0
1.6
55
21.3
8.4
5.8
5.6
5.4
5.3
5.1
5.0
4.1
4.0
4.0
60
21.3
8.4
5.8
5.6
5.4
5.3
5.1
5.0
4.1
4.0
4.0
65
2 1. 3'
8.4
5.8
5.6
5.4
5.3
5.1
5.0
4.1
4.0
4.0
The withdrawal assumptions are the withdrawal assumptions used in the July 1, 2009 FRS Actuarial Valuation.
-26-
Grahriel Roeder Smith & Company
Table XI
(Cont'd)
City of Winter Springs
Defined Benefit Plan
Actuarial Assumptions and Actuarial Cost Methods
Used in the Valuation
F. Disability Rates
1. Line -of -duty disability rates for General Employees were used in accordance with the following
illustrative example.
Awe
Male
Female
20
0.002%
0.000%
25
0.002%
0.001%
30
0.003%
0.001%
35
0.005%
0.003%
40
0.009%
0.005%
45
0.014%
0.008%
50
0.022%
0.010%
55
0.034%
0.016%
60
0.048%
0.022%
65
0.050%
0.020%
2. Non -duty disability rates for General Employees were used in accordance with the following illustrative
example.
Awe
Male
Female
20
0.000%
0.000%
25
0.027%
0.010%
30
0.053%
0.026%
35
0.066%
0.049%
40
0.092%
0.070%
45
0.122%
0.114%
50
0.203%
0.184%
55
0.339%
0.294%
60
0.445%
0.419%
65
0.215%
0.105%
The disability assumptions are the disability assumptions used in the July 1, 2009 FRS Actuarial Valuation.
-27-
Gabriel Roeder Smith & Company
Table XI
(Cont'd)
City of Winter Springs
Defined Benefit Plan
Actuarial Assumptions and Actuarial Cost Methods
Used in the Valuation
F. Disability Rates (continued)
3. Line -of -duty disability rates for Firefighters and Police Officers were used in accordance with the
following illustrative example.
Awe
Male
Female
20
0.012%
0.008%
25
0.012%
0.008%
30
0.017%
0.016%
35
0.029%
0.037%
40
0.051%
0.068%
45
0.087%
0.106%
50
0.138%
0.153%
55
0.215%
0.152%
60
0.301%
0.151%
65
0.231%
0.143%
4. Non -duty disability rates for Firefighters and Police Officers were used in accordance with the following
illustrative example.
Awe
Male
Female
20
0.037%
0.036%
25
0.037%
0.036%
30
0.043%
0.046%
35
0.055%
0.075%
40
0.087%
0.118%
45
0.140%
0.209%
50
0.292%
0.254%
55
0.244%
0.328%
60
0.206%
0.328%
65
0.206%
0.328%
The disability assumptions are the disability assumptions used in the July 1, 2009 FRS Actuarial Valuation.
-28-
Gabriel Roeder Smith & Company
Table XI
(Cont'd)
City of Winter Springs
Defined Benefit Plan
Actuarial Assumptions and Actuarial Cost Methods
Used in the Valuation
G. Assumed Retirement Age
Retirement rates were used in accordance with the following tables.
1. For members with less than ten (10) years of service:
General Firefighters and
Awe Employees Police Officers
Under 65 0% 0%
65 and above 100% 100%
2. For members with ten (10) or more years, but less than twenty-five (25) years of service:
General Firefighters and
Age Employ Police Officers
55-64 10% 20%
65 and above 100% 100%
3. For members with twenty -five (25) or more years of service:
-29-
Gabriel Roeder Smith & Cc)nipany
General
Firefighters and
Employees
Police Officers
Under 55
2%
5%
55
25%
50%
56-64
5%
20%
65 and above
100%
100%
-29-
Gabriel Roeder Smith & Cc)nipany
Table XI
(Cont'd)
City of Winter Springs
Defined Benefit Plan
Actuarial Assumptions and Actuarial Cost Methods
Used in the Valuation
H. Marital Assumptions
1. 100% of active members are assumed to be married.
2. Females are assumed to be three (3) years younger than their male spouses.
I. Interest on Future Participant Contributions
3.75 %, compounded annually.
J. Loadin
Active retirement liabilities and normal costs are increased by 1.5% to account for 30 year unreduced
benefit provision with LTD disability program.
K. Asset Valuation Method
The method used for determining the actuarial value of assets phases in the deviation between the
expected and actual return on assets at the rate of 20% 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 fair
market value of plan assets and whose upper limit is 120% of the fair market value of plan assets.
L. Cost Method
Normal Retirement, Termination, Disability, and Death Benefits: Entry Age Normal Cost Method
Under this method the normal cost for each active employee is the amount which is calculated to be a
level percentage of pay that would be required annually from his entry age to his assumed retirement
age to fund his estimated benefits, assuming the Fund had always been in effect. The normal cost for
the Fund is the sum of such amounts for all employees. The actuarial accrued liability as of any
valuation date for each active employee or inactive employee who is eligible to receive benefits under
the Fund is the excess of the actuarial present value of estimated future benefits over the actuarial
present value of current and future normal costs. The unfunded actuarial accrued liability as of any
valuation date is the excess of the actuarial accrued liability over the assets of the Fund.
-30-
Gabriel Roeder Smith & Company
Table XI
(Cont'd)
City of Winter Springs
Defined Benefit Plan
Actuarial Assumptions and Actuarial Cost Methods
Used in the Valuation
M. Changes Since Previous Valuation
1. Mortality assumption was:
The 1983 Group Annuity Male Mortality Table with ages set back two (2) years for women.
2. Salary increase assumption was:
Current salaries are assumed to increase 3% per year.
3. Withdrawal rates were:
Assumed to occur at rates approximating 11.62% at age 25 graded down to .16% at age 60 and over
(T -8 withdrawal table).
4. There were no disability rates.
5. Retirement rates were:
Later of age 60 or ten (10) years of service on the valuation date.
6. Interest on future Participant Contributions were:
Based upon the 120% Federal Midterm rate from the September preceding the valuation date.
7. Cost Method was:
Normal Retirement, Termination, Disability, and Death Benefits: Frozen Initial Liability Cost
Frozen Entry Age Normal Cost Method is a method under which the excess of the Actuarial
Present Value of Projected Benefits of the group included in the valuation, over the sum of the
Actuarial Value of Assets and the Unfunded Frozen Actuarial Accrued Liability is allocated as a
level percentage of earnings of the group between the valuation date and the assumed retirement
age. The portion of this Actuarial Present Value allocated to a specific year is the Normal Cost.
Under this method, actuarial gains (losses) reduce (increase) future Normal Costs.
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Gabriel Roeder Smith & Company
Table XI
(Cont'd)
City of Winter Springs
Defined Benefit Plan
Actuarial Assumptions and Actuarial Cost Methods
Used in the Valuation
M. Changes Since Previous Valuation (continued)
Frozen Initial Liability is the portion of the Actuarial Present Value of Projected Benefits which
is separated as of a valuation date and frozen under the Actuarial Cost Method being used. This
separated portion is the sum of an initial Unfunded Actuarial Accrued Liability and any increments
or decrements in the Actuarial Accrued Liability established subsequently as a result of changes in
pension plan benefits, actuarial assumptions or methods under the Entry Age Normal Actuarial
Cost Method.
Frozen Initial Liability Remaining Unfunded is the portion of the Frozen Initial Liability
remaining after the addition of interest and the deduction of amortization payments.
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Gabriel Roeder Smith & Company