10-01-2009 Supplemental Actuarial Report - Impact Statement June 2010 Elimination of Lump Sum Payout
R Gabriel Roeder Smith & Company One East Broward Blvd. 954.527.1616 phone
Consultants & Actuaries Suite 505 954.525.0083 fax
Ft. Lauderdale, FL 33301-1827 www.gabrielroeder.com
June 7, 2010
Board of Trustees
Village of North Palm Beach General Employees Retirement Fund
c/o Jane Lerner
Village of North Palm Beach
501 U.S. Highway 1
North Palm Beach, Florida 33408
Re: Actuarial Impact Statement as of October 1, 2009
Elimination of Lump Sums as Optional Forms of Payment
Elimination of One Year Eligibility for Membership
Dear Trustees:
As requested, we have prepared the enclosed Actuarial Impact Statement for the proposed restatement of the
existing Ordinance which, among other things, eliminates lump sums as an optional form of payment, and
eliminates the one year wait for participation in the plan. Please have a Board Member sign the Statement.
Then send the Statement along with a copy of the proposed amendment to Tallahassee.
This report is intended to describe the fmancial effect of the proposed plan changes. No statement in this
report is intended to be interpreted as a recommendation in favor of the changes, or in opposition to them.
The calculations are based upon assumptions regarding future events, which may or may not materialize. They
are also based upon present and proposed plan provisions that are outlined in the report. If you have reason to
believe that the assumptions that were used are unreasonable, that the plan provisions are incorrectly described,
that important plan provisions relevant to this proposal are not described, or that conditions have changed since
the calculations were made, you should contact the author of this report prior to relying on information in the
report.
If you have reason to believe that the information provided in this report is inaccurate, or is in any way
incomplete, or if you need further information in order to make an informed decision on the subject matter of
this report, please contact the author of the report prior to making such decision.
We welcome your questions and comments.
Sincerely yours,
~(1 (~J/~ 8
3 R/°~N°~ • ~ v
J. Stephen Palmquist, ASA Duane Howison, FSA
Senior Consultant and Actuary Consultant and Actuary
JSP/te
Enclosures
VILLAGE OF NORTH PALM BEACH GENERAL EMPLOYEES RETlI2EMENT FUND
Impact Statement -June 7, 2010
Description of Amendment/Restatement Items of Impact
? Eliminate lump sums as an optional form of payment.
? Eliminate the one year eligibility period for plan entry
Description of Amendment/Restatement Items of No Impact
? Change Board compostion
? Establish Board member terms
? Allow employees the choice of participation in the defined contribution plan
? Compliance with IRS regulations
? Compliance with USERRA
? Compliance with HEART
? Clarification of Actuarial Equivalence, Final Average Earnings and commencement of Early
Retirement.
? Compliance with Florida Statutes with respect to investments
? Compliance regarding income deduction orders
? Allowing rollovers into plan for purchase of service.
? Miscellaneous housekeeping items.
Funding Implications of Amendment
An actuarial cost estimate is attached.
Certification of Administrator
I believe the amendment to be in compliance with Part VII, Chapter 112, Florida Statutes and Section 14, Article X of
the Constitution of the State of Florida.
For the Board of Trustees
as Plan Administrator
Gabriel Roeder Smith & Company
SUPPLEMENTAL ACTUARIAL VALUATION REPORT
Plan
Village of North Palm Beach General Employees Retirement Fund
Valuation Date
October 1, 2009
Date of Report
June 7, 2010
Report Requested by
Board of Trustees
Prepared by
J. Stephen Palmquist
Group Valued
All active and inactive members
Plan Provisions Seing Considered for Change
Present Plan Provision Before Change
Members may elect a lump sum distribution as a form of payment.
Members may enter the plan one year after hire. .
Proposed Plan Change
Eliminate lump sum distributions as a form of payment.
Members may enter the plan immediately upon hire.
Participants Affected
Elimination of lump sums: all active and terminated vested members.
Immediate Participation: all new active members.
Actuarial Assumptions and Methods
Same as the Annual Actuarial Valuation as of October 1, 2009, except that the post-retirement
assumed rate of return has been changed from 5.25% to 8.00%. This change has been made because
of the elimination of lump sum distributions.
Some of the key assumptions/methods are:
Investment return: 8.00% per year, net after investment expenses
Salary increase: 5.50% per year
Cost Method: Frozen Entry Age Actuarial Cost Method
Mortality: 1983 Group Annuity Mortality Tables for males and females
Gabriel Roeder Smith & Company
Amortization Period for Any Increase in Actuarial Accrued Liability
30 years
Summary of Data Used in Report
Saine as October 1, 2009 Valuation, except that one additional member was added as being newly
eligible under the new participation provisions; see attached page.
Actuarial Impact of Proposals}
There is a decrease in cost due to the change in plan provisions.
Special Risks Involved With the Proposal That the Plan Has Not Been Exposed to Previously
None
Other Cost Considerations
None
Possible Conflicts With IRS Qualification Rules
None
As indicated below, the undersigned is a Member of the American Academy of Actuaries (MAAA) and meets
the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion herein.
J tephen Palmquist, A ,MAAA, FCA Duane Howison, FSA
Enrolled Actuary No. 08-01560 Enrolled Actuary No. 08-06169
Gabriel Roeder Smith & Company
ANNUAL REQUIItED CONTRIBUTION (ARC)
A. Valuation Date October 1, 2009 October 1, 2009
Proposed Ord. Valuation Change
B. ARC to Be Paid During
Fiscal Year Ending 9/30/2011 9/30/2011
C. Assumed Date of Employer Contrib. Bi-Weekly Bi-Weekly
D. Annual Payment to Amortize
Unfunded Actuarial Liability $ 86,388 $ 237,089 $ (150,701)
E. Employer Normal Cost 375,751 459,996 (84,245)
F. ARC if Paid on the Valuation
Date: D+E 462,139 697,085 (234,946)
G. ARC Adjusted for Frequency of
Payments 480,624 724,967 (244,343)
H. ARC as % of Covered Payroll 15.78 % 24.41 % (8.63)
I. Assumed Rate of Increase in Covered
Payroll to Contribution Year 4.00 % 4.00 °fo
J. Covered Payroll for Contribution Year 3,168,278 3,088,411 79,867
K. REC for Contribution Year: H x J 499,954 753,881 (253,927)
L. REC as % of Covered Payroll in
Contribution Year: K - J 15.78 % 24.41 % (8.63)
Gabriel Roeder Smith & Company
ACTUARIAL VALUE OF BENEFITS AND ASSETS
A. Valuation Date October 1, 2009 October 1, 2009
Proposed Ord. Valuation Change
B, Q_c`.tiiarial Present V ~ All Pro~el:ted
aiue vi u
Benefits for
1. Active Members
a. Service Retirement Benefits $ 9,054,857 $ 11,374,885 ($2,320,028)
b. Vesting Benefits 540,840 908,665 (367,825)
c. Disability Benefits - - -
d. Preretirement Death Benefits 233,818 329,780 (95,962)
e. Return of Member Contributions 5,782 4,532 1,250
£ Total 9,835,297 12,617,862 (2,782,565)
2. Inactive Members
a. Service Retirees & Beneficiaries 121,011 121,011 -
b. Disability Retirees - - -
c. Terminated Vested Members 1,452,713 1,452,713 -
d. Total 1,573,724 1,573,724 -
3. Total for All Members 11,409,021 14,191,586 (2,782,565)
C. Actuarial Accrued (Past Service)
Liability per GASB No. 25 8,328,331 10,456,011 (2,127,680)
D. Plan Assets
1. Market Value 5,208,323 5,208,323 -
2. Actuarial Value 6,048,808 6,048,808 -
E. Actuarial Present Value of Projected
Covered Payroll 26,948,832 26,025,665 923,167
F. Actuarial Present Value of Projected
Member Contributions 1,390,957 1,335,567 55,390
G. Funded Ratio: D2 / C 72.6% 57.9% 14.7%
Gabriel Roeder Smith & Company
CALCULATION OF EMPLOYER NORMAL COST
A. Valuation Date October 1, 2009 October 1, 2009
Proposed Ord. Valuation Change
B. Actuarial Present Value of Projected
Benefits $ 11,409,021 $ 14,191,586 $ (2,782,565)
C. Actuarial Value of Assets 6,048,808 6,048,808 0
D. Unfunded Actuarial Accrued Liability 811,721 2,939,401 (2,127,680)
E. Actuarial Present Value of Projected
Member Contributions 1,390,957 1,335,567 55,390
F. Actuarial Present Value of Projected
Employer Normal Costs: B-C-D-E 3,157,535 3,867,810 (710,275)
G. Actuarial Present Value of Projected
Covered Payroll 26,948,832 26,025,665 923,167
H. Employer Normal Cost Rate: F/G 11.72 % 14.86 % (3.14)
I. Covered Annual Payroll 3,046,421 2,969,626 76,795
J. Employer Normal Cost: H x I 357,041 441,286 (84,245)
K. Assumed Amount of Administrative
Expenses 18,710 18,710 0
L. Total Employer Normal Cost: J+K 375,751 459,996 (84,245)
M. Employer Normal Cost as % of
Covered Payroll 12.33 % 15.49 % (3.16)
Gabriel Roeder Smith & Company
PARTICIPANT DATA as of October 1, 2009
Proposed Ord Valuation
ACTIVE MEMBERS
Number 63 62
Covered Annual Payroll $ 3,046,421 $ 2,969,626
Average Annual Payroll $ 48,356 $ 47,897
Average Age 47.5 47.6
Average Past Service 11.6 11.8
Average Age at Hire 35.9 35.8
RETIREES & BENEFICIARIES & DROP
Number 7 7
Annual Benefits $ 29,649 $ 29,649
Average Annual Benefit $ 4,236 $ 4,236
Average Age 73.0 73.0
DISABILITY RETIREES
Number 0 0
Annual Benefits $ 0 $ 0
Average Annual Benefit $ 0 $ 0
Average Age 0.0 0.0
TERMINATED VESTED MEMBERS
Number 50 50
Annual Benefits $ 300,474 $ 300,474
Average Annual Benefit $ 6,009 $ 6,009
Average Age 52.1 52.1
Gabriel Roeder Smith & Company