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04/18/2016Monday, April 18, 2016 1:00 PM City of Clearwater City Hall 112 S. Osceola Avenue Clearwater, FL 33756 Council Chambers Pension Trustees Meeting Agenda April 18, 2016Pension Trustees Meeting Agenda 1. Call To Order 2. Approval of Minutes 2.1 Approve the minutes of the March 14, 2016 Pension Trustees meeting as submitted in written summation by the City Clerk. 3. Citizens to be Heard Regarding Items Not on the Agenda 4. New Business Items 4.1 Approve the new hires for acceptance into the Pension Plan as listed. 4.2 Approve the following request of employee Christopher Lyons, Police Department to vest his pension as provided by Section 2.419 of the Employees’ Pension Plan. 4.3 Approve the following request of employees Konrad McCree, Solid Waste General Services Department, Ronnie Melton, Marine and Aviation Department, Richard Nestor, Police Department and Raymond Niski, Police Department for a regular pension as provided by Sections 2.416 and 2.424 of the Employees’ Pension Plan. 4.4 Annual review of the Employees’ Pension Plan investment performance for the calendar and plan year ended December 31, 2015. 4.5 Accept the January 1, 2016 Annual Actuarial Valuation for the Employees’ Pension Plan. 4.6 Determine Trustees’ expected rate of return for pension plan investments for current year, each of the next several years, and for the long term thereafter, in accordance with FL Statutes 112.661(9). 5. Adjourn Page 2 City of Clearwater Printed on 4/14/2016 Cover Memo City of Clearwater City Hall 112 S. Osceola Avenue Clearwater, FL 33756 File Number: ID#16-2325 Agenda Date: 4/18/2016 Status: Agenda ReadyVersion: 1 File Type: MinutesIn Control: Pension Trustees Agenda Number: 2.1 SUBJECT/RECOMMENDATION: Approve the minutes of the March 14, 2016 Pension Trustees meeting as submitted in written summation by the City Clerk. SUMMARY: APPROPRIATION CODE AND AMOUNT: USE OF RESERVE FUNDS: Page 1 City of Clearwater Printed on 4/14/2016 Pension Trustees Meeting Minutes March 14, 2016 City of Clearwater City Hall 112 S. Osceola Avenue Clearwater, FL 33756 Meeting Minutes Monday, March 14, 2016 1:00 PM Council Chambers Pension Trustees Page 1 City of Clearwater Draft Pension Trustees Meeting Minutes March 14, 2016 Roll Call Present 5 – Chair George N. Cretekos, Trustee Jay E. Polglaze, Trustee Doreen Hock-DiPolito, Trustee Hoyt Hamilton, and Trustee Bill Jonson Also Present – William B. Horne – City Manager, Jill Silverboard – Assistant City Manager, Pamela K. Akin – City Attorney, Rosemarie Call – City Clerk, Nicole Sprague – Official Records and Legislative Services Coordinator To provide continui ty for research, items are listed in agenda order although not ne cessarily discussed in that order. Unapproved 1. Call To Order – Chair Cretekos The meeting was called to order at 1:22 p.m. at City Hall. 2. Approval of Minutes 2.1 Approve the minutes of the February 16, 2016 Pension Trustees meeting as submitted in written summation by the City Clerk. Trustee Hamilton moved to approve the minutes of the February 16, 2016 Pension Trustees meeting as submitted in written summation by the City Clerk. The motion was duly seconded and carried unanimously. 3. Citizens to be Heard Regarding Items Not on the Agenda – None. 4. New Business Items 4.1 Approve the new hires for acceptance into the Pension Plan as listed. Name/Job Classification/Department Pension Eligibility Date Jason Beisel, Public Information Coordinator, Public Communications 1/06/2016 Marissa Prosser *, Recreation Leader, Parks and Recreation 1/09/2016 Donna Kenny, Customer Service Coordinator, Customer Service 1/11/2016 Joseph Heaton, Fleet Mechanic, General Services 1/11/2016 Page 2 City of Clearwater Draft Pension Trustees Meeting Minutes March 14, 2016 William Pancoe, Plumber, General Services 1/11/2016 Johnareus Young, Parks Service Technician I, Parks and Recreation 1/11/2016 Myles Collier, Parks Service Technician I, Parks and Recreation 1/11/2016 Erik White, Utilities Mechanic, Public Utilities 1/11/2016 Paul Toffolo, Electronics Technician, Public Utilities 1/11/2016 Hatem Elgendy, Utilities Chemist, Public Utilities 1/11/2016 Patrick Flynn, Wastewater Treatment Plant Operator Trainee, Public Utilities 1/11/2016 Kevin Dubie, Solid Waste Equipment Operator, Solid Waste 1/11/2016 Robert Bostick, Jr. **, Solid Waste Worker, Solid Waste 1/11/2016 Amber Brice ***, Library Programming Specialist, Library 1/11/2016 Justin Bowman, Utilities Chemist, Public Utilities 1/25/2016 Brandon Coulter, Utilities Mechanic, Public Utilities 1/25/2016 Michael Shumaker, Recreation Supervisor II, Parks and Recreation 1/25/2016 John Cassidy, Wastewater Treatment Plant Operator Trainee, Public Utilities 1/25/2016 Tim Sunderman, Wastewater Treatment Plant Operator Trainee, Public Utilities 1/25/2016 * Marissa Prosser was employed in a temporary part-time position from 08/24/2015 to 01/08/2016. She was hired into a full time position 01/09/2016 and will be eligible for pension as of 01/09/2016. ** Robert Bostick, Jr. was employed in a temporary part-time position from 09/08/2015 to 01/10/2016. He was hired into a full time position 01/11/2016 and will be eligible for pension as of 01/11/2016. *** Amber Brice was employed in a part time position from 01/26/2015 to 01/10/2016. She was hired into a full time position 01/11/2016 and will be eligible for pension as of 01/11/2016. Trustee Jonson moved to approve the new hires for acceptance into the Pension Plan as listed. The motion was duly seconded and carried unanimously. 4.2 Approve the following request of employee Dewayne Broadwater, Parks and Recreation Department to vest his pension as provided by Section 2.419 of the Employees’ Pension Plan. Dewayne Broadwater, Spray Technician III, Park and Recreation Department, was employed by the City on October 16, 1995, and began participating in the Page 3 City of Clearwater Draft Pension Trustees Meeting Minutes March 14, 2016 Pension Plan on that date. Mr. Broadwater will terminate from City employment on February 16, 2016. 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 2.416 provides for normal retirement eligibility for non-hazardous duty employees hired prior to the effective date of this reinstatement (January 1, 2013), a member shall be eligible for retirement following the earlier of the date on which a participant has reached the age of fifty-five years and completed twenty years of credited service; the date on which a participant has reached age sixty-five years and completed ten years of credited service; or the date on which a member has completed thirty years of service regardless of age. For non-hazardous duty employees hired on or after the effective date of this restatement, a member shall be eligible for retirement following the earlier of the date on which a participant has reached the age of sixty years and completed twenty-five years of credited service; or the date on which a participant has reached the age of sixty-five years and completed ten years of credited service. Mr. Broadwater will meet the non-hazardous duty criteria and begin collecting a pension in November 2016. Section 2.416 provides for normal retirement eligibility for hazardous duty employees, a member shall be eligible for retirement following the earlier of the date on which the participant has completed twenty years of credited service regardless of age, or the date on which the participant has reached fifty-five years and completed ten years of credited service. Trustee Hock-DiPolito moved to approve the following request of employee Dewayne Broadwater, Parks and Recreation Department to vest his pension as provided by Section 2.419 of the Employees’ Pension Plan. The motion was duly seconded and carried unanimously. 4.3 Approve the following request of employees Jennifer Mortell, Library Department, and Tereasa Roose, Library Department, for a regular pension as provided by Sections 2.416 and 2.424 of the Employees’ Pension Plan. Jennifer Mortell, Librarian II, Library Department, was employed by the City on Page 4 City of Clearwater Draft Pension Trustees Meeting Minutes March 14, 2016 January 12, 2004, and her pension service credit is effective on that date. Her pension will be effective April 1, 2016. Based on an average salary of approximately $45,249.46 over the past five years, the formula for computing regular pensions and Ms. Mortell’s selection of the 100% Joint and Survivor Annuity, this pension benefit will be approximately $12,847.08 annually. Tereasa Roose, Librarian III, Library Department, was employed by the City on April 29, 1996, and her pension service credit is effective on that date. Her pension will be effective May 1, 2016. Based on an average salary of approximately $49,311.76 over the past five years, the formula for computing regular pensions and Ms. Roose’s selection of the Life Annuity, this pension benefit will be approximately $27,125.16 annually. Section 2.416 provides for normal retirement eligibility for non-hazardous duty employees hired prior to the effective date of this reinstatement (January 1, 2013), a member shall be eligible for retirement following the earlier of the date on which a participant has reached the age of fifty-five years and completed twenty years of credited service; the date on which a participant has reached age sixty-five years and completed ten years of credited service; or the date on which a member has completed thirty years of service regardless of age. For non-hazardous duty employees hired on or after the effective date of this restatement, a member shall be eligible for retirement following the earlier of the date on which a participant has reached the age of sixty years and completed twenty-five years of credited service; or the date on which a participant has reached the age of sixty-five years and completed ten years of credited service. Ms. Mortell and Ms. Roose have met the non-hazardous duty criteria. Section 2.416 provides for normal retirement eligibility for hazardous duty employees, a member shall be eligible for retirement following the earlier of the date on which the participant has completed twenty years of credited service regardless of age, or the date on which the participant has reached fifty-five years and completed ten years of credited service. Trustee Polglaze moved to approve the following request of employees Jennifer Mortell, Library Department, and Tereasa Roose, Library Department, for a regular pension as provided by Sections 2.416 and 2.424 of the Employees’ Pension Plan. The motion was duly seconded and carried unanimously. 4.4 Approve the termination of international equity money manager Earnest Partners (EP) and authorize the appropriate officials to execute same. Earnest Partners was hired as an international equity manager for the plan in April 2008. Initial performance was very good (55.54% return and 15th Page 5 City of Clearwater Draft Pension Trustees Meeting Minutes March 14, 2016 percentile ranking in 2009), but performance has steadily declined in recent years, as summarized below. The Pension Investment Committee recommends termination at this time. Percentile EP Ranking Benchmark Last 3 years 0.25% 80th 4.07% Last 5 years 1.91% 75th 3.24% In July 2015 the Pension Trustees approved the termination of an international money manager, Wentworth, Hauser and Violich, and the hiring of two international money managers, Thompson, Siegel and Walmsley LLC (TS&W) and WCM Investment Management (WCM), in anticipation of this possible future action of terminating another international money manager. The Pension Investment Committee has already moved approximately $30 million of the $37 million previously allocated to Earnest Partners to TS&W and WCM equally, leaving a balance of approximately $7 million with Earnest Partners. Upon termination the $7 million would also be equally allocated to TS&W and WCM. In response to questions, Finance Director Jay Ravins said the poor performance was not related to staffing changes but stock selection and the countries they were investing in fell out of favor. The new money managers have been performing well; top 50% percentile since they were hired. Trustee Hamilton moved to approve the termination of international equity money manager Earnest Partners (EP) and authorize the appropriate officials to execute same. The motion was duly seconded and carried unanimously. 5. Adjourn The meeting adjourned at 1:27 p.m. Chair Employees’ Pension Plan Trustees Attest City Clerk Page 6 City of Clearwater Draft Cover Memo City of Clearwater City Hall 112 S. Osceola Avenue Clearwater, FL 33756 File Number: ID#16-2205 Agenda Date: 4/18/2016 Status: Agenda ReadyVersion: 2 File Type: Action ItemIn Control: Pension Trustees Agenda Number: 4.1 SUBJECT/RECOMMENDATION: Approve the new hires for acceptance into the Pension Plan as listed. SUMMARY: Name/ Job Classification/Department Pension Eligibility Date Eryn Berg, Gas Dispatcher, Gas Department 2/06/2016 Anthony Medina *, Police Comm. Operator Trainee, Police Department 2/08/2016 Mark Jones, Service Dispatcher, Gas Department 2/08/2016 Anthony Violante, Solid Waste Accounts Coordinator, Solid Waste 2/08/2016 Bryan Burke, Stormwater Technician I, Engineering 2/08/2016 Jose Jaquez, Stormwater Technician I, Engineering 2/08/2016 Michele Stewart, Customer Service Accounting Rep., Customer Service 2/08/2016 Vincent Giallonardo, Traffic Signal Technician, Engineering 2/22/2016 Christopher Smith, Stormwater Technician I, Engineering 2/22/2016 Chauncey Swinton, Stormwater Technician I, Engineering 2/22/2016 Zane King, Tradesworker, General Services 2/22/2016 Molly Doran, Police Comm. Operator Trainee, Police Department 2/22/2016 Kellen Scott, Police Comm. Operator Trainee, Police Department 2/22/2016 Nancy Selvick, Police Comm. Operator Trainee, Police Department 2/22/2016 Nicolette Sepanski, Police Comm. Operator Trainee, Police Department 2/22/2016 James Hatten, Fire Inspector II, Fire Department 2/22/2016 SemieAkeen Hearns, Public Utilities Technician I, Public Utilities 2/22/2016 LaRon Brown, Water Distribution Operator Trainee, Public Utilities 2/22/2016 Craig Campbell, Recreation Supervisor I, Parks and Recreation 2/22/2016 * Anthony Medina was employed in temporary part-time positions from 06/02/2014 to 12/12/2014, 01/05/2015 to 12/11/2015, and 12/29/2015 to 02/05/2015. He was hired into a full time position on 02/08/2016 and will be eligible for pension as of 02/08/2016. APPROPRIATION CODE AND AMOUNT: N/A USE OF RESERVE FUNDS: N/A Page 1 City of Clearwater Printed on 4/14/2016 File Number: ID#16-2205 Page 2 City of Clearwater Printed on 4/14/2016 Interoffice Correspondence Sheet TO:Pension Advisory Committee FROM:Joseph Roseto, Human Resources Director SUBJECT:Recommendation for Acceptance into Pension Plan DATE: Subject/Recommendation: Recommend approval of the new hires for acceptance into the Pension Plan as listed. Name Job Classification Department Pension Eligibility Date Eryn Berg Gas Dispatcher Gas Department 2/06/2016 Anthony Medina *Police Communications Operator Trainee Police Department 2/08/2016 Mark Jones Service Dispatcher Gas Department 2/08/2016 Anthony Violante Solid Waste Accounts Coordinator Solid Waste 2/08/2016 Bryan Burke Stormwater Technician I Engineering 2/08/2016 Jose Jaquez Stormwater Technician I Engineering 2/08/2016 Michele Stewart Customer Service Accounting Representative Customer Service 2/08/2016 Vincent Giallonardo Traffic Signal Technician Engineering 2/22/2016 Christopher Smith Stormwater Technician I Engineering 2/22/2016 Chauncey Swinton Stormwater Technician I Engineering 2/22/2016 Zane King Tradesworker General Services 2/22/2016 Molly Doran Police Communications Operator Trainee Police Department 2/22/2016 Kellen Scott Police Communications Operator Trainee Police Department 2/22/2016 Nancy Selvick Police Communications Operator Trainee Police Department 2/22/2016 Nicolette Sepanski Police Communications Operator Trainee Police Department 2/22/2016 James Hatten Fire Inspector II Fire Department 2/22/2016 SemieAkeen Hearns Public Utilities Technician I Public Utilities 2/22/2016 LaRon Brown Water Distribution Operator Trainee Public Utilities 2/22/2016 Craig Campbell Recreation Supervisor I Parks and Recreation 2/22/2016 * Anthony Medina was employed in temporary part-time positions from 06/02/2014 to 12/12/2014, 01/05/2015 to 12/11/2015, and 12/29/2015 to 02/05/2015. He was hired into a full time position on 02/08/2016 and will be eligible for pension as of 02/08/2016. Cover Memo City of Clearwater City Hall 112 S. Osceola Avenue Clearwater, FL 33756 File Number: ID#16-2206 Agenda Date: 4/18/2016 Status: Agenda ReadyVersion: 2 File Type: Action ItemIn Control: Pension Trustees Agenda Number: 4.2 SUBJECT/RECOMMENDATION: Approve the following request of employee Christopher Lyons, Police Department to vest his pension as provided by Section 2.419 of the Employees’ Pension Plan. SUMMARY: Christopher Lyons, Police Officer, Police Department, was employed by the City on March 12, 2001 and began participating in the Pension Plan on that date. Mr. Lyons terminated from city employment on March 11, 2016. 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 2.416 provides for normal retirement eligibility for non -hazardous duty employees hired prior to the effective date of this reinstatement (January 1, 2013), a member shall be eligible for retirement following the earlier of the date on which a participant has reached the age of fifty-five years and completed twenty years of credited service; the date on which a participant has reached age sixty -five years and completed ten years of credited service; or the date on which a member has completed thirty years of service regardless of age. For non-hazardous duty employees hired on or after the effective date of this restatement, a member shall be eligible for retirement following the earlier of the date on which a participant has reached the age of sixty (60) years and completed twenty -five years of credited service; or the date on which a participant has reached the age of sixty -five years and completed ten years of credited service. Section 2.416 provides for normal retirement eligibility for hazardous duty employees, a member shall be eligible for retirement following the earlier of the date on which the participant has completed twenty years of credited service regardless of age, or the date on which the participant has reached fifty -five years and completed ten years of credited service. Mr. Lyons will meet the hazardous duty criteria and begin collecting pension in April 2021. APPROPRIATION CODE AND AMOUNT: N/A USE OF RESERVE FUNDS: Page 1 City of Clearwater Printed on 4/14/2016 File Number: ID#16-2206 N/A Page 2 City of Clearwater Printed on 4/14/2016 Cover Memo City of Clearwater City Hall 112 S. Osceola Avenue Clearwater, FL 33756 File Number: ID#16-2207 Agenda Date: 4/18/2016 Status: Agenda ReadyVersion: 2 File Type: Action ItemIn Control: Pension Trustees Agenda Number: 4.3 SUBJECT/RECOMMENDATION: Approve the following request of employees Konrad McCree, Solid Waste General Services Department, Ronnie Melton, Marine and Aviation Department, Richard Nestor, Police Department and Raymond Niski, Police Department for a regular pension as provided by Sections 2.416 and 2.424 of the Employees’ Pension Plan. SUMMARY: Konrad McCree, Solid Waste Equipment Operator, Solid Waste General Services Department, was employed by the City on August 19, 1985, and his pension service credit is effective on that date. His pension will be effective March 1, 2016. Based on an average salary of approximately $43,982.86 over the past five years, the formula for computing regular pensions and Mr. McCree’s selection of the 100% Joint and Survivor Annuity with a 10% Partial Lump Sum, this pension benefit will be approximately $30,034.20 annually. Ronnie Melton, Marine Operations Supervisor, Marine and Aviation Department, was employed by the City on July 17, 2006, and his pension service credit is effective on that date . His pension will be effective August 1, 2016. Based on an average salary of approximately $37,971.11 over the past five years, the formula for computing regular pensions and Mr . Melton’s selection of the 100% Joint and Survivor Annuity, this pension benefit will be approximately $8,841.84 annually. Richard Nestor, Police Sergeant, Police Department, was employed by the City on February 6, 1995, and his pension service credit is effective on that date. His pension will be effective March 1, 2016. Based on an average salary of approximately $99,598.09 over the past five years, the formula for computing regular pensions and Mr. Nestor’s selection of the 100% Joint and Survivor Annuity with a 30% Partial Lump Sum, this pension benefit will be approximately $39,254.16 annually. Raymond Niski, Police Communication Supervisor, Police Department, was employed by the City on April 28, 1986, and his pension service credit is effective on that date. His pension will be effective May 1, 2016. Based on an average salary of approximately $66,676.92 over the past five years, the formula for computing regular pensions and Mr. Niski’s selection of the 50% Joint and Survivor Annuity, this pension benefit will be approximately $53,156.52 annually. Section 2.416 provides for normal retirement eligibility for non -hazardous duty employees hired prior to the effective date of this reinstatement (January 1, 2013), a member shall be eligible for retirement following the earlier of the date on which a participant has reached the Page 1 City of Clearwater Printed on 4/14/2016 File Number: ID#16-2207 age of fifty-five years and completed twenty years of credited service; the date on which a participant has reached age sixty -five years and completed ten years of credited service; or the date on which a member has completed thirty years of service regardless of age. For non-hazardous duty employees hired on or after the effective date of this restatement, a member shall be eligible for retirement following the earlier of the date on which a participant has reached the age of sixty years and completed twenty -five years of credited service; or the date on which a participant has reached the age of sixty -five years and completed ten years of credited service. Mr. McCree, Mr. Melton, and Mr. Niski have met the non -hazardous duty criteria. Section 2.416 provides for normal retirement eligibility for hazardous duty employees, a member shall be eligible for retirement following the earlier of the date on which the participant has completed twenty years of credited service regardless of age, or the date on which the participant has reached fifty -five years and completed ten years of credited service. Mr. Nestor has met the hazardous duty criteria. APPROPRIATION CODE AND AMOUNT: N/A USE OF RESERVE FUNDS: N/A Page 2 City of Clearwater Printed on 4/14/2016 Cover Memo City of Clearwater City Hall 112 S. Osceola Avenue Clearwater, FL 33756 File Number: ID#16-2323 Agenda Date: 4/18/2016 Status: Agenda ReadyVersion: 1 File Type: ReportIn Control: Pension Trustees Agenda Number: 4.4 SUBJECT/RECOMMENDATION: Annual review of the Employees’ Pension Plan investment performance for the calendar and plan year ended December 31, 2015. SUMMARY: Annually a presentation of the Plan ’s investment performance is made to the Trustees. For calendar 2015, the Plan realized an investment return of 1.42%, versus a customized benchmark of 0.22%, placing the plan in the 31st percentile of public pension plans per the Wilshire Public Plan Sponsor Universe. For the last three calendar years period, the plan had an annualized return of 8.98%, versus a benchmark of 8.08%, placing the plan in the 18th percentile of public plans. During calendar 2015, the Plan introduced a new investment category, core plus real estate, per the hiring of two new money managers. The Plan also terminated one international equity money manager and hired two new international equity money managers during calendar 2015. During calendar 2016 to-date, the Trustees approved a new infrastructure money manager, as well as the termination of an additional international equity money manager. Staff continues to seek diversification and decreased volatility in investment returns for the Plan via alternative investment categories. In recent years, new categories introduced have included timber investments, core plus real estate, and infrastructure. A number of money managers underperformed their indexes during calendar 2015. The investment committee, with the assistance of the Plan ’s investment consultant, CapTrust, closely monitors underperforming money managers and will continue to recommend terminations and replacements when appropriate. APPROPRIATION CODE AND AMOUNT: N/A Page 1 City of Clearwater Printed on 4/14/2016 City of ClearwaterCity of Clearwater April 18, 2016April 18, 2016 Calendar Year 2015Investment Performance Calendar Year 2015Investment Performance Total Fund 1.42% 31st percentile Benchmark 0.22% 62nd percentile Plus 1.20% Total Fund 1.42% 31st percentile Benchmark 0.22% 62nd percentile Plus 1.20% Calendar Year 2015Investment Performance Calendar Year 2015Investment Performance Domestic Equity 1.48% 27th Benchmark 1.38% 30th Plus 0.10% Domestic Equity 1.48% 27th Benchmark 1.38% 30th Plus 0.10% Calendar Year 2015Investment Performance Calendar Year 2015Investment Performance International Equity -9.91% 83rd Benchmark -4.29% 68th Minus 5.62% International Equity -9.91% 83rd Benchmark -4.29% 68th Minus 5.62% Calendar Year 2015Investment Performance Calendar Year 2015Investment Performance Domestic Fixed Income 0.30% 55th Benchmark 0.55% 49th Minus 0.25% Domestic Fixed Income 0.30% 55th Benchmark 0.55% 49th Minus 0.25% Calendar Year 2015Investment Performance Calendar Year 2015Investment Performance Real Estate 6.35% 64th Benchmark 8.33% 61st Minus 1.98% Real Estate 6.35% 64th Benchmark 8.33% 61st Minus 1.98% Three Year ReturnThree Year Return Total Fund 8.98% 18 th Benchmark 8.08% 42 th Plus 0.90% Total Fund 8.98% 18 th Benchmark 8.08% 42 th Plus 0.90% Five Year ReturnFive Year Return Total Fund 8.00% 15 th Benchmark 7.78% 24 th Plus 0.22% Total Fund 8.00% 15 th Benchmark 7.78% 24 th Plus 0.22% Individual ManagerPerformanceCalendar 2015 Individual ManagerPerformanceCalendar 2015 VOYA LCG 7.07% 31st NT Russell1000 LCV -3.66% 74th Eagle Capital LCV 2.35% 18th Mann & Nap LCV -0.09% 27th Artisan MCG 3.38% 13th VOYA LCG 7.07% 31st NT Russell1000 LCV -3.66% 74th Eagle Capital LCV 2.35% 18th Mann & Nap LCV -0.09% 27th Artisan MCG 3.38% 13th Individual ManagerPerformanceIndividual ManagerPerformance Wedge MCV -5.72% 51 st Riverbridge SCG -3.15% 61 st Atlanta SCV 4.97% 1 st Systematic SCV -6.39% 62 nd Wedge MCV -5.72% 51 st Riverbridge SCG -3.15% 61 st Atlanta SCV 4.97% 1 st Systematic SCV -6.39% 62 nd Individual ManagerPerformanceIndividual ManagerPerformance International: Eaton Vance EM -16.09% 80 th Earnest EAFE - 8.02% 78 th New managers – TS&W & WCM International: Eaton Vance EM -16.09% 80 th Earnest EAFE - 8.02% 78 th New managers – TS&W & WCM Individual ManagerPerformanceIndividual ManagerPerformance Fixed Income: Dodge Cox -0.12% 64 th WAMCO 0.73% 41 st Fixed Income: Dodge Cox -0.12% 64 th WAMCO 0.73% 41 st Individual ManagerPerformanceIndividual ManagerPerformance Real Estate: MEPT Bricks&Mortar 12.00% 52nd Molpus Timber -0.39% 87th Hancock Timber -1.10% 88th SEC CAP REITS 4.70% 69th Real Estate: MEPT Bricks&Mortar 12.00% 52nd Molpus Timber -0.39% 87th Hancock Timber -1.10% 88th SEC CAP REITS 4.70% 69th Calendar 2015 ChangesCalendar 2015 Changes Added Core Plus Real Estate category and hired two money managers Terminated one international equity manager and hired two new managers Added Core Plus Real Estate category and hired two money managers Terminated one international equity manager and hired two new managers Calendar 2016Calendar 2016 Continuing to fund two new Core Plus Real Estate Managers – USAA and Intercontinental Continuing to fund Timber Managers – Hancock and Molpus Continuing to fund two new Core Plus Real Estate Managers – USAA and Intercontinental Continuing to fund Timber Managers – Hancock and Molpus Calendar 2016 ChangesCalendar 2016 Changes New Infrastructure Manager approved January 2016 – will begin funding commitment of $30 million International Money Manager terminated March 2016 New Infrastructure Manager approved January 2016 – will begin funding commitment of $30 million International Money Manager terminated March 2016 City of ClearwaterCity of Clearwater April 18, 2016April 18, 2016 Cover Memo City of Clearwater City Hall 112 S. Osceola Avenue Clearwater, FL 33756 File Number: ID#16-2316 Agenda Date: 4/18/2016 Status: Agenda ReadyVersion: 1 File Type: ReportIn Control: Pension Trustees Agenda Number: 4.5 SUBJECT/RECOMMENDATION: Accept the January 1, 2016 Annual Actuarial Valuation for the Employees’ Pension Plan. SUMMARY: Per the actuary report dated January 1, 2016, a minimum City employer contribution of $8.93 million, or 11.13% of covered payroll, is required for fiscal year 2017. This is an increase of $176 thousand over the fiscal 2016 required contribution of $8.76 million, or 11.66% of covered payroll. The calendar year 2015 investment return was a loss of (0.28%) net of investment fees, versus the assumed rate of 7.0%. The five-year smoothed investment return based on the actuarial value of the assets was 7.64% versus the assumed rate of 7.0%. Calendar 2011 through 2015 investment returns were (0.32%), 13.92%, 16.90%, 7.99%, and (0.28%), respectively. The plan experienced a net actuarial experience loss of $475,313 for the year. The actuarial gain from an actuarial return of 7.64% versus assumption of 7.0% was more than offset by actuarial losses, primarily due to actual salary increases of 8.65% versus expected 4.09%. This increase was partially due to the inclusion of 27 pay periods in the calendar 2015 payroll totals, versus the normal 26 pay periods. Adjusting for the extra pay period, the estimated increase was 4.62% versus the assumption of 4.09%. The Plan's funded ratio is 102.92% (including the credit balance) versus 101.89% for the prior year. The Actuarial Value of Assets exceeds the Market Value of Assets by $8.7 million as of January 1, 2016. The plan's credit balance, which reflects actual contributions in excess of actuarially required contributions for prior years, increased from $10,381,518 to $15,570,503 during calendar 2015. This $5.2 million increase was due to the City ’s intentional overfunding of the fiscal 2015 required contribution. The City contributed approximately 17% of salaries, versus the actuarially required 11.66%, in order to increase the plan ’s credit balance reserves for future volatility in required contributions. The Employees’ Pension Plan is highly leveraged on investment returns in comparison to most pension plans, which means changes in investment earnings cause significant increases Page 1 City of Clearwater Printed on 4/14/2016 File Number: ID#16-2316 or decreases in required employer contributions. This year -to-year volatility necessitates building reserves, such as the plan ’s credit balance, during periods of positive investment earnings experience. This provides the City the ability to subsidize increased employer contributions during periods of negative investment earnings experience with contributions from accumulated reserves. APPROPRIATION CODE AND AMOUNT: N/A Page 2 City of Clearwater Printed on 4/14/2016 CITY OF CLEARWATER EMPLOYEES’ PENSION PLAN ACTUARIAL VALUATION REPORT AS OF JANUARY 1, 2016 ANNUAL EMPLOYER CONTRIBUTION FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2017 TABLE OF CONTENTS Section Title Page A Discussion of Valuation Results 1 B Valuation Results 1. Participant Data 5 2. Annual Required Contribution 6 3. Actuarial Value of Benefits and Assets 7 4. Calculation of Employer Normal Cost 8 5. Reconciliation of Credit Balance 9 6. Liquidation of the Unfunded Actuarial Accrued Liability 10 7. Actuarial Gains and Losses 12 8. Recent History of Valuation Results 17 9. Recent History of Contributions 18 10. Actuarial Assumptions and Cost Method 19 11. Glossary of Terms 28 C Pension Fund Information 1. Statement of Plan Assets at Market Value 31 2. Reconciliation of Plan Assets 32 3. Development of Actuarial Value of Assets 33 4. Investment Rate of Return 34 D Financial Accounting Information 1. FASB No. 35 35 E Miscellaneous Information 1. Reconciliation of Membership Data 36 2. Active Participant Distribution 37 3. Inactive Participant Distribution 40 F Summary of Plan Provisions 41 SECTION A DISCUSSION OF VALUATION RESULTS 1 DISCUSSION OF VALUATION RESULTS Comparison of Required Employer Contributions The required employer contribution developed in this year's valuation is compared below to last year's results: Required Employer/State Contribution $8,944,103 $8,767,703 $176,400 As % of Covered Payroll 11.15 %11.68 %(0.53)% Estimated State Contribution 12,000 12,000 0 As % of Covered Payroll 0.02 %0.02 %0.00 % Required Employer Contribution 8,932,103 8,755,703 176,400 As % of Covered Payroll 11.13 %11.66 %(0.53)% Credit Balance 15,570,503 10,381,518 5,188,985 For FYE 9/30/2017 For FYE 9/30/2016 Based onBased on Increase Valuation 1/1/20151/1/2016 Valuation (Decrease) The contribution has been adjusted for interest on the basis that payments are made uniformly during the first two quarters of the City’s fiscal year. The required employer contribution has been computed under the assumption that the amount to be received from the State on behalf of police officers and firefighters in 2016 and 2017 will be $12,000. If the actual payment from the State falls below this amount, then the City must increase its contribution by the difference. The actual Employer and State contributions during the year ending December 31, 2015 were $13,217,982 and $12,000, respectively, for a total of $13,229,982, compared to the required contribution of $8,767,703. The excess contribution of $4,462,279 was used to increase the credit balance. The minimum required City contribution is 7% of covered payroll. 2 Revisions in Benefits There have been no revisions in benefits since the last valuation. Revisions in Actuarial Assumptions or Methods Effective January 1, 2016, the mortality table was changed from the fully generational RP-2000 Combined Healthy Participant Mortality Table for males and females with mortality improvements projected to all future years from the year 2000 using Scale BB, to the mortality rates used by the Florida Retirement System (FRS). The current FRS mortality rates are based on the fully generational RP-2000 Mortality Table for Annuitants with white collar and blue collar adjustments which vary between hazardous and non-hazardous duty members. Mortality improvement continues to be projected from the year 2000 to all future years using Scale BB. This change was made in compliance with Florida House Bill 1309, which requires all public pension plans in Florida to use the same mortality tables used in either of the last two actuarial valuation reports of FRS effective January 1, 2016. As a result of the change in the mortality assumption, the required contribution was reduced by $330,019 (0.41% of covered pay). Actuarial Experience There was a net actuarial experience loss of $475,313 during the year, which means that actual experience was less favorable than expected. The loss is primarily due to greater than expected salary increases (8.65% actual versus 4.09% expected). Salary increases were greater than expected mainly because reported pensionable earnings for the year ending December 31, 2015 included 27 pay periods instead of 26. Average salary increases would have been approximately 4.6% if 2015 reported pensionable earnings had only included 26 pay periods. The loss was mostly offset by a recognized investment return (on the smoothed actuarial value of assets) above the assumed rate of 7.0%. The investment return was 7.64% based on the actuarial value of assets even though it was (0.28%) based on the market value of assets, as excess market value returns in recent years continue to be phased in to the actuarial value of assets. Under Chapter 112.66 of the Florida Statues, the annual payment to amortize the UAL may not reduce the contribution required to fund the Normal Cost. As a result, since the annual payment to amortize the UAL is below $0, the actuarial experience loss had no direct effect on the required employer contribution. 3 Analysis of Change in Employer Contribution The components of change in the required City contribution are as follows: Contribution Rate Last Year 11.66 % Change in Benefits 0.00 Change in Assumptions and Methods (0.41) Amortization Payment on UAAL 0.00 Normal Cost (0.27) Experience Gain/Loss 0.00 Change in Administrative Expenses 0.15 Change in State Revenue 0.00 Contribution Rate This Year 11.13 Funded Ratio One measure of the Plan’s funding progress is the ratio of the actuarial value of assets to the actuarial accrued liability. Including the credit balance in the actuarial value of assets, the funded ratio is 102.92% this year compared to 101.89% last year. Not including the credit balance in the actuarial value of assets, the funded ratio is 101.10% this year compared to 100.63% last year. This funded ratio (not including the credit balance) was 100.60% before the change in the mortality assumption. Variability of Future Contribution Rates The Actuarial Cost Method used to determine the contribution rate is intended to produce contribution rates which are generally level as a percent of payroll. Even so, when experience differs from the assumptions, as it often does, the employer’s contribution rate can vary significantly from year- to-year. Over time, if the year-to-year gains and losses offset each other, the contribution rate would be expected to return to the current level, but this does not always happen. 4 The Actuarial Value of Assets exceeds the Market Value of Assets by $8,664,398 as of the valuation date (see Section C). This difference will be phased in over the next few years in the absence of offsetting gains. In turn, the UAL amortization payment is expected to increase. If there are no experience losses and the return on the market value of assets is 7.0% in 2016 (net of investment expenses) as assumed, it is projected that the City contribution requirement as of January 1, 2017 for the fiscal year ending September 30, 2018 will remain in the range of approximately 11%-12% of covered payroll. Relationship to Market Value If Market Value had been the basis for the valuation, the City contribution rate would have remained at 11.13% of covered payroll (since the annual payment to amortize the UAL would remain at $0 due to Chapter 112.66 of the Florida Statutes), and the funded ratio (excluding the credit balance) would have been 100.09%. The funded ratio based on the market value of assets (excluding the credit balance) last year was 107.6%. Conclusion The remainder of this Report includes detailed actuarial valuation results, financial information, miscellaneous information and statistics, and a summary of plan provisions. SECTION B VALUATION RESULTS 5 ACTIVE MEMBERS Number 1,505 1,482 Covered Annual Payroll $80,250,993 $75,078,542 Average Annual Payroll $53,323 $50,660 Average Age 44.5 44.7 Average Past Service 11.1 11.3 Average Age at Hire 33.4 33.4 RETIREES & BENEFICIARIES Number 1,037 990 Annual Benefits $36,972,899 $34,727,568 Average Annual Benefit $35,654 $35,078 Average Age 65.9 65.8 DISABILITY RETIREES Number 137 135 Annual Benefits $3,837,858 $3,642,626 Average Annual Benefit $28,014 $26,982 Average Age 63.4 63.2 TERMINATED VESTED MEMBERS Number 63 69 Annual Benefits $1,230,068 $1,287,474 Average Annual Benefit $19,525 $18,659 Average Age 50.4 51.7 PARTICIPANT DATA January 1, 2016 January 1, 2015 6 A.Valuation Date B.ADC to Be Paid During Fiscal Year Ending 9/30/2017 9/30/2017 9/30/2016 C.Assumed Date of Employer Contrib.Evenly during Evenly during Evenly during first two quarters first two quarters first two quarters of fiscal year of fiscal year of fiscal year D.Annual Payment to Amortize Unfunded Actuarial Liability $0 *$0 *$0 * E.Employer Normal Cost 8,358,975 8,667,404 8,194,115 F.ADC if Paid on the Valuation Date: D+E 8,358,975 8,667,404 8,194,115 G.ADC Adjusted for Frequency of Payments 8,944,103 9,274,122 8,767,703 H.ADC as % of Covered Payroll 11.15 %11.56 %11.68 % I.Assumed Rate of Increase in Covered Payroll to Contribution Year 0.00 %0.00 %0.00 % J.Covered Payroll for Contribution Year 80,250,993 80,250,993 75,078,542 K.ADC for Contribution Year: H x J 8,944,103 9,274,122 8,767,703 L.Estimate of State Revenue in Contribution Year 12,000 12,000 12,000 M.Required Employer Contribution (REC) in Contribution Year 8,932,103 9,262,122 8,755,703 N.REC as % of Covered Payroll in Contribution Year: M ÷ J 11.13 %11.54 %11.66 % O.Credit Balance 15,570,503 15,570,503 10,381,518 ACTUARIALLY DETERMINED CONTRIBUTION (ADC) After Assumption Change Before Assumption Change January 1, 2016 January 1, 2016 January 1, 2015 * The annual payment to amortize the UAL is less than $0; however, under Chapter 112.66 of the Florida Statutes, the annual payment to amortize the UAL may not reduce the contribution below the amount required to fund the Normal Cost. 7 A.Valuation Date B.Actuarial Present Value of All Projected Benefits for 1.Active Members a. Service Retirement Benefits $ 346,868,915 $ 355,374,695 $ 342,575,863 b. Vesting Benefits 35,105,321 36,071,581 35,447,512 c. Disability Benefits 13,817,873 15,250,204 14,668,239 d. Preretirement Death Benefits 10,280,425 5,842,243 5,717,753 e. Return of Member Contributions 2,811,989 2,590,690 2,375,571 f. Total 408,884,523 415,129,413 400,784,938 2.Inactive Members a. Service Retirees & Beneficiaries 495,874,052 495,777,951 468,689,797 b. Disability Retirees 49,834,468 51,374,715 48,987,429 c. Terminated Vested Members 14,216,453 14,322,566 15,467,289 d. Total 559,924,973 561,475,232 533,144,515 3. Total for All Members 968,809,496 976,604,645 933,929,453 C.Actuarial Accrued (Past Service) Liability 857,177,619 861,458,028 824,274,144 D.Actuarial Value of Accumulated Plan Benefits per FASB No. 35 807,130,603 811,050,604 782,286,584 E.Plan Assets 1.Market Value 873,505,080 873,505,080 897,025,140 2. Actuarial Value 882,169,478 882,169,478 839,868,311 3. Actuarial Value Excluding Credit Balance 866,598,975 866,598,975 829,486,793 F.Actuarial Present Value of Projected Covered Payroll 600,851,333 607,200,631 569,273,667 G.Actuarial Present Value of Projected Member Contributions 53,256,611 53,826,133 50,430,672 H.Accumulated Value of Active Member Contributions 60,112,481 60,112,481 58,657,980 I.Unfunded Actuarial Accrued Liability (UAAL) Based on EAN Method = C. - E.3.(9,421,356) (5,140,947) (5,212,649) J.Funded Ratio = E.2. / C.102.92%102.40%101.89% K.Funded Ratio Excluding Credit Balance = E.3. / C.101.10%100.60%100.63% ACTUARIAL VALUE OF BENEFITS AND ASSETS January 1, 2016January 1, 2016 January 1, 2015 Before Assumption Change After Assumption Change 8 A.Valuation Date B.Normal Cost for 1.Service Retirement Benefits $10,488,778 $10,854,490 $10,301,632 2.Vesting 2,036,821 2,096,550 1,994,171 3.Disability Benefits 1,363,963 1,493,072 1,395,826 4.Death Benefits 456,044 239,906 228,103 5.Refund of Contributions 729,238 699,255 652,925 6.Total for Future Benefits 15,074,844 15,383,273 14,572,657 7.Assumed Amount for Administrative Expenses 302,086 302,086 179,906 8.Total Normal Cost 15,376,930 15,685,359 14,752,563 C.Expected Member Contributions 7,017,955 7,017,955 6,558,448 D.Employer Normal Cost: B8 - C 8,358,975 8,667,404 8,194,115 E. Employer Normal Cost as % of Covered Payroll 10.42%10.80%10.91% CALCULATION OF EMPLOYER NORMAL COST ENTRY AGE NORMAL METHOD January 1, 2016 January 1, 2016 January 1, 2015 After Assumption Change Before Assumption Change 9 $10,381,518 -8,755,703 +13,217,982 +726,706 15,570,503 Interest on Credit Balance Credit Balance at End of Year Credit Balance at Beginning of Year Required Employer Contribution Employer Contribution Made Reconcilation of Credit Balance 10 LIQUIDATION OF THE UNFUNDED ACTUARIAL ACCRUED LIABILITY (UAAL) UAAL Amortization Period and Payments Date Established Source Amount Years Remaining Amount Payment 1/1/2015 Fresh Start (5,212,649)$ 22 (5,616,260)$ (474,526)$ 1/1/2016 (Gain)/Loss 475,313 15 475,313 48,773 1/1/2016 Assumption Change (4,280,409) 25 (4,280,409) (343,275) (9,017,745) (9,421,356) (769,028) Original UAAL Current UAAL 11 Amortization Schedule The UAAL is being liquidated as a level dollar amount over the number of years remaining in the amortization period. The expected amortization schedule is as follows: 2016 $(9,421,356) 2017 (9,257,996) 2018 (9,083,195) 2019 (8,896,159) 2020 (8,696,030) 2021 (8,481,892) 2026 (7,164,240) 2031 (5,316,164) 2036 (2,424,028) 2041 - Amortization Schedule Year Expected UAAL 12 ACTUARIAL GAINS AND LOSSES The assumptions used to anticipate mortality, employment turnover, investment income, expenses, salary increases, and other factors have been based on long range trends and expectations. Actual experience can vary from these expectations. The variance is measured by the gain and loss for the period involved. If significant long term experience reveals consistent deviation from what has been expected and that deviation is expected to continue, the assumptions should be modified. The net actuarial gain (loss) for the past year is computed as follows: 1.Last Year's UAAL $(5,212,649) 2.Employer Normal Cost for Contribution Year 8,194,115 3.Last Year's Contributions 8,767,703 * 4. Interest at the Assumed Rate on: a.1 and 2 for one year 208,703 b.3 from dates paid 38,726 c. a - b 169,977 5.This Year's Expected UAAL: 1 + 2 - 3 + 4c (5,616,260) 6.This Year's Actual UAAL (Before any changes in benefits and assumptions):(5,140,947) 7.Net Actuarial Gain (Loss): (5) - (6)(475,313) 8.Gain (Loss) Due to Investments 5,590,074 9.Gain (Loss) Due to other sources (6,065,387) A. Derivation of the Current UAAL * Excludes the portion of the actual contribution above the required contribution that was used to increase the credit balance. 13 Gains (losses) in previous years have been as follows: Year Ending Gain 12/31 (Loss) 2009 $32,358,262 (4.89)% 2010 2,311,412 (0.37) 2011 (13,721,771)2.28 2012 (7,015,253)1.15 2013 62,452,347 (11.02) 2014 34,213,347 (6.01) 2015 (475,313)0.07 ** Employer Cost Rate* Change in * Before 2015, Change in Normal Cost Rate. ** Before reflecting Chapter 112.66 of the Florida Statutes. Since the annual payment to amortize the UAL is less than $0, the net effect of the 2015 loss on the required employer contribution is $0 after reflecting Chapter 112.66 of the Florida Statutes (the requirement to fund at least the normal cost). 14 The fund earnings and salary increase assumptions have considerable impact on the cost of the Plan so it is important that they are in line with the actual experience. The following table shows the actual fund earnings and salary increase rates compared to the assumed rates for the last few years: 12/31/1986 N/A 7.00 %7.40 %5.00 % 12/31/1987 N/A 7.00 5.90 5.00 12/31/1988 N/A 7.00 9.10 5.00 12/31/1989 N/A 7.00 8.70 5.00 12/31/1990 N/A 7.00 5.30 5.00 12/31/1991 N/A 7.00 6.10 5.00 12/31/1992 N/A 7.00 6.80 5.00 12/31/1993 7.42 %7.00 1.20 5.00 12/31/1994 6.28 7.00 4.40 5.00 12/31/1995 9.14 7.00 6.40 5.00 12/31/1996 11.54 7.00 6.70 5.00 12/31/1997 13.74 7.00 5.60 5.00 12/31/1998 15.28 7.00 7.40 5.00 12/31/1999 17.96 7.00 4.20 5.00 12/31/2000 12.42 7.00 5.80 5.00 12/31/2001 7.40 7.00 5.90 5.00 12/31/2002 (1.85)7.50 5.80 6.00 12/31/2003 7.45 7.50 6.40 6.00 12/31/2004 2.18 7.50 6.38 6.00 12/31/2005 4.58 7.50 5.49 6.00 12/31/2006 7.87 7.50 5.15 6.00 12/31/2007 10.68 7.50 6.62 6.00 12/31/2008 (10.61)7.50 4.25 6.00 12/31/2009 16.53 7.50 3.29 6.00 12/31/2010 5.98 7.50 1.27 6.00 12/31/2011 4.46 7.50 2.56 6.00 12/31/2012 5.50 7.50 4.48 6.00 12/31/2013 14.04 7.00 3.16 4.07 12/31/2014 11.04 7.00 3.38 4.04 12/31/2015 7.64 7.00 8.65 *4.09 Averages 7.94 %---5.44 %--- Assumed Salary Increases Actual Investment Return Year Ending Actual Assumed * Salary for the year ending 12/31/2015 includes 27 pay periods rather than 26. The actual investment return rates shown above are based on the actuarial value of assets. The actual salary increase rates shown above are the increases received by those active members who were included in the actuarial valuations both at the beginning and the end of each year. 15 History of Investment Return Based on Actuarial Value of Assets -15% -10% -5% 0% 5% 10% 15% 20% 25% 30% -15% -10% -5% 0% 5% 10% 15% 20% 25% 30% Plan Year End Actual Assumed History of Salary Increases 0% 5% 10% 15% 0% 5% 10% 15% Plan Year End Compared to Previous Year Actual Assumed 16 Active Members Year Vested Other End of Ended A E A E A E A E A A A E Year 12/31/2009 49 110 54 57 0 6 0 2 10 46 56 93 1,567 12/31/2010 78 137 68 51 2 6 3 2 15 49 64 85 1,508 12/31/2011 84 124 43 49 6 6 0 2 11 64 75 84 1,468 12/31/2012 119 113 51 52 3 6 1 2 18 40 58 81 1,474 12/31/2013 102 98 27 42 2 3 4 2 11 54 65 79 1,478 12/31/2014 135 131 45 51 5 3 2 2 21 58 79 78 1,482 12/31/2015 145 122 43 52 7 3 1 2 18 53 71 82 1,505 12/31/2016 60 3 3 89 7 Yr Totals *712 835 331 354 25 33 11 14 104 364 468 582 * Totals are through current Plan Year only. Terminations Year Retirement Retirement Death Totals During Service Disability Actual (A) Compared to Expected (E) Decrements Among Active Employees Number Added Year Ended Number Number 12/31/2009 12 $142,606 16 $313,189 12/31/2010 12 139,508 18 363,242 12/31/2011 13 220,877 19 416,467 12/31/2012 12 232,755 20 466,010 12/31/2013 20 401,192 20 480,787 12/31/2014 16 275,728 21 510,892 12/31/2015 19 385,405 22 558,603 12/31/2016 25 708,907 Actual (A) Compared to Expected (E) Deaths Among Retirees and Beneficiaries Actual During Year Annual Pensions Annual Pensions Expected During Year Active Members Inactive Members 1/1/07 1,692 819 $79,385,090 $559,830,590 N/A N/A N/A $9,192,407 11.58 % 1/1/08 1,641 878 80,371,617 610,979,087 N/A N/A N/A 6,920,400 8.61 1/1/09 1,628 903 82,104,837 536,834,473 N/A N/A N/A 20,005,238 24.37 1/1/10 1,567 955 80,443,199 618,444,906 $647,167,565 $28,722,659 95.6 % 15,879,628 19.74 1/1/11 1,508 1,024 76,505,599 646,956,800 672,786,812 25,830,012 96.2 15,461,725 20.21 1/1/12 1,468 1,072 74,765,020 664,087,199 702,438,432 38,351,233 94.5 17,064,100 22.82 1/1/13 1,474 1,127 74,422,344 688,731,221 774,749,811 86,018,590 88.9 12,845,501 17.26 1/1/14 1,478 1,144 74,254,159 772,411,068 795,927,127 23,516,059 97.0 4,626,039 6.23 1/1/15 1,482 1,194 75,078,542 829,486,793 824,274,144 (5,212,649)100.6 8,194,115 10.91 1/1/16 1,505 1,237 80,250,993 866,598,975 857,177,619 (9,421,356)101.1 8,358,975 10.42 Unfunded Actuarial Liability (Entry Age)* RECENT HISTORY OF VALUATION RESULTS Number of Employer Normal Cost* Valuation Date Covered Annual Payroll Actuarial Value of Assets % of PayrollAmount Actuarial Accrued Liability (Entry Age) Funded Ratio * Starting with the January 1, 2015 valuation, the Employer Normal Cost is calculated under the Entry Age Normal Method and the Credit Balance is excluded from the Actuarial Value of Assets. Results before January 1, 2010 are from the January 1, 2009 Report prepared by PricewaterhouseCoopers. 17 1/1/07 9/30/08 $12,532,399 15.79 %$12,000 0.02 %$12,520,399 15.77 %$12,520,399 $12,000 $12,532,399 1/1/08 9/30/09 10,086,978 12.55 12,000 0.01 10,074,978 12.54 10,074,978 12,000 10,086,978 1/1/09 9/30/10 23,960,586 29.18 12,000 0.01 23,948,586 29.17 23,948,586 12,000 23,960,586 1/1/10 9/30/11 19,373,992 24.08 12,000 0.01 19,361,992 24.07 19,361,992 12,000 19,373,992 1/1/11 9/30/12 18,898,567 24.70 12,000 0.01 18,886,567 24.69 18,886,567 12,000 18,898,567 1/1/12 9/30/13 20,925,720 27.99 12,000 0.02 20,913,720 27.97 20,913,720 12,000 20,925,720 1/1/13 9/30/14 19,608,078 26.35 12,000 0.02 19,596,078 26.33 19,596,078 12,000 19,608,078 1/1/14 9/30/15 10,803,098 14.55 12,000 0.02 10,791,098 14.53 10,791,098 12,000 10,803,098 1/1/15 9/30/16 8,767,703 11.68 12,000 0.02 8,755,703 11.66 8,755,703 12,000 8,767,703 1/1/16 9/30/17 8,944,103 11.15 12,000 0.02 8,932,103 11.13 --- --- --- RECENT HISTORY OF REQUIRED AND ACTUAL CONTRIBUTIONS Estimated State Required Contributions Employer & State Net Employer % of Payroll Employer State Valuation End of Year To Which Valuation Applies Amount Actual Contributions % of Payroll TotalAmount % of PayrollAmount Results before January 1, 2010 are from the January 1, 2009 Report prepared by PricewaterhouseCoopers. 18 19 ACTUARIAL ASSUMPTIONS AND COST METHOD Valuation Methods Actuarial Cost Method - Normal cost and the allocation of benefit values between service rendered before and after the valuation date were determined using an Individual Entry-Age Actuarial Cost Method having the following characteristics: (i) the annual normal cost for each individual active member, payable from the date of employment to the date of retirement, is sufficient to accumulate the value of the member’s benefit at the time of retirement; (ii) each annual normal cost is a constant percentage of the member’s year by year projected covered pay. Actuarial gains/(losses), as they occur, reduce (increase) the Unfunded Actuarial Accrued Liability. Financing of Unfunded Actuarial Accrued Liabilities - Unfunded Actuarial Accrued Liabilities (full funding credit if assets exceed liabilities) were amortized by level (principal & interest combined) dollar amount contributions over a reasonable period of future years. Actuarial Value of Assets - The Actuarial Value of Assets phase in the difference between the expected and actual return on market value of assets at the rate of 20% per year. The Actuarial Value of Assets will be further adjusted to the extent necessary to fall within the corridor whose lower limit is 80% of the Market Value of plan assets and whose upper limit is 120% of the Market Value of plan assets. During periods when investment performance exceeds the assumed rate, Actuarial Value of Assets will tend to be less than Market Value. During periods when investment performance is less than assumed rate, Actuarial Value of Assets will tend to be greater than Market Value. Valuation Assumptions The actuarial assumptions used in the valuation are shown in this Section. Economic Assumptions The investment return rate assumed in the valuations is 7.00% per year, compounded annually (net rate after investment expenses). The Wage Inflation Rate assumed in this valuation was 2.50% per year. The Wage Inflation Rate is defined to be the portion of total pay increases for an individual that are due to macro economic forces including productivity, price inflation, and labor market conditions. The wage inflation rate does not include pay changes related to individual merit and seniority effects. The assumed real rate of return over wage inflation is defined to be the portion of total investment return that is more than the assumed wage inflation rate. Considering other economic assumptions, the 7.00% investment return rate translates to an assumed real rate of return over wage inflation of 4.50%. The rate of salary increase used for individual members can be seen in the tables below. Part of the assumption is for merit and/or seniority increase, and 2.50% recognizes wage inflation, including price inflation, productivity increases, and other macroeconomic forces. This assumption is used to project a member’s current salary to the salaries upon which benefits will be based. 20 Years of Service 1 2.50%7.90% 2 2.50%7.70% 3 2.50%7.00% 4 2.50%5.25% 5 - 14 2.50%4.25% 15 and Higher 2.50%3.50%1.00% % Increase in Salary - Hazardous Duty 1.75% Merit and Seniority Base (Inflation) Total Increase 5.40% 5.20% 4.50% 2.75% Years of Service 1 2.50%7.90% 2 2.50%5.75% 3 2.50%5.00% 4 2.50%4.50% 5 - 9 2.50%4.00% 10 and Higher 2.50%3.50% 2.50% 2.00% 1.50% 1.00% % Increase in Salary - Non-Hazardous Duty Merit and Seniority Base (Inflation) Total Increase 5.40% 3.25% Demographic Assumptions The mortality table for Hazardous Duty members is the RP-2000 Mortality Table for annuitants with future improvements in mortality projected to all future years using Scale BB. For females, the base mortality rates include a 100% white collar adjustment. For males, the base mortality rates include a 90% blue collar adjustment and a 10% white collar adjustment. These are the same rates currently in use for Special Risk Class members of the Florida Retirement System (FRS) (and they are based on a statewide experience study). FRS Healthy Mortality for Special Risk Class Members Sample Attained Ages (in 2016)Men Women Men Women 50 0.54 %0.23 %33.78 38.21 55 0.67 0.32 29.14 33.19 60 0.91 0.48 24.56 28.29 65 1.32 0.75 20.17 23.56 70 2.04 1.25 16.05 19.10 75 3.31 2.12 12.34 15.04 80 5.45 3.55 9.15 11.43 Probability of Future Life Dying Next Year Expectancy (years) 21 This assumption is used to measure the probabilities of each benefit payment being made after retirement. For active members, the probabilities of dying before retirement were based upon the same mortality table as members dying after retirement. All deaths before retirement are assumed to be non- service connected. For disabled retirees, the mortality table used was 60% of the RP-2000 mortality and 40% of the RP2000 Mortality with a White Collar adjustment for disabled annuitants, set-back 4 years for males and set- forward 2 years for females, with no provision being made for future mortality improvements. These are the same rates currently in use for Special Risk Class members of the Florida Retirement System (FRS) (and they are based on a statewide experience study). FRS Disabled Mortality for Special Risk Class Members Sample Attained Ages Men Women Men Women 50 1.67 %0.91 %23.74 27.06 55 2.03 1.26 20.77 23.37 60 2.47 1.67 17.91 19.90 65 3.07 2.24 15.15 16.62 70 3.90 3.18 12.52 13.58 75 5.30 4.60 10.02 10.86 80 7.59 6.66 7.80 8.48 Probability of Future Life Dying Next Year Expectancy (years) The mortality table for Nonhazardous Duty members is the RP-2000 Mortality Table for annuitants with future improvements in mortality projected to all future years using Scale BB. For females, the base mortality rates include a 100% white collar adjustment. For males, the base mortality rates include a 50% blue collar adjustment and a 50% white collar adjustment. These are the same rates currently in use for Non-Special Risk Class members of the Florida Retirement System (FRS) (and they are based on a statewide experience study). FRS Healthy Mortality for Non-Special Risk Class Members Sample Attained Ages (in 2016)Men Women Men Women 50 0.55 %0.23 %34.55 38.21 55 0.60 0.32 29.92 33.19 60 0.77 0.48 25.25 28.29 65 1.16 0.75 20.73 23.56 70 1.81 1.25 16.49 19.10 75 3.01 2.12 12.64 15.04 80 5.10 3.55 9.33 11.43 Probability of Future Life Dying Next Year Expectancy (years) This assumption is used to measure the probabilities of each benefit payment being made after retirement. For active members, the probabilities of dying before retirement were based upon the same mortality table as members dying after retirement. All deaths before retirement are assumed to be non- service connected. 22 For disabled retirees, the mortality table used was the RP-2000 mortality for disabled annuitants, set-back 4 years for males and set-forward 2 years for females, with no provision being made for future mortality improvements. These are the same rates currently in use for Non-Special Risk Class members of the Florida Retirement System (FRS) (and they are based on a statewide experience study). FRS Disabled Mortality for Non-Special Risk Class Members Sample Attained Ages Men Women Men Women 50 2.38 %1.35 %20.25 23.74 55 3.03 1.87 17.78 20.46 60 3.67 2.41 15.55 17.43 65 4.35 3.13 13.44 14.58 70 5.22 4.29 11.39 11.96 75 6.58 5.95 9.43 9.65 80 8.70 8.23 7.65 7.66 Probability of Future Life Dying Next Year Expectancy (years) Before the change in assumptions, the mortality table was the fully generational RP-2000 Combined Healthy Participant Mortality Table for males and females. Mortality improvements are projected to all future years from the year 2000 using Scale BB. Sample Attained Ages (in 2016)Men Women Men Women 50 0.20 %0.16 %35.58 38.00 55 0.35 0.25 30.45 32.85 60 0.60 0.43 25.51 27.83 65 1.05 0.80 20.84 23.06 70 1.74 1.38 16.52 18.66 75 2.97 2.32 12.63 14.68 80 5.05 3.78 9.28 11.17 Probability of Future Life Dying Next Year Expectancy (years) 23 The rates of retirement used to measure the probability of eligible members retiring under normal and early retirement eligibility during the next year were as follows: Years of Probability of Service Age Retirement 10 - 19 50 - 59 10 % 60 - 64 50 65 & Over 100 20 & Over Under 45 20 45 - 49 15 50 - 54 25 55 - 59 35 60 - 64 50 65 & Over 100 Hazardous Duty Retirement Years of Probability of Service Age Retirement 10 - 19 65 - 69 45 % 70 - 74 50 75 & Over 100 20 - 29 55 - 59 20 60 - 64 25 65 - 69 45 70 & Over 100 30 & Over Under 65 40 65 - 69 50 70 & Over 100 Non-Hazardous Duty Retirement 24 Rates of separation from active membership were as shown below (rates do not apply to members eligible to retire and do not include separation on account of death or disability). This assumption measures the probabilities of members remaining in employment. Years of % of Active Members Service Age Separating Within Next Year Under 1 All Ages 12.8 % 1 All Ages 5.7 2 All Ages 4.8 3 & Over Under 30 4.0 30 - 49 1.0 50 & Over 0.0 Hazardous Duty Withdrawal - Males and Females Years of % of Active Members Years of % of Active Members Service Age Separating Within Next Year Service Age Separating Within Next Year Under 1 Under 30 25.0 %Under 1 Under 25 35.0 % 30 - 34 20.0 25 - 34 30.0 35 - 49 15.0 35 - 39 25.0 50 - 59 10.0 40 - 49 20.0 60 & Over 5.0 50 - 59 15.0 60 & Over 5.0 1 Under 60 15.0 60 & Over 10.0 1 Under 30 25.0 30 - 59 15.0 2 Under 45 10.0 60 & Over 10.0 45 & Over 5.0 2 Under 45 15.0 3 Under 25 15.0 45 - 59 7.5 25 - 34 12.5 60 & Over 6.5 35 & Over 5.0 3 Under 30 20.0 4 Under 30 15.0 30 - 59 10.0 30 - 44 10.0 60 & Over 5.0 45 & Over 5.0 4 Under 30 15.0 5 & Over Under 30 12.5 30 - 34 12.5 30 - 34 7.0 35 - 44 10.0 35 - 39 6.0 45 & Over 5.0 40 - 44 5.0 45 - 49 3.5 5 & Over Under 30 7.5 50 - 54 4.0 30 - 39 6.5 55 - 59 5.0 40 - 44 5.0 60 & Over 7.5 45 & Over 4.0 Non-Hazardous Duty Withdrawal - Males Non-Hazardous Duty Withdrawal - Females 25 Rates of disability among active members (100% of disabilities are assumed to be service-connected). Sample Ages 20 0.25 %0.375 % 25 0.25 0.375 30 0.25 0.375 35 0.30 0.450 40 0.40 0.600 45 0.50 0.750 50 0.55 0.825 55 0.60 0.900 60 0.75 1.125 65 1.00 1.500 70 1.75 2.625 Males Females Disabled Within Next Year % of Active Members Becoming Hazardous Duty Disability Sample Ages 20 0.05 %0.05 % 25 0.05 0.05 30 0.05 0.05 35 0.06 0.06 40 0.07 0.07 45 0.09 0.09 50 0.12 0.12 55 0.17 0.17 60 0.27 0.27 65 0.42 0.42 70 0.67 0.67 Non-Hazardous Duty Disability % of Active Members Becoming Disabled Within Next Year Males Females 26 Miscellaneous and Technical Assumptions Administrative & Investment Expenses The investment return assumption is intended to be the net return after investment expenses. Annual administrative expenses are assumed to be equal to the administrative expenses of the previous year. Assumed administrative expenses are added to the Normal Cost. Benefit Service Exact fractional service is used to determine the amount of benefit payable. Cost of Living Increases The adjustment is 1.5% annually commencing on each April 1 for all retirees and beneficiaries who have received at least 6 monthly benefit payments. There is a five-year delay in the COLA for non- grandfathered non-hazardous duty members for benefits accrued after January 1, 2013. There is no COLA for non-grandfathered hazardous duty members for benefits accrued after January 1, 2013. Decrement Operation Disability and mortality decrements operate during retirement eligibility. Decrement Timing Decrements of all types are assumed to occur at the beginning of the year. Eligibility Testing Eligibility for benefits is determined based upon the age nearest birthday and service nearest whole year on the date the decrement is assumed to occur. Forfeitures For vested separations from service, it is assumed that 0% of members separating will withdraw their contributions and forfeit an employer financed benefit. It was further assumed that the liability at termination is the greater of the vested deferred benefit (if any) or the member’s accumulated contributions. Incidence of Contributions Employer contributions are assumed to be made in equal installments during the first two quarters of the fiscal year. Member contributions are assumed to be received continuously throughout the year based upon the computed percent of payroll shown in this report, and the actual payroll payable at the time contributions are made. Marriage Assumption 85% of males and 85% of females are assumed to be married for purposes of death-in-service benefits. Male spouses are assumed to be five years older than female spouses for active member valuation purposes. 27 Normal Form of Benefit The normal form of benefit is a life annuity for non-grandfathered non-hazardous duty members. For all other members, the normal form of benefit is a life annuity that includes a survivor benefit where after the participant’s death, 100% is payable to the spouse for five years, after which the benefit is reduced to 50%. Pay Increase Timing End of fiscal year. This is equivalent to assuming that reported pays represent the annual rate of pay on the valuation date. The pay used for the valuation is equal to the greater of the actual pay for the plan year increased by the salary scale assumption rate (which varies by years of service) and the annual rate of pay on the valuation date. Service Credit Accruals It is assumed that members accrue one year of service credit per year. 28 GLOSSARY Actuarial Accrued Liability (AAL) The difference between the Actuarial Present Value of Future Benefits, and the Actuarial Present Value of Future Normal Costs. Actuarial Assumptions Assumptions about future plan experience that affect costs or liabilities, such as: mortality, withdrawal, disablement, and retirement; future increases in salary; future rates of investment earnings; future investment and administrative expenses; characteristics of members not specified in the data, such as marital status; characteristics of future members; future elections made by members; and other items. Actuarial Cost Method A procedure for allocating the Actuarial Present Value of Future Benefits between the Actuarial Present Value of Future Normal Costs and the Actuarial Accrued Liability. Actuarial Equivalent Of equal Actuarial Present Value, determined as of a given date and based on a given set of Actuarial Assumptions. Actuarial Present Value (APV) The amount of funds required to provide a payment or series of payments in the future. It is determined by discounting the future payments with an assumed interest rate and with the assumed probability each payment will be made. Actuarial Present Value of Future Benefits (APVFB) The Actuarial Present Value of amounts which are expected to be paid at various future times to active members, retired members, beneficiaries receiving benefits, and inactive, nonretired members entitled to either a refund or a future retirement benefit. Expressed another way, it is the value that would have to be invested on the valuation date so that the amount invested plus investment earnings would provide sufficient assets to pay all projected benefits and expenses when due. Actuarial Valuation The determination, as of a valuation date, of the Normal Cost, Actuarial Accrued Liability, Actuarial Value of Assets, and related Actuarial Present Values for a plan. An Actuarial Valuation for a governmental retirement system typically also includes calculations of the Funded Ratio and the Actuarially Determined Contribution (ADC). Actuarial Value of Assets The value of the assets as of a given date, used by the actuary for valuation purposes. This may be the market or fair value of plan assets or a smoothed value in order to reduce the year-to-year volatility of calculated results, such as the funded ratio and the Actuarially Determined Contribution (ADC). 29 Amortization Method A method for determining the Amortization Payment. The most common methods used are level dollar and level percentage of payroll. Under the Level Dollar method, the Amortization Payment is one of a stream of payments, all equal, whose Actuarial Present Value is equal to the UAAL. Under the Level Percentage of Pay method, the Amortization Payment is one of a stream of increasing payments, whose Actuarial Present Value is equal to the UAAL. Under the Level Percentage of Pay method, the stream of payments increases at the rate at which total covered payroll of all active members is assumed to increase. Amortization Payment That portion of the plan contribution or ADC which is designed to pay interest on and to amortize the Unfunded Actuarial Accrued Liability. Amortization Period The period used in calculating the Amortization Payment. Actuarially Determined Contribution (ADC) The employer’s periodic required contributions, expressed as a dollar amount or a percentage of covered plan compensation. The ADC consists of the Employer Normal Cost and Amortization Payment. Closed Amortization Period A specific number of years that is reduced by one each year, and declines to zero with the passage of time. For example if the amortization period is initially set at 30 years, it is 29 years at the end of one year, 28 years at the end of two years, etc. Employer Normal Cost The portion of the Normal Cost to be paid by the employer. This is equal to the Normal Cost less expected member contributions. Equivalent Single Amortization Period For plans that do not establish separate amortization bases (separate components of the UAAL), this is the same as the Amortization Period. For plans that do establish separate amortization bases, this is the period over which the UAAL would be amortized if all amortization bases were combined upon the current UAAL payment. Experience Gain/Loss A measure of the difference between the normal cost rate from last year and the normal cost rate from this year. Funded Ratio The ratio of the Actuarial Value of Assets to the Actuarial Accrued Liability. GASB Governmental Accounting Standards Board. GASB No. 68 and GASB No. 67 These are the governmental accounting standards that set the accounting rules for public retirement systems and the employers that sponsor or contribute to them. Statement No. 68 sets the accounting rules for the employers that sponsor or contribute to public retirement systems, while Statement No. 67 sets the rules for the systems themselves. 30 Normal Cost The annual cost assigned, under the Actuarial Cost Method, to the current plan year. Open Amortization Period An open amortization period is one which is used to determine the Amortization Payment but which does not change over time. In other words, if the initial period is set as 30 years, the same 30-year period is used in determining the Amortization Period each year. In theory, if an Open Amortization Period is used to amortize the Unfunded Actuarial Accrued Liability, the UAAL will never completely disappear, but will become smaller each year, either as a dollar amount or in relation to covered payroll. Unfunded Actuarial Accrued Liability The difference between the Actuarial Accrued Liability and Actuarial Value of Assets. Valuation Date The date as of which the Actuarial Present Value of Future Benefits are determined. The benefits expected to be paid in the future are discounted to this date. SECTION C PENSION FUND INFORMATION 31 Statement of Plan Assets at Market Value 2015 2014 A.Cash and Cash Equivalents (Operating Cash)-$ -$ B.Receivables 1.Member Contributions -$ -$ 2.Employer Contributions 7,172,984 8,100,300 3.Investment Income and Other Receivables 2,317,272 2,512,142 4.Total Receivables 9,490,256$ 10,612,442$ C.Investments 1.Short-Term Investments 7,911,301$ 11,566,747$ 2.Domestic Equities 432,163,634 450,794,323 3.International Equities 113,230,315 110,222,671 4.Commodities - - 5.Domestic Fixed Income 245,680,935 266,691,996 6.International Fixed Income - - 7.Real Estate 66,204,558 48,080,996 8.Private Equity - - 9.Total Investments 865,190,743$ 887,356,733$ D.Liabilities 1.Benefits Payable -$ -$ 2.Accrued Expenses and Other Payables (1,175,919) (944,035) 3.Total Liabilities (1,175,919)$ (944,035)$ E.Total Market Value of Assets Available for Benefits 873,505,080$ 897,025,140$ F.Allocation of Investments 1.Short-Term Investments 0.91%1.30% 2.Domestic Equities 49.95%50.80% 3.International Equities 13.09%12.42% 4.Commodities 0.00%0.00% 5.Domestic Fixed Income 28.40%30.06% 6.International Fixed Income 0.00%0.00% 7.Real Estate 7.65%5.42% 8.Private Equity 0.00%0.00% 9.Total Investments 100.00%100.00% December 31 Item 32 Reconciliation of Plan Assets 2015 2014 A.Market Value of Assets at Beginning of Year 897,025,140$ 846,966,929$ B.Revenues and Expenditures 1.Contributions a.Employee Contributions 6,808,046$ 7,095,129$ b.Employer Contributions 13,217,982 15,404,370 c.State Contributions 12,000 12,000 d.Total 20,038,028$ 22,511,499$ 2.Investment Income a.Interest, Dividends, and Other Income 18,157,941$ 16,733,940$ b.Net Realized Gains/(Losses)40,834,745 54,622,256 c.Net Unrealized Gains/(Losses)(56,180,886) 499,182 d.Investment Expenses (5,274,984) (4,898,709) e.Net Investment Income (2,463,184)$ 66,956,669$ 3.Benefits and Refunds a.Refunds (936,127)$ (1,393,782)$ b.Regular Monthly Benefits (39,856,691) (37,836,269) c.Partial Lump-Sum Benefits Paid - - d.Total (40,792,818)$ (39,230,051)$ 4.Administrative and Miscellaneous Expenses (302,086)$ (179,906)$ 5.Transfers -$ -$ C.Market Value of Assets at End of Year 873,505,080$ 897,025,140$ December 31 Item Development of Actuarial Value of Assets Valuation Date - December 31 2014 2015 2016 2017 2018 2019 A.Actuarial Value of Assets Beginning of Year 772,411,068$ 839,868,311$ B.Market Value End of Year 897,025,140 873,505,080 C.Market Value Beginning of Year 846,966,929 897,025,140 D.Non-Investment/Administrative Net Cash Flow (16,898,458) (21,056,876) E.Investment Income E1. Actual Market Total: B-C-D 66,956,669 (2,463,184) E2. Assumed Rate of Return 7.00%7.00%7.00%7.00%7.00%7.00% E3. Assumed Amount of Return 58,338,901 61,768,947 E4. Amount Subject to Phase-In: E1–E3 8,617,768 (64,232,131) F.Phase-In Recognition of Investment Income F1. Current Year: 0.2 x E4 1,723,554 (12,846,426) F2. First Prior Year 14,539,026 1,723,554 (12,846,426) F3. Second Prior Year 8,472,595 14,539,026 1,723,554 (12,846,426) F4. Third Prior Year (10,299,653) 8,472,595 14,539,026 1,723,554 (12,846,426) F5. Fourth Prior Year 11,581,278 (10,299,653) 8,472,595 14,539,026 1,723,552 (12,846,427) F6. Total Phase-Ins 26,016,800 1,589,096 11,888,749 3,416,154 (11,122,874) (12,846,427) G.Actuarial Value of Assets End of Year G1. Preliminary Actuarial Value of Assets 839,868,311$ 882,169,478$ G2. Upper Corridor Limit: 120%*B 1,076,430,168$ 1,048,206,096$ G3. Lower Corridor Limit: 80%*B 717,620,112$ 698,804,064$ G4. Funding Value End of Year 839,868,311$ 882,169,478$ G5. Credit Balance 10,381,518$ 15,570,503$ G6. Final Actuarial Value of Assets 829,486,793$ 866,598,975$ H.Recognized Investment Earnings 84,355,701$ 63,358,043$ I.Difference between Market & Actuarial Value 57,156,829$ (8,664,398)$ J.Actuarial Rate of Return 11.04%7.64% K.Market Value Rate of Return 7.99%-0.28% L.Ratio of Actuarial Value of Assets to Market Value 93.63%100.99% The Actuarial Value of Assets recognizes assumed investment return (line E3) fully each year. Differences between actual and assumed investment income (Line E4) are phased-in over a closed 5-year period. During periods when investment performance exceeds the assumed rate, Actuarial Value of Assets will tend to be less than Market Value. During periods when investment performance is less than the assumed rate, Actuarial Value of Assets will tend to be greater than Market Value. If assumed rates are exactly realized for 5 consecutive years, Actuarial Value of Assets will become equal to Market Value. 33 34 Investment Rate of Return Plan Year Ending December 31 1986 13.21 % N/A 1987 10.78 N/A 1988 9.12 N/A 1989 20.84 N/A 1990 6.21 N/A 1991 28.52 N/A 1992 6.49 N/A 1993 9.29 7.42 % 1994 0.89 6.28 1995 23.36 9.14 1996 14.80 11.54 1997 17.49 13.74 1998 16.74 15.28 1999 18.61 17.96 2000 (3.43)12.42 2001 (5.16)7.40 2002 (8.83)(1.85) 2003 20.08 7.45 2004 9.73 2.18 2005 6.67 4.58 2006 11.80 7.87 2007 7.29 10.68 2008 (27.01)(10.61) 2009 30.93 16.53 2010 17.50 5.98 2011 (0.32)4.46 2012 13.92 5.50 2013 16.90 14.04 2014 7.99 11.04 2015 (0.28)7.64 Average returns: Last five years:7.41 % 8.48 % Last ten years:6.77 % 7.07 % All years:9.14 % 7.94 % Actuarial*Market* *Before investment expenses prior to 2013. The above rates are based on the retirement system’s financial information reported to the actuary. They may differ from figures that the investment consultant reports, in part because of differences in the handling of administrative and investment expenses, and in part because of differences in the handling of cash flows. SECTION D FINANCIAL ACCOUNTING INFORMATION 35 A.Valuation Date B.Actuarial Present Value of Accumulated Plan Benefits 1.Vested Benefits a.Members Currently Receiving Payments $545,708,520 $517,677,226 b.Terminated Vested Members 14,216,453 15,467,289 c.Other Members 231,093,716 232,124,866 d.Total 791,018,689 765,269,381 2.Non-Vested Benefits 16,111,914 17,017,203 3.Total Actuarial Present Value of Accumulated Plan Benefits: 1d + 2 807,130,603 782,286,584 4.Accumulated Contributions of Active Members 60,112,481 58,657,980 C.Changes in the Actuarial Present Value of Accumulated Plan Benefits 1.Total Value at Beginning of Year 782,286,584 755,555,771 2.Increase (Decrease) During the Period Attributable to: a.Plan Amendment 0 0 b.Change in Actuarial Assumptions (3,920,001)0 c.Latest Member Data, Benefits Accumulated and Decrease in the Discount Period 69,556,838 65,960,864 d.Benefits Paid (40,792,818)(39,230,051) e.Net Increase 24,844,019 26,730,813 3.Total Value at End of Period 807,130,603 782,286,584 D.Market Value of Assets 873,505,080 897,025,140 E.Actuarial Assumptions - See page entitled Actuarial Assumptions and Methods FASB NO. 35 INFORMATION January 1, 2016 January 1, 2015 SECTION E MISCELLANEOUS INFORMATION 36 A. 1.Number Included in Last Valuation 1,482 1,478 2.New Members Included in Current Valuation 145 134 3.Non-Vested Employment Terminations (53)(58) 4.Vested Employment Terminations (18)(21) 5.Service Retirements (43)(45) 6.Disability Retirements (4)(5) 7.Deaths (1)(2) 8.Pending Disabilities (3)0 9.Data Corrections/Rehired Members 0 1 10.Number Included in This Valuation 1,505 1,482 B. 1.Number Included in Last Valuation 69 60 2.Additions from Active Members 18 21 3.Lump Sum Payments/Refund of Contributions (7)(5) 4.Payments Commenced (17)(7) 5.Deaths 0 0 6.Conversion from Disability/Rehired Members 0 0 7.Data Corrections 0 0 8.Number Included in This Valuation 63 69 C. 1.Number Included in Last Valuation 1,125 1,084 2.Additions from Active Members 47 50 3.Additions from Terminated Vested Members 17 7 4.Deaths Resulting in No Further Payments (19)(16) 5.Deaths Resulting in New Survivor Benefits 1 2 6.Pending Disabilities 3 0 7.End of Certain Period - No Further Payments 0 (2) 8.Data Correction/Waiver of Benefits 0 0 9.Number Included in This Valuation 1,174 1,125 RECONCILIATION OF MEMBERSHIP DATA Active Members Service Retirees, Disability Retirees and Beneficiaries Terminated Vested Members From 1/1/2014From 1/1/2015 To 1/1/2015To 1/1/2016 37 ACTIVE PARTICIPANT DISTRIBUTION ALL ACTIVE MEMBERS Age Group 0-1 1-2 2-3 3-4 4-5 5-9 10-14 15-19 20-24 25-29 30-34 35+Totals 15-19 NO.1 0 0 0 0 0 0 0 0 0 0 0 1 TOT PAY 26,473 0 0 0 0 0 0 0 0 0 0 0 26,473 AVG PAY 26,473 0 0 0 0 0 0 0 0 0 0 0 26,473 20-24 NO.31 15 8 1 1 0 0 0 0 0 0 0 56 TOT PAY 1,020,605 588,564 253,342 35,014 39,996 0 0 0 0 0 0 0 1,937,521 AVG PAY 32,923 39,238 31,668 35,014 39,996 0 0 0 0 0 0 0 34,599 25-29 NO.38 22 20 12 8 23 1 0 0 0 0 0 124 TOT PAY 1,316,329 883,101 869,198 446,301 378,821 1,126,310 37,501 0 0 0 0 0 5,057,561 AVG PAY 34,640 40,141 43,460 37,192 47,353 48,970 37,501 0 0 0 0 0 40,787 30-34 NO.26 23 19 13 12 60 26 0 0 0 0 0 179 TOT PAY 912,552 946,648 845,964 596,145 547,975 3,250,212 1,299,487 0 0 0 0 0 8,398,983 AVG PAY 35,098 41,159 44,524 45,857 45,665 54,170 49,980 0 0 0 0 0 46,922 35-39 NO.9 14 8 5 11 42 53 15 0 0 0 0 157 TOT PAY 313,546 637,109 416,141 209,260 481,365 2,616,145 3,216,155 895,901 0 0 0 0 8,785,622 AVG PAY 34,838 45,508 52,018 41,852 43,760 62,289 60,682 59,727 0 0 0 0 55,959 40-44 NO.12 9 10 6 7 47 57 55 9 0 0 0 212 TOT PAY 448,574 347,341 431,038 254,970 323,289 2,365,271 3,459,857 4,111,296 662,689 0 0 0 12,404,325 AVG PAY 37,381 38,593 43,104 42,495 46,184 50,325 60,699 74,751 73,632 0 0 0 58,511 45-49 NO.9 12 2 9 3 23 54 58 38 10 0 0 218 TOT PAY 345,667 485,772 92,728 415,957 172,586 1,233,708 3,577,100 4,064,021 3,027,798 713,241 0 0 14,128,578 AVG PAY 38,407 40,481 46,364 46,217 57,529 53,639 66,243 70,069 79,679 71,324 0 0 64,810 50-54 NO.7 15 4 9 7 32 46 41 32 37 5 0 235 TOT PAY 270,717 572,738 202,905 316,480 341,812 1,347,830 2,326,657 2,434,051 2,144,668 2,556,337 354,791 0 12,868,986 AVG PAY 38,674 38,183 50,726 35,164 48,830 42,120 50,580 59,367 67,021 69,090 70,958 0 54,762 55-59 NO.7 2 4 5 5 24 39 36 22 18 8 0 170 TOT PAY 244,598 131,162 126,807 193,923 186,631 1,217,610 1,762,969 1,833,823 1,272,179 1,232,356 575,310 0 8,777,368 AVG PAY 34,943 65,581 31,702 38,785 37,326 50,734 45,204 50,940 57,826 68,464 71,914 0 51,632 60-64 NO.3 1 3 4 4 15 17 25 22 8 4 2 108 TOT PAY 100,475 42,667 96,207 123,974 205,777 695,907 807,482 1,273,636 1,320,216 520,377 281,969 174,656 5,643,343 AVG PAY 33,492 42,667 32,069 30,994 51,444 46,394 47,499 50,945 60,010 65,047 70,492 87,328 52,253 65+ NO.2 0 0 1 1 10 12 6 6 6 1 0 45 TOT PAY 65,821 0 0 39,286 29,363 448,316 613,357 284,489 334,963 356,725 49,913 0 2,222,233 AVG PAY 32,910 0 0 39,286 29,363 44,832 51,113 47,415 55,827 59,454 49,913 0 49,383 TOT NO.145 113 78 65 59 276 305 236 129 79 18 2 1,505 TOT AMT 5,065,357 4,635,102 3,334,330 2,631,310 2,707,615 14,301,309 17,100,565 14,897,217 8,762,513 5,379,036 1,261,983 174,656 80,250,993 AVG AMT 34,933 41,019 42,748 40,482 45,892 51,816 56,067 63,124 67,926 68,089 70,110 87,328 53,323 Years of Service to Valuation Date 38 ACTIVE PARTICIPANT DISTRIBUTION HAZARDOUS DUTY MEMBERS Age Group 0-1 1-2 2-3 3-4 4-5 5-9 10-14 15-19 20-24 25-29 30-34 35+Totals 15-19 NO.0 0 0 0 0 0 0 0 0 0 0 0 0 TOT PAY 0 0 0 0 0 0 0 0 0 0 0 0 0 AVG PAY 0 0 0 0 0 0 0 0 0 0 0 0 0 20-24 NO.8 6 0 0 0 0 0 0 0 0 0 0 14 TOT PAY 379,838 335,263 0 0 0 0 0 0 0 0 0 0 715,101 AVG PAY 47,480 55,877 0 0 0 0 0 0 0 0 0 0 51,079 25-29 NO.11 6 7 1 3 9 0 0 0 0 0 0 37 TOT PAY 523,236 351,185 421,779 62,363 214,268 621,022 0 0 0 0 0 0 2,193,853 AVG PAY 47,567 58,531 60,254 62,363 71,423 69,002 0 0 0 0 0 0 59,293 30-34 NO.5 6 6 5 4 25 6 0 0 0 0 0 57 TOT PAY 240,580 367,284 373,964 319,491 259,776 1,896,156 494,116 0 0 0 0 0 3,951,367 AVG PAY 48,116 61,214 62,327 63,898 64,944 75,846 82,353 0 0 0 0 0 69,322 35-39 NO.3 5 4 1 2 24 27 6 0 0 0 0 72 TOT PAY 124,870 295,581 247,770 65,997 148,821 1,741,471 2,078,700 513,265 0 0 0 0 5,216,475 AVG PAY 41,623 59,116 61,943 65,997 74,411 72,561 76,989 85,544 0 0 0 0 72,451 40-44 NO.3 0 2 0 1 12 25 35 5 0 0 0 83 TOT PAY 152,883 0 132,790 0 59,166 880,792 2,026,552 3,136,130 458,005 0 0 0 6,846,318 AVG PAY 50,961 0 66,395 0 59,166 73,399 81,062 89,604 91,601 0 0 0 82,486 45-49 NO.1 1 0 1 1 9 31 30 21 3 0 0 98 TOT PAY 52,265 60,980 0 88,072 67,625 679,653 2,545,008 2,697,464 2,076,205 318,908 0 0 8,586,180 AVG PAY 52,265 60,980 0 88,072 67,625 75,517 82,097 89,915 98,867 106,303 0 0 87,614 50-54 NO.1 1 0 0 1 2 8 7 12 11 1 0 44 TOT PAY 58,071 94,547 0 0 99,514 178,506 646,580 689,345 1,128,667 1,012,737 120,008 0 4,027,975 AVG PAY 58,071 94,547 0 0 99,514 89,253 80,823 98,478 94,056 92,067 120,008 0 91,545 55-59 NO.0 1 0 0 0 4 1 2 1 3 3 0 15 TOT PAY 0 78,151 0 0 0 410,222 85,576 164,433 90,310 321,593 323,456 0 1,473,741 AVG PAY 0 78,151 0 0 0 102,556 85,576 82,217 90,310 107,198 107,819 0 98,249 60-64 NO.0 0 0 0 0 2 1 0 0 0 0 1 4 TOT PAY 0 0 0 0 0 174,911 76,665 0 0 0 0 130,620 382,196 AVG PAY 0 0 0 0 0 87,456 76,665 0 0 0 0 130,620 95,549 65+ NO.0 0 0 0 0 1 1 0 0 0 0 0 2 TOT PAY 0 0 0 0 0 75,935 135,717 0 0 0 0 0 211,652 AVG PAY 0 0 0 0 0 75,935 135,717 0 0 0 0 0 105,826 TOT NO.32 26 19 8 12 88 100 80 39 17 4 1 426 TOT AMT 1,531,743 1,582,991 1,176,303 535,923 849,170 6,658,668 8,088,914 7,200,637 3,753,187 1,653,238 443,464 130,620 33,604,858 AVG AMT 47,867 60,884 61,911 66,990 70,764 75,667 80,889 90,008 96,236 97,249 110,866 0 78,885 Years of Service to Valuation Date 39 ACTIVE PARTICIPANT DISTRIBUTION NON-HAZARDOUS DUTY MEMBERS Age Group 0-1 1-2 2-3 3-4 4-5 5-9 10-14 15-19 20-24 25-29 30-34 35+Totals 15-19 NO.1 0 0 0 0 0 0 0 0 0 0 0 1 TOT PAY 26,473 0 0 0 0 0 0 0 0 0 0 0 26,473 AVG PAY 26,473 0 0 0 0 0 0 0 0 0 0 0 26,473 20-24 NO.23 9 8 1 1 0 0 0 0 0 0 0 42 TOT PAY 640,767 253,301 253,342 35,014 39,996 0 0 0 0 0 0 0 1,222,420 AVG PAY 27,859 28,145 31,668 35,014 39,996 0 0 0 0 0 0 0 29,105 25-29 NO.27 16 13 11 5 14 1 0 0 0 0 0 87 TOT PAY 793,093 531,916 447,419 383,938 164,553 505,288 37,501 0 0 0 0 0 2,863,708 AVG PAY 29,374 33,245 34,417 34,903 32,911 36,092 37,501 0 0 0 0 0 32,916 30-34 NO.21 17 13 8 8 35 20 0 0 0 0 0 122 TOT PAY 671,972 579,364 472,000 276,654 288,199 1,354,056 805,371 0 0 0 0 0 4,447,616 AVG PAY 31,999 34,080 36,308 34,582 36,025 38,687 40,269 0 0 0 0 0 36,456 35-39 NO.6 9 4 4 9 18 26 9 0 0 0 0 85 TOT PAY 188,676 341,528 168,371 143,263 332,544 874,674 1,137,455 382,636 0 0 0 0 3,569,147 AVG PAY 31,446 37,948 42,093 35,816 36,949 48,593 43,748 42,515 0 0 0 0 41,990 40-44 NO.9 9 8 6 6 35 32 20 4 0 0 0 129 TOT PAY 295,691 347,341 298,248 254,970 264,123 1,484,479 1,433,305 975,166 204,684 0 0 0 5,558,007 AVG PAY 32,855 38,593 37,281 42,495 44,021 42,414 44,791 48,758 51,171 0 0 0 43,085 45-49 NO.8 11 2 8 2 14 23 28 17 7 0 0 120 TOT PAY 293,402 424,792 92,728 327,885 104,961 554,055 1,032,092 1,366,557 951,593 394,333 0 0 5,542,398 AVG PAY 36,675 38,617 46,364 40,986 52,481 39,575 44,874 48,806 55,976 56,333 0 0 46,187 50-54 NO.6 14 4 9 6 30 38 34 20 26 4 0 191 TOT PAY 212,646 478,191 202,905 316,480 242,298 1,169,324 1,680,077 1,744,706 1,016,001 1,543,600 234,783 0 8,841,011 AVG PAY 35,441 34,157 50,726 35,164 40,383 38,977 44,213 51,315 50,800 59,369 58,696 0 46,288 55-59 NO.7 1 4 5 5 20 38 34 21 15 5 0 155 TOT PAY 244,598 53,011 126,807 193,923 186,631 807,388 1,677,393 1,669,390 1,181,869 910,763 251,854 0 7,303,627 AVG PAY 34,943 53,011 31,702 38,785 37,326 40,369 44,142 49,100 56,279 60,718 50,371 0 47,120 60-64 NO.3 1 3 4 4 13 16 25 22 8 4 1 104 TOT PAY 100,475 42,667 96,207 123,974 205,777 520,996 730,817 1,273,636 1,320,216 520,377 281,969 44,036 5,261,147 AVG PAY 33,492 42,667 32,069 30,994 51,444 40,077 45,676 50,945 60,010 65,047 70,492 44,036 50,588 65+ NO.2 0 0 1 1 9 11 6 6 6 1 0 43 TOT PAY 65,821 0 0 39,286 29,363 372,381 477,640 284,489 334,963 356,725 49,913 0 2,010,581 AVG PAY 32,911 0 0 39,286 29,363 41,376 43,422 47,415 55,827 59,454 49,913 0 46,758 TOT NO.113 87 59 57 47 188 205 156 90 62 14 1 1,079 TOT AMT 3,533,614 3,052,111 2,158,027 2,095,387 1,858,445 7,642,641 9,011,651 7,696,580 5,009,326 3,725,798 818,519 44,036 46,646,135 AVG AMT 31,271 35,082 36,577 36,761 39,541 40,652 43,959 49,337 55,659 60,094 58,466 44,036 43,231 Years of Service to Valuation Date 40 INACTIVE PARTICIPANT DISTRIBUTION Disabled Retired Total Total Total Total Age Group Number Benefits Number Benefits Number Benefits Number Benefits Under 20 - - - - - - 7 75,676 20-24 - - - - - - - - 25-29 - - - - - - - - 30-34 1 17,587 1 47,460 - - 1 33,124 35-39 5 70,126 1 40,554 - - - - 40-44 10 207,610 5 231,151 - - 1 50,168 45-49 15 362,736 6 231,968 22 962,794 3 48,531 50-54 18 358,057 12 464,210 63 2,849,336 9 267,317 55-59 5 73,039 24 631,315 145 5,975,751 11 191,203 60-64 9 140,913 27 700,801 217 9,196,253 17 410,632 65-69 - - 28 742,488 231 8,584,315 15 391,461 70-74 - - 15 306,645 102 3,587,393 18 404,564 75-79 - - 11 285,142 61 1,892,380 27 494,284 80-84 - - 4 94,940 31 808,582 16 190,457 85-89 - - 3 61,184 10 185,903 14 191,340 90-94 - - - - 11 164,218 3 10,262 95-99 - - - - 1 4,671 1 2,284 100 & Over - - - - - - - - Total 63 1,230,068 137 3,837,858 894 34,211,596 143 2,761,303 Average Age 50 63 65 69 Terminated Vested Deceased with Beneficiary SECTION F SUMMARY OF PLAN PROVISIONS 41 SUMMARY OF PLAN PROVISIONS A. Ordinances The Plan was established under the Code of Ordinances for the City of Clearwater, Florida, Chapter 2, Article V, Division 3 and was most recently amended under Ordinance No. 8333-12 passed and adopted on July 19, 2012 and enacted by public referendum in November 2012. The Plan is also governed by certain provisions of Part VII, Chapter 112, Florida Statutes (F.S.) and the Internal Revenue Code. B. Effective Date Restated Plan Effective Date: January 1, 2013 (previous restated Plan Effective Date was January 1, 1996). C. Plan Year January 1 through December 31. D. Type of Plan Qualified, governmental defined benefit retirement plan; for GASB purposes it is a single employer plan. E. Eligibility Requirements All full-time permanent employees of the City are required to participate and become participants on their date of hire. F. Grandfathered Members Members who are eligible for normal retirement as of January 1, 2013 are grandfathered in the plan provisions in effect before Ordinance No. 8333-12. G. Credited Service Credited Service is measured as the total number of years and fractional parts of years from the date of employment to the date of termination or retirement. No service is credited for any periods of employment for which a participant received a refund of their contributions. H. Compensation The total compensation for services rendered to the City reportable on the participant’s W-2 form, plus all tax deferred, tax sheltered or tax exempt items of income derived from elective employee payroll deductions or salary reductions, but excluding any lump sum payments of unused vacation and sick leave, pay for off-duty employment, and clothing, car or meal allowances. Effective January 1, 2013: For non-grandfathered hazardous duty members, the amount of overtime included in Compensation is limited to 300 hours per year; For non-grandfathered non-hazardous duty members, Compensation excludes overtime and additional pay above the base rate of pay. 42 I. Average Monthly Compensation (AMC) One-twelfth of the average of Compensation during the highest 5 years out of the last 10 years preceding termination or retirement. J. Normal Retirement Eligibility: For Non-Hazardous Duty Employment A participant hired before January 1, 2013 may retire on the first day of the month coincident with or next following the earliest of: (1) age 55 with 20 years of Credited Service, or (2) 30 years of Credited Service regardless of age, or (3) age 65 with 10 years of Credited Service. A participant hired on or after January 1, 2013 may retire on the first day of the month coincident with or next following the earliest of: (1) age 60 with 25 years of Credited Service, or (2) age 65 with 10 years of Credited Service For Hazardous Duty Employment-Police Officers and Firefighters A participant may retire on the first day of the month coincident with or next following the earlier of: (1) age 55 with 10 years of Credited Service, or (2) 20 years of Credited Service regardless of age. Benefit: 2.75% of AMC multiplied by years of Credited Service. For Non-Hazardous Duty participants hired on or after January 1, 2013, 2.00% of AMC multiplied by years of Credited Service. Normal Form of Benefit: For Non-Hazardous Duty Employment (Non-Grandfathered) A monthly annuity is paid for the life of the participant. For Hazardous Duty Employment-Police Officers and Firefighters (and Grandfathered Non-Hazardous Duty Employment) A monthly annuity is paid for the life of the participant. After the participant’s death, 100% of the Normal Retirement Benefit shall be paid as a survivor annuity to the spouse for 5 years. After 5 years, such survivor annuity is reduced to 50% of the original amount. The survivor annuity ceases upon death or remarriage of the spouse. 120 monthly payments are guaranteed for police officers and firefighters. Optional forms of benefits are available. 43 COLA: For Non-Hazardous Duty Employment 1.5% annually commencing on each April 1 for all retirees and beneficiaries who have received at least 6 monthly benefit payments. For non-grandfathered members (not eligible for normal retirement on January 1, 2013), there is a five-year delay (after the retirement date) until this COLA is applied to benefits accrued after January 1, 2013. For Hazardous Duty Employment-Police Officers and Firefighters 1.5% annually commencing on each April 1 for all retirees and beneficiaries who have received at least 6 monthly benefit payments. For non-grandfathered members (not eligible for normal retirement on January 1, 2013), there is no COLA for benefits accrued after January 1, 2013. K. Early Retirement Eligibility: Police Officers and Firefighters may elect to retire earlier than the Normal Retirement Eligibility upon the attainment of age 50 with 10 years of Credited Service. Benefit: The Normal Retirement Benefit is reduced by 3.0% for each year by which the Early Retirement date precedes age 55. Normal Form of Benefit: A monthly annuity is paid for the life of the participant. After the participant’s death, 100% of the Normal Retirement Benefit shall be paid as a survivor annuity to the spouse for 5 years. After 5 years, such survivor annuity is reduced to 50% of the original amount. The survivor annuity ceases upon death or remarriage of the spouse. 120 monthly payments are guaranteed for police officers and firefighters. Optional forms of benefits are available. COLA: 1.5% annually commencing on each April 1 for all retirees and beneficiaries who have received at least 6 monthly benefit payments. For non-grandfathered members (not eligible for normal retirement on January 1, 2013), there is no COLA for benefits accrued after January 1, 2013. L. Delayed Retirement Same as Normal Retirement taking into account Compensation earned and service credited until the date of actual retirement. M. Service Connected Disability Eligibility: Any participant who becomes totally and permanently disabled due to an illness or injury contracted in the line of duty and is deemed to be unable to perform useful and efficient service to the City is immediately eligible for a disability benefit. Benefit: For Non-Hazardous Duty Employment Participant’s accrued Normal Retirement Benefit taking into account Compensation earned and service credited until the date of disability. Benefit is guaranteed to be no 44 less than 42% of the participant’s AMC (66 2/3% of the participant’s AMC if grandfathered). Disability benefits, when combined with Worker’s Compensation benefits, cannot exceed and will be limited to 100% of the participant’s AMC on the date of disability. For Hazardous Duty Employment-Police Officers and Firefighters Participant’s accrued Normal Retirement Benefit taking into account Compensation earned and service credited until the date of disability. Benefit is guaranteed to be no less than 66 2/3% of the participant’s AMC. Disability benefits, when combined with Worker’s Compensation benefits, cannot exceed and will be limited to 100% of the participant’s AMC on the date of disability. Normal Form of Benefit: For Non-Hazardous Duty Employment (Non-Grandfathered) A monthly annuity is paid for the life of the participant. For Hazardous Duty Employment-Police Officers and Firefighters (and Grandfathered Non-Hazardous Duty Employment) A monthly annuity is paid for the life of the participant. After the participant’s death, 100% of the Normal Retirement Benefit shall be paid as a survivor annuity to the spouse for 5 years. After 5 years, such survivor annuity is reduced to 50% of the original amount. The survivor annuity ceases upon death or remarriage of the spouse. 120 monthly payments are guaranteed for police officers and firefighters. Optional forms of benefits are available. COLA: For Non-Hazardous Duty Employment 1.5% annually commencing on each April 1 for all retirees and beneficiaries who have received at least 6 monthly benefit payments. For non-grandfathered members (not eligible for normal retirement on January 1, 2013), there is a five-year delay (after the retirement date) until this COLA is applied to benefits accrued after January 1, 2013. For Hazardous Duty Employment-Police Officers and Firefighters 1.5% annually commencing on each April 1 for all retirees and beneficiaries who have received at least 6 monthly benefit payments. For non-grandfathered members (not eligible for normal retirement on January 1, 2013), there is no COLA for benefits accrued after January 1, 2013. N. Non-Service Connected Disability Eligibility: Any participant who has 10 or more years of Credited Service and becomes totally and permanently disabled and is deemed to be unable to perform useful and efficient service to the City is immediately eligible for a disability benefit. 45 Benefit: Participant’s accrued Normal Retirement Benefit taking into account Compensation earned and service credited until the date of disability. Disability benefits, when combined with Worker’s Compensation benefits, cannot exceed and will be limited to 100% of the participant’s AMC on the date of disability. Normal Form of Benefit: For Non-Hazardous Duty Employment (Non-Grandfathered) A monthly annuity is paid for the life of the participant. For Hazardous Duty Employment-Police Officers and Firefighters (and Grandfathered Non-Hazardous Duty Employment) A monthly annuity is paid for the life of the participant. After the participant’s death, 100% of the Normal Retirement Benefit shall be paid as a survivor annuity to the spouse for 5 years. After 5 years, such survivor annuity is reduced to 50% of the original amount. The survivor annuity ceases upon death or remarriage of the spouse. 120 monthly payments are guaranteed for police officers and firefighters. Optional forms of benefits are available. COLA: For Non-Hazardous Duty Employment 1.5% annually commencing on each April 1 for all retirees and beneficiaries who have received at least 6 monthly benefit payments. For non-grandfathered members (not eligible for normal retirement on January 1, 2013), there is a five-year delay (after the retirement date) until this COLA is applied to benefits accrued after January 1, 2013. For Hazardous Duty Employment-Police Officers and Firefighters 1.5% annually commencing on each April 1 for all retirees and beneficiaries who have received at least 6 monthly benefit payments. For non-grandfathered members (not eligible for normal retirement on January 1, 2013), there is no COLA for benefits accrued after January 1, 2013. O. Death in the Line of Duty Eligibility: Any participant whose employment is terminated by reason of death in the line of duty is eligible for survivor benefits. Benefit: Beneficiary will be paid the participant’s accrued benefit based upon Credited Service and AMC as of the date of death. Benefit is guaranteed to be no less than 66 2/3% of the participant’s AMC. Normal Form of Benefit: 100% of the participant’s accrued benefit shall be paid as a survivor annuity to the spouse for 5 years. After 5 years, such survivor annuity is reduced to 50% of the original amount. The survivor annuity ceases upon death or remarriage of the spouse. 120 monthly payments are guaranteed for police officers and firefighters. 46 COLA: For Non-Hazardous Duty Employment 1.5% annually commencing on each April 1 for all retirees and beneficiaries who have received at least 6 monthly benefit payments. For non-grandfathered members (not eligible for normal retirement on January 1, 2013), there is a five-year delay (after the retirement date) until this COLA is applied to benefits accrued after January 1, 2013. For Hazardous Duty Employment-Police Officers and Firefighters 1.5% annually commencing on each April 1 for all retirees and beneficiaries who have received at least 6 monthly benefit payments. For non-grandfathered members (not eligible for normal retirement on January 1, 2013), there is no COLA for benefits accrued after January 1, 2013. In lieu of the benefits described above, the participant’s beneficiary can elect to receive a refund of participant’s accumulated contributions with interest. P. Other Pre-Retirement Death Eligibility: Any participant who dies with 10 or more years of Credited Service is eligible for survivor benefits. Benefit: Beneficiary will be paid the participant’s accrued benefit based upon Credited Service and AMC as of the date of death. Normal Form of Benefit: 100% of the participant’s accrued benefit shall be paid as a survivor annuity to the spouse for 5 years. After 5 years, such survivor annuity is reduced to 50% of the original amount. The survivor annuity ceases upon death or remarriage of the spouse. 120 monthly payments are guaranteed for police officers and firefighters. COLA: For Non-Hazardous Duty Employment 1.5% annually commencing on each April 1 for all retirees and beneficiaries who have received at least 6 monthly benefit payments. For non-grandfathered members (not eligible for normal retirement on January 1, 2013), there is a five-year delay (after the retirement date) until this COLA is applied to benefits accrued after January 1, 2013. For Hazardous Duty Employment-Police Officers and Firefighters 1.5% annually commencing on each April 1 for all retirees and beneficiaries who have received at least 6 monthly benefit payments. For non-grandfathered members (not eligible for normal retirement on January 1, 2013), there is no COLA for benefits accrued after January 1, 2013. In lieu of the benefits described above, a participant’s beneficiary can elect to receive a refund of the participant’s accumulated contributions with interest. Accumulated contributions, plus interest, will be refunded for all participants with less than 10 years of Credited Service. 47 Q. Post Retirement Death Benefit determined by the form of benefit elected upon retirement. R. Optional Forms In lieu of electing the Normal Form of benefit, the optional forms of benefits available to all retirees are a Single Life Annuity, a 10 Year Certain and Life Annuity, or the 50%, 66 2/3% (for police officers and firefighters), 75% or 100% Joint and Survivor options. Members may also elect a partial lump sum equal to 10%, 20%, or 30% of the value of the normal retirement benefit with the remaining monthly retirement benefit reduced accordingly. S. Vested Termination Eligibility: A participant has earned a non-forfeitable right to Plan benefits after the completion of 10 years of Credited Service provided employee contributions are not refunded. Vesting is determined in accordance with the following table. Years of Credited Service % of Normal Retirement Benefits Less Than 10 10 or more 0% 100% Benefit: The participant’s accrued Normal Retirement Benefit as of the date of termination. Benefit begins on the member’s Normal Retirement date. Alternatively, police officers and firefighters may elect to receive an actuarially reduced Early Retirement Benefit any time after age 50. Normal Form of Benefit: For Non-Hazardous Duty Employment (Non-Grandfathered) A monthly annuity is paid for the life of the participant. For Hazardous Duty Employment-Police Officers and Firefighters (and Grandfathered Non-Hazardous Duty Employment) A monthly annuity is paid for the life of the participant. After the participant’s death, 100% of the Normal Retirement Benefit shall be paid as a survivor annuity to the spouse for 5 years. After 5 years, such survivor annuity is reduced to 50% of the original amount. The survivor annuity ceases upon death or remarriage of the spouse. 120 monthly payments are guaranteed for police officers and firefighters. Optional forms of benefits are available. 48 COLA: For Non-Hazardous Duty Employment 1.5% annually commencing on each April 1 for all retirees and beneficiaries who have received at least 6 monthly benefit payments. For non-grandfathered members (not eligible for normal retirement on January 1, 2013), there is a five-year delay (after the retirement date) until this COLA is applied to benefits accrued after January 1, 2013. For Hazardous Duty Employment-Police Officers and Firefighters 1.5% annually commencing on each April 1 for all retirees and beneficiaries who have received at least 6 monthly benefit payments. For non-grandfathered members (not eligible for normal retirement on January 1, 2013), there is no COLA for benefits accrued after January 1, 2013. Plan participants with less than 10 years of Credited Service will receive a refund of their own accumulated contributions with interest. T. Refunds Eligibility: All participants terminating employment with less than 10 years of Credited Service are eligible. Optionally, vested members (those with 10 or more years of credited service) may elect a refund in lieu of the vested benefits otherwise due. Benefit: Refund of the member’s contributions with 5% simple interest paid in a single lump sum. U. Member Contributions 8% of Compensation for Non-Hazardous Duty participants. 10% of Compensation for Hazardous Duty participants (8% of Compensation if grandfathered). V. Employer Contributions Each plan year, the Employer must contribute a minimum of 7% of the Compensation of all employees participating in the plan, plus any additional amount determined by the actuary needed to fund the plan properly according to State laws. W. Cost of Living Increases For Non-Hazardous Duty Employment 1.5% annually commencing on each April 1 for all retirees and beneficiaries who have received at least 6 monthly benefit payments. For non-grandfathered members (not eligible for normal retirement on January 1, 2013), there is a five-year delay (after the retirement date) until this COLA is applied to benefits accrued after January 1, 2013. 49 For Hazardous Duty Employment-Police Officers and Firefighters 1.5% annually commencing on each April 1 for all retirees and beneficiaries who have received at least 6 monthly benefit payments. For non-grandfathered members (not eligible for normal retirement on January 1, 2013), there is no COLA for benefits accrued after January 1, 2013. X. 13th Check Not Applicable Y. Deferred Retirement Option Plan Not Applicable Z. Other Ancillary Benefits There are no ancillary retirement type benefits not required by statutes but which might be deemed a City of Clearwater Employees’ Pension Plan liability if continued beyond the availability of funding by the current funding source. AA. Changes from Previous Valuation There have been no changes from the previous valuation. Cover Memo City of Clearwater City Hall 112 S. Osceola Avenue Clearwater, FL 33756 File Number: ID#16-2302 Agenda Date: 4/18/2016 Status: Agenda ReadyVersion: 1 File Type: Action ItemIn Control: Pension Trustees Agenda Number: 4.6 SUBJECT/RECOMMENDATION: Determine Trustees’ expected rate of return for pension plan investments for current year, each of the next several years, and for the long term thereafter, in accordance with FL Statutes 112.661(9). SUMMARY: Florida Statutes 112.661(9) requires an annual determination of expected rates of return be filed with the Florida Department of Management Services, with the plan’s sponsor, and with the consulting actuary. Staff is recommending the current plan investment rate of return assumption of 7.0%, net of investment-related fees, as the expected annual rate of return for the current year, for each of the next several years, and for the long term thereafter. APPROPRIATION CODE AND AMOUNT: N/A Page 1 City of Clearwater Printed on 4/14/2016