11To:
From:
Date:
Subject:
Background:
Attachments:
CITY OF SOUTH MIAMI
OFFICE OF THE CITY MANAGER
INTER-OFFICE MEMORANDUM
South Miami
2001
The Honorable Mayor & Members of t~~ pr Commission
Hector Mirabile. PhD. City Manager /1 1/
October 13. 20 I I Agenda Item No.:
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.
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 I. 20 I I ("CBA"). 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.
• South Miami Pension Plan Actuarial Study as of October I. 20 I 0
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ORDINANCE NO. ____ _
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.
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 II, Section 16-12, "Definitions" of the City of South
Miami Code of Ordinances is hereby amended as follows:
I •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••
***
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 anyone (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,
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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. all members other than police officers anEl police seFlleants, final average
compensation shall be averageEl over the last three year perioEl enEling on the participant's
retirement Elate, Elate of Elisability, Elate of termination of employment or the Elate of
termination of the plan, whichever is applicable. For police officers and sergeants, final
average compensation shall be the best five-year period of the police officer or sergeant's
career with the City of South Miami~ enEling on the police officer or seFlleant's retirement Elate,
Elate of Elisability, Elate of termination of employment, or Elate of termination of the plan,
'Nhichever is applicable. 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. 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.
(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 birthdaY7
(b) Each employee who becomes an employee subsequent to October 1, 1973,
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.
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1 (c) It shall become mandatory for all employees hired on or after October 1,1995,
2 to join the pension plan after completion of six (6) months of employment by the city.
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4 (d) All general emplovees who are hired by the City of South Miami on or after
5 October 1. 2011, will not be eligible to participate in the South Miami Pension Plan. All
6 general employees hired on or after October 1, 2011, shall join the ICMA-RC defined
7 contribution (DC) 457 Plan.
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9 (e) Employees who are hired on or after October 1, 2011, and are classified as
10 police officer or sergeant, shall enter the pension plan immediately upon being hired as a
11 sworn law enforcement officer.
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13 ill All general employees hired on or before September 30, 2011, will have a one-
14 time option to either remain in the South Miami Pension Plan or elect to discontinue
15 membership.
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17 ill For general employees who choose to discontinue membership in the South
18 Miami Pension Plan, employees shall provide in writing no later than
19 November 30, 2011, to the City's Human Resources Department, a letter
20 stating their choice to discontinue membership in the South Miami Pension
21 Plan. The letter shall state the percentage the employee will contribute
22 towards the ICMA-RC 457 which contribution rate shall be effective until
23 September 30, 2012. The effective date of the change is on the first pay
24 period in Januarv 2012.
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26 ill Should a general employee choose to discontinue membership in the South
27 Miami Pension Plan, the general employee will be refunded the contribution
28 which they contributed during their participation in the South Miami Pension
29 Plan and may rollover such amount into the newly established ICMA-RC
30 457 Plan.
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32 Section 3: That Chapter 16 Article II, Section 16-14, "Pension benefits and
~3 retirement date" of South Miami Code of Ordinances is hereby amended as follows:
34
35 (a) Retirement date. The normal retirement date with full unreduced pension
36 benefits for a participant, shall be as follows:
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(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
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attainment of age sixty (60) and completion of ten (10) years of credited
seNice. shall be the fiFSt day of the calendar month coincident with or,
otherwise, next follO'.lIJing the later of the participant's fifty fifth birthday and the
date on 'Nhich the participant has completed ten (10) yeaFS of credited service.
(2) Police officers. shall be the completion of twenty-five (25) years of
credited police seNice, regardless of age, or attainment of age sixty (60) and
completion of ten (10) years of credited police seNice.
10 (b) Amount of pension. The yearly amount of pension payable to a
11 participant on the first day of the month coincident with or next following the
12 participant's retirement date shall be an amount equal to the participant's number of
13 completed years of credited seNice multiplied by a percentage of final average
14 compensation as stated herein.
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(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
seNice, excluding the first two (2) years of such seNice and any
additional seNice 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 seNice plus any additional seNice completed prior to
the participant's twentieth birthday and/or additional seNice 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 seNices 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
1.8 percent to 1.9 percent for seNices 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
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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.
f. 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.
fL. 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.
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.
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(4)
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.
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
commence or be adjusted as of each October 1 and shall continue
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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.
9 (c) Early retirement.
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11 (1) A police officer participant may elect an early retirement date which may
~ 2 be the first day of any calendar month coincident with, or subsequent to the
13 participant's fiftieth birthday and completion of fifteen (15) years of credited
14 service. The pension benefits payable to any such participant on early
15 retirement date shall be equal to an actuarial equivalent, determined in
16 accordance with the table below, to the amount of pension to which is entitled
17 up to early retirement date in accordance with SUbsection (b).
18 Table-Police officer participant-
Years prior to normal Percentage
retirement date
1 97
2 94
3 91
4 88
5 85
19 Percentages for early retirement date
20 Age on normal retirement date shall be age nearest birthday. Years prior to
21 normal retirement date shall mean years and completed months from early retirement
22 date to normal retirement date. Allowance for such months shall be made by
23 interpolating in this table.
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25 Commencing after the participant's normal retirement date the basic benefit of
26 any participant retiring on or after October 1, 1970, will be supplemented by the
27 applicable supplemental benefit determined in the same manner as in subsection 16-
2.8 14(b)(2).
29 (d) Late retirement. A participant, with the written consent of his employer, may
30 elect a later retirement date which may be the first day of any calendar month after
31 normal retirement date. If the participant's contributions shall terminate on late
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retirement, benefits shall be based on annual earnings and credited service to late
retirement date.
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; prqvided, however, that the
first applicable valuation date will be the first such date foliowing such participant's
late retirement date.
(e) Life income; death benefit. The normal form of pensi9n 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 b!Jt before the sum of all
monthly payments that have become due prior to the partici[?ant'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 pr,escribed 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
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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
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.
19 c. Other options. The pension board may, approve any other
20 optional form of substantially equal payments, which are the actuarial
21 equivalent of any other form provided for in this plan, or which optional
22 form of payment is cost neutral to the plan.
23
24 :~ Section 4: That Chapter 16 Article II, Section 16-19, ""Contributions" of the City of
25' South Miami Code of Ordinances is hereby amended as follows:
26
27 Contributions
28 (a) Each participant shall contribute in each calendar year towards the cost of the
29 participant's pension an amount equal to three (3) percent of the participant's
30 earnings. With the exception of police officer participants, no participant shall make
31 any contributions toward the cost of any past service pension to which the participant
32 is entitled under this plan. The employer shall contribute the balance of the cost,
33 actuarially determined, of providing the benefits of the plan. The employer's
34 contributions shall be deposited into the pension plan on at least a quarterly basis.
35 Effective October 1, 1995, the pension contribution for all general employee
36 participants, including those general employees that are now members of the
37 retirement system, shall be increased from three (3) percent to five (5) percent of
38 earnings. Effective October 1, 2001, the pension contribution for all general employee
39 participants, including those general employees that are now members of the plan,
40 shall be increased from five (5) percent to seven (7) percent of earnings. Police officer
41 participant including bargaining unit employees, that are now members of the plan
42 and any police officers who join the plan in the future shall, effective October 1, 1993,
43 have their contribution increased from three (3) percent to five (5) percent of earnings.
44 Effective October 1, 2001, police officer participants shall contribute 7.5 percent of
45 earnings.
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(1) General employee participants. Should the employer's annual
contribution be actuarially determined to exceed twelve (12) percent, both the
employer and the participants shall share equally the amount in excess of
twelve (12) percent for that fiscal year. Effective October 1, 2005, should the
total participant and employer's annual contribution be actuarially determined
to exceed fourteen (14) percent, both the employer and the general employee
participants shall share equally the amount in excess of fourteen (14) percent
for that fiscal year.
(2) Police officer participants. Effective October 1, 2004, if the total police
officer participants contributions and employer contribution exceeds fifteen (15)
percent of covered police payroll for any fiscal year, the excess over fifteen
(15) percent shall be shared equally by the employer and police officer
participants. Police officer participant contributions shall be deposited in the
plan immediately after each pay period. Effective October 1, 2001, an amount
actuarially determined, to provide for certain minimum benefits required by
Chapter 185, F.S. shall be paid from the South Miami Police Officers
Retirement Trust Fund to the plan each year, regardless of the growth or
diminution in future Chapter 185, F.S. funds.
(3) [Otherparticipants.j Effective October 1,2009, and for one (1) fiscal year
thereafter participant contributions for the following employee designations
shall be reduced from the above calculated percentages by two (2) percentage
points:
(a) Nonbargaining unit employees.
(b) Members of the AFSME bargaining unit.
(c) Members of the police lieutenants and captains bargaining unit.
(b) All amounts paid by the employer to the insurance company in accordance with
this plan shall represent irrecoverable contributions, except as may be otherwise
provided in subsection 16-22(b).
(c) The employer shall pay the reasonable expenses of the pension board,
including any expenses for legal and actuarial services.
(d) Rollover option. A participant eligible to receive a refund of contributions may
elect, at the time and in the manner prescribed by the pension board, to have any
portion of an eligible rollover distribution paid directly to an eligible retirement plan
specified by the participant in a direct rollover. For the purposes of this section, the
following words and phrases shall have the following meanings indicated:
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(1) Eligible rollover distribution is any distribution of all or any portion of the
balance to the credit of the distributee, except that an eligible rollover
distribution does not include:
a. Any distribution that is one of a series of substantially equal
payments (not less than annually) made for the life (or life
expectancy) of the distributee, or the joint lives (or joint life
expectancies) of the distributee and the distributees designated
beneficiary, or for a specified period of ten years or more;
b. Any distribution to the extent such distribution is required under
section 401 (a)(9) of the Internal Revenue Code; and
c. The portion of any distribution that is not includable in gross income,
(2) Eligible retirement plan is an individual retirement account described in
section 408(a) of the Intemal Revenue Code, an individual retirement annuity
described in section 408(b) of the Intemal Revenue Code, an annuity plan
described in section 403(a) of the Internal Revenue Code, or a qualified trust
described in section 401(a) of the Internal Revenue Code, that accepts the
distributees eligible rollover distribution, However, in the case of an eligible
rollover distribution to the surviving spouse, an eligible retirement plan as an
individual retirement account or individual retirement annuity,
25 (3) Distributee includes an employee or former employee, In addition, the
26 employee's or former employee's surviving spouse is a distributee with regard
27 to the interest of the spouse,
28
29 (4) Direct rollover is a payment by the plan to the eligible retirement plan
30 specified by the distributee,
31
32
33 Section 5: Codification, The provisions of this ordinance shall become and be made
34 part of the Code of Ordinances of the City of South Miami as amended; that the sections of
35 this ordinance may be renumbered or re-Iettered to accomplish such intention; and that the
36 word "ordinance" may be changed to "section" or other appropriate word,
37
38 Section 6. Severability. If any section, clause, sentence, or phrase of this ordinance
39 is for any reason held invalid or unconstitutional by a court of competent jurisdiction, this
40 holding shall not affect the validity of the remaining portions of this ordinance,
41
42 Section 7. Ordinances in Conflict. All ordinances or parts of ordinances and all
43 section and parts of sections of ordinances in direct conflict herewith are hereby repealed,
44 However, it is not the intent of this section to repeal entire ordinances, or parts of ordinances,
11
1 that give the appearance of being in conflict when the two ordinances can be harmonized or
2 when only a portion of the ordinance in conflict needs to be repealed to harmonize the
3 ordinances. If the ordinance in conflict can be harmonized by amending its terms, it is hereby
4 amended to harmonize the two ordinances. Therefore, only that portion that needs to be
5 repealed to harmonize the two ordinances shall be repealed.
6
7 Section 6. Effective Date. This ordinance shall become effective upon enactment.
8
9 PASSED AND ENACTED this __ day of _____ , 2011.
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12 ATIEST:
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16 CITY CLERK
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19 1 st Reading
20 2nd Reading
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22 READ AND APPROVED AS TO FORM:
23 LANGUAGE, LEGALITY AND
24 EXECUTION THEREOF
25
26
27 CITY ATIORNEY
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APPROVED:
MAYOR
COMMISSION VOTE:
Mayor Stoddard:
Vice Mayor Newman:
Commissioner Beasley:
Commissioner Palmer:
Commissioner Harris:
12
SOUTH MIAMI PENSION PLAN
ACTUARIAL STUDY AS OF OCTOBER 1, 2010
EXECUTIVE SUMMARY I
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.
Background -The Plan is currently open to future General Employees of the City.
General Employees are currently eligible for retirement benefits upon the attainment of age fifty-
five (55) with completion often (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 Changes -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.
GRS
);> Scenario 1 -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 attainment 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 Smith & Comp."y -1 -
SOUTH MIAMI PENSION PLAN
ACTUARIAL STUDY AS OF. OCTOBER 1, 2010
i'-Scenario 4 -The supplemental benefit (COLA) for General Employees is eliminated for
future benefit accruals, including increases in the CUlTent accrued benefit due to increases
in FMC. General employees will receive the supplemental benefit on their current
accrued benefit.
i'-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.
i'-Scenario 6 -Combination of Scenarios 1 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 Plan) 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.
GRS Gabriel Roeder Smitb & Company -2 -
SOUTH MIAMI PENSION PLAN
ACTUARIAL STUDY AS OF OCTOBER 1, 2010
Scenario 6 -Combination of Scenarios 1 through 5.
The following Table shows the projected payroll and a comparison of the projected City costs
under the baseline forecast versus Scenario 6.
Fiscal (Combined) Projected City Cost Projected City Cost Cmnulative
Year Covered CUl10cnt Plan Scenario 6 Reduction in Reduction in
End Payroll Dollar % of Pay Dollar % of Pay Cill: Cost Cill: Cost
2012 3,853.670 639.694 16.6% 440,757 11.4% 198,937 198,937
2013 4.053,710 747.935 18.5% 516,825 12.7% 231.110 430,047
2014 4.252.793 801.209 18.8% 562,455 13.2% 238.754 668,801
2015 4,451.506 837.353 18.8% 577,981 13.0% 259.372 928,173
2016 4.646.915 871.743 18.8% 590.743 12.7% 281.000 1.209.173
2017 4.849.355 910.314 18.8% 607.536 12.5% 302.778 1.511.951
2018 5.049.164 947.145 18.8% 621.774 12.3% 325.371 1.837.322
2019 5.263.555 985.058 18.7% 635.150 12.1% 349,908 2.187.230
2020 5,470.084 1.022.769 18.7% 649.068 11.9% 373.701 2.560.931
2021 5.640.215 1.053.000 18.7% 657,483 11.7% 395,517 2.956,448
5 Year
Totals 21,258,594 3,897,934 2,688,761 1,209,173
10 Year
Totals 47,530,967 8,816,220 5,859,772 2,956,448
GRS Gabriel Roeder Smith & Company -21 -
GRS
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Gabriel Roeder Smith. & Company -23 -
Current Plan Proposal
Fiscal (Combined) Projected Projected Cumulative
Year Covered Proiected City Cost Member Cost Projected Ci~ Cost Member Cost Reduction in Reduction in
;;:, End Payroll Dollar % of Pay % of Pay Dollar % of Total Pay % of DE Pay City Cost City Cost ~ ~ 2012 3,853,670 639,694 16.6% 13.7% 440,757 11.4% 8.7% 198,937 198,937
~ 2013 4,053,710 747,935 18.5% 15.6% 516,825 12.7% 10.5% 231,110 430,047
" 2014 4,252,793 801,209 18.8% 16.0% 562,455 13.2% 11.4% 238,754 668,801
"" 2015 4,451,506 837,353 18.8% 16.1% 577,981 13.0% 11.4% 259,372 928,173 > " " ("")
"" 2016 4,646,915 871,743 18.8% 16.0% 590,743 12.7% 11.4% 281,000 1,209,173
~ >-3
2017 4,849,355 910,314 18.8% 16.1% 607,536 12.5% 11.4% 302,778 1,511,951 e
~ 2018 5,049,164 947,145 18.8% 16.1% 621,774 12.3% 11.4% 325,371 1,837,322 >rJl
n 2019 5,263,555 985,058 18.7% 16.1% 635,150 12.1% 11.4% 349,908 2,187,230 ~o
0 2020 5,470,084 1,022,769 18.7% 16.1% 649,068 11.9% 11.4% 373,701 2,560,931 ..... e .g >>-3
" 2021 5,640,215 1,053,000 18.7% 16.0% 657,483 11.7% 11.3% 395,517 2,956,448 ~= ~ 2022 5,860,188 1,099,605 18.8% 16.2% 679,514 11.6% 11.5% 420,091 3,376,539 >-3~ 2023 6,076,062 1,147,062 18.9% 16.3% 700,660 11.5% 11.8% 446,402 3,822,941 e .....
2024 6,303,464 1,205,593 19.1% 16.5% 730,782 11.6% 12.3% 474,811 4,297,752 ~>
2025 6,532,878 1,250,097 19.1% 16.6% 749,199 11.5% 12.3% 500,898 4,798,650 >-<~
2026 6,768,969 1,282,937 19.0% 16.4% 759,803 11.2% 12.0% 523,134 5,321,784 >-rJl"l:i
2027 7,000,671 1,341,671 19.2% 16.6% 786,978 11.2% 12.5% 554,693 5,876,477 Ot"l
2028 7,237,080 1,377,954 19.0% 16.5% 799,885 11.1% 12.4% 578,069 6,454,546 ""'1Z
2029 7,491,369 1,422,809 19.0% 16.4% 820,037 10.9% 12.4% 602,772 7,057,318 o;!l
2030 7,740,575 1,482,996 19.2% 16.6% 849,216 11.0% 13.0% 633,780 7,691,098 ("")0
2031 8,000,424 1,534,241 19.2% 16.6% 874,161 10.9% 13.3% 660,080 8,351,178 >-3Z
2032 8,271,193 1,580,205 19.1% 16.6% 896,785 10.8% 13.5% 683,420 9,034,598 O"l:i
C;it""
2033 8,539,932 1,555,297 18.2% 15.7% 874,821 10.2% 10.9% 680,476 9,715,074 t"l>
2034 8,819,609 1,544,158 17.5% 15.0% 865,994 9.8% 8.9% 678,164 10,393,238 ~Z
2035 9,106,661 1,600,396 17.6% 15.0% 900,108 9.9% 9.4% 700,288 11,093,526 ....
~
2036 9,395,113 1,606,018 17.1% 14.6% 901,685 9.6% 7.7% 704,333 11,797,859 N
2037 9,689,696 1,643,182 17.0% 14.4%
<:'>
1,028,484 10.6% 15.0% 614,698 12,412,557 ....
2038 9,997,708 1,632,654 16.3% 13.8% 980,949 9.8% 9.5% 651,705 13,064,262 <:'>
2039 10,318,583 1,704,560 16.5% 14.0% 1,010,089 9.8% 9.6% 694,471 13,758,733
2040 10,653,241 1,751,935 16.4% 13.9% 1,043,121 9.8% 9.9% 708,814 14,467,547
2041 10,994,831 1,677,375 15.3% 12.7% 984,475 9.0% 7.0% 692,900 15,160,447
10 Year
Totals 47,530,967 8,816,220 5,859,772 2,956,448
30 Year
Totals 212,329,214 38,256,965 23,096,518 15,160,447
0--