REQUEST FOR PROPOSAL FOR ACTUARIAL SERVICES RFP

Transcription

1 REQUEST FOR PROPOSAL FOR ACTUARIAL SERVICES RFP

2 Statement of Objectives The Fort Worth Employees Retirement Fund ( FWERF or the Fund ) is searching for an actuarial firm to conduct actuarial valuations and provide consulting and reporting services in connection with two (2) defined benefit retirement plans administered by FWERF. FWERF has issued this request for proposals (the RFP ) to solicit and evaluate proposals from qualified firms. Background Information The City of Fort Worth has created a singular, unitary defined benefit retirement system for all three groups of its employees: general employees, uniformed police (civil service), and uniformed firefighters (civil service) (the City Plan ). Originally, the city also established FWERF and its Board of Trustees to manage the assets and administer the benefits of the retirement system. In 2007, however, the Texas State Legislature enacted 6243i of Title 109, of the Texas Revised Civil Statutes which, among other things, reconstituted the Board of Trustees of the Fund (the Board ) and placed the City Plan under its exclusive administration and management. Pursuant to the authority contained in 6243i, the Board adopted administrative rules governing, among other things, the operation of FWERF and the management and administration of the City Plan (the Administrative Rules ). In addition, through those Administrative Rules, the Board also authorized and established a defined benefit retirement plan for the employees of FWERF (the Staff Plan, and together with the City Plan, the Plans ). Although the two Plans are separate and distinct, both provide retirement, disability, and death benefits to their respective members and survivors, and because the Board originally modelled the Staff Plan after the City Plan, the Plans share many similar provisions. Both Plans are funded through a combination of investment returns and employee/employer contributions and both Plans constitute qualified retirement plans under section 401(a) of the Internal Revenue Code. With respect to the City Plan, all employees of the city are members, with the exception of elected officers, nonsalaried appointed members of administrative boards and commissions, and part-time, temporary, and contract employees. However, the City Plan provides slightly different retirement benefits based on the category within which an employee falls general employee, police officer (civil service), or firefighter (civil service). In addition, due to prospective changes in benefits made by the city council in recent years, as well as two retroactive cost of living adjustment ( COLA ) changes offered to and selected by some but not all city employees, the City Plan now comprises a two-tiered structure of benefits, sub-divided among the three employee groups, and bifurcated in accordance with the COLA selection made by each individual employee. The City Plan also includes a Deferred Retirement Option Program ( DROP ) with multiple distribution methods. With respect to the Staff Plan, all members fall under a single-tier benefit structure; although recently the Board opted to alter on a prospective basis the Plan s COLA provisions and offered FWERF s employees the option to elect to also apply such change retroactively. The Staff Plan also includes a DROP, which is identical in structure to the City Plan s DROP. Currently, the Staff Plan has no retirees. FWERF s nineteen (19) employees are located at 3801 Hulen Street, Fort Worth, Texas. The two Plans respective assets are comingled for investment purposes and both Plans are administered by the Board. An actuarial valuation is completed annually for each Plan, which calculates funding status based on the current and projected assets and liabilities of each Plan. A copy of FWERF s most recent actuarial valuations for the calendar year ending December 31, 2015, may be found on the FWERF website at A copy of FWERF s most recent audit report for the fiscal year ending September 30, 2015, can be found on the FWERF s website as well. A copy of the Staff Plan and a prior Staff Plan valuation is included with this RFP as Exhibit 1. Page 2 of 10

3 Minimum Qualifications Actuarial firms must satisfy all of the requirements outlined below and timely submit all required documentation to be considered for award of a contract for services. 1. The firm must be a professional actuarial firm that has been in the business of providing actuarial valuations and pension consulting services for a minimum of five (5) years; 2. The firm must have provided actuarial services to at least three (3) public retirement systems or corporate pension plans similar to FWERF, with benefits that include a unitary, tiered, and bifurcated plan with a DROP or with a benefits structure of reasonably similar complexity; 3. The principal actuary assigned to provide services to FWERF must have a minimum of five (5) years professional actuarial experience, be an enrolled actuary, a member of the American Academy of Actuaries, and a fellow of the Society of Actuaries; 4. The principal actuary assigned to provide services to FWERF must have a minimum of five (5) years of experience testifying before legislative and/or administrative bodies in support of actuarial positions and/or the principles used in valuations or in estimating the costs of proposed legislation; 5. The firm s technology system must be capable of providing adequate and verifiable security for all client data, including providing a secure means of data transmission between the firm and FWERF and/or FWERF s custodian as well as providing encryption of client data at rest within the system using no less than 128-bit Key encryption; the firm must further have installed internal controls to ensure that client data is not stored outside of the system; and 6. The firm must not seek to unreasonably limit its liability for negligence. Scope of Services FWERF is issuing this RFP to obtain actuarial valuation services for each of the five (5) years ending December 31, 2016, 2017, 2018, 2019, and Valuations will be made on an annual basis and must be performed in accordance with, among other things, generally accepted actuarial practices. In addition, such valuations will require analysis of the Administrative Rules, the city s ordinances, and those actuarial assumptions approved by the Board and in place at the time of the particular valuation. The scope of the actuarial services shall include the following tasks: A. Valuation Services: The firm shall provide annual actuarial valuations for the City Plan and the Staff Plan, respectively. Each Plan includes so-called ad hoc COLA provisions which may constitute plan provisions that are difficult to appropriately measure using traditional valuation procedures; thus, annual valuations may require application of, among other things, Section of the Actuarial Standard of Practice No 4, Measuring Pension Obligations and Determining Pension Plan Costs or Contributions. The firm must also provide to FWERF certification letters of funding requirements for each Plan, which shall be included with each annual valuation for each Plan. A valuation for the City Plan must be completed and the report on such valuation presented to FWERF staff by the second Monday in the month of April of the year following the year for which the valuation is being provided. After discussion with FWERF staff regarding the valuation, the firm shall present its valuation of the City Plan to the Board at the Board s April meeting and shall further provide to FWERF a finalized report of its valuation by no later than April 30. A valuation for the Staff Plan must be completed and the report on such valuation presented to FWERF staff by the second Monday in the month of May of the year following the year for which the valuation is being provided. After discussion with FWERF staff regarding the valuation, the firm shall provide to FWERF a finalized report of its valuation by no later than May 31. Board meetings are generally held the 4 th Wednesday of each month. The firm shall provide twenty-five (25) bound, one (1) unbound, and one (1) electronic copy of the valuation of the City Plan and (10) bound, one (1) unbound, and one (1) electronic copy of the valuation of the Staff Plan. Page 3 of 10

4 Please note that although FWERF s fiscal year ends September 30 each year, valuation dates were changed in 2007 to coincide with the calendar year as opposed to the FWERF fiscal year to facilitate data gathering from the City. B. Experience Study: The firm shall conduct an experience study for the City Plan, provide a report to the Board on the results of the study, and further provide recommendations to the Board regarding the actuarial assumptions to be used going forward in connection with the valuation and administration of the Plan. The firm shall present its initial report and recommendations to the Board at the Board s March, 2019 meeting, with a final report to be provided to the Fund no later than April 30, The experience study shall cover the prior 3-year period ending December 31, In addition, the firm shall provide no later than February 15, 2019, an executive summary of its recommended assumptions to the FWERF Staff for delivery to the city in accordance with the requirements of 6243i. C. Consultation and Support Services: 1. Provide actuarial consultation and advice on specific technical, policy, or administrative issues identified by FWERF management or the Board, including consultation and advice regarding funding method and contribution rate. Such consultation and advice shall be rendered through periodic meetings, routine telephone consultations, and correspondence as required by FWERF. The consulting actuary shall attend meetings of the Board and make presentations as requested, including any joint meeting between the Board and the city council. 2. Develop and implement a transition plan from the current actuary, if necessary. 3. Provide recommendations to the Board regarding the actuarial assumptions to be used going forward in connection with the valuation and administration of the Staff Plan (because the Staff Plan currently has no retirees, assumptions to date have been based generally on the experience study performed on the City Plan). 4. Inform FWERF of any new developments in the actuarial profession and/or retirement industry and provide consultation and advice with respect to any material effects, actual or potential, on FWERF, the City Plan, and/or the Staff Plan. 5. Provide support to FWERF staff regarding the actuarial valuations and experience study to be provided. 6. Provide an annual training session to the Board and/or staff on various topics, such as training on the proper way to read and interpret actuarial studies and reports. Such training may be provided during the annual valuation presentation to the Board. 7. Develop and provide actuarial tables and factors for the calculation of benefits provided under the Plans, including service purchases and annuity tables for a DROP annuity distribution method. 8. Prepare GASB-27, GASB-67 and GASB-68 reporting information for the Plans for each of the five years listed above (GASB 68 reporting is required only for the Staff Plan). Please note that because FWERF s fiscal year ends on September 30, GASB analyses and reporting for each year will require roll-forward analyses into the following year and beyond the fiscal year end. Accordingly, the final valuation year, 2020, will necessarily require services performed after September 30, For each of the five years listed above, coordinate with FWERF staff and provide the necessary schedules and/or reports for the actuarial, financial, and statistical section(s) of FWERF s Comprehensive Annual Financial Report (the CAFR ). Schedules and reports shall be provided in accordance with the Government Finance Officers Association s ( GFOA ) best practices and sufficient to fulfill the requirements for the GFOA s Certificate of Achievement. All such schedules and reports must be provided to FWERF no later than February 1 of the second year following the year for which the CAFR is being issued. 10. Perform actuarial valuations and calculations when requested by staff and present the findings of the same as requested, including as required by 6243i in connection with proposed amendments to the Administrative Rules. 11. Calculate benefit limits under Internal Revenue Code section 415. Page 4 of 10

5 12. Calculate annual roll-forward estimate of valuation profile for inclusion in fiscal year financial audit (fiscal year ending September 30). 13. Coordinate with FWERF staff and the city s actuarial auditor in connection with the state mandated audit of FWERF s actuarial valuation. Proposal Submission Requirements and Timeline A. Content of Proposal: A proposal submission should have the following content: Background: 1. A title page indicating the date, subject, firm name, address, phone number, contact name, title, contact phone number, and contact address. Please provide the address of the office that will service this account. 2. An executive summary (optional). 3. A general description of your firm, its primary business, financial position, and other descriptive information. 4. A brief history of your firm s involvement in the actuarial consulting business, including the year of organization, current ownership, and affiliations. Discuss how many years your firm has provided actuarial consulting services to public pension plans. Include an organizational chart of your firm. 5. A discussion on any material developments in the ownership structure of your firm over the past three (3) years. Describe in detail any planned changes in the firm s operations. 6. A discussion on what you consider to be your firm s consulting specialties, strengths, and limitations. Include a listing of services your firm offers to clients in addition to actuarial consulting services. 7. Describe the resources your firm has that specifically address the needs of public sector clients. 8. Describe how your firm controls the cost of services rendered for a client. 9. Describe whether and to what extent your firm utilizes external benefits, legal, or other expertise, in providing actuarial services. 10. Please attach your firm s current Annual Financial Report. 11. Describe whether and how your firm meets the minimum qualifications enumerated in this RFP. 12. Provide any additional information about your firm, approach to the work effort, staff, etc., that you feel appropriate. Consultant Team: 13. Provide the number of actuarial consultants employed by the firm. 14. Provide name, address, business phone, business fax, address, and biography, including prior experience with conducting public sector valuations, for each consultant that will be assigned to FWERF. 15. Describe the role of each consultant for this assignment. 16. Describe your team s experience with similar work performed for other public retirement systems or corporate pensions. 17. State whether the individuals assigned to the work have any responsibilities other than providing actuarial services, and if so, specify those responsibilities. 18. Describe your firm s backup procedures in the event that key personnel in this assignment should leave the firm. 19. Describe the turnover in key professional personnel at your firm in each of the last five (5) years. 20. Discuss what policies are in effect to control the workload as it relates to the number of clients serviced by each consultant. Identify the average number of accounts that a consultant may handle. Page 5 of 10

6 Prior Experience: 21. List current public pension system clients for whom you perform actuarial valuations and serve as the primary actuary. Include a list of public pension clients added and lost in the last three (3) years. Also include a statement on how many defined benefit clients your firm services, both public and private. 22. List three (3) public employee retirement system clients for whom the firm has provided professional actuarial services within the past five (5) years. One of the reference clients must be a client who has been serviced by the proposed team. For each reference listed, include client name, address, telephone number, and name of a contact person. 23. Provide a sample public sector valuation that your firm has completed recently. The sample should be of a client with a unitary, tiered, and bi-furcated system of benefits or of a system of reasonably similar complexity. Provision of Services: 24. Provide a statement regarding the firm s capability of providing those services set forth in the Scope of Services above. 25. Describe the approach your firm would follow in conducting actuarial valuations of the pension plans administered by FWERF. Include a narrative on the strengths and limitations of your approach to actuarial services for a public sector unitary, tiered, and bifurcated pension plan. Also, include a description of your approach to the transition, if applicable, from our current actuary. 26. Discuss the theory and methodology for the actuarial assumptions your firm employs. Please include a description of your method for developing asset class assumptions. 27. Describe the procedure used by your firm in reconciling or scrubbing the data provided annually by FWERF. FWERF is focused on providing the most accurate data possible, therefore it is interested in the method by which your firm will identify and communicate potential variances from year to year or single year outliers to focus on correction, if applicable. 28. Describe your approach to measuring funding status and funding progress with respect to overall solvency as it relates to the assessment of trends over several actuarial valuations. 29. Describe your approach to monitoring and complying/implementing the current mandatory provisions of the laws, regulations, and industry guidance relating to actuarial valuations and the provision of actuarial services. 30. Describe your approach to monitoring and analyzing and the applicable legal parameters/restrictions under which FWERF must operate. 31. Describe your process for maintaining a continuous review of actuarial trends and policies in the actuarial profession. 32. Describe your firm s approach to developing and providing recommendations regarding the amortization of unfunded liabilities. 33. Describe your firm s fee structure itemized by type of service for all services as described in this RFP. i. Annual Valuation for the City Plan ii. Annual Valuation for the Staff Plan iii. Experience Study for 3-Year Period ending December 31, 2018, for the City Plan iv. Other services as described in paragraph C of the Scope of Services section of this RFP. 34. State whether the actuarial firm intends to use subcontractors for the provision of services to FWERF; if the firm does so intend, please i. Disclose the name(s) of the subcontractor(s), the service(s) to be subcontracted and how the contractor controls cost, quality, timeliness and confidentiality of these service(s). ii. Describe the contractual arrangement contemplated with each subcontractor and describe generally the control/delegation of responsibilities anticipated in that arrangement. Page 6 of 10

7 Technology: RFP Describe the information that you anticipate will be required to be provided by FWERF for your firm to perform the services requested and the extent of staff and Board involvement necessary to ensure successful and timely actuarial valuations and the provision of actuarial services. 36. Provide edits and comments, if any, to the proposed contract attached hereto. 37. Describe the capabilities of your valuation system(s) and your computer hardware support. 38. Describe your approach to the development and maintenance of valuation software. 39. Describe the hardware and software systems that you expect to use in your production of actuarial valuations, reports, and services to FWERF. 40. Describe your firm s disaster recovery plan and data sensitivity/security policies. 41. Describe whether and how your system will provide the security required by paragraph 5 of the Minimum Qualifications section of this RFP. Conflicts of Interest and Standard of Conduct: 42. Describe how your firm identifies and manages conflicts of interest. 43. Describe any potential conflicts of interest your firm may have in servicing FWERF. 44. State whether any member of your firm has provided any gifts, travel and/or lodging expenses, entertainment, or meals to any member of the Board or FWERF staff during the past 12 months and, if so, please further describe the amount of the item provided and the reason for providing it. 45. List and describe any familial or professional relationship you have with any Board member or FWERF staff. 46. Describe any litigation or regulatory proceedings that are currently pending against your firm or which have been concluded within the past five (5) years. Describe the nature of any such action, the current status, and final disposition. 47. State whether your firm has a written code of conduct or a set of standards for professional behavior and, if so, describe that code and/or standards and explain how such code and/or standards are implemented, monitored, and enforced. 48. Describe the process by which consultants recommendations to clients such as FWERF are reviewed and monitored by your firm and a statement regarding whether your firm adheres to a level of consistency in consultant recommendations. 49. State whether your firm has ever been censured by any regulatory body and, if so, please provide a description of the matter. B. Proposal Submission Timeline and Additional Information Timeline: May 16, 2016 May 30, 2016 June 15, 2016 July 1, 2016 August Board Meeting RFP released to actuarial firms and posted on Fund s website Deadline for question submission from proposers Deadline for FWERF s responses to questions Deadline for submission of proposals ( Proposal Due Date ) Finalist Presentations (if requested); FWERF staff recommendation; Board decision on award of contract (presentations, recommendation, and decision will be made at the August Board meeting, which is currently scheduled for August 24, 2016) Page 7 of 10

8 Question submissions must be ed to Firms shall submit six (6) copies of their written proposal in a sealed envelope labeled Proposal for Actuarial Services bearing the name and address of the proposer and signed by an authorized official of the firm. The submission shall be sent to: Fort Worth Employees Retirement Fund 3801 Hulen Street, Suite 101 Fort Worth, TX ATTN: Joelle Mevi, Executive Director / CIO Proposals must be received on or before the close of business (5:30 pm CDT) on the Proposal Due Date. Failure to meet the deadline may result in rejection of the proposal. FWERF reserves the right to require that the proposing firms provide, at their sole expense, live presentations to the Board at its offices in Fort Worth, TX in connection with their respective proposals. Failure to provide such presentation as requested may result in the rejection of the proposal. All proposals submitted become the property of FWERF and will not be returned. Any information included in a firm s proposal that the firm considers proprietary or confidential must be so marked. Such marking, however, is not determinative as to whether the information is considered confidential under Texas law. If the firm wishes to submit changes or addenda to a submitted proposal, such changes and/or addenda must be submitted in writing prior to the Proposal Due Date, signed in original ink by an authorized official of the firm, cross-referenced clearly with the relevant proposal section(s), and provided in a clearly marked sealed envelope. If the firm chooses to withdraw its submitted proposal at any time, a notice of withdrawal must be provided in writing and received by FWERF prior to Proposal Due Date. All proposals shall be considered valid offers for acceptance for a period of 120 days following the earlier of the Proposal Due Date or the award of the contract. FWERF shall not be liable for any costs incurred by a firm in connection with this RFP, including any expense incurred that is in any way related to the firm s development and submission of its proposal. *** Nonconformance with any submission requirement(s) may result in rejection of the proposal *** Pricing Schedule Firms shall submit a not to exceed cost proposal within their respective proposals that includes a fee schedule for each year of the contract as well as hourly rates for each member of the consultant team for any work requested that is outside of the scope of work described in this RFP. The firm s cost proposal must completely enumerate all costs and pricing options associated with the services the actuarial firm will provide. Each firm is solely responsible for the accuracy and completeness of its cost proposal. Firms may provide the cost proposal directly within the provided Schedule 1 of the proposed contract. Firm Travel Expenses: FWERF does not cover any travel expenses. Selection Process FWERF will evaluate actuarial firm proposals for timeliness, completeness, and compliance with the requirements presented in this RFP. Failure to meet all of these requirements, or substantial deviations from Page 8 of 10

9 specifications or other proposal requirements, may result in rejection of the entire proposal without further consideration. FWERF will review all proposals and firm qualifications to determine rankings. In evaluating or ranking proposals, FWERF, in its sole judgement and discretion and without the need to state any reason or justification, may reject any or all proposals. The award shall be made to the firm whose proposal is deemed, in FWERF s sole discretion, most advantageous and of best value to FWERF. The factors to be utilized by FWERF in evaluating the proposals will be weighted as follows: Ability to perform the services requested in this RFP; the clarity, completeness, and content of the firm s proposed work plan and deliverables; the content and extent of edits/comments to the proposed contract; and the firm s ability to meet FWERF s timetable: 40% Experience with public pension plan administration processes and procedures, actuarial valuations at other public retirement systems, and, more specifically, with actuarial valuations for tiered and bifurcated benefit structures for unitary plans: 20% Cost: 25% Quality of references provided with preference given to references that include experience with the actuarial firm s proposed staff: 15% FWERF reserves the right to contact the proposers individually or as a group to, among other things, request additional information or address minor issues of completeness or compliance with respect to particular proposals. However, other than such contact initiated by FWERF and the allowable submissions and presentations as set forth above, no respondent may contact any member of the Board or FWERF staff during the proposal period, which begins on May 16, 2016, and ends at the conclusion of the Board s August meeting currently scheduled for August 24, Any firm that is a current vendor of FWERF that is responding to this RFP is expected to limit its contact with FWERF stemming from its current provision of services as follows: (a) ensuring contact with only those FWERF employees with whom the firm ordinarily interacts; (b) avoiding contact with Board trustees other than at regularly scheduled meetings or as otherwise absolutely necessary; (c) ensuring that the content of all contact with FWERF employees or trustees is limited to current business and avoiding all discussion that in any way concerns the RFP or the firm s proposal. FWERF reserves the right to require additional information from proposers, and to conduct necessary investigations, including onsite due diligence, to determine responsibility of proposers and/or to determine accuracy of proposal information. FWERF may contact firm references during the initial evaluation or at a later stage in the evaluation process. Contract Negotiation In connection with the services to be provided, the selected firm will be required to execute the proposed written contract attached hereto as Exhibit 2. Written comments and/or edits to the proposed contract must be submitted as a part of the firm s proposal. FWERF will consider the substance and extent of such written edits/comments in evaluating the proposal submitted. Substantial edits are discouraged. FWERF reserves the right to further negotiate the terms and conditions of the proposed contract with the selected firm. Page 9 of 10

10 Rights Reserved To FWERF FWERF reserves the right to reject any and all proposals in whole or in part and to waive technical defects, irregularities, and omissions if, in its judgment, the best interest of FWERF will be served thereby. Page 10 of 10