CITY OF TALLAHASSEE PENSION PLAN FOR GENERAL EMPLOYEES CHAPTER , F.S. COMPLIANCE REPORT

Transcription

1 CITY OF TALLAHASSEE PENSION PLAN FOR GENERAL EMPLOYEES CHAPTER , F.S. COMPLIANCE REPORT IN CONNECTION WITH THE OCTOBER 1, 2017 FUNDING ACTUARIAL VALUATION REPORT AND THE PLAN S FINANCIAL REPORTING FOR THE YEAR ENDING SEPTEMBER 30, 2017

2 July 23, 2018 Board of Trustees Pension Plan for the City of Tallahassee Tallahassee, Florida Dear Board Members: Gabriel, Roeder, Smith & Company (GRS) has been engaged by the City of Tallahassee Pension Plan for General Employees (Plan) to prepare a disclosure report to satisfy the requirements set forth in Ch , F.S. and as further required pursuant to Ch. 60T1.0035, F.A.C. This report was prepared at the request of the City and is intended for use by the Retirement System and those designated or approved by the City. This report may be provided to parties other than the System only in its entirety and only with the permission of the City. The purpose of the report is to provide the required information specified in Ch , F.S. as well as supplement this information with additional exhibits. This report should not be relied on for any purpose other than the purpose described above. For financial reporting purposes under GASB 67, the liabilities were rolled forward from October 1, 2016 to the measurement date, September 30, The liabilities for this purpose were based on the October 1, 2016 Actuarial Valuation report dated March 13, The findings in this report are based on data or other information through September 30, Future actuarial measurements may differ significantly from the current measurements 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. The scope of this engagement does not include an analysis of the potential range of such measurements. This report was based upon information furnished by the City and the Plan Administrator concerning Retirement Plan benefits, financial transactions, plan provisions and active members, terminated members, retirees and beneficiaries. We checked for internal and yeartoyear consistency, but did not otherwise audit the data. We are not responsible for the accuracy or completeness of the information provided by the City and Plan Administrator. Except as otherwise indicated as required for the disclosures contained herein, this report was prepared using certain assumptions selected by the Board as described in our October 1, 2017 Actuarial Valuation report. This report is also based on the Plan Provisions, census data, and financial information as summarized in our October 1, 2017 Actuarial Valuation report. Please refer to the October 1, 2017

3 Board of Trustees Pension Plan for the City of Tallahassee July 23, 2018 Page ii Actuarial Valuation report, dated June 5, 2018, and the GASB No. 67 actuarial disclosure report, dated March 1, 2018, for summaries and descriptions of this information. The use of an investment return assumption that is 2% higher than the investment return assumption used to determine the funding requirements does not represent an estimate of future Plan experience nor does it reflect an observation of future return estimates inherent in financial market data. The use of this investment return assumption is provided as a counterpart to the Chapter , Florida Statutes requirement to utilize an investment return assumption that is 2% lower than the assumption used to determine the funding requirements. The inclusion of the additional exhibits showing the effect of using a 2% higher investment return assumption shows a more complete assessment of the range of possible results as opposed to showing a onesided range as required by Florida Statutes. Peter N. Strong and Jeffrey Amrose are members of the American Academy of Actuaries and meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinions contained herein. The signing actuaries are independent of the plan sponsor. This report has been prepared by actuaries who have substantial experience valuing public employee retirement systems. To the best of our knowledge the information contained in this report is accurate and fairly presents the actuarial position of the Retirement Plan as of the valuation date. All calculations have been made in conformity with generally accepted actuarial principles and practices, with the Actuarial Standards of Practice issued by the Actuarial Standards Board and with applicable statutes. 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 us or under our direct supervision, and we acknowledge responsibility for the results. To the best of our knowledge, the results are complete and accurate, and in our opinion, meet the requirements of Section (1), F.S. and Section 60T1.0035, F.A.C. Respectfully submitted, GABRIEL, ROEDER, SMITH AND COMPANY By By Peter N. Strong, FSA, MAAA Jeffrey Amrose, MAAA Enrolled Actuary No Enrolled Actuary No Senior Consultant & Actuary Senior Consultant & Actuary

4 TABLE OF CONTENTS Title Page Ch , F.S. Results Schedule of Changes in Net Pension Liability 1. Using financial reporting assumptions per GASB Statement No Using assumptions prescribed in Section (1)(a), F.S Using assumptions prescribed in Section (1)(b), F.S Using the mandated mortality and funding interest rate +2% 4 Assets Versus Benefit Payments Projections 5. Using assumptions from the Plan s latest actuarial valuation 5 6. Using assumptions prescribed in Section (1)(a), F.S Using assumptions prescribed in Section (1)(b), F.S Using the mandated mortality and funding interest rate +2% 8 Actuarially Determined Contribution 9

5 CH , FLORIDA STATUTES RESULTS

6 Schedule of Changes in the Employers' Net Pension Liability Using Financial Reporting Assumptions per GASB Statement No. 67 Fiscal year ending September 30, Total pension liability a. Service Cost $ 15,008,000 b. Interest 78,568,000 c. Benefit Changes d. Difference between actual & expected experience & Other 17,064,000 e. Assumption Changes 54,077,000 f. Benefit Payments (54,634,000) g. Contribution Refunds (269,000) h. Net Change in Total Pension Liability 109,814,000 i. Total Pension Liability Beginning 1,009,166,000 j. Total Pension Liability Ending $ 1,118,980, Plan Fiduciary Net Position a. Contributions Employer $ 14,842,000 b. Contributions State c. Contributions Member 5,160,000 d. Net Investment Income 127,148,000 e. Benefit Payments (54,634,000) f. Contribution Refunds (269,000) g. Administrative Expense (1,214,000) h. Other i. Net Change in Plan Fiduciary Net Position 91,033,000 j. Plan Fiduciary Net Position Beginning 983,771,000 k. Plan Fiduciary Net Position Ending $ 1,074,804, Net Pension Liability / (Asset) 44,176,000 Valuation Date 10/01/2016 Measurement Date 09/30/2017 Investment Return Assumption 7.70% Mortality Table FRS Mortality Regular Class 1

7 Schedule of Changes in the Employers' Net Pension Liability Using Assumptions required under (1)(a), F.S. Fiscal year ending September 30, Total pension liability a. Service Cost $ 15,008,000 b. Interest 78,568,000 c. Benefit Changes d. Difference between actual & expected experience & Other 17,064,000 e. Assumption Changes 54,077,000 f. Benefit Payments (54,634,000) g. Contribution Refunds (269,000) h. Net Change in Total Pension Liability 109,814,000 i. Total Pension Liability Beginning 1,009,166,000 j. Total Pension Liability Ending $ 1,118,980, Plan Fiduciary Net Position a. Contributions Employer $ 14,842,000 b. Contributions State c. Contributions Member 5,160,000 d. Net Investment Income 127,148,000 e. Benefit Payments (54,634,000) f. Contribution Refunds (269,000) g. Administrative Expense (1,214,000) h. Other i. Net Change in Plan Fiduciary Net Position 91,033,000 j. Plan Fiduciary Net Position Beginning 983,771,000 k. Plan Fiduciary Net Position Ending $ 1,074,804, Net Pension Liability / (Asset) 44,176,000 Valuation Date 10/01/2016 Measurement Date 09/30/2017 Investment Return Assumption 7.70% Mortality Table FRS Mortality Regular Class 2

8 Schedule of Changes in the Employers' Net Pension Liability Using Assumptions required under (1)(b), F.S. Fiscal year ending September 30, Total pension liability a. Service Cost $ 26,780,000 b. Interest 79,935,000 c. Benefit Changes d. Difference between actual & expected experience & Other e. Assumption Changes f. Benefit Payments (54,634,000) g. Contribution Refunds (269,000) h. Net Change in Total Pension Liability 51,812,000 i. Total Pension Liability Beginning 1,403,035,000 j. Total Pension Liability Ending $ 1,454,847, Plan Fiduciary Net Position a. Contributions Employer $ 14,842,000 b. Contributions State c. Contributions Member 5,160,000 d. Net Investment Income 127,148,000 e. Benefit Payments (54,634,000) f. Contribution Refunds (269,000) g. Administrative Expense (1,214,000) h. Other i. Net Change in Plan Fiduciary Net Position 91,033,000 j. Plan Fiduciary Net Position Beginning 983,771,000 k. Plan Fiduciary Net Position Ending $ 1,074,804, Net Pension Liability / (Asset) 380,043,000 Valuation Date 10/01/2016 Measurement Date 09/30/2017 Investment Return Assumption 5.70% Mortality Table FRS Mortality Regular Class 3

9 Schedule of Changes in the Employers' Net Pension Liability Using Assumptions under (1)(b), F.S. except 2% higher investment return assumption Fiscal year ending September 30, Total pension liability a. Service Cost $ 9,894,000 b. Interest 81,343,000 c. Benefit Changes d. Difference between actual & expected experience & Other e. Assumption Changes f. Benefit Payments (54,634,000) g. Contribution Refunds (269,000) h. Net Change in Total Pension Liability 36,334,000 i. Total Pension Liability Beginning 856,149,000 j. Total Pension Liability Ending $ 892,483, Plan Fiduciary Net Position a. Contributions Employer $ 14,842,000 b. Contributions State c. Contributions Member 5,160,000 d. Net Investment Income 127,148,000 e. Benefit Payments (54,634,000) f. Contribution Refunds (269,000) g. Administrative Expense (1,214,000) h. Other i. Net Change in Plan Fiduciary Net Position 91,033,000 j. Plan Fiduciary Net Position Beginning 983,771,000 k. Plan Fiduciary Net Position Ending $ 1,074,804, Net Pension Liability / (Asset) (182,321,000) Valuation Date 10/01/2016 Measurement Date 09/30/2017 Investment Return Assumption 9.70% Mortality Table FRS Mortality Regular Class 4

10 Asset and Benefit Payment Projection Not Reflecting Any Contributions from the Employer, State or Employee Using Assumptions from the Plan's Latest Actuarial Valuation FYE Assets (BOY) Expected Investment Return Projected Benefit Payments Assets (EOY) ,074,804,000 79,532,000 56,669,000 1,097,667, ,097,667,000 81,132,000 60,283,000 1,118,516, ,118,516,000 82,572,000 64,073,000 1,137,015, ,137,015,000 83,842,000 67,659,000 1,153,198, ,153,198,000 84,940,000 71,122,000 1,167,016, ,167,016,000 85,866,000 74,411,000 1,178,471, ,178,471,000 86,626,000 77,305,000 1,187,792, ,187,792,000 87,220,000 80,329,000 1,194,683, ,194,683,000 87,643,000 82,982,000 1,199,344, ,199,344,000 87,905,000 85,407,000 1,201,842, ,201,842,000 88,004,000 87,777,000 1,202,069, ,202,069,000 87,942,000 89,867,000 1,200,144, ,200,144,000 87,724,000 91,756,000 1,196,112, ,196,112,000 87,348,000 93,580,000 1,189,880, ,189,880,000 86,816,000 95,129,000 1,181,567, ,181,567,000 86,136,000 96,400,000 1,171,303, ,171,303,000 85,311,000 97,592,000 1,159,022, ,159,022,000 84,342,000 98,512,000 1,144,852, ,144,852,000 83,241,000 99,142,000 1,128,951, ,128,951,000 82,018,000 99,523,000 1,111,446, ,111,446,000 80,681,000 99,720,000 1,092,407, ,092,407,000 79,240,000 99,540,000 1,072,107, ,072,107,000 77,717,000 99,022,000 1,050,802, ,050,802,000 76,128,000 98,238,000 1,028,692, ,028,692,000 74,486,000 97,231,000 1,005,947, ,005,947,000 72,809,000 95,863, ,893,000 Number of years for which current market value of assets is adequate to sustain the payment of expected retirement benefits, reflecting no contributions from the Employer, Employee or State, contrary to Florida Statutes and Plan provisions: All future years Valuation Investment Return Assumption 7.60% Valuation Mortality Table FRS Mortality Regular Class Note: As required in Section (1)(c) of the Florida Statutes, the projection of the Fund assets do not include contributions from the Employer, Employee or State, which is contrary to Florida Statutes and Plan provisions. For this reason, these projections should not be viewed as a representation of the amount of time the Fund can sustain benefit payments. Under the GASB standards which DO include contributions from the employer, employee and State, the Fund is expected to be able to sustain the benefit payment demands in the nearterm and longterm future. 5

11 Asset and Benefit Payment Projection Not Reflecting Any Contributions from the Employer, State or Employee Using Assumptions required under (1)(a), F.S. FYE Assets (BOY) Expected Investment Return Projected Benefit Payments Assets (EOY) ,074,804,000 79,532,000 56,669,000 1,097,667, ,097,667,000 81,132,000 60,283,000 1,118,516, ,118,516,000 82,572,000 64,073,000 1,137,015, ,137,015,000 83,842,000 67,659,000 1,153,198, ,153,198,000 84,940,000 71,122,000 1,167,016, ,167,016,000 85,866,000 74,411,000 1,178,471, ,178,471,000 86,626,000 77,305,000 1,187,792, ,187,792,000 87,220,000 80,329,000 1,194,683, ,194,683,000 87,643,000 82,982,000 1,199,344, ,199,344,000 87,905,000 85,407,000 1,201,842, ,201,842,000 88,004,000 87,777,000 1,202,069, ,202,069,000 87,942,000 89,867,000 1,200,144, ,200,144,000 87,724,000 91,756,000 1,196,112, ,196,112,000 87,348,000 93,580,000 1,189,880, ,189,880,000 86,816,000 95,129,000 1,181,567, ,181,567,000 86,136,000 96,400,000 1,171,303, ,171,303,000 85,311,000 97,592,000 1,159,022, ,159,022,000 84,342,000 98,512,000 1,144,852, ,144,852,000 83,241,000 99,142,000 1,128,951, ,128,951,000 82,018,000 99,523,000 1,111,446, ,111,446,000 80,681,000 99,720,000 1,092,407, ,092,407,000 79,240,000 99,540,000 1,072,107, ,072,107,000 77,717,000 99,022,000 1,050,802, ,050,802,000 76,128,000 98,238,000 1,028,692, ,028,692,000 74,486,000 97,231,000 1,005,947, ,005,947,000 72,809,000 95,863, ,893,000 Number of years for which current market value of assets is adequate to sustain the payment of expected retirement benefits, reflecting no contributions from the Employer, Employee or State, contrary to Florida Statutes and Plan provisions: All future years Valuation Investment Return Assumption 7.60% Valuation Mortality Table FRS Mortality Regular Class Note: As required in Section (1)(c) of the Florida Statutes, the projection of the Fund assets do not include contributions from the Employer, Employee or State, which is contrary to Florida Statutes and Plan provisions. For this reason, these projections should not be viewed as a representation of the amount of time the Fund can sustain benefit payments. Under the GASB standards which DO include contributions from the employer, employee and State, the Fund is expected to be able to sustain the benefit payment demands in the nearterm and longterm future. 6

12 Asset and Benefit Payment Projection Not Reflecting Any Contributions from the Employer, State or Employee Using Assumptions required under (1)(b), F.S. FYE Assets (BOY) Expected Investment Return Projected Benefit Payments Assets (EOY) ,074,804,000 58,602,000 56,669,000 1,076,737, ,076,737,000 58,609,000 60,283,000 1,075,063, ,075,063,000 58,409,000 64,073,000 1,069,399, ,069,399,000 57,992,000 67,659,000 1,059,732, ,059,732,000 57,354,000 71,122,000 1,045,964, ,045,964,000 56,490,000 74,411,000 1,028,043, ,028,043,000 55,406,000 77,305,000 1,006,144, ,006,144,000 54,095,000 80,329, ,910, ,910,000 52,551,000 82,982, ,479, ,479,000 50,779,000 85,407, ,851, ,851,000 48,774,000 87,777, ,848, ,848,000 46,531,000 89,867, ,512, ,512,000 44,052,000 91,756, ,808, ,808,000 41,329,000 93,580, ,557, ,557,000 38,360,000 95,129, ,788, ,788,000 35,145,000 96,400, ,533, ,533,000 31,681,000 97,592, ,622, ,622,000 27,964,000 98,512, ,074, ,074,000 23,996,000 99,142, ,928, ,928,000 19,777,000 99,523, ,182, ,182,000 15,306,000 99,720, ,768, ,768,000 10,584,000 99,540, ,812, ,812,000 5,617,000 99,022,000 56,407, ,407, ,000 98,238, ,231, ,863,000 Number of years for which current market value of assets is adequate to sustain the payment of expected retirement benefits, reflecting no contributions from the Employer, Employee or State, contrary to Florida Statutes and Plan provisions: Valuation Investment Return Assumption 5.60% Valuation Mortality Table FRS Mortality Regular Class Note: As required in Section (1)(c) of the Florida Statutes, the projection of the Fund assets do not include contributions from the Employer, Employee or State, which is contrary to Florida Statutes and Plan provisions. For this reason, these projections should not be viewed as a representation of the amount of time the Fund can sustain benefit payments. Under the GASB standards which DO include contributions from the employer, employee and State, the Fund is expected to be able to sustain the benefit payment demands in the nearterm and longterm future. 7

13 Asset and Benefit Payment Projection Not Reflecting Any Contributions from the Employer, State or Employee Using Assumptions under (1)(b), F.S. except 2% higher investment return assumption FYE Assets (BOY) Expected Investment Return Projected Benefit Payments Assets (EOY) ,074,804, ,461,000 56,669,000 1,118,596, ,118,596, ,492,000 60,283,000 1,162,805, ,162,805, ,554,000 64,073,000 1,207,286, ,207,286, ,652,000 67,659,000 1,252,279, ,252,279, ,805,000 71,122,000 1,297,962, ,297,962, ,033,000 74,411,000 1,344,584, ,344,584, ,369,000 77,305,000 1,392,648, ,392,648, ,838,000 80,329,000 1,442,157, ,442,157, ,464,000 82,982,000 1,493,639, ,493,639, ,290,000 85,407,000 1,547,522, ,547,522, ,349,000 87,777,000 1,604,094, ,604,094, ,679,000 89,867,000 1,663,906, ,663,906, ,331,000 91,756,000 1,727,481, ,727,481, ,346,000 93,580,000 1,795,247, ,795,247, ,778,000 95,129,000 1,867,896, ,867,896, ,691,000 96,400,000 1,946,187, ,946,187, ,150,000 97,592,000 2,030,745, ,030,745, ,223,000 98,512,000 2,122,456, ,122,456, ,997,000 99,142,000 2,222,311, ,222,311, ,565,000 99,523,000 2,331,353, ,331,353, ,023,000 99,720,000 2,450,656, ,450,656, ,485,000 99,540,000 2,581,601, ,581,601, ,081,000 99,022,000 2,725,660, ,725,660, ,948,000 98,238,000 2,884,370, ,884,370, ,232,000 97,231,000 3,059,371, ,059,371, ,098,000 95,863,000 3,252,606,000 Number of years for which current market value of assets is adequate to sustain the payment of expected retirement benefits, reflecting no contributions from the Employer, Employee or State, contrary to Florida Statutes and Plan provisions: All future years Valuation Investment Return Assumption 9.60% Valuation Mortality Table FRS Mortality Regular Class Note: As required in Section (1)(c) of the Florida Statutes, the projection of the Fund assets do not include contributions from the Employer, Employee or State, which is contrary to Florida Statutes and Plan provisions. For this reason, these projections should not be viewed as a representation of the amount of time the Fund can sustain benefit payments. Under the GASB standards which DO include contributions from the employer, employee and State, the Fund is expected to be able to sustain the benefit payment demands in the nearterm and longterm future. 8

14 ACTUARIALLY DETERMINED CONTRIBUTION (ADC) Plan's Latest Actuarial Valuation (1)(a) F.S. Assumptions (1)(b) F.S. Assumptions (1)(b) F.S. except 2% higher investment return assumption A. Valuation Date October 1, 2017 October 1, 2017 October 1, 2017 October 1, 2017 B. Actuarial Determined Contribution (ADC) to Be Paid During Fiscal Year Ending 9/30/2019 9/30/2019 9/30/2019 9/30/2019 C. Assumed Dates of Employer Contributions Biweekly Biweekly Biweekly Biweekly D. Annual Payment to Amortize Unfunded Actuarial Liability $ 9,208,000 $ 9,208,000 $ 35,754,000 $ 0 E. Employer Normal Cost 11,876,000 11,876,000 23,238,000 5,762,000 F. Employer ADC if Paid on Valuation Date: D + E 21,084,000 21,084,000 58,992,000 5,762,000 G. Employer ADC Adjusted for Frequency of Payments 22,057,000 22,057,000 60,768,000 6,253,000 H. Employer ADC Adjusted for Frequency of Payments as % of Covered Payroll % % % 6.03 % I. Assumed Rate of Increase in Covered Payroll to Contribution Year 1.25 % 1.25 % 1.25 % 1.25 % J. Covered Payroll for Contribution Year 104,996, ,996, ,996, ,996,000 K. Employer ADC for Contribution Year: H x J 22,333,000 22,333,000 61,528,000 6,331,000 L. Estimated State Revenue in Contribution Year M. Net Employer ADC in Contribution Year 22,333,000 22,333,000 61,528,000 6,331,000 N. Net Employer ADC as % of Covered Payroll in Contribution Year: M J % % % 6.03 % O. Expected Member Contributions 5,250,000 5,250,000 5,250,000 5,250,000 P. Total Contribution (including Members) 27,583,000 27,583,000 66,778,000 11,581,000 Q. Total Contribution as % of Covered Payroll in Contribution Year: P J % % % % R. Investment Return Assumption 7.60% 7.60% 5.60% 9.60% Mortality Table FRS Mortality Regular Class FRS Mortality Regular Class FRS Mortality Regular Class FRS Mortality Regular Class 9