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HOME OF PELICAN ISLAND
PUBLIC NOTICE
POLICE PENSION BOARD
The Police Pension Board will hold its quarterly meeting Tuesday, June 16, 2015 at 10:00 a.m. in tite
City Council Chambers, City Hall, 1225 Main St. Sebastian, Florida.
AGENDA
CALL. TO ORDER
PLEDGE OF ALLEGIANCE
ROLL CALL
AGENDA MODIFICATIONS
UNFINISHED BUSINESS
A. Approval of Minutes from May 28, 2015
Steve Marcinik, Chairman
Steve Marcinik, Chairman
Steve Marcinik, Chairman
Steve Marcinik, Chairman
Steve Marcinik, Chairman
B. Actuarial Cost Study on Change in Expected hate of Return Doug Lozen, Foster and Foster
C. Custodian Services - Responses to Request for Proposals H. Lee Definer, Pension Attorney
D. Discussion of Investment Policy and Asset Allocation Board Members and Scott Owens, Morgan Stanley
PUBLIC INPUT
NEW BUSINESS
A. Approval of Invoices:
1. Municipal Code Corporation - $1,222.07
Invoice on Updating City Code for Pension Ordinance
B. Approval of Retirement Benefit for Officer Paul Graves
C. Contractual Agreement with Highland Capital Services
D. Quarterly Review of Investment Portfolio Performance
E. Quarterly Fund Review
F. Legal Updates
1. Summary Plan Description
2. Senate Bill 172
3. Other Matters
G. Next Quarterly Meeting: September 15, 2015
ADJOURN
Ken Kill -ore
.Administrative Services Director(Pension Board Member
City of Sebastian
Steve Marcinik, Chairman
Ken Killgore, Board Member
Bruce Hoffman, Board Member
Scott Owens, Morgan Stanley
Grant McMurry, Highland Capital Services
H. Lee Denner, Pension Attorney
Please note: In accordance with Florida Statue 286.0105: any person who desires to appeal any decision at this meeting will need a
record of the proceedings and for this purpose may need to ensure that a verbatim record of the proceedings is made which includes the
testimony and evidence upon which the appeal is based.
In accordance with Florida Statute 286.26: Persons with disabilities needing assistance to participate in any of these proceedings should
contact the Administrative Services Department at 1225 Main Street. Sebastian, Florida 32955, or telephone 772-388-8205.
I
DRAFT
Sebastian Police Pension Board Minutes
May 28, 201510:00 a.m.
Sebastian City Council Chambers
TYPE OF MEETING: Special
ATTENDEES: Board Members:
Steve Marcinik, Chair
Robert Zomok, Secretary
Bruce Hoffman
Ken Killgore
Richard Snell
EXCUSED:
CONSULTANTS:
SUBJECT
CALL TO ORDER.
10:07 a.m. There being a quorum present, Steve Marcinik, called the
meeting to order.
Public Comment:
None
SUBJECT
APPROVAL OF MINUTES
10:05 a.m. Richard Snell motioned the minutes of the March 17, 2015
Board Meeting be approved. Motioned seconded by Bruce Hoffman and
passed unanimously.
SUBJECT
OLD BUSINESS
2
None
SUBJECT
NEW BUSINESS
Approval of Invoices:
Morgan Stanley $3,375.00
Salem Trust $2,275.00
Christiansen & Dehner $2,955.79
Bob Zomok motioned to approve payment of the above invoices. Bruce
Hoffman seconded the motion and it passed unanimously.
Review of 2014 Annual State Report
Some minor errors were found during a local review of the data as well
as a few found during the State Review. All errors have been corrected
and the report accepted by the State.
Review of Current Investment Policy/Discussion of possible changes to
Investment Policy Statement (IPS)
During the last quarterly meeting, the Board came to the conclusion
that we needed to discuss potential changes to the Plan since the time to
make some of the anticipated changes is when the Plan is financially
sound.
Two primary areas of consideration are lowering the investment return
target to 7.6% and re -writing the Investment Policy Statement. This
meeting was to develop a proposed plan of action to revise the IPS.
We have proposed revisions submitted by Scott Owens in March 2013.
The review of that document was postponed until the revised Ordinance
was passed by Sebastian City Council. The Ordinance was accepted.
Scott Owens has indicated that Greystone Company can do more than
continue in their current oversight role. Grant McMurry has indicated
that his company, ICC, has been sold to Highland Capital Management.
Our assumption is they may be able to better serve our Board if they
have direction from us.
After a significant discussion, we came to the conclusion that our first
priority is to revise the current IPS.
3
Once this is accomplished, we can charge ICC/Highland Management
with an expectation of improved performance vis-a-vis the target
investment return of 7.6%. Heretofore, they have consistently fallen
below our targets as demonstrated by the reports from Scott Owens.
We can also determine the Asset Allocation Strategy we want to use
moving forward.
The Board then determined the following actions:
Have a separate, special meeting with Scott Owens and the Board
to revise the IPS.
Once revised, determine our Asset Allocation Strategy.
At the next quarterly meeting, ask Grant if Highland Capital can
do both Value and Growth management.
Obtain a copy of the contract we have now with ICC/Highland
Capital. (Since this change is recent, we should entertain an
updated contract.)
As a side issue, the Board is unaware of any contractual
relationship with Christiansen & Delmer. We need to ask Lee
Dehner about this item.
Ken Killgore distributed copies of the Request For Proposal responses.
At the last quarterly meeting, the Board directed Lee Dehner to draft
and issue the RFP. The RFP was initiated via Salem Trust receiving a
"qualified" financial report. Scott Owens is doing "due diligence"
relative to this matter as well.
Board Members are to review the RFP for discussion at our June
meeting.
4
SUBJECT
ADJOURNMENT
11:45 AM Having no further business for discussion, Chairman Steve
Marcinik adjourned the meeting.
Next regularly scheduled meeting is June 16, 2015, at 10:00 a.m.
in the Sebastian City Council Chambers.
Respectfully submitted,
, Bob Zomok, Secretary
Municipal Code Corporation
P.O. Box 2235
Tallahassee, FL 32316
(850) 576-3171
/ Vua LVJ I lCl
SEBASTIAN, FLORIDA
1225 MAIN STREET
SEBASTIAN, FL 32958
INVOICE"
Date: 5/21/2015
PO Number:
Invoice #: 255995
'10-4287
FEIN 59-064902£
Qty _OY4 Description Unit Price TOTAL
62 SUPPLE=MENT PAGES
$ 19.94
$1,236.28
2 NO CHARGE PAGES
$-
- -- - $0.00
1 FREIGHT
i
$ 10.79
$10,79
-1 LESS CRE=DIT ON ACCOUNT
I
I $ 25.00
(t25.00
40
40 COPIES OF SUPPLEMENT NO 58
TO THE CODE OF ORDINANCES
- - ... -
Payment Details - Due Upon Receipt
C' Please Remit Payment To:
P.O. Box 2235
Tallahassee
FL 32316
sub -Total $1,222.07
Sales Tax'
TOTAL $1,222.07
Kenneth Kill ore
From: Georgette Neama <Georgette.Neama@faster-foster.com>
Sent: Tuesday, June 09, 2015 2:24 PM
To: Kenneth Killgore
Subject: RE: Graves
Hi Ken,
This calculation is still in review. I have checked in with the reviewer and he has informed me that it should be ready in
the next couple days if not by the end of the week.
Thanks for checking in.
Regards,
Georgette Neama, Actuarial Analyst
FOSTER & FOSTER
13420 Parker Commons Blvd
Suite 104
foot Myers, FL 33912
239.433.5500 Phone
239.481.0634 Fax
geor�-,etteCei;.taster•-foster.com
www foster-toster.corn.
From: Kenneth Killgore [mailto:kkill ore Ci ofSebastian.or ]
Seat: Tuesday, June 09, 2015 11:29 AM
To: Georgette Neama
Subject: FW: Graves
Hi Georgette,
Mr. Graves is wondering why his calculations haven't yet been received.
Any idea when this will be sent?
Ken Killgore
Administrative Services Director
City of Sebastian
From: Kenneth Killgore
Sent: Monday, June 01, 2015 8:35 AM
To: 'Georgette Neama'
Subject. RE: Graves
The accrual maximum on the April request form was incorrect, as somehow we only showed sick leave hours versus
dollars and did not include the vacation amount. We apologize for this error.
I
In any case, we believe the $18,484.14 on the most recent request is the correct lump -sum amount, which should be
considered in addition to his estimated pay of $55,808.82 in 2015,
Ken Killgore
Administrative Services Director
City of Sebastian
From: Georgette Neama [ma iIto: Georgette.NeamaCdfoster-foster.com]
Sent: Saturday, May 30, 2015 6:22 PM
To: Kenneth Killgore
Subject: Graves
Hi Ken,
I am just about done with Mr. Graves final calculation however I do have a question for you. On the estimation request
form we completed in April the lump sum accrual maximum was listed as $680.92 which was confirmed in an email sent
to Doug. However, the new request form has a lump sum listed as $18,484.14. It's pretty obvious to me that this amount
is not included in final salary of $55,808.82, however I wanted to confirm with you that the lump sum in the amount of
$689.92 is still applicable to the final salary for this member. As well as confirm that it is not already included in the
amount of $55,808.82.
Please advise.
Should have this one out to you soon.
Thanks,
Georgette Neama, Actuarial Analyst
FOSTER FOSTER
13420 Parker Commons Blvd
Suite 104
Fart Myers, FL 33912
239.433,5500 Phone
239.481.0634 Fax
�eor�ett�n1fostea•-fosler.coiu
ww-,J.foster-foster.com
2
Kenneth Killgore
From: Kenneth Killgore
Sent: Wednesday, April 08, 2015 9:05 AM
To: 'Douglas Lozen'
Subject: RE: Benefit Calculation for Paul Graves
The timing is fine, he just wanted an idea. Yes, although there is a big difference in age, his beneficiary is his wife.
From: Douglas Lozen Finailto: Doug (a�Foster-Foster.coml
Sent: Wednesday, April 08, 2015 9:00 AM
To: Kenneth Killgore
Subject: RE: Benefit Calculation for Paul Graves
Hi Ken,
Just a quick question. Is the Beneficiary his wife? Because of the age difference, it potentially limits the
number of survivor options we are allowed to provide under IRS rules.
Our turnaround time is typically 10 business days. Will that work for you? We can expedite if needed.
Sens from m}Verizon wireless 4G GTE Smartph n t:
-------- Original message --------
From: Kenneth Killgore
Date:04/0$!2015 8:14 AM (GMT -05:00)
To: Douglas Lozen
Subject: FW: Benefit Calculation for Paul Graves
Good morning Doug. Attached is a revised Calculation Request Form showing his designated joint annuitant.
About how long will it take for this to be done?
Ken Killgore
Administrative Services Director
City of Sebastian
From: Kenneth Killgore
Sent: Friday, April 03, 2015 10:31 AM
1
To: 'Douglas Lozen'
Subject: RE: Benefit Calculation for Paul Graves
Okay, I will get it from him ASAP. The 2015 earnings does not include the lump sum accrual maximum
number of $689.92 or his pay from 3/21/13 to his last work day on July 12t1', which should be $19,061.20
From: Douglas Lozen[mailto:DougCa�FDSter-Foster.com]
Sent: Friday, April 03, 2015 10:15 AM
To: Kenneth Killgore
Subject: RF: Benefit Calculation for Paul Graves
Hi Ken,
We don't have anything on file regarding a Beneficiary for Mr. Graves, so will need a name and date of birth if
he would like to see survivor options.
Also, is the lump sum accrual for unused leave time included in the fiscal 2015 earnings?
Douglas H. Lozen, EA, MAAA
FOSTER FOSTER
13420 Parker Commons Blvd
Suite 104
Port Myers, FL 33912.
239.433.5500 Phone
239.481.0634 Fax
2
Kenneth Kill ore
From: Kenneth Killgore
Sent: Thursday, May 14, 2015 12:09 PM
To: Douglas Lozen <Doug@Foster-Foster.com> (Doug@Foster- 1~oster.corn)
Subject: Final Pension Calculation
Attachments: MX-4140N_20150514_104637.pdf
Hi Doug,
Attached is a Standardized Benefit Calculation Request Form for Police Officer Paul Graves. He has officially given the
City notice of his retirement date and his last work day will be July 1, 2015. Within the attachment is also his Application
for Service Retirement Benefits, should that be required.
The After Tax Contributions are based on the normal 8% for his projected contributions for his salary through July 1,
2015, plus 8% of his lump sum payout of accrued vacation and sick leave, Fiscal Year Pay for 2015 does not include the
lump sum payout and is only regular pay.
Naturally, Paul wants to know his updated numbers as soon as possible, so anything that can be done to expedite the
calculations would be appreciated. Let me know, should you have any questions or require additional information.
Ken Killgore
Administrative Services Director
City of Sebastian
Ps. I will be on vacation next week and return on May 26th, should you try to reach me over that time.
www.foster-foster.com
From, Kenneth Killgore[ mai Ito: kkillgoreS7QyofSebastian.org]
Sent: Friday, April 03, 2015 10:13 AM
To: Douglas Lozen
Subject:. Benefit Calculation for Paul Graves
Hi Doug,
One of our Officers is planning on normal retirement. I would like a calculation of his benefits for him to select
from.
Attached is the Standardized Benefit Calculation Request Form:. I believe all the information is complete,
except for Joint Annuitant information. Is this something you have on record or do I need to have hire complete
a new designation?
Thanks as always,
Ken Killgore
Administrative Services Director
City of Sebastian
C
Foster&rl,...
Standardized Benefit Calculation Request Form
Name of Plan: _�ti A.I% �, Pc I tCZ `f cGe-r,s
Name of Participant �n � (
Participant SS Participant SextlM?' F
Participant Date of Birth middlyyy)
Participant Latest tate of Hire:
Participant Date of Final Termination: 0-1! Oi 1 �f5
Previous Date of Hire 1_f (if necessary)
Previous Date of Termination: 1I (if necessary)
Requested Commencement Date: OF/ IN I
Years of Credited Service purchased; (if necessary)
(in fraction; i.e., 2 years and 158 days would be, 2 1581365)
After Tax Contributions:$ Scat,
322,. F
i ype or L.arcuiaaun
C—Normal
etirement
Early Retirement
DROP
Vested, Deferred
Disability'
(LOD or NLOD)
Pre -retirement Death
Please circle all types of calculations
being requested. In add€tion, if requesting
a disability calulation, please indicate
whether in-line or not -in-line of duty as
well as the reason for disability below
Salaryz: Calendars Year Pay or Fiscal Year Pay
Year: ��r� (most recent) T :0 +o/ i.; _<j J70 7, g,
iy
1, 3� 9,3
X013
C '� .120, 13
0 I
Ls �f r 7 t• 40
, 010
G /, o -A3.3 -v
12oul
I,
)Co
) uo -7
I �
.100L
y . y
Joint Annuitant: Joint Annuitant's Sex: M `` F i
Beneficican{ Date of Birttt
'Heart Disease, Hypertension, Emphysema, Injury. Cancer, Other (please specify)
'In terminating year. please indicate the date through which the salary is given.
Lump sum payment (if
applicable)
19, �gY. f
CITY OF SEBASTIAN
POLICE OFFICERS" RETIREMENT SYSTEM
APPLICATION FOR SERV ICE RETIREMENT BENEFITS
Name of Emp loyee: _-)u t T
Social Security Number:
Date ofEmployment:
Permanent Address:
Daytime Phone Nun-ber:
Type ofbenefit for which you are applying:
Normal X
# Early ( )
Deferred: Inxnediate:
I plan to retire on: 0- G I I t `5
Last date of work: U-1 10 1 1 1s -
If Joint and Survivor option is to be calculated, narne of joint annuitant:
Relationship: L 1
Social Security Number:
Date of B.
Address:
* Attach birth corticate or driver's license for proof of age
I hereby request that the Board of Trustees calculate my retirement options based on the
information provided above. I understand I wil make my final retirement option selection upon
receipt of the calculation of the monthly amounts for the various benefit options.
PF4 Palle l of 2
05-I3-15 v
I hereby certify that the precednig statements are true and correct to the best of my
knowledge. I also certify that I will adhere to the requirements of the Plan. I understand a false
statement may disqualify me for benefits.
This application revokes any prior application,
Signatire: G C�
Date: e?
STATE OF r/,oc jam.
COUNTY OF i
ore o' instrument was sworn before me this W day of4y,0?4, 20by
who is personally known me who has procured
as identification, and -o 1d tate an oath
r �
r
My co Sion expires:
Qs * uH LINDA M. LOHSL
Commission # FF 117566
Expires June 18, 2018
Branded Thu T., Feta irts m.9W-W7M0
"Pursuant to Section 119.071(5)(a)?., Florida Statutes, yoursocial security number is requested for the purpose of
determining eligibility farretirement benefits as a plan member retiree orbeneficiary; the processing of retirement
benefits;verificationofrefiremen tbenefits;irtmmetepotdag; orothernoticeordisclasuresrelatedtoretirementbenefits.
Your social security number will be used solely for one or more of these purposes."
PF -4 Pare 2 of 2
05-13-15
Date1�
ICC Capital Management, Inc.
255 South Orange Ave., Ste. 945
Orlando, Florida 32801
Re: SEBASTIAN POLICE OFFICERS' RETIREMENT TRUST FUND
Gentlemen:
You are authorized to act as investment counsel for the above account as to the assets assigned to
your management, and any additions thereto, including related interest and dividend payments.
Under this authority, effective on the acceptance date below, you are to direct the sale of any such
assets and the reinvestment or holding for reinvestment of any proceeds of such sales as you
deem advisable in keeping with the investment objectives of the account, as attached herewith.
You are instructed to use Prudential Securities as my broker under such arrangements as I may
establish with them. You shall not receive or have custody of assets.
For your services, we understand that no fee for regular services will be imposed for the first year.
This understanding may be canceled by the .Board of Trustees. Upon notification by the Board of
Trustees, ICC Capital Management, Inc. will immediately discontinue discretionary investment
management in the manner directed by the Board.
In conformity with the provisions of the Investment Advisers Act of 1940, you may not assign this
contract within the meaning of that Act without our consent.
Execution of this agreement acknowledges our receipt from The Investment Counsel Company of
SEC Form ADV Part II.
Accepted.:
ICC Capi ana ement, Inc.
{
By:
(Name)
c.0
(Title)
Yours truly,
SEBASTIAN POLICE OFFICERS'
RETIREMENT TRUST FUND
0"; W�P%
/
r �V / 6
FEE SCHEDULE
ICC Capital fees are charged at the following rates.
Annual Rate
on Market Value Quarterly
Stack, Bonds and Reserves 0.55% 0.1375%
Payable quarterly in advance. There are no other charges.
Example:
ICC Capital Mzmt. Fee
Market Value Annual Quarterly
Stocks, Bonds $1,000,000 $5,500 $1,375
and Reserves
Law Offices
Christiansen & Dehner, P.A.
63 Sarasota Center Blvd. Suite 107 Sarasota, Florida 34240 • 441-377-2.200 • Fax 941.377-4848
MEMORANDUM
TO: All Firefighter and Police Officer Pension Boards
FROM: Christiansen. & Dehner, P.A.
DATE: May 29, 2015
RE: Senate Bill 172 (Chapter 2015-39, Laws of Florida)
Introduction
Last week, Governor Scott approved Senate Bill 172 (hereinafter "SB 172") which
substantially amended Chapters 175 and 185, Florida Statutes. SB 172 passed unanimously through
the Florida Senate and nearly unanimously through the Florida House of Representatives, following
several years of bipartisan cooperation by Senators Bradley, Ring and Gaetz. The following memo
is a high-level summary and does not necessarily cover all detailed provisions in the 44 page bill.
While SB 172 is effective July 1, 2015, the premium tax provisions do not take effect until
entering into the next collective bargaining agreement. For non -collectively bargained service SB
172 is effictive October 1, 2015. We expect that several questions will need to be answered by the
Division of Retirement in the coming months. We encourage Boards to work with their actuary,
union and plan sponsor to translate and apply SB 172`s requirements to your plan. It is noteworthy
that the default provisions of SB 172 are flexible and may be modifaed by mutual consent of the
parties in the next collective bargaining agreement.
Boards are encouraged to place this item on the agenda for their next Board meeting. In
particular, Boards that only meet quarterly will need to establish an administrative expense budget
at their summer board meeting, effective October 1.
Nese Definitions
The following new definitions apply to both firefighter and police plans, as amended by
Sections 175.032 and 185.02.
'Base premium tax revenues": For a local law plan in effect on October 1, 2003, the
revenues received by a municipality for the 2002 calendar year. For a local law plan created between
October 1, 2003, and March 1, 2015, inclusive, the revenues received by a municipality based upon
the tax collections during the second calendar year ofparticipation.
"Minimum benefits": means the benefits specified in Sections 175.021-175.341 and
Sections 175.361-175.401 for firefighter plans and Sections 185.01-185.341 and Sections
185.37-185.50 for police plans.
'Minimum standards": means the standards specified in Sections 175.021-175.401 for
firefighter plans and Sections 185.01-185.50 for police plans.
"Special benefits": means benefits provided in a defined contribution plan component of a
local law pian into which deposits, if any, of premium taxes arc paid pursuant to Section 175.351
and 185.35.
"Compensation" or "Salary": For police plans the definition of compensation or salary has
been clarified to provide that overtime is no longer a required minimum benefit for police.
Detailed Accounting Report & Adxniriistrative Expense Budget
New Sections 175.061(8) and 185.05(8) require that all firefighter and police Boards of
Trustees shall provide a detailed accounting report and operate under an administrative expense
budget as follows:
Detailed Accounting Report: The Board shall provide a detailed accounting report of its
expenses for each fiscal year to the plan sponsor and the Department of Management Services. The
Board is also required to make the report available to each member of the plan and post the report
on the Board's website, if the Board has a website. It is suggested that future sumnary plan
descriptions be amended to indicate that the detailed accounting report is available upon request. The
report must include all administrative expenses that, for purposes of this subsection, are expenses
relating to any legal counsel, actuary, plan administrator, and all other consultants, and all travel and
other expenses. This requirement is Ikely effective on July 1, 2015.
Adarzinistrrative FMense Budget: The Board shall operate under an administrative expense
budget each fiscal year. A copy of the budget shall be provided to the plan sponsor and made
available to plan members before the beginning of the fiscal year. If the Board amends the
administrative expense budget, the Board must provide a copy of the amended budget to the plan
sponsor and make available a copy of the amended budget to plan members. The new administrative
expense budget must be prepared and made available prior to October 1, 2015.
Afinima um .2.75% Multi lien
Effective July 1, the new minimum multiplier is 2.75%. Plans with a multiplier less than
2.75% are grandfathered and need not raise their multiplier in eff-ect on July 1, 2015. If the rydtipher
is raised to 2.75% (or higher), the grandfathered plan may not thereafter decrease the multiplier to
less than 2.75%.
Requirement to Create Share Plan/Supplemental Defined Contribution Plan
SB 172 requires that each plan sponsor must create a share plan/supplemental defined
contribution plan (hereinafter "share plan') within the local law plan for the payment of special
benefits. The new share plan must be adopted upon entering into a collective bargaining agreement
on or after July 1, 2015, or by October 1, 2015, for non -collectively bargained service. Depending
upon the application of Section 175.351 and 185.35 to your plan, the new share plan may or may not
receive any fimding. Any share plan in existence on March 1, 2015, shall be deemed to be a defined
contribution plan in compliance with Sections 175.351(5) and 1$5.35(6).
Comrtpromise on Usage_ a Premium Taxes
Perhaps the most far reaching feature of SB 172 is the underlying "compromise" regarding
the use of premium tax revenues. We recommend that Boards request that their actuaries evaluate
their premium tax status in light of the new definition of base premiun tax revenue and the new
calendar year 2012 threshold. An additional feature of this compromise provides that half of
additional premium taxes received above the 2012 level must be split between special benefits paid
into a share pian, with the other 50% being used by the plan sponsor to offset defined benefit plan
costs. The parties are permitted to deviate from this default outcome by mutual consent.
Structurally, SB 172 establishes three separate outcomes for the use of premium tax revenue.
First, share plans in existence on December 1, 2000 are exempt from SB 172. Second, the parties
can mutually agree to use their premium taxes as they see fit. Third, if the parties do not mutually
agree upon the use ofpremium tax revenue the default provisions in Section 175.351 and 185.35 are
triggered as set forth below.
Default Use of Prendunt Tax Revenue
SB 172 substantially amends Sections 175.351 and 185.35 as follows:
Effective upon entering into the next collective bargaining agreement (or October 1, 2015
for non -collectively bargained service):
(a) Base premium tax revenues must be used to fimd minimurn benefits or other
retirement benefits in excess of minimum benefits.
(b) Of the additional premium tax revenues received that are in excess of the arnount
received for the 2012 calendar year, 50 percent must be used to fund mininiurn
benefits or other retirement benefits in excess of the minimum benefits, and 50
percent must be placed in a share plan to fiord special benefits.
(c) Additional premum tax revenues not described in paragraph (b) must be used to fund
benefits that are not included in the minimum benefits. If the additional premium tax
revenues subject to this paragraph exceed the full annual cost of benefits provided
through the plan which are in excess of the minimum benefits, any amount in excess
of the fiill annual cost must be used as provided in paragraph (b).
(d) Of any accumulations of additional premium tax revenues which have not been
allocated to fund benefits in excess of the minimum benefits, 50 percent of the
amount of the accumulations must be used to fund special benefits and 50 percent
must be applied to fiord any unfimded actuarial liabilities of the plan; provided that
any amount of accumulations in excess of the amount required to fund the unfunded
actuarial liabilities must be used to fund special benefits.
Abili to Deviate rani Premium Tax Allocation by Mutual Consent
Yet another example of the underlying compromise reflected in $B 172 is the ability of the
parties to deviate from the requirements of Sections 175.351 and 185.35 by nnutual consent.
Importantly, the use of premium tax revenues above the 2012 calendar year level, including any
accunnulations of additional premium tax revenues which have not been allocated to fund benefits
in excess of minimum benefits, need not be allocated 50 - 50 as long as:
(1) the plan sponsor and union mutually consent to use the premium tax
differently, and
(2) the plan continues to meet minimum benefits and minimum standards.
Exemption -for SharelSupplamental Plans in Existence on December 1, 2000
Any share plan in existence on December 1, 2000 is grandfathered from the 50 - 50 premium
tax split set forth in Section 175.351 and 185.35.
Grandfathering ofAmendments in Reliance on Naples Letters
SB 172 prospectively reverses the Division of Retirement's August 12, 2012 Naples letter,
but grandfathers any plan amendments adopted on or before March 3, 2015 in reliance upon a
'Naples letter". Changes to the local law plan which are otherwise contrary to minimum benefits and
mini= standards may continue in effect until the earlier of October 1, 2018, or the effective date
of a collective bargaining agreement that is contrary to the changes.
Conclusion
SB 172 substantially amends Chapters 175 and 185. The legislation will have a different
impact on different plans and will need to be carefully studied. All plans will need to comply with
SB 172's expense reporting and budgeting requirements prior to the end of this fiscal year. The
parties will have until the next collective bargaining agreement to decide whether or not to abide by
SB 172's default provisions governing the use ofpremium tax revenue.
The following initial questions for your actuary and plan attorney will help facilitate the
application. of SB 172 to your plan:
(1) Does your plan have any unallocated accumulations of additional premium tax
revenue?
(2) Does your plan have an existing share plan? 'Wash created prior to December 1,
2000?
(3) Was your plan amended in reliance upon a 'Naples letter'?
(4) How much premium tax was received by your plan for the 2012 calendar year?
(5) When does the current union contract expire?
We welcorne any questions or comnents and look forward to discussing this n-iemo with you..
Trustees should feel free to share this memo with their respective plan sponsor and union.
Thank you to Adam Levinson, Esq., with Klausner Kaufman Jensen & Levnason for the above
legislative summary.
iouldop�_ FOSTER & FOSTER
ACTUARIES AND CONSULTANTS
June 12, 2015
VIA EMAIL
Board of Trustees
City of Sebastian Police Officers' Retirement System
Board of Trustees
1 125 Main Street
Sebastian, FL 32958
Re: City of Sebastian
Police Officers' Retirement System
Investment Return Analysis
Dear Board:
As requested at the March 17 , 2015 Board Meeting, we have determined the liabilities and funding
requirements associated with a reduction in the net -of -fees investment return assumption according to the
following scenarios:
• A reduction from 7.75% to 7.60%.
• A reduction from 7.75% such that the City's annual contribution requirement is approximately
15.0% of payroll. For purposes of this scenario, the net -of -fees investment return assumption was
reduced to 7.30%.
Results and details of the analysis, determined as of October 1, 2014, are set forth on the enclosed schedule.
Additionally, all methods and assumptions utilized for the October 1, 2014 valuation were employed for
purposes of this study. Please also note that the increase in the Unfunded Actuarial Accrued Liability is
amortized over 20 years, utilizing the current 3% payroll growth assumption.
The undersigned is familiar with the immediate and long-term aspects of pension valuations, and meets the
Qualification Standards of the American Academy of Actuaries necessary to render the actuarial opinions
contained herein. All of the sections of this report are considered an integral part of the actuarial opinions.
If you have any questions, please let me know.
Sincerely,
Douglas . Loze E MAAA
DHL/Ike
Enclosure
13420 Parker Commons Blvd., Suite 104 Fort Myers, FL 33912 • (239) 433-5500 • Fax (239) 481-0634 • www.foster-foster.com
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