HomeMy WebLinkAboutSebastian Police October 1 2017 ValuationCITY OF SEBASTIAN
POLICE OFFICERS' RETIREMENT SYSTEM
ACTUARIAL VALUATION
AS OF OCTOBER 1, 2017
CONTRIBUTIONS APPLICABLE TO THE
PLAN/FISCAL YEAR ENDING SEPTEMBER 30, 2019
rFOSTER & FOSTER
, FJ ACTUARIES AND CONSULTANTS
December 27, 2017
Mr. Ken Killgore, Administrative Services Director
City of Sebastian
1225 Main Street
Sebastian, FL 32958
Re: City of Sebastian
Police Officers' Retirement System
Dear Board:
We are pleased to present to the Board this report of the annual actuarial valuation of the City of
Sebastian Police Officers' Retirement System. Included are the related results for GASB Statements No.
67 and No. 68. The funding valuation was performed to determine whether the assets and contributions
are sufficient to provide the prescribed benefits and to develop the appropriate funding requirements for
the applicable plan year. The calculation of the liability for GASB results was performed for the purpose
of satisfying the requirements of GASB Statements No. 67 and No. 68. Please note that these valuations
may not be applicable for any other purposes.
The valuations have been conducted in accordance with generally accepted actuarial principles and
practices, including the applicable Actuarial Standards of Practice as issued by the Actuarial Standards
Board, and reflect laws and regulations issued to date pursuant to the provisions of Chapters 112 and 185,
Florida Statutes, as well as applicable federal laws and regulations. In our opinion, the assumptions used
in these valuations, as adopted by the Board of Trustees, represent reasonable expectations of anticipated
plan experience. Future actuarial measurements may differ significantly from the current measurements
presented in this report for a variety of reasons including: changes in applicable laws, changes in plan
provisions, changes in assumptions, or plan experience differing from expectations.
In conducting the valuations, we have relied on personnel, plan design, and asset information supplied by
the Board of Trustees, financial reports prepared by the custodian bank, and the actuarial assumptions and
methods described in the Actuarial Assumptions section of this report. While we cannot verify the
accuracy of all this information, the supplied information was reviewed for consistency and
reasonableness. As a result of this review, we have no reason to doubt the substantial accuracy of the
information and believe that it has produced appropriate results. This information, along with any
adjustments or modifications, is summarized in various sections of this report.
13420 Parker Commons Blvd., Suite 104 Fort Myers, Fl. 33912 • (239) 433-5500 • Fax (239) 481-0634 • www.foster-foster.com
The total pension liability, net pension liability, and certain sensitivity information shown in this report
are based on an actuarial valuation performed as of October 1, 2016. The total pension liability was
rolled -forward from the valuation date to the plan's fiscal year ending September 30, 2017 using
generally accepted actuarial principles. It is our opinion that the assumptions used for this purpose are
internally consistent, reasonable, and comply with the requirements under GASB No. 67 and No. 68.
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.
To our knowledge, no associate of Foster & Foster, Inc. working on valuations of the program has any
direct financial interest or indirect material interest in the City of Sebastian, nor does anyone at Foster &
Foster, Inc. act as a member of the Board of Trustees of the City of Sebastian Police Officers' Retirement
System. Thus, there is no relationship existing that might affect our capacity to prepare and certify this
actuarial report.
If there are any questions, concerns, or comments about any of the items contained in this report, please
contact me at 239-433-5500.
Respectfully submitted,
Foster & Foster, Inc.
By:
DounsH. ozen, EA, MAAA
Enrolled Actuary #17-7778
DHL/lke
Enclosures
Section
I
II
V
VI
TABLE OF CONTENTS
Title
Introduction
a. Summary of Report
b. Contribution Impact of Annual Changes
c. Changes Since Prior Valuation
d. Comparative Summary of Principal
Valuation Results
Valuation Information
a. Reconciliation of Unfunded
Actuarial Accrued Liabilities
b. Detailed Actuarial (Gain)/Loss Analysis
c. Actuarial Assumptions and Methods
d. Valuation Notes
Trust Fund
Member Statistics
a. Statistical Data
b. Age and Service Distribution
c. Member Reconciliation
Summary of Plan Provisions
Governmental Accounting Standards
Board Disclosure Information
Page
5
7
8
9
15
16
17
20
21
25
26
27
28
31
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 14
SUMMARY OF REPORT
The regular actuarial valuation of the City of Sebastian Police Officers' Retirement System, performed as
of October 1, 2017, has been completed and the results are presented in this Report. The contributions
developed in the valuation apply to the City's plan/fiscal year ended September 30, 2019.
The funding requirements, compared with amounts developed in the October 1, 2016, Actuarial Valuation
Report (as modified with the August 15, 2017, Actuarial Impact Statement), are as follows:
Valuation Date
10/1/2017
10/1/2016
Applicable Plan/fiscal Yr. End
9/30/2019
9/30/2018
Total Required Contribution
% of Total Annual Payroll
36.4%
34.3%
Member Contributions (Est.)
% of Total Annual Payroll
8.0%
8.0%
City and State Required Contribution
% of Total Annual Payroll
28.4%
26.3%
State Contribution'
168,628
168,628
% of Total Annual Payroll
6.4%
6.4%
Balance from City
% of Total Annual Payroll
22.0%
19.9%
1 Under Mutual Consent between the Union and City, the City has access to all State Contributions for
determining its minimum funding requirements.
For budgeting purposes, the required Sponsor Contribution (City and State) is 26.3% of Pensionable
Earnings for the fiscal year ending September 30, 2018, and 28.4% of Pensionable Earnings for the fiscal
year ending September 30, 2019. The precise City requirement for each year is the applicable City and
State Contribution rate, less actual State Contributions.
Actuarial experience since the last valuation has been less favorable than expected, relative to the
Plan's actuarial assumptions. The primary sources of unfavorable experience included a 6.72%
investment return (Actuarial Asset basis), falling short of the 7.45% assumption, average increases in
pensionable compensation that exceeded the assumption by more than 1.0%, and no inactive
mortality. These losses were partially offset by favorable employee turnover.
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 15
This valuation of the Plan also reflects assumption changes for investment return and mortality.
Details of these changes on their impact on Plan liabilities and funding requirements are set forth in
the remainder of this report.
The balance of this Report presents additional details of the actuarial valuation and the general
operation of the Fund. The undersigned would be pleased to meet with the Board of Trustees in order
to discuss the Report and answer any pending questions concerning its contents.
Respectfully submitted,
FOSTER & FOSTER, INC.
k
By:
Douglas . Loze , EA, MAAA
Paul Baugher, FSA, EA,
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 16
CONTRIBUTION IMPACT OF ANNUAL CHANGES
(1) Contribution Determined as of October 1, 2016
18.8%
(2) Summary of Contribution Impact by component:
Change in Available State Money
1.1 %
Change in Normal Cost Rate
0.0%
Change in Administrative Expense Percentage
0.1 %
Payroll Change Effect on UAAL Amortization
-1.6%
Investment Return (Actuarial Asset Basis)
0.5%
Salary Increases
0.7%
Active Decrements
-0.2%
Inactive Mortality
0.3%
Assumption Change
2.1%
Unexpected Increase in the UAAL Amortization Payment
0.2%
Other
0.0%
Total Change in Contribution
3.2%
(3) Contribution Determined as of October 1, 2017
22.0%
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 17
Plan Changes
Ordinance 0-17-03, adopted and effective August 23, 2017, amended/implemented the below
benefit provisions. Details of the impact on Plan liabilities and funding requirements are set forth
in the August 15, 2017, Actuarial Impact Statement.
• Member Contribution Rate
• Benefit Accrual Rate
• Cost -of -Living Adjustment
Actuarial Assumi)tion/Method Changes
• In conjunction with this valuation, the investment return assumption has been
lowered from 7.45% to 7.30% per year compounded annually, net of investment
related expenses.
• As mandated by Chapter 2015-157, Laws of Florida, the assumed rates of mortality were
changed from the rates used by the Florida Retirement System actuary in the July 1, 2015
actuarial valuation to the rates used in the July 1, 2016 actuarial valuation for special risk
lives.
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 18
COMPARATIVE SUMMARY OF PRINCIPAL VALUATION RESULTS
New Assump
Old Assump
10/1/2017
10/1/2017
10/1/2016
A. Participant Data
Actives
37
37
32
Service Retirees
9
9
9
Beneficiaries
1
1
1
Disability Retirees
2
2
2
Terminated Vested
12
12
10
Total
61
61
54
Total Annual Payroll
$2,639,677
$2,639,677
$2,245,394
Payroll Under Assumed Ret. Age
2,639,677
2,639,677
2,245,394
Annual Rate of Payments to:
Service Retirees
462,272
462,272
462,272
Beneficiaries
7,211
7,211
7,211
Disability Retirees
24,283
24,283
24,283
Terminated Vested
214,152
214,152
197,061
B. Assets
Actuarial Value (AVA)
13,804,891
13,804,891
12,798,493
Market Value (MVA)
14,002,519
14,002,519
12,488,710
C. Liabilities
Present Value of Benefits
Actives
Retirement Benefits
14,455,696
13,785,968
12,062,794
Disability Benefits
485,774
468,542
428,011
Death Benefits
81,858
171,017
156,435
Vested Benefits
119,345
114,220
130,811
Refund of Contributions
87,434
86,620
58,437
Service Retirees
4,945,898
4,884,470
4,952,634
Beneficiaries
19,556
19,518
25,143
Disability Retirees
181,856
180,279
184,611
Terminated Vested
1,803,733
1,767,841
1,543,636
Share Plan Balances
0
0
0
City Prepaid Contribution
0
0
84,863
Total
22,181,150
21,478,475
19,627,375
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 19
New Assump Old Assump
C. Liabilities - (Continued) 10/1/2017 10/1/2017 10/1/2016
Present Value of Future Salaries 21,829,464 21,429,467 18,354,965
Present Value of Future
Member Contributions
1,746,357
1,714,357
1,468,397
Normal Cost (Retirement)
509,422
477,348
408,362
Normal Cost (Disability)
37,414
36,353
31,667
Normal Cost (Death)
4,304
8,988
7,516
Normal Cost (Vesting)
10,245
9,786
9,212
Normal Cost (Refunds)
14,244
14,193
9,016
Total Normal Cost
575,629
546,668
465,773
Present Value of Future
Normal Costs
4,691,343
4,368,624
3,756,758
Accrued Liability (Retirement)
10,212,932
9,885,993
8,691,744
Accrued Liability (Disability)
202,776
198,465
187,725
Accrued Liability (Death)
47,512
99,655
96,316
Accrued Liability (Vesting)
60,784
58,867
90,275
Accrued Liability (Refunds)
14,760
14,763
13,670
Accrued Liability (Inactives)
6,951,043
6,852,108
6,706,024
Share Plan Balances
0
0
0
City Prepaid Contribution
0
0
84,863
Total Actuarial Accrued Liability (EAN AL)
17,489,807
17,109,851
15,870,617
Unfunded Actuarial Accrued
Liability (UAAL)
3,684,916
3,304,960
3,072,124
Funded Ratio (AVA / EAN AL)
78.9%
80.7%
80.6%
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 110
D. Actuarial Present Value of New Assump Old Assump
Accrued Benefits 10/1/2017 10/1/2017 10/1 /2016
Vested Accrued Benefits
Inactives
Actives
Member Contributions
Total
Non -vested Accrued Benefits
Total Present Value
Accrued Benefits (PVAB)
Funded Ratio (MVA / PVAB)
Increase (Decrease) in Present Value of
Accrued Benefits Attributable to:
Plan Amendments
Assumption Changes
New Accrued Benefits
Benefits Paid
Interest
Other
Total
6,951,043
6,852,108
5,331,125
5,167,367
1.294.599
1.294.599
13,576,767
13,314,074
778,158
743,177
14,354,925
14,057,251
97.5%
99.6%
0
0
297,674
0
0
724,133
0
(495,629)
0
941,628
0
0
297,674
1,170,132
6,706,024
4,348,271
1.150.219
12,204,514
682,605
12,887,119
96.9%
City of Sebastian Police Officers' Retirement System
FOSTER & FOSTER 111
New Assump
Old Assump
Valuation Date
10/1/2017
10/1/2017
Applicable to Fiscal Year Ending
9/30/2019
9/30/2019
E. Pension Cost
Normal Cost (with interest)
% of Total Annual Payroll'
22.6
21.5
Administrative Expenses (with interest)
% of Total Annual Payroll'
1.8
1.8
Payment Required to Amortize
Unfunded Actuarial Accrued
Liability over 29 years
(as of 10/l/2017, with interest)
% of Total Annual Payroll'
12.0
11.0
Total Required Contribution
% of Total Annual Payroll'
36.4
34.3
Expected Member Contributions
% of Total Annual Payroll'
8.0
8.0
Expected City and State Contribution
% of Total Annual Payroll'
28.4
26.3
F. Past Contributions
Plan Years Ending:
9/30/2017
City and State Requirement
482,726
Actual Contributions Made:
Members (excluding buyback)
177,585
City
337,201
Prepaid City 2
84,863
State
168,628
Total
768,277
G. Net Actuarial (Gain)/Loss
269,448
' Contributions developed as of 10/1/2017 are expressed as a percentage of total
annual payroll at 10/1/2017 of $2,639,677.
10/1/2016
9/30/2018
21.5
1.7
34.3
:1
26.3
City of Sebastian Police Officers' Retirement System
FOSTER & FOSTER 112
H. Schedule illustrating the Amortization of the Total Unfunded Actuarial Accrued Liability as of:
Projected Unfunded
Year
Actuarial Accrued Liabilitv
2017
3,684,916
2018
3,626,607
2019
3,556,152
2026
2,621,134
2033
1,233,195
2039
408,323
2046
0
I. (i) 3 Year Comparison of Actual and Assumed Salary Increases
Year Ended 9/30/2017
Year Ended 9/30/2016
Year Ended 9/30/2015
(ii) 3 Year Comparison of Investment Return on Actuarial Value
Year Ended
Year Ended
Year Ended
(iii) Average Annual Payroll Growth
(a) Payroll as of-
(b) Total Increase
(c) Number of Years
(d) Average Annual Rate
9/30/2017
9/30/2016
9/30/2015
Actual
7.22%
7.49%
4.75%
Actual
6.72%
5.66%
-0.45%
10/1/2017
10/1/2007
Assumed
6.19%
6.41 %
6.65%
Assumed
7.45%
7.60%
7.75%
$2,639,677
2,026,517
30.26%
10.00
2.68%
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 113
STATEMENT BY ENROLLED ACTUARY
This actuarial valuation was prepared and completed by me or under my direct supervision, and I
acknowledge responsibility for the results. To the best of my knowledge, the results are complete and
accurate, and in my opinion, the techniques and assumptions used are reasonable and meet the
requirements and intent of Part VII, Chapter 112, Florida Statutes. There is no benefit or expense to be
provided by the plan and/or paid from the plan's assets for which liabilities or current costs have not been
established or otherwise taken into account in the valuation. All known events or trends which may
require a material increase in plan costs or required contribution rates have been taken into account in the
valuation.
k
nH.
Dougzen, EA, MAAA
Enrolled Actuary #17-7778
Please let us know when the report is approved by the Board and unless otherwise directed we will
provide copies of the report to the following offices to comply with Chapter 112, Florida Statutes:
Mr. Keith Brinkman
Bureau of Local
Retirement Systems
Post Office Box 9000
Tallahassee, FL 32315-9000
Ms. Sarah Carr
Municipal Police and Fire
Pension Trust Funds
Division of Retirement
Post Office Box 3010
Tallahassee, FL 32315-3010
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 114
RECONCILIATION OF UNFUNDED ACTUARIAL ACCRUED LIABILITIES
(1) Unfunded Actuarial Accrued Liability as of October 1, 2016
(2) Sponsor Normal Cost developed as of October 1, 2016
(3) Expected administrative expenses for the year ended September 30, 2017
(4) Expected interest on (1), (2) and (3)
(5) Sponsor contributions to the System during the year ended September 30, 2017
(6) Expected interest on (5)
(7) Expected Unfunded Actuarial Accrued Liability as of
September 30, 2017 (1)+(2)+(3)+(4)-(5)-(6)
(8) Change to UAAL due to Assumption Change
(9) Change to UAAL due to Actuarial (Gain)/Loss
(10) Unfunded Actuarial Accrued Liability as of October 1, 2017
$3,072,124
286,141
36,876
251,564
590,692
20,501
3,035,512
379,956
269,448
3,684,916
Type of
Date
Years
10/1/2017
Amortization
Base
Established
Remaining
Amount
Amount
method and benefit
10/1/2002
15
504,597
45,695
assumption change
10/1/2010
23
145,999
10,113
benefit change
10/1/2010
23
7,395
512
assumption changes
10/1/2013
16
(28,842)
(2,499)
benefit change
10/1/2014
27
(3,903)
(248)
assumption change
10/1/2015
18
216,024
17,329
method changes
10/1/2015
18
733,250
58,820
assumption change
10/1/2016
19
653,046
50,632
benefit change
10/1/2016
29
618,508
38,016
actuarial loss
10/1/2016
9
189,438
25,183
actuarial loss
10/1/2017
10
269,448
32,941
assumption change
10/1/2017
20
379,956
28,546
3,684,916 305,040
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 115
DETAILED ACTUARIAL (GAIN)/LOSS ANALYSIS
(1) Unfunded Actuarial Accrued Liability (UAAL) as of October 1, 2016 $3,072,124
(2) Expected UAAL as of October 1, 2017 3,035,512
(3) Summary of Actuarial (Gain)/Loss, by component:
Investment Return (Actuarial Asset Basis) 94,536
Salary Increases 145,590
Active Decrements (43,572)
Inactive Mortality 59,093
Other 13,801
Increase in UAAL due to (Gain)/Loss 269,448
Assumption Changes 379,956
(4) Actual UAAL as of October 1, 2017 $3,684,916
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 116
Mortalitv Rates
Interest Rate
Retirement Aye
ACTUARIAL ASSUMPTIONS AND METHODS
Healthy Active Lives:
Female: RP2000 Generational, 100% Combined
Healthy (previously Annuitant) White Collar, Scale
BB.
Male: RP2000 Generational, 10% Combined
Healthy (previously Annuitant) White Collar / 90%
Combined Healthy (previously Annuitant) Blue
Collar, Scale BB.
Healthy Inactive Lives:
Female: RP2000 Generational, 100% Annuitant
White Collar, Scale BB.
Male: RP2000 Generational, 10% Annuitant White
Collar / 90% Annuitant Blue Collar, Scale BB.
Disabled Lives:
Female: 60% RP2000 Disabled Female set forward
two years / 40% Annuitant White Collar with no
setback, no projection scale.
Male: 60% RP2000 Disabled Male setback four
years / 40% Annuitant White Collar with no setback,
no projection scale.
The assumed rates of mortality are mandated by
Chapter 2015-157, Laws of Florida. This law
mandates the use of the assumption used in either of
the two most recent valuations of the Florida
Retirement System (FRS). The above rates are those
outlined in the July 1, 2016 FRS actuarial valuation
report for special risk lives. We feel this assumption
sufficiently accommodates future mortality
improvements.
7.30% per year (previously 7.45%) compounded
annually, net of investment related expenses, as
adopted by the Board of Trustees with input from the
Plan's investment consultant.
Earlier o£ 1) age 55 and 10 years of credited service,
or 2) age 52 and 25 years of credited service,
regardless of age. Also, any member who has
reached Normal Retirement is assumed to continue
employment for one additional year. We feel this
assumption is reasonable based upon plan provisions.
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 117
Earlv Retirement Commencing at the assumed Early Retirement Age
(50), members are assumed to retire with an
immediate subsidized benefit at the rate of 5% per
year. We feel this assumption is reasonable based
upon plan provisions.
Disability Rate Age -based rates with increasing probability of
disablement at higher ages. A sample of rates are
shown below:
Age Assumption
30 0.12%
40 0.21 %
50 0.54%
60 2.70%
Termination Rate
Salary Increases
Final Salary Load
Additionally, it is assumed that 75% of disablements
and active Member deaths are service related. This
assumption was approved in conjunction with an
actuarial experience study dated September 16, 2013.
Credited Service
Assumption
First 2 Years
14.0%
Years 3-9
5.7%
Years 10-14
2.8%
15 Years and Greater
0%
This assumption was approved in conjunction with an
actuarial experience study dated September 16, 2013.
Credited Service
Assumption
First Year
16.0%
Years 2-14
7.4%
15 Years and Greater
3.8%
This assumption was approved in conjunction with an
actuarial experience study dated September 16, 2013.
Service on 10/1/2014 Load Assumption
5 or more years 20.0%
More than 2, less than 5 years 10.0%
Less than 2 years 0.0%
Administrative Expenses $45,633 annually, based on prior year's actual
expenses.
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 118
Pavroll Growth 2.41% for amortization of all UAAL bases.
Funding Method Individual Entry Age Normal Actuarial Cost Method
(level percent of pay)._
Actuarial Asset Method The Actuarial Value of Assets utilizes a four-year
smoothing methodology. The annual difference
between expected and actual investment earnings
(Market Value, net of investment -related expenses),
is phased -in over a four-year period. This
methodology change was implemented with the
October 1, 2015 valuation, and will be fully phased in
by the October 1, 2018 valuation.
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 119
VALUATION NOTES
Total Annual Pavroll is the projected annual rate of pay as of the valuation date of all covered Members.
Present Value of Benefits is the single sum value on the valuation date of all future benefits to be paid to
current Members, Retirees, Beneficiaries, Disability Retirees and Vested Terminations.
Normal (Current Year's) Cost is determined for each participant as the present value of future benefits,
determined as of the member's entry age, amortized as a level percentage of compensation over the
anticipated number of years of participation, determined as of the entry age.
Individual Entry Aye Normal Actuarial Cost Method (Level Percent of Compensation) is the method used
to determine required contributions under the Plan. The use of this method involves the systematic
funding of the Normal Cost (described above) and the Unfunded Accrued (Past Service) Liability. The
actuarial accrued liability for active participants is the difference between the present value of future
benefits and the present value of future Normal Costs. The actuarial accrued liability for inactive
participants is the present value of future benefits.
Unfunded Actuarial Accrued Liability (UAAL) is the difference between the actuarial accrued liability
(described above) and the actuarial value of assets. Under the Entry Age Normal Actuarial Cost Method,
an actuarial gain or loss, based on actual versus expected UAAL, is determined in conjunction with each
valuation of the plan.
Total Required Contribution is equal to the Normal Cost plus administrative expenses plus an amount
sufficient to amortize the Unfunded Accrued Liability over no more than 30 years. The required amount
is adjusted for interest according to the timing of contributions during the year.
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 120
STATEMENT OF FIDUCIARY NET POSITION
SEPTEMBER 30, 2017
ASSETS
COST VALUE
MARKET VALUE
Cash and Cash Equivalents:
Short Term Investments
1,469,538.95
1,469,538.95
Total Cash and Equivalents
1,469,538.95
1,469,538.95
Receivables:
Investment Income
34,918.35
34,918.35
Total Receivable
34,918.35
34,918.35
Investments:
U. S. Bonds and Bills
719,562.86
713,872.01
Federal Agency Guaranteed Securities
258,355.03
257,299.53
Corporate Bonds
2,581,062.38
2,576,698.94
Municipal Obligations
167,828.25
169,518.25
Stocks
8,107,893.55
8,780,673.23
Mutual Funds:
Equity
0.00
0.00
Total Investments
11,834,702.07
12,498,061.96
Total Assets
13,339,159.37
14,002,519.26
LIABILITIES
Total Liabilities
0.00
0.00
NET POSITION RESTRICTED FOR PENSIONS
13,339,159.37
14,002,519.26
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 121
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FOR THE YEAR ENDED SEPTEMBER 30, 2017
Market Value Basis
ADDITIONS
Contributions:
Member
City
State
Total Contributions
Investment Income:
Net Realized Gain (Loss) 858,648.29
Unrealized Gain (Loss) 268,433.70
Net Increase in Fair Value of Investments
Interest & Dividends
Less Investment Expense'
Net Investment Income
Total Additions
DEDUCTIONS
Distributions to Members:
Benefit Payments
Refunds of Member Contributions
Total Distributions
Administrative Expense
Total Deductions
Net Increase in Net Position
NET POSITION RESTRICTED FOR PENSIONS
Beginning of the Year
End of the Year
177,584.70
337,201.00
168,628.24
1,127,081.99
326,394.82
(81,819.26)
493,765.32
1,863.92
'Investment related expenses include investment advisory, custodial and performance monitoring fees.
683,413.94
1,371,657.55
2,055,071.49
495,629.24
45,632.58
541,261.82
1,513,809.67
12,488,709.59
14,002,519.26
City of Sebastian Police Officers' Retirement System
FOSTER & FOSTER 122
ACTUARIAL ASSET VALUATION
September 30, 2017
Actuarial Assets for funding purposes are developed by recognizing the total actuarial investment gain or loss for each
Plan Year over a four year period. In the first year, 25% of the gain or loss is recognized. In the second year 50%, in the
third year 75%, and in the fourth year 100% of the gain or loss is recognized. The actuarial investment gain or loss is
defined as the actual return on investments minus the actuarial assumed investment return. Actuarial Assets shall not be
less than 80% nor greater than 120% of Market Value of Assets.
Gains/(Losses) Not Yet Recognized
Plan Year
Amounts Not Yet Recognized
by Valuation Year
Ending
Gain/Loss
2017 2018
2019 2020
09/30/2014
N/A
09/30/2015
(926,233)
(231,559) 0
0
09/30/2016
204,444
102,222 51,111
0
09/30/2017
435,954
326,965 217,976
108,987
Total
197,628 269,087
108,987
Development of Investment Gain/(Loss)
Market Value of Assets, 09/30/2016 12,488,710
Contributions Less Benefit Payments and Admin Expenses 142,152
Expected Investment Earnings* 935,704
Actual Net Investment Earnings 1,371,658
2017 Actuarial Investment Gain/(Loss) 435,954
*Expected Investment Earnings = 0.0745 * (12,488,710 + 0.5 * 142,152)
Development of Actuarial Value of Assets
(1) Market Value of Assets, 09/30/2017 14,002,519
(2) Gains/(Losses) Not Yet Recognized 197,628
(3) Actuarial Value of Assets, 09/30/2017, (1) - (2) 13,804,891
(A) 09/30/2016 Actuarial Assets: 12,798,493
(I) Net Investment Income:
1. Interest and Dividends
326,395
2. Realized Gains (Losses)
858,648
3. Change in Actuarial Value
(238,977)
4. Investment Expenses
(81,819)
Total
864,247
(B) 09/30/2017 Actuarial Assets: 13,804,891
Actuarial Asset Rate of Return = 2I/(A+B-I): 6.72%
Market Value of Assets Rate of Return: 10.90%
Actuarial Gain/(Loss) due to Investment Return (Actuarial Asset Basis) (94,536)
10/01/2017 Limited Actuarial Assets: 13,804,891
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 123
CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
SEPTEMBER 30, 2017
Actuarial Asset Basis
REVENUES
Contributions:
Member 177,584.70
City 337,201.00
State 168,628.24
Total Contributions 683,413.94
Earnings from Investments:
Interest & Dividends 326,394.82
Net Realized Gain (Loss) 858,648.29
Change in Actuarial Value (238,977.30)
Total Earnings and Investment Gains 946,065.81
EXPENDITURES
Distributions to Members:
Benefit Payments 493,765.32
Refunds of Member Contributions 1,863.92
Total Distributions 495,629.24
Expenses:
Investment related' 81,819.26
Administrative 45,632.58
Total Expenses 127,451.84
Change in Net Assets for the Year 1,006,398.67
Net Assets Beginning of the Year 12,798,492.59
Net Assets End of the Year2 13,804,891.26
'Investment related expenses include investment advisory, custodial and performance monitoring fees.
2Net Assets may be limited for actuarial consideration.
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 124
STATISTICAL DATA
10/ 1 /2014 10/ 1 /2015
Actives
10/1/2016 10/1/2017
Number
35
34
32
37
Average Current Age
41.2
41.7
41.7
40.5
Average Age at Employment
31.2
30.9
30.1
29.8
Average Past Service
10.0
10.8
11.6
10.7
Average Annual Salary
$62,753
$65,339
$70,169
$71,343
Service Retirees
Number 8 9 9 9
Average Current Age 60.0 60.9 61.9 62.9
Average Annual Benefit $53,493 $51,364 $51,364 $51,364
Beneficiaries
Number 1 1 1 1
Average Current Age 64.7 65.7 66.7 67.7
Average Annual Benefit $7,211 $7,211 $7,211 $7,211
Disability Retirees
Number 2 2 2 2
Average Current Age 66.7 67.7 68.7 69.7
Average Annual Benefit $12,142 $12,142 $12,142 $12,142
Terminated Vested
Number 6 6 10 12
Average Current Age ' 48.4 49.4 48.7 48.8
Average Annual Benefit' $34,459 $34,459 $28,152 $26,769
' The Average Annual Benefit and Average Current Age excludes participants awaiting a refund of contributions.
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 125
AGE AND SERVICE DISTRIBUTION
PAST SERVICE
AGE
0
1
2
3
4
5-9
10-14
15-19
20-24
25-29
30+
Total
15-19
0
0
0
0
0
0
0
0
0
0
0
0
20-24
3
0
0
0
0
0
0
0
0
0
0
3
25 - 29
0
1
0
0
0
1
0
0
0
0
0
2
30-34
2
0
0
0
1
2
1
0
0
0
0
6
35 - 39
0
0
0
1
0
2
4
0
0
0
0
7
40 - 44
0
0
0
0
0
1
1
4
0
0
0
6
45 - 49
1
0
0
0
0
1
1
0
0
0
1
4
50-54
0
0
0
0
0
0
2
2
2
0
1
7
55-59
0
0
0
2
0
0
0
0
0
0
0
2
60-64
0
0
0
0
0
0
0
0
0
0
0
0
65+
0
0
0
0
0
0
0
0
0
0
0
0
Total
6
1
0
3
1
7
9
6
2
0
2
37
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 126
VALUATION PARTICIPANT RECONCILIATION
1. Active lives
a. Number in prior valuation 10/1/2016
b. Terminations
i. Vested (partial or full) with deferred benefits
ii. Non -vested or full lump sum distribution received
c. Deaths
i. Beneficiary receiving benefits
ii. No future benefits payable
d. Disabled
e. Retired
f. Continuing participants
g. New entrants
h. Total active life participants in valuation
2. Non -Active lives (including beneficiaries receiving benefits)
Service
Retirees,
Vested
Receiving
Receiving
Death
Benefits
Benefits
a. Number prior valuation
9
1
Retired
0
0
Vested Deferred
0
0
Death, With Survivor
0
0
Death, No Survivor
0
0
Disabled
0
0
Refund of Contributions
0
0
Rehires
0
0
Expired Annuities
0
0
Data Corrections
0
0
b. Number current valuation 9 1
' Includes non -vested members awaiting a refund of conributions.
32
(1)
0
0
0
0
0
31
6
37
Receiving
Disability
Vested
Benefits
Deferred
Total
2
10
22
0
0
0
0
2
2
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
2
12
24
City of Sebastian Police Officers' Retirement System
FOSTER & FOSTER 127
SUMMARY OF PLAN PROVISIONS
(Through Ordinance 0-17-03)
Eligibility Full-time employees who are classified as full-time
sworn Police Officers participate in the System as a
condition of employment.
Credited Service
Total years and fractional parts of years of employment
with the City as a Police Officer.
Salary Total cash compensation reportable on Form W-2, paid
during the fiscal year, for services rendered to the City as
a Police Officer. For Credited Service after July 1,
2011, annual overtime shall not exceed 300 hours.
Additionally, payment for unused sick and annual leave
time shall not be considered pensionable for hours
accrued after July 1, 2011. Also, payment for overtime
and unused sick and annual leave time at the time of
termination shall not exceed the amounts in place on
July 1, 2011.
Averaize Final Compensation
Member Contributions
Citv and State Contributions
Normal Retirement
Date
Benefit
Members hired prior to 4/11/12
Members hired after 4/10/12
Form of Benefit
Average Earnings for the highest 5 years during the 10
years immediately preceding retirement or termination.
8% of Salary.
Remaining amount required in order to pay current costs
and amortize unfunded past service cost, if any, over a
period not exceeding 30 years.
Earlier of 1) age 55 and 10 years of Credited Service, or
2) age 52 and 25 years of Credited Service.
3.0% of Average Final Compensation for each year of
Credited Service.
2.0% of Average Final Compensation for each year of
Credited Service through September 30, 2016, plus 3.0%
of Average Final Compensation for years of Credited
Service after September 30, 2016.
Ten Year Certain and Life Annuity (options available).
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 128
Earlv Retirement
Eligibility Age 50 and 10 Years of Credited Service.
Benefit Accrued benefit, reduced 3% per year prior to Normal
Retirement.
Vesting
Schedule 100% after 10 years of Credited Service.
Benefit Amount Member will receive the vested portion of his (her)
accrued benefit payable at the otherwise Normal
Retirement Date.
Disabilitv
Eligibility
Service Incurred Covered from Date of Employment.
Non -Service Incurred 10 years of Credited Service.
Benefit
Service Incurred Accrued benefit, but not less than 42% of Average Final
Compensation.
Non -Service Incurred Accrued benefit, but not less than 25% of Average Final
Compensation.
Duration Payable for life, with ten years certain, or until recovery
(as determined by the Board).
Death Benefits
Pre -Retirement
Not vested Refund of accumulated contributions.
Vested: Accrued benefit payable to Beneficiary for 10 years at
otherwise Normal Retirement Date.
Post -Retirement Benefits payable to beneficiary in accordance with
option selected at retirement.
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 129
Cost -of -Living Adiustment A 1% automatic cost -of -living adjustment (COLA),
beginning on the first October 1 following age 58 for
Members retiring after August 23, 2017 with at least 15
years of Credited Service. The COLA is applicable to
all categories of retirement, including Normal, Early,
Vesting, Disability, and pre -retirement death
Beneficiaries.
Supplemental Benefit:
Chapter 185 Share Accounts Effective September 30, 2015, excess Premium tax
monies received pursuant to Chapter 185, Florida
Statutes will be allocated to individual Member share
accounts based on years of Credited Service.
Excess Monies The current Mutual Consent between the City and
Membership allows the City to utilize all future Chapter
185 Premium tax monies to assist with Plan funding.
Therefore, no excess monies are available for Share Plan
allocation.
Investment Earnings
Expenses
Board of Trustees
Plan earnings, net of investment -related expenses.
Based on expenses related to administration of the Share
Plan, debited against individual accounts on a pro-rata
basis.
a. Two City Council appointees,
b. Two Members of the System, elected by the
Membership, and
Fifth Trustee elected by other 4 and
appointed by City Council.
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 130
GASB 67
STATEMENT OF FIDUCIARY NET POSITION
SEPTEMBER 30, 2017
ASSETS
MARKET VALUE
Cash and Cash Equivalents:
Short Term Investments
1,469,539
Total Cash and Equivalents
1,469,539
Receivables:
Investment Income
34,918
Total Receivable
34,918
Investments:
U. S. Bonds and Bills
713,872
Federal Agency Guaranteed Securities
257,300
Corporate Bonds
2,576,699
Municipal Obligations
169,518
Stocks
8,780,673
Total Investments 12,498,062
Total Assets 14,002,519
Total Liabilities 0
NET POSITION RESTRICTED FOR PENSIONS 14,002,519
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 131
GASB 67
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FOR THE YEAR ENDED SEPTEMBER 30, 2017
Market Value Basis
ADDITIONS
Contributions:
Member
City
State
Total Contributions
Investment Income:
Net Increase in Fair Value of Investments
Interest & Dividends
Less Investment Expense'
Net Investment Income
Total Additions
DEDUCTIONS
Distributions to Members:
Benefit Payments
Refunds of Member Contributions
Total Distributions
Administrative Expense
Total Deductions
Net Increase in Net Position
NET POSITION RESTRICTED FOR PENSIONS
Beginning of the Year
End of the Year
177,585
337,201
168,628
1,127,082
326,394
(81,819)
493,765
1,864
'Investment related expenses include investment advisory, custodial and performance monitoring fees.
683,414
1,371,657
2,055,071
495,629
45,633
541,262
1,513,809
12,488,710
14,002,519
City of Sebastian Police Officers' Retirement System
FOSTER & FOSTER 132
GASB 67
NOTES TO THE FINANCIAL STATEMENTS
(For the Year Ended September 30, 2017)
Plan Description
Plan Administration
The Plan is a single -employer defined benefit pension plan administered by the Plan's Board of Trustees comprised of:
a. Two City Council appointees,
b. Two Members of the System, elected by the Membership, and
c. Fifth Trustee elected by other 4 and appointed by City Council.
Plan Membership as of October 1, 2016:
Inactive Plan Members or Beneficiaries Currently Receiving Benefits 12
Inactive Plan Members Entitled to But Not Yet Receiving Benefits 10
Active Plan Members 32
54
Benefits Provided
The Plan provides retirement, termination, disability and death benefits.
Normal Retirement:
Date: Earlier of 1) age 55 and 10 years of Credited Service, or 2) age 52 and 25 years of Credited Service.
Benefit:
Members hired prior to 4/11/12: 3.0% of Average Final Compensation for each year of Credited Service.
Members hired after 4/10/12: 2.0% of Average Final Compensation for each year of Credited Service through September
30, 2016, plus 3.0% of Average Final Compensation for years of Credited Service after September 30, 2016.
Earlv Retirement:
Date: Age 50 and 10 Years of Credited Service.
Benefit: Accrued benefit, reduced 3% per year prior to Normal Retirement.
Vesting:
Schedule: 100% after 10 years of Credited Service.
Benefit: Member will receive the vested portion of his (her) accrued benefit payable at the otherwise Normal Retirement
Date.
Disabilitv:
Service Incurred: Covered from Date of Employment.
Non -Service Incurred: 10 years of Credited Service.
Benefit:
Service Incurred: Accrued benefit, but not less than 42% of Average Final Compensation.
Non -Service Incurred: Accrued benefit, but not less than 25% of Average Final Compensation.
Pre -Retirement Death Benefits:
Vested: Accrued benefit payable to Beneficiary for 10 years at otherwise Normal Retirement Date.
Non -Vested: Refund of accumulated contributions.
Cost -of -Living Adiustment:
A 1 % automatic cost -of -living adjustment (COLA), beginning on the first October 1 following age 58 for Members retiring
after August 23, 2017 with at least 15 years of Credited Service. The COLA is applicable to all categories of retirement,
including Normal, Early, Vesting, Disability, and pre -retirement death Beneficiaries.
Sunnlemental Benefit:
Chapter 185 Share Accounts: Effective September 30, 2015, excess Premium tax monies received pursuant to Chapter 185,
Florida Statutes will be allocated to individual Member share accounts based on years of Credited Service.
Excess Monies: The current Mutual Consent between the City and Membership allows the City to utilize all future Chapter
185 Premium tax monies to assist with Plan funding. Therefore, no excess monies are available for Share Plan allocation.
Investment Earnings: Plan earnings, net of investment -related expenses.
Expenses: Based on expenses related to administration of the Share Plan, debited against individual accounts on a pro-rata
basis.
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 133
GASB 67
Contributions
Member Contributions: 8% of Salary.
City and State Contributions: Remaining amount required in order to pay current costs and amortize unfunded past service
cost, if any, over a period not exceeding 30 years.
Investments
Investment Policy:
The following was the Board's adopted asset allocation policy as of September 30, 2017:
Asset Class
Domestic Equity
International Equity
Fixed Income
Real Estate
MLPs
Total
Target Allocation
52.50%
12.50%
25.00%
5.00%
5.00%
100.00%
Concentrations:
The Plan did not hold investments in any one organization that represent 5 percent or more of the Pension Plan's Fiduciary
Net Position.
Rate of Return:
For the year ended September 30, 2017, the annual money -weighted rate of return on Pension Plan investments, net of
Pension Plan investment expense, was 10.90 percent.
The money -weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing
amounts actually invested.
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 134
GASB 67
NET PENSION LIABILITY OF THE SPONSOR
The components of the Net Pension Liability of the Sponsor on September 30, 2017 were as follows:
Total Pension Liability $ 17,252,502
Plan Fiduciary Net Position $ (14,002,519)
Sponsor's Net Pension Liability $ 3,249,983
Plan Fiduciary Net Position as a percentage of Total Pension Liability 81.16%
Actuarial Assumptions:
The Total Pension Liability was determined by an actuarial valuation as of October 1, 2016 updated to September 30, 2017 using
the following actuarial assumptions:
Inflation 2.30%
Salary Increases 3.80% - 16.00%
Discount Rate 7.30%
Investment Rate of Return 7.30%
Mortality Rate Healthy Inactive Lives: ❑
Female: RP 2000 Generational, 100% Annuitant White Collar, Scale BB.
Male: RP 2000 Generational, 10% Annuitant White Collar / 90% Annuitant Blue Collar, Scale BB.
Mortality Rate Healthy Active Lives:
Female: RP2000 Generational, 100% Combined Healthy White Collar, Scale BB.
Male: RP2000 Generational, 10% Combined Healthy White Collar / 90% Combined Healthy Blue Collar, Scale BB.
Mortality Rate Disabled Lives:
Female: 60% RP2000 Disabled Female set forward two years / 40% Annuitant White Collar with no setback, no projection scale.
Male: 60% RP2000 Disabled Male setback four years / 40% Annuitant White Collar with no setback, no projection scale.
The most recent actuarial experience study used to review the other significant assumptions was dated September 16, 2013.
The Long -Term Expected Rate of Return on Pension Plan investments can be determined using a building-block method in which
best -estimate ranges of expected future real rates of return (expected returns, net of Pension Plan investment expenses and inflation)
are developed for each major asset class.
For 2017 the inflation rate assumption of the investment advisor was 2.50%.
These ranges are combined to produce the Long -Term Expected Rate of Return by weighting the expected future real rates of return
by the target asset allocation percentage and by adding expected inflation.
Best estimates of geometric real rates of return for each major asset class included in the Pension Plan's target asset allocation as of
September 30, 2017 are summarized in the following table:
Long Term
Expected Real
Asset Class
Rate of Return
Domestic Equity
5.99%
International Equity
5.60%
Fixed Income
1.85%
Real Estate
2.90%
MLPs
5.00%
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 135
GASB 67
Discount Rate:
The Discount Rate used to measure the Total Pension Liability was 7.30 percent.
The projection of cash flows used to determine the Discount Rate assumed that Plan Member contributions will be made at the
current contribution rate and that Sponsor contributions will be made at rates equal to the difference between actuarially determined
contribution rates and the Member rate. Based on those assumptions, the Pension Plan's Fiduciary Net Position was projected to be
available to make all projected future benefit payments of current plan members. Therefore, the Long -Term Expected Rate of
Return on Pension Plan investments was applied to all periods of projected benefit payments to determine the Total Pension
Liability.
Current
1% Decrease Discount Rate 1% Increase
6.30% 7.30% 8.30%
Sponsor's Net Pension Liability $ 5,578,152 $ 3,249,983 $ 19326,059
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 136
GASB 67
SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS
Last 10 Fiscal Years
Total Pension Liability
Service Cost
Interest
Change in Excess State Money
Changes of benefit terms
Differences between Expected and Actual Experience
Changes of assumptions
Benefit Payments, including Refunds of Employee Contributions
Net Change in Total Pension Liability
Total Pension Liability - Beginning
Total Pension Liability - Ending (a)
Plan Fiduciary Net Position
Contributions - Employer
Contributions - State
Contributions - Employee
Net Investment Income
Benefit Payments, including Refunds of Employee Contributions
Administrative Expense
Net Change in Plan Fiduciary Net Position
Plan Fiduciary Net Position - Beginning
Plan Fiduciary Net Position - Ending (b)
Net Pension Liability - Ending (a) - (b)
Plan Fiduciary Net Position as a percentage of the Total Pension Liability
Covered Employee Payroll,
Net Pension Liability as a percentage of Covered Employee Payroll
Notes to Schedule:
09/30/2017
09/30/2016
09/30/2015
479,778
418,144
403,611
1,179,511
1,027,558
979,259
-
-
22,218
613,973
-
(4,316)
20,758
59,175
(240,633)
382,825
626,069
223,200
(495,629)
(493,765)
(496,363)
2,181,216
1,637,181
886,976
15,071,286
13,434,105
12,547,129
$ 17,252,502
$ 15,071,286
$ 13,434,105
337,201
331,428
311,750
168,628
169,027
145,700
177,585
167,309
161,270
1,371,657
1,067,561
(50,627)
(495,629)
(493,765)
(496,363)
(45,633)
(36,876)
(40,945)
1,513,809
1,204,684
30,785
12,488,710
11,284,026
11,253,241
$ 14,002,519
$ 12,488,710
$ 11,284,026
$ 3,249,983 $ 2,582,576 $ 2,150,079
81.16% 82.86% 84.00%
$ 2,438,012 $ 2,263,866 $ 2,154,612
133.30% 114.08% 99.79%
' The Covered Employee Payroll numbers shown are in compliance with GASB 82.
Changes of benefit terms:
For measurement date 09/30/2017, amounts reported as changes of benefit terms resulted from Ordinance 0-17-03, adopted and
effective August 23, 2017, amended/implemented the below benefit provisions.
• Member Contribution Rate
• Benefit Accrual Rate
• Cost -of -Living Adjustment
For measurement date 09/30/2015, amounts reported as changes of benefit terms were resulted from a limitation on overtime and
lump sum payments of unused sick and annual leave time for inclusion in pensionable earnings and has been implemented as
follows:
• For Credited Service after July 1, 2011, annual overtime shall not exceed 300 hours. Additionally, payment for unused sick and
annual leave time shall not be considered pensionable for hours accrued after July 1, 2011.
• Payment for overtime and unused sick and annual leave time at the time of termination shall not exceed the amounts in place on
July 1, 2011.
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 137
GASB 67
Changes of assumptions:
For measurement date 09/30/2017, amounts reported as changes of assumptions resulted from the following changes:
• In conjunction with this valuation, the investment return assumption has been lowered from 7.45% to 7.30% per year
compounded annually, net of investment related expenses.
• As mandated by Chapter 2015-157, Laws of Florida, the assumed rates of mortality were changed from the rates used by the
Florida Retirement System actuary in the July 1, 2015 actuarial valuation to the rates used in the July 1, 2016 actuarial valuation
for special risk lives.
For the measurement date 09/30/2016, amounts reported as changes of assumptions were resulted from lowering the investment
return assumption from the following changes:
• The investment return assumption was lowered from 7.60% to 7.45%.
• As a result of Chapter 2015-157, Laws of Florida, the assumed rates of mortality were changed to the assumptions used by the
Florida Retirement System for special risk employees.
• The inflation assumption rate was lowered from 3.00% to 2.30%, matching the long-term inflation assumption utilized by the
Plan's investment consultant.
For measurement date 09/30/2015, amounts reported as changes of assumptions were resulted from lowering the investment
return assumption from 7.75% to 7.60%.
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 1 38
GASB 67
SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS
Last 10 Fiscal Years
09/30/2014
09/30/2013
Total Pension Liability
Service Cost
396,146
367,653
Interest
914,243
853,018
Change in Excess State Money
24,386
-
Changes of benefit terms
-
-
Differences between Expected and Actual Experience
-
-
Changes of assumptions
-
-
Benefit Payments, including Refunds of Employee Contributions
(452,892)
(465,435)
Net Change in Total Pension Liability
881,883
755,236
Total Pension Liability - Beginning
11,665,246
10,910,010
Total Pension Liability - Ending (a)
$ 12,547,129
$ 11,665,246
Plan Fiduciary Net Position
Contributions - Employer
401,103
396,603
Contributions - State
147,868
145,961
Contributions - Employee
160,494
154,683
Net Investment Income
951,910
1,029,818
Benefit Payments, including Refunds of Employee Contributions
(452,892)
(465,435)
Administrative Expense
(27,814)
(32,153)
Net Change in Plan Fiduciary Net Position
1,180,669
1,229,477
Plan Fiduciary Net Position - Beginning
10,072,572
8,843,095
Plan Fiduciary Net Position - Ending (b)
$ 11,253,241
$ 10,072,572
Net Pension Liability - Ending (a) - (b)
$ 1,293,888
$ 1,592,674
Plan Fiduciary Net Position as a percentage of the Total Pension Liability
89.69%
86.35%
Covered Employee Payroll'
$ 2,106,767
$ 2,003,398
Net Pension Liability as a percentage of Covered Employee Payroll
61.42%
79.50%
Notes to Schedule:
' The Covered Employee Payroll numbers shown are in compliance with GASB 82.
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 139
GASB 67
SCHEDULE OF CONTRIBUTIONS
Last 10 Fiscal Years
09/30/2017
09/30/2016
09/30/2015
09/30/2014
09/30/2013
Actuarially Determined Contribution
482,726
387,121
435,232
524,585
506,860
Contributions in relation to the Actuarially
Determined Contributions
505,829
500,455
435,232
524,585
520,085
Contribution Deficiency (Excess)
$ (23,103)
$ (113,334)
$ -
$ -
$ (13,225)
Covered Employee Payroll'
$ 2,438,012
$ 2,263,866
$ 2,154,612
$ 2,106,767
$ 2,003,398
Contributions as a percentage of Covered
Employee Payroll
20.75%
22.11%
20.20%
24.90%
25.96%
' The Covered Employee Payroll numbers shown are in compliance with GASB 82.
Notes to Schedule
Valuation Date: 10/01/2015
Actuarially determined contribution rates are calculated as of October 1, two years prior to the end of the fiscal year in which
contributions are reported.
Methods and assumptions used to determine contribution rates:
Funding Method:
Individual Entry Age Normal Actuarial Cost
Amortization Method:
Level Percentage of Pay, Closed.
Remaining Amortization Period:
29 Years (as of 10/01/2015 Valuation).
Mortality:
RP-2000 Table with no projection — Disabled lives set forward 5 years. We feel
this assumption sufficiently accommodates expected mortality improvements.
Interest Rate:
7.60% per year (previously 7.75%) compounded annually, net of investment related
expenses. This is supported by the target asset allocation of the trust and the
expected long-term return by asset class. Further, it falls below the national
average utilized for public pension programs.
Retirement Age:
Earlier of. 1) age 55 and 10 years of credited service, or 2) age 52 and 25 years of
credited service, regardless of age. Also, any member who has reached Normal
Retirement is assumed to continue employment for one additional year. We feel
this assumption is reasonable based upon plan provisions.
Early Retirement:
Commencing at the assumed Early Retirement Age (50), members are assumed to
retire with an immediate subsidized benefit at the rate of 5% per year. We feel this
assumption is reasonable based upon plan provisions.
Disability Rates:
Age based rates with increasing probability of disablement at higher ages. A sample
of rates are shown below:
Age Assumption
30 0.12%
40 0.21%
50 0.54%
60 2.70%
Additionally, it is assumed that 75% of disablements and active Member deaths are
service related. This assumption was approved in conjunction with an actuarial
experience study dated September 16, 2013.
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 140
GASB 67
Termination Rates:
Credited Service Assumption
First 2 Years 14.00%
Years 3-9 5.70%
Years 10-14 2.80%
15 Years and Greater 0.00%
This assumption was approved in conjunction with an actuarial experience study
dated September 16, 2013.
Salary Increases:
Credited Service Assumption
First Year 16.00%
Years 2-14 7.40%
15 Years and Greater 3.80%
This assumption was approved in conjunction with an actuarial experience study
dated September 16, 2013.
Final Salary Load:
Service on 10/01/2014 Load Assumption
5 or more years 20.0%
More than 2, less than 5 years 10.0%
Less than 2 years 0.0%
Payroll Growth:
3% for amortization of all UAAL bases. This is in compliance with Part VII of
Chapter 112, Florida Statutes.
Actuarial Asset Method:
In conjunction with the 10/01/2015 valuation of the plan, the Actuarial Value of
Assets is based on a four-year smoothing methodology. The annual difference
between expected and actual investment earnings (Market Value, net of investment -
related expenses), is phased in over a four-year period.
For the October 1, 2015 valuation, one-fourth of the difference between the actual
and expected net investment earnings for fiscal 2015 is recognized. The remainder
of the difference will be phased on over the next three valuations.
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 141
GASB 67
SCHEDULE OF INVESTMENT RETURNS
Last 10 Fiscal Years
09/30/2017 09/30/2016 09/30/2015 09/30/2014 09/30/2013
Annual Money -Weighted Rate of Return
Net of Investment Expense
10.90% 9.39% -0.45% 9.42% 11.51%
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 142
NOTES TO THE FINANCIAL STATEMENTS
(For the Year Ended September 30, 2018)
General Information about the Pension Plan
Plan Description
The Plan is a single -employer defined benefit pension plan administered by the Plan's Board of Trustees comprised of:
a. Two City Council appointees,
b. Two Members of the System, elected by the Membership, and
c. Fifth Trustee elected by other 4 and appointed by City Council.
Full-time employees who are classified as full-time sworn Police Officers participate in the System as a condition of employment.
Plan Membership as of October 1, 2016.
Inactive Plan Members or Beneficiaries Currently Receiving Benefits 12
Inactive Plan Members Entitled to But Not Yet Receiving Benefits 10
Active Plan Members 32
54
Benefits Provided
The Plan provides retirement, termination, disability and death benefits.
Normal Retirement:
Date: Earlier o£ 1) age 55 and 10 years of Credited Service, or 2) age 52 and 25 years of Credited Service.
Benefit:
Members hired prior to 4/11/12: 3.0% of Average Final Compensation for each year of Credited Service.
Members hired after 4/10/12: 2.0% of Average Final Compensation for each year of Credited Service through September 30, 2016,
plus 3.0% of Average Final Compensation for years of Credited Service after September 30, 2016.
Earlv Retirement:
Date: Age 50 and 10 Years of Credited Service.
Benefit: Accrued benefit, reduced 3% per year prior to Normal Retirement.
Vesting:
Schedule: 100% after 10 years of Credited Service.
Benefit: Member will receive the vested portion of his (her) accrued benefit payable at the otherwise Normal Retirement Date.
Disabilitv:
Service Incurred: Covered from Date of Employment.
Non -Service Incurred: 10 years of Credited Service.
Benefit:
Service Incurred: Accrued benefit, but not less than 42% of Average Final Compensation.
Non -Service Incurred: Accrued benefit, but not less than 25% of Average Final Compensation.
Pre -Retirement Death Benefits:
Vested: Accrued benefit payable to Beneficiary for 10 years at otherwise Normal Retirement Date.
Non -Vested: Refund of accumulated contributions.
Cost-of-Livine Adiustment:
A 1% automatic cost -of -living adjustment (COLA), beginning on the first October 1 following age 58 for Members retiring after
August 23, 2017 with at least 15 years of Credited Service. The COLA is applicable to all categories of retirement, including
Normal, Early, Vesting, Disability, and pre -retirement death Beneficiaries.
Sunnlemental Benefit:
Chapter 185 Share Accounts: Effective September 30, 2015, excess Premium tax monies received pursuant to Chapter 185, Florida
Statutes will be allocated to individual Member share accounts based on years of Credited Service.
Excess Monies: The current Mutual Consent between the City and Membership allows the City to utilize all future Chapter 185
Premium tax monies to assist with Plan funding. Therefore, no excess monies are available for Share Plan allocation.
Investment Earnings: Plan earnings, net of investment -related expenses.
Expenses: Based on expenses related to administration of the Share Plan, debited against individual accounts on a pro-rata basis.
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 143
Contributions
Member Contributions: 8% of Salary.
Citv and State Contributions: Remaining amount required in order to pay current costs and amortize unfunded past service cost, if
any, over a period not exceeding 30 years.
Net Pension Liability
The measurement date is September 30, 2017.
The measurement period for the pension expense was October 1, 2016 to September 30, 2017.
The reporting period is October 1, 2017 through September 30, 2018.
The Sponsor's Net Pension Liability was measured as of September 30, 2017.
The Total Pension Liability used to calculate the Net Pension Liability was determined as of that date.
Actuarial Assumptions:
The Total Pension Liability was determined by an actuarial valuation as of October 1, 2016 updated to September 30, 2017 using the
following actuarial assumptions:
Inflation 2.30%
Salary Increases 3.80% - 16.00%
Discount Rate 7.30%
Investment Rate of Return 7.30%
Mortality Rate Healthy Inactive Lives:
Female: RP 2000 Generational, 100% Annuitant White Collar, Scale BB.
Male: RP 2000 Generational, 10% Annuitant White Collar / 90% Annuitant Blue Collar, Scale BB.
Mortality Rate Healthy Active Lives:
Female: RP2000 Generational, 100% Combined Healthy White Collar, Scale BB.
Male: RP2000 Generational, 10% Combined Healthy White Collar / 90% Combined Healthy Blue Collar, Scale BB.
Mortality Rate Disabled Lives:
Female: 60% RP2000 Disabled Female set forward two years / 40% Annuitant White Collar with no setback, no projection scale.
Male: 60% RP2000 Disabled Male setback four years / 40% Annuitant White Collar with no setback, no projection scale.
The most recent actuarial experience study used to review the other significant assumptions was dated September 16, 2013.
The Long -Term Expected Rate of Return on Pension Plan investments can be determined using a building-block method in which
best -estimate ranges of expected future real rates of return (expected returns, Net of Pension Plan investment expenses and inflation)
are developed for each major asset class.
For 2017 the inflation rate assumption of the investment advisor was 2.50%.
These ranges are combined to produce the Long -Term Expected Rate of Return by weighting the expected future real rates of return
by the target asset allocation percentage and by adding expected inflation.
Best estimates of geometric real rates of return for each major asset class included in the Pension Plan's target asset allocation as of
September 30, 2017 are summarized in the following table:
Asset Class
Domestic Equity
International Equity
Fixed Income
Real Estate
MLPs
Total
Target Allocation
52.50%
12.50%
25.00%
5.00%
5.00%
100.00%
Long Term Expected
Real Rate of Return
5.99%
5.60%
1.85%
2.90%
5.00%
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 144
Discount Rate:
The Discount Rate used to measure the Total Pension Liability was 7.30 percent.
The projection of cash flows used to determine the Discount Rate assumed that Plan Member contributions will be made at the
current contribution rate and that Sponsor contributions will be made at rates equal to the difference between actuarially determined
contribution rates and the Member rate. Based on those assumptions, the Pension Plan's Fiduciary Net Position was projected to be
available to make all projected future benefit payments of current plan members. Therefore, the Long -Term Expected Rate of Return
on Pension Plan investments was applied to all periods of projected benefit payments to determine the Total Pension Liability.
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 145
CHANGES IN NET PENSION LIABILITY
Reporting Period Ending at September 30, 2017
Changes for a Year:
Service Cost
Interest
Differences between Expected and Actual Experience
Changes of assumptions
Changes of benefit terms
Contributions - Employer
Contributions - State
Contributions - Employee
Net Investment Income
Benefit Payments, including Refunds of Employee Contributions
Administrative Expense
Net Changes
Reporting Period Ending at September 30, 2018
Sensitivity of the Net Pension Liability to changes in the Discount Rate.
Sponsor's Net Pension Liability
Increase (Decrease)
Total Pension
Plan Fiduciary
Net Pension
Liability
Net Position
Liability
(a)
(b)
(a)-(b)
$ 15,071,286
$ 12,488,710
$ 2,582,576
479,778
-
479,778
1,179,511
-
1,179,511
20,758
-
20,758
382,825
-
382,825
613,973
-
613,973
-
337,201
(337,201)
-
168,628
(168,628)
-
177,585
(177,585)
-
1,371,657
(1,371,657)
(495,629)
(495,629)
-
-
(45,633)
45,633
2,181,216
1,513,809
667,407
$ 17,252,502
$ 14,002,519
$ 3,249,983
Current Discount
1 % Decrease Rate 1 % Increase
6.30% 7.30% 8.30%
$ 5,578,152 $ 3,249,983 $ 1,326,059
Pension Plan Fiduciary Net Position.
Detailed information about the pension Plan's Fiduciary Net Position is available in a separately issued Plan financial report.
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 146
FINAL PENSION EXPENSE AND DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED
INFLOWS OF RESOURCES RELATED TO PENSIONS
FISCAL YEAR SEPTEMBER 30, 2017
For the year ended September 30, 2017, the Sponsor has recognized a Pension Expense of $659,618.
On September 30, 2017, the Sponsor reported Deferred Outflows of Resources and Deferred Inflows of Resources related to
pensions from the following sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
Differences between Expected and Actual Experience 50,722 171,880
Changes of assumptions 696,060 -
Net difference between Projected and Actual Earnings on Pension Plan investments 326,766 -
Employer and State contributions subsequent to the measurement date 505,829 -
Total $ 1,579,377 $ 171,880
The outcome of the Deferred Outflows of resources related to pensions resulting from Employer and State contributions subsequent
to the measurement date has been recognized as a reduction of the Net Pension Liability in the year ended September 30, 2017.
Other amounts reported as Deferred Outflows of Resources and Deferred Inflows of Resources related to pensions will be
recognized in Pension Expense as follows:
Year ended September 30:
2018
$
207,147
2019
$
207,147
2020
$
239,631
2021
$
54,449
2022
$
95,402
Thereafter
$
97,892
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 147
PRELIMINARY PENSION EXPENSE AND DEFERRED OUTFLOWS OF RESOURCES AND
DEFERRED INFLOWS OF RESOURCES RELATED TO PENSIONS
FISCAL YEAR SEPTEMBER 30, 2018
For the year ended September 30, 2018, the Sponsor will recognize a Pension Expense of $1,392,827.
On September 30, 2018, the Sponsor reported Deferred Outflows of Resources and Deferred Inflows of Resources related to
pensions from the following sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
Differences between Expected and Actual Experience 59,569 137,504
Changes of assumptions 893,755 -
Net difference between Projected and Actual Earnings on Pension Plan investments - 133,743
Employer and State contributions subsequent to the measurement date TBD -
Total TBD $ 271,247
The outcome of the Deferred Outflows of resources related to pensions resulting from Employer contributions subsequent to the
measurement date will be recognized as a reduction of the Net Pension Liability in the year ended September 30, 2018.
Other amounts reported as Deferred Outflows of Resources and Deferred Inflows of Resources related to pensions will be
recognized in Pension Expense as follows:
Year ended September 30:
2019
$
187,220
2020
$
219,704
2021
$
34,522
2022
$
75,475
2023
$
165,156
Thereafter
$
-
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 148
SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS
Last 10 Fiscal Years
Reporting Period Ending
Measurement Date
Total Pension Liability
Service Cost
Interest
Change in Excess State Money
Changes of benefit terms
Differences between Expected and Actual Experience
Changes of assumptions
Benefit Payments, including Refunds of Employee Contributions
Net Change in Total Pension Liability
Total Pension Liability - Beginning
Total Pension Liability - Ending (a)
Plan Fiduciary Net Position
Contributions - Employer
Contributions - State
Contributions - Employee
Net Investment Income
Benefit Payments, including Refunds of Employee Contributions
Administrative Expense
Net Change in Plan Fiduciary Net Position
Plan Fiduciary Net Position - Beginning
Plan Fiduciary Net Position - Ending (b)
Net Pension Liability - Ending (a) - (b)
Plan Fiduciary Net Position as a percentage of the Total Pension Liability
Covered Employee Payroll'
Net Pension Liability as a percentage of Covered Employee Payroll
Notes to Schedule:
09/30/2018
09/30/2017
09/30/2016
09/30/2017
09/30/2016
09/30/2015
479,778
418,144
403,611
1,179,511
1,027,558
979,259
-
-
22,218
613,973
-
(4,316)
20,758
59,175
(240,633)
382,825
626,069
223,200
(495,629)
(493,765)
(496,363)
2,181,216
1,637,181
886,976
15,071,286
13,434,105
12,547,129
$ 17,252,502
$ 15,071,286
$ 13,434,105
337,201
331,428
311,750
168,628
169,027
145,700
177,585
167,309
161,270
1,371,657
1,067,561
(50,627)
(495,629)
(493,765)
(496,363)
(45,633)
(36,876)
(40,945)
1,513,809
1,204,684
30,785
12,488, 710
11,284,026
11,253,241
$ 14,002,519
$ 12,488,710
$ 11,284,026
$ 3,249,983 $ 2,582,576 $ 2,150,079
81.16% 82.86% 84.00%
$ 2,438,012 $ 2,263,866 $ 2,154,612
133.30% 114.08% 99.79%
' The Covered Employee Payroll numbers shown are in compliance with GASB 82.
Changes of benefit terms:
For measurement date 09/30/2017, amounts reported as changes of benefit terms resulted from Ordinance 0-17-03, adopted
and effective August 23, 2017, amended/implemented the below benefit provisions.
• Member Contribution Rate
• Benefit Accrual Rate
• Cost -of -Living Adjustment
For measurement date 09/30/2015, amounts reported as changes of benefit terms were resulted from a limitation on overtime
and lump sum payments of unused sick and annual leave time for inclusion in pensionable earnings and has been implemented
as follows:
• For Credited Service after July 1, 2011, annual overtime shall not exceed 300 hours. Additionally, payment for unused sick
and annual leave time shall not be considered pensionable for hours accrued after July 1, 2011.
• Payment for overtime and unused sick and annual leave time at the time of termination shall not exceed the amounts in place
on July 1, 2011.
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 149
Changes of assumptions:
For measurement date 09/30/2017, amounts reported as changes of assumptions resulted from the following changes:
• In conjunction with this valuation, the investment return assumption has been lowered from 7.45% to 7.30% per year
compounded annually, net of investment related expenses.
• As mandated by Chapter 2015-157, Laws of Florida, the assumed rates of mortality were changed from the rates used by the
Florida Retirement System actuary in the July 1, 2015 actuarial valuation to the rates used in the July 1, 2016 actuarial
valuation for special risk lives.
For the measurement date 09/30/2016, amounts reported as changes of assumptions were resulted from lowering the
investment return assumption from the following changes:
• The investment return assumption was lowered from 7.60% to 7.45%.
• As a result of Chapter 2015-157, Laws of Florida, the assumed rates of mortality were changed to the assumptions used by
the Florida Retirement System for special risk employees.
• The inflation assumption rate was lowered from 3.00% to 2.30%, matching the long-term inflation assumption utilized by the
Plan's investment consultant.
For measurement date 09/30/2015, amounts reported as changes of assumptions were resulted from lowering the investment
return assumption from 7.75% to 7.60%.
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 150
SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS
Last 10 Fiscal Years
Reporting Period Ending
09/30/2015
09/30/2014
Measurement Date
09/30/2014
09/30/2013
Total Pension Liability
Service Cost
396,146
367,653
Interest
914,243
853,018
Change in Excess State Money
24,386
-
Changes of benefit terms
-
-
Differences between Expected and Actual Experience
-
-
Changes of assumptions
-
-
Benefit Payments, including Refunds of Employee Contributions
(452,892)
(465,435)
Net Change in Total Pension Liability
881,883
755,236
Total Pension Liability - Beginning
11,665,246
10,910,010
Total Pension Liability - Ending (a)
$ 12,547,129
$ 11,665,246
Plan Fiduciary Net Position
Contributions - Employer
401,103
396,603
Contributions - State
147,868
145,961
Contributions - Employee
160,494
154,683
Net Investment Income
951,910
1,029,818
Benefit Payments, including Refunds of Employee Contributions
(452,892)
(465,435)
Administrative Expense
(27,814)
(32,153)
Net Change in Plan Fiduciary Net Position
1,180,669
1,229,477
Plan Fiduciary Net Position - Beginning
10,072,572
8,843,095
Plan Fiduciary Net Position - Ending (b)
$ 11,253,241
$ 10,072,572
Net Pension Liability - Ending (a) - (b)
$ 1,293,888
$ 1,592,674
Plan Fiduciary Net Position as a percentage of the Total Pension Liability
89.69%
86.35%
Covered Employee Payroll'
$ 2,106,767
$ 2,003,398
Net Pension Liability as a percentage of Covered Employee Payroll
61.42%
79.50%
Notes to Schedule:
' The Covered Employee Payroll numbers shown are in compliance with GASB 82.
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 151
SCHEDULE OF CONTRIBUTIONS
Last 10 Fiscal Years
09/30/2017
09/30/2016 09/30/2015 09/30/2014
09/30/2013
Actuarially Determined Contribution
482,726
387,121 435,232 524,585
506,860
Contributions in relation to the
Actuarially Determined Contributions
505,829
500,455 435,232 524,585
520,085
Contribution Deficiency (Excess)
$ (23,103)
$ (113,334) $ - $ -
$ (13,225)
Covered Employee Payroll' $ 2,438,012 $ 2,263,866 $ 2,154,612 $ 2,106,767 $ 2,003,398
Contributions as a percentage of
Covered Employee Payroll 20.75% 22.11% 20.20% 24.90% 25.96%
' The Covered Employee Payroll numbers shown are in compliance with GASB 82.
Notes to Schedule
Valuation Date: 10/01/2015
Actuarially determined contribution rates are calculated as of October 1, two years prior to the end of the fiscal year in
which contributions are reported.
Methods and assumptions used to determine contribution rates:
Funding Method:
Individual Entry Age Normal Actuarial Cost
Amortization Method:
Level Percentage of Pay, Closed.
Remaining Amortization Period:
29 Years (as of 10/01/2015 Valuation).
Mortality:
RP-2000 Table with no projection — Disabled lives set forward 5 years. We feel this
assumption sufficiently accommodates expected mortality improvements.
Interest Rate:
7.60% per year (previously 7.75%) compounded annually, net of investment related
expenses. This is supported by the target asset allocation of the trust and the
expected long-term return by asset class. Further, it falls below the national average
utilized for public pension programs.
Retirement Age:
Earlier of 1) age 55 and 10 years of credited service, or 2) age 52 and 25 years of
credited service, regardless of age. Also, any member who has reached Normal
Retirement is assumed to continue employment for one additional year. We feel this
Early Retirement:
Commencing at the assumed Early Retirement Age (50), members are assumed to
retire with an immediate subsidized benefit at the rate of 5% per year. We feel this
assumption is reasonable based upon plan provisions.
Disability Rates:
Age based rates with increasing probability of disablement at higher ages. A sample
of rates are shown below:
Age Assumption
30 0.12%
40 0.21%
50 0.54%
60 2.70%
Additionally, it is assumed that 75% of disablements and active Member deaths are
service related. This assumption was approved in conjunction with an actuarial
experience study dated September 16, 2013.
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 152
Termination Rates:
Credited Service Assumption
First 2 Years 14.00%
Years 3-9 5.70%
Years 10-14 2.80%
15 Years and Greater 0.00%
This assumption was approved in conjunction with an actuarial experience study
dated September 16, 2013.
Salary Increases:
Credited Service Assumption
First Year 16.00%
Years 2-14 7.40%
15 Years and Greater 3.80%
This assumption was approved in conjunction with an actuarial experience study
dated September 16, 2013.
Final Salary Load:
Service on 10/01/2014 Load Assumption
5 or more years 20.0%
More than 2, less than 5 years 10.0%
Less than 2 years 0.0%
Payroll Growth:
3% for amortization of all UAAL bases. This is in compliance with Part VII of
Chapter 112, Florida Statutes.
Actuarial Asset Method:
In conjunction with the 10/01/2015 valuation of the plan, the Actuarial Value of
Assets is based on a four-year smoothing methodology. The annual difference
between expected and actual investment earnings (Market Value, net of investment -
related expenses), is phased in over a four-year period.
For the October 1, 2015 valuation, one-fourth of the difference between the actual
and expected net investment earnings for fiscal 2015 is recognized. The remainder
of the difference will be phased on over the next three valuations.
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 153
FINAL COMPONENTS OF PENSION EXPENSE
FISCAL YEAR SEPTEMBER 30, 2017
Beginning balance
Employer and State contributions made after 09/30/2016
Total Pension Liability Factors:
Service Cost
Interest
Changes in benefit terms
Differences between Expected and Actual Experience
with regard to economic or demographic assumptions
Current year amortization of experience difference
Change in assumptions about future economic or
demographic factors or other inputs
Current year amortization of change in assumptions
Benefit Payments
Net change
Plan Fiduciary Net Position:
Contributions - Employer
Contributions - State
Contributions - Employee
Projected Net Investment Income
Difference between projected and actual earnings on
Pension Plan investments
Current year amortization
Benefit Payments
Administrative Expenses
Net change
Ending Balance
Net Pension Deferred Deferred Pension
Liability Inflows Outflows Expense
$ 2,150,079 $ 303,708 $ 1,432,497 $ -
- - 505,829 -
418,144
-
-
418,144
1,027,558
-
-
1,027,558
59,175
-
59,175
-
-
(34,376)
(8,453)
(25,923)
626,069
-
626,069
-
-
-
(121,324)
121,324
(493,765)
-
-
-
1,637,181
(34,376)
1,061,296
1,541,103
331,428
-
(331,428)
-
169,027
-
(169,027)
-
167,309
-
-
(167,309)
862,797
-
-
(862,797)
204,764
204,764
-
-
-
(73,436)
(185,181)
111,745
(493,765)
-
-
-
(36,876)
-
-
36,876
1,204,684
131,328
(685,636)
(881,485)
$ 2,582,576 $ 400,660 $ 1,808,157 $ 659,618
City of Sebastian Police Officers' Retirement System
FOSTER & FOSTER 154
PRELIMINARY COMPONENTS OF PENSION EXPENSE
FISCAL YEAR SEPTEMBER 30, 2018
Net Pension
Deferred
Deferred
Pension
Liability
Inflows
Outflows
Expense
Beginning balance
$ 2,582,576
$ 400,660
$ 1,808,157
$ -
Employer and State contributions made after 09/30/2017
-
-
TBD*
-
Total Pension Liability Factors:
Service Cost
479,778
-
-
479,778
Interest
1,179,511
-
-
1,179,511
Changes in benefit terms
613,973
-
-
613,973
Differences between Expected and Actual Experience
with regard to economic or demographic assumptions
20,758
-
20,758
-
Current year amortization of experience difference
-
(34,376)
(11,911)
(22,465)
Change in assumptions about future economic or
demographic factors or other inputs
382,825
-
382,825
-
Current year amortization of change in assumptions
-
-
(185,130)
185,130
Benefit Payments
(495,629)
-
-
-
Net change
2,181,216
(34,376)
206,542
2,435,927
Plan Fiduciary Net Position:
Contributions - Employer
337,201
-
(337,201)
-
Contributions - State
168,628
-
(168,628)
-
Contributions - Employee
177,585
-
-
(177,585)
Projected Net Investment Income
935,704
-
-
(935,704)
Difference between projected and actual earnings on
Pension Plan investments
435,953
435,953
-
-
Current year amortization
-
(160,626)
(185,182)
24,556
Benefit Payments
(495,629)
-
-
-
Administrative Expenses
(45,633)
-
-
45,633
Net change
1,513,809
275,327
(691,011)
(1,043,100)
Ending Balance
$ 3,249,983
$ 641,611
TBD
$ 1,392,827
* Employer and State Contributions subsequent to the measurement
date made
after September
30, 2017 but made on or before
September 30, 2018 need to be added.
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 155
GASB 68
AMORTIZATION SCHEDULE - INVESTMENTS
Increase (Decrease) in Pension Expense Arising from the Recognition of the of Differences Between Projected and Actual Earnings on Pension Plan Investments
Differences Between
Plan Year
Projected and Actual
Recognition
Ending
Earnings
Period (Years)
2017
2018
2019
2020
2021
2022 2023
2024
2025
2026
2027
2014
$ (162,421)
5
$ (32,484)
$ (32,484)
$ (32,484)
$ -
$ -
$ - $
$
$
$
$
2015
$ 925,908
5
$ 185,181
$ 185,182
$ 185,182
$ 185,182
$ -
$ $
$
$
$
$
2016
$ (204,764)
5
$ (40,952)
$ (40,953)
$ (40,953)
$ (40,953)
$ (40,953)
$ $
- $
- $
- $
- $ -
2017
$ (435,953)
5
$ -
$ (87,189)
$ (87,191)
$ (87,191)
$ (87,191)
$ (87,191) $
- $
- $
- $
- $ -
Net Increase (Decrease) in Pension
Expense
$ 111,745
$ 24,556
$ 24,554
$ 57,038
$ (128,144)
$ (87,191) $
- $
- $
- $
- $ -
City of Sebastian Police Officers' Retirement System FOSTER & FOSTER 156
GASB 68
AMORTIZATION SCHEDULE - CHANGES OF ASSUMPTIONS
Increase (Decrease) in Pension Expense Arising from the Recognition of the Effects of Changes of Assumptions
Plan Year
Changes of
Recognition
Ending
Assumptions
Period (Years)
2017
2018
2019
2020
2021
2022
2023
2024
2015 $
223,200
7
$ 31,885
$
31,886
$
31,886
$
31,886
$ 31,886
$ 31,886
$ -
$
2016 $
626,069
7
$ 89,439
$
89,439
$
89,439
$
89,438
$ 89,438
$ 89,438
$ 89,438
$
2017 $
382,825
6
$ -
$
63,805
$
63,804
$
63,804
$ 63,804
$ 63,804
$ 63,804
$
Net Increase (Decrease)
in Pension
Expense
$ 121,324
$
185,130
$
185,129
$
185,128
$ 185,128
$ 185,128
$ 153,242
$
2025 2026 2027
City of Sebastian Police Officers' Retirement System
FOSTER & FOSTER157
GASB 68
AMORTIZATION SCHEDULE - EXPERIENCE
Increase (Decrease) in Pension Expense Arising from the Recognition of the Effects of Differences between Expected and Actual Experience
Differences Between
Plan Year
Expected and Actual
Recognition
Ending
Experience
Period (Years)
2017
2018
2019
2020
2021
2022
2023
2024
2015
$ (240,633)
7
$ (34,376)
$ (34,376)
$ (34,376)
$ (34,376)
$ (34,376)
$ (34,376)
$ -
$
2016
$ 59,175
7
$ 8,453
$ 8,453
$ 8,453
$ 8,454
$ 8,454
$ 8,454
$ 8,454
$
2017
$ 20,758
6
$ -
$ 3,458
$ 3,460
$ 3,460
$ 3,460
$ 3,460
$ 3,460
$
Net Increase (Decrease)in Pension
Expense
$ (25,923)
$ (22,465)
$ (22,463)
$ (22,462)
$ (22,462)
$ (22,462)
$ 11,914
$
2025 2026 2027
City of Sebastian Police Officers' Retirement System
FOSTER & FOSTER158