Loading...
1190 Amends General Employees Pension PlanORDINANCE NO. 1190 AN ORDINANCE OF THE CITY OF OKEECHOBEE FURTHER AMENDING THE CITY OF OKEECHOBEE GENERAL EMPLOYEES' RETIREMENT SYSTEM, RESTATED PURSUANT TO ORDINANCE 1141; AMENDING SECTION 6, BENEFIT AMOUNTS AND ELIGIBILITY; AMENDING SECTION 9, VESTING; PROVIDING FOR CODIFICATION; PROVIDING FOR SEVERABILITY OF PROVISIONS; REPEALING ALL ORDINANCES IN CONFLICT HEREWITH; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City of Okeechobee General employees are presently provided pension and certain other benefits under Ordinances of the City of Okeechobee; and NOW THEREFORE, be it ordained before the City Council of the City of Okeechobee, Florida; presented at a duly advertised public meeting; and passed by majority vote of the City Council; and properly executed by the Mayor or designee, as Chief Presiding Officer for the City: SECTION 1: That the City of Okeechobee General Employees' Retirement System, restated pursuant to Ordinance No. 1141, as amended, is hereby further amended by amending Section 6, Benefit Amounts and Eligibility, subsection 1., Normal Retirement Age and Date, and subsection 4., Early Retirement Benefit, to read as follows: Normal Retirement Age and Date. A Member's normal retirement age is the earlier of the attainment of age sixty five (65) sixty-two (62) and the completion of five (5) years of Credited Service or upon the completion of thirty (30) years of Credited Service, regardless of age. Each Member shall become one hundred percent (100%) vested in his accrued benefit at normal retirement age. A Member's normal retirement date shall be the first day of the month coincident with or next following the date the Member retires from the City after attaining normal retirement age. 4. Early Retirement Benefit. A member retiring hereunder on his early retirement date may receive either a deferred or an immediate monthly retirement benefit payable in the same form as for normal retirement as follows: A. A deferred monthly retirement benefit which shall commence at age sixty five (65) sixty-two (62) and shall be continued on the first day of each month thereafter. The amount of each such deferred monthly retirement benefit shall be determined in the same manner as for retirement on his normal retirement date except that Credited Service and Average Final Compensation shall be determined as of his early retirement date; or B. An immediate monthly retirement benefit which shall commence on his early retirement date and shall be continued on the first day of each month thereafter. The benefit payable shall be as determined in paragraph A above, which is reduced by two percent (2%) for each year by which the commencement of benefits precedes age sixty f fes) sixty-two (62). SECTION 2: That the City of Okeechobee General Employees' Retirement System, restated pursuant to Ordinance No. 1141, as amended, is hereby further amended by amending Section 9, Vesting, subsection 2., to read as follows: 2. If the Member has five (5) or more years of Credited Service upon termination, the Member shall be entitled to a monthly retirement benefit, determined in the same manner as for normal or early retirement and based upon the Member's Credited Service, Average Final Compensation and the benefit accrual rate as of the date of termination, payable to him commencing at age 66 62, or age 55 reduced as for early retirement from age 65 62, provided he does not elect to withdraw his Accumulated Contributions and provided the Member survives to his otherwise normal or early retirement date. If the Ordinance No. 1190 - Page 1 of 2 Language to be added is underlined. Language to be deleted is strask thmugh. Member does not withdraw his Accumulated Contributions and does not survive to his otherwise normal or early retirement date, his designated Beneficiary shall be entitled to a benefit as provided herein for a deceased Member, vested or eligible for Retirement under Pre -Retirement Death. SECTION 3: Specific authority is hereby granted to codify and incorporate this Ordinance in the existing Code of Ordinances of the City of Okeechobee. SECTION 4: All Ordinances or parts of Ordinances in conflict herewith be and the same are hereby repealed. SECTION 5: If any section, subsection, sentence, clause, phrase of this ordinance, or the particular application thereof shall be held invalid by any court, administrative agency, or other body with appropriate jurisdiction, the remaining section, subsection, sentences, clauses, or phrases under application shall not be affected thereby. SECTION 6: That this Ordinance shall become effective upon adoption. INTRODUCED on First Reading and set for Final Public Hearing this 16th day of Jam, 2019. Dowling R. Wa fiord, Jr., Mayor ATTE T: - Lane Gamiotea, CMC, City Clerk PASSED AND ADOPTED after Second Reading and Final Public Hearing this 6th day of August, 2019. Dowling R. W tford, Jr., Mayor r ATTE T: ` Lane Gamiotea, CMC, City Clerk APPROVED FOR LEGAL SUFFICIENCY: John R. Cook, City Attorney Ordinance No. 1190 - Page 2 of 2 Language to be added is underlined. Language to be deleted is skask-1#reugh. November 1, 2018 Board of Trustees City of Okeechobee General Employees’ Retirement System c/o Ms. Kyle Tintle Resource Centers, LLC 4360 Northlake Blvd, Suite 206 Palm Beach Gardens, Florida 33410-6264 Re: City of Okeechobee General Employees’ Retirement System Actuarial Impact Statement Dear Trustees: As requested, we are pleased to enclose three (3) copies of an Actuarial Impact Statement as of October 1, 2017 for the proposed amendment under the City of Okeechobee General Employees’ Retirement System (System). Background – The System currently provides: o Normal Retirement eligibility upon the earlier of 1) attainment of age sixty-five (65) and completion of five (5) years of Credited Service or 2) completion of thirty (30) years of Credited Service o Terminated vested benefits commence upon attainment of age sixty-five (65) o Early retirement benefit reduction from age sixty-five (65) Proposed Amendment – Under the proposed amendment: o Normal Retirement eligibility upon the earlier of 1) attainment of age sixty-two (62) and completion of five (5) years of Credited Service or 2) completion of thirty (30) years of Credited Service o Terminated vested benefits commence upon attainment of age sixty-two (62) o Early retirement benefit reduction from age sixty-two (62) Results – Based upon the results of our Actuarial Impact Statement, the proposed amendment increases the first year annual City contribution by $5,918 (0.57% of covered payroll - $1,046,008). Filing Requirements – We have prepared the Actuarial Impact Statement for filing with the State of Florida. Please note that this Statement must be signed and dated on behalf of the Board of Trustees. Copies of the Ordinance upon passage at first reading along with the signed and dated Board of Trustees November 1, 2018 Page Two Actuarial Impact Statement are generally required to be filed with the State at the following address: Mr. Douglas E. Beckendorf, A.S.A. Bureau of Local Retirement Services Division of Retirement Building 8 Post Office Box 9000 Tallahassee, Florida 32315-9000 We understand the State requires funding no later than the fiscal year next following the effective date of the increases in costs resulting from the Ordinance. Please forward a copy of the Ordinance upon passage to update our files. Other Considerations – Under Governmental Accounting Standards Board (GASB) Statement Number 68, we understand the cost / income of benefit changes must be recognized immediately in pension expense (accounting not funding). Therefore, the pension expense is expected to increase the first year and then is expected to return to lower levels in fiscal years following initial recognition of the benefit change. Actuarial Assumptions and Methods, System Provisions, Financial Data, Member Census Data – The actuarial assumptions and methods, financial data and member census data employed for purposes of our Actuarial Impact Statement are the same actuarial assumptions and methods, financial data and member census data utilized for the October 1, 2017 Actuarial Valuation with the following exception: o Assumed retirement eligibility is the earlier of 1) attainment of age sixty-two (62) and completion of five (5) years of Credited Service or 2) completion of thirty (30) years of Credited Service The System provisions employed for purposes of our Actuarial Impact Statement are the same System provisions utilized for the October 1, 2017 Actuarial Valuation with the exception of the proposed amendment changes described above. This Actuarial Impact Statement is intended to describe the estimated future financial effects of the proposed System provision changes on the System, and is not intended as a recommendation in favor of the benefit changes or in opposition of the System provision changes. These calculations are based upon assumptions regarding future events. However, the System’s long term costs will be determined by actual future events, which may differ materially from the Board of Trustees November 1, 2018 Page Three assumptions made. These calculations are also based upon present System provisions that are referenced in this Actuarial Impact Statement. If you have reason to believe the assumptions used are unreasonable, the System provisions are incorrectly described as referenced, important System provisions relevant to this proposed Actuarial Impact Statement are not described or that conditions have changed since the calculations were made, you should contact the undersigned prior to relying on information in this Actuarial Impact Statement. Future actuarial measurements may differ significantly from the current measurements presented in this report due to such factors as the following: System experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period); and changes in System provisions or applicable law. Due to the limited scope of the actuary’s assignment, the actuary did not perform an analysis of the potential range of such future measurements. This Actuarial Impact Statement should not be relied on for any purpose other than the purpose described in the primary communication. Determinations of the financial results associated with the benefits described in this report in a manner other than the intended purpose may produce significantly different results. This Actuarial Impact Statement has been prepared by actuaries who have substantial experience valuing public employee retirement plans. To the best of our knowledge the information contained in this report is accurate and fairly presents the actuarial position of the System as of the Actuarial Impact Statement date. All calculations have been made in conformity with generally accepted actuarial principles and practices, with the Actuarial Standards of Practice issued by the Actuarial Standards Board and with applicable statutes. This Actuarial Impact Statement may be provided to parties other than the Board only in its entirety and only with the permission of an approved representative of the Board. The signing actuaries are independent of the System sponsor. If you have reason to believe that the information provided in this Actuarial Impact Statement is inaccurate, or is in any way incomplete, or if you need further information in order to make an informed decision on the subject matter of this report, please contact the undersigned prior to making such decision. The undersigned are Members of the American Academy of Actuaries and meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion contained herein. Board of Trustees November 1, 2018 Page Four If you should have any question concerning the above or if we may be of further assistance with this matter, please do not hesitate to contact us. Sincerest regards, Lawrence F. Wilson, E.A., A.S.A. Senior Consultant and Actuary Jennifer M. Borregard, E.A. Consultant and Actuary Enclosures City of Okeechobee General Employees' Retirement System Actuarial Impact Statement as of October 1, 2017 A. Description of Proposed System Amendment o Normal Retirement eligibility shall be the earlier of 1) attainment of age sixty-two (62) and completion of five (5) years of Credited Service or 2) completion of thirty (30) years of Credited Service regardless of age. o Terminated vested benefits commence upon attainment of age sixty-two (62) o Early retirement benefit reduction from age sixty-two (62) B. An estimate of the cost of implementing this amendment (see attachment) C. In my opinion, the proposed changes are in compliance with Part VII, Chapter 112, Florida Statutes and Section 14, Article X of the State Constitution. Chairman, Retirement Committee Date City of Okeechobee General Employees' Retirement System 1 Covered Group A.Number of Participants Actives 27 27 Retirees, Disabilities, Beneficiaries and Vested Terminations 22 22 Total Covered Annual Payroll $1,046,008 $1,046,008 Long Range Cost B.Actuarial Present Value of Projected 5,461,963 5,370,257 Benefits C.Valuation Assets 4,409,661 4,409,661 D.Actuarial Present Value of Prospective Contributions: (B)-(C)1,052,302 960,596 Current Cost E.Total Normal Cost (for current year) For Benefits 110,051 115,406 For Administrative Expense 48,490 48,490 Total Normal Cost 158,541 163,896 Increase NC Benefits for Salary Scale 6,603 6,924 Increase NC Admin Exp. for Interest 3,394 3,394 Total Normal Cost for Fiscal Year in (F)168,538 174,214 F.Fiscal Year End to which Contributions Apply 2019 2019 G.Total Required Contributions if paid quarterly during the fiscal year in (F)175,723 181,641 As % of Payroll 16.80%17.37% H.Expected Member Contributions in fiscal year (F)66,526 66,526 As % of Payroll 6.36%6.36% I.Total Required City Contribution if paid quarterly during the fiscal year in (F)109,197 115,115 As % of Payroll 10.44%11.01% ACTUARIAL IMPACT STATEMENT AS OF OCTOBER 1, 2017 Actuarial Proposed Valuation Amendment City of Okeechobee General Employees' Retirement System 2 A.Actuarial Present Value (APV) of Projected Benefits 1. Active Members Service Retirement Benefits $2,899,448 $2,815,100 Vesting Benefits 161,478 161,533 Disability Benefits 18,881 25,959 Preretirement Death Benefits 40,750 26,259 Return of Contributions 14,041 14,041 Total 3,134,598 3,042,892 2. Inactive Members Service Retirees 2,276,481 2,276,481 Disability Retirees 0 0 Beneficiaries Receiving Benefits 0 0 Terminated Vested Members 50,884 50,884 Total 2,327,365 2,327,365 3. Grand Total 5,461,963 5,370,257 B.Valuation Assets 4,409,661 4,409,661 C.APV of Projected Normal Costs: (A)-(B) 1. APV of Projected Member Contributions 600,121 522,385 2. APV of Projected Employer Normal Costs 452,181 438,211 3. Total APV of Projected Normal Costs 1,052,302 960,596 D.APV of Projected Covered Payroll 10,002,020 8,706,417 E.Normal Cost Rate: (C3) / (D)10.521%11.033% F.Annual Payroll of Active Members 1,046,008 1,046,008 G.Normal Cost for Benefits: (E) x (F)110,051 115,406 H.Normal Cost for Administrative Expense 48,490 48,490 I.Total Normal Cost: (G) + (H)158,541 163,896 DERIVATION OF NORMAL COST AS OF OCTOBER 1, 2017 Actuarial Proposed Valuation Amendment City of Okeechobee General Employees' Retirement System 3 CITY OF OKEECHOBEE GENERAL EMPLOYES' RETIREMENT SYSTEM SUMMARY OF SYSTEM PROVISIONS A. Ordinances System established under the Code of Ordinances for the City of Okeechobee General, Florida, Chapter 2, Article III, Division 7, and was most recently amended under Ordinance No. 1141 passed and adopted on September 6, 2016. The System is also governed by certain provisions of Part VII, Chapter 112, Florida Statutes (F.S.) and the Internal Revenue Code. B. Effective Date Initial Ordinance: January 1, 1972 Amended & Restated Ordinance: October 1, 2016 C. System Year October 1 through September 30. D. Type of System Qualified, governmental defined benefit retirement plan; for GASB purposes it is a single- employer plan. The System was treated as a cost sharing multiple-employer plan for GASB purposes for FYE September 30, 2015 and FYE September 30, 2016. E. Eligibility Requirements All regular full-time employees of the City (excluding certified Police Officers and Firefighters and the Utility Authority) are eligible on Date of Employment; Participation is mandatory. Elected officials are also eligible. F. Credited Service Service is measured as the total number of years and completed months of service as a participant. No service is credited for any periods of employment for which the participant received a refund of Employee Contributions. G. Compensation Compensation includes tax sheltered and tax exempt income which would otherwise be included in base income, derived from elective employee payroll deductions or salary reductions, but excluding overtime, bonuses and any other non-regular payment. H. Average Final Compensation (AFC) AFC is the average compensation over the highest five years of the last ten years. City of Okeechobee General Employees' Retirement System 4 I. Normal Retirement Eligibility: Age 62 and 5 years of service, or 30 years of service regardless of age. Benefit: 2.10% of Average Final Compensation times years and completed months of continuous service with the City. Normal Form of Benefit: Monthly annuity payable for life, with 10 years guaranteed; other options are available. COLA: None J. Early Retirement Eligibility: A participant may elect to retire earlier than the Normal Retirement Eligibility upon the attainment of age 55 with 10 years of Credited Service. Benefit: The Normal Retirement Benefit is reduced by 1/6% for each month by which the Early Retirement date precedes age 62 (i.e. 2% per year early). Normal Form of Benefit: Monthly annuity payable for life, with 10 years guaranteed; other options are available. COLA: None K. Delayed Retirement Same as Normal Retirement taking into account compensation earned and service credited until the date of actual retirement. L. Service Connected Disability Eligibility: Disabled so as to be incapable of further service with the City. Benefit: Calculated in the same manner as for Early Retirement if the benefit begins at or after age 55, and if the benefit begins prior to age 55, the benefit shall also be actuarially reduced for the period prior to age 55. Normal Form of Benefit: Monthly annuity payable for life, with 10 years guaranteed; other options are available. COLA: None City of Okeechobee General Employees' Retirement System 5 M. Non-Service Connected Disability Eligibility: Disabled so as to be incapable of further service with the City. Benefit: Calculated in the same manner as for Early Retirement if the benefit begins at or after age 55, and if the benefit begins prior to age 55, the benefit shall also be actuarially reduced for the period prior to age 55. Normal Form of Benefit: Monthly annuity payable for life, with 10 years guaranteed; other options are available. COLA: None N. Death in the Line of Duty Eligibility: Any participant who dies before starting to receive benefits. Benefit: Vested Active and Inactive participants: The amount of the death benefit shall be equal to 50% of present value of vested accrued benefit, or refund of accumulated member contributions, with interest, whichever is greater. Eligible for Retirement: The amount of the death benefit shall be the accrued benefit, determined as though the deceased had retired, payable under 10 year certain and life form, or 50% of present value of vested accrued benefit if greater. Not Vested: Return of accumulated contributions. Normal Form of Benefit: Monthly annuity payable for life, with 10 years guaranteed; other options are available. COLA: None O. Other Pre-Retirement Death Eligibility: Any participant who dies before starting to receive benefits. Benefit: Vested Active and Inactive participants: The amount of the death benefit shall be equal to 50% of present value of vested accrued benefit, or refund of accumulated member contributions, with interest, whichever is greater. Eligible for Retirement: The amount of the death benefit shall be the accrued benefit, determined as though the deceased had retired, payable under 10 year certain and life form, or 50% of present value of vested accrued benefit if greater. City of Okeechobee General Employees' Retirement System 6 Other Pre-Retirement Death - Continued Not Vested: Return of accumulated contributions. Normal Form of Benefit: Monthly annuity payable for life, with 10 years guaranteed; other options are available. COLA: None P. Post Retirement Death Benefit determined by the form of benefit elected upon retirement. Q. Optional Forms In lieu of electing the Normal Form of benefit, the optional forms of benefits available to all retirees are the Single Life Annuity option and the 50%, 66-2/3%, 75% or 100% Joint and Survivor options. A Social Security option is also available for participants retiring prior to the time they are eligible for Social Security retirement benefits. R. Vested Termination Eligibility: Participants earn a non-forfeitable right to System benefits after the completion of 5 years of Credited Service if they elect to leave their accumulated contributions in the fund. Benefit: The participant’s accrued Normal Retirement Benefit as of the date of termination, beginning at age 62. Participants with 10 or more years of Credited Service may elect to receive an actuarially reduced Early Retirement Benefit beginning anytime between ages 55 and 62. Not Vested: Return of accumulated contributions with interest. Normal Form of Benefit: Monthly annuity payable for life, with 10 years guaranteed; other options are available. COLA: None S. Refunds Eligibility: Participants leaving employment with less than 5 years of Credited Service are eligible. Optionally, vested participants (those with 5 or more years of Credited Service) may elect a refund in lieu of the vested benefits otherwise due. Benefit: Refund of the participant’s Employee Contributions with interest. City of Okeechobee General Employees' Retirement System 7 T. Participant Contributions 6% of earnings. Member contributions are accumulated at 5.25% interest through September 30, 1993, and 3.00%, interest thereafter. U. Employer Contributions The additional amount determined by the actuary needed to fund the System properly according to State laws. V. Cost of Living Increases Not Applicable W. 13th Check Not Applicable X. Deferred Retirement Option Plan Eligibility: System members are eligible for the DROP on the first day of the month coincident with or next following Normal Retirement Date. Members who meet the eligibility requirements must submit a written election to participate in the DROP. Benefit: The member’s Credited Service and FAE are frozen upon entry into the DROP. The monthly retirement benefit as described under Normal Retirement is calculated based upon the frozen Credited Service and FAE. Maximum DROP Period: 60 months Interest Credited: Members elect to have their DROP accounts credited quarterly at a rate equal to either (i) 6.5% or (ii) actual net rate of investment return realized by the System. Members may elect to change their elections once during the DROP period. Normal Form of Benefit: Monthly annuity payable for life, with 10 years guaranteed; other options are available. COLA: None City of Okeechobee General Employees' Retirement System 8 Y. Other Ancillary Benefits There are no ancillary retirement type benefits not required by statutes but which might be deemed a City of Okeechobee General Employees’ Retirement System liability if continued beyond the availability of funding by the current funding source. Z. Changes from Previous Valuation Normal Retirement Eligibility was: Age 65 and 5 years of service, or 30 years of service regardless of age. Early Retirement Benefit was: The Normal Retirement Benefit is reduced by 1/6% for each month by which the Early Retirement date precedes age 65 (i.e. 2% per year early). Vested Termination Benefit was: The participant’s accrued Normal Retirement Benefit as of the date of termination, beginning at age 65. Participants with 10 or more years of Credited Service may elect to receive an actuarially reduced Early Retirement Benefit beginning anytime between ages 55 and 65. City of Okeechobee General Employees' Retirement System 9 ACTUARIAL COST METHODS AND ASSUMPTIONS Valuation Assumptions The covered group size does not support statistically significant experience on which to base certain demographic assumptions. Mortality is based on a commonly used fully generational mortality table and projection scale. The retirement age assumption tracks the eligibility requirements for normal retirement. Note that a member must be eligible for normal retirement in order to enter the DROP. Economic Assumptions The investment return rate assumed in the valuation is 7.0% per direction from the Board of Trustees based on information from their investment consultant. The 7.0% is per year, compounded annually, net of investment expenses. The inflation rate assumed in this valuation is 2.50% per year. The Inflation Rate is defined to be the long-term rate of annual increases in goods and services. The assumed real rate of return over inflation is defined to be the portion of total investment return that is more than the assumed inflation rate. Considering other economic assumptions, the 7.0% investment return rate translates to an assumed real rate of return over inflation of 4.50%. Payroll growth The active member population is assumed to remain constant. Administrative Expenses paid out of the fund are assumed to be the actual expenses incurred for the preceding System year. Pay increase assumptions for individual active members is 6.0% per year. Part of the assumption for each age is for merit and/or seniority increase, and the other 2.50% recognizes inflation, productivity increases, and other macro-economic forces. Please see illustration below: 20 9.2 % 30 16.4 40 29.4 50 52.7 60 94.3 Current Salary as a % of Salary at Age 62 Age City of Okeechobee General Employees' Retirement System 10 Demographic Assumptions The mortality table is RP-2000 Combined Healthy Participant Mortality Table (for pre-retirement mortality) and the RP-2000 Mortality Table for Annuitants (for post-retirement mortality), with mortality improvements projected to all future years after 2000 using Scale BB. For males, the base mortality rates include a 50% blue collar adjustment and a 50% white collar adjustment. For females, the base mortality rates include a 100% white collar adjustment. These are the same rates currently in use for Regular Class members of the Florida Retirement System (FRS), as mandated by Florida House Bill 1309. FRS Post-Retirement Mortality for Regular Class Members Sample Attained Ages (in 2017)Men Women Men Women 50 0.55 %0.23 %34.66 38.31 55 0.60 0.32 30.03 33.29 60 0.76 0.47 25.36 28.39 65 1.15 0.74 20.84 23.65 70 1.78 1.24 16.59 19.19 75 2.97 2.09 12.73 15.11 80 5.03 3.51 9.40 11.49 Probability of Future Life Dying Next Year Expectancy (years) FRS Pre-Retirement Mortality for Regular Class Members Sample Attained Ages (in 2017)Men Women Men Women 50 0.21 %0.15 %35.58 38.66 55 0.36 0.24 30.46 33.51 60 0.61 0.39 25.53 28.49 65 1.08 0.70 20.88 23.67 70 1.78 1.24 16.59 19.19 75 2.97 2.09 12.73 15.11 80 5.03 3.51 9.40 11.49 Probability of Future Life Dying Next Year Expectancy (years) For disabled lives, the mortality table used was the RP-2000 Mortality for Disabled Annuitants, set- back 4 years for males and set-forward 2 years for females, with no provision being made for future mortality improvements. These are the same rates currently in use for Regular Class members of the Florida Retirement System (FRS), as mandated by Florida House Bill 1309. City of Okeechobee General Employees' Retirement System 11 FRS Disabled Mortality for Regular Class Members Sample Attained Ages (in 2017)Men Women Men Women 50 2.38 %1.35 %20.25 23.74 55 3.03 1.87 17.78 20.46 60 3.67 2.41 15.55 17.43 65 4.35 3.13 13.44 14.58 70 5.22 4.29 11.39 11.96 75 6.58 5.95 9.43 9.65 80 8.70 8.23 7.65 7.66 Probability of Future Life Dying Next Year Expectancy (years) The rates of retirement are used to measure the probability of eligible members retiring during the next year. It was assumed that members retire upon eligibility. Assumed eligibility is age 62 and 5 years of service, or 30 years of service regardless of age. Any actuarial losses due to early retirement are assumed to be offset by gains due to eliminating future salary increases. Any actuarial losses due to delayed retirement are assumed to be offset by gains due to delaying the benefit commencement date. Rates of separation from active membership were as shown below (rates do not apply to members eligible for normal retirement and do not include separation on account of death or disability). This assumption measures the probabilities of members remaining in employment. 20 12.4 % 30 10.5 40 5.7 50 1.5 60 0.5 Separation RateAge Rates of disability among active members were as shown below. This assumption measures the probability of members retiring with a disability benefit. 20 0.07 % 30 0.11 40 0.19 50 0.51 60 1.66 Disability Rate Age City of Okeechobee General Employees' Retirement System 12 Valuation Methods Actuarial Cost Method - Normal cost and the allocation of benefit values between service rendered before and after the valuation date were determined using an Aggregate Actuarial Cost Method having the following characteristics: (i) The excess of the Actuarial Present Value of Projected Benefits of the group included in the valuation, over the Actuarial Value of Assets is allocated as a level percentage of earnings of the group between the valuation date and the assumed retirement age. This allocation is performed for the group as a whole, not as a sum of individual allocations. (ii) The portion of this Actuarial Present Value allocated to a specific year is called the Normal Cost. Under this method, actuarial gains and losses, System amendments, and changes in actuarial assumptions and methods reduce or increase future Normal Costs. Timing of Contribution - increase Normal Cost for benefits by 6%; increase Normal Cost for administrative expense by 7%; increase expected member contribution by 6%; increase City contribution with interest for quarterly payments. Actuarial Value of Assets - The Actuarial Value of Assets phases in the difference between the expected return on the actuarial value of assets and the actual return on the market of assets at the rate of 25% per year. The Actuarial Value of Assets is further adjusted to the extent necessary to fall within the corridor whose lower limit is 80% of the Market Value of System assets and whose upper limit is 120% of the Market Value of System assets. During periods when investment performance exceeds the assumed rate, Actuarial Value of Assets will tend to be less than Market Value. During periods when investment performance is less than assumed rate, Actuarial Value of Assets will tend to be greater than Market Value. Changes from Previous Valuation: The rates of retirement were: It was assumed that members retire upon eligibility. Assumed eligibility is age 65 and 5 years of service, or 30 years of service regardless of age. Rationale for Assumptions: The investment earnings assumption reflects direction from the Board of Trustees based on information from their investment consultant. The mortality table is based on the assumption used by the Florida Retirement System, as required by Florida House Bill 1309 (codified in Chapter 2015- 157).