The City of St. Petersburg Police Officers Retirement System

Transcription

1 The City of St. Petersburg Police Officers Retirement System Reporting Information Required Under Section , Florida Statutes as of September 30, 2014 August, 2015

2 Joseph L. Griffin Principal, Consulting Actuary August 27, 2015 Board of Trustees The City of St. Petersburg Police Officers Retirement System P.O. Box 2842 St. Petersburg, FL Buck Consultants, LLC Suite Galleria Pkwy SE Atlanta, GA tel fax Board Members: Buck Consultants has been engaged by the Board of Trustees of the City of St. Petersburg Police Officers Retirement System ( Retirement System ) to prepare a report to satisfy the reporting requirements under Section , Florida Statutes. The Board may use this report for meeting the disclosure requirements under Section , Florida Statutes. Use of this report for any other purpose or by anyone other than the Board or the staff of the Board may not be appropriate and may result in mistaken conclusions because of failure to understand applicable assumptions, methods, or inapplicability of the report for that purpose. No one may make any representations or warranties based on any statements or conclusions contained in this report without Buck Consultants prior written consent. The schedules of changes in net pension liability are developed in accordance with Governmental Accounting Standards Board s Statements 67 and 68. More specifically, the plan fiduciary net position is shown on a market value of assets basis and the total pension liability was developed under the entry age normal cost method. The total pension liability at the beginning of the period and ending of the period reflect the existing funding assumptions as well as the prescribed mortality assumption under Section (1)(a) and the prescribed mortality and assumed rate of return on investments under Section (1)(b). The projection of market value of assets, investment return, and projected benefit payments is required by the above-referenced statute to exclude future contributions that the City, State, or members of the Retirement System are legally required to make. As such, these projections are not an appropriate measurement of the period of time that the Retirement System s assets will sustain the payment of expected retirement benefits. The expected benefit payments used in the projection have been determined using accrued benefits as of the valuation date and based on a closed group of current members. When future contributions are taken into account, the Retirement System is projected to accumulate enough assets to sustain projected benefit payments indefinitely. Thus, the projections for the closed group of members ignoring future contributions are of limited value in assessing the viability of the system. In preparing the actuarial results, we have relied upon information provided by the City of St. Petersburg regarding plan provisions, plan participants, plan assets, contribution rates and other matters used in the actuarial valuation. Although we did not audit the data, we reviewed the data for reasonableness and consistency with the prior year s information. The accuracy of the results presented herein is dependent on the accuracy of the data.

3 The City of St. Petersburg August 27, 2015 Police Officers Retirement System Page 2 Section (1)(a), Florida Statutes prescribes the use of the RP-2000 Combined Healthy Participant Mortality Tables, by gender, with generational projection by Scale AA. Section (1)(b), Florida Statutes prescribes the use of an assumed rate of return on investments and an assumed discount rate that are equal to 200 basis points less than the plan s assumed rate of return. With the exception of the prescribed mortality and investment rate of return assumptions, all methods, assumptions, plan provisions, and member data are the same as those used in the October 1, 2014 Actuarial Valuation Report. While we have performed the calculations in accordance with the methods and assumptions mandated by the Florida statutes, we express no opinion as to whether the assumptions are reasonable. The Board reviewed the investment rate of return assumption in October of 2014 based on the Board s established investment policy and a simulation of future capital markets. The Board concluded that an investment rate of return of 8.00% was appropriate for the purpose of funding the Retirement System. The use of an investment return assumption of 6.00% under Section (1)(b) would not be appropriate in evaluating the ongoing funding requirements of the Retirement System. Future actuarial measurements may differ significantly from current measurements due to plan experience differing from that anticipated by the economic and demographic assumptions, increases or decreases expected as part of the natural operation of the methodology used for these measurements, and changes in plan provisions or applicable law. An analysis of the potential range of such future differences is beyond the scope of this valuation. This report was prepared under the supervision of Joseph L. Griffin, an Associate of the Society of Actuaries and a Member of the American Academy of Actuaries. I meet the Academy s qualification Standards to issue this Statement of Actuarial Opinion. This report has been prepared in accordance with all applicable Actuarial Standards of Practice and I am available to answer questions about it. With respect to the reporting standards for defined benefit retirement plans or systems contained in Section (1), F.S., the actuarial disclosures required under this section were 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, meet the requirements of Section (1), F.S., and Section 60T , F.A.C. Buck Consultants, LLC Joseph L. Griffin, ASA, EA, MAAA, FCA Principal, Consulting Actuary

4 Table of Contents Section 1 - Schedule of Changes in Net Pension Liability... 1 Section 2 - Projection of Market Value of Assets, Investment Return, and Benefit Payments... 2 Section 3 - Actuarial Determined Contributions... 5

5 Police Officers' Retirement System Section 1 Schedule of Changes in Net Pension Liablity Fiscal Year Ending September 30, 2014 GASB No. 67/ (1)(a) F.S (1)(b) F.S. 1. Total pension liability a. Service cost $ 5,773,456 $ 6,118,880 $ 9,693,785 b. Interest 29,321,731 30,209,096 29,157,907 c. Benefit changes d. Differences between actual & expected experience e. Change in assumptions f. Benefit payments (23,247,685) (23,247,685) (23,247,685) g. Contribution refunds (247,635) (247,635) (247,635) h. Net change in pension liability $ 11,599,867 12,832,656 15,356,372 i.total pension liability - beginning of year $ 372,269, ,016, ,847,870 j. Total pension liability - ending of year $ 383,869, ,849, ,204, Plan Fiduciary Net Position a. Contributions - Employer $ 11,121,987 11,121,987 11,121,987 b. Contributions - State 1,753,617 1,753,617 1,753,617 c. Contributions - Member 2,049,238 2,049,238 2,049,238 d. Net Investment Income 36,157,744 36,157,744 36,157,744 e. Benefit payments (23,247,685) (23,247,685) (23,247,685) f. Contribution refunds (247,635) (247,635) (247,635) g. Administrative expenses (105,415) (105,415) (105,415) h. Other i. Net change in plan fiduciary net position $ 27,481,851 27,481,851 27,481,851 j. Plan fiduciary net position - beginning of year $ 348,542, ,542, ,542,662 k. Plan fiduciary net position - ending of year $ 376,024, ,024, ,024, Net pension liability / (asset) $ 7,845,201 19,824, ,179, Certain key assumptions Valuation date 10/01/ /01/ /01/2014 Measurement date 09/30/ /30/ /30/2014 Investment return assumption 8.00% 8.00% 6.00% Base Mortality table RP-2000 Combined Healthy RP-2000 Combined Healthy RP-2000 Combined Healthy Generational projection scale Scale AA Scale AA Scale AA Collar Adjustment Blue Collar None None 1

6 Police Officers' Retirement System Section 2 Projection of Market Value of Assets, Investment Return, and Benefit Payments Fiscal Year Market Value Expected Projected Market Value Ending of Assets (BOY) Investment Return Benefit Payments of Assets (EOY) ,024,513 29,124,114 24,415, ,732, ,732,743 29,446,465 25,800, ,379, ,379,015 29,697,479 26,837, ,239, ,239,154 29,899,250 27,526, ,611, ,611,798 30,068,980 28,038, ,642, ,642,291 30,214,792 28,462, ,394, ,394,746 30,335,206 28,966, ,763, ,763,347 30,428,889 29,369, ,822, ,822,761 30,500,310 29,709, ,613, ,613,757 30,550,818 30,034, ,129, ,129,705 30,579,616 30,352, ,356, ,356,397 30,584,808 30,682, ,258, ,258,340 30,565,570 30,973, ,850, ,850,630 30,523,116 31,224, ,149, ,149,705 30,460,212 31,398, ,211, ,211,777 30,380,377 31,520, ,071, ,071,632 30,291,111 31,470, ,891, ,891,817 30,197,370 31,454, ,634, ,634,672 30,098,897 31,401, ,332, ,332,564 30,000,956 31,242, ,091, ,091,262 29,912,464 30,966, ,037, ,037,066 29,841,852 30,616, ,262, ,262,082 29,795,924 30,207, ,850, ,850,818 29,782,807 29,702, ,930, ,930,741 29,812,191 29,116, ,626, ,626,067 29,892,426 28,489, ,028, ,028,921 30,032,082 27,790, ,270, ,270,575 30,241,178 27,031, ,480, ,480,008 30,530,210 26,208, ,801, ,801,252 30,910,051 25,338, ,372,607 Number of years for which current market value of assets is adequate to sustain the payment of expected retirement benefits (funding valuation basis) N/A Certain Key -- Funding valuation basis Investment return assumption 8.00% Base mortality table RP-2000 Combined Healthy Generational projection scale Scale AA Collar adjustment Blue Collar Notes: The projection above excludes future contributions that the City, State, and members of the Retirement System are legally required to make. As such, these projections are not an appropriate measurement of the period of time that the Retirement System s assets will sustain the payment of expected retirement benefits. When future contributions are taken into account, the Retirement System is projected to accumulate enough assets to sustain projected benefit payments indefinitely. Thus, the projections for the closed group of members ignoring future contributions are of limited value in assessing the viability of the system. 2

7 Police Officers' Retirement System Section 2 Projection of Market Value of Assets, Investment Return, and Benefit Payments Fiscal Year Market Value Expected Projected Market Value Ending of Assets (BOY) Investment Return Benefit Payments of Assets (EOY) ,024,513 29,122,567 24,455, ,691, ,691,750 29,438,107 25,929, ,200, ,200,198 29,674,411 27,060, ,813, ,813,887 29,852,675 27,846, ,819, ,819,941 29,989,233 28,456, ,352, ,352,673 30,091,346 28,979, ,464, ,464,837 30,156,610 29,583, ,037, ,037,892 30,182,673 30,087, ,132, ,132,774 30,172,993 30,528, ,777, ,777,737 30,127,951 30,952, ,953, ,953,534 30,045,720 31,367, ,631, ,631,738 29,923,303 31,792, ,762, ,762,528 29,758,727 32,175, ,345, ,345,389 29,551,956 32,517, ,379, ,379,901 29,304,437 32,779, ,904, ,904,844 29,018,309 32,986, ,936, ,936,610 28,699,629 33,017, ,618, ,618,552 28,351,811 33,078, ,892, ,892,187 27,972,920 33,098, ,767, ,767,008 27,566,398 33,009, ,324, ,324,313 27,139,210 32,799, ,664, ,664,161 26,697,711 32,510, ,850, ,850,891 26,246,474 32,158, ,938, ,938,777 25,791,214 31,707, ,022, ,022,802 25,339,031 31,169, ,192, ,192,370 24,895,480 30,586, ,501, ,501,689 24,466,098 29,926, ,041, ,041,136 24,057,657 29,202, ,896, ,896,158 23,677,159 28,409, ,163, ,163,428 23,331,695 27,564, ,930, ,930,352 23,028,038 26,672, ,285, ,285,515 22,773,258 25,734, ,324, ,324,123 22,574,974 24,750, ,149, ,149,066 22,441,268 23,722, ,867, ,867,530 22,380,629 22,655, ,592, ,592,978 22,402,013 21,550, ,444,788 Number of years for which current market value of assets is adequate to sustain the payment of expected retirement benefits (Section (1)(a), F.S. basis) N/A Certain Key -- Section (1)(a), F.S. basis Investment return assumption 8.00% Base mortality table RP-2000 Combined Healthy Generational projection scale Scale AA Collar adjustment None Notes: The projection above excludes future contributions that the City, State, and members of the Retirement System are legally required to make. As such, these projections are not an appropriate measurement of the period of time that the Retirement System s assets will sustain the payment of expected retirement benefits. When future contributions are taken into account, the Retirement System is projected to accumulate enough assets to sustain projected benefit payments indefinitely. Thus, the projections for the closed group of members ignoring future contributions are of limited value in assessing the viability of the system. 3

8 Police Officers' Retirement System Section 2 Projection of Market Value of Assets, Investment Return, and Benefit Payments Fiscal Year Market Value Expected Projected Market Value Ending of Assets (BOY) Investment Return Benefit Payments of Assets (EOY) ,024,513 21,838,498 24,455, ,407, ,407,681 21,637,902 25,929, ,115, ,115,924 21,346,959 27,060, ,402, ,402,161 20,980,900 27,846, ,536, ,536,440 20,550,926 28,456, ,630, ,630,866 20,061,140 28,979, ,712, ,712,823 19,508,190 29,583, ,637, ,637,459 18,888,762 30,087, ,438, ,438,430 18,203,805 30,528, ,114, ,114,206 17,451,813 30,952, ,613, ,613,865 16,629,514 31,367, ,875, ,875,863 15,732,669 31,792, ,816, ,816,019 14,757,746 32,175, ,397, ,397,898 13,702,560 32,517, ,583, ,583,014 12,565,920 32,779, ,369, ,369,440 11,346,985 32,986, ,729, ,729,882 10,047,691 33,017, ,759, ,759,886 8,667,703 33,078, ,349, ,349,412 7,202,485 33,098, ,453, ,453,798 5,651,380 33,009,093 83,096, ,096,085 4,016,117 32,799,362 54,312, ,312,839 2,297,648 32,510,981 24,099, ,099, ,266 32,158,589 0 Number of years for which current market value of assets is adequate to sustain the payment of expected retirement benefits (Section (1)(b), F.S. basis) Certain Key -- Section (1)(b), F.S. basis Investment return assumption 6.00% Base mortality table RP-2000 Combined Healthy Generational projection scale Scale AA Collar adjustment None Notes: The projection above excludes future contributions that the City, State, and members of the Retirement System are legally required to make. As such, these projections are not an appropriate measurement of the period of time that the Retirement System s assets will sustain the payment of expected retirement benefits. When future contributions are taken into account, the Retirement System is projected to accumulate enough assets to sustain projected benefit payments indefinitely. Thus, the projections for the closed group of members ignoring future contributions are of limited value in assessing the viability of the system. 4

9 Police Officers' Retirement System Section 3 Actuarially Determined Contributions Fiscal Year Ending September 30, 2016 Funding (1)(a) F.S (1)(b) F.S. 1. Valuation Date 10/1/ /1/ /1/ Valuation Payroll a. Total Covered Payroll Under Assumed Ret. Age $ 30,725,421 $ 30,725,421 $ 30,725,421 b. Valuation Payroll 31,186,302 31,186,302 31,186, Annual Cost as of Valuation Date a. Entry Age Normal Accrued Liability $ 385,892,212 $ 397,881,374 $ 505,766,791 b. Actuarial Value of Assets 354,542, ,542, ,542,760 c. Unfunded Accrued Liability $ 31,349,452 $ 43,338,614 $ 151,224,031 d. Unfunded Accrued Liability Payment $ 4,717,740 $ 5,572,007 $ 11,358,268 e. Entry Age Normal Cost 5,745,684 6,095,272 9,734,141 f. Administrative Expenses 246, , ,176 g. Interest Adjustment * 318, , ,632 h. Total Annual Cost as of the Valuation Date $ 11,028,596 $ 12,251,885 $ 21,710, Minimum Required Contribution as of Valuation Date a. Total Required Contribution $ 11,028,596 $ 12,251,885 $ 21,710,217 b. Estimated Employee Contributions 2,183,041 2,183,041 2,183,041 c. Estimated State Contributions 1,650,834 1,650,834 1,650,834 d. Estimated City Contributions 7,194,721 8,418,010 17,876, Minimum Required Contribution (as a % of Valuation Payroll) a. Total Required Contribution 35.4% 39.3% 69.6% b. Estimated Employee Contributions 7.0% 7.0% 7.0% c. Estimated State Contributions 5.3% 5.3% 5.3% d. Estimated City Contributions 23.1% 27.0% 57.3% 6. Certain key assumptions Investment return assumption 8.00% 8.00% 6.00% Base Mortality table RP-2000 Combined Healthy RP-2000 Combined Healthy RP-2000 Combined Healthy Generational projection scale Scale AA Scale AA Scale AA Collar Adjustments Blue Collar None None 5