CITY OF MIAMI GENERAL EMPLOYEES AND SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN

Transcription

1 CITY OF MIAMI GENERAL EMPLOYEES AND SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN Actuarial Valuation Report as of October 1, 215

2 TABLE OF CONTENTS Page Number Letter to the Board of Trustees 1 Liabilities Table I Summary of Valuation Results 4 Table II Gain and Loss Analysis 5 Table III Unfunded Liability Bases 6 Table IV Additional Disclosures 7 Table Va Present Value of Accrued Benefits (SB 1128) 8 Table Vb Present Value of Accrued Benefits (Plan Assumptions) 9 Table VI Information Req. by Florida Statute (Chap.112) 1 Assets Table VIIa Development of Actuarial Value of Assets 16 Table VIIb Assets of the Fund 17 Table VIIc Historical Asset Information 18 Data Table VIIIa Summary of Member Data 19 Table VIIIb Data Reconciliation 2 Table VIIIc Active Data 21 Table VIIId Age-Service Salary Table 22 Table VIIIe Retiree Data 23 Table VIIIf Comprehensive Annual Financial Report Information 24 Assumptions Table IXa Actuarial Assumptions and Methods 26 Table IXb Assumption and Method Changes 3 Plan Provisions Table Xa Plan Provisions 31 Table Xb Plan Amendments 34 SANITATION EMPLOYEES RETIREMENT TRUST

3 Cavanaugh Macdonald C O N S U L T I N G, L L C The experience and dedication you deserve February 1, 216 Board of Trustees City of Miami General Employees and Sanitation Employees Retirement Trust Staff Pension Plan 291 Bridgeport Avenue Coconut Grove, Florida Dear Members of the Board: This report presents the results of the actuarial valuation of the City of Miami General Employees and Sanitation Employees Retirement Trust Staff Pension Plan for the plan year beginning October 1, 215. The purpose of this report is to provide a summary of the funded status of the plan as of October 1, 215 and to determine the minimum required contribution amount for the 216/217 fiscal year and to satisfy State requirements. In addition, this report provides a record of any plan amendments or other plan changes affecting the financial status of the fund. Our calculations were prepared based on member data and financial information provided by the Retirement Trust office. Summary of Valuation Results Currently, the trust receives contributions from the City of Miami and from active members. The amount of the City contributions varies from year to year, while the member contributions are equal to 1.% of payroll. After taking into account expected member contributions, the total required contribution from the City is $198,553, or % of covered payroll, for the 217 fiscal year payable on October 1, 216. In comparison, the required contribution for the 216 fiscal year was $269,54, or % of covered payroll. The City Ordinance requires that as a minimum, all fiscal year contributions made by the City to the Retirement Trust shall be made quarterly, in equal payments, on the first day of each quarter. On this basis, the total required City contribution for the 216/217 fiscal year is $24,4, and the City is required to make minimum quarterly contributions of $51,1 beginning on October 1, 216. The valuation is based on a series of actuarial assumptions, including an interest rate of 7.6% per year and annual pay increases of 6.%. Experience gains and losses result when the actual experience of the plan (such as asset return, pay increases, turnover, deaths, etc.) is different from that expected by the actuarial assumptions. 355 Busbee Pkwy, Suite 25, Kennesaw, GA 3144 Phone (678) Fax (678) Offices in Englewood, CO Off Kennesaw, GA Bellevue, NE

4 The plan s unfunded liability was projected to be $1,685,439 as of October 1, 215, taking into account expected contributions from the City of $269,54 based on the October 1, 214 valuation. The actual unfunded liability is $1,65,66. The decrease of ($619,779) in the unfunded liability is mainly due to one member leaving the DROP and application of the Internal Revenue Code Section 415 maximum benefit which resulted in a reduction of approximately $48, per year in the benefit payable to the member from the Staff qualified pension plan. The $48, annual benefit will be paid in the future from the Staff Excess benefit plan. This actuarial gain to the Staff plan was somewhat offset by the impact of lowering the valuation interest rate assumption from 7.7% to 7.6%. The total decrease in City contribution to amortize the unfunded liability is $72,569 per year. A summary of the amortization payments is presented in Table III. A summary of the results of the valuation and the contribution requirements is presented in Table I. The disclosure information required by Chapter 112, Florida Statutes, is presented in Table VI. Tables VIIa through VIIc provide information about the fund s assets and historical contributions. In particular, Table VIIa provides an asset reconciliation between October 1, 214 and October 1, 215 and calculation of the actuarial value of assets. Table VIIb provides a breakdown of the fund assets by investment type and Table VIIc provides a historical record of the asset growth. Tables VIIIa through VIIIe provide a variety of useful information concerning the participant population. Table VIIIf provides information to be included in the Comprehensive Annual Financial Report. Discussion of Valuation Assumptions, Assets, Methods, Plan Provisions Based on the Board s investment policy and the forecast of future returns provided by the investment consultant we recommended reducing the assumed investment rate of return from 8.1% to 7.6% per year phased in over a five-year period. For the current valuation, the valuation interest rate was lowered from 7.7% to 7.6%. To promote stability in annual contribution rates to the Staff Plan, effective with the October 1, 22 valuation the actuarial asset method was changed to a smoothed market value average over three years. The assets used in the valuation are based on an actuarial value of $3,269,345 as of October 1, 215. The market value of assets as of October 1, 215 reported by the Retirement Trust Office is $3,145,336. Table VIIa presents a calculation of the actuarial value of assets. A summary of the actuarial assumptions and methods used in our valuation is presented in Table IXa; the enclosed Table Xa presents a summary of the plan provisions of the Staff Pension Plan. There have been no changes in the benefit provisions of the Plan since the previous valuation. Florida Requirements and Accounting Information The information required under Florida Statues, Chapter 112 is presented in Table VI. The enclosed Table IV presents additional disclosure information including the Schedule of Funding Progress.

5 Actuarial Certification This actuarial valuation 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 and, in my opinion, the techniques and assumptions used are reasonable and meet the requirements and intent of Part VII, Chapter 112, Florida Statutes. There is no benefit or expense to be provided by the plan and/or paid from the plan s assets for which liabilities or current costs have not been established or otherwise 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. This is to certify that the independent consulting actuary is a member of the American Academy of Actuaries and has experience in performing valuations for public retirement systems, that the valuation was prepared in accordance with principles of practice prescribed by the Actuarial Standards Board, and that the actuarial calculations were performed by qualified actuaries in accordance with accepted actuarial procedures, based on the current provisions of the Retirement Trust and on actuarial assumptions that are internally consistent and reasonably based on the actual experience of the Retirement Trust. Future actuarial results may differ significantly from the current results presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period or additional cost or contribution requirements based on the plan s funded status); and changes in plan provisions or applicable law. Since the potential impact of such factors is outside the scope of a normal annual actuarial valuation, an analysis of the range of results is not presented herein. The undersigned is a member of the American Academy of Actuaries and meets the Qualification Standards of the American Academy of Actuaries to render actuarial opinion contained herein. Respectfully submitted, Jose I. Fernandez, ASA, EA, FCA, MAAA Micki R. Taylor, ASA, EA, FCA, MAAA Principal and Consulting Actuary Senior Actuary Enrolled Actuary No Enrolled Actuary No JIF/mrt S:\Miami GESE\Valuation\ \Report\Miami GESE STAFF Valuation Report.Docx

6 SUMMARY OF VALUATION RESULTS TABLE I As of As of October 1, 214 October 1, Number of Members a. Active Members 3 3 b. Inactive Members (due contribs. refund) 1 1 c. Deferred Vested Members d. Retired Members: i. Non-disabled 7 7 ii. Disabled iii. Beneficiaries iv. Sub-total 7 7 e. Total Members Total Annual Compensation $164,547 $172, Total Annual Benefit Payments $339,98 $292, Derivation of Normal Cost a. Present Value of Future Benefits $5,294,332 $4,783,219 b. Actuarial Value of Assets $3,62,215 $3,269,345 c. Actuarial Accrued Liability $4,852,691 $4,335,5 d. PV of Future Member Contributions $184,293 $183,3 e. PV of Future Normal Costs $257,348 $264,914 f. Present Value of Future Payroll $1,842,927 $1,833,1 g. Normal Cost Accrual Rate 15.89% 16.36% h. Normal Cost $26,15 $28, Unfunded Liability a. Actuarial Accrued Liability $4,852,691 $4,335,5 b. Actuarial Value of Assets $3,62,215 $3,269,345 c. Unfunded Liability $1,79,476 $1,65,66 (item 5.a. minus 5.b., not less than zero) 6. Total Required Minimum City Contribution 215/216 Fiscal Year 216/217 Fiscal Year a. Normal Cost $26,15 $28,218 b. Amortization of Unfunded Liability $242,94 $17,335 c. Minimum Required Contribution $269,54 $198,553 As a percentage of covered payroll % % 7. Total Recommended Contribution Payable Quarterly $276,584 $24,4 Quarterly $69,146 $51,1 On October 1, 215 October 1, 216 Fiscal Year SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 4

7 GAIN AND LOSS ANALYSIS TABLE II 1. Actual Unfunded Accrued Liability as of October 1, 214 $1,79, Plan sponsor normal cost for this plan year $24,28 3. Interest on 1. and 2. $139, Plan sponsor contribution for this plan year (including amounts expected to be paid) ($291,87) 5. Interest on 4. ($11,27) 6. Changes due to a. + b. + c. +d. a. assumptions $49,974 b. funding method $ c. plan amendments $ d. actuarial (gain)/loss ($636,512) ($586,538) 7. Total current unfunded actuarial accrued liability $1,65,66 8. Items Affecting Calculation of Accrued Liability a. Plan provisions reflected in the unfunded accrued liability (see Table Xa on page 31) b. Plan amendments reflected in item 6.c. above (see Table Xb on page 34) c. Actuarial assumptions and methods used to determine actuarial accrued liability and normal cost (see Table IXa on page 26) d. Changes in actuarial assumptions and methods reflected in items 6.a. and 6.b. above (see Table IXb on page 3) SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 5

8 UNFUNDED LIABILITY BASES TABLE III Date Established Original Amount Outstanding Balance as of October 1, /215 Amortization Payment Outstanding Balance as of October 1, /216 Amortization Payment Years Remaining as of October 1, 215 Initial Unfunded $358,553 $282,39 $31,285 $272,762 $31, /1 Experience Loss $152,12 $31,741 $17,726 $16,459 $17, /2 Experience Loss $134,832 $4,665 $15,694 $28,12 $15, /2 Change in Asset Method ($36,383) ($21,33) ($3,67) ($19,32) ($3,657) 7 22/3 Experience Loss $27,414 $1,626 $3,187 $8,257 $3, /4 Experience Gain ($24,21) ($95,279) ($23,675) ($78,94) ($23,622) 4 24/5 Experience Gain ($65,47) ($35,159) ($7,536) ($3,33) ($7,516) 5 25/6 Experience Loss $61,473 $37,49 $7,112 $33,177 $7,9 6 25/6 Method Change ($179,695) ($137,979) ($18,26) ($13,577) ($17,937) 11 26/7 Experience Loss $31,646 $22,552 $34,847 $183,32 $34, /8 Method Change $25,86 $21,667 $2,583 $2,752 $2, /8 Experience Gain ($56,365) ($41,133) ($6,53) ($37,797) ($6,478) 8 28/9 Experience Loss $149,129 $116,859 $17,181 $18,676 $17, /1 Experience Loss $44,911 $367,485 $5,729 $345,52 $5, /1 Assumption Change $12,123 $1,923 $1,21 $1,554 $1, /11 Experience Loss $14,196 $12,486 $1,631 $11,816 $1, /11 Assumption Change $4,569 $37,662 $4,47 $36,515 $4, /12 Experience Loss $93,668 $833,676 $13,744 $794,125 $13, /12 Assumption Change $52,232 $49,82 $5,26 $48,45 $5, /13 Experience Loss $29,884 $28,766 $3,429 $27,552 $3, /13 Assumption Change $53,561 $52,365 $5,336 $51,61 $5, /14 Experience Gain ($71,73) ($71,73) ($8,152) ($68,393) ($8,14) /14 Assumption Change $55,418 $55,418 $5,519 $54,166 $5, /15 Experience Gain* ($669,753) $ $ ($669,753) ($76,346) /15 Assumption Change $49,974 $ $ $49,974 $4,939 2 $1,581,65 $1,79,476 $242,94 $1,65,66 $17,335 Projected Unfunded Date Liability October 1, 215 $1,65,66 October 1, 216 $976,316 October 1, 217 $897,892 October 1, 218 $829,179 October 1, 235 $ *The total experience loss (gain) for the 214/215 plan year of $(636,512) is offset by contribution timing differences adjusted for interest equal to $(33,241). SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 6

9 ADDITIONAL DISCLOSURES TABLE IV 1. Schedule of Funding Progress Actuarial UAAL Actuarial Actuarial Accrued Unfunded as % of Valuation Value of Liability AAL Funded Covered Covered Date Assets (AAL) (UAAL) Ratio Payroll Payroll (a) (b) (b) - (a) (a)/(b) (c) [(b) - (a)]/(c) 1/1/211 2,136,978 3,139,899 1,2, % 735, % 1/1/212 2,455,245 4,364,592 1,99, % 354, % 1/1/213 2,687,241 4,591,622 1,94, % 298, % 1/1/214 3,62,215 4,852,691 1,79, % 164, % 1/1/215 3,269,345 4,335,5 1,65, % 172, % 2. Method and assumptions used in calculations of actuarially determined contributions Valuation date: October 1, 215 Actuarial cost method: Entry Age Normal Amortization method: Level dollar amounts, closed Remaining amortization period: 1 to 2 years Asset valuation method: 3 year smoothed market Actuarial assumptions: Investment rate of return* 7.6% Projected salary increases* 6.% *Includes inflation at 3.5% Cost of living adjustments None SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 7

10 PRESENT VALUE OF ACCRUED BENEFITS (SB 1128) TABLE Va Shown below is the development of the Total Present Value of Accrued Benefits for the Plan. The calculations were performed in accordance with Chapter Laws of Florida (SB 1128) which requires the calculation of the present value of accrued benefits be calculated using the Florida Retirement System s assumed rate of return of 7.75% in order to promote comparability of actuarial data between local plans. 1. Actuarial Present Value of Accrued Benefits Actuarial Present Value of Accrued Benefits* As of As of October 1, 214 October 1, 215 a. Vested Accrued Benefits: i. Retired members, beneficiaries, and deferred vested members $4,396,383 $3,759,447 ii. Active and inactive members* $187,692 $228,356 iii. Sub-total $4,584,75 $3,987,83 b. Non-vested Accrued Benefits $29,261 $41,475 c. Total Benefits $4,613,336 $4,29, Statement of Changes in Total Actuarial Present Value of All Accrued Benefits a. Actuarial Present Value as of October 1, 214 $4,613,336 b. Increase (Decrease) During 214/215 Plan Year Attributable to: i. Interest $357,534 ii. Benefits accumulated/experience ($61,293) iii. Benefits paid ($34,299) iv. Plan amendments $ v. Changes in actuarial assumptions or methods $ vi. Net increase (decrease) ($584,58) c. Actuarial Present Value as of October 1, 215 $4,29, Items Affecting Calculation of Actuarial Present Value of Accrued Benefits a. Plan provisions reflected in the accrued benefits (see Table Xa on page 31) b. Plan amendments reflected in item 2.b.iv. above (see Table Xb on page 34) c. Actuarial assumptions and methods used to determine present values (see Table IXa on page 26) d. Changes in actuarial assumptions and methods reflected in item 2.b.v. above (see Table IXb on page 3) * The actuarial present value of vested benefits for active and inactive members includes nonforfeitable accumulated member contributions in the amount of $127,242 as of October 1, 214 and $149,193 as of October 1, 215. SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 8

11 PRESENT VALUE OF ACCRUED BENEFITS (PLAN ASSUMPTIONS) TABLE Vb Shown below is the development of the Total Present Value of Accrued Benefits for the Plan. The calculations were performed using the Plan s discount rate of 7.6% which was adopted in April 212 and first used in the October 1, 215 valuation. 1. Actuarial Present Value of Accrued Benefits As of As of October 1, 214 October 1, 215 a. Vested Accrued Benefits: i. Retired members, beneficiaries, and deferred vested members $4,42,898 $3,822,52 ii. Active and inactive members* $189,92 $233,47 iii. Sub-total $4,69,99 $4,55,99 b. Non-vested Accrued Benefits $29,655 $43,87 c. Total Benefits $4,639,645 $4,98, Statement of Changes in Total Actuarial Present Value of All Accrued Benefits a. Actuarial Present Value as of October 1, 214 (7.7% interest) $4,639,645 b. Increase (Decrease) During 214/215 Plan Year Attributable to: i. Interest $357,253 ii. Benefits accumulated/experience ($64,332) iii. Benefits paid ($34,299) iv. Plan amendments $ v. Changes in actuarial assumptions or methods $46,729 vi. Net increase (decrease) ($54,649) c. Actuarial Present Value as of October 1, 215 (7.6% interest) $4,98, Items Affecting Calculation of Actuarial Present Value of Accrued Benefits a. Plan provisions reflected in the accrued benefits (see Table Xa on page 31) b. Plan amendments reflected in item 2.b.iv. above (see Table Xb on page 34) c. Actuarial assumptions and methods used to determine present values (see Table IXa on page 26) d. Changes in actuarial assumptions and methods reflected in item 2.b.v. above (see Table IXb on page 3) * The actuarial present value of vested benefits for active and inactive members includes nonforfeitable accumulated member contributions in the amount of $127,242 as of October 1, 214 and $149,193 as of October 1, 215. SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 9

12 INFORMATION REQ. BY FLORIDA STATUTE (CHAPTER 112) TABLE VI After Assumption Change Actuarial Valuation prepared as of: October 1, 214 October 1, Participant Data a. Active members: i. Number 3 3 ii. Total annual payroll $164,547 $172,459 b. Retired members (other than disableds): i. Number 7 7 ii. Total annualized benefit $339,98 $292,125 c. Beneficiaries receiving benefits: i. Number ii. Total annualized benefit $ $ d. Disabled members receiving benefits: i. Number ii. Total annualized benefit $ $ e. Terminated vested and inactive members: i. Number 1 1 ii. Total annualized benefit $ $ 2. Assets a. Actuarial value of assets $3,62,215 $3,269,345 b. Market value of assets $3,19,324 $3,145, Liabilities a. Present value of all future expected benefit payments: i. Active and inactive members: Retirement benefits $84,163 $927,477 Return of contributions $33,271 $33,24 Total $873,434 $96,717 ii. Terminated vested members $ $ iii. Retired members and beneficiaries: Retired (other than disabled) and beneficiaries $4,42,898 $3,822,52 Disabled members $ $ Total $4,42,898 $3,822,52 iv. Total present value of all future expected $5,294,332 $4,783,219 SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 1

13 INFORMATION REQ. BY FLORIDA STATUTE (CHAPTER 112) TABLE VI (CONTINUED) Actuarial Valuation prepared as of: After Assumption Change October 1, 214 October 1, 215 b. Actuarial accrued liability $4,852,691 $4,335,5 c. Unfunded actuarial accrued liability $1,79,476 $1,65,66 (please reference Table III for details concerning the unfunded liability bases and schedule of amortization payments) 4. Actuarial Present Value of Accrued Benefits $4,613,336 $4,29,278 (please reference Table V for details concerning the present value of accrued benefits) 5. Pension Cost a. Normal cost contributed by City $26,15 $28,218 b. Payment to amortize unfunded liability $242,94 $17,335 c. Subtotal (not less than zero) $269,54 $198,553 d. Normal cost contributed by members $16,455 $17,246 e. Total required contribution $285,59 $215,799 As a percentage of payroll: % % f. Amount to be contributed by members $16,455 $17,246 As a percentage of payroll: 1.% 1.% g. Amount to be contributed by City $269,54 $198,553 As a percentage of payroll: % % Fiscal Year 6. Past Contributions 213/ /215 a. Required contribution $315,345 $31,925 b. Actual contribution made by: i. City of Miami $291,968 $291,87 ii. Members $23,377 $19,838 SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 11

14 INFORMATION REQ. BY FLORIDA STATUTE (CHAPTER 112) TABLE VI After Assumption Change Actuarial Valuation prepared as of: October 1, 214 October 1, Other disclosures a. Present value of active members': i. Future salaries: at attained age $1,842,927 $1,833,1 at entry age N/A N/A ii. Future contributions: at attained age $184,293 $183,3 at entry age N/A N/A b. Present value of future normal contributions from City $257,348 $264,914 c. Present value of future expected benefit payments for active members at entry age N/A N/A d. Amount of active and inactive members' accumulated contributions $127,242 $149,193 (CONTINUED) SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 12

15 INFORMATION REQ. BY FLORIDA STATUTE (CHAPTER 112) TABLE VI Before Assumption Change Actuarial Valuation prepared as of: October 1, 214 October 1, Participant Data a. Active members: i. Number 3 3 ii. Total annual payroll $164,547 $172,459 b. Retired members (other than disableds): i. Number 7 7 ii. Total annualized benefit $339,98 $292,125 c. Beneficiaries receiving benefits: i. Number ii. Total annualized benefit $ $ d. Disabled members receiving benefits: i. Number ii. Total annualized benefit $ $ e. Terminated vested and inactive members: i. Number 1 1 ii. Total annualized benefit $ $ 2. Assets a. Actuarial value of assets $3,62,215 $3,269,345 b. Market value of assets $3,19,324 $3,145, Liabilities a. Present value of all future expected benefit payments: i. Active and inactive members: Retirement benefits $822,263 $98,459 Return of contributions $33,263 $33,235 Total $855,526 $941,694 ii. Terminated vested members $ $ iii. Retired members and beneficiaries: Retired (other than disabled) and beneficiaries $4,372,127 $3,78,242 Disabled members $ $ Total $4,372,127 $3,78,242 iv. Total present value of all future expected $5,227,653 $4,721,936 benefit payments SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 13

16 INFORMATION REQ. BY FLORIDA STATUTE (CHAPTER 112) TABLE VI (CONTINUED) Actuarial Valuation prepared as of: Before Assumption Change October 1, 214 October 1, 215 b. Actuarial accrued liability $4,797,273 $4,285,31 c. Unfunded actuarial accrued liability $1,735,58 $1,15,686 (please reference Table III for details concerning the unfunded liability bases and schedule of amortization payments) 4. Actuarial Present Value of Accrued Benefits $4,613,336 $4,29,278 (please reference Table V for details concerning the present value of accrued benefits) 5. Pension Cost a. Normal cost contributed by City $25,358 $27,371 b. Payment to amortize unfunded liability $238,589 $166,84 c. Subtotal (not less than zero) $263,947 $193,455 d. Normal cost contributed by members $16,455 $17,246 e. Total required contribution $28,42 $21,71 As a percentage of payroll: 17.41% % f. Amount to be contributed by members $16,455 $17,246 As a percentage of payroll: 1.% 1.% g. Amount to be contributed by City $263,947 $193,455 As a percentage of payroll: 16.41% % Fiscal Year 6. Past Contributions 213/ /215 a. Required contribution $315,345 $31,925 b. Actual contribution made by: i. City of Miami $291,968 $291,87 ii. Members $23,377 $19,838 SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 14

17 INFORMATION REQ. BY FLORIDA STATUTE (CHAPTER 112) TABLE VI (CONTINUED) Before Assumption Change Actuarial Valuation prepared as of: October 1, 214 October 1, Other disclosures a. Present value of active members': i. Future salaries: at attained age $1,831,732 $1,822,425 at entry age N/A N/A ii. Future contributions: at attained age $183,173 $182,243 at entry age N/A N/A b. Present value of future normal contributions from City $247,27 $254,662 c. Present value of future expected benefit payments for active members at entry age N/A N/A d. Amount of active and inactive members' accumulated contributions $127,242 $149,193 SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 15

18 DEVELOPMENT OF ACTUARIAL VALUE OF ASSETS TABLE VIIa Valuation Date October 1: A. Actuarial Value Beginning of Year $2,687,241 $3,62,215 B. Market Value End of Year 3,19,324 3,145,336 C. Market Value Beginning of Year 2,848,86 3,19,324 D. Cash Flow D1. Contributions $315,345 $31,925 D2. Benefit Payments (311,388) (34,299) D3. Other Expenses D4. Investment Expenses D5. Net 3,957 (29,374) E. Investment Income E1. Market Total: B. - C. - D5. 338,281 (15,614) E2. Assumed Rate 7.8% 7.7% E3. Amount for Immediate Recognition 29, ,66 E4. Amount for Phased-In-Recognition 128,522 (25,274) F. Phased-In-Recognition of Investment Income F1. Current Year: 33 1/3% x E4. $42,841 ($83,425) $ $ F2. First Prior Year 42,428 42,841 (83,425) F3. Second Prior Year 75,989 42,428 42,841 (83,425) F4. Total Recognized Investment Gain $161,258 $1,844 ($4,584) ($83,425) G. Actuarial Value End of Year A. + D5. + E3. + F4. $3,62,215 $3,269,345 H. Difference Between Market & Actuarial Values $128,19 ($124,9) I. Market Value Rate of Return 11.87% (.49)% J. Actuarial Value Rate of Return 13.8% 7.76% SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 16

19 ASSETS OF THE FUND TABLE VIIb As of As of October 1, 214 October 1, Market Value of Assets* a. Cash equivalents (%) $ $ b. U.S. government & agency securities (%) $ $ c. Corporate bonds (3.3%) $922,444 $953,995 d. Corporate stock (68.1%) $2,169,879 $2,142,551 e. Real estate fund (%) $ $ f. Total invested assets (98.4%) $3,92,323 $3,96,546 g. Cash (1.6%) $99,31 $49,818 h. Fixed assets (%) $ $ i. Receivable member contributions (%) $ $ j. Accrued interest and other receivable (%) $ $ k. Accounts payable (%) ($1,3) ($1,28) l. Other payables (%) $ $ m. Market value of assets (1%) $3,19,324 $3,145,336 * The percentages in parentheses indicate the proportion of assets committed to each type of investment as of October 1, 215. Year Ending October 1, 214 Year Ending October 1, 215 Realized gains and (losses) $ $ Unrealized gains and (losses) $251,382 $(88,141) SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 17

20 HISTORICAL ASSET INFORMATION TABLE VIIc $3,5, $3,, $2,5, Historical Market Value Assets & Return 25% 2% 15% 1% $Millions $2,, $1,5, 5% % Return $1,, $5, $ Plan Year (Assets as of October 1) Market Assets Market Return -5% -1% -15% -2% Market Actuarial City and Market Actuarial Plan Value as of Value as of Benefit Other Member Value Value Year October 1 October 1 Payments Expenses Contributions Return Return 25/26 $746,12 $768,336 $ $ $12, % 6.17% 26/27 $913,764 $939,698 $2,693 $ $122, % 7.86% 27/28 $1,141,279 $1,138,655 $ $ $175,891 (14.41)%.61% 28/29 $1,14,33 $1,313,47 $ $ $234, %.61% 29/21 $1,413,563 $1,556,718 ($4,156) $ $258, % 1.37% 21/211 $1,817,316 $1,834,613 ($32,781) $ $244, % 4.65% 211/212 $2,5,377 $2,136,978 ($21,582) $ $318, % 9.59% 212/213 $2,561,83 $2,455,245 ($281,818) $ $248, % 1.89% 213/214 $2,848,86 $2,687,241 ($311,388) $ $315, % 13.8% 214/215 $3,19,324 $3,62,215 ($34,299) $ $31,925 (.49)% 7.76% 215/216 $3,145,336 $3,269,345 SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 18

21 SUMMARY OF MEMBER DATA TABLE VIIIa As of October 1, 214 As of October 1, Active Members Non-active, Non-Retired Members a. Fully vested b. Non-vested 1 1 c. Sub-total Retired Members a. Non-disabled 7 7 b. Disabled c. Beneficiaries d. Sub-total Total Members SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 19

22 DATA RECONCILIATION TABLE VIIIb Active Non-Active Non-Retired Retired Total 1. Number of members as of October 1, Change in status during the plan year: a. Actives who became inactive b. Actives/Inactive who retired c. Active/Inactive who became disabled d. Inactives who became active e. Non Vested Terms f. Returned to work 3. No longer members due to: a. Death b. Refund of contributions c. Correction in status 4. New member due to a. Initial membership b. Death of another member c. Omitted last year 5. Number of members as of October 1, Retired group contains 6 members in DROP as of October 1, 215. SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 2

23 ACTIVE DATA TABLE VIIIc Average Salary $9, $8, $7, $6, $5, $4, $3, $2, $1, $ Historical Salary Rate 1/1/11 1/1/12 1/1/13 1/1/14 1/1/15 2.% 15.% 1.% 5.%.% -5.% Percenatge Increase Average Salary Actual Salary Increase Actual Salary Increase Assumed Salary Increase Average Date Salary 1/1/11 81, % 6.% 1/1/12 59,156.% 6.% 1/1/13 59, % 6.% 1/1/14 54,849.% 6.% 1/1/15 57, % 6.% Active Members as of October 1, 215 Number Annual Compensation Males 1 $ 14,811 Females 2 $ 67,648 Total 3 $ 172,459 Average Annual Compensation $ 57,486 Average Entry Age Average Years of Service 7.67 SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 21

24 AGE-SERVICE-SALARY TABLE TABLE VIIId SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 22 *The average pay shown is the average of the annual rate of pay as of October 1, 215 excluding any overtime pay or other special compensation. Attained Completed Years of Service Age Under 1 1 to 4 5 to 9 1 to to 19 2 to to 29 3 to to 39 4 & Up Total Under 25 Avg.Pay* 25 to 29 Avg.Pay* 3 to 34 Avg.Pay* 35 to 39 Avg.Pay* 1 29, , , ,486 4 to 44 Avg.Pay* 45 to 49 Avg.Pay* 5 to 54 Avg.Pay * 55 to 59 Avg.Pay* 6 to 64 Avg.Pay* 65 & Up Avg.Pay* Total Avg.Pay* 1 29, , , ,486

25 RETIREE DATA TABLE VIIIe 3-39 Age At Retirement Number of Retirees Non Disabled Retirees Average benefit being paid to non disabled retirees is $3, per month. SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 23

26 COMPREHENSIVE ANNUAL FINANCIAL REPORT INFORMATION TABLE VIIIf Solvency Test Aggregate Accrued Liabilities for (1) (2) (3) Active Member Portion of Accrued Liabilities Active Member Retirants and (Employer Reported Assets Covered by Reported Assets Valuation Date Contributions Beneficiaries Financed Portion) Actuarial Value (1) (2) (3) September 3, 28 $526,826 $ $1,221,321 $1,313,47 1% % 64% September 3, 29 $62,664 $ $1,51,142 $1,556,718 1% % 62% September 3, 21 $778,535 $ $2,48,447 $1,834,613 1% % 52% September 3, 211 $752,812 $559,199 $1,827,888 $2,136,978 1% 1% 45% September 3, 212 $276,713 $3,27,956 $816,923 $2,455,245 1% 67% % September 3, 213 $253,63 $3,657,9 $681,55 $2,687,241 1% 67% % September 3, 214 $127,242 $4,42,898 $34,551 $3,62,215 1% 66% % September 3, 215 $149,193 $3,822,52 $363,31 $3,269,345 1% 82% % SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 24

27 COMPREHENSIVE ANNUAL FINANCIAL REPORT INFORMATION TABLE VIIIf Analysis of Financial Experience Gains & Losses in Accrued Liabilities During Year Ending September 3 Resulting from Differences Between Assumed Experience & Actual Experience (CONTINUED) $ Gain (or Loss) For Year Ending September Age & Service Retirements $ If members retire at older ages or with lower final average pay than assumed, there is a gain. If younger ages or higher average pay, a loss. Disability Retirements (249) If disability claims are less than assumed, there is a gain. If more claims, a loss. Death-In-Service Retirements (39) If survivor claims are less than assumed, there is a gain. If more claims, a loss. Withdrawal From Employment (4,79) If more liabilities are released by withdrawals than assumed, there is a gain. If smaller releases, a loss. Pay Increases and Data Adjustments 2,823 If there are smaller pay increases than assumed, there is a gain. If greater increases, a loss. Contribution Income 25,416 If more contributions are received than expected, there is a gain. If less, a loss. Investment Income 1,844 If there is greater investment income than assumed, there is a gain. If less income, a loss. Death After Retirement (1,377) If retirants live longer than assumed, there is a loss. If not as long, a gain. New Members - Other Miscellaneous gains and losses resulting from timing of financial transactions, valuation methods, increase in maximum benefit limits, etc. $ 646,395 Gain (or Loss) During Year From Financial Experience 669,753 Non-Recurring Items $ (49,974) Adjustments for plan amendments, assumption changes, etc. Composite Gain (or Loss) During Year $ 619,779 SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 25

28 ACTUARIAL ASSUMPTIONS AND METHODS TABLE IXa 1. Actuarial Cost Method The modified individual entry age normal cost method. Under this method, normal costs are determined on the individual entry age normal method. However, if the actuarial value of assets exceeds the entry age accrued liability, the individual entry age normal cost rate for the Plan shall be adjusted by the excess actuarial value of assets divided by the present value of future payroll, in order for the unfunded accrued liability to not be less than zero. 2. Decrements Pre-Retirement Mortality 1983 Group Annuity Mortality Table (male and female), set back 2 years. Post-Retirement Healthy Mortality 1983 Group Annuity Mortality Table (male and female). Post-Retirement Disabled Mortality 1983 Group Annuity Mortality Table (male and female), set forward 9 years. Disability Representative values of the assumed annual rates of disability among members in active service are set forth in the following table. Disability decrements do not compete with retirement. Age Rate Age Rate Age Rate Age Rate 2.3% 3.4% 4.7% 5.17% 25.3% 35.5% 45.1% 55.25% SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 26

29 ACTUARIAL ASSUMPTIONS AND METHODS TABLE IXa (CONTINUED) Permanent Withdrawal from Active Status Representative values of the assumed annual rates of withdrawal among members in active service are set forth in the following table. Age Completed Years of Service or more 2 12.% 1.5% 9.% 7.2% 6.% 5.3% % 1.5% 9.% 7.2% 6.% 4.6% 3 12.% 1.5% 9.% 7.2% 6.% 4.% % 1.5% 9.% 7.2% 6.% 3.4% % 9.9% 8.4% 6.6% 5.4% 2.6% % 9.3% 7.8% 6.% 4.8% 2.% 5 1.2% 8.7% 7.2% 5.4% 4.2% 1.3% % 8.4% 6.9% 5.1% 3.9% 1.% Retirement Representative values of the assumed annual rates of retirement among members in active service are set forth in the following table. Age Rate Age Rate Age Rate Age Rate Age Rate 45 15% 5 2% 55 3% 6 2% 65 2% 46 15% 51 2% 56 2% 61 2% 66 2% 47 15% 52 2% 57 2% 62 2% 67 2% 48 15% 53 2% 58 2% 63 2% 68 2% 49 15% 54 2% 59 2% 64 2% 69 2% 7 1% In addition, the valuation assumes a 65% probability the Pension Administrator will retire upon reaching the Rule of 7 eligibility. For non-administrators, 2% is added to the rates in the table when the member first reaches Rule of 7 eligibility. 3. Interest Rate 7.6% per annum, compounded annually, including inflation. 7.75% per annum in calculation of present value of accrued benefits in accordance with Florida Statues, Chapter SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 27

30 ACTUARIAL ASSUMPTIONS AND METHODS TABLE IXa (CONTINUED) 4. Salary Increases Salaries are assumed to increase at the rate of 6.% per annum, including inflation. There is no assumed total active member payroll increase. 5. Inflation 3.5% per annum. 6. Spouses The Pension Administrator is assumed to not be married; 4% of active members are assumed to be married with the husband 3 years older than his wife 7. Expenses The City shall provide for the non-investment expenses of the Plan. However, there may be some non-investment expenses during the Plan year which will be reimbursed by the City after the end of the year. An allowance for other expenses is made in that the interest rate assumption is net of investment expenses. 8. Assets The actuarial value of assets is based on a moving market value averaged over three years. Each year, the actuarial asset value is projected forward at the valuation date based on actual contributions and benefit payments at the assumed interest assumption. One third of the difference between the projected actuarial value and the market value plus prior deferrals is added to the projected actuarial value. The remaining two thirds is deferred to each of the next two years as future adjustments to the actuarial value. The result cannot be greater than 12% of market value or less than 8% of market value. As of October 1, 2 the actuarial value is equal to the estimated present value of employee payments to purchase credit for service to the effective date of the Plan (July 1, 21). SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 28

31 ACTUARIAL ASSUMPTIONS AND METHODS TABLE IXa (CONTINUED) 9. Funding Period (Pursuant to Chapter 112, Florida Statutes) The following amortization periods apply all as level dollar amounts: Benefit improvements for actives 2 years Benefit improvements for retirees 15 years Actuarial gain/loss 15 years Change in assumptions and methods 2 years The Plan s initial unfunded actuarial accrued liability as of October 1, 2 is amortized over 3 years. 1. Maximum Benefit The valuation reflects the maximum benefit limits under Internal Revenue Code Section 415, indexed in future years at the 3.5% per year assumed rate of inflation. SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 29

32 ASSUMPTION AND METHOD CHANGES TABLE IXb The following assumptions have been changed during the last few plan years: Effective October 1, 26: Upgrade in actuarial valuation software and change to a more standard version of the entry age actuarial cost method. Effective October 1, 21: Retirement rates were updated to reflect the adoption of a Deferred Retirement Option Program (DROP). Rates were changed from 5% to 65% for the Pension Administrator upon reaching Rule of 7 eligibility; 2% was added to the current rates upon reaching Rule of 7 eligibility for other members. The marriage assumption was changed from 8% for all members to % for the Pension Administrator and 4% for all other members. Effective October 1, 211: The interest rate assumption was lowered from 8.1% to 8.%. The interest rate assumption of 8.% will be first reflected in the development of the actuarial value of assets as of October 1, % interest rate in the calculation of the present value of accrued benefits in accordance with Florida Statues Chapter Effective October 1, 212: The interest rate assumption was lowered from 8.% to 7.9%. The interest rate assumption of 7.9% will be first reflected in the development of the actuarial value of assets as of October 1, 213. Effective October 1, 213: The interest rate assumption was lowered from 7.9% to 7.8%. The interest rate assumption of 7.8% will be first reflected in the development of the actuarial value of assets as of October 1, 214. Effective October 1, 214: The interest rate assumption was lowered from 7.8% to 7.7%. The interest rate assumption of 7.7% will be first reflected in the development of the actuarial value of assets as of October 1, 215. Effective October 1, 215: The interest rate assumption was lowered from 7.7% to 7.6%. The interest rate assumption of 7.6% will be first reflected in the development of the actuarial value of assets as of October 1, 216. SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 3

33 PLAN PROVISIONS TABLE Xa 1. Plan Effective Date The original plan effective date is July 1, Membership An administrative staff employee of the City of Miami GESE Retirement Trust becomes a member upon employment unless he/she is a member of any other pension or retirement system supported wholly or in part by the City. An employee ceases to be a member if (i) he/she is absent from service for more than three years of any five consecutive year period, (ii) he/she withdraws his/her contributions, (iii) he/she becomes a member of any other City-sponsored retirement Plan or (iv) he/she becomes a beneficiary or dies. 3. Membership Service Service as an employee for which contributions were made. 4. Creditable Service Sum of Membership Service, Prior Service, and Military Service. 5. Compensation Employee s base salary, including pick-up contributions. Compensation for pension purposes does not include the cash payment at retirement for accumulated unused leaves, such as, vacation and sick leave. 6. Member Contributions 1% of compensation. 7. Average Final Compensation Average annual compensation during highest two years of membership service. 8. Basic Retirement Benefit 3% of Average Final Compensation multiplied by Creditable Service. In addition the benefit is increased by 5% at retirement. SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 31

34 PLAN PROVISIONS 9. Normal Retirement TABLE Xa (CONTINUED) Eligibility 1 years of continuous Creditable Service. Benefit Amount The basic retirement benefit. Forms of Payment Normal Forms of Payment Option 6(a): Lump sum payment of member s accumulated contributions plus a monthly service retirement benefit equal to 5% of the amount to which he would have been otherwise entitled; Option 6(b): Monthly service retirement benefit for member s lifetime equal to 15% of the amount to which he would have been otherwise entitled; Option 6(c): Monthly service retirement benefit for member s lifetime equal to the amount to which he was entitled, provided that, upon his death, 4% of that amount would continue to be paid to his surviving spouse for the lifetime of such spouse. Actuarially Reduced Forms of Payment Option 2 Equal Payment Survivor Annuity: Reduced joint and 1% survivor annuity; Option 3 One-Half Payment Survivor Annuity: Reduced joint and 5% survivor annuity 1. Minimum Retired Death Benefit A retired member who dies prior to having received 12 monthly retirement payments and prior to having an optional allowance becoming effective will have a lump sum equal to the excess, if any, of 12 times the monthly payments over the actual payments received paid to his designated beneficiary. SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 32

35 PLAN PROVISIONS TABLE Xa (CONTINUED) 11. Return of Contributions A member who terminates employment and is not eligible for any other benefit shall receive a refund of his accumulated contributions. If a member dies in active service, his beneficiary shall receive a refund of his accumulated contributions except as otherwise noted in this section. 12. Deferred retirement option program ("DROP"): Any employee who has 1 or more years of service is eligible to participate in the DROP. Upon election of participation, a member's creditable service, accrued benefits, and compensation calculation are frozen and the DROP payment is based on the member's average final compensation. The member's contribution and the City contribution to the retirement plan for that member ceases as no further service credit is earned. The member does not acquire additional pension credit for the purposes of the pension plan but may continue City employment for up to a maximum of 48 months. Once the maximum participation has been achieved, the participant must terminate employment. Upon termination of employment, a participant may receive payment from the DROP account in a lump sum distribution; or periodic payments. A participant may elect to rollover the balance to another qualified retirement plan, individual retirement account, an Internal Revenue Code Section 457 Plan, or an annuity. A participant may defer payment until the latest date authorized by Section 41(a)(9) of the Internal Revenue Code. DROP participation will not affect any other death or disability benefit provided under law or applicable collective bargaining agreement. If a participant dies before the account balances are paid out in full, the beneficiary will receive the remaining balance. SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 33

36 PLAN AMENDMENTS TABLE Xb 1. Miami GESE Retirement Trust Staff Pension Plan implemented a Deferred Retirement Option Plan (DROP) for any employees having 1 or more years of service, which was approved by the Board of Trustees at its meeting on March 26, 21. SANITATION EMPLOYEES RETIREMENT TRUST STAFF PENSION PLAN PAGE 34