LTC 113-2009 Actuarial Valuation Reports for MBERP & City Pension Fund for Fire & Police Pension,-
Z~~9 A~ ~' 9 ~~° 2• v 6
~ ~~~11AMI BEACH c~~~~ ~~~~~~c~ ~~~-~~~~
OFFICE OF THE CITY MANAGER ~---
NO. LTC # 113-2009 LETTER 7C~?. C,QMMI~S~C~N
TO: Mayor Matti Herrera Bower and Members of the City Commission
FROM: Jorge M. Gonzalez, City Manager `~
DATE: April 28, 2009
SUBJECT: Actuarial Valuation Reports for Miami Beach Employees' Retirement Plan
(MBERP) and City Pension Fund for Firefighters and Police Officers in the City
of Miami Beach (Fire and Police Pension)
At the March 25, 2009 City Commission Workshop to discuss the Miami Beach Employees'
Retirement Plan (MBERP) and City Pension Fund for Firefighters and Police Officers in the
City of Miami Beach (Fire and Police Pension) alternatives, it was requested that the
Administration forward the Actuarial Valuation Reports as of October 1, 2008 for each plan
to the City Commission as soon as they became available. Both Actuarial Valuation Reports
are now available. Please find copies of them attached.
Attachments
JMG/KG I/kt
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~1~~ C Gabriel Roeder Smith & Company
J ~.J Consultants & Actuaries
CITY OF MIAMI BEACH EMPLOYEES' RETIREMENT PLAN
ACTUARIAL VALUATION REPORT AS OF OCTOBER 1, 2008
1 ANNUAL EMPLOYER CONTRIBUTION FOR TIIE FISCAL YEAR ENDING SEPTEMBER 30, 2010
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Gabriel Roeder Smith & Company One East Broward Blvd. 954.527.1616 phone
Consultants & Actuaries Suite 505 954.525.0083 fax
Ft. Lauderdale, FL 33301-1872 wwwgabrielroedercom
Apri120, 2009
Board of Trustees
City of Miami Beach Employees'
Retirement Plan
Miami Beach, Florida
Dear Board Members:
We are pleased to present our October 1, 2008 Actuarial Valuation Report for the Plan. The purpose of the
Report is to set forth required contribution levels, to disclose plan assets and actuarial liabilities, to comment
on funding progress and to provide supporting information regarding the operation of the Plan. This Report
is also designed to comply with requirements of the State.
The valuation was performed on the basis of employee, retiree and financial information supplied by the
City. Although we did not audit this information, it was reviewed for reasonableness and comparability to
prior years.
The benefits valued are outlined at the end of the Report. Actuarial assumptions and the actuarial cost
method are also described herein. Any changes in benefits, assumptions or methods are described in the
first section.
As indicated below, the undersigned are Members of the American Academy of Actuaries (MAAA) and
meet the Qualification Standards of the Academy of Actuaries to render the actuarial opinion herein.
We will be pleased to answer any questions pertaining to the valuation and to meet with you to review this
Report.
Respectfully submitted,
GABRIEL, ROEDER, SMITH AND COMPANY
By
Stephen Pahnquist, AS , FCA
Enrolled Actuary No. 08-1 60
BY ,~1~
Melissa R. Algayer, M CA
Enrolled Actuary No. 08-6467
Statement by Enrolled Actuary
This actuarial valuation and/or cost determination was prepared and completed by me or under my
direct supervision, and Y acknowledge responsibility for the results. To the best of my knowledge, the
results are complete and accurate. In my opinion, the techniques and assumptions used are reasonable, meet
the requirements and intent of Part VII, Chapter 112, Florida Statutes, and are based on generally accepted
actuarial principles and practices. There is no benefit or expense to be provided by the plan and/or paid
from the plan's assets for which liabilities or current costs have not been established or otherwise taken into
account in the valuation. All known events or trends which may require a material increase in plan costs or
required contribution rates have been taken into account in the valuation.
Signatur
~-1~~ a.~c~;
Date
OS-1560
Enrollment Number
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TABLE OF CONTENTS
Section Title Page
A Discussion of Valuation Results 1
B Valuation Results
1. Participant Data 4
2. Annual Required Contribution 5
3. Actuarial Value of Benefits and Assets 6
4. Calculation of Normal Cost ~
5. Liquidation of the Unfunded Accrued Liability 8
6. ~ Actuarial Gains and Losses 11
7. History of Investment Returns and Salary Increases 12
8. Actual Compared to Expected Decrements among
Active Employees 15
9. History of Contributions 16
10. Actuarial Assumptions and Cost Method 18
11. Glossary of Terms 21
C Pension Fund Information
1. Summary of Assets 24
2. Summary of Fund's Income and Disbursements 25
3. Actuarial Value of Assets 26
4. Investment Rate of Return 27
D Financial Accounting Information
1. FASB No. 35 28
2. GASB No. 25 29
E Miscellaneous Information
1. Reconciliation of Membership Data 31
2. Age and Service Distribution 32
3. Inactive Member Distribution 33
F Summary of Plan Provisions 34
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SECTION A
DISCUSSION OF VALUATION RESULTS
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DISCUSSION OF VALUATION RESULTS
Comparison of Required Employer Contributions
1
The required employer contribution developed in this year's actuarial valuation compared to last year is as
follows:
For FYE 9/30/10 Based
on 10/1/08 Valuation
For FYE 9/30/09 Based
on 10/1/07 Valuation
Increase (Decrease)
Required City Contribution
of
Amount Payroll
$ 17,137,394
12,863,823
4,273,571
25.20 % $
21.57
3.63
Covered Payroll
68,009,550
59,632,425
8,377,125
The contribution has been adjusted for interest on the basis that employer contributions are made in a
single payment on the first day of the fiscal year. The total actual employer contribution for the year ending
September 30, 2008 was $13,911,545 compared to the minunum required payment of $13,911,545.
Revisions in Benefits
A Deferred Retirement Option Plan (DROP) was enacted on January 28, 2009 by Ordinance 2009-3626.
Under this Plan, participants who have attained eligibility for Normal Retirement may continue working with the
City for up to three years while receiving a retirement benefit that is deposited into a DROP account. The
amount of the benefit is calculated as if the participant had retired on the date of DROP commencement. Upon
termination with the City, the accumulated value of the DROP account is distributed to the participant.
Revisions in Actuarial Assumptions and Methods
The investment return assumption was reduced from 8.65% per year to 8.50% per year. The investment
return assumption will be further reduced to 8.35% for the October 1, 2009 Valuation, 8.25% for the October 1,
J'
2010 Valuation, 8.15% for the October 1, 2011 Valuation and 8.00% for the October 1, 2012 Valuation.
Additionally, the assumed retirement rates were increased by 10% for the fast year of retirement eligibility to
J value the effect of adding the Deferred Retirement Option Plan (DROP).
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Actuarial Experience
There was a net actuarial loss of $29,844,325 for the year which means actual experience was less
favorable than expected. The actuarial loss was due to lower than expected return on investments and average
salary increases for continuing active participants that were greater than expected. The actuarial loss translates
into an increase in the employer contribution equal to $2,795,193 or 4.11 % of covered payroll.
Funded Ratio
The funded ratio this year is 80.9% compared to 86.4% last year. This year's ratio was 82.1
before the changes in assumptions and benefits described above.
The funded ratio is equal to the actuarial value of assets divided by the actuarial accrued (past service)
liability.
Analysis of Change in Emnloyer Contribution
The components of change in the required employer contribution areas follows:
Contribution rate last year 21,5'7 %
J Change in benefits (0.23)
Change in assumptions/methods 1.59
Payment on unfunded liability (2,38)
Change in employer normal cost 0.57
l Experience gain/loss 4.11
J Change in administrative expense 0.03 _
Contribution rate this year 25.20
Repaired Contributions in Later Years
The current calculated City contribution requirement is 25.20% of payroll. However, due to the recent
economic downturn, it is likely that future contribution rates will be significantly greater. Tt is important to
J keep in mind that under the asset smoothing method, the difference between actual and expected return is
J recognized over five years. As of September 30, 2008 the actuarial value of assets exceeded'the market value
1 by $62,129,769. In addition, fiuther asset losses have likely occurred after September 30, 2008. Once all the
losses through September 30, 2008 are fully recognized in the actuarial asset values, the contribution rate will
J increase by roughly 8.5% of payroll unless there are offsetting gains.
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Relationship to Market Value
3
ff Market Value had been the basis for the valuation, the City contribution rate would have been 33.69%
and the funded ratio would have been 69.1 %. In the absence of other gains and losses, the City contnbution rate
should increase to that level over the next several years.
The remainder of this Report includes detailed actuarial valuation results, financial information,
miscellaneous information and statistics, and a summary of plan provisions.
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SECTION B
VALUATION RESULTS
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] Number 968 959
Annual Benefits $ 27,377,651 $ 25,397,555
Average Annual Benefit $ 28,283 $ 26,483
Average Age 70.4 70.5
DISABII.ITY RETIREES
7
Number 43 42
Annual Benefits $ 925,417 $ 866,343
7 Average Annual Benefit $ 21,521 $ 20,627
Average Age 67.5 66.9
J TERMINATED VESTED MEMBERS
Number 87 70
Annual Benefits $ 1,455,128 $ 1,048,560
Average Annual Benefit $ 16,726 $ 14,979
Average Age 46.0 45.6
1
PARTICIPANT DATA
October 1, 2008 October 1, 2007
ACTIVE MEMBERS
Number 1,158 1,061
Covered Annual Payroll $ 68,009,550 $ 59,632,425
Average Annual Payroll $ 58,730 $ 56,204
Average Age 43.6 4.4.0
Average Past Service 8.1 8.6
Average Age at Hire 35.5 35.4
RF.TTRF.FC R RF.NF.Frrreur~e
4
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ANNUAL REQUIRED CONTRIBUTION (ARC)
A. Valuation Date October 1, 2008 October 1, 2008 October 1, 2007
.4,Jier Changes Before Changes
B. ARC to Be Paid During
Fiscal Year Ending 9/30/2010 9/30/2010 9/30/2009
C. Assumed Date of Employer Contrib. 10/1/2009 10/1/2009 10/1/2008
D. Annual Payment to Amortize
Unfunded Actuarial Liability $ 7,182,938 $ 6,577,667 $ 4,806,312
E. Employer Normal Cost 8,611,895 8,342,512 7,033,378
F. ARC if Paid on the Valuation
Date: D+E 15,794,833 14,920,179 11,839,690
G. ARC Adjusted for Frequency of
Payments 17,137,394 ~ 16,210,774 12,863,823
H. ARC as % of Covered Payroll 25.20 % 23.84 % 21.57
I. Covered PayroII for Contribution Year 68,009,550 68,009,550 59,632,425
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ACTUARIAL VALUE OF BENEFITS AND ASSETS
A. Valuation Date October 1, 2008 October 1, 2008 October 1, 2007
After Changes Before Changes
B. Actuarial Present Value of All Projected
Benefits for
1. Active Members
a. Service Retirement Benefits $ 254,664,328 $ 250,414,423 $ 229,252,192
b. Vesting Benefits 23,920,489 23,123,375 21,754,022
c. Disability Benefits 14,021,461 14,278,491 13,244,697
d. Preretirement Death Benefits 4,708,553 4,810,150 4,407,978
J e. Return of Member Contributions 941,618 939,821 730,217
f. Total 298,256,449 293,566,260 269,389,106
2. Inactive Members
a. Service Retirees & Beneficiaries 295,403,500 291,682,922 269,399,622
b. Disability Retirees 9,297,635 9,184,094 8,639,742
J c. Terminated Vested Members 12,672,793 12,404,440 9,500,862
d. Total 317,373,928 313,271,456 287,540,226
J 3. Total for All Members 615,630,377 606,837,716 556
929
332
,
,
C. Actuarial Accrued (Past Service)
Liabilityper GASB No. 25 526,481,586 518,252,592 478,067,829
J D. Actuarial Value of Accumulated Plan
Benefits per FASB No. 35 470,386,912 461,202,986 ~ 432,296,450
E. Plan Assets
1. Market Value 363,584,796 363,584,796 429,720,685
2. Actuarial Value 425,714,565 425,714,565 412,824,235
F. Unfunded Actuarial Accrued Liability: C-E2 100,767,021 92,538,027 65,243
594
J ,
G. Actuarial Present Value of Projected
Covered Payroll 459,755,910 466,544,627 416,550,185
H. Actuarial Present Value of Projected
J Member Contributions 35,584,619 35,976,042 32,091,878
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CALCULATION OF EMPLOYER NORMAL COST
A. Valuation Date October 1, 2008 October 1, 2008 October 1, 2007
After Changes Before Changes
B. Normal Cost for
1. Service Retirement Benefits $ 10,131,158 $ 9,930,065 $ 8,482,694
2. Vesting Benefits 1,391,398 1,333,944 1,177,886
3. Disability Benefits 1,145,687 1,137,139 972,110
4. Preretirement Death Benefits 347,993 346,488 287,367
5. Return of Member Contributions 582,672 581,889 521,354
6. Total for Future Benefits 13,598,908 13,329,525 11,441,411
7. Assumed Amount for Administrative
Expenses 640,506 640,506 579,706
8. Total Normal Cost 14,239,414 13,970,031 12,021,117
of Covered Payroll 20.94 % 20.54 % 20.16
C. Expected Member Contribution 5,627,519 5,627,519 4,987,739
of Covered Payroll 8.27 % 8.27 % 8.36
D. Employer Normal Cost: B8-C 8,611,895 8,342,512 7,033,378
of Covered Payroll 12.66 % 12.27 % 11.79%
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LIQUIDATION OF THE UNFUNDED ACTUARIAL ACCRUED LIABILITY
A. Derivation of the Current UAAL
1. Last Year's UAAL $ 65,243,594
2. Last Year's Employer Normal Cost 6,370,392
3. Last Year's Contributions 13,911,545
4. Interest at the Assumed Rate on:
a. 1 and 2 for one year 6,194,610
b. 3 from dates paid 1,203,349
c. a - b 4,991,261
5. This Year's Expected UAAL Prior to Revision:
1 + 2 - 3 + 4c 62,693,702
6. This Year's Actual UAAL Prior to Revisions 92,538,027
7. This Year's Gain (Loss): 5 - 6 {29,844,325)
8. Change in UAAL Due to Plan Amendments
and/or Changes in Actuarial Assumptions 8,228,994
9. This Year's Revised UAAL: 6 + 8 100,767,021
10. Gain (Loss) Due to Investments (14,095,652)
11. Gain (Loss) Due to Other Causes (15,748,673)
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B. UAAL Amortization Period and Pa ents
Ori 'nal UAAL Current UAAL
Amortization
Date Period Years
Established (Years) Amount Remaining Amount Payment
10/1/94 15 $1,654,392 1 $397,914 $397,914
10/1 /94 15 8,743,997 I 2,103,102 2,103,102
10/1/95 15 (3,893,388) 2 (1,614,333) (840,072)
10/1/96 15 (6,757,095) 3 (4,381,959) (1,581,299}
10/1!96 15 (1,455,487) 3 (943,879) (340,614)
10/1/97 15 (11,502,918) 4 (5,302,332) (1,491,924)
10/1/98 15 (9,492,383) 5 (4,778,182) (1,117,547)
10/1/99 15 (11,197,306) 6 (6,203,965) (1,255,700)
10/1/99 15 761,013 6 421,648 85,343
10/1/00 15 (1,184,364) 7 (708,652) (127,603)
10/1/O1 15 4,182,294 8 2,631,432 430,077
10/1/O1 15 8,482,719 8 5,337,185 872,301
10/1/02 30 24,017,296 24 21,644,140 1,974,300
10/1/03 30 16,972,622 25 16,931,463 1,524,794
10/1/04 30 9,682,048 26 9,408,144 837,456
10/1/OS 30 9,377,578 27 8,825,367 777,285
10/1/06 30 11,796,972 28 11,082,805 966,698
10/1/06 30 34,747,408 28 32,643,865 2,847,361
10/1/07 30 (14,036,710) 29 (13,296,604) (1,149,583)
10/1/07 30 (12,143,754) 29 (11,503,456) (994,553)
10/1/08 30 29,844,325 30 29,844,325 2,559,476
10/1/08 30 _ 8,228,994 30 8,228,994 705,726
96,828,253 100,767,021 7,182,938
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C. Amortization Schedule
The UAAL is being liquidated as a level dollar amount over the number of years remaining in the
amortization period. The expected amortization schedule is as follows:
Amortization Schedule
Year Expected UAAL
2008 $ 100,767,021
2009 101,538,736
2010 105,089,644
2011 108,030,900
2012 109,136,887
2013 108,718,146
2018 95,571,479
2023 79,101,633
2028 54,336,639
2033 19,240,705
2038 -
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11
ACTUARIAL GAINS AND LOSSES
The assumptions used to anticipate mortality, employment turnover, investment income, expenses,
salary increases, and other factors have been based on long range trends and expectations. Actual experience
can vary from these expectations. The variance is measured by the gain and loss for the period involved. If
significant long term experience reveals consistent deviation from what has been expected and that deviation
is expected to continue, the assumptions should be modified.
Net actuarial gains in previous years are as follows:
Year Ended Gain (Loss)
9/30/1990 $ (9,106,524)
9/30/1991 2,727,904
9/30/1992 4,954,823
9/30/1993 5,370,894
9/30/1994 (1,696,061)
9/30/1995 6,661,918
9/30/1996 7,568,621
9/30/1997 13,539,264
9/30/1998 6,894,790
9/30/1999 16,168,137
9/30/2000 6,540,306
9/30/2001 (6,572,791)
9/30/2002 (32,586,068)
4/30/2003 (18,414,901)
9/30/2004 (9,682,048)
9/30/2005 (7,060,041)
9/30/2006 (11,796,971)
9/30/2007 14,036,710
9/30/2008 (29,844,325)
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HISTORY OF INVESTMENT RETURNS AND SALARY INCREASES
~ The fund earnings and salary increase assumptions have considerable impact on the cost of the Plan so it
_J
_~ is important that they are consistent with the actual experience. The following table shows the actual fund
earnings and salary increase rates compared to the assumed rates for the Last several years:
General Plan Unclassified Plan
~ Investment Return Salary Increases Investment Return Salary Increases
Year Ending Actual Assumed Actual Assumed Actual Assumed Actual Assumed
~ 9/30/1989 11.6 % 8.0 % 1.9 % 6.0 % 14.6 % 8.0 % 3.2 % 6.0
9/30/1990 7.3 8.5 7.5 6.0 (2.3) 8.0 12.3 6.0
9/30/1991 8.1 8.5 3.0 6.0 21.6 8.5 3.4 6.0
~ 9/30/1992 13.7 8.5 2.0 * 6.0 5.8 9.0 2.4 6.0
9/30/1993 11.4 8.5 3.1 6.0 14.1 9.0 6.3 6.0
~ 9/30/1994 6.8 8.5 3.9 6.0 4.8 9.0 6.0 6.0
9/30/1995 11.4 8.5 8.8 6.0 24.1 9.0 7.6 6.0
9/30/1996 I5.3 8.5 4.2 6.0 13.9 9.0 8.6 6.0
~ 9/30/1997
1 13.8 8.5 6.0 6.0 19.1 9.0 7.4 6.0
~ 9/30/1998 12.5 8.5 5.0 6.0 4.3 9.0 4.1 6.0
9/30/1999 14.4 8.5 7.3 6.0 18.8 9.0 7.1 6.0
9/30/2000 10.7 8.5 6.7 6.0 16.5 9.0 6.7 6.0
9/30/2001 7.2 8.5 9.3 6.0 9.7 9.0 7.0 6.0
9/30/2002 0.3 8.5 8.9 6.0 I.7 9.0 9.2 6.0
' 9/30/2003 4.3 8.5 8.1 6.0 4.6 9.0 7.5 6.0
9/30/2004 4.1 8.5 3.1 6.0 9.7 9.0 5.7 6.0
9/30/2005 4.4 8.5 4.7 6.0 10.7 9.0 6.8 6.0
9/30/2006 7.7 8.5 11.9 6.0 10.2 8.75 7.9 6.0
9/30/2007 ** 12.0 8.75 (3.6) 6.0 NA NA NA NA
9/30/2008 ** 5.2 8.65 11.3 6.0 NA NA NA NA
Averages 9.0 % -- 5.6 % --- 11.0 % --- 6.6 % --
* Approximate rate
** Represents salary increases and investment return for the total group
Note: Figures before 1992 were taken from Reports of Buck Consultants.
The actual investment return rates shown above are based on the actuarial value of assets. The actual
salary increase rates shown above are the increases received by those active members who were included in
the actuarial valuation both at the beginning and the end of each period. The exhibits that follow illustrate the
~} table above in graphic form.
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History of Investment Return Based
on Actuarial Value of Assets -General Plan
and Combined Plan After 2006
20%
l5%
1Q%
5%
0%
-5%
-10% ~ '
~~~~ ~~a ~~~o ~~~ti ~~~ti q~o~3 ~~a ~~~~ ~~~~ ~~Q^ ~\~~ ~~a ~\o0 9~oti ~~ory ~~o~ ~~~ ~~05 ~~~ ~~o^ ~~o~
Plan Year End
~-~--Actual Assumed
20%
15%
10%
5%
0%
-5%
-10%
History of Salary Increases -General Plan
and Combined Plan After 2006
20%
16%
12%
8%
4%
0%
-4%
-8%
~~~~ 9~~'~ 9~~~ 9~~~ ci~~~ 9~~~ ci~~~ 9~~~ 0~~6 9~~~ 9~~~ 9~~~ 9~~~ 9~~~ 9~~~ 9~~~ 9~~ 9~~h cl~~ 9~~^ 9~~~
Plan Year End Compared to Previous Year
-i-Actual -~-Assumed
20%
16%
12%
8%
4%
0%
~%
-8%
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14
History of Investment Return Based on
Actuarial Value ofAssets -Unclassified Plan
30%
25%
20%
15%
10%
5%
0%
-5%
~~gei ~,~o ~,~ti ~~ ~~~ ~~~ ~,~h ~~b ~~~~ ~~~ ~~ei ~~o ~~oti 9~ory ~~~ ~~o~` ~~ph 9~oh
Plan Year End
Actual -+-Assumed
30%
25%
20%
]5%
10%
5%
0%
-5%
History of Salary Increases -Unclassified Plan
"lU%
16% -,
12%
8%
4%
0%
-4%
-8%
aka a~'o ~~'~ ~~ti ~,~'~ a~°'~ ~~h a~'~ ~~ ~,~'~ ~,'~~' a~po a~°~ a~°ti ~,~°~' ~~°~ ~,~°h ~,~°~
P1anYear End Compared to Previous Year
-~-Actual --~-Assumed
20%
16%
12%
8%
4%
0%
-4%
-8%
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15
Actual (A) Compared to Expected (E) Decrements
Among Active Employees
Number
Added Service & Active
During DROP Disability Terminations Members
Year Year Retirement Retirement Death Vested Other To tals End of
Ended A E A E A E A E A A A E Year
9/30/2003 109 46 20 40 0 3 2 1 15 9 24 33 714
9/30/2004 65 54 24 37 2 3 1 1 18 9 27 35 725
9/30/2005 73 62 16 43 2 3 2 1 23 19 42 37 736
9/30/2006 * 357 75 40 40 0 3 1 1 21 13 34 37 1,018
9/30/2007 149 106 40 86 2 3 1 2 17 46 63 49 1,061
9/30/2008 182 85 29 92 1 3 1 2 24 30 54 61 1,158
9/30/2009 123 3 2 64
6 Yr Totals ** 935 428 169 338 7 18 8 8 118 126 244 252
* Includes 401 a transfers
** Totals are through current Plan Yeaz only
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16
RECENT 13ISTORY OF REQUIRED AND ACTUAL
CONTRIBUTIONS
End of Required
Valuation Year To
Which Contribution Actual
Contribution
Valuation
Applies Amount
10/1/92 9/30/94 $ 3,004,556 $ 3,004,556
10/1/93 9/30/95 2,809,509 2,809,509
10/1/94 9/30/96 4,151,807 4,151,807
10/1/95 9/30/97 3,982,477 3,982,477
10/1/96 9/30/98 3,091,359 3,091,359
10/1/97 9/30/99 1,293,920 1,293,920
10/1/98 9/30/00- 666,897 666,897
10/1/99 9/30/01 - -
10/1/00 9/30/02 - -
10/1/O1 9/30/03 - -
10/1/02 9/30/04 2,476,702 2,476,702
10/1/03 9/30/05 5,082,595 5,082,595
10/1/04 9/30/06 5,500,329 5,500,329
10/1/OS 9/30/07 12,234,519 * 13,053,231
10/1/06 9/30/08 13,911,545 13,911,545
10/1/07 9/30/09 12,863,823 NA
10/1/08 9/30/10 17,137,394 NA
* From February 28, 2006 Actuarial Impact Statement
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ACTUARIAL ASSUMPTIONS AND COST METHOD
--' Valuation Methods
~ Actuarial Cost Method -Normal cost and the allocation of benefit values between service rendered before and
after the valuation date were determined using an Individual Entry-Age Actuarial Cost Method having the
following characteristics:
(i) the annual normal cost for each individual active member, payable from the date of employment to
the date of retirement, is sufficient to accumulate the value of the member's benefit at the time of
retirement;
(ii) each annual normal cost is a constant percentage of the member's year by year projected covered
pay.
Actuarial gains/(losses), as they occur, reduce (increase) the Unfunded Actuarial Accrued Liability.
Financing of Unfunded Actuarial Accrued Liabilities -Unfunded Actuarial-Accrued Liabilities (full funding
credit if assets exceed liabilities) were amortized by level (principal & interest combined) dollar contributions
over a reasonable period of future years.
Actuarial Value of Assets -The Actuarial Value of Assets phase in the difference between the expected
actuarial value and actual market value of assets at the rate of 20% per year. The Actuarial Value of Assets will
be further adjusted to the extent necessary to fall within the corridor whose lower limit is 80% of the Market
Value of plan assets and whose upper limit is 120% of the Market Value of plan assets. During periods when
investment performance exceeds the assumed rate, Actuarial Value of Assets will tend to be less than Market
J Value. During periods when investment performance is less than assumed rate, Actuarial Value of Assets will
tend to be greater than Market Value.
Valuation Assumptions
The actuarial assumptions used in the valuation are shown in this Section.
Economic Assumptions
The investment return rate assumed in the valuations is 8.50% per year, compounded annually (net after
investment expenses). The assumption rate for each of the next four valuations will be 8.35%, 8.25%, 8.15%,
and 8.00% respectively.
The Wage Inflation Rate assumed in this valuation was 4.00% per year. The Wage Inflation Rate is defined to
be the portion of total pay increases for an individual that are due to macro economic forces including
productivity, price inflation, and labor market conditions. The wage inflation rate does not include pay changes
related to individual merit and seniority effects.
The assumed real rate of return over wage inflation is defined to be the portion of total investment return that
is more than the assumed wage inflation rate. Considering other economic assumptions, the 8.5% investment
return rate translates to an assumed real rate of return over wage inflation of 4.5%.
J
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19
Pay increase assumptions for individual active members are assumed to be 6.00% per year up to the assumed
retirement age.
Annual Rate of
Mortality Retirement*
A e Male Female Turnover Disabili Group A Group B
25 0.05% 0.03% 14.6% 0.07% NA NA
30 0.06 0.03 7.8 0.08 NA NA
35 0.09 0.05 5.7 0.13 NA NA
40 0.12 0.07 4.7 0.20 NA NA
45 0.22 0.10 3.3 0.31 NA NA
50 0.39 0.16 2.1 0.46 30.0% 5.0%
55 0.61 0.25 1.1 0.64 12.0 5.0
60 0.92 0.42 0.4 1.04 20.0. 60.0
65 1.56 0.71 NA NA 100.0 100.0
70 2.75 1.24 NA NA NA NA
75 4.46 2.40 NA NA NA NA
80 7.41 4.29 NA NA NA NA
85 11.48 6.99 NA NA NA NA
90 16.63 11.18 NA NA NA NA
95 23.41 18.24 NA NA NA NA
100 31.92 29.52 NA NA NA NA
*for those eligible to retire
Demographic Assumptions
The mortality table was the 1983 Group Annuity Mortality for males and females; for those who have
terminated employment before 10/1/93, rates are based on the group's own experience. See Table above.
For disabled retirees, the regular mortality tables are set forward 5 years in ages to reflect impaired Longevity.
The rates of retirement used to measure the probability of eligible members retiring during the next year are
shown in the above table. To value the effect of the DROP Plan, the retirement rates for the 1~` year eligible
were increased by an additional 10% more than shown in the above table.
Rates of separation from active membership were as shown in the above table (rates do not apply to members
eligible to retire and do not include separation on account of death or disability). This assumption measures the
probabilities of members remaining in employment.
Rates of disability among active members are shown in the above table.
GRS
20
Miscellaneous and Technical Assumptions
Administrative & Investment The investment return assumption is intended to be the return net of
Expenses investment expenses. Annual administrative expenses are assumed to be
the average of non-investment related expenses averaged over the last two
years. Assumed administrative expenses are added to the Normal Cost.
Benefit Service Exact fractional service is used to determine the amount of benefit payable.
Decrement Operation Disability and mortality decrements operate during retirement eligibility.
Decrement Timing Decrements of all types are assumed to occur at the beginning of the year.
Eligibility Testing Eligibility for benefits is deternuned based upon the age nearest birthday
and service nearest whole year on the date the decrement is assumed to
occur. .
Forfeitures For vested separations from service, it is assumed that 0% of members
separating will withdraw their contributions and forfeit an employer
financed benefit. It was further assumed that the liability at termination is
the greater of the vested deferred benefit {if any) or the member's
accumulated contributions.
Incidence of Contributions Employer contributions are assumed to be made in full on the first day of
the fiscal year. Member contributions are assumed to be received
continuously throughout the year based upon the computed percent of
payroll shown in this report, and the actual payroll payable at the time
contributions are made.
Marriage Assumption 100% of males and 100% of females are assumed to be married for
purposes ofdeath-in-service benefits. Male spouses are assumed to be three
years older than female spouses for active member valuation purposes.
Normal Form of Benefit A 50% joint and survivor annuity is the normal form of benefit.
Pay Increase Timing Middle of fiscal year. This is equivalent to assuming that reported pays
represent amounts paid to members during the year ended on the valuation
date.
Cost of Living Increase 2.5% per year.
GRS
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21
GLOSSARY
-~ Actuariad Accrued Liability The difference between the Actuarial Present Value of Future Benefits, and
(~) the Actuarial Present Value of Future Normal Costs.
Actuarial Assumptions Assumptions about future plan experience that affect costs or liabilities, such
i
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ncreases
uture
as: mortality, withdrawal, disablement, and retirement;
salary; future rates of investment earnings; future investment and
administrative expenses; characteristics of members not specified in the data,
such as marital status; characteristics of future members; future elections made
by members; and other items.
Actuarial Cost Method A procedure for allocating the Actuarial Present Value of Future Benefits
between the Actuarial Present Value of Future Normal Costs and the Actuarial
Accrued Liability.
Actuarial Equivalent Of equal Actuarial Present Value, determined as of a given date and based on
a given set ~of Actuarial Assumptions.
Actuarial Present Value (APi~ The amount of funds required to provide a payment or series of payments in
-- the future. It is determined by discounting the future payments with an
1
J assumed interest rate and with the assumed probability each payment will be
made.
Actuarial Present Value of The Actuarial Present Value of amounts which are expected to be paid at
i
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Future Benefits (APVFB) c
ar
es
ene
various future times to active members, retired members,
receiving benefits, and inactive, nonretired members entitled to either a refund
or a future retirement benefit. Expressed another way, it is the value that
would have to be invested on the valuation date so that the amount invested
plus investment earnings would provide sufficient assets to pay all projected
J benefits and expenses when due.
J Actuarial Valuation The determination, as of a valuation date, of the Normal Cost, Actuarial
Accrued Liability, Actuarial Value of Assets, and related Actuarial Present
Values for a plan. An Actuarial Valuation for a governmental retirement
system typically also includes calculations of items needed for compliance
with GASB No. 25, such as the Funded Ratio and the Annual Required
Contribution (ARC).
Actuarial Value ofAssets The value of the assets as of a given date, used by the actuary for valuation
~
~ purposes. This maybe the market or fair value of plan assets or a smoothed
value in order to reduce the year-to-year volatility of calculated results, such
ARC
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).
on (
contr
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re
as the funded ratio and the actuarially requ
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Amortization Method A method for deterniining the Amortization Payment. The most common
methods used are level dollar and level percentage of payroll. Under the Level
Dollar method, the Amortization Payment is one of a stream of payments, all
equal, whose Actuarial Present Value is equal to the UAAL. Under the Level
Percentage of Pay method, the Amortization Payment is one of a stream of
increasing payments, whose Actuarial Present Value is equal to the UAAL.
Under the Level Percentage of Pay method, the stream of payments increases
at the rate at which total covered payroll of all active members is assumed to
increase.
Amortization Payment That portion of the plan contribution or ARC which is designed to pay interest
on and to amortize the Unfunded Actuarial Accrued Liability.
Amortization Period The period used in calculating the Amortization Payment.
Annual Required Contribution The employer's periodic required contributions, expressed as a dollar
(,qRC) amount or a percentage of covered plan compensation, determined under
GASB No. 25. The ARC consists of the Employer Normal Cost and
Amortization Payment.
Closed Amortization Period A specific number of years that is reduced by one each year, and declines to
zero with the passage of time. For example if the amortization period is
initially set at 30 years, it is 29 years at the end of one year, 28 years at the end
of two years, etc.
Employer Normal Cost The portion of the Normal Cost to be paid by the employer. This is equal to
the Normal Cost less expected member contributions.
Equivalent Single For plans that do not establish separate amortization bases (separate
Amortization Period components of the UAAL), this is the same as the Amortization Period. For
plans that do establish separate amortization bases, this is the period over
which the UAAL would be amortized if all amortization bases were combined
upon the current UAAL payment.
Experience Gairr/Loss A measure of the difference between actual experience and that expected
based upon a set of Actuarial Assumptions, during the period between two
actuarial valuations. To the extent that actual experience differs from that
assumed, Unfunded Actuarial Accrued Liabilities emerge which may be larger
or smaller than projected. Gains are due to favorable experience, e.g., the
assets earn more than projected, salaries do not increase as fast as assumed,
members retire later than assumed, etc. Favorable experience means actual
results produce actuarial liabilities not as large as projected by the actuarial
assumptions. On the other hand, losses are the result of unfavorable
experience, i.e., actual results that produce Unfunded Actuarial Accrued
Liabilities which are larger than projected.
~-' GRS
23
Funded Ratio The ratio of the Actuarial Value of Assets to the Actuarial Accrued
Liability.
GASB Governmental Accounting Standards Board.
GASB No. 25 and These are the governmental accounting standards that set the accounting
GASB No. 27 rules for public retirement systems and the employers that sponsor or
contribute to them. Statement No. 27 sets the accounting rules for the
employers that sponsor or contribute to public retirement systems, while
Statement No. 25 sets the rules for the systems themselves.
Normal Cost The annual cost assigned, under the Actuarial Cost Method, to the current
plan year.
Open Amortization Period An open amortization period is one which is used to determine the
Amortization Payment but which does not change over time. In other
words, if the initial period is set as 30 years, the same 30 year period is
used in deternaning the Amortization Period each year. In theory, if an
Open Amortization Period is used to amortize the Unfunded Actuarial
Accrued Liability, the UAAL will never completely disappear, but will
become smaller each year, either as a dollar amount or in relation to
covered payroll.
Unfunded Actuarial Accrued The difference between the Actuarial Accrued Liability and Actuarial
Liability Value of Assets.
Valuation Date The date as of which the Actuarial Present Value of Future Benefits are
determined. The benefits expected to be paid in the future are discounted
to this date.
GRS
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SECTION C
PENSION FUND INFORMATION
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24
SUMMARY OF ASSETS
9/30/2008
Cash and Securities -Market Value
Cash and Equivalents
Treasury and Agency Bonds & Notes
Corporate Bonds
Common Stocks
Domestic Equity Funds
Domestic Bond Funds
State of Israel Bond '
International Equity Funds
Total
Receivables and Accruals
State Contribution
Member Contn~ution
Employer Contribution
Interest and Dividends
Other
Total
~ Payables
Benefits
Refunds
Expenses
Other
Total
$ 2,634,584
11,537,121
22,685,137
49,641,367
153,016,492
92,429,493
250,000
31,585,628
363,779,822
_ 214,660
552,328
534,223
1,301,211
176,698
1,319,539
1,496,237
9/30/2007
$ 6,360,027
13,495,275
26,606,172
51,670,353
196,096,047
90,745,990
250,000
43,955,256
429,179,120
209,672
533,599
313,734
1,057,005
78,311
437,129
515,440
I, Net Assets -Market Value ~ 363,584,796 ~ 429,720,685 ~I
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25
PENSION FUND INCOME AND DISBURSEMENTS
Year Ending Year Ending
9/30/2008 9/30/2007
Market Value at Beginning of Period $ 429,720,685 $ 378 035 985
Income
Member Contributions
Employer Contributions
Library/Metro Dade Contributions
Investments -Interest and Dividends
Investments -Gains (Losses)
Total Investment Earnings
Total Income
II Disbursements
Monthly Benefit Payments
Lump Sum Distributions
Refund of Contributions
Investment Related Expenses
Other Administrative Expenses
Insurance Premiums
Transfers to Other Systems
Total Disbursements
6,602,403
13,911,545
0
7,136,653
(63,854,232)
(56,717,579)
(36,203,631)
27,336,122
0
900,303
1,056,638
639,195
0
0
29,932,258
(66,135,889)
363,584,796
7,927,173
13,053,231
11,146
5,559,442
52,758,436
58,317,878
79,309,428
25,589,393
0
611,742
781,776
641,817
0
0
27,624,728
51,684,700
429,720,685
I Market Value at End of Period
GRS
26
ACTUARIAL VALUE OF ASSETS
Year Endin Se tember 30
2008 2007
A. Beginning of Year Assets
1. Market Value $ 429,720,685 $ 378,035,985
2. Actuarial Value 412,824,235 358,458,949
B. Net of Contributions
Less Disbursements* (8,361,672) (5,851,402)
C. Actual Net Investment
Earnings* (57,774,217) 57,536,102
D. Expected Investment
Earnings* 35,347,654 31,109,159
E. Excess of Actual Over
Expected Investment
Earnings: C - D (93,121,871) .26,426,943
F. Recognition of Excess
Earnings Over 5 Years
1. From This Year (18,624,374) 5,285,389
2. From One Year Ago 2,685,676 (420,595)
3. From Two Years Ago (213,718) 2,616,059
4. From Three Yeats Ago 1,329,304 1,431,635
5. From Four Years Ago 727,460 2,739,889
6. Total (14,095,652) 11,652,377
G. 401A Plan Transfers NA NA
H. End of Year Assets
(Before Revision)
1. Market Value 363,584,796 429,720,685
2. Actuarial Value:
A2 + B + D + F6 + G 425,714,565 395,369,083
3. Final Actuarial Value
Within 80% to 120%
of Market Value .425,714,565 395,369,083
I. Partial Write Up NA 17,455,152
J. End of Year Assets A$er
Write Up 425,714,565 412,824,235
* Net of Investment Related Expenses
GRS
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INVESTMENT RATE OF RETURN
General Plan ** Unclassified Plan
Actuarial Actuarial
Year Ended Market Value Value Market Value Value
9/30/89 NA % 11.6 % 14.6 % 14.6
9/30/90 NA 7.3 (2.3) (2.3)
9/30/91 NA 8.1 21.6 21.6
9/30/92 12.2 13.7 5.8 5.8
9/30/93 14.6 11.4 14.6 14.1
9/30/94 1.4 6.8 5.3 4.8
9/30/95 20.0 11.4 25.9 24.1
9/30/96 9.8 15.3 22.7 13.9
9/30/97 23.0 13.8 35.2 19.1
9/30/98 8.4 12.5 (0.3) 4.3
9/30!99 13.1 14.4 19.1 18.8
9!30!00 10.8 10.7 11.5 16.5
9/30/01 (7.4) 7.2 (8.1) 9.7
9/30/02 (5.9) 0.3 (9.8) 1.7
9/30/03 I7.4 4.3 16.9 4.6
9/30/04 11.4 4.1 13.0 9.7
9/30/05 12.8 4.4 13.8 10.7
9/30/06 7.4 * 7.7 7.5 * 10.2 *
9/30/07 15.3 12.0 NA NA
9/30/08 (13.6) 5.2 NA NA
Average Compounded Rate of
Return for Number of Years
Shown 8.4 % 9.0 % 10.9 % 11.0
Average Compounded Rate of
Return for Last 5 Years 6.1 % 6.6 % NA NA
27
1
1
~ * Note: Effective 10/1/06, the former General and Unclassified Plans were merged and assets
were combined. Investment returns after this date are for the total group.
** Combined Plan after 2006
1
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SECTION D
FINANCIAL ACCOUNTING INFORMATION
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FASB N0.35 INFORMATION
A. Valuation Date
B. Actuarial Present Value of Accumulated
Plan Benefits
1. Vested Benefits
a. Members Currently Receiving Payments
b. Terminated Vested Members
c. Other Members
d. Total
2. Non-Vested Benefits
3. Total Actuarial Present Value of Accumulated
Plan Benefits: 1 d + 2
4. Accumulated Contributions of Active Members
I C. Changes in the Actuarial Present Value of
Accumulated Plan Benefits
1. Total Value at Beginning of Year
2. Increase (Decrease) During the Period
Attributable to:
a. Plan Amendment
b. Change in Actuarial Assumptions
c. Latest Member Data, Benefits Accumulated
and Decrease in the Discount Period
d. Benefits Paid
e. Net Increase
3. Total Value at End of Period
~I D. Market Value of Assets
iI E. Actuarial Assumptions -See page entitled
Actuarial Assumptions and Methods
October 1, 2008
$ 304,701,135
12,672,793
144,758,513
462,132,441
8,254,471
470,386,912
52,644,549
432,296,450
9,183,926
0
57,142,961
(28,236,425)
38,090,462
470,386,912
363,584,796
October 1, 2007
$ 278,039,364
9,500,862
138,395,883
425,936,109
6,360,341
432,296,450
50,696,622
395,731,353
0
4,457,370
58,308,862
(26,201,135)
36,565,097
432,296,450
429,720,685
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29
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SCHEDULE OF EMPLOYER CONTRIBUTIONS
(GASB Statement No. 25~
Year Ended
Se tember 30 Annual Required
Contribution Actual
Contribution Percentage
Contributed
1994 $ 3,004,556 $ 3,004,556 100.0
1995 2,809,509 2,809,509 100.0
1996 4,151,807 4,151,807 100.0
1997 3,982,477 3,982,477 100.0
1998 3,091,359 3,091,359 100.0
1999 1,293,920 1,293,920 100.0
2000 666,897 666,897 100.0
2001 0 0 NA
2002 0 0 NA
2003 0 0 NA
2004 2,476,702 2,476,702 100.0
2005 5,082,595 5,082,595 100.0
2006 5,500,329 5,500,329 100.0
2007 12,234,519 * 13,053,231 106.7
2008 13,911,545 13,911,545 100.0
* From February 28, 2006 Actuarial Impact Statement
30
SECTION E
MISCELLANEOUS INFORMATION
GRS
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RECONCILIATION OF MEMBERSHIP DATA
From 10/1/07 From 10/1/06
To 10/1/08 To 10/1/07
A. Active Members
1. Number Included in Last Valuation 1,061 1018
2. New Members Included in Current Valuation 182 149
3. Employment Terminations (49) (55)
4. Service Retirements (29) (40)
5. Disability Retirements (1) (2)
6. Deaths (1) (1)
7. Other -Transfers Out and Data Adjustments (5) (8)
8. 401A Transfers N/A N/A
9. Number Included in This Valuation 1,158 1,061
B. Terminated Vested Members
1. Number Included in Last Valuation 70 64
2. Additions from Active Members 24 17
3. Lump Sum Payments/Refund of Conm'butions 0 (4)
4. Payments Commenced (7) (4)
5. Deaths 0 0
6. Other -Data Adjustments 0 (3)
7. Number Included in This Valuation 87 70
C. Service Retirees, Disability Retirees and Beneficiaries
1. Number Included in Last Valuation 1001 995
2. Additions from Active Members 31 42
3. Additions from Terminated Vested Members 7 4
4. Deaths Resulting in No Further Payments (29) (41)
5. Deaths Resulting in New Survivor Benefits 0 2
6. End of Certain Period - No Further Payments 0 (1)
7. Other -Lump Sum Distributions 1 0
8. Number Included in This Valuation 1,011 1001
J
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~~
MIAMI BEACH EMPLOYEES' RETIREMENT PLAN -ACTIVE MEMBERS ON OCTOBER 1, 2008
Age
Group 0-4 5-9
~~
Years of Service
15-19 20-24 25-29 30 & Up Totals
20-24 47
Total Pay 1,520,609
Avg Pay 32,353
25-29 88 8
Total Pay 3,455,924 327,348
Avg Pay 39,272 40,919
30-34 89 23 11
Total Pay 3,815,937 1,056,261 592,431
Avg Pay 42,876 45,924 53,857
35-39 67 60 30 1
Total Pay 3,262,771 3,335,981 1,917,634 66,337
Avg Pay 48,698 55,600 63,921 66,337
40-44 63 42 43 20 6 1
Total Pay 3,460,991 2,658,024 2,901,448 1,402,814 403,155 67,478
Avg Pay 54,936 63,286 67,476 70,141 67,193 67,478
-1
-' 45-49 60 57 47 23 30 12
'~ Total Pay 3,280,143 3,149,734 2,894,635 1,643,237 2,298,456 920,045
-~ Avg Pay 54,669 55,258 61,588 71,445 76,615 76,670
-,~ 50-54 33 32 26 7 15 7
Total Pay 1,596,558 2,016,688 1,510,392 486,265 1,191,020 601,024
Avg Pay 48,381 63,022 58,092 69,466 79,401 85,861
55-59 26 26 3I 7 it 4
Total Pay 1,905,137 1,715,806 2,325,167 545,609 759,063 232,955
Avg Pay 73,275 65,993 75,005 77,944 69,006 58,239
60-64 14 13 22 ]0 I1 1
220
6
Total Pay 663,533 601,642 1,649,093 871,249 724,551 11
,
Avg Pay 47,395 46,280 74,959 87,125 65,868 116,220
65-99 5 6 10 12 1
Total Pay 372,937 237,716 593,203 830,228 51,240
Avg Pay 74,587 39,619 59,320 69,186 51,240
Total No. 492 267 220 80 73 26
Total Pay 23,334,540 15,099,200 14,384,003 5,845,739 5,376,245 1,988,962
Avg Pay 47,428 56,551 65,382 73,072 73,64? 76,499
~ GRS
32
47
1,520,609
32,353
96
3,783,272
39,409
123
5,464,629
44,428
158
8,582,723
54,321
175
10,893,910
62,251
229
14,186,250
62,949
120
7,401,947
61,683
105
7,483,737
71,274
71
4,626,288
65,159
34
2,085,324
61,333
1,158
66,028,689
57,020
--~ 33
_~ INACTIVE MEMBERS ON OCTOBER 1, 2008
Terminated Vested Disabled Retirees & Beneficiaries Grand Total
• __....~ A..,,,^ol Anneal AIIIIllal
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512,191
1,378,843
3,958,039
4,610,529
5,167,501
3,784,415
3,523,131
2,629,057
2,491,672
1,197,023
505,805
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SECTION F
--, SUMMARY OF PLAN PROVISIONS
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Effective Date
SUMMARY OF PLAN PROVISIONS
34
March 8, 2006 under Ordinance No. 2006-3504, whereby the former General and
Unclassified Plans merge to form the Miami Beach Employees' Retirement Plan
Eli 'bili
Each general employee who works more than 30 hours per week is eligible for membership
on his date of employment
Creditable Service
Service credited under the predecessor system plus service after such date with respect to
_ which member contributions are made.
Earnings
For each person who becomes a member after the Second Tier Date, base pay including
longevity, but excluding overtime, shift differential or extra compensation allowances. For
each person who became a member before the Second Tier Date, actual salary or wages
received. Earnings do not include lump sum payments of unused sick or vacation time.
'~~ Overtime pay for Tier A members is limited to 10% of regular pay.
J
Second Tier Date
April 30,1993 for members of AFSCME; August 1, 1993 for those classified as "Other' ;and
~ February 21,1994 for members of MBEBA; October 18,1992 for Unclassified members.
._~
Final Average Monthly Earnings (FAME)
One-twelfth of average annual Earnings during the two highest paid years of Creditable
Service, not less than the average monthly earnings for the 12 months prior to the effective
date for Unclassified Tier A members
-1 Normal Retirement
Eligibility Age 50 and five years of Creditable Service for those in Tier A.
Age 55 and five years of Creditable Service for those in Tier B.
Benefit 3% of FAME multiplied years of Creditable Service with the total not
7 to exceed 80% of FAME. There is a 90% cap for certain Tier A
members.
] Form of Benefit 50% joint and survivor annuity payable only to the spouse or, if no
spouse, to the surviving children until age 21; other options are also
available. Spouse's benefits cease upon remaniage.
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Early Retirement
Eligibility Tier B, members of the General Plan whose total of age plus service
is 75, not earlier than age 50.
Benefit Accrued pension actuarially reduced for number of years by which
Early Retirement Date precedes Normal Retirement Date.
Delayed Retirement
Eligibility Anytime after the Normal Retirernent Date.
Benefit Calculated in the same manner as the Normal Retirement Benefit
but using the FAME and Creditable Service as of the actual
retirement date.
Disability Benefits
Eligibility A total and permanent disability which renders a member
incapacitated, mentally or physically, for the fiuther performance of
duty. Five years of Creditable Service is also required unless the
disability is service~connected.
Benefit Ordinary Disability: Accrued retirement benefit, without reduction,
with a minimum of 35% of FAME.
Service-Connected Disability: Accrued retirement benefit without
reduction, with a minimum 'of 65% of FAME; 75% of FAME
minimum for General Tier A members.
Such amounts are reduced by workers' compensation benefits and,
in certain cases, earned income will be considered in offsetting the
benefit. The period of disability shall be included in Creditable
Service for purposes of computing normal retirement benefits when
a disability retiree reaches normal retirement age.
Preretirement Death Benefits
For a member who has at least three years of Creditable Service but who dies before
commencement of retirement benefits, a monthly benefit is payable to the spouse or, if no
spouse, to the children until age 21. The benefit is equal to 50% of the accrued normal
retirement benefit without reduction with the result being a minimum of 30% of FAME and a
maximum of 40% of FAME for General members.
Termination Benefits
Any member who terminates employment and does not request a refund of his own
contributions and has completed at least five years of Creditable Service will be eligible to
receive his accrued benefit upon reaching his normal retirement age.
GRS
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36
Post Retirement Adjustments
Retirees receive a 2.5% increase each year.
Contributions
Tier A Members
Tier B Members
From the City
Changes Since Last Valuation
10% of Earnings.
8% of Earnings.
Employees who have reached the applicable benefit accrual cap
(90% for General Tier A employees and 80% for all others) but
have not yet reached retirement age will continue to contribute to
the pension Plan, but only on the amount by which pay increases
after reaching the cap
The amount necessary to fund the Plan properly according to the
Plan's actuary.
A Deferred Retirement Option Plan (DROP) was enacted on January 28, 2009 by Ordinance 2009-3626
allowing participants who have attained eligibility for Normal Retirement to continue working with the City
for up to three years while receiving a retirement benefit that is deposited into a DROP account. The
amount of the benefit that is deposited into the DROP account is calculated as if the participant had retired
on the date of DROP commencement. Upon termination with the City, the accumulated value of the DROP
account is distributed to the participant.
GRS
City Pension Fund
for Firefighters and Police Officers
in the City of Miami Beach
Actuarial Valuation Report
as of
October 1, 2008
To Determine Annual Contributions
For the Plan Year October 1, 2008
Through September 30, 2009
To be Paid in the Fiscal Year October 1, 2009
Through September 30, 2010
buckconsultants ~~
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TABLE OF CONTENTS
Page
Number
Discussion ................................................................................................................................... 1
Liabilities
Table I Summary of Valuation Results ................................................................. 4
Table II Gain and Loss Analysis ............................................................................. 5
Table III Accounting Disclosures (GASB 25/27) .................................................... 7
Table IV Present Value of Accrued Benefits ........................................................... 9
Table V Information Req. by Florida Statute Chapter 112 ..................................... 10
Table Va Unfunded Liability Bases .................................................................... 16
Assets
Table VI Assets ........................................................................................................ 17
Table VIa Asset Reconciliation ............................................................. 18
Table VII Historical Asset Information .................................................... 19
Table VIIa Revenues by Source and Expenses by Type .................................. 20
Table VIII Contributions vs. Fund Payouts ................................................................ 21
Data
Table IX Summary of Member Data ........................................................................ 22
Table IXa Active Data ........................................................................................... 23
Table IXb Retiree Data ........................................................................................... 24
Table IXc Data Reconciliation .............................................................. 25
Table IXd Age-Service-Salary Table (All Active Members) ..................................... 26
Table IXe Age-Service-Salary Table (Active Police Officers) .................................. 27
Table IXf Age-Service-Salary Table (Active Firefighters) ....................................... 28
Table X Historical Contribution Rate ..................................................................... 29
Assumptions
Table XI Actuarial Assumptions and Methods ........................................................ 30
Table XIa Assumption Changes ............................................................ 33
Plan Provisions
Table XII Plan Provisions ........................................................................................ 34
Table XIIa Plan Amendments ................................................................ 38
City Pension Fund for Firefighters and Police Officers
in the City of Miami Beach Page i
buckconsultants ~i~
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April 24, 2009
Board of Trustees
City Pension Fund for Firefighters and Police Officers
in the City of Miami Beach
1691 Michigan Avenue, Suite 355
Miami Beach, FL 33139-2557
Dear Members of the Board:
This report presents the results of the October 1, 2008 actuarial valuation of the City Pension
Fund for Firefighters and Police Officers in the City of Miami Beach. This valuation will be used
to determine the contributions for the City's fiscal year beginning October 1, 2009.
Plan Amendments and Other Changes Affecting the Financial Status of the Fund
The assumptions used in the valuation are outlined in Table XI. Provisions of the plan are set
forth in Table XIL The valuation assumptions were updated as of October 1, 2008 and reflect
changes to the discount rate, the salary scale, the retirement assumptions, the loadings for
overtime and other pays, and the service buyback costs. In addition the Pension Fund will be
undertaking an experience study as of October 1, 2008, to review all the valuation assumptions
and additional assumption changes (if required), will be reflected in the October 1, 2009
valuation.
Summary of Valuation Results
The City contribution requirement for the fiscal year beginning October 1, 2009 is summarized
below, payable at October 1, 2009.
Required City contribution for plan year beginning 10/1/2009 $23,283,269
The City's contribution increased from $20,039,446 for the 2008/2009 fiscal year to $23,283,269
for the 2009/2010 fiscal year. The increase in the contribution requirement is due primarily to the
higher than expected pay increases, 8.77% compared to an expected 4.40%, and the asset losses
(Market Value Return of -10.43% and Actuarial Value Return of 4.87% vs. expected return of
8.50%) incurred over the 2007/2008 fiscal year.
200 GaHeria Parkway NW. Suite 1900 • Atlanta. GA 30339-5945
770.955.2488.770.933.8336 (fax) Page 1
Board of Trustees
Apri124, 2009
In addition to the City Contributions, there are expected member contributions of $4,208,505 and
contributions from the Share Plans of $120,549 to fund the ten year certain and life form of
benefit payment.
The City contribution requirements presented above for the 2009/2010 fiscal year reflect an
annual payment at the beginning of the fiscal year, which is our understanding of the City's
payment schedule. Below we present a breakdown of the interest adjustment to reflect the annual
payment for the period October 1, 2009 through September 30, 2010 with the payment due on
October 1, 2009.
Normal Cost at October 1, 2008 $11,294,379
Payment to Amortize Unfunded Liability at October 1, 2008 $11,256,706
Total $22,551,085
Interest at 8.40% per year $ 1,894,291
Preliminary Minimum Required Contribution $24,445,376
Estimated Service Buybacks at October 1, 2009 $ 2,525,103
Estimated Administrative Expenses at October 1, 2009 $ 641,844
Total Minimum Required Contribution payable October 1, 2009 $27,612,323
Expected Member Contributions ($4,208,505)
Expected Share Plan Contributions ($ 120,549
Estimated Cit Contribution a able on October 1, 2009 $23,283,269
GASB 25/27 Information
Governmental Accounting Standards Board Statement Nos. 25 and 27 (GASB 25/27) require the
disclosure of certain information. GASB 25 requires disclosure of funding progress and GASB
27 requires the calculation of the net pension obligation and annual pension cost. Results for the
2007/2008 and 2008/2009 fiscal years are shown in Table III.
Contents of the Report
A summary of the results of the valuation is presented in Table I. Information for the auditors
can be found in Tables III and IV. Information required by the State of Florida to be disclosed
under Chapter 112 is presented in Tables V and Va. Finally, Tables VI through VIII provide
information about the fund's assets, while Tables IX through IXf provide information about the
membership data. Table X is the Historical Contribution Rates.
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Page 2
Board of Trustees
Apri124, 2009
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 1-iabilities 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.
In addition, we certify that we have experience in performing actuarial valuations for public
sector 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 Pension Fund and on actuarial assumptions that are internally consistent
and reasonably based on the actual experience of the Fund.
The first signatory below is a member of the American Academy of Actuaries and meets the
Qualification Standards of the American Academy of Actuaries to render the actuarial opinion
contained herein.
Very truly yours,
/C ~~,~-
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Kerry Schmidt, FSA, MAAA David P. C bell
Principal Consultant
Enrollment No. 08-2628
P:\Retirement\Miami Beach\2008\Retirement\Valuation 10-01-2008\Report\\2008 Val Ltr.doc
txackc;c~nsultant~> ~~ Page 3
:,s con~p~~an~ .
SUMMARY OF VALUATION RESULTS TABLE I
As of As of
October 1, 2007 October 1, 2008
1. Number of Members
a. Active Members
b. Deferred Vested Members
c. Retired Members:
i. Non-disabled
ii. Disabled
iii. Beneficiaries
iv. Sub-total
482
17
420
61
91
572
1,071
487
14
441
62
98
601
1,102
d. Total Members
2. Total Annual Compensation
a. Base Pay
b. Projected Payroll (Base Pay)
c. Projected Pensionable Pay
d. Projected Pensionable Pay (plus DROP)
3. Total Retired Member Benefits
4. Annual Cost
a. Present Value of Future Benefits
b. Present Value of Future Normal Cost
City Portion
Member Portion
c. Actuarial Accrued Liability (AAL)
d. Actuarial Value of Assets
e. Unfunded AAL (UAAL)
£ Normal Cost
g. Payment to Amortize Unfunded Liability
h. Interest Adjustment
i. Service Buyback
j. Administrative Expenses
k. Total
1. Expected Member Contributions
m. Expected Share Plans Contributions
n. Estimated City Contributions
o. Total
$38,705,407
$40,060,096
$50,668,549
$58,243,398
$33,930,403
$712,545,018
$79,552,431
$44,331,719
$35, 220, 712
$632,992,587
($495,993,903)
$136,998,684
$10,858,898
$8,787,288
$1,669,926
$2,203,305
$646,588
$24,166,005
$4,006,010
$120, 549
$20,039,446
$24,166,005
5. Annual Cost (as a % of Projected Payroll)
a. Total Required Contribution 60.32%
b. Estimated Share Plans Contribution 0.30%
c. Expected Member Contribution 10.00%
d. Estimated City Contribution (4n./2b.) 50.02%
e. Estimated City Contribution (4n./2c.) 39.55%
f. Estimated City Contribution (4n./2d.) 34.41
City Pension Fund for Firefighters and Police Officers
in the City of Miami Beach
$40,661,885
$42,085,051
$53,153,934
$59,275,538
$37,220,325
$765,475,606
$81,743,662
$44, 719, 347
$37, 024, 315
$683,731,944
($507,363,813)
$176,368,131
$11,294,379
$11,256,706
$1,894,291
$2,525,103
$641, 844
$27,612,323
$4,208,505
$120,549
$23,283,269
$27,612,323
65.61
0.29%
10.00%
55.32%
43.80%
39.28%
Page 4
GAIN AND LOSS ANALYSIS TABLE II
1. Actual Unfunded Accrued Liability as of October 1, 2007 $136,998,684
2. Expected Change in Unfunded Liability During the 2007/2008 Plan Year
a. Due to Employer Normal Cost for Benefits $10,625,787
b. Due to Interest on the Unfunded Liability $11,644,888
c. Expected City and State Contributions ($20,159,995)
d. Total Expected Change $2,110,680
3. Expected Unfunded Accrued Liability as of October 1, 2008 $139,109,364
4. Change in Unfunded Liability During the 2007/2008 Plan Year Due to:
a. Method changes $0
b. Assumption changes $5,715,022
c. Plan amendments $0
d. Experience $31,543,745
e. Total change $37,258,767
5. Actual Unfunded Accrued Liability as of October 1, 2008 $176,368,131
6. Items Affecting Calculation of Accrued Liability
a. Plan provisions reflected in the accrued liability (see Table XII on page 34)
b. Plan amendments reflected in item 4.c. above (see on page 38)
c. Actuarial assumptions and methods used to determine accrued liability
(see Table XI on page 30)
d. Changes in actuarial assumptions and methods reflected in items 4.a. and 4.b. above
(see on page 33)
City Pension Fund for Firefighters and Police Officers
in the City of Miami Beach Page 5
UNFUNDED ACCRUED LIABILITY CONTRIBUTION RATE CHANGE TABLE II
(continued)
7. Expected Unfunded Accrued Liability Contribution Rate as of October 1, 2007 21.94%
8. Net Actuarial (Gains)/Losses During the 2007/2008 Plan Year
a. Due to Salary/Service/Data 0.94%
b. Due to Investment Performance 2.95%
c. Due to Turnover/Mortality 0.00%
d. Due to New Retirements and Retirement Benefits 1.89%
e. Due to New Members 0.00%
f. Total
5.78%
9. Change in Unfunded Accrued Liability Rate During the 2007/2008 Pla n Year Due to:
a. Assumption changes 0.90%
b. Method changes 0.00%
c. System benefit changes 0.00%
d. Total Change
0.90%
10. Other Effects
(1.49%)
11. Unfunded Accrued Liability Contribution Rate as of October 1, 2008 28.99%
12. Comments on Change in Unfunded Accrued Liability Contribution Rate:
Salary/Service/Data: Salary increases and adjustments in the reported data. Actual
salary increases averaged 8.77% compared to expected increase of 4.4%.
Investment Performance: -10.48% actual vs. 8.5% expected return on the actuarial
value of assets.
Turnover/Mortality: Net effect on the valuation liabilities of actual deaths, retirements,
terminations of employment and disabilities different from what was anticipated in the
aggregate by the assumptions related to those events.
New Retirements and Retirement Benefits: Greater than expected number of and
amount of benefits for new retirements.
Other effects: This item captures all other effects that contributed to the overall experience
loss that are not detailed items 8 and 9 above. Effects included in this item are "pickups"
of plan participants not valued in the prior year, catch-up COLAs for participants who
retired more than 1 year and less than 2 years, and data corrections/adjustments from the
prior year.
City Pension Fund for Firefighters and Police Officers
in the City of Miami Beach
Page 6
oCCOUNTING DISCLOSURES (GASB
A. Number of Plan Participants as of October 1
a. Retirees and beneficiaries
receiving benefits
b. Terminated plan participants entitled
to but not yet receiving benefits
c. Active plan participants
d. Total
Plan Year
2007/2008
572
17
482
1,071
B. Development of Annual Required Contribution (ARC)
a
Employer normal cost:
i. Total normal cost
ii. Expected employee contribution
iii. Employer normal cost
Amortization of UAAL:
i. PV of future benefits
ii. PV of future employer normal costs
iii. PV of future employee contributions
iv. Actuarial accrued liability (AAL)
v. Actuarial value of assets
vi. Unfunded AAL (UAAL)
vii. Amort. of UAAL
ARC
$13,584,504
($3,659,219)
$9,925,285
b.
c
(Item B.a.iii. plus item B.b.vii.)
$656,373,677
($42,313,343)
($32,044,038)
$582,016,296
($470,603,144)
$111,413,152
$7,692,760
$17,618,045
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
£ Increase(decrease) in NPO
g. NPO (beginning of year)
h. NPO (end of year)
$17,618,045
$0
$0
$17,618,045
($17,618,045)
$0
$0
$0
City Pension Fund for Firefighters and Police Officers
in the City of Miami Beach
TABLE III
Plan Year
2008/2009
601
14
487
1,102
$13,708,791
($4,006,010)
$9,702,781
$712,545,018
($44,331,719)
($35,220,712)
$632,992,587
($495,993,903)
$136,998,684
$9,534,208
$19,236,989
$19,236,989
$0
$0
X19,236,989
Page 7
ACCOUNTING DISCLOSURES (GASB 25/27
D. Three Year Trend Information
Annual Net
Year Ended Pension Percentage Pension
September 30 Cost(APC) Contributed Obligation
2006 $14,601,836 100% p
2007 $15,231,417 100% 0
2008 $17,618,045 100% 0
E. Schedule of Funding Progress
TABLE III
(continued)
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Actuarial UAAL
Actuarial Actuarial Accrued Unfunded as % of
Valuation Value of Liability AAL Funded Covered Covered
Date Assets (AAL) (UAAL) Ratio Payroll Payroll
~2) - ~I) (I) _ (2) (3) _ (5~
10/]/2003 $410,423,595 $468,290,269 $57,866,674 87.6% $32,116,520 180.2%
10/1/2004 $418,089,222 $512,038,433 $93,949,211 81.7% $32,725,380 287.1%
10/1/2005 $457,680,582 $551,907,648 $94,227,066 82.9% $31,259,918 301.4%
10/1/2006 $470,603,144 $582,016,296 $111,413,152 80.9% $35,354,776 315.1%
10/1/2007 $495,993,903 $632,992,587 $136,998,684 78.4% $38,705,407 354.0%
10/1/2008 $507,363,813 $683,731,944 $176,368,131 74.2% $40,661,885 433.7%
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 projected payroll
Cost-of-living adjustments
October 1, 2007
Entry Age Normal
Level Percent Closed
24 to 30 Years
Market Related Value
8.50%
4.53% - 10.17%
3.50%
2.50%
City Pension Fund for Firefighters and Police Officers
in the City of Miami Beach
October 1, 2008
Entry Age Normal
Level Percent Closed
23 to 30 Years
Market Related Value
8.40%
4.36% - 9.67%
3.50%
2.50%
Page 8
PRESENT VALUE OF ACCRUED BENEFITS TABLE IV
1. Actuarial Present Value of Accrued Benefits
a. Vested Accrued Benefits:
i. Participants currently
receiving benefits
ii. Other participants
iii. Sub-total
b. Non-vested Accrued Benefits
c. Total Benefits
d. Market Value of Assets
e. Percentage Funded
As of
October 1, 2007
As of
October 1, 2008
$481,464,271
$125,659,519
$435,085,692
$122,837,540
$557,923,232
$30,177,659
$588,100,891
$571,193,561
97%
$607,123,790
$33,999,361
$641,123,151
$499,788,831
78%
2. Statement of Changes in Total Actuarial Present Value of All Accrued Benefits
a. Actuarial Present Value as of October 1, 2007
b. Increase (Decrease) During 2007/2008 Plan Year Attributable to:
i. Interest
ii. Benefits accumulated
iii. Benefits paid
iv. Method Change
v. Plan amendments
vi. Changes in actuarial assumptions or methods
vii. Net increase (decrease)
c. Actuarial Present Value as of October 1, 2008
3. Items Affecting Calculation of Actuarial Present Value of Accrued Benefits
a. Plan provisions reflected in the accrued benefits (see Table XII page 34)
b. Actuarial assumptions and methods used to determine present values
(see Table XI on page 30)
$588,100,891
$48,500,453
$30,960,205
($35,014,659)
$0
$0
$8,576,261
$53,022,260
$641,123,151
City Pension Fund for Firefighters and Police Officers
in the City of Miami Beach Page 9
INFORMATION REQ. BY FLORIDA STATUTE (CHAP. 112) TABLE V
October 1, 2008
1. Participant Data
a. Active members:
i. Number
ii. Total annual payroll
iii. Projected annual payroll
b. Retired members and beneficiaries:
i. Number
ii. Total annualized benefit
c. Disabled members receiving benefits:
i. Number
ii. Total annualized benefit
d. Terminated vested members:
i. Number
ii. Total annualized benefit
2. Assets
a. Actuarial value of assets
b. Market value of assets
3. Liabilities
a. Present value of all future expected benefit payments:
i. Active members:
Retirement benefits
Vesting benefits
Disability benefits
Death benefits
Sub-total
ii. Terminated vested members
iii. Retired members and beneficiaries:
Retired (other than disabled) and beneficiaries
Disabled members
Sub-total
iv. Member contributions (annuities & refunds)
v. Total present value of all future expected ben. pmts
Police Firefighters Total
319 168 487
$24,955,974 $15,705,911 $40,661,885
$25,829,433 $16,255,618 $42,085,051
324 215 539
$20,634,088 $13,475,240 $34,109,328
51 11 62
$2,609,483 $501,514 $3,110,997
13 1 14
$207,020 $29,711 $236,731
n/a n/a $507,363,813
n/a n/a $499,788,831
$145,676,073 $103,102,885 $248,778,958
$3,085,001 $1,740,768 $4,825,769
$10,120,536 $5,788,314 $15,908,850
$7,542,235 $4,365,196 $11,907,431
$166,423,845 $114,997,163 $281,421,008
$2,238,218 $352,109 $2,590,327
$266,521,094 $174,408,286 $440,929,380
$34,778,999 $5,755,892 $40,534,891
$301,300,093 $180,164,178 $481,464,271
$0 $0 $0
$469,962,156 $295,513,450 $765,475,606
City Pension Fund for Firefighters and Police Officers
in the City of Miami Beach
Page 10
«r
INFORMATION REQ. BY FLORIDA STATUTE (CHAP. 112) TABLE V
(continued)
October 1, 2008
Police Firefighters Total
b. Liabilities due and unpaid $0 $0 $0
c. Actuarial accrued liability $415,922,426 $267,809,518 $683,731,944
d. Entry Age Normal Unfunded actuarial accrued liability n/a n/a $176,368,131
e. Frozen Initial Liability n/a n/a n/a
4. Actuarial Present Value of Accrued Benefits
(please reference Table IV for details concerning the present
value of accrued benefits)
5. Pension Cost (as a % of projected payroll)
a. Normal cost (including administrative expenses):
Dollar amount:
b. Payment to amortize unfunded liability
Dollar amount:
c. Service Buyback
Dollar amount:
c. Amount to be contributed by members
Dollar amount:
d. Expected Share Plans Contributions
Dollar amount:
d. Expected City Contribution
Dollar amount:
6. Past Contributions (For year ending September 30,2008)
a. Required Employer and State contribution
b. Actual contribution made by:
i. Employer
ii. Members
iii. State (Share Plans)
City Pension Fund for Firefighters and Police Officers
in the City of Miami Beach
$390,117,276 $251,005,875 $641,123,151
30.92% 30.14% 30.62%
$7,986,191 $4,898,760 $12,884,951
n/a n/a 28.99%
n/a n/a $12,202,269
6.00% 6.00% 6.00%
$1,549,766 $975,337 $2,525,103
10.00% 10.00% 10.00%
$2,582,943 $1,625,562 $4,208,505
0.27% 0.31 % 0.29%
$70,669 $49,880 $120,549
n/a n/a 55.32%
n/a n/a $23,283,269
n/a n/a $17,618,045
n/a n/a $17,497,496
n/a n/a $5,577,298
n/a n/a $120,549
Page 11
INFORMATION REQ. BY FLORIDA STATUTE (CHAP. 112) TABLE V
(c
October 1, 2008
Police Firefighters
7. Net actuarial (gain)/loss n/a n/a
8. Other disclosures
a. Present value of active members':
i. Future salaries:
at attained age
at entry age
ii. Future contributions:
at attained age
at entry age
b. Present value of future contributions from City and State
c. Present value of future expected benefit payments for
active members at entry age
d. Amount of active members' accumulated contributions
City Pension Fund for Firefighters and Police Officers
in the City of Miami Beach
Total
$31,543,745
$188,086,766 $103,590,244 $291,677,010
n/a n/a n/a
$24,168,667 $12,855,648 $37,024,315
n/a n/a n/a
$29,871,063 $14,848,284 $44,719,347
n/a n/a n/a
$26,102,954 $16,283,765 $42,386,719
Page 12
INFORMATION REQ. BY FLORIDA STATUTE (CHAP. 112
October 1, 2007
TABLE V
(continued)
Police Firefighters Total
9. Participant Data
a. Active members:
i. Number
ii. Total annual payroll
iii. Projected annual payroll
317 165 482
$23,823,753 $]4,881,654 $38,705,407
$24,657,584 $15,402,512 $40,060,096
b. Retired members and beneficiaries:
i. Number
ii. Total annualized benefit
c. Disabled members receiving benefits:
i. Number
ii. Total annualized benefit
d. Terminated vested members:
i. Number
ii. Total annualized benefit
10. Assets
Actuarial Value of Assets
Market Value of Assets
11. Liabilities
a. Present value of all future expected benefit payments:
i. Active members:
Retirement benefits
Vesting benefits
Disability benefits
Death benefits
Sub-total
ii. Terminated vested members
iii. Retired members and beneficiaries:
Retired (other than disabled) and beneficiaries
Disabled members
Sub-total
iv. Member contributions (annuities & refunds)
v. Total present value of all future expected ben. pmts.
305 206 511
$18,489,029 $12,304,628 $30,793,657
50 11 61
$2,613,664 $523,082 $3,136,746
16 1 17
$243,050 $29,711 $272,761
n/a n/a $495,993,903
n/a n/a $571,193,561
$143,893,388 $99,207,441 $243,]00,829
$2,852,119 $1,614,793 $4,466,912
$9,785,071 $5,672,755 $15,457,826
$7,245,324 $4,241,476 $11,486,800
$163,775,902 $110,736,465 $274,512,367
$2,627,278 $319,681 $2,946,959
$236,208,489 $157,735,731 $393,944,220
$34,995,496 $6,145,976 $41,141,472
$271,203,985 $163,881,707 $435,085,692
$0 $0 $0
$437,607,165 $274,937,853 $712,545,018
City Pension Fund for Firefighters and Police Officers
in the City of Miami Beach Page 13
INFORMATION REQ. BY FLORIDA STATUTE (CHAP. 112) TABLE V
(continued)
October 1, 2007
Police Firefighters Total
b. Liabilities due and unpaid $0 $0
$0
c. Actuarial accrued liability $384,997,216 $247,995,371
$632,992,587
d. Unfunded actuarial accrued liability n/a n/a $136,998,684
e. Frozen Initial Liability n/a n/a
n/a
12. Actuarial Present Value of Accrued Benefits
(please reference Table IV for details concerning the present
value of accrued benefits)
13. Pension Cost (as a % of payroll)
a. Normal cost:
i. Dollar amount:
b. Payment to amortize unfunded liability
Dollar amount:
c. Service buyback
Dollar amount:
d. Amount to be contributed by members
Dollar amount:
e. Expected Share Plans Contributions
Dollar amount:
£ Expected City Contribution
Dollar amount:
14. Past Contributions (For year ending September 30,2007)
a. Required Employer and State contribution
b. Actual contribution made by:
i. Employer
ii. Members
iii. State (Share Plans)
City Pension Fund for Firefighters and Police Officers
in the City of Miami Beach
$358,477,971 $229,622,920 $588,100,891
31.18% 30.78% 31.02%
$7,687,777 $4,740,714 $12,428,49]
n/a n/a 23.80%
n/a n/a $9,534,208
5.50% 5.50% 5.50%
$1,356,167 $847,138 $2,203,305
10.00% 10.00% 10.00%
$2,465,758 $1,540,251 $4,006,009
0.29% 0.32% 0.30%
$70,669 $49,880 $120,549
n/a n/a 50.02%
n/a n/a $20,039,446
n/a n/a $15,231,417
n/a n/a $15,110,868
n/a n/a $5,194,282
n/a n/a $120, 549
Page 14
INFORMATION REQ. BY FLORIDA STATUTE (CHAP. 112J TABLE V
(continued)
October 1.2007
Police Firelighters Total
15. Net actuarial (gain)/loss n/a n/a $23,808,174
l6. Other disclosures
a. Present value of active members':
i. Future salaries:
at attained age $181,171,723 $98,983,943 $280,155,666
at entry age n/a n/a n/a
ii. Future contributions:
at attained age $23,023,024 $12,197,688 $35,220,712
at entry age n/a n/a n/a
b. Present value of future contributions from City and State $29,586,925 $14,744,794 $44,331,719
c. Present value of future expected benefit payments for
active members at entry age n/a n/a n/a
d. Amount of active members' accumulated contributions $26,341,962 $15,798,527 $42,140,489
City Pension Fund for Firefighters and Police Officers
in the City of Miami Beach Page 15
UNFUNDED LIABILITY BASES
TABLE Va
2007/2008 2008/2009
Outstanding Actual Outstanding Ex ected
P
Original Balance as of Amortization Balance as of Amortization Years
Description Amount October 1, 2007 Pa ment
Y October 1, 2008 Payment Remaining
Initial Unfunded Liability $11,301,726 $12,286,647 $906,490 $12,424,522
$929
621
2
, 3
10/01/2002 Method Change $12,519,763 $13,691,977 $988,510 $13,867
285
$1
013
430
, ,
, 24
10/01/2003 Amendment $1,078,557 $1,160,337 $82,093 $1,176
873 $84
138 2
1.0/01/2003 Experience Loss
$32,473,033
$34,935,221
$2,471,630 ,
$35
433
085 ,
$2
533
198 5
,
, ,
, 25
10/01/2004 Experience Loss $34,892,889 $36,880,547 $2,560,297 $37,455
096 $2
623
323
2
, ,
, 6
10/0]/2005 Method Change -$31,074,307 -$32,231,152 -$2,198,183 -$32,772
617 -$2
251
665 2
10/01/2005 Assumption Change
$6,250,297
$6,482,984
$442,143 ,
$6
591
895 ,
,
$452
901 7
10/0]/2005 Experience Loss
$23,210,540
$24,074,630
$1,641,904 ,
,
$24
479
070 ,
$1
681
851 27
,
, ,
, 27
10/0]/2006 Method Change -$4,690,352 -$4,779,299 -$320,573 -$4,864,966 -$328,283 2g
10/01/2006 Experience Loss $20,303,584 $20,688,618 $1,387,697 $21,059,454 $1,421,071
28
10/01/2007 Experience Loss $23,808,174 $23,808,]74 $1,572,200 $24,259,669 $1,609,580 29
10/01/2008 Assumption Change $5,715,022 $5
7]5
022 $373
207
10/01/2008 Experience Loss
$31,543,745 ,
,
$31,543,745 ,
$2,059,897 30
30
Total $167,332,671 $136,998,684 $9,534,208 $176,368,133 $12,202,269
Date Proiected Unfunded Liability
October 1, 2008 $176,368,133
October 1, 2009 $178,980,787
October 1, 2010 $181,385,825
October 1, 2038 $p
City Pension Fund for Firefighters and Police Officers
in the City of Miami Beach
Page 16
ASSETS TABLE VI
As of As of
October 1, 2007 October 1, 2008
1. Market Value of Assets
a. Cash and cash equivalents (3%) $6,020,000 $14,988
368
b. U.S. government bonds & notes (12%) $75,539,671 ,
$61,697,272
c. Corporate bonds (28%) $141,859,122 $140,814,206
d. Equities (37%) $234,726,015 $186,689,508
e. Money Market Funds (1%) $5,260,968 $7,195,145
£ Foreign bonds (0%) $0 $0
g. Collective Investment Funds (17%) $105,054,959 $85,447,599
h. Other assets (1%) $8,214,182 $5,175,487
i. Accrued income receivable (1%) $2,935,283 $3,079,178
j. Contributions receivable (0%) $165,985 $171,629
k. Other receivables (0%) $0 $141,462
1. Benefits payable (-1%) ($8,214,182) ($5,175,487)
m. Other payables (0%) $368,442) ($435,536)
n. Market value of assets $571,193,561 $499,788,831
2. Actuarial Value of Assets
a. Market value of assets $571,193,561 $499,788,831
b. 5-year phase-in of net investment appreciation:
i. 2003/2004
ii. 2004/2005
iii. 2005/2006
iv. 2006/2007
v. 2007/2008
2oi = $0
4oi = ($12,749,929)
6oi = ($16,335,615)
soi = ($46,114,114)
x 2oi = ($6,374,965)
x 4oi = ($10,890,409)
x 6oi = ($34,585,586)
x 80/ _ $59,425,942
$7,574,982
vi. Total unrecognized losses(gains) ($75,199,658)
c. Actuarial Value of Assets $495,993,903
(Item a. less item b., but within an 80-120% corridor of item a.)
City Pension Fund for Firefighters and Police Officers
in the City of Miami Beach
$507,363,813
Page 17
ASSET RECONCILIATION TABLE Vla
1. Market Value of Assets as of October 1, 2007 $571,193,561
2. Increases Due to:
a. Contributions:
i. City $17,497,496
ii. State (Share Plans) $120,549
iii. Members $5,577,298
iv. Total $23,195,343
b. Investment income (interest and dividends), net of expenses $15,338,858
c. Realized and unrealized gains/(losses) ($74,282,428)
d. Total increases ($35,748,227)
3. Decreases Due to:
a. Benefit payments ($34,912,004)
b. Refund of member contributions ($102,655)
c. Administrative expenses ($641 844)
d. Total decreases ($35,656,503)
4. Market Value of Assets as of October 1, 2008 $499,788,831
City Pension Fund for Firefighters and Police Officers
in the City of Miami Beach Page 18
HISTORICAL ASSET INFORMATION TABLE VII
Historical Market Value
(Assets & Returns)
n not
Market Actuarial City, State and Market Actuarial
Plan Value as of Value as of Benefit Administrative Member Value Value
Year October 1 October 1 Pavments* Expenses Contributions Return Return
"' 2001/2002 $393,319,577 $404,340,268 $20,210,635 $498.825 $7,753,324 -1.65% 2.39%
2002/2003 $373,980,268 $400,898,095 $22,072,374 $521,173 $13,014,855 15.05% 4.82%
2003/2004 $419,972,421 $410,423.595 $24,173,338 $564,532 $14,082,481 9.72% 4.52%
2004/2005 $449,622,848 $418,089,222 $27,202,700 $581,953 $16,960,734 9.99% 12.22%
2005/2006 $483,180,441 $457,680,582 $30,109,229 $633,113 $19,517.106 8.28% 5.34%
2006/2007 $511,508,858 $470,603,144 $32,367,302 $646,588 $20,425,699 14.31% 8.18%
2007/2008 $571,193,561 $495,993,903 $35,014,659 $641,844 $23,195,343 -10.43% 4.87%
2008/2009 $499,788,831 $507,363,813
* includes contributions refunded
City Pension Fund for Firefighters and Police Officers
in the City of Miami Beach Page 19
REVENUES BY SOURCE AND EXPENSES BY TYPE TABLE Vlla
REVENUES
Fiscal City Share Plans Member Total Net Invest.
Year Contrib. Contrib. Contrib. Contrib. Income
Total
2000/2001 $733,425 $3,577,878 $4,311,303 ($38,313,700
)
($34
002
397)
2001/2002 $3,510,328 $4,242,996 $7,753,324 ($1,027,634) ,
,
$6
725
690
2002/2003 $8,577,326 $4,437,529 $]3,014,855 $55,570,845 ,
,
585
$68
700
2003/2004 $9,387,091 $107,000 $4,588,390 $14,082,481 $40,305,816 ,
,
388
$54
297
2004/2005 $11,857,606 $120,549 $4,982,579 $16,960,734 $44,381,512 ,
,
342
$61
246
2005/2006 $14,481,287 $120,549 $4,915,270 $19,517,106 $39,553,653 ,
,
070
$59
759
2006/2007 $15,110,868 $120,549 $5,194,282 $20,425,699 $72 272 894 ,
,
$92
698
594
2007/2008 $17,497,496 $120,549 $5,577,298 $23,195,343 ($58,943,570) ,
,
($35,748,227)
EXPENSES
Fiscal Benefits Member Administrative
Year Paid Refunds Expenses Total
2000/2001 $18,999,180 $75,154 $526,157 $19,600
491
2001/2002 $20,107,750 $102,885 $498,825 ,
$20,709
460
2002/2003 $21,919,356 $153,018 $521,173 ,
$22,593
547
2003/2004 $24,130,299 $43,039 $564,532 ,
$24,737
870
2004/2005 $27,168,740 $33,960 $581,953 ,
$27,784
653
2005/2006 $30,048,732 $60,497 $633,113 ,
$30,742
342
2006/2007 $32,241,728 $125,574 $646,588 ,
$33,013,890
2007/2008 $34,912,004 $102,655 $641,844 $35,656,503
City Pension Fund for Firefighters and Police Officers
in the City of Miami Beach Page 20
CONTRIBUTIONS VS. FUND PAYOUTS TABLE VIII
Historical Contributions Versus Benefit Payments & Expenses*
40
35
30
25
0
...
'" 20
15
10
5
0
~ Contributions ~ Benefit Payments & Expenses
* Please reference Table VIIa on page 20 for the historical benefit payments, expenses,
and contributions.
City Pension Fund for Firefighters and Police Officers
in the City of Miami Beach
Page 21
2001/2002 2002/2003 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008
Plan Year
SUMMARY OF MEMBER DATA TART F IX
Total Number of Members as of October 1
1,Zoo __._.___ . ............___-~._~._._._._.___.._~___.__..___~..___...~__.____.__________
1,100 _ ~
l,ooo t
1,071
900 ,A11 1,911 1,048
800 '
700
600
500
400
300
200 j
100 _ - _ ---- - ---- _ .__ ___
_-- --- _
___-- -t
0 ~
O' O~ Off` Oh Oh O~ ~
,LO ,LO ,LO ,LO ,LO ,LO ,LOO
1. Active Members
a. Police Officers
b. Firefighters
c. Sub-total
2. Non-active, Non-retired Members
a. Fully or partially vested
b. Beneficiaries
c. Sub-total
3. Retired Members
a. Non-disabled(including DROP)
b. Disabled
c. Beneficiaries
d. Sub-total
4. Total Members
As of As of
October 1, 2007 October 1, 2008
317 319
165 168
482 487
17 14
0 0
17 14
420 441
61 62
91 98
572 601
1,071 1,102
City Pension Fund for Firefighters and Police Officers
in the City of Miami Beach Page 22
ACTIVE DATA
TABLE IXa
Historical Average Age & Service
50
40
i 30
ea
y' 20
10
0
10/01 /2002 10/01 /2003 10/01 /2004 10/01 /2005 10/01 /2006 10/01 /2007 10/01 /2008
As of October 1 ~y..Average Service ~~Average Age
Average Average Average Average
Service Attained Service Attained
Date Earned Age Date Earned Age
2001/2001 12.4 39.6 10/01/2005 12.6 40.4
10/0l /2002 12.6 39.9 10/01 /2006 11.9 40.0
I 0/01 /2003 12.9 40.2 10/O1 /2007 12.3 40.2
10/01/2004 12.9 40.4 10/01/2008 11.9 39.7
A;~4r,.-;rol Cala rv RatP
25%
75,000
20% d
60,000 '~
R
i 15% L
-~~ 45,000 e
d 10% ~
R 30,000 y
'' 5% d
e Is,ooo
L
0% a
n
10/01/2001 10/01/2002 10/0 1/2003 10/01/2004 10/01/2005 10/01/2006 10/01/2007 10/01/2008
^ Average Salary ^ Assumed Increase Actual Increase
Actual Average Actual Average
Average Salary Assumed Average Salary Assumed
Date Salary Increase Increase Date Salary Increase Increase
10/01/2001 $58,149 3.78% 4.81% 10/01/2005 $68,855 5.73% 4.80%
10/01/2002 $61,847 8.58% 4.82% 10/01/2006 $74,275 7.87% 4.80%
10/01/2003 $65,145 6.88% 4.82% 10/01/2007 $80.302 9.48% 4.90%
10/01/2004 $67,060 6.25% 4.82% 10/01/2008 $83,495 8.77% 4.40%
City Pension Fund for Firefighters and Police Officers
in the City of Miami Beach
Page 23
RETIREE DATA TABLE IXb
~--
Less than 3(
30-39
40-44
45-49
50
51
52
53
C" 54
~ 55
i,
56
r.+
GtS 57
bA
58
S9
60
61
62
63
64
65
Over 65
^ Ket~rees ^ Beneficiaries ^ Disabled Retirees
Average benefit being paid to non-disabled retirees is $6,032.92 per month.
Average benefit being paid to disabled retirees is $4,181.42 per month.
Average benefit being paid to beneficiaries is $1,856.42 per month.
City Pension Fund for Firefighters and Police Officers
in the City of Miami Beach
Page 24
Number of Retirees
0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 eon v n ~?0
DATA RECONCILIATION TABLE IXc
1. Number of members as of
October 1, 2007
Non-active,
Active Non-retired Retired
482 17 572
2. Change in status during the plan year:
a. Actives who terminated
b. Actives who retired
c. Inactives who became active
d. Inactives who retired
e. Retirees who became active
£ Dormant
3. No longer members due to:
a. Death
b. Permanent break-in-service
c. Receipt of lump sum payment
d. Expiration of certain period
e. Included in error last year
4. New member due to:
a. Initial membership
b. Death of another member
c. Dormant
d. Reinstatement
5. Number of members as of
October 1, 2008
(30)
(1)
36
487
30
1
(1)
(10)
~~)
8
14
601
Total
1,071
(10)
(3)
36
8
1,102
City Pension Fund for Firefighters and Police Officers
in the City of Miami Beach
Page 25
AGE-SERVICE-SALARY TABLE
TABLE IXd
(All Active Members)
Attained Complet ed Years of Service
Age Under 1 1 to 4 5 to 9 10 to 14 15 to 19 20 to 24 25 to 29 30 to 34 35 to 39 40 & up Total
Under 25 5 5 0 0 0 0 0 0 0 0 10
Avg.Pay 58,140 60,959 0 0 0 0 0 0 0 0
59,550
25 to 29 12 27 13 0 0 0 0 0 0 0 52
Avg.Pay 57,125 62,377 79,225 0 0 0 0 0 0 0 65,377
30 to 34 8 21 34 2 0 0 0 0 0 0 65
Avg.Pay 55,711 62,636 79,646 67,113 0 0 0 0 0 0 70,819
35 to 39 2 21 44 34 3 1 0 0 0 0 105
Avg.Pay 54,434 62,774 77,733 88,038 94,172 80,233 0 0 0 0 78,128
0
40 to 44 3 7 25 44 28 20 1 0 0 0 128
Avg.Pay 54,405 63,358 80,218 84,327 101,347 108,151 89,135 0 0 0 89,160
45 to 49 0 1 10 13 22 47 2 0 0 0 95
Avg.Pay 0 72,883 82,189 86,080 94,901 106,690 126,682 0 0 0 98,626
50 to 54 0 0 3 4 6 9 1 0 0 0 23
Avg.Pay 0 0 74,131 86,021 100,175 104,853 147,393 0 0 0 98,200
55 to 59 0 0 1 2 2 2 0 0 0 0 7
Avg.Pay 0 0 69,456 82,697 107,261 88,703 0 0 0 0 89,540
60 to 64 0 0 0 0 l 1 0 0 0 0 2
Avg.Pay 0 0 0 0 112,569 80,372 0 O 0 0 96,471
k
65&up 0 0 0 0 0 0 0 0 0 0 0
Avg.Pay 0 0 0 0 0 0 0 0 0 0 0
70&up 0 0 0 0 0 0 0 0 0 0 0
Avg.Pay 0 0 0 0 0 0 0 0 0 0 0
Total 30 82 130 99 62 80 4 0 0 0 487
Avg.Pay 56,466 62,670 79,056 85,519 98,971 105,739 122,473 0 0 0 83,495
City Pension Fund for Firefighters and Police Officers
in the City of Miami Beach Page 26
AGE-SERVICE-SALARY TABLE TABLE IXe
(Police Officers)
Attained
Age Completed Years of Service
Under 1 1 to 4 5 to 9 10 to 14 15 to 19 20 to 24 25 to 29 30 to 34 35 to 39 40 & up Total
Under 25 3 2 0 0 0 0 0 0 0 0 5
Avg.Pay 55,262 57,119 0 0 0 0 0 0 0 0 56,005
25 to 29 8 16 4 0 0 0 0 0 0 0 28
Avg.Pay 55,455 61,108 79,113 0 0 0 0 0 0 0 62,065
30 to 34 4 18 18 2 0 0 0 0 0 0 42
Avg.Pay 53,446 62,717 74,829 67,113 0 0 0 0 0 0 67,234
35 to 39 2 18 34 29 1 1 0 0 0 0 85
Avg.Pay 54,434 62,582 76,242 85,736 82,330 80,233 0 0 0 0 76,194
40 to 44 3 7 15 33 19 10 1 0 0 0 88
Avg.Pay 54,405 63,358 74,550 79,970 98,645 102,482 89,135 0 0 0 83,548
45 to 49 0 1 7 7 12 25 1 0 0 0 53
Avg.Pay 0 72,883 78,486 78,973 88,302 96,728 93,626 0 0 0 89,557
50 to 54 0 0 3 2 3 5 1 0 0 0 14
Avg.Pay 0 0 74,131 76,538 84,539 90,426 147,393 0 0 0 87,758
55 to 59 0 0 1 1 0 1 0 0 0 0 3
Avg.Pay 0 0 69,456 80,392 0 80,295 0 0 0 0 76,714
60 to 64 0 0 0 0 0 1 0 0 0 0 1
Avg.Pay 0 0 0 0 0 80,372 0 0 0 0 80,372
65 to 69 0 0 0 0 0 0 0 0 0 0 0
Avg.Pay 0 0 0 0 0 0 0 0 0 0 0
70&up 0 0 0 0 0 0 0 0 0 0 0
Avg.Pay 0 0 0 0 0 0 0 0 0 0 0
Total 20 62 82 74 35 43 3 0 0 0 319
Avg.Pay 54,765 62,318 75,794 81,701 93,424 96,187 110,051 0 0 0 78,232
City Pension Fund for Firefighters and Police Officers
in the City of Miami Beach Page 27
AGE-SERVICE-SALARY TABLE TABLE IXf
(Firefighters)
Attained Complet ed Years of Service
Age Under 1 1 to 4 5 to 9 10 to 14 IS to 19 20 to 24 25 to 29 30 to 34 35 to 39 40 & up Total
Under 25 2 3 0 0 0 0 0 0 0 0 5
Avg.Pay 62,458 63,519 0 0 0 0 0 0 0 0 63,095
25 to 29 4 11 9 0 0 0 0 0 0 0 24
Avg.Pay 60,465 64,222 79,275 0 0 0 0 0 0 0 69,241
30 to 34 4 3 16 0 0 0 0 0 0 0 23
Avg.Pay 57,976 62,148 85,066 0 0 0 0 0 0 0 77,365
35 to 39 0 3 10 5 2 0 0 0 0 0 20
Avg.Pay 0 63,926 82,801 101,392 100,093 0 0 0 0 0 86,347
40 to 44 0 0 10 11 9 10 0 0 0 0 40
Avg.Pay 0 0 88,72] 97,398 107,050 113,820 0 0 0 0 101,506
45 to 49 0 0 3 6 10 22 1 0 0 0 42
Avg.Pay 0 0 90,828 94,371 102,819 118,011 159,737 0 0 0 110,069
50 to 54 0 0 0 2 3 4 0 0 0 0 9
Avg.Pay 0 0 0 95,504 115,811 122,886 0 0 0 0 114,443
55 to 59 0 0 0 1 2 1 0 0 0 0 4
Avg.Pay 0 0 0 85,002 107,261 97,110 0 0 0 0 99,159
60 to 64 0 0 0 0 1 0 0 0 0 0 1
Avg.Pay 0 0 0 0 112,569 0 0 0 0 0 112,569
65&up 0 0 0 0 0 0 0 0 0 0 0
Avg.Pay 0 0 0 0 0 0 0 0 0 0 0
70 & up 0 0 0 0 0 0 0 0 0 0 0
Avg.Pay 0 0 0 0 0 0 0 0 0 0 0
Total 10 20 48 25 27 37 1 0 0 0 168
Avg.Pay 59,868 63,761 84,630 96,823 ]06,161 116,840 159,737 0 0 0 93,488
City Pension Fund for Firefighters and Police Officers
in the City of Miami Beach
Page 28
HISTORICAL CONTRIBUTION RATE TABLE X
Member Expected City Member Expected City
Fiscal Contribution Contribution Fiscal Contribution Contribution
Year Percentage Percentage Year Percentage Percentage
2001 /2002 10.00% 21.88% 2006/2007 10.00% 46.71
2002/2003 10.00% 26.29% 2007/2008 10.00% 47.82%
2003/2004 10.00% 27.27% 2008/2009 10.00% 50.02%
2004/2005 10.00% 36.03% 2009/2010 10.00% 55.32%
2005/2006 10.00% 42.75%
City Pension Fund for Firefighters and Police Officers
in the City of Miami Beach Page 29
ACTUARIAL ASSUMPTIONS TABLE XI
1. Actuarial Cost Method
• Entry Age Normal Cost Method
2. Decrements
• Pre-Retirement Mortality "°`
Representative values of the assumed annual rates of pre-retirement mortality among
members in active service are as follows:
A e Ordinary
Mortality
Rate Accidental
Mortality
Rate
A e Ordinary
Mortality
Rate Accidental
Mortality
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
1983 Group Annuity Mortality Table
• Post-Retirement Disabled Mortality
1983 Group Annuity Mortality Table
• Disability
Representative values of the assumed annual rates of disability among members in active
service are as follows:
A e Ordinary
Disability
Rate Accidental
Disability
Rate ,~~
A e Ordinary
Disability
Rate Accidental
Disability
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 Firefighters and
Police Officers in the City of Miami Beach
Page 30
ACTUARIAL ASSUMPTIONS TABLE XI
• Permanent Withdrawal from Active Status
Representative values of the assumed annual rates of withdrawal among members in
active service are as follows:
Age Rate Age Rate Age Rate Age Rate
20 10.30% 30 4.15% 40 0.99% 45 0.48%
25 7.30% 35 1.82%
• Retirement
All members are assumed to retire at age 50 with 26.25 years of service, but not later than
age 65. Members under age 50 meeting the Rule of 70 are assumed to retire at the rate of
40% per year. Otherwise, retirement is assumed to occur in accordance with the
following rates:
A e Rate A e Rate A e Rate A e Rate
45 30.00% 51 35.00% 56 30.00% 61 45.00%
46 20.00% 52 25.00% 57 30.00% 62 45.00%
47 25.00% 53 25.00% 58 25.00% 63 55.00%
48 25.00% 54 30.00% 59 35.00% 64 85.00%
49 25.00% 55 30.00% 60 45.00% 65 100.00%
50 35.00%
Note: Ages under 50 apply only if eligible for Rule of 70
3. Interest Rates
• Used for Calculating All Liabilities (including GASB 25/27 liabilities)
8.40% per annum. This interest rate is assumed to be net of investment expenses and
commissions
4. Salary Increases
Representative values of the assumed annual rates of future salary increase are as follows:
Age Rate Age Rate Age Rate Age Rate
20 9.67% 35 4.30% 50 4.06% 60 4.36%
25 7.80% 40 4.10% 55 4.12% 65 4.65%
30 5.25% 45 4.03%
Average assumed salary increase rate is 4.4%
City Pension Fund for Firefighters and
Police Officers in the City of Miami Beach Page 31
ACTUARIAL ASSUMPTIONS TABLE XI
5. Loadings for Contingencies
• Compensation
Salary rates have been increased by 7.50% to load for overtime and other pays.
• Pre-Employment Service
A City contribution of 6.00% of loaded compensation is assumed sufficient to provide for
the purchase (or "buyback") ofpre-employment service by the membership.
6. Marriage Assumptions
• Percent Married
77% of members are assumed married or entitled to benefits for dependents, including
registered domestic partners.
• Age Difference Between Spouses
Male spouses are assumed to be three years older than female spouses.
7. Expenses
Anticipated administrative expenses, exclusive of investment expenses and commissions, are
assumed to be funded through future City normal contributions. In addition, the interest rate set
forth in item 3 above is assumed to be net of investment expenses and commissions.
8. Assets
Actuarial value of assets is equal to the market value of assets adjusted to reflect afive-year
phase-in of the net investment gain or loss. At October 1, 2005, the "fresh start method" using
the current market value of assets and starting a new five year phase-in of realized and
unrealized gains and losses was implemented, recognizing one year of asset performance in the
actuarial value of assets.
9. Aggregate Compensation
The aggregate compensation used to compute the accrued liability contribution rate was assumed
to increase at a rate of 3.50% per year.
City Pension Fund for Firefighters and
Police Officers in the City of Miami Beach
Page 32
ASSUMPTION CHANGES TABLE XIa
The following assumptions have been changed during the past few years:
1. Effective October 1, 2002:
The actuarial cost method was changed from frozen initial liability to entry age.
2. Effective October 1, 2002:
The amortization of the unfunded accrued liability was changed from level dollar to level
percentage of pay, with aggregate payroll assumed to increase at 3.50% per year
3. Effective October 1, 2005:
The "fresh start" method was applied to the actuarial value of assets to begin a new five-year
phase-in of realized and unrealized gains and losses.
The retirement rates were increased to reflect retirement experience for participants meeting the
age 50 and "Rule of 70" eligibility criteria.
The loadings for contingencies and pre-employment service were increased from 5.00% to
7.00% and from 4.50% to 5.50% respectively.
4. Effective October 1, 2006:
The actuarial valuation system used by Buck Consultants was upgraded effective October 1,
2006. The gain resulting from this upgrade was amortized over 30 years.
5. Effective October 1, 2008:
The interest rate used to calculate all liabilities was reduced to 8.40% from 8.50%.
The salary scale used to project future pay increases was reduced by 50 basis points at each age
to reflect the current and projected economic climate.
The loadings for contingencies were increased by 100 basis points (50 basis points for salary
rates and 50 basis points for buybacks).
The retirement assumption was updated to reflect an increase in the level of retirements starting
at age 45.
City Pension Fund for Firefighters and
Police Officers in the City of Miami Beach Page 33
PLAN PROVISIONS TABLE XII
1. Monthly Accrued Benefit
3% of average monthly salary 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 90% of average monthly salary. If the member was employed
prior to July 1, 1976, the benefit can be no less than that provided by the prior
Base Plan assuming its provisions continue after its merger with the prior
Supplemental Plan ("grandfathered Base Plan benefit").
Average monthly salary is based upon the highest two years of compensation. A
limited portion of overtime pay is included in the average monthly salary except
when calculating the grandfathered Base Plan benefit referred to above.
2. Service Retirement Age and Benefit
• Age
Age 50 or, if earlier, the date when age plus service equals 70 (Rule of 70);
Retiring members may also be eligible to enter the DROP (Deferred Retirement
Option Plan).
• Amount
Monthly Accrued Benefit
• Form of Payment
For members except those retiring prior to November 5, 2003, the normal form of
payment is a 75% joint and survivor annuity with a designated beneficiary as
provided under the plan, which includes 120 guaranteed monthly payments.
The members may also elect the actuarial equivalent of the 10 year certain and
life annuity, with a designated beneficiary, any of the following optional forms of
payment:
- 75% joint and contingent survivor annuity
- 66 2/3% joint and contingent annuity with a designated beneficiary
- 50% joint and contingent annuity with a designated beneficiary
- 25% joint and contingent annuity with a designated beneficiary
- 10 year certain and life annuity with a designated beneficiary
Members who retired prior to November 5, 2003 were subject to different normal
and optional forms of payment.
City Pension Fund for Firefighters and
Police Officers in the City of Miami Beach
Page 34
PLAN PROVISIONS TABLE XII
3. Disability Retirement Age and Benefit
Condition
For a service connected disability benefit, the member must become totally and
permanently disabled in the line of duty;
For anon-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 85% of compensation.
For anon-service connected disability benefit:
Monthly Accrued Benefit.
4. Withdrawal Retirement Age and Benefit
Age
Any age prior to 50 with at least 10 years of service;
Amount
Monthly Accrued Benefit (payable if participant survives to Service Retirement
Age);
• Form of Payment
For members except those retiring prior to November 5, 2003, the normal form of
payment is a 75% joint and survivor annuity with a designated beneficiary as
provided under the plan, which includes 120 guaranteed monthly payments.
The members may also elect the actuarial equivalent of the 10 year certain and
life annuity, with a designated beneficiary, any of the following optional forms of
payment:
- 75% joint and contingent survivor annuity
- 66 2/3% joint and contingent annuity with a designated beneficiary
- 50% joint and contingent annuity with a designated beneficiary
- 25% joint and contingent annuity with a designated beneficiary
- 10 year certain and life annuity with a designated beneficiary
Members who retired prior to November 5, 2003 were subject to different normal
and optional forms of payment.
City Pension Fund for Firefighters and
Police Officers in the City of Miami Beach Page 35
PLAN PROVISIONS TABLE XII
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, 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.
• 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 75% 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 or until marriage 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 at time of death.
6. Employee Contributions
10% of salary per year (on a pre-tax basis);
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 Service
Members with at least 20 years of service may purchase up to four total years of
additional service credit at the 3% accrual rate for time spent on active military duty or
other full-time public safety service for which no other benefit is payable. Also, such
member may purchase an increase in benefit of 3% or 6% without purchasing service.
Members purchasing other than military service must also be eligible to retire. The total
of any combination ofpre-employment benefit purchased is 12% increase in accrual.
8. Cost-of-Living Adjustment
Benefits are increased by 2.5% per year, compounded annually, each October 1 after
retirement, adjusted for partial years; members whose grandfathered Base Plan benefit is
greater than the benefit otherwise provided by this plan will receive the applicable cost-
of-living adjustment on that basis (2% a year beginning the October three years after
retirement) until such time as the benefit from this plan with 2.5%cost-of-living exceeds
that comparable grandfathered Base Plan benefit.
City Pension Fund for Firefighters and
Police Officers in the City of Miami Beach Page 36
PLAN PROVISIONS
TABLE XII
9. Deferred Retirement Option Program (DROP)
aR
Police Officers and Firefighters are eligible to participate in a Deferred Retirement
Option Program (DROP) upon meeting any one of the following criteria:
• the attainment of age 50 or
• the sum of the member's age and creditable service equal to at least 70
Operation of the DROP
• The member's monthly retirement benefit, based on final average earnings and
service, will be calculated as of the date prior to them entering the DROP.
• The member's monthly pension will be deposited into the selected investment
vehicles.
• The member will cease to accrue additional pension benefits (with the exception
of the COLA under the pension plan).
• The member will no longer be eligible for Disability or Service Connected Death
benefits from the Pension Plan.
• Member contributions to the Pension Plan will cease upon entering the DROP.
• Upon entering the DROP, the member will select the length of the DROP period.
The maximum period of participation in the DROP is 36 months.
Notwithstanding, participation may not continue beyond the date when the
member's combined years of creditable service and time in the DROP equals 352
months (387 months if they were a member prior to July 1, 1976).
• The member will not have access or be able to borrow against any of the funds
accumulated in their DROP account.
• The member may sever his/her employment with the City at any time during the
DROP period. Such separation will terminate their participation in the DROP.
• No payment will be made from the DROP account until the member severs their
employment with the City
• Following severance of employment, the funds in the DROP will be paid under
the options the member selected. The member will also start receiving their
monthly pension which was previously being deposited in the DROP.
City Pension Fund for Firefighters and
Police Officers in the City of Miami Beach Page 37
PLAN AMENDMENTS TABLE XIIa
The following amendments have been made:
1. Effective September 30, 2000, members of the post-May 18, 1993 plan were merged into
the pre-May 19, 1993 benefit schedule.
2. Effective November 6, 2001, domestic partners of members registered with the City of
Miami Beach are entitled to survivor benefits under the Fund.
3. Effective November 6, 2001, members with at least 20 years of service and eligible to
retire may purchase certain prior public safety service or purchase an increased benefit.
Total accrual from purchase of service, including military time, cannot exceed 12%.
4. Effective November 5, 2003, the normal form will include 120 guaranteed monthly
payments.
City Pension Fund for Firefighters and
Police Officers in the City of Miami Beach Page 38