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Agenda 01-17-12 BOYNTON BEACH POLICE OFFICERS’ PENSION FUND SPECIAL BOARD MEETING Tuesday, January 17, 2012 @ 9:30 AM Renaissance Executive Suites - Conference Room #1 1500 Gateway Blvd., Suite #220 Boynton Beach, FL 33426 AGENDA I.CALL TO ORDER – Lt. Gary Chapman, Chairman II.AGENDA APPROVAL APPROVAL OF MINUTES – III.Qtry Meeting 11-8-2011 with revised pg 10 IV.FINANCIAL REPORTS: N/A V.CORRESPONDENCE: N/A VI.OLD BUSINESS: Steve Palmquist, Gabriel, Roeder Smith & Co. (GRS) ) 1Supp Val Report of 11-01-2011 – particular reference to term rates (Nine Year Experience Study dated 2-15-2011 for reference) 2) Clarification of interest assumption and new State actuarial disclosure 3) Update of Summary Plan Description Nov 2008 – comments and or modifications. VII.NEW BUSINESS: 1) Supplemental Benefit – Set-Up for December 2012 VIII.PENSION ADMINISTRATOR’S REPORT: N/A IX.COMMENTS: X. ADJOURNMENT: Next Regular Meeting Date – Tuesday, February 14, 2012 @ 9:30 a.m. – 1500 Gateway Blvd. Suite 220, Boynton Beach, FL 33426 If you cannot attend, please call Barbara @ 561-739-7972 NOTICE PO’PB IF A PERSON DECIDES TO APPEAL ANY DECISION MADE BY THE OLICE FFICERS ENSION OARD WITH RESPECT TO ANY MATTER ,/,,/ CONSIDERED AT THIS MEETING HESHE WILL NEED A RECORD OF THE PROCEEDINGS AND FOR SUCH PURPOSE HESHE MAY NEED TO , ENSURE THAT A VERBATIM RECORD OF THE PROCEEDING IS MADE WHICH RECORD INCLUDES THE TESTIMONY AND EVIDENCE UPON .(..286.0105) WHICH THE APPEAL IS TO BE BASED FS THE CITY SHALL FURNISH APPROPRIATE AUXILIARY AIDS AND SERVICES WHERE NECESSARY TO AFFORD AN INDIVIDUAL WITH A ,, DISABILITY AN EQUAL OPPORTUNITY TO PARTICIPATE IN AND ENJOY THE BENEFITS OF A SERVICE PROGRAM OR ACTIVITY CONDUCTED .PW,(561)742-6013- BY THE CITY PLEASE CONTACT AM ELSH AT LEAST TWENTYFOUR HOURS PRIOR TO THE PROGRAM OR ACTIVITY . IN ORDER FOR THE CITY TO REASONABLY ACCOMMODATE YOUR REQUEST THEBOARD(COMMITTEE)MAYONLYCONDUCTPUBLICBUSINESSAFTERAQUORUMHASBEEN ESTABLISHED.IFNOQUORUMISESTABLISHEDWITHINTWENTYMINUTESOFTHENOTICEDSTARTTIMEOF THEMEETINGTHECITYCLERKORDESIGNEEWILLSONOTETHEFAILURETOESTABLISHAQUORUMAND THEMEETINGSHALLBECONCULDED.BOARDMEMBERSMAYNOTPARTICIPATEFURTHEREVENWHEN PURPORTEDLYACTINGINANINFORMALCAPACITY. 1 MINUTES OF THE BOYNTON BEACH POLICE OFFICERS' PENSION FUND QUARTERLY MEETING HELD ON TUESDAY, NOVEMBER, 8, 2011 AT 9:30 AM RENAISSANCE EXECUTIVE SUITES — CONFERENCE ROOM No. 1, 1500 GATEWAY BOULEVARD, SUITE No. 220, BOYNTON BEACH, FLORIDA PRESENT: Gary Chapman, Chair Barbara LaDue, Pension Administrator Toby Athol, Secretary Bonni Jensen, Board Attorney Scott Caudell Jason Llopis ABSENT: Frank Ranzie L Call to Order — Lt. Gary Chapman, Chairman Chair Chapman called the meeting to order at 9:34 a.m. A. Congratulations to Frank Ranzie for certification in CPPT program Trustee Frank Ranzie was congratulated on completing the CPPT program. It was noted it was not an easy task, and it was completed in record time. Ms. LaDue stated all the nominations for the Trustee position needed to be received by noon on Monday. To -date, the only nomination received was for Mr. Ranzie. II. Agenda Approval Ms. LaDue added Item A, to Section V. Correspondence, - FPPTA $600 annual fee for the Board's membership. This was paid through Chair Chapman's credit card. There was also additional information regarding a $30 fee for CPPTA updating. Ms. LaDue added Item F, to Section VII. New Business, - the Supplemental Actuarial Valuation Report dated November 1st. She suggested the item be placed on a future agenda as it was a lengthy item, and a representative from Gabriel Roeder & Smith was not present. Motion Mr. Athol moved to approve the agenda as amended. Mr. Caudell seconded the motion that unanimously passed. 1 Meeting Minutes Police Officers' Pension Fund Boynton Beach, Florida November 8, 2011 1I1. Approval of Minutes — Special Meeting September 20, 2011 It was noted the meeting was a special meeting and not a quarterly meeting. Motion Mr. Athol moved to approve the minutes. Mr. Caudell seconded the motion that unanimously passed. IV. Financial Reports: A. Quarterly Investment Review & Plan Year End — September 30, 2011 1 Russell Investment Group — Glenn Harris, Client Executive 1. Portfolio Review Mr. Harris stated the third - quarter returns for the key asset classes were negative. Across the board, with the exception of bonds, all were negative. The Gross Domestic Product (GDP) growth in the U.S. was revised downward. The S &P organization downgraded U.S. government debt, while treasury prices rose. There were also global concerns, such as slowing growth in China, Russia, and India, and concerns with the Eurozone. There had been a rebound in the last six weeks. Stock correlations, using the Russell 1000 Index, were reviewed. The 20- and 60-day averages reflected it did not matter what securities were owned because the market, overall, was declining. There were safe havens such as gold and treasury bonds. Many managers became more defensive and proactive. The plan had gold exposure through the commodities product and through equity securities. Gold was thought to be overvalued. At one point, the 10 -year treasury yield dipped below the equity yields. There was brief discussion about price -to -book ratios. As for diversity, the portfolio fared better the way it was situated, versus if it went 100% cash. Mr. Harris thought the fourth quarter would be a better quarter. In October, the portfolio was up 7 %, which absorbed the losses from August and September. Positive signs were the Federal Reserve trying to keep rates low to encourage borrowing. The housing market was still down, although some regions were improving. One issue was the tax policy. The goal was to get consumers to spend. it was not just about unemployment. Fixed income performance was reviewed. Mr. Harris explained, due to the last four years, it was difficult to predict what could happen in the market. Some believed the economy was still in a recession, and some believed there would be a recovery. The 2 Meeting Minutes Police Officers' Pension Fund Boynton Beach, Florida November 8, 2011 market declined, rose, and was currently flat. It was anticipated there would be a slow growth environment for years to come. The quarterly Russell Manager Survey reflected over 80% of the managers agreed there was not a double -dip recession. They were seeing greater opportunities because of the sell -off in emerging markets in the third quarter, and growth would come from emerging markets. Cyclical sectors, such as technology and health care, did not fare well. Treasuries were thought to be overvalued. The Asset Summary Report reflected the fund had about 2.3% in commodities. The contribution policy had changed, and Russell Investments would slowly move upwards to the target of 4% in the coming months. Real estate was updated and at about 5 %. The additional contribution the Trustees had authorized was timely. Fixed income bonds had a slight overweight, because the fund was underweight in commodities. For the fiscal year ending September 30th, the inflows coming into the portfolio were $9 million. Benefit payments were $4.5 million. The net Inflow was positive; however, due to the investments, the portfolio had only a slight gain for the one -year period. In the third quarter, the portfolio lost over $6 million, but It was made up in October. Total assets were positive on an absolute basis. Gross of fees, the plan was ahead of the benchmark for all periods and was in -line with the benchmark since inception. For the fiscal year, there was a negative 0.48% rate of return, versus the benchmark of 0.72 %. For the full year, equities were down about 4.3 %. Fixed income was up about 4.6% and the significant gain came from the alternative side. Real estate was up about 7 %, mostly from the private side, which was up 19.77% versus the public side, which was down 9.32 %. Through October 31, 2011, all the funds were ahead of the benchmark. Real estate securities were up almost 13 %. Since the fear in the market had subsided, there were good buying opportunities. There were managers on the institutional side that were focused on the fundamentals of companies, and mergers and acquisitions were occurring more frequently. Mr. Harris spoke about listed infrastructure and stated the institutional product they have was launched on October 31, 2011. Russell Investments had other listed infrastructure funds, and the total assets in the fund were over $1.2 billion. He noted the listed infrastructure products were global. These products were tangible products, such as: airports, power products, highways, railroads, water utilities, and others. Operating companies of these products gained income through leases and were publicly - traded securities. One example was Amtrak. Amtrak owns most of their own rails. If they sold them to a private investor and the private investor was a publicly traded company, those securities could be purchased. They were similar to equities in 3 Meeting Minutes Police Officers' Pension Fund Boynton Beach, Florida November 8, 2011 that they were traded on the exchange and had volatility. The fixed income component was the yield. Mr. Wan compared the product to a REIT with no "lock -up." The fund was daily priced, and Russell Investments had three funds. They had a mutual fund with $780 million, but it had very high fees and it was not an institutional product. They had an international fund with $300 million, and a single- manager fund with $91 million. The fund that was just launched had two clients, which seeded the fund, and a third through Russell Investment's Target Date Fund and balance funds, totaling three managers with the comingled fund. The assets there were slightly over $100 million. The Target Fund reduced risk and the standard deviation numbers were lower than those of equities. Mr. Wan thought the fund provided adequate diversification although the yield was still shy of the target rate of retum. With infrastructure, investors often fail to recognize unforeseen situations. Repairs take its toll, and it is unknown who would fund the repairs because projects are combined in the private and public sectors. The management and replacement cost of the infrastructure was now higher and the total gain, looking forward, was not as high as it historically had been. He was pleased Mr. Harris suggested a product that did not have liquidity restraints. Mr. Wan would like to research the product and managers further. Assuming that it met the criteria, Mr. Wan was supportive of the fund. Mr. Harris discussed the standard deviation had dropped from 12% to 11.84 %, and they expected returns in the portfolio to stay about the same, while the risk in the portfolio declined significantly. Fees would be about the same, if not lower. Mr. Harris thought it was important to have exposure to equities, but to move away from U.S. equities, as it was helpful to have alternative strategies to provide an upside in appreciation and yield. Mr. Wan discussed the fear factor in the market. High yield was an asset class in which the spreads widened significantly. There was about a 6% difference in income, in terms of the high yield versus the fixed income benchmark. If they bought a total high -yield index, the yield would be about 10 %. Mr. Wan was looking for opportunities in the yield because everything was undersold. There was one bond product that that could be reviewed for additional interest, but he did not know if Russell Investments had similar products. Mr. Harris responded they maintained the allocation in the current bond fund, and high yields comprised about 6.3% of the fund. Emerging market debt was slightly over 3 %. There was about 10% exposure in the extended sectors of the bond market. The Barclay's Aggregate Key benchmark did not have exposure to high- yield, emerging market debt, hence the term extended sectors. If one was invested in a bond index fund, there would be no exposure to it. Recognizing this, in 2009 and 2010 when those segments did well, the fund would do well versus the benchmark. Russell Investments offered these products because clients wanted more exposure to these types of 4 Meeting Minutes Police Officers' Pension Fund Boynton Beach, Florida November 8, 2011 opportunities. The Global Opportunistic Credit Fund, which was a mutual fund version, was launched a year ago. It cost 103 basis points and was invested in high - yield, emerging - market debt, both in the U.S. and internationally. It was expensive and had a higher degree of volatility. Mr. Wan acknowledged the plan had about 15% exposure in non - investment grade funds. Mr. Harris noted they were looking to expand on the institutional segment, because Russell Investments recognized it could be a tactical move. The Board had discussed this about six to nine months ago, and he pointed out the fund had no exposure to Greek bonds and was fairly sure there was no exposure to Italian bonds. 2. Burgess Chambers & Associates (BCA) - Frank Wan, Head of Research 1. Fund Performance Review Frank Wan, Head of Research, reviewed the total fund had a rough quarter, but there had been a rebound since the quarter end. Most trading activity occurred through high frequency traders, Exchange- traded Fund traders, and non - institutional traders. The market was moved by individuals who indiscriminately sold everything. This created difficulty for active managers, such as Russell Investments, who did not know what to purchase because of the index. Normally, the top five names on the index were bought and sold the most. Managers who did not own the top five names, because they found better performing stocks, had no way to make incremental gains during periods of volatility. For the past three and five years, the fund earned an average of 3.3% and 0.3% respectively. Factored in with smoothing, it had a significant impact on the City's contribution and the health of the fund. This fund, over the last three years, was very healthy and would have averaged over 10% for the last two years; however, the market changed. Mr. Wan reviewed the Compliance Checklist and pointed out small cap struggled during the past five years, but came back in the last six to nine months. It was presently at about 40 %. Real estate helped significantly and people bought gold. He anticipated gold prices would not crash, but silver would, as there was movement towards to quality products. Similar to stocks, individuals would sell small caps and purchase large caps, and like bonds, they would move out of corporate bonds and purchase treasuries. Mr. Wan was glad the Trustees purchased the commodity fund. There was an inverse relationship between interest rates and commodity prices. Over the past three months, inflation was between 1% and 1.5 %. It was now up to 3.5 %. Inflation rose, as did consumer staples. The Federal Reserve would keep interest rates low and this 5 Meeting Minutes Police Officers' Pension Fund Boynton Beach, Florida November 8, 2011 intervention assisted commodity price increases. The fundamentals were in place, and there was a good tailwind for commodities. Mr. Wan thought the fund could be further diversified. Transparency was a problem, but he anticipated there would be more transparency moving forward. The fund was up 7.5 %. Retail numbers may increase due to the holidays, and moving forward, the retail sector would be propelled by employment. Two months of upward employment revisions meant more people had jobs. VII. New Business, Item F. - Supplemental Actuarial Valuation Report (Heard out of Order) Chair Chapman noted the report from the plan actuary report laid out three scenarios, but he recalled the Board had adopted the change in actuarial assumption rates and the RP2000 mortality tables at the last meeting. Attorney Jensen clarified the Board adopted the actuarial assumptions with the exclusion of the termination rates and had directed the actuary to look at them an additional nine years earlier. The change would be effective October 1, 2011. The mortality tables would be phased in over five years. Chair Chapman noted the revisions were combined with other elements and suggested the members defer action on the report, as there were other factors affecting the termination rates that should be reviewed. Some level of explanation was needed. Ms. LaDue agreed to contact Mr. Palmquist, the plan actuary, and set up a meeting in mid - January. 3 Financial Statements — For your review — June 2011 updated Real Estate Values, and July, August & September 2011. V. Correspondence: A. FPPTA $600 annual fee for the Board's membership and $30 fee for CPPTA updating Chair Chapman advised he paid the Florida Public Pension Trustees Association (FPPTA) fee for the Board so the members should not send in separate checks. When the members receive their invoices for the $30 fee for the Certified Public Pension Trustees Association (CPPTA) certification, they should make their payments via credit card and send Ms. LaDue confirmation via email for reimbursement. The payment was due by March 1st, and the members needed to submit their membership paperwork so they would be current. VI. Old Business: N/A VI1. New Business: 6 Meeting Minutes Police Officers' Pension Fund Boynton Beach, Florida November 8, 2011 A. invoices for review and approval: 1. Russell Investment Group — Quarter End 9 -30 -11 - $96,095.00 2. Russell Payment Services — Quarter end 9 -30 -11 - $684.62 3. Burgess Chambers & Assoc — Third Quarter 2011 - $5,000 4. Gabriel Roeder Smith & Co. — Service 9 -30 -11 - $4,689 5. Perry & Jensen, LLC — Service August/October 2011 - $2,963.64 6. Exact Software — Annual Maintenance Dec 2011/2012 - $437.50 7. Micro Focus — annual Support/Maintenance Jan 2012/2013 - $123.70 Motion Mr. Athol moved to pay the bills. Mr. Llopis seconded the motion that unanimously passed. B. Service Refund request — Lump sum deposit by Officer Terrence Paramore Chair Chapman reviewed the request and noted there were medical expenses involved. Attorney Jensen recommended a release indicating he was giving up whatever time he paid for, and an acknowledgement of rescinding of the contract to purchase time be submitted; however, a disclaimer indicating this was all done had already been notarized. Motion Mr. Llopis moved to approve the lump sum deposit to be returned to Officer Paramore due to medical circumstances. Mr. Athol seconded the motion. Brief discussion followed Officer Paramore could reenter the plan, but would have to start all over. Vote The motion unanimously passed. C. Gabriel, Roeder, Smith & Co. — Update Summary Plan Description — Board Authorization & estimated fee $1,500/$1,800 This fee was an authorization to pay the actuary and update the Summary Plan Description. The update was required. 7 Meeting Minutes Police Officers' Pension Fund Boynton Beach, Florida November 8, 2011 Motion Mr. Athol moved to approve. Ms. Llopis seconded the motion that unanimously passed, D. State's New Actuarial Disclosure Requirement — Additional cost $750 Attorney Jensen reviewed a letter from Mr. Palmquist dated September 22nd, indicating due to the requirements of Senate Bill 1128, he wanted to charge another $750. There was consensus to not pay the additional cost. E. Attorney Report — Bonni Jensen 1 Russell Authorized Signatures Update 9 -28 -11 Attorney Jensen reviewed the change to the Russell authorized signatures. The amendment was any assets going towards deposits required only one signature. Any requests from the Trustees to the bank account still required two signatures. 2, Form 1 Reporting- Disclosure of "Intangible Personal Property" and Amendment to Form 1 — Form IX. Attorney Jensen explained the State Commission on Ethics had issued an opinion regarding how to report intangible property. A memo detailing the provisions, drafted by Attorney Jensen, was reviewed. The memo adopted the definition of intangible personal property and the reporting of six different types of intangible personal property, These were: > Assets held in Individual Retirement Accounts (IRAs); > Assets held in a 401(k); > Funds held in the FRS Investment Plan; > Assets held in the Florida Pre -paid College Plan; > Assets held in a 457 Plan /Deferred Compensation Plan; and > Assets held in the Florida Deferred Retirement Option Program (DROP). The memo outlined the same analysis would apply to a local DROP plan. The memo was comprehensive detailing disclosures had to be made at the reporting level. Lengthy discussion followed and the members expressed they did not have a clear understanding of what they were required to report. Chair Chapman read from the handout. Attorney Jensen would review the Trustees' forms and agreed over reporting was better than under reporting. She stated the form was due annually by July 1st. The update could be filed whenever. Attorney Jensen commented the State requirements for gift reporting were different than the County requirements. The Commission issued a proposed letter which made it 8 Meeting Minutes Police Officers' Pension Fund Boynton Beach, Florida November 8, 2011 more confusing, including that it was contrary to their own instructions on their own form. When this was pointed out, they retracted their decision. It was hoped a new decision indicating State reporters had to follow the State rules only. Attorney Jensen was pushing for this to be adopted. The State requirements had a provision that indicated individuals do not have to report outside employment, salary, benefits, and any gifts received in the course of the business, as It makes it very difficult for private sector individuals serving on pension boards. If the members received a reportable gift over $100, the members should file the quarterly report with the County and the State. It was the members' obligation, and they would not have to meet the November 1 deadline. It was noted the City Clerk's office sends the State form each quarter. If no gift was received, the form did not have to be submitted. As a general rule, the members were urged not to accept anything. On a different matter, the quarterly meeting schedule was reviewed. The February 7th date was changed to February 14, 2011. The February 7th date also conflicted with the FPPTA meeting. With the change to February 14, 2011, all the dates were convenient for the members. Training and the National Association of Police Officers conference was discussed. This conference, along with the National Conference of Public Employees Retirement System, Florida Public Pension Trustees Association, and Frank Russell conferences had been previously discussed and approved by the Board. The OPAL conferences were also approved for the members to attend. F. Supplemental Actuarial Valuation Report This item was addressed earlier in the meeting. VIII. Pension Administrator's report 1. Russell Authorized Signatures update 9 -28 -11 This item was addressed earlier in the meeting. 2. December 2011 Supp Distribution — Board review and approval Chair Chapman reviewed a printout of the addition& funds received in December via the 1% supplemental match on the 185 monies. Last year, it was a substantial amount of money. Police officers do not receive a cost -of- living increase, and this distribution helped to offset increases in cost of living and medical costs. 9 Meeting Minutes Police Officers' Pension Fund Boynton Beach, Florida November 8, 2011 Motion Mr. Athol moved to approve the distribution. Mr. Caudell seconded the motion that unanimously passed. 3. Benefits as of 11 -01 -11 Attorney Jensen advised HB 365 had two ongoing themes. One change followed up on the Pension Task Force, although the Task Force on the disability presumption was not completed. Chair Chapman noted he received a specific request to provide information regarding any disability incidents they had, based on Florida law. He noted there was one incident that fell within the time frame. Attorney Jensen explained the Task Force was proposing individuals with less than five years of service, or were aged 37 or older, would not be entitled to the disability presumption. It was an age discrimination issue. They also suggested adding risk factors such as: blood cholesterol, body mass index, history of tobacco and alcohol use, and other medical conditions that may cause one to have heart/lung issues. Attorney Jensen explained those issues were anticipated as indicated by the task force. These conditions were not allowed to be presumed to apply, and discussion followed it circumvented the Heart/Lung Bill. The Task Force also proposed the Board prepare a budget, and if an amendment was needed, it would have to be submitted to the municipality before it was amended. The Board was not opposed to his idea. The next several proposed changes pertained to the 185 and 175 monies. It would move these monies from the State level down to the municipality, allowing them to continue to receive and use it, no matter what was done with compliance with Chapter 185. This action would override the 1999 Statute, and the benefits they used and froze in approximately 1997, were crossed off. Funds that were received, regardless of the frozen amount, would continue to be used as were currently used. The difference was if they terminated the pension plan, they did not want to be in compliance, or if they offered a two- tiered plan, it opened the door to change how the monies were used in the future. It did not change how it was currently used. Attorney Jensen noted there was a provision in the proposal that if the municipality opted out of participating in the 185, that the tax was repealed within the municipal limits. Additionally, how the additional premium tax revenues were used was based on collective bargaining. If the Union went to impasse, the benefit was immediately dropped to the minimum state statutory requirement, and it would not go back up again until collective bargaining was agreed on. An inquiry was made if the provision would apply with an evergreen clause and it was noted, the Law of Status Quo applied. Chair Chapman noted the 185 monies currently used in the Boynton program were specifically negotiated with the City, who agreed to 10 Meeting Minutes Police Officers' Pension Fund Boynton Beach, Florida November 8, 2011 fund the benefits until such time that 185 could pay them, and the City would continue to fund them if the benefit did not. Regardless of the assets coming in via the tax premiums or the City, the benefits in place for distribution were collectively bargained. Attorney Jensen stated the proposal was a direct challenge to 60 years of pension law. IX. Comments None. X. Adjournment There being no further business to discuss, Mr. Athol moved to adjourn. Mr. Llopis seconded the motion that unanimously passed. The meeting was adjourned at 11:49 a.m. (.31 ° -/JW Catherine Cher y Recording Secretary 111511 11 Meeting Minutes /96 Police Officers' Pension Fund Boynton Beach, Florida November 8, 2011 Motion Mr. Athol moved to approve the distribution. Mr. Caudell seconded the motion that unanimously passed. 3. Benefits as of 11 -01 -11 Attorney Jensen advised HB 365 had two ongoing themes. One change followed up on the Pension Task Force on Disability Presumptions, although the Task Force work efa the was not completed. Chair Chapman noted he received a specific request to provide information regarding any disability incidents they had, based on Florida law. He noted there was one incident that fell within the time frame. Attorney Jensen explained the Task Force was proposing individuals with less than five years of service, or were aged 37 or older, would not be entitled to the disability presumption. It was an age discrimination issue. They also suggested adding risk factors such as: blood cholesterol, body mass index, history of tobacco and alcohol use, and other medical conditions that may cause one to have heart/lung issues. Attorney Jensen explained those issues were anticipated as indicated by the task force. These conditions were not allowed to be presumed to apply, and discussion followed it circumvented the Heart/Lung Bill. The Tack Forco proposed bill also proposed the Board prepare a budget, and if an amendment was needed, it would have to be submitted to the municipality before it was amended. The Board was not opposed to his idea. The next several proposed changes pertained to the 185 and 175 monies. It would move the control of these monies from the State level down to the municipality, allowing them to continue to receive and use it, no matter what was done with compliance with Chapter 185. This action would override the 1999 Statute, and the benefits they used and froze in approximately 1997, were crossed off. Funds that were received, regardless of the frozen amount, would continue to be used as were currently used. The difference was if they terminated the pension plan, they did not want to be in compliance, or if they offered a two- tiered plan, it opened the door to change how the monies were used in the future. It did not change how it was currently used. Attorney Jensen noted there was a provision in the proposal that if the municipality opted out of participating in the 185, that the tax was repealed within the municipal limits. Additionally, how the additional premium tax revenues were used was based on collective bargaining. If the Union went to impasse, the benefit was immediately dropped to the minimum state statutory requirement, and it would not go back up again until collective bargaining was agreed on. An inquiry was made if the provision would apply with an evergreen clause and it was noted, the Law of Status Quo applied. Chair Chapman noted the 185 monies currently 10 G I'S Gabriel Roeder Smith & Consultants & Actuaries CITY OF BOYNTON BEACH MUNICIPAL POLICE OFFICERS' RETIREMENT FUND NINE YEAR EXPERIENCE STUDY COVERING THE PERIOD OCTOBER 1, 2001— SEPTEMBER 30, 2010 February 15, 2011 Board of Trustees City of Boynton Beach Municipal Police Officers' Retirement Fund Boynton Beach, Flonda Dear Board Members. We are pleased to present herein our nine year Expenence Study Report. The period covered by this study is October 1, 2001 through September 30, 2010 The study was performed on the basis of participant data and financial information supplied by the plan sponsor in connection with the valuations performed during the years studied, and has been prepared in accordance with generally accepted actuarial methods and procedures This actuanal valuation and/or cost determination was prepared and completed by me or under my direct supervision, and I acknowledge responsibility for the results. To the best of my knowledge, the results are complete and accurate. In my opinion, the techniques and assumptions used are reasonable, meet the requirements and intent of Part VII, Chapter 112, Florida Statutes, and are based on generally accepted actuarial principles and practices. There is no benefit or expense to be provided by the plan and/or paid from the plan's assets for which liabilities or current costs have not been established or otherwise taken into account in the valuation. All known events or trends which may require a material increase in plan costs or required contnbution rates have been taken into account in the valuation. Gabriel, Roeder, Smith & Company will be pleased to answer any questions pertaining to the study and to meet with you to review the Report. Respectfully submitted, GABRIEL, ROEDER, SMITH & COMPANY � �n B j i _ 'SA B °Z-) --C J.�Stephe Palmquist, ASA, AAA, FCA Duane Howison, FSA Enrolled Actuary No. 08 -1560 Enrolled Actuary No. 08 -6169 TABLE OF CONTENTS I. Introduction 1 H. Summary of Recommendations 3 III. Study Categories A. Investment Rate of Return 5 B. Rates of Termination 7 C. Rates of Retirement 9 D. Rates of Salary Increase .10 E. Rates of Mortality 11 IV. Appendices A. Asset Allocation Analysis SECTION 1 INTRODUCTION 1 INTRODUCTION Background This Report presents the results of an actuarial experience study during the period of October 1, 2001 through September 30, 2010. The demographic experience of the Plan, including termination rates, retirement rates and deaths, has been studied. In addition, the economic experience, including investment return and annual pay increases, has been analyzed. Purpose of the Experience Study The goal of this Report is to review the recent experience of the Plan in order to serve as a guide in setting actuarial assumptions concerning the future. The assumptions determined by the Board of Trustees, based on this Report and their long -term perspectives, will be used to determine future plan liabilities and costs and to evaluate proposed changes in benefits, eligibility conditions, and other aspects of the Plan's operation. Methodology In this Report we compute the probability of terminations based on age or service for active members. To this end, we proceed as follows: • We count the number of members leaving for each cause during the term of the study. This is the number of decrements. • We count the number of members who could have left for each cause during the study. This is the exposure. • When there have been enough decrements, we divide the number of decrements by the exposure for an age or service group to determine the probability of leaving due to the cause in question. a When there are insufficient decrements to compute reliable rates, we compare the total number of actual decrements with the total number of decrements predicted b} al, actuanal table, and adopt the table that predicts decrements, in total, reasonably close to those observed • Actual salary increases for each year in the study period were obtained and compared to our salary increase assumption Organization of Report The cost to the Plan of recommended changes is found in Section lI of this Report This introductory section broadly describes the scope of the experience study. Section III contains a separate sub - section for each assumption analyzed. Each such sub - section contains data tables showing our findings, and other explanatory information, including our recommendation based on the specific data and assumption analyzed SECTION II SUMMARY OF RECOMMENDATIONS CITY OF BOYNTON BEACH MUNICIPAL POLICE OFFICERS' RETIREMENT FUND NINE YEAR EXPERIENCE STUDY SUMMARY OF RECOMMENDATIONS The nine year penod (October 1, 2001 through September 30, 2010) covered by this experience study provided sufficient data to form a basis for recommending changes in the economic and demographic assumptions used in the actuarial valuation of the Retirement Plan. The recommendations resulting from this experience study are summarized below: • Lower the assumed rate of return net of investment related expenses from 8.0% to either 7.75% or 7.50% • Adopt new rates of assumed employment termination based on age and service • Change retirement rate for first year of eligibility to 40% from 80 %. • Change the mortality table from the 1983 Group Annuity Mortality table to the RP -2000 Generational Mortality table 4 The estimated cost or savings associated with each of these recommendations is summarized below. For comparison purposes, the required City contribution for the fiscal year ending September 30, 2012 is $3,806,751 or 30.16% of covered payroll. It should be noted that all changes do not have to be made in one year. Such changes can be stretched over four or five years if the Board wishes. Increase /(Decrease) Actuarial in Contribution Assumption Current Proposed as a Percent of Payroll * 8.0% net of 7.75% net of Investment Return 1.71 investment expenses investment expenses Investment Return 8.0 % net of 7.5 % net of 3.47% investment expenses investment expenses Retirement Rates Retirement rate for Reduce retirement rate -1.28% 1st year is 80% for 1st year to 40% All rates based on Revised rates based on Termination Rates 3.48% age age and service 1983 Group Annuity RP -2000 Generational ° Mortality Mortality Mortality 2.62 /o Combined Effect Using 7.75% Return Assumption 6.71% Combined Effect Using 7.50% Return Assumption 8.83% For detailed discussions of each of these assumptions, see the complete analysis in the balance of this Report. * These calculations reflect the change in the unfunded accrued liability amortized over a 30 year period SECTION III STUDY CATEGORIES 5 INVESTMENT RATE OF RETURN The investment rate of return of the fund has been calculated on the following basis: ACTUARIAL VALUE BASIS: Investment earnings recognized in the Actuarial Value of Assets divided by the weighted average of the Actuarial Value of Assets during the year. MARKET VALUE BASIS: Interest, dividends, realized gains (losses) and unrealized appreciation (depreciation) divided by the weighted average of the market value of the fund during the year. Investment Rate of Return Year Ended Basis 1 1 Basis 2 12/31/82 16.4 % 9.3 % 12/31/83 12.3 9.0 12/31/84 11.9 11.5 12/31/85 23.0 16.8 12/31/86 19.0 17.6 12/31/87 0.3 4.4 12/31/88 10.4 9.0 12/31/89 20.6 15.4 9/30/90 (9 mos.) (1.9) 1.7 9/30/91 14.4 11.6 9/30/92 10.0 9.7 9/30/93 12.6 11.9 9/30/94 1.1 3.5 9/30/95 19.1 12.9 9/30/96 12.8 10.8 9/30/97 20.2 13.1 9/30/98 10.1 12.9 9/30/99 10.5 13.5 9/30/00 9.8 12.1 9/30/01 (9.1) 7.5 9/30/02 (9.2) (4.7) 9/30/03 16.1 2.8 9/30/04 8.3 2.6 9/30/05 10.6 3.0 9/30/06 6.9 5.7 9/30/07 13.1 9.9 9/30/08 (15.1) 4.2 9/30/09 (0.8) 2.8 9/30/10 10.2 3.0 Average Compounded Rate of Return for Number of Years Shown 8.8 % 8.3 % Average Compounded Rate of Return for Last 5 Years 2.3 °A) 5.1 % It must be recognized that the investment return assumption is of a long -term nature Shorn -ter � periods should not overly influence its level The current assumed rate is 8 0% net of investment relate(' fees. The results of our asset allocation analysis are shown in Appendix A To summarize these results, there would be more than an 80% chance that the current net rate of 8.0% will not be realized over a 10 year penod of time based on the current asset allocation If the net investment return assumption to lowered to 7.0% there would be a 60% chance of failing to meet the assumed return over a 30 year period If investment returns fall short of the assumption for an extended number of years, losses wi i I tend to push up the recommended contribution One source of loss which must be considered is the historically low rate of return currently available on fixed income investments. Based on this, it may be more realistic to lower the assumed rate for purposes of the actuarial valuation. A lower rate will result in a higher probability of meeting the assumption RECOMMENDATION We recommend a decrease in the annual investment return assumption from 8 00% to either 7.75% or 7.50 %. 7 RATES OF TERMINATION The actual number of members terminating employment for reasons other than retirement, disability, or death was less than the total number expected. However, termination behavior frequently differs depending on longevity. For instance, there was a significant drop in the actual rates of termination for those who were close to becoming vested. This can be seen from the table on the following page. Termination of Employment for Reasons Other Than Retirement, Disability or Death for Nine Years Ending October 1, 2010 Actual Expected Age Number (A) Number (E)* A / E 15 - 19 0 0 0.00 20 - 24 2 10 0.20 25 - 29 21 34 0.62 30 - 34 21 37 0.57 35 - 39 12 9 1.33 40 - 44 5 0 0.00 45 - 49 2 0 0.00 63 90 0.70 * Based on present assumption. RECOMMENDATION We are recommending new decrement tables for terminations from employment. The new termination rates will be dependent on the amount of service and age of each participant. The proposed rates of termination are shown on the next page: RECOMMENDED TERMINATION RATES These rates are based on service for the first five years of employment, thereafter based on age Expected Number of Actual Rates Terminations Years of for Last Recommended Based on Service 9 Years Rates Recommended Rates 0 -1 1 156% 15.0% ?t` 1 -2 10.9 100 , 2 -3 6.8 70 3 -4 45 50 4 -5 41 40 Ages for Those with at Least 5 Years of Service 25 -29 0.0 4.0 ' 30 -34 34 30 E 35 -39 20 20 4 40 - 44 2 1 1.0 E , 45 - 49 0.0 0.0 0 Expected Number of Terminations SQ Actual Number of Terminations 6 Actual / Expected 1 07 9 SERVICE RETIREMENT EXPERIENCE For each year in our nine year study, we determined which participants were eligible to retire based on the plan provisions, and compared that number to the number of participants who actually retired. The Plan provisions are: Normal Retirement (NRD): Age 55 and completion of 10 years of service, or age 50 and completion of 15 years of service, or 20 years of service regardless of age. Early Retirement (ERD): Age 50 and completion of 10 years of service. Normal Retirement The table below shows actual experience for normal retirements as compared to the assumption, along with proposed rates for the future. Actual Number of Years Present Experience Recommended After NRD Assumption 2001- 2010 Rates 0 - 1 80 % 33 % 40 % 1 - 2 10 21 10 2 - 3 10 25 10 3 - 4 10 0 10 4 - 5 10 0 10 5 - 6 10 67 10 6 - 7 10 0 10 7 + 100 0 100 Number of Normal Retirements 38 expected 20 actual 20 expected Actual / Expected 0.53 1.00 1.00 RATES OF SALARY INCREASI Actual salary increases varied from those expected during the study penod the annual salat . increase has been assumed to vary based on age between 6,5% and 5.0% for all participants, regardless u service, from all sources (inflation, ment, promotion, productivity, etc) In fact, salary increases due r, merit, promotion, and productivity have tended to increase more rapidly as a percent of pay during the early years of employment when the dollar levels are lower As a result, a table of salary increases tied le length of service would better predict future experience. Salary Increase Experience for Nine Years Ending October 1, 2010 Proposed Total Years of Actual Average Real Proposed Increase Including Service Increase CPI Increase Real Increase Expected Inflation of 3% 1 15.1 % 2.2 % 12.9 % N/A % N/A % 2 7.5 2.2 5,3 N/A N/A 3 7.8 2.2 5.6 N/A N/A 4 8.6 2.2 6.4 N/A N/A 5 9.7 2.2 7.5 N/A NrA 6 8.8 2.2 6 6 N/A N/A 7 11.8 2.2 9.6 N/A N/A 8 7.2 2.2 5 0 N/A N/A 9 5 7 2.2 1 5 N/A N/A 10 7 1 2.2 4 9 N/A N/A 15 7.8 2.2 5 6 N/A N/A 20 + 7.1 2 2 4 9 N/A N/A All Years 8.3 2.2 6.1 N/A N/A On average, the experience for salary increases has been greater than assumed. However. a memorandum of understanding ratified September 27, 2010 negated pay raises for 2010. The result of the next collective bargaining agreement would be a better basis for determining future pay increases than the prior plan experience shown above. Therefore, we recommend waiting to revise this assumption until after the next collective bargaining agreement 11 RATES OF MORTALITY AMONG ACTIVE AND INACTIVE MEMBERS The number of deaths during the study period was not large enough to be statistically significant for purposes of establishing a mortality table. Unless there is solid evidence to the contrary, a generally accepted mortality table should be used. The mortality table currently being used for actuarial valuation purposes is the 1983 Group Annuity Mortality Table. We recommend use of a more current mortality table — the RP -2000 Generational Mortality Table. This mortality table is more up to date and also projects how mortality rates will decrease in future years. The RP -2000 generational mortality table will reflect that someone who is age 55 in 10 years will be expected to live longer than someone who is age 55 today. The overall trend is that people are living longer, and this will cause an increase in cost. RECOMMENDATION We recommend adopting the RP -2000 Generational Mortality Table, set forward five years for disabled lives. Old Mortality Table and New Mortality Table Old Mortality Table - 1983 Group Annuity Mortality Table ,-. --, Sample 1 Life Exrctancy Ages 1 Male - - 50 29 18 34.92 -4 i 55 24.82 - 1 - 30.24 [---- i i 60 20.64 25.67 1--- 65 16.69 - 1 - 21.29 --F -, 70 13.18 17.13 New Mortality Table - RP-2000 Generational Mortality Table Life Expectancy Sample 2010 2015 2020 2025 Ages Male Female Male Female Male Female Male Female 1 50 33.90 35.42 34.35 35.68 34.79 35.93 35.22 ' 36 17 _ 55 28.79 30.47 29.23 30.71 29.66 30.94 30.07 1 31.18 -±- 1 60 23.88 25.70 24.29 25.93 24.70 26.16 25.10 26.39 65 19.30 21.22 19.68 21.44 20.05 21.66 20A2 ! 21 88 1 70 16.13 17.73 15.48 I 17.32 i ---r- 15 81 L 17.53 ' 16.13 17.73 ___.1 SECTION IV APPENDICES CD 00 sus S N 00000 l- V") 0, at 0 0 00go r-CN on O � h N V5 Ocri O oNi E- � a� °W b � a"S t000n� 3 E Q .� C — p N N r.• Gd c G a fx w 000000 U p„ vovnoInunkn cd iYl 8° C xv1v1rnSoo y NN c� 0 0 avOoOtn�NN O o r- r F1 u r O �� V'i 0000 o0 O�cV o 4 s >,7L0:4740 cnwo 0 a,aa3 4 b y •- .H ;cs o o U eC u cn cn Alt Pcs a a. a a v (71 l V) N V') Cl? .a Q, Ctt a� C■ act r.a Lr' O N O ) U N00 ON Cr) } L]r Q■ ■O 4 M O x i i / Tf 0 0 A • ( ) Sr Nn 0 = w.il ae) cn ■ V 2 .r o cn w Z a> U a et G m 6 C 0 0 w C 8 - r ti N ti bk E- 3 0 11 W o bI o a o6 w I } o .0 0 a. c_ U r tti at .G H G4 c4 CO A d 0 0 ea Go 0 ev z cn d GRS Gabriel Roeder Smith & Company One East Broward Blvd 954.527.1616 phone Consultants & Actuaries Suite 505 954 525.0083 fax Ft. Lauderdale, FL 33301-1827 www gabrielroeder com November 1, 2011 Ms. Barbara La Due Pension Administrator Renaissance Executive Suites 1500 Gateway Blvd. Suite 220 Boynton Beach, Florida 33426 Re: City of Boynton Beach Municipal Police Officers' Retirement Fund Dear Barbara: As requested by the Board, we are providing a Supplemental Actuarial Valuation Report illustrating the impact of changing the assumed employment termination rates to reflect actual plan experience prior to 2001. Our Experience Study shows employment termination rates for the nine years ending in 2010. The Board asked us to add experience for the nine years before 2001, but we only have retrievable records back to 1997. The results are based on census and asset data as of October 1, 2010 and have been shown in combination with other assumption changes outlined in our Experience Study Report dated February 15, 2011. We would ask the Board to review this information so a decision can be made on whether to adopt the changes. The following scenarios were developed to illustrate the effect of the change in termination rates: ➢ Scenario 1 - Same assumption set as the October 1, 2010 Valuation. D. Scenario 2 - Change the assumed rate of return from 8.0% to 7.75 %, reduce first year retirement rate assumption to 40 %, phase in the RP -2000 Combined Healthy Participant Mortality Table with full generational mortality over a period of five years. ➢ Scenario 3 - Same as Scenario 2 above, except use 2001 -2010 employment termination rates. ➢ Scenario 4 - Same as Scenario 2 above, except use 1997 -2010 employment termination rates. In an actuarial valuation it is necessary to evaluate key economic and demographic assumptions occasionally to keep cost projections as accurate as possible. These assumptions include the investment rate of return the assets will achieve in the future and the life expectancy of the members of the Plan. Adopting the proposed assumption changes would provide results more representative of the Plan's true cost. This report is intended to describe the financial effect of the proposed plan assumption changes. No statement in this report is intended to be interpreted as a recommendation in favor of the changes, or in opposition to them. The calculations are based upon assumptions regarding future events, which may or may not materialize. Future actuarial measurements may differ significantly from the current measurements presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the additional cost or contribution requirements based on the plan's funded status); and changes in plan provisions or applicable law. If you have reason to believe that the assumptions that were used Ms. Barbara La Due November 1, 2011 Page 2 of 2 are unreasonable, that the plan provisions are incorrectly described, or that conditions have changed since the calculations were made, you should contact the author of the report prior to relying on information in the report. The calculations in this report are based upon information furnished by the Plan Administrator for the October 1, 2010 Actuarial Valuation concerning Plan benefits, financial transactions, plan provisions and active members, terminated members, retirees and beneficiaries. We reviewed this information for internal and year -to -year consistency, but did not otherwise audit the data. We are not responsible for the accuracy or completeness of the information provided. This report was prepared at the request of the Board and is intended for use by the Retirement Plan and those designated or approved by the Board. This report may be provided to parties other than the Retirement Plan only in its entirety and only with permission of the Board. The undersigned are members of the American Academy of Actuaries and meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinions contained herein. The undersigned actuaries are independent of the plan sponsor. This report has been prepared by actuaries who have substantial experience valuing public employee retirement systems. To the best of our knowledge the information contained in this report is accurate and fairly presents the actuarial position of the Plan as of the valuation date. All calculations have been made in conformity with generally accepted actuarial principles and practices, and with the Actuarial Standards of Practice issued by the Actuarial Standards Board and with applicable statutes. We welcome your questions and comments. Sincerely yours, y° a\-ri±'' 7A ° ' ) 11tfLij J. Stephen Palmquist, ASA Peter N. Strong, ASA Senior Consultant and Actuary Consultant and Actuary JSP /rb Enclosures Gabriel Roeder Smith & Company 1 SUPPLEMENTAL ACTUARIAL VALUATION REPORT Plan City of Boynton Beach Municipal Police Officers' Retirement Fund Valuation Date October 1, 2010 Date of Report November 1, 2011 Report Requested by Pension Board Prepared by J. Stephen Palmquist Group Valued All active and inactive Police Officers Plan Assumptions and Methods Being Considered for Change ➢ Lower the assumed rate of return from 8.0% to 7.75 %, reduce first year retirement rate assumption to 40 %, phase in the RP -2000 Combined Healthy Participant Mortality Table with full generational mortality over a period of five years (Scenario 2). ➢ Same as Scenario 2, except use 2001 -2010 termination rates. ➢ Same as Scenario 2, except use 1997 -2010 termination rates. Plan Provisions Being Considered for Change None Participants Affected None Actuarial Assumptions and Methods Same as October 1, 2010 Actuarial Valuation Report with exceptions as noted above. Some of the key assumptions /methods are: Investment Return — 8.0% Salary increase — 5.0% to 6.5% depending on age Cost Method — Entry Age Normal Amortization Period for Any Change in Actuarial Accrued Liability 30 years Summary of Data Used in Report See attached page. 2 Actuarial Impact of Proposal(s) See attached page(s). Special Risks Involved With the Proposal That the Plan Has Not Been Exposed to Previously None Other Cost Considerations None Possible Conflicts With IRS Qualification Rules None 3 ANNUAL REQUIRED CONTRIBUTION A. Valuation Date October 1, 2010 October 1, 2010 October 1, 2010 October 1, 2010 Valuation 7 75% interest 7 75% interest 7 75% interest Ret rate change Ret rate change Ret rate change 80/20 blend 83 GAM 80/20 blend 83 GAM 80/20 blend 83 GAM and RP -2000 mortality and RP -2000 mortakty and RP -2000 mortality 2001 -2010 term rates 1997 -2010 term rates B. ARC to Be Paid During Fiscal Year Ending 9/30/2012 9/30/2012 9/30/2012 9/30/2012 C. Assumed Date of Employer Contrib. 10/1/2011 10/1/2011 10/1/2011 10/1/2011 D. Annual Payment to Amortize Unfunded Actuarial Liability $ 2,054,091 $ 2,101,979 $ 2,014,000 $ 2,010,638 E. Employer Normal Cost 1,895,893 1,973,063 2,440,886 2,313,221 F. ARC if Paid on the Valuation Date: D +E 3,949,984 4,075,042 4,454,886 4,323,859 G. ARC Adjusted for Frequency of Payments 3,949,984 4,075,042 4,454,886 4,323,859 H. ARC as % of Covered Payroll 32.55 % 33.58 % 36.71 % 35.63 % I. Assumed Rate of Increase in Covered Payroll to Contribution Year N/A % N/A % N/A % N/A % J. Covered Payroll for Contribution Year 12,592,795 * 12,592,795 * 12,592,795 * 12,592,795 * K. ARC for Contribution Year: H x J 4,098,955 4,228,661 4,622,815 4,486,813 L. Estimate of State Revenue in Contribution Year 465,087 465,087 465,087 465,087 M. Required Employer Contribution (REC) in Contribution Year 3,633,868 3,763,574 4,157,728 4,021,726 N. REC as % of Covered Payroll in Contribution Year 28.86 % 29.89 % 33.02 % 31.94 % O. Change in ARC from Valuation 1. Dollar Amount N/A 129,706 523,860 387,858 2. % of Pay N/A % 1.03 % 4.16 % 3.08 % * Estimated payroll for the year per the City's Finance Department. 4 ACTUARIAL VALUE OF BENEFITS AND ASSETS A. Valuation Date October 1, 2010 October 1, 2010 October 1, 2010 October 1, 2010 Valuation 7 75% interest 7 75% interest 7 75% interest Ret rate change Ret. rate change Ret rate change 80/20 blend 83 GAM 80/20 blend 83 GAM 80/20 blend 83 GAM and RP -2000 mortality and RP -2000 mortality and RP -2000 mortality 2001 -2010 term rates 1997 -2010 term rates 13. Actuarial Present Value of All Projected Benefits for 1. Active Members a. Service Retirement Benefits $ 51,530,350 $ 54,236,909 $ 60,362,309 $ 54,463,657 b. Vesting Benefits 2,628,219 2,803,759 2,873,105 5,993,102 c. Disability Benefits 2,823,092 3,804,418 4,145,241 3,830,927 d. Preretirement Death Benefits 934,789 1,204,589 1,310,872 1,203,056 e. Return of Member Contributions 98,024 98,189 46,892 53,461 f. Total 58,014,474 62,147,864 68,738,419 65,544,203 2. Inactive Members a. Service Retirees & Beneficianes 41,264,959 42,521,005 42,521,005 42,521,005 b. Disability Retirees 2,787,964 2,824,122 2,824,122 2,824,122 c. Terminated Vested Members 514,713 594,059 594,059 594,059 d. Total 44,567,636 45,939,186 45,939,186 45,939,186 3. Total for All Members 102,582,110 108,087,050 1 14,677,605 111,483,389 C. Actuarial Accrued (Past Service) Liability per GASB No. 25 81,957,204 83,754,722 82,100,252 82,037,034 D. Plan Assets (Actuarial Value) 48,129,593 48,129,593 48,129,593 48,129,593 E. Unfunded Actuarial Accrued Liability: C -D 33,827,611 35,625,129 33,970,659 33,907,441 F Actuarial Present Value of Projected Covered Payroll 94,279,971 107,986,009 124,916,269 117,664,675 G. Actuarial Present Value of Projected Member Contributions 6,599,598 7,559,021 8,744,139 8,236,527 11 Funded Ratio: D/C 58 73 % 57.46 % 58 62 % 58.67 % 5 CALCULATION OF EMPLOYER NORMAL COST A. Valuation Date October 1, 2010 October 1, 2010 October 1, 2010 October 1, 2010 Valuation 7 75% interest 7 75% interest 7 75% interest Ret rate change Ret rate change Ret rate change B. Normal Cost for 80/20 blend 83 GAM 80/20 blend 83 GAM 80/20 blend 83 GAM and RP -2000 mortality and RP -2000 mortality and RP -2000 mortality 2001 -2010 term rates 1997 -2010 term rates 1 Service Retirement Benefits $ 1,983,777 $ 2,014,467 $ 2,579,441 $ 2,282,985 2. Vesting Benefits 272,081 281,345 201,184 379,207 3. Disability Benefits 237,822 270,311 287,949 276,715 4 Preretirement Death Benefits 56,636 64,525 73,197 68,563 5. Return of Member Contributions 72,571 69,409 26,110 32,745 6. Total for Future Benefits 2,622,887 2,700,057 3,167,880 3,040,215 7. Assumed Amount for Administrative Expenses 122,423 122,423 122,423 122,423 8. Total Normal Cost 2,745,310 2,822,480 3,290,303 3,162,638 As % of Covered Payroll 22.62 % 23.26 % 27.12 % 26.06 C Expected Member Contribution 849,417 849,417 849,417 849,417 As % of Covered Payroll 7.00 % 7.00 % 7.00 % 7.00 % D. Net Employer Normal Cost: B8 -C 1,895,893 1,973,063 2,440,886 2,313,221 As % of Covered Payroll 15.62 % 16.26 % 20.12 % 19.06 % ' 6 PARTICIPANT DATA October 1, 2010 October 1, 2010 Increase Baseline After Changes (Decrease) ACTIVE MEMBERS Number 148 148 0 Covered Annual Payroll $ 12,134,525 $ 12,134,525 $ 0 Average Annual Payroll $ 81,990 $ 81,990 $ 0 Average Age 36.4 36.4 0.0 Average Past Service 8.1 8.1 0.0 Average Age at Hire 28.2 28.2 0.0 RETIREES, BENEFICIARIES & DROP Number 91 91 0 Annual Benefits $ 3,812,891 $ 3,812,891 $ 0 Average Annual Benefit $ 41,900 $ 41,900 $ 0 Average Age 56.5 56.5 0.0 DISABILITY RETIREES Number 15 15 0 Annual Benefits $ 311,885 $ 311,885 $ 0 Average Annual Benefit $ 20,792 $ 20,792 $ 0 Average Age 60.0 60.0 0.0 TERMINATED VESTED MEMBERS Number 3 3 0 Annual Benefits $ 56,783 $ 56,783 $ 0 Average Annual Benefit $ 18,928 $ 18,928 $ 0 Average Age 42.6 42.6 0.0 7 Employment Termination Rates These rates are based on service for the first five years of employment, thereafter based on age. Recommended Rates Years of Actual Rates Based on Data From Service 2001 -2010 1997 -2010 2001 -2010 1997 -2010 0 -1 15.6 % 18.2 % 15.0 % 18.0 % 1 - 2 10.9 12.5 10.0 12.0 2 - 3 6.8 9.7 7.0 9.0 3 - 4 4.5 5.7 5.0 6.0 4 - 5 4.1 5.9 4.0 5.0 Ages for Those with at Least 5 Years of Service 25 - 29 0.0 4.6 4.0 5.0 30 - 34 3.4 4.1 3.0 4.0 35 - 39 2.0 2.8 2.0 3.0 40 - 44 2.1 3.6 1.0 2.5 45 - 49 0.0 2.1 0.0 2.0 50 - 54 0.0 3.8 0.0 0.0 Actual Number of Terminations 63 119 % of Total Terminations with >5 Years of Service 17 % 23 % Expected Number of Terminations Based on Recommended Rates 59 113 % of Expected Terminations with >5 Years of Service 17 % 21 % (f) Monthly supplemental benefits. Effective October 1, 2006, any retiree, including DROP participants and beneficiaries who receives a monthly pension benefit is entitled to a monthly supplemental pension benefit. The monthly supplemental benefit is a distribution of a pool of assets funded by a 1% member contribution (maximum 20 years of contributions) and a matching 1% contribution from the 185 money. The distribution pool represents 100% of the investment earnings on this pool plus 10% of the principal. The distribution pool is divided into shares based upon a formula. The formula is a pro -rata basis determination based upon a retiree's number of years of credited service before retirement (maximum 20 years) plus the number of years that the retiree has been retired (maximum 20 years) as of September 30 of each year. Iigible retiree's years and partial retirement years as of September 30 of the current year (maximum credit of 20 years). The share value shall be determined by totaling all of the shares of eligible retirees divided into the current years' total distribution amount. An individual eligible retiree's distribution shall be equal to the number of the eligible retiree's shares multiplied by the share value. The benefit is payable annually in a lump sum as of October 1 of each year. The benefit shall cease upon the death of the eligible retiree or beneficiary, whichever is the last surviving pension recipient. Additionally, beginning October 1, 2003, there is a second distribution pool which is 100% of the 185 money received in excess of the base amount of $465,087, plus 1% of payroll. This distribution pool is divided in to shares similar to the first supplemental distribution. Retirees receive a full share; allocations for surviving spouses and surviving dependent children shall be adjusted by the percentage of the optional form of benefit selected. The second distribution is payable annually in a lump sum as of June 1 of each year, beginning June 1, 2004. Deferred Retirement Option Plan (DROP) Upon termination of employment, participants in the DROP may elect to receive the balance of the DROP account in the following way: a. Lump sum. The entire account balance will be paid upon approval of the Board of Trustees. b. Installments. The account balance will be paid out in five equal annual payments paid over five years, the first payment to he made upon approval of thf= Board of Trustees c Monthly installments The account balance will be paid out on a monthly basis until the account balance is paid out based on actuarial tables provided by the actuary d Partial lump sum withdrawals Part of the account balance will be paid upon approval of the Trustees Any form of payment selected by a police officer must comply with the minimum distribution requirements of section 401(A)(9) of the Internal Revenue Code, and is subject to the requirements of Section 18- 174(f), e g , payments must commence by age 70 5 CITY OF BOYNTON BEACH MUNICIPAL POLICE OFFICERS' RETIREMENT FUND SUMMARY PLAN DESCRIPTION Prepared November 2008 INTRODUCTION TO YOUR PLAN The City of Boynton Beach has established a defined benefit pension plan to provide eligible employees with retirement and related benefits. This Summary Plan Descnption is a brief description of that Plan and your rights, obligations and benefits under it This Summary Plan Description is not meant to interpret, extend or change the provisions of the Plan in any way The provisions of the Plan may only be determined accurately by reading the actual Plan documents. These documents include appropriate City ordinances, Chapters 112 and 185, Florida Statutes, and any rules and regulations adopted by the Board of Trustees. A copy of these documents is on file at the Office of the Pension Administrator and may be read by you, your beneficiaries or your legal representatives at any reasonable time. If you have any questions regarding the Summary Plan Descnption or the Plan documents, you should direct them, in writing, to the Plan's Administrator In the event of any conflict between this Summary Plan Description and the actual provisions of the Plan documents, the Plan documents control. This Summary Plan Descnption is solely intended as a guide to your benefits and is not intended to create a contract or promise of any specific benefit. Any examples used in this Summary Plan Description are for illustration purposes only and do not represent the actual benefit to be received by any specific person 2 GENERAL INFORMATION ABOUT YOUR PLAN There is certain general information you may need to know about the Plan. This general information is summarized below. Name of Plan City of Boynton Beach Municipal Police Officers' Retirement Fund Employer City of Boynton Beach Plan Administrator Board of Trustees of the City of Boynton Beach Municipal Police Officers' Retirement Fund 1500 Gateway Blvd. Suite 220 Boynton Beach, Florida 33426 Telephone: (561) 739 -7972 Trustee Plan Administrator Designated Agent for Service of Legal Process Bonni S. Jensen, Esquire Hanson, Perry & Jensen, P.A. 400 Executive Center Drive, Suite 207 West Palm Beach, FL 33401 -2922 Type of Administration The Plan Administrator is responsible for the overall administration of the Plan. It has discretionary authority to construe the terms of the Plan and make determinations on questions which may affect your eligibility for benefits. The Plan Administrator may also retain the services of attorneys, accountants, actuaries, investment advisors and other professionals. Plan Year Each 12 month period beginning on October 1st and ending on September 30th The Plan's fiscal records are maintained on this basis. Relevant Provisions of Local and State Laws The Plan is set forth in Section 18 of the Code of Ordinances of the City of Boynton Beach. The most recent amendment to the Plan reflected in this Summary Plan Description is Ordinance No. 08 -008 The Plan is also governed by certain provisions of Part VII, Chapter 112, Flonda Statutes (F.S.), Chapter 185 F.S., and various federal laws Relevant Provisions of Collective Bargaining Agreements Certain employees covered by the Plan are members of the Police Benevolent Association. There are separate contracts for Officers and Detectives, Sergeants, and Lieutenants. The current collective bargaining agreements between the units and the Employer cover the penod from October 1, 2007 through September 30, 2010. No sections of the agreements refer to pension matters Custodian The custodian of the Plan is responsible for the safe - keeping of secunties owned by the Pension Fund. The custodian is Russell Investment Group Tacoma, WA Investment Managers The investment manager is responsible for selecting the securities to be bought and sold by the Pension Fund, in accordance with guidelines established by the Plan Administrator The investment manager is: Russell Investment Group New York, NY Member You are a Member of the Plan if you fulfill the prescnbed eligibility requirements (see Eligibility and Credited Service section) 4 Beneficiary Your Beneficiary is each person designated by you to the Plan Administrator to receive any payments that may become payable by the Plan upon your death. You should designate a Beneficiary when you become a Member of the Plan. Prior to retirement, you may change your designation at any time upon written notification to the Plan Administrator. IT IS IMPORTANT TO KEEP YOUR BENEFICIARY INFORMATION UP TO DATE CONTRIBUTIONS TO THE PLAN Benefits of the Plan are financed by contributions that are paid into the pension fund and by investment earnings generated by investments of the pension fund. Contributions to the fund are made by You Your regular contribution rate is 7% of your Covered Salary (see later page for definition of Covered Salary). Your contributions will cease upon your retirement, death or employment termination Interest is not credited to your contributions You are also required to contnbute an additional 1% of Covered Salary until you complete 20 years of service. This additional contribution along with a matching amount from the Employer is being accumulated within the Fund Starting October 1, 2006, retirees and beneficiaries will receive monthly supplemental payments from this pool of money State of Florida Monies are paid each year by the State pursuant to Chapter 185, F.S. Said monies are used for the benefit of police officers Your Employer The City of Boynton Beach must contnbute an amount determined by the Plan's actuary to be sufficient, along with your contribution and the State contribution, to fund systematically the benefits under the Plan. The Employer's contribution will vary depending on the experience of the Plan 6 ELIGIBILITY AND CREDITED SERVICE EliQi_ii ty You are eligible to be a Member of the Plan if you are a sworn police officer for the Employer. Your employment must be full -time, as determined by the Employer. You become a Member of the Plan on the day you become a full -time police officer. Credited Service Credited Service is used to compute the amount of pension benefit when you retire, to determine whether you are eligible for certain benefits and to determine whether you are vested. Your Credited Service is equal to your total length of service with the Employer omitting periods when you were not employed by the Employer. Vacations and other paid leaves of absence are included. Unpaid leaves of absence are not included. Also not included in Credited Service is any period during which you could have but did not contribute to the Plan or any period for which you have withdrawn your own contributions. Break in Service If you terminate employment, receive a refund of contributions, and later return to work for the Employer, you will lose credit for previous service unless you repay the contributions you withdrew from the fund, with interest. Military Service and Prior Police Officer Service Should you be called to active duty from employment in order to enter the military, your period of leave may be included in your Credited Service if you return to work for the Employer within one year after your discharge. You may purchase up to five years of service as a police officer employed by a city, county, or state police department or your military service. You will receive this Credited Service once you pay the Fund the full actuarial cost of such service. You will be allowed to purchase the service via biweekly payroll deductions over a period equal to the length of time being purchased or five years, whichever is greater, or in one lump sum payment. Purchased service will count for benefit computation purposes, but not vesting Please note that no service credit may be purchased „_ you are receiving of wiD receive an other retirement benefit based on such service, excluding military service Family and Medical Leave Act Should you take a leave of absence under the Family and Medical Leave Act, your service will remain continuous even if you are not in a pay status. Use of accumulated leave time will be treated as Credited Service. A contribution will be picked up from paid leave. Use of unpaid leave, however, will not be treated as Credited Service. 8 RETIREMENT DATES Normal Retirement Date The Normal Retirement Date is the earliest date when unreduced retirement benefits may be paid to you. Your Normal Retirement Date is the first day of the month coincident with or next following the earliest of (a) completion of 20 years of Credited Service regardless of age, (b) age 55 with completion of ten years of Credited Service, or (c) age 50 with completion of 15 years of Credited Service. Early Retirement Date Your Early Retirement Date is the first day of any month coincident with or next following the date when you reach age 50 and complete ten years of Credited Service. You may then retire at any time with reduced benefits as described later. RETIREMENT BENEFITS Normal Retirement Benefit The monthly benefit that you will receive if you continue in employment until your Normal Retirement Date is called your Normal Retirement Benefit. The amount of your Normal Retirement Benefit is based on the following factors: 1 Your Covered Salary - This is the amount of your total cash remuneration including lump sum payment of unused vacation, overtime and sick pay. This definition excludes severance pay and other similar payments which are not for services rendered. 2. Your Average Monthly Salary - This is the average of your Covered Salary during the best five years during the final ten years of employment. 3. Your years of Credited Service at your Normal Retirement Date The calculation of your Normal Retirement Benefit is as follows 3 5% of your Average Monthly Salary multiplied by your years of Credited Service As an example, if your Average Monthly Salary at your Normal Retirement Date is $4,000 and your Credited Service is 20 years, then the calculation would be as follows 3 5% x $4,000 x 20 years = $2,800 which would be your Normal Retirement Benefit payable each month. The retirement benefit is paid to you for the rest of your life in accordance with the Normal Form of Benefit Payment as described later (However, see the sections on Death Benefits after Retirement and Election of Optional Forms of Benefit Payments.) Your benefits from this Plan are paid in addition to any benefits you may receive from Social Security Retirees receiving benefits under the Plan are required to complete an annual "Alive & Well" statement certifying that the retiree is alive. Failure to complete this statement could result in cessation of your pension benefits. 10 Accrued Benefit The portion of your Normal Retirement Benefit that you have earned at any point in time is your Accrued Benefit. Your Accrued Benefit is computed in the same way as the Normal Retirement Benefit, except you use your present Average Monthly Salary and Credited Service in the calculation. The Accrued Benefit is a monthly amount which starts on your Normal Retirement Date. Early Retirement Benefit If you decide to retire early, you may receive an immediate Early Retirement Benefit payable for the rest of your life. The benefit is equal to your Accrued Benefit but reduced for the number of months by which the starting date of the benefit precedes the date when you would have completed 20 years of Credited Service or, if earlier, age 55 had you continued in full -time employment. The benefit is reduced to take into account the younger age and earlier commencement of benefit payments. The following table shows how much your benefit will be reduced if payments begin before your Normal Retirement Date: Number of Percentage Years Early Reduction 1 1.5% 2 3.0 3 4.5 4 6.0 5 7.5 L o Deferred Retirement Option Plan (DROP) If you have reached your Normal Retirement Date but have less than 25 years of Credited Service, you are eligible to enter the DROP Plan Election into the DROP Plan is voluntary, but it is irrevocable once DROP payments begin. The maximum period of participation is five years, or, if earlier, until you have a total of 30 years of service. If you enter the DROP Plan, your contributions will stop, you will cease to accrue a benefit in the Plan, you will no longer be eligible for disability or preretirement death benefits, and you will never have the right to be a contributing member of the Plan again. Your Credited Service and Average Monthly Salary as of the first date of participation in the DROP Plan will be used to calculate your retirement benefit. If you enter the DROP Plan, the monthly benefit that you would have received if you had retired on your election date will be paid into a DROP account. This account less any outstanding loan balance will earn interest in one of three ways: 1. Gain or loss at the same rate earned by the Plan, or 2. Guaranteed rate of 7 %. 3 You may choose to have a percentage of your DROP account credited at the same rate earned by the Plan with the remainder credited at a guaranteed 7% rate. You may change the method on a yearly basis The selection for the following year must be made prior to January 1 and will become effective on January 1s Upon retirement, the balance in your DROP will become payable. You will have the following options of payment 1 A single lump sum payment 2 Five equal annual payments 3 Monthly installments until the balance is paid out with the monthly amount determined by actuarial tables Should you pass away during your participation in the DROP Plan, your Beneficiary will have the same DROP account payment options as you would have had. DROP payments to your Beneficiary will be in addition to any survivor benefits payable by the Plan 12 Loans from the DROP will be available to Members only after termination of employment, provided the member had participated in the DROP for a period of 12 months. Please contact the Plan Administrator for details regarding the limitations on such loans. Supplemental Pension Distribution If certain conditions are met and you have been retired (normal, early, disability, or DROP) for at least one year as of the preceding September 30th, on the next li a Supplemental Pension Distribution will be paid to you. The distribution will be allocated among eligible members on a pro -rata bases as described below. 1,44eva--? Monthly Supplemental Benefits Beginning October 1, 2006, each Member or Beneficiary receiving pension benefits is entitled to a monthly supplemental pension benefit. The monthly supplemental benefit will be funded by a 1% of pay contribution from the Members and a 1% of pay contribution from the Chapter 185 money. Members will contribute to this benefit through 20 years of service. The benefit will cease upon the later of the death of the retired Member or Beneficiary. A benefit pool has been established with the contributions described above. Starting in 2006, it will be divided according to the total number of shares of all eligible retirees on a pro -rata basis. The number of shares allotted to each eligible retiree is the sum of credited service at retirement (maximum credit is twenty years) and the number of years the participant has been retired (maximum credit is twenty years). An individual retiree's distribution is the number of shares multiplied by share value. Transfer of Accumulated Leave If you are eligible to receive accumulated sick leave, vacation leave or other accumulated leave payable upon retirement or entry into the DROP, your accumulated leave shall be transferred to the Plan. Within 30 days of retirement or DROP entry, you may elect one of the following distribution options: 1) Receive a lump sum equal to the transferred leave balance. 2) Transfer the entire amount of the leave balance directly to any eligible retirement plan. 3) Purchase additional service credit as permitted by the Plan. If the cost exceeds the leave balance, the remainder must be paid in a lump sum. 4) Transfer the entire amount of the leave balance into your DROP account 5) Maintain the entire leave balance in the Plan If you fail to elect a distribution option within 30 days, you will be deemed to have elected option 1) from above If you die after retirement or other termination of employment but prior to making an election or after making an election but before the distribution is made, the choice will be void. In such an event, your Beneficiary shall be entitled to receive the leave balance in a lump sum. If the Beneficiary is a spouse or former spouse, they may elect to transfer the leave balance into an eligible retirement plan within 60 days If an election is not made within 60 days, the payment will be made in a lump sum. 14 DISABILITY RETIREMENT If you become totally and permanently disabled as provided by the Plan, you may be eligible for a disability benefit. Disability eligibility determinations are made by the Board of Trustees. In the case of a disability incurred in the line of duty, you will be eligible for a benefit regardless of your length of service. In the case of a disability that is not incurred in the line of duty, you will only be eligible for a benefit if you have at least ten years of Credited Service. The amount of your benefit due to line of duty disability is 66 2/3% of your basic monthly rate of earnings in effect at the time of disability. This amount is reduced by any Social Security benefits you may receive. The amount of your benefit may only be reduced to the extent that the total of the benefit from this Plan, Workers' Compensation and Social Security exceeds 100% of your basic rate of earnings on your date of disability. In no event shall the amount of your benefit be less than the greater of your Accrued Benefit or 42% of your Average Monthly Salary. This benefit is payable until your death or recovery. The amount of your benefit due to non -line of duty disability is equal to your Accrued Benefit at the time of the disability, with the total not to exceed 60% of your Average Monthly Salary. In no event shall the amount of your benefit be less than 25% of your Average Monthly Salary. This benefit is payable until your death or recovery. SURVIVOR BENEFITS Before Retirement If you die in the line of duty, regardless of your years of service, your spouse will receive a death benefit. The amount of your line of duty death benefit is your Accrued Benefit at the time of your death, but not less than 30% of your Average Monthly Salary This benefit is payable until your spouse's death. If you have no spouse, the benefit will be paid to your estate If you die before you attain 10 years of continuous service and not in the line of duty, your Beneficiary will receive a refund of your accumulated contributions. If you pass away after you attain 10 years of continuous service, your spouse will receive your Accrued Benefit as of the date of your death Payment will continue until your spouse's death or remarriage. After Retirement If you were receiving a form of retirement payment which provided for a survivor's benefit to be paid after your death, your Beneficiary will receive payments following your death. A later page describes the various forms of retirement payments. 16 VESTED RETIREMENT BENEFIT If you terminate employment, other than by reason of retirement, disability or death, you may be entitled to a deferred Vested Retirement Benefit. This benefit is equal to your Accrued Benefit on your termination date multiplied by your vested interest. The following chart shows your vested interest in your Accrued Benefit. Vesting Schedule Completed Years Vested of Credited Service Interest Less than 5 0% 5 or more 100 The vested benefit is payable on the earlier date which you would have attained age 55 with 10 years of service or reaching what would have been 20 years of service had you continued working. If earlier, you may receive your vested benefit, reduced as for Early Retirement, any time after your 50th birthday. If you terminate employment with less than five years of Credited Service, you will receive a refund of your own contributions without interest. The taxable portion of any refund you receive is subject to an automatic 20% withholding for federal income tax purposes. This tax can be avoided, however, if you roll the taxable portion over to an Individual Retirement Account (IRA) or another qualified employer plan. This rollover will result in no tax being due until you begin withdrawing funds from the IRA or other qualified employer plan. The rollover of the distribution, however, must be made directly by the Plan to your chosen IRA or other qualified employer plan. FORMS OF BENEFIT PAYMENTS Normal Form of Benefit Payment Unless you elect otherwise before retirement, your pension is payable as a Ten Year Certain and Life Annuity This is a series of monthly payments for your life. If you should pass away before benefits have been paid for ten years, your Beneficiary will receive the same monthly amount for the balance of the ten years. Election of Optional Forms of Benefit Payments You have the right at any time pnor to your actual retirement date to elect not to have your retirement benefit paid in the Normal Form Your benefit would then be paid in the form which you choose You may choose among the options described below and revoke any such elections and make a new election at any time before your actual retirement. You must make such an election by written request to the Plan Administrator. Such an election shall be subject to the approval of the Plan Administrator. This election also applies to disability retirees and to terminated members who are eligible for payment of deferred Vested Retirement Benefits. The options available are as follows: 1. Option 1- Single Life Annuity You may elect to receive an increased monthly retirement benefit with payments for your life, ceasing upon your death. 2. Option 2 - Contingent Annuitant You may elect to receive a decreased monthly retirement benefit during your lifetime and have such decreased retirement benefit (or a designated fraction thereof) continued after the death of either you or your Beneficiary during the remaining lifetime of you or your Beneficiary. 18 3. Option 3 - Survivor Annuity You may elect to receive a decreased monthly retirement benefit during your lifetime and have such decreased retirement benefit (or a designated fraction thereof) continued after your death. Your benefit will remain unchanged if your Beneficiary's death proceeds your own. In no event may the total of benefit payments to you and your Beneficiary be less than your own accumulated contributions. . AMENDMENT OR TERMINATION OF THE PLAN The Plan may be amended or terminated at any time by the Employer. If the Plan were terminated. you would immediately become fully vested in the benefit you had earned so far. All of the assets of the Plan would be allocated to the Members according to certain classes of priority Only after all accrued benefits have been paid and any other liabilities have been satisfied could any remaining money be returned to the Employer 20 IMPORTANT NOTICE There are certain circumstances which may result in the disqualification, ineligibility, denial, loss, forfeiture, suspension or deferral of your benefits in this Plan. The following is a list of these circumstances: 1. If you terminate employment before you have enough Credited Service to have earned a vested interest, no benefits will be payable except for a return of your own contributions without interest. 2. If you die before attaining a vested interest, no benefits will be payable except for a return of your own contributions without interest. 3. No credit is allowed either for benefit accrual or vesting purposes for any period in which you are not considered a full-time employee. 4. Your retirement benefit will not be payable until your actual retirement date, even if you continue to work beyond the Normal Retirement Date. 5. Your Accrued Benefit may be forfeited if you are convicted of certain felonies as provided by State law (Chapter 112.3173 F.S.). 6. Payment of your benefits may be made subject to an income deduction order made pursuant to a state domestic relations law. YOUR RESPONSIBILITIES 1 Retain this Summary Plan Description with your other important papers for later reference or for replacement by updated versions and supplemental notices, if any 2. Upon completing eligibility requirements, sign a Membership Form, includmg a Beneficiary designation. 3 Keep your Beneficiary designation form updated to express your wishes 4. If you terminate employment, check to see if you are entitled to a Vested Retirement Benefit and the date payable 5. If you should terminate employment with rights to a deferred Vested Retirement Benefit, then, shortly before the date on which it is to begin, you should contact and notify the Employer to begin such payments. 6. Upon your retirement under Early or Normal Retirement, complete the form necessary to indicate which Optional Form of Benefit you desire 22 CLAIMS AND PROCEDURES The Plan Administrator has adopted rules to follow when a member applies for a benefit. These rules may be obtained from the Office of the Pension Administrator. it PERTINENT ACTUARIAL INFORMATION 1 E i October 1, 2007 October 1, 2006 Number of Members of the Plan Active Employees 144 4 131 Those Receiving or Due to Receive Benefits 103 100 11 Annual Payroll of Active Members $ 10,296,812 I $ 9,302,405 [" i Annual Rate of Benefits in Pay Status 3,436,702 1 3,239,450 3; Actuarial Accrued Liability 66,068,756 61 ,468,267 I! i Net Assets Available for Benefits (Actuarial Value) 41,981,125 1 37,691,909 ii Unfunded Actuarial Accrued Liability f 24,087,631 23,776,358 11 Required Contribution to be Made to the Plan Over `1 and Above Contributions by Members of the Plan 3,236,241 3,030,547 Required Contribution as % of Payroll of Active Members 31.43% { 32.58% Required Contribution to be Paid During Year Ending 9/30/08 9/30/07 24 PENSION FUND INCOME AND DISBURSEMENTS Year Ending Year Ending 9/30/2007 9/30/2006 Market Value at Beginning of Period $ 43,982,138 $ 40,432,626 Income Member Contributions 718,489 663,187 State Contributions 685,216 671,674 Employer Contributions 2,685,841 2,343,870 Buy Back Contributions 96,680 142,103 Health Subsidy Contributions 101,962 94,455 Increase in Value of Future Buy Backs (10,815) (34,980) Investment Earnings Interest & Dividends 5,083 3,174 Realized & Unrealized Gain (Loss) 6,112,410 3,087,992 Total 6,117,493 3,091,166 Total Income 10,394,866 6,971,475 Disbursements Monthly Benefit Payments 3,137,780 2,908,528 DROP Distributions 295,915 59,607 Refund of Contributions 13,403 92,935 Investment Related Expenses 313,593 274,217 Other Administrative Expenses 86,940 86,676 Insurance Premiums 0 0 Other Expenses 0 0 Total Disbursements 3,847,631 3,421,963 End of Year Market Value 50,529,373 43,982,138 Less: DROP Account Balance 2,798,891 2,463,401 Less: State Contribution Reserve 118,167 111,640 Less: Health Insurance Subsidy Reserve 1,097,169 889,402 Final Market Value 46,515,146 40,517,695 Return Assumption Changes Page 1 of 1 All Sites f3 I Advanced Search rjy Pension Home > GRS Practices > Pension > Return Assumption Changes Return Assumption Changes Actions • View: All Items j State Retirement Plan Prior Assumption New Assumption Difference Year Change Made Notes AK Alaska PERS 8.25% 8.00% -0.25% 2010 AK Alaska TRS 8.25% 8.00% -0.25% 2010 AZ Arizona Public Safety 8.50% 8.25% -0.25% 2011 May go to 8% in 2012, but requires another Board vote CA California SIRS 8.00% 7.75% -0.25% 2010 CA San Francisco City and 8.00% 735% -0.25% 2010 County RS CA Los Angeles City ERS 8.00% 7.75% - 0.25% 2011 CA San Diego County ERS 8.25% 8.00% - 0.25% 2010 CO Colorado PERA 8.50% 8.00% - 0.50% 2010 CO Colorado FPPA 8 00% 7.50% -0.50% 2011 DC District of Columbia RB 7.50% 7.00% -030% 2010 7 HI Hawaii ERS 8.00% 7.75% -0.25% 2011 IL Illinois SERS 830% 7.75% - 0.75% 2010 IL Illinois SURS 8.50% 7.75% -0.75% 2010 IN Indiana PERF 7.25% 7.00% -0.25% 2010 IN Indiana TRS 7.50% 7.00% - 0.50% 2010 MI Detroit Police and Fire 7.50% 8.00% 0 50% 2011 RS MO Missouri LAGERS 7.50% 7.25% - 0.25% 2010 ? NH New Hampshlre RS 8.50% 7.75% - 0.75% 2011 NM New Mexico ERB 8 00% 7.75% - 0.25% 2011 NY NY State and Local 8.00% 7.50% -0 50% 2010 ERS OH Ohio School Employees 8.00% 7.75% -0.25% 2011 RS PA Pennsylvania PSRS 8.50% 8.00% -030% 2009 PA Pennsylvania SERS 8.50% 8.00% - 0.50% 2009 RI Rhode island ERS 8 25% 730% - 0.75% 2011 UT Utah Retirement 7.75% 7.50% -0.25% 2011 System VA Virginia Retirement 7.50% 7.00% -0 50% 2010 System WA Washington State RS 8.00% 7.90% -0.10% 2011 WI Wisconsin Retirement 7.80% 7.20% - 0.60% 2011 System http: / /grs- sharepointlpractice/ Pension /Lists/Return %20Assumpti... 11 /1/20 1 1 CITY OF BOYNTON BEACH POLICE PENSION SYSTEM * * HEALTH INSUTANCE SUBSIDY INTEREST * * * POST * � FOR PLAN YEAR ENDING: 09/30/2011 DFTE PREPARED: December 30, 2011 2 e 9 1-2 , CURRENT PLAN YEAR CONTRIBUTIONS $ 126,413.94 MATCHING FUNDS $ 126,413.94 REFUNDS ( -) $ 4,604.37 ADDITIONAL DISTRIBUTION $ - 35,250.03 TOTALS CONTRIBUTIONS $ 960,113.30 MATCHING FUNDS $ 960,113.30 REFUNDS ( -) $ 43,645.17 ADDITIONAL DISURIBUTION $ - 515,427.92 EARNINGS $ 228,106.42 BALANCE BEFORE INTEREST $ 1, 589, 259.93 I r ' INTEREST THIS YEAR $ -4,448.32 IVIe�� USING ANNUAL RATE % -.3000 GRS Gabriel Roeder Smith & Company One East Broward Blvd 954.527.1616 phone Consultants & Actuaries Suite 505 954.525.0083 fax Ft. Lauderdale, FL 33301-1827 www.gabrielroeder.com September 22, 2011 Ms. Barbara Ladue City of Boynton Beach 1500 Gateway Blvd., Suite 220 Boynton Beach, Florida 33426 Re: City of Boynton Beach Municpal Police Officers' Retirement Fund Dear Barbara: As you may know, Senate Bill 1128 amended Section 112.63 of the Florida Statutes to create a new actuarial disclosure requirement. All governmental pension plans in Florida must now disclose the present value of the plan's accrued benefits using the assumed rate of return of the Florida Retirement System, currently 7.75 %. The reason for the new disclosure is to facilitate the comparison of a funded ratio based on this liability measure among Florida pension plans. The 7.75% rate does not have to be used for determining the required contributions. In order to satisfy this requirement, we will need to calculate this liability for your Plan, determine the funded ratio based on this liability and include this information in the upcoming Actuarial Valuation Report. The State will likely reject valuation reports that do not contain this information. More of our time will be required to provide this additional information. We recommend that the Board authorize us to provide the information needed to satisfy this actuarial disclosure requirement. Our fee to include this in the valuation report is $750. This charge will appear on an invoice sometime during the upcoming valuation cycle unless you inform us not to provide this additional disclosure. Please contact us if you would like us to provide any additional information. Sincerely, b 7 J. Stephen Palmquist, ASA, MAAA Peter N. Strong, ASA, M Senior Consultant & Actuary Consultant