12 - Memo Impact Statement Early Retirement Benefit (8 mos)CITY OF SOUTH MIAMI
OFFICE OF THE CITY MANAGER
INTER-OFFICE MEMORANDUM
To: The Honorable Mayor & Members of the City Commission
From: Hector Mirabile, Ph.D., City Manager
Date: October 31, 2011 Agenda Item No.: 12
Subject: An Ordinance amending the City of South Miami Pension Plan, providing for an
amendment to Section 16-21 Purchase of credited service, to provide an incentive for
retirement for qualified police officer employees of the City of South Miami by including
an additional eight (8) months of prior credited service, within a specified period of time.
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 changes required to provide an incentive for retirement for
qualified Police Officer employees retiring between November 1, 2011 and
November 15, 2011 by including an additional eight (8) months of prior credited
service, within a specified period of time.
COST: The proposed Ordinance provides for the City to pay the full actuarial cost due
to the increase in credited service. The full actuarial cost assuming payment on or
before the earlier of benefit commencement date or December 1, 2011 is
$17,012.
The calculation is based upon the actuarial assumptions, Plan provisions and
census data utilized in the October 1, 2010 Actuarial Valuation and assumes one
electing Police Officer. GRS calculated the cost for this service purchase assuming
a 2% multiplier for the service purchased (multiplier in effect when service was
rendered).
The City of South Miami estimates a base salary savings of $19,714 in FY 2012
and a continuous annual savings of $36,726 thereafter, assuming pay steps remain
idle and the actuary’s assumption that one eligible officer elects to retire.
Base Salary Calculations
From
To
Increase
Lt. Promotion (Step 3) $84,600
$89,232
$4,632
Sgt. Promotion (Step 2) $60,101
$63,039
$2,938
Master Sgt. (Step 3) $61,271
$64,335
$3,064
New Officer (Step 1)
$45,722
$45,722
Total
$56,356
Current Lt. Salary (Step 6)
$93,082
Annual Savings
$36,726
Actuary Payment for FY 2012
-17,012
FY 2012 Savings
19,714
SUPPORT: Gabriel Roeder Smith & Company (GRS)
Actuarial Impact Statement