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Ord No 33-11-2106ORDINANCE NO. 33 -11 -2106 An Ordinance amending the South Miami Pension Plan, providing for an amendment to Section 16- 12, Definitions, Section 16 -13, Eligibility, to Section 16 -14, Pension Benefits and Retirement Dates, to comply with current City policy concerning the definitions of annual compensation and final average compensation; and also amending Section 16 -13, Eligibility. WHEREAS, the City of South Miami and the American Federation of State, County and Municipal Employees, AFL -CIO, City Employees Local 3294 (hereinafter "Union "), have entered into a new Collective Bargaining Agreement ( "Agreement "), effective October 1, 2011 ( "CBA "); and WHEREAS, it is the purpose and intention of the Agreement to provide for salaries, fringe benefits and other terms and conditions of employment except as otherwise provided by Constitution, Statute, Charter, Ordinance, Administrative Order or Personnel Rules and Regulations; and WHEREAS, Florida law requires that if any provision of a collective bargaining agreement is in conflict with any ordinance over which the chief executive officer has no amendatory power, the chief executive officer shall submit to the appropriate governmental body having amendatory power a proposed amendment to such ordinance; and WHEREAS, the City Commission deems it to be in the public interest to provide these changes to the pension plan; NOW, THEREFORE, BE IT HEREBY ORDAINED BY THE MAYOR AND CITY COMMISSION OF THE CITY OF SOUTH MIAMI, FLORIDA, THAT: Section 1: That Chapter 16 Article ll, Section 16 -12, "Definitions" of the City of South Miami Code of Ordinances is hereby amended as follows: t a••a a a•aa u•a••a MEN ANN a•am aa•am a 0 Ana amaa•aa as a•aa ANNE •a a• a• a a amp a•• a a am no ANN a•a a• Page 1 of 10 Ord. No. 33 -11 -2106 Annual compensation shall mean base wages and salaries, including hazardous pay, overtime pay, vacation, sick leave, holiday pay, clothing allowance, educational incentive and extra duty pay. However, for compensation earned by police officers or sergeants on or after October 1, 2011, the maximum amount of overtime hours that may be used to determine annual compensation for calculating retirement benefits for any one (1) fiscal year shall not exceed three hundred (300) hours. Additionally, for police officers and sergeants, payments for accrued unused sick leave or accrued unused annual leave earned on or after October 1, 2011, and payments for extra duty or special detail work for a second party employer, performed on or after October 1, 2011, shall not be considered a part of their annual compensation for purposes of calculating their retirement benefits. In addition, shift differential pay, assignment pay and bonuses for police officers and sergeants shall not be considered a part of their annual compensation for purposes of calculating their retirement benefits. Any additional or other forms of pay not specifically mentioned hereinabove, for any and all employees, shall be excluded from the definition of annual compensation. Additionally, for compensation earned by general employees, on or after October 1, 2011, annual compensation excludes commissions, overtime pay, bonuses and any other forms of additional compensation earned outside of base wages. Final average compensation shall mean the participant's annual compensation, as determined by the employer, acting in a uniform and nondiscriminatory manner. For general employees, effective October 1, 2011, final average compensation shall be averaged over the last five (5) year period, provided however final average compensation over the last five (5) year period shall not be less than the final average compensation as of September 30, 2011, under the definition of final average compensation which existed as of September 30, 2011. For members covered under the police officers and sergeants collective bargaining agreement, final average compensation shall be the best five -year period of the police officer or sergeant's career with the City of South Miami, provided however final average compensation over the best five (5) year period shall not be less than the final average compensation as of September 30, 2011, under the definition of final average compensation which existed as of September 30, 2011. The best five (5) years is defined as the highest five (5), twenty -six (26) consecutive pay periods within a police officer or sergeant's career and such consecutive year periods shall not overlap one another. For all other members, final average compensation shall be averaged over the last three -year period - but not less than the average of the Participant's five (5) best years of annual compensation during the last ten (10) years of service. For all members final average compensation will end on the participant's retirement date, date of disability, date of termination of employment or the date of termination of the plan, whichever is applicable. Section 2: That Chapter 16 Article II, Section 16 -13, " "Eligibility" of the City of South Miami Code of Ordinances is hereby amended as follows: Eligibility. Page 2 of 10 Ord. No. 33 -11 -2106 (a) Each employee employed by the employer on October 1, 1965, shall be a participant on the first participation date on which he has completed two (2) years of credited service and has attained his twenty -fifth birthday -. (b) Each employee who becomes an employee subsequent to October 1, 19733 shall be a participant on the first participation date on which he /she has completed six (6) months of credited service and has obtained his /her twentieth birthday. For all current employees as of October 1, 1995, each fiscal year there will be a window for joining the retirement system; i.e. October 1 through October 31. (c) It shall become mandatory for all employees hired on or after October 1, 1995, to join the pension plan after completion of six (6) months of employment by the city. (d) All general employees who are hired by the City of South Miami on or after October 1, 2011, will not be eligible to participate in the South Miami Pension Plan. All general employees hired on or after October 1, 2011, shall join the ICMA -RC defined contribution (DC) 457 Plan. (e) Employees who are hired on or after October 1, 2011, and are classified as police officer or sergeant, shall enter the pension plan immediately upon being hired as a sworn law enforcement officer. (f) All general employees hired on or before September 30, 2011, will have a one- time option to either remain in the South Miami Pension Plan or elect to discontinue membership. (1) For general employees who choose to discontinue membership in the South Miami Pension Plan, employees shall provide in writing no later than December 31, 2011, to the City's Human Resources Department, a letter stating their choice to discontinue membership in the South Miami Pension Plan. The letter shall state the percentage the employee will contribute towards the ICMA -RC 457 which contribution rate shall be effective until September 30, 2012. The effective date of the change is on the first pay period in January 2012. (2) Should a general employee choose to discontinue membership in the South Miami Pension Plan, the general employee will be refunded the contribution which they contributed during their participation in the South Miami Pension Plan and may rollover such amount into the newly established ICMA -RC 457 Plan. Section 3: That Chapter 16 Article II, Section 16 -14, "Pension benefits and retirement date" of South Miami Code of Ordinances is hereby amended as follows: (a) Retirement date. The normal retirement date with full unreduced pension benefits for a participant, shall be as follows: Page 3 of 10 Ord. No. 33 -11 -2106 (1) General employees. Shall be the first day of the calendar month coincident with or, otherwise, next following the later of the participant's sixtieth birthday and the date on which the participant has completed ten (10) years of credited service. General employees participating in the plan as of September 30, 2011, will remain eligible to retire at the age of fifty -five (55) and the completion of ten (10) years of credited service and obtain their accrued benefits earned through September 30, 2011 at such time. Benefit accruals earned on or after October 1, 2011, including increases due to increases in final average compensation, will be paid at the new normal retirement date of attainment of age sixty (60) and completion of ten (10) years of credited service. (2) Police officers. shall be the completion of twenty -five (25) years of credited police service, regardless of age, or attainment of age sixty (60) and completion of ten (10) years of credited police service. (b) Amount of pension. The yearly amount of pension payable to a participant on the first day of the month coincident with or next following the participant's retirement date shall be an amount equal to the participant's number of completed years of credited service multiplied by a percentage of final average compensation as stated herein. (1) Basic benefit. a. A basic benefit for participant's retiring prior to October 1, 1970, shall be determined by multiplying 1.6 percent of the participant's final average compensation by the number of completed years of credited service, excluding the first two (2) years of such service and any additional service completed by the participant prior to the participant's twenty -fifth birthday. b. However, as to those participants who became an employee subsequent to October 1, 1973, there shall only be excluded the first six (6) months of such service plus any additional service completed prior to the participant's twentieth birthday and /or additional service completed prior to the participant becoming eligible to join this pension plan. (2) General employees. a. Effective October 1, 1993, the pension benefit accrual rate (multiplier) for general employee participants, shall be increased from 1.6 percent to 1.8 percent for services performed in the 1993 -1994 fiscal year. b. Effective October 1, 1994, the pension benefit accrual rate (multiplier) for general employee participants, shall be increased from Page 4 of 10 Ord. No. 33 -11 -2106 1.8 percent to 1.9 percent for services performed in the 1994 -1995 fiscal year. C. Effective October 1, 1995, the pension benefit accrual rate (multiplier) for general employee participants shall be increased from 1.9 percent to 2.25 percent for services performed in the 1995 -1996 fiscal year. d. Effective October 1, 1996 the pension benefit accrual rate (multiplier) for general employee participants shall be increased from 2.25 percent to 2.50 percent for services performed in the 1996 -1997 fiscal year. Effective October 1, 2001, the pension benefit accrual rate (multiplier) for general employee participants shall be 2.25 percent for all services performed through September 30, 1998. e. Effective October 1, 1997 the pension benefit accrual rate (multiplier) for general employee participants shall be increased from 2.50 percent to 2.75 percent for services performed in the 1997 -1998 fiscal year and thereafter. Effective October 1, 2001, the pension benefit accrual rate (multiplier) for general employee participants shall be 2.50 percent for services performed in the 1998 -1999 fiscal year and 2.75 percent for services performed thereafter. If. Effective October 1, 2002, the pension benefit accrual rate (multiplier) for general employee participants shall be 2.50 percent for all services performed through September 30, 1999, and 2.75 percent for services performed thereafter. g. For all service earned on or after October 1, 2011, the pension benefit accrual rate (multiplier) for general employee participants shall be reduced from 2.75% to 2.25 %. (3) Police officers. a. For sworn police personnel, effective October 1, 1993, the pension benefit accrual rate (multiplier) shall be increased from 1.6 percent to 1.8 percent, for services performed in the 1993 -1994 fiscal year. b. Effective October 1, 1994, the pension benefit accrual rate (multiplier) shall be increased from 1.8 percent to 1.9 percent, for services performed in the 1994 -1995 fiscal year. Page 5 of 10 Ord. No. 33 -11 -2106 C. Effective October 1, 1995, the pension benefit accrual rate (multiplier) shall be increased from 1.9 percent to 2.25 percent for services performed in the 1995 -1996 fiscal year. d. Effective October 1, 1996 the pension benefit accrual rate (multiplier) shall be increased from 2.25 percent to 2.50 percent for services performed in the 1996 -1997 fiscal year. e. Effective October 1, 1997 the pension benefit accrual rate (multiplier) shall be increased from 2.50 percent to 2.75 percent, for services performed in the 1997 -2001 fiscal year. f. Effective October 1, 2001, the pension benefit accrual rate (multiplier) for sworn police personnel shall be increased from 2.75 percent to 2.80 percent for services performed in the 2001 -2002 fiscal year. g. Effective October 1, 2002, the pension benefit accrual rate (multiplier) for sworn police personnel shall be increased from 2.80 percent to 2.90 percent for services performed in the 2002 -2003 fiscal year. h. Effective October 1, 2003 and thereafter the pension benefit accrual rate (multiplier) for sworn police personnel shall be increased from 2.90 percent to 3.00 percent. i. Notwithstanding the above subsection, the pension benefit accrual rate (multiplier) for sworn police personnel shall not be less than two (2) percent for all years of service. (4) Supplemental benefit. A supplemental benefit, if any is payable, determined on each valuation date which occurs after the participant's normal retirement date. The supplemental benefit shall be equal to (1) an amount determined at the first applicable valuation date by multiplying the yearly amount of basic benefit by the percentage, if any, by which the current index exceeds the base index and (2) an amount determined at each subsequent valuation date, where the current index exceeds the prior index, or where the prior index exceeds the current index, by reducing such sum by the product of such sum and the percentage by which the prior index exceeds the current index; provided, however, that in no event shall the supplemental benefit payable at any time be greater than the excess of (1) the basic benefit increased at three (3) percent compounded annually from the initial valuation date applicable to the participant over (2) the basic benefit. In no event shall the supplemental benefit be reduced below zero so as to affect the amount of basic benefit. Supplemental benefits shall Page 6 of 10 Ord. No. 33 -11 -2106 commence or be adjusted as of each October 1 and shall continue thereafter for the following eleven (11) months. Effective October 1, 2011, the supplemental benefit Cost of Living Adjustment (COLA) for general employees (eligible retirees and /or beneficiaries) is eliminated for future benefit accruals, including increases in the current accrued benefit due to increases in final average compensation. General employees will receive the supplemental benefit on their accrued benefit as of September 30, 2011. (c) Early retirement. (1) A police officer participant may elect an early retirement date which may be the first day of any calendar month coincident with, or subsequent to the participant's fiftieth birthday and completion of fifteen (15) years of credited service. The pension benefits payable to any such participant on early retirement date shall be equal to an actuarial equivalent, determined in accordance with the table below, to the amount of pension to which is entitled up to early retirement date in accordance with subsection (b). Table — Police officer participant — Percentages for early retirement date Years prior to normal Percentage retirement date 1 97 2 94 3 91 4 88 5 85 Age on normal retirement date shall be age nearest birthday. Years prior to normal retirement date shall mean years and completed months from early retirement date to normal retirement date. Allowance for such months shall be made by interpolating in this table. Commencing after the participant's normal retirement date the basic benefit of any participant retiring on or after October 1, 1970, will be supplemented by the applicable supplemental benefit determined in the same manner as in subsection 16- 14(b)(2). (d) Late retirement. A participant, with the written consent of his employer, may elect a later retirement date which may be the first day of any calendar month after normal retirement date. If the participant's contributions shall terminate on late retirement, benefits shall be based on annual earnings and credited service to late retirement date. Page 7 of 10 Ord. No. 33 -11 -2106 Commencing after the participant's late retirement date the basic benefit of any participant retiring on or after October 1, 1970, will be supplemented by the applicable supplemental benefit determined in the same manner as provided in subsection 16- 14(b)(2), based on the basic benefit actually being paid; provided, however, that the first applicable valuation date will be the first such date following such participant's late retirement date. (e) Life income; death benefit. The normal form of pension shall be a life income with the first monthly payment of a participant's pension being due on retirement date if the participant is then living, and the last monthly payment being due on the last monthly due date on which the participant is living. If the death of the participant occurs after this form of pension has become operative but before the sum of all monthly payments that have become due prior to the participant's death exceeds the death benefit which would have been payable if the participant had died immediately prior to retirement date, there shall be payable in one sum to the beneficiary entitled thereto an amount equal to the excess of such death benefit over the sum of such monthly payment. (f) Optional forms of payment. (1) A participant entitled to a normal or early service retirement benefit shall have the right at any time prior to the date upon which the first payment is received to elect to have the benefit payable under one of the options provided in this section. The participant shall be permitted to revoke any such election and to elect a new option at any time prior to the receipt of the first payment. Election of the retirement option shall be on a form prescribed by the board of trustees. a. Life annuity. A participant may elect to receive an annuity payable for life. This shall be the normal form of retirement. There shall be no guaranteed payment in excess of the accumulated contributions of the participant, which contributions shall be paid to the participant's estate or designated beneficiary should the participant die prior to receiving payments equal to said contributions. b. Joint and last survivor option. A participant may elect to receive a reduced benefit for life and to have the same benefit (or a designated fraction of the benefit) continued after the participant's death and during the lifetime of a designated joint pensioner. The participant shall have the option of electing to receive the payment of a benefit of seventy -five (75) percent, sixty -six and two- thirds (662/3) percent, or fifty (50) percent of the participant's monthly retirement allowance to be paid at the participant's death to a joint pensioner designated by the participant at the time of or prior to retirement, such benefit to be payable during the lifetime of the joint pensioner. The reduced retirement benefit shall be the actuarial equivalent of the amount of the retirement compensation otherwise payable to the participant. A designated joint 'M • 1 Ord. No. 33 -11 -2106 pensioner may be any natural person, but need not be the spouse of the participant. In the event that the designated joint pensioner dies, before the participant's benefit payments begin, this option shall be canceled automatically and a retirement income shall be payable to the member in the form of a life annuity as if the election had never been made. A retired participant may change his or her joint pensioner up to two (2) times without the approval of the board or the current joint pensioner. The retiree member need not provide proof of the good health of the joint pensioner being removed, and the designated survivor being removed need not be living. Any increase in liability to the plan associated with the new designation, as determined by the fund's actuary, shall be borne by the retiree. C. Other options. The pension board may, approve any other optional form of substantially equal payments, which are the actuarial equivalent of any other form provided for in this plan, or which optional form of payment is cost neutral to the plan. Section 4. Codification. The provisions of this ordinance shall become and be made part of the Code of Ordinances of the City of South Miami as amended; that the sections of this ordinance may be renumbered or re- lettered to accomplish such intention; and that the word "ordinance" may be changed to "section" or other appropriate word. Section 5. Severability. If any section, clause, sentence, or phrase of this ordinance is for any reason held invalid or unconstitutional by a court of competent jurisdiction, this holding shall not affect the validity of the remaining portions of this ordinance. Section 6. Ordinances in Conflict. All ordinances or parts of ordinances and all section and parts of sections of ordinances in direct conflict herewith are hereby repealed. However, it is not the intent of this section to repeal entire ordinances, or parts of ordinances, that give the appearance of being in conflict when the two ordinances can be harmonized or when only a portion of the ordinance in conflict needs to be repealed to harmonize the ordinances. If the ordinance in conflict can be harmonized by amending its terms, it is hereby amended to harmonize the two ordinances. Therefore, only that portion that needs to be repealed to harmonize the two ordinances shall be repealed. Section 7. Effective Date. This ordinance shall become effective upon enactment. PASSED AND ENACTED this 1st day of November, 2011. ATTEST: APPROVED: tITY CLERK MAY R Page 9 of 10 Ord. No. 33 -11 -2106 1St Reading — 10/18/11 2nd Reading — 11/1/01 "WICUR 1T ATTORNEY /V( COMMISSION VOTE: 5 -0 Mayor Stoddard: Yea Vice Mayor Newman: Yea Commissioner Beasley: Yea Commissioner Palmer: Yea Commissioner Harris: Yea P:\ Documents\ 2011 \11 - 027 \Ordinances \Ordinance re New CBA Changes for AFSCME v 5 -Second Reading Language.v.2. [C LEAN].doc Page 10 of 10 o f soup, 3 South Miami � r F g AIFMeica City V INCORPORATED • CITY OF SOUTH MIAMI Isz� P I I I I: OFFICE OF THE CITY MANAGER zoo, INTER - OFFICE MEMORANDUM To: The Honorable Mayor & Members of the City Commission From: Hector Mirabile, Ph.D., City Manager Date: November 1, 2011 Agenda Item No.: 13. Subject: An Ordinance amending the South Miami Pension Plan, providing for an amendment to Section 16 -12, Definitions, Section 16 -13, Eligibility, to Section 16 -14, Pension Benefits and Retirement Dates, to comply with current City policy concerning the definitions of annual compensation and final average compensation; and also amending Section 16- 13, Eligibility. REVISION TO SECTION 1 OF THE ORDINANCE — Definition Final average compensation The Pension Board Attorney along with the GRS, have recommended to the City during the second and final reading of this Ordinance, that Section 1, Final average compensation be revised to read as corrected below. The intended purpose of the change is to incorporate and make clear the definition for Lieutenants, Captains and all sworn personnel not covered by the collective bargaining agreement between the City of South Miami and the Police Officers and Sergeants. Additionally, Section 16 -19 has been removed because there are no revisions to Section 16 -19. Section 1: That Chapter 16 Article II, Section 16 -12, "Definitions" of the City of South Miami Code of Ordinances is hereby amended as follows: ....................................... ............................... 0 0 E 0 0 E 0 0 M E N E 0 0 E Final average compensation shall mean the participant's annual compensation, as determined by the employer, acting in a uniform and nondiscriminatory manner. For egneral employees, effective October 1, 2011, final average compensation shall be averaged over the last five (5 ) year period, provided however final average compensation over the last five (5) year period shall not be less than the final average compensation as of September 30, 2011, under the definition of final average compensation which existed as of September 30, 2011. all members other than police offleers and poliee sefgeants, final avefage eompensation shall be avefaged ove the last three year pefiod ending on the partieipant's r-efirement date, date of disability, date of termination „f employment the date of termination of the plan, whiehever is applieable_. For members covered under the police officers and sergeants collective bargaining agreement, final average compensation shall be the best five -year period of the police officer or sergeant's career with the City of South Miami, provided however final average compensation over the best five (5) year period shall not be less than the final average compensation as of September 30, 2011, under the definition of final average compensation which existed as of September 30, 2011. ending on the poliee offleer- or- sergeant's m4kemenl date, date of disability, date of termination o employment of 4 of to atio of the la vhieheyer is a 1. able. The best five (5) years is defined as the highest five (5), twenty -six (26) consecutive pay periods within a police officer or sergeant's career and such consecutive year periods shall not overlap one another. For all other members final average compensation shall be averaged over the last three -year period - but not less than the average of the Participant's five (5) best years of annual compensation during the last ten (10) years of service. For all members final average compensation will end on the participant's retirement date, date of disability, date of termination of employment or the date of termination of the plan, whichever is applicable. PADocuments\201 1\1 1-027\Memo Ordinace Revision Second Reading- Defintion Final Avg Comp v 3 (2) -w highlight showing changes for 2nd reading.doc To: The Honorable Mayor & Members of the City Commission From: Hector Mirabile, Ph.D., City Manager Date: October 31, 2011 Agenda Item No: 13. Subject: An Ordinance amending the South Miami Pension Plan, providing for an amendment to Section 16 -12, Definitions, Section 16 -13, Eligibility, to Section 16 -14, Pension Benefits and Retirement Dates, Section 16 -19, Contributions to comply with current City policy concerning the definitions of annual compensation and final average compensation; and also amending Section 16 -13, Eligibility. ACTUARIAL IMPACT STUDY BY GABRIEL ROEDER SMITH & COMPANY (GRS) BACKGROUND: Attached please find the Actuarial Impact Statement, providing the financial impact associated with the proposed changes in the Pension Ordinance, incorporating the most recently approved AFSCME (American Federation of State County and Municipal Employees) agreement. Below please find an outline of the proposed changes which were taken into account in the October 31, 2011 Actuarial Impact Statement: — Close the Plan to future General Employees. — Current accrued benefits of General Employees will be frozen and payable under the current terms of the Plan at the currently defined normal retirement date — the later of attainment of age fifty -five (55) and completion of ten (10) years of credited service. — Future benefit accruals, including increases due to increases in the Final Average Compensation (FAC), of General Employees will be payable at the proposed new normal retirement date — the later of attainment of age sixty (60) and completion of ten (10) years of credited service. — Allow current General Employees to discontinue membership in the Plan, receive a refund of their member contributions from the Plan and participate in a defined contribution (DC) plan. GRS assumed all General Employees with less than seven (7) years of service will be electing to participate in the DC Plan and receive a refund of their member contributions. — Reduce the benefit accrual rate to two and a quarter percent (2.25%) per year for future credited service for General Employees. — Eliminate the supplemental benefit (annual cost of living adjustment based on the consumer price index — maximum 3 %) for General Employees on future benefit accruals, including increases in the accrued benefit due to increases in the FAC. — Change the definition of FAC for General Employees for future benefit accruals to the average of the final sixty (60) months of basic compensation, but not less than current FAC. Basic compensation excludes commissions, overtime pay, bonuses and any other forms of additional compensation outside of base wages. ADDITIONAL INFO.: In the 30 -year projections for General Employees, the total contribution for the Defined Benefit (DB) Plan is expected to increase in the 26th year because we assumed the impact of the proposed Ordinance (which results in a negative amortization) will be amortized over a 25 -year period. Once the impact of the proposed Ordinance has been fully amortized, the negative amortization goes away, thereby increasing the total DB contribution by approximately $200,000. The employees' share of this increase is approximately $100,000, and since covered DB payroll for General Employees is projected to be much smaller in 26 years than it is today (because it is a closed group), the member contribution as a percent of pay increases significantly. The City contribution (as a % of pay) did not increase as much as the member contribution because the City contribution includes the City's 7% contributions to the new DC Plan (for all new General Employees), and 26 years from now, the covered payroll for new General Employees is projected to be much higher than covered payroll for DB covered General Employees._ GRS expects some changes would occur (i.e. combing of amortization bases) prior to the 26th year to even out the discontinuity of DB contributions. SUPPORT: Gabriel Roeder Smith & Company (GRS) Actuarial Impact Statement Gabriel Roeder Smith & Company One East Prroward Blvd_ 954.527.1616 phone GRS Consultants & Acmaries Suit, 505 954.525MS3 fax Ft. Lauderdale, FL 33301 -1 804 www gabrietroeder.couu October 31, 2011 Mr. Alfredo Riverol Finance Director City Hall, I" Floor 6130 Sunset Drive South Miami, Florida 33143 Re: South Miami Pension Plan Actuarial Impact Statement Dear Alfredo: As requested, we are pleased to enclose three (3) copies of the Actuarial Impact Statement for filing the proposed Ordinance (copy attached) wider the South Miami Pension Plan with the State of Florida. Proposed Ordinance — The proposed Ordinance: ➢ Closes the Plan to future General Employees. ➢ Allows current General Employees to discontinue membership in the Plan, receive a refund of their member contributions from the Plan and participate in a defined contribution (DC) plan. ➢ Protects the current accrued benefit for General Employees payable under the current terns of the Plan at the currently defined normal retirement date — the later of attainment of age fifty -five (55) and completion of ten (10) years of credited service. Future benefit accruals, including increases due to increases in Final Average Compensation (FAC), for General Employees will be payable at the proposed new normal retirement date — the later of attainment of age sixty (60) and completion of ten (10) years of credited service. ➢ Reduces the benefit accrual rate for General Employees to two and a quarter percent (2.25 %) per year for future credited service. ➢ Eliminates the supplemental benefit (annual cost of living adjustment based on the consumer price index — maximum 3 %) on future benefit accruals, including increases in the current accrued benefit due to increases in the FAC, for General Employees. ➢ Changes the definition of FAC for General Employees for future benefit accruals to the average of the final sixty (60) months of basic compensation but not less than Mr. Alfredo Riverol October 31, 2011 Page Two current FAC. Basic compensation excludes commissions, overtime pay, bonuses and any other forms of additional compensation outside of base wages. Results — The following sets out the decrease in City minimum annual required contribution. The figure in parentheses is the decrease in City minimum annual contribution requirement expressed as a dollar amount based on projected covered annual payroll for fiscal year beginning October 1, 2011 ($1,919,779 for General Employees). Group Decrease General Employees (16.5 %) ($ 316,906) Filing Requirements — We have prepared the Actuarial Impact Statement for filing with the State of Florida. Please note that this Statement must be signed and dated on behalf of the Board of Trustees. Copies of the proposed Ordinance upon passage at first reading along with the signed and dated Actuarial Impact Statement should be filed with the State at the following addresses: Mr. Douglas E. Beckendorf, A.S.A. Ms. Patricia Shoemaker Bureau of Local Retirement Services Office of Municipal Police Officers' Division of Retirement & Firefighters' Pension Fund Building 8 Building 8 Post Office Box 9000 Post Office Box 3010 Tallahassee, Florida 32315 -9000 Tallahassee, Florida 32315 -3010 We understand the State requires funding no later than the fiscal year next following the effective date of the increases in costs resulting from the proposed Ordinance. Please forward a copy of the Ordinance upon passage at second reading to update our files. Actuarial Assumptions and Methods. Financial Data, Plan Provisions and Member Census Data — The actuarial assumptions and methods and financial data utilized in this Actuarial Impact Statement are the same actuarial assumptions and methods and financial data utilized in the October 1, 2010 Actuarial Valuation with the following exceptions: ➢ As requested, we have assumed all General Employees with less than seven (7) years of service will elect a refund of their employee contributions and choose to enter the DC Plan. ➢ The payroll growth assumption has been removed for General Employees. ➢ We have assumed General Employees who retire prior to age sixty (60) but after attainment of ten (10) years of credited service (55 & 10) will receive an actuarially reduced benefit payable immediately upon retirement. Gabriel Roeder Smith & Company Mr. Alfredo Riverol October 31, 2011 Page Three The Member census data utilized in this Actuarial Impact Statement is the same Member census data utilized in the October 1, 2010 Actuarial Valuation with the addition of the overtime pay for General Employees provided by the City August 24, 2011. The Plan provisions considered in this Actuarial Impact Statement are the same Plan provisions considered in the October 1, 2010 Actuarial Valuation with the exception of the proposed amendments described above. This Actuarial Impact Statement describes the financial effect of the proposed changes on the Plan, from a neutral perspective. These calculations are based upon assumptions regarding future events. However, the Plan's long term costs will be determined by actual future events, which may differ materially from the assumptions made. These calculations are also based upon present and proposed Pension Plan provisions that are outlined or referenced in this Actuarial Impact Statement. If you have reason to believe the assumptions used are unreasonable, the Plan provisions are incorrectly described or referenced, important Plan provisions relevant to this proposed Ordinance are not described or that conditions have changed since the calculations were made, you should contact the undersigned prior to relying on information in this Actuarial Impact Statement. If you have reason to believe that the information provided in this Actuarial Impact Statement is inaccurate, or is in any way incomplete, or if you need further information in order to make an informed decision on the subject matter of this report, please contact the undersigned prior to making such decision. In our opinion the benefits provided for under the current Plan and proposed Ordinance will be sufficiently funded through the payment of the amount as indicated in this Actuarial Impact Statement and future Actuarial Valuation reports. We will continue to update you on the future payment requirements for the Plan through our actuarial reports. These reports will also continue to monitor the future experience of the Plan. Future actuarial measurements may differ significantly from the current measurements presented in this Actuarial hmpact Statement 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. Due to the limited scope of the actuary's assignment, the actuary did not perform an analysis of the potential range of such future measurements. Gabriel Roeder Smith & Company Mr. Alfredo Riverol October 31, 2011 Page Four This Actuarial Impact Statement should not be relied on for any purpose other than the purpose described in the primary communication. Determinations of the financial results associated with the benefits described in this Actuarial Impact Statement in a manner other than the intended purpose may produce significantly different results. This Actuarial Impact Statement 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 Actuarial Impact Statement is accurate and fairly presents the actuarial impact of the proposed Ordinance on the South Miami Pension Plan as of the Actuarial Impact Statement 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. The undersigned are Members of the American Academy of Actuaries and meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion contained herein. Gabriel Roeder Smith & Company Mr. Alfredo Riverol October 31, 2011 Page Five if you should have any question concerning the above or if we may be of further assistance with this matter, please do not hesitate to contact us. Sincerest regards, Lawrence F. Wilson, A.S.A. Senior Consultant and Actuary 4N� Peter N. Strong, A.S.A Consultant and Actuary Enclosures cc: Javier Banos, Esq. Ronald Cohen, Esq. Ms. Dixie Martinez Gabriel Roeder Smith & Company South Miami Pension Plan Actuarial Impact Statement as of October 1, 2010 A. Description of Proposed Amendment (see attached Proposed Amendment) ➢ Close the Plan to future General Employees. ➢ Allow current General Employees to discontinue membership in the Plan, receive a refund of their member contributions from the Plan and participate in a defined contribution (DC) plan. ➢ Current accrued benefits of General Employees will be frozen and payable under the current terms of the Plan at the currently defined normal retirement date — the later of attainment of age fifty -five (55) and completion of ten (10) years of credited service. Future benefit accruals, including increases due to increases in the Final Average Compensation (FAC), of General Employees will be payable at the proposed new normal retirement date — the later of attainment of age sixty (60) and completion of ten (10) years of credited service. ➢ Reduce the benefit accrual rate to two and a quarter percent (2.25 %) per year for future credited service for General Employees. ➢ Eliminate the supplemental benefit (annual cost of living adjustment based on the consumer price index — maximum 3 %) for General Employees on future benefit accruals, including increases in the accrued benefit due to increases in the PAC. ➢ Change the definition of FAC for General Employees for future benefit accruals to the average of the final sixty (60) months of basic compensation, but not less than current FAC. Basic compensation excludes commissions, overtime pay, bonuses and any other forms of additional compensation outside of base wages. B. An estimate of the cost of implementing this amendment (see attachment) C. In my opinion, the proposed changes are in compliance with Part VII, Chapter 112, Florida Statutes and Section 14, Article X of the State Constitution. Chairman, Retirement Committee Date Gabriel Roeder Smith & Company South Miami Pension Plan Actuarial Impact Statement as of October 1, 2010 (General Employees) A. Participant Data Actuarial Proposed Valuation Ordinance 1. Active participants 83 37 2. Retired participants and beneficiaries 2. Actuarial Value of Assets $ receiving benefits 18 18 3. Disabled participants receiving benefits 0 0 4. Terminated vested participants 3 3 5. Annual payroll of active participants $ 377637350 $ 11919,779 6. Expected payroll of active employees for the following year $ 3,853,670 $ 1,919,779 7. Annual benefits payable to those currently d. Disability benefits receiving benefits $ 408,560 $ 408,560 B. Assets 1. Market Value of Assets $ 10,157,886 $ 10,157,886 2. Actuarial Value of Assets $ 10,852,137 $ 10,8521137 C. Liabilities 1. Actuarial present value of future expected benefit payments for active members a. Retirement benefits $ 14,599,008 $ 71581,633 b. Vesting benefits 11650,670 6847765 c. Death benefits 60,230 37,749 d. Disability benefits 1,174,410 537,600 e. Refunds 247,216 17,940 f. Total $ 17,731,534 $ 8,859,687 2. Actuarial present value of future expected benefit payments for terminated vested members $ 792,292 $ 792,292 3. Actuarial present value of future expected benefit payments for members currently receiving benefits a. Service retired $ 475667784 $ 4,566,784 b. Disability retired 0 0 c. Beneficiaries 0 0 d. Miscellaneous 145,736 616,366 e. Total $ 4,7127520 $ 5,183,150 ement. Total actuarial present value of future expected benefit payments $ 23,236,346 $ 14,835,129 5. Actuarial accrued liabilities $ 15,521,998 $ 12,361,603 6. Unfunded actuarial liabilities $ 4,669,861 $ 11509,466 -I- Gabriel Roeder Smith & Company South Miami Pension Plan Actuarial Impact Statement as of October 1, 2010 (General Employees) D. Statement of Accumulated Plan Benefits 1. Actuarial present value of accumulated vested benefits a. Participants currently receiving benefits b. Other participants c. Total 2. Actuarial present value of accumulated non- vested plan benefits 3. Total actuarial present value of accumulated plan benefits E. Pension Cost 1. Total normal cost (including expenses) 2. Payment required to amortize unfunded liability Actuarial Valuation $ 4,566,784 5,986,899 $ 10,553,683 Proposed Ordinance $ 4,566,784 5,986,899 $ 101553,683 873,423 577,150 $ 11,4271106 $ II,130,833 $ 816,642 $ 394,938 287,006 123,984 3. Interest adjustment 13.7% 37,321 $ 0 17,548 4. Total required contribution $ 639,694 ' $ 1 140,969 16.8% $ 536,470 5. Item 4 as a percentage of payroll 30.3% 27.9% 6. Estimated member contributions $ 515,931 $ 2137682 7. Item 6 as a percentage of payroll 13.7% 11.1% 8. Estimated State contributions $ 0 $ 0 9. Item 8 as a percentage of payroll 0.0% 0.0% 10. Net amount payable by City $ 625,038 $ 322,788 11. Item 10 as a percentage of payroll 16.6% 16.8% F. Pension Cost for the Next Fiscal Year 1. Estimated member contributions 2. Item 1 as a percentage of payroll 3. Estimated State contributions 4. Item 3 as a percentage of payroll 5. Net amount payable by City 6. Item 5 as a percentage of payroll $ 527,968 I $ 21302 2 13.7% 11.1% $ 0 $ 0 0.0% 0.0% $ 639,694 ' $ 322,788 2 16.6% 16.8% ' Percent of pay applied to expected 2011/2012 covered payroll ($3,853,670) 2 Percent of pay applied to expected 2011/2012 covered payroll ($1,919,779) -2- Gabriel Roeder Smith & Company South Miami Pension Plan Actuarial Impact Statement as of October 1, 2010 (General Employees) -3- Gabriel Roeder Smith & Company Actuarial Proposed Valuation Ordinance ems: G. Disclosure of Following Items: 1. Actuarial present value of future salaries - attained age $ 39,855,681 $ 17,813,761 2. Actuarial present value of future employee contributions - attained age $ 2,789,898 $ 1,246,963 3. Actuarial present value of future contributions from other sources N/A N/A 4. Amount of active members' accumulated contributions $ 1,991,157 $ 1,5207527 5. Actuarial present value of future salaries and future benefits at entry age N/A N/A 6. Actuarial present value of future employee contributions at entry age N/A N/A -3- Gabriel Roeder Smith & Company South Miami Pension Plan Actuarial Impact Statement as of October 1, 2010 (Police Officers) A. Participant Data 1. Active participants 2. Retired participants and beneficiaries receiving benefits 3. Disabled participants receiving benefits 4. Terminated vested participants 5. Annual payroll of active participants 6. Expected payroll of active employees for the following year 7. Annual benefits payable to those currently receiving benefits B. Assets 1. Market Value of Assets 2. Actuarial Value of Assets C. Liabilities 1. Actuarial present value of future expected benefit payments for active members a. Retirement benefits b. Vesting benefits c. Death benefits d. Disability benefits e. Refunds f. Total 2. Actuarial present value of future expected benefit payments for terminated vested members 3. Actuarial present value of future expected benefit payments for members currently receiving benefits a. Service retired b. Disability retired c. Beneficiaries d. Miscellaneous e. Total Actuarial Valuation 45 15 0 6 $ 3,067,558 $ 3,141,179 $ 419,618 Proposed Ordinance 45 15 0 6 $ 3,067,558 $ 3,1411179 $ 419,618 $ 119610,373 $ 117610,373 $ 12,4447607 $ 12,444,607 irement. Total actuarial present value of future expected benefit payments 5. Actuarial accrued liabilities 6. Unfunded actuarial liabilities -4- Gabriel Roeder Smith Sc Company $ 12,812,307 1,628,286 43,238 367,098 314,439 $ 157165,368 $ 2,1649847 $ 5,662,764 0 136,556 31,589 $ 5,8301909 $ 23,161,124 $ 18,330,874 $ 5,886,267 $ 12,812,307 1,628,286 43,238 367,098 314,439 $ 15,165,368 $ 2,1647847 $ 51662,764 0 136,556 31,589 $ 5,830,909 $ 23,161,124 $ 18,330,874 $ 5,886,267 South Miami Pension Plan Actuarial Impact Statement as of October 1, 2010 (Police Officers) D. Statement of Accumulated Plan Benefits I. Actuarial present value of accumulated vested benefits a. Participants currently receiving benefits b. Other participants c. Total 2. Actuarial present value of accumulated non- vested plan benefits 3. Total actuarial present value of accumulated plan benefits E. Pension Cost 1. Total normal cost (including expenses) 2. Payment required to amortize unfunded liability 3. Interest adjustment 4. Total required contribution 5. Item 4 as a percentage of payroll 6. Estimated member contributions 7. Item 6 as a percentage of payroll 8. Estimated State contributions 9. Item 8 as a percentage of payroll 10. Net amount payable by City 11. Item 10 as a percentage of payroll F. Pension Cost for the Next Fiscal Year 1. Estimated member contributions 2. Item 1 as a percentage of payroll 3. Estimated State contributions 4. Item 3 as a percentage of payroll 5. Net amount payable by City 6. Item 5 as a percentage of payroll Actuarial Valuation $ 5,799,320 8,926,627 $ 14,7259947 302,389 $ 151028,336 Proposed Ordinance $ 5,799,320 8,926,627 $ 14,725,947 302,389 $ 15,028,336 $ 713,468 $ 713,468 $ 37,780 $ 368,720 1.2% 2 368,720 $ 618,834 ' $ 37,235 19.7% 379235 $ 1,119,423 $ 1,II9,423 36.5% 36.5% $ 477,874 $ 477,874 15.6% 15.6% $ 37,780 $ 37,780 1.2% 1.2% $ 603,769 $ 603,769 19.7% 19.7% $ 489,916 $ 4895916 15.6% 15.6% $ 37,780 $ 37,780 1.2% 2 1.2% 2 $ 618,834 ' $ 618,834 t 19.7% 19.7% ' Percent of pay applied to expected 2011/2012 covered payroll ($3,141,179) 2 Percent of expected 2011/2012 covered payroll ($3,141,179) -5- Gabriel Roeder Smith & Company South Miami Pension Plan Actuarial Impact Statement as of October 1, 2010 (Police Officers) G. Disclosure of Following Items: 1. Actuarial present value of future salaries - attained age 2. Actuarial present value of future employee contributions - attained age 3. Actuarial present value of future contributions from other sources 4. Amount of active members' accumulated contributions 5. Actuarial present value of future salaries and - future benefits at entry age 6. Actuarial present value of future employee contributions at entry age Actuarial Valuation $ 23,9649485 $ 1,797,336 N/A Proposed Ordinance $ 231964,485 $ 1,7979336 $ 2,358,260 $ 2,358,260 -6- Gabriel Roeder Smith & Company N/A N/A N/A N/A South Miami Pension Plan Actuarial Impact Statement as of October 1, 2010 (All Participants) A. Participant Data 1. Active participants 2. Retired participants and beneficiaries receiving benefits 3. Disabled participants receiving benefits 4. Terminated vested participants 5. Annual payroll of active participants 6. Expected payroll of active employees for the following year 7. Annual benefits payable to those currently receiving benefits B. Assets 1. Market Value of Assets 2. Actuarial Value of Assets C. Liabilities 1. Actuarial present value of future expected benefit payments for active members a. Retirement benefits b. Vesting benefits c. Death benefits d. Disability benefits e. Refunds f. Total 2. Actuarial present value of future expected benefit payments for terminated vested members 3. Actuarial present value of future expected benefit payments for members currently receiving benefits a. Service retired b. Disability retired e. Beneficiaries d. Miscellaneous e. Total Actuarial Valuation 128 33 0 9 $ 6,830,908 $ 6,994,849 $ 828,178 $ 21,7681259 $ 23,296,744 $ 271411,315 3,278,956 103,468 1,541,508 561,655 $ 32,8967902 $ 2,957,139 $ 107229,548 0 136,556 177,325 $ 109543,429 ment. Total actuarial present value of future expected benefit payments $ 46,397,470 5. Actuarial accrued liabilities 6. Unfunded actuarial liabilities 7- Gabriel Roeder Smith & Company $ 33,852,872 $ 10,556,128 Proposed Ordinance 82 33 0 9 $ 4,987,337 $ 5,0609958 $ 828,178 $ 21,768,259 $ 231296,744 $ 20,393,940 2,313,051 80,987 904,698 332,379 $ 24,025,055 $ 2,957,139 $ 10,229,548 0 136,556 647,955 $ 11,0142059 $ 37,996,253 $ 30,692,477 $ 7,395,733 South Miami Pension Plan Actuarial Impact Statement as of October 1, 2010 (All Participants) D. Statement of Accumulated Plan Benefits 1. Actuarial present value of accumulated vested benefits a. Participants currently receiving benefits b. Other participants c. Total 2. Actuarial present value of accumulated non- vested plan benefits 3. Total actuarial present value of accumulated plan benefits E. Pension Cost 1. Total normal cost (including expenses) 2. Payment required to amortize unfunded liability 3. Interest adjustment 4. Total required contribution 5. Item 4 as a percentage of payroll 6. Estimated member contributions 7. Item 6 as a percentage of payroll 8. Estimated State contributions 9. Item 8 as a percentage of payroll 10. Net amount payable by City 11. Item 10 as a percentage of payroll F. Pension Cost for the Next Fiscal Year Actuarial Valuation $ 10,3667104 14,913,526 $ 25,2799630 Proposed Ordinance $ 10,366,104 14,913,526 $ 25,279,630 1,175,812 879,539 $ 26,4551442 $ 1,530,110 $ 655,726 $ 703,598 3 74,556 $ 2,260,392 14.6% 33.1% $ 993,805 $ 14.5% $ 37,780 Item 3 as a percentage of payroll 0.6% $ 13228,807 5. 18.0 % $ 26,159,169 $ 1,108,406 $ 492;704 $ 703,598 3 54,783 $ 1,655,893 14.6% 33.2% $ 691,556 $ 13.9% $ 37,780 Item 3 as a percentage of payroll 0.8% 0.5% 2 926,557 5. 18.6% 1. Estimated member contributions $ 1,017,884 1 $ 703,598 3 2. Item I as a percentage of payroll 14.6% 13.9% 3. Estimated State contributions $ 37,780 $ 37,780 4. Item 3 as a percentage of payroll 0.5% 2 0.7% 4 5. Net amount payable by City $ 1,258,528 1 $ 941,622 3 6. Item 5 as a percentage of payroll 18.0% 18.6% t Percent of pay applied to expected 2011/2012 covered payroll ($6,994,849) 2 Percent of expected 2011/2012 covered payroll ($6,994,849) 3 Percent of pay applied to expected 2011/2012 covered payroll ($5,060,958) 4 Percent of expected 2011/2012 covered payroll ($5,060,958) 0 Gabriel Roeder Smith & Company South Miami Pension Plan Actuarial Impact Statement as of October 1, 2010 (All Participants) G. Disclosure of Followine Items Actuarial Valuation 1. Actuarial present value of future salaries - attained age $ 63,820,166 2. Actuarial present value of future employee contributions - attained age $ 4,587,234 3. Actuarial present value of fixture contributions from other sources N/A 4. Amount of active members' accumulated contributions $ 4,349,417 5. Actuarial present value of future salaries and future benefits at entry age N/A 6. Actuarial present value of future employee contributions at entry age N/A -9- Gabriel Roeder Smith & Company Proposed Ordinance — $ 41,778,246 $ 3,044,299 N/A $ 3,8781787 N/A N/A South Miami Pension Plan Actuarial Imoact Statement as of October 1, 2010 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 112, Florida Statutes. Based upon our understanding of the plan, 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 other wise provided for in the valuation. All known events or trends which may require material increase in plan costs or required contribution rates have been taken into account in the valuation. Enrollment Number: 11 -02802 Dated: October 31, 2011 J.7�,.L Lawrence F. Wilson, A.S.A. -10- Gabriel Roeder Smith Sc Company General Police General Police Remaining Unfunded Actuarial Current Unfunded Current Unfunded Amortization Amortization Funding Accrued Liabilities Liabilities Liabilities Payment Pa men Period 10/01/1990 Assumption Method Change $ 70,553 $ (83,800) $ 9,388 $ (10131) 10 years 10/01/1991 Actuarial Loss (Gain) (91,533) (64,505) (115408) (7,235) 11 years 10/01/1992 Plan Amendment (11,695) (5,397) (1,376) (566) 12 years 10/0111992 Actuarial Loss (Gain) (2132326) (144,206) (255101) (159128) 12 years 10/01/1993 Actuarial Loss (Gain) (47,719) (33,219) (55336) (3,282) 13 years 10/01/1993 Plan Amendment N/A 1785423 N/A 17,626 13 years 10/01/1994 Actuarial Loss (Gain) 140952 54,432 15,063 57093 14 years 10/01/1994 Assumption Change 39,054 22,653 4,173 2,120 14 years 10/01/1995 Actuarial Loss (Gain) (236,262) (157,283) (245243) (14,008) 15 years 10/01/1995 Plan Amendment N/A 2255783 N/A 20109 15 years 10/01/1996 Actuarial Loss (Gain) - (2167039) (91,340) (21,373) (7,777) 16 years 10/01/1996 Plan Amendment 3147500 N/A 31,114 N/A 16 years 10/01/1997 Actuarial Loss (Gain) (240,780) (176,434) (23,049) (14,414) 17 years 10/01/1997 Plan Amendment 242,183 N/A 23,183 N/A 17 years 10/01/1998 Actuarial Loss (Gain) (225,092) (285,556) (20,913) (22,460) 18 years 10/01/1999 Actuarial Loss (Gain) (44,089) (92,455) (3,987) (7,021) 19 years 10/01/1999 Plan Amendment N/A 121,812 N/A 9,251 19 years 10/01/2001 Actuarial Loss (Gain) 1,154,422 1,019,275 99,571 72,718 21 years 10/01/2001 Method Change (517,409) (512,633) (44,627) (36,573) 21 years 10/01/2001 Plan Amendment 446,129 802,055 38,479 57,221 21 years 10/01/2002 Actuarial Loss (Gain) 660,423 774,580 55,800 537737 22 years 10/01/2002 Plan Amendment 207,133 193,437 17,501 13,420 22 years 10/01/2003 Actuarial Loss (Gain) (219,348) ' "569,517 '(18,186) -- 38,495 23 years 10/01/2003 Plan Amendment N/A 240,738 N/A 16,272 23 years 10/01 /2004 Actuarial Loss (Gain) 583,124 139,074 47,516 9,175 24 years 10/01/2004 Plan Amendment - N /A. 216,700.. N/A 14,296 24 years 10/01/2005 Actuarial Loss (Gain) 80,986 (435,001) 6,495 (28,052) 25 years 10/01/2006 Actuarial Loss (Gain) 657,166 889,932 51,935 56,182 26 years 10/01/2006 Assumption Change 115,429 378,076 9,122 23,868 26 years 10/01/2007 Actuarial Loss (Gain) (4587328) (361,853) (35,735) (22,393) 27 years 10/01/2008 Actuarial Loss (Gain) (52,753) 169,135 (4,062) 10,273 28 years 10/01/2009 Actuarial Loss (Gain) 17226,402 3695854 93,354 222072 29 years 10/01/2009 Assumption Change / Plan Amendment 4535636 531,247 349531 31,704 29 years 10/01/2010 Actuarial Loss (Gain) (180,493) 1347107 (135594) 7,872 30 years 10/01/2010 Assumption Change/ Plan Amendment 1,032,635 1,299,119 77,772 765256 30 years 10/01/2010 Proposed Ordinance (35160,395) N/A (238,023) N/A 30 years TOTAL $ 11509,466 V $ 52886,267 $ 123,984 $ 368,720 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 112, Florida Statutes. Based upon our understanding of the plan, 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 other wise provided for in the valuation. All known events or trends which may require material increase in plan costs or required contribution rates have been taken into account in the valuation. Enrollment Number: 11 -02802 Dated: October 31, 2011 J.7�,.L Lawrence F. Wilson, A.S.A. -10- Gabriel Roeder Smith Sc Company South Miami Pension Plan Outline of Principal Provisions of the Retirement Plan A. Effective Date: October 1, 1965. Most recent resolution / bargaining agreement was adopted September 16, 2008. Most recently amended by Ordinance 38 -10 -2063 adopted October 19, 2010. B. Eligibility Requirements: 1. General Employees Any regular full -time employee before October 1, 2011 is eligible to enter the plan following the completion of six months of Credited Service and attainment of age 20. 2. Police Officers Any regular full -time Police Officer is eligible to enter the plan as of date of employment. C. Credited Service: 1. General Employees Continuous employment. Credited service shall exclude continuous employment prior to plan participation as follows: (1) If employed prior to October 1, 1973, credited service shall exclude the first two years of continuous employment and any additional year of continuous employment prior to attainment of age 25. (2) If employed on or after October 1, 1973, credited service shall exclude the first six (6) months of continuous employment and continuous employment prior to age 2. Police Officers Continuous employment. For Police Officers who did not participate when first eligible for the plan, credited service shall exclude continuous employment prior to plan participation as follows: (1) If employed prior to October 1, 1973, credited service shall exclude the first two years of continuous employment and any additional year of continuous employment prior to attaimnent of age 25. (2) If employed on or after October 1, 1973, credited service shall exclude the first six (6) months of continuous employment and continuous employment prior to age 20. D. Final Average Compensation (FAQ: Final Average Compensation is 1/36a' of the final 36 consecutive months of compensation. For Police Officers, not less than 1/5`" of the highest five (5) years out of the last (10) ten years of compensation. Compensation shall mean regular wages and salaries, excluding bonuses, vacation, sick leave and other additional compensation. Effective October 1, 2011, Final Average Compensation for General Employees is 1/60`" of the final 60 consecutive months of basic compensation, provided it is not less than the Final Average Compensation as of September 30, 2011 based on the defrntion above. Basic compensation shall mean regular wages and salaries, excluding commissions, overtime pay, bonuses and any other forms of additional compensation earned outside of base wages. 11- Gabriel Roeder Smith & Company South Miami Pension Plan Outline of Principal Provisions of the Retirement Plan E. Normal Retirement: 1. Eligibility a. General Employees: Attainment of age 55 and completion of ten (10) years of credited service for benefits accrued as of September 30, 2011. Attainment of age 60 and completion of ten (10) years of credited service for benefits accrued after September 30, 2011, including increases in the accrued benefit as of September 30, 2011 due to increases in the Final Average Compensation. b. Police Officers: Attainment of age 60 and completion of ten (10) years of credited service or completion of twenty -five (25) years of credited service regardless of age. 2. Benefit: The monthly plan benefit is the product of: a. FAC, b. Credited service during the appropriate period and c. The appropriate benefit percentage The appropriate benefit percentages are: 11 a. General Employees b. Police Officers F. Supplemental Benefit: For Credited Service Through September 30, 1999 October 1, 1999 through September 30, 2011 October 1, 2011 and thereafter For Credited Service Through September 30, 1995 October 1, 1995 through September 30, 1996 October 1, 1996 through September 30, 1997 October 1, 1997 through September 30, 2001 October 1, 2001 through September 30, 2002 October 1, 2002 through September 30, 2003 October 1, 2003 and thereafter Percentage 2.50% 2.75% 2.25% Percentage 2.00% 2.25% 2.50% 2.75% 2.80% 2.90% 3.00% A cost -of- living supplemental benefit based upon the consumer price index is provided upon retirement. The annual increase is limited to 3 %. For General Employees the cost -of- living supplemental benefit is only provided on the accrued benefit as of September 30, 2011 and does not apply to increases in this accrued benefit due to increases in the Final Average Compensation. -12- Gabriel Roeder Smith & Company South Miami Pension Plan Outline of Principal Provisions of the Retirement Plan G. Early Retirement: 1. Eligibility: Attainment of age 50 and completion of 15 years of credited service for Police Officers. 2. Benefit: Accrued benefit based upon FAC and credited service as of early retirement date, reduced 3% for Police Officers for each year that the benefit commencement date precedes Normal Retirement. H. Delayed Retirement: 1. Eligibility: Retirement subsequent to normal retirement date. 2. Benefit: Accrued benefit based upon FAC and credited service as of delayed retirement date. 1. Disability Retirement: 1. Eligibility: Totally and permanently disabled for a six month period while actively employed. 2. Benefit: Accrued benefit based upon FAC and credited service as of date of disability, actuarially reduced as for early retirement for early commencement. I Pre - Retirement Death Benefit: The beneficiary shall receive the member's accumulated employee contributions. K. Benefit Upon Termination of Service: 1. Benefit payable at normal retirement equal to the greater of a. Accrued benefit based upon FAC and credited service as of date of termination times the vesting percentage shown below, or b. Benefit which can be supported by the accumulated member contributions with interest to normal retirement date. No supplemental benefit shall be payable to vested terminees until they commence receiving benefits. -13- Gabriel Roeder Smith & Company South Miami Pension Plan Outline of Principal Provisions of the Retirement Plan 2. Vesting Schedule: 3. Refund Option: A terminated member may elect to receive a refund of accumulated contributions without interest in lieu of receiving any other plan benefits. L. Member Contributions: Members contribute 7% (7.5% for Police Officers) of member's basic annual compensation. Should the City contribution for General Employees be actuarially determined to exceed 7.0 %, not including expenses, both the City and the General Employees will share equally in the amount in excess of 7.0 %. Should the City contribution for Police Officers be actuarially determined to exceed 7.5 %, not including expenses, both the City and the Police Officers will share equally in the amount in excess of 7.5 %: M. Normal Form of Retirement Income: The normal form of payment shall be a life annuity with a guarantee of a refund of accumulated employee contributions. N. Changes Since Previous Valuation: • Eligibility Requirements for General Employees were: Any regular full -time employee is eligible to enter the plan following the completion of six months of Credited Service and attainment of age 20. • Final Average Compensation was: Final Average Compensation is 1 /36th of the final 36 consecutive months of compensation. For Police Officers, not less than 1 /5th of the highest five (5) years out of the last (10) ten years of compensation. Compensation shall mean regular wages and salaries, excluding bonuses, vacation, sick leave and other additional compensation. • Normal Retirement Eligibility for General Employees was: Attainment of age 55 and completion of ten (10) years of credited service. -14- Gabriel Roeder Smith & Company South Miami Pension Plan Outline of Principal Provisions of the Retirement Plan N. Changes Since Previous Valuation (cont'd): • Benefit percentages for General Employees were: For Credited Service Percentage Through September 30, 1999 2.50% October 1, 1999 and thereafter 2.75% • Supplemental Benefit was: A cost -of- living supplemental benefit based upon the consumer price index is provided upon retirement. The annual increase is limited to 3 %. -15- Gabriel Roeder Smith & Company South Miami Pension Plan Actuarial Assumptions and Methods Used in the Valuation A. Mortality For healthy General Employee participants, the RP 2000 Mortality Table was used with separate rates for males and females and for annuitants and non - annuitants, and fully generational mortality improvements projected to each future decrement date. For healthy Police Officer participants, the RP 2000 Combined Mortality Table with Blue Collar Adjustment was used with separate rates for males and females and for annuitants and non- annuitants, and fully generational mortality improvements projected to each future decrement date. For disabled participants, the RP 2000 Disabled Mortality Table was used with separate rates for males and females and fully generational mortality improvements projected to each future decrement date. B. Investment Return to be Earned by Fund 7.0 %, compounded annually. C. Allowances for Expenses or Contingencies Actual expenses paid in previous year. D. Emplovee Withdrawal Rates Withdrawal rates for males and for females were used in accordance with the following illustrative example based upon number of years of service: E. Disability Rates General Employees who retire prior to age sixty (60) but after attainment of ten (10) 16- Gabriel Roeder Smith & Company South Miami Pension Plan Actuarial Assumptions and Methods Used in the Valuation F. Marital Assumptions 100% of active members are assumed to be married. Where applicable, females are assumed to be three years younger than their male spouses. G. Salary Increase Factors Current salary is assumed to increase in accordance with the following table based upon number of years of service. H. Increase in Covered Payroll 4.0% per year, limited to average annual increase over most recent ten years* (2.4 %) for Police Officers. No increase in covered payroll is assumed for General Employees as the plan is closed to new entrants as of October 1, 2011. I. Retirement Rates Rates of early retirement for Police Officers were used in accordance with the following table. Rates of normal retirement were used in accordance with the following tables. General Employees who retire prior to age sixty (60) but after attainment of ten (10) years of credited service (55 & 10) are assumed to receive an actuarially reduced benefit payable immediately upon retirement. * Nine years available as of October 1, 2010. -17- Gabriel Roeder Smith & Company South Miami Pension Plan Actuarial Assumptions and Methods Used in the Valuation J. Cost of Living Increases Future cost of living increases are assumed to be 3.0% per annum. K. Valuation of Assets The method used for determining the actuarial value of assets phases in the deviation between the expected and actual return on assets at the rate of 20% per year. The actuarial value of assets will be further adjusted to the extent necessary to fall within the corridor whose lower limit is 80% of the fair market value of plan assets and whose upper limit is 120% of the fair market value of plan assets. L. Cost Methods Normal Retirement, Termination, Disability and Pre - Retirement Death Benefit: Entry- Age - Actuarial Cost Method Under this method the normal cost for each active employee is the amount which is calculated to be a level percentage of pay that would be required annually from his date of hire to his retirement age to fund his estimated benefits, assuming the Plan had always been in effect. The normal cost for the Plan is the sum of the individual normal costs for all active participants. The actuarial accrued liability as of any valuation date for each active employee or inactive employee who is eligible to receive benefits under the plan is the excess of the actuarial present value of estimated future benefits over the actuarial present value of current and future normal costs. The unfunded actuarial accrued liability as of any valuation date is the excess of the actuarial accrued liability over the actuarial value of assets of the Plan. M. Election for General Employees to Switch to DC Plan We have assumed all General Employees with less than seven (7) years of service have elected to participate in the DC Plan and receive a refund of their member contributions. N. Changes Since Previous Valuation • Increase in Covered Payroll was: 4.0% per year, limited to average annual increase over most recent ten years* (2.4 %). There was no assumption regarding the election to participate in the DC Plan. • The amortization period of the change in unfunded liability was 30 years for General Employees. * Nine years available as of October 1, 2010. -18- Gabriel Roeder Smith & Company South Miami Pension Plan Actuarial Assumptions and Methods Used in the Valuation N. Changes Since Previous Valuation (continued) • Retirement Rates were: Rates of early retirement for Police Officers were used in accordance with the following table. Rates of normal retirement were used in accordance with the following tables. �n�� mw 19- Gabriel Roeder Smith C Company 19- Gabriel Roeder Smith C Company South Miami CITY OF • '111101 OFFICE OF INTER-OFFICE OR To: The Honorable Mayor & Members of the Commission From: Hector Mirabile, PhD, City Manager f Date: October 13, 2011 / / Agenda Item No. Subject: An Ordinance amending the South Miami Pension Plan, providing for an amendment to Section 1'6 -12, Definitions, Section 16 -13, Eligibility, to Section 16 -14, Pension Benefits and Retirement Dates, Section 16 -19, Contributions to comply with current City policy concerning the definitions of annual compensation and final average compensation; and also amending Section 16 -13, Eligibility, Background: The City of South Miami and the American Federation of State, County and Municipal Employees, AFL -CIO, City Employees Local 3294 (hereinafter "Union "), have entered into a new Collective Bargaining Agreement ( "Agreement" ), effective October 1, 2011 ( "CBX ). It is the purpose and intention of the Agreement to provide for salaries, fringe benefits and other terms and conditions of employment except as otherwise provided by Constitution, Statute, Charter, Ordinance, Administrative Order or Personnel Rules and Regulations. Florida law requires that if any provision of a collective bargaining agreement is in conflict with any ordinance over which the chief executive officer has no amendatory power, the chief executive officer shall submit to the appropriate governmental body having amendatory power a proposed amendment to such ordinance. The City Commission deems It to be in the public interest to provide changes to the pension plan. Attachments: 0 South Miami Pension Plan Actuarial Study as of October I, 2010 SOUTH MIAMI PENSION PLAN ACTUARIAL STUDY AS OF OCTOBER 1 1 At the request of the City, we have completed ten (10) year projections illustrating the financial impact of several proposed plan provisions for General Employees of the South Miami Pension Plan_ Back round— The Plan is currently operito future General Employees of the City. General Employees are currently eligible for retirement benefits upon the attainment of age fifty - five (55) with completion of ten (10) years of service. The benefit accrual rate for General Employees is currently two and a half percent (2.50 %) for each year of credited service through September 30, 1999 and two and three quarters percent (2.75 %) for each year of credited service after October 1, 1999, General Employees currently receive a supplemental benefit in the form of an annual cost of living adjustment based on the consumer price index, not to exceed 3% annually. Final Monthly Compensation (FMC) used to calculate the retirement benefits of General Employees is currently the average of the final thirty -six (36) months of compensation during employment with the City. Compensation shall mean regular wages and salaries including overtime, excluding bonuses, vacation, sick leave and other additional compensation. Proposed Chances — We understand the City wishes to determine the effect on current and future City contributions of the following proposed changes in benefit provisions for General Employees of the City. ➢ Scenario A — The Plan is closed to future General Employees. Future General Employees will enter a defined contribution plan, with General Employees contributing 7.0% of compensation and the City contributing a matching 7.0% of compensation. ➢ Scenario 2 — The current accrued benefits of General Employees are frozen and payable under the current terms of the Plan at the currently defined normal retirement date — the later of attainment of age fifty -five (55) and completion of ten (10) years of credited service. Future benefit accruals, including increases due to increases in FMC, will be payable at the proposed new normal retirement date — the later of attainmcnt of age sixty (60) and completion of ten (10) years of credited service. ➢ Scenario 3 — The benefit accrual rate is reduced to two and a quarter percent (2.25 %) per year for future credited service. Gabriel Roeder SwIth & Company 1 - SOUTH MIAMI PENSION PLAN ACTUARIAL STUDY AS OF. OCTOBER 11 2010 Y Scenario 4 — The supplemental benefit (COLA) for General Employees is eliminated for future benefit accruals, including increases in the current accrued benefit due to increases I n FMC. General employees will receive the supplemental benefit on their current accrued benefit. y Scenario 5 — The definition of Final Monthly Compensation (FMC) is changed for future benefit accruals to the average of the final sixty (60) months of basic compensation but not less than current Final Monthly Compensation as of October I, 2010. Basic compensation excludes commissions, overtime pay, bonuses and any other forms of additional compensation outside of base wages. ➢ Scenario 6 — Combination of Scenarios I through 5 above. Results —The table on the following page shows the current net City contribution (cost) and the sum of the projected net City contributions (costs) over the next five (5) and ten (10) years for the baseline (current Flan) forecast and for each Scenario described above separately and combined as a dollar amount ($thousands) and as a percentage of projected covered payroll, respectively. As you may be aware, in the event that more than one change is being considered, it is important to note results from separate projections cannot generally be added together to produce the total. The total can be considerably different than the sum of the parts due to the interaction of various Plan provisions, actuarial assumptions and actuarial methods with each other. Gabriel Pneder Smith $r Compang ,2- SOUTH MIAMI PENSION PLAN ACTUARIAL STUDY AS OF OCTOIIER 11 2010 Scenario 6 — Combination of Scenarios l through 5. . The following Table &bows the projected payroll and a comparison of the projected City costs under the baseline forecast versus Scenario 6. fiscal Year End 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 5 Year Totals Covered Payroll 3,853,670 4,053,710 4,252,793 4,451,506 4,646,915 4,849,355 5,049,164 5,263,555 5,470,084 5,640,215 21,258,594 Current Plan Dollar %of Pa 639,694 16.6010 747,935 18.5 %n 801,209 18.80/0 837,353 18.8% $717743 18.8% 910,314 18.8% 947X45 18.8% 985,058 18.7% 1,022,769 18.7% 1,053,000 18.7% 3,897,934. 10 Year Totals 47,5301967 8,8161220 Projected City Cost Scenario 6 Dollar Reductionin %of Pa 440,757 11.4% 516,825 12.7% 5623455 13.2 %n 577,981 13.0% 590,743 12.7% 607,536 125% 621,774 12.3% 635,150 12.1% 6497068 I1.9% 6577483 11.70/0 2,688,761 2,956,448 Gabriel Roeder Smith & Company -21- Cumulative Reductionin Reductionin CI Cos city Cost 1987937 198,937 231,110 430,047 238,754 668,801 259,372 928,173 2$1,000 1,209,173 302,778 .115113951 325,371 1,837,322 349,908 2,187,230 373,701 2,560,931 395,517 21956,448 1,209,173.....: 2,956,448 Gabriel Roeder Smith & Company -21- SOUTH MIAMI PENSION PLAN ACTUARIAL STUDY AS OF OCTOBER 17 2010 Gabriel Roeder Smith, & Company -22- n {M�.>2 YJ �^��wrl ✓5;�`EEEy��,Y ��v��2',u, M°� t� • �� ^�'"�1iS�i4`t n )S.n,.��iukllt_I�.I(.! n2�i1 Y' §.�s+w' v 'F'. 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