PENSION BOARD CONSULTANTS, INC. Actuarial Report as of October 1, 2015

Transcription

1 PENSION BOARD CONSULTANTS, INC. CONSULTING, ACTUARIAL & ADMI NISTRATIV E SERVICES J ARMON WELCH. A.S. A. PRESIDE N T KELLY SHELTON ACT UARY D I RECT: FOURTEENTH ST, NE SU ITE 37 ATLANTA, GEORGIA EMAi L : P ENBRD@AO L.COM March 3, 6 Pension Board City of Pensacola Police Officers' Retirement Fund West Main Street Pensacola, Florida 35 Dear Trustees: Actuarial Report as of October, 5 We are pleased to forward our report on the actuarial valuation of the City of Pensacola Police Officers' Retirement Fund as of October, 5. The cost recommendations cover the Plan Years beginning October, 6. This is based on participant data and on asset information provided by the City and on the terms of the Plan in effect on October, 5. Valuation pay is the greater of the annualized rate of pay or FY5 pensionable earnings. All of the data has been reviewed for consistency with prior data and for general reasonableness. Statement by Actuary: This actuarial valuation and/or cost determination 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, 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 that may require material increases in Plan costs or required contribution rates have been taken into account in the valuation. I am a member of the American Academy of Actuaries and meet its Qualification Standards to render the actuarial opinion contained herein. ~ ~ J - 3o-lt. Ja~.A. PENSION BOARD CONSULTANTS, INC. Date 4-8 Enrollment Number

2 Actuarial Report for the Plan Year Beginning October, 5 Table of Contents Cost and Liabilities Analysis Derivation of Required Contribution Projected Unfunded Actuarial Accrued Liability Statement of Plan Net Assets Statement of Changes in Plan Net Assets Determination of Actuarial Value of Assets Actuarial Assumptions and Methods Plan Outline Key Statistics Reconciliation of Number of Participants by Status Active Age and Service Distribution State of Florida Information

3 Derivation of Required Contribution as of October, 5 October, 4 October, 5. Covered October Payroll (non DROP) $4,377,97 $4,43,864. Entry Age Actuarial Accrued Liabilities a. Active Participants $,75,598 $6,6,767 b. Inactive Participants $95,37,489 $,759,455 C. Total (a. + b.) $8,79,87 $7,37, 3. Value of Assets a. Actuarial Value of Assets $8,56,8 $83,576,43 b. Contribution Surplus Account* $7,58 $86,396 c. Accumulated Chapter 85 Premium Tax $396,897 $396,897 d. Net Actuarial Value of Assets (a. - b. - c.) $79,464,877 $8,373,3 4. Unfunded Actuarial Accrued Liability $38,64, $44,999,9 5. Annual Plan Cost a. UAAL Amortization Payment (6 years) $3,75,84 $4,483,574 b. Individual Entry Age Normal Cost $88,74 $9,596 c. Annual Expense Load $7, $7, d. Total Required Contribution BOY (a. + b. + c.) $4,64,556 $5,466,7 6. Contributions a. Expected State Contribution $473,83 $5,88 b. Expected Employee Contribution $7,654 $3,4 c. Minimum Required City Contribution $3,939,69 $4,73,3 (5.d. - 6.a. - 6.b.) payable October 7. Funded Status 7.6% 6.% = Net Market Value of Assets/ Total Pension Liability Reconciliation The City minimum required contribution increased $783,7 as follows:. Assumption changes (interest and mortality) increased costs $665,38.. Experience losses (primarily investment) increased costs $8,3. * adjusted for (expected less actual) contributions plus 7.5% interest on prior 3(a) and 3(b).

4 Projected Unfunded Actuarial Accrued Liability Expected Expected Expected Plan Year UAAL Amortization UAAL Beginning on / Payment on 9/3 5 $44,999,9 $4,483,574 $43,45, ,45,893 4,483,574 4,794, ,794,595 4,483,574 4,6,7 8 4,6,7 4,483,574 38,8,6 9 38,8,6 4,483,574 36,6,84 36,6,84 4,483,574 33,868,765 33,868,765 4,483,574 3,55,67 3,55,67 4,483,574 8,99, ,99,867 4,483,574 6,85,44 4 6,85,44 4,483,574 3,38,84 5 3,38,84 4,483,574,68,759 6,68,759 4,483,574 6,99,6 7 6,99,6 4,483,574 3,348, ,348,374 4,483,574 9,57, ,57,498 4,483,574 5,388,59 3 5,388,59 4,483,574 97, ,67 97,67

5 Statement of Plan Net Assets as of September 3, 4 and 5 Assets 4 5 Cash and short-term investments $,86,739 $,5,48 Real Estate $7,86,77 $7,988,799 Receivables $7,36 $,39 Investments, at fair value Fixed Income Securities $3,384,445 $3,6,64 Equities Domestic $47,7,76 $4,94,694 International $5,,5 $4,36,68 Accrued Income $7,89 $87,74 Total assets $84,539,38 $8,3,954 Liabilities Accounts payable $,5 $83,55 Net assets held in trust for pension benefits $84,437,986 $8, 3,799 Note: The market values shown above include $4,59,96 as of 9/3/4 and $4,3,55 as of 9/3/5 for accumulated DROP accounts with interest. 3

6 Statement of Changes in Plan Net Assets as of September 3, 4 and 5 Additions 4 5 Contributions Employer $3,85,656 Plan members $56, State of Florida - Insurance $473,83 Purchase of Service by Members $,4 Total contributions $4,466,963 Investment income Investment income & realized gains $,83,46 Market valuation adjustment $4,53,83 Miscellaneous {$46} $7,37,83 Less investment expense $436,6 Net investment income $6,88, Total additions $.,347,985 $3,83,839 $4,97 $5,88 $ $4,583,744 $3,433,953 ($5,379,46) {$6} ($,945,54) $47,33 {$,36,487} $,,57 Deductions Benefits $4,59,344 Refund of contributions $4, DROP payouts $,93,56 Administrative expense $69,5 Total deductions $6,63,58 Net increase $5,84,87 Net assets held in trust for pension benefits Beginning of year $79,53,59 End of year $84,437,986 $4,5,47 $,83 $,933,393 $8,44 $6,58,444 ($4,37,87) $84,437,986 $8,3,799 Note: The market values shown above include $4,59,96 as of 9/3/4 and $4,3,55 as of 9/3/5 for accumulated DROP accounts with interest. 4

7 Determination of Actuarial Value of Assets as of September 3, 5 Market Fiscal Yield Year Index as During Growth Relative Weighted Ending of 9/3 Next Year Factor Weights Value. 9.47% % % % ~ Adjustment Factor 5. divided by 44. or.43 Actuarial Value of Assets : Market Value $8,3,799 x Adjustment Factor.43 = $83,576,43 Plan Year Ending 9/3/4 9/3/5. Actuarial Asset Value, BOY $74,87,357 $8,56,8. Actuarial Asset Value, EOY $8,56,8 $83,576,43 3. Contributions from all Sources $4,466,963 $4,583, Benefit Payments and Expenses $6,63,58 $6,58,444 Net of Money Manager Fees* 5. Income, including Realized and $8,7, $4,958,84 Unrealized Gains 6. Yield for Plan Year. % 6.3% * Money manager fees for PYE4 were $436,6 and PYE5 were $47,33. 5

8 Actuarial Assumptions and Methods The actuarial assumptions are based on an experience study for the five Plan Years ending September 3,. Economic Assumptions: Annual Investment Yield: Salary Scale: Increase in Benefits: 7.5% compounded annually. 4.% compounded annually.5% per year after retirement. Expense Loading: $7, Demographic Assumptions: Mortality: Probability of Death: Turnover: Pre- and Post-Retirement: All using RP- Generational, Scale BB, with Female: % Annuitant White Collar Male: % Annuitant White Collar/9% Annuitant Blue collar Post-Disablement: Female: 6% RP Disabled Female set forward two years/4% Annuitant White Collar with no setback, no projection scale Male: 6% RP Disabled Male setback four years/ 4% Annuitant White Collar with no setback, no projection scale Line of Duty: 5%; Non-Line of Duty: 85%. No vested refunds or disability recoveries. Probability Probability Age of Disability of Withdrawal Probability of Disability: Percent Married: Line of Duty: 45%; Non-Line of Duty: 55%. 8% of active participants married with spouses three years younger. lnactives and DROP participant status is same as reported tax status. 6

9 Actuarial Assumptions and Methods Retirement: The greater of the rates below: Service 5 YOS 6-9 YOS 3 YOS Annual Rate.5.5. Age Annual Rate Age Annual Rate Actuarial Methods: Cost: Assets: Individual Entry Age Five-year Smoothing Changes Since the October, 4 Valuation. The annual net investment yield was reduced from 7.5% to 7.5%.. The mortality assumption was changed to that used in July, 5 for the FRS. 3. Next Plan Year, the asset valuation method will use a growth factor of 7.5%. 7

10 Plan Outline Eligibility: Hired before January, 3 and elected to continue in the Fund. Credited Service: All service as a Police Officer. Compensation: Limited to an officers' base pay and senior officer pay exclusive of overtime earned on or after January, 3, but shall include overtime earned as of December,. Average Final Compensation: / of the average annual Compensation of the last 5 years of Credited Service (best of last 5 for those with YOS on January, 3). Normal Retirement Date: Age 55 with years of Credited Service or 5 years of Credited Service. Normal Annual Retirement Benefit: 3% of Average Final Compensation for each Full Year of Credited Service. Early Retirement Benefit: Age 5 and years of Credited Service. Normal benefit is reduced.5% for each month preceding age 55. Form of Retirement Benefit: Life only (if YOS on January, 3, years certain with % J&S). Pre-Retirement Death and Disability: Return of employee contributions, or Line of Duty: immediate Accrued Benefit, minimum 4% of average monthly salary. Non Line of Duty: after years of Credited Service, immediate Accrued Benefit, minimum 5% of average monthly salary. Employee Contributions: 5.% of Compensation. Post-Retirement Cost of Living Increase: Board of Trustees may increase benefits up to 3% per annum based on DOL CPI (retirees and DROP participants on or after January,, 3 have maximum increase of % after years) calculated each September 3 and effective the following January. Deferred Retirement Option Plan (DROP): Pension amount frozen at date of entry to DROP Maximum 5 years DROP period No employee or City contributions while in DROP Pre January, 3 DROPs: Awarded annual COLA while in DROP Account balances are credited with 4% annual interest Post January, 3 DROPs: No COLA while in DROP Account balances are credited with.3% annual interest Changes Since the October, 4 Valuation: None. 8

11 Key Statistics Class of Particiant Valuation Date // / / //3 //4 //5 Continuing Actives* Pay Increase% 6.8% -4.% 3.% 7.53%** 4.85% Active Number Average Age Average Annual Pay $49,88 $43,56 $45,94 $49,366 $5,593 Average Past Service*** Terminated Vested Number Average Age Average Annual Benefit $3,6 $3,3 $9, $9,953 $9,8 Retired Number Average Age Average Annual Benefit $3,8 $34,96 $37,754 $4,7 $4,663 Disabled Number Average Age Average Annual Benefit $,93 $,869 $4, $5,467 $6,387 Survivors Number Average Age Average Annual Benefit $8,95 $7,933 $9,4 $9,753 $,66 DROPs Number Average Age Average Annual Benefit $55,33 $55,77 $59,759 $6,397 $59,448 * Excluding DROP's ** Corrected *** Includes buy back service. 9

12 Reconciliation of Number of Participants by Status Vested Actives Retirees Terminations Disabilities Beneficiaries DROPs Members on // Non-Vested Terminations or Terminated with Refund Vested Terminations Retirees ( ) () (8) Disabilities Deaths with Beneficiaries ( ) ( ) Deaths without Beneficiaries ( ) (4) New Beneficiaries Data Correction New DROPS () Members on //

13 Age <5 >=5 <3 >=3 <35 >=35 <4 >=4 <45 >=45 <5 >=5 <55 >=55 <6 >=6 <65 >=65 ALL Service < >= < >= < CITY OF PENSACOLA Age and Service Distribution as of October, 5 >=3 < , ,743 >=4 < >=5 < , , , , ,934 >= < , , , , , , ,539 >=5 < , , , , , ,59 >= < , , , , , ,654 >=5 < , , ,9 Cell Format: Number In Each Group, Average Age, Average Service, And Average Salary Includes both sexes >=3 < >=35 < >= ALL , , , , , , , ,593

14 State of Florida Information A Participant Data See pages 9, O and. B. Assets See page 3. C. Liabilities Before Assumption As of Changes Changes //4 //5 //5. Present Value of Future Benefits for: Retirement Benefits $4,5,994 $6,564,83 $8,47,86 Death Benefits $433,7 $437,78 $5,47 Disability Benefits $3,548,6 $3,573,37 $4,4,934 Withdrawal Benefits $748,647 $764, $838,97 Return of Contributions $5,4 $5,83 $5,954 Total Active $9,84,5 $3,388,98 $33,688,64 Terminated Vested $,,84 $838,73 $894,5 Retirees and Beneficiaries $57,859,59 $66,86,75 $69,448,6 Disableds $3,577,698 $3,539,895 $3,794,3 DROPs $3,878,6 $5,65,574 $6,6,578 Total Inactive $95,37,489 $96,5,493 $,759,455 Total Present Value of Future Benefits $4,6,639 $7,64,474 $34,448,97 D. Entry: Age Normal Actuarial Accrued Liability: Before Assumption As of Changes Changes //4 //5 //5 Actives Retirement Benefits $9,9,338 $,996,783 $3,8,435 Death Benefits $95,6 $35,54 $353,564 Disability Benefits $,355,37 $,436,98 $,739,69 Withdrawal Benefits $45,83 $47,477 $455,673 Return of Contributions -$ 5,968 -$6,49 -$7,534 Total Actives $,75,598 $4,939, $6,6,767 Total lnactives $95,37,489 $96,5,493 $,759,455 Total Entry Age Normal Actuarial Accrued Liability $8,79,87 $, 54, 6 3 $7,37,

15 State of Florida Information E. Actuarial Present Value of Accumulated Plan Benefits Before Assumption As of Changes Changes //4 //5 //5 Active Vested $4,78,6 $6,777,55 $7,585,884 Nonvested $,33,933 $,45,985 $,74,747 Inactive ~95,37,489 ~96,5,493 ~,759,455 Total $,8,44 $4,39,8 $9,4,86 Includes accumulated employee contributions of $98,58 $,3,674 $,3,674 Reconciliation with Prior Valuation. Actuarial Present Value of Accumulated Plan Benefits as of October, 4. $,8,44 (includes DROP balances of $4,59,96). Plus additional benefit accruals FYE 5. $,58, Less benefit payments to pensioners FYE 5. $6,446,3 4. Increase due to 7.5% net yield assumption. $7,94, Increase due to Assumption Changes. $5,38,58 6. Salary increases and other experience deviations from expected values. $3, Actuarial Present Value of Accumulated Plan Benefits as of October, 5. (includes DROP balances of $4,59,96) $9,4,86 F. Present Value of Before Assumption As of Changes Changes //4 //5 //5 Future Salaries $35,4,4 $34,68,3 $34,85, Future City Contributions $39,33,773 $39,46,69 $46,8,865 Future Employee Contributions $,84,9 $,8,67 $,8,385 Future Contributions from Other Sources $3,87,97 $4,4,63 $4,35,77 3

16 State of Florida Information G. Pension Cost Before Assumption As of Changes Changes //4 //5 //5 Normal Actuarial Cost $888,74 $99,34 $98,596 Minimum Payment to UAAL $3,75,84* $3,89,448 $4,483,574 *corrected Expected Usable Contributions From State Dollar Amount $473,83 $5,88 $5,88 % of Covered Payroll.8%.59%.59% Expected Contributions From Employees Dollar Amount $7,654 $3,4 $3,4 % of Covered Payroll 5.% 5.% 5.% Expected Contributions From City Dollar Amount $3,939,69* $4,57,94 $4,73,3 % of Covered Payroll 89.99% 9.73% 6.77% *corrected H. Past Contributions Expected contributions for Plan Year ending September 3, 5. See G. above. Actual contributions for Plan Year ending September 3, 5 - See page 4. I. Net Actuarial Gain (Loss) For period ended 9/3/5 - ($,4,936) J. Benefits and Expenses of Plans not Explicitly or Implicitly Provided for in Valuation None. K. Trends Not Taken Into Account But Which Are Likely to Result in Future Cost Increases None. L., Age/Service Distribution of Active Employees See page. M. Derivation of Costs on Current Plan Basis See page. 4

17 N. (i) CITY OF PENSACOLA State of Florida Information Three-Year Comparison of Actual and Assumed Salary Increases Year Ended Actual Assumed 9/3/5 9/3/4 9/3/3 4.85% 7.53%* 3.3% *corrected 4.% 4.% 5.% (ii) (iii) Five-Year Comparison of Net Investment Returns Market Actuarial Year Ended Value Value 9/3/5 -.83% 6.3% 9/3/4 8.78%. % 9/3/3 4.5%.9% 9/3/ 9.47% 7.36% 9/3/.37%.% Average Annual Growth in PayrolL last Years Plan Year 4/5 5/6 6/7 7/8 8/9 9/ / / /3 3/4 4/5 Total Valuation Payroll $7,933,68 $7,5,673 $7,6,743 $7,577,663 $7,93,4 $6,966,75 $6,85,58 $5,96,99 $4,87, $4,377,97 $4,43,864 Assumed 7.5% 7.5% 7.75% 8.% 8.% Total% Increase Annual % Increase (44.4%) (5.67%). Statement by Enrolled Actuary See Cover Letter. 5