HomeMy WebLinkAboutAgenda Fire Pension 030716THE 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 FIREFIGHTERS’
PENSION FUND
Meeting of Monday, March 7, 2016
Location: City Hall, Council Chambers
Palm Beach Gardens City Hall
10500 North Military Trail
Palm Beach Gardens, FL 33410
Time: 1 PM
AGENDA
1. Call Meeting to Order
2. Public Comments
3. Minutes:
• Regular Meeting Held on February 3, 2016
4. Presentation of the September 30, 2015 Audited Financial Statements: KSDT (Eric
Leventhal)
5. Investment Monitor Report: The Bogdahn Group (Dan Johnson)
6. Attorney Report: Sugarman & Susskind, P.A. (Pedro Herrera)
• DROP Distribution Policy
7. Administrative Report: Resource Centers (Audrey Ross)
• Disbursements
• Benefit Approvals
• Service Provider Contract Review (Actuary & Administrator)
• Schedule Special Meeting for Presentation of the 9/30/2015 Actuarial Valuation
Report
8. Old Business
9. Other Business
• GASB Statement No. 67 & No. 68 (prepared by Foster & Foster)
10. Next Meeting Previously Scheduled for Wednesday, May 4, 2016 at 1PM
11. Adjourn
PLEASE NOTE:
Should any interested party seek to appeal any decision made by the Board with respect to any matter considered at such meeting or hearing, he will need a
record of the proceedings, and for such purpose he may need to insure 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 Resource Centers, LLC no later than four days prior to the meeting.
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13420 Parker Commons Blvd., Suite 104 Fort Myers, FL 33912 · (239) 433-5500 · Fax (239) 481-0634 · www.foster-foster.com
February 26, 2016
Board of Trustees
City of Palm Beach Gardens
Firefighters’ Pension Fund
Resource Centers, LLC
4360 Northlake Blvd., Suite 206
Palm Beach Gardens, FL 33410
RE: GASB Statement No. 67 and No. 68– City of Palm Beach Gardens Firefighters’ Pension Fund
Dear Board:
We are pleased to present to the Board a GASB Statement No. 67 and No. 68 measured as of September 30,
2015 for the City of Palm Beach Gardens Firefighters’ Pension Fund.
The calculation of the liability associated with the benefits referenced in this report was performed for the
purpose of satisfying the requirements of GASB No.67 and No.68 and is not applicable for purposes, such as
determining the plans’ funding requirements. A calculation of the plan’s liability for other purposes may
produce significantly different results.
The total pension liability, net pension liability, and certain sensitivity information shown in this report are
based on an actuarial valuation performed as of October 1, 2014. The total pension liability was rolled-forward
from the valuation date to the plan’s fiscal year ending September 30th, 2015 using generally accepted actuarial
principles. It is our opinion that the assumptions used for this purposes are internally consistent, reasonable,
and comply with the requirements under GASB No.67 and No.68.
Certain schedules should include a 10-year history of information. As provided for in GASB No. 67 and No.68,
this historical information is only presented for the years in which the information was measured in conformity
with the requirements of GASB No. 67. The historical information in this report will begin with the information
presented for the fiscal year ending September 30th, 2013.
To the best of our knowledge, these statements are complete and accurate and are in accordance with generally
recognized actuarial practices and methods.
If there are any questions, concerns, or comments about any of the items contained in this report, please contact
me at 239-433-5500.
Respectfully submitted,
Foster & Foster, Inc.
By:
Douglas H. Lozen, EA, MAAA
Enrolled Actuary #14-7778
DHL/lke
Enclosures
GASB 67
STATEMENT OF FIDUCIARY NET POSITION
SEPTEMBER 30, 2015
ASSETS
Cash and Cash Equivalents:
Prepaid Expenses
Money Market
Total Cash and Equivalents
Receivables:
City Contributions in Transit
State Contributions
From Broker for Investments Sold
Investment Income
Total Receivable
Investments:
U. S. Bonds and Bills
Federal Agency Guaranteed Securities
Corporate Bonds
Stocks
Mutual Funds:
Fixed Income
Equity
Pooled/Common/Commingled Funds:
Real Estate
Total Investments
Self-Directed DROP Accounts
Total Assets
LIABILITIES
Payables:
Investment Expenses
Administrative Expenses
To Broker for Investments Purchased
Total Liabilities
NET POSITION RESTRICTED FOR PENSIONS¹
¹The Assets values and Liabilities included accumulated DROP Balances
MARKET VALUE
200
1,596,574
1,596,774
776,824
726,993
486,310
193,487
2,183,614
5,859,228
4,361,311
4,565,992
23,446,959
3,397,142
19,847,339
8,040,236
69,518,207
488,826
73,787,421
78,261
8,728
741,251
828,240
72,959,181
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 2
GASB 67
ADDITIONS
Contributions:
Member 445,465
City 3,746,995
State 726,993
Total Contributions 4,919,453
Investment Income:
Net Increase in Fair Value of Investments (1,101,846)
Interest & Dividends 2,297,605
Less Investment Expense¹(360,547)
Net Investment Income 835,212
Total Additions 5,754,665
DEDUCTIONS
Distributions to Members:
Benefit Payments 1,262,154
Lump Sum DROP Distributions 91,191
Lump Sum Share Distributions 582,083
Self- Directed DROP Benefits 0
Refunds of Member Contributions 0
Total Distributions 1,935,428
Administrative Expense 84,807
Total Deductions 2,020,235
Net Increase in Net Position 3,734,430
NET POSITION RESTRICTED FOR PENSIONS
Beginning of the Year 69,224,751
End of the Year 72,959,181
¹Investment related expenses include investment advisory, custodial and performance monitoring fees.
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Market Value Basis
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 3
GASB 67
Plan Description
Plan Administration
Plan Membership as of October 1, 2014:
Inactive Plan Members or Beneficiaries Currently Receiving Benefits 32
Inactive Plan Members Entitled to But Not Yet Receiving Benefits 3
Active Plan Members 101
136
Benefits Provided
- 2.0% of salary
Investment Earnings: Net rate of investment return realized by the Plan for the preceding Plan Year.
Vesting Schedule: Active Members who terminate employment with less than 5 years of Credited Service forfeit their
Share.
NOTES TO THE FINANCIAL STATEMENTS
The Plan provides retirement, termination, disability and death benefits.
Normal Retirement:
Date: Earlier of: 1) Age 52 with 10 years of Credited Service, or 2) attainment of 25 years of Credited Service, regardless
of Age.
Benefit: 3.0% of Average Final Compensation times Credited Service, not to exceed 75% of Average Final Compensation.
Early Retirement:
Eligibility: Age 50 with 10 years of Credited Service.
Benefit: Accrued benefit, reduced 3.0% per year that the benefit commencement date precedes age 52.
The City of Palm Beach Gardens Firefighters' Pension Fund is a single-employer defined benefit pension plan
administered by a Board of Trustees which acts as the administrator of the Fund. The Board consists of 5 trustees, 2 of
whom are appointed by the City, 2 of whom are full-time Firefighters who are elected by a majority of the Members of the
Fund and a fifth Trustee who is chosen by a majority of the first 4 Trustees.
(For the Year Ended September 30, 2015)
Vesting:
Schedule: 25% after 5 years of Credited Service, then 15% for each additional year until 100% after 10 years of Credited
Service.
Benefit: Member will receive the vested portion of his (her) accrued benefit payable at age 50 (reduced) or age 52.
Allocation: Ordinance 27, 1998 established a Share Plan for all Active Members. Premium tax monies received in excess
of the base amounts, less 6.8% of salary, is allocated annually to each individual Share Account based on Credited
Service, determined as of September 30:
- The lesser of 4.8% of salary or $507,634.00
Eligibility Service Incurred: Covered from Date of Employment.
Eligibility Non-Service Incurred: 10 years of Credited Service.
Benefit: Service Incurred 60% of Average Final Compensation, but not less than 2.0% of Average Final Compensation
times Credited Service.
Non-Service Incurred 2.5% of Average Final Compensation times Credited Service.
Death Benefits:
10 or more years of Credited Service: Monthly accrued benefit payable to designated beneficiary for 10 years at otherwise
Early (reduced) or Normal (unreduced) Retirement Date.
Less than 10 years of Credited Service: Refund of Member contributions.
Cost of Living Adjustment:
Eligibility: Normal and Early Retirees and Beneficiaries (including Vested Terminated Retirees). COLA is not payable to
Disability Retirees.
Amount: 1.0% increase for Members who are Age 53, 2.0% increase for Members who are Age 54, and 1.5% increase for
Members who are Age 55 and greater.
Chapter 175/185 Share Accounts:
Disability:
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 4
GASB 67
Contributions
Member Contributions; 6.0% of Salary.
Investments
Investment Policy:
The following was the Board's adopted asset allocation policy as of September 30, 2015:
Asset Class Target Allocation
Domestic Equity Securities 55%
Foreign Equity Securities 10%
Broad Market Fixed Income 10%
Intermediate Fixed Income 10%
Global Fixed Income 5%
Direct Real Estate 10%
Total 100%
Concentrations:
Rate of Return:
Deferred Retirement Option Program
The DROP balance as September 30, 2015 is $2,304,478.
Rate of Return: At the Member’s option, a fixed rate, actual rate of investment return for the Plan, or returns generated by
self-directed accounts.
Participation: Maximum participation period of 60 months.
The Plan did not hold investments in any one organization that represent 5 percent or more of the Pension Plan's Fiduciary
Net Position.
The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the
changing amounts actually invested.
Eligibility: Satisfaction of Normal Retirement requirements.
For the year ended September 30, 2015, the annual money-weighted rate of return on Pension Plan investments, net of
Pension Plan investment expense, was 1.2 percent.
City and State Contributions: Remaining amount required in order to pay current costs and amortize unfunded past service
cost, if any, as provided in Chapter 112, Florida Statutes.
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 5
GASB 67
The components of the Net Pension Liability of the Sponsor on September 30, 2015 were as follows:
Total Pension Liability 93,043,038$
Plan Fiduciary Net Position (72,959,181)$
Sponsor's Net Pension Liability 20,083,857$
Plan Fiduciary Net Position as a percentage of Total Pension Liability 78.41%
Actuarial Assumptions:
Inflation 3.00%
Salary Increases*0% - 3.7%* Expected increase in salary in addition to 3.00% inflation assumption
Discount Rate 7.65%
Investment Rate of Return 7.65%
Asset Class
Domestic Equity Securities 7.50%
Foreign Equity Securities 8.50%
Broad Market Fixed Income 2.50%
Intermediate Fixed Income 2.50%
Global Fixed Income 3.50%
Direct Real Estate 4.50%
Discount Rate:
The Discount Rate used to measure the Total Pension Liability was 7.65 percent.
1% Decrease
Current
Discount Rate 1% Increase
6.65%7.65%8.65%
Sponsor's Net Pension Liability 31,277,059$ 20,083,857$ 10,861,778$
The projection of cash flows used to determine the Discount Rate assumed that Plan Member contributions will be made at the
current contribution rate and that Sponsor contributions will be made at rates equal to the difference between actuarially determined
contribution rates and the Member rate. Based on those assumptions, the Pension Plan's Fiduciary Net Position was projected to be
available to make all projected future benefit payments of current plan members. Therefore, the Long-Term Expected Rate of Return
on Pension Plan investments was applied to all periods of projected benefit payments to determine the Total Pension Liability.
The Total Pension Liability was determined by an actuarial valuation as of October 1, 2014 updated to September 30, 2015 using the
following actuarial assumptions.
Mortality Rates: RP-2000 Table, sex distinct, without projection and the RP-2000 Disabled Table for Disabled lives. We feel this
assumption sufficiently accommodates future mortality improvements.
NET PENSION LIABILITY OF THE SPONSOR
The Long-Term Expected Rate of Return on Pension Plan investments was determined using a building-block method in which best-
estimate ranges of expected future real rates of return (expected returns, net of Pension Plan investment expenses and inflation) are
developed for each major asset class.
These ranges are combined to produce the Long-Term Expected Rate of Return by weighting the expected future real rates of return
by the target asset allocation percentage and by adding expected inflation.
Best estimates of arithmetic real rates of return for each major asset class included in the Pension Plan's target asset allocation as of
September 30, 2015 are summarized in the following table:
Long Term
Expected Real
Rate of Return
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 6
GASB 67
09/30/2015 09/30/2014 09/30/2013
Total Pension Liability
Service Cost 1,760,152 1,741,473 1,540,354
Interest 6,786,918 6,280,207 5,827,406
Share Plan Allocation 222,133 304,698 -
Changes of benefit terms - - -
Differences between Expected and Actual Experience (1,460,746) - -
Changes of assumptions 2,004,899 1,772,793 -
Benefit Payments, including Refunds of Employee Contributions (1,935,428) (1,844,859) (1,613,497)
Net Change in Total Pension Liability 7,377,928 8,254,312 5,754,263
Total Pension Liability - Beginning 85,665,110 77,410,798 71,656,535
Total Pension Liability - Ending (a)93,043,038$ 85,665,110$ 77,410,798$
Plan Fiduciary Net Position
Contributions - Employer 3,746,995 2,866,126 3,347,645
Contributions - State 726,993 843,533 750,073
Contributions - Employee 445,465 475,442 497,684
Net Investment Income 835,212 6,977,925 6,392,179
Benefit Payments, including Refunds of Employee Contributions (1,935,428) (1,844,859) (1,613,497)
Administrative Expense (84,807) (88,142) (99,667)
Net Change in Plan Fiduciary Net Position 3,734,430 9,230,025 9,274,417
Plan Fiduciary Net Position - Beginning 69,224,751 59,994,726 50,720,309
Plan Fiduciary Net Position - Ending (b) $ 72,959,181 $ 69,224,751 $ 59,994,726
Net Pension Liability - Ending (a) - (b)20,083,857$ 16,440,359$ 17,416,072$
Plan Fiduciary Net Position as a percentage of the Total Pension Liability 78.41%80.81%77.50%
Covered Employee Payroll*9,695,082$ 7,924,041$ 8,294,732$
Net Pension Liability as a percentage of Covered Employee Payroll 207.16%207.47%209.97%
Note to Schedule:
Changes of assumptions:
For the 2014 Fiscal year, amounts reported as changes of assumptions were resulted from:
*For the Fiscal years 2013 and 2014, the reported Covered Employee Payroll figures were based on Pensionable Salary.
SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS
Last 10 Fiscal Years
• The payroll growth assumption, utilized for amortization of the Unfunded Actuarial Accrued Liability (UAAL) has been
decreased from 2.9% to 0.7% (the actual ten-year payroll growth as of 10/1/2014). This decrease was made for the purpose of
compliance with Part VII of Chapter 112, Florida Statutes.
• The investment return assumption has been decreased from 8.05% to 7.85%. Further reductions will be implemented with
future valuations according to the following schedule:
Valuation Date Investment Return Assumption
10/1/2015 7.65%
10/1/2016 7.45%
10/1/2017 7.25%
For the 2015 Fiscal year, amounts reported as changes of assumptions were resulted from lowering the investment return
assumption from 7.85% to 7.65%. Furthermore the inflation assumption has been lowered from 4.50% to 3.00%.
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 7
GASB 67
09/30/2015 09/30/2014 09/30/2013
Actuarially Determined Contribution 3,460,519 3,404,960 3,443,143
Contributions in relation to the Actuarially
Determined Contributions 4,251,855 3,404,960 3,911,687
Contribution Deficiency (Excess)(791,336)$ -$ (468,544)$
Covered Employee Payroll*9,695,082$ 7,924,041$ 8,294,732$
Contributions as a percentage of Covered
Employee Payroll 43.86%42.97%47.16%
*For the Fiscal years 2013 and 2014, the reported Covered Employee Payroll figures were based on Pensionable Salary.
Notes to Schedule
Valuation Date:10/01/2013
Methods and assumptions used to determine contribution rates:
Funding Method:Projected Unit Credit Cost Method.
Amortization Method:
Remaining Amortization Period:
Inflation:
Mortality Rates:
Interest Rate:
Retirement Rates:
Age
Probability of
Retirement
50 5%
51 5%
52 50%
53 10%
54 10%
55 100%
Actuarial Value of Assets:
Cost of Living Adjustments:
Salary Increases*:Age Increase
20 3.7%
30 1.1%
40 0.7%
50 0.2%
60 0.0%
Payroll Growth Assumption:
21 Years (as of 10/01/2013).
4.5% per year.
*Expected increase in salary in addition to 4.5% inflation assumption.
2.9% (previously 4.5%) for amortization of the Unfunded Actuarial Accrued Liability.
SCHEDULE OF CONTRIBUTIONS
Last 10 Fiscal Years
Actuarially determined contribution rates are calculated as of October 1, two years prior to the end of the fiscal year in which
contributions are reported.
8.05% per year compounded annually, net of investment related expenses.
For those Members who attain 25 years of Credited Service, regardless of Age, the
probability of retirement is 100%.
The Actuarial Value of Assets is calculated by recognizing 25% of the difference
between the Market Value of Assets and the expected Market Value of Assets.
1.0% increase for Members who are Age 53, 2.0% increase for Members who are Age
54, and 1.5% increase for Members who are Age 55 and greater.
Level Percentage of Pay, Closed.
RP-2000 Table, sex distinct, without projection.
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 8
GASB 67
Final Pay Load:
Termination Rates:
Age
Years of
Service
All Ages 0
1
2
3
4
25 5 & Over
30
35
40
45
50
55
Disability Rates:
Age
20
25
30
35
40
45
50 0.4290%
15.0%
10.0%
9.0%
8.0%
0.0580%
0.0895%
0.1210%
0.2750%
1.7%
1.0%
% Become Disabled within Next
Year
0.0545%
7.0%
5.9%
4.4%
3.0%
2.1%
It is assumed that 75% of disablements and active Member deaths are service related.
For Members hired prior to October 1, 2011, active liabilities are increased by 3% to
account for assumed payments of unused sick and annual leave time. Members
protected from benefit changes set forth in Ordinance 23, 2012 are valued with a 4.5%
final salary load. Members hired on and after October1, 2011 are valued with no final
pay load.
0.0545%
% Separating form Employment
Within the Next Year
7.0%
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 9
GASB 67
09/30/2015 09/30/2014 09/30/2013
Annual Money-Weighted Rate of Return
Net of Investment Expense 1.20%11.56%12.25%
SCHEDULE OF INVESTMENT RETURNS
Last 10 Fiscal Years
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 10
GASB 68
General Information about the Pension Plan
Plan Description
Plan Membership as of October 1, 2014:
Inactive Plan Members or Beneficiaries Currently Receiving Benefits 32
Inactive Plan Members Entitled to But Not Yet Receiving Benefits 3
Active Plan Members 101
136
Benefits Provided
Normal Retirement:
Early Retirement:
Vesting:
Disability:
Cost of Living Adjustment:
Eligibility: Normal and Early Retirees and Beneficiaries (including Vested Terminated Retirees). COLA is not payable to Disability
Retirees.
Amount: 1.0% increase for Members who are Age 53, 2.0% increase for Members who are Age 54, and 1.5% increase for Members
who are Age 55 and greater.
Benefit: Service Incurred 60% of Average Final Compensation, but not less than 2.0% of Average Final Compensation times Credited
Service.
Non-Service Incurred 2.5% of Average Final Compensation times Credited Service.
10 or more years of Credited Service: Monthly accrued benefit payable to designated beneficiary for 10 years at otherwise Early
(reduced) or Normal (unreduced) Retirement Date.
Death Benefits:
Less than 10 years of Credited Service: Refund of Member contributions.
NOTES TO THE FINANCIAL STATEMENTS
(For the Year Ended September 30, 2016)
The Plan provides retirement, termination, disability and death benefits.
Date: Earlier of: 1) Age 52 with 10 years of Credited Service, or 2) attainment of 25 years of Credited Service, regardless of Age.
Benefit: 3.0% of Average Final Compensation times Credited Service, not to exceed 75% of Average Final Compensation.
The City of Palm Beach Gardens Firefighters' Pension Fund is a single-employer defined benefit pension plan administered by a
Board of Trustees which acts as the administrator of the Fund. The Board consists of 5 trustees, 2 of whom are appointed by the City,
2 of whom are full-time Firefighters who are elected by a majority of the Members of the Fund and a fifth Trustee who is chosen by a
majority of the first 4 Trustees.
Each person employed by the City Fire Department as a full-time Firefighter becomes a Member of the Fund as a condition of his
employment. All Firefighters are therefore eligible for Fund benefits as provided for in the Fund document and by applicable law.
Benefit: Accrued benefit, reduced 3.0% per year that the benefit commencement date precedes age 52.
Eligibility: Age 50 with 10 years of Credited Service.
Eligibility Service Incurred: Covered from Date of Employment.
Eligibility Non-Service Incurred: 10 years of Credited Service.
Schedule: 25% after 5 years of Credited Service, then 15% for each additional year until 100% after 10 years of Credited Service.
Benefit: Member will receive the vested portion of his (her) accrued benefit payable at age 50 (reduced) or age 52.
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 11
GASB 68
Contributions
Member Contributions; 6.0% of Salary.
Vesting Schedule: Active Members who terminate employment with less than 5 years of Credited Service forfeit their Share.
Allocation: Ordinance 27, 1998 established a Share Plan for all Active Members. Premium tax monies received in excess of the base
amounts, less 6.8% of salary, is allocated annually to each individual Share Account based on Credited Service, determined as of
September 30:
Chapter 175/185 Share Accounts:
Investment Earnings: Net rate of investment return realized by the Plan for the preceding Plan Year.
- 2.0% of salary
- The lesser of 4.8% of salary or $507,634.00
City and State Contributions: Remaining amount required in order to pay current costs and amortize unfunded past service cost, if
any, as provided in Chapter 112, Florida Statutes.
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 12
GASB 68
Net Pension Liability
The measurement date is September 30, 2015.
The measurement period for the pension expense was October 1, 2014 to September 30, 2015.
The reporting period is October 1, 2015 through September 30, 2016.
The Sponsor's Net Pension Liability was measured as of September 30, 2015.
The Total Pension Liability used to calculate the Net Pension Liability was determined as of that date.
Actuarial Assumptions:
Inflation 3.00%
Salary Increases*0% - 3.7%* Expected increase in salary in addition to 3.00% inflation assumption
Discount Rate 7.65%
Investment Rate of Return 7.65%
Asset Class Target Allocation
Long Term Expected
Real Rate of Return
Domestic Equity Securities 55%7.50%
Foreign Equity Securities 10%8.50%
Broad Market Fixed Income 10%2.50%
Intermediate Fixed Income 10%2.50%
Global Fixed Income 5%3.50%
Direct Real Estate 10%4.50%
Total 100%
Discount Rate:
The Discount Rate used to measure the Total Pension Liability was 7.65 percent.
The projection of cash flows used to determine the Discount Rate assumed that Plan Member contributions will be made at the
current contribution rate and that Sponsor contributions will be made at rates equal to the difference between actuarially
determined contribution rates and the Member rate. Based on those assumptions, the Pension Plan's Fiduciary Net Position was
projected to be available to make all projected future benefit payments of current plan members. Therefore, the Long-Term
Expected Rate of Return on Pension Plan investments was applied to all periods of projected benefit payments to determine the
Total Pension Liability.
The Long-Term Expected Rate of Return on Pension Plan investments was determined using a building-block method in which
best-estimate ranges of expected future real rates of return (expected returns, Net of Pension Plan investment expenses and
inflation) are developed for each major asset class.
These ranges are combined to produce the Long-Term Expected Rate of Return by weighting the expected future real rates of
return by the target asset allocation percentage and by adding expected inflation.
Best estimates of arithmetic real rates of return for each major asset class included in the Pension Plan's target asset allocation as
of September 30, 2015 are summarized in the following table:
Mortality Rates: RP-2000 Table, sex distinct, without projection and the RP-2000 Disabled Table for Disabled lives. We feel this
assumption sufficiently accommodates future mortality improvements.
The Total Pension Liability was determined by an actuarial valuation as of October 1, 2014 updated to September 30, 2015 using the
following actuarial assumptions.
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Total Pension
Liability
Plan Fiduciary
Net Position
Net Pension
Liability
(a)(b)(a)-(b)
Reporting Period Ending September 30, 2015 $ 85,665,110 $ 69,224,751 $ 16,440,359
Changes for a Year:
Service Cost 1,760,152 - 1,760,152
Interest 6,786,918 - 6,786,918
Share Plan Allocation 222,133 - 222,133
Differences between Expected and Actual Experience (1,460,746) - (1,460,746)
Changes of assumptions 2,004,899 - 2,004,899
Changes of benefit terms - - -
Contributions - Employer - 3,746,995 (3,746,995)
Contributions - State - 726,993 (726,993)
Contributions - Employee - 445,465 (445,465)
Net Investment Income - 835,212 (835,212)
Benefit Payments, including Refunds of Employee Contributions (1,935,428) (1,935,428) -
Administrative Expense - (84,807) 84,807
Net Changes 7,377,928 3,734,430 3,643,498
Reporting Period Ending September 30, 2016 $ 93,043,038 $ 72,959,181 $ 20,083,857
Sensitivity of the Net Pension Liability to changes in the Discount Rate.
1% Decrease
Current Discount
Rate 1% Increase
6.65%7.65%8.65%
Sponsor's Net Pension Liability 31,277,059$ 20,083,857$ 10,861,778$
Pension Plan Fiduciary Net Position.
Detailed information about the pension Plan's Fiduciary Net Position is available in a separately issued Plan financial report.
Increase (Decrease)
CHANGES IN NET PENSION LIABILITY
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For the year ended September 30, 2016, the Sponsor will recognize a Pension Expense of $3,763,510.
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
Differences between Expected and Actual Experience - 1,217,289
Changes of assumptions 2,832,235 -
Net difference between Projected and Actual Earnings on Pension Plan investments 2,462,213 -
Employer and State contributions subsequent to the measurement date - -
Total 5,294,448$ 1,217,289$
OUTFLOW
Year ended September 30:
2017 (243,457)$ 506,556$ 902,903$
2018 (243,458)$ 506,556$ 902,902$
2019 (243,458)$ 506,556$ 902,902$
2020 (243,458)$ 942,545$ 1,277,760$
2021 (243,458)$ -$ 90,692$
Thereafter -$ -$ -$
PENSION EXPENSE AND DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED
INFLOWS OF RESOURCES RELATED TO PENSIONS
On September 30, 2016, the Sponsor reported Deferred Outflows of Resources and Deferred Inflows of Resources related to
pensions from the following sources:
Other amounts reported as Deferred Outflows of Resources and Deferred Inflows of Resources related to pensions will be
recognized in Pension Expense as follows:
The outcome of the Deferred Outflows of resources related to pensions resulting from Employer and State contributions subsequent
to the measurement date will be recognized as a reduction of the Net Pension Liability in the year ended September 30, 2016.
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 15
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Reporting Period Ending 09/30/2016 09/30/2015 09/30/2014
Measurement Date 09/30/2015 09/30/2014 09/30/2013
Total Pension Liability
Service Cost 1,760,152 1,741,473 1,540,354
Interest 6,786,918 6,280,207 5,827,406
Share Plan Allocation 222,133 304,698 -
Changes of benefit terms - - -
Differences between Expected and Actual Experience (1,460,746) - -
Changes of assumptions 2,004,899 1,772,793 -
Benefit Payments, including Refunds of Employee Contributions (1,935,428) (1,844,859) (1,613,497)
Net Change in Total Pension Liability 7,377,928 8,254,312 5,754,263
Total Pension Liability - Beginning 85,665,110 77,410,798 71,656,535
Total Pension Liability - Ending (a) $ 93,043,038 $ 85,665,110 $ 77,410,798
Plan Fiduciary Net Position
Contributions - Employer 3,746,995 2,866,126 3,347,645
Contributions - State 726,993 843,533 750,073
Contributions - Employee 445,465 475,442 497,684
Net Investment Income 835,212 6,977,925 6,392,179
Benefit Payments, including Refunds of Employee Contributions (1,935,428) (1,844,859) (1,613,497)
Administrative Expense (84,807) (88,142) (99,667)
Net Change in Plan Fiduciary Net Position 3,734,430 9,230,025 9,274,417
Plan Fiduciary Net Position - Beginning 69,224,751 59,994,726 50,720,309
Plan Fiduciary Net Position - Ending (b) $ 72,959,181 $ 69,224,751 $ 59,994,726
Net Pension Liability - Ending (a) - (b)20,083,857$ 16,440,359$ 17,416,072$
Plan Fiduciary Net Position as a percentage of the Total Pension Liability 78.41%80.81%77.50%
Covered Employee Payroll*9,695,082$ 7,924,041$ 8,294,732$
Net Pension Liability as a percentage of Covered Employee Payroll 207.16%207.47%209.97%
Note to Schedule:
Changes of assumptions:
For the 2015 Reporting Period Ending year, amounts reported as changes of assumptions were resulted from:
SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS
Last 10 Fiscal Years
• The payroll growth assumption, utilized for amortization of the Unfunded Actuarial Accrued Liability (UAAL) has been
decreased from 2.9% to 0.7% (the actual ten-year payroll growth as of 10/1/2014). This decrease was made for the purpose of
compliance with Part VII of Chapter 112, Florida Statutes.
• The investment return assumption has been decreased from 8.05% to 7.85%. Further reductions will be implemented with
future valuations according to the following schedule:
Valuation Date Investment Return Assumption
10/1/2015 7.65%
10/1/2016 7.45%
10/1/2017 7.25%
For the 2016 Reporting Period Ending year, amounts reported as changes of assumptions were resulted from lowering the
investment return assumption from 7.85% to 7.65%. Furthermore the inflation assumption has been lowered from 4.50% to
3.00%.
*For the 2014 and 2015 Reporting Period Ending years, the reported Covered Employee Payroll figures were based on Pensionable
Salary.
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Reporting Period Ending 09/30/2016 09/30/2015 09/30/2014
Measurement Date 09/30/2015 09/30/2014 09/30/2013 01/00/1900 01/00/1900
Actuarially Determined Contribution 3,460,519 3,404,960 3,443,143 - -
Contributions in relation to the
Actuarially Determined Contributions 4,251,855 3,404,960 3,911,687 - -
Contribution Deficiency (Excess) $ (791,336) $ - $ (468,544) $ - $ -
Covered Employee Payroll*9,695,082$ 7,924,041$ 8,294,732$ -$ -$
Contributions as a percentage of
Covered Employee Payroll 43.86%42.97%47.16%#DIV/0!#DIV/0!
Notes to Schedule
Valuation Date:10/01/2013
Methods and assumptions used to determine contribution rates:
Funding Method:
Amortization Method:
Remaining Amortization Period:
Inflation:
Mortality Rates:
Interest Rate:8.05% per year compounded annually, net of investment related expenses.
Retirement Rates:
Age
Probability of
Retirement
50 5%
51 5%
52 50%
53 10%
54 10%
55 100%
Actuarial Value of Assets:
Cost of Living Adjustments:
Salary Increases*:Age Increase
20 3.7%
30 1.1%
40 0.7%
50 0.2%
60 0.0%
*Expected increase in salary in addition to 4.5% inflation assumption.
Payroll Growth Assumption:2.9% (previously 4.5%) for amortization of the Unfunded Actuarial Accrued Liability.
4.5% per year.
RP-2000 Table, sex distinct, without projection.
21 Years (as of 10/01/2013).
SCHEDULE OF CONTRIBUTIONS
Last 10 Fiscal Years
Level Percentage of Pay, Closed.
Projected Unit Credit Cost Method.
Actuarially determined contribution rates are calculated as of October 1, two years prior to the end of the fiscal year in which
contributions are reported.
*For the 2014 and 2015 Reporting Period Ending years, the reported Covered Employee Payroll figures were based on Pensionable
Salary.
The Actuarial Value of Assets is calculated by recognizing 25% of the difference
between the Market Value of Assets and the expected Market Value of Assets.
1.0% increase for Members who are Age 53, 2.0% increase for Members who are Age
54, and 1.5% increase for Members who are Age 55 and greater.
For those Members who attain 25 years of Credited Service, regardless of Age, the
probability of retirement is 100%.
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Final Pay Load:
Termination Rates:
Age
Years of
Service
All Ages 0
1
2
3
4
25 5 & Over
30
35
40
45
50
55
Disability Rates:
Age
20
25
30
35
40
45
50
It is assumed that 75% of disablements and active Member deaths are service related.
9%
8%
7%
7%
For Members hired prior to October 1, 2011, active liabilities are increased by 3% to
account for assumed payments of unused sick and annual leave time. Members protected
from benefit changes set forth in Ordinance 23, 2012 are valued with a 4.5% final salary
load. Members hired on and after October1, 2011 are valued with no final pay load.
% Separating form Employment
Within the Next Year
15%
0.0895%
0.1210%
0.2750%
0.4290%
1%
% Become Disabled within Next
Year
0.0545%
0.0545%
0.0580%
6%
4%
3%
2%
2%
10%
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Net Pension
Liability
Deferred
Inflows
Deferred
Outflows
Pension
Expense
Beginning balance $ 17,416,072 $ - $ 3,709,659 $ -
Employer and State contributions made after 09/30/2014 - - 4,473,988 -
Total Pension Liability Factors:
Service Cost 1,741,473 - - 1,741,473
Interest 6,280,207 - - 6,280,207
Share Plan Allocation 304,698 - - 304,698
Changes in benefit terms - - - -
Differences between Expected and Actual Experience
with regard to economic or demographic assumptions - - - -
Current year amortization of experience difference - - - -
Change in assumptions about future economic or
demographic factors or other inputs 1,772,793 - 1,772,793 -
Current year amortization of change in assumptions - - (305,654) 305,654
Benefit Payments (1,844,859) - - (1,844,859)
Net change 8,254,312 - 5,941,127 6,787,173
Plan Fiduciary Net Position:
Contributions - Employer 2,866,126 - (2,866,126) -
Contributions - State 843,533 - (843,533) -
Contributions - Employee 475,442 - - (475,442)
Net Investment Income 4,797,981 - - (4,797,981)
Difference between projected and actual earnings on
Pension Plan investments 2,179,944 2,179,944 - -
Current year amortization - (435,988) - (435,988)
Benefit Payments (1,844,859) - - 1,844,859
Administrative Expenses (88,142) - - 88,142
Net change 9,230,025 1,743,956 (3,709,659) (3,776,410)
Ending Balance $ 16,440,359 $ 1,743,956 $ 5,941,127 $ 3,010,763
FINAL COMPONENTS OF PENSION EXPENSE
FISCAL YEAR SEPTEMBER 30, 2015
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Net Pension
Liability
Deferred
Inflows
Deferred
Outflows
Pension
Expense
Beginning balance $ 16,440,359 $ 1,743,956 $ 5,941,127 $ -
Employer and State contributions made after 09/30/2015 - - TBD*-
Total Pension Liability Factors:
Service Cost 1,760,152 - - 1,760,152
Interest 6,786,918 - - 6,786,918
Share Plan Allocation 222,133 - - 222,133
Changes in benefit terms - - - -
Differences between Expected and Actual Experience
with regard to economic or demographic assumptions (1,460,746) 1,460,746 - -
Current year amortization of experience difference - (243,457) - (243,457)
Change in assumptions about future economic or
demographic factors or other inputs 2,004,899 - 2,004,899 -
Current year amortization of change in assumptions - - (639,803) 639,803
Benefit Payments (1,935,428) - - (1,935,428)
Net change 7,377,928 1,217,289 1,365,096 7,230,121
Plan Fiduciary Net Position:
Contributions - Employer 3,746,995 - (3,746,995) -
Contributions - State 726,993 - (726,993) -
Contributions - Employee 445,465 - - (445,465)
Net Investment Income 5,547,937 - - (5,547,937)
Difference between projected and actual earnings on
Pension Plan investments (4,712,725) - 4,712,725 -
Current year amortization - (435,989) (942,545) 506,556
Benefit Payments (1,935,428) - - 1,935,428
Administrative Expenses (84,807) - - 84,807
Net change 3,734,430 (435,989) (703,808) (3,466,611)
Ending Balance $ 20,083,857 $ 2,525,256 TBD $ 3,763,510
PRELIMINARY COMPONENTS OF PENSION EXPENSE
FISCAL YEAR SEPTEMBER 30, 2016
* Employer Contributions subsequent to the measurement date made after September 30, 2015 but made on or before
September 30, 2016 needs to be added.
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