Amend this chapter which sets forth the rules under which municipal and special district units of government are to provide information on their retirement systems plans to the Department of Management Services, Division of Retirement, (Bureau of ...
DEPARTMENT OF MANAGEMENT SERVICES
Division of Retirement - Local RetirementRULE NO: RULE TITLE
60T-1.001: Scope and Purpose
60T-1.002: Definitions
60T-1.003: Actuarial Reports
60T-1.004: Actuarial Impact Statements
60T-1.005: Review of Actuarial Reports and Actuarial Impact Statements
60T-1.006: Defined Contribution Plans
60T-1.007: Funding
60T-1.008: Additional Benefits Funded by Experience
60T-1.009: Additional Filing Requirements
PURPOSE AND EFFECT: Amend this chapter which sets forth the rules under which municipal and special district units of government are to provide information on their retirement systems plans to the Department of Management Services, Division of Retirement, (Bureau of Program Services) pursuant to Part VII of Chapter 112, Florida Statutes (F.S.). The provisions of this chapter is applicable to all counties, municipal governments, and special districts (or agencies and instrumentalities thereof), which state universities, community colleges and district schools that operate or administer a retirement system or plan for public employees funded in whole or in part by public funds.
SUBJECT AREA TO BE ADDRESSED: The participation of local governments in the Florida State Retirement System, as provided in Part VII, Chapter 112, Florida Statutes.
SPECIFIC AUTHORITY: 112.665(1) FS.
LAW IMPLEMENTED: 112.661(9), 112.61, 112.625, 112.63, 112.665, 112.64, 112.661(9) FS.IF REQUESTED IN WRITING AND NOT DEEMED UNNECESSARY BY THE AGENCY HEAD, A RULE DEVELOPMENT WORKSHOP WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW:
DATE AND TIME: July 14, 2008, 9:00 a.m.
PLACE: Department of Management Services, Director’s Conference Room Suite 208, 1317 Winewood Blvd., Building 8, Tallahassee, Florida 32399-1560, (850)488-5706
Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 48 hours before the workshop/meeting by contacting: Richard Clifford at (850)488-5706, or Toll Free (877)377-1737. If you are hearing or speech impaired, please contact the agency by calling (800)877-1113. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).
THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE DEVELOPMENT AND A COPY OF THE PRELIMINARY DRAFT IS: Garry Green, Operations and Management Consultant Manager, Department of Management Services, Division of Retirement, 1317 Winewood Blvd., Bldg. 8, Tallahassee, FL 32399-1560, (850)488-5706
THE PRELIMINARY TEXT OF THE PROPOSED RULE DEVELOPMENT IS:
60T-1.001 Scope and Purpose.
(1) This chapter sets forth the rules under which municipal and special district units of government are to provide information on their retirement plans systems to the Department of Management Services, Division of Retirement, (Bureau of Program Services) pursuant to Part VII of Chapter 112, F.S. Florida Statutes. The provisions of this chapter shall be applicable to all counties, municipal governments, and special districts (or agencies and instrumentalities thereof), state universities, community colleges and district schools that which operate or administer a retirement system or plan for public employees funded in whole or in part by public funds. This chapter shall not apply to counties, municipalities, special districts, state universities, community colleges, or district schools or with respect to any of their employees which participate as a covered group in the Florida Retirement System, except that this chapter shall apply to any defined benefit promise that may be offered by any Florida Retirement System participating agency which promise is not otherwise provided by the Florida Retirement System. This chapter shall apply to counties, municipalities, state universities, community colleges, or district schools with respect to any of their employees for whom early retirement annuities are provided pursuant to Section 121.182, 1001.64(21), 1001.74(19), 1012.685, or 1012.87, F.S.
(1) The objectives of this chapter are to enhance and further clarify the intent of Part VII, of Chapter 112, F.S. Florida Statutes, so that governmental retirement plans are systems may be managed, administered, operated, and funded in such manner as to maximize the protection of public employee retirement benefits. Inherent in this intent is the recognition that the pension liabilities attributable to the benefits promised public employees be fairly, orderly, and equitably funded by the current, as well as future, taxpayers. Accordingly, except as herein provided, it is the intent of these rules to prohibit the use of any procedure, methodology, or assumptions, the effect of which is to transfer to future taxpayers any portion of the costs which may reasonably be expected to be paid by the current taxpayers.
Specific Authority 112.665(1) FS. Law Implemented 112.61 FS. History–New 5-6-81, Amended 9-19-83, Formerly 22D-1.01, Amended 11-14-91, Formerly 22D-1.001, Amended________.
60T-1.002 Definitions.
Whenever used in this chapter, unless otherwise expressly stated, or unless the context or subject matter requires a different meaning, the following words and terms shall have the respective meaning indicated:
(1) “Actuarial Accrued Liability” means the portion of the actuarial present value of the projected benefits (and expenses, if applicable), as determined under a particular actuarial cost method, which is not provided for by future normal costs.
(2) “Actuarial Asset Value” or “Statement Value” means the value of assets in accordance with Section 112.625(7)(l), F.S. Assets for which a fair market value is not provided shall be excluded from the assets used in the determination of the annual funding cost.
(3) “Actuarial Experience” means the difference (i.e., “gain” or “loss”) between expected and actual actuarial liabilities in successive actuarial valuations, excluding the differences attributable to changes in benefits, assumptions and actuarial methodologies (e.g., valuation, cost-funding, asset valuation and other “mechanical” determinations).
(4)(1) “Actuarial Impact Statement” means a statement setting forth the actuarial liabilities and contribution requirements of a proposed change in the provisions of a local retirement plan system certified by an enrolled actuary. The statement may be or prepared by an enrolled actuary, the plan administrator, or the plan sponsor.
(5)(2) “Actuarial Report” means a report prepared and certified by an enrolled actuary based on an actuarial evaluation of a local retirement system or plan.
(6) “Applicable Mortality Table” means a table of mortality rates that produces liability and cost funding results not less than the liability and cost-funding results that would be produced by use of the following tables:
(a) For healthy active and retired members, and beneficiaries: the sex-distinct rates for healthy lives used by the Pension Benefit Guaranty Corporation pursuant to ERISA Section 4044 for 2008 valuation dates. (UP’94 projection AA to 2018.)
(b) For disabled members: the table in paragraph (a) set forward 3 years.
(c) The referenced tables in paragraphs (a) and (b) may be used on a static basis.
(7)(3) “Benefit Increase” means a change or amendment in the retirement plan design or benefit structure that which results in increased benefits or increased value of benefits for plan members or beneficiaries.
(8) “Board,” “Board of Trustees,” or “Named Fiduciary” means the person or persons so designated by the terms of the legal enactments under which the retirement plan is operated.
(9) “Cash Equivalents” means short-term highly liquid investments that are readily convertible to known amounts of cash and that are not subject to a material risk of change in value. Only those investments maturing within one year of the actuarial valuation date may be included in this asset class.
(10) “Closed Plan” means a retirement plan that, effective with the applicable stated date as of which the plan is “closed” and unless otherwise provided, no longer accepts new members but all other plan provisions continue, and funding by the members and the plan sponsor continues.
(11)(4) “Concurrent Funding” means payment of the required contributions to fund:
(a) The benefit changes that shall begin no later than the first day of the next fiscal year coincident with or next following the enactment date of the legal instrument providing the after benefits change., and
(b) A plan year, that are paid no later than the end of the one-year period immediately following the end of the plan year.
(12)(5) “Division” means the Department of Management Services, Division of Retirement, Bureau of Program Services.
(13) “DROP” is an acronym for a deferred retirement option program as defined by the applicable retirement plan.
(14) “Enactment Date” means the date a legal instrument is adopted, which date may or may not be the same as any effective date stated in the instrument.
(15)(6) “Enrolled Actuary” means an actuary who is a member of the Society of Actuaries or the American Academy of Actuaries, and who is enrolled under subtitle C of Title III of the Employee Retirement Income Security Act of 1974.
(16) “Fiscal Year” means the 12-month period in which the plan-sponsor contributions are to be paid for a plan year. The fiscal and plan years may be coincident.
(17) “Frozen Plan” means a retirement plan that, effective with the applicable stated date as of which the plan is “frozen” and unless otherwise provided, does not accept new members, does not provide any additional new benefits, current plan members keep their accrued benefits which no longer increase, service credits continue for vesting and benefit eligibility, and members no longer contribute but the plan sponsor funding continues.
(18) “Fully Funded” means that 110% of the sum of the accrued liability and the normal cost is less than the value of the retirement plan’s present assets. For this purpose: the normal cost and the accrued liability are determined according to the individual actuarial entry-age cost-funding method if such items cannot be directly calculated under the funding method used for the plan; the entry age is the member’s current age reduced to reflect the number of years of credited prior service; the value of the plan’s present assets is the lesser of the fair market value and the value determined according to the plan’s actuarial asset-valuation method; and, all determinations shall be as of the same date.
(19)(7) “Governmental Entity” or “Local Government Entity” means the state, for the Florida Retirement System, and the county, municipality, or special district, state university board, community college board, or district school board that which is the employer of the member of a local retirement system or plan.
(20) “Illiquid Investment” means an investment for which a generally recognized public market is not available (e.g., the New York Stock Exchange, AMEX, NASDAQ) or for which there is no consistent or generally accepted pricing mechanism.
(21)(8) “Local Retirement System or Plan” means any employee pension or retirement benefit plan supported in whole or in part by public funds that which is not specifically exempt by Section 112.625(1), F.S. Florida Statutes.
(22) “Material” or “Materially” means:
(a) A rate or other numerical result that, when correctly and/or completely determined, differs from the rate or other numerical result disclosed in an actuarial valuation report, actuarial impact statement and/or other statement of information provided to the Division and such difference is at least one basis point (one hundredth of one percent); and/or
(b) Any information necessary or required to satisfy Part VII of Chapter 112, F.S., Chapter 60T-1, F.A.C., or any additional information requested by the Division to complete its review of the actuarial valuation report, actuarial impact statement, or other statement of information necessary to satisfy the Division’s duties pursuant to Section 112.665(1), F.S.
(23) “Normal Cost” means the portion of the cost of projected benefits established for a plan year. It is computed differently under different actuarial cost-funding methods.
(24) “Pensionable Compensation” means the total of all items of allowance, compensation, earnings, pay, reimbursement and remuneration that are used to determine the pension benefit under the terms of the retirement plan.
(25)(9) “Plan Administrator” means the person so designated by the terms of the instrument or instruments, ordinance, or statute under which the retirement plan is operated; or the plan sponsor where no plan administrator is designated.
(26)(10) “Plan Sponsor” means the local governmental entity that which has established or that which may establish a local retirement system or plan.
(27) “Plan Year” means the 12-month period for which an annual actuarial-funding cost is determined. The plan and fiscal years may be coincident.
(28) “Reserved Fund” means an amount of assets reserved for a special purpose.
(29)(11) “Significant Plan Amendment” means any change or changes in the retirement plan or system the net effect of which would require a current or potential increase or decrease in the annual funding cost contribution rate.
(12) “Statement Value” means the value of assets in accordance with Section 302(c)(2), Florida Statutes of the Employee Retirement Income Security Act of 1974, and as permitted under regulations prescribed by the Secretary of the Treasury.
(30) “Terminated Plan” means a retirement plan that, effective with the applicable stated date as of which the plan is “terminated” and unless otherwise provided, does not accept new members, all existing active members are considered to be 100% vested in their accrued benefits that no longer increase, and members no longer contribute but the plan sponsor funding continues.
(31) “Unfunded Actuarial Accrued Liability”, or “Unfunded Liability”, or the acronym “UAAL” means the excess, if any, of the actuarial accrued liability over the actuarial value of the assets.
Specific Authority 112.665(1) FS. Law Implemented 112.61, 112.625 FS. History–New 5-6-81, Amended 9-19-83, Formerly 22D-1.02, Amended 11-14-91, Formerly 22D-1.002, Amended________.
60T-1.003 Actuarial Reports.
(1) Each retirement plan sponsor shall on its own or through the administrator or trustees of the plan’s board have an actuarial report prepared for each of its defined benefit retirement plans or systems by an enrolled actuary at least every three (3) years commencing from the date of the last actuarial report of the plan or system on October 1, 1980, if no actuarial report has been issued within the three year period prior to October 1, 1979. In addition, actuarial cost determinations recommending the contribution amount, rate or other basis applicable to periods for which an actuarial valuation has not been specifically prepared are to be also provided to the Division within 60 days of receipt by the plan administrator. No actuarial report is required for defined contribution retirement plans or systems. However, the plan sponsor of each defined contribution plan shall provide such information and financial statements, as is are necessary to gather, catalog, and maintain complete information on all public employee retirement plans systems to the Division upon its request.
(2) The results of each actuarial report shall be filed with the plan administrator within 60 days after completion and certification by the actuary and made available for inspection upon request. Also, the retirement system or plan shall provide a copy of each actuarial report to the Division of Retirement within 60 days of receipt from the actuary.
(3) Actuarial reports shall minimally disclose all the data required by Section 112.63(1), F.S., and Chapter 60T-1, F.A.C., as follows: Florida Statutes. which consist of the following
(a)1. The values of the present assets, as of the actuarial valuation date, based on market value and actuarial asset value. Disclosure by investment types is required only as follows if one or more, but not all, investment values are established using an actuarial asset value method: “statement value”
a. Investments
Cash
Cash equivalents
Contributions in collection (see items 2 & 3 below)
Bonds:U.S. Government and its agencies
U. S. Government agencies
Other:Domestic
Foreign
Total
Equities:Common Sstocks:Domestic
Foreign
Other (specify)
Total
Other (specify)
Illiquid investments (list each)
Foreign investments, other than Bonds and Equities
Total
b. Assets not available for funding
Illiquid investments for which a fair market value is not available (list each)
Amounts payable (list each and describe). Includes benefit payments with a payment due date on or before the end of the plan year but paid thereafter, excluding any expense for which the payment date was not on or before the end of the plan year.
Other (list each and describe)
Total
c. Assets available for funding (A-B)
Not reserved funds
Reserved funds (list each)
Other
Total
2. If the assets include contributions paid after the end of the plan year, complete and provide the following exhibit:
For Plan Year Ended
Date Paid
Amount Paid
Members
Plan Sponsor
Total (by plan year)
3. If the assets include contributions for a plan year prior to the plan year just ended that have not been previously included in the assets, complete and provide the following exhibit:
Paid for Plan
Paid by Member
Paid by Sponsor
Year Ended
Date
Amount
Date
Amount
Total (by plan year)
4. Disclose the derivation of the actuarial asset value used in determining the annual funding requirement.
(b) A plan to amortize any unfunded liability pursuant to Section 112.64, F.S. Florida Statutes.
(c) A schedule illustrating the amortization of unfunded liabilities as they exist on the date of the valuation, on an annual basis for the three years immediately following the current valuation date and the final year of the amortization schedule must be disclosed, as well as a statement as to how the method was derived.
(d) A description of actions taken by the governmental entity to reduce the unfunded liability, especially those taken since the last actuarial report.
(e) A description and explanation of all actuarial assumptions and methods.
1. Describe each assumption and method change since the immediate prior actuarial valuation report; if none, so state.
2. Describe completely the actuarial methodologies for determining the benefit liabilities, annual funding cost and asset values so that another actuary could, using the same methods, arrive at similar results. Alternatively, disclose the specific Internal Revenue Service provision (e.g., section, example, and/or paragraph number, and the applicable IRS publication(s)) that exactly describe(s) the actuarial methodology used for determining each of the benefit liabilities, the funding thereof, including administrative expenses, and the asset values. Describe the method(s) in use if not as exactly described in a current IRS publication.
3. Describe completely the determination of the pensionable compensation amount used in the current valuation. Also, state when the salary increase assumption commences (e.g., with the current valuation date, one year later).
(f) A comparative review illustrating the rates of salary increases granted and investment return realized, minimally, over the three-year period preceding the current actuarial report with the assumptions used.
1. The actual salary increase rate may be determined for the period between the immediately preceding actuarial valuation date and the current valuation date; however, such rate shall be shown on an annualized basis. For each period, the Rrate of actual salary increases shall be determined by using the aggregate of actual pensionable compensation paid salary increases granted, excluding new members entrants and terminations.
2. Investment return rates shall be determined on both the market value and actuarial value bases for each year and reported on a consistent basis for each year in the three-year period. Consistent use of either of the two following methods should be considered. If a different method is used, explain There should also be an explanation of how the investment return rate was determined.
a. The investment return rate may be determined using the formula “i =2I/(A+B-I)”, where:
● “i” is the return rate,
● “I” is the total investment income (net of all investment related expenses, if offset against investment income),
● “A” is the asset value at the beginning of the year, and
● “B” is the asset value at the end of the year.
b. Alternatively, the return rate may be determined weighting deposits and disbursements by date. On this basis, the report is to include an exhibit disclosing the deposits and disbursements for the year by date.
3. All amounts included as a receivable for such year and excluded as a payable for such year are to be included and excluded, respectively, in the return rate determination.
4. All assets owned by the retirement plan are to be included in the return rate determination.
5. For valuations using differing pre- and post- retirement interest rates, or “segment” interest rates (as provided in the Pension Protection Act of 2006), determine – and disclose the determination of – the effective annual interest rate for the expected liability duration period.
(g) A statement by the enrolled actuary, in the form of a certification signed and dated by the actuary, as follows:
Statement by Enrolled Actuary
“This actuarial valuation report and/or cost determination 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, F.S. Florida Statutes., and Chapter 60T‑1, F.A.C. There is no benefit provision or related expense to be provided by the retirement 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 that which may require a material increase in plan costs or required contribution rates have been taken into account in the valuation.”
______________________
______________________
Print or Type Name
Signature
______________________
______________________
Enrollment Number
Date
(4) Actuarial valuation reports shall, at a minimum, disclose such information that another actuary, unfamiliar with the situation, would find the information sufficient to appraise the reports’ conclusions and to arrive at reasonably similar results. In order for the Division to determine the completeness, accuracy, and reasonableness of the assumptions, such information shall, at a minimum, include the following items:
(a) The date as of which the valuation was prepared, and the beginning and ending dates of the period(s) for which the recommended contributions are applicable; and the period(s) in which such contributions are to be paid.
(b) The overall valuation results, the adequacy of the retirement-plan sponsor employer and member employee contribution rates in meeting the levels of member employee benefits provided in the plan system and changes, if any, needed in such rates to achieve or preserve a level of funding deemed adequate to enable payment through the indefinite future of the benefit amounts prescribed by the plan system.
(c) A brief summary of the retirement plan provisions. Additionally, disclose:
1.a. The components of pensionable compensation (e.g., W-2 remuneration, unused accrued compensatory time (e.g., vacation, sick-leave, overtime, other compensatory time), expense reimbursement).
b. The limit, if any, on the amounts of unused accrued compensatory time includable in pensionable compensation.
c. How the payment for unused accrued compensatory time, regardless of when paid, is used in determining benefits.
d. For contributory plans, the components of pensionable compensation on which the member does not contribute; if none, so state.
2. The normal benefit payment form, and any differences based on type of benefit payable (e.g., normal retirement, disability retirement).
3. All optional benefit-payment forms, including lump sum payments, the actuarial equivalence assumptions and, based on the option, each different assumption.
4. If any amendment to an existing benefit provision or the addition of a new benefit provision applicable thereafter to members who retire or who terminate with benefits deferred to commence at a later date that, pursuant to an existing plan provision, automatically applies the benefit change or addition to already retired members and beneficiaries and/or members terminated with rights to benefits deferred to commence at a later date.
5. Those benefit provisions that are to be funded solely by additional member contributions, and the additional member contribution rate.
6. The details applicable to a DROP including, but not limited to, eligibility requirements, duration, interest, and payment options.
7. State if all plan members are covered by Social Security; if not, disclose the parameters describing the members covered by Social Security, and those not covered.
8. All changes since the immediate prior report; if none, so state.
9. All legal instruments applicable to the plan adopted since the immediate prior report.
(d) Revised actuarial valuation reports shall clearly indicate each changed item, or include an appendix stating each changed item or a clear indication of the changed items. Provide a historical exhibit by plan year disclosing the required plan sponsor contribution for such year for, separately, normal cost, administrative expense, amortization of unfunded liability, adjustments to reflect the delay in payment or if applicable to a plan year beginning at a later date, and the total. Also disclose the amount paid and the amount that would have been paid for such plan year had the plan sponsor contributed the amount determined by applying the recommended contribution rate to the pensionable compensation during such plan year. Additionally, disclose the members’ contributions paid for such plan year. The funding method explained in sufficient detail so that another actuary could, using the same method, arrive at similar results.
(e) For actuarial valuation reports that which cover more than one employee group, benefit program, and/or more than one plan, and the assets are accounted for separately, and the valuation calculations are made separately, the applicable valuation results shall be disclosed separately.
(f) Disclosure of each any benefit provision and related expense to be provided by the plan and/or paid from the plan’s assets for which no liabilities or current costs have been established or otherwise provided for, including an explanation of the omission and the cost effect thereof.
(g) Disclosure of any event that which the actuary has not taken into account and any trend that which, for purposes of the actuarial assumptions used, was not assumed to continue in the future, but only if, to the best of the actuary’s knowledge, such event or trend may require a material increase in plan costs or required contribution rates.
(h) Disclosure, for each plan year, of the derivation of the current unfunded actuarial accrued liability (UAAL) from the amount established as of the immediately preceding valuation date. (UAALs Unfunded actuarial accrued liabilities are amortized by non-employee member contributions in excess of normal cost and interest requirements.) The disclosure shall, minimally, include the following:
1. UAAL at Total unfunded actuarial accrued liability for the immediately prior actuarial valuation date (state date)
$_______
2. Plan sponsor normal cost expected for this plan year: a. + b.
a. For benefits $________
b. For administrative
expense $________
$________
3. Interest accrued on 1. and 2
Disclose interest determination or explain determination
$________
4. Plan sponsor contributions for this plan year (including amounts expected to be paid): a. + b.
a. Amounts paid during such year ________ $________
b. Amounts paid after such year ________ $________
(discounted from the payment date to the ending date of the fiscal year in which the contribution was due to be paid using the plan’s valuation interest rate assumption used for the active member liabilities)
$________
5. Interest accrued on 4.a.
$________
6. Changes due to a. + b. + c. + d.
a. assumptions $________
b. actuarial funding
methods $________
c. plan amendments $________
d. actuarial experience
gain/loss $________
$________
7. UAAL as of the current valuation date: Total current unfunded actuarial accrued liability 1. + 2. + 3. 4. 5. + 6.
$________
8. Provide an exhibit of all current unamortized UAAL amounts disclosing the amount, date and amortization period at establishment, and the cause of the establishment (i.e., new plan, amendment, assumption change, actuarial method change (identify if asset or other), and actuarial experience gain/loss). Disclose each UAAL amount as of the immediate prior valuation date, the amortization payment credited to the immediate prior UAAL amount, the current unamortized UAAL amount, the remaining amortization period and the expected amortization payment, including column totals.
9. Disclose the determination of the amount available to amortize the UAALs.
(i) Provide dDemographic and financial data statistics on the active members, members (active, terminated with rights to deferred benefits, disabled, retired, retired in DROP, and beneficiaries) in the plan, as follows: retirement system including but not limited to an age and service distribution table for active members. This section shall provide a reconciliation between current data and data in the most recent state approved valuation of the active, terminated with rights to deferred benefits, and retired membership (and beneficiaries).
1. For active members, an age/service array, including compensation, using appropriate age and service groupings.
2. For active members, complete the following termination experience exhibit for each plan year since the immediate prior actuarial report. Ages may be individual or in the same 5-year age groups used for disclosing other demographic and financial data.
Termination Experience
Age
Death
Disability
Termination
Total
Expected
Actual
Expected
Actual
Expected
Actual
Expected
Actual
Provide column totals
3. For active members, a retirement and DROP experience exhibit for each plan year since the immediate prior actuarial valuation report. Depending on the plan’s retirement provisions (e.g., by age, years of service and/or age and years of service) in separate juxtaposed columns disclose: the number of members eligible for retirement; the number expected to retire; the number of them electing to retire; and of the latter, the number eligible for DROP, and the number electing DROP.
4. A reconciliation between current demographic data and such data in the most recent prior actuarial valuation report of those: active; terminated with deferred benefits; line-of-duty disabled; non-line-of-duty disabled; DROP; retired; and beneficiaries. Add categories as needed depending on the plan’s provisions. The reconciliation is to be in the form of an array with the foregoing groups disclosing, as applicable: the ending number from the immediate prior report (if different from the beginning number, enter difference); vested terminated; non-vested terminated; line-of-duty disabled; non-line-of-duty disabled; line-of-duty death; non-line-of-duty death; lump sum payment; DROP; retired; transfers; corrections; new members; and ending number. Add other causes, as applicable. Provide line and column totals.
5. For vested terminated members, retirees and beneficiaries, provide the following exhibit:
Annual Benefit Payable To
Age
Disabled
Vested Terminated
DROP
Retired
Beneficiaries
Total
#
Benefit
#
Benefit
#
Benefit
#
Benefit
#
Benefit
#
Benefit
Provide column totals
6. (A projection of emerging liabilities/cash flow needs for the next 10 – 15 years is recommended would be beneficial.)
7. A determination and disclosure of the actuarial gains and losses, by source, is recommended.
(j) An annual reconciliation of the plan’s assets from the balance determined as of the immediately preceding valuation date to the balance as of the current valuation date on both the market and actuarial value bases. If the reconciliation is done on a basis other than that used for annual funding requirements, the reconciliation shall show the dollar relationship to the actuarial value of assets as used in determining the annual funding requirements. The reconciliations shall should show separately, at a minimum:
Beginning balance (if different than immediate prior ending balance; explain and enter difference).
● Contributions by source (separately disclose special purpose contributions: e.g., “buy-back”)
● Interest and dividends
● Realized gains (losses)
● Increase (decrease) in unrealized appreciation, if applicable (net)
● Pension payments other than lump sum payments
● Lump sum payments other than member contribution refunds
● Member contribution Contribution refunds
● Expenses: Administrative
● Investment related
● Other receipts (identify)
● Other disbursements (identify)
● Increase/decrease to reserve fund (list each and amount
● Ending balance
(k) The amount of active members accumulated contributions (with interest, if provided by plan).
(l) A comparative summary of principal valuation results, essentially in the following format:
COMPARATIVE SUMMARY OF PRINCIPAL VALUATION RESULTS
(Not a required format to be used as a guide only)
Actuarial Valuation Prepared as of
Current Date
Prior Date
1. Participant Member Data
Active members
#_____
#_____
Total annual pensionable payroll
$_____
$_____
Pensionable compensation below assumed retirement
$_____
$_____
Retired members and beneficiaries (other than disabled and DROP)
#_____
#_____
Total annualized benefit
$_____
$_____
Beneficiaries
Total annualized benefit
# _____
# _____
#_____
#_____
Total annualized benefit
$_____
$_____
DROP
#_____
#_____
Total annualized benefit
$_____
$_____
Accumulated value
$_____
$_____
Disabled members receiving benefits
#_____
#_____
Total annualized benefit
$_____
$_____
Terminated vested members
#_____
#_____
Total annualized benefit
$_____
$_____
2. Assets
Actuarial value of all assets
$_____
$_____
Market value of all assets
$_____
$_____
3. Liabilities
$_____
$_____
a. Present value of all future expected benefit payments:
$_____
$_____
Active members:
$_____
$_____
Retirement benefits
$_____
$_____
Vesting benefits
$_____
$_____
Disability benefits
$_____
$_____
Death benefits
$_____
$_____
Return of contribution
$_____
$_____
Total
$_____
$_____
Inactive Members
$_____
$_____
Terminated vested members
$_____
$_____
Retired members and beneficiaries:
$_____
$_____
Retired members (other than disabled), DROP, and beneficiaries)
$_____
$_____
Disabled members
$_____
$_____
DROP (excluding accumulated balances)
$_____
$_____
DROP accumulated balance
$_____
$_____
Beneficiaries
$_____
$_____
Total
$_____
$_____
Total present value of all future expected benefit payments
$_____
$_____
Liabilities due and unpaid
$_____
$_____
Unfunded actuarial accrued liability
$_____
$_____
Reserved funds (as applicable):
$_____
$_____
DROP accumulated balance
$_____
$_____
Excess plan sponsor contributions
$_____
$_____
Actuarial experience for additional benefits
$_____
$_____
Excess Ch. 175 and/or 185 assets required for Ch. 99-1
$_____
$_____
Other Ch. 175 and/or 185 assets not required for Ch.99-1
$_____
$_____
Other (add as needed)
$_____
$_____
Total
$_____
$_____
b. Actuarial accrued liability (required if an immediate-gain funding method (see Revenue Rule 81-213) is used for any purpose in completing report)
$_____
$_____
Active members:
$_____
$_____
Retirement benefits
$_____
$_____
Vesting benefits
$_____
$_____
Disability benefits
$_____
$_____
Death benefits
$_____
$_____
Return of contribution
$_____
$_____
Total
$_____
$_____
Inactive Members: Total from a.
$_____
$_____
Total (*Refers to liabilities not funded by future normal cost contributions. Show amount, date and amortization period at establishment, and current amount of each such liability not amortized.)
$_____
$_____
4. Actuarial present value of accrued benefits (to be determined in accordance with a. and b. below)
Statement of actuarial present value of all accrued benefits
Vested accrued benefits
Inactive members and beneficiaries
$_____
$_____
DROP accumulated balance
$_____
$_____
Active members (includes non-forfeitable accumulated member contributions in the amount of ___)
$_____
$_____
Total value of all vested accrued benefits
$_____
$_____
Non-vested accrued benefits
$_____
$_____
Total actuarial present value of all accrued benefits
$_____
$_____
Statement of changes in total actuarial present value of all accrued benefits
Actuarial present value of accrued benefits at beginning of year
$_____
$_____
Increase (decrease) during year attributable to (where applicable):
Plan amendment
$_____
$_____
Changes in actuarial assumptions
$_____
$_____
Increase for interest and probability of payment due to decrease in discount period and benefits accrued
$_____
$_____
Benefits paid
$_____
$_____
Other changes (identify and state amount)
$_____
$_____
Net increase (decrease)
$_____
$_____
Actuarial present value of accrued benefits at end of year
$_____
$_____
a. Accrued benefits are those future promised benefits that are determined in accordance with the plan’s provisions based on the service members have rendered to the actuarial valuation date. Accrued benefits are those payable under all applicable plan circumstances retirement, death, disability, and termination of employment to the extent they are deemed attributable to member service rendered to the valuation date. Benefits to be provided by insured contracts for which the plan sponsor has no future liability and which are excluded from plan assets are to be excluded from plan benefits.
b. All determinations are to be on a consistent basis. Any change is to be disclosed, together with an explanation. The exhibit entries for the actuarial valuation date as of which a change is made shall show the entries on a before and after change basis.
5. Pension cost (specify plan year and applicable funding period)
$_________
$________
a. Normal cost to be paid by plan sponsor (for immediate gain-funding methods, disclose show cost for each benefit if so calculated and amount for administrative expenses, if applicable; exclude interest)
$________
$________
Payment to amortize unfunded liability
$________
$________
Expected plan sponsor contribution (include including normal cost, amortization payment, and interest and salary increase / payroll growth, as applicable)
$________
$________
As % of payroll
________%
________%
Amount to be contributed by members
$________
$________
Expected member contribution
$________
$________
As % of payroll
________%
_________%
b. If a different funding method is used for any other purpose with results provided in the report that may affect the determination of the cost in a. (e.g., a spread-gain method is used for establishing the annual funding cost and the individual entry-age method is used for full-funding determinations or other requirements), disclose the method’s normal cost for each benefit and amount for administrative expense, if applicable; exclude interest.
6. Past contributions
For each plan year since last report:
Required plan sponsor contribution by:
Plan sponsor
$________
$________
Members Required member contribution
$________
$________
Actual contributions made by:
Plan’s sponsor
$________
$________
Members
$________
$________
Other (e.g., Chapters 175/ or 185, F.S.)
$________
$________
Total
$________
$________
Members
$________
$________
7. Net actuarial experience gain (loss) (if applicable)
$________
$________
8. Other disclosures (where applicable)
Present value of active member:
Future salaries
At attained age
$________
$________
At entry age
$________
$________
Future contributions
At attained age
$________
$________
At entry age
$________
$________
Present value of future contributions from other sources (identify)
$________
$________
Present value of future expected benefit payments for active members at entry age
$________
$________
(5) Provide a historical exhibit by plan year disclosing the charged and credited plan-sponsor contributions disclosing the following: actuarial valuation date, plan-year beginning date, fiscal-year ending date, normal cost (including administrative expense if paid from the plan’s assets), amortization cost, interest on the charge items to the end of the fiscal year, total charges with interest, amount paid by the plan sponsor, allowable premium-tax refund, interest on all paid amounts to the end of the fiscal year, total of all credits and the excess or deficiency of the credit total less the charge total. Contributions paid after the end of the fiscal year are to be discounted from the payment date to the immediately preceding fiscal-year ending date. The amount of any such discount is to be disclosed in an additional column as an offset against the credits. All interest determinations shall use the plan’s valuation interest assumption used for the active member liabilities.
(6) Provide a historical exhibit by plan year, similar to 5. above, disclosing the plan-sponsor amount that is or would have been paid for such plan year had the plan sponsor contributed the amount determined by applying the recommended contribution rate to the pensionable compensation during such plan year. Additionally, disclose the members’ contributions paid for such plan year.
(7) For Chapter 175/185 plans only, please provide a historical exhibit by plan year of all state premium tax revenues received since the Chapter 99-1, Laws of Florida, base year distribution (1997). The exhibit should, at a minimum, include the information presented in Exhibit A that follows. (Not a required format – to be used as a guide only.)
Chapter 60T-1.003(7), Exhibit A
Chapter 175/185 Premium Tax Disclosure
Police
Fire
Fire Supplemental
Benefit Improvements
Current
Year
Additional
Actual
Base Year
Increase
Actual
Base
Year
Increase
Actual
Base
Year
Increase
Current Year
Cumulative
One-
Time
Premium
Tax
Year
Distribution
Distribution
Over Base
Distribution
Distribution
Over
Base
Distribution
Distribution
Over
Base
Recurring *
Recurring
Use
Total
Revenues
A
B
C = A - B
D
E
F = D - E
G
H
I = G - H
J
K = J’s
L
M = K + L
N = C + F + I - M
(not < $
(not < $0
(not < $0)
1997
BASE
__________
__________
__________
__________
__________
__________
__________
__________
__________
__________
__________
_________
________
__________
1998
__________
__________
__________
__________
__________
__________
__________
__________
__________
__________
__________
_________
________
__________
1999
__________
__________
__________
__________
__________
__________
__________
__________
__________
__________
__________
_________
________
__________
2000
__________
__________
__________
__________
__________
__________
__________
__________
__________
__________
__________
_________
________
__________
2001
__________
__________
__________
__________
__________
__________
__________
__________
__________
__________
__________
_________
________
__________
2xxx
__________
__________
__________
__________
__________
__________
__________
__________
__________
__________
__________
_________
________
__________
N's
Cumulative Additional Premium Tax Revenues as of Actuarial Valuation Date
* For each benefit improvement enacted, please disclose the ordinance number and actuarial impact separately, in a separate exhibit, if necessary.
NOTE: Not all plans will receive police, fire and fire supplemental checks. Please omit any superfluous columns in your submissions.
(5) The actuarial cost methods utilized for establishing the amount of the annual actuarial normal cost to support the promised benefits shall only be those methods approved in the Employee Retirement Income Security Act of 1974, and as permitted under regulations prescribed by the Secretary of the Treasury. The funding method utilized for the actuarial report and the resulting recommendation for contributions required to fund the retirement plan shall minimally provide a contribution sufficient to meet the normal cost, and to amortize the unfunded liability, if any, in accordance with Section 112.64, Florida Statutes.
(6) Actuarial assumptions selected for the actuarial valuation report should reflect the actuary’s best judgment of future events. They should take into account the actual experience of the covered group. The actuary should consider the impact of inflation on appropriate assumptions. The preferred approach in selecting actuarial assumptions is the use of explicit assumptions which more nearly represent the actuary’s best estimate of anticipated plan experience under each assumption. Actuarial assumptions which consistently generate experience gains or losses are prima facie indications of unreasonable actuarial assumptions.
(7) Whenever an actuarial valuation is based on actuarial assumptions, or cost methods different from those used in the preceding valuation, the current valuation must clearly indicate the effect on projected liabilities and costs resulting from the new assumptions and/or funding methods.
(8) Each report shall include an annual reconciliation of each reserved fund starting with the ending balance in the immediate prior actuarial report disclosing each of the items of income, disbursement, interest credits and debits, other adjustments as applicable, and the ending balance. Administrative expenses paid from the funds being accumulated to support the promised benefits shall be paid on a current basis in addition to the annual funding costs otherwise determined.
(9) All reconciliations (e.g., UAAL, asset, reserved fund, demographic data) are to start with the immediate prior reported ending balance. Annual funding costs or cost contribution rates determined as of a valuation date but to be paid at a later date or applicable to a period beginning at a later date are to be appropriately adjusted to reflect the intervening time interval. The adjustment shall provide for, but not be limited to, adjustments to account for interest and/or salary increase, as appropriate.
(10) Please disclose: Recommended changes in contributions or contribution rates determined as of a valuation date shall be effective not later than the first of the next fiscal year following the valuation date.
(a) Plan administrator, address and phone number.
(b) Asset custodian(s), with address(es) and phone number(s).
(c) Investment manager(s), with address(es) and phone number(s).
(11) Unless otherwise indicated or contrary to Chapter 112, Florida Statutes all actuarial procedures and determinations are to be in accordance with commonly accepted procedures and determinations. Internal Revenue Service publications should be used as the standard.
Specific Authority 112.665(1) FS. Law Implemented 112.61, 112.63 FS. History–New 5-6-81, Amended 9-19-84, Formerly 22D-1.03, Amended 11-14-91, Formerly 22D-1.003, Amended 2-23-95, ________.
60T-1.004 Actuarial Impact Statements.
(1) Regardless of funding source, no unit of local government shall agree to a proposed change in the retirement benefits or liabilities of a local retirement plan system subsequent to October 1, 1980, unless the administrator of the plan system, prior to adoption of the change by the governing body, has issued a statement of actuarial impact of the proposed change upon the plan local retirement system prior to the last public hearing thereon and has furnished a copy of such statement to the Division. Also, such statement shall incorporate by reference and have attached a copy of the proposed ordinance, amendment, resolution, collective bargaining agreement, insurance contract, or other legal instrument necessary to implement the proposed change to the plan retirement system. The adoption of a new plan shall require submission of an impact statement.
(2) The statement of actuarial impact may be based upon an actuarial valuation that has been prepared within 12 months of the proposed effective date for the amendments. The statement may be prepared by an enrolled actuary, either the plan administrator, or the plan sponsor or an enrolled actuary. The plan administrator shall transmit such statement to the Division along with the administrator’s his/her statement that the prepared information reflects the estimated costs of the proposed amendment(s).
(3) The statement of actuarial impact required by Section 112.63(3), F.S., should be in the form of a certification signed and dated by the plan administrator, including the administrator’s typed or printed name, and contain the following information:
(a) The name of the local retirement plan;
(b)(a) A description of the proposed amendment(s), identification of the applicable legal instrument necessary to implement the proposed amendment(s), the proposed effective date for the proposed amendment(s), and a statement that the actuary was provided the information necessary to evaluate the proposed amendment(s);
(c)(b) An estimate of the cost of implementing the amendment(s), signed and dated by an enrolled actuary, that which discloses, at a minimum, sufficient information on both the before and after amended amendment basis, so that another actuary, unfamiliar with the situation, would be able to appraise the estimate. If any actuarial assumptions, techniques or methods are also changed, additional information disclosing the effect of such actuarial changes must be provided separately; and
(d) A determination and disclosure of the cost effect of material favorable and/or unfavorable actuarial experience is recommended.
(e)(c) A statement indicating whether the proposed change is in compliance with Part VII, Chapter 112, Florida Statutes and Section 14, Article X of the State Constitution.
(4) Actuarial impact statements supporting benefit changes shall provide for contribution amount and contribution rate changes to be effective as follows:
(a) For prospective or retroactive increases in the benefit formula of active or inactive members – not later than the first day of the fiscal year next following the enactment date of the legal instrument providing the benefit increase.
(b) For retroactive retiree benefit increases required by litigation or federal or state regulations – not later than the first day of the fiscal year next following the effective date of the order or the regulation.
(c) For retroactive retiree benefit increases not required by litigation or federal or state regulation – not later than the first day of the fiscal year next following the enactment date of the legal instrument providing the benefit increase. A lump sum payment shall be required to fund the retroactive portion of the contribution increase from the effective date of such increase to the date of the contribution rate change and shall also be paid no later than the first day of the fiscal year next following such enactment date.
Specific Authority 112.665(1) FS. Law Implemented 112.61, 112.63(3), (4) FS. History–New 5-6-81, Amended 8-15-84, Formerly 22D-1.04, Amended 11-14-01, Formerly 22D-1.004, Amended 8-4-94,________.
60T-1.005 Review of Actuarial Reports and Actuarial Impact Statements.
(1) ACTUARIAL REPORTS:
(1)(a) If the Division does not receive the actuarial valuation report required by Section 112.63(1), (2), F.S., the statement of actuarial impact required by Section 112.63(3), F.S. Florida Statutes, or, upon review, finds that the report or statement actuarial valuation submitted is not complete, accurate, or based on reasonable assumptions and/or methods, or materially fails to satisfy Part VII of Chapter 112, F.S., or the Division requires additional material information necessary to complete its review of the report, statement, or to satisfy its duties pursuant to Section 112.665(1), F.S., it shall notify the administrator of the affected retirement plan and the affected local governmental entity and request appropriate adjustment and the additional material information. The local government shall, within 30 calendar 60 days from the receipt of the request: make the appropriate adjustment; provide the additional material information or the required report or statement; and/or notify the Division of its progress or its refusal to make the requested adjustment, provide the additional material information, report, or statement. The Division may extend the response time if it determines that reasonable progress is being made.
(b) If, after such 30 calendar days, the Division determines that the requested report, statement, adjustments and/or additional material information has with respect to the actuarial valuation have not or will not be made or provided, it shall inform the administrator of the affected retirement plan and the affected governmental entity that the consequences for failure to comply with the requirements of Section 112.63(4), F.S., require the Department of Revenue and the Department of Financial Services be notified of such noncompliance, in which case such Departments shall withhold any funds not pledged for satisfaction of bond debt service that are payable to the affected governmental entity until the adjustment is made, or the report, statement, or additional material information is provided to the Division petition for a hearing under the provision of Section 120.57, Florida Statutes, unless the local government has already done so. The withholding of funds shall commence on the 31st calendar day following receipt by the Departments of such notification from the Division.
(c) Within 21 days after receipt of the notice, the affected governmental entity may petition for a hearing under Sections 120.569 and 120.57, F.S., with the Division. If the administrative law judge recommends for the Division, the Division shall prepare an actuarial valuation report, actuarial impact statement and/or collect the requested material information, the cost of which shall be charged to the affected governmental entity of which the employees are covered by the retirement plan. If payment of such costs is not received by the Division within 60 calendar days after receipt by the affected governmental entity of the request for payment, the Division shall certify to the Department of Revenue and the Department of Financial Services the amount due, and such Departments shall pay such amount to the Division from any funds not pledged for satisfaction of bond debt service which are payable to the affected governmental entity. If the administrative law judge recommends in favor of the affected governmental entity and the Division prepares a report, statement, and/or collects the requested material information, the cost thereof shall be paid by the Division.
(2) In the case of an affected special district, the Division shall also notify the Department of Community Affairs. Upon receipt of such notification, the Department of Community Affairs shall proceed pursuant to the provisions of Section 189.421 F.S., with regard to the special district. ACTUARIAL IMPACT STATEMENTS:
(a) The Division’s review of such statement shall be based primarily on the financial aspects and soundness of the proposed amendment(s).
(b) If the Division finds that such statement is not acceptable, it shall include in its comments the specific reasons therefor, and request an adjustment. Prior to deciding whether to petition for a hearing under the provisions of Section 120.57, Florida Statutes, the local government may undertake one of the following actions: provide additional information to support and justify the previously submitted statement, amend its proposed ordinance or rescind the statement and related ordinance.
(c) If the Division determines that the requested adjustments with respect to the statement of actuarial impact have not or will not be made, it shall petition for a hearing under the provisions of Section 120.57, Florida Statutes, unless the local government has already done so. If the hearing officer recommends in favor of the local retirement system, the Division shall determine if it shall prepare a statement of actuarial impact as set forth in Section 112.63(4), Florida Statutes.
(3) Pursuant to Section 218.503(2), F.S., the Division shall notify the Governor, the Commissioner of Education, as appropriate, and the Legislative Auditing Committee within 30 days after a determination that, due to lack of funds, one or more of the following conditions have occurred or will occur if action is not taken to assist the county, municipality, special district or district school board: failure to transfer at the appropriate time employer and employee contributions for any pension, retirement or benefit plan of an employee, or failure for one pay period to pay retirement benefits owed to former employees.
Specific Authority 112.665(1)(e) FS. Law Implemented 112.63 FS. History–New 5-6-91, Formerly 22D-1.05, 22D-1.005, Amended ________.
60T-1.006 Defined Contribution Plans.
(1) Each plan sponsor of a local retirement system or plan defined as other than those requiring actuarial reports shall provide, on an annual basis, that information necessary to gather, catalog and maintain complete information to the Division.
(2) The disclosure of information may be prepared as of the plan anniversary date or as of the plan sponsor’s fiscal year ending date and shall minimally contain the following:
(a) Plan Description (For the initial Initial report only):
1 Contribution formula
a. Plan sponsor
b. Member
2. Vesting schedule
3. Normal retirement date
4. Member eligibility
5. Beginning date of plan year – annually
6. Plan sponsor
7. Plan administrator
8. A copy of the Internal Revenue Service letter approving the plan as tax qualified, and all changes thereto. The specific Internal Revenue Code sections under which the plan operates.
9. Copy of plan document, ordinances, contracts and any enactment or other legal statement regarding funding and administration.
● Copy of all legal instruments affecting member eligibility, benefit provisions, funding and administration.
● Summary plan description per Sections 112.66(1), (2), F.S.
● Disclose if all plan members are covered by Social Security; if not, disclose the parameters describing the members covered by Social Security, and those not covered.
● Plan sponsor address and phone number.
● Plan administrator address and phone number.
● Asset custodian(s) with addresses and phone numbers.
● Investment manager(s) with addresses and phone numbers.
(b) Source of funds
1. Plan Sponsor
2. Members
3. Other
(b)(c) A statement describing each change and/or amendment, if any, to the plan, since the last report, including a copy of all applicable legal instruments and IRS approval letters.
(c)(d) A signed and dated statement of the plan administrator (including the administrator’s typed or printed name) verifying the completeness and accuracy of the report, including a statement that there has been no change since the last report, if applicable.
Specific Authority 112.665(1)(e) FS. Law Implemented 112.665 FS. History–New 8-15-84, Formerly 22D-1.006, Amended 2-23-95, ________.
60T-1.007 Funding.
(1) Member Employee contributions shall be deposited into the retirement system or plan not less frequently than monthly.
(2) Employer contributions shall be deposited into the retirement system or plan not less frequently than quarterly. Consistent with the Legislative intent in s. 112.61, F.S., and the concurrent funding requirement in s. 14, Art. X of the State Constitution, required contributions are to be paid not later than one year following the end of the plan year for which such contributions are due.
(3) Any payment for retroactive contribution rate increases shall be deposited into the retirement system or plan on or before the date such payment is due.
(4) Any revenues received from any source by an employer for allocation to a retirement system or plan shall be deposited into such system or plan not later than 30 days from receipt by the employer.
(5) Administrative expenses, annual funding costs, and contribution rate increases shall be funded in accordance with subsections 60T-1.003(8) through (10) and 60T-1.004(4), Part VII of Chapter 112, F.S., and Chapter 60T-1, F.A.C.
(6) The actuarial cost methods utilized for establishing the amount of the annual actuarial normal cost to support the promised benefits shall only be those methods approved in the Employee Retirement Income Security Act of 1974, and as permitted under the regulations prescribed by the Secretary of the Treasury. Such methods shall minimally provide a contribution sufficient to meet the normal cost, administrative expense and to amortize the unfunded liability, if any, in accordance with Part VII of Chapter 112, F.S., and Chapter 60T-1, F.A.C. All such determinations shall use the applicable mortality tables.
(7) In lieu of fair market value, an actuarial asset-valuation method may be used to establish the asset value for determining annual funding cost. The method used must satisfy Federal Regulation 1.412(c)(2)-1, as modified by Revenue Procedure 2000-40 pursuant to s. 9303(c) of P.L. 100-203, as in effect on August 16, 2006. The associated corridor limits must be disclosed. Additionally, each change in method or corridor limits must be of benefit to the plan, and be approved by the plan sponsor and by the plan’s board.
(8) Actuarial assumptions selected for the actuarial valuation report should reflect the actuary’s best judgment of future events. They should take into account the actual experience of the covered group. The actuary should consider the impact of inflation on appropriate assumptions. The preferred approach in selecting actuarial assumptions is the use of explicit assumptions that represent the actuary’s best estimate of anticipated plan experience under each assumption. Actuarial assumptions that consistently generate experience gains or losses are prima facie indications of unreasonable actuarial assumptions.
(9) Whenever an actuarial valuation is based on actuarial assumptions, cost determination/funding methods or benefit provisions different from those used in the preceding valuation, the current valuation must clearly indicate the effect on projected liabilities and costs resulting from the new assumptions, cost determination/funding methods and/or benefit provisions. This can be accomplished by adding additional columns, as applicable, to item (4)(l), Rule 60T-1.003, F.A.C.
(10) Administrative expenses paid from the funds being accumulated to support the promised benefits shall be paid on a current basis in addition to the annual funding costs otherwise determined. A reasonable assumption/estimate of increase should be used to anticipate the expense amount for the current and/or future plan year(s). Any investment-related expense not netted against investment income is to be included in administrative expense if such investment expense is not paid directly by the plan sponsor. Disclose the assumption, estimate and/or methodology to accomplish this objective in item (3)(e), Rule 60T-1.003, F.A.C.
(11)(a) Annual funding costs or cost contribution rates determined as of a valuation date but to be paid at a later date or applicable to a period beginning at a later date are to be appropriately adjusted to reflect the intervening time interval. The adjustment shall provide for, but not be limited to, adjustments to account for interest and/or salary increase/ payroll growth, as appropriate. Disclose the assumptions and/or methodology to accomplish this objective in item (3)(e), Rule 60T-1.003, F.A.C.
(b) For plan years beginning after September 30, 2009, the required dollar contributions for plan years beginning with or subsequent to the actuarial valuation date shall be the product of the required contribution rate and the payrolls during such plan years. The required contribution rate is the required dollar contribution amount for the plan year beginning on the valuation date, including any adjustments for expected benefit changes and interest, divided by the compensation amount used to establish the required dollar contribution amount.
(13) Unless otherwise indicated or contrary to Part VII of Chapter 112, F.S., or Chapter 60T-1, F.A.C., all actuarial procedures and determinations are to be in accordance with commonly accepted procedures and determinations. Internal Revenue Service publications should be used as the standard.(12) Recommended changes in contributions or contribution rates determined as of a valuation date shall be effective not later than the fiscal year coincident with or next following the valuation date.
(14) A member in a DROP who is not accruing benefits is retired for all plan purposes.
(15) An annual cost shall be determined and paid for each plan year except for a year for which the plan is determined to be fully funded or for which there are no unfunded liabilities for promised benefits.
(16) For closed, frozen, and terminated plans, annual funding contributions shall continue until there are no remaining unfunded promised benefits, consistent with the Legislative intent in Section 112.61, F.S. Liabilities for any new or additional benefits enacted after the adoption date of the legal instrument by which a plan became closed, frozen, or terminated, including the liabilities attributable to actuarial method and assumption changes, and actuarial experience, are to be amortized over the lesser of 15 years and the average number of years of remaining life expectancy.
(17) Changes in the actuarial liability and asset valuation methods and cost-funding methods and determinations, must be consistent with the Legislative intent in Section 112.61, F.S., and of benefit to the plan (e.g., a change solely to reduce annual funding cost due to unfavorable experience without also changing the assumptions yielding such experience neither satisfies Section 112.61 nor benefits the plan). All changes must be approved by the plan sponsor and by the plan’s board.
(18) The number of years for amortizing actuarial experience gains and losses, increases and decreases in liabilities due to actuarial method and/or assumption changes, and plan amendments must be consistently applied (e.g., actuarial experience gains cannot be amortized over a lesser number of years than that used for losses). Additionally, each change in the number of years of amortization policy must be approved by the plan sponsor and by the plan’s board.
(19) If the amortization of the unfunded actuarial accrued liabilities commences with or is changed to the use of the payroll-growth funding method in Section 112.64(5), F.S., the payroll-growth rate used must satisfy the requirements in such section, and each actuarial valuation report using such funding shall disclose the determination of the 10-year average annual payroll-growth rate and the payroll-growth rate used in the valuation. Additionally, any change in amortization policy to include the use of this method, the payroll-growth rate used and any increase in such rate must be of benefit to the plan, and be approved by the plan sponsor and by the plan’s board. Only the pensionable compensation of active members shall be used in determining the 10-year average payroll-growth rate. Additionally, such 10-year average is the tenth root of the ratio that the current pensionable compensation bears to such compensation 10 years earlier.
(20) The awarding of cost-of-living benefit increases continually provided on an ad-hoc basis does not satisfy the Legislative intent in Section 112.61, F.S., if the additional liabilities are then to be funded over future years. If such awards are to continue on an ad-hoc basis, the benefit shall be fully paid for not later than the fiscal year next following the enactment date of the legal instrument providing the benefit increase, or such benefits are to be anticipated and pre-funded the same as all the other pension plan benefits to satisfy the Legislative intent in Section 112.61, F.S.
(21) The plan sponsor or the plan’s board may revise actuarial reports and impact statements previously provided to the Division to correct material errors or omissions. Other changes may be made provided that such revisions satisfy the Legislative intent in Section 112.61, F.S., the other requirements of Part VII of Chapter 112, F.S., and Chapter 60T-1, F.A.C., and is in the best interest of the plan and the funding of the plan’s benefits, as determined by the Division.
(22) The annually required plan sponsor contribution may be limited to the amount equal to 110% of the excess of the sum of the normal cost and accrued liability over the value of the plan’s present assets. For this purpose: the normal cost and the accrued liability are determined according to the individual entry-age actuarial cost-funding method if such items cannot be directly calculated under the funding method used for the plan; the entry age is the member’s current age reduced to reflect the number of years of credited prior service; the value of the plan’s present assets is the lesser of the fair market value and, if applicable, the value determined according to the plan’s actuarial asset-valuation method; and all determinations shall be as of the same date.
(23) The total required plan sponsor contribution for each plan year shall not be reduced to reflect member contributions that exceed the member contribution amount determined when the plan sponsor required contribution amount was established. Any such reduction is contrary to the Legislative intent in Section 112.61, F.S.
(24)(a) For plans providing additional benefits to members satisfying specified requirements, and who have the option of electing such additional benefits, the funding for such additional benefits shall commence not later than the later of the fiscal year coincident with or next following the enactment date of the legal instrument providing the additional benefits and, if applicable, the earliest date the member eligible to elect such additional benefits could have satisfied the applicable requirements to claim the additional benefits. Such additional benefits shall be funded by annual contributions that funds the benefits not later than the member’s expected retirement date. A lump sum payment is required equal to the accumulated annual contributions, with interest, that would have been paid from such earliest date the electing member could have satisfied the applicable requirements to the date when such requirements are satisfied, and shall be paid no later than the fiscal year next following such latter date.
(b) Contributions are required for those retirement plan members who decline to participate in the plan and who subsequently join the plan, or who withdraw from the plan and subsequently rejoin the plan. Consistent with the Legislative intent in Section 112.61, F.S., if credit for pension purposes is awarded for all or any portion of prior service, the plan shall be paid the full actuarial cost for such service. Such cost and any accrued interest shall be paid not later than the fiscal year coincident with or immediately following the date the member first becomes eligible to claim such service. If creditable service commences upon the date of re-entry into the plan with no credit for pension purposes for prior service, there is no additional cost for any prior service.
(25) Contributions are payable to the fund for those members who terminate from a DROP without terminating employment and who receive credit for pension benefits as if never having participated in the DROP. Such contributions shall be the full actuarial cost for the service not credited during the DROP participation period. Such contribution amounts may be offset by the accumulated DROP balance forfeited when the member terminated from the DROP without terminating employment. All such contributions and accrued interest shall be paid not later than the fiscal year coincident with or immediately following the date the member terminates from the DROP.
(26) Pursuant to subsection 60T-1.007(8), F.A.C., actuarial assumptions that consistently generate experience gains or losses are prima facie indications of unreasonable actuarial assumptions. Additionally, Section 112.63(1)(e), F.S., and paragraph 60T-1.003(3)(f), F.A.C., require a comparative review of the actual salary increases granted and the rate of investment return realized over, minimally, the 3-year period preceding the actuarial report with the applicable assumptions used during such period. Also, except as otherwise provided in Part VII of Chapter 112, F.S., Section 112.61, F.S., Legislative intent, among other things, explicitly “prohibit[s] the use of any procedure, methodology, or assumptions the effect of which is to transfer to future taxpayers any portion of the costs which may reasonably have been expected to be paid by the current taxpayers.” Accordingly, for each period of at least 3 years of unfavorable actuarial experience immediately preceding the actuarial report, if the actuary elects not to appropriately change the assumption(s) generating such experience, then the actuary shall comment regarding the efficacy of the applicable assumptions versus the experience, and justify how the continuation of such assumptions satisfies the preceding standards, individually and collectively. In the absence of compelling evidence to support such continuation, such report shall be determined to be not state accepted pursuant to Part VII of Chapter 112, F.S.
(27) As of any actuarial valuation date, all existing UAAL amounts (“charges” and “credits”) may be combined and have a single amortization payment, provided such payment is not less than the amount payable without the combining, and such that the Legislative Intent in Section 112.61, F.S., is satisfied.
Specific Authority 112.665(1) FS. Law Implemented 112.61, 112.64 FS. History–New 11-14-91, Formerly 22D-1.007, Amended ________.
60T-1.008 Additional Benefits Funded by Experience.
(1) Actuarial experience may be used to fund additional benefits. The present value of such benefits currently awarded or to be awarded shall not exceed the net favorable actuarial experience balance accumulated from all sources of actuarial gains and losses.
(2) Subject to the provisions of Part VII of Chapter 112, F.S., the determination and the payment of additional benefits shall only be in accordance with the provisions of the legal instrument applicable to such benefits adopted by the plan sponsor.
(3) Actuarial experience is determinable under any actuarial cost-funding method. For spread-gain cost-funding methods (see IRS Revenue Rule 81-213), actuarial experience may be determined using a consistently applied individual entry-age cost-funding method, or consistently using the difference in annual normal-cost-funding rates based on the spread-gain-funding method in use. All such determinations are to be disclosed in the actuarial report.
(4) The period for the measurement of net actuarial experience may commence with the effective date of the additional benefits program funded by actuarial experience, or earlier. If earlier, the contribution requirements for the affected prior years must be re-determined to account for the revised treatment of prior actuarial experience. A revised actuarial report is required for each affected prior year.
(5) A net favorable cumulative actuarial experience balance may be reserved or amortized. If reserved, the balance is to be identified and separately disclosed with the plan’s other benefit liabilities. A net unfavorable cumulative balance must be amortized. For immediate-gain funding methods, the amortization period must satisfy Section 112.64(4), F.S., and be consistent with the amortization periods amortizing favorable and unfavorable actuarial experience. For spread-gain funding methods, the balance is to be subsumed in the liabilities funded by the funding method’s normal cost. The resulting decrease (favorable balance) or increase (unfavorable balance) in the normal cost is the amortization payment.
(6) An exhibit is to be included in each actuarial valuation report disclosing, on an annual basis, the reconciliation of the immediate prior net accumulated actuarial experience balance to the current balance. The reconciliation shall disclose the actuarial experience, the value of the additional benefits awarded or to be awarded, applicable interest adjustments, and as adjusted by any amortization payments.
Specific Authority 112.665(1) FS. Law Implemented 112.61, 112.63, 112.64. History–New________.
60T-1.009 Additional Filing Requirements.
(1) Expected rates of return on investments per Section 112.661(9), F.S.
(a) For each actuarial valuation the retirement plan’s board shall determine the total expected annual rate of return on the plan’s assets (including investment-related expenses) for the current year, separately for each of the next three years, and for the long term thereafter, and file such statement with the Division, the plan sponsor and consulting actuary. The statement shall disclose how such total expected rates of return are determined on the market value basis for the plan’s investments as of the current actuarial valuation date and reflect any expected changes in such investments pursuant to the plan’s investment policy statement, and shall include all applicable supporting materials including the plan investment advisor’s return rate determinations. The following information shall be provided in a historical exhibit with each board’s statement of total expected annual rates-of-return. This information will also assist the board in establishing the expected annual rates-of-return.
1. Determine the total required annual rate-of-return as the sum of the investment-related expense (“IRE”) rate and the plan’s actuarial interest assumption. Determine the IRE rate as the difference between the rates-of-return including and excluding such expense using the formula in subparagraph 60T-1.003(3)(f)2., F.A.C. (For example, if the rate-of-return is 7.83% including expenses, and 6.90% excluding expenses, then the IRE expense rate is 0.93%. If such 0.93% expense rate is assumed to continue, and the plan’s actuarial interest assumption is 8.00%, then the annually required total rate-of-return is 8.93%.)
2. Determine the weighted-average annual yield rate for the plan’s fixed-income investments. This is the ratio “a/b”, where “a” is the sum of the expected annual fixed-income of all the fixed-income investments (not in default), and “b” is the market value of all such investments. (For example, if $45,900 is the total expected annual fixed-income on a $914,343 market-value fixed-income portfolio, then the weighted-average annual yield rate is 5.02% ($45,900/$914,343).)
3. Determine the annual yield rate for the total plan portfolio expected to be produced by the fixed-income portion of the plan’s portfolio. This is the product of the fixed-income weighted-average yield rate and the percent that the fixed-income investments are of the total plan portfolio. (For example, if the fixed-income portfolio is 32.2% of the plan’s total portfolio; then the yield rate for the total plan portfolio expected to be produced by the fixed-income portion of the portfolio is 1.62% (5.02% x 32.2%).) (Alternatively, divide the $45,900 expected annual fixed-income amount by the total plan portfolio ($2,839,575 in this example).)
4. Determine the total annual rate-of-return to be produced by the balance of the portfolio to achieve the required total rate-of-return. (For example, 7.31% (8.93% – 1.62%) is the required rate-of-return to be produced by the remaining 67.8% (100.0% – 32.2%) of the non-fixed-income portion of the portfolio. Thus, such other assets, specifically equities, must produce 10.78% (7.31%/67.8%).)
5. The historical exhibit shall disclose the following information for each plan year. For plan year ended(date): expected and actual IRE rates; expected and actual rates-of-return each on the fixed-income and equity portions of the total asset portfolio; and the assumed and actual actuarial rates-of-return. For the immediately following plan year: total market value, expected IRE rate, actuarial interest assumption, and total expected rate-of-return; for the fixed-income portfolio, its market value and percent of the total portfolio, the expected annual fixed-income amount, and such amount as a percent of the fixed-income portfolio and of the total portfolio; for the equity portion of the portfolio, its market value and percent of the total portfolio, the excess by which the total expected rate-of-return exceeds the expected rate-of-return on the fixed-income portfolio, and the expected rate-of-return on the equity portion of the portfolio required to achieve the total expected rate-of-return.
(b) For each year, the plan’s board shall also provide a statement explaining why the market value return rate is more than 2% less than the assumed actuarial rate for such year, and also state and explain the board’s corrective action.
(2) Illiquid investments pursuant to Section 112.661(17), F.S.
(a) For each actuarial valuation that includes illiquid investments in the assets used for establishing the plan’s annual funding cost, the board shall disclose:
1. The specific legal provision(s) permitting each such investment.
2. Each such investment and how its fair market value was established.
3. Each valuator(s) of such investment and the valuator(s) qualifications.
(b) For each actuarial valuation as of which date the plan did not own any illiquid investment, or if owned but the fair market value was not determined and that each such investment was excluded from the assets used to establish the annual funding cost, the board is to provide a signed statement so attesting.
(3) Annual statement pursuant to Sections 112.661(9) and (17), F.S. The retirement plan’s board shall annually provide to the Division, the plan sponsor and the plan’s actuary not later than two months following the beginning of each plan year the required disclosures in subsections 60T-1.009(1) and (2), F.A.C., together with a statement in the form of a certification signed and dated by each board member, as follows:
Statement by the Board of Trustees of the (name of plan)
(Pursuant to subsection 60T-1.009(3), F.A.C.)
The disclosures attached hereto are, to the best of my knowledge, complete and accurate, and satisfy the requirements of Sections 112.661(9) and (17), F.S., Rule 60T-1.009, F.A.C., and the Legislative intent in Section 112.61, F.S.
Print or Type Name
Signature
Date
Specific Authority 112.665(1) FS. Law Implemented 112.661(9) FS. History–New________.
Document Information
- Subject:
- The participation of local governments in the Florida State Retirement System, as provided in Part VII, Chapter 112, Florida Statutes.
- Purpose:
- Amend this chapter which sets forth the rules under which municipal and special district units of government are to provide information on their retirement systems plans to the Department of Management Services, Division of Retirement, (Bureau of Program Services) pursuant to Part VII of Chapter 112, Florida Statutes (F.S.). The provisions of this chapter is applicable to all counties, municipal governments, and special districts (or agencies and instrumentalities thereof), which state ...
- Rulemaking Authority:
- 112.665(1) FS.
- Law:
- 112.661(9), 112.61, 112.625, 112.63, 112.665, 112.64, 112.661(9) FS.
- Contact:
- Garry Green, Operations and Management Consultant Manager, Department of Management Services, Division of Retirement, 1317 Winewood Blvd., Bldg. 8, Tallahassee, FL 32399-1560, (850)488-5706
- Related Rules: (9)
- 60T-1.001. Scope and Purpose
- 60T-1.002. Definitions
- 60T-1.003. Actuarial Reports
- 60T-1.004. Actuarial Impact Statements
- 60T-1.005. Review of Actuarial Reports and Actuarial Impact Statements (Repealed)
- More ...