11-16-04 Item 14CITY OF SOUTH MIAMI
OFFICE OF THE CITY MANAGER
INTER - OFFICE MEMORANDUM
To: Honorable Mayor, Vice Mayor Date:
and City Commission
From: Maria V. Davis Subject:
City Manager
G
REQUEST
November 16, 2004
Agenda Item #�
11/16/04 Commission Meeting
Amending the Police Pension
Plan
AN ORDINANCE OF THE MAYOR AND CITY COMMISSION OF THE
CITY OF SOUTH MIAMI, FLORIDA AMENDING THE CITY OF SOUTH
MIAMI PENSION PLAN, PROVIDING FOR ELIGIBILITY AT DATE OF
EMPLOYMENT FOR POLICE OFFICER EMPLOYEES OF THE CITY OF
SOUTH MIAMI; PROVIDING FOR A MINIMUM RATE OF BENEFIT
ACCRUAL FOR POLICE OFFICER EMPLOYEES; PROVIDING FOR
SEVERABILITY; PROVIDING FOR CODIFICATION; AND PROVIDING
FOR AN EFFECTIVE DATE.
Background
The attached ordinance was prepared by the City Pension Attorney to improve the
pension plan benefits for our Police Officers at no cost to the City, using the Chapter 185
funds received annually from the State of Florida. The source of the funds is .85 percent
of gross receipts from policyholders on all premiums collected on casualty insurance
policies covering properties within the City's jurisdiction. State laws restrict the use of
these funds to payment of supplemental benefits to retiring Police Officers. This benefit is
accrued annually by all Police Officers participating in the City pension plan using a State
approved allocation method. Any available excess funds after the allocation are used to
provide improvements to the plan. As of last fiscal year, there is an available excess
amount of $77,000 that can be used to purchase improvements to the plan for officers.
RECOMMENDATON
Approval of the ordinance is recommended.
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ORDINANCE NO.
AN ORDINANCE OF THE MAYOR AND CITY
COMMISSION OF THE CITY OF SOUTH MIAMI,
FLORIDA AMENDING THE CITY OF SOUTH MIAMI
PENSION PLAN, PROVIDING FOR ELIGIBILITY AT
DATE OF EMPLOYMENT FOR POLICE OFFICER
EMPLOYEES OF THE CITY OF SOUTH MIAMI;
PROVIDING FOR A MINIMUM RATE OF BENEFIT
ACCRUAL FOR POLICE OFFICER EMPLOYEES;
PROVIDING FOR SEVERABILITY; PROVIDING FOR
CODIFICATION; AND PROVIDING FOR AN EFFECTIVE
DATE.
WHEREAS, the City of South Miami desires to provide compliance with required
minimum benefits provided in Chapter 185 of the Florida Statutes for police officer employees in
order to continue to receive state premium tax funding; and
WHEREAS, the City recognizes that such minimum benefits will actuarially impact on
the Pension Plan and shall be at the option of certain employees; and
WHEREAS, the City Commission has received and reviewed an actuarial impact
statement related to such early retirement incentive.
NOW, THEREFORE, BE IT ORDAINED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF SOUTH MIAMI, FLORIDA:
Section 1. Part I, Provisions governing the South Miami Pension Plan, Section 16 -13
of the South Miami Code of Ordinances is hereby amended to read as follows:
Sec. 16 -13. 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 birthday.
(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 1St through October 31St. It shall become mandatory for all
Page 1 of 3
I employees hired on or after October 1, 1995, to join the pension plan after
2 completion of the probationary period.
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4 (c) Each employee classified as policemen shall become eligible le to participate
5 in the plan from his/her date of employment provided he /she began
6 participation in the plan when first eligible as provided in sub - section (a)
7 & (b) of this section.
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9 (�D An employee who has received a cash payment under Option 1 of Ssection
10 16 -17(b) may elect to participate in the plan upon meeting the following
11 requirements:
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13 1. Election to participate must be made within thirty (30) days of receipt
14 of notice of eligibility to participate.
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16 2. Such employee had received a cash payment under Option 1 of section
17 16- 17(b).
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19 3. Such employee pays to the employer an amount equal to the amount of
20 cash payment he received under Option 1 of section 16- 17(b), plus
21 credited interest compounded annually at the rate of three (3) percent
22 per annum from the date on which such cash payment was made to the
23 date of such repayment.
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25 Participation under this section will be effective as of September 1, 1977.
26 In determining an employee's credited service at any future date, there
27 shall not be included any service during which the employee did not
28 participate under this plan.
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30 Section 2. Section 16- 14(b)(1) of the South Miami Code of Ordinances is hereby
31 amended to read as follows:
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33 Sec. 16 -14. Pension benefits and retirement date.
34 (b) Amount of pension.
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36 Basic benefit. A basic benefit commencing at the employee's normal retirement
37 date determined by multiplying one and six - tenths (1.6) percent of the
38 employee's final average compensation by the number of his /her completed years
39 of credited service at his or her retirement date, excluding the first two (2) years
40 of such service and any additional service completed by the employee prior to
41 his/her twenty -fifth birthday. However, as to those participants who became an
42 employee subsequent to October 1, 1973, there shall only be excluded the first six
43 (6) months of such service and any additional service completed by him /her prior
44 to his /her twentieth birthday and /or additional service completed by the employee
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prior to the time the employee became a participant. For sworn police personnel,
effective October 1, 1994, the pension benefit accrual rate (multiplier) shall be
increased from 1.6 to 1.8, for services performed in the 1993 -94 fiscal year;
effective October 1, 1994, the pension benefit accrual rate (multiplier) shall be
increased from 1.8 to 1.9, for services performed in the 1994 -95 fiscal year;
effective October 1, 1995, the pension benefit accrual rate (multiplier) shall be
increased from 1.9 to 2.25 for services performed in the 1995 -96 fiscal year; the
pension benefit accrual rate (multiplier) shall be increased from 2.25 to 2.50,
effective October 1, 1996, for services performed in the 1996 -97 fiscal year; the
pension benefit accrual rate (multiplier) shall be increased from 2.50 to 2.75,
effective October 1, 1997, for services performed in the 1997 -98 fiscal year and
thereafter. The multiplier factor to be applied at the time of retirement of each
bargaining unit employee shall be applied as prescribed in the 1992 -93 and 1995-
96 collective bargaining agreements. Provided however, the pension benefit
accrual rate (multiplier) for sworn police personnel shall not be less than two
percent (2.0% ) for all years of service. Effective October 1, 1995, the pension
benefit accrual rate (multiplier) for participants, excluding police personnel, shall
be increased from 1.6 to 1.8 for services performed in the 1995 -96 fiscal year;
effective October 1, 1996, the pension benefit accrual rate (multiplier) for
participants, excluding police personnel shall be increased from 1.8 to 2.0 for
services performed in the 1996 -97 fiscal year and thereafter.
Section 3: If any section, clause, sentence or phrase of this ordinance is for any
reason held invalid or unconstitutional by a court of competent jurisdiction, the holding shall
not affect the validity of the remaining portions of this ordinance.
Section 4: All ordinances or parts of ordinances in conflict with the provisions of
this ordinance are repealed.
Section 5: This Ordinance shall take effect immediately upon approved.
PASSED AND ADOPTED this day of , 2004
ATTEST:
CITY CLERK
1St Reading —
2"d Reading —
APPROVED:
MAYOR
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READ AND APPROVED AS TO FORM:
CITY ATTORNEY
G: \ \SMPF\ PLAN \ProvideEligibility - Employment- Police -ORDN
Page 4 of 4
COMMISSION VOTE:
Mayor Russell:
Vice Mayor Palmer:
Commissioner Birts- Cooper:
Commissioner Sherar:
Commissioner Wiscombe:
SUGARMAN & SUSSKIND
PROFESSIONAL ASSOCIATION
ATTORNEYS AT LAW
Robert A. Sugarman♦
Howard S. Susskind
Kenneth R. Harrison, Sr.
David E. Robinson
D. Marcus Braswell, Jr.
#Board Certified Labor
& Employment Lawyer
June 21, 2004
City Commission
City of South Miami
c/o Maria Davis, City Manager
6130 Sunset Drive
South Miami, Florida 33143
Re: Summary of Proposed Ordinance Amendment —
City of South Miami Police Officers' Retirement Plan
Dear Commission Members:
2801 Ponce De Leon Boulevard .
Suite 750
Coral Gables, Florida 33134
(305) 529 -2801
Broward 327 -2878
Toll Free 1 -800 -329 -2122
Facsimile (305) 447 -8T 15
This firm represents the City of South Miami Police Officers' Retirement Plan. Our
client has directed that we provide an overview of the enclosed proposed ordinance amendment
to be considered by the City Commission.
The Board of Trustees of the Police Officers' Retirement Plan recommends adoption of
this proposed ordinance amendment to the existing code in order to comply with specific
minimum requirements of Chapter 185 of the Florida Statutes.
Florida Law 99 -1 specifically required municipalities that receive state contributions
under Chapter 185 of the Florida Statutes to provide certain minimum benefits and operational
requirements. The City of South Miami receives such state contribution for its Police Officers'
Retirement Plan. The following summarizes the necessary amendments to the existing code in
order to comply with specific minimums established by the state legislative action and Florida
Law 99 -1.
Section 16 -13. Eligibility. This section of the code provides for different
participation dates depending on employment date of employees. Section (a) required a two year
period of probation before participation in the Retirement Plan was allowed.
Subsection (b) states that employees hired on a different date, a six month probation and
the necessity of obtaining a participant's 20th birthday must occur before participating in the
Retirement Plan. Further, this section provided a third provision that completion of a
probationary period was necessary for employees hired on any other date in order to enter the
Retirement Plan.
Chapter 185 of the Florida Statutes requires mandatory participation in pension plans
commencing on date of employment. Therefore, Subsection (c) has been added that allows
participation from date of employment to comply with this requirement of the state statutes.
Section 16 -14, Pension Benefits and Retirement Date was amended to add a
specific sentence at the end of Subparagraph (b)(1) which addressed the basic benefit and
contained certain limitations therein. The addition of this paragraph stated that the benefit
accrual rate for police officer participants may not be less than 2% for all years of service. This
specific language is required in Chapter 185 of the Florida Statutes.
By copy of this letter we are requesting that the Retirement Plan actuary provide an
impact statement for your consideration prior to final reading and enactment of this ordinance
amendment.
We remain available to respond to any questions you may have on this matter.
Yours truly,
,,., NNETH R. HARRISON, SR.
KRH/ld
Enclosure
cc: Board of Trustees
Larry Wilson, Actuary, Gabriel, Roeder, Smith & Co.
0:1ISMP"LANV U=Myo&ropmsadOAW.wmd- LtC4Mgr
I.A.
Consultants & Actuaries
301 East Las Olas Blvd. • Suite 200 • Ft. Lauderdale, FL 33301 - 2254.954- 527 -1616 • FAX 954 - 525 -0083
August 16, 2004
Ms. Haydee Lopez
Benefits USA, Inc.
3810 Inverrary Blvd., Suite 208
Lauderhill, FL 33319
Re: South Miami Pension Plan
Dear Haydee:
As requested, we are pleased to enclose three (3) copies of the Actuarial Impact Statement for
filing the proposed Ordinance for the South Miami Pension Plan with the State of Florida.
The proposed Ordinance (copy attached) will allow Police Officers to participate in the Plan from
date of employment and credited service shall be continuous employment provided that
participation began at first eligibility.
The proposed change in eligibility is a minimum benefit required under F.S 99 -1 for Police
Officers. Our records show, the Chapter Fund held a reserve for unused excess State funds of
$65,275 as of September 30, 2003. The proposed Ordinance includes release of the reserve to
the South Miami Pension Plan. In addition, the increase in the annual cost ($25,282) is assumed
to be paid by current and future State funds.
Please note that this Statement must be signed and dated on behalf of the Pension Board. Copies
of the proposed Ordinance following passage at first reading along with the signed and dated
Actuarial Impact Statement should be filed with the State prior to passage at second reading at
the following addresses:
Mr. Charles Slavin, A.S.A.
Ms. Patricia Shoemaker
Division of Retirement
Division of Retirement
Cedars Executive Center. Building C
Cedars Executive Center. Building C
2639 North Monroe Street
2639 North Monroe Street
Tallahassee, Florida 32399 -1560
Tallahassee, Florida 32399 -1560
Please forward a copy of the ordinance upon passage at second reading to update our files.
The employee census and financial data utilized in the preparation of this Actuarial Impact
statement are the same as utilized for the October 1, 2003 Actuarial Valuation.
Ms. Haydee Lopez
August 16, 2004
Page Two
The undersigned is a Member of the American Academy of Actuaries and meets the
Qualification Standards of the American Academy of Actuaries to render the actuarial opinion
contained herein.
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
Enclosures
cc: Mr. Ken Harrison, Esq.
GABRIE4 ROEDER, SMITH & COMPANY
o ,
South Miami Pension Plan
Actuarial Impact Statement as of October 1, 2003
Police Officers
A. Participant Data
1. Active participants
2. Terminated vested participants
3. Participants receiving benefits including DROPs
4. Annual payroll of active employees
B. Assets
1. Actuarial value
2. Market value
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
£ Total
2. Actuarial present value of future expected benefit payments
for terminated vested members
3. Actuarial present value of future expected benefit payments
for those currently receiving benefits
a. Service retired
b. Disability retired
c. Beneficiaries
d. Miscellaneous
e. Total
4. Total actuarial present value of future expected benefit payments
5. Actuarial accrued liabilities
6. Unfunded actuarial liabilities
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GABRIEL, ROEDER, SMITH & COMPANY
Actuarial
Valuation
50
1
8
$ 3,350,992
$ 6,732,468
$ 6,081,957
$ 11,328,815
782,661
53,304
285,446
206,750
$ 12,656,976
Proposed
Ordinance
50
1
8
$ 3,350,992
$ 6,797,743
$ 6,147,232
$ 11,580,543
843,728
51,943
286,980
190,383
$ 12,953,577
$ 258,298 $ 258,298
$ 875,520
0
166,487
15,959
$ 1,057,966
$ 13,973,240
$ 9,227,670
$ 2,495,202
$ 875,520
0
1 66,487
$ 1,057,966
$ 14,269,841
$ 9,502,196
$ 2,704,453
a
South Miami Pension Plan
Actuarial Impact Statement as of October 1, 2003
Police Officers
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
Actuarial
Valuation
$ 1,042,007
3,520,127
$ 4,562,134
622,216
Proposed
Ordinance
$ 1,042,007
3,735,452
$ 4,777,459
560,180
$ 5,184,350 $ 5,337,639
1.
Total normal cost
$
569,894
$
576,093
2.
Payment required to amortize unfunded liability
202,473
219,683
3.
Interest
30,187
32,060
4.
Total required contributions
$
802,554
$
827,836
5.
Item 4 as a percentage of payroll
23.9%
24.7%
6.
Estimated employee contributions
$
361,518
$
361,518
7.
Item 6 as a percentage of payroll
10.8%
10.8%
8.
Estimated State contributions
$
12,498
$
37,780
9.
Item 8 as a percentage of payroll
0.4%
1.1%
10.
Net amount payable by City
$
428,538
$
428,538
11.
Item 10 as a percentage of payroll
12.8%
12.8%
F. Disclosure of Following Items:
1. Actuarial present value of future salaries - attained age $ 31,720,433 $ 31,453,407
2. Actuarial present value of future employee contributions - attained age $ 2,379,032 $ 2,359,005
3. Actuarial present value of future contributions from other sources N/A N/A
4. Amount of active members' accumulated contributions $ 1,118,955 $ 1,118,955
5. Actuarial present value of future salaries and future benefits at entry age Not provided by software
6. Actuarial present value of future employee contributions at entry age Not provided by software
-3-
South Miami Pension Plan
Actuarial Impact Statement as of October 1, 2003
Police Officers
G. Amortization of Unfunded Actuarial Accrued Liability
Remaining
Unfunded
Amortization
Funding
Date Established
Liability
Payment
Period
10/01/1990
Assumption Method Change
$ (111,250)
$ (11,293)
17 years
10/01/1991
Actuarial Loss (Gain)
(82,013)
(8,103)
18 years
10/01/1992
Plan Amendment
(6,611)
(637)
19 years
10/01/1992
Actuarial Loss (Gain)
(176,651)
(17,032)
19 years
10/01/1993
Actuarial Loss (Gain)
(39,396)
(3,715)
20 years
10/01/1993
Plan Amendment
211,614
19,957
20 years
10/01/1994
Actuarial Loss (Gain)
62,749
5,800
21 years
10/01/1994
Assumption Change
26,117
2,414
21 years
10/01/1995
Actuarial Loss (Gain)
(176,836)
(16,051)
22 years
10/01/1995
Plan Amendment
253,853
23,042
22 years
10/01/1996
Actuarial Loss (Gain)
(100,436)
(8,967)
23 years
10/01/1997
Actuarial Loss (Gain)
(190,172)
(16,724)
24 years
10/01/1998
Actuarial Loss (Gain)
(302,323)
(26,223)
25 years
10/01/1999
Actuarial Loss (Gain)
(96,311)
(8,249)
26 years
10/01/1999
Plan Amendment
126,894
10,869
26 years
10/01/2001
Actuarial Loss (Gain)
1,032,446
86,505
28 years
10/01/2001
Method Change
(519,257)
(43,506)
28 years
10/01/2001
Plan Amendment
812,417
68,069
28 years
10/01/2002
Actuarial Loss (Gain)
775,068
64,315
29 years
10/01/2002
Plan Amendment
193,557
16,061
29 years
10/01/2003
Actuarial Loss (Gain)
563,535
46,349
30 years
10/01/2003
Plan Amendment
238,208
19,592
30 years
10/01/2003
Proposed Ordinance
209,251
17,210
30 years
TOTAL �
$ 2,704,453
$ 219,683
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. There is no benefit or expense to be provided
by the Plan and /or paid from the Plan's assets for which liabilities or current costs have not been established or
otherwise taken into account for in the valuation. All known events or trends which may require a material
increase in plan costs or required contribution rates have been taken into account in the valuation.
Enrollment Number: 02 -2802
Dated: August 16, 2004
Lawrence F. Wilson, A.S.A.
-4-
GABRIEL, ROE ®ER, SMITH & 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 July 23, 2002.
B. Eligibility Requirements:
1. General Employees
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.
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 20.
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
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 20.
D. Final Monthly Compensation (FMC):
Final Monthly 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, overtime
pay, vacation, sick leave and other additional compensation.
-5-
GARR9E4 ROEDER, SMiTH & COMPANY
South Miami Pension Plan
Outline of Principal Provisions of the Retirement Plan
E. Normal Retirement:
1. Eli .9ibility:
a. General Employees: Attainment of age 55 and completion of ten (10) years of credited
service.
b. Police officers: Attainment of age 60 and completion of ten (l 0) 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. FMC,
b. Credited service during the appropriate period and
c. The appropriate benefit percentage
The appropriate benefit percentages are:
a. General Employees
b. Police Officers
F. Supplemental Benefit:
For Credited Service
Through September 30, 1999
October 1, 1999 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%
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 %.
-6-
G ABRIEL, ROEDER, SMITH & COMPANY
South Miami Pension Plan
Outline of Principal Provisions of the Retirement Plan
G. Earlv Retirement:
1. Eligibility_: Attainment of age 60 (age 50 for Police Officers) and completion of 15 years of
credited service.
2. Benefit: Accrued benefit based upon FMC and credited service as of early retirement
date, reduced 6% (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 FMC and credited service as of delayed retirement
date.
I. Disability Retirement:
1. Eli ig bility: Totally and permanently disabled for a six month period while actively
employed.
2. Benefit: Accrued benefit based upon FMC and credited service as of date of disability,
actuarially reduced as for early retirement for early commencement.
J. 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 FMC 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.
-7-
GABR9EL, ROEDER, SMITH & COMPANY
South Miami Pension Plan
Outline of Principal Provisions of the Retirement Plan
2. Vesting Schedule:
Years of
Credited Service
Less than 10
10 or more years
3. Refund Option:
Vesting
Percentage
0%
100 %
A terminated member may elect to receive a refund of accumulated contributions (with 3%
interest for General Employees) 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 12%
(9.5% for Police Officers), both the City and the General Employees will share equally in the
amount in excess of 12% (9.5% for Police Officers).
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:
Prior to proposed Ordinance, for Police Officers:
1. Eligibility Service:
Any regular full -time employee was eligible to enter the plan following the completion of six
months of Credited Service and attainment of age 20.
2. Credited Service:
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 20.
-8-
GABRIEL, ROEDER. SMITH & COMPANY
South Miami Pension Plan
Actuarial Assumptions and Actuarial Cost Methods
Used in the Valuation
A. Mortality
For healthy active lives, the 1983 Group Annuity Mortality Table was used with separate rates for
finales and females.
For disabled lives, the 1985 Pension Disability was used with separate rates for males and females.
B. Interest to be Earned by Fund
8.0 %, compounded annually.
C. Allowances for Expenses or Contingencies
Actual expenses paid in previous year.
D. Employee Withdrawal Rates
Withdrawal rates for males and for females were used in accordance with the following illustrative
example:
E. Disability Rates
1985 Disability study, Class 1 with separate rates for females was used.
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.
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GABRIEL, ROEDER, SMITH & COMPANY
Withdrawal Ratesy.'
Per 100 ,11,
Age
males-:females
20
22.5
22,5:.1
30
1,0.5 1511
35
7.5 10 5 N,
4
40
45 %5
jbi 9
45
(
5
50
L5 30
55
60 & Over
E. Disability Rates
1985 Disability study, Class 1 with separate rates for females was used.
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.
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GABRIEL, ROEDER, SMITH & COMPANY
South Miami Pension Plan
Actuarial Assumptions and Actuarial Cost Methods
Used in the Valuation
G
. Salary Increase Factors
Current salary is assumed to increase at an annual rate equal to 6.0% per year.
H. Retirement Rates
Members are assumed to retire on their normal retirement date, minimum one year of future
service. Rates of early retirement for Police Officers were used in accordance with the following
illustrative example:
I. 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.
J. 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.
K. Changes Since Previous Valuation
None
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GABRIEL, ROEDER, SMITH & COMPANY
South Miami Pension Plan
Actuarial Impact Statement as of October 1, 2003
A. Description of Proposed Amendment (see attached Proposed Amendment)
Police Officers shall participate in the Plan from date of employment. For Police Officers, credited
service shall be continuous employment provided that participation began at first eligibility.
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