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Home My WebLink AboutAgenda Fire Pension 032811THE R ESOURCE C ENTERS , LLC 4360 Northlake Boulevard, Suite 206 Palm Beach Gardens, FL 33410 Phone (561) 624-3277 Fax (561) 624-3278 WWW .R ESOURCE C ENTERS .COM PALM BEACH GARDENS FIREFIGHTERS’ PENSION FUND Meeting of Monday, March 28, 2011 Location: Council Chambers, Palm Beach Gardens City Hall 10500 North Military Trail Palm Beach Gardens, FL 33410 Time: 9:00 A.M. A GENDA 1. Call Meeting to Order 2. Minutes of Meetings Held January 24, 2011 and February 11, 2011 3. Actuary Report: Brad Armstrong 4. Investment Monitor Report: Bogdahn Consulting 5. Attorney Report: Pedro Hererra • Status of Proposed Ordinance • Status IRS Determination Letter 6. Administrative Report: Margie Adcock • Disbursements 7. Other Business 8. Schedule Next Meeting: Monday , May 16, 2011 at 9:00 A.M. 9. Adjourn PLEASE NOTE: Should any interested party seek to appeal any decisi on made by the Board with respect to any matter considered at such meeting or hearing, he will need a record of t he 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 a ccordance with the Americans With Disabilities Act of 1990, persons needing a special a ccommodation to participate in th is meeting should contact The Resource Centers, LLC no later t han four days prior to the meeting. PALM BEACH GARDENS FIREFIGHTERS’ PENSION FUND MINUTES OF MEETING HELD January 24, 2011 A meeting of the Board of Trustees was called to order at 9:00 A.M. at Council Chambers, Palm Beach Gardens, Florida. Those persons present were: TRUSTEES OTHERS Tom Murphy Margie Adcock, Administrator Rick Rhodes Pedro Herrera, Attorney Ed Morejon Joe Bogdahn, Investment Monitor Mark Joyce Steve Gordon, Auditor WELCOME NEW TRUSTEE The Board welcomed new Trustee Mark Joyce. It was noted that Mr. Joyce replaced the position previously held by Roy Olliff. MINUTES The Board reviewed the minutes of the m eeting held November 8, 2010. A motion was made, seconded and carried 4-0 to accept the minutes of the meeting held November 8, 2010. PUBLIC COMMENTS Chief Bergel addressed the Board. He stated that he had two matters he would like to raise before the Board. First, he asked the Board for written confirmation that he was actually in the DROP. He noted that he has been getting quarterly DROP Statements of his account, but stated that he would like to have something further in writing advising that the Board actually approved his Application for the DROP. Second, he requested that the Board look into a self directed op tion for the DROP. Mr. Herrera advised Chief Bergel that the Board has tried to institute a self directed option for the DROP at various times. He stated that it is not within the Bo ard’s authority to institute such an option. Rather, the City needs to amend the Ordinan ce to allow for such an option and the City has chosen not to do that. There was a lengthy discussion. Chief Bergel stated that he would meet with the City Manager to see if he could assist the Board in moving this matter forward within the City. There was discussion on the ability to provide financial counseling to Participants considering retirem ent. Mr. Herrera stated that they advise their clients not to give such advice. It wa s noted that the Board provides various forms, which clearly explain what options are availabl e. It was also noted that the Administrator has conducted several seminars in the past discussing the benefits under the Plan as well as the on-line calculator. It was noted that these seminars have not been well attended in the past. A motion was made, seconded and ca rried 4-0 to have the Administrator, after the Board has approved a benefit election, se nd a letter to the Participant confirming Board approval of their retirement or DROP application and benefit election. ANNUAL AUDIT Steve Gordon appeared before the Board to present the audit for the period ending September 30, 2010. He stated that he did speak with Ms. Wisneski regarding the audit. She had some suggestions and he incorporated those he agreed with. He noted that most of the changes made were titling changes and we re not substantive and did not affect the 2 actual numbers. Mr. Gordon stated that he was issuing a clean unqualified opinion. He reviewed the Statement of Plan Net Assets. The total assets of th e Fund as of September 30, 2010 were $34,647,786 almost all of which were in investments. Total liabilities were $301,118. Total net assets of the Fund as of September 30, 2010 were $34,346,668. Mr. Gordon reviewed the Statement of Changes in Pl an Net Assets. He reported that the total contributions to the Fund were $4,803,312. Th e total additions were $7,163,277 and total deductions were $656,558. The net increase in Plan net assets was $6,506,719. Mr. Gordon reviewed the schedule of administra tive expenses. There was discussion on the materiality level of the Fund versus that of the City. Mr. Gordon reviewed the notes to the financial statements. It was noted that Ms. Wisneski, in anticipation of her absence today, forwarded written comments to the Admini strator to provide to the Board at this meeting. Mr. Herrera stated that there was no problem with accepting her comments as part of the record. Ms. Wisneski was not voting by proxy or taking any action. She was simply providing her comments, which does not impose any legal problem nor violate the Sunshine Law in any way. It was noted th at the Board had previously asked Ms. Wisneski to work with Mr. Gordon related to the Audit and report back to the Board. A motion was made, seconded and carried 4-0 to accept the Audit for the period ending September 30, 2010. Steve Gordon departed the meeting. INVESTMENT MONITOR REPORT Joe Bogdahn appeared before the Board. He discussed the market environment. He reviewed the performance of the Fund as of December 31, 2010. The total market value of the Fund as of December 31, 2010 wa s $36,478,829. The Fund was up 6.13% net of fees for the quarter. The total equity portfolio was up 10.14% while the benchmark was up 10.86%. The total domestic equity por tfolio was up 10.77% while the Russell 3000 was up 11.59%. The Dana core equity portfo lio was up 10.73% for the quarter while the S&P 500 was up 10.76%. The Dana growth e quity portfolio was up 10.71% for the quarter while the Russell 1000 Growth was up 11.83%. The total international portfolio was up 8.38% while the benchmark was up 6.65%. The international portfolio managed by RBC Global was up 9.82% and the interna tional portfolio managed by Manning & Napier was up 6.79% for the quarter while the EAFE was up 6.65%. The total fixed income portfolio was down .70% for the qua rter while the benchmark was down .75%. Agincourt was down 1.15% for the quarter while the benchmark was down 1.30%. DHJ fixed income was down .27% for the quarter while the benchmark was down .75%. The real estate portfolio managed by American Realty was up 3.71%. Mr. Bogdahn presented a total equity portfolio review. He stated that the Dana core product has a value tilt. The Dana growth produc t is growth with a core tilt. As such, there is a fair amount of overl ap with the process. He provided four options of blended allocations for the equity portfolio. He noted that two consistent opportunistic funds are Rockwood Strategic Equity and ICC Multi cap equity. There was a lengthy discussion on the assumed rate of return. The Board was concerned with why other plans might have met their assumption this past fiscal year while this Fund did not. Mr. Bogdahn explained that other plans are taking more risk. Mr . Bogdahn reviewed the trailing performance returns through December 31, 2010 for the 1, 2, 3, 5 and 7 year time periods with the four options of blended allocations for the equity portfolio. He reviewed the calendar year performance since 2003 with the four options. He also reviewed the rolling 3-year returns as well as the risk and reward component s. There was a lengthy discussion. Mr. Bogdahn noted that the Fund would have a little more volatility if they had ICC or 3 Rockwood. He stated that he would recomme nd that the Board at least invite ICC and Rockwood to make a presentation to the Boar d. He stated that he thinks these two managers would blend the best with Dana’s core product. The Board discussed whether they wanted to look at any other options . It was determined that the Board was comfortable with Mr. Bogdahn’s recomme ndation. A motion was made, seconded and carried 4-0 to invite Rockwood and ICC to make a presentation to the Board. CITY’S REQUEST FOR BOARD PARTICIPATION The Board was provided with a letter date d January 18, 2011 from the City Manager requesting Board participation regarding the unfunded liability of the Plan. There was a lengthy discussion. There was discussion on havi ng a special meeting with the City to discuss the history of the Plan, which m eeting should include the Actuary and the Monitor for the Fund. The Board discussed sending a letter to the City to request a workshop with the City Council. A motion wa s made, seconded and carried 4-0 to direct the Chair to send a letter to the Mayor requesting a special meeting with the City. ATTORNEY REPORT Mr. Herrera discussed the status of the proposed IRS Ordinance. He stated that he did not have an update on where the proposed Ordinan ce was at in terms of getting before City Council. He stated that they have filed for the IRS Determination Letter. He stated that there is no requirement that the Ordinance has to be passed before filing for the IRS Determination Letter. Rather, the requirement is that the Ordinance has to be in progress. Mr. Herrera provided the responses to the RFP for administrative services. He stated that he sent the RFP to six firms and received thr ee responses. It was noted that the Board has reviewed each of the contracts for the various service providers to make sure that the Board is doing its due diligence and getting what is needed for the Plan and the members. There was a lengthy discussion. It was noted th at the current Administrator is local and has had a longstanding relationship with th e Fund. A motion was made, seconded and carried 4-0 to approve renewing the services of the Pension Resource Center as provided in the response to the RFP. Mr. Herrera stated that he would draft an updated contract for the Chair to sign. ADMINISTRATIVE REPORT Ms. Adcock presented the list of disbur sements to be made. A motion was made, seconded and carried 4-0 to approve the disbursements listed. Ms. Adcock presented the Board with the be nefit calculation and election for Christopher Brown. A motion was made, seconded and carried 4-0 to approve the benefit election. OTHER BUSINESS There being no further business, the meeting adjourned. Respectfully submitted, Tom Murphy, Secretary PALM BEACH GARDENS FIREFIGHTERS’ PENSION FUND MINUTES OF MEETING HELD February 11, 2011 A meeting of the Board of Trustees was called to order at 11:35 A.M. at Council Chambers, Palm Beach Gardens, Florida. Those persons present were: TRUSTEES OTHERS Tom Murphy Margie Adcock, Administrator Rick Rhodes Pedro Herrera, Attorney Ed Morejon Joe Bogdahn & Troy Brown, Investment Monitor Mark Joyce Donna Wisneski INVESTMENT MANAGER PRESENTATIONS Joe Bogdahn appeared before the Board. He provided a brief background of the discussion at the last meeting and the r eason why the Board was interviewing Rockwood and ICC today. He noted that the Board wa s interviewing for a possible replacement for the Dana Large Cap Growth Equity portfolio. He stated that in addition to replacing the Growth product, there would be a change in th e equity allocation so that Dana Large Cap Equity allocation would reduce from 45% to 38.5% and there would be an allocation of 38.5% to either Rockwood or ICC. Mr. B ogdahn reviewed the summary table of the blended allocations adding in Rockwood and I CC. He reviewed the performance of the current portfolio compared to the blend with Rockwood and ICC using the trailing returns through December 31, 2010 on a quarter, 1, 2, 3, 5, and 7 year time period. He reviewed performance using calendar year pe riods. He reviewed the risk and return analysis. ROCKWOOD Andy Holtgrieve appeared before the Board. He stated that he was the managing partner and owner. His firm is an independent, em ployee owned investment management firm that was founded in 1997 and is located in St. Louis, Missouri. They have a very disciplined process, a tremendous amount of e xperience, and superior performance. He stated that they began the firm as a bond only manager. They teamed up with Contravisory Investment Manager (CIM) in 2004 for equity management services. He stated that the equity team is located in Boston. He discussed the equity team of CIM. He noted that CIM was founded in 1972 and is a sub advisor to Rockwood. Mr. Holtgrieve stated that they have an all cap, opportuni stic and theme based approach to equity management. He discussed their investment objective, which is to beat the benchmark over time with a particular emphasis on outperforming during down markets. He discussed their investment philosophy. He revi ewed the relative price cycle. He stated that the sell process is the key to their proce ss. Sales dictate what they do on the buy side. He reviewed their investment process. Ther e is not a lot of turnover and there are 40 2 stocks in the portfolio. He reviewed their calendar year capitalization and value versus growth from 2000 to 2009. He reviewed performance as of December 31, 2010. He reviewed their fee schedule, noting it was 70 basis points on the first $10 million. He reviewed their representative Florida client list. There was discussion on the portfolio managers at CIM and their research proce ss. There was a lengthy discussion on CIM and their relationship to Rockwood. Andy Holtgrieve departed the meeting. ICC Steve Stack appeared before the Board. He st ated that they are located in Orlando and have offices in New York and California. They are 100% employee owned with $3.27 billion in assets under management. He reviewed their representative client list. He discussed their multi cap equity product. He reviewed their investment process. They look at market capitalization, sectors and styl e. He reviewed how their process could forecast significant shifts in the portfolio pos itioning in anticipation of a change in the market leadership. He discussed their repos itioning of the portfolio in advance of the 2000 bull market peak and 2002 bear market botto m. He reviewed their portfolio profile as of December 31, 2010. He reviewed their t op ten holdings and portfolio characteristics as of December 31, 2010. He discussed their f ees, noting they were negotiable and would be willing to go down to 50 basis points. Steve Stack departed the meeting. DISCUSSION ON PRESENTATIONS The Board discussed the presentations by Rockwood and ICC. Mr. Bogdahn reviewed the risk analysis of Rockwood and ICC i ndividually. He reviewed the up capture and down capture ratios for both. He noted that ICC has clearly outperformed Rockwood. Mr. Brown discussed their process for identifying these managers in a search as candidates for the Fund. There was a discussion on the tr ansaction. Mr. Bogdahn stated that they would recommend engaging a transition manager to assist in this process. Mr. Brown discussed the process and also recommended us ing a transition manager. He noted that there would be no cost to the Fund to use a transition manager. He stated that using a transition manager here would be more effici ent. He noted that if the amount to be invested was less than $5 million or there were less than 70 positions, then it would not really be worth using a transition manager, but that is not the case here. Mr. Bogdahn recommended that the Board hire ICC. There was a lengthy discussion. A motion was made, seconded and carried 5-0 to negotiate a contract with ICC at 50 basis points to replace the Dana Growth portfolio with dom estic equity to be 50% Dana Large Cap Equity and 50% ICC Multi Cap Equity. A mo tion was made, seconded and carried 5-0 to use a transition manager to facilitate the transfer of assets from Dana to ICC. 3 CITY’S REQUEST FOR BOARD PARTICIPATION Mr. Morejon provided the Board with a letter he drafted to the Mayor regarding the City Manager’s request for participation regard ing the unfunded liability of the Plan. Mr. Murphy stated that he received an email ye sterday regarding a letter dated February 10, 2011 advising of a meeting on March 1 at Lakesi de Center from 1:30 p.m. to 3:00 p.m. It requests a representative to attend the meeting to meet with City Staff. Ms. Wisneski stated that in conversations with the Finan ce Director she thinks the City Manager has been tasked with the process he has outlin ed in his original January letter. She understands that the intent of the meeting is to get all the parties together to discuss the issue at hand. OTHER BUSINESS There being no further business, the meeting adjourned. Respectfully submitted, Tom Murphy, Secretary CITY OF PALM BEACH GARDENS FIREFIGHTERS’ PENSION FUND ACTUARIAL VALUATION REPORT SEPTEMBER 30, 2010 City of Palm Beach Gardens Firefighters’ Pension Fund O UTLINE OF C ONTENTS R EPORT OF S EPTEMBER 30, 2010 A CTUARIAL V ALUATION Pages Items - - Cover Letter Valuation Process, Experience, Commentary and Certification A-1 Actuarial valuation process A-2 Observed experience A-3 Comments, conclu sion and certification Detailed Valuation Results B-1 Funding objective a nd contribution rates B-2/3 Contribution requirement B-4 Experience gain (loss) B-5/6 Unfunded actu arial accrued liability B-7 Actuarial balance sheet Summary of Benefit Provisions and Valuation Data C-1/5 Summary of benefit provisions C-6 Financial data C-7 Funding value of assets C-8/14 Member data Actuarial Valuation Process, Summary of Actuarial Assumptions and Definitions of Technical Terms D-1/4 Actuarial valuation process in detail D-5/11 Summary of actuarial assumptions D-12/13 Definiti ons of technical terms Certain Disclosers Required by Statement No. 25 of the Governmental Accounting Standards Board E-1 Actuarial accrued liability E-2 Contributions required and contributions made E-3 Schedule of funding progress F-1/5 Summary of Valuation Data Results in State Format March 17, 2011 The Board of Trustees City of Palm Beach Gardens Firefighters' Pension Fund Palm Beach Gardens, Florida Submitted in this report are the results of an actuarial valuation of the benefit obligations, assets and contribution requirements of the City of Palm Beach Gardens Firefighters' Pension Fund. The date of the valuation was September 30, 2010. A summary of valuation results, commen ts, conclusions, and our certification are contained in Section A. Detailed valuation results are contained in Section B. The valuation was based upon information , furnished by the Fund administrator and Auditor concerning individual members, terminated member s, retired members and beneficiaries, plan benefits and financial transactions and assets. Data was checked for reasonableness and missing information, but was not otherwise audited. This information is summarized in Section C. A description of the actuarial valuation process, actuarial assumptions and definitions of technical terms are contained in Section D. Governmental Accounting Standards Board Statement No. 25 information is contained in Section E. A summary of valuation results in the State format is contained in Section F. This report has been prepared by actuaries who ha ve substantial experience valuing public employee retirement systems. To the best of our knowledge, this report is complete and accurate and was made in accordance with actuarial methods recognized by the Actuarial Standards Board of the American Academy of Actuaries. The actuarial assumptions used for the valuation are reasonable individually and in the aggregate. The actuaries submitting this report are Members of the American Academy of Actuaries (MAAA) as indicated, and meet the Qualificat ion Standards of the American Acad emy of Actuaries to render the actuarial opinion contained herein. Respectfully submitted, Brad Lee Armstrong, ASA, EA, MAAA Randall J. Dziubek, ASA, EA, MAAA BLA:sc 2678 SECTION A VALUATION PROCESS, EXPERIENCE, COMMENTARY AND CERTIFICATION City of Palm Beach Gardens Firefighters’ Pension Fund A-1 A CTUARIAL V ALUATION P ROCESS An actuarial valuation is the process by which a balance between revenue s (member contributions, City contributions, Chapter 175 re ceipts and investment income) and obligations (benefits and expenses) is determined and the funded condition is measured. The flow of activity constituting the valu ation may be summarized as follows: A. Covered person information about: − each person receiving pension payments − each former member with a vested pension not yet payable − each former member who is not vested a nd has not claimed a member contribution refund − each active member B. Financial Information (assets, revenues, and expenditures) C. Benefit Provisions (R etirement Ordinance) D. Experience Assumptions about the volume and incidence of future activities E. Actuarial Cost Method (Projected Unit Credit) for allocating benefit costs to time periods F. Mathematical linking of the person informati on, financial information, benefit provisions, experience estimates and actuarial cost method G. Determination of: − contribution rate for the plan year − current funded condition Items A, B and C are furnished by the Pension F und and constitute the current “knowns” about the Fund. Since the majority of activiti es will occur in the future, estim ates must be made about these future activities (Item D). Under the Projected Unit Credit Actuarial Cost Method, each year's differences between projected and actual Fund activities (experien ce gains/losses) reduce/increase the Unfunded Actuarial Accrued Liability. This treatment of experience gains/lo sses leaves the Normal Cost unaffected by year-to- year experience fluctuations and thereby more likel y to satisfy the level percent of payroll Funding Objective set out on page B-1. Normal Cost cha nges occur primarily in response to changes in benefits, experience assumptions average pa st service, and age at hire patterns. City of Palm Beach Gardens Firefighters’ Pension Fund A-2 O BSERVED E XPERIENCE AND A SSUMPTION AND M ETHOD C HANGES Year-to-year differences between assumed experience and observed experience are inevitable in the operation of the Fund. Each annual actuarial valu ation takes observed expe rience differences into account. If on net balance the differences are favorab le, the unfunded actuarial a ccrued liability is less than projected (an experience gain), otherwise it is more than projecte d (an experience loss). Specific activity information is located in Sections C and D. The principal sources of experience gains/losses du ring the period from October 1, 2009 to September 30, 2010 were: • A gain of approximately $1.7M due to aver age salary increase of 0.7% versus 5.1% expected. • A loss of approximately $1.5M due to the rate of return on the value of assets of 3.0% versus the projected 8.25% (page C-7). • A loss of approximately $0.6M due to 0 terminations versus 4.1 expected. The City contribution rate re quirement increased by 1.76% of payroll to 36.75% of payroll including administrative and inve stment expenses. Over 1% of the increase in the rate was attributable to lower than expected wage growth . Additional contribution ra te detail is provided on page B-2. There were no changes in assumptions or methods since the prior valuation. C OMMENTS • The Share Accounts totaled $5,456,393 with 117 me mbers having positive balances as of September 30, 2010. • The assumptions and methods should be revi ewed again prior to the September 30, 2011 actuarial valuation. The funding value of assets is $2.2M greater than th e market value of assets as of September 30, 2010 because of investment losses not yet recognized. As these losses are recognized over the next three years, they will put upward pressure on the cont ribution requirements and slow funding progress for the Fund. C ONCLUSION The funding status described on page E-3 indicates that the accrued obligations of the Fund, as measured by the method prescribed in Statement No. 25 of the Governmental Accounting Standards Board, are 63.2% funded by the funding value of asse ts vs. 59.7% one year ago. This is excluding Share Accounts. Since the Share Accounts are 100% funded, including them increases the funded ratio to 74.3% this year vs. 63.5% la st year. It is the actuary’s opini on that the required contribution rate determined by the most recent actuarial valu ation is sufficient to meet the Fund’s funding objective, presuming continued timely receipt of required contributions. S TATEMENT BY E NROLLED A CTUARY This actuarial valuation and/or cost determinat ion was prepared and completed by me or under my direct supervision, and I acknowledge responsibility fo r the results. To the best of my knowledge and belief, the results are complete and accurate, and in my opinion, the techniques and assumptions used are reasonable and meet th e 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 take n 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 take n into account in the valuation. _____________________________ Brad Lee Armstrong, ASA, MAAA, EA [08-5614] 3/17/2011 Date City of Palm Beach Gardens Firefighters’ Pension Fund A-3 SECTION B DETAILED VALUATION RESULTS City of Palm Beach Gardens Firefighters’ Pension Fund B-1 F UNDING O BJECTIVE The funding objective for the Pension Fund is to es tablish and receive cont ributions, expressed as percents of active and DROP memb er payroll, which are inherently level from year-to-year when funding assumptions are real ized and benefits are unchanged. This objective meets the requirements of Part VII, Chapter 112, Florida Statutes. C ONTRIBUTION R ATES The Pension Fund is supported by me mber contributions; City contri butions; receipts pursuant to Chapter 175, Florida Statutes; and inve stment income on Pension Fund assets. Contributions which satisfy the f unding objective are determined by th e annual actuarial valuation and are sufficient to: (1) Cover the costs allocated to the current year (normal cost) by the actuarial cost methods described in Section D ; and (2) Finance over a period of future years the actu arial cost not covered by present assets and anticipated future normal cost (unf unded actuarial accrued liability). Initial financing periods used fo r future unfunded liabilities were: 25 years for all unfunded amortization bases attr ibutable to periods occurring after 9/30/07. Contribution requirements for the fiscal year beginning October 1, 2011 are shown on pages B-2 and B-3. C ONTRIBUTIONS T O F INANCE B ENEFITS OF THE P ENSION F UND F OR THE F UND Y EAR B EGINNING O CTOBER 1, 2011 T O B E C ONTRIBUTED D URING T HE C ITY F ISCAL Y EAR B EGINNING O CTOBER 1, 2011 Normal Cost Normal and Early retirement pensions 24.43% Disability pensions 0.27 Survivor pensions Pre-retirement 0.13 Post-retirement 0.00 Termination benefits Deferred service pensions 0.67 Refunds of member contributions 0.43 Total Normal Cost 25.93 Unfunded Actuarial Accrued Liability (1) Retired members and beneficiaries 0.00 Active and vested terminated members 16.16 Total Unf'd. Actuarial Accrued Liability 16.16 Administrative and Investment Expenses 2.57 Total Calculated Contribution Requirement 44.66% Adjustments to Calculated Contribution Requirement Temporary full funding credit 0.00 FS112.64(5) Compliance 0.00 Total adjustments 0.00 Total Adjusted Contribution Requirement 44.66% Member portion 6.00 Chapter 175 portion (based on 2% member payroll with one year lag)1.91 Additional Premium Tax Revenue portion 0.00 City portion 36.75% Contributions for Contributions Expressed as Percents of Active and DROP Member Payroll (1) Please refer to page B-6 for a schedule of financing periods. FS 112.64 requires City contributions to be deposite d not less frequently t han quarterly. Member contributions, which are in addition to the City cont ributions, must be deposite d immediately after each pay period. FS 112.64 requires that Chapter 175 monies must be deposited within 5 days of receipt from the State. Procedures for determining dollar c ontribution amounts are shown on page B-3. City of Palm Beach Gardens Firefighters’ Pension Fund B-2 D ETERMINING D OLLAR C ONTRIBUTIONS For any period of time, the percent-of-payroll c ontribution rate needs to be converted to dollar amounts. We recommend one of the following procedures: Procedure (1) Contribute dollar amounts at the en d of each payroll period which are equal to the City's percent-of- payroll contribution requirement multiplied by the active and DROP member payroll for the period. Adjustments should be made as necessary to excl ude items of pay that are not compensation for Pension Fund benefits and to include non-payro ll amounts that are compensation for Pension Fund benefits. Procedure (2) Contribute $3,974,487 during the Fund fiscal year beginning October 1, 2011. Included in these amounts is the projected increase in salary level be tween the valuation date and the fiscal year in which the contribution is made. Th e projection factor of 1.06825 [(1.045^1.5)] is consistent with that used to calculate the actuarial liability. The memb er contribution amounts ma y be used as projected dollar contributions for purposes of the CAFR, but should not be us ed to reconcile actual member contributions. 11/1210/11 Total Contribution Requirement 4,804,989 $ 4,579,962 $ Less Member Contributions 625,004630,555 Total Employer Contribution Requirement 4,179,9853,949,407 Less Chapter 175 Prem. "frozen"205,498203,910 Less Chapter 175 Supp. "frozen"0 0 Less Additional Premium Tax Revenue 0 0 Base City Contribution 3,974,487$ 3,745,497 $ The above amounts are assumed to be contributed, on average, halfwa y through the fiscal year. If contributions are made on a later schedule, interest should be added at the rate of .66% (.0066) for each month of delay. City of Palm Beach Gardens Firefighters’ Pension Fund B-3 D ERIVATION OF E XPERIENCE G AIN (L OSS ) F OR THE P ERIOD FROM O CTOBER 1, 2009 TO S EPTEMBER 30, 2010 2010 DERIVATION (1) UAAL at start of year 17,873,583 $ (2) Normal cost for year ((ER Normal cost + expenses) x valuation pay for 09/10)1,888,805 (3) Employer contribution 3,550,238 (4) Interest accrued .0825 x [(1) +1/2((2) - (3))] 1,406,037 (5) Expected UAAL before changes [(1) + (2) - (3) + (4)]17,618,187 (6) Effect of assumption changes 0 (7) Effect of cost method changes/accounting and timing differences 0 (8) Effect of benefit changes 0 (9) Expected UAAL after changes 17,618,187 (10) Actual UAAL 18,097,678 (11) Gain/(Loss) (9) - (10)(479,491)$ UAAL represents Unfunded Actuarial Accrued Liability. City of Palm Beach Gardens Firefighters’ Pension Fund B-4 U NFUNDED A CTUARIAL A CCRUED L IABILITY A. Actuarial present value of future benefits 67,614,463 $ 63,781,404 $ (excluding Share Accounts) B. Actuarial present value of future normal costs 18,406,404 19,424,027 C. Actuarial accrued liability 49,208,059 44,357,377 D. Net assets available for funding 31,110,381 26,483,794 E. Unfunded actuarial accrued liability 18,097,678 $ 17,873,583 $ September 30, 2010September 30, 2009 City of Palm Beach Gardens Firefighters’ Pension Fund B-5 S OURCES AND F INANCING OF U NFUNDED A CTUARIAL A CCRUED L IABILITY % of Covered Amortization Payroll Fin. Per.FactorPaymentContribution Changes from experience deviations. Prior combined n/a30 yrs.14,771,208 $ 13yrs.10.4282871,416,456 $ 14.06% 0.00% 9/30/2006$ 687,34227 yrs. 741,59423yrs.15.757206 47,0640.47% 0.00% 9/30/2007 (295,659)26 yrs. (312,312)23yrs.15.757206 (19,820)(0.20)%0.00% 9/30/2008 1,426,76225 yrs. 1,477,57023yrs.15.757206 93,7710.93% 0.00% 9/30/2009 904,75125 yrs. 921,48924yrs.16.193924 56,9030.56% 0.00% 9/30/2010 479,49125 yrs. 479,49125yrs.16.615513 28,8580.29% 0.00% Changes from actuarial assumption and cost method revisions. 9/30/2006(2,157,223)$ 27 yrs.(2,327,490)$ 23yrs.15.757206(147,710)$ (1.47)%0.00% Changes from amendments to benefit provisions. 9/30/2002 n/a30 yrs.2,346,128 $ 22yrs.15.304816153,293 $ 1.52%0.00% Totals 18,097,678 $ 16.16%0.00% Source of Unfunded Act. Accrued Liab. Initial Amount Unfunded Act. Accrued Liab ility Current Amount Remaining Financing Period 9/30/2010 FS112.64(5) Compliance City of Palm Beach Gardens Firefighters’ Pension Fund B-6 A CTUARIAL B ALANCE S HEET - S EPTEMBER 30, 2010 Present Resources and Exp ected Future Resources A.Net assets available for benefits 1.Market value (page C-7)$28,890,275 2.Funding value adjustment 2,220,106 3.Funding value of assets $31,110,381 B.Actuarial present value of expected future City and Chapter 175 contributions 1.For normal costs 14,627,912 2.For unfunded actuarial accrued liability 18,097,678 3.Total 32,725,591 C.Actuarial present value of expected future Member contributions 3,778,492 D.Actuarial present value of Chapter 175 Share Accounts 5,456,393 E.Total Present and Expected Future Resources $73,070,856 Actuarial Present Value of Expected Future Benefit Payments and Reserves A.To retired members and beneficiaries 7,685,027 $ B.To vested terminated members 462,947 C.To present active members 1.Allocated to service rendered prior to valuation date 41,060,085 2.Allocated to service likely to be rendered after valuation date 18,406,404 3.Total 59,466,489 D.Reserve for Chapter 175 Share Accounts 5,456,393 E.Total Actuarial Present Value of Expected Future Benefit Payments 73,070,856 $ City of Palm Beach Gardens Firefighters’ Pension Fund B-7 SECTION C SUMMARY OF BENEFIT PROVISIONS AND VALUATION DATA City of Palm Beach Gardens Firefighters’ Pension Fund C-1 S UMMARY OF B ENEFIT P ROVISIONS A S OF S EPTEMBER 30, 2010 Membership All full-time certified (F.S.633.35) firefighters become members as a condition of employment. Average Final Compensation One twelfth (1/12) of the average an nual salary for the best five years of the last ten years of credited service prior to retirement, termination, or death. Normal Retirement Eligibility. Age 52 with 10 or more years of credited service; or any age with 25 or more years of credited service. Pension Amount. Three percent (3%) of average final comp ensation multiplied by credited service, provided, however, that the benefit shall not exceed 99% of average final compensation. The normal form of benefit is a benefit payable for life wi th 120 monthly payments gua ranteed. Optional forms are available on an actuarial equivalent basis. Early Retirement Eligibility. Age 50 with 10 or more years of credited service. Pension Amount. Normal retirement pension earned at time of early retirement but reduced by 3% for each year early retirement date precedes age 52. Mandatory Retirement (No Provision) City of Palm Beach Gardens Firefighters’ Pension Fund C-2 S UMMARY OF B ENEFIT P ROVISIONS (C ONTINUED ) Disability - Service Connected Eligibility. Total and likely to be permanent di sability for duties of a firefighter. Pension Amount. 60% of AFC. Minimum benefit shall be 2% of AFC times credited service. Disability - Non-Service Connected Eligibility. 10 or more years of credited service and total and likely to be permanent disability for duties of a firefighter. Pension Amount. 2.5% of AFC times credited service. Maximum benefit is 50% of AFC. Vesting Eligibility. Members with 5 or more year s of credited service but not e ligible for any other benefits under the system. Vested Percentage. 25% after 5 years, plus 15% per year th ereafter to 100% after 10 years of credited service. Pension Amount. Vested portion of member’s accrued benefit payable upon reaching age 50 under the provisions for Early Retirement or age 52 under the provisions for Normal Retirement provided the member's accumulated contributions are left in the Pension Fund. Non-Vested Termination Members who terminate employment with less than 5 years of credited servic e are entitled to a refund of their accumulated contributions. City of Palm Beach Gardens Firefighters’ Pension Fund C-3 S UMMARY OF B ENEFIT P ROVISIONS (C ONTINUED ) Deferred Retirement Option Plan (DROP) Eligibility. Any member who is eligible to receive a normal retirement pension and who can perform the full scope of duties assigned to a firefighter. Participation shall ceas e after the earlier of 5 years in the DROP or termination of service. Pension Amount. Calculated as if the member had elec ted to retire on the date of election to participate in the DROP, using cred ited service and final average salary at the date of election. The monthly retirement benefits, including any future cost-of-living increases, shal l be deposited in the member’s DROP account. Earnings of each DROP account shall be credited or debited at the end of each fiscal year quarter at the actual net rate of investment return achieved by the fund. As an alternative, the DROP member may elect that his or her DROP account be invested in a fixed rate money market fund. Disbursements from the account are deferred until termination of employment. Member Contributions. All contributions on behalf of the member to the fund cease following election to participate in the DROP. Pre-Retirement Survivor Benefits Deceased Member Partially or Fully Vested. The member’s accrued retirement pension is paid to the designated beneficiary for 120 mont hs. (Pension is reduced if paid prior to otherwise Normal Retirement Date.) Member Not Vested or Eligible for Retirement. Refund of accumulated contributions. Cost-of-Living Adjustments (COLA) Beginning January 1, 2004, and each January 1 thereaft er, all members receiving benefits, excluding Disability Retirees, shall receive an age based Cost-of-Living increase. The amount will be 1.0% for members who are age 53, 2.0% for members who are age 54, and 3.0% for members who are age 55 or greater. City of Palm Beach Gardens Firefighters’ Pension Fund C-4 S UMMARY OF B ENEFIT P ROVISIONS (C ONTINUED ) Member Contributions Each member contributes 6% of salary. An additional 2% of salary will come out of member share account and credited as member c ontributions to the defined benef it provisions of the Pension Fund. Non-Employee Contributions Chapter 175, Florida Statutes. Premium tax monies received pursu ant to F.S. Chapter 175 will be allocated to individual member sh are accounts based on years of cr edited services. On each valuation date, each individual share account shall be adjusted to reflect the investment gains or losses and to allocate the costs, fees a nd expenses of administration of the fund. Each October 1 st , beginning with October 1 st , 2003, 2% of the salary shall be deducted from the monies received from F.S. Chapter 175, tax revenues. City of Palm Beach Garden, Amounts determined actuarially in accordance with Chapter 175 and Chapter 112, Florida Statutes. Forfeiture of Retirement Benefits Retirement benefits granted by the Pension Fund are s ubject to forfeiture if an employee is convicted of an offense specified in Sections 112.3173 and 175.195, Florida Statutes, pursuant to the procedures set forth in the cited statute. City of Palm Beach Gardens Firefighters’ Pension Fund C-5 S UMMARY OF B ENEFIT P ROVISIONS (C ONCLUDED ) Disclaimer The preceding summary briefly describes the principl e benefits of the Pension Fund. Detailed benefit conditions and limitations are contai ned in the Palm Beach Gardens Code, Division 2 Firefighters’ Pension Fund, which established the Fund. Interpreta tions of the Palm Beach Gardens Code are made by the Board of Trustees. The Internal Revenue Code, Florida Statutes, the Palm Beach Gardens Code establishing the Fund, and Board interpretati ons govern the operation of the Fund and prevail over any conflict with the terms of this Summary of Benefit Provisions a nd should be consulted before you take any action concerning your membership or benefits. In case of any conflict between this Summary and the provisions of the Palm Beach Gardens Code or other applicable law, the Palm Beach Gardens Code or other applicable law will prev ail. Copies are available at the office of the Administrative Manager. A CCOUNTING I NFORMATION S UBMITTED FOR V ALUATION Revenues and Expenditures REVENUES: a.Member contributions $ 594,457 $ 602,801 b.City contributions 3,550,238 3,180,731 c.Chapter 175 receipts to member contributions 201,112 201,059 d.Chapter 175 receipts to Share Accounts 457,505 453,089 e.Interest and dividends 754,800 652,069 f.Net appreciation in fair value of investments 1,771,610 (194,895) g.Miscellaneous income 3,295 2,498 h.Total revenues 7,333,017 4,897,352 EXPENDITURES: a.Benefits paid 567,897 376,676 b.Share Account benefits paid 80,653 c.Administrative expenses 88,661 69,771 d.Investment expenses 169,740 134,095 e.Total expenditures 826,298 661,195 NET INCOME: Total revenues minus total expenditures $6,506,719 $4,236,157 Audit Adjustment 0 0 SHARE ACCOUNT NET CHANGE 792,085 428,063 ASSETS(Defined Benefits) BEGINNING OF YEAR $23,175,641 $19,367,547 ASSETS(Share Accounts) BEGINNING OF YEAR 4,664,308 4,236,245 ASSETS (Defined Benefits) END OF YEAR $28,890,275 $23,175,641 ASSETS (Share Accounts) END OF YEAR 5,456,393 4,664,308 TOTAL ASSETS END OF YEAR $34,346,668 $27,839,949 Year Ended 9/30/2010 Year Ended 9/30/2009 Summary of Assets Cash & Equivalents $ 3,574,524 $ 2,842,499 Receivables/(Payables)(117,101)846,476 Corporate Bonds/Government Securities 9,174,500 8,080,865 Common Stocks 14,222,217 12,813,663 Real Estate 2,269,135 756,753 International 5,223,393 1,234,890 Miscellaneous 0 0 Mutual Funds 0 1,264,803 Total Assets $34,346,668 $27,839,949 September 30, 2010 Market September 30, 2009 Market City of Palm Beach Gardens Firefighters’ Pension Fund C-6 D ER I V A T I O N O F F UN D I N G V AL U E O F A SS E T S M AR K E T V AL U E W I T H 25 % R EC O G N I T I O N O F E XC E S S I NV E S T M E N T I NCOME 20 0 9 20 1 0 20 1 1 20 1 2 2013 Be g i n n i n g o f Y e a r : ( 1 ) M a r k e t V a l u e $ 1 9 , 3 6 7 , 5 4 7 $ 2 3 , 1 7 5 , 6 4 1 ( 2 ) V a l u a t i o n A s s e t s 22 , 3 0 7 , 4 1 5 2 6 , 4 8 3 , 7 9 4 En d o f Y e a r : ( 3 ) M a r k e t V a l u e 23 , 1 7 5 , 6 4 1 2 8 , 8 9 0 , 2 7 5 ( 4 ) N e t A d d i t i o n s t o A s s e t s , E x c l u d i n g I n v e s t m e n t I n c o m e a n d A d m i n . E x p e n s e s 3, 6 1 0 , 4 1 3 3 , 7 8 1 , 2 0 5 ( 5 ) T o t a l I n v e s t m e n t I n c o m e = ( 3 ) - ( 1 ) - ( 4 ) 19 7 , 6 8 1 1 , 9 3 3 , 4 2 9 ( 6 ) P r o j e c t e d R a t e o f R e t u r n 8. 2 5 % 8. 2 5 % ( 7 ) P r o j e c t e d I n v e s t m e n t I n c o m e = ( 6 ) x [ ( 2 ) + . 5 x ( 4 ) ] 1, 9 8 9 , 2 9 1 2 , 3 4 0 , 8 8 8 ( 8 ) I n v e s t m e n t I n c o m e I n E x c e s s o f P r o j e c t e d I n c o m e (1 , 7 9 1 , 6 1 0 ) ( 4 0 7 , 4 5 9 ) ( 9 ) E x c e s s I n v e s t m e n t I n c o m e R e c o g n i z e d T h i s Y e a r ( 4 y e a r r e c o g n i t i o n ) ( 9 a ) F r o m T h i s Y e a r (4 4 7 , 9 0 3 ) ( 1 0 1 , 8 6 5 ) ( 9 b ) F r o m O n e Y e a r A g o (1 , 0 1 8 , 7 0 7 ) ( 4 4 7 , 9 0 3 ) ( $ 1 0 1 , 8 6 5 ) ( 9 c ) F r o m T w o Y e a r s A g o 72 , 9 6 8 ( 1 , 0 1 8 , 7 0 7 ) ( 4 4 7 , 9 0 3 ) ( $ 1 0 1 , 8 6 5 ) ( 9 d ) F r o m T h r e e Y e a r s A g o (2 9 , 6 8 3 ) 7 2 , 9 6 9 ( 1 , 0 1 8 , 7 0 8 ) ( 4 4 7 , 9 0 1 ) ( $ 1 0 1 , 8 6 4 ) (1 0 ) C h a n g e i n V a l u a t i o n A s s e t s = ( 4 ) + ( 7 ) + 9 [ a . . d ] 4, 1 7 6 , 3 7 9 4 , 6 2 6 , 5 8 7 En d o f Y e a r : ( 1 1 ) M a r k e t V a l u e 23 , 1 7 5 , 6 4 1 2 8 , 8 9 0 , 2 7 5 ( 1 2 ) V a l u a t i o n A s s e t s = ( 2 ) + ( 1 0 ) 26 , 4 8 3 , 7 9 4 3 1 , 1 1 0 , 3 8 1 ( 1 3 ) R a t e o f R e t u r n o n M a r k e t V a l u e 0. 9 % 7. 7 % ( 1 4 ) R a t e o f R e t u r n o n V a l u a t i o n A s s e t s 2. 3 % 3. 0 % ( 1 5 ) R a t i o o f V a l u a t i o n A s s e t s t o M a r k e t V a l u e 11 4 % 10 8 % Th e d e r i v a t i o n o f V a l u a t i o n A s s e t s r e c o g n i z e s p r oj e c t e d i n v e s t m e n t i n c o m e ( l i n e 7 ) f u l l y e a c h y e a r . D i f f e r e n c e s b e t w e e n t o t a l and projected investment in c o m e ( l i n e 8 ) a r e p h a s e d - i n o v e r a c l o s e d 4 - y e a r p e r i o d . D u ri n g p e r i o d s w h e n i n v e s t m e n t p e r f o r m a n c e e x c e e d s t h e p r o j e c t e d r a te, Funding Value of Assets wi l l t e n d t o b e l e s s t h a n M a r k e t V a l u e . D u r i n g p e r i o d s w h e n i n v e s t m e n t p e r f o r m a n ce i s l e s s t h a n t h e a s s u m e d r a t e , F u n d i n g V a l u e of Assets will be greater th a n M a r k e t V a l u e . T h e V a l u a t i o n A s s e t s a r e u n b i a s e d w i t h r e s p e c t t o M a r k e t V a l u e . A t a n y t i m e i t m a y b e e i t h e r g r e a t e r o r l e ss than Market Value. If actual an d p r o j e c t e d r a t e s o f i n v e s t m e n t i n c o m e a r e e x a c t l y e q u a l f o r 3 c o n s e c u t i v e y e a r s , V a l u a t i o n A s s e t s w i l l b e e q u a l t o M a r k e t V a lue. Ci t y o f P a l m B e a c h G a r d e n s F i r e f i g h t e r s ’ P e n s i o n F u n d C - 7 R ET I R E D M EM B E R A N D B EN E F I C I A R Y D AT A H IS T O R I C A L S CH E D U L E No . CO L A N o . No . No . No. 9/ 3 0 / 2 0 0 3 4 $ 1 1 2 , 9 3 4 N / A N / A 9/ 3 0 / 2 0 0 4 4 1 1 2 , 9 3 4 N / A N / A 9/ 3 0 / 2 0 0 5 1 $ 2 1 , 1 3 6 $ 2 , 7 3 8 0 $ 3 , 0 8 1 1 $ 2 0 , 7 9 3 5 1 3 3 , 7 2 7 N / A N / A 9/ 3 0 / 2 0 0 6 1 3 1 , 5 8 4 3 9 8 0 0 1 3 1 , 9 8 2 6 1 6 5 , 7 0 9 0 . 0 $ 1 , 3 0 8 9/ 3 0 / 2 0 0 7 0 0 3 , 3 2 5 0 0 0 3 , 3 2 5 6 1 6 9 , 0 3 4 0 . 1 2 , 5 1 2 9/ 3 0 / 2 0 0 8 3 1 4 1 , 8 1 3 0 1 5 7 , 9 3 1 2 8 3 , 8 8 2 8 2 5 2 , 9 1 6 0 . 1 2 , 4 4 1 9/ 3 0 / 2 0 0 9 2 2 3 0 , 0 5 3 6 6 9 0 0 2 2 3 0 , 7 2 2 1 0 4 8 3 , 6 3 8 0 . 1 2 , 9 6 5 9/ 3 0 / 2 0 1 0 1 1 0 4 , 1 1 2 6 8 9 0 2 8 3 1 1 0 4 , 5 1 8 1 1 5 8 8 , 1 5 6 0.13,525 0.1$3,874 Ex p e c t e d f o r 9/ 3 0 / 2 0 1 1 Pensions Ye a r En d e d A n n u a l Pe n s i o n s A n n u a l A n n u a l Pe n s i o n s Re m o v e d N e t I n c r e a s e Pe n s i o n s Expected Removals En d o f Y e a r Annual A d d e d A n n u a l Pe n s i o n s Ci t y o f P a l m B e a c h G a r d e n s F i r e f i g h t e r s ’ P e n s i o n F u n d C - 8 N ORMAL AND E ARLY R ETIRED M EMBERS Plan Ret. YearNumber No.AgeServ. 1998158.7yrs.58.7yrs.$ 51,471158.7N/A$ 51,471 1999159.7 58.7 51,471 2000160.7 58.7 51,471 2001161.7 58.7 51,471 2002162.7 58.7 51,471 2003163.7 58.7 51,471 2004164.7 58.7 52,628 2005165.7 58.7 54,208 2006166.7 58.7 54,605 20070 2008255.5 54.8 105,912255.518.0105,912 2009452.5 51.4 336,633248.027.9230,052 2010552.350.6441,434147.526.0104,112 New Retired Members During Prior Period Averages Averages for All Service Pension Recipients Age Attained Age Pension Current Pension Annual Annual Retirement City of Palm Beach Gardens Firefighters’ Pension Fund C-9 R ETIRED M EMBER AND B ENEFICIARY D ATA AS OF S EPTEMBER 30, 2010 T ABULATED BY T YPE OF P ENSION B EING P AID Type of Pension Being PaidNo. Ten Year Guaranteed to Beneficiary 1$ 31,584$ 150,035 Age and Service Benefits Ten Year Guarantee 2 204,370 2,899,526 Age and Service Benefits Joint and Survivor 3 237,064 3,501,731 Disability Benefits 5 115,138 1,133,735 Total Pensions Being Paid 11$ 588,156$ 7,685,027 Annual Pensions Actuarial Present Value of Pensions City of Palm Beach Gardens Firefighters’ Pension Fund C-10 R ETIRED M EMBERS AND B ENEFICIARIES AS OF S EPTEMBER 30, 2010 T ABULATED BY A TTAINED A GES Attained Ages No. 38 1 $ 35,618 41 1 20,785 47 1 104,112 48 1 109,302 50 3 219,958 51 1 21,136 52 1 22,010 63 2 55,235 Totals 11 $588,156 Annual Pension Fire Members City of Palm Beach Gardens Firefighters’ Pension Fund C-11 V ESTED T ERMINATED M EMBERS AS OF S EPTEMBER 30, 2010 T ABULATED BY A TTAINED A GES Attained Ages No. 42 1 65,370 $ 54 1 6,196 Totals 2 71,566 $ Estimated Annual Pensions City of Palm Beach Gardens Firefighters’ Pension Fund C-12 A CTIVE AND V ESTED T ERMINATED M EMBERS I NCLUDED IN V ALUATION Vestedand DROP ActiveDROPTerm. MembersMembersMembers AgeService 9/30/2001 84 1$ 4,255,52436.59.1$ 50,661 9/30/2002 92 1 4,839,56836.99.352,604 9/30/2003100 1 6,541,83737.19.565,418 9/30/2004109 1 7,567,88737.49.869,430 9/30/2005114 1 8,774,10737.18.876,966 9/30/2006121 1 9,205,47037.39.276,078 9/30/2007121 1 9,549,41038.210.178,921 9/30/2008117 2 9,852,96039.010.984,213 9/30/200911512 9,993,78939.911.886,153 9/30/20101142210,071,61740.912.886,824 Valuation Date Pay Active Member Payroll Average N UMBER A DDED TO AND R EMOVED FROM A CTIVE P ARTICIPATION Active Members VestedOther End of AEAEAEAEAAAEPeriod 9/30/2003 100 9/30/200412 00N/A0N/A0N/A033N/A109 9/30/20056 10N/A1N/A0N/A000N/A114 9/30/200611 401.500.110.103310.9121 9/30/20074 404.200.100.10446.1121 9/30/20080 425.110.100.11015.4117 9/30/20090 224.800.100.10004.6115 9/30/20100113.100.200.10004.1114 Expected for 9-30-11 5.70.20.1 3.5 Ended Terminations Norm/Early Retirement Period Number Added During Period Terminations During Period Disability Retirement Died-in Service Total A represents actual number. E represents expected number. City of Palm Beach Gardens Firefighters’ Pension Fund C-13 A CTIVE AND DROP M EMBERS AS OF S EPTEMBER 30, 2010 T ABULATED BY A TTAINED A GE AND Y EARS OF S ERVICE Attained Age0-45-910-1415-1920-2425-2930 Plus 25-296 6 12754,459 $ 30-343 10 2 15994,117 35-394 9 4 2 191,399,175 40-44 5 11 5 3 242,152,539 45-49 4 6 8 11 2 313,102,062 50-54 2 7 5 1 151,669,265 Totals13 36 23 22 19 3 11610,071,617 $ Years of Service to Valuation Date No. Valuation Payroll Totals Age:40.9years. Service:12.8years. Annual Pay:$86,824 City of Palm Beach Gardens Firefighters’ Pension Fund C-14 SECTION D ACTUARIAL VALUATION PROCESS, SUMMARY OF ACTUARIAL ASSUMPTIONS AND DEFINITIONS OF TECHNICAL TERMS City of Palm Beach Gardens Firefighters’ Pension Fund D-1 A CTUARIAL V ALUATION P ROCESS IN D ETAIL An actuarial valuation is the mathematical pro cess by which a pension fund contribution requirement is determined and its actuarial condition is measured. The flow of activity constituting the valu ation may be summarized as follows: A. Covered Person Data , furnished by the fund ad ministrator including: - Retired members and beneficiaries now receiving benefits - Former members with vested benefits not yet payable - Active members B. + Asset Data (cash & investments), furnis hed by the fund administrator C. + Fund Description Data , furnished by the fund administrator D. + Assumptions about various fu ture activities of the fund (risk elements) E. + The Actuarial Cost Method for allocating costs to time peri ods and determining the long-term planned pattern for employer contributions F. + Mathematically combining the Data, the Esti mates of Future Activities, and the Cost Method G. = Determination of: Employer Contribution Requireme nt and Actuarial Condition Items A, B and C constitute the current "knowns" a bout the Fund. A good deal of fund activity which will result in benefit payments has yet to occur. Accordingly, certain assumptions must be made about future fund activity. These assumptions (Item D) may be classified as demographic or fiscal. Demographic assumptions include future mortality ra tes, disability rates, rates of pre-retirement withdrawal from employment, and retirement ages. Fiscal assump tions consist of future salary increases and rates of investment return. City of Palm Beach Gardens Firefighters’ Pension Fund D-2 Demographic assumptions are generally selected on the basis of the Fund's historical activity, modified for expected future differences. Past activ ity of funds which are similar in nature to the fund being valued may be utilized if fund data or activities are insuffici ent to be reliable. Fiscal assumptions, on the other hand, do not lend themselves to predic tion on the basis of historical activity -- the reason being that both salary increase s and investment return are impacted by inflation. Inflation defies reliable prediction. Fiscal assumptions are generall y selected on the basis of what would be expected to occur in an inflation-fr ee environment and then both are increased by some provision for long-term inflation. This is a case where two wrongs may make a right. If inflation is higher than e xpected it will probably result in actual rates of salary increas e and investment return which exceed the assumed rates. Salaries increasing faster than expected result in unexpected costs. Investment return exceeding the assumed rate results in unanticipated assets. To a large degr ee, the additional assets will offset the additional costs over the long-term. Once items A, B, C and D are available, the actuaria l valuation process begins. The first step is to determine the plan's total actuarial present value for individuals in each of the 3 covered person categories. Retired members now receiving monthly payments; Vested terminated members not yet at retirement age; Active members . The actuarial present value is the value today afte r taking into account the pr obabilities of payment and the effect of time the plan promises to pay be nefits in the future on the basis of both service already completed and proj ected future service. The projected unit credit cost method (Item E) was used to esta blish the actuarial position of the plan and to determine an appropria te level of contributions. City of Palm Beach Gardens Firefighters’ Pension Fund D-3 This method is designed to fund each participant's pr ojected benefits under the plan as they accrue. Thus, the total pension to which each participant is expected to become entitled at retirement is broken down into units, each associated with a year of past or future service. The principle underlying the method is that each unit is funded in th e year for which it is cr edited. Typically, when the method is introduced there will be an initial liabi lity for benefits credited for service prior to that date. To the extent that this liability is not covere d by assets of the plan, ther e is an unfunded liability to be funded over a chosen period in acco rdance with an amortization schedule. An actuarial accrued liability is calculated at the valuation date as the present value of benefits credited with respect to service to that date. The unfunded accrued liability at the valuation date is the exce ss of the actuarial accrued liability over the assets of the plan. The level annual payment to be made over a stipulated number of years to amortize this unfunded liability is the past service cost. The normal cost is the present value of those benefits whic h are expected to be credited with respect to service during the year be ginning on the valuation date. Under this method, differences betw een the actual experience and that assumed in the determination of costs and liabilities will emerge as adjustments in the unfunded lia bility, subject to amortization. The next step in the valuation process is a determin ation of the contribution ra te (Item G) required to support Fund benefits in accordance with the funding objective (page B-1). The contribution rate is determ ined in two basic components: 1. T he normal cost component; and 2. The component which will finance (pay off) the unfunded actuarial accrued liability over the periods indicated on page B-6. Active member payroll was projecte d to increase 4.5% a year in de termining the level percent-of- payroll component for the unfunded actuarial accrued liab ility -- which is consistent with base rate of salary increase used to calculate the total act uarial present value. The ch aracteristics of this method are shown on page D-4. L EVEL P ERCENT OF A CTIVE AND DROP M EMBER C OVERED P AYROLL A MORTIZATION OF U NFUNDED A CTUARIAL A CCRUED L IABILITY * ($ AMOUNTS IN THOUSANDS ) Year Ended 201010,072 $ 10,072 $ 18,098 $ 18,098$ 1,629 $ 1,629 $ 201110,525 10,07217,85817,0891,7021,629 201210,998 10,07217,52116,0451,7791,629 201311,493 10,07217,07514,9631,8591,629 201412,011 10,07216,50613,8421,9421,629 201914,967 10,07211,3007,6042,4211,629 202418,652 10,072 2,9731,6053931,629 202923,244 10,072 1,739754490212 203428,966 10,072 82 28 83 29 203631,632 10,072 0 0 0 0 *479,491 $ over 25 years 921,489 over 24 years (420,638) over 23 years 2,346,128 over 22 years 14,771,208 over 13 years 18,097,678 $ Contribution Unfunded Payroll Inflated Inflated Constant Inflated Dollars Constant Value Value Dollars Constant Value Dollars Level percent-of-payroll financi ng of unfunded actuarial accrued liab ility treats eac h generation of taxpayers equally during the financ ing period. The alternative, level dollar financing, produces declining percent-of-payro ll contributions and places a greater relative burden on current taxpayers. The annual rate of incr ease in member payroll used to compute the le vel percent-of-payroll contribution is the same rate of payroll growth used to compute actuarial liability and costs. It reflects across-the-board salary increas es, not group size increases. If future payroll growth is less than the assumed rate due to smaller than projected salary increases, the percent-of-payroll cont ribution rate for unfunded act uarial accrued liability will tend to decline. If future payroll growth is less than the assumed rate due to decreases in the number of members, the percent-of-payroll contribution rate for unfunded actua rial accrued liability will tend to increase but dollar contributions will be less than indicated in the preceding schedule. City of Palm Beach Gardens Firefighters’ Pension Fund D-4 A CTUARIAL A SSUMPTIONS The actuarial assumptions regarding the INFLAT ION rate, REAL INVESTMENT RETURN rate, and SALARY INCREASE rates are used, in combination with the other assumptions, to (i) determine the present value of amounts expected to be paid in the future and (ii) establish rates of contribution which are expected to remain relatively level as a percent of total active and DROP member payroll. The annual interest rate used in making this valuati on was 8.25%. It is composed of inflation and real investment return. INFLATION RATE . 4.5% per annum, compounde d annually. This is the rate at which growth in the supply of money and credit is estimated to exceed growth in the supply of goods and services. It may be thought of as the rate of depreciation of the purchasing power of th e dollar. There are a number of indices for measuring the inflation rate. The recent in flation rate as measured by the Consumer Price Index has been: 9/30/20109/30/20099/30/20089/30/20079/30/20063 Year5 Year Actual 1.1% (1.3)%4.9%2.8%2.1%1.6%1.9% Assumed 4.5%4.5%4.5%4.5%4.5%4.5%4.5% Average Period Ended REAL INVESTMENT RETURN RATE . 3.75% per annum, compounde d annually. This is the rate of return estimated to be produced by investing a pool of assets in an in flation-free environment. Recent real rates of investment return on the funding value of assets have been: 9/30/20109/30/20099/30/20089/30/20079/30/20063 Year5 Year Total Rate 3.0% 2.3% 3.8% 9.4% 9.3% 3.0% 5.6% less Inflation Rate 1.1% (1.3)%4.9% 2.8% 2.1% 1.6% 1.9% Actual Real Rate 1.9% 3.6% (1.1)%6.6% 7.2% 1.4% 3.6% Projected Real Rate 3.75% 3.75% 3.75% 3.75% 3.75% 3.75% 3.75% Projected Total Rate 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% 8.25% Average Period Ended The total investment return rate was computed on the funding value of assets using the approximate formula i = I divided by 1/2 (A + B - I), where I is actual investment income, A is the beginning of year asset funding value, and B is the end of year asset funding value. The preceding investment return rates reflect the partic ular characteristics of this pension fund and the method of determining the f unding value of assets. They s hould not be used to measure an investment advisor's performance or for comparison with other pension funds. Such use will usually mislead. City of Palm Beach Gardens Firefighters’ Pension Fund D-5 SALARY INCREASE RATES . Active member salaries are assu med to increase between the date of hire and date of retirement or DROP. Salary increases occur in recognition of (i) individual merit and seniority, (ii) inflation-rela ted depreciation of the purchasi ng power of salaries, and (iii) competition from other employers for personnel. A schedule of assumed rates of increases in individual salaries for sample ages follows: Attributable to:2030405060 Merit & Seniority 3.7%1.1%0.7%0.2%0.0% General Increase in Wage Level Due to: Inflation 4.5%4.5%4.5%4.5%4.5% Total 8.2%5.6%5.2%4.7%4.5% Annual Rates for Salary Increase for Sample Ages The valuation is based on the number of active memb ers remaining constant, and the total payroll for the group increasing at the rate of 4.5% a year (the assumed increase in wage levels due to inflation and other causes). A schedule of recent salary cha nge experience, as measured by average reported pay, follows: 9/30/20109/30/20099/30/20089/30/20079/30/20063 Year5 Year10 Year % Change: Actual Average (1)0.7%2.8%8.1%3.8%1.9%3.9%3.5%N/A Projected 5.1%5.2% 5.3% 5.3%5.3% 5.2%5.2%5.9% % Change in Total Payroll (2)0.8%1.4% 3.2%3.7% 4.9%1.8%2.8%N/A Average Period Ended (1 ) Excluding terminations and new members. (2) Including pays of members electing DROP participation but still working. City of Palm Beach Gardens Firefighters’ Pension Fund D-6 In order to achieve the funding obj ective of a contribution rate whic h remains level as a percent of payroll, the total rate of investment return on th e funding value of assets must exceed the rate of average increase in salaries by an amount equal to the projected real investment return rate. The following schedule illustrates the recent history of the relationship between total investment return and average pay changes. 9/30/20109/30/20099/30/20089/30/20079/30/20063 Year5 Year Total Investment Return Rate 3.0%2.3 %3.8 %9.4 %9.3 %3.0 %5.6 % Rate of Change in Average Pay 0.7%2.8%8.1 %3.8 %1.9 %3.9 %3.5 % Difference:Actual 2.3%(0.5)%(4.3)%5.6 %7.4 %(0.8)%2.1 % Target 4.5%4.5%4.5 %4.5 %4.5 %4.5 %4.5 % Period Ended Average MORTALITY TABLE FOR NON-DISABLED LIVES . The RP-2000 Mortality Table for males and females. Sample AgesMenWomenMenWomen 50$132.61 $135.64 30.80 33.59 55125.54 129.58 26.18 28.91 60116.39 121.61 21.74 24.38 65105.28 111.84 17.61 20.12 7092.53 100.44 13.88 16.23 7578.29 87.57 10.57 12.74 8063.36 73.53 7.75 9.68 Value of Future Life $1 Monthly for LifeExpectancy (Years) The mortality table is used to measure the probab ilities of members dying before retirement and the probabilities of each benefit paymen t being made after retirement. City of Palm Beach Gardens Firefighters’ Pension Fund D-7 MORTALITY TABLE FOR DISABLED LIVES . The RP-2000 Disabled Mortality Table for males and females. Sample AgesMenWomenMenWomen 50$100.11 $118.00 18.21 25.11 5594.10 111.16 15.94 21.69 6087.72 103.87 13.81 18.58 6580.38 95.56 11.76 15.66 7071.90 86.05 9.77 12.93 7562.77 75.85 7.95 10.49 8053.91 65.47 6.39 8.37 Value of Future Life $1 Monthly for LifeExpectancy (Years) The mortality table is used to measure the probab ilities of members dying before retirement and the probabilities of each benefit paymen t being made after retirement. RATES OF SEPARATION FROM ACTIVE MEMBERSHIP . The rates do not apply to members eligible to retire and do not include sepa ration on account of death or disability. Separation rates are used to measure the probabiliti es of members remaining in employment. Sample Years of AgesService All 01 5 .0 % 11 0 .0 29 .0 38 .0 47 .0 255 & Over 7.0 30 5.9 35 4.4 40 3.0 45 2.1 50 1.7 55 1.0 60 1.0 Percent Separating Within Next Year VESTED MEMBERS who terminate with a benefit worth le ss than 100% of th eir own accumulated contributions were presumed to elect a refund of accumulated contributions and forfeit the vested benefit. City of Palm Beach Gardens Firefighters’ Pension Fund D-8 RATES OF DISABILITY . Disability rates measure the proba bilities of active members becoming disabled. Sample Ages 25 0.05% 30 0.06 35 0.09 40 0.12 45 0.27 50 0.43 55 0.43 60 0.43 Percent Becoming Disabled Within Next Year Fifty percent of disabilities were projected to be duty related. RATES OF RETIREMENT . Rates of retirement are used to m easure the probabilities of an eligible member retiring during the next year. Retirement Service at Age Retirement 50 5.00%25 100% 51 5.00 52 50.00 53 10.00 54 10.00 55 100.00 Percent Retiring Percent Retiring EXPENSES . Administrative and investment expenses are included as an additional employer contribution to provide for reimbursement of these e xpenses. Expenses are assumed to be the same as the preceding year. ACTIVE MEMBER GROUP SIZE . The valuation was based on a constant active member group size. This is unchanged from previous valuations. SALARY . All amounts included in the calculation of benefits were reported and valued in the actuarial valuation. City of Palm Beach Gardens Firefighters’ Pension Fund D-9 S UMMARY OF A SSUMPTIONS U SED S EPTEMBER 30, 2010 Pensions in an Inflationary Environment Value of $1,000/month Retirement Benefit To an Individual Who Retires at Age 52 In an Environment of 4.5% Inflation Age 52 $1,000 53 957 54 916 55 877 56 839 57 803 62 644 67 517 72 415 77 333 82 267 87 214 Value The life expectancy of a 60 year ol d male retiree is age 82. The life expectancy for a 60 year old female retiree is age 84. Half of the people will outlive their life expectancy. The effects of even moderate amounts of inflation can be significa nt for those who live to an advanced age. City of Palm Beach Gardens Firefighters’ Pension Fund D-10 City of Palm Beach Gardens Firefighters’ Pension Fund D-11 S UMMARY OF A SSUMPTIONS U SED S EPTEMBER 30, 2010 M ISCELLANEOUS AND T ECHNICAL A SSUMPTIONS Marriage Assumption: 100% of males and 100% of female s are assumed to be married for purposes of death-in-service benefits. Pay Increase Timing: Beginning of (Fiscal) year. This is equivalent to assuming that reported pays represent amounts paid to members during the year ended on the valuation date. Decrement Timing: Decrements of all types are assumed to occur mid-year. Eligibility Testing: Eligibility for benefits is determined based upon the age nearest birthday and service nearest whole year on the date the decrement is assumed to occur. Benefit Service: Exact fractional service is used to determine the amount of benefit payable. Decrement Relativity: Decrement rates are used without adjustment for multiple decrement table effects. Decrement Operation: Disability and withdrawal do not operate during retirement eligibility. Normal Form of Benefit: The assumed normal form of bene fit is the 10-year guaranteed straight life form. Loads: Age and service benefits were loaded by 4.5% for lump sums of accumulated annual leave. Incidence of Contributions: Contributions are assumed to be received halfway through the fiscal year. City of Palm Beach Gardens Firefighters’ Pension Fund D-12 D EFINITIONS OF T ECHNICAL T ERMS Accrued Service . Service credited under the fund which was rendered before the date of the actuarial valuation. Actuarial Accrued Liability . The difference between the actuarial present value of future benefit payments and the actuarial present va lue of future normal costs. Also referred to as "accrued liability" or "past service liability." Actuarial Assumptions . Estimates of expected future experi ence with respect to rates of mortality, disability, turnover, retirement, rate or rates of i nvestment income and salary increases. Decrement estimates (rates of mortality, disability, turn-ove r and retirement) are generally based on past experience, often modified for projected changes in conditions. Economic estim ates (salary increases and investment income) consist of the underlying rates in an inflation-free environment plus a provision for a long-term av erage rate of inflation. Actuarial Cost Method . A mathematical budgeting procedure fo r allocating the dollar amount of the "actuarial present value of future benefit payments" between future normal costs and actuarial accrued liability. Sometimes refe rred to as the "actuarial valuation cost method." Actuarial Equivalent . A single amount or series of amounts of equal actuarial present value to another single amount or series of amounts, co mputed on the basis of appropriate actuarial assumptions. Actuarial Present Value . The amount of funds currently require d to provide a payment or series of payments in the future. It is determined by disc ounting future payments at predetermined rates of interest, and by probabilities of payment. Also referred to as "present value." City of Palm Beach Gardens Firefighters’ Pension Fund D-13 Amortization . Paying off an interest-discounted amount with periodic payments of interest and principal -- as opposed to paying it off with a lump sum payment. Experience Gain (Loss). The difference between actual actuarial costs and assumed actuarial costs -- during the period between two valuation dates. Funding Value of Assets . Also referred to as actuarial valu e of assets, smoothed market value of assets, or valuation assets. Valuation assets recognize assumed investment retu rn fully each year. Differences between actual and assumed investment return are phased in ove r a closed 4-year period. During periods when investment performance exceeds the assumed rate, va luation assets will tend to be less than market value. During periods when investment performance is less than the assumed rate, valuation assets will tend to be greater than market value. If assumed rates are exactly realized for 4 consecutive years, valuation assets will b ecome equal to market value. Normal Cost . The actuarial cost allocated to the cu rrent year by the actuarial cost method. Sometimes referred to as "current service cost." Unfunded Actuarial Accrued Liability . The difference between actuarial accrued liability and the actuarial value of fund assets. Sometimes referred to as "unfunded past service liability," "unfunded accrued liability" or "unfunded supplemental present value." Most pension funds have unfunded actuarial accrued liability. It arises each time new benefits are added and each time an experience loss is realized. The existence of unfunded act uarial accrued liability is not in itself bad, any more than a mortgage on a house is bad. Unfunded actuarial accrued liability does not represent a debt that is payable today. What is important is the ability to control the amount of unfunded act uarial accrued liability and the trend in its amount (after due allowa nce for devaluation of the dollar). SECTION E CERTAIN DISCLOSURES REQUIRED BY STATEMENT NO. 25 OF THE GOVERNMENTAL ACCOUNTING STANDARDS BOARD This information is presented in draft form for rev iew by the Plan’s auditor. Please let us know if there are any items that the auditor changes so that we may maintain consistency with the Plan’s financial statements. A CTUARIAL A CCRUED L IABILITY The actuarial accrued liabili ty is a measure intended to help us ers assess (i) a pe nsion fund's funded status on a going concern basis, an d (ii) progress being made toward accumulating the assets needed to pay benefits as due. Allocati on of the actuarial presen t value of projected bene fits between past and future service was based on service using the projected unit credit actuarial cost method. Assumptions, including proj ected pay increases, were the same as used to determine the Fund's level percent of payroll annual required contribution betw een entry-age and assume d exit age. Entry-age was established by subtracting credited service from current age on the valuation date. The preceding methods comply with the financ ial reporting standards established by the Governmental Accounting Standards Board. The unit credit actuarial accrued liability was determined as part of an actuarial valuation of the plan as of September 30, 2010. Significant actuarial a ssumptions used in determining the unit credit actuarial accrued liability include (a ) a rate of return on the investment of present and future assets of 8.25% per year compounded annuall y, and (b) projected salary increases of 4.5% per year compounded annually attributable to inflation and other causes, (c ) additional proj ected salary increases of 3.7% to 0.0% per year, depending on age, attrib utable to seniority/merit. At September 30, 2010, the unfunded actuarial accrued liability is $18,097,678 determined as follows: Actuarial Accrued Liability Active participants (103 vested and 13 non-vested)41,060,085 $ Retired participants and beneficiaries currently receiving benefits (6 recipients)7,685,027 Vested terminated participants not yet receiving benefits (1 inactive)462,947 Total Actuarial Accrued Liability 49,208,059 Actuarial Value of Assets (market value was $28,890,275)31,110,381 Unfunded Actuarial Accrued Liability 18,097,678 $ During the period from October 1, 2009 to Septembe r 30, 2010, the Fund experienced a net change of $4,850,682 in the actuarial accrued liability. City of Palm Beach Gardens Firefighters’ Pension Fund E-1 C ONTRIBUTIONS R EQUIRED AND C ONTRIBUTIONS M ADE The City's funding policy provides for periodic employe r contributions at actuarially determined rates that, expressed as percentages of covered payroll, are designed to accumulate sufficient assets to pay benefits when due. The normal cost and actuarial accrued liability are determined using a projected unit credit actuarial cost method. Unfunded actuarial accrued liabilit y is being amortized as a level percent of payroll over periods ranging from 13-25 years. During the year ended September 30, 2010 cont ributions totaling $4,345 ,807 -- $3,751,350 employer ($3,550,238 from the City and $201,112 from the Stat e under Chapter 175) and $594,457 employee -- were made in accordance with contribution requirem ents determined by an actuarial valuation of the Fund as of September 30, 2008. The employer cont ributions consisted of $1,888,805 for normal cost and administrative expenses, and $1,862,545 for amor tization of the unfunded actuarial accrued liability. Employer contri butions represented 37.25% of covered payroll. Schedule of Employer Contributions Fiscal Valuation Year Date 9/30/98-999/30/1996$ 200,759 100% 9/30/99-009/30/1998 227,154 100 9/30/00-019/30/1998 423,628 100 9/30/01-029/30/1998 594,562 100 9/30/02-039/30/2001 731,241 100 9/30/03-049/30/2001 739,310 100 9/30/04-059/30/20031,188,002 100 9/30/05-069/30/20041,542,934 100 9/30/06-079/30/20052,247,828 100 9/30/07-089/30/20063,055,991 100 9/30/08-099/30/20073,180,731 100 9/30/09-109/30/20083,550,238 100 Percentage Contributed Annual Required Contribution* * Since it was stated to the actuary that the City’s practice is to contribute at least the percent of payroll employer contribution rate shown in the actuarial valuation results, the values shown are the actual contributions reported by the City in the fiscal year. City of Palm Beach Gardens Firefighters’ Pension Fund E-2 R EQUIRED S UPPLEMENTARY I NFORMATION S CHEDULE OF F UNDING P ROGRESS 9/30/19993,943 $ 5,313 $ 1,371 $ 74.2%3,194$ 42.9% 9/30/20004,8106,0661,25579.33,841 32.7 9/30/20015,4156,6751,26081.14,255 29.6 9/30/20025,75412,5776,82345.84,840141.0 9/30/20037,18317,41110,25841.26,542156.8 9/30/20048,14621,25413,10838.37,568173.2 9/30/200510,79128,08317,29238.48,774197.1 9/30/2006(a)13,97429,84615,87246.89,205172.4 9/30/200718,24833,82615,57853.99,549163.1 9/30/200822,30739,30216,99556.89,853172.5 9/30/200926,48444,35717,87459.79,994178.8 9/30/201031,11049,20818,09863.210,072179.7 Actuarial Valuation Date (AAL) (a) Actuarial Accrued Liability ((b-a)/c) Funded Ratio (a)/(b) Unfunded AAL as a Percentage of Active Member (b) * Covered Payroll (b)-(a) Active Member Covered Payroll (c) Actuarial Value of Assets Unfunded AAL Dollar amounts are in thousands. * Based on the Entry Age Actuarial Co st Method, except last row is Projected Unit Credit. (a) After changes in benefit provisions, actuarial assumptions, or cost methods. Analysis of the dollar amounts of actuarial value of assets, actuarial accr ued liability, or unfunded actuarial accrued liability in isolation can be mislead ing. Expressing the actuari al value of assets as a percentage of the actuarial accrued liability provid es one indication of the system's funded status on a going-concern basis. Analysis of this percentage over time indicates whether the system is becoming financially stronger or weaker. Generally, the greater this percen tage, the stronger the plan. The unfunded actuarial accrued liability and annual c overed payroll are both a ffected by inflation. Expressing the unfunded actuarial accr ued liability as a percentage of covered payroll approximately adjusts for the effects of inflation and aids an alysis of the progress being made in accumulating sufficient assets to pay benefits when due. Gene rally, the smaller this percentage, the stronger the plan. City of Palm Beach Gardens Firefighters’ Pension Fund E-3 SECTION F SUMMARY OF VALUATION DATA RESULTS IN STATE FORMAT S UM M A R Y O F V AL U A T I O N R ES U L T S I N S TA T E F OR M A T ($ A M O U N T S I N T H O U S A N D S ) (a ) M e m b e r D a t a (i ) A c t i v e m e m b e r s - n u m b e r 11 4 11 5 - a n n u a l i z e d v a l u a t i o n p a y r o l l 10 , 0 7 2 $ 9, 9 9 4 $ ( i i ) R e t i r e d m e m b e r s & b e n e f i c i a r i e s ( e x c l . d i s a b i l i t y ) - n u m b e r 6 5 - a n n u a l i z e d b e n e f i t p a y r o l l 47 3 $ 36 8 $ (i i i ) D i s a b l e d m e m b e r s - n u m b e r 5 5 - a n n u a l i z e d b e n e f i t p a y r o l l 11 5 11 5 (i v ) T e r m i n a t e d v e s t e d m e m b e r s - n u m b e r 2 2 - a n n u a l i z e d d e f e r r e d b e n e f i t p a y r o l l 72 $ 72 $ (b ) A s s e t s (i ) F u n d i n g v a l u e 31 , 1 1 0 $ 26 , 4 8 4 $ (i i ) M a r k e t v a l u e 28 , 8 9 0 23 , 1 7 6 ( c ) A c t u a r i a l L i a b i l i t i e s (i ) A c t u a r i a l p r e s e n t v a l u e o f a c t i v e p a r t i c . b e n e f i t s : no r m a l & e a r l y r e t i r e m e n t 56 , 9 6 7 $ 54 , 8 0 0 $ te r m i n a t i o n b e n e f i t s - p e n s i o n s 1, 2 2 1 1, 2 8 6 di s a b i l i t y r e t i r e m e n t 45 4 48 4 su r v i v o r b e n e f i t s ( p o s t - r e t i r e m e n t ) 0 0 su r v i v o r b e n e f i t s ( p r e - r e t i r e m e n t ) 25 3 25 9 te r m i n a t i o n b e n e f i t s - r e f u n d s 57 3 61 3 Sh a r e a c c o u n t s 0 0 To t a l 59 , 4 6 8 57 , 4 4 2 (i i ) A c t u a r i a l p r e s e n t v a l u e o f t e r m i n a t e d v e s t e d m e m b e r b e n e f i t s 46 3 42 7 (i i i ) A c t u a r i a l p r e s e n t v a l u e o f r e t i r e d p a r t i c . & b e n e f i c i a r y : no r m a l / e a r l y r e t i r e m e n t & s u r v i v o r s 6, 5 5 1 4, 7 6 5 di s a b i l i t y r e t i r e m e n t 1, 1 3 4 1, 1 4 7 To t a l 7, 6 8 5 5, 9 1 2 (i v ) T o t a l a c t u a r i a l p r e s e n t v a l u e o f f u t u r e b e n e f i t p a y m e n t s 67 , 6 1 6 63 , 7 8 1 (v ) P a y a b l e s no n e no n e ( v i ) A c t u a r i a l a c c r u e d l i a b i l i t y 4 9 , 2 0 8 $ 44 , 3 5 7 $ (v i i ) U n f u n d e d a c t u a r i a l a c c r u e d l i a b i l i t y ( 1 ) 18 , 0 9 8 $ 17 , 8 7 4 $ Se p t e m b e r 3 0 , 2 0 0 9 Se p t e m b e r 3 0 , 2 0 1 0 (1 ) P l e a s e r e f e r t o p a g e B - 6 f o r r e q u e s t e d d e t a i l . Ci t y o f P a l m B e a c h G a r d e n s F i r e f i g h t e r s ’ P e n s i o n F u n d F - 1 (d ) A c t u a r i a l P r e s e n t V a l u e o f A c c r u e d B e n e f i t s ( c a l c u l a t e d i n a c c o r d a n c e w i t h F A S B S t a t e m e n t N o . 3 5 ) (i ) V e s t e d a c c r u e d b e n e f i t s Re t i r e d m e m b e r s a n d b e n e f i c i a r i e s $ 7 , 6 8 5 5,912$ T e r m i n a t e d m e m b e r s 46 3 427 Ac t i v e m e m b e r s 34 , 0 0 6 29 , 0 8 1 Ac t i v e m e m b e r s h a r e a c c o u n t s 0 0 To t a l 42 , 1 5 4 35 , 4 2 0 (i i ) N o n - v e s t e d a c c r u e d b e n e f i t s 1, 3 3 3 1,437 ( i i i ) T o t a l a c t u a r i a l p . v . o f a c c r u e d b e n e f i t s 4 3 , 4 8 7 3 6 , 8 5 7 (i v ) A c t u a r i a l p . v . o f a c c r u e d b e n e f i t s a t b e g i n . o f y e a r 36 , 8 5 7 31 , 6 2 1 (v ) C h a n g e s a t t r i b u t a b l e t o : Am e n d m e n t s 0 0 As s u m p t i o n c h a n g e a n d d a t a c o r r e c t i o n s 0 0 Op e r a t i o n o f d e c r e m e n t s 7, 1 9 8 5,613 Be n e f i t p a y m e n t s (5 6 8 ) (377) Ot h e r 0 0 (v i ) N e t c h a n g e 6, 6 3 0 5,236 (v i i ) A c t u a r i a l p . v . o f a c c r u e d b e n e f i t s a t e n d o f y e a r 43 , 4 8 7 36 , 8 5 7 (e ) P l a n c o s t s f o r f i s c a l y e a r b e g i n n i n g O c t o b e r 1 , 2 0 1 0 a n d O c t o b e r 1 , 2 0 0 9 ( E A N C ) (i ) N o r m a l c o s t s Se r v i c e p e n s i o n s ( i n c l . p o s t - r e t . s u r v . p e n s i o n s ) 24 . 4 3 % 23.83% D i s a b i l i t y p e n s i o n s 0 . 2 7 0.29 Su r v i v o r p e n s i o n s ( p r e - r e t i r e m e n t ) 0. 1 3 0.13 De f e r r e d s e r v i c e p e n s i o n s 0. 6 7 0.71 Re f u n d s o f m e m b e r c o n t r i b u t i o n s 0. 4 3 0.49 T o t a l n o r m a l c o s t 25 . 9 3 25.45 ( i i ) P a y m e n t t o a m o r t i z e u n f ' d . a c t u a r i a l a c c r u e d l i a b i l i t y 1 6 . 1 6 % 15.41% ( i i i ) A d m i n i s t r a t i v e e x p e n s e s 2 . 5 7 2.04 (i v ) T e m p o r a r y f u l l f u n d i n g c r e d i t 0. 0 0 0.00 (v ) F S 1 1 2 . 6 4 ( 5 ) r e q u i r e m e n t 0. 0 0 0.00 (v i ) A m o u n t t o b e p a i d b y m e m b e r s 6. 0 0 6.00 (v i i ) C h a p t e r 1 7 5 p o r t i o n 1. 9 1 1.91 ( v i i i ) A d d i t i o n a l P r e m i u m T a x R e v e n u e p o r t i o n 0 . 0 0 0.00 (i x ) E x p e c t e d p l a n s p o n s o r c o n t r i b u t i o n % o f p a y r o l l 36 . 7 5 % 34.99% do l l a r s $ 3 , 9 7 4 3,745$ Se p t e m b e r 3 0 , 2 0 0 9 Se p t e m b e r 3 0 , 2 0 1 0 Ci t y o f P a l m B e a c h G a r d e n s F i r e f i g h t e r s ’ P e n s i o n F u n d F - 2 (f ) P a s t C o n t r i b u t i o n s ( f i s c a l y e a r s e n d i n g 9 / 3 0 / 2 0 1 0 a n d 9 / 3 0 / 2 0 0 9 ) (i ) R e q u i r e d m i n i m u m : F u n d s p o n s o r 3, 5 5 0 $ 3, 1 8 1 $ Me m b e r s 11 9 12 1 To t a l 3, 6 6 9 3, 3 0 2 ( i i ) A c t u a l : Ci t y 3 , 5 5 0 3 , 1 8 1 Ch a p t e r 1 7 5 t a x e s 20 1 20 1 Me m b e r s 11 9 12 1 To t a l 3, 8 7 0 3, 5 0 3 (g ) N e t E x p e r i e n c e G a i n ( L o s s ) (4 7 9 ) (9 0 5 ) (h ) O t h e r D i s c l o s u r e s ( i ) P r e s e n t v a l u e o f a c t i v e m e m b e r f u t u r e s a l a r i e s f r o m a t t a i n e d a g e 62 , 9 7 5 $ 67 , 5 5 1 $ fr o m e n t r y a g e ( i i ) P r e s e n t v a l u e o f a c t i v e m e m b e r f u t u r e c o n t r i b s . f r o m a t t a i n e d a g e 3, 7 7 8 $ 4, 0 5 3 $ fr o m e n t r y a g e Se p t e m b e r 3 0 , 2 0 0 9 Se p t e m b e r 3 0 , 2 0 1 0 Ci t y o f P a l m B e a c h G a r d e n s F i r e f i g h t e r s ’ P e n s i o n F u n d F - 3 Ci t y o f P a l m B e a c h G a r d e n s F i r e f i g h t e r s ’ P e n s i o n F u n d F - 4 R EC O N C I L I A T I O N O F M EM B E R S H I P FO R T H E P LA N Y EA R E ND E D S EP T E M B E R 30 , 20 1 0 No . a t S t a r t o f Y e a r 11 5 2 1 3 5 1 In c r e a s e ( D e c r e a s e ) F r o m Se r v i c e R e t i r e m e n t (1 ) 1 Di s a b i l i t y R e t i r e m e n t De a t h s O t h e r P e n s i o n T e r m i n a t i o n s V e s t e d T e r m i n a t i o n s No n - V e s t e d T e r m i n a t i o n s Ne w E n t r a n t s / R e h i r e s No . a t E n d o f Y e a r 11 4 2 2 3 5 1 Me m b e r s M e m b e r s Re t i r e d Ac t i v e T e r m i n a t e d Se r v i c e D i s a b i l i t y Beneficiaries Re t i r e d DR O P Ve s t e d Pe n s i o n R e c i p i e n t s DROP A CTIVITY FOR THE P ERIOD E NDED S EPTEMBER 30, 2010 Age EligibleElected 45-49 2 1 50-54 4 0 61 9/30/2010 City of Palm Beach Gardens Firefighters’ Pension Fund F-5