C I T Y O F O R L A N D O G E N E R A L E M P L O Y E E S P E N S I O N F U N D C H A P T E R 1 1 2. 6 6 4, F. S. C O M P L I A N C E R E P O R T S E P T E M B E R 3 0, 2 0 1 4
June 29, 2015 Board of Trustees City of Orlando General Employees Pension Fund Orlando, Florida Dear Board Members: Gabriel, Roeder, Smith & Company (GRS) has been engaged by the City of Orlando General Employees Pension Fund to prepare a disclosure report to satisfy the requirements set forth in Ch. 112.664, F.S. and as further required pursuant to Ch. 60T-1.0035, F.A.C. This report was prepared at the request of the Board and is intended for use by the Retirement Board and those designated or approved by the Board. This report may be provided to parties other than the City and the Board only in its entirety and only with the permission of the City and the Board. The purpose of the report is to provide the required information specified in Ch. 112.664, 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. The findings in this report are based on data or other information through September 30, 2014. 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 Board concerning Fund benefits, financial transactions, plan provisions and active members, terminated members, retirees and beneficiaries. We checked for internal and year-to-year consistency, but did not otherwise audit the data. We are not responsible for the accuracy or completeness of the information provided by the City. This report was prepared using certain assumptions prescribed by the Board as described in the final actuarial valuation report dated March 10, 2015 and the GASB 67 report dated January 28, 2015. Note: As required in Section 112.664(c) of the Florida Statutes, the projections of the Fund assets on pages 5-8 do not include contributions from the employer, employee or state. 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 near-term and long-term future.
The Board of Trustees June 29, 2015 Page 2 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 Pension Fund 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. The signing actuaries are independent of the plan sponsor. With respect to the reporting standards for defined benefit retirement plans or systems contained in Section 112.664(1) F.S., the actuarial disclosures required under this section were prepared and completed by the signed actuaries or under their direct supervision, and they acknowledge responsibility for the results. To the best of their knowledge, the results are complete and accurate, and in their opinion, meet the requirements of Section 112.664(1), F.S. and Section 60T-1.0035, F.A.C. Brad Lee Armstrong and Jeffrey T. Tebeau are Members of the American Academy of Actuaries (MAAA) and meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion contained herein. Respectfully submitted, Brad L. Armstrong ASA, EA, MAAA Jeffrey T. Tebeau ASA, MAAA BLA/JTT:
TABLE OF CONTENTS Title Page Ch. 112.664, F.S. Results Schedule of Changes in Net Pension Liability 1. Using financial reporting assumptions per GASB Statement No. 67 1 2. Using assumptions prescribed in Section 112.664(1)(a), F.S. 2 3. Using assumptions prescribed in Section 112.664(1)(b), F.S. 3 4. Using the mandated mortality and funding interest rate +2% 4 Asset Versus Benefit Payments Projections 1. Using funding assumptions 5 2. Using assumptions prescribed in Section 112.664(1)(a), F.S. 6 3. Using assumptions prescribed in Section 112.664(1)(b), F.S. 7 4. Using the mandated mortality and funding interest rate +2% 8 Actuarially Determined Contribution 9
Schedule of Changes in the Employers' Net Pension Liability Using Financial Reporting Assumptions per GASB Statement No. 67 Fiscal year ending September 30, 2014 1. Total pension liability a. Service Cost $ 1,417,366 b. Interest 17,584,829 c. Benefit Changes - d. Difference between actual & expected experience - e. Assumption Changes - f. Benefit Payments (14,335,291) g. Contribution Refunds - h. Other - i. Net Change in Total Pension Liability 4,666,904 j. Total Pension Liability - Beginning 226,269,321 k. Total Pension Liability - Ending $ 230,936,225 2. Plan Fiduciary Net Position a. Contributions - Employer $ 9,056,797 b. Contributions - Non-Employer Contributing Entity - c. Contributions - Member 508,575 d. Net Investment Income 17,015,603 e. Benefit Payments (14,335,291) f. Contribution Refunds - g. Administrative Expense (110,530) h. Other - Includes Share Accounts - i. Net Change in Plan Fiduciary Net Position 12,135,154 j. Plan Fiduciary Net Position - Beginning 195,879,490 k. Plan Fiduciary Net Position - Ending $ 208,014,644 3. Net Pension Liability / (Asset) $ 22,921,581 Investment Return Assumption 8.00% Mortality Table 1994 Group Annuity Table -1-
Schedule of Changes in the Employers' Net Pension Liability Using Assumptions required under 112.664(1)(a), F.S. Fiscal year ending September 30, 2014 1. Total pension liability a. Service Cost $ 1,496,854 b. Interest 18,099,990 c. Benefit Changes - d. Difference between actual & expected experience - e. Assumption Changes - f. Benefit Payments (14,335,291) g. Contribution Refunds - h. Other - i. Net Change in Total Pension Liability 5,261,553 j. Total Pension Liability - Beginning 232,669,098 k. Total Pension Liability - Ending $ 237,930,651 2. Plan Fiduciary Net Position a. Contributions - Employer $ 9,056,797 b. Contributions - Non-Employer Contributing Entity - c. Contributions - Member 508,575 d. Net Investment Income 17,015,603 e. Benefit Payments (14,335,291) f. Contribution Refunds - g. Administrative Expense (110,530) h. Other - Includes Share Accounts - i. Net Change in Plan Fiduciary Net Position 12,135,154 j. Plan Fiduciary Net Position - Beginning 195,879,490 k. Plan Fiduciary Net Position - Ending $ 208,014,644 3. Net Pension Liability / (Asset) $ 29,916,007 Investment Return Assumption 8.00% Mortality Table RP-2000 fully generational using Scale AA -2-
Schedule of Changes in the Employers' Net Pension Liability Using Assumptions required under 112.664(1)(b), F.S. Fiscal year ending September 30, 2014 1. Total pension liability a. Service Cost $ 2,460,696 b. Interest 16,739,536 c. Benefit Changes - d. Difference between actual & expected experience - e. Assumption Changes - f. Benefit Payments (14,335,291) g. Contribution Refunds - h. Other - i. Net Change in Total Pension Liability 4,864,941 j. Total Pension Liability - Beginning 284,929,559 k. Total Pension Liability - Ending $ 289,794,500 2. Plan Fiduciary Net Position a. Contributions - Employer $ 9,056,797 b. Contributions - Non-Employer Contributing Entity - c. Contributions - Member 508,575 d. Net Investment Income 17,015,603 e. Benefit Payments (14,335,291) f. Contribution Refunds - g. Administrative Expense (110,530) h. Other - Includes Share Accounts - i. Net Change in Plan Fiduciary Net Position 12,135,154 j. Plan Fiduciary Net Position - Beginning 195,879,490 k. Plan Fiduciary Net Position - Ending $ 208,014,644 3. Net Pension Liability / (Asset) $ 81,779,856 Investment Return Assumption 6.00% Mortality Table RP-2000 fully generational using Scale AA -3-
Schedule of Changes in the Employers' Net Pension Liability Using Assumptions required under 112.664(1)(b), F.S. Except 2% higher investment return assumption Fiscal year ending September 30, 2014 1. Total pension liability a. Service Cost $ 935,293 b. Interest 18,813,500 c. Benefit Changes - d. Difference between actual & expected experience - e. Assumption Changes - f. Benefit Payments (14,335,291) g. Contribution Refunds - h. Other - i. Net Change in Total Pension Liability 5,413,502 j. Total Pension Liability - Beginning 194,835,003 k. Total Pension Liability - Ending $ 200,248,505 2. Plan Fiduciary Net Position a. Contributions - Employer $ 9,056,797 b. Contributions - Non-Employer Contributing Entity - c. Contributions - Member 508,575 d. Net Investment Income 17,015,603 e. Benefit Payments (14,335,291) f. Contribution Refunds - g. Administrative Expense (110,530) h. Other - Includes Share Accounts - i. Net Change in Plan Fiduciary Net Position 12,135,154 j. Plan Fiduciary Net Position - Beginning 195,879,490 k. Plan Fiduciary Net Position - Ending $ 208,014,644 3. Net Pension Liability / (Asset) $ (7,766,139) Investment Return Assumption 10.00% Mortality Table RP-2000 fully generational using Scale AA. -4-
Asset and Benefit Payment Projection Not Reflecting Any Contributions from the Employer, State or Employee Using Financial Reporting Assumptions per GASB Statement No. 67 FYE (BOY) Expected Investment Return Projected Benefit Payments (EOY) 2015 $ 208,014,644 $ 15,976,098 $ 16,626,839 $ 207,363,903 2016 207,363,903 15,888,689 17,510,590 205,742,001 2017 205,742,001 15,730,809 18,213,773 203,259,037 2018 203,259,037 15,507,634 18,827,219 199,939,452 2019 199,939,452 15,220,744 19,360,313 195,799,883 2020 195,799,883 14,874,320 19,741,767 190,932,436 2021 190,932,436 14,472,585 20,050,244 185,354,777 2022 185,354,777 14,017,285 20,277,431 179,094,631 2023 179,094,631 13,510,858 20,417,819 172,187,669 2024 172,187,669 12,957,330 20,442,082 164,702,918 2025 164,702,918 12,361,207 20,375,665 156,688,460 2026 156,688,460 11,725,947 20,228,237 148,186,170 2027 148,186,170 11,054,819 20,001,856 139,239,134 2028 139,239,134 10,350,311 19,720,497 129,868,948 2029 129,868,948 9,613,958 19,388,950 120,093,956 2030 120,093,956 8,846,893 19,015,594 109,925,255 2031 109,925,255 8,050,422 18,589,971 99,385,706 2032 99,385,706 7,226,011 18,121,148 88,490,568 2033 88,490,568 6,374,768 17,611,931 77,253,405 2034 77,253,405 5,497,586 17,067,171 65,683,820 2035 65,683,820 4,595,369 16,483,426 53,795,762 2036 53,795,762 3,669,213 15,861,193 41,603,782 2037 41,603,782 2,720,038 15,206,626 29,117,194 2038 29,117,194 1,748,479 14,522,415 16,343,258 2039 16,343,258 754,991 13,811,738 3,286,511 2040 3,286,511-13,078,304 - Number of years for which current market value of assets are adequate to sustain the payment of expected retirement benefits reflecting no contributions from the Employer, Employee or State: 25.25 Valuation Investment return assumption 8.00% Valuation Mortality Table 1994 Group Annuity Table -5-
Asset and Benefit Payment Projection Not Reflecting Any Contributions from the Employer, State or Employee Using Assumptions required under 112.664(1)(a), F.S. FYE (BOY) Expected Investment Return Projected Benefit Payments (EOY) 2015 $ 208,014,644 $ 15,975,983 $ 16,629,707 $ 207,360,920 2016 207,360,920 15,887,818 17,526,381 205,722,357 2017 205,722,357 15,727,843 18,248,645 203,201,555 2018 203,201,555 15,500,607 18,887,936 199,814,225 2019 199,814,225 15,207,006 19,453,297 195,567,935 2020 195,567,935 14,850,497 19,873,432 190,545,000 2021 190,545,000 14,434,552 20,226,192 184,753,360 2022 184,753,360 13,960,093 20,504,391 178,209,063 2023 178,209,063 13,428,647 20,701,938 170,935,772 2024 170,935,772 12,843,366 20,787,390 162,991,748 2025 162,991,748 12,207,872 20,786,707 154,412,913 2026 154,412,913 11,524,688 20,708,630 145,228,971 2027 145,228,971 10,796,120 20,554,930 135,470,162 2028 135,470,162 10,023,624 20,349,730 125,144,056 2029 125,144,056 9,207,634 20,097,274 114,254,415 2030 114,254,415 8,348,160 19,804,834 102,797,741 2031 102,797,741 7,445,351 19,461,705 90,781,388 2032 90,781,388 6,499,464 19,076,183 78,204,669 2033 78,204,669 5,510,389 18,649,618 65,065,440 2034 65,065,440 4,477,826 18,185,232 51,358,033 2035 51,358,033 3,401,531 17,677,793 37,081,771 2036 37,081,771 2,281,468 17,126,836 22,236,403 2037 22,236,403 1,117,421 16,537,272 6,816,552 2038 6,816,552-15,909,840-2039 - - 15,246,837-2040 - - 14,551,398 - Number of years for which current market value of assets are adequate to sustain the payment of expected retirement benefits reflecting no contributions from the Employer, Employee or State: 23.42 Valuation Investment return assumption 8.00% Valuation Mortality Table RP-2000 fully generational using Scale AA -6-
Asset and Benefit Payment Projection Not Reflecting Any Contributions from the Employer, State or Employee Using Assumptions required under 112.664(1)(b), F.S. FYE (BOY) Expected Investment Return Projected Benefit Payments (EOY) 2015 $ 208,014,644 $ 11,981,987 $ 16,629,707 $ 203,366,924 2016 203,366,924 11,676,224 17,526,381 197,516,767 2017 197,516,767 11,303,547 18,248,645 190,571,669 2018 190,571,669 10,867,662 18,887,936 182,551,394 2019 182,551,394 10,369,485 19,453,297 173,467,582 2020 173,467,582 9,811,852 19,873,432 163,406,002 2021 163,406,002 9,197,574 20,226,192 152,377,384 2022 152,377,384 8,527,511 20,504,391 140,400,505 2023 140,400,505 7,802,972 20,701,938 127,501,539 2024 127,501,539 7,026,471 20,787,390 113,740,620 2025 113,740,620 6,200,836 20,786,707 99,154,749 2026 99,154,749 5,328,026 20,708,630 83,774,145 2027 83,774,145 4,409,801 20,554,930 67,629,016 2028 67,629,016 3,447,249 20,349,730 50,726,535 2029 50,726,535 2,440,674 20,097,274 33,069,935 2030 33,069,935 1,390,051 19,804,834 14,655,152 2031 14,655,152 295,458 19,461,705-2032 - - 19,076,183-2033 - - 18,649,618-2034 - - 18,185,232-2035 - - 17,677,793-2036 - - 17,126,836-2037 - - 16,537,272-2038 - - 15,909,840-2039 - - 15,246,837-2040 - - 14,551,398 - Number of years for which current market value of assets are adequate to sustain the payment of expected retirement benefits reflecting no contributions from the Employer, Employee or State: 16.75 Valuation Investment return assumption 6.00% Valuation Mortality Table RP-2000 fully generational using Scale AA -7-
Asset and Benefit Payment Projection Not Reflecting Any Contributions from the Employer, State or Employee Using Assumptions required under 112.664(1)(b), F.S. Except 2% higher investment return assumption FYE (BOY) Expected Investment Return Projected Benefit Payments (EOY) 2015 $ 208,014,644 $ 19,969,979 $ 16,629,707 $ 211,354,916 2016 211,354,916 20,259,173 17,526,381 214,087,707 2017 214,087,707 20,496,338 18,248,645 216,335,400 2018 216,335,400 20,689,143 18,887,936 218,136,607 2019 218,136,607 20,840,996 19,453,297 219,524,306 2020 219,524,306 20,958,759 19,873,432 220,609,633 2021 220,609,633 21,049,654 20,226,192 221,433,095 2022 221,433,095 21,118,090 20,504,391 222,046,794 2023 222,046,794 21,169,582 20,701,938 222,514,438 2024 222,514,438 21,212,074 20,787,390 222,939,123 2025 222,939,123 21,254,577 20,786,707 223,406,993 2026 223,406,993 21,305,268 20,708,630 224,003,631 2027 224,003,631 21,372,617 20,554,930 224,821,318 2028 224,821,318 21,464,645 20,349,730 225,936,233 2029 225,936,233 21,588,760 20,097,274 227,427,719 2030 227,427,719 21,752,530 19,804,834 229,375,415 2031 229,375,415 21,964,456 19,461,705 231,878,167 2032 231,878,167 22,234,008 19,076,183 235,035,992 2033 235,035,992 22,571,118 18,649,618 238,957,492 2034 238,957,492 22,986,488 18,185,232 243,758,748 2035 243,758,748 23,491,985 17,677,793 249,572,939 2036 249,572,939 24,100,952 17,126,836 256,547,056 2037 256,547,056 24,827,842 16,537,272 264,837,625 2038 264,837,625 25,688,271 15,909,840 274,616,056 2039 274,616,056 26,699,264 15,246,837 286,068,483 2040 286,068,483 27,879,278 14,551,398 299,396,364 Number of years for which current market value of assets are adequate to sustain the payment of expected retirement benefits reflecting no contributions from the Employer, Employee or State: N/A* Valuation Investment return assumption 10.00% Valuation Mortality Table RP-2000 fully generational using Scale AA * The Fund is not projected to run out of money under the 10.00% interest rate assumption. -8-
ACTUARIALLY DETERMINED CONTRIBUTION GASB No. 67 Assumptions 112.664(1)(a) F.S. Assumptions 112.664(1)(b) F.S. Assumptions 112.664(1)(b) F.S. except 2% higher investment return assumption A. Valuation Date September 30, 2014 September 30, 2014 September 30, 2014 September 30, 2014 B. Actuarial Determined Contribution (ADC) to Be Paid During Fiscal Year Ending 9/30/2016 9/30/2016 9/30/2016 9/30/2016 C. Assumed Dates of Employer Contributions Quarterly Quarterly Quarterly Quarterly D. Annual Payment to Amortize Unfunded Actuarial Liability $ - $ - $ - $ - E. Total Normal Cost 8,562,928 10,993,953 27,058,738 396,224 F. ADC: D + E $ 8,562,928 $ 10,993,953 $ 27,058,738 $ 396,224 G. As a % of Covered Payroll 105.46 % 135.40 % 333.26 % 4.88 % H. Assumed Rate of Increase in Covered Payroll to Contribution Year 0.00 % 0.00 % 0.00 % 0.00 % I. Covered Payroll for Contribution Year 8,119,345 8,119,345 8,119,345 8,119,345 J. ADC for Contribution Year: G x I 8,562,928 10,993,953 27,058,738 396,224 K. Allowable Credit for State Revenue in Contribution Year 0 0 0 0 L. Member Contributions 396,224 396,224 396,224 396,224 M.Employer ADC in Contribution Year $ 8,166,704 $ 10,597,729 $ 26,662,514 $ - N. Employer ADC as % of Covered Payroll in Contribution Year: M I 100.58 % 130.52 % 328.38 % 0.00 % O. Investment Return Assumption 8.00% 8.00% 6.00% 10.00% Mortality Table 1994 Group Annuity Table RP-2000 fully generational using Scale AA RP-2000 fully generational using Scale AA RP-2000 fully generational using Scale AA -9-