HomeMy WebLinkAboutAgenda Police Pension 081106Revised Agenda
City of Palm Beach Gardens Police Officers'
Pension Fund
MEETING OF AUGUST 11TH, 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
• February 9th, 2006 Regular Meeting
• March 30th, 2006 Special Meeting
4. Independent Consultant Report: Allan Owens, Finance Director
5. Actuarial Valuation Report: Gabriel, Roeder, Smith & Company (Steve Palmquist)
6. Investment Manager Report: Rhumbline Advisors (Denise D'Entremont)
7. Investment Consultant Report: GRS Asset Consulting (John McCann)
• Investment Policy Guideline for Signatures
8. Attorney Report: Hanson, Perry, & Jensen, P.A. (Bonni Jensen)
• Summary Plan Description Update
• Buyback Policy
• Independent Actuarial Study
9. Reporting of Plan Financials
• Financial Statement
• Disbursements
10. Benefit Approvals
Disability Benefits Criteria Information Request from Sam Nasca
11. Administrative Report
• Purchase of Mutual Funds
12. Other Business
13. Schedule Next Meeting
14. Adjourn
PLEASE NOTE:
Should any interested pa (i / Seek to appeal any docisicn of this, Bo?ir'd .v th re: >peia to any matter considered at such
meeting or hearing, s /he will need a record of the pror.•,Tecl :^gs and or such purpose nay reed to ensure that a verbatim
record or the proceedings ':s made, which record irclude s, the tesz! 7 io1y and eV iier.Ce upon which the appeal is to be
based.
In accordance with the Americans With Disabilitiz_ Act or 1990, persons need ng a spec ai accommodation to participate
in this meeting should contact the 'The Pens on Resource. C,:'nte r, U.0 no late, than four days pr or to the meeting.
i
PALM BEACH GARDENS POLICE PENSION FUND
MINUTES OF THE MEETING HELD
FEBRUARY 9, 2006
A regularly scheduled meeting for the Pension Board was called to order at 1:05
P.M., by Chairman Spencer in the Commission Chambers at the Palm Beach
Gardens City Hall, Palm Beach Gardens, Florida. Those Board Members present
were: Barone, Pierson, Sidey, Spencer and Seidensticker. Also present were:
Bonni Jensen, Board Counsel; John McCann of GRS Asset Consulting, Inc., and
Joseph E. Mastrangelo, representing Administrative Services, Inc.
Chairman Spencer began the meeting by documenting the letter of resignation
received from Administrative Services, Inc., and expressing to Mr. Mastrangelo
their appreciation for his years of service to the Board.
The Minutes of the meeting held on December 6`h, 2005 were approved as
submitted on a motion which was duly made, seconded and unanimously carried.
Mr. Mastrangelo reviewed the Statement of Income and Expense whereupon a
motion was duly made, seconded and unanimously carried ratifying all
disbursements made subsequent to the last regularly scheduled meeting.
Mr. Mastrangelo confirmed that there were no pension applications requiring the
Board's attention at this meeting.
Chairman Spencer requested Ms. Jensen to present her report as Board Counsel.
Ms. Jensen noted that as an ongoing educational process for the City Council as
well as the Oversight Committee, she and Chairman Spencer were planning to
attend a meeting with the City Council to respond to the various items raised by
the Oversight Committee and to respond to any questions which the City Council
may have as well. Chairman Spencer requested that Mr. McCann plan on attending
to review the historical returns of the Plan as related to the assumed actuarial rate
of return which appears to be of concern to all parties.
Mr. McCann confirmed that he would be pleased to attend and provide the City
Council and Oversight Committee with in -depth information regarding the Plan's
investment returns and diversification.
Ms. Jensen reported that the ordinance amending the normal retirement, annual
adjustments and monthly supplemental benefits' sections had been passed on first
reading. Subsequent to the first reading, certain Plan Participants had raised
PALM BEACH GARDENS POLICE PENSION FUND
MINUTES OF THE MEETING HELD
February 9, 2006
questions regarding the language relating to the monthly supplemental benefits and
it had been requested that the language be changed to reflect that it is the intent of
the Board of Trustees to raise the dollar amount of the benefit when the Chapter
185 monies increase sufficiently to fund the cost of a raise. After a thorough
discussion, a motion was duly made, seconded and unanimously carried approving
the revised ordinance incorporating that language.
Ms. Jensen then presented to the Board a Statement of Policy regarding buy -back
of Police /Non- intervening Military Service which she reviewed in its entirety. After
a thorough discussion and certain recommended changes, Ms. Jensen was
requested to incorporate those changes and revise the policy for the Board's final
approval at the next regularly scheduled meeting.
Ms. Jensen presented to the Board a draft of the Request for Proposal to be sent to
prospective administrative managers and a listing of those candidates. Ms. Jensen
confirmed to the Board by way of full disclosure that Hansen Perry & Jensen to
have an ownership interest in The Pension Resource Center, however that
ownership interest is being divested and the closing with respect to that matter
should be accomplished within thirty (30) days. Ms. Jensen documented that she
does not feel that there is any conflict of interest inherent thereto and the Board
after some discussion agreed.
The Board reviewed the various candidates concurring that there were only two
who they would consider. A motion was duly made, seconded and unanimously
carried to provide the Request for Proposal would be sent to Benefits USA and The
Pension Resource Center with a special meeting to be held on March 30 ', 2006 to
interview the prospective candidates.
The Board then discussed the various forthcoming educational conferences,
recommending that any Board Member who can make every concerted effort to
attend.
Chairman Spencer requested Mr. McCann to present his report to the Board.
Mr. McCann presented to the Board his firm's report for the quarter ending
December 31St, 2005, beginning his report by reviewing the compliance checklist
noting that only the areas concerning ICC's fixed income returns had some negative
responses. Mr. McCann noted that ICC did not beat the index and were not in the
top fifty percentile and just slightly lags the index over the last five (5) years. The
Board inquired of Mr. McCann as to whether or not he would recommend any
change in managers with Mr. McCann responding that he feels that there should be
no change in managers since ICC Capital Management is close to the average
manager in their returns.
2
PALM BEACH GARDENS POLICE PENSION FUND
MINUTES OF THE MEETING HELD
February 9, 2006
Mr. McCann then reviewed the total assets of the portfolio which reflected it was
comprised of 55% in equities, 44% in fixed income and one percent (1 %) in cash
and equivalents. Of the equity sector, the asset allocation reflected 10% in the
Rhumbline S &P 600, nine percent (9 %) in the Rhumbline S &P 400 and 36% in the
Rhumbline S &P 500. Mr. McCann reviewed the total portfolio returns which
reflected that the Plan continues to rank very high compared to their peers in the
industry. He went on to compare each of the assets under management by
Rhumbline Advisors and ICC Capital Management to the Index and their peers in
the industry as well as a risk versus return comparison.
The Board discussed with Mr. McCann their concerns with respect to attaining the
assumed actuarial rate of return of eight and one -half percent (8'/2 %) with such a
large commitment to a bond portfolio. Mr. McCann responded and in review of
historical returns predicated on the asset allocation which the Board has, it should
be in the position to meet the assumed actuarial rate of return. The Board
emphasized to Mr. McCann he should bring along these types of statistics when
addressing the City Council and Oversight Committee to allay any fears of which
they may have with respect to the Plan attaining his assumed actuarial rate of
return.
Pursuant to his discussions with the Board at the last regularly scheduled meeting,
Mr. McCann presented for their consideration a review of International Equity
Mutual Funds. Mr. McCann reviewed each of the nine (9) candidates at length,
with respect to their investment philosophy, fees and returns. The size and the
scope of the funds and their ratings were also discussed in great detail.
The Board felt that an allocation to the International Equity area should be made so
as to further diversify the Plan's portfolio agreeing that a five percent (5 %)
allocation to this discipline would be appropriate. The Board discussed in detail
where the assets for this new allocation would come from and it was concurred
that it should be withdrawn from the fixed income portion of the portfolio with Mr.
McCann reminding the Board that that would change the asset allocation to a 65%
equity and 35% fixed allocation.
Additionally, Mr. McCann pointed out that these mutual funds would have to be
bought through either ICC Capital Management or Rhumbline since neither he nor
the Plan could purchase the mutual fund shares directly.
After a very thorough and lengthy discussion, a motion was duly made, seconded
and unanimously carried to change the asset allocation to one of 65% in equities
and 35% in fixed income with five percent (5 %) of the equity allocation to be in
3
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I
PALM BEACH GARDENS POLICE PENSION FUND
MINUTES OF THE MEETING HELD
February 9, 2006
the International Mutual Funds in the sum of $1,000,000 authorizing Rhumbline to
purchase the following funds and in their respective amounts:
a $100,000 allocation to T. Rowe Price International, Disc. (PRIDX)
a $100,000 allocation to T. Rowe Price International Stock (PRITX)
a $200,000 allocation to ICAP (ICEUX)
a $200,000 allocation to Vanguard International Value (VTRIX)
a $200,000 allocation to Vanguard International Growth (VWIGX)
a $200,000 allocation to Vanguard Global Equity (VHGEX)
Mr. McCann confirmed that he will follow through with the purchase of these
mutual fund shares through Rhumbline.
Mr. McCann requested the Board's consideration for an increase in his annual fee of
$1,000 predicated on the additional work which will be entailed in monitoring the
International Mutual Funds. A motion was duly made, seconded and unanimously
carried authorizing an increase in the annual consulting fee for GRS Asset
Consulting, Inc.
Mr. McCann then announced to the Board that Gabriel Roeder Smith & Company,
the former parent company of GRS Asset Consulting, Inc., has divested themselves
of the consulting business and Mr. McCann has purchased that company and it is
now known as GRS Asset Consulting, Inc., with John McCann as President of a
wholly separate and independent operating company. Mr. McCann presented in
assignment for the Board's consideration in amending the current Consulting
Contract to reflect this change and a motion was duly made, seconded and
unanimously carried authorizing the Chairman and Secretary to execute the
assignment of Mr. McCann's contract.
The next regularly scheduled meeting was set for Thursday, March 30th, 2006, to
commence at 9:00 A.M., in the City Council Chambers, City Hall, Palm Beach
Gardens, Florida. There being no further business to come before the Board,
Chairman Spencer duly adjourned the meeting at 3:30 P.M.
Respectfully submitted,
DAVID PIERSON
Secretary
CJ
PALM BEACH GARDENS POLICE PENSION FJND
MINUTES OF THE SPECIAL MEETING HELD
MARCH 30, 2006
A special meeting of the Pension Board was called to order at 9:25 A.M., by Chairman Jay
Spencer in the Council Chambers at the Palm Beach Gardens City Hall at 10500 North
Military Trail, Palm Beach Gardens, Florida. Those Board Members present were:
Chairman Jay Spencer, Secretary David Pierson, Brad Seidensticker, and Jules Barone.
Also present were: Jill Hanson, Legal Counsel, of Hanson, Perry & Jensen; and Karen
Amenita, Legal Assistant, of Hanson, Perry & Jensen.
The purpose of this meeting is to interview bidders for the position of Pension Fund
Administrator. Two proposals to provide-services were received: Benefits USA and Pension
Resource Center. The proposals were received by Bonni Jensen, Fund Legal Counsel,
and mailed to the Trustees with a checklist and a copy of the RFP specifications that she
sent to the bidders.
Benefits USA made the first presentation. Pete Prior was in attendance for Benefits USA.
Mr. Prior discussed his company's services. Brad Seidensticker pointed out that the
proposal of fees states "minimum monthly fee is $2,000." He questioned Mr. Prior as what
the complete monthly fee proposal is. Pete Prior assured the Board that the $2,000 fee
is the complete monthly fee. Brad then stated that the RFP requested a 3 -year guarantee
on fees and the booklet provided by Benefits USA did not reflect a guarantee. Mr. Prior
agreed to guarantee his firm's fees for 3 years.
David Pierson suggested that questions be held till the end of the presentation, since the
Board was only allowing 10 minutes for the presentation and then a 20- minute question
and answer session. The Board agreed.
Upon completing his presentation, Pete Prior opened the floor to the Trustees to address
their questions. Brad Seidensticker expressed concern over the transition from the current
Administrator, ASI, to a new Administrator and wondered how Benefits USA planned to
handle it. Mr. Prior stated that he did not know if ASI had electronic capability to transfer
information. Jill Hanson responded that she previously worked with ASI on other funds and
she knew they did have electronic capabilities, but it was not compatible with her client's
transition. Mr. Prior stated that his firm does not charge the client for initial set up. He
stated that his firm's new software is very effective and commented that Watson Wyatt
uses the same software. He also said that the Board has the option to choose whether or
not they allow users to update their own info because that could present problems. He
prefers to allow them access to downloadable forms they can complete and return to his
office for processing.
Mr. Prior asked the Board if the administrator would be cutting the benefit checks. He
recommended that the custodian write those checks, suggesting it was not a good idea for
the Fund to have "all its eggs in one basket." If the Board wants benefit checks, they would
Page 1 of 3
need to let Mr. Prior know as the proposal does not include benefit checks.
Jill Hanson pointed out that the RFP asked bidders to list those clients who had terminated
the Administrative Services of the bidder. She asked Mr. Prior why he did not address that
question in his proposal. He responded that he would prefer to respond off the record, and
said that Benefits USA was terminated by Sunrise General Employees and Miami Springs;
one was a service issue the other was a political issue.
Ms. Hanson asked if there was a full -time staff member in the office of Benefits USA at all
times. Peter Prior responded that there is - and that he is readily accessible by cell phone
or email. The Board thanked Mr. Prior for his presentation to the Board.
David Pierson asked Chairman Spencer about the foreign investing questioning whether
it had been done. Jay Spencer reported that to his knowledge it had not been done based
on conversations with Bonni Jensen and John McCann, and his discussions with Bonni.
Jay believed the Fund's Custodian needed to be involved. Mr. Pierson wondered why it
was taking so long and thought John and Bonni would have found a solution sooner.
The second presentation was made by Scott Baur, for his company, Pension Resource
Center ( "PRC "). Mr. Baur opened his presentation stating that his firm provides
Administrative Services to the Palm Beach Gardens Firefighters Pension Board of
Trustees, and would very much like to provide services to the Police Board as well. He
pointed out that the services ASI provided to the Board were broader than those PRC
currently provides to the PBG Firefighters, and that his proposal was based on those
broader services.
Scott believes it will be an easy transition for PRC to take over from ASI. He has taken
over Funds previously administered by ASI and there were no hindrances. PRC will
receive the information from ASI and the City of Palm Beach Gardens electronically -
probably using an FTP site to safeguard the sensitive employee information.
Mr. Baur expressed that his office has a good relationship with the City of PBG and that
another administrator from his office, Margie Adcock, who currently works with the
Firefighters, would work with him on this Fund.
After a thorough and comprehensive presentation of PRC's proposal, Mr. Baur opened the
floor for questions. Brad Seidensticker asked why the proposal booklet refers to Oakland
Park Police and Fire pension Fund in two places - including the fee schedule. Also, Brad
pointed out that the fees are different in the sample contract provided. The fees in the
sample contract are correct. Unfortunately, Mr. Baur overlooked the references to Oakland
Park; it was a typo. He apologized to the Trustees.
There was also a typo to the fees on the summary provided by Hanson Perry & Jensen.
The fees should have been listed as $2,275 for full Administration instead of $3,600 as
inadvertently stated in the summary. The correction is noted. Mr. Baur stated that he will
provide full administrative services to the Fund for a flat fee of $2,275 which includes check
processing fees.
Page 2 of 3
The Board asked what type of software is used by PRC. Scott Baur explained that PRC
uses programs designed by Ellen Schaeffer, and that PRC is her primary client. Brad
questioned whether or not PRC had back up for Ellen in the event she was unavailable or
something happened to her that rendered her incapable of servicing the product. Scott
replied that PRC owns the source code and that he has his own staff that works with Ellen
and would serve as back up.
Brad pointed out to Mr. Baur that the RFP requested fees be guaranteed for 3 years and
his proposal stated 3 years in one place and 2 years in another. Scott Baur responded that
his fees are guaranteed for 3 years and he believes his fees are reasonable and
sustainable. He stated that PRC has not raised its fees to any of the funds it currently
services - including PBG Firefighters; and they were hired in 1999 or 2000 by PBG
Firefighters.
Jill Hanson asked Scott Baur if annual benefit statements are provided by Pension
Resource Center. Scott responded that PRC has the ability to do so and will provide to the
Actuary for review, but their philosophy at PRC is that the Actuary should be the final
authority on benefit calculations.
The Board thanked Scott Baur for his presentation.
A Board discussion ensued and a question arose as to whether the Board could go to PRC
and ask them to meet the fee proposed by Benefits USA. Jill Hanson said it could not be
done outside of a public meeting due to the Sunshine Law. She said the Board could hire
PRC and then negotiate a better fee. David Pierson commented that the difference was
$275 and it was not worth arguing over.
MOTION: Jules Barone moved to retain Pension Resource Center, provided that
they produce accurate information in a new proposal correcting the
fees and any other oversights presented in the original proposal.
SECOND: David Pierson seconded.
CARRIED: The motion carried unanimously.
Chairman Spencer requested that Hanson, Perry & Jensen advise Pension Resource
Center that they are hired subject to providing a corrected proposal to the Board.
The next regularly scheduled meeting being subject to call and there being no further
business to come before the Board, the meeting was duly adjourned by Chairman Spencer
at 10:50 A.M.
Respectfully submitted,
DAVID PIERSON, Secretary
Page 3 of 3 H: \PBG 0003 \MEETING \Minutes\M1N 03.30.06.wpd
t ,
Palm Beach Gardens Police Pension Fund
Supplemental Benefit Approval
CALLEA, JOSEPH F
Original Benefit:
Date of Hire:
Date of Retirement:
Type of Retirement:
Revised Benefit:
Years of Service:
Retro Months:
Retro Payment:
CROCETTA, FRANKLIN A
Original Benefit:
Date of Hire:
Date of Retirement:
Type of Retirement:
Revised Benefit:
Years of Service:
Retro Months:
Retro Payment:
DONALDSON, LOIS A
Original Benefit:
Date of Hire:
Date of Retirement:
Type of Retirement:
Revised Benefit:
Years of Service:
Retro Months:
Retro Payment:
Chairman
Secretary
$1,624.09
May 31, 1987
March 1, 2002
Normal
$1,799.09
14
23
$4,025.00
$1,774.58
November 29, 1989
February 24, 1997
Duty Disability
$1,862.08
7
23
$2,012.50
$1,450.10
January 3, 1994
November 13, 1997
Non -Duty Disability
Date
$1,487.60
3
23
$862.50
Palm Beach Gardens Police Pension Fund
Supplemental Benefit Approval
FITZGERALD, JAMES O
Original Benefit:
Date of Hire:
Date of Retirement:
Type of Retirement:
Revised Benefit:
Years of Service:
Retro Months:
Retro Payment:
HALLONQUIST, ALBERT N
Original Benefit:
Date of Hire:
Date of Retirement:
Type of Retirement:
Revised Benefit:
Years of Service:
Retro Months:
Retro Payment:
HINO, CHARLES A
Original Benefit:
Date of Hire:
Date of Retirement:
Type of Retirement:
Revised Benefit:
Years of Service:
Retro Months:
Retro Payment:
Chairman
Secretary
$2,231.16
October 5, 1992
May 1, 2003
Normal
$2,356.16
10
23
$2,875.00
$2,907.29
May 12, 1992
January 1, 2001
Non -Duty Disability
Date
$2,994.79
7
23
$2,012.50
$832.26
August 14, 1975
March 1, 1995
Early
$1,069.76
19
23
$5,462.50
Palm Beach Gardens Police Pension Fund
Supplemental Benefit Approval
KIMBERLIN, DAVID
Original Benefit: $2,423.03
Date of Hire: January 5, 1987
Date of Retirement: June 1, 2005
Type of Retirement: Normal
Revised Benefit: $2,648.03
Years of Service: 18
Retro Months: 15
Retro Payment: $3,375.00
KNAPP, MICHAEL A
Original Benefit:
$1,936.83
Date of Hire:
May 17, 1996
Date of Retirement:
November 13, 1997
Type of Retirement:
Duty Disability
Revised Benefit: $1,949.33
Years of Service: 1
Retro Months: 23
Retro Payment: $287.50
LINDERMAN, CAREY
Original Benefit: $3,647.93
Date of Hire: June 14, 1979
Date of Retirement: December 1, 2002
Type of Retirement: Normal
Revised Benefit: $3,935.43
Years of Service: 23
Retro Months: 23
Retro Payment: $6,612.50
Chairman Date
Secretary
Palm Beach Gardens Police Pension Fund
Supplemental Benefit Approval
MAMAK, GEORGE P
Original Benefit: $1,832.90
Date of Hire: November 8, 1989
Date of Retirement: February 3, 1997
Type of Retirement: Duty Disability
Revised Benefit:
$1,920.40
Years of Service:
7
Retro Months:
23
Retro Payment:
$2,012.50
MARTS, ROBERT P
Original Benefit: $1,183.34
Date of Hire: May 12, 1979
Date of Retirement: December 29, 1993
Type of Retirement: Normal
Revised Benefit: $1,358.34
Years of Service: 14
Retro Months: 23
Retro Payment: $4,025.00
WARDLE JR, LEO F
Original Benefit: $2,483.15
Date of Hire: November 18, 1988
Date of Retirement: October 1, 1998
Type of Retirement: Non -Duty Disability
Revised Benefit: $2,595.65
Years of Service: 9
Retro Months: 23
Retro Payment: $2,587.50
Chairman Date
Secretary
Palm Beach Gardens Police Pension Fund
Supplemental Benefit Approval
NASCA, SAMUEL A
Original Benefit: $2,639.78
Date of Hire: January 31, 1994
Date of Retirement: December 1, 2004
Type of Retirement: Non -Duty Disability
Revised Benefit: $2,764.78
Years of Service: 10
Retro Months: 21
Retro Payment: $2,625.00
OCTAVI, DANIEL J
Original Benefit: $2,686.52
Date of Hire: May 12, 1992
Date of Retirement: February 1, 1999
Type of Retirement: Duty Disability
Revised Benefit: $2,761.52
Years of Service: 6
Retro Months: 23
Retro Payment: $1,725.00
PARRISH, ALVIN
Original Benefit: $2,423.30
Date of Hire: March 1, 1994
Date of Retirement: October 1, 2003
Type of Retirement: Duty Disability
Revised Benefit:
$2,535.80
Years of Service:
9
Retro Months:
23
Retro Payment:
$2,587.50
Chairman Date
Secretary
Palm Beach Gardens Police Pension Fund
Supplemental Benefit Approval
REALMUTO, ANDREW J
Original Benefit: $2,370.19
Date of Hire: May 12, 1992
Date of Retirement: June 1, 1996
Type of Retirement: Non -Duty Disability
Revised Benefit:
$2,420.19
Years of Service:
4
Retro Months:
23
Retro Payment:
$1,150.00
SHARON, CHARLES
Original Benefit:
$1,625.74
Date of Hire:
May 12, 1992
Date of Retirement:
May 1, 2004
Type of Retirement:
Normal
Revised Benefit: $1,763.24
Years of Service: 11
Retro Months: 23
Retro Payment: $3,162.50
SIMMONS, MARTHA J. A.
Original Benefit: $1,924.38
Date of Hire: March 29, 1994
Date of Retirement: May 27, 1997
Type of Retirement: Non -Duty Disability
Revised Benefit:
$1,961.88
Years of Service:
3
Retro Months:
23
Retro Payment:
$862.50
Chairman Date
Secretary
Palm Beach Gardens Police Pension Fund
Supplemental Benefit Approval
SIMPSON, KELLY
Original Benefit:
Date of Hire:
Date of Retirement:
Type of Retirement:
Revised Benefit:
Years of Service:
Retro Months:
Retro Payment:
TEGREENE, WILBUR L
Original Benefit:
Date of Hire:
Date of Retirement:
Type of Retirement:
Revised Benefit:
Years of Service:
Retro Months:
Retro Payment:
WOODS, CARL W
Original Benefit:
Date of Hire:
Date of Retirement:
Type of Retirement:
Revised Benefit:
Years of Service:
Retro Months:
Retro Payment:
Chairman
Secretary
$2,952.63
June 15, 1985
August 1, 2005
Normal
$3,202.63
20
13
$3,250.00
$2,553.59
January 6, 1988
May 27, 1997
Non -Duty Disability
Date
$2,666.09
9
23
$2,587.50
$2,929.94
May 6, 1992
August 1, 2004
Normal
$3,079.94
12
23
$3,450.00
Analysis of Actuarial
Assumptions and Funding of
the City of Palm Beach Gardens
Defined Benefit Plans
May 22, 2006
Pete BEACH
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Table of Contents
Section I.- Summary of Findings ...................... ............................... 3
Section II.- Firefighters' Pension Plan ............... ............................... 4
Section III.-Police Officers' Pension Plan ........ ............................... 11
Appendix........................................................ .............................18
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Section I: Summary of Findings
Bolton Partners, Inc. was retained by the City of Palm Beach Gardens to review the actuarial
assumptions and funded status of the Palm Beach Gardens Firefighters' Pension Plan and of the
Palm Beach Gardens Police officers' Pension Plan. Our analysis is based on a review of the last
three annual actuarial valuations of each plan, and reviews of each plan's investment policy and
recent asset statements. Our recommendations, which are detailed in the following report, are:
Firefighters' Plan:
A. reduce the annual investment return assumption from 8.5% to 7.5%
B. reduce the turnover assumption by 60%
C. update the mortality assumption.
D. Reduce the amortization period for liabilities increases arising out of future
benefit improvements from 30 years to 15 years.
We have not calculated the exact affect of those changes on plan costs, but clearly it will
be significant, probably increasing plan costs on the order of 50 %.
Police Officers' Plan:
A. reduce the annual investment return assumption from 8.5% to 7.5 %,
B. update the mortality assumption, from the 1983 GAM table to the RP 2000 table,
C. reduce the salary growth assumption,
D. reduce the amortization period for future benefit improvements from 30 years to
15 years,
E. reduce the retirement rate assumption.
While we are recommending a number a changes in assumptions, we do not expect
annual costs to the City to change dramatically.
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Section II: Firefighters' Pension Plan
Background
As of the October 1, 2005 valuation of the Firefighters' Pension Plan, the funded ratio (the ratio
of actuarial value of assets to accrued liabilities) was 38.4 %. Over the past five years the ratio
has declined from its high of 81.1% at the October 1, 2001 valuation.
While the decline in funded ratio indicates deterioration in the overall funded status of the Plan,
it is not the best measure of the funding progress of the plan. The actuarial accrued liability that
is used in the funded ratio calculations is simply an element fi•om the actuarial valuation that is a
component in developing the annual cost of the Plan. The actuarial accrued liability is not the
liability for benefits earned to date and it is not the liability for benefits earned to date even with
adjustment for future pay increases. Instead it is a theoretical value of the assets in the Plan as if
the Plan were started the day the first firefighter was hired and the normal costs were fully
funded each year and the Plan achieved exactly the actuarial assumptions.
Since the entire design of the actuarial valuation is structured to keep the cost stable from year to
year, a better measure than looking at the funded status of the Plan is the employer cost as a
percentage of payroll. Over the past four years the employer cost for the Firefighters' pension
plan, as a percentage of payroll, has increased from 15.3% at the October 1, 2002 valuation, to
25.6% at the October 1, 2005 valuation.
The ultimate cost of a pension plan depends on the actual benefits and expenses paid and the
plan's actual investment earnings. Annual costs are determined by applying an actuarial cost
method to the expected liabilities. To make these determinations, some assumptions must be
made about future events. The key assumptions that drive liabilities and costs are:
➢ Investment Return
➢ Mortality
➢ Turnover
➢ Retirement
➢ Disability
➢ Salary growth
If a plan's experience is more favorable than the actuarial assumptions, costs will go down each
year and the funded ratio will improve_ Similarly, if experience is less favorable than the
assumptions, costs will go up and the funded ratio will deteriorate. Actual experience will
always differ from plan assumptions. Minor variations, and even occasional major variations,
are normal. However, if the assumptions are consistently overly optimistic, plan costs will
inexorably increase. The effect is to pass the cost for current services into future budgets and
4 Bolton Partners, Inc.
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onto future taxpayers. Similarly, if assumptions are systematically conservative, current budgets
and taxpayers will be covering the costs for future services. Costs for this Plan have been
increasing because of experience losses on investment returns, salary growth and turnover.
Investment Return
As the Plan grows, the most significant assumption in determining costs and liabilities will likely
be the investment return assumption. The Palm Beach Gardens Firefighters' Pension Plan uses
an annual investment return assumption of 8.5 %. Among public retirement plans in Palm Beach
County, Florida the investment return rates are either 8% or 8' /z %. Statewide, and nationally, 8%
is the most common assumption used by public retirement plans.
According to the Plan's actuarial reports, the actual return for the Fund has averaged 6.7%
annually over the last ten years. The annual results have been as follows:
Year Ended September 30
Fund Return Net of Expenses
1996
8.7%
1997
18.4%
1998
11.4%
1999
13.8%
2000
9.7%
2001
-14.5%
2002
-9.6%
2003
11.7%
2004
10.1%
2005
12.3%
The general practice of other governmental pension funds suggests that the 8.5% return
assumption is high. The actual experience of this fund also indicates that the 8.5% return
assumption is high.
When looking at the return assumptions of other funds for guidance, it is important to recognize
that reducing an investment return assumption is a difficult step for a jurisdiction to take. It will
have an immediate impact on cost requirements_ As a result, many jurisdictions tend to move
slowly in lowering investment return assumptions. Another factor affecting investment return is
investment expenses. Investment expenses as a percent of assets tend to be smaller as the size of
2005 National Association of State Retirement Administration Public Fund Survey and
2005 Wilshire Research report on 125 public sector plans
5 Bolton Partners, Inc.
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the fund increases. Thus larger plans may have a somewhat higher overall investment return
assumption.
The fundamental way to set the investment return assumption is to look at the expected return for
the fund given its asset mix. The Plan's asset allocation is 65% to equity investments and 35%
to fixed income investments. Over the long -terns stocks are projected to outperform inflation by
6% and bonds are projected to outperform inflation by 2.75 %. Applying the asset allocation to
these expected returns produces an expected return of approximately 7.9 %.2
The outlook for investment return has been declining over recent years. Ten years ago this
model would have produced an expected annual return, before expenses, of 8.5 %. The
assumption that is used in the valuation of the plan should reflect the decline.
The projections assume inflation at 3 %. The projected return numbers are gross return prior to
investment expenses. Investment expenses for the fund have been averaging about 60 basis
points. Adjusting for expenses results in an expected long -term return of approximately 7.3 %.
As the fund grows in size over time, expenses as a percentage of assets will tend to decrease.
Accordingly, an expected return of 7.5% is consistent with this model.
It should also be noted that this is the expected return, but there is significant variation around
this return. For a single year, the standard deviation around the expected return is over 10 %. As
a result (and prior experience supports this), the fund can expect significant variation around the
new expected return over time. There are actuarial methods to help mitigate the volatility effect
on annual costs. The specific methods are asset averaging and amortization of investment gains
and losses. These are discussed later in this report. On balance, notwithstanding the preference
for an 8% rate among other funds, we believe that a 7.5% return assumption is appropriate and
reasonable for the Plan at this time.
It should be noted that there is a move among corporate plans to even lower interest rates. We
have attached an appendix on this.
Turnover
The following table provides the sample rates of separation of service that are used in the
valuation of the Plan. These rates do not include death or disability.
2 For purposes of long -term return projections we used the research of Wilshire Consulting. Wilshire Consulting is a
large international investment consultant. The research of other large investment consulting firms produces similar
results.
6 Bolton Partners, Inc.
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Sample Ages
Percent Separating
Within Next Year
25
16.1%
30
15.0
35
11.6
40
8.2
45
4.9
50
1.7
55
1.7
60
1.7
Based on these rates, the expected turnover is approximately 12 members of the Fire Department
each year. According to the valuations, the average actual number of terminations over the last
three years has been under four. The October 1, 2005 actuarial valuation indicates a turnover
loss for the year ended September 30, 2005 of approximately $1.3 million.
Under current assumptions, only one out of each ten firefighters hired in their early twenties is
projected to work twenty -five years. Low turnover is, of course, a positive characteristic for the
Department and for the City. It suggests a stable workforce and is usually attributable to good
compensation, benefits and working conditions. Based on the experience, we recommend that
the turnover rates be reduced 60% to better conform to actual experience. This will increase the
projection to between four and five out of every ten firefighters hired in their early twenties will
work twenty -five years.
Mortality
The Plan uses the 1983 Group Annuity Table as its mortality assumption. Although this table is
based on mortality experience from the 1960's, it is still a reasonable table to use for firefighter
retirement systems. However, in view of a national trend toward improving mortality, we
recommend a modest change to a more contemporary table. Specifically, we recommend the RP
2000 Blue Collar Mortality Table. Life expectancies under the two tables compare as follows:
7 1 Bolton Partners, Inc.
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Disability
Disability can be a significant cost when it occurs since payments become payable immediately.
There have been two disabilities under the Plan within the last three years; however, the
experience of the Plan is simply not statistically significant. We would not recommend any
change in the disability assumption at the current time.
Rates of Retirement
The current rates of retirement are 100% for a member when first eligible. While this is the most
expensive assumption to make for the Plan, we believe it is reasonable in view of the DROP
options available to participants and we recommend no changes to this assumption.
Salary Growth
The current salary growth assumption is 6.5% annually. In the recent past, salary growth in
excess of the assumptions has been a driving factor behind increasing plan costs and diminished
funded status. Salary increases will occur in accordance with normal progression through the
department, seniority, and promotions. Salaries will also go up with negotiations from time to
time. Under the current salary structure a firefighter can expect to see average annual increases
at 5% during the first eight years of employment, with longevity increases at 10, 15 and 20 years
of service. These step increases work out to an average of 2.0% per year over 25 years. Implicit
inflation increases are approximately 3 %. The effect of promotion is another 1.5% a year.
Additional increases will be attributable to negotiated increases in the entire compensation level
or in specific positions.
According to the October 1, 2005 actuarial valuation the plan had an actuarial loss of $2.0
million for the year ended September 30, 2005 due to salaries. The report indicated that average
salaries increased 12.8% and average salaries for members with over 15 years of service
increased 16.1 %. Typically a firefighter pension plan would have a salary growth assumption
that declines with years of service something like the following:
8 Bolton Partners, Inc.
1983 GAM
RP 2000 Blue Collar
Male Age
Life Expectancy
Life Expectancy
47
31.9
32.5
52
27.4
27.9
57
23.1
23.4
Disability
Disability can be a significant cost when it occurs since payments become payable immediately.
There have been two disabilities under the Plan within the last three years; however, the
experience of the Plan is simply not statistically significant. We would not recommend any
change in the disability assumption at the current time.
Rates of Retirement
The current rates of retirement are 100% for a member when first eligible. While this is the most
expensive assumption to make for the Plan, we believe it is reasonable in view of the DROP
options available to participants and we recommend no changes to this assumption.
Salary Growth
The current salary growth assumption is 6.5% annually. In the recent past, salary growth in
excess of the assumptions has been a driving factor behind increasing plan costs and diminished
funded status. Salary increases will occur in accordance with normal progression through the
department, seniority, and promotions. Salaries will also go up with negotiations from time to
time. Under the current salary structure a firefighter can expect to see average annual increases
at 5% during the first eight years of employment, with longevity increases at 10, 15 and 20 years
of service. These step increases work out to an average of 2.0% per year over 25 years. Implicit
inflation increases are approximately 3 %. The effect of promotion is another 1.5% a year.
Additional increases will be attributable to negotiated increases in the entire compensation level
or in specific positions.
According to the October 1, 2005 actuarial valuation the plan had an actuarial loss of $2.0
million for the year ended September 30, 2005 due to salaries. The report indicated that average
salaries increased 12.8% and average salaries for members with over 15 years of service
increased 16.1 %. Typically a firefighter pension plan would have a salary growth assumption
that declines with years of service something like the following:
8 Bolton Partners, Inc.
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Years of Service
1-10
8.0%
11-20
6.5%
21 and Up
3.5%
However, in view of the experience we would not recommend changing to this type of schedule.
It should also be noted that in recent years a number of police and fire departments have seen
substantial pay increases above inflation. In building a model for pension funding, we do not
believe it is appropriate to anticipate that these high levels of increase will continue. Instead,
when negotiations take place, the parties should recognize that any increase beyond the rate of
current inflation will have a residual impact on pension costs and that has to be considered in the
overall cost of the bargaining agreement.
For example, a contract growth of 5% across the board increase in pay for each of the next 3
years will permanently add approximately 1.2% of pay to annual retirement costs. For a change
weighted to longer service employees the impact could be significantly higher. The Plan's
actuary should calculate the permanent cost impact of these types of salary changes before they
are adopted.
Amortization Periods
The Plan currently uses a 30 year amortization period for increases in liabilities due to changes in
benefits. The Plan uses a 15 year amortization period for actuarial gains and losses. We believe
that a 15 year amortization period is appropriate for actuarial gains and losses. As noted earlier,
while the long -term return expectation is approximately 7.5 %, there is potential for substantial
variation year to year around this expectation. Volatility in cost that is simply a result of the
normal investment variation should be avoided. The Plan uses a four year asset averaging
method which helps mitigate the impact of short term market swings on annual cost. We believe
that the 15 year amortization is also appropriate allowing for stability in costs from year to year.
We do not believe that a 30 year amortization is generally appropriate for the impact of benefit
improvements. Thirty year amortization stretches the cost of benefit improvement for a long
time after a member's working career has ended and perhaps for even a long time after a
member's death. We would recommend, in general, a 15 year amortization period for additional
liabilities as a result of future benefit improvements. This would match the costs more closely to
a member's working career. In addition, it provides a much better match with amortizations of
actuarial gains and losses.
9 Bolton Partners, Inc.
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COLA
The Plan's actuarial valuation indicates that a COLA benefit began January 1, 2004. However,
the valuation does not show a liability for this benefit in its amortization schedule. It should be
verified with the Plan Actuary that the COLA is included in the Plan costs and liabilities.
Funded Status and Annual Costs
Dropping the investment return assumption from 8.5% to 7.5% will raise annual costs by
approximately 7% of payroll and reduce funded status by approximately 5 %. The turnover
assumption change may be more significant. Changing the plan's mortality assumption will be
an additional cost increase factor.
10 Bolton Partners, Inc.
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Section III: Police Officers' Pension Plan
Background
As of the October 1, 2005 valuation of the Police Officers' Pension Fund, the funded ratio (the
ratio of actuarial value of assets to accrued liabilities) was 63.7 %. Over the past twelve years the
ratio has declined from its high of 106.4% at the October 1, 1994 valuation.
While the decline in funded ratio indicates deterioration in the overall funded status of the Plan,
it is not the best measure for evaluating the Plans' funding progress'. The actuarial accrued
liability that is used in the funded ratio calculations is simply an element from the actuarial
valuation that is a component in developing the annual cost of the Plan. The actuarial accrued
liability is not the liability for benefits earned to date and it is not the liability for benefits earned
to date even with adjustment for future pay increases. Instead it is a theoretical value of the
assets in the Plan as if the Plan were started the day the first police officer was hired and the
normal costs were fully funded each year and the Plan achieved exactly the actuarial
assumptions.
Since the design of the actuarial valuation is structured to keep the cost stable from year to year,
a better measure than looking at the funded status of the Plan is the employer cost as a
percentage of payroll. Over the past four years the employer cost for the police officers' pension
plan, as a percentage of payroll, has increased from 21.5% at the October 1, 2002 valuation, to
29.5% at the October 1, 2005 valuation.
The ultimate cost of a pension plan depends on the actual benefits and expenses paid and the
plan's actual investment earnings. Annual costs are determined by applying an actuarial cost
method to the expected liabilities. To make these determinations, some assumptions must be
made about future events. The key assumptions that drive liabilities and costs are:
➢
Investment Return
➢
Mortality
➢
Turnover
➢
Retirement
➢
Disability
➢
Salary Growth
If a plan's experience is more favorable than the actuarial assumptions, costs ,vill go down each
year and the funded ratio will improve. Similarly, if experience is less favorable than the
assumptions, costs will go up and the funded ratio will deteriorate. Actual experience will
' The funded ratio is a useful measure for comparing funding progress between the Police Officers' Plan and the
Firefighters' Plan since it is calculated essentially the same way for each.
11 Bolton Partners, Inc.
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always differ from plan assumptions. Minor variations, and even occasional major variations,
are normal. However, if the assumptions are consistently overly optimistic, plan costs will
inexorably increase. The effect is to pass the cost for current services into future budgets and
onto future taxpayers. Similarly, if assumptions are systematically conservative, current budgets
and taxpayers will be covering the costs for future services. Costs for this Plan have been
increasing because of experience losses on investment returns, salary growth and turnover.
Inflation and Payroll Growth Factors
The Firefighters Plan uses a 3% inflation and payroll growth factor. The Police plan has been
using 31 /s %o. We prefer the 3% assumption and believe the same assumption should be used for
both plans. We have continued with the 3% assumption in our analysis of the Police Plan.
Investment Return
As the Plan grows, the most significant assumption in determining costs and liabilities will likely
be the investment return assumption. The Palm Beach Gardens Police Officers' Pension Fund
uses an annual investment return assumption of 8.5 %. Among public retirement plans in Palm
Beach County, Florida the investment return rates are either 8 % or 8' /2/o. Statewide, and
nationally, 8% is the most common assumption used by public retirement plans 4.
According to the Plan's actuarial reports, the actual rate return for the Fund based on market
value has averaged 6.6% annually over the last ten years. The annual results have been as
follows:
Year Ended September 30
Fund Return Net of Expenses
1996
5.2%
1997
24.2%
1998
5.3%
1999
11.6%
2000
6.7%
2001
-7.8%
2002
-6.5%
2003
12.7%
2004
8.6%
2005
9.6%
4 2005 National Association of State Retirement Administration Public Fund Survey and
2005 Wilshire Research report on 125 public sector plans
12 Bolton Partners, Inc.
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The general practice of other governmental pension funds suggests that the 8.5% return
assumption is high. The actual experience of this fund also indicates that the 8.5% return
assumption is high.
When looking at the return assumptions of other fiends for guidance, it is important to recognize
that reducing an investment return assumption is a. difficult step for a jurisdiction to take. It will
have an immediate impact on cost requirements. As a result, many jurisdictions tend to move
slowly in lowering investment return assumptions. Another factor affecting investment return is
investment expenses. Investment expenses as a percent of assets tend to be smaller as the size of
the fund increases. Thus larger plans may have a somewhat higher overall investment return
assumption.
The fundamental way to set the investment return assumption is to look at the expected return for
the fund given its asset mix. As of October 1, 2005 the total market value of the fund $19.0
million. Of that amount, the $8.8 million or 46% was invested in fixed income securities. We
have advised by John McCann, investment consultant to the fund, that the fixed income exposure
was being reduced by $1 million and these funds would be invested in international equities.
The resulting asset mix would be 41 % fixed and 59% equities. Over the long -term stocks are
projected to outperform inflation by 6% and bonds are projected to outperform inflation by
2.75 %. Applying these expected returns to a 6% equity /40% fixed portfolio produces an
expected return of approximately 7.7 %.5 At 65% equity 30% fixed income asset mix the
expected return is 7.9 %.
The outlook for investment return has been declining over recent years. Ten years ago this
model would have produced an expected annual return, before expenses, of 8.5 %. The
assumption that is used in the valuation of the plan should reflect the decline.
The projections assume inflation at 3 %. The projected return numbers are gross return prior to
investment expenses. Investment expenses for the fund have been averaging about 40 basis
points. Adjusting for expenses results in an expected long -term return of approximately 7.5 %.
As the fund grows in size over time, expenses as a percentage of assets will tend to decrease.
Accordingly, an expected return of 7.5% is consistent with this model . 6
It should also be noted that this is the expected return, but there is significant variation around
this return. For a single year, the standard deviation around the expected return is over 10 %. As
a result (and prior experience supports this), the fund can expect significant variation around the
new expected return over time. There are actuarial methods to help mitigate the volatility effect
on annual costs. The specific methods are asset averaging and amortization of investment gains
and losses. These are discussed later in this report. On balance, notwithstanding the preference
5 For purposes of long -term return projections we used the research of Wilshire Consulting, Wilshire Consulting is a
large .international investment consultant. The research of other major investment consulting firms produces similar
results.
6 At 3'h% inflation, this model produces an 8% expected annual return.
13 Bolton Partners, Inc.
rALM BEACH
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for an 8% rate among other funds, we believe that a 7.5% return. assumption is appropriate and
reasonable for the Plan at this time.
It should be noted that there is a move among corporate plans to even lower interest rates. We
have attached an appendix on this.
Turnover
The following table provides the sample rates of separation of service that are used in the
valuation of the Plan. These rates do not include death or disability.
Sample Ages
Percent Separating
Within Next Year
25
5.7%
30
5.0%
35
3.8%
40
2.6%
45
1.6%
50
0.8%
55
0.3%
According to the October 1, 2005 valuation report, the assumed turnover rates would produce
three terminations per year. The actual experience has been between two and five terminations
per year. Over a four -year period, there were 14 terninations, compared to an expectation of 11.
The experience is consistent with assumptions and indicates that there is no need to consider
changes in the turnover assumption.
Mortality
The Plan uses the 1983 Group Annuity Table as its mortality assumption. Although this table is
based on mortality experience from the 1960s, it is still a reasonable table to use for police
officer retirement systems. However, in view of the national trend that mortality rates have been
decreasing steadily, we recommend a modest change to a more contemporary table. Specifically,
we recommend the RP 2000 Blue Collar Mortality Table. Life expectancies under the two tables
compare as follows:
14 Bolton Partners, Inc.
44ILSO
, LY OFAC. H
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There will be an increase in liability associated with this change, but it will provide a better
assumption of future anticipated mortality experience.
Disability
Disability can be a significant cost when it occurs since payments become payable immediately.
Often times a substantial part of the total cost for a police pension plan is attributable to
disabilities. There have been two disabilities under the Plan within the last four years this is
consistent with assumptions. While this is not participant significant statistically there is no
indication of high disability frequency and we do not recommend a change in the disability
assumption.
Rates of Retirement
The plan assumptions provide for 5% retirement rate during early retirement eligibility, then,
60% when first eligible for normal retirement, 40% for each of the four years after initial
eligibility for normal retirement, and then 100% retirement rate for any active member who is
not retired five years after normal retirement eligibility. This pattern of retirement rates is not
unreasonable for a police officers' pension plan. However, the valuation report for October 1,
2005, shows that the retirement experience for the prior four years has been lower than expected.
The experience for the past four years included DROP elections into the DROP program with
continued service with the Police Department. There were nine effective retirements in this
period. This compares with 23 expected retirements.
There are two groups of retirement- eligible participants: the group who are age 50 or older with
less than 20 years of service and the group under age 50 with 20 or more years of service. We
believe that these two groups will exhibit different rates of retirement.
We recommend reducing the retirement rates in accordance with the following table to better
match with experience. From these considerations, we have constructed the following schedule
15 Bolton Partners, Inc.
1983 GAM
RP 2000 Blue Collar
Male Age
Life Expectancy
Life Expectancy
Male
Male
47
31.9
32.5
52
27.4
27.9
57
23.1
23.4
There will be an increase in liability associated with this change, but it will provide a better
assumption of future anticipated mortality experience.
Disability
Disability can be a significant cost when it occurs since payments become payable immediately.
Often times a substantial part of the total cost for a police pension plan is attributable to
disabilities. There have been two disabilities under the Plan within the last four years this is
consistent with assumptions. While this is not participant significant statistically there is no
indication of high disability frequency and we do not recommend a change in the disability
assumption.
Rates of Retirement
The plan assumptions provide for 5% retirement rate during early retirement eligibility, then,
60% when first eligible for normal retirement, 40% for each of the four years after initial
eligibility for normal retirement, and then 100% retirement rate for any active member who is
not retired five years after normal retirement eligibility. This pattern of retirement rates is not
unreasonable for a police officers' pension plan. However, the valuation report for October 1,
2005, shows that the retirement experience for the prior four years has been lower than expected.
The experience for the past four years included DROP elections into the DROP program with
continued service with the Police Department. There were nine effective retirements in this
period. This compares with 23 expected retirements.
There are two groups of retirement- eligible participants: the group who are age 50 or older with
less than 20 years of service and the group under age 50 with 20 or more years of service. We
believe that these two groups will exhibit different rates of retirement.
We recommend reducing the retirement rates in accordance with the following table to better
match with experience. From these considerations, we have constructed the following schedule
15 Bolton Partners, Inc.
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PALM BEAUX
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of retirement rates. Although the table appears complicated, current actuarial computer
programs can accommodate tables of this type.
The application of these retirement rates results in 4 expected retirements in the current plan
year. The present retirement rates produce 9 expected retirements.
The Actuary treats a DROP election as a retirement. This means that the normal cost
calculations are based on fully funding a member's benefit by the time he goes into DROP. An
alternative is to schedule the benefit funding to end at time of actual retirement. The effect is to
spread out the funding over a couple of years and to reduce the annual cost. Calculation of the
effect on cost of this approach is beyond the scope of this report, but can be determined by the
Plan Actuary.
Salary Growth
The current salary growth assumption is 9% annually. This assumption was changed in the most
recent actuarial valuation from 6% to the current 9 %. The plan experience over the past 10 years
has been 7.9 %; over 16 years, 8.5 %.
Salary increases will occur in accordance with normal progression through the department,
seniority, and promotions. Salaries will also go up with negotiations from time to time.
The starting salary for a police officer is $40,675 annually. The maximum annual police officer
salary is $68,894. Over a 20 year career the implicit salary growth rate is 2.7 %. Allowing 1.5%
annually for promotion and 3.0% for inflation produces an annual salary increase rate of 7.2 %.
Notwithstanding the past experience, we believe that overall 7.2% assumption is the appropriate
basis for plan valuation.
16 Bolton Partners, Inc.
Retirement Rates
Eligible for Normal Retirement
Under 20 Yrs of
20 or More Years, but
25 or More Years of
Service
Less than 25
Service
Under age 52
N/A
25%
100%
Age 52 or older, but
13%
25%
100%
under age 60
Age 60 or older
40%
100%
100%
The application of these retirement rates results in 4 expected retirements in the current plan
year. The present retirement rates produce 9 expected retirements.
The Actuary treats a DROP election as a retirement. This means that the normal cost
calculations are based on fully funding a member's benefit by the time he goes into DROP. An
alternative is to schedule the benefit funding to end at time of actual retirement. The effect is to
spread out the funding over a couple of years and to reduce the annual cost. Calculation of the
effect on cost of this approach is beyond the scope of this report, but can be determined by the
Plan Actuary.
Salary Growth
The current salary growth assumption is 9% annually. This assumption was changed in the most
recent actuarial valuation from 6% to the current 9 %. The plan experience over the past 10 years
has been 7.9 %; over 16 years, 8.5 %.
Salary increases will occur in accordance with normal progression through the department,
seniority, and promotions. Salaries will also go up with negotiations from time to time.
The starting salary for a police officer is $40,675 annually. The maximum annual police officer
salary is $68,894. Over a 20 year career the implicit salary growth rate is 2.7 %. Allowing 1.5%
annually for promotion and 3.0% for inflation produces an annual salary increase rate of 7.2 %.
Notwithstanding the past experience, we believe that overall 7.2% assumption is the appropriate
basis for plan valuation.
16 Bolton Partners, Inc.
hALY B!A[H
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As noted in the discussions of the the Firefighters Plan, any negotiated salary increases beyond
the rate of inflation will have a residual pension cost impact. We do not see a basis for
incorporating a permanent assumption that the overall police pay scale will increase at a rate
greater than inflation. However, if a greater increase is considered in negotiations, the Plan
actuary should calculate the permanent cost impact at that time.
Amortization Periods
The Plan currently uses a 30 -year amortization for increases in liabilities due to changes in
benefits. For experience gains and losses, the funding method amortizes these increases in
liability over the future working lifetime of active plan participants. The effective amortization
period is approximately 9 years. We do not recommend a change, but note that in comparison,
the Firefighters' Plan amortizes gains and losses over 15 years.
We do not believe that a 30 -year amortization is generally appropriate for the impact of benefit
improvements. Thirty -year amortization stretches the cost of benefit improvement for a long
time after a member's working career has ended and perhaps even for a long time after a
member's death. We would recommend, in general, a 15 -year amortization period for additional
liabilities as a result of future benefit improvements. This would match the costs more closely to
a member's working career.
Funded Status and Annual Costs
We have not calculated the cost impact of our proposed changes. On balance we do not believe
adopting the recommended changes will dramatically change annual costs. The increases in
costs and liabilities from change to the investment return rates will be offset by salary
assumptions and retirement rate savings.
17 Bolton Partners, Inc.
441LOO
r,ff. BEACH
G�toewf
:14pwxmf.wr
Appendix
Corporate plans, subject to ERISA and FAS 87, use lower investment return rates than public
plans. In essence, many of these plans use assumptions targeted to plan termination funding.
For funding purposes, the Palm Beach Gardens Plans uses an interest discount rate (whether
8'/2% or 7'/2 %) that anticipates returns on equities to be above risk free bond rates. The actuarial
funding method is a budgeting method and not a method intended to produce full funding on
plan termination. A plan termination funding target would be one where the target is sufficient
to purchase the benefits earned at a given point in time. Since 7'/2% and 8'/2% interest rates are
above the market interest rate offered by annuity providers, a plan could be 100% funded using
plan's rate but not on termination basis.
Unlike governments, private sector employers have no taxing powers and some do go bankrupt.
Financial Economics theory has driven the funding rules for the private sector to move toward
funding using bond rates. At this point in time, many large private sector employers have their
funding based on bond rates. Their accounting rules (FAS87) also base liability measures solely
on bond rates (currently measured at around 5.5 %).
Can the public sector continue to focus on long -term budgeting and not plan termination? Yes,
but there are several factors that need to be recognized.
What is worth more: $1 in stocks or $1 in bonds? The answer is that neither is worth more, they
both are worth $1. Thus, why are contributions to the pension fund reduced by investing in
stocks vs. 100% in bonds? The answer is that it is anticipating (capitalizing) the equity risk
premium (higher expected return on stocks vs. bonds) before it has been earned.
Some argue that the current actuarial funding (budgeting) rules using high interest assumptions
upsets the bargaining process. If a new retiree wants to buy an annuity of $1,000 /month using
his Section 457 money, he would be lucky to find an insurance company to sell him an annuity
with a 5% interest rate. Yet when you bargain for benefits, the same $1,000 benefit is priced at a
8'/2% (or 7' /z %) rate when provided by the retirement plan. This difference is not due to the
pooling of risk, but simply ignoring the cost of the risk being taken by the City. This situation
can create pressure to bargain for more retirement benefits and increase the risk to future
taxpayers.
18 Bolton Partners, Inc.
Inu-miffhWe
Investment Review
to the
Trustees
of the
Palm Beach Gardens
Police Pension Fund
August 11, 2006
Denise D'Entremont
Marketing Director
dad@indexmngr.com
bCawl �
PALM BEACH GARDENS'POLICE PENSION FUND
MARKET VALUE SUMMARY
S &P 500 POOLED INDEX FUND — Large -Cap Core
Original Contribution (6/27/00) $5,461,008.87
Additional Contributions (7) $1,437,669.00
Net Investment $6,898,677.87
Market Value as of 7/31/06 $7,268,860.41
S&P 400 POOLED INDEX FUND — Mid -Cap Core
Original Contribution (11/20/02)
Market Value as of 7/31/06
$1,000,000.00
S&P 600 POOLED INDEX FUND -- Small -Cap Core
Original Contribution (10/14/03) $1,000,000.00
Additional Contributions (2) $414,985.11
Net Investment $1,414,985.11
Market Value as of 7/31/06 $1,982,920.48
TOTAL ASSETS MANAGED AS OF 7131106:
S &P 500 Pooled Index Fund $7,268,860.41
S &P 400 Pooled Index Fund $1,777,728.60
S &P 600 Pooled Index Fund $1,982,920.48
TOTAL: $11,029,509.49
1
�i1usbUme
PALM BEACH GARDENS POLICE PENSION FUND
PORTFOLIO RETURNS
S &P 500 POOLED INDEX FUND - Large -Cap Core
Date of Inception: June 27, 2000
PORTFOLIO
S &P 500 INDEX
2006 (YTD)
3.43%
3.34%
July
0.63
0.62
Q2
-1.40
-1.44
Q1
4.24
4.21
2005
4.89%
4.88%
Q4
-1.66
-1.67
Q3
3.58
3.60
Q2
1.36
1.37
Q1
-2.11
-2.15
2004
10.86%
10.88%
Q4
9.19
9.23
Q3
-1.85
-1.87
Q2
1.72
1.72
Q1
1.70
1.69
2003
28.59%
28.68%
Q4
12.12
12.18
Q3
2.63
2.65
Q2
15.35
15.39
Q1
-3.12
-3.15
2002
- 21.91%
- 22.10%
Q4
8.43
8.44
Q3
- 17.16
-17.28
Q2
-13.35
-13.40
Q1
0.34
0.27
2001
- 11.67%
- 11.89%
2000
-8.25%
-8.73%
Q4
-7.55
-7.84
Q3
-0.75
-0.97
Since Inception (Annualized) - 0.35%
-0.51%
2
owlati6a
CHARACTERISTICS
(as of June 30, 2006)
S&P 500 POOLED INDEX FUND
(as of June 30, 2006)
Assets: $1.9 Billion
Number of Participants: 28
% of Fund: 0.37%
3
PORTFOLIO
S &P 500 INDEX
Number of Holdings
500
500
Weighted Market Cap ($MM)
86,888
86,897
P/B Ratio
2.8
2.8
P/E Ratio
17.3
17.3
Dividend Yield ( %)
1.93
1.93
5 Year Earnings Growth ( %)
10.30
10.29
Return on Equity
19.57
19.59
Beta
1.00
1.00
S&P 500 POOLED INDEX FUND
(as of June 30, 2006)
Assets: $1.9 Billion
Number of Participants: 28
% of Fund: 0.37%
3
Uu—mbErne
4
TOP 10 HOLDINGS
(as of June 30, 2006)
2006 (YTD)
NAME
# OF SHARES
WEIGHT
RETURN
Exxon Mobil Corp
1,026,597
3.24%
10.35%
General Electric Co
1,752,293
2.97
-4.54
Citigroup Inc
845,748
2.10
1.50
Bank America Corp
774,313
1.92
6.46
Microsoft Corp
1,468,304
1.76
-10.25
Procter & Gamble
552,968
1.58
-2.95
Johnson & Johnson
496,686
1.53
0.89
Pfizer Inc
1,236,766
1.49
2.53
American Int'l Group
438,892
1.33
-13.04
Altria Group Inc
352,619
1.33
27.72
Totals:
8,945,186
19.23%
4
'RhObtime
TOP 5 PERFORMERS FOR S &P 500 INDEX
(as of June 30, 2006)
BOTTOM 5 PERFORMERS FOR S&P 500 INDEX
(as of June 30, 2006)
2006 YTD
COMPANY
INDUSTRY
RETURN
WEIGHT
Allegheny Technologies
Steel
92.55%
0.05%
Archer Daniels
Food & Agriculture
68.34
0.23
Nucor Corp
Steel
65.56
0.15
Officemax Inc
Paper Products
62.08
0.03
Ciena Corp
Electronics
61.95
0.02
BOTTOM 5 PERFORMERS FOR S&P 500 INDEX
(as of June 30, 2006)
5
2006 YTD
COMPANY
INDUSTRY
RETURN
WEIGHT
Kb Home
Construction
- 36.40%
0.03%
Goodyear Tire & Rubber
Tires & Rubber
-36.13
0.02
St Jude Med Inc
Drugs & Medicine
-35.42
0.10
Radioshack Corp
Retail
-33.43
0.02
D R Horton Inc
Construction
-32.93
0.06
5
,WffR
PORTFOLIO COMMISSIONS
(January 1 - June 30, 2006)
Brokers Utilized: ITG & Lehman
Total Commissions: $36,211
Fund's Pro -rata Estimate: $133
Total Shares Traded: 2,668,479
Average Commissions per Share: 1.35 a /share
U
' PALM BEACH GARDENS POLICE PENSION FUND
Investment Review
Quarter Ending
' June 30, 2006
LJ
ICC Capital Management, Inc.
1
PALM BEACH GARDENS POLICE PENSION FUND
Investment Performance Report
Quarter Ending
June 30, 2006
Total Return Summary
Portfolio Allocation
Investment Performance by Asset Category
Fixed - Income Analysis
Purchases & Sales
Realized Gains/ Losses
Portfolio Summary
Portfolio Appraisal
ICC Capital Management, Inc.
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1
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2
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3
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4
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8
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10
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11
PALM BEACH GARDENS POLICE PENSION FUND
Total Return Summary
Quarter Ending
June 30, 2006
Starting Value
$9,141,648
$8,805,691
$5,053,073
Ending Value
$10,005,381
$10,005,381
$10,005,381
Difference
$863,733
$1,199,690
$4,952,308
Net Contributions/ (Withdrawals)
$846,280
$1,167,516
$3,704,404
GaitMoss) from Investments
$17,453
$32,174
$1,247,904
TOTAL RETURNT 0.18% 0.38% 25.38%
ANNUALIZED TOTAL RETURN 4.63%
ICC Capital Management, Inc.
1
' PALM BEACH GARDENS POLICE PENSION FUND
Portfolio Allocation at Market
' Quarter Ending
June 30, 2006
Asset Allocation:
0/`100 (Mkt)
Market Value
CASH /EQUIVS
as of 3131106
3.1%
FIXED INCOME
4
96.9%
Market Value
CASH /EQUIVS
as of 6130106
3.9%
FIXED INCOME
4
96.1%
Mkt Value
Mkt Value %
Mkt Value
Mkt Value
as of 3/31/06
as of 3/31/06
as of 6/30/06
as of 6/30/06
CasW uivs
$284,129
3.1%
$392,263'---
3.9%
Fixed
$8,857,519
96.9%
$9,613,118
96.1%
Total
$9,141,648
100.0%
$10,005,381
100.0%
ICC Capital Management, Inc.
2
PALM BEACH GARDENS POLICE PENSION FUND
Investment Performance by Asset Category
' Quarter Ending
June 30, 2006
'
uarte
I ■ ACCOUNT ■LBGC
2.00
1.00
0.13
0.18
'
0.00
-0.14
-0.14
-1.00
'
-2.00
BONDS
TOTAL
'
FYTD (9130)
�■ ACCOUNT ■ LBGC
'
2.00
1.00
0.24
0.38
'
0.00
-1.00
-0.56
-0.56
-2.00
BONDS
TOTAL
'
■ACCOUNT ■LBGC
5 Year Annualized
10.00
'
7.50
4.65 5.13
4.63 5.13
5.00
'
2.50
0.00
'
BONDS
TOTAL
The red total bar represents the Lehman Brothers GovernmenVCredit Index.
IICC Capital Management, Inc.
3
PALM BEACH GARDENS POLICE PENSION FUND
Fixed Income Analysis
Quarter Ending
June 30, 2006
Averse Quality — AAA Average
Duration — 3.66
Current Yield — 5.0
Federal Agencies MBS
24.6% 21.2%
Corporate Bonds
21.9%
US Treasuries
32.3%
Corporate Bonds
S&P Rating
Moody Rating
IBM Corp
A+
Al
First Data Corp
A+
A2
A+
AA2
n Sachs
A+
AA3
or oration
A+
AA3
earns
A
Al
an Chase
A
Al
e5.00
an Chase
A
Al
an Chase
A
Al
Stanle
A
Al
m uter
A
A2
ust Bank
A
Aa3
Conoco Inc
A-
Al
Key Bank Na
A-
A2e
Deere & Co
A-
A3
Intl Lease Fin Aiq 5 7/8
AA-
Al
General Electric Cap Crop
AAA
AAA
Kohls Corp
BBB+
A3
GovernmenVAgency Bonds
S&P Rating
Moody Rating
Federal National Mort a e Assn
AAA
AAA
Freddie Mac 6.75 03/31
AAA
AAA
Us Treasury N/b
AAA
AAA
United States Treas Bond
AAA
AAA
United States Treasury
AAA
AAA
Us Treasury Bds
AAA
AAA
Mortgage Backed Securities
S&P Rating
Moody Rating
Fnci N #725445
AAA
AAA
F ci N # 11690
AAA
AAA
F ci N #b13978
AAA
AAA
Gnsf M #552509
AAA
AAA
F ci N #b13455
AAA
AAA
Fnci M #254371
AAA
AAA
Fnci N #255888
AAA
AAA
Gnoo M #781313
AAA
AAA
Fnci N #825335
AAA
AAA
Fnci N #829053
AAA
AAA
Gnsf M #582153
AAA
AAA
Portfolio Duration vs. Index Duration (Ratio)
1.8%
1.4%
1.0% NEUTRAL
0.6% DEFENSIVE
INDEX —� ACCT
AGGRESSIVE
0.2%
6/30/2004 9/30/2004 12/31/2004 3/31/2005
6/30/2005 9/30/2005 12/31/2005 3/31/2006 6/30/2006
ICC Capital Matiagement, Inc.
4
ICC CAPITAL MANAGEMENT
PURCHASE AND SALE
PALM BEACH GARDENS POLICE PENSION FUND FIXED INCOME
From 03 -31 -06 To 06 -30 -06
Trade Settle Unit
Date Date Quantity Security Price Amount
PURCHASES
06 -27 -06
06 -30 -06
45,000.000 BEAR STEARNS
97.40
43,829.55
5.700% Due 11 -15 -14
04 -12 -06
04 -18 -06
90,000.000 FEDERAL NATIONAL MORTGAGE
101.65
91,485.00
ASSN
6.000% Due 05 -15 -08
06 -27 -06
06 -30 -06
55,000.000 FEDERAL NATIONAL MORTGAGE
100.84
55,463.65
ASSN
6.000% Due 05 -15 -08
04 -12 -06
04 -18 -06
82,999.450 FGCI N #G11690
93.38
77,500.74
4.000% Due 02 -01 -20
06 -27 -06
06 -30 -06
70,499.680 FGCI N #G11690
91.75
64,683.46
4.000% Due 02 -01 -20
04 -12 -06
04 -18 -06
5,000.000 FREDDIE MAC 6.75 03/31
117.38
5,869.15
6.750% Due 03 -15 -31
06 -27 -06
06 -30 -06
5,000.000 FREDDIE MAC 6.75 03/31
115.16
5,758.10
6.750% Due 03 -15 -31
04 -13 -06
04 -19 -06
45,000.000 GOLDMAN SACHS
94.65
42,594.75
5.125% Due 01 -15 -15
04 -13 -06
04 -19 -06
15,000.000 IBM CORP
103.98
15,596.70
6.500% Due 01 -15 -28
06 -27 -06
06 -30 -06
35,000.000 IBM CORP
102.34
35,817.60
6.500% Due 01 -15 -28
04 -13 -06
04 -19 -06
20,000.000 KEY BANK NA
105.86
21,171.80
7.000% Due 02 -01 -11
04 -13 -06
04 -19 -06
20,000.000 SOUTHTRUST BANK
94.18
18,835.60
4.750% Due 03 -01 -13
04 -12 -06
04 -18 -06
15,000.000 UNITED STATES TREAS BOND
127.78
19,167.19
7.875% Due 02 -15 -21
06 -27 -06
06 -30 -06
10,000.000 UNITED STATES TREAS BOND
124.09
12,409.38
7.875% Due 02 -15 -21
04 -12 -06
04 -18 -06
85,000.000 US TREASURY N/B
98.44
83,671.88
3.500% Due 05 -31 -07
05 -23 -06
05 -26 -06
860,000.000 US TREASURY N/B
98.54
847,402.34
3.500% Due 05 -31 -07
06 -27 -06
06 -30 -06
110,000.000 US TREASURY NB
98.36
108,195.31
3.500 % Due 05 -31 -07
1,549,452.20
SALES
05 -15 -06
05 -15 -06
580,000.000 UNITED STATES TREAS NTS
100.00
580,000.00
2.000% Due 05 -15 -06
580,000.00
5
ICC CAPITAL MANAGEMENT
PURCHASE AND SALE
PALM BEACH GARDENS POLICE PENSION FUND FIXED INCOME
From 03 -31 -06 To 06 -30 -06
Trade Settle Unit
Date Date Quantity Security Price Amount
PRINCIPAL PAYDOWNS
04 -15 -06
04 -15 -06
1,336.570 FGCI N #1313455
100.00
1,336.57
4.500% Due 04 -01 -19
05 -15 -06
05 -15 -06
2,316.880 FGCI N #13 13455
100.00
2,316.88
4.500% Due 04 -01 -19
06 -15 -06
06 -15 -06
929.530 FGCI N #B 13455
100.00
929.53
4.500% Due 04 -01 -19
04 -15 -06
04 -15 -06
2,086.660 FGCI N #13 13978
100.00
2,086.66
4.000% Due 05 -01 -19
05 -15 -06
05 -15 -06
2,110.770 FGCI N #13 13978
100.00
2,110.77
4.000% Due 05 -01 -19
06 -15 -06
06 -15 -06
2,094.880 FGCI N #13 13978
100.00
2,094.88
4.000% Due 05 -01 -19
04 -15 -06
04 -15 -06
1,275.352 FGCI N #G11690
100.00
1,275.35
4.000% Due 02 -01 -20
04 -15 -06
04 -15 -06
593.373 FGCI N #G11690
100.00
593.37
4.000% Due 02 -01 -20
04 -15 -06
04 -15 -06
571.205 FGCI N #G11690
100.00
571.21
4.000 % Due 02 -01 -20
05 -15 -06
05 -15 -06
1,653.709 FGCI N #G 11690
100.00
1,653.71
4.000% Due 02 -01 -20
05 -15 -06
05 -15 -06
769.408 FGCI N #G11690
100.00
769.41
4.000% Due 02 -01 -20
05 -15 -06
05 -15 -06
740.663 FGCI N #G11690
100.00
740.66
4.000% Due 02 -01 -20
06 -15 -06
06 -15 -06
1,438.414 FGCI N #G11690
100.00
1,438.41
4.000% Due 02 -01 -20
06 -15 -06
06 -15 -06
669.239 FGCI N #G11690
100.00
669.24
4.000% Due 02 -01 -20
06 -15 -06
06 -15 -06
644.237 FGCI N #G11690
100.00
644.24
4.000% Due 02 -01 -20
04 -25 -06
04 -25 -06
2,788.830 FNCI M #254371
100.00
2,788.83
5.500% Due 07 -01 -17
05 -25 -06
05 -25 -06
2,627.140 FNCI M #254371
100.00
2,627.14
5.500% Due 07 -01 -17
06 -25 -06
06 -25 -06
2,673.020 FNCI M #254371
100.00
2,673.02
5.500% Due 07 -01 -17
04 -25 -06
04 -25 -06
322.740 FNCI N #255888
100.00
322.74
4.000% Due 08 -01 -20
05 -25 -06
05 -25 -06
318.850 FNCI N #255888
100.00
318.85
4.000% Due 08 -01 -20
06 -25 -06
06 -25 -06
320.530 FNCI N #255888
100.00
320.53
4.000% Due 08 -01 -20
6
1
1
ICC CAPITAL MANAGEMENT
PURCHASE AND SALE
PALM BEACH GARDENS POLICE PENSION FUND FIXED INCOME
From 03 -31 -06 To 06 -30 -06
Trade
Date
Settle
Date
Quantity Security
Unit
Price
Amount
04 -25 -06
04 -25 -06
6,226.210 FNCI N #725445
100.00
6,226.21
4.500% Due 05 -01 -19
05 -25 -06
05 -25 -06
6,737.920 FNCI N #725445
100.00
6,737.92
4.500 % Due 05 -01 -19
06 -25 -06
06 -25 -06
6,212.730 FNCI N #725445
100.00
6,212.73
4.500% Due 05 -01 -19
04 -25 -06
04 -25 -06
312.600 FNCI N #825335
100.00
312.60
4.000% Due 05 -01 -20
05 -25 -06
05 -25 -06
335.220 FNCI N #825335
100.00
335.22
4.000% Due 05 -01 -20
06 -25 -06
06 -25 -06
305.190 FNCI N #825335
100.00
305.19
4.000% Due 05 -01 -20
04 -25 -06
04 -25 -06
634.270 FNCI N #829053
100.00
634.27
4.000% Due 08 -01 -20
05 -25 -06
05 -25 -06
381.980 FNCI N #829053
100.00
381.98
4.000% Due 08 -01 -20
06 -25 -06
06 -25 -06
337.140 FNCI N #829053
100.00
337.14
4.000% Due 08 -01 -20
04 -15 -06
04 -15 -06
1,025.190 GNJO M #781313
100.00
1,025.19
6.000% Due 07 -15 -16
05 -15 -06
05 -15 -06
937.380 GNJO M #781313
100.00
937.38
6.000% Due 07 -15 -16
06 -15 -06
06 -15 -06
1,614.590 GNJO M #781313
100.00
1,614.59
6.000% Due 07 -15 -16
04 -15 -06
04 -15 -06
7,653.950 GNSF M #552509
100.00
7,653.95
6.000% Due 04 -15 -32
05 -15 -06
05 -15 -06
2,774.050 GNSF M #552509
100.00
2,774.05
6.000% Due 04 -15 -32
06 -15 -06
06 -15 -06
8,285.810 GNSF M #552509
100.00
8,285.81
6.000 % Due 04 -15 -32
04 -15 -06
04 -15 -06
1,232.160 GNSF M #582153
100.00
1,232.16
6.000% Due 06 -15 -32
05 -15 -06
05 -15 -06
3,102.640 GNSF M #582153
100.00
3,102.64
6.000% Due 06 -15 -32
06 -15 -06
06 -15 -06
1,043.810 GNSF M #582153
100.00
1,043.81
6.000% Due 06 -15 -32
77,434.84
7
ICC CAPITAL MANAGEMENT
' REALIZED GAINS AND LOSSES
PALM BEACH GARDENS POLICE PENSION FUND FIXED INCOME
From 03 -31 -06 Through 06 -30 -06
'
Open
Datc
Close
Date
Quantity Security
Cost
Basis
Proceeds
Gain Or Loss
Short Term Long Term
'
04 -15 -02
04 -15 -06
7,653.950 GNSF M #552509
7,559.47
7,653.95
94.48
6.000% Due 04 -15 -32
06 -13 -02
04 -15 -06
1,232.160 GNSF M #582153
1,230.04
1,232.16
2.12
6.000% Due 06 -15 -32
'
07 -02 -02
04 -15 -06
1,025.190 GNJO M #781313
1,057.23
1,025.19
-32.04
6.000% Due 07 -15 -16
09 -08 -04
04 -15 -06
1,336.570 FGCI N #1313455
1,332.63
1,336.57
3.94
4.500% Due 04 -01 -19
09 -23 -04
04 -15 -06
2,086.660 FGCI N #13 13978
2,054.38
2,086.66
32.28
'
4.000 % Due 05 -01 -19
05 -11 -05
04 -15 -06
1,275.352 FGCI N #G1 1690
1,237.49
1,275.35
37.86
4.000% Due 02 -01 -20
01 -30 -06
04 -15 -06
593.373 FGCI N #G11690
565.56
593.37
27.81
t
4.000% Due 02 -01 -20
04 -12 -06
04 -15 -06
571.205 FGCI N #G11690
533.36
571.21
37.85
4.000% Due 02 -01 -20
'
09 -18 -01
04 -25 -06
322.740 FNCI N 1255888
4.000% Due 08 -01 -20
314.07
322.74
8.67
05 -23 -02
04 -25 -06
2,788.830 FNCI M #254371
2,776.63
2,788.83
12.20
5.500% Due 07 -01 -17
09 -15 -04
04 -25 -06
6,226.210 FNCI N #725445
6,232.96
6,226.21
-6.75
4.500% Due 05 -01 -19
'
08 -23 -05
04 -25 -06
634.270 FNCI N #829053
615.24
634.27
19.03
4.000% Due 08 -01 -20
09 -08 -05
04 -25 -06
312.600 FNCI N #825335
304.20
312.60
8.40
4.000% Due 05 -01 -20
'
04 -15 -02
05 -15 -06
2,774.050 GNSF M #552509
2,739.81
2,774.05
34.24
6.000% Due 04 -15 -32
06 -13 -02
05 -15 -06
3,102.640 GNSF M #582153
3,097.31
3,102.64
5.33
'
07 -02 -02
05 -15 -06
6.000 % Due 06 -15 -32
937.380 GNJO M #781313
966.67
937.38
-29.29
6.000% Due 07 -15 -16
09 -08 -04
05 -15 -06
2,316.880 FGCI N #13 13455
2,310.05
2,316.88
6.83
4.500% Due 04 -01 -19
09 -23 -04
05 -15 -06
2,110.770 FGCI N #B 13978
2,078.12
2,110.77
32.65
'
4.000% Due 05 -01 -19
05 -11 -05
05 -15 -06
1,653.709 FGCI N #G1 1690
1,604.61
1,653.71
49.10
4.000% Due 02 -01 -20
01 -30 -06
05 -15 -06
769.408 FGCI N #611690
733.34
769.41
36.07
'
4.000% Due 02 -01 -20
04 -12 -06
05 -15 -06
740.663 FGCI N #GI 1690
691.59
740.66
49.07
4.000% Due 02 -01 -20
12 -15 -05
05 -15 -06
580,000.000 UNITED STATES TRFAS
574,834.52
580,000.00
5,165.48
'
NTS
2.000% Due 05 -15 -06
09 -08 -05
05 -25 -06
318.850 FNCI N #255888
310.28
318.85
8.57
4.000% Due 08 -01 -20
'
05 -23 -02
05 -25 -06
2,627.140 FNCI M #254371
2,615.65
2,627.14
1 1.49
5.500% Due 07-01-17
09 -15 -04
05 -25 -06
6,737.920 FNCI N #725445
6,745.22
6,737.92
-7.30
4.500% Due 05 -01 -19
08 -23 -05
05 -25 -06
381.980 FNCI N #829053
370.52
381.98
11.46
'
4.000% Due 08 -01 -20
09 -08 -05
05 -25 -06
335.220 FNCI N #825335
326.21
335.22
9.01
4.000% Due 05 -01 -20
'
8
1
ICC CAPITAL MANAGEMENT
REALIZED GAINS
AND LOSSES
'
PALM BEA CH GARDENS POLICE PENSION FUND FIXED INCOME
From 03 -31 -06 Through 06 -30 -06
'
Gain Or Loss
Open
Close
Cost
Date
Date
Quantity Security
Basis Proceeds
Short Term Long
Term
'
04 -15 -02
06 -15 -06
8,285.810 GNSF M #552509
8,183.53
8,285.81
102.28
6.000% Due 04 -15 -32
06 -13 -02
06 -15 -06
1,043.810 GNSF M #582153
1;042.02
1,043.81
1.79
6.000% Due 06 -15 -32
07 -02 -02
06 -15 -06
1,614.590 GNJO M #781313
1,665.05
1,614.59
-50.46
'
6.000% Due 07 -15 -16
09 -08 -04
06 -15 -06
929.530 FGCI N #813455
926.79
929.53
2.74
4.500% Due 04 -01 -19
09 -23 -04
06 -15 -06
2,094.880 FGCI N #813978
2,062.47
2,094.88
32.41
'
4.000% Due 05 -01 -19
05 -11 -05
06 -15 -06
1,438.414 FGCI N #G11690
1,395.71
1,438.41
42.70
4.000% Due 02 -01 -20
01 -30 -06
06 -15 -06
669.239 FGCI N #G1 1690
637.87
669.24
31.37
'
4.000% Due 02 -01 -20
04 -12 -06
06 -15 -06
644.237 FGCI N #G1 1690
601.56
644.24
42.68
4.000% Due 02 -01 -20
09 -08 -05
06 -25 -06
320.530 FNCI N #255888
311.92
320.53
8.61
4.000% Due 08 -01 -20
05 -23 -02
06 -25 -06
2,673.020 FNCI M #254371
2,661.33
2,673.02
11.69
5.500% Due 07 -01 -17
09 -15 -04
06 -25 -06
6,212.730 FNCI N #725445
6,219.46
6,212.73
-6.73
4.500% Due 05 -01 -19
'
08 -23 -05
06 -25 -06
337.140 FNCI N #829053
327.03
337.14
10.11
4.000% Due 08 -01 -20
09 -08 -05
06 -25 -06
305.190 FNCI N #825335
296.99
305.19
8.20
4.000% Due 05 -01 -20
'
TOTAL GAINS
5,520.26
478.27
TOTAL LOSSES
0.00
- 132.57
651,568.87
657,434.84
5,520.26
345.71
'
TOTAL REALIZED GAIN/LOSS 5,865.97
t
1
1
9
ICC CAPITAL MANAGEMENT
PORTFOLIO SUMMARY
PALM BEA CH GARDENS POLICE PENSION FUND FIXED INCOME
June 30, 2006
Pct. Cur. Est.Annual
Security Type Total Cost Market Value Assets Yield Income
Cash & Equivalents
CASH AND
392,262.54
392,262.54
3.9
1.4
5,491.68
EQUIVALENTS
392,262.54
392,262.54
3.9
1.4
5,491.68
Fixed Income
CORPORATE BONDS
2,218,238.10
2,093,720.85
20.9
5.9
123,853.75
GOVERNMENT
3,121,587.52
3,077,528.12
30.8
3.9
120,818.75
BONDS
MORTGAGE POOLS
2,102,737.49
2,018,890.35
20.2
4.8
97,209.43
GOVERNMENT
2,412,293.80
2,348,239.06
23.5
5.9
139,537.50
SPONSORED BOND
Accrued Interest
74,739.76
0.7
9,854,856.92
9,613,118.14
96.1
5.0
481,419.43
TOTAL PORTFOLIO
10,247,119.46
10,005,380.68
100.0
4.9
486,911.11
i
ICC CAPITAL MANAGEMENT
PORTFOLIO APPRAISAL
PALM BEACH GARDENS POLICE PENSION FUND FIXED INCOME
June 30, 2006
Unit Total Market Pct. Cur.
Quantity Security Cost Cost Price Value Assets Yield
CASH AND EQUIVALENTS
CASH & CASH EQUIVALENTS 392,262.54
392,262.54
CORPORATE BONDS
80,000.000 GENERAL ELECTRIC
CAP CROP
8.300% Due 09 -20 -09
255,000.000 FIRST DATA CORP
4.500% Due 06 -15 -10
20,000.000 KEY BANK NA
7.000% Due 02 -01 -1 l
20,000.000 SOUTHTRUST BANK
4.750% Due 03 -01 -13
200,000.000 INTL LEASE FIN AIG
5 7/8
5.875 % Due 05 -01 -13
100,000.000 JP MORGAN CHASE
4.875% Due 03 -15 -14
180,000.000 MORGAN STANLEY
4.750% Due 04 -01 -14
145,000.000 CITIGROUP 5.00
5.000% Due 09 -15 -14
170,000.000 JP MORGAN CHASE
5.125 % Due 09 -15 -14
45,000.000 BEAR STEARNS
5.700% Due 11 -15 -14
210,000.000 GOLDMAN SACHS
5.125% Due 01 -15 -15
50,000.000 JP MORGAN CHASE
5.250% Due 05 -01 -15
75,000.000 NCNB CORPORATION
10.200% Due 07 -15 -15
75,000.000 IBM CORP
6.500% Due 01 -15 -28
115,000.000 DELL COMPUTER
7.100% Due 04 -15 -28
145,000.000 CONOCOINC
6.950% Due 04 -15 -29
170,000.000 KOHLS CORP
7.250 % Due 06 -01 -29
45,000.000 DEERE & CO
7.125% Due 03 -03 -31
Accrued Interest
GOVERNMENT BONDS
2,690,000.000
US TREASURY N/B
243,624.45
3.500% Due 05 -31 -07
15,000.000
US TREASURY BDS
21,171.80
8.875% Due 02 -15 -19
265,000.000
UNITED STATES
6.7
TREAS BOND
18,835.60
7.875% Due 02 -15 -21
110.79
88,629.60 107.56
392,262.54 3.9 1.4
392,262.54 3.9 1.4
86,051.20 0.9 7.7
96.60
246,340.20
95.54
243,624.45
2.4
4.7
105.86
21,171.80
104.82
20,964.60
0.2
6.7
94.18
18,835.60
93.82
18,764.60
0.2
5.1
105.64
211,282.00
99.25
198,498.00
2.0
5.9
99.68
98.28
98.66
101.08
97.40
98.63
101.59
119.77
105.60
122.15
117.35
120.00
122.40
99,682.00
93.09
176,896.80
91.68
143,064.25
93.60
171,839.40
94.45
43,829.55
97.70
207,133.20
93.49
50,797.00
94.26
89,826.00
128.38
79,202.05
102.81
140,469.05
108.15
170,153.15
108.81
204,005.10
104.58
55,081.35
112.56
2,218,238.10
98.70
2,655,064.85
98.41
143.14
21,471.09
132.87
135.75
359,725.01
125.81
93,092.00
0.9
5.2
165,027.60
1.6
5.2
135,715.65
1.4
5.3
160,573.50
1.6
5.4
43,966,80
0.4
5.8
196,324.80
2.0
5.5
47,129.50
0.5
5.6
96,285.75
1.0
7.9
77,110.50
0.8
6.3
124,371.35
1.2
6.6
157,781.75
1.6
6.4
177,787.70
1.8
6.9
50,651.10
0.5
6.3
30,936.80
0.3
2,124,657.65
21.2
5.9
2,647,128.12
26.5
3.6
19,931.25
0.2
6.7
333,403.12
3.3
6.3
ICC CAPITAL MANAGEMENT
PORTFOLIO APPRAISAL
PALM BEA CH GARDENS POLICE PENSION FUND FIXED INCOME
June 30, 2006
Unit Total Market Pet. Cur,
Quantity Security Cost Cost Price Value Assets Yield
65,000.000 UNITED STATES 131.27 85,326.57 118.56 77,065.62 0.8 5.8
GOVERNMENT SPONSORED BOND
2,185,000.000 FEDERAL NATIONAL
MORTGAGE ASSN
6.000 % Due 05 -15 -08
125,000.000 FREDDIE MAC 6.75
03/31
6.750% Due 03 -15 -31
Accrued Interest
TOTAL PORTFOLIO
2,102,737.49
102.93 2,249,105.65 100.91
130.55 163,188.15 114.75
2,412,293.80
10,247,119.46
12
17,993.65 0.2
3,095,521.78 30.9 3.9
60,257.04
0.6
TREASURY
143,371.46
1.4
5.6
165,793.19
1.7
6.875% Due 08 -15 -25
369,760.06
3.7
4.3
454,086.34
4.5
Accrued Interest
384,596.09
3.8
4.3
60,437.99
0.6
4.3
67,468.71
3,121,587.52
4.3
MORTGAGE POOLS
0.6
4.3
205,688.11
59,810.260
6.0
GNJO M #781313
103.12
61,679.33
100.75
0.1
6.000% Due 07 -15 -16
20.2
4.8
145,784.190
FNCI M #254371
99.56
145,146.39
98.34
5.500% Due 07 -01 -17
175,390.560
FGCI N #B 13455
99.71
174,873.49
94.53
4.500% Due 04 -01 -19
400,606.779
FGCI N #1313978
98.45
394,409.89
92.30
4.000% Due 05 -01 -19
479,798.750
FNCI N #725445
100.11
480,318.63
94.64
4.500% Due 05 -01 -19
416,680.490
FGCIN #G11690
95.08
396,176.89
92.30
4.000% Due 02 -01 -20
65,500.530
FNCI N #825335
97.31
63,740.20
92.27
4.000% Due 05 -01 -20
73,120.170
FNCI N #255888
97.31
71,155.07
92.27
4.000% Due 08 -01 -20
65,364.670
FNCI N #829053
97.00
63,403.73
92.27
4.000% Due 08 -01 -20
207,042.170
GNSF M #552509
98.77
204,486.49
99.35
6.000% Due 04 -15 -32
47,428.900
GNSF M #582153
99.83
47,347.38
99.35
6.000% Due 06 -15 -32
Accrued Interest
GOVERNMENT SPONSORED BOND
2,185,000.000 FEDERAL NATIONAL
MORTGAGE ASSN
6.000 % Due 05 -15 -08
125,000.000 FREDDIE MAC 6.75
03/31
6.750% Due 03 -15 -31
Accrued Interest
TOTAL PORTFOLIO
2,102,737.49
102.93 2,249,105.65 100.91
130.55 163,188.15 114.75
2,412,293.80
10,247,119.46
12
17,993.65 0.2
3,095,521.78 30.9 3.9
60,257.04
0.6
6.0
143,371.46
1.4
5.6
165,793.19
1.7
4.8
369,760.06
3.7
4.3
454,086.34
4.5
4.8
384,596.09
3.8
4.3
60,437.99
0.6
4.3
67,468.71
0.7
4.3
60,312.63
0.6
4.3
205,688.11
2.1
6.0
47,118.71
0.5
6.0
6,573.27
0.1
2,025,463.61
20.2
4.8
2,204,801.56 22.0 5.9
143,437.50 1.4 5.9
19,236.04 0.2
2,367,475.10 23.7 5.9
10,005,380.68 100.0 4.9
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:
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 Officer with 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
6� —
�W-a
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
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
I
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
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
20
TRUSTEES
Witnessed by:
BSJ /ka
December 6, 2005- revised August 9, 2006
H: \PBG 0003 \Buyback \PBG - Buyback Policy.wpd
Page 4 of 4
PALM BEACH GARDENS PENSION FUND
BOARD OF TRUSTEES
COMBINED INVESTMENT POLICY STATEMENT
FOR ICC CAPITAL MANAGEMENT &
RHUMBLINE GLOBAL ADVISORS
PURPOSE OF INVESTMENT POLICY STATEMENT
The Pension Board Trustees maintain that an important determinant of future investment returns is the
expression and periodic review of the Fund's investment objectives. To that end, the Trustees have
adopted this statement of Investment Policy.
In fulfilling their fiduciary responsibility, the Trustees recognize that the retirement system is an essential
vehicle for providing income benefits to retired participants or their beneficiaries. The Board also
recognizes that the obligations of the Fund are long -term and that investment policy should be made with
a view toward performance and return over a number of years. The general investment objective, then, is
to obtain a reasonable total rate of return — defined as interest and dividend income plus realized and
unrealized capital gains or losses — commensurate with the Prudent Investor Rule and any other
applicable statute or requirement.
A reasonably consistent and adequate return, protection of the assets against the inroads of inflation and
safety of the assets are paramount. However, the volatility of interest rates and securities markets make it
necessary to judge results within the context of several years rather than over short periods of one or two
years or less. Performance will be measured quarterly.
II. INVESTMENT PERFORMANCE OBJECTIVES — QUARTERLY EVALUATION MECHANISMS
The below listed performance measures will be used as objective criteria for evaluating effectiveness of
the Investment Managers:
A. Total Return of the Combined Managers:
1. The performance of the total fund will be measured each quarter for rolling three and five year
periods. These periods are considered sufficient to accommodate the different market cycles
commonly experienced with investments. The return of this portfolio is expected to exceed the
return of a portfolio comprising:
Since Inception (3/31/92) until 11/30/95 —
25% S &P500, 60% Lehman Brothers Gov /Credit (LBGC), and
15% Salomon Treasury Bill — 3 month (TBill);
From 12/1/95 until 11/30/96 —
30% S &P500, 60% LBGC and 10% TBill;
From 12/1/96 until 11/30/97 —
40% S &P500, 50% LBGC, and 10% TBill;
From 12/1 /97 until 12/31 /98 —
60% S &P500 and 40% LBGC;
From 1/1/99 until 6/30/00 —
30% Russell 1000 Growth, 30% Russell 1000 Value, and 40% LBGC;
From 7/01/2000 until 12/31/2002 the combined performance is expected to exceed the
return of a portfolio comprising:
60% S &P500 and 40% LBGC.
From 01/01/2003 until 12/31/2003 the combined performance is expected to exceed the
return of a portfolio comprising:
50% S &P500, 10% S &P MidCap 400 and 40% LBGC.
From 01/01/2004 onwards the combined performance is expected to exceed the return of a
portfolio comprising:
40% S &P500, 10% S &P MidCap 400, 10% S &P SmallCap 600 and 40% LBGC.
From 10/0112006 onwards the combined performance is expected to exceed the
return of a portfolio comprising:
40% S &P500, 10% S &P MidCap 400, 10% S &P SmallCap 600,5% MSCI EAFE and
35% LBGC.
B. For ICC Capital Management:
The performance of the total fund will be measured each quarter for rolling three and five year periods.
These periods are considered sufficient to accommodate the market cycles commonly experienced with
investments. After July 1, 2000 the return of this portfolio is expected to exceed the return of the LBGC.
C. For Rhumbline Global Advisors
The performance of the total fund will be measured each quarter for rolling three and five year periods.
These periods are considered sufficient to accommodate the market cycles commonly experienced with
investments. After July 1, 2000 until December 31, 2002 the return of this portfolio is expected to match
the return of the S &P500 Index. From January 1, 2003 until December 31, 2003 the return of this portfolio
is expected to match the return of an 80% S &P500 and 20% S &P MidCap 400 policy. After January 1,
2004 the return of this portfolio is expected to match the return of a 60% S &P500, 20% S &P MidCap 400
and 20% S &P SmallCap 600 policy.
D. For Each Investment Manager:
1. Relative to other similar investment managers, it is expected the manager's performance with
regard to the total return of the fund will be in the top forty percent (40 %) of the appropriate
Mobius Universe over three to five year periods. When performance is below the standard, the
manager will report to the Trustees the reasons for the occurrence and the steps taken to avoid
reoccurrence.
2. On an absolute basis, it is expected that the total return of the fund will equal or exceed the
actuarial earnings assumption, and equal or exceed the Consumer Price Index, plus 3% over
2
three to five year periods. When performance is below these standards, the manager will
report to the Trustees the reasons for occurrence and the steps taken to avoid reoccurrence.
3. From time to time the performance monitor may adjust or change the evaluation indices and /or
universes so as to more adequately measure and evaluate the investment manager's particular
equity and fixed income investment style. Any such adjustment or change would be
communicated to both the Investment Manager and the Pension Board Trustees at the time of
said adjustment or change.
III. INVESTMENT GUIDELINES
A. Authorized Investments
1. 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.
2. Obligations issued by the United States Government or in obligations guaranteed as to
principal and interest by the united State Government.
3. 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, provided:
a. Equities will be traded on one or more of the following recognized national exchanges:
1. New York Stock Exchange
2. American Stock Exchange
3. The NASDAQ Stock Market
b. The individual issue meets the following rating criteria:
1. Fixed income: Standard & Poor's, AAA, AA, A or Moody's Aaa, Aa, A
2. Equities: Value Lines Investment Survery Rank for Safety, 1, 2, and 3 or Standard &
Poor's A +, A or A-
3. Money Market: Standard & Poor's Al or Moody's P1
c. Not more than five percent of the Fund's assets shall be invested in the common stock
or capital stock of any one issuing company, nor shall the aggregate investment in any
one issuing company exceed five percent (5 %) of the outstanding capital stock of the
company.
4. Commingled stock, bond or money market funds whose individual investments are restricted to
securities meeting the criteria expressed in III.
5. Bonds issued by the State of Israel.
6. The use of unhedged and /or leveraged derivatives will not be allowed in any form.
B. Limitations
Kl
Investments in corporate common stock, convertible bonds and convertible preferred issues should be
targeted at sixty percent (60 %) of the fund at market value and shall not exceed seventy percent (70 %) of
the fund assets at cost. No restriction is placed on the Fund's percentage holdings of bonds or cash.
IV. COMMUNICATIONS AFFECTING BOTH MANAGERS
A. The custodian shall apprise the Trustees of all transactions and shall forward all proxies to the
Managers within five calendar days. On a monthly basis, the custodian shall supply an accounting
statement which will include a summary of all receipts and disbursements and the cost and the
market value of all assets. On a quarterly basis, the Managers shall provide a written report
affirming compliance with the security restrictions of Section III above and a summary of common
stock diversification and attendant schedules. In addition, the Managers shall provide each quarter a
report detailing the fund's performance, adherence to the investment policy, forecast of the market
and economy, portfolio analysis and current assets of the Trust. Written reports shall be mailed to
the Trustees within 60 days of the end of the quarter. The Managers will provide immediate written
and telephone notice to the Chairman of the Board of Trustees and the Performance Monitor of any
significant market related or non - market related event, specifically including, but not limited to the
resignation, termination or incapacity of any senior personnel.
B. The Managers will disclose any securities which are not in compliance with Section III in each
quarterly report.
C. If the fund owns securities, which complied with Section III at the time of purchase, that are
subsequently down graded below permissible levels, the Managers will dispose of such securities in
the normal course of business.
D. The Managers' quarterly reports will list separately any security whose value has diminished twenty -
five percent (25 %) or more from purchase price.
E. The Trustees intend to meet periodically with the monitoring service's representative to review the
Performance Report. The Trustees will meet with the Investment Managers and appropriate outside
consultants to discuss performance results, economic outlook, investment strategy and tactics and
other pertinent matters affecting the Fund as needed.
F. The Managers shall report to the Trustees on an annual basis how each proxy was voted, the issue
as to each, and the date the proxy was voted. If a proxy was not voted, the Managers shall provide
a written statement indicating the reason that particular proxy was not voted.
G. The Trustees may wish to recapture as many of their commission dollars as possible consistent with
obtaining the "best execution" as defined in ERISA Technical Release 86 -1 which is made part of
this agreement by reference.
H. When there is any change in ownership of the investment management firm, the new firm will
provide the Trustees with an audited balance sheet and will keep the Trustees fully informed of all
material events. This is to include, but not be limited to, the loss of any clients, deterioration of the
financial health of the firma and all employment contracts.
4
V. CRITERIA FOR INVESTMENT MANAGER REVIEW
The Board wishes to adopt standards by which judgments of the ongoing performance of an Investment
Manager may be made. With this in min, the following are adopted:
If, at any time, any one of the following is breached, the Managers will be warned of the Board's serious
concern for the Fund's continued safety and performance.
1. Four consecutive quarters of total fund performance below the fiftieth percentile (501h) in the
Mobius Mutual Fund Manager performance rankings.
2. Standard deviation for the Fund in excess of one hundred - twenty percent (120 %) of the investment
policy.
3. Loss by the Manager of any senior investment personnel.
4. Any change in basic investment philosophy by the Manager.
5. Failure to attain a sixty percent (60 %) vote of confidence by the Board members.
6. Failure to observe the security quality restrictions of Section III.
7. Failure to maintain a positive three -year alpha.
This shall in no way limit or diminish the Trustee's right to terminate the Manager at any time for any
reason.
VI. FLORIDA STATUTES AND APPLICABLE CITY ORDINANCES
If at any time this document is found to be in conflict with Florida Statutes, or applicable City Ordinances,
the Statute and Ordinances shall prevail.
VII. REVIEW AND AMENDMENTS
It is intended the Investment Managers and Trustees review this document periodically. If at any time the
Manager feels that the specific objectives defined herein cannot be met, or the guidelines constrict
performance, the Trustees should be so notified in writing. By the initial and continuing acceptance of this
investment policy statement, the Investment Manager concurs with the provisions of this document.
For ICC Capital Management
For Rhumbline Global Advisors
Date
Date
For the Pension Board of Palm Beach Gardens Police Date
5
PENSION RESOURCE CENTERS
Accounts Payable Check Register
FOR: PALM BEACH GARDENS POLICE
Check Nurnberl Date
Payee and Description
Amount ,
2000
June 21, 2006
FPPTA
$500.00
Registration for Jay Spencer
2001
June 21, 2006
Gabriel Roedner Smith & Company
$8,207.00
Services - 5/31/06, 10/01/05 Valuation Report, Buy Back Calculations
2002
June 21, 2006
Hanson, Perry & Jensen, PA
$4,042.00
Legal services thru 6/15/06
2003
June 21, 2006
Cherry, Bekaert & Holland
$1,015.00
Audit for year ended 9/30/05
2004
June 21, 2006
Pension Resource Centers
$4,550.00
Admin. Services - May & June
2005
July 5, 2006
Pension Resource Centers
$2,331.25
Admin. Services - July
2006
July 27, 2006
Jay Spencer
$757.19
Travel Reimbursement - FPPTA Conference
2007
August 7, 2006
Ellen Schaffer
$382.50
Consulting & Programming Service
2008
August 7, 2006
Gerald J. Wilkoff, Inc.
$1,266.00
Employee Dishonesty /Fidelity Insurance
2009
August 7, 2006
Gabriel Roeder Smith & Company
$3,222.00
Actuarial Services through 6/30/06
2010
August 7, 2006
Rhumline Advisers
$2,714.86
Advisory Fees 2nd Quarter 2006
2011
August 7, 2006
VOID
2012
August 7, 2006
Hanson, Perry & Jensen
$343.03
Legal services thru 7/15/06
2013
August 8, 2006
Pension Resource Centers
$2,326.74
Admin. Services - August
Total $31,657.57
Chairman
Secretary
Date
March 2, 2006
Palm Beach Gardens Police Pension Fund
Bonni S. Jensen, Esq.
Hanson, Parry & Jensen, P.A. MAR - 3 2006
Re: Request for Information
Greetings to all!!
I respectfully request some information from the Board in reference to disability
applications for retirement. I recall there were criteria that needed to be met before the
trustees could move forward with their decision. I don't recall the criteria specifically (I
believe there were 3 or 4, i.e. the applicant is unable to perform his/her function; the
disability is permanent; etc.). I also believe one of the criteria has something to do with
termination.
I therefore request the Board to provide me, in writing, the list of criteria which
need to be addressed as part of the determination of the granting of disability benefits.
I offer my sincere Thanks! to all for your cooperation and consideration.
Sincerely,
Sam Nasca
11518 Landing Pl. #B -3
No. Palm Beach, FL 33408
(561) 622 -7199
OCTOBER 1, 2005
ACTUARIAL VALUATION REPORT
FOR THE
CITY OF PALM BEACH GARDENS POLICE
OFFICERS' PENSION FUND
ANNUAL EMPLOYER CONTRIBUTION
IS DETERMINED BY THIS VALUATION
FOR THE PLAN YEAR ENDING
SEPTEMBER 30, 2006
TO BE PAID IN THE EMPLOYER FISCAL YEAR ENDING
SEPTEMBER 30, 2007
go GABRIEL, ROEDER, SMITH & COMPANY
1.� GABRIEL, ROEDER, SMITH $ COMPANY
Gabriel Roeder Smith & Company 301 East Las Olas Blvd. 954.527.1616 phone
GRS Consultants & Actuaries Suite 200 954.525.0083 fax
Ft. Lauderdale, FL 33301 -2254 www.gabrietroeder.coni
May 15, 2005
Board of Trustees
City of Palm Beach Gardens
Police Officers Pension Fund
Palm Beach Gardens, Florida
Dear Board Members:
We are pleased to present our October 1, 2005 Actuarial Valuation Report for the Plan. The
purpose of the Report is to set forth required contribution levels, to disclose plan assets and
actuarial liabilities, to comment on funding progress and to provide supporting information
regarding the operation of the Plan. This Report is also designed to comply with requirements of
the State.
The valuation was performed on the basis of employee, retiree and financial information supplied
by Administrative Services, Inc. Although we did not audit this information, it was reviewed for
reasonableness and comparability to prior years.
The benefits valued are outlined at the end of the Report. Actuarial assumptions and the actuarial
cost method are also described herein. Any changes in benefits, assumptions or methods are
described in the first section.
We will be pleased to answer any questions pertaining to the valuation and to meet with you to
review this Report.
Respectfully submitted,
GABRIEL, ROEDER, SMITH AND COMPANY
By
Steph n Palmquist, A , MAAA, FCA
Enrolled Actuary No. 05-T560
Statement by Enrolled Actuary
This actuarial valuation and /or cost determination was prepared and completed by me or
under my direct supervision, and I acknowledge responsibility for the results. To the best of my
knowledge, the results are complete and accurate. In my opinion, the techniques and
assumptions used are reasonable, meet the requirements and intent of Part VII, Chapter 112,
Florida Statutes, and are based on generally accepted actuarial principles and practices. There is
no benefit or expense to be provided by the plan and /or paid from the plan's assets for which
liabilities or current costs have not been established or otherwise taken into account in the
valuation. All known events or trends which may require a material increase in plan costs or
required contribution rates have been taken into account in the valuation.
el Signature
— �T_-C�,
Date
05 -1560
Enrollment Number
M GABRIEL, ROEDER, SMITH & COMPANY
TABLE OF CONTENTS
Section
Title
Page
A
Discussion
of Valuation Results
1.
Discussion of Valuation Results
1
2.
Chapter Revenue
3
B
Valuation Results
1.
Participant Data
4
2.
Annual Required Contribution
5
3.
Actuarial Value of Benefits and Assets
6
4.
Calculation of Employer Normal Cost
7
5.
Liquidation of Unfunded Actuarial Accrued
Liability
8
6.
Actuarial Gains and Losses
10
7.
Recent History of Required and Actual
Contributions
13
8.
Actuarial Assumptions and Cost Method
14
9.
Glossary of Terms
16
C
Pension
Fund Information
1.
Summary of Assets
17
2.
Pension Fund Income and Disbursements
18
3.
Reconciliation of DROP Accounts
19
4.
Calculation of Actuarial Value of Assets
20
5.
Investment Rate of Return
21
D Financial Accounting Information
1. FASB No. 35 22
2. GASB No. 25 23
3. GASB No. 27 25
E Miscellaneous Information
1. Reconciliation of Membership Data 27
2. Active Participant Distribution 28
3. Inactive Participant Distribution 29
F Summary of Plan Provisions 30
Em GABRIEL, ROEDER, SMITH & COMPANY
SECTION A
DISCUSSION OF VALUATION RESULTS
� GABRIEL, ROEDER, SMITH & COMPANY
1
DISCUSSION OF VALUATION RESULTS
Comparison of Required Employer Contributions
A comparison of the required employer contribution developed in this year's actuarial
valuation and the previous valuation is as follows.
The required employer contribution has been adjusted for interest on the basis that
contributions are made in equal payments at the end of each quarter.
The contribution has also been computed under the assumption that the amount to be
received from the State on behalf of police officers this year will be the same as the baseline
amount of $235,818. Any increase in the State revenue over $235,818 must be used to provide
additional benefits. If the actual payment from the State falls below $235,818, then the City must
increase its contribution by the difference.
Actual employer and State contributions for the last year were $1,468,223 and $235,818,
respectively, for a total of $1,704,041. The annual required contribution was $1,704,041.
= GABRIEL, ROEDER, SMITH & COMPANY
For FYE 9/30/07
For FYE 9/30/06
Based on
Based on
1011/2005
10/1/2004
Increase
Valuation
Valuation
(Decrease)
Required Employer /State Contribution
$ 2,477,836
$ 1,931,054
$ 546,782
As % of Covered Payroll
32.65 %
27.62 %
5.03 %
Estimated State Contribution
$ 235,818
$ 235,818
$ 0
As % of Covered Payroll
3.11 %
3.37 %
(0.26) %
Required Employer Contribution
$ 2,242,018
$ 1,695,236
$ 546,782
As °!o of Covered Payroll
29.54 %
24.25 %
5.29 %
The required employer contribution has been adjusted for interest on the basis that
contributions are made in equal payments at the end of each quarter.
The contribution has also been computed under the assumption that the amount to be
received from the State on behalf of police officers this year will be the same as the baseline
amount of $235,818. Any increase in the State revenue over $235,818 must be used to provide
additional benefits. If the actual payment from the State falls below $235,818, then the City must
increase its contribution by the difference.
Actual employer and State contributions for the last year were $1,468,223 and $235,818,
respectively, for a total of $1,704,041. The annual required contribution was $1,704,041.
= GABRIEL, ROEDER, SMITH & COMPANY
2
Revisions in Benefits
There have been no changes in benefits since the last valuation.
Revisions in Actuarial Assumptions or Methods
The salary scale assumption was increased from 6% per year to 9% per year, with a 14%
salary increase in service year ten.
Actuarial Experience
There was a net actuarial loss of $1,006,694 for the year which means that actual
experience was less favorable than expected. The loss is due to lower than expected investment
return. The net actuarial loss has increased the required employer contribution by 2.31% of
covered payroll.
Analysis of Change in Employer Contribution
The components of change in the employer contribution rate are as follows:
Contribution rate last year
24.25 %
Change in assumptions
2.94
Payment on unfunded liability
(0.20)
Experience (gain)/loss
2.31
Change in administrative expense
0.02
Change in State revenue
0.22
Contribution rate this year 29.54
The remainder of this Report includes detailed actuarial valuation results, financial
information, miscellaneous information and statistics, and a summary of plan provisions.
M GABRIEL, ROEDER, SMITH & COMPANY
3
CHAPTER REVENUE
Increments in Chapter revenue over that received in 1998 must first be used to fund
the cost of compliance with minimum benefits. Once minimums are met, any subsequent
additional Chapter revenue must be used to provide extra benefits.
As of the valuation date, there are no minimum benefit requirements outstanding.
Actuarial Confirmation of the Use of State Chapter Money
1. Base Amount Previous Plan Year
$ 235,818
2. Amount Received for Previous Plan Year
411,047
3. Benefit Improvements Made in Previous Plan Year
0
4. Excess Funds for Previous Plan Year: (2) - (1) - (3)
175,229
5. Accumulated Excess at Beginning of Previous Year
159,088
6. Prior Excess Used in Previous Plan Year
0
7. Accumulated Excess as of Valuation Date
(Available for Benefit Improvements): (4) + (5) - (6)
334,317
8. Base Amount This Plan Year: (1) + (3)
235,818
The Accumulated Excess shown in line 7 is being held in reserve to pay for additional
benefits. The reserve is subtracted from Plan assets (see Section C of this Report). The Base
Amount in line 8 is the maximum amount the employer may take as a credit against its required
contribution; however, in no event may the employer take credit for more than the actual amount
of Chapter revenue received.
GABRIEL, ROEDER, SMITH & COMPANY
SECTION B
VALUATION RESULTS
= GABRIEL, ROEDER, SMITH & COMPANY
PARTICIPANT DATA
October 1, 2005
October 1, 2004
ACTIVE MEMBERS
Number
105
98
Covered Annual Payroll
$
7,332,448
$
6,755,078
Average Annual Payroll
$
69,833
$
68,929
Average Age
39.8
39.2
Average Past Service
9.9
9.7
Average Age at Hire
29.9
29.5
RETIREES, BENEFICIARIES & DROP
Number
11
9
Annual Benefits
$
327,733
$
242,192
Average Annual Benefit
$
29,794
$
26,910
Average Age
56.3
57.8
DISABILITY RETIREES
Number
12
12
Annual Benefits
$
323,791
$
319,834
Average Annual Benefit
$
26,983
$
26,653
Average Age
50.9
49.9
TERMINATED VESTED MEMBERS
Number
0
2
Annual Benefits
$
0
$
23,916
Average Annual Benefit
$
0
$
11,958
Average Age
0.0
41.3
M GABRIEL, ROEDER, SMITH & COMPANY
ANNUAL REQUIRED CONTRIBUTION (ARC)
A. Valuation Date
October 1, 2005
October 1, 2004*
B. ARC to Be Paid During
Fiscal Year Ending
9/30/2007
9/30/2006
C. Assumed Dates of Employer
Contributions
Quarterly
Quarterly
D. Annual Payment to Amortize
Unfunded Actuarial Liability
$ 373,214
$ 306,109
E. Employer Normal Cost
1,903,641
1,468,590
F. ARC if Paid on the Valuation
Date: D +E
2,276,855
1,774,699
G. ARC Adjusted for Frequency of
Payments
2,394,067
1,866,061
H. ARC as % of Covered Payroll
32.65 %
27.62 %
I. Assumed Rate of Increase in Covered
Payroll to Contribution Year
3.50 %
3.50 %
J. Covered Payroll for Contribution Year
7,589,084
6,991,505
K. ARC for Contribution Year: H x J
2,477,836
1,931,054
L. Estimate of State Revenue in
Contribution Year
235,818
235,818
M. Required Employer Contribution (REC)
in Contribution Year
2,242,018
1,695,236
N. REC as % of Covered Payroll in
Contribution Year: M _ J
29.54 %
24.25 %
* Before change in salary increase assumption.
M GABRIEL, ROEDER, SMITH & COMPANY
ACTUARIAL VALUE OF BENEFITS AND ASSETS
A. Valuation Date
October 1, 2005
October 1, 2004"
B. Actuarial Present Value of All Projected
Benefits for
1. Active Members
a. Service Retirement Benefits
$ 32,051,280
$ 24,955,831
b. Vesting Benefits
983,590
872,437
c. Disability Benefits
2,378,890
1,879,546
d. Preretirement Death Benefits
460,917
380,950
e. Return of Member Contributions
41,400
36,202
f. Total
35,916,077
28,124,966
2. Inactive Members
a. Service Retirees & Beneficiaries
3,547,742
2,579,739
b. Disability Retirees
3,257,238
3,260,186
c. Terminated Vested Members
-
104,733
5,944,658
d. Total
6,804,980
3. Total for All Members
42,721,057
34,069,624
C. Actuarial Accrued (Past Service)
Liability per GASB No. 25
29,730,475
24,962,551
D. Actuarial Value of Accumulated Plan
Benefits per FASB No. 35
24,604,240
21,015,802
E. Plan Assets
1. Market Value
19,042,660
15,777,299
2. Actuarial Value
18,950,104
16,405,794
F. Actuarial Present Value of Projected
Covered Payroll
54,439,621
44,790,332
G. Actuarial Present Value of Projected
Member Contributions
4,681,807
3,851,969
* Before change in salary increase assumption.
= GABRIEL, ROEDER, SMITH & COMPANY
CALCULATION OF EMPLOYER NORMAL COST
A. Valuation Date
October 1, 2005
October 1, 2004"
B. Actuarial Present Value of Projected
Benefits
$ 42,721,057
$ 34,069,624
C. Actuarial Value of Assets
18,950,104
16,405,794
D. Unfunded Actuarial Accrued Liability
5,562,336
4,573,607
E. Actuarial Present Value of Projected
Member Contributions
4,681,807
3,851,969
F. Actuarial Present Value of Projected
Employer Normal Costs: B -C -D -E
13,526,810
9,238,254
G. Actuarial Present Value of Projected
Covered Payroll
54,439,621
44,790,332
H. Employer Normal Cost Rate: F/G
24.85 %
20.63 %
I. Covered Annual Payroll
7,332,448
6,755,078
J. Employer Normal Cost: H x 1
1,822,114
1,393,573
K. Assumed Amount of Administrative
Expenses
81,527
75,017
L. Total Employer Normal Cost: J +K
1,903,641
1,468,590
M. Employer Normal Cost as % of
Covered Payroll
25.96 %
21.74 %
* Before change in salary increase assumption.
M GABRIEL, ROEDER, SMITH & COMPANY
LIQUIDATION OF THE UNFUNDED FROZEN ACTUARIAL ACCRUED LIABILITY
A. Derivation of the Current UAAL
Original UAAL
1.
Last Year's UAAL
$ 4,573,607
2.
Last Year's Employer Normal Cost
1,268,603
3.
Last Year's Contributions
1,704,041
4.
Interest at the Assumed Rate on:
a. 1 and 2 for one year
496,588
Amount
b. 3 from dates paid
47,631
Payment
c. a - b
448,957
5.
This Year's UAAL Prior to Revision:
$ 2,207
$ 251
1 +2-3+4c
4,587,126
6.
Change in UAAL Due to Plan Amendments
(994)
(86)
and /or Changes in Actuarial Assumptions
975,210
7.
This Year's Revised UAAL: 5 + 6
5,562,336
B. UAAL Amoritzation Period and Payments
Original UAAL
Current UAAL
Amortization
Period
Years
Years
(Years)
Amount
Remaining
Amount
Payment
7/1/1986
30
$ 4,147
11
$ 2,207
$ 251
10/1/1991
30
(1,504)
16
(994)
(86)
10/1/1991
30
286,223
16
188,839
16,422
10/1/1992
30
122,611
17
83,593
6,984
10/1/1993
30
(194,444)
18
(137,508)
(11,073)
10/1/1995
30
796,975
20
721,113
54,409
10/1/1996
30
(189,977)
21
(182,604)
(13,385)
10/1/2000
30
3,639,273
25
3,912,480
260,338
10/1/2005
30
975,210
30
975,210
59,354
$ 5,438,514
$ 5,562,336
$ 373,214
M GABRIEL, ROEDER, SMITH & COMPANY
1$i
C. Amortization Schedule
The UFAAL is being amortized as a level percent of payroll. The expected amortization
schedule is as follows:
Amortization Schedule
Year
Expected UAAL
2005
$ 5,562,336
2006
5,630,211
2007
5,689,669
2008
5,739,512
2009
5,778,409
2010
5,804,899
2015
5,689,330
2020
4,947,024
2025
3,299,393
2030
639,611
2035
0
M GABRIEL, ROEDER, SMITH & COMPANY
10
ACTUARIAL GAINS AND LOSSES
The assumptions used to anticipate mortality, employment turnover, investment income,
expenses, salary increases, and other factors have been based on long range trends and
expectations. Actual experience can vary from these expectations. The variance is measured by
the gain and loss for the period involved. If significant long term experience reveals consistent
deviation from what has been expected and that deviation is expected to continue, the
assumptions should be modified. The net actuarial gain (loss) for the past year is computed as
follows:
A. Employer Normal Cost as a
Percentage of Covered Payroll
1. Last Valuation 20.63 %
2. Current Valuation (Before Changes) 22.82
3. Difference: 1 - 2 (2.19)
B. Actuarial Present Value of
Projected Covered Payroll 1 $ 45,967,747
C. Net Actuarial Gain (Loss): A3 x B 1 (1,006,694)
D. Gain (Loss) Due to Investments 1 (659,978)
E. Gain (Loss) Due to Other Sources 1 (346,71
Experience gains /losses for the past few years are as follows:
Year Ending
September 30
Gain (Loss)
1996
$ (284,232)
1997
(994,552)
1998
(674,477)
1999
(424,754)
2000
68,592
2001
(435,534)
2002
(2,162,823)
2003
(949,324)
2004
(246,347)
2005
1,006,694
� GABRIEL, ROEDER, SMITH & COMPANY
11
The fund earnings and salary increase assumptions have considerable impact on the cost of
the Plan so it is important that they are in line with the actual experience. The following table
shows the actual fund earnings and salary increase rates compared to the assumed rates for the
last few years:
Year Ending
Investment Return
Salary Increases
Actual
Assumed
Actual
Assumed
9/30/1990
9.1 %
8.0 %
9.1 %
6.5 %
9/30/1991
8.6
8.0
9.5
6.5
9/30/1992
8.2
8.0
10.9
6.5
9/30/1993
8.8
8.0
14.1
6.5
9/30/1994
2.4
8.0
0.6
6.5
9/30/1995
18.2
8.0
12.8
6.5
9/30/1996
5.2
8.0
3.6
6.5
9/30/1997
10.3
8.0
11.5
6.5
9/30/1998
9.2
8.0
10.0
6.5
9/30/1999
9.6
8.0
8.4
6.5
9/30/2000
9.0
8.0
5.9
6.5
9/30/2001
6.3
8.5
1.1
6.0
9/30/2002
(1.6)
8.5
11.8
6.0
9/30/2003
3.7
8.5
7.4
6.0
9/30/2004
3.9
8.5
16.4
6.0
9/30/2005
4.8
8.5
3.6
6.0
Average for
Years Shown
7.1
N/A
8.5
N/A
* Actual raises during the year were less than 10.0 %. However, there was a problem of
underreporting of compensation in the previous year that resulted in the 11.5% average
increase.
The actual investment return rates shown above are based on the actuarial value of assets.
The actual salary increase rates shown above are the increases received by those active
members who were included in the actuarial valuations both at the beginning and the end of each
year.
= GABRIEL, ROEDER, SMITH & COMPANY
12
Actual (A) Compared to Expected (E) Decrements
Among Active Employees
Number
Added
Service &
Active
During
DROP
Disability
Terminations
Members
Vested Other Totals
Year
Year
Retirement
Retirement
Death
End of
Ended
Year
A 1
E
A
E
I A
E
A
E
A
A
A I
E
9/30/2002
10
5
2
4
0
0
0
0
1
2
3
2
90
9/30/2003
14
9
3
5
1
0
0
0
1
4
5
3
95
9/30/2004
10
7
2
6
1
0
0
0
1
3
4
3
98
9/30/2005
11
4
2
8
0
0
0
0
0
2
2
3
105
9/30/2006
9
1
0
3
4 Yr Totals'
45
25
9
23
2
0
0
0
3
11
14
11
* Totals are through current Plan Year only.
= GABRIEL, ROEDER, SMITH & COMPANY
13
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rt 0i GABR {EL, ROEDER, SMITH & COMPANY
14
ACTUARIAL ASSUMPTIONS AND COST METHOD
A. Cost Method
1. Funding Frozen Entry Age Cost Method.
2. Accumulated Benefit Obligation Accrued Benefit Method.
B. Investment Earnings (including inflation) 8.5% per year, compounded annually; net rate after
investment related expenses.
C. Salary Increases (including inflation) 9% each year up to the assumed retirement age,
with a 14% salary increase in service year ten;
projected benefits are increased by 6% to allow for
the inclusion of unused sick and vacation pay in final
average earnings.
D. Inflation
E. Retirement Age
F. Turnover Rates
G. Mortality Rates
H. Disability
1. Rates
2. Percent Service Connected
3. Mortality
I. Asset Value
J. Administrative Expenses
K. Increase in Covered Payroll
L. Post Retirement Benefit Increase
M. Changes Since Last Valuation
3.5% per year.
See Table below for retirement rates.
See Table below.
1983 Group Annuity Mortality Table; set back 6
years for female rates.
See table below.
75%
Regular rates set forward 5 years.
Difference between actual and expected returns
recognized over five years.
For other than investment related expenses,
assumed to be average of actual expenses over last
two years.
3.5% per year.
N/A
The salary scale assumption was changed from
6% per year to 9% per year, with a 14% salary
increase in service year ten.
= GABRIEL, ROEDER, SMITH & COMPANY
15
Age
Annual Rate of
Turnover
Disability
20
6.0%
0.21%
25
5.7
0.23
30
5.0
0.27
35
3.8
0.35
40
2.6
0.45
45
1.6
0.77
50
0.8
1.50
55
0.3
2.32
Annual Rate of Retirement
For each year eligible for
early retirement
5%
For year when normal
retirement date is attained
60
For each of four years after
normal retirement date
40
For fifth year after normal
retirement date
100
= GABRIEL, ROEDER, SMITH & COMPANY
16
GLOSSARY OF TERMS
Actuarial Present Value is the value of an amount or series of amounts payable at various
times, determined as of the valuation date by the application of the set of actuarial assumptions.
Actuarial Assumptions are assumptions as to the occurrence of future events affecting pension
costs. The previous page outlines the Actuarial Assumptions utilized in this valuation.
Actuarial Cost Method is a procedure for determining the Actuarial Present Value of pension
plan benefits and for developing an actuarially equivalent allocation of such value to time periods,
usually in the form of a Normal Cost and Actuarial Accrued Liability.
Frozen Entry Age Actuarial Cost Method is a method under which the excess of the Actuarial
Present Value of Projected Benefits of the group included in the valuation, over the sum of the
Actuarial Value of Assets, the Unfunded Frozen Actuarial Accrued Liability and the Actuarial
Present Value of Future Member Contributions (if any) is allocated as a level percentage of
earnings of the group between the valuation date and the assumed retirement age. This
allocation is performed for the group as a whole, not as a sum of individual allocations. The
portion of this Actuarial Present Value allocated to a specific year is called the Employer Normal
Cost. Under this method, actuarial gains (losses) reduce (increase) future Normal Costs.
Frozen Actuarial Accrued Liability is the portion of the Actuarial Present Value of Projected
Benefits which is separated as of a valuation date and frozen under the Actuarial Cost Method
being used. This separated portion is the sum of an initial Unfunded Actuarial Accrued Liability
and any increments or decrements in the Actuarial Accrued Liability established subsequently as
a result of changes in pension plan benefits or Actuarial Assumptions.
Unfunded Frozen Actuarial Accrued Liability is the portion of the Frozen Accrued Liability
remaining after the addition of interest and the deduction of amortization payments.
M GABRIEL, ROEDER, SMITH & COMPANY
SECTION C
PENSION FUND INFORMATION
M GABRIEL, ROEDER, SMITH & COMPANY
17
SUMMARY OF ASSETS
9130/2005
9130/2004
Cash and Securities - Market Value
Cash
$ 184,948
$ 159,831
Money Market Funds
633,533
471,868
Treasury and Agency Bonds & Notes
6,335,035
5,383,279
Corporate Bonds
1,782,891
910,333
Common Stocks
0
0
Pooled Equity Funds
10,472,796
8,930,663
Pooled Bond Funds
0
0
Other Securities
0
0
15,855,974
Total
19,409,203
Receivables and Accruals
Member Contribution
82,180
26,445
Employer Contribution
0
50,011
Interest and Dividends
71,225
45,953
Buy -Backs
0
77,321
Total
153,405
199,730
Payables and Reserves
DROP Account
162,658
99,859
State Contribution Reserve
334,317
159,088
Benefits
0
0
Refunds
0
0
Expenses
22,973
19,458
Other
0
0
Total
519,948
278,405
Net Assets - Market Value
19,042,660
15,777,299
� GABRIEL, ROEDER, SMITH & COMPANY
18
PENSION FUND INCOME AND DISBURSEMENTS
Year Ending
Year Ending
9/30/2005
9/30/2004
Market Value at Beginning of Period
$ 16,036,246
$ 13,154,159
Income
Member Contributions
757,209
671,048
State Contributions
411,047
364,985
Employer Contributions
1,468,223
1,239,522
Investment Earnings
Dividends and Interest
289,491
223,102
Realized & Unrealized Gain (Loss)
1,337,175
982,732
Total Investment Earnings
1,626,666
1,205,834
Total Income
4,263,145
3,481,389
Disbursements
Monthly Benefit Payments
519,538
419,229
DROP Distributions
54,223
0
Refund of Contributions
34,050
51,376
Investment Related Expenses
66,503
51,085
Other Administrative Expenses
85,442
77,612
Insurance Premiums
0
0
Other Disbursements
0
0
Total Disbursements
759,756
599,302
Net Increase During Period
3,503,389
2,882,087
Market Value at End of Period
19,539,635
16,036,246
Less: DROP Account Balance
162,658
99,859
Less: State Contribution Reserve
334,317
159,088
Final Market Value
19,042,660
15,777,299
M GABRIEL, ROEDER, SMITH & COMPANY
19
RECONCILIATION OF DROP ACCOUNTS
Value at beginning of year
$ 99,859
Payments credited to accounts
107,716
Investment Earnings credited
9,307
Withdrawals from accounts
54,224
Value at end of year
162,658
M GABRIEL, ROEDER, SMITH & COMPANY
W
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INVESTMENT RATE OF RETURN
The investment rate of return has been calculated on the following bases:
Basis 1 - Interest, dividends, realized gains (losses) and unrealized appreciation
(depreciation) divided by the weighted average of the market value of the
fund during the year. This figure is normally called the Total Rate of
Return.
Basis 2 - Investment earnings recognized in the Actuarial Value of Assets divided by
the weighted average of the Actuarial Value of Assets during the year.
Year Ending
September 30
Investment Rate of Return
Market Value
Actuarial Value
1990
9.1 %
9.1 %
1991
8.6
8.6
1992
8.2
8.2
1993
8.8
8.8
1994
2.4
2.4
1995
18.2
18.2
1996
5.2
5.2
1997
24.2
10.3
1998
5.3
9.2
1999
11.6
9.6
2000
6.7
9.0
2001
(7.8)
6.3
2002
(6.5)
(1.6)
2003
12.7
3.7
2004
8.6
3.9
2005
9.6
4.8
Average Compounded
Rate of Return for
Number of Years
Shown
7.8 %
7.1 %
Average Compounded
Rate of Return for Last 5
Years
5.1 %
5.1 %
M GABRIEL, ROEDER, SMITH & COMPANY
SECTION D
FINANCIAL ACCOUNTING INFORMATION
= GABRIEL, ROEDER, SMITH & COMPANY
22
FASB NO. 35 INFORMATION
A. Valuation Date
October 1, 2005
October 1, 2004
B. Actuarial Present Value of Accumulated
Plan Benefits
1. Vested Benefits
a. Members Currently Receiving Payments
$ 6,804,980
$ 5,839,925
b. Terminated Vested Members
0
104,733
c. Other Members
16,878,854
14,144,127
d. Total
23,683,834
20,088,785
2. Non - Vested Benefits
920,406
927,017
3. Total Actuarial Present Value of Accumulated
Plan Benefits: 1d + 2
24,604,240
21,015,802
4. Accumulated Contributions of Active Members
3,850,337
3,318,087
C. Changes in the Actuarial Present Value of
Accumulated Plan Benefits
1. Total Value at Beginning of Year
21,015,802
17,335,772
2. Increase (Decrease) During the Period
Attributable to:
a. Plan Amendment and Change in
Change in Actuarial Assumptions
0
0
c. Latest Member Data, Benefits Accumulated
and Decrease in the Discount Period
4,196,249
4,150,635
d. Benefits Paid
(607,811)
(470,605)
e. Net Increase
3,588,438
3,680,030
3. Total Value at End of Period
24,604,240
21,015,802
D. Market Value of Assets
19,042,660
15,777,299
E. Actuarial Assumptions - See page entitled
Actuarial Assumptions and Methods
= GABRIEL, ROEDER, SMITH & COMPANY
23
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O O O O 0)
O 0) O O O
0 0 0
.O
O O O O O
O O O O O
N N N
0 0 0
N N N
a+
r r r r r
r r
Q;
O O O O O
r r r r r
O O O O O
r r r r r
r`
O O O
r r r
GABRIEL, ROEDER, SMITH & COMPANY
24
SCHEDULE OF CONTRIBUTIONS FROM THE EMPLOYER
AND THE STATE OF FLORIDA
(GASB Statement No. 25)
Year Ending
September 30
Annual Required
Contribution
Actual
Contribution
Percentage
Contributed
1994
$ 242,083
$ 268,705
111.0%
1995
244,317
258,492
105.8
1996
404,856
438,206
108.2
1997
438,074
469,583
107.2
1998
592,522
601,235
101.5
1999
760,142
760,959
100.1
2000
853,790
853,790
100.0
2001
935,273
945,392
101.1
2002
1,005,662
1,015, 588
101.0
2003
1,425,328
1,425,328
100.0
2004
1,475,340
1,475,340
100.0
2005
1,704,041
1,704,041
100.0
M GABRIEL, ROEDER, SMITH & COMPANY
25
ANNUAL PENSION COST AND NET PENSION OBLIGATION
(GASB STATEMENT NO. 27)
Employer FYE September 30
2006
2005
2004
Annual Required Contribution (ARC)`
$ 1,931,054
$ 1,704,041
$ 1,475,340
Interest on Net Pension Obligation (NPO)
(7,571)
(8,071)
(8,608)
Adjustment to ARC
(13,433)
(13,958)
(14,925)
Annual Pension Cost (APC)
1,936,916
1,709,928
1,481,657
Contributions made
``
1,704,041
1,475,340
Increase (decrease) in NPO
**
5,887
6,317
NPO at beginning of year
(89,066)
(94,953)
(101,270)
NPO at end of year
**
(89,066)
(94,953)
Includes expected State contribution.
`* To be determined.
THREE YEAR TREND INFORMATION
Fiscal
Annual Pension
Actual
Percentage of
I
Net Pension
Year Endin
Cost APC
Contribution
A Contributed
Obligation
9/30/2003
$ 1,432,064
$ 1,425,328
99.5%
$ (101,270)
9/30/2004
1,481,657
1,475,340
99.6
(94,953)
9/30/2005
1,709,928
1,704,041
99.7
89,066
M GABRIEL, ROEDER, SMITH & COMPANY
26
REQUIRED SUPPLEMENTARY INFORMATION
GASB Statement No. 25 and No. 27
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:
Valuation date
Contribution Rates:
Employer (and State)
Plan Members
Actuarial Cost Method
Amortization Method
Remaining amortization period
Asset valuation method
Actuarial assumptions:
Investment rate of return
Projected salary increases
Includes inflation and other general increases at
Cost -of- living adjustments
M GABRIEL, ROEDER, SMITH & COMPANY
October 1, 2005
32.65%
8.60%
Frozen Entry Age
Level percent, closed
30 years
5 -year smoothed market
8.5%
9.0% (14% in service year ten)
3.5%
Not Applicable
SECTION E
MISCELLANEOUS INFORMATION
= GABRIEL, ROEDER, SMITH 8, COMPANY
27
RECONCILIATION OF MEMBERSHIP DATA
A. Active Members
1 From 1011/04
From 10/1/03
1
11
To 10/1105
To 1011104
A. Active Members
1. Number Included in Last Valuation
98
95
2. New Members
10
10
3. Non - Vested Employment Terminations
(2)
(3)
4. Vested Employment Terminations
0
(1)
5. Service Retirements
(1)
(2)
6. DROP Retirement
(1)
0
7. Disability Retirements
0
(1)
8. Deaths
0
0
9. Other
1
0
10. Number Included in This Valuation
105
98
B. Terminated Vested Members
1. Number Included in Last Valuation
2
2
2. Additions from Active Members
0
1
3. Lump Sum Payments /Refund of Contributions
0
(1)
4. Payments Commenced
0
0
5. Deaths
0
0
6. Other
(2)
0
7. Number Included in This Valuation
0
2
C. DROP Plan Members
1. Number Included in Last Valuation
2
2
2. Additions from Active Members
1
0
3. Retirements
(1)
0
4. Deaths Resulting in No Further Payments
0
0
5. Other
0
0
6. Number Included in This Valuation
2
2
D. Service Retirees, Disability Retirees and Beneficiaries
1. Number Included in Last Valuation
19
16
2. Additions from Active Members
1
3
3. Additions from Terminated Vested Members
0
0
4. Additions from DROP
1
0
5. Deaths Resulting in No Further Payments
0
0
6. Deaths Resulting in New Survivor Benefits
0
0
7. End of Certain Period - No Further Payments
0
0
8. Other
0
0
9. Number Included in This Valuation
21
19
M GABRIEL, ROEDER, SMITH & COMPANY
28
ACTIVE PARTICIPANT DISTRIBUTION
l`' GABRIEL, ROEDER, SMITH & COMPANY
Years of Service to Valuation Date
e Group
0 -1
1 -2
2 -3
3-4
4 -5
5 -9
10 -14
15 -19
20 -24
25 -29
30 -34
35 & U
Totals
25 -29 NO.
1
2
2
0
1
0
0
0
0
0
0
0
6
OT PAY
37,317
101,152
93,691
0
59,734
0
0
0
0
0
0
0
291,894
AVG PAY
37,317
50,576
46,846
0
59,734
0
0
0
0
0
0
0
48,649
30 -34 NO.
4
5
3
2
1
6
4
0
0
0
0
0
25
OT PAY
149,266
158,315
147,757
75,095
44,223
325,190
260,875
0
0
0
0
0
1,160,721
VG PAY
37,317
31,663
49,252
37,547
44,223
54,198
65,219
0
0
0
0
0
46,429
35 -39 NO.
1
0
4
2
0
4
6
1
0
0
0
0
18
OT PAY
39,183
0
207,711
98,404
0
245,097
404,723
84,661
0
0
0
0
1,079,779
VG PAY
39,183
0
51,928
49,202
0
61,274
67,454
84,661
0
0
0
0
59,988
0 -44 NO.
3
1
1
0
1
1
9
10
7
0
0
0
33
OT PAY
113,816
47,173
41,504
0
52,254
62,625
694,278
902,827
670,287
0
0
0
2,584,764
VG PAY
37,939
47,173
41,504
0
52,254
62,625
77,142
90,283
95,755
0
0
0
78,326
45 -49 NO.
0
0
1
0
0
3
3
5
1
0
0
0
13
OT PAY
0
0
42,849
0
0
208,275
219,018
470,517
72,574
0
0
0
1,013,2331
VG PAY
0
0
42,849
0
0
69,425
73,006
94,103
72,574
0
0
0
77,941
50 -54 NO.
0
0
0
0
0
0
0
4
0
0
0
0
4
OT PAY
0
0
0
0
0
0
0
331,163
0
0
0
0
331,163
VG PAY
0
0
0
0
0
0
0
82,791
0
0
0
0
82,791
55 -59 NO,
0
0
0
0
0
0
1
2
0
0
0
0
3
OT PAY
0
0
0
0
0
0
93,575
169,836
0
0
0
0
263,411
VG PAY
0
0
0
0
0
0
93,575
84,918
0
0
0
0
87,804
60 -64 NO.
0
0
0
0
0
0
1
1
0
0
0
0
2
OT PAY
0
0
0
0
0
0
103,105
62,348
0
0
0
0
165,453
VG PAY
0
0
0
0
0
0
103,105
62,348
0
0
0
0
82,727
65 -69 NO.
0
0
0
0
0
1
0
0
0
0
0
0
1
OT PAY
0
0
0
0
0
100,735
0
0
0
0
0
0
100,735
AVG PAY
0
0
0
0
0
100,735
0
0
0
0
0
0
100,735
OT NO.
9
8
11
4
3
15
24
23
8
0
0
0
105
OT AMT
339,582
306,640
533,512
173,499
156,211
941,922
1,775,574
2,021,352
742,861
0
0
0
6,991,153
VG AMT
37,731
38,330
48,501
43,375
52,070
62,795
73,982
87,885
92,858
0
0
0
66,582
l`' GABRIEL, ROEDER, SMITH & COMPANY
29
INACTIVE PARTICIPANT DISTRIBUTION
f<m GABRIEL, ROEDER, SMITH & COMPANY
Terminated
Vested
Disabled
Retired
Deceased with
Beneficiary
Total
Total
Total
Total
Age Group
Number Benefits
Number Benefits
Number Benefits
Number Benefits
Under 20
- -
- -
- -
- -
20 -24
- -
- -
- -
- -
25 -29
- -
- -
- -
- -
30 -34
- -
- -
- -
- "
35 -39
- -
- -
- -
- -
40 -44
- -
1 23,242
2 70,591
- -
45 -49
- -
4 105,326
1 50,372
- -
50 -54
- -
5 149,380
1 43,775
- -
55 -59
- -
1 17,401
3 92,545
- -
60 -64
- -
- -
2 36,761
- -
65 -69
- -
1 28,442
1 19,489
- -
70 -74
- -
- -
- -
- "
75 -79
- -
- -
1 14,200
- -
80 -84
- -
- -
- -
- -
85 -89
- -
- -
- -
- -
90 -94
- -
- -
- -
- -
95 -99
- -
- -
- -
- -
100 & Over
- -
- -
- -
- "
Total
- -
12 323,791
11 327,733
- -
Average Age
N/A
51
56
N/A
f<m GABRIEL, ROEDER, SMITH & COMPANY
SECTION F
SUMMARY OF PLAN PROVISIONS
M GABRIEL, ROEDER, SMITH & COMPANY
SUMMARY OF PLAN PROVISIONS
Effective Date
July 1, 1972.
30
Full -time police officers are eligible for membership on the first day of the month
coincident with or next following date of employment.
Compensation
Actual compensation reported to IRS for income tax purposes plus deferred
compensation.
Average Final Compensation (AFC)
Average of Compensation over the last five years of service including lump sum
payments of unused leave.
Credited Service
Total number of full years (and fraction thereof) of service as a police officer.
Normal Retirement
Eligibility The earlier of age 52 with ten years of service, or 20 years of service
regardless of age.
Benefit 3.00% of AFC multiplied by Credited Service up to a maximum of 75% of AFC.
Form of Benefit Ten Year Certain and Life Annuity, with other options available.
Early Retirement
Eligibility Age 50 with ten years of Credited Service.
Benefit Accrued pension benefit reduced by 3.0% for each year by which early
retirement date precedes the normal retirement date.
Delayed Retirement
Eligibility Any time after the Normal Retirement Date.
Benefit Calculated in the same manner as the Normal Retirement Benefit but based on
Credited Service and AFC as of the actual retirement date.
M GABRIEL, ROEDER, SMITH & COMPANY
31
Death Benefits (Pre- retirement)
Non - Service Connected:
A monthly benefit is paid to the beneficiary in an amount depending on the following:
(1) if the member is eligible for normal retirement, the benefit is equal to his
accrued benefit, and is payable for life.
(2) if the member has five years of Credited Service, the benefit is that otherwise
payable at Early or Normal retirement age.
(3) if the member has less than five years of Credited Service, a payment equal to
100% of his contributions without interest will be made to his beneficiary.
Service Connected:
A benefit equal to 50% of AFC, with a minimum equal to the accrued pension, payable
for the life of the spouse.
Disability Benefits
Non - Service Connected:
Eligibility Continuous and permanent incapacity for rendering useful and efficient
service as a police officer, and ten years of Credited Service.
Benefit 2.5% of AFC multiplied by Credited Service, but not less than 25% of
salary and not less than the accrued pension.
Service Connected:
Eligibility Continuous and permanent incapacity for rendering useful and efficient
service as a police officer.
Benefit 60% of current rate of pay, but no less than the accrued pension.
Deferred Retirement Option Plan (DROP)
Members who continue in employment past normal retirement date may either accrue
larger pensions or freeze their accrued benefit and enter the DROP. Each participant
in the DROP has an account credited with benefits not received and investment
earnings.
Termination Benefits
For a member who is not vested when he terminates, a refund of his accumulated
contributions is payable. For a member who is vested when he terminates, his vested
accrued benefit is payable at his Early or Normal Retirement Date. The vesting
schedule is as follows:
= GABRIEL, ROEDER, SMITH & COMPANY
32
Years of
Credited Service
Vested
%
Under 5
0%
5
25
6
40
7
55
8
70
9
85
10 or more
100
Contributions
From Members 8.6% of Compensation.
From the State Premium tax refunds received pursuant to Chapter 185, Florida
Statutes.
From the City The remaining amount necessary to fund the Plan properly
according to the Plan's actuary.
Changes Since Last Valuation
There have been no changes in benefits since the last valuation.
= GABRIEL, ROEDER, SMITH $ COMPANY
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.
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
contribution) or may agree to pay the amount du e
installments, Member shall pay interest at Fund's
until the total amount due is paid.
Method of purchase
Lump sum (as follows:
$ Rollover
lump sum (by rollover or cash
in installments. If paying in
actuarial assumption (8.25 %)
$ 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.
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. 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:
BSJlka - August 9, 2006
H: \PBG 0003 \Buyback \K -Prior PO with PBG PD.wpd
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:
on
(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
or
b.
from to
(Month- Day -Year)
(Month- Day -Year)
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)
�111
C. I would like to purchase United States Military service time from
to . (Please attach a copy of your Form DD214)
I 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 maybe refunded to any person who stops work for the City as a police officer with less
than ten (10) years of service.
BSJ /ka
HAPBG 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
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.
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 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
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. 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:
Signature of Notary Public - State of Florida
[ NOTARY SEAL ] Print, Type, or Stamp Commissioned Name of Notary Public
HAPBG 0003 \Buyback \K -Prior PO Servicempid
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 Member forfeits all credited service sought except that which 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
did not take an oath.
Personally known to me - OR -
Produced identification
NOTARY: Please specify type of identification provided:
[ NOTARY SEAL I
who personally appeared and who did or
Signature of Notary Public - State of Florida
Print, Type, or Stamp Commissioned Name of Notary Public
H: \PBG 00031Buyback \K -Prior Military Service.wpd
BSJ /ka
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