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04/17/2017Monday, April 17, 2017 1:00 PM City of Clearwater City Hall 112 S. Osceola Avenue Clearwater, FL 33756 Council Chambers Pension Trustees Meeting Agenda April 17, 2017Pension Trustees Meeting Agenda 1. Call To Order 2. Approval of Minutes 2.1 Approve the minutes of the March 13, 2017 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 Accept the January 1, 2017 Annual Actuarial Valuation for the Employees’ Pension Plan. 4.2 Approve the new hires for acceptance into the Pension Plan as listed. 4.3 Approve the following request of employees Felicia Donnelly, Parks and Recreation Department, Tracey Reed, Library Department and Scott Jordan, Planning and Development Department, to vest their pensions as provided by Section 2.419 of the Employees’ Pension Plan. 4.4 Approve the following request of employee Donald Thomson, Fire Department, for a regular pension as provided by Sections 2.416 and 2.424 of the Employees’ Pension Plan. 5. Adjourn Page 2 City of Clearwater Printed on 4/13/2017 Cover Memo City of Clearwater City Hall 112 S. Osceola Avenue Clearwater, FL 33756 File Number: ID#17-3319 Agenda Date: 4/17/2017 Status: Agenda ReadyVersion: 1 File Type: MinutesIn Control: Pension Trustees Agenda Number: 2.1 SUBJECT/RECOMMENDATION: Approve the minutes of the March 13, 2017 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 4/13/2017 Pension Trustees Meeting Minutes March 13, 2017 City of Clearwater City Hall 112 S. Osceola Avenue Clearwater, FL 33756 Meeting Minutes Monday, March 13, 2017 1:00 PM Council Chambers Pension Trustees Page 1 City of Clearwater Draft Pension Trustees Meeting Minutes March 13, 2017 Roll Call Present 5 - Chair George N. Cretekos, Trustee Doreen Caudell, Trustee Bob Cundiff, Trustee Hoyt Hamilton, and Trustee Bill Jonson Also Present – William B. Horne – City Manager, Pamela K. Akin – City Attorney, Rosemarie Call – City Clerk, Nicole Sprague – Official Records and Legislative Services Coordinator, and Joe Roseto – Human Resources Director To provide continui ty for research, items are listed in agenda order although not necessarily discussed in that order. Unapproved 1. Call To Order – Chair Cretekos The meeting was called to order at 1:28 p.m. at City Hall. 2. Approval of Minutes 2.1 Approve the minutes of the February 13, 2017 Pension Trustees Meeting as submitted in written summation by the City Clerk. Trustee Jonson moved to approve the minutes of the February 13, 2017 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 Alvin Miller, Recreation Leader, Parks and Recreation 12/24/2016 Christopher Fowler, Police Officer, Police 01/07/2017 Daniel Jewett, Police Officer, Police 01/07/2017 Elliot Lightfoot, Police Officer, Police 01/07/2017 Jarik Melendez-Torres, Police Officer, Police 01/07/2017 Page 2 City of Clearwater Draft Pension Trustees Meeting Minutes March 13, 2017 Xavier Rodriguez, Police Officer, Police 01/07/2017 Erin Hollingsworth, Librarian III, Library 01/09/2017 Zachary Cudizio, Parking Enforcement Specialist, Engineering 01/09/2017 Caleb Peterson, Recreation Supervisor, Parks and Recreation 01/09/2017 Albert McCue, Police Information Technician I, Police 01/09/2017 Anthony Pitsenbarger, Public Utilities Technician I, Public Utilities 01/09/2017 Danny Fiber, Police Officer, Police 01/09/2017 Raul Garcia, Public Utilities Technician I, Public Utilities 01/09/2017 Charles Lewis, Stormwater Technician I, Engineering 01/23/2017 Marcus Weaver, Stormwater Technician I, Engineering 01/23/2017 Justin Kristich, Recreation Supervisor I, Parks and Recreation 01/23/2017 Jason Detwiler, Water Distribution Operator Trainee, Public Utilities 01/23/2017 Agustin Menchaca III , Water Distribution Operator Trainee, Public Utilities 01/23/2017 Myra James, Development Review Technician I, Planning and Development 01/23/2017 Kathy Paulsen, Human Resources Office Assistant, Human Resources 01/23/2017 Trustee Caudell 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 employees Barbara Eigenmann, Fire Department, Richard Harris, Police Department, Veronica Hunt, Police Department and Joyce Kirchoffer, Library Department for a regular pension as provided by Sections 2.416 and 2.424 of the Employees’ Pension Plan. Barbara Eigenmann, Staff Assistant, Fire Department, was employed by the City on January 26, 1987, and her pension service credit is effective on that date. Her pension will be effective February 1, 2017. Based on an average salary of approximately $39,383.70 over the past five years, the formula for computing regular pensions and Ms. Eigenmann’s selection of the 50% Joint and Survivor Annuity, this pension benefit will be approximately $24,831.84 annually. Richard Harris, Police Lieutenant, Police Department, was employed by the City on May 27, 1980, and his pension service credit is effective on that date. His pension will be effective February 1, 2017. Based on an average salary of approximately $115,265.22 over the past five years, the formula for computing regular pensions and Mr. Harris’ selection of the 100% Joint and Survivor Annuity, this pension benefit will be approximately $111,646.68 annually. Veronica Hunt, Police Office Specialist, Police Department, was employed by the City on December 6, 1985, and her pension service credit is effective September 28, 1992. Her pension will be effective February 1, 2017. Based on an average salary of approximately $43,630.25 over the past five years, the formula for computing regular pensions and Ms. Hunt’s selection of the 50% Page 3 City of Clearwater Draft Pension Trustees Meeting Minutes March 13, 2017 Joint and Survivor Annuity, this pension benefit will be approximately $30,192.72 annually. Joyce Kirchoffer, Librarian I, Library Department, was employed by the City on April 29, 1993, and her pension service credit is effective June 24, 1993. Her pension will be effective March 1, 2017. Based on an average salary of approximately $39,166.31 over the past five years, the formula for computing regular pensions and Ms. Kirchoffer’s selection of the Life Annuity, this pension benefit will be approximately $25,493.76 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. Eigenmann, Ms. Hunt and Ms. Kirchoffer 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. Harris has met the hazardous duty criteria. Trustee Cundiff moved to approve the following request of employees Barbara Eigenmann, Fire Department, Richard Harris, Police Department, Veronica Hunt, Police Department and Joyce Kirchoffer, 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. 4.3 Annual review of the Employees’ Pension Plan investment performance for the calendar and plan year ended December 31, 2016. Annually a presentation of the Plan’s investment performance is made to the Page 4 City of Clearwater Draft Pension Trustees Meeting Minutes March 13, 2017 Trustees. For calendar 2016, the Plan realized an investment return of 6.63%, versus the plan’s assumed rate of 7.00%, and versus a customized benchmark of 7.32%, placing the plan in the 79th 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 5.42%, versus a benchmark of 5.74%, placing the plan in the 27th percentile of public plans. For the past five years, the plan had an annualized return of 9.48%, versus a benchmark of 8.93%, placing the plan in the 21st percentile of public plans. During calendar 2016, the Trustees approved a new infrastructure money manager, as well as the termination of an international equity money manager. The Pension Investment Committee 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 2016. 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. Finance Director Jay Ravins provided a PowerPoint presentation. In response to questions, Mr. Ravins said the total fund performance was 6.63%, which is under the 7% target. For the past five of ten years, the fund has outperformed. To some degree, the City's benchmark is customized to its asset allocation. Mr. Ravins said other plan portfolios include hedge funds as part of their benchmark; the City's portfolio does not include hedge funds and the reason why it is not part of its benchmark. CapTrust representative John Griffith said on December 31, 2016, the asset allocation was very close to target, the closest it has been. Mr. Ravins said despite the plan not meeting its benchmark target, the plan remains fully funded; the plan has been over 100% funded. 2017 investments are off to a good start, hitting the 7% assumption. Staff will know for certain if there is any impact to the City's budget next month when the actuary report is reviewed. Staff does not anticipate any budgetary impact since the overall performance was close to 7% and there are accumulated earnings from prior years. Page 5 City of Clearwater Draft Pension Trustees Meeting Minutes March 13, 2017 5. Adjourn The meeting adjourned at 1:41 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#17-3372 Agenda Date: 4/17/2017 Status: Agenda ReadyVersion: 1 File Type: Action ItemIn Control: Pension Trustees Agenda Number: 4.1 SUBJECT/RECOMMENDATION: Accept the January 1, 2017 Annual Actuarial Valuation for the Employees’ Pension Plan. SUMMARY: Per the actuary report dated January 1, 2017, a minimum city employer contribution of $8.65 million, or 10.91% of covered payroll, is required for fiscal year 2017. This is a decrease of $285,000 over the fiscal 2016 required contribution of $8.93 million, or 11.13% of covered payroll. The calendar year 2016 investment return was a gain of 6.70%, 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 8.22% versus the assumed rate of 7.0%. During calendar years 2012 through 2016, investment returns were 13.92%, 16.90%, 7.99%, (0.28%), and 6.70%, respectively. The plan experienced a net actuarial experience gain of $18.1 million for the year. The gain is primarily due to the actuarial gain from the actuarial investment return of 8.22% versus the assumption of 7.0%. The Plan's funded ratio at January 1, 2017 was 105.38% (including the credit balance) versus 102.92% for the prior year. The actuarial value of assets exceeds the market value of assets by $22.4 million as of January 1, 2017. The plan's credit balance, which reflects actual contributions in excess of actuarially required contributions for prior years, increased from $15.6 million to $19.4 million during calendar 2016. This $3.8 million increase was due to the City ’s budgeted overfunding of the fiscal 2017 required contribution. The City contributed approximately 15% of salaries, versus the actuarially required 11.13%, 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 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 Page 1 City of Clearwater Printed on 4/13/2017 File Number: ID#17-3372 contributions during periods of negative investment earnings experience with contributions from accumulated reserves. Page 2 City of Clearwater Printed on 4/13/2017 CITY OF CLEARWATER EMPLOYEES’ PENSION PLAN ACTUARIAL VALUATION REPORT AS OF JANUARY 1, 2017 ANNUAL EMPLOYER CONTRIBUTION FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2018 D R A F T D R A F T March 24, 2017 Board of Trustees City of Clearwater Employees’ Pension Plan Clearwater, Florida Dear Board Members: The results of the January 1, 2017 Annual Actuarial Valuation of the City of Clearwater Employees’ Pension Plan are presented in this report. The computed contribution rate shown on page 1 may be considered as a minimum contribution rate that complies with the Board’s funding policy. Users of this report should be aware that contributions made at that rate do not guarantee benefit security. Given the importance of benefit security to any retirement system, we suggest that contributions to the System in excess of those presented in this report be considered. The contribution rate in this report is determined using the actuarial assumptions and methods disclosed in Section B of this report. This report does not include an assessment of the risks of future experience not meeting the actuarial assumptions. Such an assessment of risks was outside the scope of this assignment. We encourage a review and assessment of investment and other significant risks that may have a material effect on the Plan’s financial condition. This report was prepared at the request of the Board and is intended for use by the Retirement System and those designated or approved by the Board. This report may be provided to parties other than the System only in its entirety and only with the permission of the Board. GRS is not responsible for unauthorized use of this report. The purposes of the valuation are to measure the System’s funding progress and to determine the employer contribution rate for the fiscal year ending September 30, 2018. This report should not be relied on for any purpose other than the purposes described herein. Determinations of financial results, associated with the benefits described in this report, for purposes other than those identified above may be significantly different. The findings in this report are based on data or other information through December 31, 2016. Future actuarial measurements may differ significantly from the current measurements presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period or additional cost or contribution requirements based on the plan’s funded status); and changes in plan provisions or applicable law. The scope of an actuarial valuation does not include an analysis of the potential range of such measurements. This valuation assumed the continuing ability of the plan sponsor to make the contributions necessary to fund this Plan. A determination regarding whether or not the plan sponsor is actually able to do so is outside our scope of expertise and was not performed. D R A F T The valuation was based upon information furnished by the City concerning Retirement System benefits, financial transactions, plan provisions and active members, terminated members, retirees and beneficiaries. We checked for internal and year-to-year consistency, but did not otherwise audit the data. We are not responsible for the accuracy or completeness of the information provided by the City. In addition, this report was prepared using certain assumptions approved by the Board and prescribed by the Florida Statutes as described in the section of this report entitled Actuarial Assumptions and Methods. The prescribed assumptions are the assumed mortality rates detailed in the Actuarial Assumptions and Methods section in accordance with Florida House Bill 1309 (codified in Chapter 2015-157). This report has been prepared by actuaries who have substantial experience valuing public employee retirement systems. To the best of our knowledge the information contained in this report is accurate and fairly presents the actuarial position of the Retirement System as of the valuation date. All calculations have been made in conformity with generally accepted actuarial principles and practices, with the Actuarial Standards of Practice issued by the Actuarial Standards Board and with applicable statutes. Peter N. Strong and Trisha Amrose are members of the American Academy of Actuaries. These actuaries meet the Academy’s Qualification Standards to render the actuarial opinions contained herein. The signing actuaries are independent of the plan sponsor. This actuarial valuation and/or cost determination was prepared and completed by me or under my direct supervision, and I acknowledge responsibility for the results. To the best of my knowledge, the results are complete and accurate. In my opinion, the techniques and assumptions used are reasonable, meet the requirements and intent of Part VII, Chapter 112, Florida Statutes, and are based on generally accepted actuarial principles and practices. There is no benefit or expense to be provided by the plan and/or paid from the plan’s assets for which liabilities or current costs have not been established or otherwise taken into account in the valuation. All known events or trends which may require a material increase in plan costs or required contribution rates have been taken into account in the valuation. Gabriel, Roeder, Smith & Company will be pleased to review this valuation and Report with the Board of Trustees and to answer any questions pertaining to the valuation. Respectfully submitted, GABRIEL, ROEDER, SMITH AND COMPANY Peter N. Strong, FSA, MAAA Trisha Amrose, MAAA Enrolled Actuary No. 14-6975 Enrolled Actuary No. 14-8010 D R A F T 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 D R A F T SECTION A DISCUSSION OF VALUATION RESULTS D R A F T 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 $ 8,659,427 $ 8,944,103 $ (284,676) As % of Covered Payroll 10.92 %11.15 % (0.23) % Estimated State Contribution 12,000 12,000 0 As % of Covered Payroll 0.01 %0.02 % (0.01) % Required Employer Contribution 8,647,427 8,932,103 (284,676) As % of Covered Payroll 10.91 %11.13 % (0.22) % Credit Balance 19,445,883 15,570,503 3,875,380 1/1/2017 Valuation (Decrease) Increase Valuation 1/1/2016 For FYE 9/30/2018 For FYE 9/30/2017 Based onBased on 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 2017 and 2018 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, 2016 were $11,717,548 and $12,000, respectively, for a total of $11,729,548, compared to the required contribution of $8,944,103. The excess contribution of $2,785,445 was used to increase the credit balance. The minimum required City contribution is 7% of covered payroll. D R A F T 2 Revisions in Benefits There have been no revisions in benefits since the last valuation. Revisions in Actuarial Assumptions or Methods The mortality assumption for active members prior to retirement was revised in accordance with a revision to the active member pre-retirement mortality assumption used by the Florida Retirement System (FRS) in their July 1, 2016 Actuarial Valuation. No revisions were made to mortality rates applicable to retirees. Prior to this revision, pre-retirement mortality rates for active members were the same as the post- retirement rates for active members and retirees. 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. A more detailed description can be found in the section of this report titled Actuarial Assumptions and Cost Method. As a result of the change in the pre-retirement mortality assumption, the required contribution increased by 0.11% of covered payroll, or $83,845. For informational purposes, if this year’s valuation had been completed using the mortality rates assumed prior to January 1, 2016 (the RP-2000 Combined Healthy Participant Mortality Table for males and females with mortality improvements projected with Scale BB) rather than the mortality rates mandated by the Florida Statutes, the required City contribution for FY 2018 would have been $8,885,377, or 11.21% of covered payroll, and the funded ratio (excluding the credit balance) as of January 1, 2017 would have been 102.74%. Actuarial Experience There was a net actuarial experience gain of $18,096,188 during the year, which means that actual experience was more favorable than expected. The gain is primarily due to a recognized investment return (on the smoothed actuarial value of assets) above the assumed rate of 7.0% and lower than expected salary increases. Although the investment return on the market value of assets was 6.70%, the investment return was 8.22% based on the actuarial value of assets, as previously unrecognized investment gains were phased in. In addition, actual average salary increases were 1.23%, compared to an expected average increase of 4.13%. Salary increases were lower than expected mainly because reported pensionable earnings for the year ending December 31, 2015 included 27 pay periods, whereas 26 pay periods are included in the D R A F T 3 reported pensionable earnings for the year ending December 31, 2016. An experience gain also resulted from retirement experience (there were 49 retirements during the year versus 60 expected). Mortality experience was a minor offsetting source of experience loss, as there were fewer retiree deaths during the year than expected (20 actual deaths with $498,746 in annual pensions versus 25 expected deaths with $708,907 in annual pensions). 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 gain had no direct effect on the required employer contribution. Analysis of Change in Employer Contribution The components of change in the required City contribution are as follows: Contribution Rate Last Year 11.13 % Change in Benefits 0.00 Change in Assumptions and Methods 0.11 Amortization Payment on UAAL 0.00 Normal Cost (0.33) Experience Gain/Loss 0.00 Change in Administrative Expenses 0.01 Change in State Revenue (0.01) Contribution Rate This Year 10.91 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 105.38% this year compared to 102.92% last year. Not including the credit balance in the actuarial value of assets, the funded ratio is 103.17% this year compared to 101.10% last year. This funded ratio (not including the credit balance) was 103.21% 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-D R A F T 4 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. The Actuarial Value of Assets exceeds the Market Value of Assets by $22,413,724 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. If there are no experience losses and the return on the market value of assets is 7.0% in 2017 (net of investment expenses) as assumed, it is projected that the City contribution requirement as of January 1, 2018 for the fiscal year ending September 30, 2019 will remain in the range of approximately 10%-11% 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 10.91% of covered payroll (since the annual payment to amortize the UAL would have remained at $0 due to Chapter 112.66 of the Florida Statutes), and the funded ratio (excluding the credit balance) would have been 100.62%. The funded ratio based on the market value of assets (excluding the credit balance) last year was 100.09%. Conclusion The remainder of this Report includes detailed actuarial valuation results, financial information, miscellaneous information and statistics, and a summary of plan provisions. D R A F T SECTION B VALUATION RESULTS D R A F T 5 ACTIVE MEMBERS Number 1,520 1,505 Covered Annual Payroll $ 79,276,100 $ 80,250,993 Average Annual Payroll $ 52,155 $ 53,323 Average Age 44.3 44.5 Average Past Service 10.9 11.1 Average Age at Hire 33.4 33.4 RETIREES & BENEFICIARIES Number 1,078 1,037 Annual Benefits $ 39,298,148 $ 36,972,899 Average Annual Benefit $ 36,455 $ 35,654 Average Age 66.3 65.9 DISABILITY RETIREES Number 134 137 Annual Benefits $ 3,889,865 $ 3,837,858 Average Annual Benefit $ 29,029 $ 28,014 Average Age 63.2 63.4 TERMINATED VESTED MEMBERS Number 66 63 Annual Benefits $ 1,254,568 $ 1,230,068 Average Annual Benefit $ 19,009 $ 19,525 Average Age 50.1 50.4 PARTICIPANT DATA January 1, 2017 January 1, 2016 D R A F T 6 A.Valuation Date B.ADC to Be Paid During Fiscal Year Ending 9/30/2018 9/30/2018 9/30/2017 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 8,092,922 8,014,563 8,358,975 F.ADC if Paid on the Valuation Date: D+E 8,092,922 8,014,563 8,358,975 G.ADC Adjusted for Frequency of Payments 8,659,427 8,575,582 8,944,103 H.ADC as % of Covered Payroll 10.92 %10.82 %11.15 % I.Assumed Rate of Increase in Covered Payroll to Contribution Year 0.00 %0.00 %0.00 % J.Covered Payroll for Contribution Year 79,276,100 79,276,100 80,250,993 K.ADC for Contribution Year: H x J 8,659,427 8,575,582 8,944,103 L.Estimate of State Revenue in Contribution Year 12,000 12,000 12,000 M.Required Employer Contribution (REC) in Contribution Year 8,647,427 8,563,582 8,932,103 N.REC as % of Covered Payroll in Contribution Year: M ÷ J 10.91 %10.80 %11.13 % O.Credit Balance 19,445,883 19,445,883 15,570,503 ACTUARIALLY DETERMINED CONTRIBUTION (ADC) After Assumption Change Before Assumption Change January 1, 2017 January 1, 2017 January 1, 2016 * 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. D R A F T 7 A.Valuation Date B.Actuarial Present Value of All Projected Benefits for 1.Active Members a. Service Retirement Benefits $ 344,686,807 $ 339,084,990 $ 346,868,915 b. Vesting Benefits 34,490,262 34,091,593 35,105,321 c. Disability Benefits 13,745,145 13,592,191 13,817,873 d. Preretirement Death Benefits 5,984,099 9,988,053 10,280,425 e. Return of Member Contributions 2,778,269 2,984,718 2,811,989 f. Total 401,684,582 399,741,545 408,884,523 2.Inactive Members a. Service Retirees & Beneficiaries 524,368,640 524,368,640 495,874,052 b. Disability Retirees 50,425,996 50,425,996 49,834,468 c. Terminated Vested Members 14,083,542 14,083,542 14,216,453 d. Total 588,878,178 588,878,178 559,924,973 3. Total for All Members 990,562,760 988,619,723 968,809,496 C.Actuarial Accrued (Past Service) Liability 880,316,652 880,012,709 857,177,619 D.Actuarial Value of Accumulated Plan Benefits per FASB No. 35 835,933,687 836,067,811 807,130,603 E.Plan Assets 1.Market Value 905,261,405 905,261,405 873,505,080 2. Actuarial Value 927,675,129 927,675,129 882,169,478 3. Actuarial Value Excluding Credit Balance 908,229,246 908,229,246 866,598,975 F.Actuarial Present Value of Projected Covered Payroll 601,882,706 595,983,669 600,851,333 G.Actuarial Present Value of Projected Member Contributions 53,377,255 52,851,227 53,256,611 H.Accumulated Value of Active Member Contributions 60,655,020 60,655,020 60,112,481 I.Unfunded Actuarial Accrued Liability (UAAL) Based on EAN Method = C. - E.3.(27,912,594) (28,216,537) (9,421,356) J.Funded Ratio = E.2. / C.105.38% 105.42% 102.92% K.Funded Ratio Excluding Credit Balance = E.3. / C.103.17% 103.21% 101.10% ACTUARIAL VALUE OF BENEFITS AND ASSETS January 1, 2017January 1, 2017 January 1, 2016 Before Assumption Change After Assumption Change D R A F T 8 A.Valuation Date B.Normal Cost for 1.Service Retirement Benefits $ 10,431,629 $ 10,160,752 $ 10,488,778 2. Vesting 2,024,528 1,997,067 2,036,821 3.Disability Benefits 1,335,018 1,330,914 1,363,963 4.Death Benefits 248,588 445,115 456,044 5.Refund of Contributions 695,405 722,961 729,238 6.Total for Future Benefits 14,735,168 14,656,809 15,074,844 7.Assumed Amount for Administrative Expenses 301,781 301,781 302,086 8.Total Normal Cost 15,036,949 14,958,590 15,376,930 C.Expected Member Contributions 6,944,027 6,944,027 7,017,955 D.Employer Normal Cost: B8 - C 8,092,922 8,014,563 8,358,975 E. Employer Normal Cost as % of Covered Payroll 10.21%10.11%10.42% CALCULATION OF EMPLOYER NORMAL COST ENTRY AGE NORMAL METHOD January 1, 2017 January 1, 2017 January 1, 2016 After Assumption Change Before Assumption Change D R A F T 9 $ 15,570,503 - 8,932,103 + 11,717,548 + 1,089,935 19,445,883 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 D R A F T 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)$ 21 (6,033,770)$ (520,421)$ 1/1/2016 (Gain)/Loss 475,313 14 511,090 54,617 1/1/2016 Assumption Change (4,280,409) 24 (4,597,669) (374,641) 1/1/2017 (Gain)/Loss (18,096,188) 15 (18,096,188) (1,856,882) 1/1/2017 Assumption Change 303,943 25 303,943 24,375 (26,809,990) (27,912,594) (2,672,952) Original UAAL Current UAAL D R A F T 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: 2017 $ (27,912,594) 2018 (27,006,413) 2019 (26,036,803) 2020 (24,999,321) 2021 (23,889,215) 2022 (22,701,401) 2027 (15,392,439) 2032 (5,082,800) 2037 (1,771,300) 2042 - Amortization Schedule Year Expected UAAL D R A F T 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 $ (9,421,356) 2.Employer Normal Cost for Contribution Year 8,358,975 3.Last Year's Contributions 8,944,103 * 4. Interest at the Assumed Rate on: a.1 and 2 for one year (74,367) b.3 from dates paid 39,498 c. a - b (113,865) 5.This Year's Expected UAAL: 1 + 2 - 3 + 4c (10,120,349) 6.This Year's Actual UAAL (Before any changes in benefits and assumptions)(28,216,537) 7.Net Actuarial Gain (Loss): (5) - (6)18,096,188 8.Gain (Loss) Due to Investments 10,817,097 9.Gain (Loss) Due to other sources 7,279,091 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. D R A F T 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 ** 2016 18,096,188 (2.51) ** 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 2016 gain 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). D R A F T 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 12/31/2016 8.22 7.00 1.23 * 4.13 Averages 7.95 % ---5.30 % --- Assumed Salary Increases Actual Investment Return Year Ending Actual Assumed * Salary for the year ending 12/31/2015 included 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. D R A F T 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 D R A F T 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 159 144 49 60 4 3 2 3 18 71 89 89 1,520 12/31/2017 59 3 2 91 8 Yr Totals *871 979 380 414 29 36 13 17 122 435 557 671 * 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 20 498,746 25 708,907 12/31/2017 26 753,482 Actual (A) Compared to Expected (E) Deaths Among Retirees and Beneficiaries Actual During Year Annual Pensions Annual Pensions Expected During Year D R A F T 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 1/1/17 1,520 1,278 79,276,100 908,229,246 880,316,652 (27,912,594) 103.2 8,092,922 10.21 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 D R A F T 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 8,932,103 12,000 8,944,103 1/1/17 9/30/18 8,659,427 10.92 12,000 0.02 8,647,427 10.91 --- --- --- % of Payroll Employer State Valuation Date End of Year To Which Valuation Applies Amount Actual Contributions % of Payroll TotalAmount % of PayrollAmount RECENT HISTORY OF REQUIRED AND ACTUAL CONTRIBUTIONS Estimated State Required Contributions Employer & State Net Employer Results before January 1, 2010 are from the January 1, 2009 Report prepared by PricewaterhouseCoopers. 18 D R A F T 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. Both the economic and decrement assumptions were established following the Experience Study Report as of January 1, 2012 covering the five years ending December 31, 2011. Economic Assumptions The investment return rate assumed in the valuations is 7.00% per year, compounded annually (net rate after investment expenses). The Inflation Rate assumed in this valuation is 2.50% per year. The Inflation Rate is defined to be the expected long-term rate of increases in the prices of goods and services. The assumed real rate of return over inflation is defined to be the portion of total investment return that is more than the assumed inflation rate. Considering other economic assumptions, the 7.00% investment return rate translates to an assumed real rate of return over 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 increases and productivity increases, and 2.50% recognizes inflation, including price inflation and other macroeconomic forces. This assumption is used to project a member’s current salary to the salaries upon which benefits will be based. D R A F T 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 Combined Healthy Participant Mortality Table (for pre-retirement mortality) and the RP-2000 Mortality Table for Annuitants (for post- retirement mortality) 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 used for Special Risk Class members of the Florida Retirement System (FRS) in their actuarial valuation as of July 1, 2016. FRS Healthy Post-Retirement Mortality for Special Risk Class Members Sample Attained Ages (in 2017)Men Women Men Women 50 0.54 % 0.23 % 33.90 38.31 55 0.67 0.32 29.26 33.29 60 0.90 0.47 24.68 28.39 65 1.31 0.74 20.28 23.65 70 2.01 1.24 16.15 19.19 75 3.26 2.09 12.43 15.11 80 5.37 3.51 9.23 11.49 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. D R A F T 21 FRS Healthy Pre-Retirement Mortality for Special Risk Class Members Sample Attained Ages (in 2017)Men Women Men Women 50 0.23 % 0.15 % 34.89 38.66 55 0.39 0.24 29.77 33.51 60 0.71 0.39 24.89 28.49 65 1.23 0.70 20.33 23.67 70 2.01 1.24 16.15 19.19 75 3.26 2.09 12.43 15.11 80 5.37 3.51 9.23 11.49 Probability of Future Life Dying Next Year Expectancy (years) This assumption is used to measure the probabilities of active members dying prior to 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 Table for Disabled Annuitants with ages set back 4 years for males and set forward 2 years for females, and 40% of the RP- 2000 Annuitants Mortality Table with a White Collar adjustment with no age set back, both with no provision being made for future mortality improvements. These are the same rates used for Special Risk Class members of the Florida Retirement System (FRS) in their actuarial valuation as of July 1, 2016. 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 Combined Healthy Participant Mortality Table (for pre-retirement mortality) and the RP-2000 Mortality Table for Annuitants (for post- retirement mortality) 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) in their actuarial valuation as of July 1, 2016. D R A F T 22 FRS Healthy Post-Retirement Mortality for Non-Special Risk Class Members Sample Attained Ages (in 2017)Men Women Men Women 50 0.55 % 0.23 % 34.66 38.31 55 0.60 0.32 30.03 33.29 60 0.76 0.47 25.36 28.39 65 1.15 0.74 20.84 23.65 70 1.78 1.24 16.59 19.19 75 2.97 2.09 12.73 15.11 80 5.03 3.51 9.40 11.49 Dying Next Year Expectancy (years) Probability of Future Life This assumption is used to measure the probabilities of each benefit payment being made after retirement. FRS Healthy Pre-Retirement Mortality for Non-Special Risk Class Members Sample Attained Ages (in 2017)Men Women Men Women 50 0.21 % 0.15 % 35.58 38.66 55 0.36 0.24 30.46 33.51 60 0.61 0.39 25.53 28.49 65 1.08 0.70 20.88 23.67 70 1.78 1.24 16.59 19.19 75 2.97 2.09 12.73 15.11 80 5.03 3.51 9.40 11.49 Probability of Future Life Dying Next Year Expectancy (years) This assumption is used to measure the probabilities of active members dying prior to retirement. All deaths before retirement are assumed to be non-service connected. 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) in their actuarial valuation as of July 1, 2016. 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) D R A F T 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 D R A F T 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 D R A F T 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 D R A F T 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 all active members and for members who became inactive after January 1, 2009. For members who became inactive on or before January 1, 2009, spouses ages are based on the assumed beneficiary dates of birth provided by the prior actuary. D R A F T 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. D R A F T 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). D R A F T 29 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. 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. 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. 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. D R A F T 30 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. D R A F T SECTION C PENSION FUND INFORMATION D R A F T 31 Statement of Plan Assets at Market Value 2016 2015 A.Cash and Cash Equivalents (Operating Cash)-$ -$ B.Receivables 1.Member Contributions -$ -$ 2.Employer Contributions 5,462,001 7,172,984 3.Investment Income and Other Receivables 2,295,576 2,317,272 4.Total Receivables 7,757,577$ 9,490,256$ C. Investments 1.Short-Term Investments 10,199,335$ 7,911,301$ 2.Domestic Equities 389,773,760 432,163,634 3.International Equities 159,375,680 113,230,315 4. Commodities - - 5.Domestic Fixed Income 254,108,019 245,680,935 6.International Fixed Income - - 7.Real Estate 84,706,678 66,204,558 8.Private Equity - - 9.Total Investments 898,163,472$ 865,190,743$ D.Liabilities 1.Benefits Payable -$ -$ 2.Accrued Expenses and Other Payables (659,644) (1,175,919) 3.Total Liabilities (659,644)$ (1,175,919)$ E.Total Market Value of Assets Available for Benefits 905,261,405$ 873,505,080$ F.Allocation of Investments 1.Short-Term Investments 1.14%0.91% 2.Domestic Equities 43.40%49.95% 3.International Equities 17.74%13.09% 4. Commodities 0.00%0.00% 5.Domestic Fixed Income 28.29%28.40% 6.International Fixed Income 0.00%0.00% 7.Real Estate 9.43%7.65% 8.Private Equity 0.00%0.00% 9.Total Investments 100.00%100.00% December 31 Item D R A F T 32 Reconciliation of Plan Assets 2016 2015 A.Market Value of Assets at Beginning of Year 873,505,080$ 897,025,140$ B.Revenues and Expenditures 1. Contributions a.Employee Contributions 6,745,883$ 6,808,046$ b.Employer Contributions 11,717,548 13,217,982 c.State Contributions 12,000 12,000 d. Total 18,475,431$ 20,038,028$ 2.Investment Income a.Interest, Dividends, and Other Income 17,968,591$ 18,157,941$ b.Net Realized Gains/(Losses)37,295,825 40,834,745 c.Net Unrealized Gains/(Losses)7,582,732 (56,180,886) d.Investment Expenses (5,165,139) (5,274,984) e.Net Investment Income 57,682,009$ (2,463,184)$ 3.Benefits and Refunds a.Refunds (1,226,578)$ (936,127)$ b.Regular Monthly Benefits (42,872,756) (39,856,691) c.Partial Lump-Sum Benefits Paid - - d. Total (44,099,334)$ (40,792,818)$ 4.Administrative and Miscellaneous Expenses (301,781)$ (302,086)$ 5. Transfers -$ -$ C.Market Value of Assets at End of Year 905,261,405$ 873,505,080$ December 31 Item D R A F T Development of Actuarial Value of Assets Valuation Date - December 31 2015 2016 2017 2018 2019 2020 A.Actuarial Value of Assets Beginning of Year 839,868,311$ 882,169,478$ B.Market Value End of Year 873,505,080 905,261,405 C.Market Value Beginning of Year 897,025,140 873,505,080 D.Non-Investment/Administrative Net Cash Flow (21,056,876) (25,925,684) E.Investment Income E1. Actual Market Total: B-C-D (2,463,184) 57,682,009 E2. Assumed Rate of Return 7.00% 7.00% 7.00% 7.00% 7.00% 7.00% E3. Assumed Amount of Return 61,768,947 60,007,730 E4. Amount Subject to Phase-In: E1–E3 (64,232,131) (2,325,721) F.Phase-In Recognition of Investment Income F1. Current Year: 0.2 x E4 (12,846,426) (465,144) F2. First Prior Year 1,723,554 (12,846,426) (465,144) F3. Second Prior Year 14,539,026 1,723,554 (12,846,426) (465,144) F4. Third Prior Year 8,472,595 14,539,026 1,723,554 (12,846,426) (465,144) F5. Fourth Prior Year (10,299,653) 8,472,595 14,539,026 1,723,552 (12,846,427) (465,145) F6. Total Phase-Ins 1,589,096 11,423,605 2,951,010 (11,588,018) (13,311,571) (465,145) G.Actuarial Value of Assets End of Year G1. Preliminary Actuarial Value of Assets 882,169,478$ 927,675,129$ G2. Upper Corridor Limit: 120%*B 1,048,206,096$ 1,086,313,686$ G3. Lower Corridor Limit: 80%*B 698,804,064$ 724,209,124$ G4. Funding Value End of Year 882,169,478$ 927,675,129$ G5. Credit Balance 15,570,503$ 19,445,883$ G6. Final Actuarial Value of Assets 866,598,975$ 908,229,246$ H.Recognized Investment Earnings 63,358,043$ 71,431,335$ I.Difference between Market & Actuarial Value (8,664,398)$ (22,413,724)$ J.Actuarial Rate of Return 7.64% 8.22% K.Market Value Rate of Return -0.28% 6.70% L.Ratio of Actuarial Value of Assets to Market Value 100.99% 102.48% 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 D R A F T 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 2016 6.70 8.22 Average returns: Last five years:8.88 % 9.25 % Last ten years:6.27 % 7.10 % All years:9.06 % 7.95 % 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. D R A F T SECTION D FINANCIAL ACCOUNTING INFORMATION D R A F T 35 A.Valuation Date B.Actuarial Present Value of Accumulated Plan Benefits 1.Vested Benefits a.Members Currently Receiving Payments $ 574,794,636 $ 545,708,520 b.Terminated Vested Members 14,083,542 14,216,453 c.Other Members 233,198,125 231,093,716 d. Total 822,076,303 791,018,689 2.Non-Vested Benefits 13,857,384 16,111,914 3.Total Actuarial Present Value of Accumulated Plan Benefits: 1d + 2 835,933,687 807,130,603 4.Accumulated Contributions of Active Members 60,655,020 60,112,481 C.Changes in the Actuarial Present Value of Accumulated Plan Benefits 1.Total Value at Beginning of Year 807,130,603 782,286,584 2.Increase (Decrease) During the Period Attributable to: a.Plan Amendment 0 0 b.Change in Actuarial Assumptions (134,124) (3,920,001) c.Latest Member Data, Benefits Accumulated and Decrease in the Discount Period 73,036,542 69,556,838 d.Benefits Paid (44,099,334) (40,792,818) e.Net Increase 28,803,084 24,844,019 3.Total Value at End of Period 835,933,687 807,130,603 D.Market Value of Assets 905,261,405 873,505,080 E.Actuarial Assumptions - See page entitled Actuarial Assumptions and Methods FASB NO. 35 INFORMATION January 1, 2017 January 1, 2016 D R A F T SECTION E MISCELLANEOUS INFORMATION D R A F T 36 A. 1.Number Included in Last Valuation 1,505 1,482 2.New Members Included in Current Valuation 158 145 3.Non-Vested Employment Terminations (71)(53) 4.Vested Employment Terminations (18)(18) 5.Service Retirements (49)(43) 6.Disability Retirements (4)(4) 7.Deaths (2)(1) 8.Pending Disabilities 0 (3) 9.Data Corrections/Rehired Members 1 0 10.Number Included in This Valuation 1,520 1,505 B. 1.Number Included in Last Valuation 63 69 2.Additions from Active Members 18 18 3.Lump Sum Payments/Refund of Contributions (6)(7) 4.Payments Commenced (9)(17) 5.Deaths 0 0 6.Conversion from Disability/Rehired Members (1)0 7.Data Corrections 1 0 8.Number Included in This Valuation 66 63 C. 1.Number Included in Last Valuation 1,174 1,125 2.Additions from Active Members 53 47 3.Additions from Terminated Vested Members 9 17 4.Deaths Resulting in No Further Payments (20)(19) 5.Deaths Resulting in New Survivor Benefits 1 1 6.Pending Disabilities 0 3 7.End of Certain Period - No Further Payments (3)0 8.Data Correction/Waiver of Benefits (2)0 9.Number Included in This Valuation 1,212 1,174 RECONCILIATION OF MEMBERSHIP DATA Active Members Service Retirees, Disability Retirees and Beneficiaries Terminated Vested Members From 1/1/2015From 1/1/2016 To 1/1/2016To 1/1/2017 D R A F T 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 27,003 0 0 0 0 0 0 0 0 0 0 0 27,003 AVG PAY 27,003 0 0 0 0 0 0 0 0 0 0 0 27,003 20-24 NO.27 19 8 3 1 0 0 0 0 0 0 0 58 TOT PAY 917,365 655,724 306,647 100,846 32,655 0 0 0 0 0 0 0 2,013,237 AVG PAY 33,976 34,512 38,331 33,615 32,655 0 0 0 0 0 0 0 34,711 25-29 NO.46 40 19 15 6 18 0 0 0 0 0 0 144 TOT PAY 1,597,584 1,588,335 768,812 624,016 214,744 919,466 0 0 0 0 0 0 5,712,957 AVG PAY 34,730 39,708 40,464 41,601 35,791 51,081 0 0 0 0 0 0 39,673 30-34 NO.24 19 21 21 16 46 41 0 0 0 0 0 188 TOT PAY 831,116 874,928 909,855 924,175 714,446 2,573,824 2,032,639 0 0 0 0 0 8,860,983 AVG PAY 34,630 46,049 43,326 44,008 44,653 55,953 49,577 0 0 0 0 0 47,133 35-39 NO.17 10 12 9 5 39 52 12 0 0 0 0 156 TOT PAY 631,448 383,302 568,742 489,029 234,339 2,107,540 3,261,729 612,910 0 0 0 0 8,289,039 AVG PAY 37,144 38,330 47,395 54,337 46,868 54,039 62,726 51,076 0 0 0 0 53,135 40-44 NO.5 8 9 10 7 35 53 62 11 0 0 0 200 TOT PAY 149,790 335,294 327,838 424,206 292,150 1,714,115 3,185,559 4,439,602 698,128 0 0 0 11,566,682 AVG PAY 29,958 41,912 36,426 42,421 41,736 48,975 60,105 71,606 63,466 0 0 0 57,833 45-49 NO.15 8 10 4 8 23 51 52 44 8 0 0 223 TOT PAY 577,930 356,342 433,600 162,639 327,522 1,242,352 3,179,937 3,764,707 3,391,072 535,338 0 0 13,971,439 AVG PAY 38,529 44,543 43,360 40,660 40,940 54,015 62,352 72,398 77,070 66,917 0 0 62,652 50-54 NO.11 7 6 2 8 26 34 44 40 30 5 0 213 TOT PAY 368,443 295,973 229,366 104,390 336,023 1,143,765 1,734,676 2,528,420 2,808,765 2,087,211 451,533 0 12,088,565 AVG PAY 33,495 42,282 38,228 52,195 42,003 43,991 51,020 57,464 70,219 69,574 90,307 0 56,754 55-59 NO.9 6 8 5 5 18 48 34 26 10 11 1 181 TOT PAY 338,782 232,847 404,432 162,282 203,552 781,298 2,293,004 1,585,221 1,411,474 546,975 688,792 44,635 8,693,294 AVG PAY 37,642 38,808 50,554 32,456 40,710 43,405 47,771 46,624 54,287 54,698 62,617 44,635 48,029 60-64 NO.3 4 0 2 4 15 23 30 18 14 3 3 119 TOT P AY 115,898 132,660 0 70,954 130,660 691,194 1,159,594 1,448,074 1,045,575 1,055,572 206,308 232,872 6,289,361 AVG PAY 38,633 33,165 0 35,477 32,665 46,080 50,417 48,269 58,088 75,398 68,769 77,624 52,852 65+ NO.0 2 1 0 1 6 10 3 7 6 1 0 37 TOT PAY 0 70,193 43,519 0 38,230 226,684 442,668 159,383 389,909 341,551 51,403 0 1,763,540 AVG PAY 0 35,096 43,519 0 38,230 37,781 44,267 53,128 55,701 56,925 51,403 0 47,663 TOT NO.158 123 94 71 61 226 312 237 146 68 20 4 1,520 TOT AMT 5,555,359 4,925,598 3,992,811 3,062,537 2,524,321 11,400,238 17,289,806 14,538,317 9,744,923 4,566,647 1,398,036 277,507 79,276,100 AVG AMT 35,161 40,046 42,477 43,134 41,382 50,444 55,416 61,343 66,746 67,157 69,902 69,377 52,155 Years of Service to Valuation Date D R A F T 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.11 4 3 0 0 0 0 0 0 0 0 0 18 TOT PAY 479,618 234,118 167,660 0 0 0 0 0 0 0 0 0 881,396 AVG PAY 43,602 58,530 55,887 0 0 0 0 0 0 0 0 0 48,966 25-29 NO.11 12 6 5 0 7 0 0 0 0 0 0 41 TOT PAY 514,483 701,975 342,425 301,744 0 497,016 0 0 0 0 0 0 2,357,643 AVG PAY 46,771 58,498 57,071 60,349 0 71,002 0 0 0 0 0 0 57,503 30-34 NO.6 7 7 6 5 21 11 0 0 0 0 0 63 TOT PAY 272,040 412,506 440,729 364,635 313,814 1,623,569 846,150 0 0 0 0 0 4,273,443 AVG PAY 45,340 58,929 62,961 60,773 62,763 77,313 76,923 0 0 0 0 0 67,832 35-39 NO.2 1 5 5 2 17 27 3 0 0 0 0 62 TOT PAY 97,003 64,075 292,400 314,975 125,939 1,186,273 2,125,727 264,406 0 0 0 0 4,470,798 AVG PAY 48,502 64,075 58,480 62,995 62,970 69,781 78,731 88,135 0 0 0 0 72,110 40-44 NO.0 2 0 2 0 10 25 39 4 0 0 0 82 TOT PAY 0 138,328 0 121,065 0 725,358 1,938,339 3,455,899 347,822 0 0 0 6,726,811 AVG PAY 0 69,164 0 60,533 0 72,536 77,534 88,613 86,956 0 0 0 82,034 45-49 NO.2 1 1 0 0 7 26 31 24 2 0 0 94 TOT PAY 123,877 69,914 62,107 0 0 487,822 2,067,341 2,724,859 2,288,041 189,346 0 0 8,013,307 AVG PAY 61,939 69,914 62,107 0 0 69,689 79,513 87,899 95,335 94,673 0 0 85,248 50-54 NO.0 1 0 0 1 2 8 8 17 10 2 0 49 TOT PAY 0 71,585 0 0 89,270 189,789 622,453 777,675 1,599,917 952,116 235,449 0 4,538,254 AVG PAY 0 71,585 0 0 89,270 94,895 77,807 97,209 94,113 95,212 117,725 0 92,617 55-59 NO.0 0 2 0 0 1 4 0 1 0 3 0 11 TOT PAY 0 0 207,478 0 0 117,830 377,553 0 77,164 0 292,409 0 1,072,434 AVG PAY 0 0 103,739 0 0 117,830 94,388 0 77,164 0 97,470 0 97,494 60-64 NO.1 0 0 0 0 0 3 1 0 1 0 1 7 TOT PAY 58,071 0 0 0 0 0 301,766 78,156 0 99,572 0 117,191 654,756 AVG PAY 58,071 0 0 0 0 0 100,589 78,156 0 99,572 0 117,191 93,537 65+ 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 TOT NO.33 28 24 18 8 65 104 82 46 13 5 1 427 TOT AMT 1,545,092 1,692,501 1,512,799 1,102,419 529,023 4,827,657 8,279,329 7,300,995 4,312,944 1,241,034 527,858 117,191 32,988,842 AVG AMT 46,821 60,446 63,033 61,246 66,128 74,272 79,609 89,037 93,760 95,464 105,572 117,191 77,257 Years of Service to Valuation Date D R A F T 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 27,003 0 0 0 0 0 0 0 0 0 0 0 27,003 AVG PAY 27,003 0 0 0 0 0 0 0 0 0 0 0 27,003 20-24 NO.16 15 5 3 1 0 0 0 0 0 0 0 40 TOT PAY 437,747 421,606 138,987 100,846 32,655 0 0 0 0 0 0 0 1,131,841 AVG PAY 27,359 28,107 27,797 33,615 32,655 0 0 0 0 0 0 0 28,296 25-29 NO.35 28 13 10 6 11 0 0 0 0 0 0 103 TOT PAY 1,083,101 886,360 426,387 322,272 214,744 422,450 0 0 0 0 0 0 3,355,314 AVG PAY 30,946 31,656 32,799 32,227 35,791 38,405 0 0 0 0 0 0 32,576 30-34 NO.18 12 14 15 11 25 30 0 0 0 0 0 125 TOT PAY 559,076 462,422 469,126 559,540 400,632 950,255 1,186,489 0 0 0 0 0 4,587,540 AVG PAY 31,060 38,535 33,509 37,303 36,421 38,010 39,550 0 0 0 0 0 36,700 35-39 NO.15 9 7 4 3 22 25 9 0 0 0 0 94 TOT PAY 534,445 319,227 276,342 174,054 108,400 921,267 1,136,002 348,504 0 0 0 0 3,818,241 AVG PAY 35,630 35,470 39,477 43,514 36,133 41,876 45,440 38,723 0 0 0 0 40,620 40-44 NO.5 6 9 8 7 25 28 23 7 0 0 0 118 TOT PAY 149,790 196,966 327,838 303,141 292,150 988,757 1,247,220 983,703 350,306 0 0 0 4,839,871 AVG PAY 29,958 32,828 36,426 37,893 41,736 39,550 44,544 42,770 50,044 0 0 0 41,016 45-49 NO.13 7 9 4 8 16 25 21 20 6 0 0 129 TOT PAY 454,053 286,428 371,493 162,639 327,522 754,530 1,112,596 1,039,848 1,103,031 345,992 0 0 5,958,132 AVG PAY 34,927 40,918 41,277 40,660 40,940 47,158 44,504 49,517 55,152 57,665 0 0 46,187 50-54 NO.11 6 6 2 7 24 26 36 23 20 3 0 164 TOT PAY 368,443 224,388 229,366 104,390 246,753 953,976 1,112,223 1,750,745 1,208,848 1,135,095 216,084 0 7,550,311 AVG PAY 33,495 37,398 38,228 52,195 35,250 39,749 42,778 48,632 52,559 56,755 72,028 0 46,038 55-59 NO.9 6 6 5 5 17 44 34 25 10 8 1 170 TOT PAY 338,782 232,847 196,954 162,282 203,552 663,468 1,915,451 1,585,221 1,334,310 546,975 396,383 44,635 7,620,860 AVG PAY 37,642 38,808 32,826 32,456 40,710 39,028 43,533 46,624 53,372 54,698 49,548 44,635 44,829 60-64 NO.2 4 0 2 4 15 20 29 18 13 3 2 112 TOT P AY 57,827 132,660 0 70,954 130,660 691,194 857,828 1,369,918 1,045,575 956,000 206,308 115,681 5,634,605 AVG PAY 28,914 33,165 0 35,477 32,665 46,080 42,891 47,239 58,088 73,538 68,769 57,841 50,309 65+ NO.0 2 1 0 1 6 10 3 7 6 1 0 37 TOT PAY 0 70,193 43,519 0 38,230 226,684 442,668 159,383 389,909 341,551 51,403 0 1,763,540 AVG PAY 0 35,097 43,519 0 38,230 37,781 44,267 53,128 55,701 56,925 51,403 0 47,663 TOT NO.125 95 70 53 53 161 208 155 100 55 15 3 1,093 TOT AMT 4,010,267 3,233,097 2,480,012 1,960,118 1,995,298 6,572,581 9,010,477 7,237,322 5,431,979 3,325,613 870,178 160,316 46,287,258 AVG AMT 32,082 34,033 35,429 36,983 37,647 40,823 43,320 46,692 54,320 60,466 58,012 53,439 42,349 Years of Service to Valuation Date D R A F T 40 INACTIVE PARTICIPANT DISTRIBUTION Disabled Retired Total Total Total Total Age Group Number Benefits Number Benefits Number Benefits Number Benefits Under 20 - - - - - - 5 59,710 20-24 - - - - - - - - 25-29 - - - - - - - - 30-34 1 17,587 2 83,502 - - 1 33,621 35-39 5 94,550 1 41,162 - - - - 40-44 11 209,680 4 173,596 2 70,751 1 50,921 45-49 14 301,032 10 396,078 21 907,681 3 49,259 50-54 23 484,855 8 310,690 67 2,985,300 9 272,252 55-59 5 50,050 22 669,347 131 5,684,695 9 191,194 60-64 7 96,814 26 693,195 225 9,693,509 19 403,633 65-69 - - 28 762,187 229 8,770,209 16 399,476 70-74 - - 14 289,834 141 4,964,867 19 447,965 75-79 - - 12 298,114 62 1,985,907 26 553,334 80-84 - - 6 149,031 30 881,782 22 287,913 85-89 - - 1 23,129 15 336,324 9 109,464 90-94 - - - - 6 70,507 7 59,751 95-99 - - - - 2 25,805 1 2,318 100 & Over - - - - - - - - Total 66 1,254,568 134 3,889,865 931 36,377,337 147 2,920,811 Average Age 50 63 66 70 Terminated Vested Deceased with Beneficiary D R A F T SECTION F SUMMARY OF PLAN PROVISIONS D R A F T 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. D R A F T 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. D R A F T 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 D R A F T 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. D R A F T 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. D R A F T 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. D R A F T 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. D R A F T 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. D R A F T 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. D R A F T GRSGabriel Roeder Smith & Company Consultants & Actuaries CITY OF CLEARWATER EMPLOYEES' PENSION PLAN 1111 ACTUARIAL VALUATION REPORT AS OF JANUARY 1, 2017 ANNUAL EMPLOYER CONTRIBUTION FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2018 U n Q i GRS Retirement Consulting March 24, 2017 Board of Trustees City of Clearwater Employees' Pension Plan Clearwater, Florida U Plan are presented in this report. Dear Board Members: P: 954.527.1616 F: 954.525.0083 www.grsconsulting.com The results of the January 1, 2017 Annual Actuarial Valuation of the City of Clearwater Employees' Pension U U N U U U N U N U N N U N N U The computed contribution rate shown on page 1 may be considered as a minimum contribution rate that complies with the Board's funding policy. Users of this report should be aware that contributions made at that rate do not guarantee benefit security. Given the importance of benefit security to any retirement system, we suggest that contributions to the System in excess of those presented in this report be considered. The contribution rate in this report is determined using the actuarial assumptions and methods disclosed in Section B of this report. This report does not include an assessment of the risks of future experience not meeting the actuarial assumptions. Such an assessment of risks was outside the scope of this assignment. We encourage a review and assessment of investment and other significant risks that may have a material effect on the Plan's financial condition. This report was prepared at the request of the Board and is intended for use by the Retirement System and those designated or approved by the Board. This report may be provided to parties other than the System only in its entirety and only with the permission of the Board. GRS is not responsible for unauthorized use of this report. The purposes of the valuation are to measure the System's funding progress and to determine the employer contribution rate for the fiscal year ending September 30, 2018. This report should not be relied on for any purpose other than the purposes described herein. Determinations of financial results, associated with the benefits described in this report, for purposes other than those identified above may be significantly different. The findings in this report are based on data or other information through December 31, 2016. Future actuarial measurements may differ significantly from the current measurements presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period or additional cost or contribution requirements based on the plan's funded status); and changes in plan provisions or applicable law. The scope of an actuarial valuation does not include an analysis of the potential range of such measurements. This valuation assumed the continuing ability of the plan sponsor to make the contributions necessary to fund this Plan. A determination regarding whether or not the plan sponsor is actually able to do so is outside our scope of expertise and was not performed. U s The valuation was based upon information furnished by the City concerning Retirement System benefits, financial transactions, plan provisions and active members, terminated members, retirees and beneficiaries. We checked for internal and year -to -year consistency, but did not otherwise audit the data. We are not responsible for the accuracy or completeness of the information provided by the City. U Peter N. Strong and Trisha Amrose are members of the American Academy of Actuaries. These actuaries meet the Academy's Qualification Standards to render the actuarial opinions contained herein. In addition, this report was prepared using certain assumptions approved by the Board and prescribed by the Florida Statutes as described in the section of this report entitled Actuarial Assumptions and Methods. The prescribed assumptions are the assumed mortality rates detailed in the Actuarial Assumptions and Methods section in accordance with Florida House Bill 1309 (codified in Chapter 2015 -157). This report has been prepared by actuaries who have substantial experience valuing public employee retirement systems. To the best of our knowledge the information contained in this report is accurate and fairly presents the actuarial position of the Retirement System as of the valuation date. All calculations have been made in conformity with generally accepted actuarial principles and practices, with the Actuarial Standards of Practice issued by the Actuarial Standards Board and with applicable statutes. The signing actuaries are independent of the plan sponsor. This actuarial valuation and /or cost determination was prepared and completed by me or under my direct supervision, and I acknowledge responsibility for the results. To the best of my knowledge, the results are complete and accurate. In my opinion, the techniques and assumptions used are reasonable, meet the requirements and intent of Part VII, Chapter 112, Florida Statutes, and are based on generally accepted actuarial principles and practices. There is no benefit or expense to be provided by the plan and/or paid from the plan's assets for which liabilities or current costs have not been established or otherwise taken into account in the valuation. All known events or trends which may require a material increase in plan costs or required contribution rates have been taken into account in the valuation. Gabriel, Roeder, Smith & Company will be pleased to review this valuation and Report with the Board of Trustees and to answer any questions pertaining to the valuation. Respectfully submitted, U ar-t–ar2— U Peter N. Strong, FSA, AA Trisha Amrose, MAAA Enrolled Actuary No. 1 6975 Enrolled Actuary No. 14 -8010 GABRIEL, ROEDER, SMITH AND COMPANY U U D iiime RetirementG1 \ S Consulting 1111 Section A B TABLE OF CONTENTS Title Discussion of Valuation Results Valuation Results Page 1 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 D E F 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 Financial Accounting Information 1. FASB No. 35 Miscellaneous Information 35 1. Reconciliation of Membership Data 36 2. Active Participant Distribution 37 3. Inactive Participant Distribution 40 Summary of Plan Provisions 41 GRS SECTION A DISCUSSION OF VALUATION RESULTS GRS 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: 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 2017 and 2018 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, 2016 were 11,717,548 and $12,000, respectively, for a total of $11,729,548, compared to the required contribution of 8,944,103. The excess contribution of $2,785,445 was used to increase the credit balance. The minimum required City contribution is 7% of covered payroll. GRS For FYE 9/30/2018 Based on 1/1/2017 Valuation For FYE 9/30/2017 Based on 1/1/2016 Valuation Increase Decrease) Required Employer /State Contribution 8,659,427 8,944,103 284,676) As % of Covered Payroll 10.92 11.15 0.23) Estimated State Contribution 12,000 12,000 0 As % of Covered Payroll 0.01 0.02 0.01) Required Employer Contribution 8,647,427 8,932,103 284,676) As % of Covered Payroll 10.91 11.13 0.22) Credit Balance 19,445,883 15,570,503 3,875,380 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 2017 and 2018 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, 2016 were 11,717,548 and $12,000, respectively, for a total of $11,729,548, compared to the required contribution of 8,944,103. The excess contribution of $2,785,445 was used to increase the credit balance. The minimum required City contribution is 7% of covered payroll. GRS 2 Revisions in Benefits There have been no revisions in benefits since the last valuation. Revisions in Actuarial Assumptions or Methods The mortality assumption for active members prior to retirement was revised in accordance with a revision to the active member pre - retirement mortality assumption used by the Florida Retirement System FRS) in their July 1, 2016 Actuarial Valuation. No revisions were made to mortality rates applicable to retirees. Prior to this revision, pre - retirement mortality rates for active members were the same as the post- retirement rates for active members and retirees. 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. A more detailed description can be found in the section of this report titled Actuarial Assumptions and Cost Method. As a result of the change in the pre- retirement mortality assumption, the required contribution increased by 0.11% of covered payroll, or $83,845. For informational purposes, if this year's valuation had been completed using the mortality rates assumed prior to January 1, 2016 (the RP -2000 Combined Healthy Participant Mortality Table for males and females with mortality improvements projected with Scale BB) rather than the mortality rates mandated by the Florida Statutes, the required City contribution for FY 2018 would have been 8,885,377, or 11.21% of covered payroll, and the funded ratio (excluding the credit balance) as of January 1, 2017 would have been 102.74 %. Actuarial Experience There was a net actuarial experience gain of $18,096,188 during the year, which means that actual experience was more favorable than expected. The gain is primarily due to a recognized investment return on the smoothed actuarial value of assets) above the assumed rate of 7.0% and lower than expected salary increases. Although the investment return on the market value of assets was 6.70 %, the investment return was 8.22% based on the actuarial value of assets, as previously unrecognized investment gains were phased in. In addition, actual average salary increases were 1.23 %, compared to an expected average increase of 4.13 %. Salary increases were lower than expected mainly because reported pensionable earnings for the year ending December 31, 2015 included 27 pay periods, whereas 26 pay periods are included in the Si GRS a I 3 IIreported pensionable earnings for the year ending December 31, 2016. An experience gain also resulted IIfrom retirement experience (there were 49 retirements during the year versus 60 expected). Mortality U experience was a minor offsetting source of experience loss, as there were fewer retiree deaths during the IIyear than expected (20 actual deaths with $498,746 in annual pensions versus 25 expected deaths with a$708,907 in annual pensions). RIUnder Chapter 112.66 of the Florida Statues, the annual payment to amortize the UAL may not N reduce the contribution required to fund the Normal Cost. As a result, since the annual payment to IIamortize the UAL is below $0, the actuarial experience gain had no direct effect on the required employer IIcontribution. Analysis of Change in Employer Contribution The components of change in the required City contribution are as follows: a Contribution Rate Last Year 11.13 % IN Change in Benefits 0.00 Change in Assumptions and Methods 0.11 IIAmortization Payment on UAAL 0.00 NI Normal Cost (0.33) Experience Gain/Loss 0.00 Change in Administrative Expenses 0.01 Change in State Revenue (0.01) Contribution Rate This Year 10.91 II Funded Ratio II II One measure of the Plan's funding progress is the ratio of the actuarial value of assets to the II actuarial accrued liability. Including the credit balance in the actuarial value of assets, the funded ratio is a105.38% this year compared to 102.92% last year. Not including the credit balance in the actuarial value of assets, the funded ratio is 103.17% this year compared to 101.10% last year. This funded ratio (not including the credit balance) was 103.21% before the change in the mortality assumption. Variability of Future Contribution Rates ISThe Actuarial Cost Method used to determine the contribution rate is intended to produce IIIcontribution rates which are generally level as a percent of payroll. Even so, when experience differs afrom the assumptions, as it often does, the employer's contribution rate can vary significantly from year - II 11 GRS 4 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. The Actuarial Value of Assets exceeds the Market Value of Assets by $22,413,724 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. If there are no experience losses and the return on the market value of assets is 7.0% in 2017 (net of investment expenses) as assumed, it is projected that the City contribution requirement as of January 1, 2018 for the fiscal year ending September 30, 2019 will remain in the range of approximately 10%-11% 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 10.91% of covered payroll (since the annual payment to amortize the UAL would have remained at $0 due to Chapter 112.66 of the Florida Statutes), and the funded ratio (excluding the credit balance) would have been 100.62 %. The funded ratio based on the market value of assets (excluding the credit balance) last year was 100.09 %. Conclusion The remainder of this Report includes detailed actuarial valuation results, financial information, miscellaneous information and statistics, and a summary of plan provisions. GRS U U a SECTIONB v) aH7zoH III III III III 5 PARTICIPANT DATA January 1, 2017 January 1, 2016 ACTIVE MEMBERS Number 1,520 1,505 Covered Annual Payroll 79,276,100 80,250,993 Average Annual Payroll 52,155 53,323 Average Age 44.3 44.5 Average Past Service 10.9 11.1 Average Age at Hire 33.4 33.4 RETIREES & BENEFICIARIES Number 1,078 1,037 Annual Benefits 39,298,148 36,972,899 Average Annual Benefit 36,455 35,654 Average Age 66.3 65.9 DISABILITY RETIREES Number 134 137 Annual Benefits 3,889,865 3,837,858 Average Annual Benefit 29,029 28,014 Average Age 63.2 63.4 TERMINATED VESTED MEMBERS Number 66 63 Annual Benefits 1,254,568 1,230,068 Average Annual Benefit 19,009 19,525 Average Age 50.1 50.4 GRS 6 ACTUARIALLY DETERMINED CONTRIBUTION (ADC) A. Valuation Date January 1, 2017 January 1, 2017 January 1, 2016 After Before Assumption Change Assumption Change B. ADC to Be Paid During Fiscal Year Ending 9/30/2018 9/30/2018 9/30/2017 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 8,092,922 8,014,563 8,358,975 F. ADC if Paid on the Valuation Date: D +E 8,092,922 8,014,563 8,358,975 G. ADC Adjusted for Frequency of Payments 8,659,427 8,575,582 8,944,103 H. ADC as % of Covered Payroll 10.92 % 10.82 % 11.15 % I. Assumed Rate of Increase in Covered Payroll to Contribution Year 0.00 % 0.00 % 0.00 % J. Covered Payroll for Contribution Year 79,276,100 79,276,100 80,250,993 K. ADC for Contribution Year: H x J 8,659,427 8,575,582 8,944,103 L. Estimate of State Revenue in Contribution Year 12,000 12,000 12,000 M. Required Employer Contribution (REC) in Contribution Year 8,647,427 8,563,582 8,932,103 N. REC as % of Covered Payroll in Contribution Year: M - J 10.91 % 10.80 % 11.13 % O. Credit Balance 19,445,883 19,445,883 15,570,503 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. GRS U U U U U U ACTUARIAL VALUE OF BENEFITS AND ASSETS A. Valuation Date January 1, 2017 January 1, 2017 January 1, 2016 After Before Assumption Assumption Change Change B. Actuarial Present Value of All Projected Benefits for 1. Active Members a. Service Retirement Benefits 344,686,807 339,084,990 346,868,915 b. Vesting Benefits 34,490,262 34,091,593 35,105,321 c. Disability Benefits 13,745,145 13,592,191 13,817,873 d. Preretirement Death Benefits 5,984,099 9,988,053 10,280,425 e. Return of Member Contributions 2,778,269 2,984,718 2,811,989 f. Total 401,684,582 399,741,545 408,884,523 2. Inactive Members a. Service Retirees & Beneficiaries 524,368,640 524,368,640 495,874,052 b. Disability Retirees 50,425,996 50,425,996 49,834,468 c. Terminated Vested Members 14,083,542 14,083,542 14,216,453 d. Total 588,878,178 588,878,178 559,924,973 3. Total for All Members 990,562,760 988,619,723 968,809,496 C. Actuarial Accrued (Past Service) Liability 880,316,652 880,012,709 857,177,619 D. Actuarial Value of Accumulated Plan Benefits per FASB No. 35 835,933,687 836,067,811 807,130,603 E. Plan Assets 1. Market Value 905,261,405 905,261,405 873,505,080 2. Actuarial Value 927,675,129 927,675,129 882,169,478 3. Actuarial Value Excluding Credit Balance 908,229,246 908,229,246 866,598,975 F. Actuarial Present Value of Projected Covered Payroll 601,882,706 595,983,669 600,851,333 G. Actuarial Present Value of Projected Member Contributions 53,377,255 52,851,227 53,256,611 H. Accumulated Value of Active Member Contributions 60,655,020 60,655,020 60,112,481 I. Unfunded Actuarial Accrued Liability (UAAL) Based on EAN Method = C. - E.3. 27,912,594) 28,216,537) 9,421,356) J. Funded Ratio = E.2. / C. 105.38% 105.42% 102.92% K. Funded Ratio Excluding Credit Balance = E.3. / C. 103.17% 103.21% 101.10% GRS 8 CALCULATION OF EMPLOYER NORMAL COST ENTRY AGE NORMAL METHOD A. Valuation Date January 1, 2017 January 1, 2017 January 1, 2016 After Before Assumption Change Assumption Change B. Normal Cost for 1. Service Retirement Benefits 10,431,629 10,160,752 10,488,778 2. Vesting 2,024,528 1,997,067 2,036,821 3. Disability Benefits 1,335,018 1,330,914 1,363,963 4. Death Benefits 248,588 445,115 456,044 5. Refund of Contributions 695,405 722,961 729,238 6. Total for Future Benefits 14,735,168 14,656,809 15,074,844 7. Assumed Amount for Administrative Expenses 301,781 301,781 302,086 8. Total Normal Cost 15,036,949 14,958,590 15,376,930 C. Expected Member Contributions 6,944,027 6,944,027 7,017,955 D. Employer Normal Cost: B8 - C 8,092,922 8,014,563 8,358,975 E. Employer Normal Cost as % of Covered Payroll 10.21% 10.11% 10.42% GRS 9 Reconcilation of Credit Balance Credit Balance at Beginning of Year $ 15,570,503 Required Employer Contribution - 8,932,103 Employer Contribution Made + 11,717,548 Interest on Credit Balance + 1,089,935 Credit Balance at End of Year 19,445,883 GRS 10 LIQUIDATION OF THE UNFUNDED ACTUARIAL ACCRUED LIABILITY (UAAL) UAAL Amortization Period and Payments Original UAAL Current UAAL Date Years Established Source Amount Remaining Amount Payment 1/1/2015 Fresh Start 5,212,649) 21 6,033,770) 520,421) 1/1/2016 Gain)/Loss 475,313 14 511,090 54,617 1/1/2016 Assumption Change 4,280,409) 24 4,597,669) 374,641) 1/1/2017 Gain)/Loss 18,096,188) 15 18,096,188) 1,856,882) 1/1/2017 Assumption Change 303,943 25 303,943 24,375 26,809,990) 27,912,594) 2,672,952) GRS O U N 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: Amortization Schedule Year Expected UAAL 2017 27,912,594) 2018 27,006,413) 2019 26,036,803) 2020 24,999,321) 2021 23,889,215) 2022 22,701,401) 2027 15,392,439) 2032 5,082,800) 2037 1,771,300) 2042 GRS 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: A. Derivation of the Current UAAL 1. Last Year's UAAL 9,421,356) 2. Employer Normal Cost for Contribution Year 8,358,975 3. Last Year's Contributions 8,944,103 4. Interest at the Assumed Rate on: a. 1 and 2 for one year 74,367) b. 3 from dates paid 39,498 c. a - b 113,865) 5. This Year's Expected UAAL: 1+2 - 3 +4c 10,120,349) 6. This Year's Actual UAAL (Before any changes in benefits and assumptions) 28,216,537) 7. Net Actuarial Gain (Loss): (5) - (6) 18,096,188 8. Gain (Loss) Due to Investments 10,817,097 9. Gain (Loss) Due to other sources 7,279,091 Excludes the portion of the actual contribution above the required contribution that was used to increase the credit balance. GRS a 13 a 5 Gains (losses) in previous years have been as follows: Change in Year Ending Gain Employer 12/31 (Loss) Cost Rate* a 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 ** 5 2016 18,096,188 (2.51) ** a 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 2016 gain 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). a a U U a a a a a a a a a a GRS 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: Year Ending Investment Return Salary Increases Actual Assumed Actual Assumed 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 12/31/2016 8.22 7.00 1.23 4.13 Averages 7.95 5.30 Salary for the year ending 12/31/2015 included 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. GRS 15 History of Investment Return Based on Actuarial Value of Assets 30% 10% 25% 20% 5% 30% 25% 20% 15% 15% 10% L. 10% 5% End Compared to Previous Year 5% 004: Actual Assumed I I I I I I I I I I I I I I I I I I I i 0% 5% 5% 10% 10% 15% 15% c 4) b1 bh 1 c DN- ~ \S,- Nr1 N\) s s s1<If)) e \,,-° $1'O1.Z'`IZrIZ N`L'',,- 1 1NiN \,- \,-\\- N, Plan Year End R- Actual t Assumed History of Salary Increases 15% 15% 10% A 10% 5% OAR ir _ r IV 5% 1 0% I I I I I I I I I I I I I I I I I I I I I I i I I V I I I 0% Q1 \ \ Q \c e n\~, e, e, ei),. en 1,\ q`b 0%\ o°,\ 01 0~,\ O~,\ 01n\0~ ,\Ob O~ re,e 1~ ,\ ~ ~~~ \1~1~ ,\1 ~ ,\1 Plan Year End Compared to Previous Year II- Actual Assumed GRS 16 Actual (A) Compared to Expected (E) Decrements Among Active Employees Number Expected During Year Year Annual Annual Added Number Pensions Number Pensions Active 12 During Service Disability 12/31/2010 Terminations Members Year Year Retirement Retirement Death Vested Other Totals End of Ended AE 232,755 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 159 144 49 60 4 3 2 3 18 71 89 89 1,520 12/31/2017 59 3 2 91 8 Yr Totals * 871 979 380 414 29 36 13 17 122 435 557 671 Totals are through current Plan Year only. Actual (A) Compared to Expected (E) Deaths Among Retirees and Beneficiaries Actual During Year Expected During Year Year Annual Annual Ended Number Pensions Number Pensions 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 20 498,746 25 708,907 12/31/2017 26 753,482 GRS III Ill RECENT HISTORY OF VALUATION RESULTS Number of Actuarial Accrued Unfunded Actuarial Employer Normal Cost* Valuation Active Inactive Covered Annual Actuarial Value Liability Liability Funded Date Members Members Payroll of Assets Entry Age) Entry Age)* Ratio Amount of Payroll 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 1/1/17 1,520 1,278 79,276,100 908,229,246 880,316,652 27,912,594) 103.2 8,092,922 10.21 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 ofAssets. Results before January 1, 2010 are from the January 1, 2009 Report prepared by PricewaterhouseCoopers. RECENT HISTORY OF REQUIRED AND ACTUAL CONTRIBUTIONS End of Required Contributions Year To Employer & State Estimated State Net Employer Actual Contributions Which Valuation Valuation of of of Date Applies Amount Payroll Amount Payroll Amount Payroll Employer State Total 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 8,932,103 12,000 8,944,103 1/1/17 9/30/18 8,659,427 10.92 12,000 0.02 8,647,427 10.91 Results before January 1, 2010 are from the January 1, 2009 Report prepared by PricewaterhouseCoopers. 00 II • II . . II • • II II • II l • • • II • • • Ill • • II • . • • II • II ACTUARIAL ASSUMPTIONS AND COST METHOD Valuation Methods 19 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. Both the economic and decrement assumptions were established following the Experience Study Report as of January 1, 2012 covering the five years ending December 31, 2011. Economic Assumptions The investment return rate assumed in the valuations is 7.00% per year, compounded annually (net rate after investment expenses). The Inflation Rate assumed in this valuation is 2.50% per year. The Inflation Rate is defined to be the expected long -term rate of increases in the prices of goods and services. The assumed real rate of return over inflation is defined to be the portion of total investment return that is more than the assumed inflation rate. Considering other economic assumptions, the 7.00% investment return rate translates to an assumed real rate of return over 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 increases and productivity increases, and 2.50% recognizes inflation, including price inflation and other macroeconomic forces. This assumption is used to project a member's current salary to the salaries upon which benefits will be based. GRS 20 Increase in Salary - Hazardous Duty Years of Merit and Base Total Service Seniority (Inflation) Increase 1 5.40% 2.50% 7.90% 2 5.20% 2.50% 7.70% 3 4.50% 2.50% 7.00% 4 2.75% 2.50% 5.25% 5 - 14 1.75% 2.50% 4.25% 15 and Higher 1.00% 2.50% 3.50% Increase in Salary - Non - Hazardous Duty Years of Merit and Base Total Service Seniority (Inflation) Increase 1 5.40% 2.50% 7.90% 2 3.25% 2.50% 5.75% 3 2.50% 2.50% 5.00% 4 2.00% 2.50% 4.50% 5 - 9 1.50% 2.50% 4.00% 10 and Higher 1.00% 2.50% 3.50% Demographic Assumptions The mortality table for Hazardous Duty members is the RP -2000 Combined Healthy Participant Mortality Table (for pre- retirement mortality) and the RP -2000 Mortality Table for Annuitants (for post - retirement mortality) 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 used for Special Risk Class members of the Florida Retirement System (FRS) in their actuarial valuation as of July 1, 2016. FRS Healthy Post - Retirement Mortality for Special Risk Class Members Sample Probability of Future Life Attained Dying Next Year Expectancy (years) Ages (in 2017) Men Women Men Women 50 0.54 % 0.23 % 33.90 38.31 55 0.67 0.32 29.26 33.29 60 0.90 0.47 24.68 28.39 65 1.31 0.74 20.28 23.65 70 2.01 1.24 16.15 19.19 75 3.26 2.09 12.43 15.11 80 5.37 3.51 9.23 11.49 This assumption is used to measure the probabilities of each benefit payment being made after retirement. GRS a II III 21 U II FRS Healthy Pre - Retirement Mortality for Special Risk Class Members Sample Probability of Future Life Attained Dying Next Year Expectancy (years) IIAges (in 2017) Men Women Men Women 50 0.23 % 0.15 % 34.89 38.66 II 55 0.39 0.24 29.77 33.51 60 0.71 0.39 24.89 28.49 65 1.23 0.70 20.33 23.67 70 2.01 1.24 16.15 19.19 75 3.26 2.09 12.43 15.11 80 5.37 3.51 9.23 11.49 This assumption is used to measure the probabilities of active members dying prior to retirement. All II deaths before retirement are assumed to be non - service connected. II For disabled retirees, the mortality table used was 60% of the RP -2000 Mortality Table for Disabled Annuitants with ages set back 4 years for males and set forward 2 years for females, and 40% of the RP- 2000 Annuitants Mortality Table with a White Collar adjustment with no age set back, both with no provision being made for future mortality improvements. These are the same rates used for Special Risk Class members of the Florida Retirement System (FRS) in their actuarial valuation as of July 1, 2016. FRS Disabled Mortality for Special Risk Class Members Sample Probability of Future Life Attained Dying Next Year Expectancy (years) 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 II 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 II The mortality table for Nonhazardous Duty members is the RP -2000 Combined Healthy ParticipantIIMortalityTable (for pre- retirement mortality) and the RP -2000 Mortality Table for Annuitants (for post- retirement mortality) 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) in their actuarial valuation as of July 1, 2016. II III II II Ill GRS 22 FRS Healthy Post - Retirement Mortality for Non - Special Risk Class Members Sample Probability of Future Life Attained Dying Next Year Expectancy (years) Ages (in 2017) Men Women Men Women 50 0.55 % 0.23 % 34.66 38.31 55 0.60 0.32 30.03 33.29 60 0.76 0.47 25.36 28.39 65 1.15 0.74 20.84 23.65 70 1.78 1.24 16.59 19.19 75 2.97 2.09 12.73 15.11 80 5.03 3.51 9.40 11.49 This assumption is used to measure the probabilities of each benefit payment being made after retirement. FRS Healthy Pre - Retirement Mortality for Non - Special Risk Class Members Sample Probability of Future Life Attained Dying Next Year Expectancy (years) Ages (in 2017) Men Women Men Women 50 0.21 % 0.15 % 35.58 38.66 55 0.36 0.24 30.46 33.51 60 0.61 0.39 25.53 28.49 65 1.08 0.70 20.88 23.67 70 1.78 1.24 16.59 19.19 75 2.97 2.09 12.73 15.11 80 5.03 3.51 9.40 11.49 This assumption is used to measure the probabilities of active members dying prior to retirement. All deaths before retirement are assumed to be non - service connected. 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) in their actuarial valuation as of July 1, 2016. FRS Disabled Mortality for Non - Special Risk Class Members Sample Probability of Future Life Attained Dying Next Year Expectancy (years) 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 GRS a a U U 23 II early 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: a Hazardous Duty Retirement III Years of Probability of Service Age Retirement U 10 -19 50 -59 10% 60 - 64 50 65 &Over 100 U 20 & Over Under 45 20 II 45 - 49 15 III 55 - 54 25 55 - 59 35 60 - 64 50 65 & Over 100 U IINon - Hazardous Duty Retirement II Years of Probability of Service Age Retirement 10 -19 65 -69 45 % 70 - 74 50 75 & Over 100 IN 60 - 29 55 - 59 20 60 - 64 25 65 - 69 45 70 &Over 100 II 30 & Over Under 65 40 II 65 - 69 50 II 70 & Over 100 GRS 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. Hazardous Duty Withdrawal - Males and Females 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 30 - 49 50 & Over 4.0 1.0 0.0 Non - Hazardous Duty Withdrawal - Males Non- Hazardous Duty Withdrawal - Females Years of % of Active Members Service Age Separating Within Next Year Under 1 Under 30 25.0 % 30 - 34 20.0 35 - 49 15.0 50 - 59 10.0 60 & Over 5.0 1 Under 60 15.0 60 & Over 10.0 2 Under 45 10.0 45 & Over 5.0 3 Under 25 15.0 25 - 34 12.5 35 & Over 5.0 4 Under 30 15.0 30 - 44 10.0 45 & Over 5.0 5 & Over Under 30 12.5 30 - 34 7.0 35 - 39 6.0 40 - 44 5.0 45 - 49 3.5 50 - 54 4.0 55 - 59 5.0 60 & Over 7.5 Years of % of Active Members Service Age Separating Within Next Year Under 1 Under 25 35.0 % 25 - 34 30.0 35 - 39 25.0 40 - 49 20.0 50 - 59 15.0 60 & Over 5.0 1 Under 30 25.0 30 - 59 15.0 60 & Over 10.0 2 Under 45 15.0 45 - 59 7.5 60 & Over 6.5 3 Under 30 20.0 30 - 59 10.0 60 & Over 5.0 4 Under 30 15.0 30 - 34 12.5 35 -44 10.0 45 & Over 5.0 5 & Over Under 30 7.5 30 - 39 6.5 40 - 44 5.0 45 & Over 4.0 GRS 25 Rates of disability among active members (100% of disabilities are assumed to be service - connected). Hazardous Duty Disability of Active Members Becoming Sample Disabled Within Next Year Ages Males Females 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 Non - Hazardous Duty Disability of Active Members Becoming Sample Disabled Within Next Year Ages Males Females 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 GRS Administrative & Investment Expenses Benefit Service Cost of Living Increases Decrement Operation Decrement Timing Eligibility Testing Forfeitures Incidence of Contributions Marriage Assumption 26 Miscellaneous and Technical Assumptions 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. Exact fractional service is used to determine the amount of benefit payable. 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. Disability and mortality decrements operate during retirement eligibility. Decrements of all types are assumed to occur at the beginning of the year. 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. 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. 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. ' 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 all active members and for members who became inactive after January 1, 2009. For members who became inactive on or before January 1, 2009, spouses ages are based on the assumed beneficiary dates of birth provided by the prior actuary. GRS II a IIII 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. IN IN II GRS Actuarial Accrued Liability AAL) Actuarial Assumptions Actuarial Cost Method Actuarial Equivalent Actuarial Present Value APJ'9 Actuarial Present Value of Future Benefits (APVFB) Actuarial Valuation Actuarial Value ofAssets 28 GLOSSARY The difference between the Actuarial Present Value of Future Benefits, and the Actuarial Present Value of Future Normal Costs. 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. 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. Of equal Actuarial Present Value, determined as of a given date and based on a given set of Actuarial Assumptions. 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. 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. 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). 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). GRS 5 Actuarially Determined Contribution (ADC) Amortization Method Amortization Payment Amortization Period Employer Normal Cost Equivalent Single Amortization Period Experience Gain/Loss Funded Ratio Normal Cost Open Amortization Period Closed Amortization Period 29 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. 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. That portion of the plan contribution or ADC which is designed to pay interest on and to amortize the Unfunded Actuarial Accrued Liability. The period used in calculating the Amortization Payment. 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. The portion of the Normal Cost to be paid by the employer. This is equal to the Normal Cost less expected member contributions. 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. A measure of the difference between the normal cost rate from last year and the normal cost rate from this year. The ratio of the Actuarial Value of Assets to the Actuarial Accrued Liability. The annual cost assigned, under the Actuarial Cost Method, to the current plan year. 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. GRS Unfunded Actuarial Accrued Liability Valuation Date 30 • III IN el ir R The difference between the Actuarial Accrued Liability and Actuarial Value of Assets. 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 GRS Statement of Plan Assets at Market Value Item A. Cash and Cash Equivalents (Operating Cash) B. Receivables 1. Member Contributions 2. Employer Contributions 3. Investment Income and Other Receivables 4. Total Receivables C. Investments 1. Short-Term Investments 2. Domestic Equities 3. International Equities 4. Commodities 5. Domestic Fixed Income 6. International Fixed Income 7. Real Estate 8. Private Equity 9. Total Investments D. Liabilities 1. Benefits Payable 2. Accrued Expenses and Other Payables 3. Total Liabilities E. Total Market Value of Assets Available for Benefits F. Allocation of Investments 1. Short-Term Investments 2. Domestic Equities 3. International Equities 4. Commodities 5. Domestic Fixed Income 6. International Fixed Income 7. Real Estate 8. Private Equity 9. Total Investments 31 December 31 2016 2015 5,462,001 2,295,576 7,757,577 10,199,335 389,773,760 159,375,680 254,108,019 84,706,678 7,172,984 2,317,272 9,490,256 7,911,301 432,163,634 113,230,315 245,680,935 66,204,558 898,163,472 $ 865,190,743 659,644) (1,175,919) 659,644) $ (1,175,919) 905,261,405 $ 873,505,080 1.14% 43.40% 17.74% 0.00% 28.29% 0.00% 9.43% 0.00% 100.00% 0.91% 49.95% 13.09% 0.00% 28.40% 0.00% 7.65% 0.00% 100.00% Reconciliation of Plan Assets Item A. Market Value of Assets at Beginning of Year B. Revenues and Expenditures 1. Contributions a. Employee Contributions b. Employer Contributions c. State Contributions d. Total 2. Investment Income a. Interest, Dividends, and Other Income b. Net Realized Gains /(Losses) c. Net Unrealized Gains /(Losses) d. Investment Expenses e. Net Investment Income 3. Benefits and Refunds a. Refunds b. Regular Monthly Benefits c. Partial Lump -Sum Benefits Paid d. Total 4. Administrative and Miscellaneous Expenses 5. Transfers C. Market Value of Assets at End of Year December 31 2016 2015 873,505,080 6,745,883 11,717,548 12,000 18,475,431 17,968,591 37,295,825 7,582,732 5,165,139) 57,682,009 1,226,578) 42,872,756) 897,025,140 6,808,046 13,217,982 12,000 20,038,028 18,157,941 40,834,745 56,180,886) 5,274,984) 2,463,184) 936,127) 39,856,691) 44,099,334) $ (40,792,818) 301,781) $ (302,086) 905,261,405 873,505,080 32 GRS a a u • . • • • • R Development of Actuarial Value of Assets Valuation Date - December 31 A. Actuarial Value of Assets Beginning of Year B. Market Value End of Year C. Market Value Beginning of Year D. Non - Investment/Administrative Net Cash Flow E. Investment Income El. Actual Market Total: B -C -D E2. Assumed Rate of Return E3. Assumed Amount of Return E4. Amount Subject to Phase -In: E1 —E3 F. Phase -In Recognition of Investment Income Fl. Current Year: 0.2 x E4 F2. First Prior Year F3. Second Prior Year F4. Third Prior Year F5. Fourth Prior Year F6. Total Phase -Ins G. Actuarial Value of Assets End of Year G1. Preliminary Actuarial Value of Assets G2. Upper Corridor Limit: 120 % *B G3. Lower Corridor Limit: 80 % *B G4. Funding Value End of Year G5. Credit Balance G6. Final Actuarial Value of Assets H. I. J. K. L. Recognized Investment Earnings Difference between Market & Actuarial Value Actuarial Rate of Return Market Value Rate of Return Ratio of Actuarial Value of Assets to Market Value 2015 839,868,311 873,505,080 897,025,140 21,056,876) 2,463,184) 7.00% 61,768,947 64,232,131) 12,846,426) 1,723,554 14,539,026 8,472,595 10,299,653) 1,589,096 2016 882,169,478 905,261,405 873,505,080 25,925,684) 882,169,478 1,048,206,096 698,804,064 882,169,478 15,570,503 866,598,975 63,358,043 8,664,398) 7.64% 0.28% 100.99% 2017 2018 2019 2020 57,682,009 7.00% 60,007,730 2,325, 721) 7.00% 7.00% 7.00% 465,144) 12,846,426) (465,144) 1,723,554 (12,846,426) (465,144) 14,539,026 1,723,554 (12,846,426) 8,472,595 14,539,026 1,723,552 11,423,605 2,951,010 (11,588,018) 927,675,129 1,086,313,686 724,209,124 927,675,129 19,445,883 908,229,246 71,431,335 22,413,724) 8.22% 6.70% 102.48% 7.00% 465,144) 12,846,427) (465,145) 13,311,571) (465,145) 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. 34 Investment Rate of Return Plan Year Ending December 31 Market* Actuarial* 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 2016 6.70 8.22 Average returns: Last five years: Last ten years: All years: 8.88 % 9.25 % 6.27 % 7.10 % 9.06 % 7.95 % 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. GRS IN SECTIOND i III 35 FASB NO. 35 INFORMATION A. Valuation Date B. Actuarial Present Value of Accumulated Plan Benefits 1. Vested Benefits a. Members Currently Receiving Payments b. Terminated Vested Members c. Other Members d. Total 2. Non - Vested Benefits 3. Total Actuarial Present Value of Accumulated Plan Benefits: ld + 2 4. Accumulated Contributions of Active Members C. Changes in the Actuarial Present Value of Accumulated Plan Benefits 1. Total Value at Beginning of Year 2. Increase (Decrease) During the Period Attributable to: a. Plan Amendment b. Change in Actuarial Assumptions c. Latest Member Data, Benefits Accumulated and Decrease in the Discount Period d. Benefits Paid e. Net Increase 3. Total Value at End of Period D. Market Value of Assets E. Actuarial Assumptions - See page entitled Actuarial Assumptions and Methods January 1, 2017 574,794,636 14,083,542 233,198,125 822,076,303 13,857,384 835,933,687 60,655,020 807,130,603 0 134,124) 73,036,542 44,099,334) 28,803,084 835,933,687 905,261,405 January 1, 2016 545,708,520 14,216,453 231,093,716 791,018,689 16,111,914 807,130,603 60,112,481 782,286,584 0 3,920,001) 69,556,838 40,792,818) 24,844,019 807,130,603 873,505,080 GRS SECTION E MISCELLANEOUS INFORMATION GRS 36 RECONCILIATION OF MEMBERSHIP DATA From 1/1/2016 To 1/1/2017 From 1/1/2015 To 1/1/2016 A. Active Members 1. Number Included in Last Valuation 1,505 1,482 2. New Members Included in Current Valuation 158 145 3. Non - Vested Employment Terminations 71) 53) 4. Vested Employment Terminations 18) 18) 5. Service Retirements 49) 43) 6. Disability Retirements 4) 4) 7. Deaths 2) 1) 8. Pending Disabilities 0 3) 9. Data Corrections /Rehired Members 1 0 10. Number Included in This Valuation 1,520 1,505 B. Terminated Vested Members 1. Number Included in Last Valuation 63 69 2. Additions from Active Members 18 18 3. Lump Sum Payments /Refund of Contributions 6) 7) 4. Payments Commenced 9) 17) 5. Deaths 0 0 6. Conversion from Disability /Rehired Members 1) 0 7. Data Corrections 1 0 8. Number Included in This Valuation 66 63 C. Service Retirees, Disability Retirees and Beneficiaries 1. Number Included in Last Valuation 1,174 1,125 2. Additions from Active Members 53 47 3. Additions from Terminated Vested Members 9 17 4. Deaths Resulting in No Further Payments 20) 19) 5. Deaths Resulting in New Survivor Benefits 1 1 6. Pending Disabilities 0 3 7. End of Certain Period - No Further Payments 3) 0 8. Data Correction/Waiver of Benefits 2) 0 9. Number Included in This Valuation 1,212 1,174 37 ACTIVE PARTICIPANT DISTRIBUTION ALL ACTIVE MEMBERS GRS Years of Service to Valuation Date 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 N0. 1 0 0 0 0 0 0 0 0 0 0 0 1 TOT PAY 27,003 0 0 0 0 0 0 0 0 0 0 0 27,003 AVG PAY 27,003 0 0 0 0 0 0 0 0 0 0 0 27,003 20 -24 NO. 27 19 8 3 1 0 0 0 0 0 0 0 58 TOT PAY 917,365 655,724 306,647 100,846 32,655 0 0 0 0 0 0 0 2,013,237 AVG PAY 33,976 34,512 38,331 33,615 32,655 0 0 0 0 0 0 0 34,711 25 -29 NO. 46 40 19 15 6 18 0 0 0 0 0 0 144 TOT PAY 1,597,584 1,588,335 768,812 624,016 214,744 919,466 0 0 0 0 0 0 5,712,957 AVG PAY 34,730 39,708 40,464 41,601 35,791 51,081 0 0 0 0 0 0 39,673 30 -34 NO. 24 19 21 21 16 46 41 0 0 0 0 0 188 TOT PAY 831,116 874,928 909,855 924,175 714,446 2,573,824 2,032,639 0 0 0 0 0 8,860,983 AVG PAY 34,630 46,049 43,326 44,008 44,653 55,953 49,577 0 0 0 0 0 47,133 35 -39 NO. 17 10 12 9 5 39 52 12 0 0 0 0 156 TOT PAY 631,448 383,302 568,742 489,029 234,339 2,107,540 3,261,729 612,910 0 0 0 0 8,289,039 AVG PAY 37,144 38,330 47,395 54,337 46,868 54,039 62,726 51,076 0 0 0 0 53,135 40 -44 NO. 5 8 9 10 7 35 53 62 11 0 0 0 200 TOT PAY 149,790 335,294 327,838 424,206 292,150 1,714,115 3,185,559 4,439,602 698,128 0 0 0 11,566,682 AVG PAY 29,958 41,912 36,426 42,421 41,736 48,975 60,105 71,606 63,466 0 0 0 57,833 45 -49 NO. 15 8 10 4 8 23 51 52 44 8 0 0 223 TOT PAY 577,930 356,342 433,600 162,639 327,522 1,242,352 3,179,937 3,764,707 3,391,072 535,338 0 0 13,971,439 AVG PAY 38,529 44,543 43,360 40,660 40,940 54,015 62,352 72,398 77,070 66,917 0 0 62,652 50 -54 NO. 11 7 6 2 8 26 34 44 40 30 5 0 213 TOT PAY 368,443 295,973 229,366 104,390 336,023 1,143,765 1,734,676 2,528,420 2,808,765 2,087,211 451,533 0 12,088,565 AVG PAY 33,495 42,282 38,228 52,195 42,003 43,991 51,020 57,464 70,219 69,574 90,307 0 56,754 55 -59 NO. 9 6 8 5 5 18 48 34 26 10 11 1 181 TOT PAY 338,782 232,847 404,432 162,282 203,552 781,298 2,293,004 1,585,221 1,411,474 546,975 688,792 44,635 8,693,294 AVG PAY 37,642 38,808 50,554 32,456 40,710 43,405 47,771 46,624 54,287 54,698 62,617 44,635 48,029 60-64 NO. 3 4 0 2 4 15 23 30 18 14 3 3 119 TOT PAY 115,898 132,660 0 70,954 130,660 691,194 1,159,594 1,448,074 1,045,575 1,055,572 206,308 232,872 6,289,361 AVG PAY 38,633 33,165 0 35,477 32,665 46,080 50,417 48,269 58,088 75,398 68,769 77,624 52,852 65+ NO. 0 2 1 0 1 6 10 3 7 6 1 0 37 TOT PAY 0 70,193 43,519 0 38,230 226,684 442,668 159,383 389,909 341,551 51,403 0 1,763,540 AVG PAY 0 35,096 43,519 0 38,230 37,781 44,267 53,128 55,701 56,925 51,403 0 47,663 TOT NO. 158 123 94 71 61 226 312 237 146 68 20 4 1,520 TOT AMT 5,555,359 4,925,598 3,992,811 3,062,537 2,524,321 11,400,238 17,289,806 14,538,317 9,744,923 4,566,647 1,398,036 277,507 79,276,100 AVG AMT 35,161 40,046 42,477 43,134 41,382 50,444 55,416 61,343 66,746 67,157 69,902 69,377 52,155 GRS 38 ACTIVE PARTICIPANT DISTRIBUTION HAZARDOUS DUTY MEMBERS Years of Service to Valuation Date 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 N0. 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. 11 4 3 0 0 0 0 0 0 0 0 0 18 TOT PAY 479,618 234,118 167,660 0 0 0 0 0 0 0 0 0 881,396 AVG PAY 43,602 58,530 55,887 0 0 0 0 0 0 0 0 0 48,966 25 -29 NO. 11 12 6 5 0 7 0 0 0 0 0 0 41 TOT PAY 514,483 701,975 342,425 301,744 0 497,016 0 0 0 0 0 0 2,357,643 AVG PAY 46,771 58,498 57,071 60,349 0 71,002 0 0 0 0 0 0 57,503 30-34 NO. 6 7 7 6 5 21 11 0 0 0 0 0 63 TOT PAY 272,040 412,506 440,729 364,635 313,814 1,623,569 846,150 0 0 0 0 0 4,273,443 AVG PAY 45,340 58,929 62,961 60,773 62,763 77,313 76,923 0 0 0 0 0 67,832 35-39 NO. 2 1 5 5 2 17 27 3 0 0 0 0 62 TOT PAY 97,003 64,075 292,400 314,975 125,939 1,186,273 2,125,727 264,406 0 0 0 0 4,470,798 AVG PAY 48,502 64,075 58,480 62,995 62,970 69,781 78,731 88,135 0 0 0 0 72,110 40-44 NO. 0 2 0 2 0 10 25 39 4 0 0 0 82 TOT PAY 0 138,328 0 121,065 0 725,358 1,938,339 3,455,899 347,822 0 0 0 6,726,811 AVG PAY 0 69,164 0 60,533 0 72,536 77,534 88,613 86,956 0 0 0 82,034 45 -49 NO. 2 1 1 0 0 7 26 31 24 2 0 0 94 TOT PAY 123,877 69,914 62,107 0 0 487,822 2,067,341 2,724,859 2,288,041 189,346 0 0 8,013,307 AVG PAY 61,939 69,914 62,107 0 0 69,689 79,513 87,899 95,335 94,673 0 0 85,248 50-54 NO. 0 1 0 0 1 2 8 8 17 10 2 0 49 TOT PAY 0 71,585 0 0 89,270 189,789 622,453 777,675 1,599,917 952,116 235,449 0 4,538,254 AVG PAY 0 71,585 0 0 89,270 94,895 77,807 97,209 94,113 95,212 117,725 0 92,617 55 -59 NO. 0 0 2 0 0 I 4 0 1 0 3 0 11 TOT PAY 0 0 207,478 0 0 117,830 377,553 0 77,164 0 292,409 0 1,072,434 AVG PAY 0 0 103,739 0 0 117,830 94,388 0 77,164 0 97,470 0 97,494 60 -64 NO. 1 0 0 0 0 0 3 1 0 1 0 1 7 TOT PAY 58,071 0 0 0 0 0 301,766 78,156 0 99,572 0 117,191 654,756 AVG PAY 58,071 0 0 0 0 0 100,589 78,156 0 99,572 0 117,191 93,537 65+ 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 TOT NO. 33 28 24 18 8 65 104 82 46 13 5 1 427 TOT AMT 1,545,092 1,692,501 1,512,799 1,102,419 529,023 4,827,657 8,279,329 7,300,995 4,312,944 1,241,034 527,858 117,191 32,988,842 AVG AMT 46,821 60,446 63,033 61,246 66,128 74,272 79,609 89,037 93,760 95,464 105,572 117,191 77,257 39 ACTIVE PARTICIPANT DISTRIBUTION NON - HAZARDOUS DUTY MEMBERS GRS Years of Service to Valuation Date 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 27,003 0 0 0 0 0 0 0 0 0 0 0 27,003 AVG PAY 27,003 0 0 0 0 0 0 0 0 0 0 0 27,003 20-24 NO. 16 15 5 3 1 0 0 0 0 0 0 0 40 TOT PAY 437,747 421,606 138,987 100,846 32,655 0 0 0 0 0 0 0 1,131,841 AVG PAY 27,359 28,107 27,797 33,615 32,655 0 0 0 0 0 0 0 28,296 25 -29 NO. 35 28 13 10 6 11 0 0 0 0 0 0 103 TOT PAY 1,083,101 886,360 426,387 322,272 214,744 422,450 0 0 0 0 0 0 3,355,314 AVG PAY 30,946 31,656 32,799 32,227 35,791 38,405 0 0 0 0 0 0 32,576 30 -34 NO. 18 12 14 15 11 25 30 0 0 0 0 0 125 TOT PAY 559,076 462,422 469,126 559,540 400,632 950,255 1,186,489 0 0 0 0 0 4,587,540 AVG PAY 31,060 38,535 33,509 37,303 36,421 38,010 39,550 0 0 0 0 0 36,700 35 -39 NO. 15 9 7 4 3 22 25 9 0 0 0 0 94 TOT PAY 534,445 319,227 276,342 174,054 108,400 921,267 1,136,002 348,504 0 0 0 0 3,818,241 AVG PAY 35,630 35,470 39,477 43,514 36,133 41,876 45,440 38,723 0 0 0 0 40,620 40-44 NO. 5 6 9 8 7 25 28 23 7 0 0 0 118 TOT PAY 149,790 196,966 327,838 303,141 292,150 988,757 1,247,220 983,703 350,306 0 0 0 4,839,871 AVG PAY 29,958 32,828 36,426 37,893 41,736 39,550 44,544 42,770 50,044 0 0 0 41,016 45 -49 NO. 13 7 9 4 8 16 25 21 20 6 0 0 129 TOT PAY 454,053 286,428 371,493 162,639 327,522 754,530 1,112,596 1,039,848 1,103,031 345,992 0 0 5,958,132 AVG PAY 34,927 40,918 41,277 40,660 40,940 47,158 44,504 49,517 55,152 57,665 0 0 46,187 50 -54 NO. 11 6 6 2 7 24 26 36 23 20 3 0 164 TOT PAY 368,443 224,388 229,366 104,390 246,753 953,976 1,112,223 1,750,745 1,208,848 1,135,095 216,084 0 7,550,311 AVG PAY 33,495 37,398 38,228 52,195 35,250 39,749 42,778 48,632 52,559 56,755 72,028 0 46,038 55 -59 NO. 9 6 6 5 5 17 44 34 25 10 8 1 170 TOT PAY 338,782 232,847 196,954 162,282 203,552 663,468 1,915,451 1,585,221 1,334,310 546,975 396,383 44,635 7,620,860 AVG PAY 37,642 38,808 32,826 32,456 40,710 39,028 43,533 46,624 53,372 54,698 49,548 44,635 44,829 60 -64 NO. 2 4 0 2 4 15 20 29 18 13 3 2 112 TOT PAY 57,827 132,660 0 70,954 130,660 691,194 857,828 1,369,918 1,045,575 956,000 206,308 115,681 5,634,605 AVG PAY 28,914 33,165 0 35,477 32,665 46,080 42,891 47,239 58,088 73,538 68,769 57,841 50,309 65+ NO. 0 2 1 0 1 6 10 3 7 6 1 0 37 TOT PAY 0 70,193 43,519 0 38,230 226,684 442,668 159,383 389,909 341,551 51,403 0 1,763,540 AVG PAY 0 35,097 43,519 0 38,230 37,781 44,267 53,128 55,701 56,925 51,403 0 47,663 TOT NO. 125 95 70 53 53 161 208 155 100 55 15 3 1,093 TOT AMT 4,010,267 3,233,097 2,480,012 1,960,118 1,995,298 6,572,581 9,010,477 7,237,322 5,431,979 3,325,613 870,178 160,316 46,287,258 AVG AMT 32,082 34,033 35,429 36,983 37,647 40,823 43,320 46,692 54,320 60,466 58,012 53,439 42,349 GRS 40 INACTIVE PARTICIPANT DISTRIBUTION Terminated Vested Disabled Retired Deceased with Beneficiary Total Total Total Total Age Group Number Benefits Number Benefits Number Benefits Number Benefits Under 20 5 59,710 20 -24 25 -29 30 -34 1 17,587 2 83,502 1 33,621 35 -39 5 94,550 1 41,162 40 -44 11 209,680 4 173,596 2 70,751 1 50,921 45 -49 14 301,032 10 396,078 21 907,681 3 49,259 50 -54 23 484,855 8 310,690 67 2,985,300 9 272,252 55 -59 5 50,050 22 669,347 131 5,684,695 9 191,194 60 -64 7 96,814 26 693,195 225 9,693,509 19 403,633 65 -69 28 762,187 229 8,770,209 16 399,476 70 -74 14 289,834 141 4,964,867 19 447,965 75 -79 12 298,114 62 1,985,907 26 553,334 80 -84 6 149,031 30 881,782 22 287,913 85 -89 1 23,129 15 336,324 9 109,464 90 -94 6 70,507 7 59,751 95 -99 2 25,805 1 2,318 100 & Over Total 66 1,254,568 134 3,889,865 931 36,377,337 147 2,920,811 Average Age 50 63 66 70 SECTIONF cg III Ill III SUMMARY OF PLAN PROVISIONS A. Ordinances 41 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. GRS 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. GRS 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 GRS 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. GRS II IN 45 III IIBenefit: 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) 11 A monthly annuity is paid for the life of the participant. For Hazardous Duty Employment- Police Officers and Firefighters (and Grandfathered IIINon - 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. 1.5% annually commencing on each April 1 for all retirees and beneficiaries who have III eligible 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 III 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. IlBenefit: 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 IIIspouse 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. II120 monthly payments are guaranteed for police officers and firefighters. 11 11 GRS 11 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. GRS Q. Post Retirement Death Benefit determined by the form of benefit elected upon retirement. 47 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, 1111 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. GRS 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. 11 11 GRS Cover Memo City of Clearwater City Hall 112 S. Osceola Avenue Clearwater, FL 33756 File Number: ID#17-3294 Agenda Date: 4/17/2017 Status: Agenda ReadyVersion: 2 File Type: Action ItemIn Control: Pension Trustees Agenda Number: 4.2 SUBJECT/RECOMMENDATION: Approve the new hires for acceptance into the Pension Plan as listed. SUMMARY: Name/Job Classification/Department Pension Eligibility Date Nicholas Pryor, Parks Service Technician I, Parks and Recreation 02/06/2017 Cory Garakop, Parks Service Technician I, Parks and Recreation 02/06/2017 Janelle Saylor, Police Communications Operator Trainee, Police 02/06/2017 Christie Bishop, Police Communications Operator Trainee, Police 02/06/2017 Chelsea Pruess, Police Communications Operator Trainee, Police 02/06/2017 Sean Austin, Police Communications Operator Trainee, Police 02/06/2017 William Kostka, Electronics Technician, Public Utilities 02/06/2017 Stephen Ross, Water Distribution Operator Trainee, Public Utilities 02/06/2017 Don Kelly, Parking, Facility, and Security Aide, Library 02/18/2017 Lisa Alber, Accounting Technician, Engineering 02/21/2017 Jacob Shaw, Stormwater Technician I, Engineering 02/21/2017 Ivan Dimitrov, Engineering Specialist II, Engineering 02/21/2017 Jeremy Brown, Senior Professional Engineer, Engineering 02/21/2017 Jessica Pryor, Customer Service Representative, Gas 02/21/2017 Cleophas Lyons, Network Analyst I, Information Technology 02/21/2017 Eric Verhayden, Network Analyst I, Information Technology 02/21/2017 Hailey Bryant, Accounting Clerk, Solid Waste 02/22/2017 APPROPRIATION CODE AND AMOUNT: N/A USE OF RESERVE FUNDS: N/A Page 1 City of Clearwater Printed on 4/13/2017 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 Nicholas Pryor Parks Service Technician I Parks and Recreation 02/06/2017 Cory Garakop Parks Service Technician I Parks and Recreation 02/06/2017 Janelle Saylor Police Communications Operator Trainee Police 02/06/2017 Christie Bishop Police Communications Operator Trainee Police 02/06/2017 Chelsea Pruess Police Communications Operator Trainee Police 02/06/2017 Sean Austin Police Communications Operator Trainee Police 02/06/2017 William Kostka Electronics Technician Public Utilities 02/06/2017 Stephen Ross Water Distribution Operator Trainee Public Utilities 02/06/2017 Don Kelly Parking, Facility, and Security Aide Library 02/18/2017 Lisa Alber Accounting Technician Engineering 02/21/2017 Jacob Shaw Stormwater Technician I Engineering 02/21/2017 Ivan Dimitrov Engineering Specialist II Engineering 02/21/2017 Jeremy Brown Senior Professional Engineer Engineering 02/21/2017 Jessica Pryor Customer Service Representative Gas 02/21/2017 Cleophas Lyons Network Analyst I Information Technology 02/21/2017 Eric Verhayden Network Analyst I Information Technology 02/21/2017 Hailey Bryant Accounting Clerk Solid Waste 02/22/2017 Cover Memo City of Clearwater City Hall 112 S. Osceola Avenue Clearwater, FL 33756 File Number: ID#17-3296 Agenda Date: 4/17/2017 Status: Agenda ReadyVersion: 2 File Type: Action ItemIn Control: Pension Trustees Agenda Number: 4.3 SUBJECT/RECOMMENDATION: Approve the following request of employees Felicia Donnelly, Parks and Recreation Department, Tracey Reed, Library Department and Scott Jordan, Planning and Development Department, to vest their pensions as provided by Section 2.419 of the Employees’ Pension Plan. SUMMARY: Felicia Donnelly, Admin Support Manager, Parks and Recreation Department, was employed by the City on April 7, 2003, and began participating in the Pension Plan on that date. Ms. Donnelly terminated from City employment on February 25, 2017. Tracey Reed, Librarian III, Library Department, was employed by the City on November 14, 2005, and began participating in the Pension Plan on that date. Ms. Reed terminated from City employment on December 3, 2016. Scotty Jordan, Development Review Tech II, Planning and Development Department, was employed by the City on October 30, 2006, and began participating in the Pension Plan on that date. Mr. Jordan will terminate from City employment on March 18, 2017. 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. Ms. Donnelly will meet the non -hazardous duty criteria and begin collecting a pension in August 2024. Ms. Reed will meet the non-hazardous duty criteria and begin collecting a pension in April 2026. Mr. Jordan will meet the non-hazardous duty criteria and Page 1 City of Clearwater Printed on 4/13/2017 File Number: ID#17-3296 begin collecting a pension in October 2017. 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. APPROPRIATION CODE AND AMOUNT: N/A USE OF RESERVE FUNDS: N/A Page 2 City of Clearwater Printed on 4/13/2017 Cover Memo City of Clearwater City Hall 112 S. Osceola Avenue Clearwater, FL 33756 File Number: ID#17-3297 Agenda Date: 4/17/2017 Status: Agenda ReadyVersion: 2 File Type: Action ItemIn Control: Pension Trustees Agenda Number: 4.4 SUBJECT/RECOMMENDATION: Approve the following request of employee Donald Thomson, Fire Department, for a regular pension as provided by Sections 2.416 and 2.424 of the Employees’ Pension Plan. SUMMARY: Donald Thomson, Firefighter/Driver-Operator, Fire Department, was employed by the City on January 6, 1986, and his pension service credit is effective on that date. His pension will be effective March 1, 2017. Based on an average salary of approximately $66,720.71 over the past five years, the formula for computing regular pensions and Mr. Thomson’s selection of the 100% Joint and Survivor Annuity, this pension benefit will be approximately $55,762.20 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. 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. Thomson has met the hazardous duty criteria. APPROPRIATION CODE AND AMOUNT: N/A USE OF RESERVE FUNDS: N/A Page 1 City of Clearwater Printed on 4/13/2017 File Number: ID#17-3297 Page 2 City of Clearwater Printed on 4/13/2017