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06-17-1999 - SpecialAgenda/Pe,nsio 6-17-99 0095 AGENDA Board of Trustees of the Employees' Pension Fund Special Meeting - June 17, 1999 5:00 P.M. 1. Call to Order 2. Discuss pension buybacks 3. Adjourn see minutes: mpf06d99 G PRICEWATERHOUSECOC)PERS ? RECEIVED JUN 1 8 1999 Finance Dew Ir Ke ouseCoope Kennedy Boulev vard rd Suite 1500 Tampa FL 33602-5147 I Telephone (813) 229 0221 Facsimile (813) 229 3646 June 16, 1999 Ms. Margaret L. Simmons, CPA Finance Director City of Cle&-water 100 South Myrtle Avenue Clearwater, FL Dear Margie: As you requested, we have estimated the cost impact of amending the City's pension plan to allow employees to repurchase past service based on the lesser of their contributions with interest or the actuarial present value of the additional service. In order to estimate the cost impact of this change, we have to make assumptions regarding the number of employees who would be affected. The City identified 24 employees who might repurchase past service if this change were adopted. Since it is unclear how many more employees might be eligible, we determined the cost two ways - based on the original 24 employees and assuming there were an additional 24 similarly situated. We also made a revision to our actuarial assumptions to reflect the potential cost impact of current employees who terminate in the future and are rehired at a later date and repurchase their prior service. To estimate the cost impact of these employees, we reduced the withdrawal assumption in our valuation by 2% per year. As described above, we also determined the cost impact if it were reduced by 4% per year to allow for the high degree of uncertainty regarding the number of employees it may apply to. Under Scenario 1 (24 current employees, 2% effective reduction in withdrawal rates), the City's annual funding requirement pursuant to Florida Statutes would increase by approximately $130,000 if this plan change were adopted. This represents 0.3% of payroll. The City's unfunded actuarial accrued liability would increase by approximately $1,600,000. Under Scenario 2 (48 current employees, 4% effective reduction in withdrawal rates), the City's annual funding requirement pursuant to Florida Statutes would increase by approximately $260,000 (0.5% of payroll). The unfunded actuarial accrued liability would increase by approximately $3,200,000. Please note that if the City wishes to amend the plan, State law requires that a formal actuarial impact statement be prepared before any change is adopted. ov 2r Ms. Margaret L. Simmons, CPA June 16, 1999 Page Two Our calculations are based on the results of the January 1, 1998 actuarial valuation of the plan and on employee data and plan asset information supplied by the City of Clearwater. The actuarial assumptions and plan provisions used are the same as those contained in our 1998 actuarial valuation report except as noted herein. If you have any questions or comments regarding this information, please give us a call. Very truly yours, 4----- M kkis Stephen M. Metz Principal Associate of the Society of Actuaries Enrolled Actuary # 99-4342 SMM/mml C r- a v _ CL & am PL to C14 C CC)i 1~A (7 NN 1cV Q c o ;?s c' `* i ao 04 O N N H N «?q C) Q ul H H ift H a m C) rn o m Q C i °O g' E1? w QW N ti r - co N N Vi N Y H 7p '!c?) O m 7 m 0 O m m m • C cd?p .?t CR ? ti O m 0 O N M co N (DD U) ?. ? N N N N H y N to C C r O 3 d O O O m N co m« Z } Z } Z } n- m 3 8 a) C14 04 v 0 CL C N r r N C4 oD CO •m, Of Goo Q 9 r A N V- Q a 9 4 O .A W c :3 c1 O a t? O a C a v as V Z5 a ? r to S LN c' v a a O cc LD o m o M 9 w A« N .0 c fat o "? 41 IA V o w? 'n w gQ C9 in a`?t?t3a? 3? Oa .2 CL t PENSION BUY-BACK SUMMARY Jeffrey Harper-Jeff Harper was employed by the City on October 27, 1969. He was not allowed to participate in the Pension Plan at that time due to what appears to be an arbitrary decision made by he Assistant City Manager at that time. On June 29, 1974, this decision was reversed and he was allowed to join the Plan effective that date. Mr. Harper never formally requested back service credit indicating that he thought the request might adversely affect his employment. Upon his retirement on September 30, 1998, Mr. Harper requested that he be given credit for the four and one-half years that he was not allowed to participate in pension. On October 8, 1998, the Pension Advisory Committee approved Mr. Harper's pension with the October 27, 1969 date. After discussion at several Trustees' meetings, the Pension Trustees, upon the recommendation of the City Attorney and the City's pension attorney, approved Mr. Harper's pension with the October 27, 1969, entry date with the stipulation that Mr. Harper pay the amount he would have contributed to the Plan plus 5% interest. He paid this amount and is now receiving a monthly benefit in the amount of $5609.19. The back credit increased his pension by 19.8% amounting to $900.00 per month. Kenneth Donagan- Ken Donagan was originally employed by the City on April 8, 1974, as a Police Officer. He worked for 9 %2 years and resigned on September 2, 1983. At the time of his resignation, he withdrew his pension contributions in the amount of $10,614.81. On October 31, 1983, he requested a withdrawal of his resignation in accordance with the Civil Service Rules and returned to work on February 6, 1984. Upon his return he asked to buy back his previous period of employment for pension purposes and the request was, denied. Over the years he made this same request on numerous occasions and was repeatedly denied. In 1996 when the new Pension Plan became effective, he again asked to buy back this time. Per the ordinance, he was advised he would have to pay the actuarial value of $250,000 to receive credit for this time. In February, 1999, his request was again brought before the PAC and Trustees. On February 11, 1999, the PAC approved his request to repay the $16,614.81 without interest. On March 15, 1999, the Trustees also unanimously approved Mr. Donagan's request without interest. Mr. Donagan paid back his money and is now receiving a monthly benefit in the amount of $3188.12. Leonard Marotta-Len Marotta was originally employed by the City on August 26, 1979, as a Police Officer. On August 26, 1982, he resigned and withdrew his pension contributions in the amount of $3,890.97. He withdrew his resignation 19 days past the 6-month deadline for withdrawals but was approved by the City Manager for re-employment. He returned to work as a Police Officer on April 25, 1983. At that time he made a request to buy back his previous three years for pension purposes and was denied. In 1996 he made another request and was advised he would have to pay back the actuarial value of $65,000. He carne before the PAC on March 11, 1999, and the Committee approved his request to buy back the time (three years) with payment of 5% t i interest per year from the date of withdrawal to the current date a ousting to $8,785.74 as of May 3, 1999, rather than the actuarial value of $65,000. Th s is pending before the Trustees. The 1999 actuarial value is $90,994. David Krieger-Dave Krieger was originally employed by the City on September 3, 1969, as a Police Officer. On August 11,1972, he resigned from the City to attend school after being denied a leave of absence for this purpose. He withdrew his pension contributions in the amount of $1,292.62 which equaled his contributions of $1,615.78 less a 20% administrative fee that was charged at the time. Mr. Krieger made several requests to return to employment as a Police Officer after graduating but was denied due to a hiring freeze at the time. He did finally return on March 28, 1977, and as admitted to Pension Plan effective that date. Upon his employment he made a rec nest to buy back the previous period of employment and was denied. He made several such requests over the years but was repeatedly denied. In 1996 he made another requ st and was advised he would have to pay the actuarial value of $76,000. On April 8, 1999, Mr. Krieger came before the PAC to make a request to buy back this time in a mo?e affordable manner in light of other recent buy back decisions by the PAC and Trustees. The Committee approved his request to buy back the time with interest at 5% per year from the date of withdrawal amounting to $4,763.88 as of May 3, 1999. This matter is pending before the Trustees. The 1999 actuarial value is $54,541. Glenn Weaver-Glenn Weaver was originally employed by the City on April 28, 1983. He resigned on October 23, 1987, to accept employment with the City of Largo. At that time he withdrew his contributions in the amount of $7,048.99. On March 30, 1989, he returned to the City of Clearwater and was readmitted to the Pension Plan effective that date. He asked about repaying his money and was told it could not be done. He again asked about this in 1996 but did not pursue it at that time when he was told by someone in Human Resources that it would probably be cost prohibitive. On April 8, 1999, he appeared before the PAC to again make this request. The Committee continued this until the next meeting. The 1999 actuarial value is $29,814. Georgette Summarell---Georgette Summarell was originally employed on April 26, 1976. On August 17, 1991, she resigned because her husband was transferred out of state. She withdrew her contributions in the amount of $24,284.71. She later withdrew her resignation within the 6-month time limit and returned to em loyrnent on March 23, 1992. She was admitted to the Pension Plan effective that date. In 1996 she requested to buy back her previous time but did not pursue it at that time. This was on the agenda for the April 8, 1999, PAC meeting and the Committee continued this until the next meeting. The 1999 actuarial value is $147,947. Camille Motley-Camille Motley was originally employed on April 21, 1977. She resigned on April 24, 1981, to pursue employment in the private sector. At that time she withdrew her contributions in the amount of $2,307.89. She returned to City employment on August 16, 1982. In 1996 she requested a b y back of her previous time. She was advised at the time it would cost her $62,939 so she did not pursue it. This was on the April 8, 1999, agenda for the PAC but was continued until the next meeting. The 1999 actuarial value is $94,738.