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HomeMy WebLinkAboutAgenda Police Pension 111606Agenda City of Palm Beach Gardens Police Officers' Pension Fund MEETING OF NOVEMBER 16TH1 2006 LOCATION: City Council Chambers' City Hall 10500 North Military Trail Palm Beach Gardens, FL 33410 TIME: 9:00 AM 1. Call Meeting To Order 2. Roll Call: • Lt. Jay Spencer, Chairman • David Pierson, Secretary • Jules Barone, Trustee • Brad Seidensticker, Trustee • Wayne Sidey, Trustee 3. Approval of Minutes • August 11th, 2006 Regular Meeting 4. Board to elect Fifth Trustee 5. Auditor Report: Cherry, Bekaert & Holland, L.L.P. (Peter Alfele, CPA) 6. Recommendations for Assumption Changes: Gabriel, Roeder, Smith & Company (Steve Palmquist) 7. Investment Manager Report: Rhumbline Advisors (Denise D'Entremont) 8. Investment Consultant Report: GRS Asset Consulting (John McCann) 9. Attorney Report: Hanson, Perry, & Jensen, P.A. (Bonni Jensen) • Buyback Policy • Letter from Sam Nasca • Reappointment of City Trustees • Summary Plan Description • Travel Policy 10. Disbursements Approval 11. Benefit Approvals 12. Banking Letter of Recommendation (Scott Baur) 13. Administrative Report (Scott Baur) • Website • Transition Update 14. Other Business 15. Schedule Next Meeting 16. Adjourn 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. C (h (Ls CL E O U c O U Q C .aG V N L Y C co m � '0 r .Q c .0 LE) �o E n �n C aU- 0OO md� >u� c) .. (L �c 4) y jo m r (o N �v m m to (m m� �L DW V _;C O W C N -�O O O N �7 �_ d 0 0 3 0 \ �+ c�C.460 m�Ae . LL ow b9 C:) Y Y YYrO(MO� V gOO_Yurit -,c3C) (plfl (l1 A fF?� EAR V A S &I� A A C 0 0 0 0 U U U 0 C C C C C C C c C C c 4)02! i C c N N N m N N (a m m LO 3 Y Go CO co ca co co co CD Im in V U) N c N �, N N LL Y Y N LLL IV NU) ` E N N 0 c uL c i m c c m m m m 0 0 O_ O_ c c X 0 O Z X 0 O Z O r m QC d C C Q E Q .. E :3 N N N 3 N cr N > j N N D D N �j 0 OoCOLYOLY 0 N m CL Y C C W 0 .0 D 0) 0 0 to .0 U C (0 mCC m C ,Y l0 LL C N 0 _ 3 .0 >N m lL LL (D > PENSION RESOURCE CENTERS Accounts Payable Check Register FOR: PALM BEACH GARDENS POLICE Check Numberl Date Payee and Description Amount 2014 September 6, 2006 Pension Resource Center $2,290.51 Admin. Services - September 2015 September 6, 2006 Hanson, Perry & Jensen, P.A. $2,012.54 Legal Services Renders thru 8/15/06 2016 October 3, 2006 Barcelo Orlando Hotel $330.00 Room Reservation - Annual Police & Firefighters Pension Trustees Conference - Jules Barone 2017 October 3, 2006 Gabriel Roedner Smith & Company $3,649.00 Services thru 8/31/06 2018 October 3, 2006 Pension Resource Centers $2,275.00 Admin. Services - October 2019 October 3, 2006 Hanson, Perry & Jensen, PA $288.70 Legal services thru 9/15/06 2020 October 13, 2006 Ellen Schaffer $1,060.00 2021 October 20, 2006 Jules Barone $120.00 Travel Advance - Police & Fire Pension Trustees Conf. 2022 November 2, 2006 ICC Capital Management $24,905.53 Management Fees 7/01/06- 9/30/06 2023 November 2, 2006 Cherry, Bekaert & Holland $1,900.00 Audit of Financial Statements for Year Ended 9/30/05 2024 November 2, 2006 Gabriel Roeder Smith & Company $1,324.00 Actuarial Services through 9/3/06 2025 November 2, 2006 Pension Resource Center $2,296.34 November Administrative Fee Chairman Secretary Date Total $42,451.62 PENSION RESOURCE CENTER 4360 Northlake Boulevard, Suite 206 West Palm Beach, FL 33410 Bill To Palm Beach Gardens Police Pension Fund 1 (1) Invoice U- Date Invoice # 9/1/2006 1568 Ship To P.O. Number Terms Rep Ship Via F.O.B. Project 9/1/2006 Quantity Item Code Description Price Each Amount 1 1 Admin Fee - PBGPPF FED -EX Palm Beach Gardens Police Pension Fund - Admin Fee - September 2006 FedEx Overnite Package (s) - 6/23/06 UMB Fund Services - ICAP Funds, Inc. 2,275.00 15.51 2,275.00 15.51 Total $2,290.51 JILL HANSON* mjhanson@hpjlaw.com ANN H. PERRY aperty0 hpjlaw.com BONN] SPATARA JENSEN bsjensen@hpjlaw.com *mm Aaartm w N.Y. F ANSON, PERRY & JENSEN, P.A. 400 EXECUTIVE CENTER DRIVE, SurTE 207 — WEST PALM BEACH, FLORIDA 33401 -2922 ()v August 22, 2006 Via Email Palm Beach Gardens Police Pension Fund Pension Resource Center Attn: Scott Baur & Denise Clougherty 4360 Northlake Boulevard, Suite 206 Palm Beach Gardens, FL 33410 Re: Dear Scott: TELEPHONE (561) 686 -6550 FACSIMILE (561) 686 -2802 V-10 Hanson Perry & Jensen Billing Statement Enclosed please find the Firm's invoice for services rendered for the period that ended 8/15/2006. Thank you for your payment of $343.03. Your current balance due is $2,012.54. If you have any questions, please do not hesitate to contact me. BSJladt Enckmm Copy to: Jay Spencer, Chairman David Pierson, Secretary Denise Clougherty, Administrator Via Email Only Sincerely, Bonni S. Jensen 0 HANSON, PERRY & JENSEN, P.A. 400 Executive Center Drive Suite 207 West Palm Beach, FL 33401 Phone: 561- 686 -6550 Invoice submitted to: P.B. Gardens Police Pension Fund Attn: Scott Baur & Denise Clougherty - via email c/o Pension Resource Center 4360 Northlake Boulevard, Suite 206 Palm Beach Gardens FL 33410 Copy to: Chairman & Secretary August 21, 2006 In Reference To: FOR PROFESSIONAL SERVICES RENDERED AS FOLLOWS: Client/ File No.: 0003 Invoice # 60877 Professional Services Administrator - PRC 8/10/2006 BSJ Review Review Summary of Benefits Administrator - PRC SUBTOTAL: Attendance at Trustee Meetings 8/10/2006 KA Prep Atty Rept Prepare Attorney Report, Handouts, and Notebook for upcoming Meeting - 08/11/06 Attendance at Trustee Meetings 8/11/2006 BSJ Attend Attend meeting Conference with Jay Spencer Review Plan Document Attendance at Trustee Meetings Hrs /Rate Amount 0.75 127.50 170.00 /hr [ 0.75 127.501 2.00 130.00 65.00 /hr 2.50 425.00 170.00 /hr P.B. Gardens Police Pension Fund Page 2 Hrs /Rate Amount SUBTOTAL: [ 4.50 555.00] Buyback 8/9/2006 BSJ Review & revise 1.75 297.50 Review and revise Buyback Policy and Contracts for 170.00 /hr Buyback Buyback KA Review & revise 1.00 65.00 Review and revise from 02/09/06 markup 65.00 /hr Review and revise Contract for Buyback prior Palm Beach Gardens Police Service Buyback 8/10/2006 KA E -Mail 0.25 16.25 E -Mail Buyback policy and forms to Trustees and 65.00 /hr Pension Resource Center Buyback SUBTOTAL: [ 3.00 378.75] Direct Rollovers 8/11/2006 KA E -Mail 0.25 16.25 E -Mail policy to Scott Baur 65.00 /hr Direct Rollovers KA Review & revise 0.50 32.50 Review and revise Rollover policy to show Pension 65.00 /hr Resource Center as Administrator instead of Administrative Services, Inc. Direct Rollovers SUBTOTAL: [ 0.75 48.75] Directed Brokerage - Lynch. Jones & Ryan 8/2/2006 BSJ Review 0.10 17.00 Review letter from Lynch, Jones & Ryan re: change in 170.00 /hr calculation of directed brokerage recapture Directed Brokerage - Lynch, Jones & Ryan P.B. Gardens Police Pension Fund 8/2/2006 KA E -Mail E -Mail letter from Lynch, Jones & Ryan to Trustees Scan letter dated 06/30/06 Directed Brokerage - Lynch, Jones & Ryan SUBTOTAL: Investment Guidelines 8/9/2006 KA E -Mail E -mail to John McCann requesting Investment Policy Guidelines Investment Guidelines SUBTOTAL: Minutes of Trustees Meetings 8/9/2006 KA E -Mail E -Mail to Pension Resource Center re: Minutes for 02/09/06 not year approved and submitted Minutes of Trustees Meetings SUBTOTAL: Misc Matters 7/25/2006 BSJ Draft Draft Memorandum re: Notice on Websites Misc Matters 7/28/2006 OA Scan Scan and E -mail notice of new law to all Trustees Misc Matters 8/15/2006 BSJ Telephone call Telephone call with Jay Spencer re: Health insurance Misc Matters SUBTOTAL: Page 3 Hrs /Rate Amount 0.30 19.50 65.00 /hr [ 0.40 36.50] 0.13 7.80 65.00 /hr [ 0.13 7.801 0.25 16.25 65.00 /hr [ 0.25 16.25] 0.25 42.50 170.00 /hr 0.25 10.00 40.00 /hr 0.25 42.50 170.00 /hr [ 0.75 95.00] P.B. Gardens Police Pension Fund Monitor /Consultants - GRS 8/9/2006 KA E -Mail E -Mail to John McCann re: Addendum #2 to Agreement Monitor /Consultants - GRS BSJ Draft Draft Addendum Monitor /Consultants - GRS 8/11/2006 BSJ Draft Draft cover letter to Pension Resource Center with original Addendum #2 to the Investment Monitor Agreement Monitor /Consultants - GRS SUBTOTAL: Participant - General Correspondence 8/10/2006 BSJ E -Mail E -Mail to Sarah Varga re: Status of Lovejoy, Tuman, Bahr & Thomas E -mail to Scott Baur re: status of Buybacks for Shackleford, Smith, Gitto & Beach Participant - General Correspondence SUBTOTAL: Page 4 Hrs /Rate Amount 0.13 7.80 65.00 /hr 0.75 127.50 170.00 /hr 0.50 85.00 170.00 /hr [ 1.38 220.301 0.35 59.50 170.00 /hr [ 0.35 59.50] Participant - Nasca Sam - Disability Application 7/19/2006 KA E -Mail 0.25 16.25 E -Mail to Pension Resource Center requesting letter from 65.00 /hr S. Nasca be placed on August 11th Agenda Participant - Nasca Sam - Disability Application SUBTOTAL: [ 0.25 16.25] Plan Document 8/14/2006 KA E -mails 0.50 32.50 E -mails with Trisha @ GRS re: Ordinance 8, 2006 65.00 /hr Plan Document P.B. Gardens Police Pension Fund Page 5 Hrs /Rate Amount SUBTOTAL: [ 0.50 32.50] Summary Plan Description 8/9/2006 KA Review & revise 1.00 65.00 Review and revise Summary Plan Description per 65.00 /hr attorney markup E -mail to GRS re: pertinent Actuary Data for Summary Plan Description Summary Plan Description BSJ Draft 0.75 127.50 Draft Summary Plan Description 170.00 /hr Summary Plan Description 8/10/2006 KA E -Mail 0.10 6.50 E -Mail to Steve Palmquist requesting that GRS supply 65.00 /hr Actuarial Data Summary Plan Description SUBTOTAL: [ 1.85 199.00] § 175/185 Compliance 7/25/2006 BSJ Review 0.50 85.00 Review Emails re: IPT Database & Point 170.00 /hr Draft Memorandum to Boards of Contact Research Point of Contact § 175/185 Compliance 7/31/2006 KA E -Mail 0.25 16.25 E -Mail Premium Tax Distribution List from Division of 65.00 /hr Retirement § 175/185 Compliance 8/1/2006 KA Telephone call 0.75 48.75 Telephone call from Jay Spencer re: Memorandum from 65.00 /hr Bonni S. Jensen DOR Tax Database Update Research DOR Documents for Jay Spencer E -mail to Jay Spencer - Palm Beach Gardens Contact name § 175/185 Compliance P.B. Gardens Police Pension Fund 8/1/2006 BSJ E -Mail E -Mail to Scott Baur re: §185 money status § 1751185 Compliance SUBTOTAL: For professional services rendered Additional Charges: Bill File 8/11/2006 HPJ UPS overnight$ United Parcel Service Invoice No.: OOOF49280326 Tracking #1 ZF492800392211779 to Scott Baur (Inv Monitor Addendum) Bill File 8/15/2006 HPJ Postage$ Postage Bill File HPJ Photocopies$ Copy Charges Bill File SUBTOTAL: Total additional charges Total amount of this bill Previous balance Total payments Balance due Page 6 Hrs /Rate Amount 0.10 17.00 170.00 /hr [ 1.60 167.001 16.46 $1,960.10 QN /Price 1 8.17 8.17 1 0.87 0.87 217 43.40 0.20 L $52.44 $2,012.54 $343.03 ($343.03) $2,012.54 09; 25/'_'006 12:34 FAX 4073513923 RAI)ISSO\ 2001 /001 September 25, 2006 Mr. Jules Barone 10500 North Military -rai_. Palm Beach Gardens, FIj 33,' 10 Thank you for making . /our reservation at the garcelo Orlando Hotel Your one room accommoiation is as follows: Arrival Date Depart.zre Date Daily Rate eeezeeer? eeeeeeeeeeecz`: eee€ eeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee 10/24/06 10 /27 /0E 110.00 Your confirmation nur,.:xer - s 912277, and you are guaranteed for late arrival. If you find it nFr_csary to charge your plans, please inform us 72 hours prior to ycu,- arrival data to avoid being billed for one night room and ta::. Registration time is after 4:00 P.M. and departure is at 12:00 Noon. Just a quick reminder. oui Guest Services Desk is available to assist you in making ,:,pecial arrangements, such as: attraction tickets, rental cars .tnd restaurant reservations. If it is necessary fo:- yoL. to ship materials to the hotel, each item must be properly packed and marked with name of the guest,arrival date and a contact phone number. Hotel reserves the right to refuse accepting any packages3 thEt appears damaged, and in any event,assumes no liability for the .ondition of the contents of such packages. The hotel will charge a minimum fee of $5 per 50 pounds plus $5 for every 48 hours that wo keep it in storage. Again, thank you for (::hooting The Barcelo Orlando Hotel there is anything elst,- we can do for you please feel free to call us at 407 - 345 -0505. We lock forward to having you as our guest. Best Regards, Reservations Dept Gabriel Roeder Smith & Company Consultants & Actuaries 301 East Las Olas Blvd. Suite 200 Ft. Lauderdale, Florida 33301 -2254 (954) 527 -1616 BOARD OF TRUSTEES, CITY OF PALM BEACH GARDENS POLICE OFFICERS PENSION FUND Mr. J. Scott Baur, Administrator The Pension Resource Center, Inc. 4360 Northlake Blvd., Suite 206 Palm Beach Gardens, FL 33410 J 9/7/2006 Invoice Dept. # 78009 Gabriel Roeder Smith & Company PO Box 78000 Detroit, Michigan 48278 -0009 or ACH Payment to: Gabriel Roeder Smith & Company JPMorgan Chase, ABA #: 072000326 Account #: 0486723 U PLEASE INDICATE THE INVOICE NUMBER ON YOUR REMITTANCE. THANK YOU. PENSION RESOURCE CENTER Invoice 4360 Northlake Boulevard, Suite 206 V West Palm Beach, FL 33410 Date Invoice # 10/1/2006 1613 Bill To Palm Beach Gardens Police Pension Fund Ship To P.O. Number Terms Rep Ship Via F.O.B. Project 10/1/2006 Quantity Item Code Description Price Each Amount 1 Admin Fee- PBGPPF Palm Beach Gardens Police Pension Fund - Admin Fee - October 2006 2,275.00 2,275.00 Total $2,275.00 HANSON, PERRY & JENSEN, P.A. 400 Executive Center Drive Suite 207 West Palm Beach, FL 33401 Phone: 561 -686 -6550 Invoice submitted to: P.B. Gardens Police Pension Fund Attn: Scott Baur & Denise Clougherty - via email c/o Pension Resource Center 4360 Northlake Boulevard, Suite 206 Palm Beach Gardens FL 33410 Copy to: Chairman & Secretary September 20, 2006 In Reference To: FOR PROFESSIONAL SERVICES RENDERED AS FOLLOWS: Client/ File No.: 0003 Invoice # 60949 Professional Services Administrator - PRC 9/11/2006 KA Scan Scan and E -mail to Pension Resource Center Summary (Effective 08/01/06) marked up with changes by Bonni S. Jensen to Scott Baur and Bonnie Lindberg at Pension Resource Center Administrator - PRC SUBTOTAL: DROP 8/1912006 BSJ Telephone call Telephone call with Jay Spencer DROP SUBTOTAL: Hrs /Rate Amount 0.25 16.25 65.00 /hr 0.25 16.25] 0.10 17.00 170.00 /hr 0.10 17.001 P.B. Gardens Police Pension Fund X175/185 Compliance 8/28/2006 BSJ E -Mail E -Mail to Scott Baur and Denise Clougherty re: status of state reports § 175/185 Compliance 9/12/2006 BSJ Telephone call Telephone call from Jay Spencer re: State letter - Annual Report not filed yet § 175/185 Compliance SUBTOTAL: [ For professional services rendered Additional Charges : Bill File 9/15/2006 HPJ Photocopies$ Copy Charges Bill File SUBTOTAL: Total additional charges Total amount of this bill Previous balance Total payments Balance due Page 3 Hrs /Rate Amount 0.10 17.00 170.00 /hr 0.10 17.00 170.00 /hr 0.20 2.20 QW /Price 46 0.20 ti w L lr.�Wj $288.70 $2,012.54 ($2,012.54) $288.70 Page 1 of 2 Bonnie Lindberg From: Bonnie Lindberg Sent: Friday, October 20, 2006 11:59 AM To: Elaine Bagdan Subject: FW: Hotel Reservations Hi Elaine, 6^90"'G Please issue a check to Jules Befris in the amount of $120.00. He will be attending the 38th Annual Police Officers & Firefighters Pension Trustees Conference in Orlando from October 25 - 27, 2006. He will be driving up to Orlando on October 24th, so he is due $30.00 a day for four days. He will come in the office next week to pick this check up. Sincerely, Bonnie. Lindberg Administrator The Pension Resource Center, LLC 4360 Northlake Blvd., Suite 206 Palm Beach Gardens, FL 33410 561.624.3277 x13 561.624.3278 Fax bonnie @resourcecenters.com - - - -- Original Message---- - From: Julius Barone [mailto:jbarone @pbgfl.com] Sent: Monday, October 09, 2006 2:23 PM To: Bonnie Lindberg Subject: RE: Hotel Reservations HELLO BONNIE, WILL I NEED A CHECK FROM YOU FOR THE HOTEL AND CAN I RECEIVE THE PER DIEM BEFORE I TRAVEL. I LEAVE ON OCT. 24TH LATE AFTERNOON. Ofc. Jules Barone Special Operations Bureau Palm Beach Gardens Police Department From: Bonnie Lindberg [ mailto :blindberg @resourcecenters.com] Sent: Monday, September 25, 2006 2:18 PM To: Julius Barone Subject: RE: Hotel Reservations Good Afternoon Jules, As we discussed today, please find the following files attached: • Travel and Expense Report • Statement of Policy for Trustee Expenses Should you have any questions or need any further information, please call me at 624.3277 ext. 13. y1 y`t�n; r 0190 lCAPITAL MANAGEMENT October 1, 2006 PALM BEACH GARDENS POLICE PENSION FUND Joe Mastrangelo Administrative Services, Inc. 7x)90 S W 1 l 7 Ave Mtamt, i- 33183-3845 Invoice Number: 094155 ICC Capital Management, Inc. STATEMENT OF MANAGEMENT FEES ----------------------------------------------- - - - - -- For the Period July 1, 2006 thru September 30, 2006 Portfolio Valuation with Accrued Interest as of 09 -30 -06 9,919,040 (c� 0.500% per annum Quarterly Management Fee Past Due Amount TOTAL DUE AND PAYABLE --------------------------------- - - - - -- $ 9,919,039.96 12,398.80 -------------------- $ 12,398.80 12,506.73 $ 24,905.53 -------------------- - - - - -- 390 North Orange Avenue . 27th Floor . Orlando, Florida 32801 . PH 800- 480 -6445 . PH 401- 839 -8440 . FX 407- 841 -2814 WEB "nvst a :apical um CHERRY BEKAERT & HOLLAND, L.L.P. ONE CLEARLAKE CENTRE 250 S. AUSTRALIAN AVE. STE. 1201 WEST PALM BEACH, FL 33401 (561)835 -8352 PALM BEACH GARDENS POLICE PENSION FUND c% PENSION RESOURCE CENTER, INC. 4360 NORTHLAKE BLVD., SUITE 206 PALM BEACH GARDENS, FL 33410 Invoice No. 317854 Date 912912006 Client No. 4253650.0 FOR PROFESSIONAL SERVICES RENDERED: FINAL BILLING ON AUDIT OF FINANCIAL STATEMENTS FOR THE YEAR ENDED SEPTEMBER 30, 2005 nr, ? ;; %�mf.. , `i V J Current Amount Due $ 1,900.00 Terms: Invoices payable within 15 days from invoice date. A service charge will be added to past due accounts equal to 1 1/2% per month (18% annually) on the previous month's balance less payments received during the month, with a minimum charge of $2.00 per month. GRSGabriel Roeder Smith &Company Consultants & Actuaries 301 East Las Olas Blvd. Suite 870 Ft. Lauderdale, Florida 33301 -2254 (954) 527 -1616 ! BOARD OF TRUSTEES, CITY OF PALM BEACH GARDENS POLICE OFFICERS PENSION FUND Mr. J. Scott Baur, Administrator The Pension Resource Center, Inc. 4360 Northlake Blvd., Suite 206 Palm Beach Gardens, FL 33410 n; - , 10/2/2006 Invoice G ItzVQice # 98945 Dept. # 78009 Gabriel Roeder Smith & Company PO Box 78000 Detroit, Michigan 48278 -0009 or ACH Payment to: Gabriel Roeder Smith & Company JPMorgan Chase, ABA #: 072000326 Account #: 0486723 PLEASE INDICATE THE INVOICE NUMBER ON YOUR REMITTANCE. THANK YOU. For services rendered through 9/30/06 1. Charges to date for preparation of the 10/1/06 Actuarial Valuation Report 100360 -106 $561 2. Buy Back Calculations for: Buntin, Lawrence 100360 -606 $763 Invoice Total $1,324 Paid to Date Client No. 100360 Amount Due $1,324 PLEASE INDICATE THE INVOICE NUMBER ON YOUR REMITTANCE. THANK YOU. PENSION RESOURCE CENTER Invoice 4360 Northlake Boulevard, Suite 206 Date Invoice # West Palm Beach, FL 33410 II/l/2006 1666 Bill To Palm Beach Gardens Police Pension Fund Ship To P.O. Number Terms Rep Ship Via F.O.B. Project It/l/2006 Quantity Item Code Description Price Each Amount I I Admin Fee - PBGPPF FED -EX Palm Beach Gardens Police Pension Fund - Admin Fee - November FedEx Ovemite Package (s) - 1 ovemite : Division of Retirement 2,275.00 21.34 2,275.00 21.34 Total $2,246.34 4 i PALM BEACH GARDENS POLICE PENSION FUND STATEMENT OF POLICY REGARDING BUYBACK OF POLICE /NON- INTERVENING MILITARY SERVICE WHEREAS, the Palm Beach Gardens Police Pension Fund ( "Plan "), and the City of Palm Beach Gardens Code of Ordinances, Section 50 -127 provides that participants may purchase prior police officer or non - intervening military service as "credited service" in this Plan; and WHEREAS, the Trustees desire to adopt a Statement of Policy regarding the buyback of prior police officer and non - intervening military service; NOW, THEREFORE, it is hereby resolved that the following Statement of Policy Regarding Buyback of Police Officer /Non - Intervening Military Service is hereby adopted: I. TIME AVAILABLE FOR PURCHASE A. A Member may purchase years or fractional parts of years of service that a member: 1. Previously served as a police officer with the City of Palm Beach Gardens and for which accumulated contributions were withdrawn from the Fund; 2. Previously served as a Police Officerwith any other municipal, county state or federal law enforcement department or agency; or 3. Previously served in the United States Military (before beginning employment with the City of Palm Beach Gardens Police Department). Page 1 of 4 B. A Member shall not be eligible to purchase prior service if such service is or will form the basis for a pension from another retirement system or plan. This exclusion does not apply to military service. II. APPLICATION PROCESS A. A Member shall make application to buyback service time on a form provided by the Board of Trustees. A copy of the form is attached to this Policy. B. A police officer may request to purchase some or all available years of service. C. The Trustees shall review and approve all requests for buybacks in accordance with this Statement of Policy. D. Upon approval of application for buyback, the cost shall be calculated by the Fund's actuary as follows: 1. Previous Palm Beach Gardens Service calculation based upon repayment of refund with interest, from the date of withdrawal to the date of repayment. 2. Previous Police Officer or Military Service calculated based upon salary and contribution rate in effect at the time that purchase is requested; plus the amount required to make the cost neutral; plus the cost for professional services # E. After the amount of the buyback is calculated and the Member has elected 0 to purchase permissive service, the Member shall execute a "Buyback Contract" which shall set forth the specific buy back provisions for that individual Member. Page 2 of 4 F. The request for buyback may be made at any time during employment but such request can only be made once. G. The credit purchased under this policy will count for all purposes, including 7 vesting. III. FUNDS AVAILABLE FOR PAYMENT A Member may pay for the cost of the purchase of time with any of the following sources, if available. A. A Member may pay for the buyback out of pocket, in one lump sum payment; or B. Using rollovers from other qualified plans; or C. The police officer can buy back this time over a period equal to the length of time being purchased or five years, whichever is greater, at an interest rate which is equal to the fund's actuarial assumption. IV. REPAYMENT PERIOD A. The time period for repayment is 5 years or a period equal to the amount of time being purchased. B. Repayment must begin within six months of the request for credit. C. While in repayment status, no credit will be given for any years of service until the full number of years of service to be purchased has been + repurchased. D. If a member becomes disabled and entitled to a benefit while in the process of completing a buyback, then the member will not have to complete the buyback, but any payments made before disability is determined shall remain with the Fund. Page 3 of 4 E. If a Member terminates employment with the City of Palm Beach Gardens Police Department before attaining 5 years of service (with the City) or before completing entire service buyback repurchase, then any buyback contributions made shall be refunded to the Member without interest. V. COST OF CALCULATIONS A. Participants must pay the cost of the actuary's calculation for the buyback. However, each member will be entitled to one free calculation. B. Attached is a chart showing some examples of buyback costs. The cost to purchase time will vary depending upon an individual's age, present rate of pay, amount of time to be purchased, number of years until retirement and other actuarial factors. THIS STATEMENT OF POLICY REGARDING BUYBACK OF POLICE OFFICER /NON- INTERVENING MILITARY SERVICE is adopted by the Board of Trustees of the PALM BEACH GARDENS POLICE PENSION FUND on this day of Witnessed by: .20 TRUSTEES Page 4 of 4 BSJ /ka December 6, 2005- revised August 9, 2006 H: \PBG 0003 \Buyback\PBG - Buyback Policy.wpd f p PALM BEACH GARDENS POLICE PENSION FUND APPLICATION FOR BUY BACK OF SERVICE PLEASE PRINT OR TYPE: 1. a. Name of Employee: (Last) b. Social Security Number: _ C. Date of Birth: no (Month- Day -Year) Home Telephone Number: (Include Area Code) Other Contact Number: (Include Area Code) e. Home Address: (Street) (First) (Middle) (City) (State) (Zip Code) 2. a. Date of hire by the City of Palm Beach Gardens as a Police Officer: (Month -Day -Year) b. Position in the Police Department: 3. a. I would like to purchase police officer service time from (Enter municipality) Police Department from to. (Month- Day -Year) (Month- Day -Year) or b. I would like to purchase police officer service time from (a governmental entity rendering police services) from to (Month- Day -Year) (Month- Day -Year) This service is not the basis for a pension nor will it be the basis for a pension. Page 1 of 2 Address and contact information: (You must provide detailed contact information or form will be returned to you) or i C. I would like to purchase United States Military service time from to . (Please attach a copy of your Form DD214) hereby certify that the above statements are true and correct to the best of my knowledge. I understand that a false statement may disqualify me for benefits. I further understand that the actuarial cost of this request will be included in the amount that I must pay to purchase the time. EMPLOYEE'S SIGNATURE DATE STATE OF FLORIDA COUNTY OF PALM BEACH Sworn to (or affirmed) and subscribed before me this day of 20 , by Personally known OR Produced identification Type of identification produced: Notary Public, State of Florida Print, type or stamp name of Notary below: [ notary seal ] NOTE: Pension contributions may be refunded to any person who stops work for the City as a police officer with less than ten (10) years of service. BSJ /ka H \PBG 0003 \Buyback \PBG Buyback App FORM.wpd Page 2 of 2 REVISED- December 6, 2005-HPJ PALM BEACH GARDENS POLICE PENSION FUND BUY BACK CONTRACT PRIOR PALM BEACH GARDENS POLICE SERVICE This contract made this day of , 20_ between ( "Member ") and the Palm Beach Gardens Police Pension Fund ( "Fund ") WHEREAS, Memberwas previously employed with the City of Palm Beach Gardens as a Police Officer and wishes to re- purchase such service in the Fund; WHEREAS, the City of Palm Beach Gardens Code of Ordinances, Section 50 -127 allows for the purchase of this service if the member pays to the plan the amount of the refunded contributions plus interest at the rate equal to the fund's actuarial assumption from date of withdrawal to date of repayment. 1. Member acknowledges and accepts the provisions of the City of Palm Beach Gardens Code of Ordinances, Section 50 -127 as amended and the Fund's Statement of Policy regarding the buyback of prior City of Palm Beach Gardens Police service, a copy of which are attached and incorporated by reference in this contract. 2. Member shall present that Board with a completed application for buy back of past Police service. The Member shall provide information sufficient for the verification of past service with the prior employer. 3. Member agrees to purchase years and months of credited service. The amount of the buy back is 4. Member may purchase the credited service in one lump sum (by rollover or cash contribution) or may agree to pay the amount due in installments. If paying in installments, Member shall pay interest at Fund's actuarial assumption (8.25 %) until the total amount due is paid. Method of purchase Lump sum (as follows: $ Rollover $ Cash Contribution Payroll deduction of $ for years and months. 5. Member agrees that once this contract is executed, the purchase of past service credited service must be completed unless the Member leaves the City of Palm Beach Gardens without vesting in the Plan. Page 1 of 2 6. Member agrees that if he /she fails to complete the obligation due under this contract, that Member forfeits all credited service sought and shall hold harmless and release the Plan from any liability for any such service. 7. This Contract shall be construed under the laws of the State of Florida. Any legal challenges to the terms of this Contract shall be filed in a court of competent jurisdiction in Palm Beach County, Florida. 8. In any legal proceedings commenced concerning a breach or for enforcement of this Contract, Member agrees that the Plan is entitled to recover from Member all costs of litigation, including all reasonable attorney's fees. have also been advised to seek the counsel of a qualified tax advisor regarding the tax consequences to me of purchasing this additional service. I, , hereby request to purchase years of service. I further certify that this time is not the basis for another pension. MEMBER'S SIGNATURE STATE OF FLORIDA COUNTY OF Sworn to (or affirmed) and subscribed before me this day of , 20 , by who personally appeared and who did or did not take an oath. Personally known to me - OR - Produced identification NOTARY: Please specify type of identification provided: [ NOTARY SEAL I Page 2 of 2 Signature of Notary Public - State of Florida Type, print or stamp name of Notary below: BSJ /ka - August 9, 2006 H: \PBG 0003 \Buyback \K -Prior PO with PBG PD.wpd PALM BEACH GARDENS POLICE PENSION FUND BUY BACK CONTRACT PAST POLICE OFFICER SERVICE This contract made this day of , 20_ between ( "Member ") and the Palm Beach Gardens Police Pension Fund ( "Fund ") WHEREAS, Member has previously served with a governmental law enforcement agency and wishes to purchase such service in the Fund; and WHEREAS, Member is not entitled to a pension benefit based upon such service; and WHEREAS, the City of Palm Beach Gardens Code of Ordinances, Section 50 -127 allows for the purchase of this service if the member pays to the plan the full actuarial cost of the buyback. Member acknowledges and accepts the provisions of the City of Palm Beach Gardens Code of Ordinances, Section 50 -127 as amended and the Fund's Statement of Policy regarding the buyback of prior Police /Non- Intervening Military service, a copy of which are attached and incorporated by reference in this contract. 2. Member shall present that Board with a completed application for buy back of past Police service. The Member shall provide information sufficient for the verification of past service with the prior employer. 3. Member agrees to purchase years and months of credited service. The amount of the buy back is 4. Member may purchase the credited service in one lump sum (by rollover or cash contribution) or may agree to pay the amount due in installments. If paying in installments, Member shall pay interest at Fund's actuarial assumption (8.25 %) until the total amount due is paid. Method of purchase Lump sum (as follows: Rollover Cash Contribution Payroll deduction of $ for years and months. 5. Member agrees that once this contract is executed, the purchase of past service credited service must be completed unless the Member leaves the City of Palm Beach Gardens without vesting in the Plan. Page 1 of 2 6. Member agrees that if he /she fails to complete the obligation due under this contract, that Member forfeits all credited service sought and shall hold harmless and release the Plan from any liability for any such credited service. 7. This Contract shall be construed under the laws of the State of Florida. Any legal challenges to the terms of this Contract shall be filed in a court of competent i jurisdiction in Palm Beach County, Florida. 8. In any legal proceedings commenced concerning a breach or for enforcement of this Contract, Member agrees that the Plan is entitled to recover from Member all costs of litigation, including all reasonable attorney's fees. have also been advised to seek the counsel of a qualified tax advisor regarding the tax consequences to me of purchasing this additional service. I, , hereby request to purchase years of service. I further certify that this time is not the basis for another pension. MEMBER'S SIGNATURE STATE OF FLORIDA COUNTY OF Sworn to (or affirmed) and subscribed before me this day of 20 , by did not take an oath. Personally known to me - OR - Produced identification who personally appeared and who did or NOTARY: Please specify type of identification provided: Signature of Notary Public - State of Florida [ NOTARY SEAL I Print, Type, or Stamp Commissioned Name of Notary Public H \PBG 0003\Buyba06K -PTiw PO Se— ce.wpd Page 2 of 2 August 10. 2006 PALM BEACH GARDENS POLICE PENSION FUND BUY BACK CONTRACT NON - INTERVENING MILITARY SERVICE This contract made this day of , 20_ between ( "Member ") and the Palm Beach Gardens Police Pension Fund ( "Fund ") WHEREAS, Memberwas honorably discharged from the United States Military and wishes to purchase such service in the Fund; and WHEREAS, the Palm Beach Gardens Code of Ordinance Section 50 -127 allows for the purchase of this service if the member pays to the plan the full actuarial cost of the buyback. 1. Member acknowledges and accepts the provisions of Section 50 -127 as amended and the Fund's Statement of Policy regarding the buyback of prior police and non - intervening military service, copies of which are attached and incorporated by reference in this contract. 2. Member shall present that Board with a completed application for buy back of United States Military service. The Member shall provide information sufficient for the verification of past service with the military. 3. Member agrees to purchase years and months of credited service. The amount of the buy back is 4. Member may purchase the credited service in one lump sum (by rollover or cash contribution) or may agree to pay the amount due in installments. If paying in installments, Member shall pay interest at the actuarial assumption rate, which is currently 8.25% until the total amount due is paid. Method of purchase Lump sum (as follows: $ Rollover $ Cash Contribution Payroll deduction of for years and months. 5. Member agrees that once this contract is executed, the purchase of past service credited service must be completed unless the Member leaves the City of Palm Beach Gardens without vesting in the Plan. 6. Member agrees that if he /she fails to complete the obligation due under this contract, that Memberforfeits all credited service sought except thatwhich has been paid for and shall hold harmless and release the Plan from any liability for any such credited service. If a member is vested, no contributions shall be returned. Page 1 of 2 7. This Contract shall be construed under the laws of the State of Florida. Any legal challenges to the terms of this Contract shall be filed in a court of competent jurisdiction in Palm Beach County, Florida. 8. In any legal proceedings commenced concerning a breach or for enforcement of this Contract, Member agrees that the Plan is entitled to recover from Member all costs of litigation, including all reasonable attorney's fees. I have also been advised to seek the counsel of a qualified tax advisor regarding the tax consequences to me of purchasing this additional service. I, , hereby request to purchase years of service. MEMBER'S SIGNATURE STATE OF FLORIDA COUNTY OF Sworn to (or affirmed) and subscribed before me this day of 20 , by who personally appeared and who did or did not take an oath. Personally known to me - OR - Produced identification NOTARY: Please specify type of identification provided: Signature of Notary Public - State of Florida Print, Type, or Stamp Commissioned Name of Notary Public (NOTARY SEAL I H \PBG 0003 \Buyback \K -Prior Military Servlce.wpd aSJ /ka August 10, 2006 Page 2 of 2 M i' HANSON, PERRY & JENSEN, P.A. 400 EXECUTIVE CENTER DRIVE, SUITE 207 - WEST PALM BEACH, FLORIDA 33401-2922 JILL HANSON- mjhanson@hpjlaw.com ANN H. PERRY aperry®hpjlaw.com BONN] SPATARA JENSEN bsjensen @hpjlaw.com .Aso AomITED IN N.Y. MEMORANDUM TO: Board of Trustees Palm Beach Gardens Police Pension Fund FROM: Bonni S. Jensen Hanson, Perry & en n, P.A. SUBJECT: Pension Protection Act of 2006 DATE: November 16, 2006 TELEPHONE (561) 686 -6550 FACSIMILE (561) 686 -2802 On August 17, 2006, President Bush signed the Pension Protection Act of 2006. Most of the law is directed to Plans that are subject to the operation of ERISA (private sector pension plans). However, there are some provisions that are applicable to public sector plans. Below is a summary of the law changes which effect public pension plans. Retired public safety officers may elect to exclude up to $3,000 annually from pension income from a government pension plan if used to pay for qualified health insurance premiums. The member must be separated from service by reason of disability or attainment of normal retirement age to be eligible for this exclusion. A. Definitions: (1) Public Safety Officers - means the following individuals serving a public agency in an official capacity: • an individual involved in crime and juvenile delinquency control or reduction, or enforcement of the criminal laws (including juvenile delinquency), including, but not limited to police, corrections, probation, parole, and judicial officers; • professional Police; • officially recognized or designated public employee members of a rescue squad or ambulance crew; • officially recognized or designated members of a legally organized volunteer fire department; and Board of Trustees Palm Beach Gardens Police Pension Fund November 16, 2006 Page 2 of 3 • officially recognized or designated chaplains of volunteer fire departments, fire departments, and police departments. This section (unlike other sections that use different definitions of public safety officers) uses the definition in Sec. 1204(8)(A) of the Omnibus Crime Control and Safe Streets Act of 1986. (2) Qualified health insurance premiums - means premiums for coverage for the eligible retired public safety officer, his spouse, and dependents, by an accident or health insurance plan or qualified long- term care insurance contract. The payment of the insurance premiums must' be made directly to the provider of the health insurance plan or qualified long -term care contract by deduction from a distribution from the eligible retirement plan. B. Effective date. The amendments apply to distributions in tax years beginning after December 31, 2006. C. Plan of Action: (1) Create an election forms for its eligible public safety members prior to January 1, 2007. (2) Coordinate limits with the City §457 Plans as there is only one limitation. D. Issues: (1) Whether exclusion is available for members who retired prior to the normal retirement date. The answer is unclear. (2) Whether the Pension Fund can make payments to a health insurance or long term care provider other than the employer sponsored plan. The answer is probably not. 2. Qualified public safety employees, who separate from service after age 50, may take distribution from government pension plans without being subject to the 10- percent early withdrawal penalty tax. Board of Trustees Palm Beach Gardens Police Pension Fund November 16, 2006 Page 3 of 3 A. Definition: A "qualified public safety employee" means any employee of a State or political subdivision of a State who provides police protection, fire- fighting service, oremergency medical servicesforany area within the jurisdiction of the State or political subdivision. B. Effective date: This provision applies to distributions after August 17, 2006. C. Plan of Action: (1) Properly code 1099R forms. BSJ /ka E- Copy:PRC, Administrator November 9, 2006 H:\PBG 0003 \Board \Memo Pens Protect Act 2006 .wpd Palm Beach Gardens Police Pension Fund City Provided Health Insurance Premium Election Form NAME: DATE: Social Security Number: Address: Date of Birth: Please elect your preference for the Fund's payment of your health insurance premiums (up to a maximum of $3,000.00 in a calendar year) provided through the City of Palm Beach Gardens, pursuant to the Pension Protection Act of 2006. Please choose one of the following options: I prefer pre -tax payments (up to $250 per month) prefer post -tax payments I understand that the Board is offering this pre -tax opportunity to me without guidance from the IRS, based upon a reasonable good faith understanding of the Pension Protection Act of 2006. Therefore, if I am subject to additional taxes or penalties I agree to hold harmless the Board of Trustees and the Pension Plan from and against any and all claims, demands, or causes of action of any kind or nature associated with my election. Participant's Signature: Date Signed: Please return your completed form to: Palm Beach Gardens Police Pension Fund Pension Resource Center, LLC 4360 Northlake Boulevard, Suite 206 Palm Beach Gardens, FL 33410 IRS CIRCULAR 230 NOTICE: To the extent that this message or any attachment concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law. BSJ /ka - November 1, 2006 HABB 0188 \FORMS- Standard \Health Ins Prem election form_mtd.wpd Hanson, Perry & Jensen, P.A. West Palm Beach, Florida SPECIAL TAX NOTICE REGARDING PLANS PAYMENTS PALM BEACH GARDENS POLICE PENSION FUND This notice contains important information you will need before you decide how to receive your benefits from the Palm Beach Gardens Police Officers Pension Fund (the "Plan "). SUMMARY A payment from the Plan that is eligible for "rollover" can be taken in two ways. You can have all or any portion of your payment either (1) PAID IN A "DIRECT ROLLOVER" OR (2) PAID TO YOU. A rollover is a payment of your Plan benefits to your individual retirement arrangement (IRA) or to another employer plan. This choice will affect the tax you owe. If you choose a Direct Rollover: Your payment will not be taxed in the current year and no income tax will be withheld. Your payment will be made directly to your IRA or, if you choose, to another employer plan that accepts your rollover. Your payment will be taxed later when you take it out of the IRA or the employer plan. If you choose to have your Plan benefits PAID TO YOU: • You will receive only 80% of the payment, because the Plan administrator is required to withhold 20% of the payment and send it to the IRS as income tax withholding to be credited against your taxes. • Your payment will be taxed in the current year unless you roll it over. You may be able to use special tax rules that could reduce the tax you owe. However, if you receive the payment before age 59 1/2, you also may have to pay an additional 10% tax. • You can roll over the payment by paying it to your IRA or to another employer plan that accepts your rollover within 60 days of receiving the payment. The amount rolled over will not be taxed until you take it out of the IRA or employer plan. • If you want to roll over 100% of the payment to an IRA or an employer plan, you must find other money to replace the 20% that was withheld. If you roll over only the 80% that you received, you will be taxed on the 20% that was withheld and that is not rolled over. Page 1 of 7 MORE INFORMATION PAYMENTS THAT CAN AND CANNOT BE ROLLED OVER 2 II. DIRECT ROLLOVER 2 III. PAYMENT PAID TO YOU 3 IV. SURVIVING SPOUSES, ALTERNATE PAYEES, AND OTHER BENEFICIARIES 6 I. PAYMENTS THAT CAN AND CANNOT BE ROLLED OVER Payments from the Plan maybe "eligible rollover distributions." This means that they can be rolled over to an IRA or to another employer plan that accepts rollovers. Your Plan administrator should be able to tell you what portion of your payment is an eligible rollover distribution. The following types of payments cannot be rolled over: Non - taxable Payments. In general, only the "taxable portion" of your payment is an eligible rollover distribution. If you have made "after -tax" employee contributions to the Plan, these contributions will be non - taxable when they are paid to you, and they cannot be rolled over. (After -tax employee contributions generally are contributions you made from your own pay that were already taxed.) Payments Spread Over Long Periods. You cannot roll over a payment if it is part of a series of equal (or almost equal) payments that are made at least once a year and that will last for: your lifetime (or your life expectancy), or your lifetime and your beneficiary's lifetime (or life expectancies), or a period of ten years or more. Required Minimum Payments. Beginning in the year you reach age 701/2, a certain portion of your payment cannot be rolled over because it is a "required minimum payment" that must be paid to you. II. DIRECT ROLLOVER You can choose a direct rollover of all or any portion of your payment that is an "eligible rollover distribution," as described above. In a direct rollover, the eligible rollover distribution is paid directly from the Plan to an IRA or another employer plan that accepts rollovers. If you choose a direct rollover, you are not taxed on a payment until you later take it out of the IRA or the employer plan. Page 2 of 7 Direct Rollover to an IRA. You can open an IRA to receive the direct rollover. (The term "IRA," as used in this notice, includes individual retirement accounts and individual retirement annuities.) If you choose to have your payment made directly to an IRA, contact an IRA sponsor (usually a financial institution) to find out how to have your payment made in a direct rollover to an IRA at that institution. If you are unsure of how to invest your money, you can temporarily establish an IRA to receive the payment. However, in choosing an IRA, you may wish to consider whether the IRA you choose will allow you to move all or a part of your payment to another IRA at a later date, without penalties or other limitations. See IRS Publication 590, Individual Retirement Arrangements, for more information on IRA's (including limits on how often you can roll over between IRA's). Direct Rollover to a Plan. If you are employed by a new employer that has a plan, and you want a direct rollover to that plan, ask the administrator of that plan whether it will accept your rollover. An employer plan is not legally required to accept a rollover. If your new employer's plan does not accept a rollover, you can choose a direct rollover to an IRA. Direct Rollover of a Series of Payments. If you receive eligible rollover distributions that are paid in a series for less than ten years, your choice to make or not make a direct rollover for a payment will apply to all later payments in the series until you change your election. You are free to change your election for any later payment in the series. Ill. PAYMENT PAID TO YOU If you have the payment made to you, it is subject to 20% income tax withholding. The payment is taxed in the year you receive it unless, within 60 days, you roll it over to an IRA or another plan that accepts rollovers. If you do not roll it over, special tax rules may apply. Income Tax withholding: Mandatory Withholding. If any portion of the payment to you is an eligible rollover distribution, the Plan is required by law to withhold 20% of that amount. This amount is sent to the IRS as income tax withholding. For example, if your eligible rollover distribution is $10,000, only $8,000 will be paid to you because the Plan must withhold $2,000 as income tax. However, when you prepare your income tax return for the year, you will report the full $10,000 as a payment from the Plan. You will report the $2,000 as tax withheld, and it will be credited against any income tax you owe for the year. Voluntary Withholding. If any portion of your payment is not an eligible rollover distribution but is taxable, the mandatory withholding rules described above do not apply. In this case, you may elect not to have withholding apply to that portion. To elect out of withholding, ask the Plan administrator for the election form and related information. Page 3 of 7 Sixty -Day Rollover Option. If you have an eligible rollover distribution paid to you, you can still decide to roll over all or part of it to an IRA or another employer plan that accepts rollovers. If you decide to roll over, you must make the rollover within 60 days after you receive the payment. The portion of your payment that is rolled over will not be taxed until you take it out of the IRA or the employer plan. You can roll over up to 100% of the eligible rollover distribution, including an amount equal to the 20% that was withheld. If you choose to roll over 100 %, you must find other money within the 60 -day period to contribute to the IRA or the employer plan to replace the 20% that was withheld. On the other hand, if you roll over only the 80% that you received, you will be taxed on the 20% that was withheld. Example: Your eligible rollover distribution is $10,000, and you choose to have it paid to you. You will receive $8,000 and $2,000 will be sent to the IRS as income tax withholding. Within 60 days after receiving the $8,000, you may roll over the entire $10,000 to an IRA or employer plan. To do this, you roll over the $8,000 you received from the Plan, and you will have to find $2,000 from other sources (your savings, a loan, etc.). In this case, the entire $10,000 is not taxed until you take it out of the IRA or employer plan. If you roll over the entire $10,000, when you file your income tax return you may get a refund of the $2,000 withheld. If, on the other hand, you roll over only $8,000, the $2,000 you did not roll over is taxed in the year it was withheld. When you file your income tax return, you may get a refund of part of the $2,000 withheld. (However, any refund is likely to be larger if you roll over the entire $10,000.) Additional 10% Tax If You Are Under Age 591/2. If you receive a payment before you reach age 591/2 and you do not roll it over, then, in addition to the regular income tax, you may have to pay an extra tax equal to 10% of the taxable portion of the payment. The additional 10% tax does not apply to your payment if it is (1) paid to you because you separate from service with your employer during or after the year you reach age 55 (or separate from service during or after the year you reach age 50, if you are a qualified public safety employee), (2) paid because you retire due to disability, (3) paid to you as equal (or almost equal) payments over your life or life expectancy (or your and your beneficiary's lives or life expectancies), or (4) used to pay certain medical expenses. See IRS Form 5329 for more information on the additional 10% tax. Special Tax Treatment. If your eligible rollover distribution is not rolled over, it will be taxed in the year you receive it. However, if it qualifies as a "lump sum distribution," it may be eligible for special tax treatment. A lump sum distribution is a payment, within one year, of your entire balance under the Plan (and certain other similar plans of the employer) that is payable to you because you have reached age 591/2 or have separated from service with your employer (or, in the case of a self - employed individual, because you have reached age 591/2 or have become disabled). For a payment to qualify as a lump sum distribution, you must have been a participant in the Plan for at least 5 years. The special tax treatment for lump sum distributions is described below. Page 4 of 7 Five -Year Averaging. If you receive a lump sum distribution after you are age 591/2, you may be able to make a one -time election to figure the tax on the payment by using "5 -year averaging." Five -year averaging often reduces the tax you owe because it treats the payment much as if it were paid over 5 years. Ten -Year Averaging If You Were Born Before January 1, 1936. If you receive a lump sum distribution and you were born before January 1, 1936, you can make a one -time election to figure the tax on the payment by using "10 -year averaging" (using 1986 tax rates) instead of 5 -year averaging (using current tax rates). Like the 5 -year averaging rules, 10 -year averaging often reduces the tax you owe. ' Capital Gain Treatment If You Were Born Before January 1, 1936. In addition, if you receive a lump sum distribution and you were born before January 1, 1936, you may elect to have the part of your payment that is attributable to your pre -1974 participation in the Plan (if any) taxed as long -term capital gain at a rate of 20 %. There are other limits on the special tax treatment for lump sum distributions. For example, you can generally elect this special tax treatment only once in your lifetime, and the election applies to all lump sum distributions that you receive in that same year. If you have previously rolled over a payment from the Plan (or certain other similar plans of the employer), you cannot use this special tax treatment for later payments from the Plan. If you roll over your payment to an IRA, you will not be able to use this special tax treatment for later payments from the IRA. Also, if you roll over only a portion of your payment to an IRA, this special tax treatment is not available for the rest of the payment. Additional restrictions are described in IRS Form 4972, which has more information on lump sum distributions and how you elect the special tax treatment. Employer Stock or Securities. There is a special rule for a payment from the Plan that includes employer stock (or other employer securities). To use this special rule, (1) the payment must qualify as a lump sum distribution as described above (or would qualify except that you do not yet have 5 years of participation in the Plan), or (2) the employer stock included in the payment must be attributable to "after -tax" employee contributions, if any. Under this special rule, you may have the option of not paying tax on the "net unrealized appreciation" of the stock until you sell the stock. Net unrealized appreciation generally is the increase in the value of the employer stock while it was held by the Plan. For example, if employer stock was contributed to your Plan account when the stock was worth $1,000 but the stock was worth $1,200 when you received it, you would not have to pay tax on the $200 increase in value until you later sold the stock. You may instead elect not to have the special rule apply to the net unrealized appreciation. In this case your net unrealized appreciation will be taxed in the year you receive the stock, unless you roll over the stock. The stock (including any net unrealized appreciation) can be rolled over to an IRA or another employer plan either in a direct rollover or a rollover that you make yourself. Page 5 of 7 If you receive employer stock in a payment that qualifies as a lump sum distribution, the special tax treatment for lump sum distributions described above (such as 5 -year averaging) also may apply. See IRS Form 4972 for additional information on these rules. IV. SURVIVING SPOUSES, ALTERNATE PAYEES, AND OTHER BENEFICIARIES. In general, the rules summarized above that apply to payments to employees also apply to payments to surviving spouses of employees and to spouses or former spouses who are "alternate payees." You are an alternate payee if your interest in the Plan results from a "qualified domestic relations order," which is an order issued by a court, usually in connection with a divorce or legal separation. Some of the rules summarized above also apply to a deceased employee's beneficiary who is not a spouse. However, there are some exceptions for payments to surviving spouses, alternate payees, and other beneficiaries that should be mentioned. If you are a surviving spouse, you may choose to have an eligible rollover distribution paid in a direct rollover to an IRA or paid to you. If you have the payment paid to you, you can keep it or roll it over yourself to an IRA but you cannot roll it over to an employer plan. If you are an alternate payee, you have the same choices as the employee. Thus, you can have the payment paid as a direct rollover or paid to you. If you have it paid to you, you can keep it or roll it over yourself to an IRA or to another employer plan that accepts rollovers. If you are a beneficiary other than the surviving spouse, you cannot choose a direct rollover, and you cannot roll over the payment yourself. If you are a surviving spouse, an alternate payee, or another beneficiary, your payment is not subject to the additional 10% tax described in section III above, even if you are younger than age 591/2. If you are a surviving spouse, an alternate payee, or another beneficiary, you may be able to use the special tax treatment for lump sum distributions. If you receive a payment because of the employee's death, you may be able to treat the payment as a lump sum distribution if the employee met the appropriate age requirements, whether or not the employee had 5 years of participation in the Plan. HOW TO OBTAIN ADDITIONAL INFORMATION This notice summarizes only the federal (not state or local) tax rules that might apply to your payment. The rules described above are complex and contain many conditions and exceptions that are not included in this notice. Therefore, you may want to consult with a professional tax advisor before you take a payment of your benefits from the Plan. Also, you can find more specific information on the tax treatment of payments from qualified retirement plans in IRS Publication 575, Pension and Annuity Income, and IRS Publication 590, Individual Retirement Arrangements. These publications are available from your local IRS office or by calling 1- 800 - TAX - FORMS. Page 6 of 7 Please sign, date and return this page only, to the Fund Administrator: Palm Beach Gardens Police Pension Fund Pension Resource Center, LLC 4360 Northlake Boulevard, Suite 206 Palm Beach Gardens, FL 33410 have received and read this 7 -page form. Date: Participant's Signature: Please Print Participant Name: IRS CIRCULAR 230 NOTICE: To the extent that this message or any attachment concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law. HAPBG 0003 \FORMS \SPECIALTAX NOTICE.wpd Page 7 of 7 City of Palm Beach Gardens Police Officers' Pension Fund Summary of Changes in Actuarial Assumptions and Methods Actuarial Assumptions and Methods Before Changes 1. The investment earnings assumption is 8.5% per year, compounded annually, net of investment - related expenses. 2. The funding cost method is the Frozen Entry Age Cost Method using 30 -year amortization of bases. 3. The asset valuation method reflects the difference between actual and expected return recognized over five years. 4. The mortality table is the 1983 Group Annuity Mortality Table for males (set back 6 years for females). 5. The retirement rates used are summarized in the table below: Retirement Rates Each year eligible for earlv retirement 5% ear when normal retirement ate is attained 60 of next four years 40 IFifth year after normal retirement date 100 6. The salary increase assumption is 9% per year, with a 14% salary increase in service year ten; the assumed increase in total covered payroll is 3.5 %. 7. The inflation assumption is 3.5% per year. Actuarial Assumptions and Methods After Changes 1. We have shown results under two alternatives of the investment earnings assumption: 8% per year and 7.5% per year. 2. The funding cost method is the Entry Age Normal Cost Method using 15 -year amortization of future bases arising from benefit changes or actuarial gains and losses. 3. Starting with the October 1, 2006 valuation, the asset valuation method will reflect the recognition of 20% of the difference between actual and expected actuarial asset value. This is the method used by the Florida Retirement System. 4. The mortality table is the RP 2000 Generational Healthy Annuitants Mortality Table for males and females. 5. The retirement rates used are the rates shown in the attached table. 6. The salary increase assumption is 7.5% per year; the assumed increase in total covered payroll is 5 %. 7. The inflation assumption is 3% per year. 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N O O o 0 0 0 0 0 0 0 0 0 0 0 o o \° 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0° o 0 0 o O Q°0000°0000tf) 00000 0 0 0 0 0 0 00 0 0 04 M tO rO O 0 o 0 o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 o O v O O O O o 0 0 0 0 0 L q 0 0 0 0 C) 0 0 0 0 Cl 0 O O O O N U) U) U) tf i ° to � \° \° \° \° \° \° \° \° \° \° o \° \° \° -0 0 0 o o 0 o o 0 o o O o 0 o o O X 0 0 0 0 0 0 0 0 0 0 0 0 0 0 It 0 0 0 0 0 0 0 0 0 O N U) U) U) U) O O NMvWt0 r- M0 Vi O) - > •- V d c m a E O U c t6 L E U) N CU N N 0 0 O N CO r (U E O Z ANNUAL REQUIRED CONTRIBUTION (ARC) A. Valuation Date October 1, 2005 October 1, 2005 October 1, 2005 From 813012006 New Methods New Methods Supplemental and Assumptions and Assumptions Valuation (8% Investment (7.5% Investment Earnings Assumption) Earnings Assumption) B. ARC to Be Paid During Fiscal Year Ending 9/30/2007 9/30/2007 9/30/2007 C. Assumed Date of Employer Contrib. Quarterly Quarterly Quarterly D. Annual Payment to Amortize Unfunded Actuarial Liability $ 694,188 $ 931,752 $ 985,668 E. Employer Normal Cost 2,224,802 1,568,650 1,784,407 F. ARC if Paid on the Valuation Date: D + E 2,918,990 2,500,402 2,770,075 G. ARC Adjusted for Frequency of Payments 3,069,260 2,621,772 2,896,363 H. ARC as % of Covered Payroll 41.86 % 36.05 % 39.82 % I. Assumed Rate of Increase in Covered Payroll to Contribution Year 3.50 % 5.00 % 5.00 % J. Covered Payroll for Contribution Year 7,589,084 7,636,762 7,636,762 K. ARC for Contribution Year: H x J 3,176,791 2,753,053 3,040,959 L. Estimate of State Revenue in Contribution Year 412,644 412,644 412,644 M. Required Employer Contribution (REC) in Contribution Year 2,764,147 2,340,409 2,628,315 N. REC as % of Covered Payroll in Contribution Year: M _ J 36.42 % 30.65 % 34.42 % O. Change in REC Amount from Baseline (423,738) (135,832) P. Change in REC % from Baseline (5.77) % (2.00) % Gabriel, Roeder, Smith and Company November 16, 2006 ACTUARIAL VALUE OF BENEFITS AND ASSETS A. Valuation Date October 1, 2005 October 1, 2005 October 1, 2005 From 813012006 New Methods New Methods Supplemental and Assumptions and Assumptions Valuation (8% Investment (7.5% Investment Earnings Assumption) Earnings Assumption) B. Actuarial Present Value of All Projected Benefits for 1. Active Members a. Service Retirement Benefits $ 38,926,570 $ 42,080,813 $ 45,890,509 b. Vesting Benefits 1,212,027 1,345,714 1,513,408 c. Disability Benefits 2,528,555 3,514,192 3,799,544 d. Preretirement Death Benefits 530,383 393,912 428,540 e. Return of Member Contributions 41,400 41,396 41,719 f. Total 43,238,935 47,376,027 51,673,720 2. Inactive Members a. Service Retirees & Beneficiaries 3,771,534 4,021,743 4,216,180 b. Disability Retirees 3,371,516 3,661,032 3,824,771 c. Terminated Vested Members - - - d. Total 7,143,050 7,682,775 8,040,951 3. Total for All Members 50,381,985 55,058,802 59,714,671 C. Actuarial Accrued (Past Service) Liability per GASB No. 25 35,004,203 37,308,212 39,572,880 D. Plan Assets 1. Market Value 19,042,660 19,042,660 19,042,660 2. Actuarial Value 18,950,104 18,950,104 18,950,104 E. Unfunded Actuarial Accrued Liability 10,836,064 18,358,108 20,622,776 F. Actuarial Present Value of Projected Covered Payroll 54,439,621 61,724,113 63,438,115 G. Actuarial Present Value of Projected Member Contributions 4,681,807 5,308,274 5,455,678 Gabriel, Roeder, Smith and Company November 16, 2006 CJD C) 0 N O C? Q) C) 6 ca O M Q) y CU CU Cl) 4= v CD y oC u co E c �o CD c cn 0 Cu y Y CU N L O a+ d C d O C U C C3 c C, o U mco y U � O CU CO CD O C d Y ? 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O C� ZD Z i .n C d Z BE C� C WE � o 'd as 3b 3� E� b a �a Analysis Page 1 of 1 For internal and /or client reporting purposes only Release Date: 09 -30 -2006 MainStay ICAP Intl I Eq Style Fl Style Morningstar Category Release Date: 09 -30 -2006 n Large /Blend - Foreign Large Value Analysis by Dan Lefkovitz 07 -10 -2006 A new advisor introduces risk, but we wouldn't sell ICAP International. In fact, we just might buy. One of our favorite independent asset managers, Institutional Capital, is no longer independent. The winner of Morningstar's 2005 International Fund Manager of the Year Award and runner -up for the domestic honor has sold its business to New York Life Investment Management in a deal finalized on June 30, 2006. This fund, as well as siblings ICAP Equity ICAEX and ICAP Select Equity ICSLX, will be integrated into NYLIM's MainStay fund family, likely by the end of August. The good news is that shareholders who invest before then will continue to pay this fund's low fees and will be able to add to their investment. But thereafter, NYLIM will close the fund's no -load share class to new investors and will begin distributing the higher - priced fund through its sales force. ICAP has told Morningstar that its key investment professionals, including Rob Lyon and Jerry Senser, have signed long -term employment contracts and that nothing will change about how this fund is run. No doubt, there is reason for concern. Mergers, especially those involving large financial conglomerates, are risky. Despite the contract, Lyon and the other talented investors at ICAP could leave. And NYLIM's record on shareholder friendliness isn't as strong as ICAP's was. But we can't just assume that things will go wrong. NYLIM has taken a hands -off approach toward other boutique asset managers it has purchased, such as MacKay Shields. It is in NYLIM's best interests to keep Lyon and ICAP happy so they can keep delivering outstanding returns on this and other funds. Lyon and his ICAP colleagues also have financial incentives to stay and build the business. Right now, we don't see a reason to bolt this fund, whose relative value approach has delivered great long -term returns. In fact, interested no -load investors might want to buy in soon. 0 19% 2006 Markngatar, Iec. AN rights reserved. 225 W Wacker G., Chicago, IL. 60606,312-696-6000 MnRNIN6SiAR Atlhough data are gathered ham rehahle sources. Mwmgstar ramp( guarantee ram*eness and accurary. 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W CD CO G C.) -O _ C L u 71 u El 13 I I C O y0 = U cu O • _T pe= c d cu a) Y �=3 CD Co CT (T a) ') a) LU 3: U CT C7) CD O E LM a 3 cm 2 � J O J C C 0 0 O m 0 h w Y U N 0 3E W c C 2 °� CD M LO L17 CO — CD 0 c c O O Z _ O +' O N Cr L C E > c Z CD c N cYa F=- Q 0 M CD O n O N CT M N CD CD- 0 CCS y (cD uj Q U CU co N E (2 IT Q CV C0 O O O O N m O (LJ 0 M Co 0 Lq Lq M m M 'Cf L a� N O O O a E N Y h Y U% _O C/) (/.) L C Co O U � Z F n a` Ln a z OC C Z w� {s ss m� III 3.„ a� a E b �o ea Analysis Page 1 of 1 For internal and/or client reporting purposes only Release Date: 09 -30 -2006 Vanguard Global Equity Eq Style FI Style Morningstar Category Release Date: 09 -30 -2006 ® Large /Blend - World Stock Analysis by Kai Necking 08 -28 -2006 Vanguard Global Equity has undergone dramatic changes, but it retains much of its appeal. This fund built an exceptionally strong track record under the stewardship of subadvisor Marathon Asset Management. From the fund's inception on August 15, 1995, through October 22, 2004, the fund's average annual return of 10.4% represents the sixth -best result among the 47 funds in the world -stock category with that much history. Lead manager Jeremy Hosking achieved those numbers by applying a strict value discipline, which helped the fund hold up particularly well in the bear market of 2000 -02. His flexibility to delve into mid- and small -cap names also significantly contributed to this success. However, as assets grew, Vanguard added Boston -based quant shop Acadian Asset Management as an additional subadvisor in late 2004. The addition changed the profile of the fund: Acadian's models incorporate various short-term factors and thus lead to much higher portfolio turnover. Its approach is also more benchmark- oriented than Marathon's more contrarian philosophy. Acadian's addition thus arguably led to a dilution of Marathon's very active, yet long- term - oriented, management style, but at the same time increased diversification and reduced volatility for the fund. Vanguard added a third subadvisor in April 2006, when AllianceBemstein's international value team, which has assembled a strong record at AllianceBernstein International Value ABIAX, joined the fray. The team's approach resembles that of Marathon in its value discipline and low turnover, but is more dedicated to large -cap stocks. Those investors who chose the fund precisely for Marathon's distinctive style may be disappointed by the changes here. But we think the fund remains a fine core holding, thanks to a combination of three strong and experienced subadvisors, and a low expense ratio typical of Vanguard. C 1996 -2006 Morningstar, Inc. AN rights reserved. 225 W Wacker Dr., Ncago, 14 60606,312-696-6000 MnRNIN6SiAR Principia'" AhhmMh data are gathered fiorn reW* souses, Marengstar cannot gaaraMee completeness and w—wy. co C) C) N O M O a) ca 0 CV h co d a) O CU N N ?' 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Id: co G �; a) CD- 0 CO Lu Q U d N cu cu E m 2 Q CD CD O Cl? C:) CD Cn C m CD ED 0 M cD . - O CD ti Cl) O O m w h m O 0 O E Cn Y h /) Y � C) C� Cn L C Co O C Z ie .v CL L"1 Z Z Le C= w� £s a 6 0 3 b 3� a� a� se � m b �o eta O p U N E 64 6 3 — O CZ O C.7 C- Cn a o c) O O O C O E o �--� (O Co C6 w > Q c [z m m — a w U m }` � X d d M Cr i� E m 2 — rn m co Cn L N CC/) L O U v E C d p U m a) O Cu m > x iL C = CO U T p3 .1 a) ��=y y y V co LU > U > > > C� Q Q Q Q E 2 � � O J C 0 0 Q M co (a O co y Y U O 0 x c 0) Cr LO o n Lo co m 0 CA (n CA O � c :2 L6 O O 2 = O O co o N cx_- L C � > .N- Z 0 CD rn (n F— Q I C� CC! Id: co G �; a) CD- 0 CO Lu Q U d N cu cu E m 2 Q CD CD O Cl? C:) CD Cn C m CD ED 0 M cD . - O CD ti Cl) O O m w h m O 0 O E Cn Y h /) Y � C) C� Cn L C Co O C Z ie .v CL L"1 Z Z Le C= w� £s a 6 0 3 b 3� a� a� se � m b �o eta Analysis Page 1 of 1 For internal and /or client reporting purposes only Release Date: 09 -30 -2006 Vanguard Intl Gr Adm Eq Style FI Style Morningstar Category Release Date: 09 -30 -2006 4 Large /Growth - Foreign Large Blend Analysis: Prospectus Summary and Analysis Analysis by Kai Necking 07 -31 -2006 We still consider Vanguard International Growth a good foreign core holding. This fund's portfolio is split up between two subadvisers, London -based Schroders and Baillie Gifford in Edinburgh, Scotland. While the latter team, led by James Anderson, manages its sleeve in a classic growth style, Schroders - -who currently controls about 70% of the assets - -is using a more restrained growth approach. And although Schroders' veteran lead manager Richard Foulkes retired in October 2005, we're not concerned: Virginie Maisonneuve, his replacement, hasn't skipped a beat and continues to emphasize large, high - quality growth stocks. Also, she can rely on the same extensive in -house research provided by experienced sector analysts. Maisonneuve uses a bottom -up, fundamental stock - picking process, but that doesn't mean she's blind to the major global economic trends that influence a stock's prospects. For instance, she expects China to continue on its strong growth path but with a refocusing on boosting domestic consumption. She expects this to benefit some of her core holdings in the consumer staples sector, such as French cosmetics firm L'Oreal LRLCY. She also likes firms that can take advantage of the growing expenditures for infrastructure improvements emanating from emerging markets in general, with large turbine market leader Rolls -Royce RYCEY serving as an example. But Maisonneuve also has considerable exposure to very defensive areas not usually associated with growth at all, such as utilities, where she likes the sustainability and visibility of the sector's earnings outlook. Due to its balanced approach, this fund tends to rarely blow its peers in the foreign large -blend category out of the water, but it also seldom disappoints. Helped by Vanguard's customary low expenses, it's assembled a solid track record. That sustainable edge, coupled with its prudent, well- researched growth approach, makes this fund a long -term winner. © 1996 -2006 Mamfgstar, Inc. Aa rights reserved. 225 W. Wacker Du, Ch-W, IL 60606, 312- 696 -601)0 MORNIN6SiAR Although data are gathered han reliable sauces. MouwVstar to 1 guarantee cenpleteness and accuracy. Princlpla— 0 0 (V O Ch a) O d cc 0 m CD CD CU O -o m h a> � .n C N T N =co oN N = a, a N L CL L_ O CT — C U '.L CU O C Q C O 0 U C CU N U d Co cuC cu Y O_ E .a Y T C �o O m 'y CU f0 co a) E c0 E c, N cn CV O CU m [1 U C Q "O (U U C Q i- O CD � C C.) m v CD N co C J C C O � O U M aLO ED LO Z 69 U C T c T CO Q O N 0 M 6 Q d I/ Qm �..� 0 cc Y 0 cm 0 C ca co Y Q _> p CO co Cn O Cn 0 0 O — O 61 f+ X CYO N M CO CO v 00 Cl) O7 O co 0 0 O �- Q S 0 00 C.0 t\ CO m Q r N N N Lo U N m N 0 w .T- W QNj p 9■ E co O CM O - O O C cn m O CD O — io w O 0 O O � U N W it {O N c-i m CD C O CT C- c E co m o ae o I N O ch (V N 0 cn CD _> p CO co Cn O Cn 0 0 O — O 61 f+ X CYO N M CO CO v 00 Cl) O7 O co 0 0 O �- Q S 0 00 C.0 t\ CO m Q r N N N Lo U N m N 0 w .T- W QNj p 9■ E co O CM O - O O C cn m O CD O — to m M m — O O 0 'ct C` m M 'ct CV W it {O N c-i m CD C O CT C- c E co m o c C Cn S G O 0 cn CD to m o El El ME _> p CO co Cn O Cn 0 0 O — O 61 f+ X CYO N M CO CO v 00 Cl) O7 O co 0 0 O �- Q S 0 00 C.0 t\ CO m Q r N N N Lo U N m N 0 w .T- W QNj p O O co O CM O - O O w- cn m O CD O — to m M m — O !f N a 'ct C` m M 'ct CV I— 00 N it {O N c-i m CD � O� C') r m r� E 0 cn CD O C O U cn � O N .O N _O vC/) W O O Cn W �•+ 0 cts dJ ca � c4 a) m '� R C � y Lo 4 W N CD t+ V� acoi S O U m iL E U c w � 99 13mca _ c0 M CO ooao Q c I I C 0 O U co V CL a_+ 7 O d C- CD > Q) CU W -:� C, tT C77 CD m E rn = L J O J C N O N CO M N N 0 N � O O C C 0 O S S O CD a co 0 C E >o aye Z C H N � � a C) rn O CD � M CO 4 O CD O ca N N Y U N O O co .y d W Q W U O CU (O N C c O t4 o � E 2 2 c Q C7 C7 O "t O N N N L m O N LO 0 m (n 0 O d _O o O O m co CT C Y � d N E O O 0 ` CT o _ c0 M CO W Q c CO w U m j- CD d d M E CD — m E Cn L d v E � O C m N co LZ I I C 0 O U co V CL a_+ 7 O d C- CD > Q) CU W -:� C, tT C77 CD m E rn = L J O J C N O N CO M N N 0 N � O O C C 0 O S S O CD a co 0 C E >o aye Z C H N � � a C) rn O CD � M CO 4 O CD O ca N N Y U N O O co .y d W Q W U O CU (O N C c O t4 o � E 2 2 c Q C7 C7 O "t O N N N h m 3° O 0 d E U to Y N ,: C/) _0 C,.i (/) L ca C ca Cn O C-) S Z E W .n �Cl C a L� C o fs a ag 3� R c m b se A� C L m O LO 0 m 0 cm o O O m co N h m 3° O 0 d E U to Y N ,: C/) _0 C,.i (/) L ca C ca Cn O C-) S Z E W .n �Cl C a L� C o fs a ag 3� R c m b se A� Analysis Page 1 of 1 For internal and/or client reporting purposes only Release Date: 09 -30 -2006 Vanguard Intl Value Eq Style FI Style Morningstar Category Release Date: 09 -30 -2006 ® Large/Value - Foreign Large Blend Prospectus , Analysis Analysis by Kai Necking 07 -31 -2006 Just as Vanguard International Value is digesting the impact of its second subadvisor, a third one is unnecessarily added. This offering used to be subadvised exclusively by Hansberger Global Investors. Bernstein was added in early 2005, and Lazard joined the lineup in July 2006. While Hansberger has assembled a fine long -term track record for the fund, the firm's "normalized- earnings" approach has at times led to a portfolio with significant exposure to growth stocks. Still, the Hansberger team led by Ronald Holt managed to keep losses roughly in line with what many international value funds experienced during the bear market of 2000 -02, and significantly outperformed even most of its growth- category rivals when markets took off again in 2003 and 2004. But in early 2005, Vanguard decided to bring this fund's style profile more in line with its moniker by entrusting Bernstein's Kevin Simms with part of the portfolio's assets. Bernstein's approach employs a more rigorous value discipline than Hansberger's, and the team has proven its skill at AllianceBernstein International Value ABIAX. This transition has also led to more diversification at both the sector and individual holding levels, with the portfolio now consisting of close to 200 positions. And while that will most likely mean that the fund won't perform as strongly during market rallies, it should provide it with more bear - market protection due to the defensive nature of Bernstein's picks. We're not sure how adding Lazard, whose managers Gabrielle Boyle and Michael Powers have assembled a mediocre record at Lazard International Equity Select LZESX, would actually improve the fund beyond offering further diversification. All told, while we think investors are getting a solid core foreign holding at a very low price, we worry that Vanguard is diluting the potential value added by too eagerly adding subadvisors. 919962006 Mornrgstm, Inc. AN right, reserved. 225 W.Wacker U., Ncw go, Il, 60606,312-696-6000 MnRNINGSiM A"hough data we gathered frm reiable saaces, Mo gstar cmmt gemantee c— pleteness and accuracy. Pr10C1P18 m PALM BEACH GARDENS POLICE OFFICERS' PENSION FUND A Pension Trust Fund of the City of Palm Beach Gardens, Florida Financial Statements and Accompanying Information For Years Ended September 30, 2005 and 2004 PALM BEACH GARDENS POLICE OFFICERS' PENSION FUND Contents Page Report of Independent Auditors ...................................................... ............................... 2 - 3 Management's Discussion and Analysis ......................................... ............................... 4 - 9 BASIC FINANCIAL STATEMENTS Statements of Plan Net Assets ....................................................... ............................... 10 Statements of Changes in Plan Net Assets ..................................... ............................... 11 Notes to Financial Statements ........................................................ ............................... 12- 16 REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) Schedule of Funding Progress ........................................................ ............................... 17 Schedule of Contributions from the Employer and Other Contributing Entities ....................................................... ............................... 18 Note to Schedule of Funding Progress and Schedule of Contributions from the Employer and Other Contributing Entities ....................................................... ............................... 19-20 OTHER SUPPLEMENTARY INFORMATION Schedule of Administrative and Investment Expenses ..................... ............................... 21 OTHER REPORTS Report on Internal Control Over Financial Reporting and on Compliance And Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ..... ............................... 22-23 Report of Independent Auditors Board of Trustees Palm Beach Gardens Police Officers' Pension Fund Palm Beach Gardens, Florida We have audited the accompanying statements of plan net assets of the Palm Beach Gardens Police Officers' Pension Fund (the "Fund ") as of September 30, 2005 and 2004, and the related statements of changes in plan net assets for the years then ended. These financial statements are the responsibility of the Fund's Board of Trustees and Officers. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As discussed in Note 1, the financial statements present only the Fund and do not purport to, and do not, present fairly the financial position of the City of Palm Beach Gardens, Florida as of September 30, 2005 and 2004, and the changes in its financial position for the years then ended in conformity with accounting standards generally accepted in the United States of America. In our opinion, the financial statements referred to above present fairly, in all material respects, information regarding the Palm Beach Gardens Police Officers' Pension Fund's plan net assets as of September 30, 2005 and 2004, and the changes therein for the years then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated March 15, 2006 on our consideration of the Fund's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Management's discussion and analysis, and the required supplementary information listed on the table of contents, are not required parts of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information and express no opinion on it. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The other supplementary information listed on the accompanying table of contents is presented for the purposes of additional analysis and is not a required part of the basic financial statements. The other supplementary information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in relation to the basic financial statements taken as a whole. West Palm Beach, Florida March 15, 2006 MANAGEMENT'S DISCUSSION AND ANALYSIS Management's Discussion and Analysis As management of the Palm Beach Gardens Police Officers' Pension Fund (Fund), we offer readers of the Fund's financial statements this narrative overview of the financial activities of the Fund for the years ended September 30, 2005 and 2004. This narrative is intended to supplement the Fund's financial statements, and we encourage readers to consider the information presented here in conjunction with these statements, which begin on page 10. Overview of the financial statements The following discussion and analysis are intended to serve as an introduction to the Fund's financial statements. The financial statements are: • Statements of Plan Net Assets • Statements of Changes in Plan Net Assets • Notes to the Financial Statements This report also contains the following "Required Supplementary Information" to the financial statements: • Schedule of Funding Progress • Schedule of Employer Contributions • Notes to the Required Supplementary Information The financial statements contained in the report are described below: • The Statements of Plan Net Assets is a point -in -time snapshot of account balances at fiscal year -end. It reports the assets available for future payments to retirees and any current liabilities that are owed as of the statement date. The resulting Net Assets value (Assets — Liabilities = Net Assets) represents the value of assets held in trust for pension benefits. • The Statements of Changes in Net Assets displays the effect of pension fund transactions that occurred during the fiscal vear, where Additions — Deductions = Net Increase (Decrease) in Net Assets. This Net Increase (Decrease) in Net Assets reflects the change in the net asset value of the Statement of Plan Net Assets from the prior year to the current year. Both statements are in compliance with Governmental Accounting Standards Board (GASB) Pronouncements. • The Notes to the Financial Statements are an integral part of the financial statements and provide additional information that is essential to the comprehensive understanding of the data provided in the financial statements. These notes describe the accounting and administrative policies under which the Fund operates and provide additional levels of detail for select financial statement items (See Notes to Financial Statements on pages 12 to 16 of this report.) M Because of the long term nature of a defined benefit pension plan, financial statements alone cannot provide sufficient information to properly reflect the ongoing plan perspective. Therefore, in addition to the financial statements explained above, this financial report includes two additional "Required Supplementary Information" schedules with historical trend information. • The Schedule of Funding Progress (page 17) includes actuarial information about the status of the plan from an ongoing, long -term perspective and the progress made in accumulating sufficient assets to pay pension benefits when due. The Actuarial Value of Assets in excess of Actuarial Accrued Liabilities indicate that sufficient assets exist to fund future pension benefits of the current members and benefits recipients. • The Schedule of Contributions from the Employer and Other Contributing Entities (page 18) presents historical trend information regarding the value of total annual contributions required to be paid by the City and State and the actual performance of the City and State in meeting this requirement. • The Notes to Required Supplementary Information provide background information and explanatory detail to aid in understanding the required supplementary schedules. Financial highlights • The net assets of the Fund exceeded its liabilities at the close of the fiscal years ended September 30, 2005 and 2004, with $19,539,635 and $16,014,364 in net assets held in trust for pension benefits, respectively. • Net assets increased by $3,525,271, or 22.0 percent during 2005, primarily due to employer and employee contributions. • Net assets increased by $2,860,205, or 21.7 percent during 2004, primarily due to employer and employee contributions. • The Fund's fundinq objective is to meet long -term benefit obliqations. As of September 30, 2004, the date of the latest actuarial valuation, the funded ratio of the Fund was 65.7 percent. In general, this means that for every dollar of pension benefits due, the Fund has $0.66 of net assets available for payment. • Additions to plan net assets for the year ended September 30, 2005 were $4,221,203, which includes member, employer and state contributions of $2,658,361, and net gains from investment activities totaling $1,562,842. • Additions to plan net assets for the year ended September 30, 2004 were $3,408,422, which includes member, employer and state contributions of $2,253,673, and net gains from investment activities totaling $1,154,749. • Deductions from plan net assets increased from $548,217 during 2004 to $695,932 in 2005 or about 26.9 percent. Most of the increase relates to new retirees and disability benefit payments made in 2005. 5 • Deductions from plan net assets increased from $481,772 during 2003 to $548,217 in 2004 or about 13.8 percent. Most of the increase relates to additional requests for distributions of termination refunds during 2004. Analysis of financial activities The Fund's funding objective is to meet long -term benefit obligations through investment income and contributions. Accordingly, the collection of employer and member contributions, and the income from investments provide the reserves needed to finance future retirement benefits. Contributions from the City of Palm Beach Gardens are made at levels determined by the Fund's actuary. Because of lower than expected investment returns and experience losses incurred in previous years, the City's contribution requirement has increased. The Fund's investment portfolio produced positive returns in 2005 and 2004. Net assets held in trust for pension benefits rose by $3,525,271 in 2005, compared to a $2,860,205 increase experienced in 2004. Since these net assets are used to meet ongoing benefit obligations to plan participants and their beneficiaries, 2005's positive returns have improved the Fund's funding status. Net Assets (Table 1) As of September 30, 2005, 2004 and 2003 2005 2004 2003 Increase (Decrease) 2005 to 2004 2004 to 2003 $ % $ Current and other assets Investments, at fair value Total assets Current liabilities Net assets $ 338,353 19,224,255 $ 337,679 15,696,143 $ 223,876 12,945,547 $ 674 1 3,528,112 0.1% 22.5 $ 113,803 2,750,596 50.8% 21.2 19,562,608 22,973 16,033,822 19,458 13,169,423 15,264 3,528,786 3,515 22.0 18.1 2,864,399 4,194 21.8 27.5 $19,539,635 1 $16,014,364 1 $13,154,159 1 $3,525,271 1 22.0 1 $2,860,205 1 21.7 t l II 1UUI l le AS the years roll fU_W_rd and LLC total assets and liabilities JI UV, the Fund's i VCJt.Y Cnt will play a more significant roll in funding future retirement benefits — eventually providing 80 to 90 percent of the necessary funds. Therefore, investment return over the long term is critical to the funding status of the retirement Fund. During 2005 and 2004, the Fund's investment portfolio returned gains of approximately 10 percent. It is important to remember that a retirement Fund's funding is based on a long time horizon, where temporary ups and downs in the market are expected. The more critical factor is that the Fund be able to meet an expected earnings yield of 8.5 percent annual return on investments. Based on our latest actuarial valuation for the year ended September 30, 2004, the Fund's actuarial value of liabilities exceeds its actuarial value of assets by $8.56 million, producing a funded ratio of 65.7 percent. The funded ratio is a key indication of financial strength of a retirement Fund and analyzing this percentage over time indicates whether the Fund is becoming stronger or weaker. Investment and experience losses incurred in the previous years have caused a downward trend in the funded ratio for recent years. M Financial analysis — summary As previously noted, net assets viewed over time may serve as a useful indication of the Fund's financial position (See Table 1 above.) At the close of fiscal years 2005 and 2004, the assets of the Fund exceeded its current liabilities by $19,539,635 and $16,014,364, respectively, shown as net assets held in trust for pension benefits. The net assets are available to meet the Fund's ongoing obligation to plan participants and their beneficiaries. Net assets The Fund's net assets are established from employer and member contributions, and the accumulation of investment income, net of investment and administrative expenses and benefit payments. Additions to plan net assets As noted above, the net assets needed to finance retirement benefits are accumulated through the collection of employer and member contributions and through investment earnings (net of investment expenses.) The additions totaled $4,221,203 for the year ended September 30, 2005. This was $812,781 more than the prior year, primarily due to increased employer contributions, lump sums received from employees to repurchase prior service credits, and improved investment returns. The additions totaled $3,408,422 (for the year ended September 30, 2004). This was $79,410 more than the prior year, primarily due to increased employer contributions, lump sums received from employees to repurchase prior service credits. Additions to Net Assets (Table 2) For the Years Ended September 30, 2005, 2004 and 2003 Increase Decrease 2005 to 2004 2004 to 2003 2005 2004 2003 $ % $ % Employer contributions $1,468,223 $1,239,522 $1,189,510 $228,701 18.5% $ 50,012 4.2% Mpmhar rnntrihiifinnc 779 (191 649 166 5n7 474 129 925 2n .n 141 R92 27.9 State of Florida contributions 411,047 I 364,985 292,446 46,062 12.6 72,539 24.8 Net investments income 1,562,842 1,154,749 1,339,582 408,093 35.3 184,833 13.8 Total additions $4,221,203 $3,408,422 1 $3,329,012 1 $812,781 1 23.8 $ 79,410 2.4 Deductions from plan net assets The Fund was created to provide retirement, survivor and disability benefits to qualified members and their beneficiaries. The cost of such programs includes recurring benefit payments, refunds of contributions to employees who terminate employment, and the cost of administering the Fund. 7 Deductions from Net Assets (Table 3) For the Years Ended Se tember 30, 2005, 2004 and 2003 2005 2004 2003 Increase Decrease 2005 to 2004 2004 to 2003 $ % $ % Benefit payments Refund of contributions Administrative expenses Total deductions $573,761 34,050 88,121 $419,229 51,376 77,612 $384,440 24,911 72,421 $154,532 (17,326) 10,509 36.9% (33.7) 13.5 $34,789 26,465 5,191 9.0% 106.2 7.2 $695,932 $548,217 $481,772 $147,715 26.9 $66,445 13.8 Expenses for the year ended September 30, 2005 totaled $695,253, an increase of 26.5 percent from 2004. The increase was primarily due to benefits paid to new retirees in 2005. Expenses for the year ended September 30, 2004 totaled $548,217, an increase of 13.8 percent from 2004. The increase was primarily due to more refunds of contributions to terminated employees than experienced in 2003 Further analysis of benefit payments is provided in Table 4 below. Benefit Payments (Table 4) For the Year Ended September 30, 2005, 2004 and 2003 2005 2004 2003 Increase Decrease 2005 to 2004 2004 to 2003 $ % $ % Normal retirement payments Disability pension payments DROP account withdrawals Total benefit payments $198,888 320,649 54,224 $134,711 284,518 - $ 91,311 259,395 33,734 $64,177 36,131 54,224 8.8% 12.7 N/A $43,400 25,123 (33,734) 47.5% 9.6 100.0 $573,761 $419,229 $ 384,440 $154,551 36.9 $ 34,789 9.0 The deductions of plan net assets of $695,923 and additions to plan net assets of $4,221,203 ' resulted in an overall increase of $3,525,271 in net assets held in trust for pension benefits for the year ended September 30, 2005. The deductions of plan net assets of $548,217 and additions to plan net assets of $3,408,422 resulted in an overall increase of $2,860,205 in net assets held in trust for pension benefits for the year ended September 30, 2004. Fiduciary responsibilities ' The Board of Trustees is the fiduciary of the pension trust fund. Fiduciaries are charged with the responsibility of assuring that the assets of the Fund are used exclusively for the benefit of plan participants and their beneficiaries and defraying reasonable expenses of administering the Fund. 9 Requests for information This financial report is designed to provide the Board of Trustees, our membership, taxpayers and investment managers with an overview of the Fund's finances and accountability for the money received. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to: Palm Beach Gardens Police Officers' Pension Fund c/o Pension Resource Centers, Inc. 4360 Northlake Boulevard, Suite 206 Palm Beach Gardens, FL 33410 we BASIC FINANCIAL STATEMENTS Palm Beach Gardens Police Officers' Pension Fund Statements of Plan Net Assets Assets Cash and cash equivalents Receivables: Interest and dividends Police officers City of Palm Beach Gardens Total receivables Investments, at fair values: Government securities Mortgage backed securities Money market funds Domestic corporate fixed income Pooled equity trust funds Total investments Total assets Liabilities Accounts payable Net assets held in trust for pension benefits (A schedule of funding progress is presented on page 17) September 30, 2005 2004 $ 184,948 $ 159,831 71,225 45,953 82,180 81,884 - 50,011 153,405 3,301,213 3,033,822 633,533 1,782,891 10,472,796 19,224,255 19,562,608 22,973 177,848 2,010,557 3,372,722 471,868 910,333 8,930,663 15,696,143 16,033,822 19,458 $ 19,539,635 $ 16,014,364 See notes to financial statements. 10 Palm Beach Gardens Police Officers' Pension Fund Statements of Changes in Plan Net Assets Additions Contributions: City of Palm Beach Gardens State of Florida Police officers Total contributions Investment income : Net appreciation in fair value Interest and dividends Less investment expenses Net investment income Total additions ' Deductions Participant benefit payments Refunds of participant benefit contributions ' Administrative expenses Total deductions Net increase Net assets held in trust for pension benefits Beginning of year End of year Year Ended September 30, 2005 2004 51,376 88,121 $ 1,468,223 $ 1,239,522 411,047 364,985 779,091 649,166 2,658,361 2,253,673 1,337,175 982,732 289,491 223,102 1,626,666 1,205,834 63,824 51,085 1,562,842 1,154,749 4,221,203 3,408,422 573,761 419,229 34,050 51,376 88,121 77,612 695,932 548,217 3,525,271 2,860,205 16, 014, 364 13 ,154,159 $ 19,539,635 $ 16,014,364 See notes to financial statements. 11 Palm Beach Gardens Police Officers' Pension Fund Notes to Financial Statements Years Ended September 30, 2005 and 2004 Note 1 - Summary of significant accounting policies Reporting entity - The Palm Beach Gardens Police Officers' Pension Fund (Fund) was established to account for the financial activity of the City of Palm Beach Gardens Police Pension Plan. The Fund is managed by a five member Board of Trustees comprised of two members appointed by the Council of the City of Palm Beach Gardens, Florida (City), two members elected by /from the plan membership and one member elected by the other four members. The Fund is reported in the fiduciary funds (pension trust) in the City's basic financial statements. Basis of accounting - The Fund's financial statements are prepared using the accrual basis of accounting. Contributions from the Fund's members are recognized as revenue in the period in which the contributions are due. Contributions from the City of Palm Beach Gardens, as calculated by the Fund's actuary, are recognized as revenue when due and when the City has made a formal commitment to provide the contributions. Expenses are recognized in the accounting period incurred, if measurable. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. During 2005, the Fund adopted Statement 40 of the Governmental Accounting Standards Board, Deposits and Investment Risk Disclosures. Disclosures required by this Statement are included in Note 3. Method used to value investments - Investments are reported at fair value. Money market mutual funds are reported at cost which approximates fair value. Securities traded on national or international exchanges are valued at the last reported sales price or exchange rates. The value of the Fund's participation in pooled equity trust funds is based on the beginning of year value of the Fund's interest in the trust, plus actual contributions and allocated investment income, less actual distributions and allocated administrative expenses. Quoted market prices are used to value investments in the trust funds. Net appreciation (depreciation) in fair value of investments includes the difference between cost and fair value of investments held as well as LI__ n_♦ ___C__J gains and I_____ L__ ___. ...L:_L _ -- __IJ I._L_ -__! _._J J:. .:J _._J [._ __ UIC IICI ICaIILCU l�.d111J d11U IUJJCJ 11' U- JCl:U11UCJ wI is I are sold. Interest est aI d UIvIUCIIU IIIUUIl Ee are recognized on the accrual basis when earned. Purchases and sales of investments are recorded on a trade date basis. Use of estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the plan administrator to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results may differ from those estimates. Note 2 - Plan description and contribution information Plan description The following brief description of the Fund, is provided for general information purposes only. Participants should refer to City ordinances for more complete information. 12 Palm Beach Gardens Police Officers' Pension Fund Notes to Financial Statements Years Ended September 30, 20Q5 and 2004 Note 2 - Plan description and contribution information (continued) Plan description (continued) The City of Palm Beach Gardens, Florida adopted this single employer defined benefit pension plan. The Fund is governed by Florida Statutes Chapter 185, as revised by ordinances passed by the Palm Beach Gardens City Council. All full time police officers are covered under the plan. The Plan provides retirement, death and disability benefits for its members. Benefit provisions are established and may be amended by the City of Palm Beach Gardens, in conjunction with the Palm Beach County Police Benevolent Association. A member may retire with normal benefits after the earlier of age 52 with 10 years of service, or 20 years of service regardless of age. Reduced early retirement benefits are available once a member reaches age 50 and accumulates 10 years of credited service. Normal retirement benefits are 3.00% of the member's average final compensation times his or her credited service years up to a maximum of 75% of average final compensation. Early retirement benefits are the same as normal retirement benefits, reduced by 3.0% for each year by which early retirement precedes the normal retirement date. Average final compensation for purposes of calculating benefits is the average compensation over the last five years of service including lump sum payments of unused leave. Eligibility for disability benefits begins from the member's date of hire, if the disability is service connected, or after 10 years of service if non - service connected. Service- incurred disability benefits are 60% of the member's current compensation, but not less than the accrued pension. Non - service incurred disability benefits are 2.5% of the member's average final compensation times his or her credited service years, but not less than 25% of salary or the accrued pension benefit, whichever is greater. Pre - retirement death benefits for service related deaths are paid to the member's widow for life. r_.__ra_ _i _. .i_._�_a r_nni _r ate_ .Y�__r_ r:__i average .:ate _i a DCIICIIts are calculated at JU %0 UI he Inernbe s linal average salary, with d 1111111111U111 el�Udl LU the accrued pension (with no early retirement reduction). Pre - retirement death benefits for non - service related deaths are paid to the member's widow for life. For members with less than 10 years of contributing service at the date of death, the benefit is the return of the member's contributions without interest. For members with 10 years or more of contributing service at the date of death, the benefit is equal to that payable at early or normal retirement age. If the member is eligible for normal retirement, the benefit is equal to his or her accrued benefit, and is payable for life. Termination benefits for unvested members are the return of the member's contributions. For members who are vested when they terminate, their vested accrued benefit is payable at the early or normal retirement date. 13 Palm Beach Gardens Police Officers' Pension Fund Notes to Financial Statements Years Ended September 30, 2005 and 2004 Note 2 - Plan description and contribution information (continued) Plan description (continued) Membership in the Plan consisted of the following at October 1, 2004, the date of the latest actuarial valuation: Retirees and beneficiaries receiving benefits 19 Terminated employees entitled to benefits but not yet receiving them 4 Active members 98 Total 121 Contributions Contribution requirements are established and may be amended by the City of Palm Beach Gardens in conjunction with the Palm Beach County Police Benevolent Association. Contribution requirements are based on the benefit structure established by the City. Members are required to contribute 8.6% of their covered salary. Pursuant to Chapter 185 of Florida Statutes, a premium tax on certain casualty insurance contracts written on Palm Beach Gardens properties is collected by the state and remitted to the Fund for the state's annual contribution amount. The Fund is required to contribute the remaining amounts necessary to finance the benefits through periodic contributions at actuarially determined rates. Administrative costs are financed through investment earnings. A rehired member may buy back one or more years of continuous past service by paying into the Fund the amount of contributions the employee would otherwise have paid for such service, plus the investment earnings that would have been earned had such funds been invested by the Fund during that time. Noie 3 - Deposits and investments Deposits ' Custodial credit risk - Florida Statutes require the Fund to maintain its deposits with financial institutions in a qualified public depository, as determined by the Treasurer of the State of Florida. The Fund's accounts maintained in qualified public depositories are covered by federal depository insurance for an amount equal to the aggregate of each participant's ascertainable, non - contingent interest in the Fund (up to $100,000 per participant). Amounts in excess of federal depository insurance are secured by the Public Depository Trust Fund (Trust Fund) ' maintained by the Treasurer. The Trust Fund is a multiple financial institution pool with the ability to assess its member financial institutions for collateral shortfalls if a member fails. 14 Palm Beach Gardens Police Officers' Pension Fund Notes to Financial Statements Years Ended September 30, 2005 and 2004 Note 3 - Deposits and investments (continued) Investments Investments at fiscal year end consist of the following at September 30, 2005: Interest rate risk - Although the Fund's investment policy does not provide limitations as to maturities, the Fund minimizes risk of fair value losses in its fixed income portfolio due to rising interest rates by structuring its investment portfolio so that securities mature to meet ongoing cash requirements, thereby avoiding the need to sell securities on the open market prior to maturity; and by investing operating funds primarily in shorter -term securities or by cash flow projections. Credit Risk: Florida Statutes and the Fund's investment policy limit investments to: • Time, savings and money market deposit accounts of a national bank, a state bank or a savings and loan association insured by the Federal Deposit Insurance Corporation; ' Obligations issued by the United States Government or in obligations ni igrantaari ac to nrinr,.ingl gnd interest by the I Initeri 4tateS (invPrnment- • Stocks, bonds or other evidences of indebtedness issued or guaranteed by a corporation organized under the laws of the United States, any state or ' organized territory of the United States, or the District of Columbia; • Commingled stock, bond or money market funds; and • Bonds issued by the State of Israel. ' Equity investments must be traded on one or more of the recognized national exchanges and meet certain rating criteria. Investments in fixed income securities are limited to issuers whose obligations are rated at the time of purchase at one of three highest classifications established by at least two ' nationally recognized statistical rating organizations (NRSROs). 15 Credit Investment maturit in ears rating Less Than More Than Investment types: (Moody's) Fair Value 1 1 -5 6 -10 10 Money market funds Not rated $ 633,533 $ 633,533 $ $ $ Governmental securities AAA 3,301,213 2,863,944 437,269 Mortgage backed notes AAA 3,033,822 - 782,698 2,251,124 Domestic corporate fixed income A1-AA3 1,782,891 1,096,569 686,322 Pooled equity trust funds Not rated 10,472,796 N/A N/A N/A N/A $19,224,255 Total investments Interest rate risk - Although the Fund's investment policy does not provide limitations as to maturities, the Fund minimizes risk of fair value losses in its fixed income portfolio due to rising interest rates by structuring its investment portfolio so that securities mature to meet ongoing cash requirements, thereby avoiding the need to sell securities on the open market prior to maturity; and by investing operating funds primarily in shorter -term securities or by cash flow projections. Credit Risk: Florida Statutes and the Fund's investment policy limit investments to: • Time, savings and money market deposit accounts of a national bank, a state bank or a savings and loan association insured by the Federal Deposit Insurance Corporation; ' Obligations issued by the United States Government or in obligations ni igrantaari ac to nrinr,.ingl gnd interest by the I Initeri 4tateS (invPrnment- • Stocks, bonds or other evidences of indebtedness issued or guaranteed by a corporation organized under the laws of the United States, any state or ' organized territory of the United States, or the District of Columbia; • Commingled stock, bond or money market funds; and • Bonds issued by the State of Israel. ' Equity investments must be traded on one or more of the recognized national exchanges and meet certain rating criteria. Investments in fixed income securities are limited to issuers whose obligations are rated at the time of purchase at one of three highest classifications established by at least two ' nationally recognized statistical rating organizations (NRSROs). 15 Palm Beach Gardens Police Officers' Pension Fund Notes to Financial Statements Years Ended September 30, 2005 and 2004 Note 3 - Deposits and investments (continued) Investments Custodial credit risk: For an investment, custodial credit risk is the risk that, in the event of the ' failure of the counterparty, the Fund will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The Fund's policy is to maintain its security investments in custodial accounts that identify securities held in the name ' of the Fund by registering securities in the name of the Fund, or in street name or nominee name as the Fund's agent. ' Concentration of credit risk: The Fund's investment policy limits investments in the stock of any one issuing company to five percent (5 %) of the Fund's assets, and to five percent (5 %) of the outstanding capital stock of any issuing company. As of September 30, 2005, none of the Fund's investments (other than those in mutual funds, external investment pools, and other pooled investments) exceeded five percent (5 %) of plan net assets. INote 4 - Income taxes The Fund's tax counsel believes that the Fund is designed and is currently being operated in compliance with applicable requirements of the Internal Revenue Code. Note 5 - Pending litigation, claims and assessments ' The Fund is party to various lawsuits and claims which it is vigorously defending or pursuing. These matters arise out of the normal course of its operations. While the results of litigation ' cannot be predicted with certainty, management believes the final outcome of such litigation will not have a material effect on the Fund's financial position. IVULt; O - HIIICIIUIIICIII, ' During the fiscal years ended September 30, 2005 and 2004, the City Council of Palm Beach Gardens adopted ordinances amending certain provisions of the Fund. The substantial effects ' of the ordinances are listed below. Ordinance 9, 2004 ' Require for the Police Chief to participate in the Plan. • Amending the benefit for early retirement to be reduced by 3.0% per year for each year by which early retirement precedes the normal retirement date. ' Provide for the line of duty disability benefit to be, at a minimum, the member's accrued pension benefit. • Provide for buyback of prior military service. ' Provide for a monthly supplemental benefit to be funded by excess Chapter 185 F.S. money received each calendar year. The ordinance was passed April 15, 2004 and was effective retroactively to October 1, 2003. 16 1 REQUIRED SUPPLEMENTARY INFORMATION Palm Beach Gardens Police Officers' Pension Fund Schedule of Funding Progress (Unaudited) Actuarial Accrued UAAL As Percentage of Covered Payroll ((b -a) /c) 60.5% 83.4 95.5 122.7 133.0 126.7 17 Actuarial Liability Unfunded Actuarial Value (AAL) AAL Funded Covered Valuation of Assets Entry Age (UAAL) Ratio Payroll Date (a) (b) (b - a) (a/b) (c) 10/1/99 $ 8,162,736 $11,019,072 $2,856,336 74.1% $4,720,813 10/1/00 9,795,534 14,097,068 4,301,534 69.5 5,156,136 10/1/01 11,417,844 16,106,731 4,688,887 70.9 4,908,315 10/1/02 12,303,486 19,140,962 6,837,476 64.3 5,572,514 10/1/03 14,231,515 22,196,413 7,964,898 64.1 5,989,146 10/1/04 16,405,794 24,962,551 8,556,757 65.7 6,755,078 UAAL As Percentage of Covered Payroll ((b -a) /c) 60.5% 83.4 95.5 122.7 133.0 126.7 17 Palm Beach Gardens Police Officers' Pension Fund Schedule of Contributions from the Employer and Other Contributing Entities (Unaudited) Fiscal Annual Year Ended Required Percentage September 30 Contributions Contributed 2000 $ 853,790 100.0% 2001 935,273 101.1 2002 1,005,662 103.7 2003 1,425,328 104.0 2004 1,475,340 108.6 2005 1,704,041 110.3 Note: Annual required contributions reported above include contributions from both the City of Palm Beach Gardens and the State of Florida. IM, Palm Beach Gardens Police Officers' Pension Fund Note to the Schedule of Funding Progress and Schedule of Contributions from the Employer and Other Contributing Entities The information presented in the required supplementary schedules was determined as part of the actuarial valuations at the dates indicated. Additional information as of the latest actuarial valuation follows: Valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Actuarial assumptions: Investment rate of return Projected salary increases" *Includes inflation at Cost of living adjustments Significant factors affecting trends in actuarial information October 1, 2004 Frozen entry age Level percent, closed 12 -26 years 5 -year smoothed market 8.5% 6.0% 3.5% N/A 2004 Changes in plan provisions and actuarial methods since prior valuations • None. 2003 Changes in plan provisions and actuarial methods since prior valuations • The early retirement penalty was reduced to 3.0% per year. • Minimum disability benefits equal to the accrued pension were enacted. 2002 Changes in plan provisions and actuarial methods since prior valuations • None. 2001 Changes in plan provisions and actuarial methods since prior valuations • None. 2000 Changes in plan provisions and actuarial methods since prior valuations • Normal retirement allowed after 20 years of service regardless of age. • The multiplier was raised to 3% for all years of service, with a maximum of 75 %. • The line of duty disability benefit was reduced from 66 2/3% of pay to 60 %. • The pre- retirement non -duty death benefit was changed from a ten year to a lifetime distribution. 19 Palm Beach Gardens Police Officers' Pension Fund Note to the Schedule of Funding Progress and Schedule of Contributions from the Employer and Other Contributing Entities Significant factors affecting trends in actuarial information (continued) 2000 Changes in plan provisions and actuarial methods since prior valuations (continued) • A minimum duty death benefit was established in an amount equal to the accrued pension (with no early retirement reduction). • A non - guaranteed COLA provision tied to actuarial experience was implemented. • The member contribution rate was raised from 6% of pay to 8.6 %. • The assumed rate of return has been raised from 8% to 8.5 %. • The salary increase assumption was reduced from 6.5% to 6 %. The new rate reflects a new pay plan that has been effective for less than two years. • Assumed rates of employment termination were reduced by about one -half. • Assumed rates of disability were increased by 50 %. • Amortization of the unfunded actuarial liability was changed from level dollar to level percent funding. It is being assumed that covered payroll will increase by 3.5% per year. • The assumed rate of inflation has been changed from 4% to 3.5 %. 1999 Changes in plan provisions and actuarial methods since prior valuations. • None. 20 OTHER SUPPLEMENTARY INFORMATION Palm Beach Gardens Police Officers' Pension Fund Schedule of Administrative and Investment Expenses Year Ended September 30, 2005 2004 Administrative Expenses Accounting $ 11,145 $ 10,025 Administrative fees 10,297 9,814 Actuary 34,134 20,144 Legal fees 15,462 22,846 Other administrative expense 17,083 14,783 $ 88,121 $ 77,612 Investment Expenses Investment management fees ICC Capital Management $ 36,657 $ 30,553 Rhumbline 11,917 6,032 Custody fees - Fiduciary Trust of the South 5,000 5,000 Performance monitor - GRS Asset Consulting 10,250 9,500 $ 63,824 $ 51,085 21 OTHER REPORTS Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Board of Trustees Palm Beach Gardens Police Officers' Pension Fund Palm Beach Gardens, Florida We have audited the financial statements of Palm Beach Gardens Police Officers' Pension Fund (Fund) as of and for the years ended September 30, 2005 and 2004, and have issued our report thereon, dated March 15, 2006. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to the financial audits in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered the Fund's internal control over financial reporting in order to determine our auditing procedures for the purposes of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting that might be material weaknesses. A material weakness is a reportable condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts caused by error or fraud that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Fund's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. 22 This report is intended solely for the information and use of the Board of Trustees and management, and is not intended to be and should not be used by anyone other than these specified parties. C, •a vvy, 19' %1 I ah SO' L • L-, -f. West Palm Beach, Florida March 15, 2006 23