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04/15/2019Monday, April 15, 2019 9:00 AM City of Clearwater Main Library - Council Chambers 100 N. Osceola Avenue Clearwater, FL 33755 Council Chambers - Main Library Pension Trustees Meeting Agenda April 15, 2019Pension Trustees Meeting Agenda 1. Call To Order 2. Approval of Minutes 2.1 Approve the March 18, 2019 Pension Trustees Meeting Minutes as submitted in written summation by the City Clerk. 3. Citizens to be Heard Regarding Items Not on the Agenda 4. New Business Items 4.1 Approve the new hires for acceptance into the Pension Plan as listed. 4.2 Approve the following request of employees Joseph Assed, Public Utilities Department, Kevin Bowler, Fire Department, and Sharron Jackson, Park and Recreation Department, for a regular pension as provided by Sections 2.416 and 2.424 of the Employees’ Pension Plan. 4.3 Accept the January 1, 2019 Annual Actuarial Valuation for the Employees’ Pension Plan. 4.4 Determine Trustees’ expected rate of return for pension plan investments for current year, each of the next several years, and for the long term thereafter, in accordance with Florida Statutes 112.661(9). 5. Director's Report 6. Adjourn Page 2 City of Clearwater Printed on 4/9/2019 Cover Memo City of Clearwater Main Library - Council Chambers 100 N. Osceola Avenue Clearwater, FL 33755 File Number: ID#19-5853 Agenda Date: 4/15/2019 Status: Agenda ReadyVersion: 1 File Type: MinutesIn Control: Pension Trustees Agenda Number: 2.1 SUBJECT/RECOMMENDATION: Approve the March 18, 2019 Pension Trustees Meeting Minutes 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 4/9/2019 Pension Trustees Meeting Minutes March 18, 2019 Page 1 City of Clearwater City of Clearwater Main Library - Council Chambers 100 N. Osceola Avenue Clearwater, FL 33755 Meeting Minutes Monday, March 18, 2019 9:00 AM Council Chambers - Main Library Pension Trustees Draft Pension Trustees Meeting Minutes March 18, 2019 Page 2 City of Clearwater Roll Call Present 3 - Vice Chair Bob Cundiff, Trustee Hoyt Hamilton, and Trustee Jay Polglaze Absent 2 - Chair George N. Cretekos, and Trustee David Allbritton Also Present – William B. Horne II – City Manager, Jill Silverboard Deputy City Manager, Micah Maxwell – Assistant City Manager, Pamela K. Akin – City Attorney, Rosemarie Call – City Clerk, Nicole Sprague – Official Records and Legislative Services Coordinator, and Jennifer Poirrier – Human Resources Director To provide continuity for research, items are listed in agenda order although not necessarily discussed in that order. Unapproved 1. Call to Order – Vice Chair Cundiff The meeting was called to order at 9:35 a.m. in Council Chambers at the Main Library. 2. Approval of Minutes 2.1 Approve the February 19, 2019 Pension Trustees Meeting Minutes as submitted in written summation by the City Clerk. Trustee Polglaze moved to approve the February 19, 2019 Pension Trustees Meeting Minutes 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. Draft Pension Trustees Meeting Minutes March 18, 2019 Page 3 City of Clearwater Name/ Job Classification/ Department Pension Eligibility Date Chelsea Schneiter, Customer Service Representative, Customer Service 01/07/2019 Michael Rivas, Survey Assistant I, Engineering 01/07/2019 David Koleszar, Police Officer, Police 01/07/2019 Corey Roberts, Police Officer, Police 01/07/2019 Paul Durrance, Police Officer, Police 01/07/2019 Alexis Hayward, Police Officer, Police 01/07/2019 Alex Krolick, Police Officer, Police 01/07/2019 Justus Mullin, Police Officer, Police 01/07/2019 Alexander Grant, Solid Waste Equipment Operator, Solid Waste 01/07/2019 Marvin Blythewood, Solid Waste Equipment Operator, Solid Waste 01/07/2019 Wayne Ferrell, Parks Service Supervisor I, Parks & Recreation 01/07/2019 Edward Moralobo, Recreation Leader, Parks & Recreation 01/19/2019 Janelle Vincenty, Staff Assistant, Fire 01/22/2019 Richard Droncheff, Gas Technician I, Gas 01/22/2019 William Bucceri, Tradesworker, Marine & Aviation 01/22/2019 Juliahna Green, Neighborhood Services Coordinator, Planning & Dev. 01/22/2019 Michael Ryder, Heavy Equipment Operator, Parks & Recreation 01/22/2019 Joseph Rotondo, Recreation Leader, Parks & Recreation 01/22/2019 Trustee Hamilton 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 David Huff, Public Utilities Department, Timothy Keene, Public Utilities Department, Christine Schlerf, Human Resources Department and Shawn Stafford, Public Communications Department, to vest their pensions as provided by Section 2.419 of the Employees’ Pension Plan. David Huff, Wastewater Treatment Plant Oper B, Public Utilities Department, was employed by the City on December 10, 2007, and began participating in the Pension Plan on that date. Mr. Huff terminated from City employment on Draft Pension Trustees Meeting Minutes March 18, 2019 Page 4 City of Clearwater December 7, 2018. Timothy Keene, Public Utilities Tech III, Public Utilities Department, was employed by the City on August 4, 1997, and began participating in the Pension Plan on that date. Mr. Keene terminated from City employment on January 19, 2019. Christine Schlerf, Human Resources Manager, Human Resources Department, was employed by the City on May 22, 2000, and began participating in the Pension Plan on that date. Ms. Schlerf terminated from City employment on December 19, 2018. Shawn Stafford, Station Manager, Public Communications Department, was employed by the City on May 6, 1996, and began participating in the Pension Plan on that date. Mr. Stafford terminated from City employment on November 3, 2018. The Employees’ Pension Plan provides that should an employee cease to be an employee of the City of Clearwater or change status from full-time to part-time after completing ten or more years of creditable service (pension participation), such employee shall acquire a vested interest in the retirement benefits. Vested pension payments commence on the first of the month following the month in which the employee normally would have been eligible for retirement. Section 2.416 provides for normal retirement eligibility for non-hazardous duty employees hired prior to the effective date of this reinstatement (January 1, 2013), a member shall be eligible for retirement following the earlier of the date on which a participant has reached the age of fifty-five years and completed twenty years of credited service; the date on which a participant has reached age sixty-five years and completed ten years of credited service; or the date on which a member has completed thirty years of service regardless of age. For non-hazardous duty employees hired on or after the effective date of this restatement, a member shall be eligible for retirement following the earlier of the date on which a participant has reached the age of sixty years and completed twenty-five years of credited service; or the date on which a participant has reached the age of sixty-five years and completed ten years of credited service. Mr. Huff will meet the non-hazardous duty criteria and begin collecting a pension in December 2026. Mr. Keene will meet the non-hazardous duty criteria and begin collecting a pension in February 2024. Ms. Schlerf will meet the non-hazardous duty criteria and begin collecting a pension in January 2022. Mr. Stafford will meet the non-hazardous duty criteria and begin collecting a pension in June 2026. Trustee Hamilton moved to approve the following request of employees David Huff, Public Utilities Department, Timothy Draft Pension Trustees Meeting Minutes March 18, 2019 Page 5 City of Clearwater Keene, Public Utilities Department, Christine Schlerf, Human Resources Department and Shawn Stafford, Public Communications Department, to vest their pensions as provided by Section 2.419 of the Employees’ Pension Plan. The motion was duly seconded and carried unanimously. 4.3 Approve the following request of employees Vincent Booker, Fire Department, James Jackson, Parks and Recreation Department, William Jaroszek, Information Technology, Thomas Jensen, Fire Department and Patricia Meri, Customer Service Department, for a regular pension as provided by Sections 2.416 and 2.424 of the Employees’ Pension Plan. Vincent Booker, Fire Lieutenant, Fire Department, was employed by the City on November 2, 1992, and his pension service credit is effective on that date. His pension will be effective February 1, 2019. Based on an average salary of approximately $83,831.58 over the past five years, the formula for computing regular pensions and Mr. Booker’s selection of the 50% Joint and Survivor Annuity, this pension benefit will be approximately $55,621.20 annually. James Jackson, Tradesworker, Parks and Recreation Department, was employed by the City on August 4, 1997, and his pension service credit is effective on that date. His pension will be effective February 1, 2019. Based on an average salary of approximately $38,383.58 over the past five years, the formula for computing regular pensions and Mr. Jackson’s selection of the 50% Joint and Survivor Annuity, this pension benefit will be approximately $22,078.80 annually. William Jaroszek, Senior Systems Programmer, Information Technology Department, was employed by the City on August 29, 1990, and his pension service credit is effective on that date. His pension will be effective February 1, 2019. Based on an average salary of approximately $85,206.82 over the past five years, the formula for computing regular pensions and Mr. Jaroszek’s selection of the Joint and Survivor Annuity, this pension benefit will be approximately $66,520.44 annually. Thomas Jensen, Fire Lieutenant, Fire Department, was employed by the City on May 26, 1987, and his pension service credit is effective on that date. His pension will be effective February 1, 2019. Based on an average salary of approximately $106,223.63 over the past five years, the formula for computing regular pensions and Mr. Jensen’s selection of the 50% Joint and Survivor Annuity, this pension benefit will be approximately $96,354.84 annually. Patricia Meri, Senior Customer Service Representative, Customer Service Department, was employed by the City on August 5, 1985, and her pension service credit is effective on that date. Her pension will be effective February 1, Draft Pension Trustees Meeting Minutes March 18, 2019 Page 6 City of Clearwater 2019. Based on an average salary of approximately $49,533.38 over the past five years, the formula for computing regular pensions and Ms. Meri’s selection of the Single Life Annuity, this pension benefit will be approximately $45,617.52 annually. Section 2.416 provides for normal retirement eligibility for non-hazardous duty employees hired prior to the effective date of this reinstatement (January 1, 2013), a member shall be eligible for retirement following the earlier of the date on which a participant has reached the age of fifty-five years and completed twenty years of credited service; the date on which a participant has reached age sixty-five years and completed ten years of credited service; or the date on which a member has completed thirty years of service regardless of age. For non-hazardous duty employees hired on or after the effective date of this restatement, a member shall be eligible for retirement following the earlier of the date on which a participant has reached the age of sixty years and completed twenty-five years of credited service; or the date on which a participant has reached the age of sixty-five years and completed ten years of credited service. Mr. Jackson, Mr. Jaroszek and Ms. Meri 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. Booker and Mr. Jensen have met the hazardous duty criteria. Trustee Hamilton moved to approve the following request of employees Vincent Booker, Fire Department, James Jackson, Parks and Recreation Department, William Jaroszek, Information Technology, Thomas Jensen, Fire Department and Patricia Meri, Customer Service Department, for a regular pension as provided by Sections 2.416 and 2.424 of the Employees’ Pension Plan. The motion was duly seconded and carried unanimously. 4.4 Annual review of the Employees’ Pension Plan investment performance for the calendar and plan year ended December 31, 2018. Annually a presentation of the Plan’s calendar year investment performance is made to the Trustees. For calendar 2018, the Plan realized a negative investment return of (2.65%), versus a customized benchmark of negative (4.62%), placing the plan in the 29th percentile of public pension plans per the Wilshire Public Plan Sponsor Universe. Draft Pension Trustees Meeting Minutes March 18, 2019 Page 7 City of Clearwater For the last three calendar years, the plan had an average annualized return of 6.41%, versus a benchmark of 5.72%, placing the plan in the 38th percentile of public plans. Staff continues to seek diversification and decreased volatility in investment returns for the Plan via alternative investment categories. In recent years, new categories introduced have included timber investments, core plus real estate, and infrastructure. The investment committee, with the assistance of the Plan’s investment consultant, CapTrust Advisors, 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 actuarial valuation will determine the overall impact to the contribution next year. The Plan had a good year in the drop-off of the 5-year rolling average, which will replace this year’s poor performance. He hoped that since the City has been over-contributing to rebuild the credit balance, not much change will be seen for the required contribution. Mr. Ravins said the City has not used any of the credit balance to date; pending the result of the actuarial valuation, the Trustees may be asked to use a portion of the credit balance to offset a significantly increased required employer contribution. Overall, the Plan performed very well. 5. Director's Report – None. 6. Adjourn The meeting adjourned at 9:48 a.m. Chair Employees’ Pension Plan Trustees Attest City Clerk Draft Cover Memo City of Clearwater Main Library - Council Chambers 100 N. Osceola Avenue Clearwater, FL 33755 File Number: ID#19-5845 Agenda Date: 4/15/2019 Status: Agenda ReadyVersion: 2 File Type: Action ItemIn Control: Pension Trustees Agenda Number: 4.1 SUBJECT/RECOMMENDATION: Approve the new hires for acceptance into the Pension Plan as listed. SUMMARY: Name/Job Classification/Department Pension Eligibility Date Alexander Kaye, Police Cadet, Police 02/04/2019 Robert Black, Fleet Mechanic, General Services 02/04/2019 Angel Lopez, Fleet Mechanic, General Services 02/04/2019 Matthew Lentner, Parks Service Technician I, Parks & Recreation 02/04/2019 Brenden Overton, Parks Service Technician I, Parks & Recreation 02/04/2019 Aaron Cowan Jr., Parks Service Technician I, Parks & Recreation 02/04/2019 Brandi Harriman, Police Communication Operator Trainee, Police 02/04/2019 Nikki Webster, Police Communication Operator Trainee, Police 02/04/2019 Jason Judd, WasteWater Treatment Plant Operator A, Public Utilities 02/04/2019 Jason Young, Utilities Mechanic, Public Utilities 02/04/2019 Tiison Richardson, Solid Waste Worker, Solid Waste 02/04/2019 Kyahna Roberts, Solid Waste Worker, Solid Waste 02/04/2019 Anthony Foster, Solid Waste Equipment Operator, Solid Waste 02/04/2019 Bernard McNally, Parking, Facility & Security Aide, Marine & Aviation 02/04/2019 Tamela Root, Customer Service Representative, Customer Service 02/16/2019 Kieffer Nyland, Drafting & Mapping Technician, Engineering 02/19/2019 Richard Berg III, Stormwater Technician I, Engineering 02/19/2019 Christopher Hurtt, Parks Service Technician I, Parks & Recreation 02/19/2019 Edward Craft, Utilities Mechanic, Public Utilities 02/19/2019 APPROPRIATION CODE AND AMOUNT: N/A USE OF RESERVE FUNDS: N/A Page 1 City of Clearwater Printed on 4/9/2019 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 Alexander Kaye Police Cadet Police 02/04/2019 Robert Black Fleet Mechanic General Services 02/04/2019 Angel Lopez Fleet Mechanic General Services 02/04/2019 Matthew Lentner Parks Service Technician I Parks & Recreation 02/04/2019 Brenden Overton Parks Service Technician I Parks & Recreation 02/04/2019 Aaron Cowan Jr. Parks Service Technician I Parks & Recreation 02/04/2019 Brandi Harriman Police Communication Operator Trainee Police 02/04/2019 Nikki Webster Police Communication Operator Trainee Police 02/04/2019 Jason Judd WasteWater Treatment Plant Operator A Public Utilities 02/04/2019 Jason Young Utilities Mechanic Public Utilities 02/04/2019 Tiison Richardson Solid Waste Worker Solid Waste 02/04/2019 Kyahna Roberts Solid Waste Worker Solid Waste 02/04/2019 Anthony Foster Solid Waste Equipment Operator Solid Waste 02/04/2019 Bernard McNally Parking, Facility & Security Aide Marine & Aviation 02/04/2019 Tamela Root Customer Service Representative Customer Service 02/16/2019 Kieffer Nyland Drafting & Mapping Technician Engineering 02/19/2019 Richard Berg III Stormwater Technician I Engineering 02/19/2019 Christopher Hurtt Parks Service Technician I Parks & Recreation 02/19/2019 Edward Craft Utilities Mechanic Public Utilities 02/19/2019 Cover Memo City of Clearwater Main Library - Council Chambers 100 N. Osceola Avenue Clearwater, FL 33755 File Number: ID#19-5846 Agenda Date: 4/15/2019 Status: Agenda ReadyVersion: 2 File Type: Action ItemIn Control: Pension Trustees Agenda Number: 4.2 SUBJECT/RECOMMENDATION: Approve the following request of employees Joseph Assed, Public Utilities Department, Kevin Bowler, Fire Department, and Sharron Jackson, Park and Recreation Department, for a regular pension as provided by Sections 2.416 and 2.424 of the Employees’ Pension Plan. SUMMARY: Joseph Assed, Water Distribution Operator, Public Utilities Department, was employed by the City on February 16, 1988, and his pension service credit is effective on that date. His pension will be effective March 1, 2019. Based on an average salary of approximately $55,525.61 over the past five years, the formula for computing regular pensions and Mr. Assed’s selection of the Joint and Survivor Annuity, this pension benefit will be approximately $47,399.16 annually. Kevin Bowler, Fire Lieutenant, Fire Department, was employed by the City on March 4, 1996, and his pension service credit is effective on that date. His pension will be effective March 1, 2019. Based on an average salary of approximately $85,784.93 over the past five years, the formula for computing regular pensions and Mr. Bowler’s selection of the 50% Joint and Survivor Annuity, this pension benefit will be approximately $55,332.60 annually. Sharron Jackson, Recreation Leader II, Parks and Recreation Department, was employed by the City on March 26, 1979, and her pension service credit is effective on that date. Her pension will be effective April 1, 2019. Based on an average salary of approximately $42,595.52 over the past five years, the formula for computing regular pensions and Ms. Jackson’s selection of the Life Annuity, this pension benefit will be approximately $46,868.16 annually. Section 2.416 provides for normal retirement eligibility for non-hazardous duty employees hired prior to the effective date of this reinstatement (January 1, 2013), a member shall be eligible for retirement following the earlier of the date on which a participant has reached the age of fifty-five years and completed twenty years of credited service; the date on which a participant has reached age sixty-five years and completed ten years of credited service; or the date on which a member has completed thirty years of service regardless of age. For non-hazardous duty employees hired on or after the effective date of this restatement, a member shall be eligible for retirement following the earlier of the date on which a participant has reached the age of sixty years and completed twenty-five years of credited service; or the date on which a participant has reached the age of sixty-five years and completed ten years of credited service. Mr. Assed and Ms. Jackson 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 Page 1 City of Clearwater Printed on 4/9/2019 File Number: ID#19-5846 participant has reached fifty-five years and completed ten years of credited service. Mr. Bowler has met the hazardous duty criteria. APPROPRIATION CODE AND AMOUNT: N/A USE OF RESERVE FUNDS: N/A Page 2 City of Clearwater Printed on 4/9/2019 Cover Memo City of Clearwater Main Library - Council Chambers 100 N. Osceola Avenue Clearwater, FL 33755 File Number: ID#19-6018 Agenda Date: 4/15/2019 Status: Agenda ReadyVersion: 1 File Type: Action ItemIn Control: Pension Trustees Agenda Number: 4.3 SUBJECT/RECOMMENDATION: Accept the January 1, 2019 Annual Actuarial Valuation for the Employees’ Pension Plan. SUMMARY: Per the actuary report dated January 1, 2019, a minimum city employer contribution of $9.71 million, or 11.48% of covered payroll, is required for fiscal year 2020. This is an increase of approximately $910,000 over the fiscal 2019 required contribution of $8.80 million, or 10.69% of covered payroll. The calendar year 2018 investment return was a loss of (2.48%), net of investment fees, versus the assumed rate of 6.75%. The five-year smoothed investment return based on the actuarial value of the assets was 5.76% versus the assumed rate of 6.75%. Calendar 2014 through 2018 investment returns were 7.99%, (0.28%), 6.70%, 16.01%, and (2.48%), respectively. The plan experienced a net actuarial experience loss of ($5.8) million for the year. The loss is primarily due to the actuarial loss from the actuarial investment return of 5.76% versus the assumption of 6.75%. The Plan's funded ratio at January 1, 2019 was 104.09% (including the credit balance) versus 106.96% for the prior year. The actuarial value of assets exceeds the market value of assets by $41.5 million as of January 1, 2019. The plan's credit balance, which reflects actual contributions in excess of actuarially required contributions for prior years, increased from $22.8 million to $26.6 million during calendar 2018. This $3.8 million increase was due to the City’s budgeted overfunding of the fiscal 2019 required contribution. The City contributed 13% of covered salaries, versus the actuarially required 10.69%, to increase the plan’s credit balance reserves in anticipation of 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 contributions Page 1 City of Clearwater Printed on 4/9/2019 File Number: ID#19-6018 during periods of negative investment earnings experience with contributions from accumulated reserves. Page 2 City of Clearwater Printed on 4/9/2019 City of Clearwater Employees’ Pension Plan Actuarial Valuation Report as of January 1, 2019 Annual Employer Contribution for the Fiscal Year Ending September 30, 2020 March 29, 2019 Board of Trustees City of Clearwater Employees’ Pension Plan Clearwater, Florida Dear Board Members: The results of the January 1, 2019 Annual Actuarial Valuation of the City of Clearwater Employees’ Pension Plan are presented in this report. This report was prepared at the request of the Board and is intended for use by the Retirement System and those designated or approved by the Board. This report may be provided to parties other than the 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, 2020. 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 contribution rate in this report is determined using the actuarial assumptions and methods disclosed in Section B of this report. This report includes risk metrics in Section A, but does not include a robust assessment of future experience not meeting the actuarial assumptions. A robust assessment of risks was outside the scope of this assignment. 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. The findings in this report are based on data or other information through December 31, 2018. 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 audit the data. We are not responsible for the accuracy or completeness of the information provided by the City. City of Clearwater Employees’ Pension Plan TABLE OF CONTENTS Section Title Page A Discussion of Valuation Results 1. Discussion of Valuation Results 1 2. Risks Associated with Measuring the Accrued Liability and Actuarially Determined Contribution 5 B Valuation Results 1. Participant Data 8 2. Actuarially Determined Contribution (ADC) 9 3. Actuarial Value of Benefits and Assets 10 4. Calculation of Employer Normal Cost 11 5. Reconciliation of Credit Balance 12 6. Liquidation of the Unfunded Actuarial Accrued Liability 13 7. Actuarial Gains and Losses 15 8. Recent History of Valuation Results 20 9. Recent History of Contributions 21 10. Actuarial Assumptions and Cost Method 22 11. Glossary of Terms 32 C Pension Fund Information 1. Statement of Plan Assets at Market Value 35 2. Reconciliation of Plan Assets 36 3. Development of Actuarial Value of Assets 37 4. Investment Rate of Return 38 D Financial Accounting Information 1. FASB No. 35 39 E Miscellaneous Information 1. Reconciliation of Membership Data 40 2. Active Participant Distribution 41 3. Inactive Participant Distribution 44 F Summary of Plan Provisions 45 City of Clearwater Employees’ Pension Plan SECTION A DISCUSSION OF VALUATION RESULTS City of Clearwater Employees’ Pension Plan 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 $9,720,956 $8,813,297 $907,659 As % of Covered Payroll 11.49 %10.71 %0.78 % Estimated State Contribution 12,000 12,000 0 As % of Covered Payroll 0.01 %0.02 %(0.01)% Required Employer Contribution 9,708,956 8,801,297 907,659 As % of Covered Payroll 11.48 %10.69 %0.79 % Credit Balance 26,608,126 22,819,909 3,788,217 1/1/2019 Valuation (Decrease) Increase Valuation 1/1/2018 For FYE 9/30/2020 For FYE 9/30/2019 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 2019 and 2020 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, 2018 were $10,992,120 and $12,000, respectively, for a total of $11,004,120, compared to the required contribution of $8,813,297. The excess contribution of $2,190,823 was used to increase the credit balance. The minimum required City contribution is 7% of covered payroll. Revisions in Benefits There have been no revisions in benefits since the last valuation. City of Clearwater Employees’ Pension Plan 2 Revisions in Actuarial Assumptions or Methods The assumed investment return assumption has been reduced by 0.25% from 7.00% to 6.75%. Assumed rates of salary increase, retirement, withdrawal, and disability have also been revised based on a 5-year experience study performed for the Plan since the prior valuation. Please see the Actuarial Assumptions and Cost Method subsection of this report as well as the Experience Investigation for the Five Years Ended December 31, 2017, dated December 6, 2018 for additional information on the revised assumptions. The new assumptions were adopted by the Pension Board for initial use in this January 1, 2019 Actuarial Valuation Report. In the aggregate, the assumption changes mentioned above increased the required contribution by $997,871, or 1.17% of covered payroll. The Board has also approved lowering the investment return assumption further in the next three valuations. The rate will be decreased from 6.75% to 6.65% effective January 1, 2020, to 6.55% effective January 1, 2021, and to 6.50% effective January 1, 2022. There was no change in the mortality assumption since this assumption is mandated by Chapter 112.63 of the Florida Statutes. 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 used by the Florida Retirement System (FRS) as mandated by the Florida Statutes, the required City contribution for FY 2020 would have been $10,019,095, or 11.84% of covered payroll, and the funded ratio (excluding the credit balance) as of January 1, 2019 would have been 100.95%. Actuarial Experience There was a net actuarial experience loss of $5,803,978 during the year, which means that actual experience was less favorable than expected. The loss is due to a recognized investment return (on the smoothed actuarial value of assets) below the assumed rate of 7.0%. The investment return on the market value of assets was (2.48)%, and the investment return was 5.76% based on the actuarial value of assets. The investment losses were partially offset by net liability-related experience gains. There were demographic experience gains resulting from fewer service retirements and more employment terminations than expected. Actual mortality experience was a small source of experience loss which partially offset the other liability gains, as there were slightly fewer retiree deaths during the year than expected (25 versus 28 expected). Under Chapter 112.66 of the Florida Statutes, the annual payment to amortize the UAL may not reduce the contribution required to fund the Normal Cost. As a result, since the annual payment to amortize the UAL is below $0, the actuarial experience loss had no direct effect on the required employer contribution. City of Clearwater Employees’ Pension Plan 3 Analysis of Change in Employer Contribution The components of change in the required City contribution are as follows: Contribution Rate Last Year 10.69 % Change in Benefits 0.00 Change in Assumptions and Methods 1.17 Amortization Payment on UAAL 0.00 Normal Cost (0.40) Experience Gain/Loss 0.00 Change in Administrative Expenses 0.02 Change in State Revenue 0.00 Contribution Rate This Year 11.48 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 104.09% this year (106.88% before the changes in assumptions) compared to 106.96% last year. Not including the credit balance in the actuarial value of assets, the funded ratio is 101.33% this year (104.05% before the changes in assumptions) compared to 104.47% last year. Variability of Future Contribution Rates The Actuarial Cost Method used to determine the contribution rate is intended to produce contribution rates which are generally level as a percent of payroll. Even so, when experience differs from the assumptions, as it often does, the employer’s contribution rate can vary significantly from year-to-year. The Actuarial Value of Assets exceeds the Market Value of Assets by $41,529,102 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 gains and the return on the market value of assets is 6.75% in 2019 (net of investment expenses) as assumed, there will be an additional phase- in of market value losses into the actuarial value of assets. Additionally, the investment return assumption is scheduled to be lowered from 6.75% to 6.65% next year. The combination of these two items is expected to bring the Plan’s funded ratio below 100% next year, which will create a UAAL amortization payment, putting upward pressure on the City contribution requirement for FY 2021, potentially increasing it by approximately $1 million. City of Clearwater Employees’ Pension Plan 4 Relationship to Market Value If Market Value had been the basis for the valuation, the City contribution rate would have been 14.88% of covered payroll (or about $12.6 million), and the funded ratio (excluding the credit balance) would have been 97.03%. The funded ratio based on the market value of assets (excluding the credit balance) last year was 108.73%. Conclusion The remainder of this Report includes detailed actuarial valuation results, financial information, miscellaneous information and statistics, and a summary of plan provisions. City of Clearwater Employees’ Pension Plan 5 RISKS ASSOCIATED WITH MEASURING THE ACCRUED LIABILITY AND ACTUARIALLY DETERMINED CONTRIBUTION The determination of the accrued liability and the actuarially determined contribution requires the use of assumptions regarding future economic and demographic experience. Risk measures, as illustrated in this report, are intended to aid in the understanding of the effects of future experience differing from the assumptions used in the course of the actuarial valuation. Risk measures may also help with illustrating the potential volatility in the accrued liability and the actuarially determined contribution that result from the differences between actual experience and the actuarial assumptions. 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 due to changing conditions; 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 future measurements. Examples of risk that may reasonably be anticipated to significantly affect the plan’s future financial condition include: 1. Investment risk – actual investment returns may differ from the expected returns; 2. Contribution risk – actual contributions may differ from expected future contributions. For example, actual contributions may not be made in accordance with the plan’s funding policy or material changes may occur in the anticipated number of covered employees, covered payroll, or other relevant contribution base; 3. Salary and Payroll risk – actual salaries and total payroll may differ from expected, resulting in actual future accrued liability and contributions differing from expected; 4. Longevity risk – members may live longer or shorter than expected and receive pensions for a period of time other than assumed; 5. Other demographic risks – members may terminate, retire or become disabled at times or with benefits other than assumed resulting in actual future accrued liability and contributions differing from expected. The effects of certain trends in experience can generally be anticipated. For example if the investment return since the most recent actuarial valuation is less (or more) than the assumed rate, the cost of the plan can be expected to increase (or decrease). Likewise if longevity is improving (or worsening), increases (or decreases) in cost can be anticipated. The computed contribution rate shown on page 1 may be considered as a minimum contribution rate that complies with the Board’s funding policy. The timely receipt of the actuarially determined contributions is critical to support the financial health of the plan. Users of this report should be aware that contributions made at the actuarially determined rate do not necessarily guarantee benefit security. City of Clearwater Employees’ Pension Plan 6 Plan Maturity Measures Risks facing a pension plan evolve over time. A young plan with virtually no investments and paying few benefits may experience little investment risk. An older plan with a large number of members in pay status and a significant trust may be much more exposed to investment risk. Generally accepted plan maturity measures include the following: 1/1/2019 1/1/2018 Ratio of the market value of assets to total payroll 11.39 12.38 Ratio of actuarial accrued liability to payroll 11.41 11.13 Ratio of actives to retirees and beneficiaries 1.21 1.21 Ratio of net cash flow to market value of assets (3.18)%(2.82)% Ratio of Market Value of Assets to Payroll The relationship between assets and payroll is a useful indicator of the potential volatility of contributions. For example, if the market value of assets is 2.0 times the payroll, a return on assets 5% different than assumed would equal 10% of payroll. A higher (lower) or increasing (decreasing) level of this maturity measure generally indicates a higher (lower) or increasing (decreasing) volatility in plan sponsor contributions as a percentage of payroll. Ratio of Actuarial Accrued Liability to Payroll The relationship between actuarial accrued liability and payroll is a useful indicator of the potential volatility of contributions for a fully funded plan. A funding policy that targets a funded ratio of 100% is expected to result in the ratio of assets to payroll and the ratio of liability to payroll converging over time. The ratio of liability to payroll may also be used as a measure of sensitivity of the liability itself. For example, if the actuarial accrued liability is 2.5 times the payroll, a change in liability 2% other than assumed would equal 5% of payroll. A higher (lower) or increasing (decreasing) level of this maturity measure generally indicates a higher (lower) or increasing (decreasing) volatility in liability (and also plan sponsor contributions) as a percentage of payroll. Ratio of Actives to Retirees and Beneficiaries A young plan with many active members and few retirees will have a high ratio of active to retirees. A mature open plan may have close to the same number of actives to retirees resulting in a ratio near 1.0. A super-mature or closed plan may have significantly more retirees than actives resulting in a ratio below 1.0. Ratio of Net Cash Flow to Market Value of Assets A positive net cash flow means contributions exceed benefits and expenses. A negative cash flow means existing funds are being used to make payments. A certain amount of negative net cash flow is generally expected to occur when benefits are prefunded through a qualified trust. Large negative net cash flows as a percent of assets may indicate a super-mature plan or a need for additional contributions. City of Clearwater Employees’ Pension Plan 7 Additional Risk Assessment Additional risk assessment is outside the scope of the annual actuarial valuation. Additional assessment may include scenario tests, sensitivity tests, stochastic modeling, stress tests, and a comparison of the present value of accrued benefits at low-risk discount rates with the actuarial accrued liability. SECTION B VALUATION RESULTS City of Clearwater Employees’ Pension Plan 8 ACTIVE MEMBERS Number 1,555 1,555 1,523 Covered Annual Payroll $84,608,940 $84,462,621 $82,317,307 Average Annual Payroll $54,411 $54,317 $54,049 Average Age 43.9 43.9 44.0 Average Past Service 10.3 10.3 10.6 Average Age at Hire 33.6 33.6 33.4 RETIREES & BENEFICIARIES Number 1,155 1,155 1,123 Annual Benefits $43,900,946 $43,900,946 $42,029,629 Average Annual Benefit $38,009 $38,009 $37,426 Average Age 67.0 67.0 66.7 DISABILITY RETIREES Number 133 133 136 Annual Benefits $4,069,094 $4,069,094 $4,040,807 Average Annual Benefit $30,595 $30,595 $29,712 Average Age 64.8 64.8 63.9 TERMINATED VESTED MEMBERS Number 86 86 75 Annual Benefits $1,719,905 $1,719,905 $1,407,716 Average Annual Benefit $19,999 $19,999 $18,770 Average Age 48.5 48.5 49.4 PARTICIPANT DATA January 1, 2019 January 1, 2018January 1, 2019 After Assumption Changes Before Assumption Changes City of Clearwater Employees’ Pension Plan 9 A.Valuation Date B.ADC to Be Paid During Fiscal Year Ending 9/30/2020 9/30/2020 9/30/2019 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 9,106,282 8,152,416 8,236,726 F.ADC if Paid on the Valuation Date: D+E 9,106,282 8,152,416 8,236,726 G.ADC Adjusted for Frequency of Payments 9,720,956 8,723,085 8,813,297 H.ADC as % of Covered Payroll 11.49 %10.33 %10.71 % I.Assumed Rate of Increase in Covered Payroll to Contribution Year 0.00 %0.00 %0.00 % J.Covered Payroll for Contribution Year 84,608,940 84,462,621 82,317,307 K.ADC for Contribution Year: H x J 9,720,956 8,723,085 8,813,297 L.Estimate of State Revenue in Contribution Year 12,000 12,000 12,000 M.Required Employer Contribution (REC) in Contribution Year 9,708,956 8,711,085 8,801,297 N.REC as % of Covered Payroll in Contribution Year: M ÷ J 11.48 %10.31 %10.69 % O.Credit Balance 26,608,126 26,608,126 22,819,909 ACTUARIALLY DETERMINED CONTRIBUTION (ADC) After Assumption January 1, 2019 January 1, 2019 January 1, 2018 Changes Before Assumption Changes * 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. City of Clearwater Employees’ Pension Plan 10 A.Valuation Date B.Actuarial Present Value of All Projected Benefits for 1.Active Members a. Service Retirement Benefits $ 366,373,759 $ 350,263,150 $ 349,500,746 b. Vesting Benefits 32,775,263 34,025,504 34,245,751 c. Disability Benefits 18,314,541 14,302,517 14,192,268 d. Preretirement Death Benefits 6,514,460 5,992,410 5,977,601 e. Return of Member Contributions 3,916,877 3,408,942 3,004,156 f. Total 427,894,900 407,992,523 406,920,522 2.Inactive Members a. Service Retirees & Beneficiaries 596,727,046 577,281,219 556,713,663 b. Disability Retirees 53,960,615 51,404,381 51,685,695 c. Terminated Vested Members 18,970,922 18,362,415 14,735,991 d. Total 669,658,583 647,048,015 623,135,349 3. Total for All Members 1,097,553,483 1,055,040,538 1,030,055,871 C.Actuarial Accrued (Past Service) Liability 965,611,907 940,408,824 916,334,666 D.Actuarial Value of Accumulated Plan Benefits per FASB No. 35 913,458,490 893,436,141 866,723,368 E.Plan Assets 1.Market Value 963,571,264 963,571,264 1,019,110,192 2. Actuarial Value 1,005,100,366 1,005,100,366 980,134,451 3. Actuarial Value Excluding Credit Balance 978,492,240 978,492,240 957,314,542 F.Actuarial Present Value of Projected Covered Payroll 695,032,441 647,577,400 628,628,623 G.Actuarial Present Value of Projected Member Contributions 61,737,378 57,460,638 55,880,281 H.Accumulated Value of Active Member Contributions 62,268,307 62,268,307 60,969,115 I.Unfunded Actuarial Accrued Liability (UAAL) Based on EAN Method = C. - E.3.(12,880,333) (38,083,416) (40,979,876) J.Funded Ratio = E.2. / C.104.09%106.88%106.96% K.Funded Ratio Excluding Credit Balance = E.3. / C.101.33%104.05%104.47% ACTUARIAL VALUE OF BENEFITS AND ASSETS January 1, 2019January 1, 2019 January 1, 2018 Before Assumption Changes After Assumption Changes City of Clearwater Employees’ Pension Plan 11 A.Valuation Date B.Normal Cost for 1.Service Retirement Benefits $11,370,851 $10,745,382 $10,742,727 2.Vesting 2,130,683 2,101,517 2,058,733 3.Disability Benefits 1,644,733 1,410,706 1,410,003 4.Death Benefits 265,837 256,143 253,393 5.Refund of Contributions 815,818 743,373 714,178 6.Total for Future Benefits 16,227,922 15,257,121 15,179,034 7.Assumed Amount for Administrative Expenses 318,903 318,903 294,925 8.Total Normal Cost 16,546,825 15,576,024 15,473,959 C.Expected Member Contributions 7,440,543 7,423,608 7,237,233 D.Employer Normal Cost: B8 - C 9,106,282 8,152,416 8,236,726 E. Employer Normal Cost as % of Covered Payroll 10.76%9.65%10.01% CALCULATION OF EMPLOYER NORMAL COST ENTRY AGE NORMAL METHOD January 1, 2019 January 1, 2019 January 1, 2018 Before Assumption Changes After Assumption Changes City of Clearwater Employees’ Pension Plan 12 $22,819,909 -8,801,297 +10,992,120 +1,597,394 26,608,126 Interest on Credit Balance Credit Balance at End of Year Credit Balance at Beginning of Year Required Employer Contribution Employer Contribution Made Reconcilation of Credit Balance City of Clearwater Employees’ Pension Plan 13 LIQUIDATION OF THE UNFUNDED ACTUARIAL ACCRUED LIABILITY (UAAL) UAAL Amortization Period and Payments Date Established Source Amount Years Remaining Amount After Assumption Changes Before Assumption Changes 1/1/2015 Fresh Start (5,212,649)$ 19 (6,921,448)$ (615,615)$ (625,861)$ 1/1/2016 (Gain)/Loss 475,313 12 586,565 68,261 69,018 1/1/2016 Assumption Change (4,280,409) 22 (5,273,485) (437,391) (445,564) 1/1/2017 (Gain)/Loss (18,096,188) 13 (20,766,436) (2,294,735) (2,322,170) 1/1/2017 Assumption Change 303,943 23 348,610 28,355 28,903 1/1/2018 (Gain)/Loss (11,075,148) 14 (11,861,200) (1,251,528) (1,267,540) 1/1/2019 (Gain)/Loss 5,803,978 15 5,803,978 587,560 595,557 1/1/2019 Assumption Change 25,203,083 25 25,203,083 1,980,523 N/A (6,878,077) (12,880,333) (1,934,570) (3,967,657) Original UAAL Current UAAL Payment City of Clearwater Employees’ Pension Plan 14 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: 2019 $(12,880,333) 2020 (11,684,622) 2021 (10,408,181) 2022 (9,045,579) 2023 (7,591,002) 2024 (6,038,242) 2029 - Amortization Schedule Year Expected UAAL City of Clearwater Employees’ Pension Plan 15 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 $(40,979,876) 2.Employer Normal Cost for Contribution Year 8,236,726 3.Last Year's Contributions 8,813,297 * 4. Interest at the Assumed Rate on: a.1 and 2 for one year (2,292,021) b.3 from dates paid 38,926 c. a - b (2,330,947) 5.This Year's Expected UAAL: 1 + 2 - 3 + 4c (43,887,394) 6.This Year's Actual UAAL (Before any changes in benefits and assumptions)(38,083,416) 7.Net Actuarial Gain (Loss): (5) - (6)(5,803,978) 8.Gain (Loss) Due to Investments (11,776,532) 9.Gain (Loss) Due to other sources 5,972,554 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. City of Clearwater Employees’ Pension Plan 16 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)** 2017 11,075,148 (1.48)** 2018 (5,803,978)0.75 ** 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 UAAL is less than $0, the net effect of these gains and losses 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). City of Clearwater Employees’ Pension Plan 17 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 12/31/2017 8.89 7.00 7.35 4.16 12/31/2018 5.76 7.00 4.08 4.18 Averages 7.90 %---5.33 %--- Salary Increases Actual Investment Return Year Ending Actual Assumed 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. City of Clearwater Employees’ Pension Plan 18 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 City of Clearwater Employees’ Pension Plan 19 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 164 161 47 59 2 3 2 2 25 85 110 91 1,523 12/31/2018 207 175 45 65 1 3 0 2 27 102 129 92 1,555 12/31/2019 52 4 2 99 10 Yr Totals *1242 1315 472 538 32 42 15 21 174 622 796 854 * 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 15 288,110 26 753,482 12/31/2018 25 762,324 28 831,241 12/31/2019 28 885,857 Actual (A) Compared to Expected (E) Deaths Among Retirees and Beneficiaries Actual During Year Annual Pensions Annual Pensions Expected During Year City of Clearwater Employees’ Pension Plan 20 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 1/1/18 1,523 1,334 82,317,307 957,314,542 916,334,666 (40,979,876)104.5 8,236,726 10.01 1/1/19 1,555 1,374 84,608,940 978,492,240 965,611,907 (12,880,333)101.3 9,106,282 10.76 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. City of Clearwater Employees’ Pension Plan 21 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 0.01 8,647,427 10.91 8,647,427 12,000 8,659,427 1/1/18 9/30/19 8,813,297 10.71 12,000 0.02 8,801,297 10.69 8,801,297 12,000 8,813,297 1/1/19 9/30/20 9,720,956 11.49 12,000 0.01 9,708,956 11.48 --- --- --- % 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. City of Clearwater Employees’ Pension Plan 22 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 Investigation for the Five Years Ended December 31, 2017, dated December 6, 2018. The mortality assumption is mandated by Chapter 112.63, Florida Statutes. Economic Assumptions The investment return rate assumed in the valuation is 6.75% per year, compounded annually (net rate after investment expenses). This assumption was changed this year (based on the results of a 5-year experience study) from 7.00%. City of Clearwater Employees’ Pension Plan 23 The Inflation Rate assumed in this valuation is 2.25% 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 6.75% 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 2.25% recognizes inflation. This assumption is used to project a member’s current salary to the salaries upon which benefits will be based. This assumption was changed this year (based on the results of a 5-year experience study) from the service-based rates used in the prior valuation, which varied from 3.5% to 7.9%. Years of Service 1 - 2 2.25%7.60% 3 - 4 2.25%6.25% 5 - 9 2.25%5.50% 10 - 14 2.25%5.25% 15 and Higher 2.25%4.50% 3.00% 2.25% 5.35% 4.00% 3.25% % Increase in Salary - Hazardous Duty Merit and Seniority Inflation Total Increase Years of Service 1 2.25%6.50% 2 2.25%5.60% 3 2.25%4.50% 4 - 9 2.25%3.75% 10 - 14 2.25%3.55% 15 - 19 2.25%3.05% 20 and Higher 2.25%2.75% 1.50% 1.30% 0.50% 0.80% 4.25% 3.35% 2.25% % Increase in Salary - Non-Hazardous Duty Merit and Seniority Inflation Total Increase City of Clearwater Employees’ Pension Plan 24 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), as required under Florida Statutes, Chapter 112.63. FRS Healthy Post-Retirement Mortality for Special Risk Class Members Sample Attained Ages (in 2019)Men Women Men Women 50 0.53 %0.23 %34.12 38.50 55 0.66 0.32 29.49 33.48 60 0.89 0.46 24.92 28.58 65 1.28 0.72 20.51 23.83 70 1.95 1.21 16.36 19.36 75 3.17 2.04 12.61 15.26 80 5.21 3.42 9.37 11.62 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. FRS Healthy Pre-Retirement Mortality for Special Risk Class Members Sample Attained Ages (in 2019)Men Women Men Women 50 0.22 %0.15 %35.11 38.85 55 0.39 0.24 30.00 33.70 60 0.70 0.39 25.12 28.68 65 1.20 0.69 20.55 23.86 70 1.95 1.21 16.36 19.36 75 3.17 2.04 12.61 15.26 80 5.21 3.42 9.37 11.62 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. City of Clearwater Employees’ Pension Plan 25 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), as required under Florida Statutes, Chapter 112.63. 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), as required under Florida Statutes, Chapter 112.63. FRS Healthy Post-Retirement Mortality for Non-Special Risk Class Members Sample Attained Ages (in 2019)Men Women Men Women 50 0.55 %0.23 %34.88 38.50 55 0.60 0.32 30.26 33.48 60 0.75 0.46 25.59 28.58 65 1.12 0.72 21.06 23.83 70 1.73 1.21 16.79 19.36 75 2.88 2.04 12.91 15.26 80 4.88 3.42 9.54 11.62 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. City of Clearwater Employees’ Pension Plan 26 FRS Healthy Pre-Retirement Mortality for Non-Special Risk Class Members Sample Attained Ages (in 2019)Men Women Men Women 50 0.21 %0.15 %35.80 38.85 55 0.35 0.24 30.68 33.70 60 0.61 0.39 25.75 28.68 65 1.06 0.69 21.10 23.86 70 1.73 1.21 16.79 19.36 75 2.88 2.04 12.91 15.26 80 4.88 3.42 9.54 11.62 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), as required under Florida Statutes, Chapter 112.63. 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) City of Clearwater Employees’ Pension Plan 27 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 - 54 5 % 55 - 59 15 60 - 64 40 65 & Over 100 20 & Over Under 55 15 55 - 59 30 60 - 64 40 65 & Over 100 Hazardous Duty Retirement Years of Probability of Service Age Retirement 10 - 19 65 - 74 30 % 75 & Over 100 20 - 29 55 - 64 20 65 - 69 30 70 & Over 100 30 & Over Under 55 45 55 - 59 20 60 - 64 30 65 - 69 50 70 & Over 100 Non-Hazardous Duty Retirement This assumption was changed this year (based on the results of a 5-year experience study) from the age-and-service-based rates used in the prior valuation, which varied from 10% to 100%. City of Clearwater Employees’ Pension Plan 28 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 separating from employment prior to becoming eligible for retirement. Years of % of Active Members Years of % of Active Members Service Age Separating Within Next Year Service Age Separating Within Next Year Under 1 All Ages 8.5 %Under 1 All Ages 20.0 % 1 All Ages 7.5 1 & Over All Ages 4.0 2 - 5 Under 40 4.5 40 & Over 2.5 6 & Over Under 40 2.0 40 & Over 1.5 Hazardous Duty Withdrawal - Males Hazardous Duty Withdrawal - 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 35 25.0 %Under 3 Under 30 22.0 % 35 & Over 11.0 30 - 34 15.0 35 - 44 5.0 1 - 2 All Ages 16.0 45 - 49 14.0 50 - 59 18.0 3 - 4 Under 40 11.0 60 & Over 25.0 40 & Over 5.0 3 - 4 Under 30 18.0 5 - 9 Under 30 12.5 30 - 39 14.0 30 - 49 5.0 40 - 59 5.0 50 - 59 3.0 60 & Over 20.0 60 & Over 7.5 5 - 9 Under 35 5.0 10 & Over Under 35 7.5 35 - 44 6.0 35 - 39 4.0 45 - 59 4.5 40 - 49 3.5 60 & Over 3.0 50 - 54 2.0 55 - 59 3.0 10 & Over Under 40 6.0 60 & Over 4.5 40 - 44 5.0 45 - 49 3.75 50 - 54 3.25 55 - 59 2.75 60 & Over 6.0 Non-Hazardous Duty Withdrawal - Males Non-Hazardous Duty Withdrawal - Females City of Clearwater Employees’ Pension Plan 29 This assumption was changed this year (based on the results of a 5-year experience study) from age-and-service-based rates used in the prior valuation, which varied from 0% to 35%. Rates of disability among active members (100% of disabilities are assumed to be service- connected). Sample Ages 20 0.25 %0.50 % 25 0.25 0.50 30 0.25 0.75 35 0.30 1.00 40 0.45 1.25 45 0.60 1.50 50 0.60 1.50 55 0.60 1.50 60 0.75 1.50 65 1.00 1.50 70 1.50 1.50 Males Females Hazardous Duty Disability % of Active Members Becoming Disabled Within Next Year Sample Ages 20 0.03 %0.03 % 25 0.03 0.03 30 0.03 0.03 35 0.04 0.04 40 0.07 0.07 45 0.10 0.10 50 0.14 0.14 55 0.24 0.24 60 0.29 0.29 65 0.34 0.34 70 0.44 0.44 Males Females Non-Hazardous Duty Disability % of Active Members Becoming Disabled Within Next Year This assumption was changed this year (based on the results of a 5-year experience study) from age-based rates used in the prior valuation. City of Clearwater Employees’ Pension Plan 30 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. City of Clearwater Employees’ Pension Plan 31 Marriage Assumption 75% of males and 75% of females are assumed to be married for purposes of death-in-service benefits and to determine the normal form of benefit when applicable. Male spouses are assumed to be three years older than female spouses for all active members and for members who became inactive before January 1, 2015. For members who became inactive on or after January 1, 2015, spouses ages are based on the beneficiary dates of birth provided by the Plan Administrator. 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. City of Clearwater Employees’ Pension Plan 32 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). City of Clearwater Employees’ Pension Plan 33 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. City of Clearwater Employees’ Pension Plan 34 Open Amortization Period An open amortization period is one which is used to determine the Amortization Payment but which does not change over time. In other words, if the initial period is set as 30 years, the same 30-year period is used in determining the Amortization Period each year. In theory, if an Open Amortization Period is used to amortize the Unfunded Actuarial Accrued Liability, the UAAL will never completely disappear, but will become smaller each year, either as a dollar amount or in relation to covered payroll. Unfunded Actuarial Accrued Liability The difference between the Actuarial Accrued Liability and Actuarial Value of Assets. Valuation Date The date as of which the Actuarial Present Value of Future Benefits are determined. The benefits expected to be paid in the future are discounted to this date. SECTION C PENSION FUND INFORMATION City of Clearwater Employees’ Pension Plan 35 Statement of Plan Assets at Market Value 2018 2017 A.Cash and Cash Equivalents (Operating Cash)-$ -$ B.Receivables 1.Member Contributions -$ -$ 2.Employer Contributions 5,075,757 4,898,468 3.Investment Income and Other Receivables 4,974,583 5,736,629 4.Total Receivables 10,050,340$ 10,635,097$ C.Investments 1.Short-Term Investments 15,241,276$ 28,627,149$ 2.Domestic Equities 374,546,281 432,388,268 3.International Equities 159,926,512 185,785,460 4.Domestic Fixed Income 297,341,842 280,945,411 5.International Fixed Income - - 6.Real Estate 93,435,527 88,936,244 7.Infrastructure 37,781,686 31,973,181 8.Private Equity - - 9.Total Investments 978,273,124$ 1,048,655,713$ D.Liabilities 1.Benefits Payable -$ -$ 2.Accrued Expenses and Other Payables (24,752,200) (40,180,618) 3.Total Liabilities (24,752,200)$ (40,180,618)$ E.Total Market Value of Assets Available for Benefits 963,571,264$ 1,019,110,192$ F.Allocation of Investments 1.Short-Term Investments 1.56%2.73% 2.Domestic Equities 38.29%41.23% 3.International Equities 16.35%17.72% 4.Domestic Fixed Income 30.39%26.79% 5.International Fixed Income 0.00%0.00% 6.Real Estate 9.55%8.48% 7.Infrastructure 3.86%3.05% 8.Private Equity 0.00%0.00% 9.Total Investments 100.00%100.00% December 31 Item City of Clearwater Employees’ Pension Plan 36 Reconciliation of Plan Assets 2018 2017 A.Market Value of Assets at Beginning of Year 1,019,110,192$ 905,261,405$ B.Revenues and Expenditures 1.Contributions a.Employee Contributions 7,172,027$ 7,070,641$ b.Employer Contributions 10,992,120 10,660,241 c.State Contributions 12,000 12,000 d.Total 18,176,147$ 17,742,882$ 2.Investment Income a.Interest, Dividends, and Other Income 20,589,882$ 18,750,403$ b.Net Realized Gains/(Losses)59,848,063 53,515,048 c.Net Unrealized Gains/(Losses)(98,752,444) 76,499,841 d.Investment Expenses (6,623,785) (6,169,286) e.Net Investment Income (24,938,284)$ 142,596,006$ 3.Benefits and Refunds a.Refunds (1,050,810)$ (1,028,495)$ b.Regular Monthly Benefits (47,209,075) (44,639,425) c.Partial Lump-Sum Benefits Paid (198,003) (527,256) d.Total (48,457,888)$ (46,195,176)$ 4.Administrative and Miscellaneous Expenses (318,903)$ (294,925)$ 5.Transfers -$ -$ C.Market Value of Assets at End of Year 963,571,264$ 1,019,110,192$ December 31 Item City of Clearwater Employees’ Pension Plan 37 Development of Actuarial Value of Assets Valuation Date - December 31 2017 2018 2019 2020 2021 2022 A.Actuarial Value of Assets Beginning of Year 927,675,129$ 980,134,451$ B.Market Value End of Year 1,019,110,192 963,571,264 C.Market Value Beginning of Year 905,261,405 1,019,110,192 D.Non-Investment/Administrative Net Cash Flow (28,747,219) (30,600,644) E.Investment Income E1. Actual Market Total: B-C-D 142,596,006 (24,938,284) E2. Assumed Rate of Return 7.00%7.00%6.75%6.65%6.55%6.50% E3. Assumed Amount of Return 62,170,412 70,071,393 E4. Amount Subject to Phase-In: E1–E3 80,425,594 (95,009,677) F.Phase-In Recognition of Investment Income F1. Current Year: 0.2 x E4 16,085,119 (19,001,935) F2. First Prior Year (465,144) 16,085,119 (19,001,935) F3. Second Prior Year (12,846,426) (465,144) 16,085,119 (19,001,935) F4. Third Prior Year 1,723,554 (12,846,426) (465,144) 16,085,119 (19,001,935) F5. Fourth Prior Year 14,539,026 1,723,552 (12,846,427) (465,145) 16,085,118 (19,001,937) F6. Total Phase-Ins 19,036,129 (14,504,834) (16,228,387) (3,381,961) (2,916,817) (19,001,937) G.Actuarial Value of Assets End of Year G1. Preliminary Actuarial Value of Assets 980,134,451$ 1,005,100,366$ G2. Upper Corridor Limit: 120%*B 1,222,932,230$ 1,156,285,517$ G3. Lower Corridor Limit: 80%*B 815,288,154$ 770,857,011$ G4. Funding Value End of Year 980,134,451$ 1,005,100,366$ G5. Credit Balance 22,819,909$ 26,608,126$ G6. Final Actuarial Value of Assets 957,314,542$ 978,492,240$ H.Recognized Investment Earnings 81,206,541$ 55,566,559$ I.Difference between Market & Actuarial Value 38,975,741$ (41,529,102)$ J.Actuarial Rate of Return 8.89%5.76% K.Market Value Rate of Return 16.01%-2.48% L.Ratio of Actuarial Value of Assets to Market Value 96.18%104.31% 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. City of Clearwater Employees’ Pension Plan 38 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 2017 16.01 8.89 2018 (2.48)5.76 Average returns: Last five years:5.39 % 8.30 % Last ten years:10.26 % 8.74 % All years:8.90 % 7.90 % Actuarial*Market* *Before investment expenses prior to 2013. The above rates are based on the retirement system’s financial information reported to the actuary. They may differ from figures that the investment consultant reports, in part because of differences in the handling of administrative and investment expenses, and in part because of differences in the handling of cash flows. SECTION D FINANCIAL ACCOUNTING INFORMATION City of Clearwater Employees’ Pension Plan 39 A.Valuation Date B.Actuarial Present Value of Accumulated Plan Benefits 1.Vested Benefits a.Members Currently Receiving Payments $650,687,661 $608,399,358 b.Terminated Vested Members 18,970,922 14,735,991 c.Other Members 229,609,403 230,918,891 d.Total 899,267,986 854,054,240 2.Non-Vested Benefits 14,190,504 12,669,128 3.Total Actuarial Present Value of Accumulated Plan Benefits: 1d + 2 913,458,490 866,723,368 4.Accumulated Contributions of Active Members 62,268,307 60,969,115 C.Changes in the Actuarial Present Value of Accumulated Plan Benefits 1.Total Value at Beginning of Year 866,723,368 835,933,687 2.Increase (Decrease) During the Period Attributable to: a.Plan Amendment 0 0 b.Change in Actuarial Assumptions 20,022,349 0 c.Latest Member Data, Benefits Accumulated and Decrease in the Discount Period 75,170,661 76,984,857 d.Benefits Paid (48,457,888)(46,195,176) e.Net Increase 46,735,122 30,789,681 3.Total Value at End of Period 913,458,490 866,723,368 D.Market Value of Assets 963,571,264 1,019,110,192 E.Actuarial Assumptions - See page entitled Actuarial Assumptions and Methods FASB NO. 35 INFORMATION January 1, 2019 January 1, 2018 SECTION E MISCELLANEOUS INFORMATION City of Clearwater Employees’ Pension Plan 40 A. 1.Number Included in Last Valuation 1,523 1,520 2.New Members Included in Current Valuation 206 163 3.Non-Vested Employment Terminations (102)(85) 4.Vested Employment Terminations (27)(25) 5.Service Retirements (45)(47) 6.Disability Retirements (1)(2) 7.Deaths 0 (2) 8.Rehired Members/Data Corrections 1 1 9.Number Included in This Valuation 1,555 1,523 B. 1.Number Included in Last Valuation 75 66 2.Additions from Active Members 27 25 3.Lump Sum Payments/Refund of Contributions (5)(3) 4.Payments Commenced (9)(13) 5.Deaths 0 0 6.Conversion from Disability/Rehired Members (2)(1) 7.Data Corrections 0 1 8.Number Included in This Valuation 86 75 C. 1.Number Included in Last Valuation 1,259 1,212 2.Additions from Active Members 46 48 3.Additions from Terminated Vested Members 9 13 4.Deaths Resulting in No Further Payments (24)(13) 5.Deaths Resulting in New Survivor Benefits 0 1 6.End of Certain Period - No Further Payments (1)(2) 7.Data Correction/Waiver of Benefits (1)0 8.Number Included in This Valuation 1,288 1,259 RECONCILIATION OF MEMBERSHIP DATA Active Members Service Retirees, Disability Retirees and Beneficiaries Terminated Vested Members From 1/1/2017From 1/1/2018 To 1/1/2018To 1/1/2019 City of Clearwater Employees’ Pension Plan 41 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.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.30 15 9 5 2 0 0 0 0 0 0 0 61 TOT PAY 983,963 515,449 394,614 185,560 68,698 0 0 0 0 0 0 0 2,148,284 AVG PAY 32,799 34,363 43,846 37,112 34,349 0 0 0 0 0 0 0 35,218 25-29 NO.45 37 30 22 15 13 0 0 0 0 0 0 162 TOT PAY 1,656,955 1,628,234 1,368,638 974,534 781,803 543,528 0 0 0 0 0 0 6,953,692 AVG PAY 36,821 44,006 45,621 44,297 52,120 41,810 0 0 0 0 0 0 42,924 30-34 NO.32 24 23 19 17 51 26 1 0 0 0 0 193 TOT PAY 1,255,723 1,037,798 1,033,400 937,621 911,992 2,739,815 1,610,027 59,346 0 0 0 0 9,585,722 AVG PAY 39,241 43,242 44,930 49,348 53,647 53,722 61,924 59,346 0 0 0 0 49,667 35-39 NO.25 16 13 10 9 31 57 13 0 0 0 0 174 TOT PAY 945,488 770,394 619,018 492,822 425,912 1,782,872 3,645,304 806,442 0 0 0 0 9,488,252 AVG PAY 37,820 48,150 47,617 49,282 47,324 57,512 63,953 62,034 0 0 0 0 54,530 40-44 NO.16 14 8 5 9 32 62 53 8 0 0 0 207 TOT PAY 526,276 555,589 276,609 196,314 418,175 1,679,995 4,378,355 3,740,423 604,863 0 0 0 12,376,599 AVG PAY 32,892 39,685 34,576 39,263 46,464 52,500 70,619 70,574 75,608 0 0 0 59,790 45-49 NO.23 11 6 9 11 26 43 49 35 6 0 0 219 TOT PAY 846,944 463,062 237,016 498,489 518,694 1,258,429 2,688,097 3,785,121 3,083,030 497,290 0 0 13,876,172 AVG PAY 36,824 42,097 39,503 55,388 47,154 48,401 62,514 77,247 88,087 82,882 0 0 63,362 50-54 NO.18 5 5 5 2 17 30 42 55 19 2 0 200 TOT PAY 633,530 336,173 262,587 230,256 84,799 790,757 1,618,162 2,772,330 3,959,567 1,490,989 151,334 0 12,330,484 AVG PAY 35,196 67,235 52,517 46,051 42,400 46,515 53,939 66,008 71,992 78,473 75,667 0 61,652 55-59 NO.14 6 5 6 9 19 29 33 25 14 8 1 169 TOT PAY 633,558 237,994 210,813 319,958 493,938 809,632 1,512,562 1,802,466 1,477,340 1,024,460 645,070 46,520 9,214,311 AVG PAY 45,254 39,666 42,163 53,326 54,882 42,612 52,157 54,620 59,094 73,176 80,634 46,520 54,523 60-64 NO.1 2 2 1 1 11 19 30 26 8 10 1 112 TOT PAY 70,380 64,675 78,385 38,725 55,448 524,360 914,710 1,395,363 1,424,766 598,352 597,099 46,528 5,808,791 AVG PAY 70,380 32,338 39,192 38,725 55,448 47,669 48,143 46,512 54,799 74,794 59,710 46,528 51,864 65+ NO.2 1 1 2 1 6 19 11 6 3 4 2 58 TOT PAY 87,174 25,890 30,847 93,886 45,583 281,057 858,956 559,645 306,158 163,927 277,328 96,182 2,826,633 AVG PAY 43,587 25,890 30,847 46,943 45,583 46,843 45,208 50,877 51,026 54,642 69,332 48,091 48,735 TOT NO.206 131 102 84 76 206 285 232 155 50 24 4 1,555 TOT AMT 7,639,991 5,635,258 4,511,927 3,968,165 3,805,042 10,410,445 17,226,173 14,921,136 10,855,724 3,775,018 1,670,831 189,230 84,608,940 AVG AMT 37,087 43,017 44,235 47,240 50,066 50,536 60,443 64,315 70,037 75,500 69,618 47,308 54,411 Years of Service to Valuation Date City of Clearwater Employees’ Pension Plan 42 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.6 1 3 1 0 0 0 0 0 0 0 0 11 TOT PAY 316,017 65,895 189,695 62,515 0 0 0 0 0 0 0 0 634,122 AVG PAY 52,670 65,895 63,232 62,515 0 0 0 0 0 0 0 0 57,647 25-29 NO.11 14 12 7 8 2 0 0 0 0 0 0 54 TOT PAY 582,933 884,367 742,238 474,420 523,079 132,293 0 0 0 0 0 0 3,339,330 AVG PAY 52,994 63,169 61,853 67,774 65,385 66,147 0 0 0 0 0 0 61,839 30-34 NO.11 5 6 7 8 19 11 0 0 0 0 0 67 TOT PAY 570,353 303,194 384,147 459,827 551,796 1,391,181 962,992 0 0 0 0 0 4,623,490 AVG PAY 51,850 60,639 64,025 65,690 68,975 73,220 87,545 0 0 0 0 0 69,007 35-39 NO.4 3 4 3 3 15 25 4 0 0 0 0 61 TOT PAY 215,195 191,371 255,074 204,129 202,763 1,066,639 2,197,586 410,958 0 0 0 0 4,743,715 AVG PAY 53,799 63,790 63,769 68,043 67,588 71,109 87,903 102,740 0 0 0 0 77,766 40-44 NO.0 1 0 0 1 10 37 25 4 0 0 0 78 TOT PAY 0 68,191 0 0 66,312 724,022 3,120,909 2,460,878 420,403 0 0 0 6,860,715 AVG PAY 0 68,191 0 0 66,312 72,402 84,349 98,435 105,101 0 0 0 87,958 45-49 NO.3 2 0 2 1 3 17 29 22 2 0 0 81 TOT PAY 169,265 145,658 0 144,392 65,579 220,636 1,493,881 2,721,180 2,404,371 280,718 0 0 7,645,680 AVG PAY 56,422 72,829 0 72,196 65,579 73,545 87,875 93,834 109,290 140,359 0 0 94,391 50-54 NO.1 1 1 1 0 1 7 15 17 8 0 0 52 TOT PAY 62,504 160,848 78,022 84,370 0 83,249 576,237 1,447,713 1,773,171 850,422 0 0 5,116,536 AVG PAY 62,504 160,848 78,022 84,370 0 83,249 82,320 96,514 104,304 106,303 0 0 98,395 55-59 NO.1 0 0 1 2 0 3 5 3 3 3 0 21 TOT PAY 62,504 0 0 98,593 219,448 0 347,057 421,283 289,767 300,542 368,267 0 2,107,461 AVG PAY 62,504 0 0 98,593 109,724 0 115,686 84,257 96,589 100,181 122,756 0 100,355 60-64 NO.0 0 0 0 0 0 1 0 0 1 0 0 2 TOT PAY 0 0 0 0 0 0 122,498 0 0 86,972 0 0 209,470 AVG PAY 0 0 0 0 0 0 122,498 0 0 86,972 0 0 104,735 65+ NO.0 0 0 0 0 0 1 0 0 0 0 0 1 TOT PAY 0 0 0 0 0 0 91,216 0 0 0 0 0 91,216 AVG PAY 0 0 0 0 0 0 91,216 0 0 0 0 0 91,216 TOT NO.37 27 26 22 23 50 102 78 46 14 3 0 428 TOT AMT 1,978,771 1,819,524 1,649,176 1,528,246 1,628,977 3,618,020 8,912,376 7,462,012 4,887,712 1,518,654 368,267 0 35,371,735 AVG AMT 53,480 67,390 63,430 69,466 70,825 72,360 87,376 95,667 106,255 108,475 122,756 0 82,644 Years of Service to Valuation Date City of Clearwater Employees’ Pension Plan 43 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.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.24 14 6 4 2 0 0 0 0 0 0 0 50 TOT PAY 667,946 449,554 204,919 123,045 68,698 0 0 0 0 0 0 0 1,514,162 AVG PAY 27,831 32,111 34,153 30,761 34,349 0 0 0 0 0 0 0 30,283 25-29 NO.34 23 18 15 7 11 0 0 0 0 0 0 108 TOT PAY 1,074,022 743,867 626,400 500,114 258,724 411,235 0 0 0 0 0 0 3,614,362 AVG PAY 31,589 32,342 34,800 33,341 36,961 37,385 0 0 0 0 0 0 33,466 30-34 NO.21 19 17 12 9 32 15 1 0 0 0 0 126 TOT PAY 685,370 734,604 649,253 477,794 360,196 1,348,634 647,035 59,346 0 0 0 0 4,962,232 AVG PAY 32,637 38,663 38,191 39,816 40,022 42,145 43,136 59,346 0 0 0 0 39,383 35-39 NO.21 13 9 7 6 16 32 9 0 0 0 0 113 TOT PAY 730,293 579,023 363,944 288,693 223,149 716,233 1,447,718 395,484 0 0 0 0 4,744,537 AVG PAY 34,776 44,540 40,438 41,242 37,192 44,765 45,241 43,943 0 0 0 0 41,987 40-44 NO.16 13 8 5 8 22 25 28 4 0 0 0 129 TOT PAY 526,276 487,398 276,609 196,314 351,863 955,973 1,257,446 1,279,545 184,460 0 0 0 5,515,884 AVG PAY 32,892 37,492 34,576 39,263 43,983 43,453 50,298 45,698 46,115 0 0 0 42,759 45-49 NO.20 9 6 7 10 23 26 20 13 4 0 0 138 TOT PAY 677,679 317,404 237,016 354,097 453,115 1,037,793 1,194,216 1,063,941 678,659 216,572 0 0 6,230,492 AVG PAY 33,884 35,267 39,503 50,585 45,312 45,121 45,931 53,197 52,205 54,143 0 0 45,148 50-54 NO.17 4 4 4 2 16 23 27 38 11 2 0 148 TOT PAY 571,026 175,325 184,565 145,886 84,799 707,508 1,041,925 1,324,617 2,186,396 640,567 151,334 0 7,213,948 AVG PAY 33,590 43,831 46,141 36,472 42,400 44,219 45,301 49,060 57,537 58,233 75,667 0 48,743 55-59 NO.13 6 5 5 7 19 26 28 22 11 5 1 148 TOT PAY 571,054 237,994 210,813 221,365 274,490 809,632 1,165,505 1,381,183 1,187,573 723,918 276,803 46,520 7,106,850 AVG PAY 43,927 39,666 42,163 44,273 39,213 42,612 44,827 49,328 53,981 65,811 55,361 46,520 48,019 60-64 NO.1 2 2 1 1 11 18 30 26 7 10 1 110 TOT PAY 70,380 64,675 78,385 38,725 55,448 524,360 792,212 1,395,363 1,424,766 511,380 597,099 46,528 5,599,321 AVG PAY 70,380 32,338 39,193 38,725 55,448 47,669 44,012 46,512 54,799 73,054 59,710 46,528 50,903 65+ NO.2 1 1 2 1 6 18 11 6 3 4 2 57 TOT PAY 87,174 25,890 30,847 93,886 45,583 281,057 767,740 559,645 306,158 163,927 277,328 96,182 2,735,417 AVG PAY 43,587 25,890 30,847 46,943 45,583 46,843 42,652 50,877 51,026 54,642 69,332 48,091 47,990 TOT NO.169 104 76 62 53 156 183 154 109 36 21 4 1,127 TOT AMT 5,661,220 3,815,734 2,862,751 2,439,919 2,176,065 6,792,425 8,313,797 7,459,124 5,968,012 2,256,364 1,302,564 189,230 49,237,205 AVG AMT 33,498 36,690 37,668 39,354 41,058 43,541 45,431 48,436 54,752 62,677 62,027 47,308 43,689 Years of Service to Valuation Date City of Clearwater Employees’ Pension Plan 44 INACTIVE PARTICIPANT DISTRIBUTION Disabled Retired Total Total Total Total Age Group Number Benefits Number Benefits Number Benefits Number Benefits Under 20 - - - - - - 3 66,662 20-24 - - - - - - 1 9,018 25-29 - - - - - - - - 30-34 5 76,685 - - - - 1 16,760 35-39 12 261,690 3 126,576 - - 3 95,502 40-44 13 273,145 3 127,927 3 123,509 2 53,253 45-49 20 449,103 10 460,902 21 870,110 2 44,623 50-54 17 369,533 9 304,575 54 2,669,165 7 201,475 55-59 10 170,376 16 569,719 145 6,412,605 8 317,129 60-64 9 119,373 24 698,727 197 8,772,289 22 458,446 65-69 - - 23 643,236 248 9,733,877 14 354,549 70-74 - - 21 552,283 204 7,564,560 23 557,750 75-79 - - 11 218,909 68 2,681,832 22 486,293 80-84 - - 10 294,640 44 1,290,249 24 411,968 85-89 - - 3 71,600 17 448,557 5 73,406 90-94 - - - - 4 88,379 10 72,503 95-99 - - - - 1 21,701 2 4,776 100 & Over - - - - - - - - Total 86 1,719,905 133 4,069,094 1,006 40,676,833 149 3,224,113 Average Age 48 65 67 70 Terminated Vested Deceased with Beneficiary SECTION F SUMMARY OF PLAN PROVISIONS City of Clearwater Employees’ Pension Plan 45 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. City of Clearwater Employees’ Pension Plan 46 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. 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. City of Clearwater Employees’ Pension Plan 47 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. 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. City of Clearwater Employees’ Pension Plan 48 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 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. City of Clearwater Employees’ Pension Plan 49 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. 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. City of Clearwater Employees’ Pension Plan 50 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. City of Clearwater Employees’ Pension Plan 51 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. City of Clearwater Employees’ Pension Plan 52 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. 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. City of Clearwater Employees’ Pension Plan 53 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. 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. City of Clearwater Employees’ Pension Plan 54 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. For Hazardous Duty Employment-Police Officers and Firefighters 1.5% annually commencing on each April 1 for all retirees and beneficiaries who have received at least 6 monthly benefit payments. For non-grandfathered members (not eligible for normal retirement on January 1, 2013), there is no COLA for benefits accrued after January 1, 2013. X. 13th Check Not Applicable Y. Deferred Retirement Option Plan Not Applicable Z. Other Ancillary Benefits There are no ancillary retirement type benefits not required by statutes but which might be deemed a City of Clearwater Employees’ Pension Plan liability if continued beyond the availability of funding by the current funding source. AA. Changes from Previous Valuation There have been no changes from the previous valuation. Cover Memo City of Clearwater Main Library - Council Chambers 100 N. Osceola Avenue Clearwater, FL 33755 File Number: ID#19-6020 Agenda Date: 4/15/2019 Status: Agenda ReadyVersion: 1 File Type: Action ItemIn Control: Pension Trustees Agenda Number: 4.4 SUBJECT/RECOMMENDATION: Determine Trustees’ expected rate of return for pension plan investments for current year, each of the next several years, and for the long term thereafter, in accordance with Florida Statutes 112.661(9). SUMMARY: Florida Statutes 112.661(9) requires an annual determination of expected rates of return be filed with the Florida Department of Management Services, with the plan ’s sponsor, and with the consulting actuary. Staff is recommending the current plan investment rate of return assumption of 6.75%, net of investment-related fees, as the expected annual rate of return for the current year; 6.65% for the next year; 6.55% for the year thereafter; and 6.50% for the long term. Page 1 City of Clearwater Printed on 4/9/2019