Loading...
09-05-1989 Noe GENERAL EMPLOYEES PENSION BOARD POLICE RETIREMENT BOARD TUESDAY, SEPTEMBER 5, 1989 COMMUNITY CENTER 10:00 A.M. Vice Mayor Gold called to order a regular meeting of the General Employees Pension Board and the Police Retirement Board, at 10:00 a.m., Tuesday, September 5, 1989 in the Community Center. ROLL CALL: General Employees Pension Board members present: Vice Mayor Gold, Susan Wadsworth, Charles Chamberlin, Karen Rickelman and Rev. Harvey Hardin. Police Retirement Board members present: John Borzner. Also present were Jack Ascherl, Agent of Record and Sondra Meager - Pengov, Secretary. NEW BUSINESS_ Vice Mayor Gold introduced Mr. Ascherl to the Board. Mr. Ascherl distributed a report; Analysis of the Actuarial Report for the City of Edgewater General Employees' Retirement Plan (see attached.) The report provides information needed to determine current year contribution to the plan. Mr. Ascherl stated everything is in "good shape." The Frozen Initial Liability is $367,418 of which 3362,927 is unfunded as of the beginning of the plan year. Mr. Ascherl said, we were actually getting a lot of our past service almost paid off. When the plan changed and the benefits were increased this created a big liability, that's why we are kind of starting all over in funding our past service liability. Minimum Funding Account, charges to the Funding Standard Account was discussed explaining, the Accumulated Funding Deficiency, we had no deficiency last year, as always; Employer Normal Cost as of a year ago was requiring 380,155 for total normal cost; Amortization charges (past service liability contributions) was 338, 678, with Interest on that amount of $9,506. The total charges against the account is $128,339. Mr. Ascherl also discussed Credits to the Funding Standard Account and Accumulated Credit Balance. He also referred to Emerging Retirement Liability which shows where the plan is headed on the bases of the plan year beginning October 1, 1988 through October 1, 2002. Further review of the report followed. The Contract Holders Fund report was reviewed. This is a report of the monies invested, showing the fund balance of $748,357.53 as of December 31, 1988, the amount was all invested in the General Investment Fund. A more conservative investment has been the contention over the years, whereas we presently invest in a sure investment, not mixed, where the investment could fluctuate. Mr. Ascherl further reviewed the report (copy of report attached.) A quarterly report developed by Mr. Ascherl's office was distributed to the Board's. This shows the total monies in the account to be $871,117 (estimated), 100 % of the funds. Rate of Return for 1988, 3 Yr. and 5 Yr. Avg. were shown (see copy of report attached.) Going back to the Contract Holders Fund, Mr. Ascherl explained ' 'Nfe General Employees Pension Board Tuesday, September 5, 1989 Page -2- that the idea of diversifying further is something that should be considered. A suggestion that the Fund Mix Target would be the ideal mix. The Fund Mix shows the Bond and Mortgage Account would be 27.5 %, General Investment Account would be 27.5%, U.S. Stock Account would be 35'/. and Real Estate Account would be 10'/.. The question, will mixing this account yield a higher rate of return, rather than having it all in the General Investment Account? The overall average has been 11:6 on the account, with nearly zero risk. The soft approach of going 100'/. General Investment Account is currently being used. If the Fund Mix Target were to be decided on, it would have to be understood that the percentages will change. The Police Pension Plan is staying with the 100% General Investment Account at this time. Mr. Borzner asked if the cost would be any more to diversify. Mr. Ascherl replied no. Mr. Ascherl said if no changes are wanted, no action needs to be made, we will continue with the 100% in the General Investment Account. Mr. Chamberlain stated, since the General Investment Account has done so well, he sees no reason to change it. Ms. Rickelman stated at the last Board meeting a suggestion to voluntarily contribute to the pension plan was desired. Ms. Rickelman stated there is no way this can be done with the existing plan, another plan would have to be set up. Ms. Rickelman discussed the benefit to an employee who has no spouse. A deceased employee's pension goes back into the plan, not to a beneficiary. Ms. Rickelman is awaiting information to prevent this. The information will state that a lump sum benefit equal to the present value of accrued benefit (would be received by a designated person.) Also, the cost of living increase in the benefit payment would only effect the fund when a person retired. Mr. Ascherl stated a cost of living plan is one of the most expensive things to be put into a plan. Mr. Ascherl reviewed employee supplemental benefits and the different ways this can be done.Mr. Ascherl will get additional information listing options 1 through 5 listing the pluses and minuses to help understand the plan. Ms. Rickelman discussed the memo from Mr. Munoz, Finance Director, regarding Investment Portfolio Performance Analysis. Vice Mayor Gold suggested the Board should possibly listen to an independent auditor for additional options. Mr. Chamberlin agreed, saying we should try to narrow the independent auditors to possibly three (3). The Board agreed to this. There being no further business to come before the Board, Mr. Chamberlin made a motion to adjourn. Seconded by Vice Mayor Gold. The meeting adjourned at 11:22 a.m. Minutes respectfully submitted by: Sondra Meager - Pengov, Secretary /smp Report of the t 1 Valuation uar MADE AS O F October 1, 1988 FOR City of Edgewater General Employees' Retirement Plan GA 59450 -- Principal Mutual Life the' •fpa ' Insurance Company 711 tiiyh Street Des Moines, lom i b0309 Financial Group Gp 9502 -3 i �1 J Nor Nye ANALYSIS OF THE ACTUARIAL REPORT FOR City of Edgewater General Employees' Retirement Plan GA 59450 This Actuarial Valuation Report is for the plan year beginning October 1, 1988. The report provides the information you need to determine your current year contribution to the plan. A summary of the results of the actuarial valuation is as follows: Total Normal Cost $ 88,042 Normal Cost as Percentage of Compensation 6.4% Minimum Employer Deposit to avoid Funding Deficiency 126,021 Normal Cost plus amount to fund the Unfunded Frozen Initial Liability over 20 years 134,008 Total Normal Cost as a percentage of compensation has decreased from 7.0% to 6.4 %. This decrease is a result of higher than assumed investment earnings and the deaths of two plan participants. You may deposit for the current plan year any amount in excess of the minimum deposit, $126,021. If you wish to follow a schedule of funding, dollar amounts are illustrated in paragraph lc, page 2 of the report which will fund the Normal Cost and fund the Unfunded Frozen Initial Liability over a definite period of years. Inquiries concerning your actuarial valuation report should be referred to your local Principal Mutual Life Insurance Company Group Representative or your valuation analyst in the home office. Feel free to use the home office toll free number (1- 800 - 543 -4015) and ask for Dave Hardin, ext. 6232. You may call Dave directly at (515) 247 -6232. January 31, 1989 Pension Actuarial Services Principal Mutual Life the • rincipa Insurance Company 711 High Street Financial Dos Moines, Iowa 50309 Group Nov Nome ACTUARIAL VALUATION RESULTS For the plan year beginning October 1, 1988 As of the valuation date October 1, 1988 1. Deposit Levels a. Your minimum deposit necessary for the current plan year is $126,021 as of the end of the plan year. You may decrease this amount with interest at 8.0% from the end of the plan year to the date the deposit is received. This minimum amount is in addition to employee contri- butions, if applicable. This minimum is based on the requirements of Part VII, Chapter 112, Florida Statutes. Specifically, this is the amount necessary to fund the.Normal Cost, and to amortize the Unfunded Frozen Initial Liability (UFIL) according to the schedule indicated in Appendix III. b. The dollar amount illustrated below is the deposit required to fund your Normal cost and to fund the Unfunded Frozen Initial Liability over a specified number of years. This amounts include interest for a full plan year at 8.0 %. Current Plan Year Last Plan Year Period in Years Amount Percentage* Amount Percentage* 20 year funding $134,008 9.7% $124,896 10.9% 2. Normal Costs Current Plan Year Last Plan Year Amount Percentage* Amount Percentage* Total Normal Cost $ 88,042 6.4% $ 80,155 7.0% 3. The Frozen Initial Liability is $367,418 of which $362,927 is unfunded as of the beginning of the plan year. *Amounts are expressed as a percentage of active employee annual compensation, which for the current plan year is $1,379,409 and for the last plan year was $1,144,007. -2- _ Principal Mutual Life ♦ the rincipa • Insurance Company 711 High Street Financial Des Moines. Iowa 50309 J Group tir .r II' MINIMUM FUNDING ACCOUNT 1. The Minimum Funding Account is used to measure the adequacy of funding your pension plan. An Accumulated Credit Balance (total credits exceed total charges) shows that the deposit has been adequate to meet minimum funding requirements. An Accumulated Funding Deficiency (total charges exceed total credits) shows that deposits have not been sufficient to meet the minimum funding requirements. To prevent a deficiency, your contribution should be at least equal to the minimum deposit shown on page 2. Your Minimum Funding Account is calculated at the end of the plan year. Therefore, the Minimum Funding Account for the October 1, 1987 plan year is shown in this October 1, 1988 Valuation Report. 2. Minimum Funding Account for the plan year beginning October 1, 1987 and ending September 30, 1988. a. Charges to the Funding Standard Account i. Accumulated Funding Deficiency - -last valuation date $ 0 ii. Employer Normal Cost - -last valuation date 80,155 iii. Amortization charges 38,678 iv. Interest on the above items 9,506 Total Charges $128,339 b. Credits to the Funding Standard Account i. Accumulated Credit Balance - -last valuation date $ 492 ii. Employer contributions - -last plan year 118,426 iii. Amortization credits 8,687 iv. Interest on the above items 2,080 Total Credits $129,685 c. Accumulated Credit Balance $ 1,346 The outstanding balance of amortization charges and credits as of the beginning of the current plan year is $364,273. The corresponding Unfunded Frozen Initial Liability as of the beginning of the current plan year is $362,927. Principal Mutual Life the • rincipa Insurance Company 711 High Street -3- Financial Des Moines, Iowa 50309 � GP 14553 A -9 Group Nor Nwe EMERGING RETIREMENT LIABILITY The following is a listing by plan year of projected retirement benefits, the expected increase to the retired life floor and a cumulative total of these increases. Plan Year Projected Monthly Expected Increase Cumulative Beginning Pension 1 to Floor 2 - Increase 10 -1 -88 $1,560 $170,274 $ 170,274 10 -1 -89 172 19,316 189,590 10 -1 -90 180 18,177 207,767 10 -1 -91 0 0 207,767 10 -1 -92 1,231 136,505 344,272 10 -1 -93 0 0 344,272 10 -1 -94 0 0 344,272 10 -1 -95 0 0 344,272 10 -1 -96 0 0 344,272 10 -1 -97 0 0 344,272 10 -1 -98 6,048 719,213 1,063,485 10 -1 -99 688 83,502 1,146,987 10 -1 -00 4,293 480,912 1,627,899 10 -1 -01 1,113 124,712 1,752,611 10 -1 -02 5,059 632,579 2,385,190 • For the purposes of illustration 1. The projected monthly pension was calculated using the salary scale, if any, shown on page 7 of this report. 2. The expected increase to your "floor" is calculated using the purchase rates in effect on the current anniversary for the normal form of annuity. This increase represents the total purchase price. Principal Mutual Life the • rincipa Insurance Company 711 High Street -4- Financial Des Moines, Iowa 50309 Group *l , ftof • CENSUS DATA AND ASSET DISPLAY I. CENSUS DATA — based on data supplied by the employer Active Participants Inactive Participants Age Projected Group Number Monthly Pension* Number Monthly Pension Under 25 12 $ 53,958 25 — 29 13 56,559 1 $ 25 30 — 34 17 69,912 35 — 39 21 73,788 2 196 40 — 44 8 22,059 2 205 45 — 49 10 10,143 50 — 54 3 4,602 55 — 59 4 1,404 1 538 60 — 64 7 1,740 65 & over Totals 95 $294,165 6 $964 Projected monthly pension was calculated on the assumption that employees would experience annual compensation increases of 7.5 %. II. The following assets were used in calculating Normal Cost and deposit levels shown in this report. General Investment Fund $631,254.22 This valuation does not include retired lives since it is assumed that the retired life liability is offset by the retired life "floor ". The actuarial value of the retired life "floor" is $102,066.15. Principal Mutual Life the • rincipa Insurance Company 711 High Street Financial Des Moines, Iowa 50309 Group GP 1 4555 M3 -5- leMO SUMMARY OF PLAN PROVISIONS 1. Plan Eligibility Age: Attained age 18. Service: Three months of service. Class: General classification. 2. Normal Retirement Benefit Eligibility: Attained age 60 with five years of accrual service or after 30 years of accrual service. Form: Monthly annuity payable for life (optional forms may be elected prior to retirement). Amount (Accrued Benefit): 27 of Average Compensation multiplied by Accrual Service. 3. Early Retirement Benefit Age: Attained age 55. Service: Five years of plan participation. Form: Same as Normal Retirement Benefit. Amount: Accrued Benefit on Early Retirement Date reduced by 6 2/37 for each year up to five and 3 1 /3 % for each year between five and ten that the Early Retirement Date precedes Normal Retirement Date. 4. Late Retirement Benefit Age: No maximum age. Form: Same as Normal Retirement Benefit. Amount: Accrued Benefit as of Normal Retirement Date increased to recognize that the annuity commences subsequent to Normal Retirement Date. -6- Principal Mutual Life the ' rincipa Insurance Company 711 High Street Financial Des Moines, Iowa 50309 Group Now NINO 5. Termination Benefit Vesting Percentage: 100% subsequent to five years of plan participation. Form: Same as Normal Retirement Benefit with income deferred until Normal Retirement Date. Amount: Accrued Benefit on date of termination multiplied by the Vesting Percentage. 6. Disability Benefit Eligibility: Active participant with five years of plan partici- pation. Form: Monthly income payable until Normal Retirement, death, or recovery and a deferred annuity payable at the Normal Retirement Date. Amount: The greater of (a) or (b): (a) Accrued Benefit on date of disability. (b) 25% of Average Compensation. 7. Qualified Preretirement Survivor Annuity Eligibility: Qualified married participant fully or partially vested in an accrued benefit. Form: Monthly annuity payable to spouse, deferred to participant's Earliest Retirement Date if later than the date of death. Amount: If death occurs, the amount paid to the surviving spouse is equal to the amount that would have been paid had the participant terminated employment on the date of death and survived to his /her earliest retire- ment age, retired with a qualified joint and 50% survivor annuity in effect, then died the next day. 8. Definitions Average The monthly average of total pay received for the Compensation: three consecutive years out of the ten latest years prior to Normal Retirement Date which gives the highest average. Principal Mutual Lite the • rincipa Insurance Company 711 High Street -6a- Financial Des Moines, Iowa 50309 Group 'r✓ vale ACTUARIAL VALUATION ASSUMPTIONS AND METHODS Since the benefits which your employees will receive are payable in the future, certain assumptions must be made regarding future plan experience. The cost method allocates estimated plan costs to plan years in a rational manner. Actuarial Assumptions Interest 8.0% per annum, compounded annually. Mortality 1971 Group Annuity Table (Male) with pro- jection, Principal Mutual Life Insurance Company modification (setback 0 for males, 6 for females). Expenses 5.0% of estimated plan costs. Retirement Age Normal Retirement Age as defined on page 6. Salary Scale 7.5% increase each year until retirement. Disability Rates of disablement based on Period 4 (Benefit 4) and disabled life reserves based on Benefit 4 of the 1952 Intercompany Disability Study. Assets Fixed income assets are valued on a contract basis. Long -term Equity Investments are adjusted by spreading unrealized appreciation and depreciation over four years. Short -term Investments, Real Estate, and Bonds are valued at market. Withdrawal Table 11 from the Actuary's Pension Handbook. Selected rates of withdrawal are shown below. Rate of Rate of Age Withdrawal Age Withdrawal 20 25.94% 40 17.69% 25 24.92 45 13.96 30 23.20 50 9.67 35 20.77 55 4.96 Social Security Benefit expected to be available at retirement based on a 6.0% increase in the Social Security average earnings and a 5.5% increase in the Consumer Price Index. Principal Mutual Life -7- the • rincipa " Insurance Company 711 High Street Financial Des Moines, Iowa 50309 Group v NW ` C) , C O C g H o a =E t o rn a w W f 0 N � Ln H F-1 14 To N ,C z z u : _ 2 H H V-1 C 0 y w a s x a 5 �o a E Cl, C1, H a 4 w Ca z H 0 Z o \° or F-1 c0 V U W z Co O. 3 CO • c • o Z Ol O> x Q. V a a c'' u) 'v o o ff W • X a Z a ' c7 W < X o ff CO CO S 0 .a W W O H Z Z 0 Q z 1 a z z H Ol N 0 Q K 0 0\O w .� o 0 W H H< 0 0 W 41 41 0 X rn W W H H z OD KC r > Z CO Co Kt CO X Cam, Z W CO CO X 1 W O o H C7 1 1 x H > H W H r U] M < W a w 0 0 Z N co < CO H L O 1 - 1 H CO x < O r-i W Ol 3 0 I- 1 Z = H H I O 0 0 U) 0 a H .a H rz w H 0 x M o 0 0 0 0 o M v] x H to 0 0 0 0 0 0 Ln H o H A m z N • 0 0 • • • N • w w a Q) 0 10 u'1 Z 0 C4 1 o rn ri H ..] E 1 r--1 Z .. - U) 3 0\ o \ 0 Z I CO > z in s a ►■. r1m •• N N •z & 0) 0 0 W W 0 H z z W a 0 0 CD 0 H 0 3 ur u} m a Xa+ CO •crWH • • w W CO -Z <w x C L W 01 H � z CO CO E-1 H Z H 0 w CO CO W ■a Z H H 3 1 I >■ H X H Ca H 0 x W 0 M o CA W rn Z Z U H a 0 1 1 0 0 W [Z 0 H 0 to G.. H a 0 0 Z G., C7 W C0 = H U a4 O Z W rZ O7 H Z H z Z U U U] H C1, 0 0 0 U] KC Z z x Z O 0 < O FC H H C� 0 Ca W W f ., x U 0 E-4 3 10 W x X Z H 0 Z 0000)0) ri > U CO co W !Z W H H U < 0 0 10 • H < CO 00 CL Cs, O Ca u] cn U << -) W CO H W 1 1 .7 W W KC H 0 KC > 0 0 -1 -1 co G 4 C� > CZ W W H Z H in W C7) 0 0 W 0 0 Z 0) a4 AG H 0 0 W - C14 W 1 1 0 X H H U a FC 0 F U to u] H r-I d' H H W u ] Z O KC H H W in 0 u) 0 0 > X H < .] H H Z U] KC X Ix W IZ R 3 cn Z o >+ W a .) x CL z U W ) W W W 4141 • W ..a 0 41 KC - CO W F-1 X 0 U Z >C U] Z C Z H H OD KC x W 04 Q Z 4 1 1 H • 00OZ 0 CO U in- E IX 0 4 41 < H 0 44 0 Z IX OD H E-4 CS) l 1c 4s p, U) 54 < v) 1-4 0 a] C7 W H H z z c7 a a a H0 w o x U z er, "r Noe o E A 7 E W V - C ai cmc N e: C 7 'C m w d C ;Z. 0 l7 Q a VC ZI e e p C O CO �� • Ln a. cn al 0 4 w O E 0 4 0 CL In o l0 0 co M E - 4 r - 1 o N d' •1• In O r1 l0 0 In d' C 0 M N l0 M N 10 M d' r-I CO C M CL rn o 0 o d o H to r- I d' O 'n r C4 CD in- ++ 1 1 0 0 0 11 10 oo • • In In N Cs. oo M m N 10 r-1 r-I N M r-I M 1.1) N N 0 00 C) i (Z1 O 0 d d z N ELI + l0 r r-1 .'N W 0 a H C4 Cw vt yr V} tr z x x w E w x E-' co a () 00 ,g m w I Ix H .--1 w z > � Z o Z 1010 ►.. 1 W H H ,-1 O z O a o <� a H a A A H a w 0 •-4 0 1 U a , Z — C4 o H w tz 0 '-4 a 0 c9 w a w a s R. W a 1n 11 41 0 O H 0 C4 a w 41 0 41 41 0 O w o 0 a a o; 0 H rs+ E" 1D H E+ w w H z 0 H w 3 4 0 a s w a z o 41 E-' U w w z a ox o 1010 U 0 o C7 f-4 A (.7 U Ul H U 0 O O 0 ' 0 W w H ,-1 Z Z 10 U) U) < H w W 0 0 4 H W ris 0 w 0 a w r.=.1 HH .a o w O U x 41 a w U • U z H U] H 0 >+ a Z U 0 H . Z >+ 4=C H < Z x <, k rS; 0 0 0 1 i El .a 0 U 1--' H 04 41 .a .a .] H H .a •-• < 0 < .a 0 < U co , 3 co < < H M z a F` . 4 110V NO • g Z fU `6' o mN .., io u , c c) 5 L i 2 w a5,.o cD a a co O a v . c • 0 s o 0 0 0 co r1 co o - d' N Ln CO LO N '3' Ql ro N N 0 0 N L() N CO 00 r-i r- . . 4 N ,--I d' 0 • 0 z c,r yr x w w x H W 0 0 CG a w Kt 0 Z w U H U W C/) W z C] W z z a w H X w as a W CO < w 1 w z A > a 0 a W w a w N x > 0 W '-' 0 U a4 Cr] W W z °4 0 -1-1 z E " H KC u) U > KC `I H H W a H 0 W 0 Kt (4 U] 0 H co H a v] u] 0 z H H H Z Z w z ' U Z 0 0 0 a C4 I rt H U W X CO a 04 < 0 0 H FC 0 0 H (1) U Z a H a w Z I"1 H FO z co H z 0 a > 0 Z o < a w ..a H a .a . F+ 0 m w a a a Kt w .a W I ■-+ 0 a Kt w Z Z E-4 H > H H 0 0 a 0 0 0 Z rf rf U i *WV `a A / GA 611 27.5X 27.5X RE 0 GA \ ) WI 0% tiS 0% 100X Us .........■____ \\■•1 ■-_-_-_-.- 3________.L__X _______■17 FUND MIX TARGET FUND MIX ON 4-1 -89 76.6X / co, itil///06 p. 0 IIII'IIII US 4.7X � i� RE s.ZX I '1 � eu oX 1 ��X BM OX FUND NIX ON 7 -1 -89 fUNO 1MX ON 10-1-81 1 "e► vai 1 i1 Z GA ' 0 % ,0.3X �4.,x / RE �.s>r 4Tifilli /��1--tE2-__,....„....- RE d �i 911 O% - 911 0* FUND MIX ON , _, -!0 FUND 1AX ON 4-1 -90 1 1 1 34.6X \ \ G1► ell K .5% 20 . 27.s% Ic � 10x t U S RE = US RE � ` 33x FUND MIX ON 4-1 -91 FUND MIX ON 4-1 -92 i 1 NW' • w 0 III \ .0 L (1) CD 00 CO • 8888 m co co cn >1 >, >, >, 2 N M�tfl U cA U1 a) u) 0 \ -4, rd —I r-- M V- cry ▪ m o") rn • 4- n co U >1 '+ r I H u1 O IN 1 p y ,_, H co ,___I co �7 O co O M N _i r._, • co cm Lc) r -- M 00 M [ d' N co co r M M 01 ! dl O al N l0 Lo 1 ,...1 r-1 I O 9 co O H I 0 I ro o g CO U CJ O > 0 N or ?; H H H 0 4J� ,--1 -0 -I 0 dP cP eP o1 dP r-1 H o \o Cf) L8 o 0 a I dP a 1 0 O 03 eil rS c0 o 0 . S Q � M g > .-i f-1 J Q r0 0 (_w a Q 9 IT o o ; ro 0 0 0 b 0 c n H 0 r,; )-6 \ - S -.-1 W G -4i 4J 'D X -NC 2>1§. J0 ' fx � . °- _ w z 2 u) u) i ..5:: L r.... u) " 6 , lim► r✓ 4:)::711){4 , a n co a co 0 0, p q qq o ,---1 r ' V U U U ' m • la la Sa 1-1 >, M z NMCUI 0 c,„ CO Cn • \ 0 rn M > H < H co -1, ii).- o rn rn O >i H >, O ! o) M o -I , - co 61 l0 N I co I CO r-- N c l0 Cr) M 01 Ql • • . T --1 o Ol N lfl VD O u) O H O >i < H H Q cn U1 Ul U) U) 0) RI (((� O O O O O > O -P 4J 4J r C. -H > CO' ow 6 H o H la. dP dP dP cW dP o 6 i Opp o ff C1, j a s E, .. I N 4) +P -0 -P -P o C CD CD an al t °` r� i i -d • CO � r: Q z. p 4 co � Q a ? Q PI 0.) c a +� W N co 1 C! C7 1 ? a 4.., tr1 H > p, w t r3 rJ 1 yr ' Q. 0 1.1 w \ . -H W -4 -ri O a z cn cn u � — L. (J) —