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FIle Ref. #045 F1RE&POL1CE-PENS10N 1D:3056737126 SEP 03'97 14:05 No.OOl P.Ol ~ c.J-v...~ ^4" ~'(~...fo...( AAV 2-j~ q~ ..- ~. Fire . Police Pension Office Miami ..ach, Florida Ir.nsmltta. feoelmlle ~ i fl1l .1~lI ~ TO: fAX t#: 8UEJJI;CT; DATE: PAGES: ROBERT PARCHER. CITY CLERK. (305) 673-7254 CORRECTED LETTER September 3, 1991 2 COMMENTS: PLEAse REPLACE LEITER PREVIOUSL V SENT WITH THE ENCLOSED. n ...0 -, ....J --~ ~ ef) -" l"'f"\ n --0 \" I C~ (.r) .--, '. ) ~'.~. .' (j:' c.:. -q -q rV -0 0 rn ."",""'11: t i"\ - -0 I:L~ :::~ rn (;'0 I:J From thf desk of... SV&LYN FELDMAN ADMINISlRATIVE SECRETARY FIRe AND POLICE PElN510N FUNDS B0611NCOLN ROAD SUITE 0400 MIAMI BEACH FL 33139-2902 (305) G7J.7039 Fax: (305) 673-7128 FIRE&POLICE-PENSION ID:3056737126 SEP 03'97 14:05 No.OOl P.02 City l"IIlion Fund fo, Fir.""" and fDlic".,,, In tl" cu, oJ Mitun' B,,"II ,m" City Supp,.",.1II41 P_n,",1I Fund /01' Pllq-;,ht." _4 Polk. OjJic.n in thl CIIJI of Miami Betu:h . ~ September 3, 1997 FROM: Robert Parcher City CIeri< Evelyn Feldman _.. .1/ Administrative Secretary ..v'.{ Pursuant to your request, encfosed are the following: TO: (1) Financial Statements - September 30, 1996 and 1995 City Pension Fund for Firemsn and Policemen in the City of Miami Beach (Base Plan) (2) Financial Statements - September 30, 1996 and 1995 City Supplemsntal Pension Fund for Flrenghters and Police Officers in the City of Miami Beach (Supplemental Plan) (3) Actual1al Valuation Repot1 as of October 1, 1996 (used to detlaDlne gp/Jtributlons f9r the CI(y'4 fj,C8' year be,glon/ng October t 1fS'{) City PensIon Fund for Firemen and Policemen In the City of Miami Beach (Base Plan) (4) Actuarial Valuation Report as of October 1, 1996 (11.1.(/ to determine contributions for tfJ. (;ity's fiscal year bf#ginnlng October 1. 199ft) City SupplfJmt1ntal Pension Fund for Firefighters and Police Officers in the City of Miami Beach (Supplomental Plan) Should you have any questions, please do not hesitate to contaot the Administrator. eef enolosures . .< 60S Lincoln Road . S"Ue 400 · Ml4m' Segel., Florida 33139-Z90: . (305) 613.1039 City Pension Fund for Firemen and Policemen in the City of Miami Beach and City Supplemental Pension Fundfor Firefighters and Police Officers in the City of Miami Beach September 3, 1997 TO: Robert Parcher City Clerk FROM: Evelyn Feldman Administrative Secretary y~".'1 (;;: Pursuant to your request, enclosed are the following: (1) Financial Statements - September 30, 1996 and 1995 City Pension Fund for Firemen and Policemen in the City of Miami Beach (Base Plan) (2) Financial Statements - September 30, 1996 and 1995 City Supplemental Pension Fund for Firefighters and Police Officers in the City of Miami Beach (Supplemental Plan) 7 Actuarial Valuation Report as of October 1, 1996 (us-4 determine contributions for the City's fiscal year beginning October 1, 19~i;; Pension Fund for Firemen and Policemen in the City of Miami Beach (Base Plan) fo Actuarial Valuation Report as of October 1, 1996 (usJHfto determine contributions for the City's fiscal year beginning October 1, 199.1f City Supplemental Pension Fund for Firefighters and Police Officers in the City of Miami Beach (Supplemental Plan) 2- (3) (4) Should you have any questions, please do not hesitate to contact the Administrator. eef enclosures 605 Lincoln Road · Suite 400 · Miami Beach, Florida 33139-2902 · (305) 673-7039 CITY PENSION FUND FOR FIREMEN AND POLICEMEN CITY OF MIAMI BEACH FINANCIAL STATEMENTS SEPTEMBER 30, 1996 AND 1995 KOCH, ZELKO, ROTH, REISS, BEUANTONI, SCHINDER . ROSENBERG, PA. Certified Public Accountants @ CITY PENSION FUND FOR FIREMEN AND POLICEMEN CITY OF MIAMI BEACH FINANCIAL STATEMENTS SEPTEMBER 30, 1996 AND 1995 TABLE OF CONTENTS Independent auditor's report.................. ........................................... ..... 1 Financial statements: Statements of net assets available for benefits........................................... 2 Statements of changes in net assets available for benefits.............................. 3 Statement of accumulated plan benefits................................................... 4 Statement of changes in accumulated plan benefits ..................................... 5 Notes to financial statements.. ..... ........................... ... ................... ......... 6-11 Required supplementary information: Schedule 1 - Revenues by source and expenses by type................................. 12 Schedule 2 - Analysis of funding progress................................................ 13 KOCH, ZELKO, ROTH, REISS, BELlANTONI, SCHINDER Ie ROSENBERG, P.A. Certtfted Public Accountants * KOCH, ZELKO, ROTH, REISS, BELlANTONI, SCHINDER Be ROSENBERG, PA. CERTIFIED PUBLIC ACCOUNTANTS Jeffrey B. Koch. CPA Robert A. Zelko. CPA Michael J. Roth, CPA A. Gerald Reiss, CPA Donald F. Bellantoni. CPA Bernard J. Schinder, CPA Jack N. Rosenberg, CPA Lawrence W. Rubenstein, CPA Sharon Caplan Olesiewicz, CPA Lauren S. Eisenberg, CPA Beth H. Gittelson, CPA Debra A. Bachenheimer, CPA Report of Independent Certified Public Accountants Board of Trustees City Pension Fund for Firemen and Policemen City of Miami Beach, Florida We have audited the accompanying statements of net assets available for benefits of the City Pension Fund for Firemen and Policemen - City of Miami Beach at September 30, 1996 and 1995, and the related statements of changes in net assets available for benefits for the years then ended and the statement of accumulated plan benefits as of October 1, 1995 and the related statement of changes in accumulated plan benefits for the year then ended. These financial statements are the responsibility of the Plan's trustees. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the fmancial statements referred to above present fairly, in all material respects, the financial status of the City Pension Fund for Firemen and Policemen - City of Miami Beach as of September 30, 1996 and 1995, and the changes therein for the years then ended in conformity with generally accepted accounting principles. The supplementary information in Schedules 1 and 2 which show historical pension information is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information and express no opinion on it. k~r ~"~I t2~~J>/ ~/~ J.-~/f./T, December 13, 1996 4700 SHERIDAN STREET - BLDG. N. HOLLYWOOD, FLORIDA 33021-3497 (954) 989-7462 . DADE (305) 652-4255. BOCA RATON (561) 395-3550. FAX (954) 962-1021 Members American Institute of Certified Public Accountants _ Florida Institute of Certified Public Accountants _ Private Companies Practice Section {'\ .., CITY PENSION FUND FOR FIREMEN AND POLICEMEN CITY OF MIAMI BEACH STATEMENTS OF NET ASSETS A V AILABLE FOR BENEFITS SEPfEMBER 30, 1996 AND 1995 ASSETS 1996 1995 Investments, at fair value United States Government securities $ 32,105,825 $ 29,617,748 Corporate bonds 66,312,262 64,917,069 Common stocks 99,958,848 91,210,125 Money market funds 419,401 510,802 Short-term obligations 14.500.000 9.000.220 213,296,336 195,255,964 Cash 10,000 10,000 Accrued interest receivable 1.814.000 1.687.000 $215.120.336 $196.952.964 LIABILITIES Deferred City contribution $ 541.944 $ 1.514.378 Net assets available for benefits $214.578.392 $195.438.586 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. -2- KOCH, ZELKO, ROTH, REISS, BELlANTONI, SCHINDER" ROSENBERG, P.A. Celflfled Public Accountants @ CITY PENSION FUND FOR FIREMEN AND POLICEMEN CITY OF MIAMI BEACH STATEMENTS OF CHANGES IN NET ASSETS A V AILABLE FOR BENEFITS FOR THE YEARS ENDED SEPTEMBER 30, 1996 AND 1995 1996 1995 Investment income: Net appreciation (depreciation) in fair value of investments Interest Dividends Realized gain on sale of investments Total additions $ 9,788,735 $ 15,847,487 7,560,853 7,124,366 1,817,876 1,793,719 7 .558.984 4.775.725 26.726.448 29.541.297 774.469 637 .638 972,434 20,677 ,522 1,539,504 1,374,253 241.000 152.691 2.752.938 22.204.466 30.253.855 52.383.401 Operating expense reimbursement by City Contributions: City Employees - Contributions Buybacks/transfers Pension benefits paid: Service retirements (recipients, 265 and 248 in 1996 and 1995, respectively) Disability retirements (recipients, 50 and 56 in 1996 and 1995, respectively) Beneficiary payments (recipients, 64 and 63 in 1996 and 1995, respectively) Total deductions 8,181,493 7,657,530 1,504,346 1,458,691 513.011 458.889 10.198.850 9.575.110 77 4 .469 637 .638 140.730 63 .553 11.114.049 10.276.301 19,139,806 42,107,100 195.438.586 153.331.486 $214.578.392 $195.438.586 Operating expenses Refund of employee contributions Net increase (decrease) Net assets available for benefits Beginning of year End of year THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. -3- KOCH, ZELKO, ROTH, REISS, BELlANTONI, SCHINDER" ROSENBERG, P.A. Certified Public Accountants @ CITY PENSION FUND FOR FIREMEN AND POLICEMEN CITY OF MIAMI BEACH STATEMENT OF ACCUMULATED PLAN BENEFITS OCTOBER 1,1995 Actuarial present value of accumulated plan benefits: Vested benefits - Participants currently receiving payments Other participants - Active - Deferred Nonvested benefits Total actuarial present value of accumulated plan benefits $115,031,496 40,472,510 2.160.631 157,664,637 3.370.442 $161.035.079 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. -4- KOCH, ZELKO. ROTH, REISS. BEUANTONI, SCHIND&R. ROSENBERG, P.A. Certtfted Public Accountants (i) CITY PENSION FUND FOR FIREMEN AND POLICEMEN CITY OF MIAMI BEACH STATEMENT OF CHANGES IN ACCUMULATED PLAN BENEFITS FOR THE YEAR ENDED OCTOBER 1, 1995 Actuarial present value of accumulated plan benefits as of October 1, 1994 $153.042.456 Increase (decrease) due to: Interest, survivorship, membership changes and benefit accrual Benefits paid 17,635,371 (9.642.748) Total increase 7.992.623 Actuarial present value of accumulated plan benefits as of October 1, 1995 $161.035.079 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. -5- KOCH, ZELKO, ROTH, REISS, BELlANTONI, SCHINDER " ROSENBERG, PA. Celtlfted Public Accountants * CITY PENSION FUND FOR FIREMEN AND POLICEMEN CITY OF MIAMI BEACH NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1996 AND 1995 Note 1 - Summary of sienificant accountine policies and other matters a. Description of Plan: The City Pension Fund For Firemen and Policemen - City of Miami Beach (the Plan) is a defined benefit pension plan covering substantially all policemen and firemen of the City of Miami Beach (the City) created under Chapter 23414, Laws of Florida, Special Acts of 1945, as amended through November 7, 1989. The following is a brief description of the Plan provided for general information purposes only. Members should refer to the Plan for more complete information. The Plan document governs in the event a question arises. b. Service retirement benefits: Those members who entered the Plan prior to July 1, 1976, shall be entitled to receive benefits as follows: Any member may retire on a service retirement pension upon his completion of 15 years of creditable service, but not before attaining age 50. However, any member upon attainment of age 55 may retire upon completion of 10 years of creditable service. Upon retirement, a member will receive a monthly pension, payable for life, equal to 3% of the average monthly salary for each of the first 20 years of creditable service and 2-3/4% of the average monthly salary for each year of creditable service in excess of 20 years, provided that the pension does not exceed 85% of the average monthly salary. The average monthly salary of the member is computed based on the salary for the two highest paid years prior to the date of retirement. A member entering the Plan subsequent to June 30, 1976, will receive benefits as follows: Any member may retire on a service retirement pension upon his completion of 10 years of creditable service, but not before attaining age 55. Upon retirement, a member will receive a monthly pension, payable for life, equal to 2.50% of the average monthly salary for each of the first 25 years of creditable service and 2 % of the average monthly salary for each year of creditable service thereafter, provided that the pension does not exceed 80% of the average monthly salary. The average monthly salary of the member is computed based on the salary of the three highest paid years prior to the date of retirement. -6- KOCH, ZELKO, ROTH, REISS, BEUANTONI, SCHINDER. ROSENBERG, P.A. CertIfIed Public Accountants * CITY PENSION FUND FOR FIREMEN AND POLICEMEN CITY OF l\fiAMI BEACH NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1996 AND 1995 Note 1 - Summary of sienificant accountim! policies and other matters (continued) c. Disability benefits: 1. Service connected - Any member who becomes totally and permanently disabled at any time as a result of illness or injury suffered in the line of duty may be retired on an accidental disability pension. 2. Non-service connected - Any member who becomes totally or permanently disabled after 5 years of creditable service as a result of illness or injury not suffered in the line of duty may be retired on an ordinary disability retirement pension. Upon disability retirement, a member receives a monthly pension equal to their service retirement benefits. For a service connected disability, the minimum pension payable is 75% of monthly salary of the member at the time of disability retirement, less any offset for workers' compensation. d. Death benefits The Plan also provides benefits for spouses and/or children of members for service connected and non-service connected deaths. e. Cost of living adiustment In conformity with Sec. 7-l/2K of the Plan all retirees and beneficiaries, who have been receiving a pension for at least 3 years as of each July 1 will receive a 2 % increase in benefits the next following October 1. f. Refund of emoloyee contributions If a member resigns or is lawfully discharged before retirement, his contributions with 3% interest per annum are returned to him. The Plan also provides a special provision for vested benefits for employees who terminate after 10 years of service. g. Membership At October 1, 1995, date of latest actuarial report, there were 428 active members, 248 retired members on service retirements, 57 retired members on disability retirements, 61 beneficiaries of deceased members and 19 deferred vested members. -7- KOCH, ZELKO, ROTH, REISS, BELlANTONI, SCHINDER Ie ROSENBERG, P.A. CertIfled Public Accountants * CITY PENSION FUND FOR FIREMEN AND POLICEMEN CITY OF MIAMI BEACH NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1996 AND 1995 Note 1 - Summary of sienificant accountine policies and other matters (continued) h. Contributions The City of Miami Beach (the Employer) is required to contribute an actuarially determined amount that, when combined with members' contributions, will fully provide for all benefits as they become payable. Additional contributions were made by the City to cover the unfunded prior service liability ($19,978,332) and were included with the City contributions in the statement of changes in net assets available for benefits for the year ended September 30, 1995. All members of the Plan prior to July 1, 1976, contribute 8% of their salary and employees becoming members on or after July 1, 1976 contribute 6% of their salary. The contributions to the Plan for the year ended September 30, 1996, of $2,752,938 were made in accordance with actuarially determined requirements computed through an actuarial valuation performed as of October 1, 1995. The contribution consisted of $2,752,938 normal cost (10.4% of current covered payroll). The City contributed $972,434 (3.7% of current covered payroll), employees contributed $1,780,504 (6.7% of current covered payroll). Excess contributions made by the City of $541,944 are shown as deferred city contribution on the statement of net assets available for benefits September 30, 1996 i. Investments - The Plan's investment policy is to invest in bonds issued by the U.S. Government, agencies or U. S. Corporations and dividend paying equities of U . S. Corporations listed on a recognized exchange. All stocks and bonds must hold a rating in one of the three highest classifications by a major rating service. The Plan's investment in equities shall not exceed 50% of the total fund portfolio at cost. No one equity security can exceed 3% of the total fund at market value. The Plan retains an investment counselor who supervises and directs the investment of the assets. The Plan requires the City of Miami Beach to be custodian of all assets. The City in turn has a custodial agreement with a trust company which provides for the custody and handling of all transactions. The investments owned are held in a trust account in the name of the Plan but the securities are held in nominee name to facilitate trading. The fair value of quoted investment securities is based on the closing sale price as of September 30, 1996 and 1995, as reported by recognized securities exchanges. Short-term obligations are stated at cost which approximates market value. Gains and losses on the sale of investments are based on the first-in, first-out identification method. Dividends and interest income are recognized when earned. j. Termination - In case of termination of the Plan, benefits accrued to members to the extent funded will be nonforfeitable. -8- KOCH, ZELKO, ROTH, REISS, BEUANTONI, SCHINDER Ie ROSENBERG, PA. CertIfIed Public Accountants . @ CITY PENSION FUND FOR FIREMEN AND POLICEMEN CITY OF MIAMI BEACH NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1996 AND 1995 Note 1 - Summary of sienificant accountine policies and other matters (continued) k. Use of estimates- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Note 2 - Investments As of September 30, 1996 and 1995, the level of credit risk of the Plan's investments is in category 1, which included investments that are insured or registered or securities held by the Plan or its agent in the Plan's name. As of September 30, 1996 and 1995, the Plan held no investments which individually exceeded 5 % of the net assets available for benefits. The carrying amounts for investments held at September 30, are as follows: 1996 United States Government securities Corporate bonds Stocks Money market funds Short-term obligations $ 31,951,334 65,369,820 68,013,173 419,401 14.500.000 $180.253.728 1995 $ 28,826,213 62,371,275 71,293,583 510,802 9.000.220 $172.002.093 Appreciation (depreciation) in fair value of the Plan's investments for the year ended September 30, 1996 and 1995, (including investments bought and held during the year) is as follows: 1996 Investments: United States Government securities Corporate bonds Stocks Short-term obligations $ (637,046) (1,603,352) 12,029,133 -0- $ 9.788.735 -9- KOCH, ZELKO, ROTH, REISS, BELlANTONI, SCHINDER Ie ROSENBERG, P.A. CeItIfIed Public Accountants 1995 $ 1,250,975 3,659,981 10,936,366 165 $15.847.487 * CITY PENSION FUND FOR FIREMEN AND POLICEMEN CITY OF MIAMI BEACH NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1996 AND 1995 Note 3 - Operatinl: expenses The operating expenses for the years ended September 30, consisted of the following: 1996 1995 Investment counsel Payroll and payroll benefits (A) Legal Accounting and bookkeeping Conferences and meetings Custodial fee Actuarial Fund evaluation Members' medical Other Telecommunications equipment Insurance Rent Computer consultant $405,794 178,702 18,706 20,075 10,131 24,686 15,977 7,500 14,365 15,635 9,041 28,174 20,833 4.850 774,469 -0- Office expenses paid directly by City $774.469 $338,096 149,478 25,517 15,621 6,487 12,552 22,075 7,500 7,598 12,053 -0- 23,565 -0- -0- 620,542 17.096 $637.638 (A) The Board of Trustees set up a Defined Contribution Money Purchase Pension Plan covering all the Plan's employees with over one year of service. Contributions are 10% of covered payroll. Benefit payments upon retirement or termination of employment are based on the following vesting schedule: 0 to 4 years of service - 0 % vested, 5 or more years of service - 100% vested. Note 4 - Actuarial present value of accumulated plan benefits and fundine status and proeress Accumulated plan benefits Accumulated plan benefits are those future periodic payments that are attributable, under the Plan's provisions, to service which employees have rendered to date. Accumulated plan benefits include benefits expected to be paid to retired or terminated members or their beneficiaries and present employees or their beneficiaries. The actuarial present value of accumulated plan benefits was determined by an actuary using a unit credit basis at an assumed rate of return of 8.5% and is independent of the funding method used to determine contributions to the Plan. For the valuation prepared as of October 1, 1995, there were no assumption changes. Assumptions used for the calculations of the accumulated plan benefits are the same as the actuarial plan valuation as of October 1, 1995. -10- KOCH, ZELKO, ROTH, REISS, BEUANTONI, SCHINDER. ROSENBERG, P.A. c.rttfIed Public Accountants * CITY PENSION FUND FOR FIREMEN AND POLICEMEN CITY OF MIAMI BEACH NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1996 AND 1995 Note 4 - Actuarial present value of accumulated plan benefits and fundine status and proeress (continued) Pension benefit oblillations The pension benefit obligation, which is the present value of credited projected pension benefits estimated to be payable in the future as a result of employee service to date, was calculated using a projected unit credit basis, taking into account projected increases in salary that grades from 10.17 % to 4.53% depending on age. The measure is independent of the actuarial funding method used to determine contributions to the Plan. As of October 1, 1995, the (overfunded) pension benefit obligation was as follows: Pension benefit obligation: Retirees and beneficiaries currently receiving benefits and terminated employees not yet receiving benefits $ 117,192,127 Current employees: Accumulated employee contributions Employer-financed vested Employer-fmanced nonvested 15,625,134 24,463,824 15.033.174 Total pension benefit obligation 172,314,259 Net assets available for benefits - actuarial value (actuarial market value - $196,350,728) 078.695.061) (Overfunded) pension benefit obligation $ (6.380.802) The change in the pension benefit obligatio.n from the previous valuation date to the current valuation date is as follows: Pension benefit obligation as of October 1, 1994. $163.121.466 Increase (decrease) due to: Interest, survivorship, membership changes and benefit accrual Benefits paid 18,835,541 (9.642.748) Total increase 9.192.793 Pension benefit obligation as of October 1, 1995. $172.314.259 -11- KOCH, ZELKO, ROTH, REISS, BELlANTONI, SCHINDER. ROSENBERG, P.A. CertIfIed Public Accountants * CITY PENSION FUND FOR FIREMEN AND POLICEMEN CITY OF MIAMI BEACH REVENUES BY SOURCE AND EXPENSES BY TYPE SUPPLEMENTARY INFORMATION SCHEDULE "1" Revenues bv Source Investment Employee Employer Income Other Fiscal Year Contributions Contributions (Loss ) Income Total 12/31/86 $1,212,056 $ 4,636,633 $ 10,580,972 $275,102 $ 16,704,763 9/30/87 (1) 1,046,528 3,461,101 6,039,777 220,699 10,768,105 9/30/88 1,509,222 4,615,187 3,970,488 332,630 10,427,527 9/30/89 1,461,298 4,670,975 16,192,153 392,472 22,716,898 9/30/90 1,530,032 3,485,343 (587,217) 446,820 4,874,978 9/30/91 1,437,305 3,829,503 18,740,868 497,407 24,505,083 9/30/92 1,396,369 3,968,669 13,415,990 507,685 19,288,713 9/30/93 1,343,195 3,559,095 17,993,802 527,555 23,423,647 9/30/94 1,335,375 3,494,717 1,389,310 559,320 6,778,722 9/30/95 1,526,944 20,677,522 29,541,297 637,638 . 52,383,401 9/30/96 1,780,504 972,434 26,726,448 774,469 30,253,855 Expenses by Type Administrative Fiscal Year Benefits EXDenses Refunds Total 12/31/86 $ 4,144,003 $275,102 $ 40,549 $ 4,459,654 9/30/87 (1) 3,266,635 220,699 58,592 3,545,926 9/30/88 4,578,856 332,630 16,105 4,927,591 9/30/89 5,111,466 392,472 22,172 5,526,110 9/30/90 6,088,186 446,820 39,400 6,574,406 9/30/91 6,766,637 497,407 49,724 7,313,768 9/30/92 7,480,357 507,685 45,755 8,033,797 9/30/93 8,317,278 527,555 49,131 8,893,964 9/30/94 8,910,079 559,320 36,821 9,506,220 9/30/95 9,575,110 637,638 63,553 10,276,301 9/30/96 10,198,850 774,469 140,730 11,114,049 (1) The Plan changed its fiscal year from December 31st to September 30th in 1987. Period shown is for nine months. -12- KOCH, ZELKO, ROTH, REISS, BEUANTONI, SCHINDER. ROSENBERG, P.A. Certified Public Accountants @ CITY PENSION FUND FOR FIREMEN AND POLICEMEN CITY OF MIAMI BEACH SUPPLEMENTARY INFORMATION ANALYSIS OF FUNDING PROGRESS (In Millions of Dollars) SCHEDULE "2" (1) (2) (3) (4) (5) (6) Unfunded (Ovecfunded) Unfunded Pension (Overfunded) Benefit Net Assets Pension Obligation Available Pension Percentage Benefit Annual as % of for Benefit Funded Obligation Covered Payroll Fiscal Year Benefits Oblil!ation (1) / (2) (2) - (1) Pavroll (4) / (5) 9/30/87 $ 77.9(A) $180.2(C) 72.0% $30.3 $13.8(E) 219.6%(E 9/30/88 $ 87.6(B) $117.0(D) 74.9% $29.4 $19.1 154.0% 9/30/89 $ 97.6(B) $114.1(D) 85.6% $16.5 $20.0 82.5% 9/30/90 $109.4(B) $134.3(0) 81.5% $24.9 $21.6 115.3% 9/30/91 $116.6(B) $141.2(D) 82.6% $24.6 $21.8 112.8% 9/30/92 $124.7(B) $140.7(0) 88.6% $16.0 $22.8 70.2% 9/30/93 $133.3(B) $ 147.5(D) 90.4% $14.2 $21. 8 65.1% 9/30/94 $143.1(B) $155.7(D) 91.8% $12.6 $22.2 56.8% 9/30/95 $168.8(B) $163.1(D) 103.5% $(5.7) $23.6 (24.2)% 9/30/96 $178.7(B) $172.3(0) 103.7% $(6.4) $26.4 (24.2)% (A) Actuarial value at January 1, 1987. (B) Actuarial value at October 1, 1987, 1988, 1989, 1990, 1991, 1992, 1993, 1994 and 1995, respectively. (C) At January 1, 1987. (D) At October 1, 1987, 1988, 1989, 1990, 1991, 1992, 1993 and 1995, respectively. The October 1, 1988, 1989, 1990, 1991 and 1992 amounts give effect to changes in actuarial assumptions. (E) Payroll is for a nine (9) month period only. Information prior to January 1, 1987 is not available, and as such, an index trend is not reflected. -13- KOCH, ZELKO, ROTH, REISS, BEUANTONI, SCHINDER. ROSENBERG, P.A. Certlfted Public Accountants @ CITY SUPPLEMENTAL PENSION FUND FOR FIREFIGHTERS AND POLICE OFFICERS CITY OF MIAMI BEACH FINANCIAL STATEMENTS SEPTEMBER 30,1996 AND 1995 KOCH, ZELKO, ROTH, REISS, BEUANTONI, SCHINDER Ir ROSENBERG, P.A. CertIfIed Public Accountants * CITY SUPPLEMENTAL PENSION FUND FOR FIREFIGHTERS AND POLICE OFFICERS CITY OF MIAMI BEACH FINANCIAL STATEMENTS SEPTEMBER 30, 1996 AND 1995 TABLE OF CONTENTS Independent auditor's report.................................................................. 1 Financial statements: Statements of net assets available for benefits. ..... .............. ............. .......... 2 Statements of changes in net assets available for benefits... .. . . . . . . . . . . . . . . . . . . . . . . . . . 3 Statement of accumulated plan benefits................................................... 4 Statement of changes in accumulated plan benefits ..................................... 5 Notes to fmancial statements................................................................. 6-11 Required supplementary information: Schedule 1 - Revenues by source and expenses by type................................. 12 Schedule 2 - Analysis of funding progress................................................ 13 KOCH, ZELKO, ROTH, REISS, BELLANTONI, SCHINDER. ROSENBERG, P.A. CertIfIed Public Accountants * KOCH, ZELKO, ROTH, REISS, BELlANTONI, SCHINDER & ROSENBERG, P.A. CERTIFIED PUBLIC ACCOUNTANTS Jeffrey B. Koch, CPA Robert A. Zelko, CPA Michael J. Roth, CPA A. Gerald Reiss, CPA Donald F. Bellantoni. CPA Bernard J. Schinder, CPA Jack N. Rosenberg. CPA Lawrence W. Rubenstein, CPA Sharon Caplan Olesiewlcz. CPA Lauren S. Eisenberg, CPA Beth H. Gittelson, CPA Debra A. Bachenheimer. CPA Report of Independent Certified Public Accountants Board of Trustees City Supplemental Pension Fund for Firefighters and Police Officers City of Miami Beach, Florida We have audited the accompanying statements of net assets available for benefits of the City Supplemental Pension Fund for Firefighters and Police Officers - City of Miami Beach at September 30, 1996 and 1995, and the related statements of changes in net assets available for benefits for the years then ended and the statement of accumulated plan benefits as of October 1, 1995 and the related statement of changes in accumulated plan benefits for the year then ended. These financial statements are the responsibility of the Plan's trustees. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial status of the City Supplemental Pension Fund for Firefighters and Police Officers - City of Miami Beach as of September 30, 1996 and 1995, and the changes therein for the years then ended in conformity with generally accepted accounting principles. The supplementary information in Schedules 1 and 2 which show historical pension information is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information and express no opinion on it. ~'~/~/~/ ~'/~rJ-~lt.A. December 6,1996 4700 SHERIDAN STREET - BLDG. N. HOLLYWOOD, FLORIDA 33021-3497 (954) 989-7462 . DADE (305) 652-4255. BOCA RATON (561) 395-3550. FAX (954) 962-1021 Members American Institute of Certified Public Accountants _ Fiorida Institute of Certified Pubiic Accountants _ Private Companies Practice Section I' .~ CITY SUPPLEMENTAL PENSION FUND FOR FIREFIGHTERS AND POLICE OFFICERS CITY OF MIAMI BEACH STATEMENTS OF NET ASSETS A V AILABLE FOR BENEFITS SEPTEMBER 30, 1996 AND 1995 ASSETS 1996 1995 Investments, at fair value United States Government securities $14,981,404 $ 10,410,409 Corporate bonds 23,662,206 17,335,534 Common stocks 38,104,275 31,674,562 Money market funds 924,648 1,074,182 Short-term obligations 4.150.000 11.000.275 81,822,533 71,494,962 Cash 10,000 10,000 Accrued interest receivable 707 .000 488.000 $82.539.533 $71.992.962 LIABILITIES Pensions payable Deferred city contribution $ 22,703 180.560 203.263 $ ..{)- ..{)- ..{)- Net assets available for benefits $82.336.270 $ 71.992.962 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. -2- KOCH, ZELKO, ROTH, REISS, BEUANTONI, SCHINDER. ROSENBERG, P.A. Celtlfted Public Accountants * CITY SUPPLEMENTAL PENSION FUND FOR FIREFIGHTERS AND POLICE OFFICERS CITY OF MIAMI BEACH STATEMENTS OF CHANGES IN NET ASSETS A V AILABLE FOR BENEFITS FOR THE YEARS ENDED SEPI'EMBER 30, 1996 AND 1995 1996 1995 Investment income: Net appreciation (depreciation) in fair value of investments Interest Dividends Realized gain on sales of investments Total additions $ 3,349,096 $4,503,744 2,837,848 2,284,598 560,213 339,229 1.552.148 924.553 8.299.305 8.052.124 2,268,440 31,842,646 1,312,969 1,120,817 446.856 63.610 4.028.265 33.027.073 12.327.570 41.079.197 Contributions: City Employees - Contributions Buybacks/transfers Pension benefits paid: Service retirements (recipients, 257 and 255 in 1996 and 1995, respectively) Disability retirements (recipients, 58 and 54 in 1996 and 1995, respectively) Beneficiary payments (recipients, 62 and 64 in 1996 and 1995, respectively) Net increase 1,255,060 1,469,759 209,578 180,870 83.640 72.785 1.548.278 1.723.414 349.586 250.336 86.398 15.578 1.984.262 1.989.328 10,343,308 39,089,869 71.992.962 32.903.093 $82.336.270 $ 71.992.962 Operating expenses Refund of employee contributions Total deductions Net assets available for benefits Beginning of year End of year THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. -3- KOCH, ZELKO, ROTH, REISS, BELLANTONI, SCHINDER . ROSENBERG, P.A. Cefttfted Public Accountants * CITY SUPPLEMENTAL PENSION FUND FOR FIREFIGHTERS AND POLICE OFFICERS CITY OF MIAMI BEACH STATEMENT OF ACCUMULATED PLAN BENEFITS OCTOBER 1, 1995 Actuarial present value of accumulated plan benefits: Vested benefits - Participants currently receiving payments Other participants - Active - Deferred Nonvested benefits Total actuarial present value of accumulated plan benefits $25,062,313 15,173,597 480.991 40,716,901 4.575.313 $45.292.214 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 4- KOCH, ZELKO, ROTH, REISS, BELlANTONI, SCHINDER. ROSENBERG, P.A. CertIfIed Public Accountants * CITY SUPPLEMENTAL PENSION FUND FOR FIREFIGHTERS AND POllCE OFFICERS CITY OF MIAMI BEACH STATEMENT OF CHANGES IN ACCUMULATED PLAN BENEFITS FOR THE YEAR ENDED OCTOBER 1, 1995 Actuarial present value of accumulated plan benefits as of October 1, 1994 $44.723.064 Increase (decrease) due to: Plan amendments Interest, survivorship, membership changes and benefit accrual Benefits accumulated Benefits paid -0- 3,801,460 (1,486,230) (1.746.080) Total increase 569.150 Actuarial present value of accumulated plan benefits as of October 1, 1995 $45.292.214 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. -5- KOCH, ZELKO, ROTH, REISS, BEUANTONI, SCHINDER . ROSENBERG, P.A. Cetttfted Public Accountants * CITY SUPPLEMENTAL PENSION FUND FOR FIREFIGHTERS AND POLICE OFFICERS CITY OF MIAMI BEACH NOTES TO FINANCIAL STATEMENTS SEPrEMBER 30,1996 AND 1995 Note 1 - Summary of sipificant accountine policies and other matters a. Description of Plan: The City Supplemental Pension Fund for Firefighters and Police Officers - City of Miami Beach (the Plan) is a defined benefit pension plan established October 1, 1989, covering substantially all firemen and policemen of the City of Miami Beach (the City) created under Ordinance No. 89- 2640 as amended through December 7, 1994. The following is a brief description of the Plan provided for general information purposes only. Members should refer to the Plan for more complete information. The Plan document governs in the event a question arises. b. Base System: The Base System means the City Pension Fund for Firemen and Policemen - City of Miami Beach. c. Service retirement benefits: Those members who were employed by the City prior to May 19, 1993, shall be entitled to receive benefits as follows: Any member may retire on a service retirement pension upon the attainment of age 50. Upon retirement, a member will receive a monthly pension, payable for life, equal to 3 % of the average monthly salary for each of the first 15 years of creditable service and 4% of the average monthly salary for each year of creditable service in excess of 15 years, provided that the pension does not exceed 90% of the average monthly salary, reduced by the Base System Benefit. The average monthly salary of the member is computed based on the salary for the two highest paid years, as defined, prior to the date of retirement. A member employed by the City on or after May 19, 1993, will receive benefits as follows: Any member may retire on a service retirement pension upon the attainment of age 55 with 10 years or more of creditable service. Upon retirement, a member will receive a monthly pension, payable for life, equal to 3 % of the average monthly salary for each year of creditable service, provided that the pension does not exceed 80% of the average monthly salary, reduced by the Base System Benefit. The average monthly salary of the member is computed based on the salary for the three highest paid years, as defined, prior to the date of retirement. -6- KOCH, ZELKO, ROTH, REISS, BEllANTONI, SCHINDER Ie ROSENBERG, P.A. Certtfted Public Accountants * CITY SUPPLEMENTAL PENSION FUND FOR FIREFIGHTERS AND POLICE OFFICERS CITY OF MIAMI BEACH NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30,1996 AND 1995 Note 1 - Summary of sj~ifi"jIInt accountina policies and other matters (continued) d. Disability benefits: 1. Service connected - Any member who becomes totally and permanently disabled at any time as a result of illness or injury suffered in the line of duty may be retired on an accidental disability pension. 2. Non-service connected - Any member who becomes totally or permanently disabled after 5 years of creditable service as a result of illness or injury not suffered in the line of duty may be retired on an ordinary disability retirement pension. Upon disability retirement, a member receives a monthly pension equal to their service retirement benefits. For a service connected disability, the minimum pension payable is 85% (for members employed prior to May 19, 1993) or 75% (for members employed on or after May 19, 1993) of monthly salary of the member at the time of disability retirement, reduced by the Base System Benefit. For a non-service connected disability, the minimum pension payable is 50% (for members employed on or after May 19, 1993) of monthly salary of the member at the time of disability retirement, reduced by the Base System Benefit. e. Death benefits - The Plan also provides benefits for spouses and/or children of members for service connected and non-service connected deaths. f. Cost of livin'1 adiustment - In conformity with Sec. 7.03 of the Plan, retirees and beneficiaries receiving a monthly pension for at least 1 year will receive a 2.5% (for pensioners employed pre May 19, 1993) or 1.5% (for pensioners employed on or after May 19, 1993) increase in benefits (reduced by increased amounts payable under the Base System) the next October 1st. g. Refund of emoloyee contributions - If a member resigns or is lawfully discharged before retirement, his contributions with 3 % interest per annum are returned to him. The Plan also provides a special provision for vested benefits for employees who terminate after 10 years of service for members employed prior to May 19, 1993, or 1 year of service for members employed on or after May 19, 1993. h. Membership - At October 1, 1995, the date of latest actuarial report, there were 455 active members, 257 retired members on service retirements, 58 retired members on disability retirements, 62 beneficiaries of deceased members and 10 deferred vested members. -7- KOCH, ZELKO, ROTH, REISS, BEUANTONI, SCHINDER Ie ROSENBERG, PA. CertIfIed Public Accountants @ CITY SUPPLEMENTAL PENSION FUND FOR FIREFIGHTERS AND POllCE OFFICERS CITY OF MIAMI BEACH NOTES TO FINANCIAL STATEMENTS SEPI'EMBER 30,1996 AND 1995 Note 1 - Summary of sianific.ant accountim! policies and other matters (continued) i. Contributions - The City of Miami Beach (the Employer) is required to contribute an actuarially determined amount that, when combined with members' contributions, will fully provide for all benefits as they become payable. Additional contributions were made by the City to cover the unfunded prior service liability ($29,435,681) which were included with City contributions in the statement of changes in net assets available for benefits for the year ended September 30, 1995. Members of the Plan contribute 10% of their salary reduced by any amount contributed under the Base System. The contributions to the Plan for the year ended September 30, 1996 of $4,028,265 were made in accordance with actuarially determined requirements computed through an actuarial valuation performed as of October 1, 1995. The contribution consisted of $4,028,265 normal cost (14.3% of current covered payroll). The City contributed $2,268,440 (8.1 % of current covered payroll), employees contributed $1,759,825 (6.2% of current covered payroll). Excess contributions made by the City of $180,560 are shown as deferred City contribution on the statement of net asssets available for benefits September 30, 1996. j. Investments - The Plan's investment policy is to invest in bonds issued by the U. S. Government, agencies or U.S. Corporations and dividend paying equities of U.S. Corporations listed on a major stock exchange. Corporate bonds must be rated in the highest four categories of quality. The Plan's investment in equities shall not exceed 50% of the total fund portfolio at cost. No one equity security can exceed 3% of the total fund at market value. Effective November, 1993, a maximum of 12.5% of the total Plan at market value may be invested in non-dividend paying stock. The Plan retains an investment counselor who supervises and directs the investment of the assets. The Plan requires the City of Miami Beach to be custodian of all assets. The City in turn has a custodial agreement with a trust company which provides for the custody and handling of all transactions. The investments owned are held in a trust account in the name of the Plan, but the securities are held in nominee name to facilitate trading. The fair value of quoted investment securities is based on the closing sale price as of September 30, 1996 and 1995, as reported by recognized securities exchanges. Short-term obligations are stated at cost which approximates market value. Gains and losses on the sale of investments are based on the first-in, first-out identification method. Dividends and interest income are recognized when earned. k. Termination - In case of termination of the Plan, benefits accrued to members to the extent funded will be nonforfeitable. 1. Use of estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. -8- KOCH, ZELKO, ROTH, REISS, BEUANTONI, SCHINDER Be ROSENBERG, P.A. Certified Public Accountants @ CITY SUPPLEMENTAL PENSION FUND FOR FIREFIGHTERS AND POLICE OFFICERS CITY OF MIAMI BEACH NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1996 AND 1995 Note 2 - Investments As of September 30, 1996 and 1995, the level of credit risk of the Plan's investments is in category 1, which included investments that are insured or registered or securities held by the Plan or its agent in the Plan's name. As of September 30, 1996 and 1995, the Plan held no investments which individually exceeded 5% of the net assets available for benefits. The carrying amounts for investments held at September 30, are as follows: Short-term obligations United States Government securities Corporate bonds Stocks Money market funds 1996 $ 4,150,000 14,929,539 23,617,527 29,673,615 924.648 $73.295.329 1995 $ 11,000,275 10,045,805 16,732,883 27,457,180 1.074.182 $66.310.325 Appreciation (depreciation) in fair value of the Plan's investments for the years ended September 30, 1996 and 1995, (including investments bought and held during the year) is as follows: 1996 1995 Investments : Short-term obligations United States Government securities Corporate bonds Stocks $ -0- (312,739) (551,443) 4.213.278 $3.349.096 Note 3 - Operatioc expenses The operating expenses as of September 30, consisted of the following: Investment counsel Legal Accounting and bookkeeping Custodial fee Actuarial Fund evaluation Members' medical Other Insurance 1996 $243,447 14,947 14,312 18,879 18,252 7,500 2,880 22,335 7.034 $349.586 -9- KOCH, ZELKO, ROTH, REISS, BELlANTONI, SCHINDER 8r ROSENBERG, PA. Certtfled Public Accountants $ 55 458,771 903,390 3.141.528 $4.503.744 1995 $ 167,433 18,115 10,753 12,731 23,599 7,500 275 2,277 7.653 $250.336 @ CITY SUPPLEMENTAL PENSION FUND FOR FIREFIGHTERS AND POllCE OFFICERS CITY OF MIAMI BEACH NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1996 AND 1995 Note 4 - Actuarial present value of act'umulated plan benefits and fundinr status and proeress Accumulated plan benefits Accumulated plan benefits are those future periodic payments that are attributable, under the Plan's provisions, to service which employees have rendered to date. Accumulated plan benefits include benefits expected to be paid to retired or terminated members or their beneficiaries and present employees or their beneficiaries . The actuarial present value of accumulated plan benefits was determined by an actuary using a unit credit basis at an assumed rate of return of 8.5% and is independent of the funding method used to determine contributions to the Plan. For the valuation as of October 1, 1995, there were no assumption changes. Assumptions used for the calculations of the accumulated plan benefits are the same as the actuarial plan valuation as of October 1, 1995. Pension benefit obli~ations The pension benefit obligation, which is the present value of credited projected pension benefits estimated to be payable in the future as a result of employee service to date, was calculated using a projected unit credit basis, taking into account projected increases in salary that grades from 10.17% to 4.53% depending on age. The measure is independent of the actuarial funding method used to determine contributions to the Plan. -10- KOCH, ZELKO, ROTH, REISS, BELLANTONI, SCHINDER 8r ROSENBERG, P.A. Certified Public Accountants * CITY SUPPLEMENTAL PENSION FUND FOR FIREFIGHTERS AND POLICE OFFICERS CITY OF MIAMI BEACH NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1996 AND 1995 Note 4 - Actuarial present value of aCl'lIInulated plan benefits and fundinl' status and proeress (continued) As of October 1, 1995, the (overfunded) pension benefit obligation was as follows: Pension benefit obligation: Retirees and beneficiaries currently receiving benefits and terminated employees not yet receiving benefits $25,062,313 Current employees: Accumulated employee contributions Employer-financed vested Employer-financed nonvested 5,743,581 8,760,423 19.528.932 Total pension benefit obligation 59,095,249 Net assets available for benefits - actuarial value (actuarial market value - $71,955,469) 67.704.067 (Overfunded) pension benefit obligation ~(8.608~81ID The change in the pension benefit obligation from the previous valuation date to the current valuation date is as follows: Pension benefit obligation as of October 1, 1994. $56.864.515 Increase (decrease) due to: Plan amendments Interest, survivorship, membership changes and benefit accrual Benefits paid -0- 3,976,814 (1.746.080) Total increase 2.230.734 $59.095.249 Pension benefit obligation as of October 1, 1995. -11- KOCH, ZELKO, ROTH, REISS, BEUANTONI, SCHINDER Ie ROSENBERG, P.A. CeItIfIed Public Accountants * CITY SUPPLEMENTAL PENSION FUND FOR FIREFIGHTERS AND POLICE OFFICERS CITY OF MIAMI BEACH SUPPLEMENTARY INFORMATION REVENUES BY SOURCE AND EXPENSES BY TYPE SCHEDULE "1" Revenues by Source Employee Employer Investment Income Other Fiscal Year Contributions Contributions (Loss) Income Total 9/30/90 $1,353,565 $,4,589,242 $ (99,821) $88,987 $5,931,973 9/30/91 1,049,166 4,831,198 1,093,231 108,007 7,081,602 9/30/92 1,001,214 5,029,974 1,560,483 150,563 7,742,234 9/30/93 1,082,219 4,927,413 2,925,321 163,587 9,098,540 9/30/94 1,107,257 5,549,520 329,950 6,986,727 9/30/95 1,184,427 31,842,646 8,052,124 41,079,197 9/30/96 1,759,825 2,268,440 8,299,305 12,327,570 Exoenses bv Tvoe Administrative Fiscal Year Benefits EXDenses Refunds Total 9/30/90 $ 307,715 $ 88,987 $ 915 $ 397,617 9/30/91 339,122 108,007 3,674 450,803 9/30/92 513,265 150,563 12,459 676,287 9/30/93 841,126 163,587 29,233 1,033,946 9/30/94 1,173,358 190,872 15,102 1,379,332 9/30/95 1,723,414 250,336 15,578 1,989,328 9/30/96 1,548,278 349,586 86,398 1,984,262 September 30, 1990 was the first year of the Plan. -12- KOCH, ZELKO, ROTH, REISS, BEllANTONI, SCHINDER. ROSENBERG, P.A. Celtlfted Public Accountants * CITY SUPPLEMENTAL PENSION FUND FOR FIREFIGHTERS AND POLICE OFFICERS CITY OF MIAMI BEACH SUPPLEMENTARY INFORMATION ANALYSIS OF FUNDING PROGRESS (In Millions of Dollars) SCHF.DULE "2" (1) (2) (3) (4) (5) (6) Unfunded Unfunded (Overfunded) Net (Overfunded) Peosion Assets Peosion Benef'1t A yail- Peosion Percent- Benel'lt Obligation able Benef'1t age Obli- Annual as % of for Obli- Funded gation Coyered PayroU Fiscal Y ear Benef'1ts utim! ill..LW m..:..m ~ ffi.Lm 9/30/90 $ .3(A) $25.9(B) 1.2~ $25.6 $22.4 114.3% 9/30/91 $ 5.7(A) $32.2(B) 17.7~ $26.5 $22.7 116.7% 9/30/92 $11.9(A) $39.O(B) 30.5~ $27.1 $23.8 113.9% 9/30/93 $18.5(A) $43.7(B) 42.3~ $25.2 $22.9 110.0~ 9/30/94 $25 .3(A) $54.1(B) 46.8~ $28.8 $23.3 123.6% 9/30/95 $61.9(A) $56.9(B) 108.8~ $(5.0) $25.0 (20.0)~ 9/30/96 $67.7(A) $59.1(B) 114.6~ $(8.6) $28.1 (30.6)% (A) Actuarial value at October 1, 1989, 1990, 1991, 1992, 1993 , 1994, and 1995 respectively. (B) At October 1, 1989, 1990, 1991, 1992, 1993, 1994, and 1995 respectively. September 30, 1990 was the first year of the Plan. -13- KOCH, ZELKO, ROTH, REISS, BELlANTONI, SCHINDER. ROSENBERG, P.A. Celtlfted Public Accountants @ City Pension Fund for Firemen and Policemen in the City of Miami Beach Actuarial Valuation Report as of October 1, 1996 sucr CONSULTANTS TABLE OF CONTENTS Page Number Discussion.................................................................................................................... ......... 1 Liabilities Table I Table IT Table ill Table IV Table V Table Va Table Vb Assets Table VI Table VII Table VIII Data Table IX Table IXa Table IXb Table IXc Table IXd Table X Assumptions Table XI Table XIa Plan Provisions Table XII Table XIIa Summary of Valuation Results........................................................... Gain and Loss Analysis...................................................................... Accounting Disclosures (GASB 25/27).... ........ ........ ..... ..... ................ Present Value of Accrued Benefits..... .... .... ................... ..... ............ .... Information Req. by Florida Statute Chapter 112............................... (for those who became members prior to July 1, 1976)............... (for those who became members after June 30, 1976)................. Assets............................................................................................... . Historical Asset Information.............................................................. Contributions vs. Fund Payouts......................................................... Summary of Member Data................................................................. Active Data................................................................................ Retiree Data. .............................................................................. Data Reconciliation.................................................................... Age-Service-Salary Table........................................................... Historical Contribution Rate.............................................................. Actuarial Assumptions....................................................................... Assumption Changes.................................................................. Plan Provisions.................................................................................. Plan Amendments....................................................................... City Pension Fund for Firemen and Policemen in the City of Miami Beach 3 4 5 7 8 11 12 13 14 15 16 17 18 19 20 21 22 25 26 29 Pagei sue' CONSULTANTS 200 Galleria Parkway, N, W, Suite 1200 Atlanta, Georgia 30339-5945 February 19, 1997 This report presents the results of the October 1, 1996 actuarial valuation of the City Pension Fund for Firemen and Policemen in the City ofMiarni Beach. This valuation is used to determine the contributions for the City's fiscal year beginning October 1, 1997. The City contribution requirements for the fiscal year beginning October 1, 1997 are summarized below: Required City contribution for plan year beginning 10/1/97 $ 632,540 The assumptions used in the valuation are outlined in Table XI. Provisions of the plan are set forth in Table XII. A record of changes in the assumptions and plan provisions during the last few years is set forth in Tables XIa and XIla, respectively. Information for the auditors can be found in Tables III and IV. Information required to be disclosed by the State of Florida under Chapter 112 is presented in Table V. Finally, Tables VI through VIII provide information about the fund's assets, while Tables IX through X provide information about the membership data. Certification This actuarial valuation and/or cost determination was prepared and completed by us or under our direct supervision and we acknowledge responsibility for the results. To the best of our knowledge, the results are complete and accurate and, in our opinion, the techniques and assumptions used are reasonable and meet the requirements and intent of Part VII, Chapter 112, Florida Statutes. There is no benefit or expense to be provided by the plan and/or paid from the plan's assets for which liabilities or current costs have not been established or otherwise taken into account in the valuation. All known events or trends which may require a material increase in plan costs or required contribution rates have been taken into account in the valuation. Buck Consultants, Inc. 7701955-2488 Fax 7701933-8336 Page 1 In addition, we certify that we are members of the American Academy of Actuaries, that we have experience in performing valuations for public retirement systems, that the valuation was prepared in accordance with the standards of practice prescribed by the Actuarial Standards Board, and that the actuarial calculations were performed by qualified actuaries in accordance with accepted actuarial procedures, based on the current provisions of the retirement system and on actuarial assumptions that are internally consistent and reasonably based on the actual experience of the system. [Signed] JOSE 1. FERNANDEZ [Signed] ZANESE B. DUNCAN Jose 1. Fernandez, AS.A, M.AAA Principal & Consulting Actuary Enrollment No. 96-4461 Zanese B. Duncan, AS.A, M.AAA Consulting Actuary Enrollment No. 96-4264 Page 2 SUMMARY OF VALUATION RESULTS TABLE I 1. Number of Members a. Active Members b. Deferred Vested Members c. Retired Members: 1. Service 11. Disabled 111. Beneficiaries iv. Sub-total d. Total Members 2. Total Annual Rate of Covered Payroll 3. Funding Results a. Present Value of Future Benefits b. Actuarial Value of Assets. c. PV of Future Contributions d. PV of Future Prior Service Contribs. e. PV of Future Normal Contribs. f Portion of item e. to be Paid by Members g. Portion of item e. to be Paid by City h. Present Value of Future Payroll 1. City's Normal Cont. Rate (adj.for int.) As of October 1, 1995 As of October 1, 1996 428 19 462 9 248 57 61 366 813 253 54 68 375 846 $18,S99,282 $20,S92,S20 $197,046,282 ($178,695,061) $18,3S1,221 $0 $18,351,221 ($10,833,083) $7,518,138 $173,769,700 $206,120,472 ($189,443,255) $16,677,217 $0 $16,677,217 ($11,925,883) $4,751,334 $192,936,700 4.69% 2.67% 4. Expected Annual Contribution (% of payroll) a. Employees b. City: 1. Normal rate ii. Prior service IV. Sub-total c. Total 6.23% 6.18% 4.69% 0.00% 4.69% 10.92 % 2.67% 0.00% 2.67% 8.8S% · Includes contribution receivable of $972,434 at October 1, 1995 and $541,944 at October 1, 1996. City Pension Fund for Firemen and Policemen in the City of Miami Beach Page 3 GAIN AND LOSS ANALYSIS TABLE II 1. Actual Unfunded Accrued Liability as of October 1, 1995 $0 2. Expected Change in Unfunded Liability During the 1995/96 Plan Year a. Due to Normal Cost b. Due to Interest on the Normal Cost and Unfunded Liability c. Due to City Contributions Reflected d. Due to Interest on Reflected Contributions e. Total Expected Change $933,567 $38,867 ($972,434) $0 $0 3. Expected Unfunded Accrued Liability as of October 1, 1996 $0 4. Change in Unfunded Liability During the 1995/96 Plan Year Due to: a. Method changes $0 b. Assumption changes $0 c. Plan amendments $0 d. Total Change $0 S. Actual Unfunded Accrued Liability as of October 1,1996 $0 6. Items Affecting Calculation of Accrued Liability a. Plan provisions reflected in the accrued liability (see Table XII on page 26) b. Plan amendments reflected in item 4.d. above (see Table XIIa on page 29) c. Actuarial assumptions and methods used to determine prior service liability (see Table XI on page 22) d. Changes in actuarial assumptions and methods reflected in items 4.b. and 4.c. above (see Table XIa on page 25) City Pension Fund for Firemen and Policemen in the City of Miami Beach Page 4 ACCOUNTING DISCLOSURES (GASB 25/27) TABLE III For the 1995/96 Plan Year For the 1996/97 Plan Year A. Number of Plan Participants as of October 1 a. Retirees and beneficiaries receiving benefits 366 375 b. Terminated plan participants entitled to but not yet receiving benefits 19 9 c. Active plan participants 428 462 d. Total 813 846 B. Development of Annual Required Contribution (ARC) a. Employer normal cost: 1. Total normal cost (BOY) $2,397,257 $2,221,068 11. Expected employee contribution ($1,424,823) ($1,588,528) 111. Employer normal cost $972,434 $632,540 b. 40-year amortization ofUAAL: 1. PV of future benefits $197,046,282 $206,120,472 11. PV of future employer normal costs ($7,518,138) ($4,751,334) 111. PV of future employee contributions ($10,833,083) ($11,925,883) IV. Actuarial accrued liability (AAL) $178,695,061 $189,443,255 v. Actuarial value of assets ($178,695,061) ($189,443,255) VI. Unfunded AAL (UAAL) $0 $0 Vll. 40-year amort. ofUAAL $0 $0 c. 40-year amortization ofNPO $0 $0 d. ARC $972,434 $632,S40 (Item B.a.iii. plus item B.b.vii. plus item B.c.) C. Annual Pension Cost and Net Pension Obligation (NPO) a. ARC b. Interest on NPO c. Adjustment to ARC d. Annual Pension Cost e. Contributions made (w/interest to EOY) f Increase( decrease) in NPO g. NPO (beginning of year) h. NPO (end of year) $972,434 $0 $0 $972,434 ($972,434) $0 $0 $0 $632,540 $0 $0 $632,540 City Pension Fund for Firemen and Policemen in the City of Miami Beach Page 5 ACCOUNTING DISCLOSURES (GASB 25/27) D. Schedule of Employer Contributions TABLE III ( continued) Annual Year Ended Required Percentage September 30 Contribution Contributed 1996 $972,434 100% E. Schedule of Funding Progress (1) (2) (3) (4) (5) (6) Actuarial UAAL Actuarial Actuarial Accrued Unfunded as % of Valuation Value of Liability AAL Funded Covered Covered Date Assets (AAL) (VAAL) Ratio Payroll Payroll (2) - (1) (1) + (2) (3) + (5) 10/1/95 S178,695,061 S178,695,061 SO 100.0% S21,078,673 0.0% 10/1/96 $189,443,255 $189,443,255 $0 100.0% $23,690,628 0.0% F. Additional Information Valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Actuarial assumptions: Investment rate of return * Projected salary increases * * Includes inflation at: Cost-of-living adjustments ** .. Beginning three years after retirement City Pension Fund for Firemen and Policemen in the City of Miami Beach October 1. 1995 Frozen entry age Level dollar open 40 years 5-year smoothed market October 1. 1996 Frozen entry age Level dollar open 40 years 5-year smoothed market 8.50% 4.53% to 10.17% 3.50% 2.00% 8.50% 4.53% to 10.17% 3.50% 2.00% Page 6 PRESENT VALUE OF ACCRUED BENEFITS TABLE IV 1. Actuarial Present Value of Accrued Benefits As of October 1, 1995 a. Vested Benefits: 1. Members currently receiving benefits 11. Other members 111. Sub-total b. Non-vested Benefits c. Total Benefits d. Market Value of Assets * $111,431,496 $46,233,141 $157,664,637 $3,370,442 $161,03S,079 ($196,350,728) 2. Statement of Change in Actuarial Present Value of Accrued Benefits a. Actuarial Present Value as of October 1, 1995 $161,035,079 b. Increase (Decrease) During 1995/96 Plan Year Due to: 1. Interest $13,687,982 11. Benefits accumulated $4,663,290 111. Benefits paid ($10,138,558) IV. Plan amendments $0 v. Changes in actuarial assumptions or methods $0 VI. Net increase (decrease) $8,212,714 c. Actuarial Present Value as of October 1, 1996 $169,247,793 3. Items Affecting Calculation of Actuarial Present Value of Accrued Benefits a. Plan provisions reflected in the accrued benefits (see Table XII on page 26) b. Plan amendments reflected in item 2.b.iv. above (see Table XIIa on page 29) c. Actuarial assumptions and methods used to determine present values (see Table XI on page 22) d. Changes in actuarial assumptions and methods reflected in item 2.b.v. above (see Table XIa on page 25) As of October 1, 1996 $116,243,363 $49,158,218 $165,401,581 $3,846,212 $169,247,793 ($21S,120,336) * Asset values include contribution receivable of$972,434 as of October 1, 1995 and $541,944 as of October 1, 1996. City Pension Fund for Firemen and Policemen in the City of Miami Beach Page 7 INFORMATION REQ. BY FLORIDA STATUTE (CHAP. 112) TABLE V Participant Data 1. Active Members a. Number b. Annual rate of compensation 2. Retired Members a. Number on service retirement b. Annual benefits c. Number on disability retirement d. Annual benefits e. Number of beneficiaries of deceased members f Annual benefits g. Number of deferred vested members h. Annual benefits Assets Assets for valuation purposes* Market value of assets* Liabilities 3. Present value of prospective benefits payable in respect of: a. Retired members and beneficiaries: 1. Present retirees on svc. ret. drawing allowances 11. Present beneficiaries drawing allowances 111. Present retirees on dis. ret. now drawing allowances IV. Sub-total b. Former active members eligible for deferred benefits Contribution for fiscal year bel!innine:: October 1. 1996 October 1. 1997 428 $21,078,673 462 $23,690,628 248 253 $7,905,393 $8,574,603 57 54 $1,582,458 $1,510,432 61 68 $435,306 $636,150 19 9 $645,102 $230,067 $178,695,061 $196,350,728 $189,443,255 $215,120,336 $87,997,158 $3,858,064 $19,576,274 $111,431,496 $93,073,960 $4,895,795 $18,273,608 $116,243,363 $5,760,631 $2,068,108 * Includes contribution receivable of$972,434 at October 1, 1995 and $541,944 at October 1, 1996. City Pension Fund for Firemen and Policemen in the City of Miami Beach Page 8 INFORMATION REG. BY FLORIDA STATUTE (CHAP. 112) TABLE V ( continued) Contribution for fiscal year beltinninl!:: October 1. 1996 October 1. 1997 c. Present active members: 1. Service retirement benefits S67,801,883 S74,640,457 11. Deferred vested benefits SI,738,962 SI,822,2oo Ill. Disability benefits S7,316,167 S8,079,069 IV. Death benefits S2,560,729 $2,785,935 v. Return of contributions $436,414 $481,340 VI. Sub-total $79,854,155 $87,809,001 d. Total present value of all prospective benefits payable $197,046,282 $206,120,472 4. Present Value of Accrued Benefits SI61,035,079 $169,247,793 5. Frozen Initial Liability SO $0 6. Unfunded Prior Service Liability $0 $0 Contribution 7. Normal Contribution Rate: a. From City (including interest) 4.69% 2.67% b. From members. 6.23% 6.18% 8. Required City Contributions as % of Compensation (including interest): a. Normal b. Prior service c. Total 4.69% 0.00% 4.69% 2.67% 0.00% 2.67% 9. Loaded Compensation on which Item 8. is based $21,078,673 $23,690,628 ... Composite rate. Individuals who were members prior to July 1, 1976 contribute 8% of compensation; all other members contribute 6% of compensation. City Pension Fund for Firemen and Policemen in the City of Miami Beach Page 9 INFORMATION REQ. BY FLORIDA STATUTE (CHAP. 112) TABLE V ( continued) Contribution for fiscal year beirlnnin2: October 1. 1996 October 1. 1997 10. Required City Contributions (including interest): a. Normal b. Prior service c. Total $972,434 $0 $972,434 $632,540 SO $632,540 11. Percentage of Compensation to be Contributed by Members 6.23% 6.18% 12. Present Value of Active Members': a. Future salaries b. Future contributions $173,769,700 $10,833,083 $192,936,700 $11,925,883 13. Prior Fiscal Year's Contribution (cash basis): a. Required City $3,333,530 $972,434 b. Actual City $22,191,900 $972,434 c. Actual and required member $1,526,944 SI,780,504 14. Accumulated Member Contributions $15,625,134 $17,207,797 City Pension Fund for Firemen and Policemen in the City of Miami Beach Page 10 INFORMATION REQ. BY FLORIDA STATUTE (CHAP. 112) (for those who became members prior to July 1, 1976) TABLE Va Contribution for fiscal year bel!innin2: October 1. 1996 October 1. 1997 1. Active Members a. Number 85 81 b. Annual rate of compensation 5,347,685 5,358,720 2. Retired Members a. Number 358 367 b. Annual benefits 9,696,317 10,491,333 3. Deferred Vested Members a. Number 17 7 b. Annual benefits 624,690 209,655 4. Present value of prospective benefits payable in respect of: a. Present retired members and beneficiaries now drawing allowances and former active members eligible for deferred vested benefits S113,960,745 S115,042,284 b. Present active members: 1. Service retirement benefits S37,752,388 S39,718,667 ii. Deferred vested benefits $414,124 S345,319 111. Disability benefits $1,356,960 $1,172,022 lV. Death benefits S521,839 S450,169 v. Return of contributions $52,258 S45,051 Vl. Sub-total S40,097,569 S41,731,228 c. Total present value of all prospective benefits payable $154,058,314 $156,773,512 5. Present Value of Active Members': a. Future salaries $20,345,200 $17,484,600 b. Future contributions $1,627,617 Sl,398,763 6. Accumulated Member Contributions $6,973,676 S7,227,213 City Pension Fund for Firemen and Policemen in the City of Miami Beach Page 11 INFORMATION REQ. BY FLORIDA STATUTE (CHAP. 112) (for those who became members after June 30, 1976) TABLE Vb Contribution for fiscal year bel!innin2: October 1. 1996 October 1. 1997 1. Active Members a. Number 343 381 b. Annual rate of compensation $15,730,988 $18,331,908 2. Retired Members a. Number 8 8 b. Annual benefits S226,840 S229,852 3. Deferred Vested Members a. Number 2 2 b. Annual benefits S20,412 $20,412 4. Present value of prospective benefits payable in respect of: a. Present retired members and beneficiaries now drawing allowances and former active members eligible for deferred vested benefits $3,231,382 S3,269,187 b. Present active members: 1. Service retirement benefits S30,049,495 S34,921,790 11. Deferred vested benefits Sl,324,838 Sl,476,881 111. Disability benefits S5,959,207 S6,907,047 lV. Death benefits S2,038,890 $2,335,766 v. Return of contributions $384,156 S436,289 Vl' Sub-total $39,756,586 S46,077,773 c. Total present value of all prospective benefits payable S42,987,968 S49,346,960 5. Present Value of Active Members': a. Future salaries S153,424,500 S175,452,loo b. Future contributions S9,205,466 S10,527,120 6. Accumulated Member Contributions $8,651,458 $9,980,584 City Pension Fund for Firemen and Policemen in the City of Miami Beach Page 12 ASS ETS TABLE VI As of As of October 1, 1995 October 1, 1996 1. Market Value of Assets" a. Cash and cash equivalents (7%) $9,521,022 $14,929,401 b. U.S. government bonds & notes (15%) $29,617,748 $32,105,825 c. Corporate bonds (31 %) $64,917,069 $66,312,262 d. Equities (46%) $91,210,125 $99,958,848 e. Insurance contracts (0%) $0 $0 f Real estate (0%) $0 $0 g. Mortgageslloans (0%) $0 $0 h. Other assets (0%) $0 $0 1. Accrued income receivable (1 %) $1,687,000 $1,814,000 J. Contributions receivable (0%) $0 $0 k. Other receivables (0%) $0 $0 1. Benefits payable (0%) ($60,292) $0 m. Other payables (0%) $541,944 $0 n. Market value of assets $196,350,728 $215,120,336 I 2. Actuarial Value of Assets a. Market value of assets $196,350,728 $215,120,336 b. 5-year phase-in of net investment appreciation: i. 1991/92 ($5,219,016) x 20% = ii. 1992/93 ($9,758,254) x 40% = iii. 1993/94 $6,316,680 x 60% = iv. 1994/95 ($20,623,212) x 80% = v. 1995/96 $17,347,719 vi. Total unrecognized losses(gains) ($1,043,803) ($3,903,302) $3,790,008 ($16,498,570) x 20% = x 40% = x 60% = x 80% = ($1,951,651) $2,526,672 ($12,373,927) ($13,878,175) ($25,677,081) $189,443,255 I ($17,655,667) c. Actuarial Value of Assets I $178,695,061 I (Item a. less item b., but within an 80-120% corridor of item a.) '" The percentages in parentheses indicate the proportion of assets committed to each type of investment as of October 1, 1996. City Pension Fund for Firemen and Policemen in the City of Miami Beach Page 13 HISTORICAL ASSET INFORMATION TABLE VII Historical Market Value Assets & Yields 50 18% 16% 14% 12% 10% "0 8% - Q,j .- ~ 6% 4% 2% 0% -2% t- 0\ ...... \0 0\ 0\ ..... _ Assets -'-Yield 250 200 ~ 150 .2 ~ ~ 100 0 00 0\ 0 ..... C'l ('f') '<t \r) \0 00 00 0\ 0\ 0\ 0\ ~ ~ 0\ c:::: ...... -.... 25 -.... N -.... 00 0\ ..... ('f') V') 00 00 00 0\ 0\ 0\ 0\ 0\ 0\ 0\ 0\ 0\ 0\ 0\ 0\ 0\ 0\ 0\ ..... ..... ..... ..... ..... ..... ..... ..... ..... Plan Year (Assets as of October 1) Market Actuarial Market Actuarial Plan Value as of Value as of Benefit City and Member Value Value Year October 1 October 1 Payments* Expenses Contributions Yield Yield 1987/88 $94,343,458 $87,643,624 $4,6l5,535 $0 $5,455,669 4.19% 1O.3l % 1988/89 $99,154,080 $97,564,808 $5,123,387 $0 $5,678,214 16.28% 11.57% 1989/90 $115,901,060 $109,437,355 $6,123,364 $0 $4,816,947 -0.51% 7.82% 1990/91 $114,007,426 $116,640,777 $6,939,066 $0 $4,976,108 16.67% 8.70% 1991/92 $130,885,336 $124,745,089 $7,510,950 $0 $5,365,038 10.28% 8.66% 1992/93 $142,087,615 $133,304,151 $8,374,012 $0 $4,893,234 12.82% 10.13% 1993/94 $156,599,038 $143,145,667 $8,964,654 $0 $24,781,560 0.90% 6.98% 1994/95 $173,805,435 $168,805,762 $9,642,748 $0 $2,646,744 17.35% 10.21 % 1995/96 $196,350,728 $178,695,061 $10,138,558 $0 $2,752,938 13.58% 10.36% 1996/97 $215,120,336 $189,443,255 * Including accrued contribution refunds City Pension Fund for Firemen and Policemen in the City of Miami Beach Page 14 CONTRIBUTIONS VS. FUND PA VOUTS TABLE VIII Historical Contributions Versus Benefit Payments* 30 5 25 20 ~ o .- - 15 ~ ~ 10 0 00 0\ 0 ..... N ('f') '<t 00 00 0\ 0\ 0\ 0\ 0\ -.... ...... -.... 2:5 ...... N ...... t- oo 0\ ..... ('f') 00 00 00 0\ 0\ 0\ 0\ 0\ 0\ 0\ 0\ 0\ 0\ 0\ ..... ..... ..... ..... ..... ..... Plan Year \r) 0\ :;r 0\ 0\ ..... \0 0\ ...... V') 0\ 0\ ..... _ Contributions -'-Benefit Payments * Please reference Table VII on page 14 for the historical benefit payments and contributions. City Pension Fund for Firemen and Policemen in the City of Miami Beach Page 15 SUMMARY OF MEMBER DATA TABLE IX Total Number of Members as of October 1 1,000 800 600 400 200 o 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 100% . Retired C Def. Vested t' 180% " u 60% ... .I:l i 40% o ] ~ =:i . Active 0% 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 As of As of October 1, 1995 . October 1, 1996 1. Active Members 428 462 2. Non-active, Non-retired Members a. Fully vested 19 9 b. Partially vested 0 0 c. Non-vested 0 0 d. Beneficiaries 0 0 e. Sub-total 19 9 3. Retired Members a. Service 248 253 b. Disabled 57 54 c. Beneficiaries 61 68 d. Sub-total 366 375 4. Total Members 813 846 City Pension Fund for Firemen and Policemen in the City of Miami Beach Page 16 ACTIVE DATA TABLE IXa 40 35 30 ~ 25 ~ 20 ~ ;;.. 15 10 5 0 1988 1989 Historical Average Age & Service 1990 1991 1992 1993 As of October 1 1994 Average As Of Service October 1 Earned 1988 12.2 1989 11.8 1990 11.2 1991 11.5 1992 11.7 Average Attained Age Average Average As Of Service Attained October 1 Earned Age 1993 12.3 37.7 1994 12.6 38.0 1995 12.8 38.5 1996 12.7 38.5 37.4 37.1 36.7 37.0 37.3 Historical Salary Rate $60,000 to $50,000 ~ $40,000 .. $30,000 r $20,000 ;.. < $10,000 $0 As or October 1 12% .. 10% B .. 8% ... .s 6% .. J 4% ~ 2% .. Ilo. 0% . Average Salary 1993 1994 1995 1996 . Assumed Increase C Actual Increase 1987 1988 1989 1990 1991 1992 Average Actual Average Actual Asof Salary Salary As of Salary Salary October 1 Rate Increase October 1 Rate Increase 1987 $39,273 N/A 1992 $41,570 3.20% 1988 $40,898 7.70% 1993 $43,892 6.30% 1989 $41,352 4.00% 1994 $45,698 5.30% 1990 $40,935 3.30% 1995 $48,113 8.20% 1991 $41,072 2.30% 1996 $50,223 8.00% City Pension Fund for Firemen and Policemen in the City of Miami Beach Pagel? RETIREE DATA TABLE IXb o 20 40 60 80 100 120 .....;' . , '" ,',' .'. , , ,:" ". ,'.:":,','";',',,,, I" ", ,. ,,: ,::"', '" ,,' ", " , ,',> , ' '" ",'.::.. ::)" ',' .'.'; '. ' '.," , ' ,,? ,', ' , , '. ",,' ',:.: <"'. ",'" :., ":', ,. .. ' : > '" ',:, ", " :,: , : ", ,,,-:: ',' '." ,,': ,:, '.,'; } ,..:;. , :" ,'t'. ; "" ,', ,,,' ',' .' '.' ,s' ", :."'" Less than 30 '-J.',,", :,', '. ,'" ',' ",;" .' ',.' " ':",',. ;'" 30-39 ' ;' ,.:' ",:", , ''''.' .' ,",,' , ' I, '. , ,", :~',; :: ,,:, , " ' .' ~ :"" ,", ,':':",',' ":' "', ' ',.' ,<', ';' 40-49 50 :'t:,f:::,:";~",~' '." 1':' --' .. ~ .:(~~;t~~:!i: ~ tr\:: /' , "".' '", 51 52 " ',::. " ,~-- 53 _ f ' ,,-;;;::-:: , , ",' :.':', "",', '; ,'.. '" 54 .... c: Q,j e Q,j - .- .... Q,j " 55 56 ~'< "'" >,: 57 , 58 59 60 61 62 63 .", 64 !; 65 I'~ Over 65 ~i ;:, ;;: .... ~ Q,j O.ll < ,:, , "."" c", ',' " , ':t ,;;: ."; o Disabled retirees . Non-disabled retirees Note: Age at retirement is based on retiree data from both the Base and Supplemental plans as of October 1, 1996. Base Plan A verage benefit being paid to non-disabled retirees is $2824.31 per month. A verage benefit being paid to disabled retirees is $2330.91 per month. A verage benefit being paid to beneficiaries is $779.6 per month. City Pension Fund for Firemen and Policemen in the City of Miami Beach Page 18 DATA RECONCILIATION TABLE IXc Non-active, Active Non-retired Retired :Dll!! 1. Number of participants as of October 1, 1995 428 19 366 813 2. Change in status during the plan year: a. Actives who became inactive (1) 1 b. Actives who retired (4) 4 c. Inactives who became active d. Inactives who retired (8) 8 e. Retirees who became active 3. No longer participating due to: a. Death (12) 12 b. Permanent break -in-service c. Receipt of lump sum payment (4) (4) d. Expiration of certain period e. Included in error last year 4. New participant due to: a. Initial participation 43 43 b. Death of another participant 9 9 c. Omitted in error last year 5. Number of participants as of October 1, 1996 462 9 375 846 City Pension Fund for Firemen and Policemen in the City of Miami Beach Page 19 AGE-SERVICE-SALARY TABLE TABLE IXd Attained Comoleted Years of Service Age Under 1 lto2 3 to 7 8 to 12 13 to 17 18 to 22 23 to 27 28 to 32 33 to 37 38 & up Total Under 23 0 0 0 0 0 0 0 0 0 0 0 Avg.Pay 0 0 0 0 0 0 0 0 0 0 0 23 to 27 0 13 1 0 0 0 0 0 0 0 14 Avg.Pay 0 30,013 44,840 0 0 0 0 0 0 0 31,072 28 to 32 0 29 22 19 1 0 0 0 0 0 71 Avg.Pay 0 32,892 42,393 50,359 46,615 0 0 0 0 0 40,704 33 to 37 0 10 33 57 28 1 0 0 0 0 129 Avg.Pay 0 33,225 43,115 49,981 55,714 59,821 0 0 0 0 48,246 38 to 42 0 1 8 26 59 22 0 0 0 0 116 Avg.Pay 0 44,840 44,510 50,883 52,329 61,511 0 0 0 0 53,143 43 to 47 0 0 0 7 34 26 20 1 0 0 88 Avg.Pay 0 0 0 51,585 52,391 56,280 58,334 52,226 0 0 54,825 48 to 52 0 0 0 0 6 6 25 4 0 0 41 A vg.Pay 0 0 0 0 51,147 56,720 65,023 57,355 0 0 61,029 53 to 57 0 0 0 0 0 0 2 0 0 0 2 Avg.Pay 0 0 0 0 0 0 53,166 0 0 0 53,166 58 to 62 0 0 0 0 0 0 0 0 0 0 0 Avg.Pay 0 0 0 0 0 0 0 0 0 0 0 63 & over 0 0 0 0 0 0 0 0 1 0 1 Avg.Pay 0 0 0 0 0 0 0 0 57,055 0 57,055 Total 0 53 64 109 128 55 47 5 1 0 462 Avg.Pay 0 32,474 43,068 50,365 52,986 58,485 61,672 56,329 57,055 0 50,224 City Pension Fund for Firemen and Policemen in the City of Miami Beach Page 20 HISTORICAL CONTRIBUTION RATE TABLE X 150 , '," ' "'.' ~ .' . ':' .,C.: .': .:. " :' .' ",,,'. ":"." " ,::<.,. c, ,"..' ':,'''"" ...., '" , . " .,'. ", ...., > :,'; ,. . ...," .' " '.',' " .. : 125 100 ,'. .. . "".','.,"'" ':'" :: ..~.," . ,:" .'," ",,',',' I ";:" .... " ,..:";'~"~ "",' :.: " ':, '. '...... . . ',,,' ;' .' "'., \ '"~c. ,:, ,..... ,/ .': " : '.' "'.' :.. ,I L J 00 00 ..... r- oo 0\ - 0\ 00 ..... 00 00 0\ - o 0\ ...... 0\ 00 0\ - - 0\ ..... o 0\ 0\ - N 0\ ...... - 0\ 0\ - r<"I 0\ ..... N 0\ 0\ - ~ 0\ ...... r<"I 0\ 0\ - V"l 0\ ...... ~ 0\ 0\ - 10 0\ ...... V"l 0\ 0\ - r- $ 0\ 0\ - o Member Contribution Rate . City Contribution Rate Member City Member City Plan Contribution Contribution Plan Contribution Contribution Year Percentage Percentage Year Percentage Percentage 1987/88 6.78% 26.48% 1992/93 6.44% 17 .34 % 1988/89 6.74% 25.62% 1993/94 6.38% 17 .53% 1989/90 6.73% 24.93% 1994/95 6.34% 117.69% 1990/91 6.58% 19.02% 1995/96 6.28% 5.10% 1991/92 6.51% 19.09% 1996/97 6.23% 4.69% City Pension Fund for Firemen and Policemen in the City of Miami Beach Page 21 ACTUARIAL ASSUMPTIONS TABLE XI 1. Actuarial Cost Method · Entry Age Normal Cost Method, with Frozen Initial Liability 2. Decrements . Pre-Retirement Mortality Representative values of the assumed annual rates of pre-retirement mortality among members in active service are as follows: Ordinary Accidental Ordinary Accidental Mortality Mortality Mortality Mortality Al!e Rate Rate Age Rate Rate 20 .0017 .0002 45 .0055 .0006 25 .0018 .0004 50 .0077 .0009 30 .0020 .0005 55 .0114 .0003 35 .0030 .0005 60 .0178 .0002 40 .0043 .0005 64 .0264 .0001 . Post-Retirement Healthy Mortality 1979 George B. Buck Mortality Table · Post-Retirement Disabled Mortality 1979 George B. Buck Mortality Table . Disability Representative values of the assumed annual rates of disability among members in active service are as follows: Ordinary Accidental Ordinary Accidental Disability Disability Disability Disability Age Rate Rate Al!e Rate Rate 20 .0004 .0003 45 .0032 .0026 25 .0006 .0005 50 .0055 .0044 30 .0009 .0007 55 .0079 .0063 35 .0012 .0010 60 .0110 .0090 40 .0018 .0014 64 .0143 .0126 City Pension Fund for Firemen and Policemen in the City of Miami Beach Page 22 ACTUARIAL ASSUMPTIONS TABLE XI ( continued) . Permanent Withdrawal from Active Status Representative values of the assumed annual rates of withdrawal among members in active service are as follows: ........................... ::f:t:::::fff)'iit .......,........... ..... ::::::::::::::@::::::::@@:::z.O::::: ............................ ........................... ............................ ........................... .....................................2.....5....... ................... . ... .................. . -.. :;:::;:;:;:;:::::;:;:::;:;:::;:;::::::.,<, '.:;:;: ............................ ........................... Rate 10.30% 7.30% ::::::::::::::::::::::::::::::Iii::::: :::::::::::f::::::::::f::::::::::Ifi::::: ............................. ............................ .........."................. .....-...................... :.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:>.!!=it:.:.: ~~;{}f~~~f/~fr~)~~~~~J . ... .. . ........ ,.... Rate 4.15% 1.82 % :::::::::::jf::::::::::::::l;ii::::: :::::::::::::::::::::::::::::::::::::::11::::: :.:.:.:.:.:.:.:.:.;.:.:.:.;.:.:.:.:.:.:.:.:.:.:.:.:.:.:.: ............................ ............................. ..............,............. ............................. .:.:.:.:.:.:,:.:.:.;.:.:.;.:.:.:.:.:.:.;.;.;.:.:.:.:.:.:- ....................-........ .............................. '.' . ....... . '.' .... -...... ......~ '.' '.' Rate 0.99% ::t:::::::::::]:::::::::l;ii::::: :::::::::::::::::::::::::::::::::::::::::;l:~::::: r~t~1~~~;~~~ittttr~r~ ......................................................'.' .............,........................................... :::::;:;::::::::::::::::;;;::~::::::::::::::;;;::;::::::: ;:::;::::::::::::=:;:=::::::::::;:;':::;::::::::::::;::;: . . . . . . . .. ............. Rate 0.48% . Retirement All members are assumed to retire at the earliest age at which they qualify for the maximum benefit under the Supplemental Plan, i.e. age 50 and 26.25 years of service, but not later than age 65. Otherwise, retirement is assumed to occur in accordance with the following rates: :::::::::::=:::::::::::::::::x~~::::: . . . . . . . . . . . . . . . . . . . . . . . . ::::!!!::::!!:!:::::!:::::!::::::::::~9::::! ;m:m::;m;m:::::m:mmm:$I:m: ............................ ........................... ............................ ........................... .....................................5...2......... ................... ... ................... . .. }!;!:!;!:~:~:r~:}~:~:~;!:i:~.: '. ... .}~ ...................,....... ::::::::::::::::::::::::::::::::::::::53::::: . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .............. . 3. Interest Rates Rate 25.20% 23.40% 14.70% 15.00% ::::::::::::::::::::::::::::1i1iit::: ::::::::::@::::=:::=:@::::::::::=g::::: ............................ ............................. .......................................................'. .:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:.:5..5.......:.:. ....................................... . ...... .................... ... .................... .. 1I1I1II111111I1I1I111111111I11111111111111111 ............................ Rate 15.35% 15.75% 16.22% 16.78% ::::::::::::::::::::::::::::::Iii::::: . Rate 17.40% 18.20% 19.15% 20.30% ::::::::::::::::::::::::::::::I~it::: :::::::::::::::::::::::::::::::::::::::6.:1::::: 1IIIIIIIllilllllllilllilll:l.llilllllil!lllll: ::=;:::::::::::::::::::::::::::::::::::(i:I::::: ':::::':::::':!:::::::::!:!:'!.!:i::!:!g)::::1 ............................ Rate 30.00% 30.00% 30.00% 100.00% . Used for Calculating All Liabilities (including GASB 25/27 liabilities) 8.50% per annum 4. Salary Increases Representative values of the assumed annual rates offuture salary increase are as follows: :::::::::::::::=:@::::Ix::::~::::: ................... ..... ........................... .....................................2.....0........ ................... ... .-................ . .. ................... ... ..................... .. .................... ... ................... .. ::II:.I!..!!!.:..:.:.:I.I,.:....!...;~:I/!: ;m:::m::::;m(:::::::m:m:3.o::m . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... .......... .. ..... Rate 10.17% 8.30% 5.75% 5. Loadings for Contingencies :::=:::=:::::::::=:@@fl?:::::::::::::: . . . . . . . . . . . . . . . . . . . . . . . . . I"I""'IIIIIII'I'IIIIIIIIIII'I'IIIIIIIIII!/: ............................. :::::::::::::::::::::::::::::::::::::::4$.::::: Rate 4.80% 4.60% 4.53% :::::::::::::::::::::::t:::I::::::::::::::::: :::::::::::::::::::::::::::::::::::::::5:(f':: . Rate 4.56% 4.62% :::::::::::::::::::@:::::]iY::::::::::::::: .................... ..... ............................ . Rate 4.86% 5.15% . Compensation The salary rates for individuals who were members prior to July 1, 1976 have been increased by 10% to reflect estimated actual salaries. City Pension Fund for Firemen and Policemen in the City of Miami Beach Page 23 ACTUARIAL ASSUMPTIONS TABLE XI ( continued) . Accrued Benefits (FASB 35) The present value of accrued benefits for active members who became members prior to July 1, 1976 (excluding the portion relating to contribution refunds) has been increased by 5.5% to reflect benefits based on estimated actual earnings. 6. Marriage Assumptions . Percent Married 75% of members are assumed married or entitled to dependent benefits. . Age Difference Between Spouses Male spouses are assumed to be three years older than female spouses. 7. Expenses The City makes a separate contribution for the exact amount of expenses. 8. Assets Actuarial value of assets is equal to the market value of assets adjusted to reflect a five-year phase-in of the net investment gain or loss. 9. Maximum Benefit Limitation Under IRe ~415 Pursuant to the Technical and Miscellaneous Revenue Act of 1988 (TAMRA), the maximum benefit limitation on benefits payable from the plan as set forth in Internal Revenue Code (IRe) ~415 has not been applied to the benefits of those members who entered the plan. prior to January 1, 1990. For all other members, the maximum benefit limitation under IRC ~415 has been applied and has been assumed to increase 4.5% per annum. City Pension Fund for Firemen and Policemen in the City of Miami Beach Page 24 ASSUMPTION CHANGES TABLE Xla The following assumptions have been changed during the last eight plan years: 1. Effective October 1, 1988, the assumed annual interest rate was changed from 7% to 8.5%, the salary scale assumption was changed from 5.5% per year to 6% per year, and the assumed annual aggregate compensation increase used to amortize the unfunded prior service liability was increased from 3% to 4%. Also, all members were assumed to retire upon qualifying for the maximum benefit under the Supplemental Plan. 2. Effective October 1, 1989, the post-retirement mortality table was changed to the 1979 George B. Buck Mortality Table. 3. Effective October 1, 1990, retirement rates for those who became members after June 30, 1976 were revised to reflect the retirement rates assumed for the Supplemental Plan. 4. Effective October 1, 1991, the salary increase assumption was changed from 6% per annum at all ages to a graded salary scale ranging from 10.17% to 4.53%, depending on age. 5. Effective October 1, 1991, the amortization of the unfunded prior service liability is calculated on a level-payment basis rather than on the basis of payments assumed to increase 4% per year. 6. Effective October 1, 1992, the loading on base compensation for those who became members prior to July 1, 1976 was changed from 15% to 10% and the loading on liabilities for accounting purposes for such members was changed from 8% to 5.5%. * Note: Assumption changes that have first been reflected in this valuation are shown in bold print. City Pension Fund for Firemen and Policemen in the City of Miami Beach Page 25 PLAN PROVISIONS TABLE XII 1. Monthly Accrued Benefit For individuals who were members prior to July 1, 1976: 3% of average monthly salary multiplied by service up to 20 years, plus 2.75% of average monthly salary multiplied by service in excess of 20 years, to a maximum monthly benefit of 85% of average monthly salary. For all other members: 2.5% of average monthly salary multiplied by service up to 25 years, plus 2% of average monthly salary multiplied by service in excess of 25 years, to a maximum monthly benefit of 80% of average monthly salary. (Average monthly salary is based upon the highest two years of compensation for individuals who were members prior to July 1, 1976 and is based upon the highest three years of compensation for all other members.) 2. Service Retirement Age and Benefit . Age For individuals who were members prior to July 1, 1976, age 50 and the attainment of 15 years of service; F or all other members, the later of age 55 and the attainment of 10 years of service. . Amount Monthly Accrued Benefit . Form of Payment 50% joint and survivor annuity (Minimum of 25% of average monthly salary payable to beneficiary upon member's death. ). 3. Disability Retirement Age and Benefit . Condition F or a service connected disability benefit, the member must become totally and permanently disabled in the line of duty; F or a non-service connected disability benefit, the member must otherwise become totally and permanently disabled and have at least five years of service. . Amount For a service connected disability benefit: Monthly Accrued Benefit, with a minimum benefit of 75% of compensation less an offset for any workers' compensation benefits payable. F or a non-service connected disability benefit: Monthly Accrued Benefit City Pension Fund for Firemen and Policemen in the City of Miami Beach Page 26 PLAN PROVISIONS TABLE XII ( continued) 4. Withdrawal Retirement Age and Benefit . Age Any age with at least 10 years of service . Amount Monthly Accrued Benefit (payable if participant survives to Service Retirement Age) . Form of Payment 50% joint and survivor annuity (Minimum of 25% of average monthly salary payable to beneficiary upon member's death. ) 5. Death Benefits . Service connected death benefit Greater of Monthly Accrued Benefit and $220.00 is payable for the first 12 months after death and 50% of the Monthly Accrued Benefit is payable thereafter (with a minimum benefit of 25% of average monthly salary); benefits are payable to the widow until death or remarriage. In addition, $100.00 per month is payable to each unmarried child until age 18 (until age 22 if a full-time student), provided that the combined total of any children's benefits cannot exceed $200.00. However, the children's benefit is not payable if the combined total of all widow's and children's benefits exceeds $320.00 per month. · Non-service connected death benefit F or members with at least five years of service, Monthly Accrued Benefit is payable for the first 12 months after death and 50% of the Monthly Accrued Benefit is payable thereafter (with a minimum benefit of 25% of average monthly salary); benefits are payable to the widow until death or remarriage. However, if the member has been married for less than ten years, then benefits are payable to the spouse only for the life expectancy of the deceased member. In addition, $100.00 per month is payable to each unmarried child until age 18 (until age 22 if a full-time student), provided that the combined total of any children's benefits cannot exceed $200.00. However, the children's benefit is not payable if the combined total of all widow's and children's benefits exceeds $320.00 per month. 6. Employee Contributions For individuals who were members prior to July 1, 1976, 8% of salary per year; For all other members, 6% of salary per year. If contributions are refunded to the member, then interest is credited at the rate of 3 % per annum. City Pension Fund for Firemen and Policemen in the City of Miami Beach Page 27 PLAN PROVISIONS TABLE XII ( continued) 7. Cost-of-Living Adjustment Benefits are increased by 2% per year each October 1 after retirement provided that benefits commenced at least three years prior to the preceding July 1. City Pension Fund for Firemen and Policemen in the City of Miami Beach Page 28 PLAN AMENDMENTS TABLE Xlla The following plan amendments have been adopted within the past eight plan years: 1. Effective with the October 1, 1988 valuation, spousal benefits for members retiring on a service connected disability retirement prior to October 1, 1967 were increased. Also, certain members were transferred from the post-July 1, 1976 benefit schedule to the pre-July 1, 1976 schedule. 2. Effective with the October 1, 1990 valuation, the plan provides for "pick-up" of member contributions under IRC ~414(h) and formal compliance with IRC ~415. * Note: Amendments that have first been reflected in this valuation are indicated in bold print. City Pension Fund for Firemen and Policemen in the City of Miami Beach Page 29 City Supplemental Pension Fund . for Firefighters and Police Officers in the City of Miami Beach Actuarial Valuation Report as of October 1, 1996 sucr CO'NSULTANTS TABLE OF CONTENTS Page Number Discussion........................................................................................................................ ..... 1 Liabilities Table I Table II Table ill Table IV Table V Assets Table VI Table VII Table VITI Data Table IX Table IXa Table IXb Table IXc Table IXd Table X AssumDtions Table XI Table XIa Plan Provisions Table :xn Table XIIa Summary of V aluation Results............................................... ......... '" Gain and Loss Analysis...................................................................... Accounting Disclosures (GASB 25/27)............................. ........ ......... Present Value of Accrued Benefits..................................................... Information Req. by Florida Statute Chapter 112........................ ....... Assets............................................................................................... . Historical Asset Information.............................................................. Contributions vs. Fund Payouts......................................................... Summary of Member Data................................................................. Active Data........ .............................................................. .......... Retiree Data............................................................................... Data Reconciliation....... ............................................................. Age-Service-Salary Table........................................................... Historical Contribution Rate.............................................................. A . 'As . ctuarlCu sumptlons..... ............................................................... ... Assumption Changes.................................................................. Plan Provisions.................................................................................. Plan Amendments....................................................................... City Supplemental Pension Fund for Firefighters and Police Officers in the City of Miami Beach 3 4 5 7 8 11 12 13 14 15 16 17 18 19 20 23 24 27 pagei sue/' CONSULTANTS 200 Galleria Parkway. N.W. Suite 1200 Atlanta, Georgia 30339-5945 February 19, 1997 This report presents the results of the October 1, 1996 actuarial valuatioll of the City Supplemental Pension Fund for Firefighters and Police Officers in the City of Miami Beach. This valuation is used to determine the contributions for the City's fiscal year beginning October 1, 1996. The City contribution requirements for the fiscal year beginning October 1, 1996 are summarized below: Required City contribution for plan year beginning 10/1/96, less contribution paid 10/1/96 Contribution remaining to be paid for 1996/97 plan year $ 3,411,078 $ (2.220.000) $ 1,191,078 The assumptions used in the valuation are outlined in Table XI. Provisions of the plan are set forth in Table XII. A record of changes in the assumptions and plan provisions during the last few years is set forth in Tables XIa and XIIa, respectively. Information for the auditors can be found in Tables III and IV. Information required to be disclosed by the State of Florida under Chapter 112 is presented in Table V. Finally, Tables VI through VITI provide information about the fund's assets, while Tables IX through X provide information about the membership data, Certification This actuarial valuation and/or cost determination was prepared and completed by us or under our direct supervision and we acknowledge responsibility for the results. To the best of our knowledge, the results are complete and accurate and, in our opinion, the techniques and assumptions used are reasonable and meet the requirements and intent of Part vn, Chapter 112, Florida Statutes. There is no benefit or expense to be provided by the plan and/or paid from the plan's assets for which liabilities or current costs have not been established or otherwise taken into account in the valuation. All known events or trends which may require a material increase in plan costs or required contribution rates have been taken into account in the valuation. Buck Consultants, Inc. 7701955-2488 Fax 7701933-8336 Page 1 In addition, we certifY that we are members of the American Academy of Actuaries, that we have experience in performing valuations for public retirement systems, that the valuation was prepared in accordance with the standards of practice prescribed by the Actuarial Standards Board, and that the actuarial calculations were performed by qualified actuaries in accordance with accepted actuarial procedures, based on the current provisions of the retirement system and on actuarial assumptions that are internally consistent and reasonably based on the actual experience of the system. [Signed] JOSE I. FERNANDEZ [Signed] ZANESE B. DUNCA1~ Jose I. Fernandez, AS.A, M.AAA Principal & Consulting Actuary Enrollment No. 96-4461 Zanese B. Duncan, AS.A, M.A.AA Consulting Actuary Enrollment No. 96-4264 Page 2 SUMMARY OF VALUATION RESULTS TABLE I 1. Number of Members a. Active Members b. Deferred Vested Members c. Retired Members: 1. Service 11. Disabled 111. Beneficiaries lV. Sub-total d. Total Members 2. Total Annual Rate of Covered Payroll 3. Funding Results a. Present Value of Future Benefits b. Anticipated Administrative Expenses c. Actuarial Value of Assets d. PV of Future Contributions e. PV of Future Prior Service Contribs. f PV of Future Normal Contribs. g. Portion of item f. to be Paid by Members h. Portion of item f to be Paid by City 1. Present Value of Future Payroll J. City's Normal Cont. Rate (before adjust.) k. Adj. for diff.in loaded compensation 1. City's Normal Contribution Rate As of October 1,1995 As of October 1, 1996 455 10 497 8 257 58 62 ---- 377 ~--------- 842 254 55 69 378 883 $21,724,534 $24,702,786 $91,183,345 $391,000 ($67,704,067) $23,870,278 $0 $23,870,278 ($8,049,455) $15,820,823 $188,825,400 $105,753,694 $423,725 ($75,443,185) $30,734,234 $0 $30,734,234 ($8,353,249) $22,380,985 $202,791,400 8.33% 0.51% 8.89% 11. 04% 0.52% 11.56% 4. Expected Annual Contribution (% of payroll) a. Employees b. City: 1. Normal rate (including expenses) 11. Prior service 111. Military buyback lV. Sub-total c. Total 4.26% 4.12 % 8.89% 0.00% 1. 00% 9.89% 14.15% 11.56% 0.00% 1.00% 12.56% 16.68% City Supplemental Pension Fund for Firefighters and Police Officers in the City of Miami Beach Page 3 GAIN AND LOSS ANALYSIS TABLE II 1. Actual Unfunded Prior Service Liability as of October 1, 1995 $0 2. Expected Change in Unfunded Liability During the 1995/96 Plan Year a. Due to Normal Cost b. Due to Interest on the Normal Cost and Unfunded Liability c. Due to Recognized City Contributions d. Due to Interest on Contributions e. Total Expected Change $2,362,883 $] 13,722 ($2,268,440) ($208,165) $0 3. Expected Unfunded Prior Service Liability as of October 1, 1996 $0 4. Change in Unfunded Liability During the 1995/96 Plan Year Due to: a. Experience different from that assumed $0 b. Method changes $0 c. Assumption changes $0 d. Plan amendments $0 e. Total Change $0 5. Actual Unfunded Prior Service Liability as of October 1, 1996 $0 6. Items Affecting Calculation of Prior Service Liability a. Plan provisions reflected in the prior service liability (see Table XII on page 24) b. Plan amendments reflected in item 4.d. above (see Table XIIa on.page 27) c. Actuarial assumptions and methods used to determine prior service liability (see Table XI on page 20) d. Changes in actuarial assumptions and methods reflected in items 4.b. and 4.c. above (see Table XIa on page 23) City Supplemental Pension Fund for Firefighters and Police Officers in the City of Miami Beach Page 4 ACCOUNTING DISCLOSURES (GASB 25/27) TABLE III For the 1995/96 Plan Year For the 1996/97 Plan Year A. Number of Plan Participants as of October 1 a. Retirees and beneficiaries receiving benefits 377 378 b. Terminated plan participants entitled to but not yet receiving benefits 10 8 c. Active plan participants 455 497 d. Total 842 883 B. Development of Annual Required Contribution (ARC) a. Employer normal cost: i. Total normal cost (BOY) ii. Expected employee contribution iii. Employer normal cost b. 40-year amortization ofUAAL: i. PV of future benefits 11. PV of future employer normal costs 111. PV of future employee contributions lV. Actuarial accrued liability (AAL) Y. Actuarial value of assets Vl. Unfunded AAL (UAAL) vii. 40-year amort. ofUAAL c. 40-year amortization ofNPO d. ARC (Item B.a.iii. plus item B.b.vii. plus item B.c.) $3,467,179 ($1,104,296) $2,362,883 $4,625,107 ($1,214,029) $3,411,078 $9],574,345 ($15,820,823) ($8,049,455) $67,704,067 __J$67,704,067) $0 $0 $0 $2,362,883 $106,177,419 ($22,380,985) ($8,353,249~ $75,443,185 ($75,443,185) '- 1 $0 $0 $0 $3,411,078 C. Annual Pension Cost and Net Pension Obligation (NPO) a. ARC $2,362,883 $3,411,078 b. Interest on NPO $0 $0 c. Adjustment to ARC $0 $0 d. Annual Pension Cost $2,362,883 $3,411,078 e. Contributions made (w/interest to EOY) ($2,362,883) f Increase( decrease) in NPO $0 g. NPO (beginning of year) $0 h. NPO (end of year) $0 City Supplemental Pension Fund for Firefighters and Police Officers in the City of Miami Beach Page 5 ACCOUNTING DISCLOSURES (GASB 25/27) D. Schedule of Employer Contributions TABLE III ( continued) Annual Year Ended Required Percentage September 30 Contribution Contributed 1996 $2,362,883 100% E. Schedule of Funding Progress (1) (2) (3) (4) (5) (6) Actuarial UAAL Actuarial Actuarial Accrued Unfunded as % of Valuation Value of Liability AAL Funded Covered Covered Date Assets (AAL) (UAAL) Ratio Payroll Payroll (2) - (1) (1) .;. (2) (3).;. (5) 10/1/95 $67,704,067 $67,704,067 SO 100.0% $23,891,647 0.0% 10/1/96 $75,443,185 $75,443,185 $0 100.0% $27,158,261 0.0% F. Additional Information Valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Actuarial assumptions: Investment rate of return * Projected salary increases * * Includes inflation at: Cost-of-living adjustments October 1. 1995 Frozen entIy age Level dollar open. 40 years 5-year smoothed market October 1. 1996 Frozen entIy age Level dollar open 40 years 5-year smoothed market 8.50% 4.53% to 10.17% 3.50% 2.50% 8.50% 4.53% to 10.17% 3.50% 2.50% City Supplemental Pension Fund for Firefighters and Police Officers in the City of Miami Beach Page 6 PRESENT VALUE OF ACCRUED BENEFITS TABLE IV 1. Actuarial Present Value of Accrued Benefits As of October 1, 1995 a. Vested Benefits: 1. Members currently receiving benefits 11. Other members iii. Sub-total b. Non-vested Benefits c. Total Benefits d. Market Value of Assets $25,062,313 $15,654,588 $40,716,901 $4,575,313 $45,292,214 ($71,955,469) 2. Statement of Change in Actuarial Present Value of Accrued Benefits a. Actuarial Present Value as of October 1, 1995 $45,292,214 b. Increase (Decrease) During 1995/96 Plan Year Due to: 1. Interest $3,849,838 n. Benefits accumulated $10,183,823 111. Benefits paid ($1,746,080) lV. Plan amendments $0 v. Changes in actuarial assumptions or methods $0 V1. Net increase (decrease) $12,287,581 c. Actuarial Present Value as of October 1, 1996 $57,579,795 3. Items Affecting Calculation of Actuarial Present Value of Accrued Benefits a. Plan provisions reflected in the accrued benefits (see Table XII on page 24) b. Plan amendments reflected in item 2.b.iv. above (see Table XIIa on page 27) c. Actuarial assumptions and methods used to determine present values (see Table XI on page 20) d. Changes in actuarial assumptions and methods reflected in item 2.b.v. above (see Table XIa on page 23) City Supplemental Pension Fund for Firefighters and Police Officers in the City of Miami Beach As of October 1, 1996 $26,729,984 $24,434,988 $5l,164,972 $6,414,823 $57,579,795 ($82,333,762) Page 7 INFORMATION REQ. BY FLORIDA STATUTE (CHAP. 112) TABLE V Participant Data 1. Active Members a. Number b. Annual rate of compensation 2. Retired Members a. Number on service retirement b. Annual benefits c. Number on disability retirement d. Annual benefits e. Number of beneficiaries of deceased members f Annual benefits g. Number of deferred vested members h. Annual benefits Assets Assets for valuation purposes Market value of assets J...iabilities 3. Present value of prospective benefits payable in respect of: a. Retired members and beneficiaries: 1. Present retirees on svc. ret. drawing allowances 11. Present beneficiaries drawing allowances 111. Present retirees on dis. ret. now drawing allowances lV. Sub-total b. Former active members eligible for deferred benefits City Supplemental Pension Fund for Firefighters and Police Officers in the City of Miami Beach Contribution for fiscal year bel!innin~ October 1. 1995 October 1. 1996 455 $21,724,534 497 $24,702,786 257 254 $1,869,224. $1,156,C'87 58 55 S205,027 S237,669 62 69 $75,804 S96,820 10 8 $29,547 $21,504 $67,704,067 S71.955,469 S75,443,185 $82,333,762 S19,745,707 S935,704 $3,899,911 $24,581,322 S20,334,976 $1,523,722 $4,476,981 $26,335,679 $480,991 $394,305 Page 8 INFORMATION REQ. BY FLORIDA STATUTE (CHAP. 112) TABLE V ( continued) Contribution for fiscal year bel!inninf!: October 1. 1995 October 1. 1996 C. Present active members: 1. Service retirement benefits 11. Deferred vested benefits 111. Disability benefits lV. Death benefits v. Return of contributions Vl. Sub-total $57,170,266 $69,487,515 $2,466,902 S2,207,145 $2,862,958 $3,429,511 $3,284,494 $3,582,360 $336,412 $317,179 $66,121,032 $79,023,710 $391,000 $423,725 S91,574,345 S106,177,419 S45,292,214 $62,579,795 SO SO SO $0 d. Anticipated administrative expenses e. Total present value of all prospective benefits payable 4. Present Value of Accrued Benefits 5. Frozen Initial Liability 6. Unfunded Prior Service Liability Contribution 7. Normal Contribution Rate: a. From City (including provision for expenses) b. From members. 8.89% 4.26% 11.56% 4.12% 8. Required City Contributions as % of Compensation (including interest): a. Normal (including provision for expenses) b. Prior service c. Military buyback d. Total 8.89% 0.00% 1.00% 9.89% 11.56% 0.00% 1.00% 12.56% 9. Loaded Compensation on which Item 10. is based S23,891,647 $27,158,261 · Composite rate. Contributions of 10% of compensation reduced by the amount of contribution, if any, made to the City Pension Fund for Firemen and Policemen in the City of Miami Beach (Base System) are required of active members. City Supplemental Pension Fund for Firefighters and Police Officers in the City of Miami Beach Page 9 .INFORMATION REQ. BY FLORIDA STATUTE (CHAP. 112) TABLE V ( continued) Contribution for fiscal year bel!innine: October 1. 1995 October I. 1996 1.0. Required City Contributions (including interest): a. Nomlal (including expenses) b. Prior service c. Military buyback d. Total S2,123,967 SO $238,916 $2,362,883 S3,139,495 SO $271,.583 S3.411,078 11. Percentage of Compensation to be Contributed by Members 4.26% .:1..12% 12. Present Value of Active Members': a. Future salaries S188,825,400 S202,791,400 b. Future contributions S8,049,455 $8,353,249 13. Prior Fiscal Year's Contribution (cash basis): a. Required City S2,406,965 $2,268,440 b. Actual City S31,842,646 $2,268,440 c. Actual and required member Sl,184,427 Sl,759,825 14. Accumulated Member Contributions $5,743,581 S7,428,707 City Supplemental Pension Fund for Firefighters and Police Officers in the City of Miami Beach Page 10 ASSETS TABLE VI As of October 1, 1995 1. Market Value of Assets" a. Cash and cash equivalents (6%) b. U.S. government bonds & n.otes (18%) c. Corporate bonds (29%) d. Equities (46%) e. Insurance contracts (0%) f Real estate (0%) g. Mortgageslloans (0%) h. Other assets (0%) 1. Accrued income receivable (1 %) J. Contributions receivable (0%) k. Other receivables (0%) 1. Benefits payable (0%) m. Other payables (0%) n. Market value of assets $12,084,457 $10,4l0,409 $17,335,534 $31,674,562 $0 $0 $0 $0 $488,000 $0 $0 ($37,493) $0 $71,955,469 I 2. Actuarial Value of Assets a. }"-farket value of assets $71,955,469 b. 5-year phase-in of net investment appreciation: i. 1991/92 ($686,481) x 20% = ii. 1992/93 ($1,775,289) x 40% = iii. 1993/94 $1,230,632 x 60% = iv. 1994/95 ($5,177,961) x 80% = v. 1995/96 $4,901,244 vi. Total unrecognized losses(gains) ($137,296) ($710,116) $738,379 ($4,142,369) ($4,251,402) c. Actuarial Value of Assets L $67,704,067 I (Item a. less item b., but within an 80-120% corridor of item a.) As of October 1, 1996 $5,084,648 $14,981,404 $23,662.206 $38,104,275 $0 $82,333,762 ($355,058) $492,253 ($3,106,777) ($3,920,995) ($6,890,577) L $75,443,185 I x 20% = x 40% ,.: x 60% = x 80% = '" The percentages in parentheses indicate the proportion of assets committed to each type of investment as of October 1, 1996. City Supplemental Pension Fund for Firefighters and Police Officers in the City of Miami Beach Page 11 HISTORICAL ASSET INFORMATION TABLE VII 35% 30% 25% 20% 15% "0 10% ~ .- ~ 5% 0% -5% -10% -15% t- 0\ ...... \0 0\ 0\ - _ Assets -'-Yield Historical Market Value (Assets & Yields) 100 90 80 70 ~ 60 0 .- - 50 - .- ~ 40 ~ 30 20 10 0 0 0\ ...... 0\ 00 0\ ..... - N ('f') '<t V') \0 0\ 0\ 0\ 0\ 0\ ~ 25 -.... N ...... ...... - ('f') '<t \r) 0\ 0\ 0\ 0\ 0\ 0\ 0\ 0\ 0\ 0\ 0\ 0\ - - - ..... ..... - Plan Year (Assets as of October 1) Market Actuarial Market Actuarial Plan Value as of Yalue as of Benefit City and Member Value Yalue Year October I October 1 Pavments'" Expenses Contributions Yield Yield 1989190 $311,109 $311.109 $311,913 $0 $5,942,807 -13.14% -6.36% 1990/91 $5,531,073 $5,743,216 $345,295 $0 $5,880,364 13.17% 7.20% 1991/92 $12,159,375 $11,891,406 $523,484 $0 $6,031,188 10.46% 7.27% 1992/93 $19,227,562 $18.464,142 $876,362 $0 $6.009,632 13.42% 8.06% 1993/94 $27,286,153 $25,293,531 $1.209,320 $190,872 $36,092.458 1.10% 6.66% 1994/95 $62.308,369 $61,846.341 $1,746,080 $250.336 $3.591.392 29.21 % 6.80% 1995/96 $71,955.469 $67,704,067 $1.513.293 $349,586 $4,028,265 11.24% 10.31 % 1996/97 $82,333,762 $75,443,185 * Including accrued contribution refunds City Supplemental Pension Fund for Firefighters and Police Officers in the City of Miami Beach Page 12 CONTRIBUTIONS VS. FUND PAYOUTS TABLE VIII 40 35 30 25 Ie :S 20 .- ~ ~ 15 10 5 0 Historical Contributions Versus Benefit Payments & Expenses* 1989/90 1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 Plan Year _ Contributions -'-Benefit Payments & Expenses * Please reference Table VII on page 12 for the historical benefit payments, expenses, and contributions. City Supplemental Pension Fund for Firefighters and Police Officers in the City of Miami Beach Page 13 SUMMARY OF MEMBER DATA TABLE IX 800 Total Number of Members as of October 1 1,000 600 400 o 1989 1990 1991 1992 1993 1994 1995 1996 100% . Retired t' ~ 80% -; U 60% >. .Q i 40% :> ~ 1 20% :l C Def. Vested . Acti ve 0% 1989 1990 1991 1992 1993 1994 1995 1996 As of As of October 1, 1995 October 1, 1996 1. Active Members 455 497 2. Non-active, Non-retired Members a. Fully vested 10 8 b. Partially vested 0 0 c. Non-vested 0 0 d. Beneficiaries 0 0 e. Sub-total 10 8 3. Retired Members a. Non-disabled 257 254 b. Disabled 58 55 c. Beneficiaries 62 69 d. Sub-total 377 378 4. Total Members 842 883 City Supplemental Pension Fund for Firefighters and Police Officers in the City of Miami Beach Page 14 ACTIVE DATA TABLE IXa 40 35 30 ~ 25 = 20 iloI >- 15 10 5 0 1989 1990 1991 1992 1993 As of October 1 Average Average As Of Service Attained October 1 Earned Age 1989 11.5 37.2 1990 11.4 37.2 1991 11.2 37.2 1992 11.5 37.6 Historical Average Age & Service 1994 1995 Average Average As Of Service Attained October 1 Earned Age 1993 12.0 38.1 1994 12.3 38.5 1995 12.4 37.9 1996 12.4 38.9 50000 Historical Salary Rate 10000 40000 t' j 30000 .. IOoll e 20000 .. .. -< 1989 1990 1991 1992 1993 1994 1995 8% .. ~ ... 6% .s .. IOoll 4% .s = t 2% .. =- 0% . Average Salary 1996 . Assumed Inaease CActuaI Increase o As of October 1 Average Actual Average Actual AsOf Salary Salary AsOf Salary Salary October 1 Rate Increase October 1 Rate Increase 1989 $41,058 N/A 1993 $43,539 6.40% 1990 $40,620 3.40% 1994 $45,359 5.30% 1991 $40,702 2.40% 1995 $47,746 8.20% 1992 $41,279 3.30% 1996 $49,703 8.00% City Supplemental Pension Fund for Firefighters and Police Officers in the City of Miami Beach PagelS RETIREE DATA TABLE IXb o 20 40 60 80 100 120 1"'. ,." . . " : ,"" t,'.. ' . < ,':,',, ': r',:" . .... .. .'. I .:: "",' ':"";""i':':~"""<' !:':,\:,:~:: . ~"'T--:-"'----; .' ," ',', ,,,":, ",1.:, ';':":.:: ..,'".......:",,,:.. :"',., . .... .... . ..'.\ " ~~:~}" ,'- ~.:..,.::'\,'. ;,.': ,,~ '.. .,,,',;" '. L,!, :-li:'::'~ .,', ;:.':::<:. ">,~:. _ :,' .',.' ..",~'.:;:::i '>;';.. ""', //\:",';:,' + '.,..' c"':..' ":,'. ::, I, ::: ::,': ..::: " ,.' , + ,..,':,.". " ' ".", .. :i'i' ',"."/'. '.:':" .' '.:', "', ":. " :" ," ';' ." . .. ".. .<. . ,... : .. : " ,,;.';,; '.,',:. :::',: ':. ',:i, ... ,. '" .:::', "." :' , .. '::" : ',',' '''. .,.:,."',': ..'.':'.:,;,",,' " ,'" ;...,' " ':: r:..:, ':' :,. ,.' ",' ii'F~'J"~ ";' ,.,:' ,",: ',.:':"';" ..: ':,":, ' . "," "'. ': .'" "<>::,-: :,<,' ,,... ':: .,', /:' ,::,<', "',.. "','::" '. ':'..:: .:., '., "., .' ::' : '::: '..", ':" '; .,: "" ,";" ':' ,:"",, '; > '. '," ,,\:"; " ':. . :',,' , ,.'. ,,:,::. .:"., . ',',., "": ':':, ',' ,:,:. .:. :..:':' :"C' . " '..". . .',,:;::- ..;" :,::: '" :, ';. ': . "< :j, ',' :. .' . ,c,- 1,'( .' .,-, p ,'::' I, . I. .' j-, ,:,' ':^ " . . I'. Less than 30 30-39 40-49 50 51 52 53 54 - c: Q,j 55 ... c: Q,j 1.0 56 .... - Q,j ~ 57 - eo: Q,j 58 eJl ~ 59 60 61 62 ," '. ~~h,1j~~~1~ ~,;:r:~~;;1' . ~:: :::,". t:,.:( ',.c ,:::.: '> ": ". ':; '" 'I',~ 63 64 ." 65 C'" ':.i' ',c, .:. : ',":. Over 65 >, . ,',;' C . , " .:i ,., ',': ".' :~':' " '..; ...; ,",;: ',: " ,::, , '. <'. ',.:;'.::. :",:, o Disabled retirees . Non-disabled retirees Note: Age at retirement is based on retiree data from both the Base and Supplemental plans as of October 1, 1996. Supplemental Plan A verage benefit being paid to non-disabled retirees is $379.29 per month. A verage benefit being paid to disabled retirees is $360.1 per month. Average benefit being paid to beneficiaries is $116.93 per month. City Supplemental Pension Fund for Firefighters and Police Officers in the City of Miami Beach Page 16 DATA RECONCILIATION TABLE IXc Non-active, Active Non-retired Retired Total 1. Number of participants as of October 1, 1995 455 10 377 842 2. Change in status during the plan year: a. Actives who became inactive (1) 1 b. Actives who retired (4) 4 c. Inactives who became active d. Inactives who retired (1) 1 e. Retirees who became active 3. No longer participating due to: a. Death (12) (12) b. Permanent break -in-service c. Receipt of lump sum payment (4) (4) d. Expiration of certain period e. Included in error last year (1) (1) 4. New participant due.to: a. Initial participation 51 51 b. Death of another participant 9 9 c. Omitted in error last year 5. Number of participants as of 4971 81 3781 October 1, 1996 883 City Supplemental Pension Fund for Firefighters and Police Officers in the City of Miami Beach Page 17 AGE-SERVICE-SALARY TABLE TABLE IXd - Attained Comoleted Years of Serlice Age Under 1 lto2 3 to 7 8 to 12 13 to 17 18 to 22 23 to 1.7 28 to 32 33 to 37 38 & up Total Under 23 0 0 0 0 0 0 0 0 0 0 0 Avg.Pay 0 0 0 0 0 0 0 0 0 0 0 23 to 27 0 13 1 0 01 0 01 0 0 0 14 Avg.Pay 0 30,013 44,840 0 o ! 0 0 0 0 0 31.,072 28 to 32 0 29 22 19 1 0 0 0 0 0 71 Avg.Pay 0 32,892 42,393 50,359 46,615 0 0 0 0 0 40,704 33 to 37 0 11 33 57 30 0 0 0 0 0 131 Avg.Pay 0 32,891 43,115 49,981 55,240 0 0 0 0 0 48,021 38 to 42 0 3 9 27 62 22 0 0 0 0 123 Avg.Pay 0 34,748 43,828 50,318 51,578 61,511 0 0 0 0 52,100 43 to 47 0 1 5 14 34 26 20 1 0 0 101 Avg.Pay 0 29,545 38,544 50,187 52,391 56,280 58,334 52,226 0 0 53,350 48 to 52 0 0 3 3 11 5 26 4 0 0 52 Avg.Pay 0 0 47,676 45,666 50,520 57,952 64,467 57,355 0 0 58,290 53 to ~:t 0 0 0 0 1 0 2 0 (l 0 3 Avg.Pay 0 0 0 0 47,737 0 53,166 0 0 0 51,356 58 to 62 0 0 0 0 0 1 0 0 3 0 1 Avg.Pay 0 0 0 0 0 48,207 0 0 0 0 48,207 63 & over 0 0 0 0 0 0 0 0 1 0 1 Avg.Pay 0 0 0 0 0 0 0 0 57,055 0 57,055 Total 0 57 73 120 139 54 48 5 1 0 497 Avg.Pay 0 32,274 42,883 50,033 52,420 58,416 61,441 56,329 57,055 0 49,704 City Supplemental Pension Fund for Firefighters and Police Officers in the City of Miami Beach Page 18 HISTORICAL CONTRIBUTION RATE TABLE X 175 .' " " :'~~,: ' . . .:: <,' ':", ' '. '. .-' " . y' ,.' ",' '"'''' ,; .' '. . ,,' ',' . .,..,:.",.,:;,:,,/,' ,:',~ "'. ','," ,'" .,.:-..,,':',',: "''''';''''. ,..' ';'",..i'".,.. _ "" ';"'..:,', ..>,',.':,. ,,,.,. -'-" ;.;, <~. ....:: '..,' :",: :;,';j I. .' I.',",;, .:: .".' '.:::" ..' "." "<'r:';' .." . '. ':-:. . .,':.-;. " ,:'. ,,:,,:, ". .':,: ',:i,';:;,'.', ';'" "". '. .( :':; ,," "";,c,..-,,,; ". ; ',",;. :-,:.-.. "'" '", "'- ::,: ;., :,. :, '.;'.\ .,': ,:; . '.'.. '. ' _ ;;:::<i!?;1g2f~:' .: ,'" ,:~",.::::: ,';:':. I :' .,:.:'.;::. :::'H~::~2~:~;; ~:;:,',' ".. .: .~;::: ,:i:;.>:. ' , ',; ':. "'"'-- .....:. " : .... ,~. "." :'," ' '. '.. '. ,: :;: > .", ."', ':~,..J' .... ~ '. <',"':;" ':".',~<'::,":":I ,:,.:,,:;',::) '," :'.' \';'.,: ',' ~ :, '.. >".,.,':,: >- . '; .",.' ': ',..::" ,,:: ",;.'~: ,,,". ,;' ",' "," ",'.:',: ',".' ~ ':. ;'" ,'. '. ',',.,,,', . J ''':'-''. '" ':~;" ':.: ,;:: ;'J,' :'~ E 75 " ,'., ';.',,: 'J;f~ '"' . .',.: ',' "'. ",~.', <"'{ "': : :",'~ . - ::>~\ ','.',: ::,';' 50 '" , ~ ., ,"," ,,,,;,,'.,,:;J;,,;,~(,:(;, . ',,' ' k '. ,"..: 'eX ).ii:~i:;:';';' . "~:; '. :'" ,: , ;'. "'",::': ',;" " :,: . ,', ',;'<:'j;;;(.";<t. ,,:;; :,:; 2:iI~.IH__ Ii .,. .,. 150 125 100 ~~Ii 1989/90 1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 CJ Member Contribution Rate . City Contribution Rate Member City Member City Plan Contribution Contribution Plan Contribution Contribution Year Percentage Percentage Year Percentage Percentage 1989/90 3.40% 20.77% 1993/94 3,90% 25,03% 1990/91 3,68% 20.90% 1994/95 3.96% 148.07% 1991/92 3,77% 21.76% 1995/96 4.26% 9.89% 1992/93 3.84% 22.27% 1996/97 4.12% 12.56% City Supplemental Pension Fund for Firefighters and Police Officers in the City of Miami Beach Page 19 ACTUARIAL ASSUMPTIONS TABLE XI 1. Actuarial Cost Method · Entry Age Normal Cost Method, with Frozen Initial Liability 2. Decrements · Pre-Retirement Mortality Representative values of the assumed annual rates of pre-retirement mortalitT'among',,> . members in active service are as follows. Ordinary Accidental Ordinary Accidental Mortality Mortality Mortality Mortality Aee Rate Rate Al!e Rate Rate 20 .0017 .0002 45 .0055 .0006 25 .0018 .0004 50 .0077 .0009 30 .0020 .0005 55 .0114 .0003 35 .0030 .0005 60 .0178 .0002 40 .0043 .0005 64 .0264 .0001 · Post-Retirement Healthy Mortality 1979 George B. Buck Mortality Table · Post-Retirement Disabled Mortality 1979 George B. Buck Mortality Table e Disability Representative values of the assumed annual rates of disability among members in active service are as follows: Ordinary Accidental Ordinary Accidental Disability Disability Disability Disability Aee Rate Rate Aee Rate Rate 20 .0004 .0003 45 .0032 .0026 25 .0006 .0005 50 .0055 .0044 30 .0009 .0007 55 .0079 .0063 35 .0012 .0010 60 .0110 .0090 40 .0018 .0014 64 .0143 .0126 City Supplemental Pension Fund for Firefighters and Police Officers in the City of Miami Beach Page 20 ACTUARIAL ASSUMPTIONS TABLE XI ( continued) · Permanent Withdrawal from Active Status Representative values of the assumed annual rates of withdrawal among members in active service are as follows: :::~:::::::::II:I:fir::it: Rate !lliliillllili'lllli:i..liiillllll/III~lli~ ;~:oO~~:n I=::::i=::::::::::::;:tit::;~:I i/li;iii!!::1111/lii/iJiliiiil Rate 4.151% 1.82% i::i:ii::;::i:ii::@I=I==:::=~;:::: .0.................. ......... .i....I.:li..i...:!.:!!....il!lil:.lij~;II.li .:.::.:~: :::::. ," ;.:.;.' . . . . . . . . . . '." ':':':':~":..ii.", , Rate .-. 0.99% =::::::iiiiii:i;::::!i:::::i:*t::;~i:::: 1'!!'i.I!':li'!!!li'lil..llil:li':!i;llllj w: ........,.-.;....'~....~...b... Rate 0.48% ---1 , Retirement All members are assumed to retire at the earliest age at which they qualify for the .maximum benefit, i.e. age 50 and 26.25 years of service, but not later than age 65. Otherwise, retirement is assumed to occur in accordance with the following rates: ::::i:I:::::::::::::{:=!i.iiiI . Rate 25.20% 23.40% 14.70% 15.00% 3. Interest Rates =i:I::::=:i::::::::::::::tNiii.Ii . Rate 15.35% 15.75% 16.22 % 16.78% ::m:::::i!::m::::::::::i\!ie!;::: :::I::;::::i::;~:i:::::::l:::::::I::::: III'/I'IIII:!.IIIII'IIIIIIIII;':I;",_I:I/' ::iiI::::::::::::::i::::::::::::::::sii::: .... ... ....... Rate 17.40% 18.20% 19.15% 20.30% ::::::::::!::::!:::::t:tl1!~t;i . :!:rr:::::t:::::::r:::::i:;isi!':; ... ..... ............. .. Rate 30.00% 30.00% 30.00% 100.00% · Used for Calculating All Liabilities (including GASB 25/27 liabilities) 8.50~,-; per an.rmm 4. Salary Increases Representative values of the assumed annual rates of future salary increase are as follows: :::::::::::::Ii:I:fiititi . ............................ Rate 10.17% 8.30% 5.75% ::i::i}:::::::::::::i::::::!&iti::::: . Rate 4.80% 4.60% 4.53% =::i:::I::i:::::::I:::::!&iti=:::: ...........................-. ......................................~A'.,.. .......................................~,.... i:!!!l:l:li:llll:ii!!ii!i:::ii:i!illiis:::::=s.::;:::::::1 .....h.............. .'.. .................... -.. :::::::I:::;:::::::::::I:::::::::l:::::::::::i::::;:.:::: Rate 4.56% 4.62% I::::::i::::!:!::::::::::::!&iti::::j :::::I:I::;::::lil:ili'i::::li:I::!::I~!'!11 :::i:::::~:::::I:I:I:II~::III::;::il:l:II::::i Rate 4.86% 5.15% 5. Loadings for Contingencies · Compensation The salary rates for individuals who were members prior to May 19, 1993 have been increased by 10% to reflect estimated actual salaries. City Supplemental Pension Fund for Firefighters and Police Officers in the City of Miami Beach Page 21 ACTUARIAL ASSUMPTIONS TABLE XI ( continued) · Pre-Employment Military Service A City contribution of 1 % of loaded compensation is assumed sufficient to provide for the purchase (or "buyback") of pre-employment military service by the membership. · Accrued Benefits (F ASB 35) The present value of accrued benefits for active members (excluding the portion relating to contribution refunds) has been increased by 5.5% to reflect benefits based on estimated actual earnings. 6. Marriage Assumptions · Percent Married 75% of members are assumed married or entitled to dependent benefits. · Age Difference Between Spouses Male spouses are assumed to be three years older than female spouses. 7. Expenses Anticipated administrative expenses are assumed to be funded through future City normal contributions. 8. Assets Actuarial value of "assets is equal to the market value of assets adjusted to reflect a five-year phase-in. of the net investment gain or loss. 9. Maximum Benefit Limitation Under me ~415 The maximum benefit limitation on benefits payable from the plan as set forth in Internal Revenue Code (IRC) ~415 has been assumed to increase 4.5% per annum. City Supplemental Pension Fund for Firefighters and Police Officers in the City of Miami Beach Page 22 ASSUMPTION CHANGES TABLE Xla The following assumptions have been changed during the last Sl'{ plan years: 1. Effective October 1, 1991, the salary increase assumption was changed from 6% per annum at all ages to a graded salary scale ranging from 10.17% to 4.53%, depending on age. 2. Effective October 1, 1991, the amortization of the unfunded prior service liability is calculated on a level-payment basis rather than on the basis of payments assumed to increase 4% per year. 3. Effective October 1, 1992, the loading on base compensation was changed from 14.5% to 10% and the loading on liabilities for accounting purposes was changed from 7.75% to 5.5%. 4. Effective October 1, 1993, administrative expenses are funded directly and assumed to be paid through future City normal contributions. * Note: Assumption changes that have first been reflected in this valuation are shown in bold print. City Supplemental Pension Fund for Firefighters and Police Officers in the City of Miami Beach Page 23 PLAN PROVISIONS TABLE XII Note: All benefits are calcula.ted net of Base Plan benefits. 1. Monthly Accrued Benefit For individuals who were members prior to May 19, 1993: 3% of average monthly SFJary multiplied by service up to 15 years, plus 4% of average monthly salary multiplied by service in excess of 15 years, to a maximum monthly benefit of 90C}'a of average montbly salary. For all other members: 3% of average monthly salary multiplied by service, to a maximum monthly benefit of 80% of average monthly salary. (Average monthly salary is based upon the highest two years of compensation for individuals who were members prior to May 19, 1993 and is based upon the highest three years of compensation for all other members. For individuals who were members prior to May 19, 1993, a limited portion of overtime pay is included in the average monthly salary.) 2. Service Retirement Age and Benefit . Age For individuals who were members prior to May 19, 1993, age 50; For all other members, the later of age 55 and the attainment of 10 years of service. · Amount Monthly Accrued Benefit 18 Form of Payment For individuals who were members prior to May 19, 1993, 75% joint and survivor annuity; For all other. members, 50% joint and survivor. annuity..'.:"" , (Minimum of 25% of average monthly salary payable to beneficiary upon member's death. ) 3. Disability Retirement Age and Benefit · Condition F or a service connected disability benefit, the member must become totally and permanently disabled in the line of duty; For a non-service connected disability benefit, the member must otherwise become totally and permanently disabled and have at least five years of service. . Amount F or a service connected disability benefit: Monthly Accrued Benefit, with a minimum benefit of 75% (85% for individuals who were members prior to May 19, 1993) of compensation less an offset for any workers' compensation benefits payable. City Supplemental Pension Fund for Firefighters and Police Officers in the City of Miami Beach Page 24 PLAN PROVISIONS TABLE XII ( continued) For a non-service connected disability benefit: Monthly Accrued Benefit, with a minimum benefit of 50% (for individuals who were not members prior to May 19, 1993) of compensation. 4. Withdrawal Retirement Age and Benefit . Age For individuals who were members prior to May 19, 1993, any a.ge with at least lOyears';.- of service; For all other individuals, any age with at least one year of service. . Amount Monthly Accrued Benefit (payable if participant survives to Service Retirement Age); (For individuals who were not members prior to May 19, 1993, the benefit is multiplied by 10% for each year of service to a maximum of 100%.) . Form of Payment For individuals who were members prior to May 19, 1993, 75% joint and survivor annuity; For all other members, 50% joint and survivor annuity. (Minimum of 25% of average monthly salary payable to beneficiary upon member's death. ) 5. Death Benefits · Service connected death benefit Greater of Monthly Accrued Benefit and 85% of compensation payable' as a' monthly benefit to the widow until death or remarriage;' to.unmarried,chjldren in equal shares until age 18 (until age 22 if a full-time student or until recoveryfromdisabilitrifdisablecf);:'orc ' to dependent parents in equal shares. · Non-service connected death benefit For members with at least five years of service, Monthly Accrued Benefit is payable for the first 12 months after death and 50% (75% for individuals who were members prior to May 19, 1993) of the Monthly Accrued Benefit is payable thereafter (with a minimum benefit of 25% of average monthly salary); benefits are payable to the widow until death or remarriage, to unmarried children in equal shares until age 18 (until age 22 if a full-time student or until recovery from disability if disabled), or to dependent parents in equal shares. However, if the member has been married for less than ten years, benefits are payable to the spouse only for the life expectancy of the deceased member. City Supplemental Pension Fund for Firefighters and Police Officers in the City of Miami Beach Page 25 PLAN PROVISIONS TABLE XII ( continued) 6. Employee Contributions 10% of salary per year (on a pre-tax: basis), less amounts contributed to the Base Plan; If contributions are refunded to the member or to his beneficiaries, then interest is credited at the rate of 3% per annum. 7. Pre-Employment Military Senrice :Members with at least 20 years of service may purchase up to f.'JUf years of additional service credit at the 3% accrual rate for time spent on active military duty. 8. Cost-of-Living Adjustment For individuals who were members prior to May 19, 1993, benefits are increased by 2.5% per year, compounded annually, each October 1 after retirement, adjusted for partial years; For all other members, benefits are increased 1.5% (non-compounded) each October 1 after retirement, adjusted for partial years. 9. Enhanced Retirement Programs Any active member who was at least age 48 by July 28, 1993 (but less than age 50) could retire between May 29 and July 28 as if he were at least age 50. Also, any active member age 50 or more could have service increased up to two years, as long as the maximum benefit was not exceeded. Any active member who was at least ageA8 by September 30, .1994 (but less than age 50) could retire between August 2 and September 30 as. if he were at least age 50. Also,.anyactive member age 50 or more could have service increased up to two years, as long as the maximum benefit was not exceeded. City Supplemental Pension Fund for Firefighters and Police Officers in the City of Miami Beach Page 26 PLAN AMENDMENTS TABLE Xlla The following plan amendments have been adopted within the past few years: 1. Effective May 19, 1993 for a member joining the plan on or after that date, the following changes were made: · service retirement eligibility was changed from age 50 to age 55 with 10 years of service; · benefit formula was changed from 4% of average salary for years of service over 15 to 3% of average salary; · maximum benefit was reduced from 90% of two-year average sa.lary to 80% of three-year average salary; · minimum service connected disability benefit was reduced from 85% of compensation to 75% of compensation; · non-service connected death benefit was reduced from 75% of accrued benefit to 50% of accrued benefit; · cost-of-living adjustment was reduced from 2.5%. per year compounded annually to 1.5% per year non-compounded; and · vesting schedule was changed from 0% prior to the attainment of 10 years of service to 10% vesting for each year of service less than 10. 2. From May 29, 1993 to July 28, 1993, an enhanced retirement program was available as described in item 9. of Table XII. 3. From August 2, 1994 to September 30, 1994, an enhanced retirement program was available as described in item 9. of Table XII. 4. E.ffective December 7,1994: · as required by the Unemployment Compensation Amendm~nts of 1992, the plan was. amended to allow for the direct rollover of eligible distributions into anothe.. qualified plan or IRA; · as permitted by the Omnibus Budget Reconciliation Act of 1993 (OBRA 93), the plan was amended to provide for the grandfathering of compensation for employees hired before October 1, 1996; and · as required by State Law CS/HB 665, the plan was amended to provide that the surviving spouse of any member killed in the line of duty will not forfeit benefits upon remarriage. * Note: Amendments that have first been reflected in this valuation are indicated in bold print. City Supplemental Pension Fund for Firefighters and Police Officers in the City of Miami Beach Page 27