12-16-1987 - Joint GEPB/PPB •
49 1tit of ',Ebgewater `.e
� ,� POST OFFICE BOX 100
*tx _* EDGEWATER, FLORIDA 32032
7110
4
54 .i: O
GENERAL EMPLOYEES PENSION BOARD
AND
POLICE RETIREMENT BOARD
REGULAR MEETING
WEDNESDAY, DECEMBER 16, 1987
2:00 P.M.
CONFERENCE ROOM, CITY HALL
Mayor Earl Baugh called to order a regular meeting of the Police
Retirement Board and General Employees Pension Board at 2:00 P.M.,
Wednesday, December 16, 1987, in the Conference Room of City Hall.
ROLL CALL:
Police Retirement Board members present were Dan Grisell, James
Inman, Larry Jarkovsky, Nancy Swiney, and Wallace Trickey. General
Employees Pension Board members present were Mayor Baugh, Connie
Martinez, Melvin Copeland, Susan Wadsworth, Karen Rickelman, and
Reverend Harvey Hardin. Also present were Jack Ascherl, consultant
for the plans, and Beverly Kinney, Secretary.
Mr. Ascherl stated the Board's had been looking at options on changes
that could be made to the plans. He discussed the major changes that
had taken place, depending on the type of plan to the General Employees
Pension Plan and the Police Pension Plan. (See attached)
Mr. Ascherl stated the Police Pension Plan was "healthy ", because the
plan was written to qualify for state money totaling a little more
than $28,000.00, and there is an employee contribution of one percent
(1%). Currently the plan is for retirement at sixty (60) years of
and, with no year's of service as an option.
Mr. Ascherl stated the General Employees Plan had no employee or state
contributions, but was a straight cash flow from the city's pocket,
and they had put in about $75,000.00 for the last year.
Mrs. Rickelman moved the General Employees Pension Board recommend
adoption of plan 2 to Council, seconded by Mr. Copeland. Motion
Carried 6 -0.
Mayor Baugh asked Mrs. Rickelman where the money would come from for
the increase in the plan. Mrs. Rickelman stated $135,051.00 had been
budgeted for pension contributions. The Mayor asked that the inform -
mation be supplied to Council.
Mayor Baugh recommended the Police Pension Board also adopt Plan 2.
Mr. Jarkovsky, Chairman, stated they had not had enough time to get
together with all the members to make a decision. There was some
discussion as to the possibility of getting the members together to
chose a plan, but no definite deadline was set.
It was determined the recommendation by the General Employees Pension
Board would go to the next Council meeting, but Mr. Ascherl stated he
would not be able to attend.
Mr. Ascherl went through the Pension Investment Rates that were
currently available. (See attached)
Mr. Ascherl stated the recommendation made by the General Employees
Pension Board would become retroactive to October 1, 1987.
Mrs. Swiney moved that once a decision is reached regarding a plan
for the Police Pension that it be made retroactive to October 1, 1987,
seconded by Mr. Inman. Motion Carried 5 -0.
There being no further business to come before the Board, Mayor Baugh
asked for a motion to adjourn. Mrs. Wadsworth so moved, seconded by
Mrs. Swiney. The meeting adjourned at 2:30 P.M.
Minutes respectuflly submitted by: Beverly Kinney.
7.
Actuarial Review
of Proposed
Pension Plan
Changes
PREPARED FOR:
City of Edgewater, Florida Police
GA 59448
PREPARED:
September 17, 1987
Principal Mutual Life
Insurance Company
This cost impact statement has been prepared in response to your request for
cost information to make various changes to your plan.
A. Data and Assumptions Used to Value Benefits
1. In preparing these calculations we have used the current valuation
assumptions of 8.0% interest earnings, a rate of withdrawal based on
Table 6 of the Actuary's Pension Handbook, and assumed salary increases
of 7.5% each year until retirement.
2. Assets of $200,493 were used in our calculation.
3. Our calculations are based on employee data as of October 1, 1
4. Liabilities have been redetermined to reflect the changes described
below.
B. Proposed Changes
The current plan provides the following benefits:
Normal Retirement Benefit
Eligibility: Attained age 60 with five years of plan participation,
but no later than attained age 65.
Form: Monthly annuity payable for life (optional forms may
be elected prior to retirement).
Amount
(Accrued Benefit): 2% of Average Compensation multiplied by Accrual Service.
Average
Compensation: The monthly average of an employee's fixed rate of
pay received for the ten compensation years prior to
Normal Retirement Date.
As a result of your request we have valued the following:
Plan 1
For this display the eligibility for Normal Retirement has been changed
to the earlier of_25 years of accrual service or attained age 55 with , )e.
years of accrual service.
Plan 2 ,0
9, L r Zi-
For this display the eligibility for Normal Retirement is the same as c{ , 5
under Plan 1. In addition, the definition of Average Compensation has been �,f,
changed to the monthly average of total pay received for the three con- �%' �4
secutive years out of the ten latest years which gives the highest average. Y (,t
'r► w
Plan 3
For this display the plan's retirement benefit has been changed to the sum
of (a) and (b) below:
(a) 2% of Average Compensation multiplied by years of service prior to
October 1, 1986.
(b) 3% of Average Compensation multiplied by years of service subsequent
to October 1, 1986.
The eligibility for Normal Retirement and the definition of Average Compen-
sation for this display are the same as they are under the current plan.
Plan 4
For this display the eligibility for Normal Retirement has been changed to
the earlier of 25 years of accrual service gr attained age 60 with 5 years
of plan participation but no later than attained age 65. Also, the plan's
retirement benefit has been changed to -2.11%-of Average Compensation multi-
plied by years of service. The definition of Average Compensation remains
unchanged from the current plan.
Plan 5
This display reflects a change in the plan's retirement benefit to 3.070 of
Average Compensation multiplied by years of service. The eligibility for
Normal Retirement and the definition of Average Compensation are the same
as Plan 4.
Plan 6
This display reflects a change intheeligibility for Normal Retirement to
the earlier of 20 f accrual service or attained aRe 60 with 5 years
of plan participation but no later than attained age 65. The plan's retire-
ment benefit has been changed to 2.5% of Average Compensation multiplied by
years of service. The definitionn of Average Compensation remains unchanged
from the current plan.
C. Display of Estimated Costs
The following display page illustrates costs as shown in the October 1, 1986
Actuarial Valuation Report and estimated costs for the proposed changes as
described above.
D. Comments
The estimates in this report are based upon the previously discussed Actu-
arial Assumptions. If, between now and the next valuation date, these
assumptions are not realized, costs may vary form these estimates.
„,
�✓
City of Edgewater, Florida Police
GA 59448
Cost Estimates as of October 1, 1986
October 1, 1986
Actuarial Valuation Plan 1 Plan 2 Plan 3
Total Normal Cost $ 12,515 $ 14,800 $ 21,100 $ 16,200
Estimated Employee
Contributions 2,405 2,400 2,400 2,400
Employer Normal Cost 10,110 12,400 18,700 13,800
Minimum Deposit Required* 0 0 7,400 0
20 Year Funding 15,370 20,700 31,500 22,100
Frozen Initial Liability 64,594 92,300 132,000 92,000
Unfunded Frozen Initial
Liability 39,268 66,900 106,700 66,600
Annual Compensation 240,528 240,528 240,528 240,528
* The Minimum Deposits shown above reflect a credit balance in the Funding
Standard Account of $22,377. In the absence of this credit balance the
Minimum Deposit Required would have been $16,400 in the valuation, $21,300
for Plan 1, $31,600 for Plan 2, and $22,700 for Plan 3.
Noe vire
City of Edgewater, Florida Police
GA 59448
Cost Estimates as of October 1, 1986
Plan 4 Plan 5 Plan 6
Total Normal Cost $ 23,300 $ 24,600 $ 23,000
Estimated Employee
Contribution 2,400 2,400 2,400
Employer Normal Cost 20,900 22,200 20,600
Minimum Deposit Required* 11,200 13,800 11,900
20 Year Funding 35,500 38,200 36,300
Frozen Initial Liability 147,600 161,000 158,500
Unfunded Frozen Initial
Liability 122,300 135,700 133,200
Annual Compensation 240,528 240,528 240,528
* In the absence of the $22,377 credit balance, the Minimum Deposit Required
would have been $35,300 for Plan 4, $37,900 for Plan 5, and $36,100 for
Plan 6.
,,._
.... .
., . -w ,..r+f
Actuarial Review
of Proposed
Pension Plan
Changes
PREPARED FOR:
City of Edgewater
General Employees' Retirement Plan
GA 59450
PREPARED:
September 17, 1987
Principal Mutual Life
the' np ` Insurance Company
711 High Street
Financial Des Moines, Iowa 50309
Group
GP •3552 -2
• Niue err►
Cost Impact Statement for
City of Edgewater General Employees' Retirement Plan
GA 59450
This cost impact statement has been prepared in response to your request for
cost information to change the plan's benefit formula and eligibility for
normal retirement.
A. Data and Assumptions Used to Value Benefits
1. In preparing these calculations we have used the current valuation
assumptions of 8.0% interest earnings, a rate of withdrawal based on
Table 11 of the Actuary's Pension Handbook, and assumed salary increases
of 7.5% each year until retirement.
2. Assets of $406,735 were used in our calculations.
3. Our calculations are based on employee data as of October 1, 1986.
B. Proposed Changes
The current plan provides the following retirement benefits:
Normal Retirement Benefit
Eligibility: Attained age 65 with five years of plan
participation, but no later than attained
age 70.
Form:
Monthly annuity payable for life (optional
forms may be elected prior to retirement).
Amount
(Accrued Benefit): 2% of Average Compensation multiplied by
Accrual Service.
Average Compensation: The monthly average of an employee's fixed
rate of pay received for the ten compensa
tion years prior to Normal Retirement Date.
As a result of your request, we have valued the following:
Plan 1
For this display the eligibility for Normal Retirement has been changed
to the earlier of 30 years of accrual service or attained age 60 with
years of accrual service.
Principal Mutual Lift
the • rincipa V Insurance Company
711 Hit,l, Streei
financial INts
50
Group
Nue
Plan 2 30/62° C 9
For this display the eligibility for Normal Retirement is the same as under
Plan 1. In addition, the defintiion of Average Compensation has been changed
to the monthly average of total pay for the three consecutive years out
of the ten latest years which gives the highest average.
Plan 3
For this display the plan's retirement benefit has been changed to the
sum of (a) and (b) below:
(a) 2% of Average Compensation multiplied by years of service prior to
October 1 198f_
(b) 3 Average Compensation multiplied by years of service subsequent
to Oct 1 19$b._---
The eligibility for Normal Retirement and the definition of Average Compen-
sation for this display are the same as they are under the current plan.
Plan 4
For this display the eligibility for Normal Retirement has been changed
to the earlier of 25 years of accrual service or attained age 65 with 5
years of plan participation but no later than attained age 70. Also the
plan's retirement benefit has been changed to 2.8% of Average Compensation
multiplied by years of service. The definition of Average Compensation
remains unchanged from the current plan.
Plan 5
This display reflects a change in the plan's retirement benefit to .3A/ 3 , T
of Average Compensation multiplied by years of service. The eligibility
for Normal Retirement and the definition of Average Compensation are the
same as Plan 4.
Plan 6
This display reflects a change in the eligibility for Normal Retirement
to the earlier of 20 years of accrual service or attained age 65 with 5
years of plan participation but no later than attained age 70. The plan's
retirement benefit has been changed to 2.5% of Average Compensation multi-
plied by years of service. The definition of Average Compensation remains
unchanged from the current plan.
_ Principal Mutual Lite
the • rincipa insurance Company
Financial
M0.1 ' kwN a s:IU'-
Group
Nu"
C. Display of Estimated Costs
The following display page illustrates costs as shown in the October 1,
1986 Actuarial Valuation Report and estimated costs for the proposed changes
as described above.
D. Comments
The estimates in this report are based upon the previously discussed Actu-
arial Assumptions. If, between now and the next valuation date, these
assumptions are not realized, costs may vary from these estimates.
The above information was prepared in the home office by your valuation
analyst, Dave Hardin. If you have quesitons concerning the review, please
contact Dave. (The phone number in the home office is 515 247 - 7803.)
Principal Mutual Life
the • incipa Insurance Company
71 Hlcr St t -'t
Des Mu io.va 50303
Financial
Group
City of Edgewater General Employees' Retirement Plan
GA 59450
Cost Estimates as of October 1, 1986
Normal Cost
Normal Cost as percentage
of compensation
Minimum Deposit Required
20 year funding
Frozen Initial Liability
Unfunded Frozen Initial
Liability
Annual Compensation*
October 1, 1986 .
Valuation Report
Plan 1
Plan 2
Plan 3
Plan 4
Plan 5
Plan 6
$ 69,778 $
61,900
$ 83,100
$ 83,200
$ 96,500
$ 99,800
$ 102,200
9.(
6.4%
6.0%
8.1%
7.6%
8.8 %,
9.1%
74,869
71,600
108,500
98,400
128,700
136,300
139,600
77,016
74,500
113,400
101,900
134,400
142,600
146,000
10,114
68,700
226,100
112,200
289,800
335,900
344,100
8,782
67,400
224,700
110,900
288,500
334,600
342,700
1,095,600
1,027,200
1,027,200
1,095,600
1,095,600
1,095,600
1,095,600
*The Annual Compensation shown for Plan 1 and Plan 2 differs from than shown for the October 1, 1986 Valuation Report
because two participants would be eligible to retire immediately under these plans. Thus, their compensation is not
used for the calculation of Normal Cost.
the . INVESTMENT RESULTS Defined
Benefit
financial Plans
Group
Annual Rate of Return ( %) for the one year
Interest
Account period ending on September 30 of the year shown Average Crediting
(Compounded Annually) Rate on
1983 1984 1985 1986 1987 3 -Year 5 -Y ear October 1, 1987
LOAN (FIXED - INCOME) ACCOL'N'rS
• Fixed Income - Participating
(General Account)
- Book Value Rate of Return
- Market Value Rate of Return
• Money Market
(Separate Account LI)
• Bond & Mortgage
(Primart Separate Account)
OWNERSHIP (EQUITY) ACCOt'NTS
• Common Stock
(Separate Account A)
• Real Estate
(Real Estate Separate Account)
9.55% to
10.0596'
14.33%
12.34%
14.39%
12.59%
9.40%
13.15%
13.32%
12.32%
5.47%
21.02%
24.19%
2.33%
14.72%
13.77%
9.37%
10.64%
8.86%
7,24%
6.34%
7.48%
8.48%
'•
8.71%
24.54%
21.29%
0.50%
14.93%
"
56.21%
9.45%
0.13%
16.58%
28.60%
48.60%
30.61%
28.36%
12.43%
8.73%
7.11%
6.99%
7.61%
8.92%
7.50%
11.16 %' **
N/A
N/A
All account returns are after imcgrnew mamFement expenses
Results for all accounts are the r :It'.' of return that would have been earned from a
single ,um invested at the start of the period and left until the end of the period, with
no other transactions.
Fixed Income- Participating rc,ult< ,ac shoxkn on both it book value basis (interest
only) and a market value basi, (interest plus market changes in hook value). The
Market xalue is calculated usiry the method currently in effect for determining a
lurnp sum payout when a contract is terminated.
This information is based on past performance which is not a reliable indicator of
future performance. Current discussion is provided in our quarterly "Briefly"
newsletter. We also offer guaranteed intere,t acwunts with two to eight \
guarantee periods. More investment information about all our accounts is available
throm!h \,our Plan Consultant. our regional Group Office. or the person in our home
office assigned to vour plan.
17,thnated rare for. the yuartcr.:lctuul rate is ,uh cci to adlu (higher nr lowrr due to change, in
ca,h Ilow and inters rate,
Our Bond & Ntoripre Account ,lamed durin_ 1 .I.
ti icld to malurits a of Septcmlxer 30. 1987.
(u1 :1 (1 ) n-.
Now vow
PENSION INVESTMENT RATES
(for new investments)
General mint 9.55 to 10.05
Money Market 8.2
Bored Acct. 10.0
Stock Account limit value) -6.66 (past month)
+8.56 (3rd quarter)
-3.46 (YTD)
Real Estate + .64 (last month)
+6.33 (YTD)