HomeMy WebLinkAboutAgenda Fire Pension 041216THE RESOURCE CENTERS , LLC
4360 Northlake Boulevard, Suite 206 Palm Beach Gardens, FL 33410
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PALM BEACH GARDENS FIREFIGHTERS’
PENSION FUND
Special Meeting of Tuesday, April 12, 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. Presentation of the September 30, 2015 Actuarial Valuation Report: Foster & Foster
(Doug Lozen)
4. Next Meeting Previously Scheduled for Wednesday, May 4, 2016 at 1PM
5. 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.
CITY OF PALM BEACH GARDENS
FIREFIGHTERS’ PENSION FUND
ACTUARIAL VALUATION REPORT
AS OF OCTOBER 1, 2015
CONTRIBUTIONS APPLICABLE TO THE CITY'S
PLAN/FISCAL YEAR ENDING SEPTEMBER 30, 2017
13420 Parker Commons Blvd., Suite 104 Fort Myers, FL 33912 · (239) 433-5500 · Fax (239) 481-0634 · www.foster-foster.com
March 4, 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: City of Palm Beach Gardens
Firefighters’ Pension Fund
Dear Board:
We are pleased to present to the Board this report of the annual actuarial valuation of the City of Palm
Beach Gardens Firefighters’ Pension Fund. The valuation was performed to determine whether the assets
and contributions are sufficient to provide the prescribed benefits and to develop the appropriate funding
requirements for the applicable plan year. Please note that this valuation may not be applicable for any
other purposes.
The valuation has been conducted in accordance with generally accepted actuarial principles and
practices, including the applicable Actuarial Standards of Practice as issued by the Actuarial Standards
Board, and reflects laws and regulations issued to date pursuant to the provisions of Chapters 112, and
175, Florida Statutes, as well as applicable federal laws and regulations. In our opinion, the assumptions
used in this valuation, as adopted by the Board of Trustees, represent reasonable expectations of
anticipated plan experience. Future actuarial measurements may differ significantly from the current
measurements presented in this report for a variety of reasons including: changes in applicable laws,
changes in plan provisions, changes in assumptions, or plan experience differing from expectations.
In conducting the valuation, we have relied on personnel, plan design, and asset information supplied by
the City of Palm Beach Gardens, financial reports prepared by the custodian bank, and the actuarial
assumptions and methods described in the Actuarial Assumptions section of this report. While we cannot
verify the accuracy of all this information, the supplied information was reviewed for consistency and
reasonableness. As a result of this review, we have no reason to doubt the substantial accuracy of the
information and believe that it has produced appropriate results. This information, along with any
adjustments or modifications, is summarized in various sections of this report.
The undersigned is familiar with the immediate and long-term aspects of pension valuations and meets
the Qualification Standards of the American Academy of Actuaries necessary to render the actuarial
opinions contained herein. All of the sections of this report are considered an integral part of the actuarial
opinions.
To our knowledge, no associate of Foster & Foster, Inc. working on valuations of the program has any
direct financial interest or indirect material interest in the City of Palm Beach Gardens, nor does anyone at
Foster & Foster, Inc. act as a member of the Board of Trustees of the City of Palm Beach Gardens
Firefighters’ Pension Fund. Thus, there is no relationship existing that might affect our capacity to
prepare and certify this actuarial report.
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
TABLE OF CONTENTS
Section Title Page
I Introduction
a. Summary of Report 5
b. Contribution Impact of Annual Changes 7
c. Changes Since Prior Report 8
d. Comparative Summary of 9
Principal Valuation Results
II Valuation Information
a. Reconciliation of Unfunded
Actuarial Accrued Liability 14
b. Detailed Actuarial Gain/Loss Analysis 15
c. Actuarial Assumptions and Methods 16
d. Valuation Notes 19
III Trust Fund 20
IV Member Statistics
a. Statistical Data 25
b. Age and Service Distribution 26
c. Valuation Participant Reconciliation 27
V Summary of Plan Provisions 28
VII Share Plan Reconciliation 31
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 4
SUMMARY OF REPORT
The regular annual actuarial valuation of the City of Palm Beach Gardens Firefighters’ Pension Fund,
performed as of October 1, 2015, has been completed, and the results are presented in this Report.
The contribution amounts developed in this valuation are applicable to the plan/fiscal year ended
September 30, 2017.
The contribution requirements, compared with amounts developed in the October 1, 2014, actuarial
valuation, are as follows:
Valuation Date
Applicable Plan/Fiscal Year End
10/1/2015
9/30/2017
10/1/2014
9/30/2016
Total Required Contribution
% of Total Annual Payroll 53.11% 53.44%
Member Contributions (Est.)
% of Total Annual Payroll 6.00% 6.00%
City and State Required Contribution
% of Total Annual Payroll 47.11% 47.44%
State Contribution ¹ 483,382 483,382
% of Total Annual Payroll 6.80% 6.80%
Balance from City ¹
% of Total Annual Payroll 40.31% 40.64%
¹ State Contribution shown is an amount based on 6.80% of the October 1, 2015 valuation payroll. For
budgeting purposes, the required Sponsor Contribution (City and State) is 47.44% of Pensionable
Earnings for the fiscal year ending September 30, 2016, and 47.11% for the fiscal year ending
September 30, 2017. The precise City requirement is the applicable Sponsor percentage, less State
Contributions equal to 6.80% of Pensionable Payroll realized for the applicable fiscal year.
Experience during the last twelve months was more favorable than expected, relative to the Plan’s
actuarial assumptions. The primary sources of favorable experience included a 9.80% investment return
(Actuarial Asset Basis), exceeding the 7.85% assumption, and average increases in Pensionable
Compensation that fell below the assumed rate by almost 5.00%.
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 5
In spite of the Plan’s net favorable experience for the year, funding requirements, when expressed as a
percentage of payroll have only slightly decreased for the following reasons:
1.A reduction in the payroll growth assumption (as required by Chapter 112, Florida Statutes) for
the purpose of amortizing the Unfunded Actuarial Accrued Liability (UAAL). This reduction
results in a slight increase to the Principal portion of the amortization payment.
2.A reduction in the investment return assumption from 7.85% to 7.65% (as approved by the Board
at the November 6, 2013 Board Meeting).
The balance of this Report presents additional details of the actuarial valuation and the general operation
of the Fund. The undersigned would be pleased to meet with the Board to discuss the Report and answer
any questions concerning its contents.
Respectfully submitted,
FOSTER & FOSTER, INC.
By:____________________________
Douglas H. Lozen, EA, MAAA
By:____________________________
Heidi E. Andorfer, FSA, EA
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 6
(1) Contribution Determined as of October 1, 2014 40.64%
(2)Summary of Contribution Impact by component:
Change in Available State Money 0.0%
Investment Return (Actuarial Asset Basis)-2.6%
Salary Increases -2.4%
Payroll Change 2.6%
Payroll Growth Assumption 0.7%
Active Decrements 0.7%
Inactive Mortality 0.1%
Assumption Change 3.5%
Additional City Contribution -1.4%
Benefit Payments Lower than Expected -0.8%
Other -0.7%
Total Change in Contribution -0.33%
(3)Contribution Determined as of October 1, 2015 40.31%
CONTRIBUTION IMPACT OF ANNUAL CHANGES
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 7
CHANGES SINCE PRIOR VALUATION
Plan Changes
There were no changes in benefits since the prior valuation.
Actuarial Assumption/Method Changes
The payroll growth assumption, utilized for amortization of the Unfunded Actuarial Accrued
Liability (UAAL) has been decreased from 0.70% to 0.00% (the actual ten-year payroll growth as
of 10/1/2015, limited to no less than 0.00%). 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 7.85% to 7.65%. Further reductions
will be implemented with future valuations according to the following schedule:
Valuation Date Investment Return Assumption
10/1/2016 7.45%
10/1/2017 7.25%
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 8
COMPARATIVE SUMMARY OF PRINCIPAL VALUATION RESULTS
New Assump Old Assump
10/1/2015 10/1/2015 10/1/2014
A. Participant Data
Number Included
Actives 96 96 101
Service Retirees 14 14 13
DROP Retirees 18 18 13
Beneficiaries 1 1 1
Disability Retirees 5 5 5
Terminated Vested 3 3 3
Total 137 137 136
Total Annual Payroll $7,565,506 $7,565,506 $8,142,582
Payroll Under Assumed Ret. Age 7,108,558 7,108,558 7,891,466
Annual Rate of Payments to:
Service Retirees 1,122,296 1,122,296 1,026,770
DROP Retirees 1,370,978 1,370,978 989,169
Beneficiaries 0 0 31,584
Disability Retirees 118,217 118,217 118,217
Terminated Vested 90,766 90,766 90,766
B. Assets
Actuarial Value ¹74,423,562 74,423,562 65,148,793
Market Value ¹72,470,355 72,470,355 68,881,378
C. Liabilities
Present Value of Benefits
Actives
Retirement Benefits 46,654,096 45,151,565 48,794,607
Disability Benefits 378,523 369,299 389,224
Death Benefits 193,973 189,471 203,661
Vested Benefits 2,989,557 2,864,619 2,993,757
Refund of Contributions 22,859 22,785 25,001
Service Retirees 17,250,127 16,875,827 15,530,771
DROP Retirees¹23,323,776 22,838,524 16,196,194
Beneficiaries 0 0 30,516
Disability Retirees 1,156,125 1,138,078 1,151,962
Terminated Vested 940,073 912,079 853,303
Share Plan Balances 8,580,169 8,580,169 8,889,212
Total 101,489,278 98,942,416 95,058,208
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 9
New Assump Old Assump
C. Liabilities - (Continued)10/1/2015 10/1/2015 10/1/2014
Present Value of Future Salaries 46,768,515 46,382,511 50,396,106
Present Value of Future
Member Contributions 2,806,111 2,782,951 3,023,766
Normal Cost (Retirement)1,771,652 1,712,501 1,950,239
Normal Cost (Disability)22,097 21,566 24,026
Normal Cost (Death)9,704 9,476 10,170
Normal Cost (Vesting)159,306 152,503 164,293
Normal Cost (Refunds)5,802 5,783 7,384
Total Normal Cost 1,968,561 1,901,829 2,156,112
Present Value of Future
Normal Costs 13,555,347 13,019,128 14,166,576
Accrued Liability (Retirement)34,109,862 33,099,231 35,695,123
Accrued Liability (Disability)269,978 263,979 271,752
Accrued Liability (Death)140,527 137,578 146,182
Accrued Liability (Vesting)2,151,380 2,065,938 2,116,754
Accrued Liability (Refunds)11,914 11,885 9,863
Accrued Liability (Inactives) ¹42,670,101 41,764,508 33,762,746
Excess State Monies Reserve 8,580,169 8,580,169 8,889,212
Total Actuarial Accrued Liability 87,933,931 85,923,288 80,891,632
Unfunded Actuarial Accrued
Liability (UAAL)13,510,369 11,499,726 15,742,839
Funded Ratio (AVA / AL)84.6%86.6%80.5%
D. Actuarial Present Value of Accrued Benefits
Vested Accrued Benefits
Inactives ¹42,670,101 41,764,508 33,762,746
Share Plan Balances 8,580,169 8,580,169 8,889,212
Actives 19,880,550 19,178,106 20,580,231
Member Contributions 5,333,428 5,333,428 5,492,028
Total 76,464,248 74,856,211 68,724,217
Non-vested Accrued Benefits 1,415,671 1,375,245 1,674,889
Total Present Value Accrued Benefits 77,879,919 76,231,456 70,399,106
Funded Ratio (MVA / PVAB)93.1%95.1%97.8%
Increase (Decrease) in Present Value of
Accrued Benefits Attributable to:
Plan Amendments 0 0
Assumption Changes 1,648,463 0
New Accrued Benefits 0 2,466,686
Benefits Paid 0 (2,079,063)
Interest 0 5,444,727
Other 0 0
Total 1,648,463 5,832,350
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 10
New Assump Old Assump
Valuation Date 10/1/2015 10/1/2015 10/1/2014
Applicable to Fiscal Year Ending 9/30/2017 9/30/2017 9/30/2016
E. Pension Cost
Normal Cost (with interest) $2,043,858 $1,976,476 $2,240,739
% of Total Annual Payroll ²28.75 27.80 28.39
Administrative Expenses (with interest)88,051 88,136 91,602
% of Total Annual Payroll ²1.24 1.24 1.16
Payment Required to Amortize
Unfunded Actuarial Accrued
Liability over 20 years
(as of 10/1/2015, with interest)1,643,344 1,465,405 1,885,649
% of Total Annual Payroll ²23.12 20.61 23.89
Total Required Contribution 3,775,253 3,530,017 4,217,990
% of Total Annual Payroll ²53.11 49.65 53.44
Expected Member Contributions 426,513 426,513 473,488
% of Total Annual Payroll ²6.00 6.00 6.00
Expected City & State Contribution 3,348,740 3,103,504 3,744,502
% of Total Annual Payroll ²47.11 43.65 47.44
F. Past Contributions
Plan Years Ending:9/30/2015
Total Required Contribution 3,905,984
City and State Requirement 3,460,519
Actual Contributions Made:
Members (excluding buyback)445,465
City 3,746,995
State 504,860 ³
Total 4,697,320
G. Net Actuarial (Gain)/Loss (2,986,312)
¹ The asset values and liabilities for DROP Members include accumulated DROP
Balances as of 9/30/2015 and 9/30/2014.
² Contributions developed as of 10/1/2015 are expressed as a percentage of total
annual payroll at 10/1/2015 of $7,108,558.
³ Reflects traditional interpretation of Chapter 99-1, Florida Statutes.
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 11
H. Schedule Illustrating the Amortization of the Total Unfunded Actuarial Accrued Liability as of:
Projected Unfunded
Year Accrued Liability
2015 13,510,369
2016 12,840,024
2017 12,118,400
2022 7,592,751
2026 5,938,472
2031 2,205,334
2035 0
I. (i) 3 Year Comparison of Actual and Assumed Salary Increases
Actual Assumed
Year Ended 9/30/2015 0.29%5.13%
Year Ended 9/30/2014 1.61%5.00%
Year Ended 9/30/2013 -6.22%5.10%
(ii) 3 Year Comparison of Investment Return on Actuarial Value
Actual Assumed
Year Ended 9/30/2015 9.80%7.85%
Year Ended 9/30/2014 10.89%8.05%
Year Ended 9/30/2013 10.08%8.25%
(iii) Average Annual Payroll Growth
(a) Payroll as of:10/1/2015 $7,565,506
10/1/2005 8,774,107
(b) Total Increase -13.77%
(c) Number of Years 10.00
(d) Average Annual Rate -1.47%
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 12
STATEMENT BY ENROLLED ACTUARY
This actuarial valuation was prepared and completed by me or under my direct supervision, and I
acknowledge responsibility for the results. To the best of my knowledge, the results are complete and
accurate, and in my opinion, the techniques and assumptions used are reasonable and meet the
requirements and intent of Part VII, Chapter 112, Florida Statutes. There is no benefit or expense to be
provided by the plan and/or paid from the plan's assets for which liabilities or current costs have not been
established or otherwise taken into account in the valuation. All known events or trends which may
require a material increase in plan costs or required contribution rates have been taken into account in the
valuation.
_____________________________
Douglas H. Lozen, EA, MAAA
Enrolled Actuary #14-7778
Please let us know when the report is approved by the Board and unless otherwise directed we will
provide copies of the report to the following offices to comply with Chapter 112 Florida Statutes:
Mr. Keith Brinkman
Bureau of Local
Retirement Systems
Post Office Box 9000
Tallahassee, FL 32315-9000
Ms. Sarah Carr
Municipal Police and Fire
Pension Trust Funds
Division of Retirement
Post Office Box 3010
Tallahassee, FL 32315-3010
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 13
RECONCILIATION OF UNFUNDED ACTUARIAL ACCRUED LIABILITIES
(1) Unfunded Actuarial Accrued Liability as of October 1, 2014 $15,742,839
(2) Sponsor Normal Cost developed as of October 1, 2014 1,682,624
(3) Expected administrative expenses for the year ended September 30, 2015 88,142
(4) Expected interest on (1), (2) and (3)1,371,358
(5) Sponsor contributions to the System during the year ended September 30, 2015 ¹ 4,251,855
(6) Expected interest on (5)147,070
(7) Expected Unfunded Actuarial Accrued Liability as of
September 30, 2015 (1)+(2)+(3)+(4)-(5)-(6)14,486,038
(8) Change to UAAL due to Assumption Change 2,010,643
(9) Change to UAAL due to Actuarial (Gain)/Loss (2,986,312)
(10) Unfunded Accrued Liability as of October 1, 2015 13,510,369
Type of Date Years 10/1/2015 Amortization
Base Established Remaining Amount Amount
Prior Experience 10/1/1993 8 $11,301,251 $1,802,640
Benefit Change 10/1/2002 17 2,253,908 224,204
Experience Loss 10/1/2006 18 720,969 69,736
Assum/Method Chg 10/1/2006 18 (2,262,759)(218,867)
Experience Gain 10/1/2007 18 (303,628)(29,369)
Experience Loss 10/1/2008 18 1,436,477 138,944
Experience Loss 10/1/2009 18 901,204 87,169
Experience Loss 10/1/2010 18 471,505 45,607
Experience Loss 10/1/2011 18 4,060,131 392,718
Benefit Change 10/1/2011 18 (2,367,471)(228,995)
Experience Loss 10/1/2012 18 287,461 27,805
Experience Gain 10/1/2013 8 (3,037,285)(484,471)
Assumption Change 10/1/2013 18 1,627,043 157,377
Experience Gain 10/1/2014 9 (2,359,067)(345,714)
Assumption Change 10/1/2014 19 1,756,299 165,629
Experience Gain 10/1/2015 10 (2,986,312)(406,919)
Assumption Change 10/1/2015 20 2,010,643 185,308
13,510,369 1,582,802
¹ Includes additional city contribution of $791,354 to pay down the Unfunded Actuarial Accrued Liability.
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 14
(1) Unfunded Actuarial Accrued Liability (UAAL) as of October 1, 2014 $15,742,839
(2) Expected UAAL as of October 1, 2015 14,486,038
(3) Summary of Actuarial (Gain)/Loss, by component:
Investment Return (Actuarial Asset Basis)(1,296,849)
Salary Increases (1,196,735)
Active Decrements 361,806
Inactive Mortality 74,767
Benefit Payments Lower than Expected (412,194)
Other (517,107)
Increase in UAAL due to (Gain)/Loss (2,986,312)
Assumption Changes 2,010,643
(4) Actual UAAL as of October 1, 2015 $13,510,369
DETAILED ACTUARIAL (GAIN)/LOSS ANALYSIS
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 15
ACTUARIAL ASSUMPTIONS AND METHODS
Mortality Rates RP-2000 Table, sex distinct, without projection and the
RP-2000 Disabled Table for Disabled lives. We feel this
assumption sufficiently accommodates mortality
improvements.
Interest Rate 7.65% (previously 7.85%) per year compounded
annually, net of investment related expenses. This is
supported by the target asset class allocation of the trust
and the expected long-term return by asset class.
Retirement Rates
Age
Probability of
Retirement
50 5.00%
51 5.00
52 50.00
53 10.00
54 10.00
55 100.00
For those Members who attain 25 years of Credited
Service, regardless of Age, the probability of retirement
is 100%. These rates are reasonable given the retirement
provisions in the plan.
Termination Rates
Age
Years
of Service
% Separating from
Employment Within the
Next Year
All Ages 0 15.00%
1 10.00
2 9.00
3 8.00
4 7.00
25 5 & Over 7.00
30 5.90
35 4.40
40 3.00
45 2.10
50 1.70
55 1.00
We feel these rates are consistent with those utilized for
plans containing other Florida municipal firefighters.
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 16
Disability Rates
Age
% Become Disabled
within Next Year
0.0545%
25 0.0545
30 0.0580
35 0.0895
40 0.1210
45 0.2750
50 0.4290
It is assumed that 75% of disablements and active
Member deaths are service related. We feel these rates
are consistent with those utilized for plans containing
other Florida municipal firefighters.
Salary Increases ¹
Age Increase
20 5.20%
30 2.60
40 2.20
50 1.70
60 0.00
¹ Expected increase in salary in addition to 3.00%
inflation and promotion assumption.
This is based on the results of an actuarial experience
study delivered on November 1, 2013.
Final Pay Load For Members hired prior to October 1, 2011, active
liabilities are increased by 3.00% 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 4.50% final salary
load. Members hired on and after October 1, 2011 are
valued with no final pay load.
Cost of Living Adjustments 1.00% increase for members who are Age 53, 2.00%
increase for members who are Age 54, and 3.00%
increase for members who are Age 55 and greater. For
those members who were not eligible for Normal
Retirement as of September 12, 2012, the COLA
beginning at age 55 is based on 3.00% for service prior
to September 12, 2012, and 1.50% for service thereafter.
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 17
Payroll Growth Assumption 0.00% (previously 0.70%) for amortization of the
Unfunded Actuarial Accrued Liability. This is in
compliance with Part VII of Chapter 112, Florida
Statutes.
Administrative Expenses $84,807 annually. This assumption is equal to the amount
paid out of the trust in the prior year.
Actuarial Value of Assets 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.
Funding Method P r o j e c t e d U n i t C r e d i t C o s t M e thod.
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 18
VALUATION NOTES
Total Annual Payroll is the projected annual rate of pay as of the valuation date of all covered Members.
Present Value of Benefits is the single sum value on the valuation date of all future benefits to be paid to
current Members, Retirees, Beneficiaries, Disability Retirees and Vested Terminations.
Normal (Current Year's) Cost is determined for each participant as the present value of the increase in the
accrued benefit for the plan year, utilizing projected salary.
Projected Unit Credit Actuarial Cost Method (Level Percent of Compensation) is the method used to
determine required contributions under the Plan. The use of this method involves the systematic
funding of the Normal Cost (described above) and the Unfunded Accrued (Past Service) Liability.
The actuarial accrued liability is the present value of accrued benefits, utilizing projected salary for
active Plan Participants.
Unfunded Actuarial Accrued Liability (UAAL) is the difference between the actuarial accrued liability
(described above) and the actuarial value of assets. Under the Projected Unit Credit Actuarial Cost
Method, an actuarial gain or loss, based on actual versus expected UAAL, is determined in
conjunction with each valuation of the plan.
Total Required Contribution is equal to the Normal Cost plus an amount sufficient to amortize the
Unfunded Accrued Liability over no more than 30 years. The required amount is adjusted for interest
according to the timing of contributions during the year.
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 19
ASSETS COST VALUE MARKET VALUE
Cash and Cash Equivalents:
Prepaid Expenses 200.00 200.00
Money Market 1,596,573.88 1,596,573.88
Total Cash and Equivalents 1,596,773.88 1,596,773.88
Receivables:
City Contributions in Transit 776,824.12 776,824.12
State Contributions 726,993.10 726,993.10
From Broker for Investments Sold 486,309.84 486,309.84
Investment Income 193,487.37 193,487.37
Total Receivable 2,183,614.43 2,183,614.43
Investments:
U. S. Bonds and Bills 5,755,015.73 5,859,227.85
Federal Agency Guaranteed Securities 4,340,320.81 4,361,311.00
Corporate Bonds 4,616,232.16 4,565,992.13
Stocks 21,531,866.27 23,446,958.85
Mutual Funds:
Fixed Income 3,887,988.74 3,397,142.13
Equity 16,581,167.37 19,847,338.93
Pooled/Common/Commingled Funds:
Real Estate 8,040,235.53 8,040,235.53
Total Investments 64,752,826.61 69,518,206.42
Total Assets 68,533,214.92 73,298,594.73
LIABILITIES
Payables:
Investment Expenses 78,261.22 78,261.22
Administrative Expenses 8,728.00 8,728.00
To Broker for Investments Purchased 741,250.84 741,250.84
Total Liabilities 828,240.06 828,240.06
NET POSITION RESTRICTED FOR PENSIONS 67,704,974.86 72,470,354.67
STATEMENT OF FIDUCIARY NET POSITION
SEPTEMBER 30, 2015
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 20
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FOR THE YEAR ENDED SEPTEMBER 30, 2015
Market Value Basis
ADDITIONS
Contributions:
Member 445,464.82
City 3,746,994.64
State 726,993.10
Total Contributions 4,919,452.56
Investment Income:
Net Realized Gain (Loss) 1,751,446.01
Unrealized Gain (Loss) (2,855,110.30)
Net Increase in Fair Value of Investments (1,103,664.29)
Interest & Dividends 2,297,604.81
Less Investment Expense¹ (360,546.88)
Net Investment Income 833,393.64
Total Additions 5,752,846.20
DEDUCTIONS
Distributions to Members:
Benefit Payments 1,262,153.53
Lump Sum DROP Distributions 91,190.90
Lump Sum Share Distributions 582,082.55
Self- Directed DROP Benefits 143,635.62
Refunds of Member Contributions 0.00
Total Distributions 2,079,062.60
Administrative Expense 84,807.19
Total Deductions 2,163,869.79
Net Increase in Net Position 3,588,976.41
NET POSITION RESTRICTED FOR PENSIONS
Beginning of the Year 68,881,378.26
End of the Year 72,470,354.67
¹Investment related expenses include investment advisory, custodial and performance monitoring fees.
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 21
Plan Year
Ending Gain/(Loss) 2015 2016 2017 2018
09/30/2012 4,536,378 0 0 0 0
09/30/2013 2,088,861 522,215 0 0 0
09/30/2014 2,072,082 1,036,041 518,020 0 0
09/30/2015 (4,681,951) (3,511,463) (2,340,975) (1,170,488) 0
Total (1,953,207) (1,822,955) (1,170,488) 0
Market Value of Assets, 09/30/2014 68,881,378
Contributions Less Benefit Payments & Admin Expenses 2,755,583
Expected Investment Earnings ¹5,515,345
Actual Net Investment Earnings 833,394
09/30/2015 Actuarial Investment Gain/(Loss)(4,681,951)
¹ Expected Investment Earnings = 0.0785 * (68,881,378 + 0.5 * 2,755,583)
(1) Market Value of Assets, 09/30/2015 72,470,355
(2) Gains/(Losses) Not Yet Recognized (1,953,207)
(3) Actuarial Value of Assets, 09/30/2015, (1) - (2)74,423,562
(A) 09/30/2014 Actuarial Assets:65,148,793
(I) Net Investment Income:
1. Interest and Dividends 2,297,605
2. Realized Gains (Losses) 1,751,446
3. Change in Actuarial Value 2,830,682
4. Investment Expenses (360,547)
Total 6,519,186
(B) 09/30/2015 Actuarial Assets:74,423,562
Actuarial Assets Rate of Return = 2I/(A+B-I):9.80%
Market Value of Assets Rate of Return:1.21%
Actuarial Gain/(Loss) due to Investment Return (Actuarial Asset Basis)1,296,849
10/01/2015 Limited Actuarial Assets:74,423,562
Amounts Not Yet Recognized by Valuation Year
Development of Investment Gain/(Loss)
Development of Actuarial Value of Assets
ACTUARIAL ASSET VALUATION
September 30, 2015
Actuarial Assets for funding purposes are developed by recognizing the total actuarial investment gain or loss for
each Plan Year over a four year period. In the first year, 25% of the gain or loss is recognized. In the second year
50%, in the third year 75%, and in the fourth year 100% of the gain or loss is recognized. The actuarial investment
gain or loss is defined as the actual return on investments minus the actuarial assumed investment return. Actuarial
Assets shall not be less than 80% nor greater than 120% of Market Value of Assets.
Gains/(Losses) Not Yet Recognized
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 22
SEPTEMBER 30, 2015
Actuarial Asset Basis
REVENUES
Contributions:
Member 445,464.82
City 3,746,994.64
State 726,993.10
Total Contributions 4,919,452.56
Earnings from Investments:
Interest & Dividends 2,297,604.81
Net Realized Gain (Loss) 1,751,446.01
Change in Actuarial Value 2,830,681.70
Total Earnings and Investment Gains 6,879,732.52
EXPENDITURES
Distributions to Members:
Benefit Payments 1,262,153.53
Lump Sum DROP Distributions 91,190.90
Lump Sum Share Distributions 582,082.55
Self- Directed DROP Benefits 143,635.62
Refunds of Member Contributions 0.00
Total Distributions 2,079,062.60
Expenses:
Investment related¹ 360,546.88
Administrative 84,807.19
Total Expenses 445,354.07
Change in Net Assets for the Year 9,274,768.41
Net Assets Beginning of the Year 65,148,793.26
Net Assets End of the Year² 74,423,561.67
¹Investment related expenses include investment advisory, custodial and performance monitoring fees.
²Net Assets may be limited for actuarial consideration.
CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 23
Beginning of the Year Balance 959,198.24
Plus Additions 962,171.60
Investment Return Earned (14,526.87)
Less Distributions (91,190.90)
End of the Year Balance 1,815,652.07
DEFERRED RETIREMENT OPTION PLAN ACTIVITY
October 1, 2014 to September 30, 2015
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 24
STATISTICAL DATA
10/1/2012 10/1/2013 10/1/2014 10/1/2015
Actives
Number 108 105 101 96
Average Current Age 42.0 42.6 41.9 42.1
Average Age at Employment 28.3 28.5 28.5 28.4
Average Past Service 13.7 14.1 13.4 13.7
Average Annual Salary $90,000 $82,724 $80,620 $78,807
Service Retirees
Number 7 9 13 14
Average Current Age N/A N/A N/A 54.5
Average Annual Benefit $64,520 $75,167 $78,982 $80,164
DROP Retirees
Number 6 8 13 18
Average Current Age N/A N/A N/A 54.2
Average Annual Benefit $78,548 $73,309 $76,090 $76,165
Beneficiaries
Number 1 1 1 1
Average Current Age N/A N/A N/A N/A
Average Annual Benefit N/A N/A N/A N/A
Disability Retirees
Number 5 5 5 5
Average Current Age N/A N/A N/A 52.1
Average Annual Benefit $23,643 $23,643 $23,643 $23,643
Terminated Vested
Number 2 3 3 3
Average Current Age N/A N/A N/A 48.3
Average Annual Benefit $35,783 $30,255 $30,255 $30,255
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 25
AGE AND SERVICE DISTRIBUTION
PAST SERVICE
AGE 01234 5 - 910-14 15-19 20-24 25-29 30+ Total
15 - 19 000000 0000 00
20 - 24 020000 0000 02
25 - 29 020200 0000 04
30 - 34 110005 6000 013
35 - 39 002103 8200 016
40 - 44 000004 9420 019
45 - 49 000000 5 1 1 5 0 0 21
50 - 54 000000 4571 017
55 - 59 000000 1011 03
60 - 64 000010 0000 01
65+000000 0000 00
Total 15231 1 23 3 2 2 1 5 2 0 96
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 26
VALUATION PARTICIPANT RECONCILIATION
1. Active lives
a. Number in prior valuation 10/1/2014 101
b. Terminations
i. Vested (partial or full) with deferred benefits 0
ii. Non-vested or full lump sum distribution received 0
c. Deaths
i. Beneficiary receiving benefits 0
ii. No future benefits payable 0
d. Disabled 0
e. Retired 0
f. DROP (6)
g. Continuing participants 95
h. New entrants 1
i. Total active life participants in valuation 96
2. Non-Active lives (including beneficiaries receiving benefits)
Service
Retirees,
Vested Receiving Receiving
Receiving DROP Death Disability Vested
Benefits Benefits Benefits Benefits Deferred Total
a. Number prior valuation 13 13 1 5 3 35
Retired 1 (1) 0 0 0 0
DROP 060006
Vested Deferred 000000
Death, With Survivor 000000
Death, No Survivor 000000
Disabled 000000
Refund of Contributions 000000
Rehires 000000
Expired Annuities 000000
Data Corrections 000000
b. Number current valuation 14 18 1 5 3 41
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 27
SUMMARY OF PLAN PROVISIONS
(Through Ordinance 2, 2013)
Eligibility Full-time certified Firefighters.
Credited Service Total years and fractional parts of years of employment
with the City as a Firefighter while making Member
contributions.
Salary Total compensation, excluding overtime and payments
for unused accrued sick and annual leave for salary
earned after September 13, 2012.
Average Final Compensation Average Salary for the 5 best years of the 10 years
immediately preceding retirement or termination.
Member Contributions 6.00% of Salary.
City and State Contributions Remaining amount required in order to pay current costs
and amortize unfunded past service cost, if any, as
provided in Part VII, Chapter 112, F.S.
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 3.00% of Average Final Compensation times Credited
Service, not to exceed 75% of Average Final
Compensation.
Form of Benefit Ten Year Certain and Life Annuity (options available).
Early Retirement
Eligibility Age 50 with 10 years of Credited Service.
Benefit Accrued benefit, reduced 3.00% per year that the benefit
commencement date precedes age 52.
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 28
Vesting
Schedule 25% after 5 years of Credited Service, then 15% for each
additional year until 100% after 10 years of Credited
Service.
Benefit Amount Member will receive the vested portion of his (her)
accrued benefit payable at age 50 (reduced) or age 52.
Disability
Eligibility
Service Incurred Covered from Date of Employment.
Non-Service Incurred 10 years of Credited Service.
Exclusions Disability resulting from use of drugs, illegal
participation in riots, service in military, etc.
Benefit
Service Incurred 60% of Average Final Compensation, but not less than
2.00% of Average Final Compensation times Credited
Service.
Non-Service Incurred 2.50% of Average Final Compensation times Credited
Service.
Duration Payable for life (with 120 payments guaranteed) or until
recovery (as determined by the Board). Optional forms
of payment are available.
Death Benefits
10 or more years of Monthly accrued benefit payable to designated
Credited Service beneficiary for 10 years at otherwise Early (reduced) or
Normal (unreduced) Retirement Date.
Less than 10 years of Refund of Member contributions.
Credited Service
Post-Retirement Benefits payable to beneficiary in accordance with
option selected at retirement.
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 29
Cost of Living Adjustment
Eligibility Normal and Early Retirees and Beneficiaries (including
Vested Terminated Retirees). COLA is not payable to
Disability Retirees.
Amount 1.00% increase for members who are Age 53, 2.00%
increase for members who are Age 54, and 1.50%
increase for members who are Age 55 and greater.
Deferred Retirement Option Plan
Eligibility Satisfaction of Normal Retirement requirements.
Participation Maximum participation period of 60 months.
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.
Distribution Cash lump sum (options available) at termination of
employment.
Chapter 175/185 Share Accounts
Allocation Ordinance 27, 1998 established a Share Plan for all
Active Members. Premium tax monies received in
excess of the base amounts, less the sum of the amounts
below are allocated annually to each individual Share
Account based on Credited Service, determined as of
September 30:
2.00% of salary.
The lessor of 4.80% of salary or $507,634.00.
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.
Distribution Active Members with 5 or more years of Credited
Service will be paid a lump sum upon separation from
service.
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 30
9/30/2014 Balance 8,889,212.40
Plus Additions 222,132.97
Investment Return Earned 107,559.47
Less Distributions (582,082.55)
Less Expenses (56,653.19)
9/30/2015 Balance 8,580,169.10
¹ The 9/30/2015 balance is an estimate based on activity during the year. The precise calculation
will be determined by Resource Centers, LLC.
SHARE PLAN RECONCILIATION ¹
October 1, 2014 to September 30, 2015
City of Palm Beach Gardens Firefighters' Pension Fund FOSTER & FOSTER | 31