CITY OF CLEARWATER EMPLOYEES' PENSION PLAN ACTUARY'S REPORT
r
The City of Clearwater Employees' Pension Plan
' Actuary's Report
' As of January 1, 2007 to determine annual contribution
for the Plan Year: 01/01/2007 - 12/31/2007 to be paid in the
Fiscal Year: 10/01/2007 - 09/30/2008
Prepared by PricewaterhouseCoopers, LLP
May 2007
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May 17, 2007
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Stephen M. Metz
Associate of the Society of Actuaries
Enrolled Actuary Number 05-04342
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City of Clearwater
100 S. Myrtle Avenue
Clearwater, FL 33756-5520
This document was not intended or written to be used, and it cannot be used,
for the purpose of avoiding U.S. federal, state or local tax penalties.
Ladies and Gentlemen:
PricewaterhouseCoopers LLP
Two Commerce Square, Suite 1700
2001 Market Street
Philadelphia, PA 19103-7042
Telephone (267) 330 3000
Facsimile (267) 330 3300
This report presents the results of the January 1, 2007 actuarial valuation of the City of Clearwater
Employees' Pension Plan. It has been prepared primarily to present to management the contribution
requirements for 2007 and also the current status of funding of accumulated plan benefits. Section
IV of this report includes a presentation of the information required by Government Accounting
Standards Board (GASB) Statement No. 25.
Our calculations were based on financial data and employee data furnished by the City of
Clearwater.
The valuation was based upon generally accepted actuarial methods, and we performed such tests
as we considered necessary to assure the accuracy of the results. To our knowledge, there are no
benefits or expenses to be provided by the plan for which a liability or current cost was not
established. We certify that the amounts presented in the accompanying report have been
appropriately determined according to the actuarial assumptions stated herein.
Statement by Enrolled Actuary
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 these provided by the plan or paid from the plan's assets for which
liabilities or current costs have not been established or otherwise taken into account 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.
Respectfully submitted,
James D. Burke
Fellow of the Society of Actuaries
Enrolled Actuary Number 05-06899
CONTENTS
Pages
SECTION I SUMMARY 1-6
SECTION II FUNDING 7-11
SECTION III ASSETS 12 - 15
SECTION IV ACCOUNTING 16 - 17
SECTION V CENSUS DATA 18 - 22
SECTION VI ASSUMPTIONS AND METHODS 23 - 25
SECTION VII SUMMARY OF PLAN PROVISIONS 26 - 28
CITY OF CLEARWATER EMPLOYEES' PENSION PLAN
SECTION I -SUMMARY
A. Actuary's Comments
This report presents the highlights of the January 1, 2007 actuarial valuation prepared to determine
the contribution requirements for the 2007-2008 fiscal year.
Since the last actuarial valuation of the plan on January 1, 2006, the following assumptions were
changed:
• The mortality assumption was updated from the 1994 Group Annuity Reserving Table to the
1 RP 2000 Combined Healthy Mortality Table, to reflect more recent trends in mortality;
• The retirement assumption was updated to reflect the City's experience and expected future
retirement rates;
• The withdrawal assumption was updated to reflect the City's experience and expected future
withdrawal rates.
For a detailed description of the actuarial assumptions, including the new assumed retirement and
withdrawal rates, please see Section VI of this report.
Since the last actuarial valuation of the plan, there have been no changes to the actuarial cost method
or the asset valuation method. For a detailed description of these methods, please see Section VI.
Since the last actuarial valuation of the plan, there have been no changes in the plan provisions. For
a detailed description of the plan provisions, please see Section VII.
The minimum required City contribution pursuant to Florida Statutes for the 2007 plan year is
$12,520,399 or 15.77% of pay (excluding the credit balance of $15,046,922), compared to
$15,438,360 (or 20.31 % of pay) for 2006. Although State law allows the City to use the credit balance
to entirely fund the actuarially required City contribution, the City ordinance establishing the Plan
requires the City to contribute at least 7% of payroll. The minimum required contribution was affected
by the following factors:
• Assumption changes, described above, had the effect of reducing the minimum required
contribution from 19.51 % of pay to 15.77%;
• While the investment return on the market value of assets was 11.80%, the return on the
actuarial value of assets was only 7.87% due to prior years' losses, compared to an assumed
rate of 7.5%;
• The actual average salary increase was 5.15%, compared to an assumed rate of 6.0%;
The plan enjoys a couple of advantages that will mitigate future cost increases somewhat:
• The credit balance is currently equal to $15,046,922, which can be used to offset future City
contributions.
• The market value of assets now exceeds the actuarial value by approximately $30 million.
This difference will flow through the plan's asset valuation method over the next four years,
decreasing costs slightly.
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CITY OF CLEARWATER EMPLOYEES' PENSION PLAN
SECTION 1- SUMMARY
(continued)
While the plan remains well funded compared to the majority of public and private pension plans,
there are several issues that should be kept in mind:
If the City contributes 10% of payroll for the 2007 fiscal year (as it did for 2006), it will reduce
the credit balance by roughly $3.5 million.
If the City wishes to continue its recent practice of contributing 10% of payroll and using the
credit balance to cover the difference, it will be able to do so for three to four more years.
After that point, if the Plan's experience matches the actuarial assumptions, the City will have
to increase its contributions to a level close to 20% of payroll.
Due to the Plan's large asset pool and the impact of the employee contributions, the City's
cost is highly leveraged, which means that changes in the assets and liabilities can change the
City's funding requirements dramatically.
The funded status of the accumulated benefits improved significantly compared to the prior year. The
ratio of assets at market value to the actuarial present value of accumulated plan benefits is 132% at
January 1, 2007, compared to 121% at January 1, 2006.
Contribution Requirements for the Plan Year Ending December 31, 2007
Minimum Required Employer Contribution
Florida Statutes
7% of Payroll
$12,520,399-
$5,556,956
The employer contribution is assumed to be made uniformly during the first two quarters of the
fiscal year beginning on October 1, 2007. Differences in the investment return due to
contributions actually being made at any other time will be recognized as an actuarial gain or loss
in the following valuation. The minimum required contribution represents a funding level which
will satisfy the minimum funding requirements under Part VII, Chapter 112, Florida Statutes.
Please refer to Section VI and VII of the report for a summary of the actuarial assumptions and
plan provisions, respectively.
- Excluding the credit balance (currently $15,046,922)
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' CITY OF CLEARWATER EMPLOYEES' PENSION PLAN
SECTION I - SUMMARY
(continued)
C. Comparative Summary of Princi pal Valuation Results
Actuarial Valuation Prepared as of: Jan. 1, 2007 Jan. 1, 2007 Jan. 1, 2006
After Assumption Before Assumption
Change Change
'
(a) Participant Data
Number Included
Active Members
1,692
1692
1,671
Retirees and Beneficiaries 758 758 721
Terminated Vested Participants 61 61 58
Annual Payroll of Actives $79,385,090 $79,385,090 $76,010,269
Annualized Benefits
Retirees and Beneficiaries $19,847,421 $19,847,421 $18,243,971
Terminated Vested Participants $1,011,310 $1,011,310 $1,016,166
(b) Actuarial Reserves
Market Value $590,066,492 $590,066,492 $534,252,349
Actuarial Value $559,830,590 $559,830,590 $525,573,824
(c) Liabilities
Present Value of Expected Benefits:
Active Participants:
Retirement Benefits $341,955,028 $377,807,282 $358,857,273
Termination Benefits $41,486,735 $30,315,587 $30,101,976
Disability Benefits $22,026,650 $18,931,815 $18,309,704
Death Benefits $5,326,021 $4,398,684 $4,274,602
Refund of Employee Contributions $4,490,875 $2,918,997 $2,871,864
Total Active $415,285,309 $434,372,365 $414,415,419
Terminated Vested Participants $9,801,171 $9,815,788 $9,890,291
Retirees and Beneficiaries $250,792,752 $253,986,740 $235,058,990
Total Present Value of Expected Benefits $675,879,232 $698,174,893 $659,364,700
Liabilities Due and Unpaid $667,685 $667,685 $662,183
3
CITY OF CLEARWATER EMPLOYEES' PENSION PLAN
SECTION I - SUMMARY
(continued)
C. Comparative Summary of Principal Valuation Results (continued)
Actuarial Valuation Prepared as of: Jan. 1, 2007 Jan. 1, 2007 Jan. 1, 2006
After Assumption Before Assumption
Chanoe Chanae
(c) Liabilities (continued)
Unfunded Actuarial Accrued Liability
Supplemental FIL - 1/1/1979 $353,049 $353,049 $511,323
Supplemental FIL - 1/1/1981 99,990 99,990 120,785
Supplemental FIL - 111/1982 (1,425,761) (1,425,761) (1,654,101)
Supplemental FIL - 1/1/1987 867,052 867,052 924,064
Supplemental FIL - 1/1/1988 1,019,638 1,019,638 1,078,158
Supplemental FIL - 1/1/1989 1,404,906 1,404,906 1,475,841
Asset Valuation Method - 1/1/1994 2,949,812 2,949,812 3,034,876
Change
Plan Amendment - 1/1/1996 12,625,111 12,625,111 12,923,544
Plan Amendment - 1/1/2000 48,332,987 48,332,987 49,121,389
Assumption Changes - 1/1/2002 (29,113,721) (29,113,721) (29,512,123)
Assumption Changes - 1/1/2007 (14,695,526) 0 N/A
Total $22,417,537 $37,113,063 $38,023,756
(d) Funding Account Credit Balance
Prior Year Amount $18,817,573 $18,817,573 $24,083,096
Prior Year:
Required Employer Contributions (15,438,360) (15,438,360) (14,471,960)
Employer Contributions Made 10,256,391 10,256,391 7,400,205
Interest on Credit Balance
1,411,318 1,411,318 1,806,232
Total $15,046,922 $15,046,922 $18,817,573
(e) Actuarial Present Value of Accrued
Benefits $445,702,880 $471,538,049 $440,674,422
Changes During Prior Year:
Value from Prior Year $440,674,422 $440,674,422 $417,252,415
Benefits Paid $(20,187,167) $(20,187,167) $(18,314,544)
Interest, Aging and Benefits Accrued 51,050,794 51,050,794 41,736,551
Change in Assumptions (25,835,169) 0 0
Change in Plan Provisions 0 0 0
Net Change $5,028,458 $30,863,627 $23,422,007
Value at Current Year $445,702,880 $471,538,049 $440,674,422
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CITY OF CLEARWATER EMPLOYEES' PENSION PLAN
SECTION I - SUMMARY
(continued)
C. Comparative Summary of Principal Valuation Results (continued)
Actuarial Valuation Prepared as of: Jan. 1, 2007 Jan. 1, 2007 Jan. 1, 2006
After Assumption Before Assumption
Chanoe Chanoe
(f) Pension Cost for Year
Normal Cost $12,415,828 $14,019,407 $13,742,657
Amortization of Unfunded Frozen
Initial Liability 2,342,499 3,499,977 3,499,977
Administrative Expenses 2,968,095 2,968,095 2,808,804
Shortfall for Expenses in Prior Year 159,291 159,291 278,379
Interest Adjustment 997,493 1,204,572 1,201,365
Total Required Contribution $18,883,206 $21,851,342 $21,531,182
As a Percentage of Payroll 23.79% 27.53% 28.33%
Anticipated Employee Contributions $6,350,807 $6,350,807 $6,080,822
As a Percentage of Payroll 8.00% 8.00% 8.00%
Anticipated State Contributions $12,000 $12,000 $12,000
As a Percentage of Payroll 0.02% 0.02% 0.02%
City Required Contribution 12,520,399 15,488,535 15,438,360
As a Percentage of Payroll 15.77% 19.51% 20.31%
(g) Prior Year Actual Contributions made by
State $12,000 $12,000 $12,000
Employees 6,060,134 6,060,134 5,827,931
City 10,256,391 10,256,391 7,400,205
Total $16,328,525 $16,328,525 $13,240,136
(h) Gains and Losses N/A N/A N/A
(i) Other Present Values
Present Value of Future Salaries
At attained age $694,770,240 $658,460,027 $633,768,660
Present Value of Future Employee
Contributions
At attained age $55,581,619 $52,676,802 $50,701,493
CITY OF CLEARWATER EMPLOYEES' PENSION PLAN
SECTION I - SUMMARY
(continued)
C. Comparative Summary of Principal Valuation Results (continued)
Actuarial Valuation Prepared as of: Jan. 1, 2007 Jan. 1, 2007 Jan. 1, 2006
After Before
Assumption Assumption
Change Change
(i) Other Present Values (continued)
Present Value of Future Normal Costs
$108,678,027 $116,278,162 $114,584,693
0) Comparison of Actual and Assumed
Salary Increases Investment R
Actual eturn
Year Ended Actual Assumed Market Value Actuarial Value Assumed
12/31/1986 7.40% 5.00% 13.21% N/A 7.00%
12/31/1987 5.90% 5.00% 10.78% N/A 7.00%
12/31/1988 9.10% 5.00% 9.12% N/A 7.00%
12/31/1989 8.70% 5.00% 20.84% N/A 7.00%
12/31/1990 5.30% 5.00% 6.21% N/A 7.00%
12/31/1991 6.10% 5.00% 28.52% N/A 7.00%
12/31/1992 6.80% 5.00% 6.49% N/A 7.00%
12/31/1993 1.20% 5.00% 9.29% 7.42% 7.00%
12/31/1994 4.40% 5.00% 0.89% 6.28% 7.00%
12/31/1995 6.40% 5.00% 23.36% 9.14% 7.00%
12/31/1996 6.70% 5.00% 14.80% 11.54% 7.00%
12/31/1997 5.60% 5.00% 17.49% 13.74% 7.00%
12/31/1998 7.40% 5.00% 16.74% 15.28% 7.00%
12/31/1999 4.20% 5.00% 18.61% 17.96% 7.00%
12/31/2000 5.80% 5.00% (3.43%) 12.42% 7.00%
12/31/2001 5.90% 5.00% (5.16%) 7.40% 7.00%
12/31/2002 5.80% 6.00% (8.83%) (1.85%) 7.50%
12/31/2003 6.40% 6.00% 20.08% 7.45% 7.50%
12/31/2004 6.38% 6.00% 933% 2.18% 7.50%
12/31/2005 5.49% 6.00% 6.67% 4.58% 7.50%
12/31/2006 5.15% 6.00% 11.80% 7.87% 7.50%
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CITY OF CLEARWATER EMPLOYEES' PENSION PLAN
SECTION If - FUNDING
A. Development of the Unfunded Frozen Actuarial Accrued Liability
1. Unfunded Frozen Actuarial Accrued Liability
as of January 1, 2006 $38,023,756
Interest to December 31, 2006 $2,851,782
$40,875,538
2. Employer Normal Cost* for Year with interest $11,675,885
to December 31, 2006
3. Required Employer Contributions for Period $15,438,360
4. Increase/(Decrease) Due to Assumption Changes $(14,695,526)
5. Unfunded Frozen Actuarial Accrued Liability at
December 31, 2006 $22,417,537
* Includes Expenses and Adjustments
' CITY OF CLEARWATE R EMPLOYEES' PENSION PLAN
SECTION 11- FUNDING
(continued)
B. Development of Normal Cost
The Normal Cost is the portion of the cost of projected benefits w hich is allocated to t he current year by
the actuarial cost method. The Normal Cost for the plan years beginning January 1, 2007 and January
' 1, 2006 are determined as follows:
Total Projected Actuarial Liability: Jan. 1, 2007 Jan. 1, 2007 Jan. 1, 2006
After Before
Assumption Assumption
Change Change
The present value as of the beginning of the
plan year of all benefits expected to be paid in
' the future to current participants.
• Active participants
• Terminated vested participants $415,285,309
9,801,171 $434,372,365
9,815,788 $414,415,419
9,890,291
• Retired and disabled participants 250,792,752 253,986,740 235,058,990
• Total Participants $675,879,232 $698,174,893 $659,364,700
Credit Balance: Employer contributions from
prior years reserved for future use. $15,046,922 $15,046,922 $18,817,573
Fund: The actuarial value of fund assets as of
' the beginning of the plan year. $559,830,590 $559,830,590 $525,573,824
Excess of Total Projected Actuarial
' Liability Over the Fund Minus the Credit
Balance: The portion of the projected total
' actuarial liability to be funded in the future. $131,095,564 $153,391,225 $152,608,449
This portion is divided into two components:
' a. Unfunded frozen actuarial accrued liability $22,417,537 $37,113,063 $38,023,756
b. Present value of future service liability
(funded over the expected future service
years of current participants) $108,678,027 $116,278,162 $114,584,693
Present Value of Future Covered Payroll $694,770,240 $658,460,027 $633,768,660
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CITY OF CLEARWATER EMPLOYEES' PENSION PLAN
SECTION II - FUNDING
(continued)
B. Development of Normal Cost (continued)
Jan. 1, 2007 Jan. 1, 2007 Jan. 1, 2006
After Before
Assumption Assumption
Change Change
Normal Cost Rate: The ratio of the present
value of future service liability to the present
value of future covered payroll. 15.64% 17.66% 18.08%
' Annual Covered Payroll: The reported
payroll for plan participants who have not
attained the assumed retirement age.
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$79,385,090 $79,385,090 $76,010,269
Normal Cost: The annual cost as of the
beginning of the plan year to fund the future
service liability over the expected future years
of service of the current participants. $12,415,828 $14,019,407 $13,742,657
CITY OF CLEARWATER EMPLOYEES' PENSION PLAN
SECTION II - FUNDING
(continued)
C. Schedule of Amortization Pavments
Initial Jan. 1, 2007 Annual
Date Initial Amortization Unamortized Amortization
Established Reason Amount Period (Years) Amount Payment
1/1/1979 Supplemental
FIL $2,707,962 30 $353,049 $182,906
1/1/1981 Supplemental
FIL 390,421 30 99,990 27,771
1/1/1982 Supplemental
FIL (4,521,985) 30 (1,425,761) (327,812)
1/1/1987 Supplemental
FIL 1,519,142 30 867,052 117,504
1/1/1988 Supplemental
FIL 1,673,738 30 1,019,638 129,658
1/1/1989 Supplemental
FIL 2,177,772 30 1,404,906 168,952
1/1/1994 Asset Valuation
Method Change 3,724,296 30 2,949,812 290,865
1/1/1996 Plan 15,063,842 30 12,625,111 1,179,254
Amendment
1/1/2000 Plan 52,921,724 30 48,332,987 4,160,471
Amendment
1/1/2002 Assumption
Changes (30,846,502) 30 (29,113,721) (2,429,592)
1/1/2007 Assumption
Changes (14,695,526) 30 (14,695,526) (1,157,478)
Total Charges $67,652,545 $6,257,381
Total Credits (45,235,008) (3,914,882)
Total $22,417,537 $ ,342 499
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1 CITY OF CLEARWATER EMPLOYEES' PENSION PLAN
SECTION II - FUNDING
(continued)
D. Anticipated Amortization Schedule
Shown below is the anticipated amortization schedule for the Unfunded Frozen Actuarial Accrued
' Liability taking into account the plan's funding policy.
' Anticipated Amortization Schedule
1 Unfunded Frozen
Date Actuarial Accrued Liability
2007 $22,417,537
2008 $21,580,666
' 2009 $20,681,030
2010 $19,910,545
2037 $0
On July 1, 1963, the Unfunded Frozen Actuarial Accrued Liability was established equal to the difference
' between the retirement plan's accrued liability, determined under the Entry Age Normal Funding Method
and the actuarial value of plan assets. According to the plan's funding policy, the initial liability is to be
amortized by a series of level payments over a forty-year period. Subsequent changes in the level of the
Frozen Actuarial Accrued Liability due to plan amendments or changes in actuarial assumptions are to
be amortized on a straight-line basis over a period of thirty years. By contributing more than the stated
funding policy, the amortization of the Unfunded Frozen Actuarial Accrued Liability can be accelerated.
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CITY OF CLEARWATER EMPLOYEES' PENSION PLAN
SECTION III -ASSETS
Comparative Balance Sheet
As of December 31, 2006
ASSETS Market Value
Dec. 31, 2006 Market Value
Dec. 31, 2005
Cash and Cash Equivalents $2,139,316 $(1,621,349)
International Equity Securities 67,122,769 54,427,233
Domestic Corporate Equity Securities 302,072,191 293,796,569
Preferred Stock 161,044 1,094,165
Domestic Bonds 214,354,361 183,690,140
Total Investments $585,849,681 $531,386,758
Receivables:
Interest - Pooled Cash 27,588 0
Commission Recapture 56,913 36,083
Employer Contributions 4,794,995 3,491,691
State Contributions 5,000 0
Total Assets $590,734,177 $534,914,532
LIABILITIES AND ACTUARIAL RESERVES
Liabilities:
Accounts Payable
$667,685 $662,183
Total Liabilities $667,685 $662,183
Actuarial Reserves:
Accumulated Member Contributions $49,816,350 $48,234,206
Balance of Actuarial Reserves 540,250,142 486,018,143
Total Actuarial Reserves $590,066,492 $534,252,349
TOTAL LIABILITIES AND ACTUARIAL RESERVES $590,734,177 $534,914,532
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CITY OF CLEARWATER EMPLOYEES' PENSION PLAN
SECTION III - ASSETS
(continued)
Schedule of Changes in Actuarial Reserves
For the Plan Year Ended December 31, 2006
Market Value
Revenues:
Employee Contributions $6,060,134
Employer Contributions 10,256,391
State Contributions 12,000
$16,328,525
Earnings on Investments:
Interest $9,849,351
Dividends 3,166,020
Realized Net Gains on Securities Transactions 60,632,789
$73,648,160
Unrealized Appreciation (Depreciation)
on Investments ($11,007,280)
Expenses:
Benefits Paid $(19,140,278)
Refunds of Contributions (1,046,889)
Professional Fees (2,968,095)
Other Expenses 0
$(23,155,262)
Net Change in Actuarial Reserves $55,814,143
Actuarial Reserves at Beginning of Plan Year $534,252,349
Actuarial Reserves at End of Plan Year $590,066,492
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CITY OF CLEARWATER EMPLOYEES' PENSION PLAN
SECTION 111 - ASSETS
(continued)
Development of Actuarial Value of Assets
1. Actuarial Reserves at Beginning of Plan Year $534,252,349
2. Time Weighted Employee Contributions 3,030,067
(.5 x $6,060,134)
3. Time Weighted Employer Contributions 641,024
(.5 x.125 x $10,256,391)
4. Time Weighted State Contributions 6,000
(.5 x $12,000)
5. Time Weighted Benefit Payments 9,252,452
( (11/24) x $20,187,167)
6. Time Weighted Expenses 1,484,048
(.5 x $2,968,095)
7. Time Weighted Value of Actuarial Reserves $527,192,940
(items 1+2+3+4-5-6)
8. Expected Asset Return 39,539,471
(Item 7 x 7.50%)
9. Actual Asset Return 62,640,880
10. Difference of Expected Return over Actual Return $(23,101,409)
11. Actuarial Reserves at End of Plan Year 590,066,492
12. Expected Actuarial Reserves at End of Plan Year $566,965,083
(Items 10 + 11)
13. Difference Between Actual and Expected Asset Return $23,101,409
(Items 11 - 12)
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I CITY OF CLEARWATER EMPLOYEES' PENSION PLAN
SECTION III -ASSETS
(continued)
Development of Actuarial Value of Assets (continued)
Date Initial Annual Amount Amount Excluded Amount Excluded
Established Amount Recognized Prior Valuation Current Valuation
01/01/2003 $(71,661,013) $(14,332,203) $14,332,203 $0
01/01/2004 $49,774,669 $9,954,934 $(19,909,868) $(9,954,934)
01/01/2005 $10,516,067 $2,103,213 $(6,309,640) $(4,206,427)
01/01/2006 $(4,010,976) $(802,195) $3,208,781 $2,406,586
01/01/2007 101
409
$23 $4,620,282 $0 $(18,481,127)
,
,
Total $(30,235,902)
Actuarial Reserves $590,066,492
Actuarial Value of Assets, Before Applying Limits $559,830,590
80% of Actuarial Reserves $472,053,194
120% of Actuarial Reserves $708,079,790
Actuarial Value of Assets, After Applying Limits $559,830,590
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CITY OF CLEARWATER EMPLOYEES' PENSION PLAN
SECTION IV -ACCOUNTING
A. Plan Description and Contribution Information
Membership of the plan consisted of the following at January 1, 2006, the date of the latest actuarial
valuation:
Retirees and beneficiaries receiving benefits 721
Terminated plan members entitled to but not yet receiving benefits 58
Active plan members 1,671
Total 2.450
Number of participating employers 1
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1 CITY OF CLEARWATER EMPLOYEES' PENSION PLAN
SECTION IV -ACCOUNTING
(continued)
B. Required Supplementary Information Scheduling of Funding Progress
Actuarial UAAL as a
Actuarial Value Accrued Liability Unfunded Percentag
Actuarial of Assets (AAL) AAL Funded Covered e of
Valuation (a) Frozen Entry (UAAL) Ratio Payroll Covered
Date Age (b) (b-a) (a/b) (c) Payroll
( (b-a) / c)
01/01/1991 $141,865,764 $152,118,075 $10,252,311 93% $34,532,753 30%
01/01/1992 $184,746,269 $194,550,126 $9,803,857 95% $36,626,332 27%
01/01/1993 $198,315,690 $207,639,701 $9,324,011 96% $38,731,039 24%
01/01/1994 $213,014,474 $225,549,346 $12,534,872 94% $38,710,974 32%
01/01/1995 $225,482,726 $237,428,796 $11,946,070 95% $41,371,332 29%
01/01/1996 $244,744,488 $271,124,381 $26,379,893 90% $44,208,964 60%
01/01/1997 $272,346,200 $297,892,502 $25,546,302 91% $44,955,348 57%
01/01/1998 $308,596,133 $333,250,492 $24,654,359 93% $47,281,198 52%
01/01/1999 $354,088,751 $377,788,731 $23,699,980 94% $49,666,523 48%
01/01/2000 $414,826,422 $490,426,940 $75,600,518 85% $50,937,403 148%
01/01/2001 $461,724,610 $535,672,208 $73,947,598 86% $54,864,584 135%
01/01/2002 $491,859,015 $533,191,487 $41,332,472 92% $58,929,582 70%
01/01/2003 $477,541,459 $517,933,495 $40,392,036 92% $65,150,820 62%
01/01/2004 $507,256,663 $546,915,627 $39,658,964 93% $69,907,473 57%
01/01/2005 265,274
$510 $549,136,184 $38,870,910 93% $73,836,304 53%
1 01/01/2006 ,
$525,573,824 $563,597,580 $38,023,756 93% $76,010,269 50%
01/01/2007 $559,830,590 $582,248,127 $22,417,537 96% $79,385,090 28%
The information presented in the required supplementary schedules was determined as part of the
actuarial valuations at the dates indicated. Additional information as of the latest actuarial valuation
follows:
d 01/01/2006
ate
Valuation
Actuarial cost method Frozen Entry Age
Amortization method Level Dollar Closed
Remaining amortization periods Various
Asset valuation method Five Year Average
Actuarial assumptions:
Investment rate of return 7.5%
Projected salary increases 6.0%
Include merit increases 3.0%
Cost-of-living adjustments 3.0%
* Effective January 1, 1994, the asset valu ation method was changed from market value to a five
year average method.
17
CITY OF CLEARWATER EMPLOYEES' PENSION PLAN
SECTION V - CENSUS DATA
A. Reconciliation of Employee Data
A summary of changes in the employee data from January 1, 2006 through January 1, 2007 follows
Employees who do not participate in the plan are not included.
Retired
Terminated Participants
Active Vested And
Employees Employees Beneficiaries Total
Participants included in the
January 1, 2006 valuation 1,671 58 721 2,450
Nonvested terminations (14) (14)
Data revisions* 1 3 4
Vested terminations (12) 12 0
Deaths without eligible (1) (6) (7)
beneficiary
Retirements (33) (7) 40 0
Cash settlements (88) (88)
Rehires 5 (2) 3
New participants 163 163
Participants included in the
January 1, 2007 valuation 1,692 61 758 2,511
Active Participants:
Fully vested 1,097
Non-vested 595
Total 1,692
18
CITY OF CLEARWATER EMPLOYEES' PENSION PLAN
SECTION V - CENSUS DATA
(continued)
B. Age - Service Distribution of Active Participants as of January 1, 2007
Years of Service
Attained 0-4 5-9 10 - 14 15 - 19 20 - 24 25+ Total
Age No. No. No. No. No. No. No.
Under 25 86 0 0 0 0 0 86
25 to 29 118 23 0 0 0 0 141
30 to 34 89 73 25 0 0 0 187
35 to 39 85 73 55 22 0 0 235
40 to 44 65 60 56 61 24 2 268
45 to 49 65 43 43 58 58 13 280
50 to 54 39 42 36 45 36 57 255
55 to 59 32 17 28 31 21 24 153
60 to 64 11 8 13 17 9 4 62
65+ 5 3 6 7 1 3 25
Total 595 342 262 241 149 103 1,692
Active Participant Statistics
Average Age 43.29 years
Average Service 10.22 years
19
C
CITY OF CLEARWATER EMPLOYEES' PENSION PLAN
SECTION V - CENSUS DATA
(continued)
Aae - Service Distribution of Active Hazardous Duty Participants as of Januarv 1, 2007
Years of Service
Attained 0-4 5-9 10 - 14 15 - 19 20 - 24 25+ Total
Age No. No. No. No. No. No. No.
Under25 19 0 0 0 0 0 19
25 to 29 46 7 0 0 0 0 53
30 to 34 28 41 11 0 0 0 80
35 to 39 33 40 30 14 0 0 117
40 to 44 9 9 27 32 8 0 85
45 to 49 1 2 3 15 16 3 40
50 to 54 3 1 2 6 3 18 33
55 to 59 2 0 1 2 2 3 10
60 to 64 0 0 0 0 0 0 0
65+ 0 0 0 0 0 0 0
Total 141 100 74 69 29 24 437
Active Participant Statistics
Average Age 38.04 years
Average Service 10.07 years
20
CITY OF CLEARWATER EMPLOYEES' PENSION PLAN
SECTION V - CENSUS DATA
(continued)
D. Age - Service Distribution of Active Non-Hazardous Duty Participants as of January 1, 2007
Years of Service
Attained 0-4 5-9 10 - 14 15 - 19 20 - 24 25+ Total
Age No. No. No. No. No. No. No.
Under 25 67 0 0 0 0 0 67
25 to 29 72 16 0 0 0 0 88
30 to 34 61 32 14 0 0 0 107
35 to 39 52 33 25 8 0 0 118
40 to 44 56 51 29 29 16 2 183
45 to 49 64 41 40 43 42 10 240
50 to 54 36 41 34 39 33 39 222
55 to 59 30 17 27 29 19 21 143
60 to 64 11 8 13 17 9 4 62
65+ 5 3 6 7 1 3 25
Total 454 242 188 172 120 79 1,255
Active Participant Statistics
Average Age 45.12 years
Average Service 10.27 years
21
CITY OF CLEARWATER EMPLOYEES' PENSION PLAN
SECTION V - CENSUS DATA
(continued)
E. Inactive Participant Count and Benefits as of January 1, 2007
Number of Annual
Participants Benefit
Terminated Vested Participants 61 $1,011,309
Retired Participants and Beneficiaries 758 $19,847,421
22
I CITY OF CLEARWATER EMPLOYEES' PENSION PLAN
SECTION VI - ASSUMPTIONS AND METHODS
A. Actuarial Assum ptions
Investment Yield The investment rate of earnings is assumed to be 7.5% per annum.
Mortality Mortality is based on the RP 2000 Combined Healthy Mortality Table.
Withdrawal Employees are assumed to terminate according to the following schedules,
depending upon whether or not the employee is deemed "Hazardous
Duty":
Hazardous Duty Withdrawal
Aqe All Years
20 7.5%
30 3%
40 3%
50 3%
55 0%
Non-Hazardous Dut y Withdrawal
First Second Third More than 3
Aqe Year of Year of Year of Years of
Service Service Service Service
20 25% 25% 25% 20%
30 15% 12.5% 10% 8%
40 15% 12.5% 10% 5%
50 15% 5% 5% 4%
60 0% 0% 0% 0%
Disability Pre-retirement incidence of disability is assumed to occur in accordance
with a standard scale of moderate disability rates (Class 1, 1952 Inter-
Company). Rates for females are assumed to be double that for males.
Sample rates for males are shown below:
Aqe Incidence of Disability
20 .17%
30 .17%
40 .20%
50 .29%
60 .59%
70 1.74%
23
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1
CITY OF CLEARWATER EMPLOYEES' PENSION PLAN
SECTION VI - ASSUMPTIONS AND METHODS
(continued)
A. Actuarial Assumptions (continued)
Service vs. Non-service All pre-retirement deaths are assumed to be non-service related. All
incidence of disability is assumed to be service related.
Salary Scale Future salaries are assumed to increase at the rate of 6% per year - 3%
due to cost-of-living, and 3% due to merit increases.
Valuation Salary Compensation during the plan year is assumed to be the greater of (1) and
(2):
(1) Compensation earned during the prior plan year, increased by
salary scale;
(2) Pay rate for the current plan year.
Retirement Rates Employees are assumed to retire according to the following schedules,
depending upon whether or not the employee is deemed "Hazardous
Duty":
Hazardous Duty Retirement
10 to 19 20 or More
Years of Years of
Age Service Service
45 15% 15%
50 20% 20%
55 20% 35%
60+ 100% 100%
Non-Hazardous Duty Retirement
10 to 19 20 to 29 30 or More
Years of Years of Years of
Aqe Service Service Service
50 0% 0% 20%
55 0% 30% 25%
60 10% 30% 25%
65 35% 75% 75%
70+ 100% 100% 100%
Timing of Contribution The employer contribution is assumed to be made uniformly during the first
two quarters of the fiscal year beginning on October 1 following the
valuation date.
Employees Covered All participants as of the actuarial valuation date.
24
CITY OF CLEARWATER EMPLOYEES' PENSION PLAN
SECTION VI - ASSUMPTIONS AND METHODS
(continued)
A. Actuarial Assumptions (continued)
Spouses Eighty-five percent (85%) of the active participants are assumed to be
married (or have dependents eligible for Survivor's Benefits). Female
spouses are assumed to be five years younger than male spouses.
State Contributions The state contributions are assumed to equal $12,000 per year.
Expenses Expenses are assumed to equal last year's actual expenses.
Completeness of All benefits and expenses to be provided by the Plan are recognized in the
Assumptions valuation. All known events are taken into account; no current trends are
assumed to discontinue in the future.
B. Asset Valuation Method
The Actuarial Value of Assets is based on a five-year moving average of assets valued at statement
value. The statement value reflects an amortized value for bonds and market value for equity
investments. From the statement value, actual and expected return on investments is derived. Any
difference between the actual return on investments for a given year and the expected return is spread
over five years. After five years the entire amount is fully recognized. However, the Actuarial Value of
Assets will never exceed 120% nor fall below 80% of the market value of assets. The use of a derived
value of plan assets rather than current market value will produce a more stable funding pattern for the
plan by partially eliminating the effect of unusual market fluctuations.
C. Actuarial Cost Method
The actuarial cost method is the Frozen Entrv Aae Actuarial Cost Method. Under this method the excess
of the actuarial present value of projected benefits over the sum of the actuarial value of assets plus the
Unfunded Frozen Actuarial Accrued Liability is funded on a level basis over the future compensation of
active employees. The portion of this excess allocated to the current year is called the Normal Cost.
The Frozen Actuarial Accrued Liability is determined using the Entry Age Actuarial Cost Method. This
' Frozen Actuarial Accrued Liability is adjusted from time to time to reflect changes in the Plan or in the
actuarial assumptions. The Unfunded Frozen Actuarial Accrued Liability is separately amortized over a
fixed number of years.
25
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1
CITY OF CLEARWATER EMPLOYEES' PENSION PLAN
SECTION VII - SUMMARY OF PLAN PROVISIONS
This summary is intended as an outline of plan provisions and does not alter the intent or meaning of the
provisions contained in the contract and / or plan document.
Plan Year
Eligibility
Current Employee
Contributions
Average Monthly
Compensation
Accrued Benefit
January 1 to December 31.
Any permanent employee shall participate in the plan immediately.
8.0% of wages and salaries actually paid to a participant.
The total Compensation received during the highest five years of service of the last ten
years divided by sixty.
A monthly benefit equal to 2.75% of Average Monthly Compensation multiplied by the
number of years of service to date.
' Retirement Benefit
A. Eligibility (Normal Retirement Date)
' Non-Hazardous Duty: Completion of 30 years of service, completion of at least 20 years of service
and the attainment of age 55, or completion of at least ten years of service and the attainment of
age 65.
• Hazardous Duty: Completion of 20 years of service or completion of at least ten years of service
and the attainment of age 55.
B. Normal Retirement Benefit
' The participant's Accrued Benefit payable as of his actual retirement date on or after his Normal
Retirement Date. No adjustment applies for deferred retirement beyond his Normal Retirement Date.
' C. Normal Form of Benefit
A monthly annuity for the life of the participant. After the participant's death, 100% of the Normal
Retirement Benefit shall be paid as a Survivor Annuity to the spouse for five years. After five years,
such Survivor Annuity is reduced to 50% of the original amount. The Survivor Annuity ceases upon
death or remarriage of the spouse. 120 monthly payments are guaranteed in any case for police and
fire fighters.
1
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CITY OF CLEARWATER EMPLOYEES' PENSION PLAN
SECTION VII - SUMMARY OF PLAN PROVISIONS
(continued)
D. Early Retirement Benefit
' For police and fire fighters, an early retirement benefit is payable to those participants who have
completed ten years of service and the attainment of age 50. The benefit is equal to the retirement
' benefit calculated as of the date of early retirement, reduced by 3% per year for each year below age
55.
E. Cost of Living Increase
All participants commencing annuity benefit payments shall be entitled to a 1.5% increase in their
benefit amount each year.
' Disability Benefit
A. Eligibility
Total and permanent disability. If the disability is non-service connected, there is an additional
' requirement of the completion of ten years of service.
B. Disability Benefit
The participant's Accrued Benefit, payable immediately. If the disability is service connected, the
Disability Benefit must be at least 66.67% of Average Monthly Compensation.
' C. Normal Form of Benefit
A monthly annuity for the life of the participant. After the participant's death, a Survivor Annuity is
' provided as described under the Normal Form of Benefit for retirement benefits. 120 monthly payments
are guaranteed in any case for police and fire fighters.
' D. Cost of Living Increase
All participants commencing annuity benefit payments shall be entitled to a 1.5% increase in their
benefit amount each year.
Death Benefit
I A. Eligibility
Any actively employed participant.
I B. Death Benefit
I The participant's Accrued Benefit, payable immediately. If death is service connected, the Death
Benefit must be at least 66.67% of Average Monthly Compensation.
1
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' CITY OF CLEARWATER EMPLOYEES' PENSION PLAN
SECTION VII - SUMMARY OF PLAN PROVISIONS
(continued)
C. Form of Benefit
A monthly Survivor Annuity as described under the Normal Form of Benefit.
' D. Cost of Living Increase
All participants commencing annuity benefit payments shall be entitled to a 1.5% increase in their
benefit amount each year.
Vested Termination Benefit
A. Eligibility
Completion of ten years of service.
B. Termination Benefits
' The participant's Accrued Benefit payable as of his Normal Retirement Date, provided Employee
Contributions are not refunded.
C. Form of Payment
A monthly annuity for the life of the participant. After the participant's death, a Survivor Annuity is
provided as described under the Normal Form of Benefit, beginning at the latter of the participant's
' Normal Retirement Date or date of death.
D. Cost of Living Increase
' All participants commencing annuity benefit payments shall be entitled to a 1.5% increase in their
benefit amount each year.
Non-Vested Termination Benefit
A. Eligibility
Any actively employed participant.
' B. Benefit
Refund of Employee Contributions with 5% simple interest.
' C. Form of Benefit
Lump sum.
1
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