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HomeMy WebLinkAboutAgenda Police Pension 053117 Agenda City of Palm Beach Gardens Police Officers’ Pension Fund MEETING OF MAY 31, 2017 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 • Brad Seidensticker, Secretary • Allan Owens, Trustee • Marc Glass, Trustee • Greg Mull, Trustee 3. Investment Manager Report – Highland Capital (Steve Stack) 4. Investment Consultant Report – AndCo Consulting (John McCann) 5. Attorney Report – KKJ&L (Bonni Jensen) • Memo – Annual Form 1 Filing • Memo – Top 10 Internal Controls to Prevent & Detect Fraud • Memo – Cyber, Privacy & Crime Insurance • Updated Summary Plan Description 6. Administrator Report – Resource Centers (Audrey Ross) • Admin Expense Report and Budget 7. Disbursements 8. Benefit Approvals 9. Financial Statements 10. Other Business • Salem Trust 3/31/17 Service Report Summary 11. Public Comments 12. Adjourn Next Meeting Date: Scheduled for Thursday September 21, 2017 @ 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. Minutes 3-9-17.doc Page 1 of 4 City of Palm Beach Gardens Police Officers’ Pension Fund Minutes of the Meeting Held March 9, 2017 The regular meeting of the Board of Trustees of the City of Palm Beach Gardens Police Officers’ Pension Fund was called to order at 9:05 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) Brad Seidensticker, Secretary Bonni Jensen (KKJ&L) Marc Glass, Trustee John McCann (AndCo. Consulting) Greg Mull, Trustee Steve Stack (Highland Capital) TRUSTEE UPDATE Ms. Ross briefly stated that the City is still working on appointing someone for the open Trustee seat on the pension Board. The City is also asking for any recommendations as well. INVESTMENT MANAGER REPORT Highland Capital Management – Presented by Steve Stack Mr. Stack briefly updated the Board on his firm and stated that they recently added a new employee who works in the financial and risk based sector. He reviewed the market environment during the quarter ending December 31, 2016 and noted that interest rates rose and bonds sold off and this Plan benefited from it. Mr. Stack stated that portfolio wise they have shortened duration in anticipation on interest rates rising so therefore 60% of their assets are in the 3-5 year range and they are finding good yield there. They are also moving more into mortgage backed securities because as rates rise less people will be refinancing their homes. As of March 7, 2017 the fixed income portfolio was up 1.28% so they are still keeping ahead. Lastly Mr. Stack gave a brief update on the equities and noted that they continue to do well and are up 12.91% for the quarter. INVESTMENT CONSULTANT REPORT AndCo. Consulting – Presented by John McCann Mr. McCann explained this firm’s new name change to AndCo. Consulting that was effective January 1, 2017. This name change does not have any effect on the portfolio or personnel. Mr. McCann briefly reviewed the Plan’s September 30, 2016 aggregate chart that he does at the end of each year since he did not have time to go over this at the last meeting. Mr. McCann stated that the Plan now has 4 funds with Rhumbline as the International equity portfolio was recently funded. As of December 31, 2016 the total fund was up 2.43% versus the benchmark at 1.72% and the total assets are up to $84.4M. Since the end of the quarter the fund has added another $2M. He reviewed the asset allocation which is slightly out of balance on the fixed income side due to the bonds rallying, but since the end of the quarter they are back in line with the target allocation. Mr. McCann briefly reviewed each manager’s performance during the quarter and commented that Oppenhiemer and Dreyfus will be moving Minutes 3-9-17.doc Page 2 of 4 over to Highland Capital. Also as of current this Plan is fully invested with American Realty at 7.8% but can still go up to 10%. The Trustees had a lengthy discussion on adding more to American Realty as real estate has been doing great. American Realty currently has a 6 month entry queue but they can still put in the request now. Mr. McCann stated that they will more than likely take from fixed income to fund real estate, but he stated that he will confirm that once the call from American Realty is actually made. MOTION: Mr. Glass made a motion to increase the American Realty holding to 10% by moving $2M from Highland Capital. SECOND: Mr. Mull seconded the motion. CARRIED: The motion carried unanimously 4-0. Ms. Jensen commented that Thistle contract was assigned to the Bogdahn Group and now they will need to assign it to AndCo. Consulting. Ms. Jensen recommends at this point for the Board to sign a new contract with AndCo. Consulting to reflect the name change, but everything else remains the same. MOTION: Mr. Glass made a motion to allow the Chair to sign in between meetings the updated Investment Consultant contract noting the name change only. SECOND: Mr. Mull seconded the motion. CARRIED: The motion carried unanimously 4-0. ATTORNEY REPORT KKJ&L - Presented by Bonni Jensen Ms. Jensen reviewed the new online State Annual Report requirement. This new requirement requires that all State Annual Reports be filed online through the Division of Retirement website. Therefore the signatures of the Chairman and Secretary are no longer required. Ms. Jensen stated that the FRS recently decreased their assumed rate of return from 7.8% to 7.6%, although their goal is 7.5%. This Plan was already proactive in decreasing their assumed rate of return as they are at 6.8%. Also last year the FRS changed their mortality table in which all DB Plans had to adopt as well, and this Plan adopted that new table last year. Now this year the FRS has changed their mortality table again, therefore this Plan has another 2 years to implement the new table into the Plan once again. Ms. Jensen noted that the IRS mileage rate decreased from 54 cents to 53.5 cents effective January 1, 2017. Ms. Jensen reviewed the Miami Beach fraud issue that recently occurred. She explained what happened and commented that now would be a good time for this Plan to double check their securities with their service providers and to also look into cyber liability insurance coverage which can also protect the Plan against multiple other uses. Ms. Ross will look into having someone attend a Board meeting to discuss cyber liability coverage and to give some quotes. The Board briefly discussed transitioning the DROP statements from GRS to PRC since PRC processes the actual DROP distributions, the accounting would be easier and cleaner. The Trustees tabled this discussion until the next meeting. Minutes 3-9-17.doc Page 3 of 4 The Trustees had a very lengthy discussion on the Share accounts and the excess State money. Mr. Spencer explained that after the last meeting Ms. Jensen sent a letter to the City regarding this outstanding issue and the City stated that the CBA is closed and they are not reopening it at this time. Therefore at this point the default plan is now in place regarding the Share accounts and splitting the excess State money 50/50 between the Plan and the City. This default plan also affects the retirees. On behalf of the retirees, Mr. Spencer stated that the default Plan will take away benefits from retirees that they have earned and that is not legally allowed. Therefore we need to keep in mind any legal ramifications that could occur when dealing with this issue. There was a very lengthy discussion on the State money and what benefits it has been used for and what benefits it will be used for going forward. Ms. Jensen reminded the Trustees that under the default provision Share accounts have to be established, but now the question is how those Share accounts will be funded. Mr. Spencer shared some ideas he had the Actuary work out in regards to splitting up the State money amongst the Share accounts for active and retired members. Ms. Jensen stated that at this point to get a move on the issue, the City will need to pass an Ordinance implementing Share accounts into the pension plan and then they will work on funding them. After that the Board will need to meet with the PBA to come up with the funding aspect. Ms. Jensen stated that the summary plan description needs to be updated but at this point she thinks the Board should wait until the Share account/state money issue is resolved so that it can be added into this document as well. Ms. Jensen presented the Board with her fee increase proposal. Her last fee increase was back in March 2014 and therefore she is now asking to increase her hourly rate to $265 (she noted that all her new clients pay $365 per hour). This new fee would be effective April 1, 2017 and there is no lock in period. The Trustees discussed the proposal and asked that a 3 year fee guarantee rate be added in. Ms. Jensen concurred. MOTION: Mr. Glass made a motion to approve Ms. Jensen’s fee increase to $265 per hour effective April 1, 2017, with a 3 year fee guarantee. SECOND: Mr. Seidensticker seconded the motion. CARRIED: The motion carried unanimously 4-0. ADMINISTRATOR REPORT Resource Centers – Presented by Audrey Ross N/A MINUTES MOTION: Mr. Glass made a motion to approve the minutes from the December 2, 2016 regular meeting. SECOND: Mr. Mull seconded the motion. CARRIED: The motion carried unanimously 4-0. DISBURSEMENTS APPROVALS MOTION: Mr. Glass made a motion to approve the disbursements. SECOND: Mr. Mull seconded the motion. Minutes 3-9-17.doc Page 4 of 4 CARRIED: The motion carried unanimously 4-0. BENEFIT APPROVALS MOTION: Mr. Seidensticker made a motion to approve the applications to exit the DROP for Jack Schnur, Ralph Kranchick, Chris Barca & Tim Roman, the application for distribution from DROP account (due to retirement 1/1/17) for Jack Schnur, the applications for distributions from DROP account (due to retirement 3/1/17) for Chris Barca & Tim Roman, the applications for distributions from DROP accounts (1/15/17) for William Brandt, Robert O’Dell, Wayne Sidey & Todd Thomas, the applications for distributions from DROP accounts (2/15/17) for John Boyle, Sheree Brown, Gwen Fleming, Richard Geist, Robert Odell, Jeff Main & Joseph Sheehan, and the application for distribution of DROP account (3/15/17) for Gary Carmack. SECOND: Mr. Glass seconded the motion. CARRIED: The motion carried unanimously 4-0. FINANCIAL STATEMENTS The board reviewed and discussed the financial statements that were provided through January 2017. The board received and filed the financial statements through January 2017. OTHER BUSINESS Ms. Ross presented the Board with the Salem Trust letter that announced Mr. Rinsem’s retirement that was effective December 31, 2016. PUBLIC COMMENTS N/A AJOURN There being no further business, the Trustees officially adjourned the meeting at 11:08PM. The next meeting is scheduled for Wednesday May 31, 2017 at 9AM. Respectfully submitted, _____________________________ Brad Seidensticker, Secretary Minutes 4-28-17(SM).doc Page 1 of 4 City of Palm Beach Gardens Police Officers’ Pension Fund Minutes of the Special Meeting Held April 28, 2017 The special meeting of the Board of Trustees of the City of Palm Beach Gardens Police Officers’ Pension Fund was called to order at 9:11 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 Pete Strong (GRS) Greg Mull, Trustee Neal Renuart (Cherry Bekaert) R. Anderson (PBG Police Officer/Union Rep) Randy Buntin (PBG Police Officer/ Union Rep) Greg Allen (PBG Police Officer/Union Rep) Dorian Hawkins (PBG Police Officer/Union Rep) Allan Owens (City of PBG Finance Director) SEPTEMBER 30, 2016 AUDITED FINANCIAL STATEMENTS Presented by Neal Renuart Mr. Renuart introduced himself to the Board and stated that he is taking over servicing for this Plan since Mr. Burdick retired from Cherry Bekaert last year. He stated that an unmodified clean opinion was issued in regards to the September 30, 2016 audited financial statements. He reviewed the Plan’s internal controls and procedures in which there were no deficiencies or reportable compliance issues. He also reviewed the new additional disclosures that were added in this year due to the State mandate. He reminded the Trustees that the new disclosures do not affect the Plan’s actual numbers or funding methods. For the fiscal year ending September 30, 2016 the Fund ended with $82,113,694 in assets which are up from $74,092,896 last year. Therefore the Plan had an $8M investment gain this year net of fees. The total employer contributions slightly decreased as the employee contributions slightly increased. The Plan’s total benefit payments increases as well as the admin expenses, but the admin expenses still remain relatively low compared to the Plan size. MOTION: Mr. Glass made a motion to approve the September 30, 2016 Audited Financial Statements as presented. SECOND: Mr. Seidensticker seconded the motion. CARRIED: The motion carried unanimously 4-0. SEPTEMBER 30, 2016 ACTUARIAL VALUATION REPORT Presented by Pete Strong Mr. Strong stated that the Plan had an overall increase in covered payroll for the fiscal year ending September 30, 2016, which ultimately lead to increased contributions. The City is required to contribute $2.8M or 47.23% of covered payroll for the fiscal year beginning October 1, 2017. The current active DROP payroll is at 29.58% and he also reviewed the State money base amounts. Any State money Minutes 4-28-17(SM).doc Page 2 of 4 over the base amount will be split 50/50 between the City and the members. This Plan had a net actuarial gain this year of $420,988 due to investment returns above the assumed rate of return and salary increases being lower than expected. Mr. Strong reviewed the Plan’s funded ratio which is currently at 73.4% (71.8% without including the DROP assets). He also commented that the City made an additional contribution during the fiscal year which went to the Plan’s unfunded liability. As of September 30, 2016 there were 86 active members in the Plan and 68 retirees. Mr. Strong reviewed the Plan’s current unfunded liability which is around $23M with 15 years left to pay it off. Lastly he discussed the cumulative gains and losses over the years which determines if a COLA benefit would ever be payable. Once the accumulative loss of $7.7M is recognized, then a COLA benefit would be payable but it would take a lot of gains and years to offset the total loss. MOTION: Mr. Glass made a motion to approve the September 30, Actuarial Valuation Report as presented. SECOND: Mr. Mull seconded the motion. CARRIED: The motion carried unanimously 4-0. Ms. Strong stated that the City contributes their portion in one lump sum payment at the beginning of each fiscal year to avoid paying interest and it betters the Plan by paying down the unfunded liability. MOTION: Mr. Mull made a motion to set the Plan’s assumed rate of return at 6.8% for this year, next year, and the long term thereafter per the recommendation of the Plan’s investment consultant. SECOND: Mr. Glass seconded the motion. CARRIED: The motion carried unanimously 4-0. STATE MONEY DISCUSSION The Trustees invited the Union Reps to attend today’s meeting to discuss setting up and funding the Share accounts that were recently put into place. Ms. Jensen reviewed the historical makeup of the Chapter 185 money and the current supplemental benefit that is in place of $12.50 per year of service. Up until this year the additional Chapter 185 money was set towards this benefit and ultimately this benefit would increase. In 2013 and 2014 the City and the Union agreed to give the City the State money to help pay for the offset in increasing employer contributions. Now during this current CBA, the Union and the City did not reach an agreement in regards to the State money so the default provision will be put into place with the City to receive 50% of the State money, and then the members will get the other 50% of the State money. At this point an agreement has to be reached between the members on how this Share accounts money will be used; to create individual share accounts or continue to fund the supplemental benefit that is already in place. The Board and the Union reps had a very lengthy conversation on the State money, the Share accounts, who would be affected and who would not be. Ultimately it is up to the membership to vote on this now because for this current CBA the default option is already in place until they mutually agree to something different in a future CBA. Ms. Jensen recommended that the pension board give authorization to the Union reps to use GRS for any studies that they may need to in regards to this situation and to also work with her firm as well. It was also noted that the Board would pay for any GRS studies that are requested. Ms. Jensen reminded the Trustees that this is an urgent and we need to get a move on this situation very quickly. Minutes 4-28-17(SM).doc Page 3 of 4 BENEFIT APPROVALS MOTION: Mr. Mull made a motion to accept the application for distribution from DROP account for Ralph Kranchick. SECOND: Mr. Glass seconded the motion. CARRIED: The motion carried unanimously 4-0. OTHER BUSINESS N/A PUBLIC COMMENTS N/A AJOURN There being no further business, the Trustees officially adjourned the meeting at 12:16PM. The next meeting is scheduled for Wednesday May 31, 2017 at 9AM. Respectfully submitted, _____________________________ Brad Seidensticker, Secretary Account Description2015/2016 Fiscal Year Actual Expenses% Total Budget2017/2018 Fiscal Year Budget% Total BudgetCurrently Paid to date (FY 16/17)Budget AssumptionsPlan Expense:Service Providers:Actuary44,256.0028.5%57,532.8026.3%10,342.00 Category Increase by 30%Administrator31,088.6420.0%38,860.8017.8%18,122.63 Category Increase by 25%Auditor/ Accounting15,150.009.8%18,937.508.7%8,000.00 Category Increase by 25%Attorney/ Legal16,331.8510.5%20,414.819.3%3,447.50 Category Increase by 25%Investment Consultant22,360.4014.4%27,950.5012.8%10,749.90 Category Increase by 25%Subtotal:129,186.89 83.2%163,696.41 75.0%Other Plan Expenses:Dues and Subscriptions690.000.4%1,862.500.9%690.00 Category Increase by 25% + $1,000Insurance6,688.424.3%8,360.533.8%6,764.12 Category Increase by 25%Miscellaneous Expenses2,479.861.6%20,000.009.2%3,721.41 Transfer Category Minimum $20,000Travel & Education16,288.4510.5%24,432.6811.2%3,470.19 Category Increase by 50%Subtotal:26,146.73 16.8%54,655.70 25.0%TOTAL:155,333.62100.0%218,352.11100.0%*This report does not include Investment Manager or Custodian expenses*Palm Beach Gardens Police Officers' Pension FundFiscal Year 2017-2018 BudgetFiscal Year 2015-2016 Actual Report City of Palm Beach Gardens Police Officers’ Pension Fund Summary Plan Description OCTOBER 2014 MARCH 2017 Introduction As a participant in the Palm Beach Gardens Police Officers’ Pension Fund, you are included in a program of benefits to help you meet your financial needs in retirement, or in the event of disability or death. The purpose of this booklet is to give you a brief description of benef its available to you under your pension plan. Planning for retirement begins now. This booklet can be a valuable tool in preparing for your retirement and financial future. If you need any further information on any of the topics presented in this booklet, please contact the Fund Administrator, Resource Centers, LLC, or the Board of Trustees. They will answer any questions to help you better understand your benefits. The information presented is a summary of the pension plan as provided in the City of Palm Beach Gardens Code of Ordinances which governs your Pension Fund. The legal citation for your Plan is Chapter 50, Article III, Section 50-61 et seq., as amended through July 10, 2014 City of Palm Beach Gardens Code. Any discrepancies between information in this booklet and the Plan will be governed by the Plan. A copy of the Plan can be obtained f rom the Fund Adm inistrator, Resource Centers, LLC. T heir address is: Resource Centers, LLC 4360 Northlake Boulev ard, Suite 206 Palm Beach Gardens, FL 33410 (561) 624-3277 - T elephone (561) 624-3278 - Facsim ile www.resourcecenters.com Board of Trustees Palm Beach Gardens Police Officers’ Pension Fund Jay Spencer, Chairman David Pierson, Secretary Gregory Mull, Trustee Brad Seidensticker, Trustee Secretary Marc Glass, Trustee TABLE OF CONTENTS DEFINITIONS..........................................................Page 1 PARTICIPATION IN THE PENSION FUND...................................Page 2 ELIGIBILITY FOR NORMAL RETIREMENT...................................Page 2 AMOUNT OF A NORMAL RETIREMENT PENSION............................Page 2 EARLY RETIREMENT PENSION...........................................Page 4 MONTHLY SUPPLEMENTAL BENEFITS.....................................Page 4 FORMS OF PAYMENT OF A PENSION......................................Page 4 Normal Form.....................................................Page 4 Optional Forms of Payment..........................................Page 5 SURVIVOR BENEFITS - DEATH BEFORE RETIREMENT.......................Page 6 Duty Related Deaths...............................................Page 6 Non-Duty Related Deaths...........................................Page 6 DISABILITY RETIREMENT................................................Page 7 Duty Disability Retirement...........................................Page 7 Non-Duty Disability Retirement.......................................Page 8 ENDING EMPLOYMENT BEFORE RETIREMENT..............................Page 8 ANNUAL PENSION ADJUSTMENTS (non-guaranteed)..........................Page 9 FILING FOR RETIREMENT..............................................Page 10 DEFERRED RETIREMENT OPTION PLAN (DROP)...........................Page 10 TRUSTEE TO TRUSTEE TRANSFER ......................................Page 11 COST OF THE PENSION FUND..........................................Page 11 ADMINISTRATION OF THE PENSION FUND................................Page 11 INVESTMENTS.......................................................Page 11 ACTUARIAL SOUNDNESS..............................................Page 12 FORFEITURE OF PENSION.............................................Page 12 REVIEW PROCEDURE.................................................Page 13 AGENT FOR SERVICE OF LEGAL PROCESS ..............................Page 13 PLAN YEAR..........................................................Page 14 RELEVANT PROVISIONS OF COLLECTIVE BARGAINING AGREEMENT.........Page 14 DEFINITIONS Accumulated contributions - the total of all amounts contributed by a participant to the Palm Beach Gardens Of ficer’s Police Pension Fund. Average Monthly Earnings - the monthly average of salary during the last five years of employment. Beneficiary - an individual who is receiving a survivor benefit from the Pension Fund following the death of a participant. Board - the Board of Trustees which administers, manages and operates the Pension Fund. Credited service - A participant's years of service as a police officer in Palm Beach Gardens Police Department and includes those years which a participant has purchased by making a contribution to the plan. Years of service can be purchased for years or fractional parts of years that a police officer served in the United States Military service, or service with another municipal, county, state, or federal law enforcement agency. Participants may also be entitled to credited service for military service which interrupts em ployment. Participant - a Palm Beach Gardens police officer participating in the Pension Fund. Salary - Average monthly earnings as reported to Internal Revenue Service for income tax purposes, plus deferred compensation. Additionally, salary includes amounts paid by the City as differential wages while the participant is absent from employment while in qualified military service. Effective September 13, 2012, salary means base pay, excluding all other compensation. The salary of any participant employed on September 13, 2012, shall include payment for unused accrued sick and annual leave up to the dollar amount of unused sick and annual leave that the participant has accrued as of September 13, 2012. The salary at retirement of any participant who is employed on September 13, 2012, shall not be less than the participant’s salary on September 12, 2012, as determined in accordance with the definition of salary in effect on September 12, 2012. Palm Beach Gardens March 2017 October 2014 Police Officers’ Pension Fund Page 1 PARTICIPATION IN THE PENSION FUND Each police officer employed in the City of Palm Beach Gardens Police Department is a Pension Fund participant. A police officer is a full-time employee who is certified as a law enforcement officer as a condition of employment in accordance with the provisions of §943.10, Florida Statutes. The Police Chief may elect not to participate in the Plan. ELIGIBILITY FOR NORMAL RETIREMENT A police officer who either has 20 or more years of credited service or is age 52 or older and has 10 or more years of credited service is eligible for normal retirement. An application for normal retirement must be filed with the Fund Administrator and approved by the Board of Trustees. Effective September 13, 2012, for police officers with less than 10 years of creditable service and police officers hired on or after that date, the normal retirement date shall be age 59 with 10 or more years of credited service. Effective July 1, 2016, f or police of ficers with less than 10 years of creditable service as of September 13, 2012 and police officers hired on or after that date, the normal retirement date shall be age 55 with at least 10 years of creditable service, or 25 years of creditable service regardless of age. AMOUNT OF A NORMAL RETIREMENT PENSION The amount of a normal retirement pension is based on a participant's credited service, average monthly earnings and pension m ultiplier. Average Monthly Earnings is the monthly average of salary during the last five years of employment producing the highest average. Salary includes base salary, overtime, longevity pay and may include other types of pay. Credited service is generally a participant's period of employment as a police officer in the Police Department of the City of Palm Beach Gardens, measured in years and completed months of a year. Special conditions apply if a participant has a break in service as a police officer. In certain circumstances, limited periods of military service and police service with another Florida municipality may be recogn ized as credited service. Promptly contact the Fund Administrator if any of these situations apply and you have not already resolved the question. The pension multiplier is 3.5% for all years of credited service up to September 13, 2012 plus 2.75% f or all years of credited service after that date. T he benef it Palm Beach Gardens March 2017 October 2014 Police Officers’ Pension Fund Page 2 shall be limited to a maximum of 75% of the average monthly earnings. Participants who are eligible for normal retirement age on September 13, 2012 will be entitled to a 3.5% m ultiplier and will not be subject to the 75% cap. Sample Benefit Calculation The following example illustrates how average monthly earnings are calculated. This is an example for planning purposes only and does not indicate the actual benef it for any participant. Year Before Sample Salary Retirement for Year 5th 25,000 4th 26,000 3rd 27,000 2nd 28,000 1st 29,000 To calculate f inal average salary, total the last f ive years salary and divide by 60: $25,000 + $26,000 + $27,000 + $28,000 + $29 ,000 = $2,250 60 The monthly normal retirement pension is calculated as f ollows: 3.50% of average monthly earnings per year of credited service up to September 13, 2012 and 2.75% of average monthly earnings per year of credited service after September 13, 2012 up to a m aximum of 75%. The following is an illustration of a normal retirement pension calculation. This is an example for planning purposes only and does not indicate the actual benefit for any participant. (1) Total credited service up to Septem ber 13, 2012 19.0 yrs. (2)Total credited service after September 13, 2012 1.0 yr. (3) Average monthly earnings $2,250 (4)3.50% of line (1).035 x 19 66.5% (5)2.75% of line (2).0275 x 1 2.75% (6)Line (4) plus line (5)66.5% + 2.75% 69.25% (7)Line (6) times line (3)69.25% x 2,250 $1,558.13 Palm Beach Gardens March 2017 October 2014 Police Officers’ Pension Fund Page 3 EARLY RETIREMENT PENSION A police officer who is age 50 and has 10 years of service is eligible for early retirement. The early retirement benefits that are payable to a police officer are determined in the sam e manner as the norm al retirement benef it but are reduced by 3% for each year by which the participant’s age at retirement preceded the participant’s normal retirement age to take into account the police officer’s younger age and the earlier com mencement of retirement incom e payments. MONTHLY SUPPLEMENTAL BENEFITS Beginning October 1, 2004, all retirees in payment status are entitled to a monthly supplemental pension benefit equal to $12.50 per year of service. This benefit is payable monthly for the life of the retiree. This benefit is payable to a surviving beneficiary of a retiree on a monthly basis for the period of time that the surviving benef iciary is in receipt of a pension in accordance with the form of benefit chosen at the tim e that benef its begin. FORMS OF PAYMENT OF A PENSION Normal Form The standard form of payment for the pension described above is a benefit payable for 10 years certain, in other words, you are guaranteed 120 monthly payments. The retiree will receive a benef it for life. However, if the retiree dies prior to receiving 120 payments, then pension payments will continue until a total of 120 payments have been m ade. A participant may designate a beneficiary to receive the benefit payable, if any, upon the death of the retired participant. A retired participant may also change the designated joint pensioner or survivor up to two times after retirement with certain restrictions. Please see the administrator for details. This change may affect the amount of the benef it. W hen there is no beneficiary named, the benefit will be paid to the spouse, dependen t children, or dependent living parents of the police officer, or if there is no such survivor, then to the deceased police of ficer’s estate. IT IS IMPORTANT TO KEEP YOUR BENEFICIARY DESIGNATION UP TO DATE Palm Beach Gardens March 2017 October 2014 Police Officers’ Pension Fund Page 4 Optional Forms of Payment Optional forms of payment are available in lieu of the normal form described above. The amount of pension under each optional form has the same actuarial value as the normal form of payment. The normal form of payment is a lifetime benefit payable to the retiree, with 120 payments guaranteed (in the event that the retiree dies after receiving only 100 payments, the remaining 20 payments will be paid to the nam ed beneficiary or to the estate of the retiree). C Option I - Joint and 100% Survivor - The joint and 100% survivor form of payment pays the retired participant a reduced monthly pension for life. Upon the retired participant's death, the beneficiary (a spouse or relative) designated when the form of payment was elected will be paid 100% of the reduced m onthly pension f or life. C·Option II - Joint and 75% Survivor - The joint and 75% survivor form of payment pays the retired participant a reduced monthly pension while the retired participant is alive. The reduction is not as great as under Option I. Upon the retired participant's death, the beneficiary (a spouse or relative) will be paid 75% of the reduced m onthly pension for life. C Option III - Joint and 66-2/3% Survivor - The joint and 66-2/3% survivor form of payment pays the retired participant a reduced monthly pension while the retired participant is alive. The reduction is not as great as under Option II. Upon the retired participant's death the beneficiary (a spouse or relative) will be paid 66-2/3% of the reduced monthly pension for life. C Option IV - Joint and 50% Survivor - The joint and 50% survivor form of payment pays the retired participant a reduced monthly pension while the retired participant is alive. The reduction is not as great as under Option III. Upon the retired participant's death, the beneficiary (a spouse or relative) will be paid 50% of the reduced m onthly pension f or life. •Option V - Life Annuity - The straight life form of payment pays the retired participant an increased monthly pension for life. The amount of this benefit is more than the normal form and other optional forms. No monthly pension is ever paid a spouse, child, dependent parent or other beneficiary under this f orm of payment. Palm Beach Gardens March 2017 October 2014 Police Officers’ Pension Fund Page 5 C Option VI - Other - In lieu of the other optional forms, benefits may be paid in any form approved by the Board so long as it is the actuarial equivalent of the benef its otherwise payable. The Fund Administrator can give you an estimate of the amount of your pension under any of the optional forms of payment. A request for an optional form of payment must be submitted in writing to the Board before the effective date of retirement. An optional form of payment cannot be changed after the first pension check is cashed. The election of Options I, II, III and IV shall be null and void if the designated beneficiary dies before the participant’s payments commence. SURVIVOR BENEFITS - DEATH BEFORE RETIREMENT Duty Related Deaths The surviving spouse, or in certain circumstances surviving children, of a participant who dies while employed in the Police Department as a police officer will be paid a duty death pension if the Board finds the death to be the result of causes arising out of and in the course of the participant's performance of duty as a police of ficer. A surviving spouse is paid a monthly pension, for life, of 50% of the participant's average monthly earnings. An unmarried child under the age of 18, or age 24 if a full time student, is paid a monthly pension in the amount of an equal share of 50% of the participant's average monthly earnings if a surviving spouse is not being paid a pension. Payment terminates upon the earlier of adoption, marriage, attainment of age 18 (age 24, if a full time student, or loss of full time student status) or death. The death benef it is paid to the estate if the participant leaves neither a surviving spouse nor an eligible surviving child. In any of these cases, the board may, in its sole discretion, direct that the actuarial value of the monthly payment be paid as a lump sum. Non-Duty Related Deaths If a participant who has 5 or more years of credited service dies while employed in the Police Department as a police officer and the death is not in the line of duty, the beneficiary is paid a pension equal to the benefits otherwise payable at early or normal retirement age. Palm Beach Gardens March 2017 October 2014 Police Officers’ Pension Fund Page 6 If no pension is paid or will become payable on account of the death of a participant, the participant's accumulated contributions are paid to the parti- cipant's designated benef iciary or to the participant's estate if there is no designated benef iciary. DISABILITY RETIREMENT A pension may be payable to a participant who becomes disabled while employed in the police department as a police officer. Eligibility and the amount of the pension are dependent on whether or not the disability occurred in the line of duty. The disability must arise from a mental or physical illness, disease or injury which totally and permanently prevents the participant from performing useful and efficient service as a police officer in the Palm Beach Gardens Police Department. No police officer shall be permitted to retire under a disability retirement until examined by a duly qualified physician or surgeon to be selected by the Board of Trustees and the physician or surgeon finds the participant to be disabled from performing the functions of a police officer. The final determination of disability is made by the Board. If disability results from excessive and habitual use of drugs, intoxicants or narcotics, willful and illegal participation in fights, riots or civil insurrection, or while committing a crime, or injury or disease sustained while serving in an armed force, no disability pension can be awarded. This exclusion does not affect participants who have become disabled as a result of intervening military service under the federal Heroes Earnings Assistance and Relief Tax Act of 2008 (H.R. 6081; P.L. 100-245). A participant who is retired for disability may be required to undergo periodic medical examination under the direction of the Board of Trustees to determine if the retired participant is capable of performing the duties of a police officer in the Department. Duty Disability Retirement If the Board finds the disability to have arisen out of and in the course of the participant's performance of duty as a Palm Beach Gardens police officer, the amount of pension is equal to 60% of the participant’s rate of pay at the time of disability or the accrued pension benefit, whichever is greater provided the disability has continued f or a period of six months. Palm Beach Gardens March 2017 October 2014 Police Officers’ Pension Fund Page 7 Non-Duty Disability Retirement There is a 10 year credited service requirement for disability retirement if the disability is not the result of performing duty as a Palm Beach Gardens police officer. Additionally, there is no non-line of duty disability for a participant who has reached or passed norm al retirement eligibility. The amount of pension is calculated the same as a normal retirement pension based on average monthly earnings and credited service at the time of disability. The minimum pension is 25% of average monthly earnings or the accrued pension benef it, whichever is greater. There is no non-duty disability pension if a police officer's credited service is less than 10 years. In that event, accumulated contributions are ref unded. ENDING EMPLOYMENT BEFORE RETIREMENT If a participant with less than 10 years of credited service quits or is fired from employment as a Palm Beach Gardens police officer, the participant shall be entitled to a retirem ent benef it subject to the vested percentages below: Years of credited Service Vested % Under 5 0% 5 25 6 40 7 55 8 70 9 85 10 or more 100 A participant may elect to receive the return of all contributions in lieu of all other benefits under the plan. If a participant has at least 10 years of credited service when employment as a police officer terminates, the right to a deferred normal retirement is retained so long as accumulated contributions are lef t on deposit in the Pension Fund. The amount of deferred normal retirement pension is calculated using average monthly earnings and credited service at the time of termination of employment as a police officer. Normal retirement and payment of a pension is available upon application on or after age 52. The amount of pension may be subject to Palm Beach Gardens March 2017 October 2014 Police Officers’ Pension Fund Page 8 early retirement reduction in accordance w ith the chart on pag e 4. Credited service will be reinstated if re-employment as a Palm Beach Gardens police officer occurs and any withdrawn accumulated contributions are repaid within 5 years of re-employment. The repayment must include interest from the date of withdrawal to the date of repayment. The election to purchase such time must be made within six months of date of hire. Additionally, service time with the military, another federal, state, county or municipal police departm ent may be purchased. ANNUAL PENSION ADJUSTMENTS (non-guaranteed) Retired participants (including DROP participants) and beneficiaries who have been in receipt of a pension benefit for at least one year on the distribution date may receive an adjustment to their pension benefit amount as of July 1st of each year if the pension fund assets have earned more than 8.5% as of September 30th and the pension f und has positive actuarial experience. The potential total distribution is based upon an actuarial formula which is contained in the pension plan document. Essentially, the retirees and beneficiaries share in the positive investment experience of the retiree portion of the pension f und over 8.5%. All pension recipients monthly pension benefits will be increased on a percentage basis and the percentage will be the same for all pension recipients. The percentage increase will be determined by the actuary and will equal the earnings above 8.5% on the assets reserved to pay pension recipients. The distribution is limited to a 4% increase in any one year. A retiree must be in receipt of a pension for at least one year on July 1 to be entitled to an adjustment. Conversely, if the Fund does not earn more than 8.5%, there will be no pension adjustment. For police officers who are employed and have not reached the normal retirement date prior to September 13, 2012, there shall be no cost of living adjustment applied to benefits earned based on creditable service on and after that date; and for police officers hired on or after September 13, 2012, there shall be no cost of living adjustment. Palm Beach Gardens March 2017 October 2014 Police Officers’ Pension Fund Page 9 FILING FOR RETIREMENT In order to ensure that you receive your pension on time, you should file your application with the Fund Administrator at least 30 days before retirement. All forms can be obtained from the Fund Administrator at the address on the Introduction page. Penalties will be imposed for making a false or misleading statement to obtain a pension benefit. It can take up to 60 days after your date of retirement to receive your first pension check. DEFERRED RETIREMENT OPTION PLAN (DROP) A participant may elect DROP participation prior to completing 25 years of credited service if the participant is eligible for normal retirement. Effective July 1, 2016, a participant who is eligible to enter into the DROP may delay entry into the DROP until the time the participant has accrued the maximum benefit percentage of 75%. However, the participant must elect to participate within 30 days of attaining the 75% maximum benefit. DROP participation ends at the f irst to occur of: 1) termination of employment, 2)30 years of credited service, or 3)5 years of participation. However, effective July 1, 2016, a participant who delays the election to participate in the DROP until attaining the 75% maximum benef it may participate for the full 5 years even if that time takes participation beyond 30 years of credited service. Upon the effective date of DROP participation a participant's pension amount is calculated based on credited service and final average salary at that time and the amount remains permanently frozen. The participant's DROP account is credited with monthly amounts equal to the frozen pension during the period of DROP participation. DROP accounts are credited with investment earnings during the DROP period. Participants may choose between the rate of return on the pension fund or a fixed rate of 6.5% as the investment earnings credit. No investment earnings or monthly credits are made after the end of the DROP period, if the participant rem ains employed. Participant DROP accounts are subject to adm inistrative charges. A participant may elect payment of the DROP account at any time following termination of employment but not later than age 70 ½. Payment is available under several options. Detailed inf ormation is available from the administrator. Palm Beach Gardens March 2017 October 2014 Police Officers’ Pension Fund Page 10 TRUSTEE TO TRUSTEE TRANSFER To minimize the tax consequences of rolling DROP accounts over to an IRA or another qualified plan, direct trustee-to-trustee transfers are available. Please see the administrator for the appropriate f orms. COST OF THE PENSION FUND Participants are required to contribute 8.60% of covered salary. Contributions are deducted from each paycheck and credited to the participant's Pension Fund account. The City of Palm Beach Gardens also contributes to the Pension Fund. The amount of City contribution is mathematically determined in accordance with State statutes to f inance Pension Fund benef its as they are earned. ADMINISTRATION OF THE PENSION FUND The Pension Fund is administered by a Board of Trustees which is responsible for overseeing the investment of Pension Fund assets and application of the provisions of the Pension Plan document contained in the Palm Beach Gardens Code. The Board has authority over distribution of all pensions and makes final decisions on claims and appeals. Five trustees comprise the Board: two legal residents of the City appointed by the City Commission, two full-time police officers elected by Pension Fund participants and a trustee chosen by the majority of the other f our trustees. Pension Fund assets are maintained and invested entirely separate from City assets and cannot be used for any purpose other than those specified in the Plan. INVESTMENTS The assets of the Plan are presently invested by ICC Capital Management Inc., Rhumbline, American Realty, International Bond Mutual Funds, and International Equity Mutual Funds under investment guidelines adopted by the Board of Trustees in consultation with their investment advisors. Palm Beach Gardens March 2017 October 2014 Police Officers’ Pension Fund Page 11 ACTUARIAL SOUNDNESS The actuary for the Plan has determined that the Plan is actuarially sound and can adequately fund the benefits based upon projected contributions to the Plan and investment earnings. FORFEITURE OF PENSION Any Participant who is convicted of any of the below offenses committed prior to retirement or whose office or employment is terminated by reason of his or her admitted commission of the below offenses shall forfeit all rights and benefits under this Fund, except for a refund of accumulated contributions. The specified offenses are: (1)Committing, aiding or abetting of an embezzlement of public funds; (2) Committing, aiding or abetting of any theft by a public officer or employee from employer; (3) Bribery in connection with the employment of a public officer or employee; (4) Any felony specified in Chapter 838, Florida Statutes; (5) The committing of impeachable of fense (6) The committing of any felony by a public officer or employee who, willfully and with intent to defraud the public or the public agency for which the public officer or employee acts or in which he or she is employed of the right to receive the faithful performance of his or her duty as a public officer or employee, realizes or obtains, or attempts to realize or obtain, a profit, gain, or advantage for himself or herself or for some other person through the use or attempted use of the power, rights, privileges, duties, or position of his or her public of fice or employment position. (7)The committing on or after October 1, 2008, of any felony defined in §800.04, Florida Statutes, against a victim younger than 16 years of age, or any felony defined in Chapter 794, Florida Statutes against a victim younger than 18 years of age, by a public officer or employee through the use or attempted use of power, rights, privileges, duties, or position of his or her public of fice or employment position. Any Participant who has received benef its from the Plan in excess of his Palm Beach Gardens March 2017 October 2014 Police Officers’ Pension Fund Page 12 accumulated contributions shall be required to repay the Fund. The Board may implement legal action necessary to recover such funds. Additionally, a Participant who makes a false or misleading statement to obtain retirement benefits shall commit a misdemeanor of the first degree and if convicted, the Participant shall f orfeit his/her benef it. REVIEW PROCEDURE Any participant, former participant, or beneficiary who has been denied a benef it by a decision of the Board shall be entitled to request in writing that the Board give further consideration to the claim. This request, together with a written statement of the reasons why the applicant believes his claim should be allowed, shall be filed with the Board no later than 20 days after receipt of the written notification of the denial. If no appeal is filed within this time period, the proposed order shall be f inal. The Board shall then conduct a hearing within 45 days of the receipt of the appeal. W ritten notice of the hearing will be sent by certified mail to the applicant 10 days prior to the hearing. The applicant may be represented at the hearing by an attorney or other representative of his/her choosing. During the hearing the applicant shall have the opportunity to submit written and oral evidence and arguments in support of his/her claim. The applicant shall also have the opportunity to review the Board’s file at or prior to the hearing. Either the applicant of the Board may request that a court reporter record the proceedings. In this event a complete written transcript of the proceedings shall be furnished to both parties at the expense of the party requesting the attendance of the court reporter. W ithin 20 days after rendering its order, the Board will send by a method providing proof of delivery, a copy of the order to the applicant. AGENT FOR SERVICE OF LEGAL PROCESS Board of Trustees j Resource Centers, LLC 4360 Northlake Boulev ard Suite 206 Palm Beach Gardens, Florida 33410 Palm Beach Gardens March 2017 October 2014 Police Officers’ Pension Fund Page 13 PLAN YEAR The plan year is the twelve month period beginning each October 1. Records are kept on a f iscal year basis. RELEVANT PROVISIONS OF COLLECTIVE BARGAINING AGREEMENT Certain employees covered by the Plan are participants of the Palm Beach County Police Benevolent Association Bargaining Unit. The current Collective Bargaining Agreement between the City and the Union expires on September 30, 2013 2019 Appendi x A to the Collective Bargaining Agreement addresses Retirement. Palm Beach Gardens March 2017 October 2014 Police Officers’ Pension Fund Page 14 Palm Beach Gardens March 2017 October 2014 Police Officers’ Pension Fund Page 15 Palm Beach Gardens March 2017 October 2014 Police Officers’ Pension Fund PALM BEACH GARDENS POLICE PENSION FUND Benefit Approvals Meeting of May 31, 2017 APPLICATION FOR DISTRIBUTION OF DROP ACCOUNTS (3/15/17) ERNEST CARR DATE OF RETIREMENT 04/30/2015 DATE OF BIRTH 02/26/1941 TYPE OF DISTRIBUTION PARTIAL LUMP SUM-CASH TOTAL GROSS DISTRIBUTION $42,000.00 TAX WITHHOLDING (20%) $8,400.00 TOTAL NET DISTRIBUTION $33,600.00 CURRENT DROP ACCOUNT BALANCE $410,510.11 _________________________ APPLICATION FOR DISTRIBUTION OF DROP ACCOUNTS (4/15/17) JOSEPH SHEEHAN DATE OF RETIREMENT 01/29/2016 DATE OF BIRTH 03/28/1961 TYPE OF DISTRIBUTION PARTIAL LUMP SUM-CASH TOTAL GROSS DISTRIBUTION $10,000.00 TAX WITHHOLDING (20%) $2,000.00 TOTAL NET DISTRIBUTION $8,000.00 CURRENT DROP ACCOUNT BALANCE $439,080.15 _________________________ JULES BARONE DATE OF RETIREMENT 02/15/2013 DATE OF BIRTH 05/28/1943 TYPE OF DISTRIBUTION PARTIAL LUMP SUM-CASH TOTAL GROSS DISTRIBUTION $12,000.00 TAX WITHHOLDING (20%) $2,400.00 TOTAL NET DISTRIBUTION $9,600.00 CURRENT DROP ACCOUNT BALANCE $231,225.35 _________________________ RALPH KRANCHICK DATE OF RETIREMENT 01/04/2017 DATE OF BIRTH 06/21/1956 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 $294,961.78 _________________________ TIMOTHY ROMAN DATE OF RETIREMENT 02/28/2017 DATE OF BIRTH 04/19/1970 TYPE OF DISTRIBUTION PARTIAL LUMP SUM-CASH TOTAL GROSS DISTRIBUTION $42,000.00 TAX WITHHOLDING (20%) $8,400.00 TOTAL NET DISTRIBUTION $33,600.00 CURRENT DROP ACCOUNT BALANCE $53,093.35 _________________________ APPLICATIONS FOR DISTRIBUTION OF DROP ACCOUNTS (5/15/17) JEFF MAIN DATE OF RETIREMENT 12/29/2016 DATE OF BIRTH 04/28/1960 TYPE OF DISTRIBUTION PARTIAL LUMP SUM-CASH TOTAL GROSS DISTRIBUTION $18,750.00 TAX WITHHOLDING (20%) $3,750.00 TOTAL NET DISTRIBUTION $15,000.00 CURRENT DROP ACCOUNT BALANCE $120,266.85 _________________________ APPLICATION FOR REFUND OF CONTRIBUTIONS ABIGAIL CARBUCCIA DATE OF BIRTH 02/24/1989 DATE OF HIRE 09/08/2014 DATE OF TERMINATION 09/01/2016 YEARS OF SERVICE 1 YEAR, 11 MTHS & 24 DAYS TOTAL REFUND $8,637.21 TAX WITHHOLDING (0%) $0.00 (ROLLOVER) TOTAL NET REFUND $8,637.21 _________________________ __________________________________, CHAIRMAN APPROVED _________________________________, SECRETARY _____5/31/17______________________, DATE Pension Resource Centers Accounts Payable Check Register FOR: PALM BEACH GARDENS POLICE Meeting Board Meeting May 31, 2017 Check Number Date Payee and Description Amount 2839 April 1, 2017 City of Palm Beach Gardens $32,847.81 2840 March 27, 2017 Palm Beach Gardens Fire $5,485.11 Corrected Deposit that went into wrong account 2841 April 6, 2017 Pension Resource Center $2,575.00 Administrative Fee - April 2017 2842 April 10, 2017 Cherry Bekaert LLP $8,000.00 Auditor Fee - 2/27/17 2843 April 10, 2017 Klausner, Kaufman, Jensen & Levinson $45.00 Legal Services Rendered through 2-28-17 2844 April 10, 2017 Klausner, Kaufman, Jensen & Levinson $95.00 Legal Services Rendered through 10/2017 2845 May 1, 2017 City of Palm Beach Gardens $32,847.81 2846 April 27, 2017 Omni Orlando Resort at ChampionsGate $570.00 FPPTA Conference Greg Mull 2017 2847 April 27, 2017 Omni Orlando Resort at ChampionsGate $570.00 FPPTA Conference Marc Glass 2017 2848 April 27, 2017 FPPTA $650.00 Greg Mull 2017 2849 April 27, 2017 FPPTA $650.00 Marc Glass 2017 2850 May 2, 2017 Pension Resource Center $2,665.82 Administrative Fee - May 2017 2851 May 8, 2017 Gabriel Roeder Smith & Company $7,176.00 Actuarial Services Rendered through 3/31/17 2852 May 8, 2017 Klausner, Kaufman, Jensen & Levinson $2,128.00 Legal Services Rendered through 3-31-17 2853 May 8, 2017 Highland Capital Management, LLC $28,675.28 Management Fee - 1st Quarter 2017 2854 May 8, 2017 Rhumbline Advisers $6,344.00 Investment Advisory Fee - 1st Quarter 2017 2855 May 8, 2017 Rhumbline Advisers $1,250.00 Investment Advisory Fee - 1st Quarter 2017 2856 May 8, 2017 AndCo Consulting $5,374.95 Investment Consulting Fee 3/31/17 2857 May 8, 2017 Cherry Bekaert LLP $6,600.00 Second Progress billing on audit 4/14/17 Total:$144,549.78 Paid by Custodian January 10, 2017 Salem Trust $5,503.67 April 10, 2017 Salem Trust $5,641.69 Total $155,695.14 Chair___________________________ Secretary___________________________ Date_______________________________ DEERFIELD BEACH TAMPA 1715 N WESTSHORE BOULEVARD, SUITE 750 • TAMPA, FL 33607 • TEL (877) 382-5268 • FAX (813) 301-1295 www.salemtrust.com SALEM TRUST COMPANY IS A SUBSIDIARY OF U.S. FIDUCIARY SERVICES, INC., AN EMPLOYEE-OWNED COMPANY. Our Definition of Reliability: The vision of Salem Trust Company is “To be the custodian demanded by public sector retirement plans and institutional clients.” To track, analyze, and ultimately improve the reliability of our service to you, we developed the Salem Trust “Service Report Summary” to track 5 primary components of a comprehensive quarterly performance scorecard containing 17 discrete tasks, also available by request. Each month, based on data used by our independent auditors and government regulators, the report objectively compares how we have performed in relation to our performance goals for essential services. Our objective is to deliver better service to you by analyzing how the average performance can be improved. Over time, with your help, we will launch other measurements of service performance. Salem Trust Service Report Summary For the period ending March 31, 2017 Published Date: May 3, 2017 OUR COMMITMENT TO Reliability Directions to Everywhere, Key West, FL Salem Trust Service Report Summary page 2 Published: May 3, 2017 92% 93% 94% 95% 96% 97% 98% 99% 100% Apr'16 May '16 Jun '16 Jul '16 Aug '16 Sep '16 Oct '16 Nov '16 Dec '16 Jan '17 Feb '17 Mar '17 Statement Production Actual Monthly Performance Statement Production Category  Goal 92% 93% 94% 95% 96% 97% 98% 99% 100% Apr'16 May '16 Jun '16 Jul '16 Aug '16 Sep '16 Oct '16 Nov '16 Dec '16 Jan '17 Feb '17 Mar '17 Trade Settlements  Actual Monthly Performance Trade Settlements  Category Goal 92% 93% 94% 95% 96% 97% 98% 99% 100% Apr'16 May '16 Jun '16 Jul '16 Aug '16 Sep '16 Oct '16 Nov '16 Dec '16 Jan '17 Feb '17 Mar '17 Income Processing Actual Monthly Performance Income Processing Category  Goal Client Statement Production: Tracks when statements are released to our clients. Trade Settlements: Measures how many securities are posted by their settlement dates. Income Processing: Measures all types of income, including interest, dividends, capital gains and pay downs. Salem Trust Service Report Summary page 3 Published: May 3, 2017 92% 93% 94% 95% 96% 97% 98% 99% 100% Apr'16 May '16 Jun '16 Jul '16 Aug '16 Sep '16 Oct '16 Nov '16 Dec '16 Jan '17 Feb '17 Mar '17 Cash Processing Actual Monthly Performance Cash Processing Average Category Goal 92% 93% 94% 95% 96% 97% 98% 99% 100% Apr'16 May '16 Jun '16 Jul '16 Aug '16 Sep '16 Oct '16 Nov '16 Dec '16 Jan '17 Feb '17 Mar '17 Corporate Actions Actual Monthly Performance Corporate Actions Category Goal Cash Processing: Tracks when wires, ACHs and checks are produced or transmitted. Corporate Actions: Measures the completion of stock splits, company reorganizations and stock calls. Client Service Totals as of March 31, 2017: Client relationships • Client assets under administration: $7.4 billion • Client relationships: 220 Client service ratio • Full-time Salem Trust client services employees: 7 • Average number of client relationships per Salem Trust relationship manager: 55 Benefit payments • Monthly recurring payments made in past 12 months: 74,705 • Lump sum payments made in past 12 months: 1,268 Securities movement • Number of security positions held: 28,174 (excluding money market funds) • Number of securities trades processed: 132,898 Salem Trust Service Report Summary page 4 Published: May 3, 2017 Discrete Tasks per Service Category: Listed below are the individual tasks, with their goals, for each category tracked in the comprehensive quarterly performance scorecard. The graphs in this Salem Trust Service Report Summary average all discrete tasks within a category. Client statement production performance base: • Standard statements released for print within 5 business days: 99% • Employee benefit statements release for print within 10 business days: 95% Trade settlements performance base: • Money market trades posted on settlement date: 99% • Mutual fund trades posted on settlement date: 95% • DTC and Fed trades posted on settlement date: 95% Income processing category performance base: • Money market dividends posted within 1 business day of payable date: 99% • Mutual fund dividends and capital gains distributions posted within 3 business days of payable date: 95% • Book-entry DTC dividends posted within 1 business day of payable date: 95% • Book-entry Fed interest posted within 1 business day of payable date: 85% • MBS, CMO & asset-backed principal paydowns posted within 2 business days of payable date: 90% • MBS, CMO & asset-backed interest posted within 2 business days of payable date: 90% Cash processing category performance base: • Wire transfers transmitted on same business day: 99% • ACH transfers transmitted on same business day: 99% • Checks produced on same business day: 99% Corporate actions category performance base: • Stock splits & stock dividends posted within 1 business day of ex-date: 95% • Exchanges, spinoffs, mergers & all other reorgs posted within 1 business day after receipt: 95% • Maturities & full calls posted within 1 business day of maturity or call date: 95% Investment products and services are not bank deposits or obligations of, or guaranteed or endorsed or otherwise supported by, Salem Trust Company, its parent company or any affiliate, are not federally insured or guaranteed by the United States Government, Federal Deposit Insurance Corporation, Federal Reserve Board or any other governmental agency, and are subject to investment risks, including possible loss of the principal amount invested. Investments are: IN NO EVENT WILL SALEM TRUST COMPANY OR ITS AFFILIATES BE LIABLE FOR ANY DAMAGES, INCLUDING WITHOUT LIMITATION DIRECT OR INDIRECT, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES ARISING IN CONNECTION WITH THIS PUBLICATION OR USE THEREOF BY ANY PARTY OR IN CONNECTION WITH ANY ERROR OR OMISSION.