HomeMy WebLinkAbout2011 03 31 Regular 601 Discussion Of Future Valuation Of The City Of Winter Springs Defined Benefit Plan - Phase II GRS Gabriel Roeder Smith & Company One East Broward Blvd. 954.527.1616 phone
Consultants & Actuaries Suite 505 954.525.0083 fax
Ft. Lauderdale, Fl. 33.101 -1804 www.gahriclrocder.com
February 14, 2011
Mr. Shawn Boyle
Finance and Administrative Services Director
City of Winter Springs
1126 East State Road 434
Winter Springs, Florida 32708
Re: City of Winter Springs Defined Benefit Plan
Actuarial Study as of October 1, 2009 — Phase II
Dear Shawn:
As requested, we are pleased to enclose six (6) copies of Phase II of our Actuarial Study
including ten (10) year projections for the City of Winter Springs Defined Benefit Plan.
If you should have any question concerning the above or if we may be of further assistance with
this matter, please do not hesitate to contact us.
Sincerest regards,
Lawrence F. Wilson, A.S.A. Peter N. Strong, A.S.A.
Senior Consultant and Actuary Consultant and Actuary
Enclosures
GRS Gabriel Roeder Smith & Company
Consultants & Actuaries
CITY OF WINTER SPRINGS DEFINED BENEFIT PLAN
ACTUARIAL STUDY — PHASE 11
February 14, 2011
Gabriel Roeder Smith & Company
CITY OF WINTER SPRINGS DEFINED BENEFIT PLAN
ACTUARIAL STUDY AS OF OCTOBER 1, 2009
TABLE OF CONTENTS
Pate
I. Executive Summary 1
II. Projection Results 7
III. Outline of Principal Provisions of the Retirement Plan 34
IV. Actuarial Assumptions and Cost Methods 37
Gabriel Roeder Smith & Company
CITY OF WINTER SPRINGS DEFINED BENEFIT PLAN
ACTUARIAL STUDY AS OF OCTOBER 1, 2009
EXECUTIVE SUMMARY 1
At the request of the City of Winter Springs, we have completed ten (10) year projections
illustrating the financial impact of several proposed plan provisions of the City of Winter Springs
Defined Benefit Plan (Plan).
Background — The benefit accrual rate is currently three percent (3.0 %) for each year of credited
service - maximum thirty (30) years.
Final average salary (FAS) used to calculate retirement benefits is currently the average of the
highest three (3) consecutive years of total compensation during employment with the City/
County. Total compensation includes but is not limited to commissions, overtime pay and
bonuses.
Vesting of benefits is currently phased in from three (3) to seven (7) years at twenty percent
(20 %) per year of service — twenty percent (20 %) vesting after three (3) years of service, forty
percent (40 %) vesting after four (4) years - grading to one hundred percent (100 %) vesting upon
completion of seven (7) years of service.
Employees are currently eligible for early retirement benefits upon the earlier of (a) attainment of
age fifty -five (55) with completion of ten (10) years of service or (b) completion of twenty -five
(25) years of service. Benefits are unreduced if early retirement occurs after attainment of age
fifty -five (55). Early retirement benefits are actuarially reduced for benefit commencement prior
to age fifty -five (55).
Proposed Changes — We understand the City wishes to determine the effect on current and
future City and County's Plan contributions of the following proposed changes.
➢ Scenario 1 — Reduce the benefit accrual rate to two and a half percent (2.5 %) per year of
credited service after September 30, 2009 - maximum thirty (30) years of total service.
➢ Scenario 2 — Change the final average salary (FAS) used to calculate retirement benefits
to the average of the highest five (5) consecutive years of basic compensation out of the
last ten (10) years - not less than the average of the highest three (3) consecutive years of
total compensation as of October 1, 2009. Basic compensation excludes commissions,
overtime pay and bonuses.
➢ Scenario 3 — Change the vesting schedule for future benefit accruals to a seven (7) year
cliff vesting schedule. Under this schedule, members are zero percent (0 %) vested until
completion of seven (7) years of service. Upon completion of seven (7) years of service
members are one hundred percent (100 %) vested.
Accrued benefits as of October 1, 2009 remain subject to the current graded vesting
schedule of twenty percent (20 %) upon completion of three (3) years of service
increasing 20% per year until 100% vested upon completion of seven (7) years of service.
GRS Gabriel Roeder Smith & Company - 1 -
CITY OF WINTER SPRINGS DEFINED BENEFIT PLAN
ACTUARIAL STUDY AS OF OCTOBER 1, 2009
➢ Scenario 4 — Change the unreduced early retirement eligibility for future benefit accruals
to:
• For General Employees — eligible upon attainment of age fifty -five (55) with
completion of fifteen (15) years of service.
• For Police Officers and Firefighters — eligible upon completion of thirty (30)
years of service.
Accrued benefits as of October 1, 2009 remain payable unreduced upon attainment of age
fifty -five (55) with completion of ten (10) years of service.
Accrued benefits as of October 1, 2009 remain payable after completion of twenty -five
(25) years of service prior to attainment of age fifty -five (55) with an actuarial reduction
for each year early retirement benefit commencement precedes age fifty -five (55).
Benefits accrued after October 1, 2009 are payable under the above proposed unreduced
early retirement eligibility dates. For purposes of this Study, we have assumed members
will be able to commence receipt of the portion of their benefit accrued after October 1,
2009 at the current early retirement eligibility date — attainment of age fifty -five (55) with
completion of ten (10) years of service or upon completion of twenty -five (25) years of
service — subject to reduction in the amount of one fifteenth (1 /15 per year for the first
five (5) years and one thirtieth (1 /30 per year for years in excess of five (5) years for
early retirement benefit commencement.
➢ Scenario 5 — All above changes above combined.
To illustrate sensitivity of the net City / County contribution to investment return, we
have projected Scenario 5 assuming investment return of eight percent (8 %) per annum
(current Valuation assumption), seven percent (7 %) per annum and nine percent (9 %) per
annum, respectively, during the projection period.
➢ Scenario 6 — Freeze the Plan effective October 1, 2009.
Members who are participants of the Plan as of October 1, 2009 continue to accrue
benefits under the Plan. No new participants will enter the Plan after September 30,
2009.
➢ Scenario 7 — Terminate the Plan effective October 1, 2009.
For Members who are participants of the Plan as of October 1, 2009, benefits are frozen
as of October 1, 2009. All frozen benefits are 100% vested as of October 1, 2009. No
new participants will enter the Plan after September 30, 2009.
GRS Gabriel Roeder Smith & Company - 2 -
CITY OF WINTER SPRINGS DEFINED BENEFIT PLAN
ACTUARIAL STUDY AS OF OCTOBER 1, 2009
Results - The following table shows the current net City and County contribution (cost) and the
sum of the projected net City and County contributions (costs) over the next ten (10) years for
the baseline (current Plan) forecast and for each Scenario described above separately and
combined as a dollar amount ($thousands) and as a percentage of projected covered payroll,
respectively.
Net Cite / County Cost - .Accumulated Net Cite / County Cost
(`thousands)
Next 1 bear Next 10 \ears
.lmount (Decrease) \mount (Decrease)
Baseline (Current Plan)
- Net City and County Cost $ 2,746 N/A $ 31,806 N/A
- Covered Payroll $ 11,083 $ 125,652
- % of Covered Payroll 24.8% N/A 25.3% N/A
Scenario 1: 2.5% Benefit Accrual
Rate for Future Service
- Net City and County Cost $ 2,510 ($ 236) $ 28,882 ($ 2,924)
- Covered Payroll $ 11,083 $ 125,652
- % of Covered Payroll 22.6% (2.2 %) 23.0% (2.3 %)
Scenario 2: FAS Based on Average
of Highest 5 Years of Base Pay
- Net City and County Cost $ 2,381 ($ 365) $ 27,982 ($ 3,824)
- Covered Payroll $ 10,175 $ 116,508
- % of Covered Payroll 23.4% (3.6 %) 24.0% (3.3 %)
Scenario 3: 7 -Year Cliff Vesting
for Future Service
- Net City and County Cost $ 2,744 ($ 2) $ 31,773 ($ 33)
- Covered Payroll $ 11,083 $ 125,652
- % of Covered Payroll 24.8% (0.0 %) 25.3% (0.0 %)
Scenario 4: Revised Early Ret
Eligibility for Future Service
- Net City and County Cost $ 2,588 ($ 158) $ 29,938 ($ 1,868)
- Covered Payroll $ 11,096 $ 126,416
- % of Covered Payroll 23.3% (1.4 %) 23.7% (1.5 %)
Scenario 5: Scenarios 1 - 4
Combined
- Net City and County Cost $ 2,052 ($ 694) $ 23,985 ($ 7,821)
- Covered Payroll $ 10,186 $ 117,141
- % of Covered Payroll 20.1% (6.8 %) 20.5% (6.7 %)
Scenario 6: Freeze Plan (No New
Entrants) effective 10/1/2009
- Net City and County Cost $ 2,667 ($ 79) $ 28,096 ($ 3,710)
- Covered Payroll $ 10,322 $ 90,408
- % of Covered Payroll 25.8% (0.8 %) 31.1% (4.1 %)
Scenario 7: Terminate Plan
effective 10/1/2009
- Net City and County Cost $ 1,068 ($ 1,678) $ 12,172 ($ 19,634)
- Covered Payroll $ 10,322 $ 90,408
- % of Covered Payroll 10.3% (16.3 %) 13.5% (21.7 %)
GRS Gabriel Roeder Smith & Company - 3 -
CITY OF WINTER SPRINGS DEFINED BENEFIT PLAN
ACTUARIAL STUDY AS OF OCTOBER 1, 2009
Sensitivity Analysis
Net Cite / County Cost - ,kccunmlated Net Cite / Count■ Cost
(Sthousands)
Nest 1 1 "ear Net 10 bears
:Amount (Decrease) .kn ount (Decrease)
Baseline (Current Plan — 8 %)
- Net City and County Cost $ 2,746 N/A $ 31,806 N/A
- Covered Payroll $ 11,083 $ 125,652
- % of Covered Pa oll 24.8% N/A 25.3% N/A
Scenario 5: Scenarios 1 - 4
Combined (8 %)
- Net City and County Cost $ 2,052 ($ 694) $ 23,985 ($ 7,821)
- Covered Payroll $ 10,186 $ 117,141
- % of Covered Pa oll 20.1% 6.8% 20.5% 6.7%
Baseline (Current Plan — 7 %)
- Net City and County Cost $ 2,749 N/A $ 32,768 N/A
- Covered Payroll $ 11,083 $ 125,652
- % of Covered Pa oll 24.8% N/A 26.1% N/A
Scenario 5: Scenarios 1 - 4
Combined (7 %)
- Net City and County Cost $ 2,055 ($ 694) $ 24,869 ($ 7,899)
- Covered Payroll $ 10,186 $ 117,141
- % of Covered Pa oll 20.2% 6.8% 21.2% 6.7%
Baseline (Current Plan — 9 %)
- Net City and County Cost $ 2,743 N/A $ 30,799 N/A
- Covered Payroll $ 11,083 $ 125,652
- % of Covered Pa oll 24.7% N/A 24.5% N/A
Scenario 5: Scenarios 1 - 4
Combined (9 %)
- Net City and County Cost $ 2,049 ($ 694) $ 23,059 ($ 7,740)
- Covered Payroll $ 10,186 $ 117,141
- % of Covered Pa oll 20.1% 6.8% 19.7% 6.6%
Actuarial Assumptions and Methods, System Provisions, Financial Data, Member Census
Data — The actuarial assumptions and methods, system provisions, financial data and member
census data employed for purposes of our Actuarial Study are the same actuarial assumptions
and methods, system provisions, financial data and member census data utilized for the October
1, 2009 Actuarial Valuation with the following modifications.
• For Scenarios 4 and 5, assumed retirement rates are based upon rates from the Tables
below.
GRS Gabriel Roeder Smith & Company - 4 -
CITY OF WINTER SPRINGS DEFINED BENEFIT PLAN
ACTUARIAL STUDY AS OF OCTOBER 1, 2009
For General Employees (percent retiring based on age and years of service):
Years of Service
Age 0 - 10 10 - 15 15 - 25 25 - 30 30 or more
Under 55 0% 0% 0% 2% 2%
55 0% 5% 10% 20% 25%
55 — 64 0% 5% 10% 4% 5%
65 100% 100% 100% 100% 100%
For Firefighters and Police Officers (percent retiring based on age and years of service):
Years of Service
Age 0 -10 10 -15 15 -25 25 -30 30 or more
Under 55 0% 0% 0% 4% 5%
55 0% 10% 15% 40% 50%
55 — 64 0% 10% 15% 15% 20%
65 100% 100% 100% 100% 100%
• For Scenarios 6 and 7, future gains and losses are amortized over a period of twenty -five
(25) years.
For Scenarios 1 through 5, throughout the forecast period new Police Officer and General
Employee members are assumed to be hired each year at a rate sufficient to maintain a constant
active Police Officer and General Employee headcount — stationary population. Active
Firefighters are assumed to not be replaced by new active Firefighters. New employees are
assumed to have the same average demographic characteristics (age, gender, salary — adjusted
each year for inflation) as those members hired over the past five (5) years.
Projections are deterministic - throughout the projection period Plan experience is expected to
match the assumptions — including a market value 8% annual investment return — we have
included a sensitivity analysis for Scenario 5 (all changes combined) where 7% and 9% annual
returns are also modeled.
This Projection Study is intended to describe the estimated future financial effects of the
proposed benefit changes on the Plan and is not intended as a recommendation in favor of the
change nor in opposition to the change.
These calculations are based upon assumptions regarding future events. However, the Plan's
long term costs will be determined by actual future events, which may differ materially from the
assumptions made.
GRS Gabriel Roeder Smith & Company - 5 -
CITY OF WINTER SPRINGS DEFINED BENEFIT PLAN
ACTUARIAL STUDY AS OF OCTOBER 1, 2009
If you have reason to believe the assumptions used are unreasonable, the Plan provisions are
incorrectly described or referenced, important Plan provisions relevant to this Actuarial Study
are not described or that conditions have changed since the calculations were made, you should
contact the undersigned prior to relying on information in this Projection Study. If you have
reason to believe that the information provided in this Actuarial Study is inaccurate, or is in any
way incomplete, or if you need further information in order to make an informed decision on the
subject matter of this report, please contact the undersigned prior to making such decision.
The undersigned are Members of the American Academy of Actuaries and meet the
Qualification Standards of the American Academy of Actuaries to render the actuarial opinion
contained herein.
If you should have any question concerning the above or if we may be of further assistance with
this matter, please do not hesitate to contact us.
Sincerest regards,
-
Lawrence F. Wilson, A.S.A. Peter N. Strong, A.S.A.
Senior Consultant and Actuary Consultant and Actuary
Enclosures
GRS Gabriel Roeder Smith & Company - 6 -
CITY OF WINTER SPRINGS DEFINED BENEFIT PLAN
ACTUARIAL STUDY AS OF OCTOBER 1, 2009
I PROJECTION RESULTS
Scenario 1— Reduce the benefit accrual rate to two and a half percent (2.5 %) per year of credited
service after September 30, 2009 - maximum thirty (30) years total service.
The following Table shows the projected payroll and a comparison of the projected City and
County costs under the baseline forecast versus Scenario 1.
Projected Projected Cumulative
Fiscal City and City and Reduction in Reduction in
Year Covered County Cost County Cost City and City and
End Payroll Current Plan Scenario 1 County Cost County Cost
2012 11,083,213 2,746,240 2,509,847 236,393 236,393
2013 11,467,759 2,913,424 2,663,670 249,754 486,147
2014 11,842,171 3,101,952 2,840,083 261,869 748,016
2015 12,177,484 3,158,995 2,886,878 272,117 1,020,133
2016 12,369,938 3,210,571 2,924,891 285,680 1,305,813
2017 12,708,207 3,254,552 2,956,023 298,529 1,604,342
2018 13,039,669 3,294,074 2,983,504 310,570 1,914,912
2019 13,336,686 3,329,127 3,006,090 323,037 2,237,949
2020 13,693,343 3,373,902 3,037,577 336,325 2,574,274
2021 13,933,458 3,422,843 3,073,256 349,587 2,923,861
5 Year
Totals 58,940,565 15,131,182 13,825,369 1,305,813
10 Year
Totals 125,651,928 31,805,680 28,881,819 2,923,861
GRS Gabriel Roeder Smith & Company - 7 -
■
Projected Net City and County Cost
Scenario 1- 2.5% Accrual Rate for Future Service
E 3,500,000
Pc n
o
CD 3,000,000
CD
- ,y
F.
n o
F
2,500,000 Z
n
b r
2,000,000 y
• d �
i z
1,500,000 n
o oil cA
1,000,000 O Z
y
til
500,000 to to
m
70
N I--i
0 , 1 1 , , 1 1 I 1 , O
• Current Plan • Scenario 1
Doi
Projected Net City and County Cost as a Percentage of Pay
Scenario 1- 2.5% Accrual Rate for Future Service
w 30.0% - --
cr
CD n
7d
ro
". 25.0% - n o
F.
g. 2:J
20.0% r
CrJ
15.0% t
H - i ,
10.0% H
5.0% Cli tit
M
N o--
cz
ti °yam ..(NN,
'IT ` °y rl, ° � � �� °� °� °� Z
• Current Plan Scenario 1
CITY OF WINTER SPRINGS DEFINED BENEFIT PLAN
ACTUARIAL STUDY AS OF OCTOBER 1, 2009
Scenario 2 — Change the final average salary (FAS) used to calculate retirement benefits to the
average of the highest five (5) consecutive years of basic compensation out of the last ten (10)
years - not less than the average of the highest three (3) consecutive years of total compensation
as of October 1, 2009.
The following Table shows the projected payroll and a comparison of the projected City and
County costs under the baseline forecast versus Scenario 2.
Projected Projected Cumulative
Fiscal City and City and Reduction in Reduction in
Year Covered County Cost County Cost City and City and
End Payroll Current Plan Scenario 2 County Cost County Cost
2012 10,175,174 2,746,240 2,381,457 364,783 364,783
2013 10,541,214 2,913,424 2,542,722 370,702 735,485
2014 10,897,174 3,101,952 2,725,767 376,185 1,111,670
2015 11,230,744 3,158,995 2,781,141 377,854 1,489,524
2016 11,444,263 3,210,571 2,827,992 382,579 1,872,103
2017 11,784,431 3,254,552 2,868,229 386,323 2,258,426
2018 12,117,217 3,294,074 2,905,405 388,669 2,647,095
2019 12,438,434 3,329,127 2,939,459 389,668 3,036,763
2020 12,798,163 3,373,902 2,980,923 392,979 3,429,742
2021 13,081,179 3,422,843 3,028,813 394,030 3,823,772
5 Year
Totals 54,288,569 15,131,182 13,259,079 1,872,103
10 Year
Totals 116,507,993 31,805,680 27,981,908 3,823,772
GRS Gabriel Roeder Smith & Company - 10 -
•
Projected Net City and County Cost
Scenario 2 - Change FAS to Final 5 -Year Average of Base Pay
c 3,500,000
g. n
o �]
p - 3,000,000 ›•
n o
F. 1 '1
R.
2,500,000 'N n �
b r "
2,000,000
d
1,500,000
H LA CA
1,000,000 - y
to to
500,000 Z
N M--+
• Current Plan • Scenario 2
■
IP
I
Projected Net City and County Cost as a Percentage of Pay
Scenario 2 - Change FAS to Final 5 -Year Average of Base Pay
1 30.0%
c
n
o
n.
.1 25.0% n o
F. y �
R
4 20.0%
r 4 4
15.0% ■- z
c
o 10.0% 1.1
d
p
n z
to to
5.0% Cil C
N 1
O -�
■ Current Plan Scenario 2
N
CITY OF WINTER SPRINGS DEFINED BENEFIT PLAN
ACTUARIAL STUDY AS OF OCTOBER 1, 2009
Scenario 3 — Change the vesting schedule for future benefit accruals to a seven (7) year cliff
vesting schedule. Members are zero percent (0 %) vested until completion of seven (7) years of
service. Members are one hundred percent (100 %) vested upon completion of seven (7) years of
service.
The following Table shows the projected payroll and a comparison of the projected City and
County costs under the baseline forecast versus Scenario 3.
Projected Projected Cumulative
Fiscal City and City and Reduction in Reduction in
Year Covered County Cost County Cost City and City and
End Payroll Current Plan Scenario 3 County Cost County Cost
2012 11,083,213 2,746,240 2,743,913 2,327 2,327
2013 11,467,759 2,913,424 2,910,818 2,606 4,933
2014 11,842,171 3,101,952 3,099,104 2,848 7,781
2015 12,177,484 3,158,995 3,156,099 2,896 10,677
2016 12,369,938 3,210,571 3,207,502 3,069 13,746
2017 12,708,207 3,254,552 3,251,201 3,351 17,097
2018 13,039,669 3,294,074 3,290,533 3,541 20,638
2019 13,336,686 3,329,127 3,325,293 3,834 24,472
2020 13,693,343 3,373,902 3,369,744 4,158 28,630
2021 13,933,458 3,422,843 3,418,418 4,425 33,055
5 Year
Totals 58,940,565 15,131,182 15,117,436 13,746
10 Year
Totals 125,651,928 31,805,680 31,772,625 33,055
GRS Gabriel Roeder Smith & Company - 13 -
RP
Projected Net City and County Cost
Scenario 3 - Change Vesting Schedule to 7 -Year Cliff Vesting for Future Service
c 3,500,000 -
e n
a 3,000,000
n o
F 1-i il
2,500,000
b t" V
' 2,000,000 [ r �
•e z
1,500,000
O d
ql C
I I I H
, til
o d
to to
500,000 m z
r-, til
N 11
C
0
N.
• Current Plan • Scenario 3
■
Projected Net City and County Cost as a Percentage of Pay
Scenario 3 - Change Vesting Schedule to 7 -Year Cliff Vesting for Future Service
P 30.0%
cr
e n
o
". 25.0% - _ n o
F.
Z"
§ 20.0% /—
ca ra
z 15.0%
n
10.0% O
0 d
5.0% Cil C11
XJ
v 0
N r■4
0.0% "G
_C"1 , ,�oti �o ti � ' tio '19 1, ,�o ti oti� ' yotio 1,
III ■ Current Plan Scenario 3
CITY OF WINTER SPRINGS DEFINED BENEFIT PLAN
ACTUARIAL STUDY AS OF OCTOBER 1, 2009
Scenario 4 — Change the unreduced early retirement eligibility for future benefit accruals to
attainment of age fifty -five (55) with completion of fifteen (15) years of service (General
Employees) - completion of thirty (30) years of service (Police Officers and Firefighters).
The following Table shows the projected payroll and a comparison of the projected City and
County costs under the baseline forecast versus Scenario 4.
Projected Projected Cumulative
Fiscal City and City and Reduction in Reduction in
Year Covered County Cost County Cost City and City and
End Payroll Current Plan Scenario 4 County Cost County Cost
2012 11,096,209 2,746,240 2,587,940 158,300 158,300
2013 11,494,237 2,913,424 2,749,947 163,477 321,777
2014 11,881,758 3,101,952 2,932,381 169,571 491,348
2015 12,244,679 3,158,995 2,981,437 177,558 668,906
2016 12,432,212 3,210,571 3,022,435 188,136 857,042
2017 12,787,628 3,254,552 3,062,706 191,846 1,048,888
2018 13,144,264 3,294,074 3,100,342 193,732 1,242,620
2019 13,458,324 3,329,127 3,126,915 202,212 1,444,832
2020 13,819,434 3,373,902 3,164,837 209,065 1,653,897
2021 14,057,546 3,422,843 3,208,569 214,274 1,868,171
5 Year
Totals 59,149,095 15,131,182 14,274,140 857,042
10 Year
Totals 126,416,291 31,805,680 29,937,509 1,868,171
GRS Gabriel Roeder Smith & Company - 16 -
■
Projected Net City and County Cost
Scenario 4 - Change Unreduced Early Retirement Eligibility to 55 & 15 (General) and 30 Years (Police /Fire)
E
c 3,500,000
Pc n
0 3
CD
Cl.
::::
to
1
w re
` 2,000,000 y b
d E
oc z
1,500,000
Od
ofi t=1
oil
1,000,000 O ~
O
to to
500,000 til
N I--1
c
0
`L��� 'L � '19 N '19 �� �� '1 00 ' ` ti 0 1 '
z
■ Current Plan ■ Scenario 4
71
IP
Projected Net City and County Cost as a Percentage of Pay
Scenario 4 - Change Unreduced Early Retirement Eligibility to 55 & 15 (General) and 30 Years (Police /Fire)
30.0% -
n
o
rp
M 25.0% -- n c
g o
y
§ 20.0% _ _ H
TI
b
15.0%
2
0 d
10.0 % uuaui O � iii til
n z
o
tt
5.0% Ci7 hJ
sa O
IN II
cz
0.0% o
■p b
• Current Plan ■ Scenario 4
CITY OF WINTER SPRINGS DEFINED BENEFIT PLAN
ACTUARIAL STUDY AS OF OCTOBER 1, 2009
Scenario 5 — All changes (Scenarios 1 through 4) combined.
The following Table shows the projected payroll and a comparison of the projected City and
County costs under the baseline forecast versus Scenario 5 (all changes combined), assuming
investment returns of 8% per annum throughout the projection period (baseline — current
valuation assumption).
Projected Projected Cumulative
Fiscal City and City and Reduction in Reduction in
Year Covered County Cost County Cost City and City and
End Payroll Current Plan Scenario 5 County Cost County Cost
2012 10,186,427 2,746,240 2,051,881 694,359 694,359
2013 10,563,771 2,913,424 2,198,204 715,220 1,409,579
2014 10,930,660 3,101,952 2,366,627 735,325 2,144,904
2015 11,286,887 3,158,995 2,407,495 751,500 2,896,404
2016 11,495,620 3,210,571 2,434,262 776,309 3,672,713
2017 11,850,982 3,254,552 2,460,175 794,377 4,467,090
2018 12,203,840 3,294,074 2,485,117 808,957 5,276,047
2019 12,539,780 3,329,127 2,500,925 828,202 6,104,249
2020 12,901,662 3,373,902 2,524,603 849,299 6,953,548
2021 13,181,367 3,422,843 2,556,197 866,646 7,820,194
5 Year
Totals 54,463,365 15,131,182 11,458,469 3,672,713
10 Year
Totals 117,140,996 31,805,680 23,985,486 7,820,194
GRS Gabriel Roeder Smith & Company - 19 -
ir
Projected Net City and County Cost
Scenario 5 - All Proposed Changes Combined
C1
3,500,000
y
et °- 3,000,000 K
2,500,000 7.51
C")
b
w no
2,000,000 y I ;21 d
�C z
1,500,000
LA "T1 t
0
1,000,000 ~
y �
0
to to
500,000 Z
N
b
• Current Plan (8 %) • Scenario 5 (8 %)
O
•
Projected Net City and County Cost as a Percentage of Pay
Scenario 5 - All Proposed Changes Combined
P 30.0%
Po ' n
7d y
o
et i
" 25.0% C) o ,:.
... , c 20.0% y
4 r
raa
v)
15.0% IIIIIuI CZ Z
10.0% 0
i
O d
5.0% M td
N 1--{
y 0 1 � ti 0� � y0 ' '19 rLO L 0 y 0 0g r 1 1 Y
Ai Current Plan (8 %) IL Scenario 5 (8 %)
N
CITY OF WINTER SPRINGS DEFINED BENEFIT PLAN
ACTUARIAL STUDY AS OF OCTOBER 1, 2009
Scenario 5 — All changes (Scenarios 1 through 4) combined.
The following Table shows the projected payroll and a comparison of the projected City and
County costs under the baseline forecast versus Scenario 5 (all changes combined), assuming
investment returns of 7% per annum throughout the projection period (sensitivity — 1%).
Projected Projected Cumulative
Fiscal City and City and Reduction in Reduction in
Year Covered County Cost County Cost City and City and
End Payroll Current Plan Scenario 5 County Cost County Cost
2012 10,186,427 2,749,323 2,054,919 694,404 694,404
2013 10,563,771 2,924,178 2,208,695 715,483 1,409,887
2014 10,930,660 3,125,439 2,389,294 736,145 2,146,032
2015 11,286,887 3,200,758 2,447,382 753,376 2,899,408
2016 11,495,620 3,276,623 2,496,730 779,893 3,679,301
2017 11,850,982 3,348,268 2,547,833 800,435 4,479,736
2018 12,203,840 3,418,963 2,600,672 818,291 5,298,027
2019 12,539,780 3,488,805 2,647,161 841,644 6,139,671
2020 12,901,662 3,572,043 2,704,344 867,699 7,007,370
2021 13,181,367 3,663,171 2,772,277 890,894 7,898,264
5 Year
Totals 54,463,365 15,276,321 11,597,020 3,679,301
10 Year
Totals 117,140,996 32,767,571 24,869,307 7,898,264
GRS Gabriel Roeder Smith & Company - 22 -
■
Projected Net City and County Cost
Scenario 5 - All Proposed Changes Combined
4,000,000
R. n
z P4
Q , 3,500,000 y
ft ft
n o
F - lal
3,000,000
n
w 2,500,000 • no
� • b
2,000,000
�
1,500,000 Q t
• *II
1,000,000 O t il
td tIZ
500,000 2
M
N 0--4
C y
0
I I I I I I 9 I 1 I ^ CZ
• Current Plan (7 %) • Scenario 5 (7 %)
N
W
Y
Projected Net City and County Cost as a Percentage of Pay
Scenario 5 - All Proposed Changes Combined
C7
30.0% ._
g. n
o y
et
'" 25.0% n o
F. ell
- -
20.0%
C
15.0% d z
10.0% H
5.0
C
N
0.0% 1 1 1 1 1 1 1 1 1 I O "
• Current Plan (7 %) Scenario 5 (7 %)
N
■
CITY OF WINTER SPRINGS DEFINED BENEFIT PLAN
ACTUARIAL STUDY AS OF OCTOBER 1, 2009
Scenario 5 — All changes (Scenarios 1 through 4) combined.
The following Table shows the projected payroll and a comparison of the projected City and
County costs under the baseline forecast versus Scenario 5 (all changes combined), assuming
investment returns of 9% per annum throughout the projection period (sensitivity + 1 %).
Projected Projected Cumulative
Fiscal City and City and Reduction in Reduction in
Year Covered County Cost County Cost City and City and
End Payroll Current Plan Scenario 5 County Cost County Cost
2012 10,186,427 2,743,158 2,048,842 694,316 694,316
2013 10,563,771 2,902,610 2,187,654 714,956 1,409,272
2014 10,930,660 3,078,191 2,343,691 734,500 2,143,772
2015 11,286,887 3,116,482 2,366,875 749,607 2,893,379
2016 11,495,620 3,142,899 2,370,229 772,670 3,666,049
2017 11,850,982 3,157,825 2,369,632 788,193 4,454,242
2018 12,203,840 3,164,175 2,364,803 799,372 5,253,614
2019 12,539,780 3,161,753 2,347,436 814,317 6,067,931
2020 12,901,662 3,164,594 2,334,429 830,165 6,898,096
2021 13,181,367 3,167,022 2,325,753 841,269 7,739,365
5 Year
Totals 54,463,365 14,983,340 11,317,291 3,666,049
10 Year
Totals 117,140,996 30,798,709 23,059,344 7,739,365
GRS Gabriel Roeder Smith & Company - 25 -
■
Projected Net City and County Cost
Scenario 5 - All Proposed Changes Combined
P
c 3,500,000
n
o
et
a 3,000,000
n
F.. y .'
n 2,500,000 Z
n
"O
:::: b d � , ,
o d
1,000,000 0 1-1
fl
500,000
c y
■ Current Plan (9 %) s Scenario 5 (9 %)
N
IP
Projected Net City and County Cost as a Percentage of Pay
Scenario 5 - All Proposed Changes Combined
DC o . 30.0%
n
o ~
0 et
o. l C
co
25.0% n O
ii
F.
o 20.0% y
y • b
15.0% i , z
• Cn
10.0% O
�
n
o d
to to
5.0% 0 tttll
zz
� m
N I-1
0.0% . , i i i I r I I I C b
'v 1§C-6 fLO, `Lpy ti� 'V '1, `L0 tib c>
rL ti 'L
• Current Plan (9 %) • Scenario 5 (9 %)
■
N
J
CITY OF WINTER SPRINGS DEFINED BENEFIT PLAN
ACTUARIAL STUDY AS OF OCTOBER 1, 2009
Scenario 6 — Freeze the Plan effective October 1, 2009. Members who are participants of the
Plan as of October 1, 2009 continue to accrue benefits under the Plan. No new participants will
enter the Plan after September 30, 2009.
The following Table shows the projected payroll and a comparison of the projected City and
County costs under the baseline forecast versus Scenario 6.
Projected Projected Cumulative
Fiscal City and City and Reduction in Reduction in
Year Covered County Cost County Cost City and City and
End Payroll Current Plan Scenario 6 County Cost County Cost
2012 10,321,710 2,746,240 2,667,415 78,825 78,825
2013 10,050,996 2,913,424 2,769,031 144,393 223,218
2014 9,850,158 3,101,952 2,902,140 199,812 423,030
2015 9,624,283 3,158,995 2,900,184 258,811 681,841
2016 9,180,024 3,210,571 2,881,145 329,426 1,011,267
2017 8,896,844 3,254,552 2,855,949 398,603 1,409,870
2018 8,626,977 3,294,074 2,827,996 466,078 1,875,948
2019 8,286,136 3,329,127 2,791,316 537,811 2,413,759
2020 8,000,583 3,373,902 2,763,647 610,255 3,024,014
2021 7,570,302 3,422,843 2,736,736 686,107 3,710,121
5 Year
Totals 49,027,171 15,131,182 14,119,915 1,011,267
10 Year
Totals 90,408,013 31,805,680 28,095,559 3,710,121
G 1 W Gabriel Roeder Smith & Company - 28 -
RP
Projected Net City and County Cost
Scenario 6 - Freeze Plan as of October 1, 2009 (No New Entrants)
P
P 3,500,000 -
PC x
n
0
et
°' 3,000,000
n c
R.
K 2,500,000
n
b C"
t
2,000,000 — [ 11:
C7 WI
0 z
1,500,000
0
oi l
1,000,000 ~ 2
i-i t
o
to td
500,000
�z
N I--I
o y
0 0
• Current Plan • Scenario 6
N
RP
Projected Net City and County Cost as a Percentage of Covered Pay
Scenario 6 - Freeze Plan as of October 1, 2009 (No New Entrants)
AC 40.0%
cr
n
a . 35.0% e-
n n
l 1 O F
y
'4' 30.0%
n H 250% 20.0%
:.c,
c4c1)
15.0% 0t; I 1 1 1 I 1 1 ,mit,1
o z
10.0% r
0
to to
5.0% 7Z
~■ til
N
0.0% vD b
• Current Plan • Scenario 6
w
0
CITY OF WINTER SPRINGS DEFINED BENEFIT PLAN
ACTUARIAL STUDY AS OF OCTOBER 1, 2009
Scenario 7 — Terminate the Plan effective October 1, 2009. For Members who are participants
of the Plan as of October 1, 2009, benefits are frozen as of October 1, 2009. All frozen benefits
are 100% vested as of October 1, 2009. No new participants will enter the Plan after September
30, 2009.
The following Table shows the projected payroll and a comparison of the projected City and
County costs under the baseline forecast versus Scenario 7.
Projected Projected Cumulative
Fiscal City and City and Reduction in Reduction in
Year Covered County Cost County Cost City and City and
End Payroll Current Plan Scenario 7 County Cost County Cost
2012 10,321,710 2,746,240 1,067,684 1,678,556 1,678,556
2013 10,050,996 2,913,424 1,166,122 1,747,302 3,425,858
2014 9,850,158 3,101,952 1,297,187 1,804,765 5,230,623
2015 9,624,283 3,158,995 1,304,111 1,854,884 7,085,507
2016 9,180,024 3,210,571 1,279,152 1,931,419 9,016,926
2017 8,896,844 3,254,552 1,256,551 1,998,001 11,014,927
2018 8,626,977 3,294,074 1,235,369 2,058,705 13,073,632
2019 8,286,136 3,329,127 1,209,120 2,120,007 15,193,639
2020 8,000,583 3,373,902 1,187,004 2,186,898 17,380,537
2021 7,570,302 3,422,843 1,169,844 2,252,999 19,633,536
5 Year
Totals 49,027,171 15,131,182 6,114,256 9,016,926
10 Year
Totals 90,408,013 31,805,680 12,172,144 19,633,536
IRS Gabriel Roeder Smith & Company - 31 -
so
Projected Net City and County Cost
Scenario 7 - Terminate Plan as of October 1, 2009
c 3,500,000
n
7d , "
0
''�
r /
0
' 3,000,000
B
5
2,500,000 'Z Z
n
'O C" =
2,000,000
d
'"
1,500,000
..
O 0
'2,t-2
1,000,000
• m
O d
cc cc
rkl
500,000 Z
"s7
N
.,,
c.
0 `
.ri,
b r.
ti Oy� ti 5, � , ti Oti�' y Oti� ti Oti1 , ti Oti�' ti Oti, ,L01' ,L01'
• Current Plan Scenario 7
w
N
RP
Projected Net City and County Cost as a Percentage of Covered Pay
Scenario 7 - Terminate Plan as of October 1, 2009
IP 30.0%
n
CD
CD
25.0%
no
x
y
c 20.0% r CT1
• "d
15.0%
� z
10.0% � �
n z
o d
S.0% ��
7:
N0..*
oti oti oti o oti oti oti oti civ ol•
ti ti ti ti ti ti ti ti ti 1,
• Current Plan Scenario 7
w
w
CITY OF WINTER SPRINGS DEFINED BENEFIT PLAN
ACTUARIAL STUDY AS OF OCTOBER 1, 2009
I 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. Total Compensation
Wages, salaries and other amounts received (whether or not paid in cash) for personal services
actually rendered in the course of employment. This includes but is not limited to commissions,
overtime pay and bonuses.
E. Final Average Compensation
Average earnings during the three (3) highest consecutive compensation periods during
employment with the City.
F. 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.
GRS Gabriel Roeder Smith & Company - 34 -
CITY OF WINTER SPRINGS DEFINED BENEFIT PLAN
ACTUARIAL STUDY AS OF OCTOBER 1, 2009
G. Early Retirement
1. Eligibility
(a) Attainment of age 55 and completion of ten (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.
H. 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.
I. Disability Retirement
1. Eligibility
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.
J. 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.
GRS Gabriel Roeder Smith & Company - 35 -
CITY OF WINTER SPRINGS DEFINED BENEFIT PLAN
ACTUARIAL STUDY AS OF OCTOBER 1, 2009
K. Participant Contributions
Three percent (3 %) of compensation for General Employees and Police Officers.
L. 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%
M. Normal Form of Retirement Income
Monthly benefit payable for life.
Other Options
Actuarially equivalent joint and survivor at 50 %, 75 %, 100 %; or ten (10) years certain and
life.
GRS Gabriel Roeder Smith & Company - 36 -
CITY OF WINTER SPRINGS DEFINED BENEFIT PLAN
ACTUARIAL STUDY AS OF OCTOBER 1, 2009
ACTUARIAL ASSUMPTIONS AND METHODS
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, net of investment expenses.
C. Allowances for Expenses or Contingencies
Prior year's actual administrative expenses are included in Normal Cost.
D. Salary Increase Factors
Current salary is assumed to increase at a rate based on the table below per year until
retirement.
General Firefighters and
Service Employees Police Officers
Less than 5 years 6.5% 7.5%
5- 9years 5.5% 5.5%
10 — 14 years 4.5% 5.5%
15+ years 3.0% 3.5%
GRS Gabriel Roeder Smith & Company - 37 -
CITY OF WINTER SPRINGS DEFINED BENEFIT PLAN
ACTUARIAL STUDY AS OF OCTOBER 1, 2009
E. Employee Withdrawal Rates
1. Withdrawal rates for male General Employees were used in accordance with the
following illustrative example:
Withdrawal Rates per 100 Employees
Service
Age 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:
Withdrawal Rates per 100 Employees
Service
Age 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 23.2 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.
GRS Gabriel Roeder Smith & Company - 38 -
CITY OF WINTER SPRINGS DEFINED BENEFIT PLAN
ACTUARIAL STUDY AS OF OCTOBER 1, 2009
3. Withdrawal rates for male Firefighters and Police Officers were used in accordance with
the following illustrative example:
Withdrawal Rates per 100 Employees
Service
Age 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:
Withdrawal Rates per 100 Employees
Service
Age 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 21.3 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.
GRS Gabriel Roeder Smith & Company - 39 -
CITY OF WINTER SPRINGS DEFINED BENEFIT PLAN
ACTUARIAL STUDY AS OF OCTOBER 1, 2009
F. Disability Rates
1. Line -of -duty disability rates for General Employees were used in accordance with the
following illustrative example.
Age 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.
Age 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 withdrawal assumptions are the withdrawal assumptions used in the July 1, 2009 FRS
Actuarial Valuation.
GRS Gabriel Roeder Smith & Company - 40 -
CITY OF WINTER SPRINGS DEFINED BENEFIT PLAN
ACTUARIAL STUDY AS OF OCTOBER 1, 2009
3. Line -of -duty disability rates for Firefighters and Police Officers were used in
accordance with the following illustrative example.
Age 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.
Age 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 withdrawal assumptions are the withdrawal assumptions used in the July 1, 2009 FRS
Actuarial Valuation.
GRS Gabriel Roeder Smith & Company - 41 -
CITY OF WINTER SPRINGS DEFINED BENEFIT PLAN
ACTUARIAL STUDY AS OF OCTOBER 1, 2009
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
Age 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 Employees Police Officers
55 — 64 10% 20%
65 and above 100% 100%
3. For members with twenty -five (25) or more years of service:
General Firefighters and
Age Employees Police Officers
Under 55 2% 5%
55 25% 50%
56 — 64 5% 20%
65 and above 100% 100%
GRS Gabriel Roeder Smith & Company - 42 -
CITY OF WINTER SPRINGS DEFINED BENEFIT PLAN
ACTUARIAL STUDY AS OF OCTOBER 1, 2009
Note: For Scenarios 4 and 5, retirement rates were used in accordance with the following
tables.
1. For General Employees:
Years of Service
Age 0 - 10 10 -15 15 -25 25 -30 30 or more
Under 55 0% 0% 0% 2% 2%
55 0% 5% 10% 20% 25%
55 — 64 0% 5% 10% 4% 5%
65 100% 100% 100% 100% 100%
2. For Firefighters and Police Officers:
Years of Service
Age 0 - 10 10 -15 15 -25 25 -30 30 or more
Under 55 0% 0% 0% 4% 5%
55 0% 10% 15% 40% 50%
55 — 64 0% 10% 15% 15% 20%
65 100% 100% 100% 100% 100%
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. 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.
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CITY OF WINTER SPRINGS DEFINED BENEFIT PLAN
ACTUARIAL STUDY AS OF OCTOBER 1, 2009
K. 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 Plan had always
been in effect. The normal cost for the Plan 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 Plan is the excess of the actuarial
present value of 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 Plan assets.
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