2016-12-29 Milliman Actuarial Report_PF Retirement Fund0Milliman
December 29, 2016
PERSONAL & CONFIDENTIAL
Ms. Sarnia Janjua
Interim Village Manager
Village of North Palm Beach
501 U.S. Highway 1
North Palm Beach, Florida 33408
Re: Review of Proposed Changes to Fire and Police Retirement Fund
Dear Sarnia:
15800 Bluemound Road
Suite 100
Brookfield, WI 53005-6043
USA
Main +1262 784 2250
Fax +1 262 923 3687
www.milliman.com
This letter provides the results of the requested review of the proposed changes to the Fire and Police
Retirement Fund ("Fund") for the Village of North Palm Beach ("Village").
EXECUTIVE SUMMARY
The proposed changes by the fire and police unions are expected to result in higher contributions
and greater financial risk for the Village.
The expected Village costs for both the current plan provisions and the proposed changes will
be even higher under our best estimate assumptions. This is mainly driven by the Florida
mandated mortality assumptions that must be used going forward and a lower investment return
to reflect current economic conditions.
The proposed changes in aggregate will cost more than the expected increase in state aid.
The proposed DROP feature is not explicitly included in the analysis prepared by the current
fund actuary and could increase costs and risk further.
We note that recent plan design trends in public pension plans have been to reduce, rather than
increase future benefits.
REVIEW OF REQUESTED CHANGES
Our understanding of the changes requested by the fire union are summarized below. We
understand that the police union has requested the same changes, but has not committed to
increasing their contributions.
o Increase employee contribution from 5% to 8% effective April 1, 2017
o Increase benefit accrual rate (multiplier) from 2.5% to 3% retroactive to October 1, 2015
o Maximum benefit capped at 100% of Average Final Compensation
o Define Normal Retirement Date as the earlier of
Milliman This work product was prepared solely for the Village of North Palm Beach for the purposes described herein and may not be
appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who
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December 29, 2016
Page 2
• Attaining age 52 regardless of years of credited service; or
• The completion of 25 years of service regardless of age
El Create 5 year DROP
• Require distribution of DROP money Win 180 days of separation
El All State Aid under Section 175/185 of Florida Statutes to be used by Village to pay down
the Village's obligation
Comments
The following comments pertain to both the police and fire proposals.
The requested changes will likely lead to higher Village contributions under the actuarial
assumptions used by the fund actuary
El Village contributions are determined by the fund actuary as the total required
contributions less expected employee contributions less expected State Aid
El The increase in the total required contributions for the package of requested changes is
likely to exceed the sum of the proposed increase in employee contributions plus the
expected increase in State Aid
The requested changes will lead to greater risk for the Village.
El For example, if future investment returns are less than what the fund actuary assumes,
the total required contribution will increase.
El However, neither member contributions nor State Aid will increase due to the
unfavorable investment returns.
El Because the requested changes increase benefits, the Village bears greater risk.
The expected Village costs would be higher under our best estimate assumptions
El The mandated mortality assumptions that will be required for the October 1, 2016
actuarial valuation will produce higher Village costs
El Our best estimate economic assumptions include an investment return assumption of
6.15% and an inflation assumption of 2.30%. Reflecting these assumptions consistently
in the actuarial valuation will produce higher Village contributions
According to the fund actuary's July 7, 2015 actuarial impact letter, the DROP provision is not
explicitly included in the analysis.
El Our experience has been that adding a DROP provision has an impact on both the cost
of providing benefits and on the costs to administer the plan
El We recommend that details of the DROP provision be specified, actuarial assumptions
be made about utilization and duration of DROP benefits, and the costs of adding the
DROP provisions be explicitly included in the actuarial cost estimates.
Plan design trends in public pension plans have been to reduce, not increase future benefits
We did not identify any additional questions for police and fire with respect to their proposals.
Milliman This work product was prepared solely for the Village of North Palm Beach for the purposes described herein and may not be
appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who
receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when
reviewing Milliman's work product.
December 29, 2016
Page 3
Ranking of Requested Changes
Based on our experience, the following is our general financial impact ranking, from highest to
lowest cost, of the changes proposed by police and fire. An actuarial valuation of the changes
may have different results, but that was not requested for this project.
El Increase benefit accrual rate (multiplier) from 2.5% to 3% retroactive to October 1, 2015
El Maximum benefit capped at 100% of Average Final Compensation
El Define Normal retirement Date as the earlier of
• Attaining age 52 regardless of years of credited service; or
• The completion of 25 years of service regardless of age
El Create 5 year DROP
• Require distribution of DROP money Win 180 days of separation
The requested changes affect both the amount of pension benefits and the timing of when pension
benefits are paid. We would expect retirement behavior to change if the requested changes are made to
the Plan. We note that any increase in the employee contribution rates will reduce the Village's obligation.
REVIEW OF OCTOBER 1, 2015 ACTUARIAL VALUATION — CURRENT PLAN DESIGN
The October 1, 2015 actuarial valuation report prepared by the fund actuary includes both contribution
requirements and information for the Village's financial statements.
Table 1 below shows the contribution requirements calculated by the fund actuary.
Table 2 below shows the fund actuary's development of the net pension liability that is required
by GASB 68 to be reported as a balance sheet liability on the Village's financial statements.
Table 3 below shows the key actuarial assumptions used by the fund actuary in the October 1,
2015 actuarial valuation report.
Total Required Contribution Rate 29.02%
Member Contribution Rate 4.38%
Expected State Aid 5.09%
Net Village Contribution Rate 19.55%
Total Pension Liability $21,852,818
Market Value of Assets 17,716,664
Net Pension Liability(') $ 4,136,154
Net Pension Liability calculated using 7.90% discount rate. The actuarial valuation report also includes a
Net Pension Liability of $7,202,336 calculated using a 6.90% discount rate.
Milliman This work product was prepared solely for the Village of North Palm Beach for the purposes described herein and may not be
appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who
receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when
reviewing Milliman's work product.
December 29, 2016
Page 4
Investment Return 7.90%
Salary Increases 6.00%
Inflation 3.00%
Cost of Living Adjustments 3.00%
Mortality
- Base mortality RP -2000 for males and females as appropriate
- Mortality improvement None
Comments
Analysis of Actuarial Valuation Assumptions Used
Effective January 1, 2016, Section 112.63(1)(f) of Florida Statutes require that plans must use
the mortality tables and methodology employed by the Florida Retirement System ("FRS") in one
of its two most recently published actuarial valuation reports. It is our understanding that the
valuation report as of October 1, 2016 will be the first report to which this requirement applies.
o The mortality tables and methodology employed by the FRS for healthy participants are
described below:
• For males, RP -2000 Annuitant Male Mortality Table with 10% White Collar / 90%
Blue Collar Adjustment, with fully generational mortality improvements projected
to each future decrement date with Scale BB.
• For females, RP -2000 Annuitant Female Mortality Table with White Collar
Adjustment, with fully generational mortality improvements projected to each
future decrement date with Scale BB.
o The required mortality tables and methodology could have been used in both the October
1, 2015 actuarial valuation and the analysis of the benefit enhancements.
o The impact of the revised mortality assumption is likely to be a decrease in the funded
status and an increase in the required contribution rate.
Economic Assumptions
o Based on our analysis as detailed below, our best estimate is an assumption of 6.15%
for expected investment returns net of plan investment expenses. The fund actuary used
an assumption of 7.90% in the October 1, 2015 actuarial valuation. The Village should
consider using this 6.15% Net Investment Return assumption as the interest discount to
determine Village costs in the review of both the current and proposed benefit changes.
o Milliman's capital market assumptions include an assumption of 2.30% for future
inflation. The fund actuary used an assumption of 3.00% in the October 1, 2015 actuarial
valuation. The Village should consider using salary increase and cost of living adjustment
assumptions that are 70 basis points lower than the assumptions used by the fund
actuary in the October 1, 2015 actuarial valuation. This difference is to reflect the
different inflation assumptions between the fund actuary's assumption of 3.00% and
Milliman's capital market assumptions of 2.30%:
• The fund actuary used a salary increase assumption of 6.00% in the October 1,
2015 actuarial valuation. The Village should consider using a salary increase
assumption of 5.30%.
Milliman This work product was prepared solely for the Village of North Palm Beach for the purposes described herein and may not be
appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who
receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when
reviewing Milliman's work product.
December 29, 2016
Page 5
• The fund actuary used a cost of living adjustment assumption of 3.00% in the
October 1, 2015 actuarial valuation. The Village should consider using a cost of
living adjustment assumption of 2.30%.
El The overall net impact of the revised economic assumptions is likely to be a decrease in
the funded status and an increase in the required contribution rate.
• The decrease in the net investment return assumption is likely to be a decrease in
the funded status and an increase in the required contribution rate.
• The decrease in the salary increase assumption is likely to be an increase in the
funded status. The salary increase assumption is likely to decrease both the
present value of future benefits and the present value of future salary. These two
items have opposite effects on the required contribution rate. Without further
analysis that is beyond the scope of this review, we are not able to provide
guidance on whether the reduction in the salary increase assumption will likely
increase or decrease the required contribution rate.
El We noted a change to the salary increase assumption to 5.30% after the 70 basis point
reduction due to the differences in the future inflation assumption.
El Generally speaking, the components of the salary increase assumption are inflation,
productivity, and merit. We typically see a 1 % assumption for productivity. Therefore, the
merit component of the salary increase assumption is 2.00% (= 5.30% - 2.30% - 1.00%).
El The review of the merit component of the salary increase assumption is outside the
scope of our assignment.
El The Village may want to consider whether further adjustments to the salary increase
assumption are warranted based on the Village's current pay practices and expectations
of future salary increases for police and fire participants.
• The decrease in the cost of living adjustment assumption is likely to bean increase
in the funded status and a decrease in the required contribution rate.
We did not identify any other questions for the actuary other than the points above.
The Village may want to ask the current actuary to provide support for the investment return assumption,
cost of living adjustment and salary increases.
REVIEW OF FUND ACTUARY'S COST ESTIMATES FOR PROPOSED POLICE AND FIRE CHANGES
Current Plan Provisions
Projected pension benefits reflect the current pension plan provisions as defined in Village Ordinances.
Current plan provisions are dependent on the member's date of hire. Outlined below is a summary of
plan provisions included in this analysis.
Average Final Compensation: Average over the highest five best years of the 10 years
immediately preceding retirement.
Milliman This work product was prepared solely for the Village of North Palm Beach for the purposes described herein and may not be
appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who
receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when
reviewing Milliman's work product.
December 29, 2016
Page 6
Normal Retirement
El Eligibility: Earlier of (1) age 55 and (2) age 52 and 25 years of service.
El Benefit:
• Larger of (a) and (b) below:
• (a) 2.5% of Average Monthly Earnings per year of service subject to a maximum
of 60% of Average Monthly Earnings.
• (b) 2.0% of Average Monthly Earnings per year of service.
Requested Police and Fire Benefit Enhancements
The fund actuary has provided actuarial analysis of 9 variations of benefit enhancements in letters dated
July 7, 2016, July 11, 2016, and July 25, 2016. The fund actuary did not use unique labels for each of
these 9 scenarios in the three separate letters. For the Village's convenience, we have assigned a
scenario number to each variation. Outlined below is a summary of the benefit enhancements the current
actuary included in each scenario.
Scenario 1:
o Increase the accrual rate from 2.50% to 2.75%.
o Increase the maximum percentage of Average Monthly Earnings from 60% to 75%.
o Implement a Deferred Retirement Option Plan (DROP).
Scenario 2:
o Increase the accrual rate from 2.50% to 3.00%.
o Increase the maximum percentage of Average Monthly Earnings from 60% to 75%.
o Implement a DROP.
Scenario 3:
o Change the retirement eligibility from the earlier of (1) age 55 and (2) age 52 and 25
years of service to the earlier of (1) age 52 or (2) 25 years of service.
o Implement a DROP.
Scenario 4
o Increase the accrual rate from 2.50% to 2.75%.
o Increase the maximum percentage of Average Monthly Earnings from 60% to 75%.
o Change the retirement eligibility from the earlier of (1) age 55 and (2) age 52 and 25
years of service to the earlier of (1) age 52 or (2) 25 years of service.
o Implement a DROP.
Scenario 5
o Increase the accrual rate from 2.50% to 3.00%.
o Increase the maximum percentage of Average Monthly Earnings from 60% to 75%.
o Change the retirement eligibility from the earlier of (1) age 55 and (2) age 52 and 25
years of service to the earlier of (1) age 52 or (2) 25 years of service.
o Implement a DROP.
Scenario 6
o Increase the accrual rate from 2.50% to 2.75%.
Milliman This work product was prepared solely for the Village of North Palm Beach for the purposes described herein and may not be
appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who
receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when
reviewing Milliman's work product.
December 29, 2016
Page 7
Scenario 7
El Increase the accrual rate from 2.50% to 3.00%.
Scenario 8
El Increase the accrual rate from 2.50% to 2.75%.
El Increase the maximum percentage of Average Monthly Earnings from 60% to 100%.
Scenario 9
o Increase the accrual rate from 2.50% to 3.00%.
o Increase the maximum percentage of Average Monthly Earnings from 60% to 100%.
The Table 4 below summarizes the fund actuary's analysis of the requested benefit enhancements:
Comments
Both the increase in Village contribution dollars and net pension liability would be higher after
reflecting (1) the mortality table and methodology used by the Florida Retirement System, (2) our
recommended changes to the economic assumptions, or (3) the combined impact of mortality
and economic assumptions.
The fund actuary's 7/7/2016 letter indicates there is approximately $67,000 per year in additional
state aid to assist with plan funding.
El The fund actuary's letter does not indicate how the $67,000 was determined.
Except for Scenario 6, the requested benefit enhancements increase the Village
contribution dollars more than the increase in state aid.
Absent significant increases in member contribution rates, the Village would be paying
more in pension costs than the increase in the state aid.
Milliman This work product was prepared solely for the Village of North Palm Beach for the purposes described herein and may not be
appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who
receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when
reviewing Milliman's work product.
Table 4: Actuary's Cost
Estimates
Scenario
(Milliman Label)
Estimated
GASB 67
Funded Ratio
Total Required
Contribution
Rate
Member
Contribution
Rate
State
Contribution
Dollars
Village
Contribution
Rate
Village
Contribution
Dollars
Baseline
81.1%
29.02%
4.38%
$230,695
19.55%
$886,389
1
74.3%
36.48%
4.38%
$230,695
27.01%
$1,224,623
2
72.1%
39.45%
4.38%
$230,695
29.98%
$1,359,282
3
75.0%
40.76%
4.38%
$230,695
30.57%
$1,212,928
4
69.4%
49.29%
4.38%
$230,695
39.10%
$1,551,373
5
66.3%
54.91%
4.38%
$230,695
44.72%
$1,774,358
6
80.0%
30.32%
4.38%
$230,695
20.85%
$945,331
7
78.7%
31.81%
4.38%
$230,695
22.34%
$1,012,887
8
76.5%
34.49%
4.38%
$230,695
25.02%
$1,134,397
9
75.0%
36.72%
4.38%
$230,695
27.25%
$1,235,504
Comments
Both the increase in Village contribution dollars and net pension liability would be higher after
reflecting (1) the mortality table and methodology used by the Florida Retirement System, (2) our
recommended changes to the economic assumptions, or (3) the combined impact of mortality
and economic assumptions.
The fund actuary's 7/7/2016 letter indicates there is approximately $67,000 per year in additional
state aid to assist with plan funding.
El The fund actuary's letter does not indicate how the $67,000 was determined.
Except for Scenario 6, the requested benefit enhancements increase the Village
contribution dollars more than the increase in state aid.
Absent significant increases in member contribution rates, the Village would be paying
more in pension costs than the increase in the state aid.
Milliman This work product was prepared solely for the Village of North Palm Beach for the purposes described herein and may not be
appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who
receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when
reviewing Milliman's work product.
December 29, 2016
Page 8
According to the fund actuary's July 7, 2015 actuarial impact letter, the DROP provision is not
explicitly included in the analysis.
El Our experience has been that adding a DROP provision has an impact on both the cost
of providing benefits and on the costs to administer the plan
El We recommend that details of the DROP provision be specified, actuarial assumptions
be made about utilization and duration of DROP benefits, and the costs of adding the
DROP provisions be explicitly included in the actuarial cost estimates.
The Village may also want to have the current actuary re -run the valuation based on Milliman's best
estimates of actuarial and investment assumptions as identified in this letter.
DEVELOPMENT OF BEST ESTIMATE RATE OF NET INVESTMENT RETURN
Our best estimate investment return assumption of 6.15% for the Fund reflects the target asset allocation
as of September 30, 2016 and Milliman's capital market assumptions as of June 30, 2015. In a pension
plan, the outflow of benefit payments and expenses are financed over time by the inflow of contributions
and resulting investment income. The investment return assumption is used to determine the present
value of Fund liabilities and the portion of future required benefit payments and expenses that is expected
to be paid from investment income versus future employer contributions.
Fund Asset Allocation
The table 5 below shows the asset class, the target policy weighting as of September 30, 2016, and the
indices used by Milliman in this analysis.
Asset Class Target Policy Weighting Index
Domestic Fixed Income 30% Barclays Aggregate
Domestic Equity 50% Russell 3000
International Equity 10% MSCI ACWI xUS NR
Real Estate 10% NCREIF Property
The Target Policy Weightings are based on the information provided by the Bogdahn Group, the investment
advisor used by the Fund.
Investment Return Model
Milliman develops expected long-term capital market returns based on current yields and valuation levels,
published surveys of expert forecasts of real GDP growth and inflation, and historical risk measures of
asset class return volatility and covariance. These capital market assumptions underlie the "building
block" method used in our estimate of expected return. The building block method in our model considers
asset allocation, expected return and variance of each class, and correlation and covariance between
asset classes. We then analyze the output ranges and adjust for expected investment expenses in order
to arrive at our recommended investment return assumption. Due to the very low starting level of interest
rates in the current environment, the expected returns reflect increasing rates over the next 10 years
based on surveys of economists.
Milliman This work product was prepared solely for the Village of North Palm Beach for the purposes described herein and may not be
appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who
receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when
reviewing Milliman's work product.
December 29, 2016
Page 9
Model Output — Net Return Basis
In addition to the expected geometric mean, we identify the 25th and 75th percentile expected returns.
Table 6 below shows Milliman's expected 25th, 50th and 75th percentile returns for a 10, 30, and 50 year
period based on our ASOP27 model as of June 30, 2015. The percentile return refers to the likelihood
that we expect the actual return over the period to be less than the stated result. For example, we estimate
that there is a 25% probability that over the next 50 years the return will be less than 5.17%. Underlying
our expected investment return assumption is a 2.30% assumption for long-term average inflation.
Investment management fees and investment consulting expenses reduce the gross return available to
the Village for use in paying benefits. We have applied a 10 basis point reduction to account for
investment management fees in developing the table below. The 10 basis point reduction is an estimate
of the level of fees associated with passive investments in the equity and fixed income asset classes (the
expected returns used for alternative asset classes are net of expected fees). Actively managed
investments in equity and fixed income asset classes would likely come with higher manager fees, but
would not be expected to be incurred over the long run without enough positive outperformance to cover
the difference. Expected administrative expenses are added to the normal cost on a year -by -year basis
in developing the recommended employer contribution and are not reflected in the expected returns
below.
10 Year Period 30 Year Period 50 Year Period
75th Percentile Return 7.82% 7.34% 7.15%
50th Percentile Return 5.58 6.06 6.16
25th percentile return 3.39 4.79 5.17
Best Estimate Rate of Net Investment Return
Due to the long-term nature of the pension obligation, we look at results compounded over a 50 year
period to develop a best estimate investment return assumption. The current 7.90% assumption exceeds
the third quartile of our results over a 50 year period, so we view this assumption as optimistic over a
very long time horizon. In other words, it is more likely that investment losses will occur in the future as
opposed to investment gains relative to the 7.90% long-term return assumption. That means employer
contributions are expected to increase over time as investment returns fall short of optimistic expectations.
Based on the above results we believe that an assumption of 6.15% would better reflect expected
investment returns net of plan investment expenses and provide an unbiased expectation of future
results. In other words, we expect the net investment return will be above the net return of 6.15% fifty
percent of the time, and below the net investment return fifty percent of the time.
The Village should consider using this 6.15% Net Investment Return assumption as the interest discount
to determine Village costs in the review of both the current and proposed benefit changes. Reducing the
assumed rate of return from 7.90% to 6.15% means lower projected investment income. That means
more of the expected future outflows will need to be financed by future employer contributions. In other
words, a decrease in the investment return assumption causes an increase in the plan's liability and
annual accruals. Should the Fund have net earnings in excess of 6.15% in future years, cash costs would
Milliman This work product was prepared solely for the Village of North Palm Beach for the purposes described herein and may not be
appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who
receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when
reviewing Milliman's work product.
December 29, 2016
Page 10
decrease over time as investment gains materialize and are incorporated into future years' valuation
results. The opposite holds true as well.
DOCUMENTS REVIEWED
The reports used for this analysis are shown below.
9/30/2016 performance report by the Bogdahn Group
9/30/2015 audited financial statements by plan auditor
9/30/2015 GASB 67 and 68 report dated 2/4/2016 prepared by fund actuary
10/1/2015 Actuarial Valuation Report dated 2/15/2016 prepared by fund actuary
Summary Plan Description dated May 2012
7/7/2016 Actuarial Analysis of Benefit Enhancements prepared by fund actuary
7/11/2016 Actuarial Analysis of Benefit Enhancements prepared by fund actuary
7/25/2016 Actuarial Analysis of Benefit Enhancements prepared by fund actuary
. - A=F_A&IF_1►1I1IILViIMir_llI:s]ZK
This analysis is based on a high level limited scope review of the current actuarial assumptions and most
recent actuarial valuation and is limited to the discount rate, salary increase, cost of living adjustments,
and mortality assumptions. In performing this analysis, we relied on data and other information, provided
by the Village and the Fund. We have not audited or verified this data and other information. If the
underlying data or information is inaccurate or incomplete, the results of our analysis may likewise be
inaccurate or incomplete.
Milliman is neither a law firm nor an audit firm, and is not providing legal or accounting advice to the
Village. Those functions are being performed by the Village staff members and by other professional
advisors that the Village has retained. Milliman reviewed and commented on the requested benefit
enhancements for the Village's review using our best estimates. Milliman is not recommending policy or
providing any opinion with respect to any of the proposed benefit programs. All policy decisions are made
by the Village.
Future actuarial measurements may differ significantly from the current measurements due to such
factors as the following: plan experience differing from that anticipated by the economic or demographic
assumptions; changes in economic or demographic assumptions; increases or decreases expected as
part of the natural operation of the methodology used for these measurements (such as the end of an
amortization period or additional cost or contribution requirements based on the plan's funded status);
and changes in plan provisions or applicable law. Due to the limited scope of our assignment, we did not
perform an analysis of the potential range of future measurements.
This analysis was prepared exclusively for the Village of North Palm Beach for a specific and limited
purpose. It assumes a high level of knowledge concerning Fund operations, and uses Fund actuarial
results, which Milliman has not audited. It is not for the use or benefit of any third party for any purpose.
Milliman This work product was prepared solely for the Village of North Palm Beach for the purposes described herein and may not be
appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who
receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when
reviewing Milliman's work product.
December 29, 2016
Page 11
Any third party recipient of Milliman's work product should not rely upon Milliman's work product, but
should engage qualified professionals for advice appropriate to its own specific needs.
The intent of our engagement with the Village is to provide a high level limited review of the current
valuation and proposed benefit enhancements to help the Village better understand the potential
implications of the proposed police and fire changes, as well as the assumptions used in the latest
actuarial valuation. The information in this letter may not be appropriate for other purposes, so please do
not distribute it to any third parties without Milliman's written permission. Milliman does not intend to
benefit any third party through this work.
CERTIFICATION
On the basis of the foregoing we hereby certify that, to the best of our knowledge and belief, this report
is complete and accurate and has been prepared in accordance with generally recognized and accepted
actuarial principles and practices which are consistent with the principles prescribed by the Actuarial
Standards Board (ASB) and the Code of Professional Conduct and Qualification Standards for Public
Statements of Actuarial Opinion of the American Academy of Actuaries.
QUALIFICATIONS
We, Timothy J. Herman, FSA, and John M. Chmielewski, FSA, are actuaries for Milliman, Inc. We are
members of the American Academy of Actuaries and of the Society of Actuaries, and meet the Qualification
Standards of the American Academy of Actuaries to render the actuarial opinion contained herein.
Sincerely,
I,, . .
Timothy J. Herman, FSA, EA, MAAA
Principal and Consulting Actuary
)John M. Chmielewski, FSA, EA, MAAA
Consulting Actuary
TJH/JMC/cmw
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Milliman This work product was prepared solely for the Village of North Palm Beach for the purposes described herein and may not be
appropriate to use for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who
receive this work. Milliman recommends that third parties be aided by their own actuary or other qualified professional when
reviewing Milliman's work product.