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12/17/20121. Call to Order 2. Approval of Minutes PENSION TRUSTEES AGENDA Location: Council Chambers - City Hall Date: 12/17/2012- 1:00 PM 2.1 Approve the minutes of the November 13, 2012 Pension Trustees meeting as submitted in written summation by the City Clerk. � Attachments 3. Pension Trustee Items 3.1 Approve the request of the new hires for acceptance into the pension plan as listed. � Attachments 3.2 Approve the request of employee Stephen Logan of the General Services Department for a regular pension as provided by Sections 2.397 and 2.398 of the Employees' Pension Plan. � Attachments 3.3 Approve the request of employee Linda McPherson of the Solid Waste/General Services Department to vest her pension as provided by Section 2.397 of the Employees' Pension Plan. � Attachments 3.4 Approve contracts hiring Manning and Napier; and Eagle Capital Management as large cap value money managers for the pension plan, and authorize the appropriate officials to execute same. � Attachments 3.5 Accept the actuary's recommendations for changes to plan actuarial assumptions and methods, per the Experience Investigation completed by Gabriel Roeder Smith and Company for the five—year period ending December 31, 2011. � Attachments 4. Other Business 5. Adjourn Pension Trustees Agenda Council Chambers — City Hall SUBJECT / RECOMMENDATION: Meeting Date:12/17/2012 Approve the minutes of the November 13, 2012 Pension Trustees meeting as submitted in written summation by the City Clerk. SUMMARY: Review Approval: Cover Memo Item # 1 Attachment number 1 \nPage 1 TRUSTEES OF THE EMPLOYEES' PENSION FUND MEETING MINUTES CITY OF CLEARWATER Po� �� 1��3 �� I � � �0'� � Present: Chair/Trustee George N. Cretekos, Trustee Paul Gibson, Trustee Doreen Hock-DiPolito, Trustee Bill Jonson, and Trustee Jay Polglaze. Also Present: William B. Horne II - City Manager, Jill S. Silverboard - Assistant City Manager, Rod Irwin - Assistant City Manager, Pamela K. Akin - City Attorney, Rosemarie Call - City Clerk, and Nicole Sprague - Official Records and Legislative Services Coordinator. Unapproved To provide continuity for research, items are in agenda order although not necessarily discussed in that order. ' 1. Call to Order — Chair Georqe N. Cretekos The meeting was called to order at 1:19 p.m. at City Hall. 2. Approval of Minutes � � �► =. 2.1 Approve the minutes of the October 15, 2012 Pension Trustees meetinq as submitted in written summation by the City Clerk. Trustee Bill Jonson moved to approve the minutes of the October 15, 2012 Pension Trustees meeting as submitted in written summation by the City Clerk. The motion was duly seconded and carried unanimously. 3. Pension Trustee Items 3.1 A�prove the request of the new hires for acceptance into the Pension Plan as listed. �� Name, Job. Class, & Dept./Div. Greg Cornella, Gas Technician I, Gas Department Pension Trustees 2012-11-13 Hire Date 08/28/2012 Pension Eliq. Date 08/28/2012 Item # 1 Joshua Clower, Personal Payroll Tech, Parks and Rec Elizabeth Bayly, Recreation Specialist, Parks and Rec 08/28/2012 08/28/2012 Attachment number 1 \nPage 2 08/28/2012 08/28/2012 Phillip Horne, Water Distribution Operator Trainee, PU 08/28/2012 08/28/2012 Jerry Dilley, Fleet Mechanic, Solid Waste/General Ser 08/27/2012 08/27/2012 David Hall, Solid Waste Equipment Operator, SW/GS 08/28/2012 08/28/2012 Ralph Saraceno, Bldg Construction Insp, Planning/DS 08/28/2012 08/28/2012 Beverly Ryland-Hinton, Police Information Technician, PD 08/28/2012 08/28/2012 Bryant Blair, Field Service Rep, Customer Service Dept 09/04/2012 09/04/2012 Keith Bauer, Solid Waste Worker, SW Dept 09/10/2012 09/10/2012 Michael Kirn, Drafting and Mapping Tech, Engineering Dept 09/10/2012 09/10/2012 Jonathan Coker, Fleet Mechanic, Fleet Department 09/10/2012 09/10/2012 Matthew Burgett, Gas Technician I, Gas Department 09/10/2012 09/10/2012 Christopher Cleaver, Tradesworker, Parks and Recreation 09/17/2012 09/17/2012 Charlene Invino, Accounting Clerk, Fleet Department 09/17/2012 09/17/2012 Toby Malloy, Police Aide, Police Department 08/16/2010 09/24/2012* Thomas J. Murphy, Marine Fac Oper, Marine and Aviation 03/10/2010 09/22/2012** Robert Orner, Fleet Mechanic, SW/General Services 09/24/2012 09/24/2012 *Employee was originally hired as a part time employee on 08/16/10. Changed to full time employee and pension eligible on 09/24/12. **Employee was originally hired as a part time employee on 03/10/10. Changed to full time employment and pension eligible on 09/22/12. Trustee Doreen Hock-DiPolito moved to approve the request of the new hires for acceptance into the Pension Plan as listed. The motion was duly seconded and carried unanimously. Pension Trustees 2012-11-13 2 Item # 1 . Attachment number 1 \nPage 3 3_2 Approve the request of employees William Connell of the Police Department, Sheila Waters-Borland of the Police Department, Philip Biazzo of the Police Department, and Ruby Jackson of the Parks and Recreation Department for a reqular pension as provided by Sections 2.397 and 2.398 of the Employees Pension Plan. William Connell, Police Officer, Police Department, was employed by the City on December 30, 1991, and his pension service credit is effective on that date. His pension will be effective October 1, 2012. Based on an average salary of approximately $72,704.52 per year over the past five years, the formula for computing regular pensions, and Mr. Connell's selection of the 100% Joint and SurvivorAnnuity, this pension will approximate $41,475.96 annually. Sheila Waters-Borland, Police Sergeant, Police Department, was employed by the City on July 2, 1990, and her pension service credit is effective on that date. Her pension will be effective October 1, 2012. Based on an average salary of approximately $86,615.29 per year over the past five years, the formula for computing regular pensions, and Ms. Waters-Borland's selection of the 100% Joint and Survivor Annuity, this pension will approximate $52,971.24 annually. Philip Biazzo, Police Officer, Police Department, was employed by the City on October 5, 1992, and his pension service credit is effective on that date. His pension will be effective November 1, 2012. Based on an average salary of approximately $71,906.25 per year over the past five years, the formula for computing regular pensions, and Mr. Biazzo's selection of the Life Annuity, this pension will approximate $39,663.84.32 annually. Ruby Jackson, Parks Service Technician II, Parks and Recreation Department, was employed by the City on June 3, 1985, and her pension service credit is effective on January 27, 1995. Her pension will be effective November 1, 2012. Based on an average salary of approximately $30,343.82 per year over the past five years, the formula for computing regular pension and Mr. Brod's selection of the 75% Joint and Survivor Annuity, this pension will approximate $18,767.88 annually. Section 2.397 provides for normal retirement eligibility when a participant has completed thirty years of credited service, has reached age 55 and completed twenty years of credited service, or has reached age 65 and completed ten years of credited service. Ms. Jackson qualifies under the age 65 and 10 years of service criteria. Pension Trustees 2012-11-13 Item # 1 Attachment number 1 \nPage 4 Section 2.397 also provides for normal retirement eligibility when a participant has completed twenty years of credited service or has reached age 55 and completed ten years of credited service in a type of employment described as hazardous duty and further defines service as a Police Major, Police Sergeant, and Police Lieutenant as meeting the hazardous duty criteria. Mr. Connell, Ms. Waters- Borland, and Mr. Biazzo qualify under the hazardous duty criteria. Trustee Jay Polglaze moved to approve the request of employees William Connell of the Police Department, Sheila Waters-Borland of the Police Department, Philip Biazzo of the Police Department, and Ruby Jackson of the Parks and Recreation Department for a regular pension as provided by Sections 2.397 and 2.398 of the Employees Pension Plan. The motion was duly seconded and carried unanimously. 3.3 Approve the request of employee Kenneth Szuba of the Gas Systems Department to vest his pension as provided bv Section 2.397 of the Emplo� = Pension Plan. Kenneth Szuba, Gas Specialist - Gas Systems Department, was employed by the City on November 14, 1983, and began participating in the Pension Plan on that date. Mr. Szuba will be terminated from City employment on December 28, 2012. The Employees' Pension Plan provides that should an employee cease to be an employee of the City of Clearwater or change status from full-time to part-time after completing ten or more years of creditable service (pension participation), such employee shall acquire a vested interest in the retirement benefits. Vested pension payments commence on the first of the month following the month in which the employee normally would have been eligible for retirement. Section 2.397 provides for normal retirement eligibility when a participant has reached age 55 and completed twenty years of credited service, has completed 30 years of credited service, or has reached age 65 and completed ten years of credited service. Mr. Szuba would have completed at least 20 years of service and will reach age 55 on February 27, 2013. His pension will be effective March 1, 2013. Trustee Paul Gibson moved to approve the request of employee Kenneth Szuba of the Gas Systems Department to vest his pension as provided by Section 2.397 of the Employees Pension Plan. The motion was duly seconded and carried unanimously. 4. Other Business — None. Pension Trustees 2012-11-13 4 Item # 1 5. Adiourn The meeting was adjourned at 1:21 p.m. Attest City Clerk Chair Employees' Pension Plan Trustees Attachment number 1 \nPage 5 's�. Pension Trustees 2012-11-13 5 Item # 1 Pension Trustees Agenda Council Chambers — City Hall SUBJECT / RECOMMENDATION: Approve the request of tbe new hires for acceptance into the pension plan as ]isted. SUMMARY: Name, Job. Class, & Dept./Div. Pension Hire Date Eli .� Date Nikolas Papadoupolos, Parking Tech, Engineering Dept 10/O1/12 Robert Skinner, Parking Technician, Engineering Department 10/O1/12 Carlos Cardenas, Electrician, General Services 10/08/l2 Darryl Scott, Solid Waste Warker, Solid Waste Dept 10/08/12 Tayna Reed, Police Officer, Police Department 10/22/12 Tomislav Marjanovic, Police Officer, Police Department 10/22/12 Michael Leonardo, Police Officer, Police Department 10/22/12 Kelly Adkisson, Administrative Analyst, Police Department 06/23/97 Robert Willms, Parks Service Tech I, Parks and Recreation 10/22/12 Jameel Zabadi, Public Utilities Tech I, Public Utilities Dept l0/22/12 Daniel King, Public Utilities Technician I, Public Utilities Dept 10/22/12 10/O1/12 10/O1/12 10/08/ 12 10/08/12 10/22/ 12 10/22/12 10/22/ 12 10/22/ 12 * 10/22/12 10/22/12 10/22/ 12 *Employee originally hired on 6/23/97, rehired on 10/22/12 and is pension eligible on 10/22/12. Review Approval: Meeting Date:12/17/2012 Cover Memo Item # 2 Pension Trustees Agenda Council Chambers — City Hall Meeting Date:12/17/2012 SUBJECT / RECOMMENDATION: Approve the request of employee Stephen Logan of the General Services Department for a regular pension as provided by Sections 2.397 and 2.398 of the Employees' Pension Plan. SUMMARY: Stephen Logan, Fleet Mechanic, Solid Waste/General Services Department, was employed by the City on December 17, 1979, and his pension service credit is effective on that date. His pension will be effective January 1, 2013. Based on an average salary of approximately $52,318.21 per year over the past five years, the formula for computing regular pensions, and Mr. Logans' selection of the Joint and Survivor Annuity, this pension will approximate $47.494.80 annually. Section 2.397 provides for normal retirement eligibility when a participant has completed thirty years of credited service, has reached age 55 and completed twenty years of credited service, or has reached age 65 and completed ten years of credited service. Mr. Logan qualifies under the thirty years of service criteria. Review Approval: Cover Memo Item # 3 CIT`Y �F CLEARINI�TER EMPL�JYEES' SEPARATI(�M PAY PREFERE�lGES PREFE�E�fCE #1 Employees can receiv� a�ump sum paymer�t far Wacatit�n, flc�atirrg holiday pay, sicEc leav�: incer�tive, ban�s days (rf appiicable), and 112 of accr�ed sick I�ave at the time of separatian #rorr�i the City. There will k�e nc� deduction fc�r pertsion frarn this 9ur�p surn payment r�ar wii! this amaunt c�unt as earnings in the ca�culatio�r c�f t�e pensian. The 4ast day of work will be the terminatiQrr ��te and per�sion benefits wi�} begin the fapiowing manth. PREFEREN�CE #2 Employee can �xtend ter�-ninatior� dat� by part or all of the time due fQr v�cat3on, fiaating holiday �ay, sick ieave ir�centive, bonus days �if applicable}, ar�d 1f2 of accrueci siek 6eaWe. Employe� may cht�ose ta rur� out t�is time in a�ry manner. Balance will be paid an a lump s�m an employe�'s finaf pay�}�e�k. Termin�tion date wilf �e the firtal day �f exter�cfed time. P�nsian benefi#s wi11 begin the fc�llawirrg month. I, �!'1 '�l , an ern�loyee of the City of Clearw�ter, heref�y apply fa� per�sio� �enefts �nde� t�e City's Employees' Pensic�n Plan. I hereby certify that I fulfy under�tand t}�e preferera�es o�Fered �o me. I chr�as� to retire u�ing separation pay p�eference #�_ and wish my �enefits to be calculated under this preferer�c�_ Pl�ase use r�y I�a�re ir� the fallawing rnanr�er: �t �"i � � Lump Sum �Ql .�k�,� ��catior� �� .� __� sick � flaaters �l'��''J E�4nus ho�ars E u��rst�nd that my �r�fe�ence cannot be ehanged arrce ihis form �� signeei ar�d t�at my de�isian is irr�v��*cabEe. �'' EMPLC3YEE'S SIGNRTURE: S�GIAL S�C�RIT`( #: WIY�JESSES: AC�QRESS: ��.��p V'`��{1C'�, '�f�Jr'� -- - ` �"' j ' in '�-� ��--� � � i i .<��.�'7 " ' �_'t�} �` '� �C'_. ��1 1 PHONE: '��" �' '� � �n °' ��Zl�ATE: ��`�;� Revised 11�J2 Fcrrr� #9900-6G�OR �ile Name: Empioyee 5eperation Pey Pref �, �-►��ri af C1�an,uater General Job CCassification: �r G�epartrnent: �C� Ber�efits ❑ate: �'� Date of B�r#h: � Spouse's I�ame: _ Lf� Spouse's Qate af Sirti�: CI°TY DF �L�ARW�4TEF� P�NSIC3N ENTITLEI''Ji�hIT DPTION REQU�ST FC)RM es' Pensior� P4an. do hereby �pply fc�r retirement �nder th� City i C_ , Divisian: D�te of Hir�: � Resi�n�tio�r Date: The type af pensinn for which I�m applying is �check only ��e): � Regular Pensi�n base� on years of servi�e I — Joh-cc�r�nec�ed �]isabi�ity Pensian I` Nan-j�b-cnnnected �Jis�bifiiy Pension Sex: [M ]F 5�x: M '� The City of C9e2swater Emplayees' Pens�on Plan provid�s multipf� op�ions to Plan Par�icip�nts �s to Ehe manner of the p�nsian benefit payrr�ent. �piian �! k�eVQw repr�ser�ts t�ie siar�dard or normak form of re�irement ber�efit. TY�� other optional forrns {#2 -#6J shalQ bE ce�rnput�d to be the F,ctuarial Equival��t of the narmak ben�ft. C1 tion �- Joint and Survivor Ann�ait The normal far�n or retirement bene�it shall bv an annuity� paid manthly far the fife �f the F�articipant, v��i�h a 4��J°/o s�rvivor annasty paia mc�thly fQr a p�ri�d �f fve years fol�owir�g the d�ati� cf the F'articip�nt ta t�e beneficiary, provided thai fo11c��,�ing such five yea� �Prio� ih� su�vivor ann�ity shafl �� re�uceci ica 5C1�/� o€ the original survivar annuiry amc�unt. �5e� secti�n 2.397 (a} (3} �A]] The Pa�iciparat's survivsng spouse receives the designated amo�nt for the rest of hisJ}�er life ar until helshe remarries. lf na survi+riny spa��, depPr�d�nt chil�ren under the ag� a� 18 sh�61 be ci�cmed t� be [he �eneficiary and receiVe the design�ted �rr�ount untE1 the ag° o� ��. [Secfi�n 2.397 {a} �3) and Sectifln 2.39� (b} (� }] Ci tian 2 - Life �4nr�uit � The Par�iicipant receF�es hislher pension as Iang as heishe lives. fJppn the deat� pf the Pd�tECipant, ber�wiits � c�ase. [Section 2.3�8 ib} (�} (a; l`1�� Q�tion 3- 1Q Year Certain & Life Annuitv -(�rrusi c�esir�nate a E�ene'�ic�ary� T�e Partici�ant r�cei�es hislhe� pe!�sion �s I�ng �s he�'sh� lives. €f ih� Par#ickp�nt aizs �efore 1�[� rnonthCy �aymerts ha�e �een ma��, the remainin� �ayments up to th� 12Q payrner�t5 are made to hislk��r beneficiary. lf paymGr:ts to the ben�fieiary camrnence �nJ h�ishe dies t�e;ofe thP tata� of 1?Q p�v��enrs nas k�e�n madE, .�e �emainder of ihe p�ymer�ts is p�sti �o t�E oen�fici�r,�'s estate. !f ihe frst �er�e�csar� predeceases kh� paricspant, helsi�e m�y designai� a ne�v ��nefiGiary. I� r�Q �reneficsG�+ is a;ive �t the ti�e a; the pa�tiri��nt's death, the p�rticspant s esta�e wil� be paid irie b�l:�nce c�i the 126 payments. [Seciion 2.398 (b} (Z) (a} (2}] ��{is�r� 4 rv 5{�%.�4��i & StsrviWVr Annuat� -{must d�signate a ber�eficiary} T�e �'ariicipant r¢ce�v�es hislh�r pension �s l�ng us halshe liv�s. 1` the 'ParicEpan� ��ies fsrst, tre benpfs�3ary r�cesv�s 54°l0 of the pei�sion icr th� rest �i hisr`hzr fife. €f th� benefciay �i3es fsrst, �`�e �arsiciparat eontEnues ta r�c�i�r� 1dD°I� o+ his.�h�r pension and upon his{her�e��n, hen�fits �ease. [S�cttqn 2.3a� (�} (2) �a} 4�i� a�son 6- 75°Ia Joint & Survivar �lr�nuit -{rn�.�st d�sigr�� a taeneficiary') The Partic�pant recPives his.li�er �er,s€on as lor�g as helshe fives. 13 the Particip�nz Ci�s first, th� beneii�iary' receives 7��/G of ��E pensEan f�r thE r�si af hisJ�:er lif�. l; ihe hen�fici�ry di�s first, the Pa�#icipant caniirru�s to re�ei�r� '��4°I� caf his�her �ensian and u�on hisfher de�th, bEne its c�as�. �Sec�Eon 2.�9� fb] (�) (a) (3j] Uptiar� B-'}OQ°/o Jairrt 8� 5urvivor Annus -(must designate a beneftcEary} Th� Participant r�ceiv�:s hislner �ensian as long �s i�elsl�e Ci�es. Ef thn �'a�ic�pant �ies first, the �en�s�Ge�ry receives 1�0% af th� penston f�r t1�� rest o; hislher fife_ Ef the k�er�efiGiary dies �irst, ine P�rtscipant continues to ��cei�e 1�D"ro of hislner pensian and upan hisl}�er death, benei�ts cease. [Sectio� �.3�8 �b} �2) ��} (3}l ; hav'e cons3de�eci the norrr�al form af benefi paymer�t und�r sucn Plan (tivhich is design�t�d on this �orrn as �pfion 1} and the var�aus aliernaiive optional hene�t payment methods �C�ptians 2 through �} unde� suci� !�lan and hav� �lected ta r�ceiv� my retiremer�t benef�s as tndicat�d below. ��lote: Qptia� selectinre ta be ir�dECated both by �Iumbcr and [3�s�riptio�.} i under5tar�d that once my first pension cf�ec�C is receiVed, rny decision on this option is irrerro�able. If takin ❑ t�on 1 si n pe�ow: Qpkion #- 1 E�pioyee's Sign�ture: De�cription: _,,�int and 5urvivor Dene�den� chifd�en +��der the age of 18 and r�sid��g �r� rny h�usehold are: Chil�i's N�me �� If fakir�� f7ntinn � SiC�t? �S�1+vw' [�p#I�fl #' � �mplaye�'s Signature: pescrip�ion: Lii� Annuiky !f �ak3nq Q�tior� 3, 4, 5, ar B fill in beneficiary ir��r�rmativn �nd si�n below; Qpti�n #: My designated i?eneficiary is� hlame: Sacial Sec�riry iV�4rr�ber: � Address: � m �r��oy�e's Si�n�ture: Descripfion: f]ate of Birkl�: Sex Nl � f7ate: _ �� : ��-- D�te flf 8i�h ❑ate: Phor�e Number: �aLe: Sl"AT� �� FLORIQA The faregoing instrum�r�t w�s acknawledg�d before me t€�is L'C7�f�1TY �F PINE�LAS �� . ,�' L'� oy �� (J r'� �vhc� is persc�naEl own to me ar �n�ho has provided __ �� as sd�ntification a�� wi�o di�fd;d n�t t�ke �r� oath. No�ary PubEic ! � �1C,�7r'%�� +� r Narri� �f �iatary Prir�te� lViy Cammisssan expires ��.�:I�i�/G� M1CFi�itE KUiC� I+�OTA�tY PL9'i31-iC , Re�. ^r't7� �A� pF FLORI'�3F� ^o� m ��39GU-�0'•�9 �` �, �y�! E�2Ui501 1 � �cpires 5l2312016 Fil� Name: P�nsion �ntitl�ment Optio€� Form 5tephen La�an LAST DATE PAIC3: BENEFI�S aATE CREC31iEC� SERVICE Estimated �ension 1Nor�shee# 1212112D12 12117l1979 33.�111 � I�repared by: Miehelle Kutch � ��te: i 0125112 � w ��oss CALE�IDAR f'�NSIC7N YEAR EARhIINGS 2Q07 $51,259.$9 ��a$ �51,741.33 20a9 $52,832.$fi 201� $52,624.11 2(}11 �53, � 32.87 $261,591.�6 �5 Year T�tal} 51 $5�,318.21 (Yearly Av9) 121 $4,359.85 (Mc�r�thly Avg) x �.0275 (Ben�fit Rate} x 33,�)1 � 1(Yrs Qf 5ervice) $3,957.90 {Est Mtly Pension� City of Clearwater Emplvyees' P�nsion F�lan Act�aarial Equivalence Factors ESTIMATE Employe� Name: Stephen Logan Empl�yee Date Qf Birth: 2 9 1958 Marital Status: m Spouse []ate of B�rth: €� 31 1960 Beneficiary Date of 6irth: $ 31 19�� Benefit Commencernent [7a#e : 1 1 24'I � Estimat�d Ivlon#hly Normal R�etiremen# �enefit: $3,957.9D Jptian 1 {�piw�on 2. C3ptivn 3 Uptia� 4 optivn � C}pt�on 6 m � � w �5-�]ct-12 sm clract�l Versir�n: 3 -4-�6 Actuarial Equivafent Adjustment �actars: Narmal Fflrm 1.00OOU Life Annuity � 0 Year Certain �o�ro .��s 75°/o J�S 1 �]�3°Io J&S ESTIMATE 1.C19223 i�1��*�f:3 � .c��ra 1.40531 L7.97933 Estim�ted Mcanthly Benefit �3,957.9a $4, 322.92 $4,26D. �$ �4,a��.�� $3,9i$.9L1 ��yV f V.OV Pension Trustees Agenda Council Chambers — City Hall Meeting Date:12/17/2012 SUBJECT / RECOMMENDATION: Approve the request of employee Linda McPherson of the Solid Waste/General Services Department to vest her pension as provided by Section 2.397 of the Employees' Pension Plan. SUMMARY: Linda McPherson, Senior Accountant, Solid Waste/General Services Department, was employed by the City on January 8, 1996, and began participating in the Pension Plan on August 14, 1999. Ms. McPherson will be terminating from City employment on December 14, 2012. The Employees' Pension Plan provides that should an employee cease to be an employee of the City of Clearwater or change status from full—time to part—time after coinpleting ten onnore years of creditable service (pension participation), such employee shall acquire a vested interest in the retirement benefits. Vested pension payments commence on the first of the month following the month in which the employee normally would have been eligible for retirement. Section 2.397 provides for normal retirement eligibility when a participant has reached age 55 and completed twenty years of credited service, has completed 30 years of credited service, or has reached age 65 and completed ten years of credited service. Ms. McPherson would have completed at least 10 years of service and will reach age 65 on September 25, 2014. Her pension will be effective October 1, 2014. Review Approval: Cover Memo Item # 4 �i� �� , .�� YS f [,��s APPLICATIl7N FQR'VESTED RIGHTS PEN51(7N �j�� ,�� beinc� a�erson leauir�g emplayme�t with the City o� Clea�wa�er, F�orida, and ha�ing camp��ted ten �1 �) �ar more years af credi#ed s�rv�ce, suc serWice �a�ing occurr�d during the per�t�d from �da�� of en�ry i to Per�sion Pl�n} to (d�te �f resignation ar charrge of status} '�` h� e� ma4�es application to receive the vested rights p�nsian pro�id f� by the Gity Cflde ?f C3rdinances. As suc� �orme� emp4ayee, I understand the pension request�:c� will be c.omput�d purs�an� to the provisions of the City ��de of �Qrd�nance in eff��t on the dafie �f resignatian_ l hereby further certify fhat r�ay dafe �f birth is �,�'� ��'f Th�e date 1 wili b�gin t4 recei�e my p�nsiors vvill be C��G�,�'�,a,� �� C��! �'• Furkher, � additian�lly certify �hat I hau� made na app[icatior� seekir�� to obtain a return c�f the cr�ntrib�tions that b paid intc� the Pensic�n �un� during the period of r�y emplaymen� set fort� above, 1 haWe not b�en canvicted of a#ela�ry during my per�od of empic�ymer�t, ��d I have no� �eceive�i any �ther ty�� af pension from the CitY- � � � �i nature Sociay �ecurity hlumber 9 �� c�,�.:!-�. •� tr�s Qepart entlDivision ��.,� cti �e.�,�,�� Job Clas��fication STATE �F FLORIDA �� r�� '� ,�'� �'"�. S#r�et Address ,�c��r� �� 3 -�-� � �� City, State, Z:ip �ode The faregoing instrument was acknowledged before C�]IJNTY C]� PINE�.LAS rr�e this � day of ��-f��.�►` ,�p !� � by o�,�,��r�- ,��1' ��',%'l��Yt, � who is persor�al! nown ta me or who has provided +��r�+�+.� �rurc� +wozn�X pua�rc � sr�r� oF ��o�t�Q� 3. • l�f�fl��iR C. �.�V�� 1 t �ires 51231��1fi as ider�tificati�n and whc� didldid na� �ake an aath. ��r,�`i��'i �� Nt)t�ry PubI�C �1 ,f',!'�s��,�,r _ ,��G� N�me of Natary Print�d My camm�ssian expires: .�j � 3 I R��+. �109 V�;sted Pension Farrn Pension Trustees Agenda Council Chambers — City Hall SUBJECT / RECOMMENDATION: Meeting Date:12/17/2012 Approve contracts hiring Manning and Napier; and Eagle Capital Management as ]arge cap value money managers for the pension plan, and authorize the appropriate officials to execute same. SUMMARY: The plan's large cap value manager was terminated earlier this year due to poor performance. The funds were transferred into the Northern Trust Russell 1000 Value IndeX Fund pending the hiring of replacement manager(s). The plan's Pension Investment Committee determined a preference for a replacement large cap value manager or managers that would provide above average "downside" protection in declining markets, while providing a competitive return during "up" markets. The Committee requested Cap Trust, the plan's investment performance consultant, to conduct a manager search with this guidance. The screening process and the due diligence review produced a short list of three managers, as follows, that were interviewed by the Pension Investment Committee. Eagle Capital Management Manning and Napier O'Shaughnessy Asset Management The Committee elected to hire both Eagle Capital Management and Manning and Napier to fill the large cap value space. The managers are very different in style, qualitative versus quantitative, and are non�orrelated. Each of the new managers will get about $30 million to manage with a like amount remaining in the Northern Trust Russell 1000 value index fund. Eagle Capital charges an annual management fee of 1°/o on the first $5 million and 0.75% on balances over $5 million, payable quarterly in arrears. Eagle's process is a very fundamental, "bottoms up" approach, which requires a highly labor—intensive process (expensive) to identify buying opportunities. Eagle's fee is about average for this style of manager Manning and Napier charges an annual management fee of 0.35% payable semi—annually in advance. Mannin�s process is highly quantitative and computer driven (cheaper) at the level of identifying buying opportunities. Manning is a very large organization and is able to spread these costs across a larger client basis. Manning's fee is slightly less than the average for a manager of this style. The Pension Investment Committee feels that hiring these two large cap value managers, with significantly different styles and fees, will best achieve the desired down—side protection and competitive up—side returns, �d is in the best interest of the plan. Cover Memo Review Approval: 1) Office of Management and Budget 2) Legal 3) Clerk 4) Assistant City Manager 5) City Manager 6) Clerk Attachment number 1 \nPa Dated 2012 EAGLE CAPITAL MANAGEMENT, LLC (the "Investment Manager") - and - CITY OF CLEARWATER EMPLOYEE'S PENSION FUND (the "Client") INVESTMENT MANAGEMENT AGREEMENT Item # 5 {00041930.DOCX;1 } LN DOCSOI /722490.8 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. Attachment number 1 \nPa TABLE OF CONTENTS Appointment of Investment Manager . ...........................................................................2 Investment Account Assets ............................................................................................2 InvestmentAuthority . ....................................................................................................2 Feesand Expenses . ........................................................................................................3 Aggregation and Allocation ...........................................................................................3 Broker-Dealer Transactions ...........................................................................................4 Voting Rights; Legal Claims . ........................................................................................ 5 Investment Manager Representations . ...........................................................................5 Client Representations . .................................................................................................. 5 Liability. ......................................................................................................................... 7 Valuati on . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Termination. ................................................................................................................... 8 Reporting........................................................................................................................ 8 Booksand Records . ....................................................................................................... 8 Confidentiality. .............................................................................................................. 8 Assignment. ................................................................................................................... 8 Notices. .......................................................................................................................... 9 GeneralProvisions .........................................................................................................9 Item # 5 {00041930.DOCX; L } LNDOCSO 1 /722490.A �1� Attachment number 1 \nPa THIS INVESTMENT MANAGEMENT AGREEMENT (the "Agreement") is made effective as of DECEMBER 1, 2012 between CITY OF CLEARWATER EMPLOYEE'S PENSION FLJND (the "Client") and Eagle Capital Management, LLC (the "Investment Manager"). 1. Appointment of Investment Manager. The Client appoints the Investment 1Vlanager as a discretionary manager of the Investment Account Assets (as defined in paragraph 2.2 below) in accordance with the terms of this Agreement. The Investment Manager accepts the appointment and agrees to manage the Investment Account Assets in accordance with the terms of this Agreement and the Investment Guidelines set out in the Schedule to this Agreement (the "Investment Guidelines"). The services of the Investment Manager are not exclusive and the Investment Manager is free to render similar services to others. 2. Investment Account Assets. 2.1 The Client will appoint an independent custodian or trustee (the "Custodian") and the Investment Account Assets will be held by the Custodian in a segregated account (the "Investment Account"). At no time will the Investment Manager have or take direct or indirect custody of the Investment Account Assets. 2.2 The "Investment Account Assets" will consist of the portfolio of assets entrusted from time to time to the management of the Investment Manager by the Client under this Agreement, being: the cash, stocks, bonds, securities, funds and other investments or property of any kind whatsoever (reasonably acceptable to the Investment Manager); plus ii. all investments, reinvestments and proceeds of the sale of those assets, including (but not limited to) all dividends, interest and earnings on investments, and all appreciation on and additions to such assets; minus iii. any ]osses, expenses, withdrawals and distributions, The Investment Account Assets will not include, and the Investment Manager will not have responsibility for, any assets of the Client not expressly allocated to the Investment Account under this Agreement, and the Investment Manager will only be responsible for such assets for as long as they remain in the Investment Account. 2.3 The Client may make contributions and withdrawals to the Investment Account by providing an acicnowledged written notice to the Investment Manager. Any additions to the Investment Account must be reasonably acceptable to the Investment Manager. 3. Investment Authority. 3.1 Subject to the Investment Guidelines, the Investment Manager will, without obtaining further instructions and in accordance with its own judgment and discretion, sell, retain, exchange or otherwise deal in investments and other assets, subscribe to issues and offers for sale, advise on or execute transactions, effect transactions on any markets, negotiate and execute counterparty and account opening documentation, take all routine or day-to-day decisions and otherwise take any actions, which it considers necessary or desirable in connection with the Investment Account Assets. Item # 5 {00041930.DOCX; L } LNDOCSO 1 /722490.8 2 Attachment number 1 \nPa 4. Fees and Expenses. 4.1 For the Investment Manager's services, the Investment Manager is authorized to charge the Investment Account quarterly with one quarter of the annual fee at the rate of 1.0°/o of the assets on the first $5 million and 0.75°/o above $5 million (the "Management Fee"). The Management Fee will be calculated on the value of the Investment Account Assets at the end of each quarter and will be payable in arrears; provided that, to the eXtent that the Client makes a contribution or withdrawal to the Investment Account of an amount in excess of $10 million dollars or 5% of the value of the Investment Account Assets (such an amount being the "Prorated Amount") on any day other than the iirst day of a calendar quarter, the Management Fee payable in respect of the Prorated Amount will be prorated to reflect the number of days in the calendar quarter that the Prorated Amount formed part of the Investment Account Assets. 4.2 Any and all expenses directly relating to the investment of Investment Account Assets (including, but not limited to, all brokerage, commission and other transaction charges, custodian fees, interest charges, transfer and registration fees and all taxes, including any interest and penalties relating to such expenses), which may be levied or assessed under existing or future laws will, unless otherwise agreed, be charged to and paid out of the Investment Account Assets. The Client will be responsible for any such expenses that are not paid out of the Investment Account Assets. 5. Aggregation and Allocation. 5.1 The Investment Manager will have the authority, but not the obligation, to aggregate purchase or sale orders for the Investment Account Assets with similar orders being made simultaneously for other accounts managed by Investment Manager, or with accounts of the affiliates of the Investment Manager, if in the Investment Manager's reasonable judgment such aggregation will result in an overall economic beneiit to the Investment Account considering the advantageous selling ar purchase price, brokerage commission and other expenses. 5.2 The Client acknowledges that the determination of such economic benefit to the Investment Account Assets by the Investment Manager is subjective and represents the Investment Manager's evaluation that the Investment Account Assets are benefited by relatively better purchase or sales prices, lower commission expenses and beneficial timing of transactions or a combination of these and other factors. 5.3 In accounting for such aggregated order price, commission and other expenses will be averaged on a per bond or share basis daily. 5.4 It is understood that the Investment Manager performs investment advisory services for various clients and that other accounts and persons advised by the Investment Manager may have different investment objectives or considerations to the Investment Account. As a result, decisions regarding purchases and sales for each management account are made separately and independently in light of the objectives and purposes of each account. Item # 5 {00041930.DOCX; L } LNDOCSO 1 /722490.A 3 Attachment number 1 \nPa 5.5 The Investment Manager will allocate investment opportunities in a manner which it believes to be in the best interests of the accounts involved and in accordance with the Investment Manager's fiduciary responsibilities. 5.6 The Client agrees that the Investment Manager may give advice and take action in the performance of its duties with respect to any of its other clients which differ from action taken with respect to the Investment Account Assets. 6. Broker-Dealer Transactions. 6.1 The Investment Manager will have full authority and discretion to select the broker or dealer who will execute any transaction in respect of the Investment Account. If the Client directs the Investment Manager to execute transactions through one (or more) specific broker(s), the Investment Manager will not be liable for any loss resulting from acceptance of that direction. Nothing shall require the Investment Manager to accept direction to use a broker designated by the Client. 6.2 In the selection of brokers or dealers and the placing of orders, the Investment Manager will attempt to obtain the most favorable price and execution available, except to the extent it may be permitted to pay higher brokerage commissions for brokerage and research services as described below. 63 In using its best efforts to obtain favorable price and execution, the Investment Manager may talce into account all factors it considers relevant, including, for example, price, the size of the transaction, the nature of the market for the security, the amount of the commission, the timing of the transaction taking into account market prices and trends, the reputation, experience, and iinancial stability of the broker or dealer involved and the quality of service provided by the broker or dealer in other transactions. 6.4 The Investment Manager will not be deemed to have acted unlawfully or to have breached any duty created by this Agreement solely because it caused the Investment Account to pay a broker or dealer who provides brokerage and research services to the Investment Manager a higher commission for carrying out a portfolio investment transaction than another broker or dealer would have charged for that transaction, if the Investment Manager determines in good faith that the commission was reasonable considering the value of the brokerage and research services provided by that broker or dealer. That good faith determination may consider the needs and interests of all accounts managed by the Investment Manager. 6.5 Subject to the foregoing, the Investment Manager may elect to trade the securities through or with any registered brokers or dealers, or through alternate trading systems, or directly with other holders and may use block transactions or consolidate for trading purposes the Investment Account's trades with similar trades being executed for other funds managed by the Investment Manager. However, the Investment Manager, and any firm affiliated with the Investment Manager, may not be the broker, dealer, agent, or principal for any of the Investment Account's security trades without the Investment Manager first notifying the Client in writing. 6.6 The Investment Manager will not be liable for any acts or omissions of any broker or dealer selected by the Investment Manager, as long as the Investment Manager has Item # 5 {00041930.DOCX; L } LNDOCSO 1 /722490.8 4 Attachment number 1 \nPa not acted with negligence in its selection or continuance of dealings with a broker or dealer. 7. Voting Rights; Legal Claims. 7.1 The Investment Manager will vote all proxies relating to the Investment Account, but will not be responsible for participation in class action law suits. 8. Investment Manager Representations. 8.1 The Investment Manager acknowledges that it is a fiduciary with respect to the Client and the management of the Investment Account Assets under this Agreement. 8.2 The Investment Manager confirms that it is an investment adviser registered with the United States Securities and Exchange Commission under the Investment Advisers Act 1940. The Client acknowledges receipt of the Investment Manager's current form ADV Part II and Privacy Disclosure Document. In compliance with Rule 204-3 under the Advisers Act, the Client has the right to terminate this agreement, without penalty, within five business days after entering if the Investment Manager's form ADV Part II was not received mare than 48 hours prior to entering this agreement. 83 The Investment Manager warrants that: it has full power and authority to enter into this Agreement and to perform its obligations under this Agreement and to carry out all the agreements and transactions within the scope of this Agreement; and ii. it holds all necessary registrations, licenses and similar instruments under applicable laws to carry out its duties and this Agreement. 8.4 There exists in full force and effect an insurance policy protecting the Investment Manager (and its officers, directors, and employees) against liability or loss for a breach of fiduciary responsibility, errors and omissions and negligent acts by the Investment Manager in connection with its duties under the Agreement, and the coverage limitations of such policy equal or exceeds Five Million Dollars ($5,000,000). 9. Client Representations. 9.1 The Client warrants that it is authorized to enter into this Agreement and perform its obligations in accordance with the terms of this Agreement and has obtained all corporate authorizations and approvals necessary to permit the Investment Manager to carry out its duties and obligations under this Agreement. 9.2 The Client warrants that neither its entry into this Agreement nor into any transactions within the scope of this Agreement will breach in any material respect any law, rule or regulation applicable to the Client. 93 The Client understands that, from time to time, the Investment Account Assets may be invested in a"new issue," as defined in the U.S. Financial Industry Regulatory Authority's ("FINRA") Rule 5130 and the Client represents that it is not a restricted person for purposes of participation in new issues. The Client also represents that it is Item # 5 {00041930.DOCX; L } LNDOCSO 1 /722490.A 5 Attachment number 1 \nPa not (i) an executive officer or director of a public company or a covered non-public company for purposes of FINRA Rule 5131(b) (i.e., the "spinning" rule), (ii) a person materially supported by such an officer or director, or (iii) an entity that is more than 25°/o owned by such an officer or director and/or a person materially supported by such an officer or director. 9.4 The Client (or an advisor or consultant relied upon by the Client) in reaching a decision to seek to enter into this Agreement, has sufficient knowledge and experience in financial, tax and business matters as to enable the Client (or such advisor or consultant) to evaluate the merits and risks of the investment of the Investment Account Assets in accordance with the Investment Guidelines and to make an informed investment decision with respect to such considerations. 9.5 The Client represents that: it is not an entity that would subject the Investment Manager to recordkeeping or other restrictions or requirements under rule 206(4)-5 of the Investment Advisers Act 1940 (i.e., the "pay to play rule"); and ii. no fees, bonuses or other compensation are being received by the Client or any of its personnel or related persons in connection with the Client's selection and appointment of the Investment Manager. 9.6 The Client represents and warrants that, to the best of its knowledge, none of: i. the Client; ii. any person controlling or controlled by the Client, or if the Client is a privately held entity, any person having a beneficial interest in the Client; or, iii. any person for whom the Client is acting as agent or nominee in connection with the Investment Account, is either: a country, territory, individual or entity named on any list maintained by the Office of Foreign Assets Control ("OFAC"), nor is a person ar entity prohibited under the OFAC Programs; or ii. a senior foreign political figure (being a current or former senior official in the executive, legislative, administrative, military or judicial branches of a non- U.S. government, whether elected or not; a current or former senior official of a major non-U.S. political party; or a current or former senior executive of a non-U.S. government-owned commercial enterprise), or any immediate family member or close associate of a senior foreign political iigure. 9.7 The Client represents and warrants that it is not: an employee benefit plan, as defined in Section 3(3) of ERISA; ii. a plan, as that term is used in Section 4975 of the Code, that is subject to Section 4975 of the Code; Item # 5 {00041930.DOCX; L } LNDOCSO 1 /722490.8 6 Attachment number 1 \nPa iii. a governmental plan or other entity that is subject to any federal, state or local law that is similar to the provisions of Section 406 of ERISA or Section 4975 of the Code; or iv. an entity the assets of which constitute "plan assets" within the meaning of Department of Labor Regulation 29 C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA. The Client will provide the Investment Manager with immediate written notice should the Client determine that it is in breach of this representation and warranty. 10. Liability. 10.1 The Investment Manager will not be liable to the Client for any punitive, indirect or consequential damages or for damages that are not reasonably fareseeable, arising as a result of or in connection with: events ar circumstances beyond the Investment Manager's reasonable control including, but not limited to nationalization, expropriation, currency restrictions, act of war ar terrorism, riot, revolution, acts of God or other similar events or acts; ii. errors by the Client or by the Custodian in its instructions to the Investment Manager; or iii. errors or omissions caused by a securities exchange, clearing system or similar third party securities processing, clearing or settlement system. 10.2 The Investment Manager will not be responsible for the title, validity or genuineness, including good deliverable form, of any property or evidence of title received or delivered by it pursuant to this Agreement and will be held harmless in acting upon any notice, request, consent, certificate or instrument reasonably believed by it to be genuine and to be signed or otherwise given by the proper party or parties. 10.3 No guarantee is given by the Investment Manager as to the performance or profitability of the Investment Account Assets or the success of any investment strategy recommended or used by the Investment Manager. 11. Valuation. 11.1 The valuation of the Investment Account Assets will be determined by the Client or its Custodian and the Investment Manager will have no responsibility or liability for such valuations. If the Investment Manager disagrees with a particular valuation for purposes of calculating the fee payable to the Investment Manager under Section 4, the parties will negotiate in good faith to resolve that disagreement. The Investment Manager also performs regular reconciliations of the determination of the net asset value of the Investment Account Assets performed by the Custodian and will make the results of those reconciliations available on reasonable request. Item # 5 {00041930.DOCX; L } LNDOCSO 1 /722490.8 % Attachment number 1 \nPa 12. Termination. 12.1 This Agreement will continue in effect until terminated: (i) at any time by the Client ar(ii) on 30 days' prior notice by the Investment Manager to the Client. 12.2 Notwithstanding the foregoing, the Investment Manager may terminate this Agreement with immediate effect if the Client commits a material breach of this Agreement. 12.3 The Client will pay any accrued but unpaid fee up to and including the date of termination. 13. Reporting. The Investment Manager will provide the Client with quarterly reports that set out the assets held in the Investment Account. It is understood that custodial records will be the prevailing source for tax information. 14. Books and Records. The Investment Manager will maintain complete records relating to the provision of investment services under this Agreement far a period of at least five (5) years following each transaction or activity (or in accordance with applicable laws). 15. Confidentiality. 15.1 Each party will treat as coniidential and not disclose to third parties the terms and conditions of this Agreement and all non-public information and advice given by either party to the other, under or in connection with this Agreement or the parties' activities under this Agreement (the "Confidential Information"). 15.2 Neither party will make use of or disclose any Confidential Information of the other party except as expressly authorized in this Agreement or as required by law or legal process, or as part of a routine regulatory examination. Each party's obligations under this Section 15 with respect to the Confidential Information of the other party will extend only to the earlier of (i) such time as the information enters the public domain through no fault of the party seeking to disclaim a confidentiality obligation or; (ii) two (2) years following the termination of this Agreement. 15.3 The Investment Manager may disclose to prospective or existing investors that the Client is a client of the Investment Manager, except that the disclosure may not reveal the investment performance, amount or composition of the Client's Investment Account. 16. Assignment. 16.1 The Investment Manager will not assign (as that term is defined in the Investment Advisers Act 1940) this Agreement without the prior consent of the Client. Item # 5 {00041930.DOCX; L } LNDOCSO 1 /722490.A g Attachment number 1 \nPa 17. General Provisions. 17.1 Any notice, direction, instruction, acknowledgment, or other communication required by this Agreement will be in writing to Client or the Manager, as applicable, at the following addresses: To the Manager: Eagle Capital Management, LLC 499 Park Avenue, 17th Floor New York, NY 10022 Attention: Ravenel B. Curry, III To the Client: Stuart Kaufinan, Esq. Klausner, Kaufman, Jensen and Levinson 10059 NW 1 st Court Plantation, Florida 33324 17.2 This Agreement, together with the Investment Guidelines, constitutes the entire agreement between the parties on the subject matter of this Agreement. This Agreement supersedes all prior agreements and understandings (written or oral), and there are no other agreements, understandings, representations or warranties of any kind, expressed or implied, not expressly set forth in this Agreement. 17.3 This Agreement and its Investment Guidelines may not be amended, modified or waived without an agreement in writing signed by each of the parties to this Agreement. 17.4 If any provision of this Agreement is determined to be invalid, illegal or unenforceable, the remaining provisions of this Agreement remain in full farce, as long as the essential terms and conditions of this Agreement for each party remain valid, binding, and enforceable. 17.5 This Agreement may be executed in any number of counterparts, all of which together wil] constitute one and the same instrument. 17.6 No failure or delay on the part of either party in exercising any right, power or remedy under this Agreement in respect of any occurrence or event on one occasion will operate as a waiver of any such right, power or remedy in respect of such an occurrence or event on any other occasion. Either party's failure to insist at any time on strict compliance with this Agreement or with any term hereof or any continued course of such conduct on its part will in no event constitute or be considered a waiver by such party of any rights or privileges. 17.7 This Agreement will be construed and interpreted in accordance with the laws of the State of Florida to the extent not superseded by any federal law. Any legal Item # 5 {00041930.DOCX; L } LNDOCSO 1 /722490.A 9 Attachment number 1 \nPa proceeding arising out of this Agreement will be brought in the courts of the State of Florida located in Pinellas County. 18. Disclosure 18.1 The Investment Manager agrees to disclose, in writing to Client within ten (10) business days, if the Investment Manager becomes the subject of an investigation by the Securities and Exchange Commission for alleged breach of federal securities laws; any investigaiion by the U.S. Department of Justice for allegations relating to violation of federal securities laws or related allegations of fraud; or if the Investment Manager is named as the defendant in any civil action alleging fraud, negligence or breach of fiduciary responsibility. 19. Investment Objective and Policy 191 The primary objective of the portfolio is to seek as high a level of total return that is consistent with prudent risk through investments in a diversified portfolio of marketable equiry securities. The Investment Manager agrees to observe the Pension Plan for the Fund and the investment policy as set forth by the Client in Exhibit "A". In the event that the Investment Manager should purchase any security in violation of the invest�nent policy of the Client, and as a result of any sale thereof realizes a loss as measured by the initial purchase price of the security, the Investment Manager shall malce the Client whole for any such losses. Additionally, the decision to continue to hold or dispose of an asset subsequent to its purchase that no longer meets the investment policy standards shall be made in accordance with the Client's investment policy. [Remainder of page left intentionally blank; signature page follows immediately.] Item # 5 {00041930.DOCX; L} LNDOCSO 1/722490.A 1 � Attachment number 1 \nPa IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date first above written. EAGLE CAPITAL MANAGEMENT, LLC : Name: Title: BOARD OF TRUSTEES OF THE EMPLOYEES' PENSION FUND OF THE CITY OF CLEARWATER, FLORIDA C George N. Cretekos Chairperson Approved as to form: Attest: Stuart A. Kaufman Rosemarie Call Pension Attorney City Clerk Item # 5 {00041930.DOCX; L} LNDOCSO 1/722490.8 1 1 Attachment number 2 \nPage 1 1�I 11�ANNING & NAP �I� INVESTMENT MANAGEMENT AGREEMENT FOR FIDUCIARY - TAX EXEMPT ACCOUNT Item # 5 Attachment number 2 \nPage 2 ��I NIANNjNG & NAP��R. Account Name FIDUCIARY ACCOUNT INFORMATION: ** The account is: Fiduciary - Tax Exempt Please specify an account type: Municipality ACCOUNT INFORMATION Contact Person(s) Physical Address — Street Address 1(required) Physical Address — Street Address 2 City State Zip PRIMARY CONTACT INFORMATION: Primary Social Security #/ Tax ID #(required) Date of Birth (required) or one ome one o i e one ax mai ress GENERAL ACCOUNT INFORMATION: 35,000,000.00 .. . . :. - - . :. - - -.. -- .- - -.. -. Tax ID#) Greg Holden Is the plan sponsor of this account a publicly traded company? (if applicable) Yes No Is the account holder a government entity? Yes No If yes, do any state, provincial or local investment restrictions apply? Yes No How did you hear about us? Accountant Attorney Consultant Financial Advisor Friend/ Relative Manning & Napier employee Manning & Napier website Newspaper or magazine article Item # 5 Attachment number 2 \nPage 3 ��I NIANNjNG & NAP��R. ❑1'elevision � Other Please note: If you have any particular financial priorities, objectives, goals, needs or limitations not otherwise addressed in your account documents which might affect the manner in which your investments are to be managed, please notify your Account Representative immediately. �*Additional documentation may be required to open a Fiduciary Account. If this account is a corporation, partnership or other legal entity, the names of any persons authorized to transact business on behalf of the entity must be provided to the Investment Manager along with their signatures; in addition to formal documents that may serve as entity identity verification (ex. Articles of Incorporation, Partnership Agreement, Business License, etc.). A sample form of a resolution is included with this Agreement to indicate those parties authorized to transact business. (Please note: the certified copy of the Corporate Resolution may be mailed at a later date without delaying the start of the Account). Item # 5 Attachment number 2 \nPage 4 1�I II�ANNING & NAP �I� INTENT OF THE PARTIES: Whereas Manning & Napier Advisors, LLC ("Investment Manager") located at 290 Woodcliff Drive, Fairport, New York 14450 is a registered investment adviser under the Investment Advisers Act of 1940; Whereas the Client wishes to engage the services of the Investment Manager as provided in the Investment Management Agreement between the Client and the Investment Manager below; NOW THEREFORE, the parties intend that the following Investment Management Agreement govern the relationships between them: INVESTMENT MANAGEMENT AGREEMENT: Appointment of Investment Manager The Client appoints the Investment Manager as Client's agent and attorney-in-fact, to manage assets of the Client which will be delivered to the Custodian for that purpose, together with the proceeds of investment and reinvestment, (hereinafter referred to as the "AccounY'), with full authority to invest and reinvest assets of the Account in securities or funds on behalf of the Client. In general, the role of investment manager includes, but is not limited to, the following: working with the Client to establish appropriate investment objectives for the portfolio; making asset allocation decisions within the portfolio in accordance with set objectives; making the day-to-day investment decisions for the portfolio; providing materials necessary for monitoring results in an accurate and relevant manner. Should the Client itself, or through a third party service provider, wish to perform services similar to, or impacting on, the Investment Manager's above listed responsibilities, the interests of the Account will be served by the Client notifying the Investment Manager in advance, to ensure consistency in the measurement and performance of the investment management process. Discretionary Authority The Client acknowledges and understands that: The Investment Manager is given a Limited Power of Attorney giving full and exclusive discretionary authority to invest and reinvest the assets in the Account, and, in that connection, to make determinations as to which securities are to be bought or sold, where the securities are to be bought or sold and the total amount of securities to be bought or sold for the Account, without obtaining the consent of or consulting with the Client, but consistent with Investment Objectives, asset allocation guidelines, funding policy and method or Special Instructions with respect to the Account as communicated to the Investment Manager by the Client. The term "securities" as used in this Agreement may include (but not by way of limitation): stocks, bonds, exchange-traded funds, mutual funds, currency hedging instruments such as forward currency contracts or options on currencies, securities traded on foreign exchanges, and any other instrument in the discretion of the Investment Manager are appropriate in connection with managing a portfolio that may contain both non-U.S. and U.S. holdings for the Client. It is understood that all or a portion of the Account may be held in cash or cash equivalents. Unless the Client elects to retain voting powers for the securities held in the Account (to so elect, the Client should notify the Investment Manager in writing), the Investment Manager shall have the power and authority to vote according to its sole discretion the proxies for all securities held in the Account including the right to revoke proxies given by the Client prior to the effective date of this Agreement. Without limiting the foregoing, the Investment Manager is hereby authorized to consent to, or request any action on the part of such corporation whose securities are held in the Account, and to participate in reorganizations, recapitalizations, consolidations, mergers and similar transactions with respect to such stocks or other securities. The Investment Manager shall not be liable for any actions taken pursuant to the voting power and authority granted hereunder. The Investment Manager shall not have the right to transfer out of or deposit into the Account funds or securities unless such transaction is part of a purchase or sale of securities on Client's behalf, involves a clearly documented error, or involves an amount or adjustment determined by the Investment Manager to be payable from the Account pursuant to the terms of this Agreement. The Investment Manager shall not Item # 5 � Attachment number 2 \nPage 5 1�I 11�ANNING & NAP �I� be liable for Client initiated transactions which are outside the authority granted by this Limited Power of Attorney. The Custodian for the Account is hereby authorized and empowered to follow the Investment Manager's instructions in every respect with regard to any such trades, purchases, or sales for the Account. It is further understood that the Custodian will not be liable for the actions or instructions from the Investment Manager, provided that the Custodian shall remain fully responsible for the safekeeping of assets in the Account and for complying with legal requirements applicable to such safekeeping. Any uninvested cash will be swept into a money market fund offered by the AccounYs Custodian, which fund has associated with it certain advisory fees and other costs. Commencement of Services The Investment Manager will assume no responsibilities under this Agreement or the Investment Advisers Act of 1940, and no fees shall be due, until the "Commencement Date" has been reached. The Commencement Date is deemed to be reached when the assets comprising the Account (or a substantial enough portion of the assets comprising the Account as determined at the discretion of the Investment Manager) are ready to trade in the sole discretion of the Investment Manager. The Commencement Date shall not be deemed to have been triggered if the Custodian sweeps cash from the Account in order to generate interest for the Account, or if the Investment Manager liquidates securities transferred into the Account by the Client, or if the Investment Manager issues instructions for isolated trades due to circumstances unrelated to or which precede its general discretionary management of the Account or which result from the specific direction of the Client. Securities transferred into the Account may, in the sole discretion of the Investment Manager, be liquidated prior to the Commencement Date. The Investment Manager shall not, under any circumstances, be liable for opportunity cost or any loss which results from a reduction in the value of the assets in the Account prior to the Commencement Date. Fees The client will pay management fees to the Investment Manager as listed on Schedule A to this Agreement. Certain securities purchased, including mutual funds and exchange-trade funds, shall also charge expenses as reflected in the net asset value of the units or shares purchased. Termination This Agreement shall remain in full force and effect until terminated by either of the parties hereto. Either party may terminate this Agreement with or without cause. Termination shall occur upon at least thirty (30) days written notice; and in such event, the Investment Manager shall be paid through the date of termination. Upon receipt of such notice of termination, the Investment Manager shall, to the extent practicable, liquidate all securities in the Account in a timely manner by reducing the Client's holdings to cash or cash equivalents unless the Client specifically instructs the Investment Manager to do otherwise in the notice of termination. If the Client grants the Investment Manager authority to invest in shares of investment companies (the "Sector Funds") for which the Investment Manager acts as investment advisor in the portfolio, those funds will be liquidated in a timely manner. The Sector Funds cannot be transferred in-kind should the Investment Manager's services be terminated. The Client has a right to terminate this Agreement without penalty within 5 business days after the date of execution of this Agreement; provided, however, that any investment action taken by Investment Manager with respect to the Account prior to the effective date of such termination shall be at Client's risk. Representations of the Client The Client represents and warrants that in entering into this Agreement, he/she has relied only upon representations and data which have been provided in written materials of the Investment Manager. The Client further represents and warrants that he/she has reached the age of 21 years and is of sound mind and has not been adjudicated incompetent. Item # 5 Attachment number 2 \nPage 6 1�I II�ANNING & NAP �I� If the Client is a corporation, foundation, trust or other similar form of entity, the Client represents that the person executing this Agreement is authorized to do so and upon execution this Agreement constitutes an enforceable obligation of the Client. Account Investment Objectives The Investment Manager will manage the Account according to its understanding of the Client's investment objectives. The client will communicate any change in investment objectives to the Investment Manager in writing, provided, however, that no such change will be effective until the Investment Manager has determined if it is appropriate for the Client. It is the responsibility of the client to notify the Investment Manager in writing whenever there has been any significant change in the ClienYs financial needs, goals or status and to provide whatever financial data or documentation is requested by the Investment Manager in a timely manner. The Investment Manager will be allowed a reasonable time period to come into compliance with changes in investment objectives so that prevailing market conditions can be considered. Use of Recording Devices In order to protect the interests of all parties, the Investment Manager is authorized in its sole discretion to record any telephone or other communications relating in any way to the Account. Disclaimers The Investment Manager will not be responsible for and is hereby released from any loss or damages in any form resulting directly or indirectly from the failure of the Client to fulfill any of his/her responsibilities under this Agreement or to provide the Investment Manager with complete, accurate, and truthful data as required in this Agreement or as otherwise requested by the Investment Manager. The disclaimers or limitations of liability of the Investment Manager in this Disclaimers Section and elsewhere in this Investment Management Agreement (including the last sentences of the following Sections: Discretionary Authority (subsection: voting power and authority), Commencement of Services and Acknowledgement) do not constitute a waiver of any right of the Client provided by the Advisers Act of 1940, any other federal and state securities laws, or ERISA if applicable, and the Client retains all such rights. Arbitration All disputes between the Investment Manager and the Client, except for those involving alleged theft or misappropriation, shall be submitted to arbitration with the American Arbitration Association; and the results of such shall be binding upon the parties and enforceable in a court of law. Any such arbitration shall be arbitrated by one person who shall be a businessman not active in the investment advisory business. This Arbitration Section does not constitute a waiver by the Client of any right provided by the Advisers Act, or other federal and state securities laws or ERISA, including any right to choose the forum, whether arbitration or litigation in court, in which to seek resolution of disputes. ERISA Representations and Warranties If the Client is a Qualified Retirement Plan (including a Keogh Plan) as defined in the Employee Retirement Income Security Act of 1974 ("ERISA"): (A) the Client represents and warrants that the person signing for the Client is a named fiduciary under the qualified plan with authority to appoint an investment manager for the assets of the qualified plan in accordance with the provisions of the qualified plan and Section 402(c)(3) of ERISA, that the qualified plan permits investments of the type to be made pursuant to the Investment Management Agreement and the Investment Objectives, and that any Special Instructions provided by the Client to the Investment Manager are consistent with the plan documents and funding and benefit requirements of the plan and the beneficiaries; (B) the Client shall provide the Investment Manager with a copy of any portion of the Qualified Retirement Plan documents which limit or tend to limit in any way the Investment Manager's discretion over management of the Account; (C) the Investment Manager represents and warrants that it is, and at all times during the term of this Agreement shall be, an investment manager as that term is defined in Section 3(38) of ERISA; Item # 5 Attachment number 2 \nPage 7 1�I 11�ANNING & NAP �I� (D) the Investment Manager acknowledges that it is a fiduciary with respect to the Plan. (E) if applicable, the Investment Manager, upon request, will provide Client with any information that may be necessary for the preparation of the annual Form 5500, including disclosure of compensation (direct or indirect)." Miscellaneous No assignment of this Agreement shall be made without the written consent of both parties. Any notice or service of process to be given hereunder shall be sufficient if in writing and addressed to the parties at their last known address or place of business. This Agreement shall be governed by the laws of the State of New York (without regard to any principles of conflicts of laws) and applicable federal laws and regulations; and is binding upon the parties hereto and their respective executors, administrators, heirs and successors in interest. The site of jurisdiction and venue for any arbitration or court proceeding will be Monroe County, New York. Neither party shall, except as required by law, governmental order, or in the preparation for, or in the conduct of, litigation or arbitration, disclose to any third party the fact of litigation or arbitration, or any of the allegations of the parties relating thereto. This Agreement may not be amended or modified in any way except by a subsequent written agreement executed by the parties. In the case of joint Account, each owner must subscribe to this Agreement. The Investment Manager is expressly authorized, in its sole discretion, to rely and to act upon the instructions of a single joint owner; unless and until written instructions to the contrary, signed by each such joint owner, are received by the Investment Manager. If any term, covenant, condition or provision of this Agreement shall be construed to be illegal, invalid or unenforceable, the remainder of this Agreement shall be unaffected and shall remain in full force and effect. Item # 5 Attachment number 2 \nPage 8 1�I 11�ANNING & NAP �I� ACKNOWLEDGEMENT I certify under penalties of perjury that (1) the Social Security or taxpayer identification number provided is correct (or I am waiting for a number to be issued to me), and (2) I am not subject to backup withholding because (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding for failure to report all dividend and interest income, or (s) I have been notified by the IRS that I am no longer subject to backup withholding. The Internal Revenue Service does not require your consent to any provision of this document other than the certifications required to avoid backup withholding. Client Siqnature: I hereby agree to the Investment Management Agreement as set forth above. BOARD OF TRUSTEES OF THE EMPLOYEES' PENSION PLAN OF THE CITY OF CLEARWATER, FLORIDA : George N. Cretekos Chairperson Approved as to form: Attest: Stuart A. Kaufman Rosemarie Call Pension Attorney City Clerk Investment Manaqement Siqnature: The Investment Manager hereby accepts its appointment as the ClienYs Investment Manager Manning & Napier Advisors, LLC Title Date Item # 5 5 Attachment number 3 \nPage 1 Dated 2Q12 EAGLE CAPITAL MANAGEM�;NT, LLC (the "In�estment Manager") - and - CITY aF CLEARWATER EMPLDYEE'S PENSIUN FUND (the "Client") INVESTMEIVT MANAGEMENT A[;REEMENT Item # 5 �ncx�aiy�7.[x�cx;i ��.Nf�orsainaaa�rs.s TASLE �F C�NTFIVTS 1. Appointme�t of Investment Manager ........................... 2. In�estment Account Assets------------------------------------------• 3. In�estment Autharity . ................�--................................ 4. Fees and Expenses . ....................................................�-• 5- Aggregatian and Allacation .......................................... 6. Sroker-Dealer Transactions------------------------------------------ 7. Vating Rigl�ts; Legal Claims . ....................................... $. In�estment Manager Representations ........................... 9. Client Representations ................................................... 1D. Liability.....-� ...................�--------.........-----�--....................., 11. Valuatinn .................�--............---------......,...-------�-............ 12. Termination .....................................�-----...........--�-----...... 13. Reporting ....................................................................... 14. Bonks and Recards . .................................................•----� 15. Canfidentiality-----------------�.................................---------... 16. Assignment .....................�--............................................ I7. Notices ........................................................................... i 8. General Pro�isions- � ....................................................... Attachment number 3 \nPage 2 •-----� ......................................... 2 ........................•---.................... 2 ........-�------------------------�.......-----. 2 ...............�........----.................... 3 ------� .................�....................... 3 ................� �-............................. 4 ..........................................�----- � ..... ........ . . . . ... ............... . .. .......... 5 ..................�-------...................... S ................................................'7 ....................... �--............-------... 7 ............................................... $ ............................................... 8 ............................................... 8 ........................................�...... 8 .................�----......................... $ ................... �--------................... 9 ............................................... 9 Item # 5 {cxx�aiyi�.�x�cx;i ��.�vnncsa�n??a.�n.s (i) Attachment number 3 \nPage 3 THIS INVESTMENT MANAGEMEItiTT AGREEMEIVT (the "Agreement") is made effecti�e as af I3ECEMBEIt I, 2U12 between CITY DF CLEARWATER EMPL�YEE'S PENSIQN FUN� (the "Client") and Eagle Capital Management, LLC (the "In�estment Manager"}. l. Appaintment oi In�estment Manager. The Client appoints the In�estment Manager as a discretionary manager of the In�estment Accaunt Assets (a.5 defin�d in paragraph 2.2 below} in accordance with the terms of this Agreement. The In�estmer�t Manager accepts the appaintmenk and agrees to manage the In�estment Ac�ount Assets in accordance with the terms af this Agreement and the In�estment Guidelines set out in the Scheduie ta this Agreement [the "In�estrnent Guidelines"}. The services of the Investment Manager are nat exclusi�e and t�e In�estment Manager is free tv render similar scrvi�es to nthers. 2. In�estment Accpunt Assets. 2.1 The Client will appaint an independent custndian or trustee (the "Custodian"} and the In�estment Account Assets will be h�ld by the Cust�dian in a segregated accpunt (the "In�estment Account"}. At no time will the In�estment Manager ha�e ar take direct or indirect custody of the In�estment Account Ass�ts. 2.2 The "In�estment Accaunt Asset�s" will cQnsist of the portFolio of assets entrusted from time tv time to the management of the In�estment Manager by the Client under ihis Agreement, being: the cash, stocks, bonds, securities, funds and other in�estments or property af ariy kind whatsae�er (reasonably acceptable to t.iie In�estment Manager); plus ii. all investments, rein�estments and proceeds of the sale of those assets, including (but not limited to) all di�idends, interest and earnings on in�estments, and all appre�iatian an and additions to such assets; minus iii. any lasses, expenses, withdrawals and distributians, The In�estment Account Assets will nat in�lude, and the In�est►nent Manager will not ha�e responsibility for, any assets of the Ciient nat expressly aliocated #o the In�estment Account under this Agreement, and the In�estment Mariager will only be responsible for such assets for as long as they remain in t1�e In�estment A�caunt. 2.3 The Client may make contrihutiQns and withdrawals to the In�estment Account by pra�iding an acknowledged written natice ta the In�estment Manager. Any additians ta the In�estment Account must be reasanably acceptable to the In�estment Manager. 3. In�estment Authvrity. 3.1 Subject to the In�estment Guidelines, the In�estment Manager wiil, without abtaining further instru�tions and in accnrdance with its own judgment and discretion, sell, retain, exchange or otherwise deal in investments and other assets, subscribe to issues and offers for sale, advise on or execute transactions, effect transactians on ar�y markets, negotiate and execute caunterparty and a�count opening documentation, take all routine or day-tQ-c�ay decisions and atherwise take any actions, which it consicien necessary vr desirable in c�nnectian with the In�estment Accvunt Assets. Item # 5 ;i7f1i141917.[7OCx;1 �LN17[�"501C72249U.8 � Attachment number 3 \nPage 4 4. N e�s and Expenses. 4.1 For the In�estment Manager's ser�ices, the In�estment Manager is authorixed to charge the In�estment Account quarterly with one quarter of tne annual fee at the rate of I.Q% of the assets on the �rst $5 million and 0.75°Io aba�e $S million {the "Management Fee"}. The Management Fec will be calculated on the �alue af the Investment Account Assets at the end of each quarter and will be paya6le in arrears; pro�ided th�t, to the extenk that the Client makes a contribution or withdrawal to the In�estment Account of an amount in excess c�f $1� million dnllars or 5°In c�f the �alue of the In�estmcnt Accaunt Assets (such an amount being the "Prorated Amaunt"} on any day other than the first day af a calendar quarter, the Management Fee payable in respect of the Prarated Amount will be prorated ta reflect the number of days in the calendar quarter that the Prorated Amaunt f�rmed part vf the In�estment A��aunt Assets. 4.2 Any and all expenses directly relating to the in�estmenc qf In�esttnent Account Assets (including, but not limited to, all brokerage, commission and other transaction charges, �ustadian fees, interest charges, transfer and registration fees and all taxes, in�luding any inferest and penalties relating ta such expenses), which may be le�ied or assessed under existing or future laws will, untess atherwise agreed, be �harged ta and paid out of the In�estment Ac�ount Assets. The Client wili b� responsible for any such expenses that are not paid out of the In�estment Account AsseEs. 5. Aggregatian and Allocatian. 5.1 The In�estment Manager will ha�e the authority, hut not the obligation, to aggregatc purchase or sale orders for the In�estrnent Account Assets with similar order5 being made simuItaneously fvr other ac�ounts managed by In�eStment Manager, or with ac�aunts af the af�liates of the In�estment Manager, if in the Investment Manager's reasonable judgment svch aggregation will result in an p�erall economic benefit to the In�estment Account consid�ring the ad�antageous selling or purchase price, hrokerage commissia�t anc� other e�penses. 5.2 The Client a�knowledges that the deiermination of sv�h economi� henefit ta the In�estment Account Assets by the Investment Manager is subje�tive and represents the In�estment Manager's e�aluation that the In�estment Accaunt Assets are benefited by reIati�ely better purchase ar sales prices, �awer commission expenses and beneficial timing of transactions or a comhination af these and other factors. 5.3 In accounting for sucI� aggregaced arder price, commission and other expenses will be a�eraged on a per band or share basis claily. 5.4 It is understoad that fhe In�estment Manager performs in�estment ad�isory ser�ices for �arious clients �nd khat other accounts and gersans advised hy the In�estment Manager may ha�e different in�estmeni objectives nr cvnsideratinns to the Ir��estment Acc:aunt. As a result, decisions regarding purchases and sales for each management accounE are made separateIy and independently in light nf the abjecti�es and purpase5 of each a�count. Item # 5 {iH}p41417.17[1CX:l �L�il]C1CSUlC122490.R 3 Attachment number 3 \nPage 5 5.5 The Investment Manager will allocafe in�estment opportunities in a manner which it belie�es to be in the best interests of the ac�ounts in�ol�ed and in ac�ordance with the In�estment Manager's fiduciary responsibilities. 5.b Thc Client agrees that the In�estment Manager may gi�e ad�i�e and take a�tion in the performance of its duties with respect to any uf its other clients which differ frnm action taken with respe�t ta the Ir��estment Account Assets. 6. Iiraker-Deaier Transactions. Ca. i The In�estment Manager will ha�e full authnrity and discretion ta select the brnker or dealer who will exe�ute any transa�tion in respect of the In�estment Account. If the Client directs the Investment Manager to execute transactians thmugh one (or more) spe�i�� braker(s), the Investment Manager will nat be liable For ariy loss r�sulting from acceptance of that direction. Nothing shall require the Investment Manager to accept direction to use a broker designated by the Client. G.2 In the selectian of brakers or dealers and the placing of orders, the Inv�stment Manager will attempt to obtain the most favorable pri�e and execution a�ailable, except to the extent it may be permitted tn pay higher brokerage cammissions for brokerage and research ser�ices as c3escrihed belaw. 5.3 In using its I�est effQrts ta abtain fa�orable pri�e and execution, the In�estment Manager may take into account all factors it considers rele�ant, including, for example, price, the siae Qf the transactian, the nature uf the market for the security, the amount af the cvmmission, the timing of the transactian taking inta accaunt market pri�es and trends, the reputation, experien�e, and �nancial stability af the broker or dealer in�ol�ed and #he quality of service pro�ided by the broker or dealer in other transactions. b.� The In�estment Manager will not be deemed ta ha�e acted unlawfully or to h��e brea�hed any duty created by this Agreement solely E�ecause it caused the In�estrnent Account ta pay a brvker or dealer who gro�ides hrokerage and research serr�ices tv the In�estment Manager a higher commission for �arrying aut a portfolio in�estment transaction than another braker or dealer waula ha�e charged for that transactian, if tt�e In�estmen# Manager determines in good faith that the cammission was reasonable considering the �alue of the brokerage and research sen+ices pro�ided by khat braker or dealer. That good faith determinatior� may cQnsider the needs and inferests of all accounts managed by the In�estment Manager. 5.5 5uhject to the foregaing, the In�estment Mariager may elect to trade the securities thraugh ar with any registered hrakers or dealers, or througt� alternate trading systems, or directly with other holders and may use block transactions or consalidate fur trading purpases the Inr�estment Account's trades with simiIar #xades being executed for other funds managed hy the In�estment Manager. Howe�er, the In�estment Manager, and any firm affiliated with the In�estment Manager, may ntit be the brvker, dealer, agent, vr principa! for any of the In�estment Ac�ount's security trades without the In�estment Manager first notifying the Client in writing. f.6 The Investment Manager will r�ot be iiab�e for any a�ts or amissions of any broker nr dealer selected by the In�cstment Manager, as long as the In�estrinent Manager h�.5 Item # 5 ; rxlna i�l i 7.noCx; i�LUnncsa i r722ayD.8 4 Attachment number 3 \nPage 6 not acted with negligence in its selectian ar continuance uf dealings with a 6roker or dealer. 7. Voting Rights; Legal Clainns. 7.1 The In�estment Manager wi11 �ote a11 praxie� reiating to the Investment Account, hut will nat be responsible for participation in class actian law suits. $. In�estment Manager Representations. 8. i The In�estment Manager acknowledges that it is a fiduciary with respecf to the Client and the management of the In�estment Account Assets under this Agreement. 8.2 The In�cstrnent Manager confirms that it is an in�estment ad�iser registered with the United States Securities and Ex�hange Cammission under the In�estment Ad�isers Act 194D. The Clienf acknowledges receipt af the In�estment Manager's �urrent form ADV Parc II and Pri�acy Discl�sure I]ocumer�t. I� compliance with Rule 204-3 under khe Ad�isers Act, the CIient ha.s the right ta terminate this agrf:ement, withaut penalky, within ��e husiness days after entering if the In�estment Manager's form ADV Part II was not recei�ed more than 48 hours prior to entering this agreement. 8.3 The In�eStment Manager warrants that: it has full power and authc�rity to enter into this Agreement and ta perform its obligativns under this Agreement and ta �arry out all the agreements and transactions within the scope of this Agreement; and ii. it hnlds all necessary registrations, li�enses and similar instr�ments under applicable laws to carry ovt its duties and this Agreement. 8.4 There cxists in fv11 force and effe�t an insurance policy protecting the Investment Manager (and its of�cers, dire�tars, and employees} against Iiability or loss for a hreach of �duciary responsibility, errors and omissinns and negligent acts by the In�estment Manager in conne�tion with its duties under the Agreement, and the co�erage limitations of su�h policy equal ar exceeds Fi�e Million Dollars ($S,OQ[�,004}. 9. Client Representations. 9.1 The Client warrants that it is authorized to enter i�ta this Agreement and perform its abligatians in accorc�ance with the terms of this Agreernent and has obtained al� corparate authori7ations and apgro�als necessary tn permit the In�estment Manager tn carry out its duties and obligations under this Agreement. 9.2 The Client warrants that neither its entry into this Agreement nor inta any transactivns within the scope of this Agreement wil] breach in any material respect any law, rule c�r reguiatian applicable to the Client. 9.3 The. Client understands that, from time. to time, the In�estment A�count Assets may be invested in a"new issue," as defined in fihe U.S. Finaz�cial Industry Regulatory Authority's {"FINRA"} Rule 5130 ar�d the Ciienk repre4ents that it is not a re5tricted person for purposes af participatian in new issues. The Client also represents that it is Item # 5 {iH)(S41917.17UL'�:I �1.IYUOCSU1f722490.8 Attachment number 3 \nPage 7 not (i) an executi�e officer or dire�tar of a public c�mpany ar a ca�ered nnn-public campany for purposes af FINRA Rule S 131(b) (i.e., the "s�inning" ru�e), (ii) a person materially supported by such an officer or directflr, or {iii} an entity that is more than 2S�Ia owned hy such an afficer ar directar andl�r a person materially supported by su�h an afficer or directar. 9.4 The Client (�r an ad�isor ar cansultant retied upon �y the Client} in reaching a decision to seek to enter into this Agreement, has suffi�ient knowledge and experience in �nan�ial, tax and business matters as to enable the Client {or su�h ad�isar vr cansultant} to e�aluate the merits and risks of the in�estment of the Investment Accaunt Assets in accordance with the In�vestment �uidelines �nd ta make an infarmed in�estment decision with respe�t to such cansiderations. 9.5 The Client represents that: i. it is nnt an entity that wauld subject the Investrt�ent Manager to recardkeeping c�r ather restrictions or requirements under rule 206(4}-5 af the In�estment Advisers Act � 940 (i.e., the "pay ta play rulc"); and ii. na fees, banuses ar other campensation are being reeei�ed by the Ciient or any of its personnel or related persons in connection with the Client's selectian and appointm�nt of the In�estment Manager. 9.6 The Client represents and warrants that, to the best �i its knawIedge, none of: i. the Client; ii. any person cflntrolling r�r contralled by the Client, or if the Client is a pri�ately held entity, any person ha�ing a heneficial interest in the Client; or, iii. any person for whnm the �lient is acting as agent or naminee in connectinn with the Investtttent Account, is either: a country, territory, indi�idual or entity named on any list maintained by the Office of Foreign Assets Control {"QFAC"), nar is a person or entity prohi6ited under the OFAC Programs; or ii. a seniur foreign political figure (being a current or former senior offic:ial in the cxecuti�e, legislati�e, administrati�e, military or judi�ial bran�hes of a nan- U.S. go�ernment, whether elected or not; a current ar former senior official af a tnajor non-U.S. policical party; or a cunent ar farmer senior executi�e of a nan-[I.S. ga.�ernment-awned commercial enterprise), or any immediate family memher or cla;;e associate of a senior fareign political figure. 9.7 The C�ient represents and warran�s that it is not: an ernplayee benefit plan, as defined in Sectivn 3[3) af ERISA; ii. a plan, ay that term is used in Section 4975 af the Code, Ehat is su6ject ta Sectian 4975 of the Cade; Item # 5 {f][)041917.U[lC7{:1 JLNDOCSO1f72245�0.8 (] Attachment number 3 \nPage 8 iii. a governmental plan ar other entity thaC is suhject to any federal, stat� or lncal law that is sirriilar ta the pro�isians of Section 4Q5 of ERISA �r Section 4475 of the Code; or i�. an entity the assets af which constitute "plan assets" within the meaning af Department of Labor Regutation 29 C.F.R. Sectiun 2510.3-1�1, ay modified by Section 3(42) of ERISA. The Client wili prn�ide the Investm�nt Manager with immediate written natice shauld the Client determinc that it is in breach af this representation arid warrar�ty. ld. Lia[�ility. 10. ] The In�estment Manager will not be liak�le to the Clier�t for any pUniti�e, indirect or consequential damages or for darr�ages that are not reasonabIy foreseeable, arising as a result of or in cpnnection with: e�ents or circumstances beyor�d the In�estment Manager's reasonable control inc�uding, but not limited to natinnaIization, expropriativn, currency restrictions, act of war or terrorism, riot, revalution, acts of God or other similar e�ents nr a�ts; ii. errors by the �lient or by the Custodian in its instructiQns to the In�estment Manager; ar iii. errors �r omissions caused by a securities exchange, clearing system or similar third party securitie5 pro�essing, clearing or settlement system. 10.2 The In�eskment Manager will nat be respansibie for t�e title, �alidity ar genuineness, in�Iuding gaad deli�erabie farm, of any prvperty Qr e�idence of title recei�ed or deli�ered by it pursuant to this Agreement and wiIl be held harmiess in acting upon any nvtice, request, cnnsent, certificate or instrume�t reasonably helie�ed by it t� he gcnuine and to }ae signed or otherwise gi�en 6y the proper party ar parties. I0.3 IVo gUarantee is gi�en by the In�estment Manager as ta khe performance or profi#ability of the In�estment Account Assets ar Ehe success of any in�estment strategy recommended vr used by the In�estment Manager. 11. Valuatinn. 1 1.1 The �al�ation of the In�estment Account Assets wi[l he c�etermined by ihe Client or its Custadian and the In�estment Manager will k�a�e no respon.sibility or liability for such �aluatiar�s. If the Investment Manager disagrees with a particular �aluation for purposes af �alculating the fee payable to the In�estment Manager under Sectian 4, the parties will negatiate in good faith to resal�e that disagreement. Th� In�estment Manager aIso performs regular recanciliations af the determination vf ihe net asset �aI�e af the Investment Accaunt Assets per{'ormed by the Custodian and will make t�e results of thase reconciliations a�ailab�e on reasanable request. Item # 5 t�fcx�tiyn.oncx:z ��,r�rx�csa�n�?a�.s 7 Attachment number 3 \nPage 9 l�. Terminatinn. 12. i This Agreemcnt wilI �Qntinue in effect until terminated: (i) at any time by the Client or (ii} on 3� days' prior notice by Ehe In�estment Mar�ager to ihe CZient. 1Z.2 Notwithstanding the foregoing, #he In�estment Manager may termin�te thi5 Agreement with immediate effect if the Ctient commits a matcrial breach of this Agreement. 12.3 The Ciient will pay any accrued but unpaid Fee up to and including the date of terrnination. 13. RepQrting. The In�eSfinent Manager wi�l pro�ide the Client with quarterly reparts that s�t out the assets held in the Investtnent Accaunt. It is underst�od that custodial records will be t�►e pre�ailing source far tax infarmatian. 14. gvoks; and Records. The In�estment Manager will maintain complete recards relating to the pro�ision of in�estment ser�ices under t�is Agreement for a period nf at least fi�e {5) years following each transaction or activity (or in a�cordance with applicahie laws). 15. L'a�dentiality. 15.1 Each p�rty wil� treaf as can�dential and not disctose to third parties the term5 and conditions of this Agreement and all non-pubiic informatian and ad�vice given by either party to the other, under or in cannection with t�is Agreement or the parties' acti�ities under this Agreement [the "Canfidentiat Information"}. iS.2 Neither party will make use of vr dis�lose any �onfidential Infvrmation of the other party except as expressiy authorized in this Agreement or as required by law ar legal process, or as part of a routine regulatory examinativn. Each party's obligations under this Section 15 with respect tu the Confidential Infarmatian of the other party wi11 exterid only tv the earlier of {i) such time as the infnrmatinn enters the guhlic �omain thr�ugh no fault of the party seeking to disclaim a confidentiality obligation or; {ii) two (2} years fallowing the termination nf this Agreement. 15.3 The In�estment Manager may disclose to prospecti�e or existing in�estars that the Client is a client of the Investment Manager, except that the disclosure may not re�eal the in�estmcnt performance, arnount or cam�sositian of the Client's In�eStrt�ent Account. I �. Assignment� F 6.1 The In�estment Manager will not assign (as that tennn is defined in the In�estment Ad�isers Act 144(3) this Agreement without the prior consent of the CIient. Item # 5 �n[rna��.�x�cx:� �i.MOC�csa�nz?a�x�.s $ Attachment number 3\nPage 1 � 17. Notices. 17.1 Any notice, direction, insEructian, acknowtedgment, or other communication required by this Agreement will be in writing ta Client or the Manager, as appIicable, at the foIlowing addresses: To the Manager: Eagle Capital ManagemeRt, LLC 499 Park A�enue, 17th Floar New York, NY 10022 Attentian: Ra�enel L. Curry, III Ta the Client: Stuart K.aufman, Esq. Klausner, Kaufman, rensen and Le�insan 1 dOS9 NW 1 st Court Flantation, Florida 33324 Genera] Pro�isions. 17.2 T�is Agreement, tagether with the In�estment Guidelines, constitutes the entire agreement between the parties on the subject matter of this Agreement. This Agreement supersedes all prior agreements and understandings {written or oral), and there are no other agreements, understandir�gs, representatians or warranties of any kind, expressed or implied, not expressly set farth in this Agreement. 17.3 This Agreement and its In�estment Guidelines may nof he amended, mot�i�ed or wai�ed without an agreemcnt in writing signed by each of the parties to thi5 Agreement. i7.4 If any prv�ision of this Agreement is determined ta he in�alid, illegal nr unenfarceable, Ehe remaining pro�isians of rhis Agreement remain in full force, as long as the essential terms �nd canditions of this Agrecment for each party rert�ain �aiid, binding, and enforceable. 17.5 This Agreernent may be exe�uted in any number of counterparts, all of which together will constitute nne and the Same instrument. 17.fi Na failure or delay vn the part of either party in exercising any right, power nr remedy under this Agreemer�t in respect of any occurrence or e�ent on one occasion will operate as a waiver of any such right, power or remedy in respect of such an occurrence or e�ent on any ot�er occasion. Either party's failure to insist at any time on strict campliance with this Agreement nr with any term hereof or any �ontinued course of such condu�t on its part will in no event constitute Qr be considered a wai�er by such party of any rights ar pri�ileges. Item # 5 �rxx�a�yi�.nocx:i }i.�vuncsoim_2a9n.x 9 Attachment number 3 \nPage 1 17.7 This Agreement will he construed and interpreted in accordance with the laws of the 5tate af Florida to the exter�t not superseded by any federal law. Any legal proceeding arising aut of this Agreement will be brought in the caurts of the State of Florida lacated in Hillsboraugh County. 17.8 Disciasure The Invcslment Managcr agrees tn disclnse, in writing to CZient withirt ten (lU) business days, if the In�estment Manaber becomes the suhject nf' an in�esiigation hy thc Securities and F..xchan�e Cc3mmissintt far allegec� hreach of federal sccurities laws; any in�csEigatinn hy t�e U.S. Dcpartmcnt nf ]ustice fnr allegations relating tn vic�latic�n of fcderal securities laws c�r related allegatinns of Frauc�; ❑r if the In�estment Manager is namecl as the dcfendant in any ci�il a�ticfn alleging fraud, neg]igence t�r breach of fiduciary responsihifity. 17.9 INVESTMENT �B ECTIVE AND PULICY The primary ohjecti�e n#� the portfc7lio is kc� scck as high a levcl of tntal return that is cc�nsistenl wilh prudent risk lhrc�ugh in�estments in a diversificd pnrtfolia oi marketahlc cquity se�:urities. The In�estment Manager agrees tn observe the Pensinn P�an lnr th� Fund and the inveslment poiicy as seE forth hy the Client in Exhibit "A". In thc event tF�at the In�eslment Mana�er shauld purc;hase any security in �italalinn af the investment �SOticy nf' [hc ClienE, and as a result o#' any salc there[�f� reaZiLes a loss as measured by the initia] purchase price Qt thc security, ihe In�estment Managcr sha�] make the Client whole fnr any such lnsses. Aciditiclnally, the decisicm to cc�ntinue to hold nr dispnse nt' an asset subsequenl to its purchas� that no longer meets the investmcnt p�licy standards shall Y�e macie in accordance with the Clien['s in�estment pnlicy. [Remainder of page left intentianally blank; signature page follow5 immediately.] Item # 5 { 6[k141917. DClC}C; f} LNIX]C501�']2249q.8 1 d Attachment number 3 \nPage 1 IN WITNESS WI-IERE�F, the parties hereta ha�e ex�cuted this Agreement efFective as af the date first aba�e written. EAL:LE AL MAN GE T, LLC Sy Name: Tit1e: BUARD UF TR[]STEES UF THE EMPL�YEES' PENSION F[]ND QF THE CITY QF G�EARWATER, FL�RIDA � George N. Cretekos Chairpersnn Appr��ed as tn f�rrn: Attest: Rosemarie Calt City Clerk Item # 5 �{Hlf]41NI7.D(1CX:1 }I.IYDQCSU1C72249[1.R ] ] Pension Trustees Agenda Council Chambers — City Hall SUBJECT / RECOMMENDATION: Meeting Date:12/17/2012 Accept the actuary's recommendations for changes to plan actuarial assumptions and methods, per the Experience Investigation completed by Gabriel Roeder Smith and Company for the five-year period ending December 31, 2011. SUMMARY: It is recommended to have a pension plan experience study conducted by an actuarial firm at least every five years to assure that reasonable and relevant assumptions and methods are in effect to calculate the annual actuarially required contribution necessary to properly fund the plan. It has been approximately six years since completion of the last experience study for the Clearwater Employees' Pension Plan. The Plan's actuaries, Gabriel Roeder Smith and Company (GRS), have completed an Experience Investigation study far the pension plan (attached) and have provided recommendations of changes to the assumptions and methods used in the plan's annual actuarial valuation. The net effect of all proposed changes increases the annual required contribution to the plan by an estimated $1,665,000, or 2.28% of covered payroll. These changes include changes to the salary increase assumption, assumed rates of future employee terminations, assumed rates of future retirements, assumed rates of future disability, assumed mortality rates, and a change in the investment return assumption, as listed on the attachment. These changes are also described in more detail by the actuary in the attached Experience Investigation report. Staff recommends approval of all recommended changes to more accurately determine the pension plan liability and required funding levels, per the professional advice of the plan's actuaries. Type: Current Year Budget?: Budget Adjustment Comments: Current Year Cost: Not to Exceed: For Fiscal Year: Other Yes Budget Adjustment: to Annual Operating Cost: Total Cost: None Review Approval: 1) Office of Management and Budget 2) Legal 3) Clerk 4) Assistant City Manager 5) City Manager 6) Clerk Cover Memo Item # 6 Attachment number 1 \nPage 1 G�C Gabriel Roeder Smith & Company ,, Consultants & Actuaries CITY OF CLEARWATER EMPLOYEES' PENSION PLAN EXPERIENCE INVESTIGATION FOR THE FIVE YEARS ENDED DECEMBER 31, 2011 November 2012 GRSGahricl Racdcr 5mith & Cornpany Item # 6 Attachment number 1 \nPage 2 GRSGal�riel Ro�der Smith & Cora�pany Gabriel Roeder 5mith & Campany (]ne East Broward Blvd. C�nsultants � Actuaries Suite 5D5 Ft. L�ucierci�le, �'L 333D]-1372 November 29, 2012 Board of Trustees City of Clearwater Employees' Pension Plan Clearwater, Florida Re: Experience Study for the Five-Year Period Ending December 31, 2011 Dear Trustees: Attachment number 1 \nPage 3 954.527.161b pl�one 954.525.a(}83 fax svww. ga h rie l roecl e r. ca m Gabriel, Roeder, Smith & Company is pleased to provide the results of our experience investigation for the City of Clearwater Employees' Pension Plan. The period covered by this study is January 1, 2007 through December 31, 2011. Based upon the results, certain changes in actuarial assumptions for valuation purposes are recommended. The Table of Contents, which immediately follows, sets out the material contained in this report. This Report was prepared at the request of the Board and is intended for use by the Retirement System and those designated or approved by the Board. This Report may be provided to parties other than the Plan only in its entirety and only with the permission of the Board. The purpose of this Report is to evaluate the assumptions and methods used for the January 1, 2012 Actuarial Valuation, and to describe the �nancial effect of the recommended assumption and method changes based on our findings. This Report should not be relied on for any purpose other than the purpose described above. The study was performed on the basis of participant data and financial information supplied by the City in connection with the valuations performed during the years studied. We checked for internal and year-to-year consistency, but did not otherwise audit this data. We are not responsible for the accuracy or completeness of the information provided by the City. The enclosed calculations are based upon the Plan provisions as summarized in the January 1, 2012 Actuarial Valuation Report, but also reflecting the amendments passed in the November 6, 2012 referendum (as summarized in our Actuarial Impact Statement dated March 13, 2012). If you have reason to believe the assumptions used are unreasonable, the Plan provisions are incorrectly described or referenced, or that important Plan provisions relevant to this study are not described, you should contact the undersigned prior to relying on this information. Item # 6 GRS Gabriel R�ed�r Smith & Camgany Attachment number 1 \nPage 4 The m�asurement date used tor calGUlatin� the finan�ial effect c�f the as5timption and method change5 w��s Jan�iary I, L012. Future actuari�l measurerrle��ts r7i�y diffcr �ignifica�itly= frcain tt�c currcnt rneasurertlents t.�reseiitecf in this Report due to such facterrs as the Follow�in�: plar� e:�perier7e;e differing fr�rn t}iat antici�ate�3 �y the ece�n�3mic c�r dern�gra}�hic a5s��mpCi��s; change5 i�i ecanomiL c�r c�erna�raphic ass�irnptit�ns; incre�scs or dccrca5c5 �x�ceted as pai�t of the n��tt��-al o�e�-a#i�n of khe rY�ethorlc�lcs�y uscd fe�r these measureinent� {s�:c:h as the eY�d oi' an anlc�rti�atiari �eriocl or acic�itir�nal cast �r car7trihutiflr� requirelnent5 hascd �n the plan's ftrnded status}; and chaii�es iiY plan pr�visic�ns oa- ap�licahle l��w. The unc�er5igiteci act�tarie� are memYs�rs t�f t17e Arncracan A�ademy �f Aetuar�es �nci meet the Qualification Standards of the Ameri�at� Acaciemy of Actttaz�ies t� t�ender the actuari�l ��ainic,ns cniitaincd hereir7. The signirT� actuaries are in�iepencient of the plan spansor. This RepUrt has heen prepared by aet�iaries wh0 �7c�VC SUt]S�a1lI]�tI L'X�7Ci1C11CC Vc��L11I1� �lL1�l�iC er�ap3c�ycc rctiremcnt systerns. To the best Uf aui• klZawle��e the infr�rrnacio�� c�nt.air�ed in chis report is aceurate at�d fairly present.s the actuarial p�sition of the Plan as of the ualuation eiate. A1] calc:ulati�n5 ha�e been 1na�e in conforrnity with �ei�cra]]y accepted a�tuar'ral principles an�l practiccs, ��ith the Ar:tuarial Standarcls c�f Practi�e issued by the Actuarial Stan�lards B�arcl and with applicabl� �tatutes. Respectfully submitt.ed, GABRIEL, R(7EDER, SMITH & COMPANY � ) � `7 � - +r +� i B� ;.'�. .� 'v �`�... ., �� i"�'L 'l�•-,r.�� - -t,_,. � - ��t- $,7 . Step ecl P�alniyuist, AS , MAAA, F'G'A eter N. 5trc�n�, ASA, M , FCA Enr�llc� Actuary Nc�. 11- 56[] Enr�ll�rl Actuary N�. 11-�i�75 � �� Gabriel I�neder Smixh � Campany CITY OF CLEARWATER EMPLOYEES' PENSION PLAN FIVE-YEAR EXPERIENCE INVESTIGATION Item TABLE OF CONTENTS Summary of Findings Experience Investigation Results Methodology Basic Results and Conclusions Rates of Salary Increase Rates of Retirement Rates of Mortality Rates of Termination Rates of Disability Investment Return and Wage Growth Appendices Table I: Comparison of Actual and Expected Annual Salaries Table II: Comparison of Actual and Expected Retirements Table III: Comparison of Actual and Expected Terminations Table IV: Comparison of Actual and Expected Disabilities Purpose of an Actuarial Valuation Role of the Actuarial Assumptions GRS Gabricl Racder 5mith & Campany Attachment number 1 \nPage 5 Page No. 1 3 3 4 4 5 6 7 10 11 15 17 18 21 22 22 Attachment number 1 \nPage 6 CITY OF CLEARWATER EMPLOYEES' PENSION PLAN EXPERIENCE INVESTIGATION SUMMARY OF FINDINGS The five-year period (January 1, 2007 to December 31, 2011) covered by this experience investigation provided sufficient data to form a basis far recommending updates in the following demographic and financial assumptions used in the actuarial valuation of the Pension Plan. Recommended changes in actuarial assumptions resulting from this experience investigation, including the anticipated impact on City contributions as a dollar amount and a percentage of expected 2012 covered payroll ($72,791,074) are summarized below. (Note: the amortization period for the change in accrued liability resulting from the assumption changes was 30 years.) For comparison purposes, the required City contribution far the fiscal year ending September 30, 2013 (after reflecting the amendments passed in the November 6, 2012 referendum, as summarized in our Actuarial Impact Statement dated March 13, 2012) is $16,987,91 l, or 23.3�% of covered payroll. The amendment reduced the required City contribution by $3,925,809, or 5.39% of covered payroll. The funded ratio after reflecting the amendments is 97.6% based on the current assumptions (versus 94.5% before reflecting the amendments). • Update the future salary increase assumption to reflect observed higher salary increases for shorter service members and lower salary increases for longer service members. �. � � $3,000,246) or (4.12%) of covered a roll • Update assumed rates of future employment termination based on actual experience (to reflect generally lower observed withdrawal experience than expected and to reflect observed differences in withdrawal experience between male and female non-hazardous duty members). �. � � +$389,440 or 0.53% of covered a roll � Update assumed rates of future retirement to reflect lower observed retirement experience and a trend for some employees to work beyond age 65. �, i i ($666,316) or (0.92%) of covered pa roll Item # 6 GRS�Ga6riel R.oeder 5mnth & Cc�mpany - 1- Attachment number 1 \nPage 7 CITY OF CLEARWATER EMPLOYEES' PENSION PLAN EXPERIENCE INVESTIGATION SUMMARY OF FINDINGS (CONTINUED) • Update assumed rates of future disability based on actual experience (to reflect higher observed disability experience than expected for hazardous duty members and lower observed disability experience than expected for non-hazardous duty members). �. i � +$6,401 or 0.01 % of covered a roll • Reflect current and future full generational mortality improvements in assumed mortality rates and set mortality rates forward five years for disability retirees. �, � � +$3,714,699 or 5.10% of covered a roll • Lower the expected investment return assumption from 7.50% gross to 7.00% net of investment expenses. �, i i +$1,092,780 or 1.50% of covered a roll • Combined effect of all assumption changes except lowering the expected investment return assumption. �. � � +$374,245 or 0.51 % of covered a roll • Combined effect of all assumption changes including lowering the expected investment return assumption to 7.00% net of expenses. �, i � +$1,664,698 or 2.28% of covered ayroll Note: The sum of the individual cost impacts does not equal the impact of all changes combined. This is due to the interaction of Plan provisions and actuarial assumptions with one another and the effect that one assumption change can have on the impact of another assumption change. Item # 6 GRS�Ga6riel R.oeder 5mnth & Cc�mpany - 2- Attachment number 1 \nPage 8 CITY OF CLEARWATER EMPLOYEES' PENSION PLAN EXPERIENCE INVESTIGATION RESULTS The methodology, basic results and conclusions of the five-year experience investigation of the actuarial assumptions are described below. Methodology The expected salaries at the end of each year were obtained by use of the salary scale assumption (currently 6.0% per year) used in the January 1, 2012 actuarial valuation. The resulting expected salaries were then compared with the actual salaries reported. The number of inembers exposed to risk during each period was tabulated (exposure) and the expected incidence of termination (separation of inembers not eligible for early or normal retirement), retirement and disability were obtained by use of the termination, retirement and disability rates employed in the most recent actuarial valuation. The actual number of terminations, retirees and disabilities was tabulated and compared with those expected. The published mortality table used as the basis for the rates of mortality used in the most recent actuarial valuation (RP 2000 Combined Healthy Participant Mortality Table for males and females) was reviewed in connection with the latest published tables to determine the continued adequacy of the current mortality assumptions. Finally, an evaluation of the Plan's investment return assumption was conducted, using forward- looking capital market assumptions (of expected investment returns and volatilities for various asset classes) collected from eight different investment consultants. Item # 6 GRS�Ga6riel R.oeder 5mnth & Cc�mpany - 3- CITY OF CLEARWATER EMPLOYEES' PENSION PLAN EXPERIENCE INVESTIGATION RESULTS Basic Results and Conclusions Rates of Salary Increase Attachment number 1 \nPage 9 Observed rate of pay increases were higher than expected in the first few years of service and lower than those expected in later years of service based upon the current assumptions. Compensation increases during the first year was not included in the analysis, due to large fluctuations in pay and incomplete data. We propose the total rate of salary increase with components as follows. Actual versus expected experience is shown in the Appendix on pages 15-16. SALARY INCREASE ASSUMPTION - HAZARDOUS EMPLOYEES Current Salary Increase Rates Proposed Salary Increase Rates Years Promotion, Total Promotion, Total of Assumed Productivity Current Assumed Productivity Proposed Service Inflation & Seniority Rates Inflation & Seniority Rates 1 3.00°/a 3.00% 6.00°/a 2.50% 5.40°/a 7.90% 2 3.00°/a 3.00% 6.00°/a 2.50% 5.20°/a 7.70% 3 3.00°/a 3.00% 6.00°/a 2.50% 4.50°/a 7.00% 4 3.00°/a 3.00% 6.00°/a 2.50% 2.75°/a 5.25% 5- 14 3.00°/a 3.00% 6.00°/a 2.50% 1.75°/a 4.25% 15 & Over 3.00% 3.00% 6.00% 2.50% 1.00% 3.50% SALARY INCREASE ASSUMPTION - NON-HAZARDOUS EMPLOYEES Current Salary Increase Rates Proposed Salary Increase Rates Years Promotion, Total Promotion, Total of Assumed Productivity Current Assumed Productivity Proposed Service Inflation & Seniority Rates Inflation & Seniority Rates 1 3.00% 3.00% 6.00% 2.50% 5.40% 7.90% 2 3.00°/a 3.00% 6.00°/a 2.50% 3.25°/a 5.75% 3 3.00°/a 3.00% 6.00°/a 2.50% 2.50°/a 5.00% 4 3.00°/a 3.00% 6.00°/a 2.50% 2.00°/a 4.50% 5- 9 3.00°/a 3.00% 6.00°/a 2.50% 1.50°/a 4.00% 10 & Over 3.00% 3.00% 6.00% 2.50% 1.00% 3.50% Item # 6 GRS�Ga6riel R.oeder 5mnth & Cc�mpany - 4- Attachment number 1 \nPage 1� CITY OF CLEARWATER EMPLOYEES' PENSION PLAN EXPERIENCE INVESTIGATION RESULTS Rates of Retirement The observed number of retirements was lower than that expected under the assumed rates of retirement used in the January 1, 2012 actuarial valuation. Observed experience indicates that some hazardous members work beyond age 60 and some non-hazardous members work beyond age 70. The current and proposed retirement rates are shown in the following tables. Actual versus expected experience is shown in the Appendix on page 17. RETIREMENT RATES - HAZARDOUS EMPLOYEES Years of Expected Expected Service Age Current Proposed 10 - 19 50 - 59 20% 10% 60 - 64 100% 50% 65 & Over 100% 100% 20 & Over Under 45 15°/a 20% 45 - 49 15°/a 15% 50 - 54 20°/a 25% 55 - 59 35°/a 35% 60 - 64 100% 50% 65 & Over 100% 100% RETIREMENT RATES - NON-HAZARDOUS EMPLOYEES Years of Expected Expected Service Age Current Proposed ] 0- 19 65 - 69 35°/a 45% 70 - 74 100% 50% 75 & Over 100% ] 00% 20 - 29 55 - 59 30°/a 20% 60 - 64 30% 25% 65 - 69 75% 45% 70 & Over 100% 100% 30 & Over Under 55 20% 40% 55 - 64 25% 40% 65 - 69 75°/a 50% 70 & Over 100% 100% Item # 6 GRS�Ga6riel R.oeder 5mnth & Cc�mpany - 5- Attachment number 1 \nPage 1 CITY OF CLEARWATER EMPLOYEES' PENSION PLAN EXPERIENCE INVESTIGATION RESULTS Rates of Mortality We propose that the assumed healthy mortality rates, which are currently based upon the rates from the RP 2000 Combined Healthy Participant Mortality Table with separate rates for males and females, be updated to include future mortality improvements using Scale BB, making the table a fully generational mortality table. We also propose that for disability retirees the assumed mortality rates described above be set forward five years to reflect impaired longevity. LIFE EXPECTANCY COMPARISON (Current versus Proposed Mortality Assumption) Current Assumption Proposed Assumption Proposed Assumption RP 2000 RP 2000 (Generational) RP 2000 (Generational) (Not Generational) Base Year 2012 Base Year 2022 Age Male Female Male Female Male Female 40 80.3 83.2 85.6 88.1 86.7 89.1 45 80.5 83.4 85.4 87.8 86.4 88.8 50 80.8 83.6 85.1 87.6 86.2 88.6 55 81.2 83.9 85.0 87.4 86.1 88.4 60 81.7 84.4 85.0 87.4 86.2 88.4 65 82.6 85.1 85.4 87.7 86.5 88.6 70 83.9 86.2 86.1 88.3 87.1 89.2 Item # 6 GRS�Ga6riel R.oeder 5mnth & Cc�mpany - 6- Attachment number 1 \nPage 1 CITY OF CLEARWATER EMPLOYEES' PENSION PLAN EXPERIENCE INVESTIGATION RESULTS Rates of Employment Termination The actual number of terminations was lower than the number of expected terminations for hazardous members and non-hazardous male members, but was higher than the number of expected terminations for non-hazardous female members. Since experience varies by both age and years of service, we propose select and ultimate rates of termination, with a three-year select period for hazardous members and a five-year select period for non-hazardous members. Also, since experience for non-hazardous members differs between males and females, our proposed rates for non-hazardous members vary by gender. The current and proposed termination rates are shown in the following tables. Actual versus expected experience is shown in the Appendix on pages 18-20. WITHDRAWAL RATES HAZARDOUS EMPLOYEES - Males and Females Years of Service Age Current Rates Proposed Rates Under 1 Under 30 7.5% 12.8% 30 - 54 3.0°/a 12.8% 55 & Over 0.0% 12.8% 1 Under 30 7.5% 5.7% 30 - 54 3.0°/a 5.7% 55 & Over 0.0% 5.7% 2 Under 30 7.5% 4.8% 30 - 54 3.0°/a 4.8% 55 & Over 0.0% 4.8% 3& Over Under 30 7.5% 4.0% 30 - 49 3.0% 1.0% 50 - 54 3.0% 0.0% 55 & Over 0.0% 0.0% Item # 6 GRS�Ga6riel R.oeder 5mnth & Cc�mpany - 7- Attachment number 1 \nPage 1 Rates of Employment Termination (Continued) WITHDRAWAL RATES NON-HAZARDOUS EMPLOYEES - Males Years of Service Age Current Rates Proposed Rates Under 1 Under 30 25.0% 25.0°/a 30 - 34 15.0% 20.0% 35 - 49 15.0% 15.0% 50 - 59 15.0% 10.0% 60 & Over 0.0% 5.0% 1 Under 30 25.0% 15.0% 30 - 49 12.5% 15.0% 50 - 59 5.0% 15.0% 60 & Over 0.0% 10.0% 2 Under 25 25.0% 10.0% 25 - 29 20.0% 10.0% 30 - 44 10.0% 10.0% 45 - 49 10.0% 5.0% 50 - 59 5.0°/a 5.0% 60 & Over 0.0% 5.0% 3 Under 25 20.0% 15.0% 25 - 29 15.0% 12.5% 30 - 34 8.0°/a 12.5% 35 - 39 8.0°/a 5.0% 40 - 44 5.0°/a 5.0% 45 - 59 4.0°/a 5.0% 60 & Over 0.0% 5.0% 4 Under 25 20.0% 15.0% 25 - 29 15.0% 15.0% 30 - 39 8.0°/a 10.0% 40 - 44 5.0% 10.0% 45 - 59 4.0°/a 5.0% 60 & Over 0.0% 5.0% 5& Over Under 25 20.0% 12.5% 25 - 29 15.0% 12.5% 30 - 34 8.0°/a 7.0% 35 - 39 8.0% 6.0% 40 - 44 5.0% 5.0% 45 - 49 4.0% 3.5% 50 - 54 4.0% 4.0% 55 - 59 4.0°/a 5.0% 60 & Over 0.0°/a 7.5% Item # 6 GRS�Ga6riel R.oeder 5mnth & Cc�mpany - 8- Attachment number 1 \nPage 1� Rates of Employment Termination (Continued) WITHDRAWAL RATES NON-HAZARDOUS EMPLOYEES - Females Years of Service Age Current Rates Proposed Rates Under 1 Under 25 25.0% 35.0% 25 - 29 25.0% 30.0% 30 - 34 15.0% 30.0% 35 - 39 15.0% 25.0% 40 - 49 15.0% 20.0% 50 - 59 15.0% 15.0% 60 & Over 0.0% 5.0% 1 Under 30 25.0% 25.0% 30 - 49 12.5% 15.0% 50 - 59 5.0% 15.0% 60 & Over 0.0% 10.0% 2 Under 25 25.0% 15.0% 25 - 29 20.0% 15.0% 30 - 44 10.0% 15.0% 45 - 49 10.0% 7.5°/a 50 - 59 5.0% 7.5% 60 & Over 0.0% 6.5% 3 Under 25 20.0% 20.0% 25 - 29 15.0% 20.0% 30 - 39 8.0% 10.0% 40 - 44 5.0% 10.0% 45 - 59 4.0% 10.0% 60 & Over 0.0% 5.0% 4 Under 25 20.0% 15.0% 25 - 29 15.0% 15.0% 30 - 34 8.0% 12.5% 35 - 39 8.0% 10.0% 40 - 44 5.0% 10.0% 45 - 59 4.0% 5.0°/a 60 & Over 0.0% 5.0°/a 5& Over Under 25 20.0% 7.5% 25 - 29 15.0% 7.5% 30 - 39 8.0% 6.5°/a 40 - 44 5.0% 5.0% 45 - 59 4.0% 4.0°/a 60 & Over 0.0% 4.0% Item # 6 GRS�Ga6riel R.oeder 5mnth & Cc�mpany - 9- Attachment number 1 \nPage 1 CITY OF CLEARWATER EMPLOYEES' PENSION PLAN EXPERIENCE INVESTIGATION RESULTS Rates of Disability The actual number of disabilities was higher than the number of expected disabilities for hazardous members, but was lower than the number of expected disabilities for non-hazardous members. The current and proposed disability rates are shown in the following tables. Actual versus expected experience is shown in the Appendix on page 21. DISABILITY RATES - HAZARDOUS EMPLOYEES Expected Current Rates Expected Proposed Rates Age Males Females Males Females 20 0.17% 0.34% 0.25% 0.375°/a 25 0.17% 0.34% 0.25% 0.375°/a 30 0.17% 0.34% 0.25% 0.375% 35 0.18% 0.36% 0.30% 0.450°/a 40 0.20% 0.40% 0.40% 0.600% 45 0.23% 0.46% 0.50% 0.750°/a 50 0.29% 0.58% 0.55% 0.825°/a 55 0.39% 0.78% 0.60% 0.900°/a 60 0.59% 1.18% 0.75% 1.125% 65 1.04% 2.08% 1.00% 1.500°/a 70 1.74% 3.48% 1.75% 2.625°/a DISABILITY RATES - NON-HAZARDOUS EMPLOYEES Expected Current Rates Expected Proposed Rates Age Males Females Males Females 20 0.17% 0.34% 0.05% 0.05% 25 0.17% 0.34% 0.05% 0.05% 30 0.17% 0.34% 0.05% 0.05% 35 0.18% 0.36% 0.06% 0.06% 40 0.20% 0.40% 0.07% 0.07% 45 0.23% 0.46% 0.09% 0.09% 50 0.29% 0.58% 0.12% 0.12% 55 0.39% 0.78% 0.17% 0.17% 60 0.59% 1.18% 0.27% 0.27% 65 1.04% 2.08% 0.42% 0.42% 70 1.74% 3.48% 0.67% 0.67% Item # 6 GRS �Ga6riel R.oeder 5mnth & Cc�mpany - 10 - Attachment number 1 \nPage 1� CITY OF CLEARWATER EMPLOYEES' PENSION PLAN EXPERIENCE INVESTIGATION RESULTS Investment Return and Wage Growth Economic assumptions include long-term rates of investment return and inflation (the across- the-board portion of salary increases). Unlike demographic activities, economic activities do not lend themselves to analysis solely on the basis of internal historical patterns because both salary increases and investment return are more affected by external forces; namely inflation (both wage and price), general productivity changes and the local economic environment which defy accurate long-term prediction. Estimates of economic activities are generally selected on the basis of the expectations in an inflation-free environment and then both are increased by some provision for long-term inflation. If inflation and/or productivity increases are higher than expected, it will probably result in both actual rates of salary increases and investment return which exceed the assumed rates. Salaries increasing faster than expected produce unexpected higher liabilities. Investment return exceeding the assumed rates (whether due to manager performance, change in the mix of assets, or general market conditions) results in unanticipated higher assets. To the extent that inflation, productivity, and other factors have about the same effect on both sides of the balance sheet, these additional assets and liabilities can offset one another over the long-term. Wage Inflation. The average rate of increase in National Average Earnings over the past 50 years is higher than the current 3.0% assumption. The difference between the long-term averages and more recent experience is related to the excess rates of price and wage inflation during the 1970s, which most observers do not expect to see repeated. When the decade of high inflation is factored out, long term national averages remain just above the current 3.0% assumption. Investment Return and Spread. The current asset portfolio for the retirement program is a diversified mix of equity, fiXed income and other investments. Real market returns (the spread between recognized net investment return and wage inflation) for balanced portfolios have averaged 3.9% over the past 50 years. Only hindsight will tell whether a particular combination of economic assumptions is optimaL If future economic patterns are as favorable as in the 1980's and 1990's, this spread would prove to be conservative. If, on the other hand, the investment markets produce lower real returns, contribution rate increases will become likely at some future date. Item # 6 GRS �Ga6riel R.oeder 5mnth & Cc�mpany - 11 - Attachment number 1 \nPage 1 CITY OF CLEARWATER EMPLOYEES' PENSION PLAN EXPERIENCE INVESTIGATION RESULTS Investment Return and Wage GYOwth (Continued) The current real gross return assumption for the pension valuation is 4.5% (7.5% nominal gross return less 3.0% inflation). INVESTMENT RETURN EXPERIENCE Year Investment Actual Market Ending Yield Value Yield 1 12/31/2011 7.50% (0.32%) 12/31/2010 7.50% 17.50°/a 12/31/2009 7.50% 30.93% 12/31/2008 7.50% (27.01%) 12/31/2007 7.50% 7.29% 12/31/2006 7.50% 11.80% 12/31/2005 7.50% 6.67% 12/31/2004 7.50% 9.73% 12/31 /2003 7.50% 20.08% 12/31/2002 7.50% (8.83%) Last 3 Years 7.50% 15.32% Last 5 Years 7.50°/o 3.73% Last 10 Years 7.50% 5.58% Last 26 Years N/A 9.10% Yield calculated as 2U(A+B-� It must be recognized that the investment return assumption is of a long-term nature. Short-term periods should not overly influence its level. The current assumed rate of return is 7.50°/o gross of investment related fees. Investment related expenses are approximately 0.52% of assets which means that the expected net return is approximately 6.98%. If investment returns fall short of the assumption for an extended number of years, losses will tend to push up the required contribution. Based on this, it may be more realistic to lower the assumed rate for purposes of the actuarial valuation. A lower rate will result in a higher probability of ineeting the assumption and smaller actuaria] losses when the assumption is not realized. Item # 6 GRS �Ga6riel R.oeder 5mnth & Cc�mpany - 12 - Attachment number 1 \nPage 1 CITY OF CLEARWATER EMPLOYEES' PENSION PLAN EXPERIENCE INVESTIGATION RESULTS Investment Return and Wage Growth (Continued) Actuarial Standard of Practice (ASOP) No. 27 defines a range of reasonableness as lying between the 25th percentile and 75th percentile of expected returns. We would not be able to use an assumed return outside of this range and adhere to the current ASOP governing this assumption. There is currently a proposed revision of the ASOP which will lilcely result in a narrower range. These tables set forth the results of an analysis made of expected investment yields based on the target allocation of assets held under the City of Clearwater Employees' Pension Plan. Investment Expected Standard Consultant Investment Expected Nominal Deviation Expected Alpha for Consultant Expected Prospective Nominal Active Return Net of Expected Investment Nominal Active Inflation Real Return Inflation Return Management of Expenses Return Consultant Return Mana ement Assum tion (2)+(3)-(4) Assumption (5)+(6) Ex enses (7)-(8) (1-Year) ��) (�) (3) (4) (5) (6) ��) �g) �9) ��) 1 6.50% 0.42% 2.50% 4.42% 2.50% 6.92% 0.42% 6.50% 12.00% 2 7.27% 0.42% 3.00% 4.69% 2.50% 7.19% 0.42% 6.77% 11.80% 3 7.21% 0.42% 2.50% 5.13% 2.50% 7.63% 0.42% 7.21% 11.90% 4 8.14% 0.42% 3.26% 5.30% 2.50% 7.80% 0.42% 7.38% 14.00% 5 7.42% 0.42% 2.40% 5.44% 2.50% 7.94% 0.42% 7.52% 10.40% 6 7.89% 0.42% 2.50% 5.81 % 2.50% 8.31 % 0.42% 7.89% 12.60% 7 7.97% 0.42% 2.50% 5.89% 2.50% 8.39% 0.42% 7.97% ]2.80% 8 8.1 1% 0.42% 2.16% 6.36% 2.50% 8.86% 0.42% 8.44% 13.00% Average 7.56°/u 0.42°/u 2.60°/u 5.38°/u 2.50% 7.88% 0.42% 7.46% 12.31% Distribution of 20-Year Average Probability Probability Probability Investment Geometric Net Nominal Return of exceeding of exceeding of exceeding Consultant 25th SOth 75th 7.00% 7.25% 6.75% (1) (�) �3) (4) (5) (6) (�) 1 4.05% 5.82% 7.62% 32.9% 29.6% 36.4% 2 4.36% 6.11% 7.89% 36.7% 33.2% 40.3% 3 4.77% 6.53% 8.33% 43.0°/a 39.4% 46.8% 4 4.40% 6.46% 8.56% 43.1% 39.9% 46.3% 5 5.47% 7.01% 8.57% 50.1% 45.8% 54.5% 6 5.29% 7.15% 9.04% 52.1% 48.6% 55.7% 7 5.30% 7.20% 9.13% 52.8°/a 49.2% 56.3% 8 5.72% 7.65% 9.61% 58.9% 55.5% 62.3% Average 4.92% 6J4% 8.60°/a 46.2% 42J% 49.8% Item # 6 GRS �Ga6riel R.oeder 5mnth & Cc�mpany - 13 - Attachment number 1 \nPage 1 CITY OF CLEARWATER EMPLOYEES' PENSION PLAN EXPERIENCE INVESTIGATION RESULTS Investment Return and Wage Growth (Continued) We recommend a decrease in the annual investment return assumption to 7.00% net of investment expenses and a decrease in the annual inflation assumption to 2.50%. If the investment return assumption is lowered to 7.00%, there would still be a 53.8% chance of failing to meet the assumed return over a 20-year period. This recommendation should be reviewed again if the asset allocation is changed significantly. It is also very important for the Board to seek advice of the Plan's investment consultant on this matter. Item # 6 GRS �Ga6riel R.oeder 5mnth & Cc�mpany - 14 - Attachment number 1 \nPage 2� CITY OF CLEARWATER EMPLOYEES' PENSION PLAN APPENDIX TABLE I COMPARISON OFACTUAL AND EXPECTED ANNUAL MEMBER SALARIES ANNUAL SALARY INCREASES - HAZARDOUS EMPLOYEES By Years of Service Years of Service Prior Year Expected % Incr Actual % Incr Proposed 1 $6,025,530 $6,387,062 6.00°/a $6,483,005 7.59% 7.90% 2 6,653,165 7,052,355 6.00°/a 7,141,392 7.34% 7.70% 3 7,845,489 8,316,219 6.00°/a 8,364,924 6.62% 7.00% 4 7,326,164 7,765,734 6.00°/a 7,684,480 4.89% 5.25% 5- 14 60,118,563 63,725,676 6.00°/a 62,476,747 3.92% 4.25% 15 & Over 39,723,150 42,106,539 6.00°/a 40,635,ll9 2.30% 3.50% Total 127,692,061 135,353,585 6.00% 132,785,667 3.99% 4.60% ANNUAL SALARY INCREASES - HAZARDOUS EMPLOYEES By Attained Age (For Informational Purposes only) Age Prior Year Expected % Incr Actual % Incr Under 30 $14,276,884 $15,133,497 6.00% $15,329,295 7.37% 30 - 34 22,769,648 24,135,827 6.00% 23,920,771 5.06% 35 - 39 33,955,685 35,993,026 6.00% 35,386,488 4.21 % 40 - 44 29,932,586 31,728,541 6.00% 30,833,725 3.01% 45 - 49 15,939,704 16,896,087 6.00% 16,348,539 2.56% 50 & Over 10,817,554 11,466,607 6.00% 10,966,849 1.38% Total 127,692,061 135,353,585 6.00% 132,785,667 3.99% Item # 6 GRS �Ga6riel R.oeder 5mnth & Cc�mpany - 15 - Attachment number 1 \nPage 2 CITY OF CLEARWATER EMPLOYEES' PENSION PLAN APPENDIX TABLE I (Continued) COMPARISON OFACTUAL AND EXPECTED ANNUAL MEMBER SALARIES ANNUAL SALARY INCREASES - NON-HAZARDOUS EMPLOYEES By Years of Service Years of Service Prior Year Expected % Incr Actual % Incr Proposed 1 $8,921,366 $9,456,648 6.00°/a $9,598,648 7.59% 7.90% 2 9,686,658 10,267,858 6.00% 10,207,788 538% 5.75% 3 9,605,789 10,182,137 6.00°/a 10,051,752 4.64% 5.00% 4 9,442,097 10,008,622 6.00% 9,818,257 3.98% 4.50% 5- 9 41,524,017 44,015,458 6.00°/a 42,991,967 3.54% 4.00% 10 & Over 120,977,460 128,236,108 6.00% 123,623,298 2.19% 3.50% Total 200,157,387 212,166,831 6.00°/a 206,291,710 3.06% 4.03% ANNUAL SALARY INCREASES - NON-HAZARDOUS EMPLOYEES By Attained Age (For Informational Purposes only) Age Prior Year Expected % Incr Actual % Incr Under 30 $13,987,857 $14,827,128 6.00% $14,899,392 6.52% 30 - 34 13,184,066 13,975,110 6.00% 13,760,631 4.37% 35 - 39 17,240,226 18,274,640 6.00% 17,886,016 3.75% 40 - 44 28,831,057 30,560,920 6.00% 29,761,903 3.23% 45 - 49 41,345,362 43,826,084 6.00% 42,475,346 2.73% 50 & Over 85,568,819 90,702,949 6.00% 87,508,422 2.27% Total 200,157,387 212,166,831 6.00% 206,291,710 3.06% Item # 6 GRS �Ga6riel R.oeder 5mnth & Cc�mpany - 16 - Attachment number 1 \nPage 2 CITY OF CLEARWATER EMPLOYEES' PENSION PLAN APPENDIX TABLE II COMPARISON OF ACTUAL AND EXPECTED RETIREMENTS RETIREMENT EXPERIENCE - HAZARDOUS EMPLOYEES Current Proposed Expected Years of Assumed Expected Actual Actual Retirement Retirements Service Age Exposure Rates Ret.'s Ret.'s Rates Rates (New Rates) 10 - 19 50 - 59 50 20% 10.0 3 6.0% 10% 5.0 60 - 64 3 100°/a 3.0 0 0.0% 50% 1.5 65 & Over 0 100% 0.0 0 N/A 100% 0.0 20 + Under 45 41 15% 6.2 9 22.0% 20% 8.2 45 - 49 123 15% 18.5 18 14.6% 15°/a 18.5 50 - 54 85 20% 17.0 22 25.9% 25% 21.2 55 - 59 34 35% ll.9 12 35.3% 35% 11.9 60 - 64 4 100% 4A 2 50.0% 50% 2.0 65 & Over 0 100% 0.0 0 N/A 100% 0.0 Total 340 20.8% 70.6 66 19.4% 20.1% 68.3 RETIREMENT EXPERIENCE - NON-HAZARDOUS EMPLOYEES Current Proposed Expected Years of Assumed Expected Actual Actual Retirement Retirements Service Age Exposure Rates Ret.'s Ret.'s Rates Rates (New Rates) 10 - 19 65 - 69 44 35% 15.4 20 45.5% 45% 19.8 70 - 74 11 100°/a 11.0 3 27.3% 50°/a 5.5 75 & Over 7 100% 7.0 1 14.3% 100% 7.0 20 - 29 55 - 59 206 30% 61.8 33 16.0% 20% 41.2 60 - 64 120 30% 36.0 28 233% 25% 30.0 65 - 69 17 75% 12.8 7 41.2% 45% 7.7 70 & Over 7 100% 7.0 4 57.1% 100% 7.0 30 + Under 55 29 20% 5.8 14 483% 40% 11.6 55 - 64 61 25% 15.3 26 42.6% 40°/a 24.4 65 - 69 2 75% 1.5 1 50.0% 50% 1.0 70 & Over 0 100% 0.0 0 N/A 100% 0.0 Total 504 34.4% 173.6 137 27.2°/a 30.8% 155.2 Item # 6 GRS �Ga6riel R.oeder 5mnth & Cc�mpany - 17 - Attachment number 1 \nPage 2 CITY OF CLEARWATER EMPLOYEES' PENSION PLAN APPENDIX TABLE III COMPARISON OF ACTUAL AND EXPECTED TERMINATIONS WITHDRAWAL EXPERIENCE - HAZARDOUS EMPLOYEES (Males and Females) Years of Expected Actual Expected Withdrawals Service Age Exposure Withdrawals Withdrawals (with Proposed Rates) Under 1 All Ages 47 2.72 6 6.0 1 All Ages 123 6.90 7 7.0 2 All Ages 126 632 6 6.0 3& Over Under 30 155 11.62 6 6.2 30 - 49 1,368 41.04 13 13.7 50 & Over 27 0.66 0 0.3 Total 1,846 69.26 38 39.2 Item # 6 GRS �Ga6riel R.oeder 5mnth & Cc�mpany - 18 - Attachment number 1 \nPage 2� CITY OF CLEARWATER EMPLOYEES' PENSION PLAN APPENDIX TABLE III (Continued) COMPARISON OF ACTUAL AND EXPECTED TERMINATIONS WITHDRAWAL EXPERIENCE - NON-HAZARDOUS EMPLOYEES (Males) Years of Expected Actual Expected Withdrawals Service Age E�rposure Withdrawals Withdrawals (with Proposed Rates) Under 1 Under 30 71 17.75 17 17.75 30 - 34 18 2.70 4 3.60 35 - 49 59 8.85 9 8.85 50 - 59 13 1.95 1 1.30 60 & Over 4 0.00 0 0.20 1 Under 60 241 39.80 34 36.15 60 & Over 4 0.00 1 0.40 2 Under 45 182 29.85 16 18.20 45 & Over 58 3.50 1 2.90 3 Under 25 27 5.40 4 4.05 25 - 34 86 10.80 11 10.75 35 & Over 131 6.16 6 6.55 4 Under 30 65 10.50 8 9.75 30 - 44 92 6.61 11 9.20 45 & Over 78 2.48 4 3.90 5& Over Under 30 80 12.25 9 10.00 30 - 34 175 14.00 12 12.25 35 - 39 238 19.04 ] 2 14.28 40 - 44 369 18.45 18 18.45 45 - 49 547 21.88 16 19.14 50 - 54 687 27.48 27 27.48 55 - 59 208 8.32 13 10.40 60 & Over 148 0.00 19 1110 Total 3,581 267.77 253 256.65 Item # 6 GRS �Ga6riel R.oeder 5mnth & Cc�mpany - 19 - Attachment number 1 \nPage 2 CITY OF CLEARWATER EMPLOYEES' PENSION PLAN APPENDIX TABLE III (Continued) COMPARISON OF ACTUAL AND EXPECTED TERMINATIONS WITHDRAWAL EXPERIENCE - NON-HAZARDOUS EMPLOYEES (Females) Years of Expected Actual Expected Withdrawals Service Age E�rposure Withdrawals Withdrawals (with Proposed Rates) Under 1 Under 25 15 3.75 6 5.25 25 - 34 29 5.85 9 8.70 35 - 39 7 1.05 2 1.75 40 - 49 17 2.55 4 3.40 50 - 59 13 1.95 2 1.95 60 & Over 2 0.00 0 0.10 1 Under 30 40 10.00 ] 0 10.00 30 - 59 77 8.42 11 11.55 60 & Over 9 0.00 4 0.90 2 Under 45 79 11.35 12 11.85 45 - 59 35 2.85 2 2.63 60 & Over 6 0.00 1 0.39 3 Under 30 26 4.20 6 5.20 30 - 59 88 4.8'7 9 8.80 60 & Over 5 0.00 1 0.25 4 Under 30 18 2.95 3 2.70 30 - 34 15 1.20 2 1.87 35 - 44 27 1.68 3 2.70 45 & Over 48 1.80 3 2.40 5& Over Under 30 36 5.70 2 2.70 30 - 39 142 11.36 9 9.23 40 - 44 178 8.90 9 8.90 45 & Over 858 33.68 34 34.32 Total 1,770 12411 144 137.54 Item # 6 GRS �Gabriel R.oeder 5mnth & Cc�mpany - 20 - Attachment number 1 \nPage 2� CITY OF CLEARWATER EMPLOYEES' PENSION PLAN APPENDIX TABLE IV COMPARISON OF ACTUAL AND EXPECTED DISABILITIES DISABILITY EXPERIENCE - HAZARDOUS EMPLOYEES Average Expected Expected Expected Actual Actual Proposed Disabilities Gender Exposure Disabilities Avg Rates Disabilities Rates Rates (New Rates) Males 1,989 4.29 0.216% 8 0.402% 0.390% 7.8 Females 197 0.77 0.391% 1 0.508% 0.505% 1.0 Total 2,186 5.06 0.231 % 9 0.412% 0.401 % 8.8 DISABILITY EXPERIENCE - NON-HAZARDOUS EMPLOYEES Average Expected Expected Expected Actual Actual Proposed Disabilities Gender Exposure Disabilities Avg Rates Disabilities Rates Rates (New Rates) Males 3,907 12.2 0.312% 2 0.051 % 0.126% 4.9 Females 1,948 13.3 0.683% 1 0.051% 0.142% 2.8 Total 5,855 25.5 0.436% 3 0.051% 0.131% 7.7 Item # 6 GRS �Gabriel R.oeder 5mnth & Cc�mpany - 21 - Attachment number 1 \nPage 2 CITY OF CLEARWATER EMPLOYEES' PENSION PLAN APPENDIX Purpose of the Actuarial Valuation In a defined benefit pension plan, an employer makes a promise to its employees of a lifetime pension. The amount of the monthly pension is determined by a benefzt fo�mula which is often based upon a multiplier percentage and the number of years of service and the average final earnings of the employee. The employer must design and follow a systematic plan for advance-funding this obligation. That is accomplished by establishing a pension fund and performing annual actuarial valuations to measure the liabilities associated with the obligation and to calculate how much the employer must contribute to the pension fund in order to make good on its promise. The calculations in the actuarial valuation are performed each year to re-measure the liabilities. The stakeholders need to know how the plan is doing in its goal of systematically financing the promised benefits. So it is important to make the actuarial calculations in accordance with the professional actuarial standards of practice and the accounting standards. Role of Actuarial Assumptions The nature of the pension promise and its systematic funding require long term projections of the employee workforce (using demographic assumptions) and long term projections of the salaries and investment returns (using economic assumptions). The entire actuarial valuation process depends on the selection and use of reasonable actuarial assumptions as to future demographics and future economics. There are many different actuarial assumptions employed in an actuarial valuation. The primary actuarial assumptions include: 1. Rates of Salary Increases 2. Rates of Retirement 3. Rates of Mortality 4. Rates of Termination of Employment 5. Rates of Disability 6. Rates of Investment Return The actuary and plan management must be comfortable with the actuarial assumptions. The assumptions must be reasonable. Without a level of confidence in the reasonableness of the actuarial assumptions, the stakeholders and users of the valuation results cannot have confidence in the results. However, there is no way to have confidence in the actuarial assumptions unless an actuarial experience study is performed to assess the reasonableness of the current assumptions or to change them to be more in line with past experience and with future expectations. For this reason the Board has requested that we undertake an actuarial experience study to recommend changes to the actuarial assumptions used in the annual actuarial valuation. Item # 6 GRS �Gabriel R.oeder 5mnth & Cc�mpany - 22 - City of Clearwater Employees' Pension Plan Experience Investigation Report For the Five Years Ended December 31, 2011 Assumption Mortality Rates Salary Increases Investment Return Retirement Rates Termination Rates Disability Rates All Combined * Impact on Cost Annual Contribution $ 3,714,699 $ (3,000,246) $ 1,092,780 $ (666,316) $ 389,440 $ 6,401 $ 1,664,698 All except Investment Return $ 374,245 Attachment number 2 \nPage 1 % of Payroll 5.10% -4.12% 1.50% -0.92% 0.53% 0.01% 2.28% 0.51% * Note: The sum of the above individual impacts does not equal the total of all changes combined. This is due to the interaction of Plan provisions and actuarial assumptions with one another and the effect that one assumption change can have on the impact of another assumption change. Item # 6