HomeMy WebLinkAboutAgenda Police Pension 120215 Agenda
City of Palm Beach Gardens Police Officers’
Pension Fund
MEETING OF DECEMBER 2, 2015
LOCATION: City Council Chambers’
10500 North Military Trail
Palm Beach Gardens, FL 33410
TIME: 9 AM
1. Call Meeting To Order
2. Roll Call:
• Jay Spencer, Chairman
• Marc Glass, Trustee
• John Manuel, Trustee
• Greg Mull, Trustee
• Brad Seidensticker, Trustee
3. Actuary Report – GRS (Pete Strong)
• Experience Study Report
• Discussion Regarding Additional City Contributions
4. Investment Manager Report – American Realty (Richelle Hayes)
5. Investment Manager Report – RhumbLine Advisors (Denise D’Entremont)
6. Investment Manager Report – Highland Capital (Steve Stack)
7. Investment Consultant Report – Thistle Assets (John McCann)
8. Attorney Report – KKJ&L (Bonni Jensen)
• NCPERS Code of Conduct Discussion
• Discussion Regarding Rehiring After Retirement
• Discussion Regarding SB 172
9. Administrator Report – Resource Centers (Audrey Ross)
• Proposed 2016 Meeting Dates (draft)
10. Approval of Minutes
• August 12, 2015 Regular Meeting
11. Disbursements
12. Benefit Approvals
13. Other Business
14. Public Comments
15. Adjourn
Next Meeting Date:
Scheduled for Thursday January 21, 2016 @ 9AM.
PLEASE NOTE:
Should any interested party seek to appeal any decision of this Board with respect to any matter considered at such meeting or hearing, s/he
will need a record of the proceedings and for such purpose may need to ensure that a verbatim record of the proceedings is made, which
record includes the testimony and evidence upon which the appeal is to be based.
In accordance with the Americans With Disabilities Act of 1990, persons needing a special accommodation to participate in this meeting
should contact the The Pension Resource Center, LLC no later than four days prior to the meeting.
Resource Centers LLC – Omega Recordkeeping Group LLC
Pension Resource Center LLC – Financial Resource Center LLC
THE RESOURCE CENTERS , LLC
4360 Northlake Boulevard, Suite 206 Palm Beach Gardens, FL 33410
Phone (561) 624-3277 Fax (561) 624-3278 WWW .RESOURCE CENTERS .COM
PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
2016 MEETING DATES
Thursday January 21, 2016 @ 9AM
Thursday April 21, 2016 @ 9AM
Thursday August 18, 2016 @ 9AM – Need to Change this Date
Thursday October 20, 2016 @ 9AM
PALM BEACH GARDENS POLICE
PENSION FUND
Benefit Approvals
Meeting of December 2, 2015
APPLICATIONS FOR DISTRIBUTION OF DROP ACCOUNTS
(8/15/2015)
GWEN FLEMING DATE OF RETIREMENT 10/10/2014
DATE OF BIRTH 12/04/1963
TYPE OF DISTRIBUTION PARTIAL LUMP SUM-CASH
TOTAL GROSS DISTRIBUTION $30,000.00
TAX WITHHOLDING (20%) $ 6,000.00
TOTAL NET DISTRIBUTION $24,000.00
CURRENT DROP ACCOUNT BALANCE $162,364.78
_________________________
JACK SEGRETO DATE OF RETIREMENT 05/28/2015
DATE OF BIRTH 02/02/1965
TYPE OF DISTRIBUTION PARTIAL LUMP SUM-CASH
TOTAL GROSS DISTRIBUTION $50,000.00
TAX WITHHOLDING (20%) $10,000.00
TOTAL NET DISTRIBUTION $40,000.00
CURRENT DROP ACCOUNT BALANCE $95,113.24
_________________________
APPLICATION FOR DISTRIBUTION OF DROP ACCOUNT
(10/15/2015)
SHEREE BROWN DATE OF RETIREMENT 05/27/2014
DATE OF BIRTH 10/01/1954
TYPE OF DISTRIBUTION PARTIAL LUMP SUM-CASH
TOTAL GROSS DISTRIBUTION $24,000.00
TAX WITHHOLDING (20%) $ 4,800.00
TOTAL NET DISTRIBUTION $19,200.00
CURRENT DROP ACCOUNT BALANCE $203,316.59
_________________________
APPLICATIONS FOR DISTRIBUTION OF DROP ACCOUNTS
(11/15/2015)
GWEN FLEMING DATE OF RETIREMENT 10/10/2014
DATE OF BIRTH 12/04/1963
TYPE OF DISTRIBUTION PARTIAL LUMP SUM-CASH
TOTAL GROSS DISTRIBUTION $40,000.00
TAX WITHHOLDING (20%) $ 8,000.00
TOTAL NET DISTRIBUTION $32,000.00
CURRENT DROP ACCOUNT BALANCE $134,696.97
_________________________
APPLICATION FOR DISTRIBUTION OF DROP ACCOUNT
(REQUIRED MINIMUM DISTRIBUTION 10-15-15)
JULES BARONE DATE OF RETIREMENT 02/15/2013
DATE OF BIRTH 05/28/1943
TYPE OF DISTRIBUTION PARTIAL LUMP SUM-CASH
TOTAL GROSS DISTRIBUTION $8,613.67
TAX WITHHOLDING (20%) $1,722.73
TOTAL NET DISTRIBUTION $6,890.94
CURRENT DROP ACCOUNT BALANCE $227,564.07
_________________________
APPLICATION FOR REFUND OF CONTRIBUTIONS
JIVANET RIVERA DATE OF BIRTH 09/11/1990
DATE OF HIRE 05/20/2013
DATE OF TERMINATION 10/02/2014
YEARS OF SERVICE 1 YEAR, 4 MONTHS & 12 DAYS
TOTAL REFUND $5,426.71
TAX WITHHOLDING (20%) $1,085.34 (cash)
TOTAL NET REFUND $4,341.37
_________________________
__________________________________, CHAIRMAN
APPROVED _________________________________, SECRETARY
_________________________________, DATE
Pension Resource Centers
Accounts Payable Check Register
FOR: PALM BEACH GARDENS POLICE
Meeting
Check Number Date Payee and Description Amount
2704 August 11, 2015 FPPTA $450.00
Registration - Fall Trustee School - October 4, 2015 -
October 7, 2015 - Greg Mull
2705 August 17, 2015 Naples Grande Beach Resort $507.00
Reservations for Greg Mull - 10/4/2015 - 10/7/2015
FPPTA Fall Trustee School
2706 August 18, 2015 FPPTA $450.00
Registration - Fall Trustee School - October 4, 2015 -
October 7, 2015 - Jay Spencer
2707 August 18, 2015 Naples Grande Beach Resort $507.00
Reservations for Jay Spencer - 10/4/2015 - 10/07/2015
FPPTA Fall Trustee School
2708 September 1, 2015 City of Palm Beach Gardens $14,997.44
Retiree Insurance
2709 September 1, 2015 Pension Resource Center $2,575.00
Administrative Fee - September 2015
2710 September 1, 2015 Law Offices of Bonnie Jensen, P. A. $1,289.41
Legal Services Rendered through 8/15/2015
2711 September 4, 2015 Highland Capital Management, LLC $27,819.02
Investment Management Fee - 2nd Quarter 2015
2712 October 1, 2015 City of Palm Beach Gardens $15,570.84
Retiree Insurance
2713 October 2, 2015 Pension Resource Center $2,575.00
Administrative Fee - October 2015
2714 October 2, 2015 Pension Resource Center $69.84
Administrative Fee - Death Search 2nd & 3rd Quarter 2015
2715 October 2, 2015 Gabriel, Roeder, Smith & Company $5,218.00
Professional actuarial services rendered through 8/31/15
2716 October 2, 2015 Law Offices of Bonnie Jensen, P. A. $763.70
Legal Services Rendered through 9/15/2015
Total: $72,792.25
Chair___________________________
Secretary___________________________
Date_______________________________
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
EXPERIENCE INVESTIGATION FOR THE EIGHT YEARS ENDED SEPTEMBER 30, 2014
October 2015
October 21, 2015
Board of Trustees
City of Palm Beach Gardens Police Officers’ Pension Fund
Boynton Beach, Florida
Re: Experience Study for the Eight-Year Period Ending September 30, 2014
Dear Board Members:
Gabriel, Roeder, Smith & Company is pleased to provide the results of our experience investigation for
the City of Palm Beach Gardens Police Officers’ Pension Fund (Plan). The period covered by this
study is October 1, 2006 through September 30, 2014. Based upon the results, certain changes in
actuarial assumptions for valuation purposes are recommended.
The Table of Contents, which immediately follows, sets out the material contained in this report.
This Report was prepared at the request of the Board and is intended for use by Plan and those
designated or approved by the Board. This Report may be provided to parties other than the Plan
only in its entirety and only with the permission of the Board.
The purpose of this Report is to evaluate the assumptions and methods to be used for the October 1,
2015 and subsequent years’ Actuarial Valuations, and to describe the financial effect of the
recommended assumption and method changes based on our findings. This Report should not be
relied on for any purpose other than the purpose described above.
The study was performed on the basis of participant data and financial information supplied by the
Plan Administrator and the City of Palm Beach Gardens in connection with the valuations performed
during the years studied. We checked for internal and year-to-year consistency, but did not
otherwise audit this data. We are not responsible for the accuracy or completeness of the
information provided by the City.
The enclosed calculations are based upon the Plan provisions as summarized in the October 1, 2014
Actuarial Valuation Report. If you have reason to believe the assumptions used are unreasonable,
the Plan provisions are incorrectly described or referenced, or that important Plan provisions
relevant to this study are not described, you should contact the undersigned prior to relying on this
information.
The measurement date used for calculating the financial effect of the assumption and method
changes is October 1, 2014. Future actuarial measurements may differ significantly from the
current measurements presented in this Report due to such factors as the following: plan experience
differing from that anticipated by the economic or demographic assumptions; changes in economic
or demographic assumptions; increases or decreases expected as part of the natural operation of the
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
EIGHT-YEAR EXPERIENCE INVESTIGATION
TABLE OF CONTENTS
Item Page No.
Summary of Findings 1
Experience Investigation Results 3
Methodology 3
Basic Results and Conclusions 4
Rates of Salary Increase 4
Rates of Retirement 5
Rates of Mortality 9
Rates of Termination 10
Rates of Disability 12
Appendices
Appendix I: Comparison of Actual and Expected Annual Salaries 13
Appendix II: Comparison of Actual and Expected Retirements 14
Appendix III: Comparison of Actual and Expected Terminations 15
Appendix IV: Comparison of Actual and Expected Disabilities 16
Appendix V: Purpose of an Actuarial Valuation 17
Role of the Actuarial Assumptions 17
- 1 -
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
EXPERIENCE INVESTIGATION
SUMMARY OF FINDINGS
The eight-year period (October 1, 2006 to September 30, 2014) covered by this experience
investigation provided sufficient data to form a basis for recommending updates in the following
demographic and financial assumptions used in the actuarial valuation of the Pension Fund.
Recommended changes in actuarial assumptions resulting from this experience investigation,
including the “what if” impact on the FY 2016 City contribution requirement as a dollar amount and
a percentage of expected covered payroll and the “what if” impact on the Plan’s funded ratio as of
October 1, 2014 are summarized below (Note: the amortization period for the change in accrued
liability resulting from the assumption changes was 15 years). If these changes are made in the
October 1, 2015 Actuarial Valuation Report, the impact on the FY 2017 City contribution and
funded ratio as of October 1, 2015 may vary to some extent from what is shown below.
Update the future salary increase assumption to reflect lower observed salary increases, on
average, than expected.
Impact on City Contribution Funded Ratio (Impact)
($280,600) or (5.29%) of covered payroll 71.9% (1.1% increase)
Update assumed rates of future employment separation to reflect somewhat lower overall
observed separation experience than expected and the trend of higher than expected
observed separation rates for short service members.
Impact on City Contribution Funded Ratio (Impact)
+ $103,389 or 2.12% of covered payroll 70.4% (0.4% decrease)
Update assumed rates of future retirement to reflect higher overall observed normal
retirement experience than expected.
Impact on City Contribution Funded Ratio (Impact)
+ $127,773 or 2.62% of covered payroll 70.1% (0.7% decrease)
Update assumed rates of future disability based on actual experience (to reflect lower
observed disability experience than expected).
Impact on City Contribution Funded Ratio (Impact)
($32,675) or (0.67%) of covered payroll 70.8% (0.0% increase)
- 2 -
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
EXPERIENCE INVESTIGATION
SUMMARY OF FINDINGS (CONTINUED)
Update the mortality assumption from the RP-2000 Combined Healthy Participant
Mortality Table for males and females with future generational mortality improvements
projected using Scale AA to the FRS mortality rates for special risk members. The current
FRS mortality rates are based on the RP-2000 Mortality Table for Healthy Annuitants with
future generational mortality improvements projected using Scale BB with 90% blue collar
rates and 10% white collar rates for males and 100% white collar rates for females. This
change will be required under Florida law effective in the October 1, 2016 Actuarial
Valuation.
Impact on City Contribution Funded Ratio (Impact)
($145,330) or (2.98%) of covered payroll 71.8% (1.0% increase)
Combined effect of all recommended assumption changes.
Impact on City Contribution Funded Ratio (Impact)
($185,828) or (3.33%) of covered payroll 71.5% (0.7% increase)
This does not include the impact of the scheduled annual reduction in the investment return
assumption of 10 basis points, which is expected to increase the City contribution by
approximately $110,000. If the investment return assumption were reduced by 20 basis
points from October 1, 2014 to October 1, 2015 instead of 10 basis points, then the overall
impact of the assumption changes would be a small increase in the City contribution (of
approximately $35,000) rather than a $185,828 decrease.
Note: The sum of the individual cost impacts does not equal the impact of all changes
combined. This is due to the interaction of Plan provisions and actuarial assumptions with one
another and the effect that one assumption change can have on the impact of another
assumption change.
- 3 -
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
EXPERIENCE INVESTIGATION RESULTS
The methodology, basic results and conclusions of the eight-year experience investigation of the
actuarial assumptions are described below.
Methodology
The expected salaries each year were obtained by use of the salary scale assumption used in the
October 1, 2014 actuarial valuation. The resulting expected salaries were then compared with the
actual salaries reported. Due to the change in the definition of Compensation from total W-2
earnings to base pay effective in September 2012, salary increase experience was separately
measured for the period 2006 through 2012 using total reported W-2 earnings and for the period
2012 through 2014 using base pay. Then both groups of experience were combined.
The number of members exposed to risk during each period was tabulated (exposure) and the
expected incidence of termination (separation of members not eligible for early or normal
retirement), retirement and disability were obtained by use of the termination, retirement and
disability rates employed in the most recent actuarial valuation. The actual number of terminations,
retirees and disabilities was tabulated and compared with those expected.
- 4 -
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
EXPERIENCE INVESTIGATION RESULTS
Basic Results and Conclusions
Rates of Salary Increase
Observed rates of salary increase were generally lower than expected during the experience
investigation period, with the exception of the years immediately following completion of 19 and 20
years of service. It is important to note, however, that the only period for which experience is
available during these service years is the 2006 through 2012 period, during which total W-2
earnings (including overtime) counted as pensionable compensation. Since the years following
completion of 19 and 20 years of service were frequently the years leading up to retirement (and thus
were used in the determine the average earnings used for retirement benefits), it is likely that the
higher observed salary increases during these years were the result of increases in overtime rather
than increases in base pay. Since the current definition of Compensation in the Pension Fund is base
pay, the higher-than-expected observed salary increases in the years following completion of 19 and
20 years have not had have much influence on the development of the proposed salary increase
assumption.
Higher than expected salary increases Compensation increases for members with less than 12
months of service were not included in this analysis due to fluctuations in pay for new hires and
incomplete data.
We propose revised assumed rates of salary increase with components as follows. Actual versus
expected experience is shown in Appendix I on page 13.
Years of Promotion, Total Promotion, Total
Service Assumed Productivity Current Assumed Productivity Proposed
Inflation & Seniority Rates Inflation & Seniority Rates
0 - 3 3.00% 4.50% 7.50% 2.50% 4.50% 7.00%
4 & Over 3.00% 4.50% 7.50% 2.50% 3.00% 5.50%
Proposed Salary Increase RatesCurrent Salary Increase Rates
SALARY INCREASE ASSUMPTION
- 5 -
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
EXPERIENCE INVESTIGATION RESULTS
Rates of Retirement
The observed number of retirements was higher overall than expected under the assumed rates of
retirement during the investigation period. Experience is only currently available for members who
had at least 10 years of service as of September 13, 2012 (the effective date for the change in normal
retirement eligibility for members with less than 10 years of service on that date). Therefore, the
proposed retirement rates for members with less than 10 years of service as of September 13, 2012
have been extrapolated from the proposed rates for members who had at least 10 years of service as
of September 13, 2012.
The proposed retirement rates are shown below and on the next page. The current rates are shown
on pages 7-8. Actual versus expected experience is shown in Appendix II on page 14.
Years of Service Age Proposed Rates
Under 20 50 - 51 2.5%
52 - 56 22.5%
57 & Over 50.0%
20 Under 45 35.0%
45 - 59 65.0%
60 & Over 100.0%
21 - 22 Under 50 15.0%
50 - 59 65.0%
60 & Over 100.0%
23 - 24 Under 46 15.0%
46 - 54 50.0%
55 - 59 65.0%
60 & Over 100.0%
25 & Over All Ages 100.0%
PROPOSED RETIREMENT RATES
- MEMBERS WITH AT LEAST 10 YOS AT 9/13/2012 -
- 6 -
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
EXPERIENCE INVESTIGATION RESULTS
Rates of Retirement
Years of Service Age Proposed Rates
Under 20 50 - 54 2.5%
55 - 59 22.5%
60 & Over 50.0%
20 - 22 50 - 54 2.5%
55 - 59 65.0%
60 & Over 100.0%
23 - 24 50 - 54 2.5%
55 - 57 50.0%
58 - 59 65.0%
60 & Over 100.0%
25 Under 58 50.0%
58 - 59 65.0%
60 & Over 100.0%
26 Under 55 15.0%
55 - 57 50.0%
58 - 59 65.0%
60 & Over 100.0%
27 & Over All Ages 100.0%
PROPOSED RETIREMENT RATES
- MEMBERS WITH LESS THAN 10 YOS AT 9/13/2012 -
In addition, a 100% probability of retirement is assumed if at any point a member reaches the maximum
benefit of 75% of Average Monthly Earnings prior to reaching a 100% rate based on age and service in the
table above.
- 7 -
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
EXPERIENCE INVESTIGATION RESULTS
Rates of Retirement
Years of Service Age Current Rates
10 50 - 51 2.5%
52 - 54 20.0%
55 55.0%
56 - 59 65.0%
60 & Over 100.0%
11 - 19 50 - 51 2.5%
52 - 54 10.0%
55 47.5%
56 57.5%
57 - 59 60.0%
60 & Over 100.0%
20 Under 46 40.0%
46 - 49 22.5%
50 25.0%
51 27.5%
52 30.0%
53 40.0%
54 45.0%
55 70.0%
56 - 59 80.0%
60 & Over 100.0%
21 - 22 Under 48 5.0%
48 - 49 10.0%
50 - 52 12.5%
53 - 54 15.0%
55 47.5%
56 - 59 65.0%
60 & Over 100.0%
23 - 24 Under 48 5.0%
48 - 49 10.0%
50 - 54 15.0%
55 47.5%
56 - 59 65.0%
60 & Over 100.0%
25 & Over All Ages 100.0%
CURRENT RETIREMENT RATES
- MEMBERS WITH AT LEAST 10 YOS AT 9/13/2012 -
- 8 -
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
EXPERIENCE INVESTIGATION RESULTS
Rates of Retirement
Years of Service Age Current Rates
10 50 - 54 2.5%
55 - 57 20.0%
58 55.0%
59 65.0%
60 & Over 100.0%
11 - 19 50 - 54 2.5%
55 - 57 10.0%
58 47.5%
59 57.5%
60 & Over 100.0%
20 50 - 54 2.5%
55 30.0%
56 40.0%
57 45.0%
58 70.0%
59 80.0%
60 & Over 100.0%
21 - 22 50 - 54 2.5%
55 12.5%
56 - 57 15.0%
58 47.5%
59 65.0%
60 & Over 100.0%
23 - 24 50 - 54 2.5%
55 - 57 15.0%
58 47.5%
59 65.0%
60 & Over 100.0%
25 - 26 Under 58 15.0%
58 47.5%
59 65.0%
60 & Over 100.0%
27 & Over All Ages 100.0%
CURRENT RETIREMENT RATES
- MEMBERS WITH LESS THAN 10 YOS AT 9/13/2012 -
In addition, a 100% probability of retirement is assumed if at any point a member reaches the maximum
benefit of 75% of Average Monthly Earnings prior to reaching a 100% in the table above.
- 9 -
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
EXPERIENCE INVESTIGATION RESULTS
Rates of Mortality
We propose that the assumed mortality rates, which are currently based upon the rates from the RP-
2000 Combined Healthy Participant Mortality Table for males and females with future generational
mortality improvements projected using Scale AA, be updated to the FRS mortality rates for special
risk members. The current FRS mortality rates are based on the RP-2000 Mortality Table for
Healthy Annuitants with future generational mortality improvements projected using Scale BB with
90% blue collar rates and 10% white collar rates for males and 100% white collar rates for females.
This change will be required under Florida law effective in the October 1, 2016 Actuarial Valuation.
Below is a comparison of the life expectancies under the current and proposed mortality tables.
Age Male Female Male Female
40 84.8 85.9 83.3 88.4
45 84.5 85.7 83.4 88.2
50 84.4 85.7 83.7 88.1
55 84.2 85.7 84.0 88.1
60 84.3 85.9 84.4 88.2
65 84.7 86.4 85.1 88.5
70 85.5 87.3 85.9 89.0
75 86.7 88.6 87.3 90.0
80 88.4 90.3 89.1 91.4
Proposed Assumption: FRS Mortality
Base Year 2015
LIFE EXPECTANCY COMPARISON
(Current versus Proposed Mortality Assumption)
Current Assumption
RP 2000 Generational - Scale BB; Collar Adj'sRP 2000 Generational - Scale AA
Base Year 2015
- 10 -
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
EXPERIENCE INVESTIGATION RESULTS
Rates of Employment Separation (withdrawal)
The actual number of separations from employment was somewhat lower overall than the number of
expected separations during the experience investigation period. However, the actual number of
separations from employment during the first three years of service was higher than the number of
expected separations. Therefore, we are proposing adoption of a select and ultimate table of
assumed separation rates.
The proposed separation rates are shown in the following table. The current assumed separation
rates are shown on the next page. Actual versus expected separation experience is shown in
Appendix III on page 15.
Years of Service Age Proposed Rates
0 - 2 All Ages 10.5%
3 All Ages 3.0%
4 or More Under 35 2.0%
35 - 44 1.0%
45 and Up 0.5%
PROPOSED SEPARATION RATES
(Select and Ultimate Rates:
Service-Based for the first 3 Years, then Age-Based)
- 11 -
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
EXPERIENCE INVESTIGATION RESULTS
Rates of Employment Separation (withdrawal)
Age Assumed Rates
Under 24 6.0%
24 5.9%
25 5.7%
26 5.6%
27 5.5%
28 5.4%
29 5.2%
30 5.0%
31 4.8%
32 4.5%
33 4.3%
34 4.0%
35 3.8%
36 3.5%
37 3.3%
38 3.0%
39 2.8%
40 2.6%
41 2.4%
42 2.2%
43 2.0%
44 1.8%
45 1.6%
46 1.4%
47 1.2%
48 1.0%
49 0.9%
50 0.8%
51 0.7%
52 0.6%
53 0.5%
54 0.4%
55 0.3%
Over 55 0.2%
CURRENT SEPARATION RATES
- 12 -
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
EXPERIENCE INVESTIGATION RESULTS
Rates of Disability
We recommend lowering the assumed rates of disability since no disabilities were observed during
the eight-year investigation period. The current and proposed disability rates are shown in the
following table. Actual versus expected experience is shown in Appendix IV on page 16.
Age
20 0.210% 0.126%
25 0.225% 0.135%
30 0.270% 0.162%
35 0.345% 0.207%
40 0.450% 0.270%
45 0.765% 0.459%
50 1.500% 0.900%
55 2.325% 1.395%
Expected
Current Rates
Expected
Proposed Rates
DISABILITY RATES
- 13 -
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
EXPERIENCE INVESTIGATION
APPENDIX I
COMPARISON OF ACTUAL AND EXPECTED
ANNUAL MEMBER SALARIES
Years of
Service Prior Year Expected % Incr Actual % Incr Proposed
Under 4 $5,936,375 $6,381,603 7.50% $6,307,515 6.25%7.00%
4 - 7 10,052,362 10,806,289 7.50% 10,285,428 2.32%5.50%
8 - 11 8,911,177 9,579,515 7.50% 9,357,885 5.01%5.50%
12 - 15 11,106,739 11,939,744 7.50% 11,560,137 4.08%5.50%
16 - 18 8,831,874 9,494,264 7.50% 9,266,205 4.92%5.50%
19 - 20 3,097,546 3,329,862 7.50% 3,407,794 10.02%5.50%
21 & Over 2,566,970 2,759,493 7.50% 2,745,528 6.96%5.50%
Total 50,503,043 54,290,770 7.50% 52,930,492 4.81% 5.68%
Current Assumption Actual Experience
ANNUAL SALARY INCREASES
By Years of Service
- 14 -
CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
EXPERIENCE INVESTIGATION
APPENDIX II
COMPARISON OF ACTUAL AND EXPECTED RETIREMENTS
Current Proposed Expected
Years of Assumed Expected Actual Actual Retirement Retirements
Service Age Exposure Rates Ret.'s Ret.'s Rates Rates (New Rates)
10 50 - 51 1 2.5% 0.03 0 0.0%2.5% 0.03
52 - 54 0 20.0% 0.00 0 N/A 22.5% 0.00
55 - 56 0 60.0% 0.00 0 N/A 22.5% 0.00
57 - 59 0 65.0% 0.00 0 N/A 50.0% 0.00
60 & Over 1 100.0% 1.00 0 0.0%50.0% 0.50
11 - 19 50 - 51 21 2.5% 0.53 0 0.0%2.5% 0.53
52 - 54 12 10.0% 1.20 3 25.0%22.5% 2.70
55 - 56 6 47.5%-57.5% 3.15 1 16.7%22.5% 1.35
57 - 59 4 60.0% 2.40 2 50.0%50.0% 2.00
60 & Over 6 100.0% 6.00 1 16.7%50.0% 3.00
20 Under 45 10 20.0% 2.00 4 40.0%35.0% 3.50
45 - 49 10 20%-22.5% 2.18 7 70.0%65.0% 6.50
50 - 59 10 25%-80% 4.10 7 70.0%65.0% 6.50
60 & Over 1 100.0% 1.00 1 100.0%100.0% 1.00
21 - 22 Under 50 30 5%-10% 1.70 5 16.7%15.0% 4.50
50 - 54 3 12.5%-15% 0.40 2 66.7%65.0% 1.95
55 - 59 3 65.0% 1.95 2 66.7%65.0% 1.95
60 & Over 0 100.0% 0.00 0 N/A 100.0% 0.00
23 - 24 Under 46 12 5.0% 0.60 2 16.7%15.0% 1.80
46 - 54 15 5%-10% 1.55 9 60.0%50.0% 7.50
55 - 59 0 47.5%-65% 0.00 0 N/A 65.0% 0.00
60 & Over 0 100% 0.00 0 N/A 100.0% 0.00
25 All Ages 5 100% 5.00 5 100.0%100.0% 5.00
Total 150 23.2% 34.79 51 34.0% 33.5% 50.31
RETIREMENT EXPERIENCE (MEMBERS WITH AT LEAST 10 YOS AT 9/13/2012)
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CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
EXPERIENCE INVESTIGATION
APPENDIX III
COMPARISON OF ACTUAL AND EXPECTED SEPARATIONS FROM EMPLOYMENT
(Service-Based for Years 0 - 3, then Age-Based)
Rounded Yrs
of Service at
Beg of Yr
Rounded
Age at
Beg of Yr Exposure
Expected
Separations
Average
Expected
Rates
Actual
Separations
Actual
Rates
Proposed
Rates
Expected
Separations (w/
Proposed Rates)
0 - 2 All Ages 74 3.16 4.3% 8 10.8% 10.5%7.77
3 All Ages 35 1.43 4.1% 1 2.9% 3.0%1.05
4 or More Under 35 103 4.83 4.7% 2 1.9% 2.0%2.06
35 - 44 293 8.12 2.8% 3 1.0% 1.0%2.93
45 and Up 92 1.11 1.2% 0 0.0% 0.5%0.46
Total 597 18.65 3.1% 14 2.3% 2.4% 14.27
SEPARATION EXPERIENCE
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CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
EXPERIENCE INVESTIGATION
APPENDIX IV
COMPARISON OF ACTUAL AND EXPECTED DISABILITIES
Average Expected
Expected Expected Actual Actual Proposed Disabilities
Group Exposure Disabilities Avg Rates Disabilities Rates Rates (New Rates)
All Actives 750 4.95 0.660% 0 0.000%0.396% 2.97
DISABILITY EXPERIENCE
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CITY OF PALM BEACH GARDENS POLICE OFFICERS’ PENSION FUND
EXPERIENCE INVESTIGATION
APPENDIX V
Purpose of the Actuarial Valuation
In a defined benefit pension plan, an employer makes a promise to its employees of a lifetime
pension. The amount of the monthly pension is determined by a benefit formula which is often
based upon a multiplier percentage and the number of years of service and the average final
earnings of the employee.
The employer must design and follow a systematic plan for advance-funding this obligation.
That is accomplished by establishing a pension fund and performing annual actuarial valuations
to measure the liabilities associated with the obligation and to calculate how much the employer
must contribute to the pension fund in order to make good on its promise.
The calculations in the actuarial valuation are performed each year to re-measure the liabilities.
The stakeholders need to know how the plan is doing in its goal of systematically financing the
promised benefits. So it is important to make the actuarial calculations in accordance with the
professional actuarial standards of practice and the accounting standards.
Role of Actuarial Assumptions
The nature of the pension promise and its systematic funding require long term projections of the
employee workforce (using demographic assumptions) and long term projections of the salaries
and investment returns (using economic assumptions). The entire actuarial valuation process
depends on the selection and use of reasonable actuarial assumptions as to future demographics
and future economics. There are many different actuarial assumptions employed in an actuarial
valuation. The primary actuarial assumptions include:
1. Rates of Salary Increases
2. Rates of Retirement
3. Rates of Mortality
4. Rates of Termination of Employment
5. Rates of Disability
6. Rates of Investment Return
The actuary and plan management must be comfortable with the actuarial assumptions. The
assumptions must be reasonable. Without a level of confidence in the reasonableness of the
actuarial assumptions, the stakeholders and users of the valuation results cannot have confidence
in the results. However, there is no way to have confidence in the actuarial assumptions unless
an actuarial experience study is performed to assess the reasonableness of the current
assumptions or to change them to be more in line with past experience and with future
expectations.
For this reason the Board has requested that we undertake an actuarial experience study to
recommend changes to the actuarial assumptions used in the annual actuarial valuation.
Minutes 8-12-15.doc
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City of Palm Beach Gardens Police Officers’
Pension Fund
Minutes of the Meeting Held
August 12, 2015
The regular meeting of the Board of Trustees of the City of Palm Beach Gardens
Police Officers’ Pension Fund was called to order at 9:09 AM by Jay Spencer in the
Council Chambers at the Palm Beach Gardens City Hall at 10500 North Military Trail,
Palm Beach Gardens, Florida.
TRUSTEES PRESENT OTHERS PRESENT
Jay Spencer, Chairman Audrey Ross (Resource Centers)
Marc Glass, Trustee Bonni Jensen (KKJ&L)
Brad Seidensticker, Trustee John McCann (Thistle Asset Consulting)
Greg Mull, Trustee (arrived 9:47AM) Alan Owens (City of PBG Finance Director)
John Manuel, Trustee Steve Stack (Highland Capital)
PUBLIC COMMENTS
The Board welcomed new Trustee John Manuel to the Board. Mr. Manuel was
appointed by the City to serve a 4 year term on the Police Pension Board.
Mr. Owens explained that the City is in the process of completing their other post
employee benefits “OPEB” report and he needs the Pension Board’s permission to
use their Actuary, GRS, to provide the pension census data information that is
required. GRS has a contract with the pension Board and therefore would need the
Board’s permission to work directly with the City. The Trustees discussed and did
not see an issue with this as all the information being requested is all public records
as well.
MOTION: Mr. Seidensticker made a motion to approve and authorize the
City to work directly with the pension Board’s Actuary, GRS, on
the required information needed for their OPEB report.
SECOND: Mr. Mull seconded the motion.
CARRIED: The motion carried unanimously 5-0.
The Trustees thanked Mr. Owens on behalf of the City for the additional contributions
that the City recently made that are above and beyond their normal required
amount. The City worked hard on getting these additional funds and they would like
to see this Pension Plan’s unfunded liability start being paid down rather sooner than
later. Mr. Owens stated that this is something that he finally got the City Council to
approve earlier this year and hopes to do this every year if the funding permits.
Lastly Mr. Owen’s stated that he is still in talks with the City Manager about the City
paying their annual required contributions in full at the beginning of the year so that
they get a break on the interest.
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SELECTION OF SECRETARY
Mr. Glass nominated Mr. Seidensticker as secretary. Mr. Seidensticker accepted the
nomination.
MOTION: Mr. Glass made a motion to approve and authorize Brad
Seidensticker as Secretary of the Board.
SECOND: Mr. Manuel seconded the motion.
CARRIED: The motion carried unanimously 5-0.
INVESTMENT MANAGER REPORT
Highland Capital Management – Presented by Steve Stack
Mr. Stack updated the Board on the ICC/Highland Capital transition for the new
parties present at today’s meeting. He commented that the transition has been
completed for a couple of months now and everything has been running smoothly.
Mr. Stack reviewed the report for the quarter ending June 30, 2015 and noted that
on the growth side the total fund net of fees was up 1.60%. For the fiscal year to
date they are also up at 12.99%. On the fixed income side things are not going as
well, the fund is down -1.56% for the quarter and barley up at 0.86% for the fiscal
year to date. Mr. Stack discussed the bond market and noted that it is still very
volatile out there and therefore that has lead them to be more conservative in
regards to the portfolio duration and it remains low. He reviewed the asset
allocation on the equity side and commented that they are positioned well and
benefiting from it too.
INVESTMENT CONSULTANT REPORT
Thistle Asset Consulting – Presented by John McCann
Mr. McCann reviewed the market environment during the quarter as well as the
Plan’s compliance checklist and noted all is well. He also reviewed the asset
allocation and commented that he would like to add more into the Real Estate fund
with American Realty. The Plan’s investment policy guidelines already allow for an
increase so this would not require a policy change. The Trustees discussed how
much more they would want to allocate to American Realty. Mr. McCann explained
that currently American Realty has no incoming queue and therefore he would
recommend allocating 2.5% or $1.9M from the equities fund (Rhumbline’s large cap
core S&P 500 account). The Trustees had a lengthy discussion on the rebalancing
recommendation and noted that Real Estate has been doing very well.
MOTION: Mr. Glass made a motion to approve and authorize the transfer
of $1M from the S&P 500 account at Rhumbline to the
American Realty fund per the recommendation of the Plan’s
Investment Consultant.
SECOND: Mr. Seidensticker seconded the motion.
CARRIED: The motion carried unanimously 5-0.
For the quarter ending June 30, 2015 the total fund net of fees was ahead of the
index at 0.05% versus -0.39% and for the fiscal year to date they are also ahead at
6.83% versus the index at 5.52%. Mr. McCann reviewed the asset allocation and
noted that the total equities outperformed the index and were positive. The total
fixed income outperformed the index but was still negative. He briefly reviewed
each manager’s performance during the quarter and noted that all the managers
Minutes 8-12-15.doc
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outperformed their respective indexes with the exception of the international equities
fund. Mr. McCann noted that overall the fund is doing very well despite the market
place and stated that he will invite American Realty and Rhumbline to the next
meeting for an update since it is the end of the fiscal year anyways.
ATTORNEY REPORT
KKJ&L - Presented by Bonni Jensen
Ms. Jensen briefly reviewed her memos regarding the new State requirements that
passed back in 2013 but are now just being implemented. These new requirements
include the Chapter 112.664 compliance report that the Plan’s Actuary has already
completed and filed with the Division of Retirement by the deadline. Mr. McCann had
to also create a document that was included in this report. Senate Bill 172 passed
this year which now requires that the Plan create an administrative budget and file it
by September 30, 2015. Ms. Ross has prepared this budget and will present it under
her report. In addition this Bill also requires that effective October 1, 2016 all defined
benefit Plans like this one must use the same mortality table that the FRS uses. Ms.
Jensen stated that this is a conversation that this Board needs to have with heir
Actuary in the near future to discuss the impact of this change. Lastly this bill also
requires that all defined benefit plans create share accounts and discussed how these
Share accounts would be funded. Ms. Jensen explained that the City and the Union
would need to mutually agree on how to split the excess State money, or the
Division of Retirement has implemented a default plan where 50% of the excess
State money would be split among the Share account and the other 50% would go
towards the Plan’s unfunded liability. The Division of Retirement is pushing for
mutual consent between the City and the Union. She commented that either way
individual share account need to be set up to be incompliance with the new State
Statute, but they do not need to funded right away. This new requirement is
effective with the next collective bargaining agreement.
Ms. Jensen presented the Board with an updated DROP distribution application. The
application is in a much easier format in regards to the different distribution methods
allowable under the Plan.
ADMINISTRATOR REPORT
Resource Centers – Presented by Audrey Ross
Ms. Ross presented the Board with the draft of the administrate budget for the fiscal
year 2015/2016. She explained how this budget was created and what figures
where used. This is an estimated budget of future expenses and if the budget is
exceeded then it needs to be revised and refiled.
MOTION: Mr. Glass made a motion to approve the 2015/2016
administrative budget as presented and to file it with the
appropriate parties as well as posting on the pension Plan’s
website.
SECOND: Mr. Mull seconded the motion.
CARRIED: The motion carried unanimously 5-0.
Ms. Ross presented the Board with the 2015/2016 Auto Insurance Renewal Quote.
The premium remains right around the same as last year at $918.
MOTION: Mr. Seidensticker made a motion to approve the 2015/2016
auto insurance renewal fee as presented.
SECOND: Mr. Mull seconded the motion.
Minutes 8-12-15.doc
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CARRIED: The motion carried unanimously 5-0.
MINUTES
MOTION: Mr. Glass made a motion to approve the minutes from the April
30, 2015 regular meeting as amended.
SECOND: Mr. Manuel seconded the motion.
CARRIED: The motion carried unanimously 5-0.
DISBURSEMENTS APPROVALS
MOTION: Mr. Seidensticker made a motion to approve the
disbursements.
SECOND: Mr. Glass seconded the motion.
CARRIED: The motion carried unanimously 5-0.
The Trustees asked on the status of the Salem Trust reimbursement to the Plan. The
Plan incurred additional auditing fees that year due to Salem Trust’s SAE 16 Audit
Report outcome and Salem agreed to pay those additional fees. Ms. Ross stated that
they are discounting the Plan’s fees $450 for four quarters until the total fee is paid
off.
BENEFIT APPROVALS
MOTION: Mr. Mull made a motion to approve the application to exit the
DROP for Joseph Corrao, the application for distribution from
DROP account (5/15/2015) for Sheree Brown, and the
applications for distribution from DROP accounts (6/15/2015)
for Gwen Fleming & Jack Segreto.
SECOND: Mr. Glass seconded the motion.
CARRIED: The motion carried unanimously 5-0.
MOTION: Mr. Glass made a motion to approve the application for
distribution from DROP account (6/15/2015) for Jay Spencer.
SECOND: Mr. Mull seconded the motion.
CARRIED: The motion carried unanimously 4-0.
Ms. Spencer abstained from the vote has filed a Form 8B
FINANCIAL STATEMENTS
The board reviewed and discussed the financial statements that were provided
through June 2015.
The board received and filed the financial statements through June 2015.
OTHER BUSINESS
Mr. Mull & Mr. Glass shared some information they had recently learned at the FPPTA
Trustee School. The Trustees also discussed some upcoming schools and
conferences that they should be attending.
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AJOURN
There being no further business, the Trustees officially adjourned the meeting at
11:07AM. The next meeting is scheduled for Friday October 23, 2015 at 9AM.
Respectfully submitted,
_____________________________
Brad Seidensticker, Secretary