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HomeMy Public PortalAboutOrd 1029 - General Employees Retirement Plan4 ORDINANCE NO. 1029 AN ORDINANCE OF THE CITY OF CRESTVIEW AMENDING ORDINANCE NO. 781, ESTABLISHING THE CITY OF CRESTVIEW GENERAL EMPLOYEES' RETIREMENT PLAN, AS SUBSEQUENTLY AMENDED; AMENDING SECTION 1, DEFINITIONS; AMENDING SECTION 6, BENEFIT AMOUNTS AND ELIGIBILITY; AMENDING SECTION 26, DEFERRED RETIREMENT OPTION PLAN; PROVIDING SEVERABILITY OF PROVISIONS; REPEALING ALL ORDINANCES IN CONFLICT HEREWITH AND PROVIDING AN EFFECTIVE DATE. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF CRESTVIEW, FLORIDA; SECTION 1. That Ordinance No. 781 of the City of Crestview, establishing the City of Crestview General Employees' Retirement Plan, as subsequently amended, is further amended by amending section 1, Definitions, by amending the definition of Credited Service, to read as follows: CreditedServicemeans the total number of years and fractional parts of years of service as a General Employee with Member contributions, when required, omitting intervening years or fractional parts of years when such Member was not employed by the City as a General Employee. A Member may voluntarily leave his contribution in the Fund for a period of five (5) years after leaving the employ of the City pending the possibility of being reemployed as a General Employee, and remaining employed for a period of not less than three (3) one (1) years, without losing credit for the time that he was a Member of the System. If the Member does not remain employed for a period of three (3) one year (1) years upon reemployment within five (5) years, then the Accumulated Contribution will be returned upon his written request. In the event that a Member of this System has also accumulated credited service in another pension system maintained by the City, then such other credited service shall be used in determining vesting as provided for in Section 9, and for determining eligibility for early or normal retirement in each system. Such other credited service shall not be considered in determining benefits under this System, but shall be considered for determining benefits under -1 - Coding: Words stricken are deletions; words underlined are additions such other system using the benefit accrual rate in effect in such other system at the time of the Member's termination or retirement from the City of Crestview. Only his Credited Service under this System on or after his date of membership in this System shall be considered for this System's benefit calculation. The benefit calculation for a Member of this System who is or becomes eligible for a benefit from this System after he has become a member of another pension system maintained by the City, shall be based upon the Member's Average Final Compensation and benefit accrual rate in effect on the date of Member's termination of employment or retirement from the City. The years or fractional parts of a year that a General Employee serves in the military service of the Armed Forces of the United States, the United States Merchant Marine or the United States Coast Guard. voluntarily or involuntarily, after separation from employment as a General Employee with the City to perform training or service, shall be added to his years of Credited Service for all purposes, including vesting, provided that: A. The General Employee must return to his employment as a General Employee within one (1) year from the earlier of the date of his military discharge or his release from service. B. The General Employee deposits into the Fund the same sum that the Member would have contributed if he had remained a General Employee during his absence. The General Employee must deposit all missed contributions within a period equal to three (3) times the period of military service, but not more than five (5) years or he will forfeit the right to receive Credited Service for his military service pursuant to this Section. C. The maximum credit for military service pursuant to this Section shall be five (5) years. D. In order to qualify for the purchase of Credited Service pursuant to this Section, the General Employee must have been discharged or released from service under honorable conditions. -2 - Coding: Words stricken are deletions; words underlined are additions E. This Section is intended to satisfy the minimum requirements of the Uniformed Services Employment and Reemployment Rights Act (USERRA), (P.L. 103-353). To the extent that this Section does not meet the minimum standards of USERRA, as it may be amended from time to time, the minimum standards shall apply. SECTION 2. That Ordinance No. 781 of the City of Crestview, establishing the City of Crestview General Employees' Retirement Plan, as subsequently amended, is further amended by amending Section 6, Benefit Amounts and Eligibility, subsection 2. Normal Retirement Benefit, to read as follows: 2. Normal Retirement Benefit. A Member retiring hereunder on or after his normal retirement date shall receive a monthly benefit which shall commence on his Retirement and be continued thereafter during Member's lifetime, ceasing upon death. The monthly retirement benefit shall equal two and sixty-four hundredths percent (2.64%) of Average Final Compensation for each year of Credited Service, plus two -hundred fifteen dollars ($215) per month additional benefit on each normal retirement benefit payment. SECTION 3. That Ordinance No. 781 of the City of Crestview, establishing the City of Crestview General Employees' Retirement Plan, as subsequently amended, is further amended by amending section 26, Deferred Retirement Option Plan, to read as follows: SECTION 26. DEFERRED RETIREMENT OPTION PLAN. 1. Definitions. As used in this Section 26, the following definitions apply:" A. "DROP" -- The City of Crestview General Employees' Deferred Retirement Option Plan. B. "DROP Account" -- The account established for each DROP participant under subsection 3. 2. Participation. A. Eligibility to Participate. -3 - Coding: Words stricken are deletions; words underlined are additions In lieu of terminating his employment as a General Employee, any Member who is eligible for normal retirement under the System may elect to defer receipt of such service retirement pension and to participate in the DROP provided that the election to participate in the- DROP is made the election to participate is made within twelve (12) months from the B. Election to Participate. A Member's election to participate in the DROP must be made in writing in a time and manner determined by the Board and shall be effective on the first day of the first calendar month which is at least fifteen (15) business days after it is received by the Board. C. Period of Participation. A Member who elects to participate in the DROP under subsection 2.B., shall participate in the DROP for a period not to exceed sixty (60) months beginning at the time his election to participate in the DROP first becomes effective. A Member may participate only once. D. Termination of Participation. (1) A Member participating in the DROP shall cease participating in the DROP by: (a) electing in writing, in a time and manner determined by the -4 - Coding: Words stricken are deletions; words underlined are additions (b) () continuing to be employed as a General Employee at the end of his period of participation in the DROP as determined under subsection 2.C.; or (c) Lb j terminating his employment as a General Employee. (2) Upon the Member's termination of participation in the DROP, pursuant to subsection (1),(a) er-(-b) above, all amounts provided for in subsection 3.B., including monthly benefits and investment earnings or losses, shall cease to be transferred from the System to his DROP Account. Any amounts remaining in his DROP Account shall be paid to him in accordance with the provisions of subsection 4. when he terminates his employment as a General Employee. (3) A Member who ciccts to terminates his participation in the DROP under subsection 2.D. shall not be permitted to again become a participant in the DROP. E. Effect of DROP Participation on the System. (1) A Member's Credited Service and his accrued benefit under the System shall be determined on the date his election to participate in the DROP first becomes effective. The Member shall not accrue any additional Credited Service or any additional benefits under the System (except for any additional benefits provided under any cost -of -living adjustment in the System) while he is a participant in the DROP. After a Member commences participation, he shall not be permitted to again contribute to the System nor shall he be eligible for disability or pre -retirement death benefits. (2) No amounts shall be paid to a Member from the System while the Member is a participant in the DROP. Unless otherwise specified -5 - Coding: Words stricken are deletions; words underlined are additions in the System, if a Members participation in the DROP is terminated other than by terminating his employment as a General Employee, no amounts shall be paid to him from the System until he terminates his employment as a General Employee. Unless otherwise specified in the System, amounts transferred from the System to the Member's DROP Account shall be paid directly to the member only on the termination of his employment as a General Employee. 3. Funding. A. Establishment of DROP Account. A DROP Account shall be established for each Member participating in the DROP. A Member's DROP Account shall consist of amounts transferred to the DROP under subsection 3.B., and earnings on those amounts. B. Transfers From Retirement System. (1) As of the first day of each month of a Member's period of participation in the DROP, the monthly retirement benefit he would have received under the System had he terminated his employment as a General Employee and elected to receive monthly benefit payments thereunder shall be transferred to his DROP Account, except as otherwise provided for in subsection 2.D.(2). A Member's period of participation in the DROP shall be determined in accordance with the provisions of subsections 2.C. and 2.D., but in no event shall it continue past the date he terminates his employment as a General Employee. (2) Except as otherwise provided in subsection 2.D.(2), a Member's DROP Account under this subsection 3.B. shall be debited or -6 - Coding: Words stricken are deletions; words underlined are additions credited with earnings after each fiscal year quarter. The average daily balance in a Member's DROP Account shall be credited or debited at a rate equal to the actual net rate of investment return realized by the System for that quarter. "Net investment return" for the purpose of this paragraph is the total return of the assets in which the Member's DROP Account is invested by the Board net of brokerage commissions, transaction costs and management fees. (3) A Member's DROP Account shall only be credited or debited with earnings and monthly benefits while the Member is a participant in the DROP and after the Member dies, retires or terminates his employment as a General Employee. If a Member is employed by the City after (5) years, then or after participating in the DROP for five beginning with the Member's 61st month of DROP participation, whichever occurs first, the Member's DROP Account will no longer be credited or debited with earnings, nor will monthly benefits be transferred to the DROP account. All such non -transferred amounts shall be forfeited and continue to be forfeited while the Member is employed by the City. A Member employed by the City after five (5) years of DROP participation will still not be eligible for pre - retirement death or disability benefits, nor will be accrue additional Credited Service. 4. Distribution of DROP Accounts on Termination of Employment. A. Eligibility for Benefits. -7 - Coding: Words stricken are deletions; words underlined are additions A Member shall receive the balance in his DROP Account in accordance with the provisions of this subsection 4. upon his termination of employment as a General Employee. Except as provided in subsection 4.D., no amounts shall be paid to a Member from the DROP prior to his termination of employment as a General Employee. B. Form of Distribution. (1) Unless the Member elects otherwise, distribution of his DROP Account shall be made in a cash lump sum, subject to the direct rollover provisions set forth in subsection 4.G. A Member may, however, elect, in such time and manner as the Board shall prescribe, that his DROP distribution be used to purchase a nonforfeitable fixed annuity payable in such form as the Member may elect. Elections under this paragraph shall be in writing and shall be made in such time or manner as the Board shall determine. If the annuity form selected is not a qualified joint and fifty percent (50%) survivor annuity with the Member's Spouse as the Beneficiary, the annuity payable to the Member and thereafter to his Beneficiary shall be subject to the incidental death benefit rule as described in Section 401(a)(9)(G) of the Code and its applicable regulations. (2) If a Member dies before his benefit is paid, his DROP Account shall be paid to his Beneficiary in such optional form as his Beneficiary may select. If no Beneficiary designation is made, the DROP Account shall be distributed to the Member's estate. C. Date of Payment of Distribution. (1) Except as otherwise provided in this subsection 4., distribution of a Member's DROP Account shall be made as soon as -8 Coding: Words stricken are deletions; words underlined are additions 11111 Hummummun administratively practicable following the Member's termination of employment. (2) In lieu of a distribution as described in paragraph (1) above, a Member may, in accordance with such procedures as the Board shall prescribe, elect to have the distribution of his DROP Account made as of the first day of any month coincident with or following his termination of employment as a General Employee; provided, however, payments shall be made before the distribution date elected by the Member to the extent necessary to comply with the provisions of subsections 4.D. and 4.F. D. Aye Seventy and One -Half (,70-1/2) Rey: aired Distribution. In no event shall the provisions of subsection 4. operate so as to allow the distribution of a Member's DROP Account to be later than the April 1 following the later of the calendar year in which he terminates his employment as a General Employee or he attains age seventy and one-half (70-1/2). In the event a Member is required to receive payment while in service under the provisions of this subsection D., he shall receive one lump sum payment on or before his required beginning date equal to his entire DROP Account balance and annual lump sum payments thereafter of amounts credited to his DROP Account during each calendar year. Upon the Member's subsequent termination of employment, payment of his DROP Account shall be made in accordance with the provisions of subsection 4.B. E. Proof of Death and Right of Beneficiary or Other Person. The Board may require and rely upon such proof of death and such evidence of the right of any Beneficiary or other person to receive the value of a deceased Member's DROP Account as the Board may deem -9 - Coding: Words stricken are deletions; words underlined are additions proper and its determination of the right of that Beneficiary or other person to receive payment shall be conclusive. F. Distribution Limitation. Notwithstanding any other provision of subsection 4., all distributions from the DROP shall conform to the regulations issued under Section 401(a)(9) of the Code, including the incidental death benefit provisions of Section 401(a)(9)(G) of the Code. Further, such regulations shall override any DROP provision that is inconsistent with Section 401(a)(9) of the Code. G. Direct Rollover of Certain Distributions. This subsection applies to distributions made on or after January 1, 1993. Notwithstanding any provision of the DROP to the contrary that would otherwise limit a distributee's election under this subsection, a distributee may elect, at the time and in the manner prescribed by the Board, to have any portion of an eligible rollover distribution paid directly by the DROP to an eligible retirement plan specified by the distributee in a direct rollover as otherwise provided under the System in Section 24, herein incorporated by reference. 5. Administration of DROP. A. Board Administers the DROP. The general administration of the DROP, the responsibility for carrying out the provisions of the DROP and the responsibility of overseeing the investment of the DROP's assets shall be placed in the Board. The members of the Board may appoint from their number such subcommittees with such powers as they shall determine; may adopt such administrative procedures and regulations as they deem desirable for the conduct of their affairs; may authorize one or more of their number or any -10 - Coding: Words stricken are deletions; words underlined are additions 110 1111 agent to execute or deliver any instrument or make any payment on their behalf; may retain counsel, employ agents and provide for such clerical, accounting, actuarial and consulting services as they may require in carrying out the provisions of the DROP; and may allocate among themselves or delegate to other persons all or such portion of their duties under the DROP, other than those granted to them as Trustee under any trust agreement adopted for use in implementing the DROP, as they, in their sole discretion, shall decide. A Trustee shall not vote on any question relating exclusively to himself. B. Individual Accounts. Records and Reports. The Board shall maintain, or cause to be maintained, records showing the operation and condition of the DROP, including records showing the individual balances in each Member's DROP Account, and the Board shall keep, or cause to be kept, in convenient form such data as may be necessary for the valuation of the assets and liabilities of the DROP. The Board shall prepare or cause to be prepared and distributed to Members participating in the DROP and other individuals or filed with the appropriate governmental agencies, as the case may be, all necessary descriptions, reports, information returns, and data required to be distributed or filed for the DROP pursuant to the Code, the applicable portions of the Act and any other applicable laws. C. Establishment of Rules. Subject to the limitations of the DROP, the Board from time to time shall establish rules for the administration of the DROP and the transaction of its business. The Board shall have discretionary authority to construe and interpret the DROP (including but not limited to determination of an individual's eligibility for DROP participation, the right and amount of any -11 - Coding: Words semen are deletions; words underlined are additions benefit payable under the DROP and the date on which any individual ceases to be a participant in the DROP). The determination of the Board as to the interpretation of the DROP or its determination of any disputed questions shall be conclusive and final to the extent permitted by applicable law. The Board shall also oversee the investment of the DROP'S assets. D. Limitation of Liability. (1) The Trustees shall not incur any liability individually or on behalf of any other individuals for any act or failure to act, made in good faith in relation to the DROP or the funds of the DROP. (2) Neither the Board nor any Trustee of the Board shall be responsible for any reports furnished by any expert retained or employed by the Board, but they shall be entitled to rely thereon as well as on certificates furnished by an accountant or an actuary, and on all opinions of counsel. The Board shall be fully protected with respect to any action taken or suffered by it in good faith in reliance upon such expert, accountant, actuary or counsel, and all actions taken or suffered in such reliance shall be conclusive upon any person with any interest in the DROP. 6. 'General Provisions. A. Amendment of DROP. The DROP may be amended by an ordinance of the City at any time and from time to time, and retroactively if deemed necessary or appropriate, to amend in whole or in part any or all of the provisions of the DROP. However, except as otherwise provided by law, no amendment shall make it possible for any part of the DROP's funds to be used for, or diverted to, purposes other than for the exclusive benefit of persons entitled to benefits 12 Coding: Words stricken are deletions; words underlined are additions under the DROP. No amendment shall be made which has the effect of decreasing the balance of the DROP Account of any Member. B. Facility of Payment. If the Board shall find that a Member or other person entitled to a benefit under the DROP is unable to care for his affairs because of illness or accident or is a minor, the Board may direct that any benefit due him, unless claim shall have been made for the benefit by a duly appointed legal representative, be paid to his Spouse, a child, a parent or other blood relative, or to a person with whom he resides. Any payment so made shall be a complete discharge of the liabilities of the DROP for that benefit. C. Information. Each Member, Beneficiary or other person entitled to a benefit, before any benefit shall be payable to him or on his account under the DROP, shall file with the Board the information that it shall require to establish his rights and benefits under the DROP. D. Prevention of Escheat. If the Board cannot ascertain the whereabouts of any person to whom a payment is due under the DROP, the Board may, no earlier than three (3) years from the date such payment is due, mail a notice of such due and owing payment to the last known address of such person, as shown on the records of the Board or the City. If such person has not made written claim therefor within three (3) months of the date of the mailing, the Board may, if it so elects and upon receiving advice from counsel to the DROP, direct that such payment and all remaining payments otherwise due such person be canceled on the records of the DROP. Upon such cancellation, the DROP shall have no further liability therefor except that, in the event such person or his Beneficiary later notifies the Board of his -13 - Coding: Words stricken are deletions; words underlined are additions whereabouts and requests the payment or payments due to him under the DROP, the amount so applied shall be paid to him in accordance with the provisions of the DROP. E. Written Elections. Notification. (1) Any elections, notifications or designations made by a Member pursuant to the provisions of the DROP shall be made in writing and filed with the Board in a time and manner determined by the Board under rules uniformly applicable to all employees similarly situated. The Board reserves the right to change from the time and manner for making notifications, elections or designations by Members under the DROP if it determines after due deliberation that such action is justified in that it improves the administration of the DROP. In the event of a conflict between the provisions for making an election, notification or designation set forth in the DROP and such new administrative procedures, those new administrative procedures shall prevail. (2) Each Member or Retiree who has a DROP Account shall be responsible for furnishing the Board with his current address and any subsequent changes in his address. Any notice required to be given to a Member or Retiree hereunder shall be deemed given if directed to him at the last such address given to the Board and mailed by registered or certified United States mail. If any check mailed by registered or certified United States mail to such address is returned, mailing of checks will be suspended until such time as the Member or Retiree notifies the Board of his address. F. Benefits Not Guaranteed. -14 - Coding: Words strieken are deletions; words underlined are additions 11111111111111,1111 1111111111111111111111111111111 All benefits payable to a Member from the DROP shall be paid only from the assets of the Member's DROP Account and neither the City nor the Board shall have any duty or liability to furnish the DROP with any funds, securities or other assets except to the extent required by any applicable law. G. Construction. (1) The DROP shall be construed, regulated and administered under the laws of Florida, except where other applicable law controls. (2) The titles and headings of the subsections in this Section 26 are for convenience only. In the case of ambiguity or inconsistency, the text rather than the titles or headings shall control. H. Forfeiture of Retirement Benefits. Nothing in this Section shall be construed to remove DROP participants from the ose employment maxe hate ' b. in motion 22 while employed, will be subject to f f + � ll + t bone is inelu,.7 DROP L fi+ suan to the above provisions of law application of any forfeiture provisions applicable to the system. DROP participants shall be subectoo forfeiture of all retirement benefits, including DROP benefits. SECTION 4: Specific authority is hereby granted to codify and incorporate this Ordinance in the existing Code of Ordinances of the City of Crestview. SECTION 5: All Ordinances or parts of Ordinances in conflict herewith be and the same are hereby repealed. SECTION 6: If any section, subsection, sentence, clause, phrase of this ordinance, or the particular application thereof shall be held invalid by any court, administrative agency, or -15 - Coding: Words stricken are deletions; words underlined are additions other body with appropriate jurisdiction, the remaining section, subsection, sentences, clauses, or phrases under application shall not be affected thereby. SECTION 7: This Ordinance shall become effective upon adoption. PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CRESTVIEW, FLORIDA on the ha "day of 2000. ATTEST: yh AL I i' JACKSON, CITY CLERK APPROVED BY ME THIS /4. .day of GEORGE I WHITEHURST, MAYOR Approved as to form: BEN HOL E , C Y AT noc\cv\gen\05-16-00.ord WIII. IAM F. KILPAT: COUNCIL PRESIDEN , 2000. -16 - Coding: Words stricken are deletions; words underlined are additions MEMORANDUM MEMO TO: City Council FR: Brenda Crosson. Chairman RE: Adoption of Ordinance for Benefit Improvement to General Employees Retirement Plan Date: May 17, 2000 Last year the Board discussed improvement of benefits after the plan actuary advised that the plan is over funded. The employees/members of the General Employees Retirement Plan met with Mr. Lee Dehner. Attorney and Ward Foster, Acturary during three member meetings on April 11, 2000 to vote on which improvement they wished. During a special meeting the afternoon of April 11, 2000 the Board discussed the date of DROP election and recommended a change to allow the eligibility date for the DROP to be anytime after the employee is eligible for normal retirement. This will allow the employee to time the end of their five year period with the beginning of their social security benefits. They also discussed the requirement of a vested employee to be re-employed for a three year period to be eligible to receive retirement at the current benefit rate rather than the benefit rate at which they left service. It was the consensus of the Board that a one year period for re-employment was a sufficient amount of time and that the three year period unfairly penalized an employee that returned to work after leaving THEIR money in the fund for the time they were not employed with the City. Ward Foster, Actuary for the General Employees Retirement Board has completed his review of the changes and advises that the benefit improvements will have no financial impact on the City's funding requirements. The City's contribution rate is currently the minimum allowed which is 5%. The improvements will change the City's current funding requirement for the plan from 1.1% to 4%. This is also assuming a 6% yearly wage increase for employees. Also included is a February 2000 un-audited excerpt of the Compiled Financial Statement prepared by Allen, Yaglow, and Carr, Inc. indicating that the value of the fund has increased from 5 million dollars in October 1999 to 7 million in February 2000. We have two excellent funds investment management firms in place for our retirement funds. It is the intent of the Board to place the ordinance on the Council Agenda on May 22, 2000, for first reading. If you have any questions, please let me know. Respectfully Submitted. 6 Brenda A. Crosson Chairman 3 Atch. 1. Letter to Definer 2. Letter of no Impact, Foster 3. Excerpt Compiled Financial Statement, Allen Yaglow & Carr w City Of CrEstviEW Chairman Brenda A. Crosson Mr. H. Lee Delmer Christiansen & Dehner, P.A. 63 Sarasota Center Blvd. Suite 107 Sarasota, Florida 34240 Dear Mr. Dehner: General Employees' Retirement Plan Board of Trustees Post Office Drawer 1209 Telephone No. (850) 682 32 Crestview, Florida 32536 Fax No. (850)682-73159 On April 11, 2000, the General Employees' Board of Trustees held a special meeting, and the following items were approved: 1. Plan members chose Alternative Benefit Improvement Option F increasing the multiple from 2.4% to 2.64%. Board recommends adoption of Benefit Improvement Alternative Option F. 2. Approved amendment to plan pertaining to DROP (Deferred Retirement Option Plan) Section 26,2.A. Eligibility to Participate. Board requests that the twelve(12) month limitation period to participate in the DROP be removed allowing members toenter the DROP anytime after becoming eligible. 3. Approved amendment to plan pertaining to Section 1, Definition of Credited Service. Board request change to read as follows: A General Employee may voluntarily leave his ..., and remaining employed for a period of not less than wee -(3) y:-.%ar::r one (I) year. without losing credit.... If the General employee does not remain employed for a period of thr:.e (3) yes one 1'' year upon reemployment .... 4. Board requests attorney to prepare Ordinance with amendments as requested and codifying all ordinances previously adopted as soon as possible. 5. Board requests Actuary to provide an Actuarial -Impact Statement pertaining to requested amendments. Please E -Mail the amended and codified ordinance to me at bcrosson@co.okaloosa.fl.us. The Board will hold a special meeting to approve the ordinance and forward it to the Council for adoption. Sincerely, Brenda A. Crosson 1111111 111111 SENT`3Y: FOSTER & FOSTER, INC.; 941 481 0634 ; MAY -12 1:43PM; PAGE 2/2 TELEPHONE W41/433-5500 FOSTER & FOSTER, INC. 6201 PRESIDENTIAL COURT, S.W.. SUITE 203 FORT MYERS. FLORIDA 33919 May 12, 2000 VIA FAX and MAIL Ms. Kathy L. Austin City of Crestview General Employees' Pension Board P.O. Drawer 1209 Crestview, FL 32536 FACSIMILE (941) 481-0634 Re: City of Crestview General Employees' Retirement Plan Dear Kathy: We have received Brenda Crosson's memo dated May 11, 2000, regarding the substantive amendments to the referenced retirement program and are writing to advise that the formal Actuarial Impact Statement (dated April 13, 2000) is only required to identify those Plan changes that have an impact on the funiing requirements. It is our opinion that the implementation of the DROP program and the changes to the "Credited Service" definition will have no actuarial impact on the funding requirements to the program. If you have any questions regarding this matter, please let us know. Sincerely, Ward V. Foster, Jr. WVF/hj a Enclosures cc: H. Lee Definer, Board Attorney CITY OF CRESTVIEW GENERAL EMPLOYEES' RETIREMENT PLAN ACTUARIAL IMPACT STATEMENT April 13, 2000 Attached hereto is a comparison of the impact on the Total Required Contribution (per Chapter 112, Florida Statutes) resulting from the implementation of the following benefit improvements: 1) Increase the benefit rate for all years of service from 2.40% to 2.64%. The impact of these changes on the annual funding requirements, determined as of October 1, 1999, is as follows: Total Required Contribution % of Total Annual Payroll Expected Member Contributions Balance From City % of Total Annual Payroll Current $131,598 7.5% 112,480 19,118 1.1% Pr000sed $183,167 10.4% 112,480 70,687 4.0% Increase 51,569 2.9% The changes presented herein are in compliance with Part VII, Chapter 112, Florida Statutes and Section 14, Article X of the State Constitution. ‘1441/ y'13Loov Ward V. Foster,! Jr., A.S.A. Enrolled Actuary #99-2808 STATEMENT OF PLAN ADMINISTRATOR The prepared information presented herein reflects the estimated cost of each proposed improvement. oard of Trustees Comparative Summary of Principal Valuation Results Before After 10/1/99 10/1/99 A. Participant Data Number Included Actives 89 89 Service Retirees 12 12 Beneficiaries 1 1 Terminated Vested 6 6 Disability Retirees 0 0 Total 108 108 Total Annual Payroll $1,757,502 $1,757,502 Payroll Under Assumed Ret. Age 1,757,502 1,757,502 Annual Rate of Payments to: Service Retirees $94,141 $94,141 Beneficiaries 2,612 2,612 Terminated Vested 16,181 16,181 Disability Retirees 0 0 B. Assets Actuarial Value Market Value C. Liabilities $5,166,270 5,47E,681 $5,166,270 5,478,681 Present Value of Benefits Active Members Retirement Benefits $3,596,146 $3,889,475 Disability Benefits 159,459 175,405 Death Benefits 34,147 37,562 Vested Benefits : 1,085,310 1,193,841 Refund of Contributions 30,202 30,202 Service Retirees 890,511 890,511 Beneficiaries 32,401 32,401 Terminated Vested 96,790 96,790 Disability Retirees 0 0 Total $5,924,966 $6,346,187 C. Liabilities - (Continued) Liabilities Due and Unpaid $0 $0 Present Value Fut Salaries (AA) 10,462,900 10,462,900. Present Value Fut Salaries (EA) 12,032,700 12,032,700 Present Value of Future Member Contributions 669,626 669,626 Present Value of Future Normal Costs (Entry Age) 1,220,263 1,315,671 Actuarial Accrued Liability 5,393,354 5,591,276 Unfunded Actuarial Accrued 227 084 Liability (UAAL) ' 425,006 Before After 10/1/99 10/1/99 D. Actuarial Present Value of Accrued Benefits Vested Accrued Benefits Inactives $1,019,702 Actives 607,472 Member Contributions 525,020 Total $2,152,194 Non -vested Accrued Benefits 284,109 Total $1,019,702 720,721 525,020 $2,265,443 312,520 $284,109 $312,520 Total Present Value Accrued Benefits $2,436,303 $2,577,963 Increase (Decrease) in Present Value of Accrued Benefits Attributable to: Plan Amendments Assumption Changes $141,660 New Accrued Benefits 0 Benefits Paid 0 Interest 0 Other 0 0 $141,660 E. Pension Cost Normal Cost (with interest) % of Total Annual Payroll* Payment Required to Amortize Unfunded Actuarial Accrued Liability over 26 years (as of 10/1/99) to 2025 % of Total Annual Payroll* Total Required Contribution % of Total Annual Payroll* Expected Member Contributions % of Total Annual Payroll* Expected City Contribution % of Total Annual Payroll* Before After 10/1/99 10/1/99 $116,165 $155,174 6.6 8.8 15,434 0.9 131,598 7.5 112,480 6.4 19,118 1.1 27,993 1.6 183,167 10.4 112,480 6.4 70,667 4.0 * Contributions developed as of 10/1/99 are expressed as a percentage of projected annual payroll at 10/1/99 of $1,757,502 ACTUARIAL ASSUMPTIONS AND FUNDING METHODS Mortality Rates Interest Rates Retirement Age Early Retirement Disability Rates Termination Rates Salary Increases Administrative Exrenses Payroll Growth Assumations 1983 Group Annuity Mortality Table. 8% per year compounded annually, net of investment related expenses. Age 55 and 10 years of service. Mem- bers eligible to retire on the valua- tion date are assumed to work one additional year. Commencing with the earliest Early Retirement Age (50), members are assumed to retire with an immediate subsidized benefit at the rate of 5% per year. See table below (1202). See table below (1312). 6% per year until the assumed retire- ment age; see table below. $22,400 per year 3% per year % Becoming Disabled % Terminating Current Salary as % of Age During the Year During the Year Salary at Ace 55 20 30 40 50 .051% .058 .121 .429 38.6% 19.4 7.3 2.7 Funding Method Frozen Entry Age Actuarial Cost Method 13.0% 23.3 41.7 74.7 EFFECTIVE DATE (Restated Plan) LATEST AMENDMENT CREDITED SERVICE SALARY AVERAGE FINAL COMPENSATION (AFC) NORMAL RETIREMENT Eligibility Benefit Amount Form of Benefit EARLY RETIREMENT Eligibility Benefit Amount DISABILITY Eligibility Benefit Amount SUMMARY OF PLAN PROVISION October 1, 1992. September 27, 1999. Years and fractional parts of years of service with the City as a General Employee. W-2 earnings, excluding lump sum sick and vacation pay, commissions, bonuses, and expense allowances, but including tax exempt, tax sheltered, and tax deferred income. Average Salary during 5 best years of the last 10. Age 55 and 10 years of Credited Serv- ice. 2.4% of Average Final Compensation for each year of Credited Service. In addition, Normal Retirees receive an additional $215 per month for life. Life Annuity (options available). Age 50 and 10 years of Credited Serv- ice. Accrued benefit actuarially reduced. a. 10 years of Credited Service. b. Total and permanent disability prior to Normal Retirement Date. Accrued Benefit, actuarially reduced as for Early Retirement paid for life (with 120 payments guaranteed) or until recovery. ri PRE -RETIREMENT DEATH Not Vested Vested Refund of accumulated Member Contribu- tions, with interest. Accrued benefit paid to beneficiary for 10 years beginning at the member's otherwise Normal Retirement Date (unreduced) or, on a reduced basis, on any earlier date. VESTING (TERMINATION) Less than 10 years Refund of Member Contributions with interest. 10 years or more Accrued benefit payable at the other- wise Early or Normal Retirement Date. or Refund of Member Contributions. CONTRIBUTIONS Employee 6.4% of Salary. City 5% of payroll of covered members plus any remaining amount necessary for payment of Normal (current year's) Cost and amortization of the accrued past service liability over 30 years (per Chapter 112, F) . BOARD OF TRUSTEES a) Two Council appointees, b) Two elected Members of the Plan, and c) Fifth Member elected by the other four and appointed by the Council as a ministerial duty. EXHIBIT A CRESTVIEW GENERAL, EMPLOYEES RETIREMENT PLAN STATEMENT OF PLAN ASSETS, LIABILITIES AND FUND BALANCE 02/29/00 02/28/99 09/30/99 (Unaudited) (Unaudited) (Audited) ASSETS: Cash -demand Prepaid insurance Investments: Key Trust/Boatmen's (market) S 36,640.24 S 58,070.48 S 45,039.01 1,915.32 1,823.26 202.62 7.042.797.91 5.110872. 88 5.433.439.86 7 081.; 47 70,7f6 62 55 478,681.49 LIABILITIES AND FUND BALANCE: Refunds and interest requested by participants S S Accounts payable - - - S Fund balance (Exhibit B) 8,391.89 7.081.353.47 5.170.766.62 5,470,289.60 $7.081.353.47 "7170,766.62 x,478.681.49 See accountant's compilation report.