City of Dearborn Police and Fire Revised Retirement System

Transcription

1 City of Dearborn and Fire Revised Retirement System Dear Retirement System Member: Summary Annual Report To Members June 30, 2015 The Retirement System, which is managed by the Retirement Board, is designed to help you meet your financial needs should you become disabled, retire or die. The City also supports a Retiree Health Insurance Program, which is separate from the Retirement System. The Retirement Board's fiduciary responsibility to you is to supervise the general administration of the System and invest its assets. Our Board retains professional advisors to assist us in fulfilling these duties. We have prepared this summary report to give you a brief overview of the Retirement System and how it operates. We hope you will find it useful and informative. However, a summary cannot cover all the details of the System, which is governed by the provisions of the City's charter, the City's retirement ordinance and the Retirement Board's official rules and regulations. Additional information about the System and its financial operation is available in the Finance Department. Respectfully submitted, Retirement Board Investment Fiduciaries City of Dearborn and Fire Revised Retirement System i Wells Capital Management Carl Meyers, Chairman i PHOCUS Financial Advisors Don Cundy, Vice-Chairman i Prudential Real Estate Investors Alan C. Brzys, Member i Baird Core Bund Fund Jeffrey Gee, Member i Pictet Asset Management Brian Keith, Fire Member i World Asset Management Michael Weinburger, Fire Member i Brandywine Asset Management Thomas Norwood, Citizen Trustee i Grantham, Mayo, Van Otterloo, LLC i Blackrock, Inc. i EnTrust Capital i DeRoy and Devereaux i Peregrine Capital Management i Loomis, Sayles & Co. LP i Wellington Management i Windhaven Investment Management i Acadian Emerging Markets i LS Investment Advisors Master Trust Custodian i Comerica Bank Investment Consultant i New England Pension Consultants Actuary i Gabriel, Roeder, Smith & Company Secretary i James J. O Connor 1

2 Legal Advisor i Jeremy Romer Pension Administrator i Wendy K. Orcutt Summary Results of Actuarial Valuation Your retirement system's financial objective is to establish and receive contributions, which will remain approximately level from year to year and will not have to be increased for future generations of taxpayers. Contribution levels are expressed in terms of percents of the city's active member payroll. To determine an appropriate Employer contribution level for the ensuing year and to gauge how the system's funding is meeting this fundamental objective, an independent firm of actuaries and employee benefit consultants, Gabriel, Roeder, Smith & Company, conducts annual actuarial valuations. These valuations are based on your System's past experience, information about current participation and financial markets, and assumptions concerning the System s future demographic and economic activity. The results of the June 30, 2015 valuation, based on the established funding objective, are summarized below: Fiscal year 2017 Employer Contribution Rates As a Percentage of Active Member Payroll Contributions for Fire Members Members Normal Cost of Benefits % 26.40% Accrued Liabilities Member portion Computed Employer Rate 57.8 % 75.9% The System received the required employer contributions for the year covered by this report. Funded Status $ Millions Fire i Actuarial accrued liabilities $ i Applied assets (smoothed market value) i % Funded 80.9% 83.5% Number of Active Members-Fire Inactive Vested Members - Fire... 3 Number of Retirees and Beneficiaries-Fire 127 Average Annual Retirement Allowance-Fire $ 53,246 Total Annual Retirement Allowances-Fire $ 6,714,956 Weighted Average of Member Contributions 5% Refundable Contribution Valuation Payroll-Fire... $ 7,124,786 Number of Active Members Inactive Vested Members Number of Retirees and Beneficiaries- 259 Average Annual Retirement Allowance- $ 45,590 Total Annual Retirement Allowances- $11,495,762 Weighted Average of Member Contributions 5% Refundable Contribution Valuation Payroll-... $ 6,955,562 2

3 Total Soft Dollar Expenditures... There were no soft dollar expenditures Itemized Budget and Expenditures... See Attached Assumed Rate of Investment Return % Assumed Rate of Long Term Wage Inflation 3.0% Smoothing Method... 5 Year Smoothed Market... 80%/120% Corridor Amortization Method and Period... Level Dollar/15 Years Actuarial Cost Method... Entry Age Normal Investment Performance Net of Fees on rolling calendar-year basis: 1 Year (2.8) % 3 Year 4.1% 5 Year 4.4% 7 Year 7.7% 10 Year 4.6% SUMMARY OF CURRENT ASSET INFORMATION Revenues & Expenditures Operating Revenues: Employee contributions $ 735,288 Employer contributions 9,193,439 Interest and dividends 4,687,861 Miscellaneous income 0 Net increase in value of investments (2,591,963) Total Operating Revenues 12,024,625 Operating Expenses: Annuities 18,210,717 Professional services 1,318,353 Employee refunds 999,301 Total Operating Expenses 20,528,371 Net Income (Loss) (8,503,746) Fund Balance, July 1, ,607,965 Fund Balance, June 30, 2015 $ 273,104,219 Investments Stock and equity mutual funds... 69% Bonds Cash and equivalents... 2 Real Estate... 5 Total 100% The market rate of return on system assets for the year ended June 30, 2015 was.28 %. 3

4 SUMMARY OF PROVISIONS 1. Voluntary Retirement. Members may retire after either: completing 25 years or service regardless of age, or attaining age 55 and completing 10 years of service. 2. Compulsory Retirement. A member must retire upon attaining age 60, except that under certain conditions a member may be extended in service to age Final Average Salary. The average of a member's annual pays during the highest 36 consecutive months of service contained within the last 10 years of service. For fire, the final average salary computation includes overtime taken in cash, accumulated overtime limited to 160 hours, and up to 160 hours of accumulated unused vacation days. For police, the computation includes overtime taken in cash, accumulated overtime limited to 120 hours, carry-over time to 40 hours, and up to 20 days of unused vacation time or paid time off. 4. Age and Service Allowance. Fire Final average salary times the sum of 2.8% times the first 26 years of service plus 2.2% times the next one year of service plus 1% times the next 3 years of service, with a maximum of 78%. Non-supervisory members Final average salary times the sum of 2.8% times the first 25 years of service plus 1.0% times the next five years of service, with a maximum of 75%. Supervisory and Inspector members Final average salary times the sum of 2.8% times the first 24 years of service plus 3.8% times the next one year of service plus 1.4% times the next 5 years of service, with a maximum of 78%. 5. Deferred Allowance. A Member with 10 or more years of service who leaves City employment before retirement is entitled to receive an allowance computed in the same manner as an age and service allowance, payments beginning upon the member's application at age 55 or when the member would have attained 25 years of service, whichever is earlier. 6. Duty Disability Allowance. A member who becomes totally and permanently disabled from dutyconnected causes receives, subject to offsetting for worker's compensation, a duty disability allowance equal to 70% of final average salary. 7. Non-Duty Disability Allowance. A member with 10 or more years of service who becomes totally and permanently disabled from other than duty-connected causes receives a non-duty disability allowance computed in the same manner as and age and service allowance. 8. Death-in-Service Benefits. Upon the death of a member, the surviving dependents receive, subject to offsetting for worker's compensation, the following benefits: (a) The spouse receives an annuity equal to the Option B-100 annuity (joint and 100% survivor actuarial equivalent benefit) which would have been payable had the deceased member retired at the time of death and elected Option B-100. The minimum annuity payable to the spouse is 20% of the member's final average salary. (b) The dependent children under 18 (23 if they are full-time students) each receive and annuity of 15% of the member's final average salary until they reach 18 (23.) If there are 4 or more dependent children, each child receives an equal share of 50% of the member's final average salary until they reach the above ages. (c) If there are neither a spouse nor children, each dependent parent receives an annuity equal to 15% of final average salary. 4

5 9. Benefit Changes After Retirement. The cap on all raises is the lower of the rate of inflation or 2%. The provision provides compound increases after retirement. Fire retirements after July 1, 2002, provide increases each January 1 or July 1, beginning with the January 1 or July 1 that is at least 24 full months after retirement. Persons retired prior to July 1, 2002 are covered by different provisions. Non-supervisory members retiring after July 1, 2002 receive raises starting 2 years after retirement. Persons retired prior to July 1, 2002 are covered by different provisions. Supervisory and Inspector members retiring after July 1, 2001 receive raises starting 24 full months after retirement. Persons retired prior to July 1, 2001 are covered by different provisions. 10. Annuity Withdrawal. Upon retirement, a member may withdraw a lump sum not to exceed the amount of his accumulated member contributions (not including interest) at time of retirement. The life allowance otherwise payable is not reduced to reflect the withdrawal of contributions. A member may also make an annuity withdrawal after 25 years of credited service. 11. Optional Benefit Forms. Retiring members may elect to receive a retirement allowance with the provision that a portion (100%, 75%, or 50%) of the amount will continue to a beneficiary after the death of the retiree. The 50% reduction is provided at no cost to the member, while those who elect the 75 or 100% option will have their benefits reduced by the excess of the cost of the elected option over the cost of the 50% option. The amount is based upon 7.25% interest, the RP 2000 Mortality Table projected to 2020 using projection scale BB (multiplied by 110% for males) with a 95% Unisex Blend, and the ages of the retiree and beneficiary on the retirement date or the member's 25 year anniversary if earlier. If a member elects an optional form and the beneficiary predeceases the member, the amount payable to the member "pops-up" to the amount that would have been payable if the optional form had not been elected. This "pop-up" benefit is provided at no cost to the retiring member. 12. Member Contributions. members contribute 5% of annual pay. Fire members contribute 5% of annual pay effective 7/1/10. If a member terminates employment before any allowance is payable, accumulated contributions are refunded. 13. Employer Contributions. The city contributes the remainder amounts necessary to finance the Retirement System. 14. Effective July 1, 2005 the and Fire Revised Retirement System became closed to nonsupervisory police officers hired on or after that date. 15. Effective May 1, 2009 the and Fire Revised Retirement System became closed to Firefighters hired on or after that date. 5