2021-10-01 Police Pension Plan Actuarial Valuation
City of Tamarac Police Officers’
Pension Trust Fund
Actuarial Valuation Report as of October 1, 2024
Annual Employer Contribution for the Fiscal Year
Ending September 30, 2025
February 14, 2025
Board of Trustees
City of Tamarac Police Officers' Pension Trust Fund
Tamarac, Florida
Re: City of Tamarac Police Officers’ Pension Trust Fund
Actuarial Valuation as of October 1, 2024
Dear Board Members:
The results of the October 1, 2024 Annual Actuarial Valuation for the City of Tamarac Police Officers’ Pension Trust Fund (Plan) are presented in this report.
The computed contribution shown on page 1 may be considered as a minimum contribution that complies with the Board’s funding policy. Users of this report should be aware that contributions made at that level do not guarantee benefit security. Given the importance of benefit security to any retirement system, we suggest that contributions to the Plan in excess of those presented in this report should be considered.
This report was prepared at the request of the Board and is intended for use by the Retirement System and those designated or approved by the Board. This report may be provided to parties other than the System only in its entirety and only with the permission of the Board. GRS is not responsible for unauthorized use of this report.
The purposes of the valuation are to measure the System’s funding progress, to determine the employer contribution for the fiscal year ending September 30, 2025, and to determine the actuarial information for Governmental Accounting Standards Board (GASB) Statements No. 67 for the fiscal year ending September 30, 2024. This report also includes estimated GASB Statements No. 67 information for the fiscal year ending September 30, 2025. This report should not be relied on for any purpose other than the purposes described herein. Determinations of financial results, associated with the benefits described in this report, for purposes other than those identified above may be significantly different.
The contribution in this report is determined using the actuarial assumptions and methods disclosed in Section II of this report. This report includes risk metrics in Section I but does not include a more robust assessment of the risks of future experience not meeting the actuarial assumptions. Additional assessment of risks was outside the scope of this assignment. We encourage a review and assessment of investment and other significant risks that may have a material effect on the Plan’s financial condition.
This valuation assumed the continuing ability of the plan sponsor to make the contributions necessary to fund this plan. A determination regarding whether or not the plan sponsor is actually able to do so is outside our scope of expertise and was not performed.
The findings in this report are based on data and other information through September 30, 2024. The valuation was based upon information furnished by the Plan Administrator, concerning Retirement System benefits, financial transactions, plan provisions and active members, terminated members, retirees and beneficiaries. We checked for internal reasonability and year‐to‐year consistency, but did not audit the data. We are not
SECTION I DISCUSSION
DISCUSSION OF VALUATION RESULTS
REQUIRED EMPLOYER CONTRIBUTION
The required City contribution for the fiscal year beginning October 1, 2024 is expected to be $599,033. Fiscal Year Beginning October 120242023
Required City Contribution
Total Required City & State Contribution$832,907$791,438
Expected State Premium Tax Refund$943,247$872,750
Portion of State Premium Tax Refund
Allocated to Funding Pension Benefits$233,874$233,874
Remaining City Contribution$599,033$557,564
The increase in the required contribution from 2023 to 2024 was due primarily to unfavorable actuarial experience, as explained below. The actual City contribution for the fiscal year ending September 30, 2024 was $557,564, which is the same as the required amount of $557,564.
Assumptions are made each year regarding the expected premium tax refund from the State. The City is responsible for the total amount of $832,907 offset by the portion of premium tax money allocated to funding pension benefits. If the premium tax refund falls below $233,874, then the remaining contribution due from the City would increase by the same amount.
EXPERIENCE
Actual experience during the last year was less favorable than that anticipated by the actuarial assumptions. The experience loss was primarily due to lower mortality experience than expected. This loss was partially offset by a higher than expected investment return, based on the actuarial value of assets. The return on an actuarial valuation asset basis was 7.2%, which was greater than the 6.00% assumed rate. The net market value return for the year was 15.7%. The combined result was a net experience loss of $126,363 which increased the contribution by approximately $29,000.
VARIABLE‐COST‐OF‐LIVING PAYMENT
A cost‐of‐living amount of up to 2% of annual benefits is payable for any year in which the Plan has an actuarial gain and an accumulated gain. For the plan year ended September 30, 2024, there was an experience loss and the accumulated experience is remains negative. Therefore, no variable cost‐of‐living amount is payable based on this provision in the Plan.
CHANGES IN ACTUARIAL COST METHODS AND ASSUMPTIONS
There were no changes in actuarial cost methods or assumptions in connection with this valuation.
CHANGES IN BENEFITS
There were no changes in benefit provisions in connection with this valuation.
VARIABLILITY OF FUTURE CONTRIBUTION LEVELS
The Actuarial Cost Method used to determine the required contribution is intended to produce contributions which are generally level from year to year. Even so, when experience differs from the assumptions, as it often does, the employer’s contribution can vary significantly from year‐to‐year. Over time, if the year‐to‐year gains and losses offset each other, the contribution would be expected to return to the current level, but this does not always happen.
This year the Actuarial Value of Assets was approximately $162,000 less than the Market Value of Assets as of the valuation date (see Section III). The difference will be recognized over the next few years in the absence of offsetting losses, causing the employer contribution level to decrease by approximately $37,000 over the same period. If the Market Value had been the basis for the valuation, the City contribution would have been approximately $562,000 and the funded ratio would have been 91.2%.
In addition, the plan has one year left on most of the existing amortization payments. The required City contribution is expected to decrease significantly once most of the existing amortization payments have concluded.
FUNDED RATIO, RECOMMENDATIONS AND CONCLUSION
The funded ratio is 89.0%, as compared to 82.0% last year. In recent years, several steps have been taken to address the funded status, including reductions in the amortization periods for current and future bases, and reductions in the investment return assumption. Due to the maturity of the Plan, we recommend continuing to lower the investment return assumption.
Additionally, the plan is in a negative cash flow position, meaning that benefits and administrative expenses are greater than contributions. The cash flow was ‐1.7% compared to the market value of the fund at the end of the year. It is important that the incidence of contributions is such that the fund continues to be able to pay benefits and expenses as they are due. We recommend that the Board consider having cash flow projections prepared including scenarios such as low investment returns.
The remainder of this Report covers detailed actuarial valuation results, financial information, other information and statistics, a summary of plan provisions, and annual filings required by law.
RISKS ASSOCIATED WITH THE MEASURING THE ACCRUED LIABILITY AND ACTUARIALLY DETERMINED CONTRIBUTION
The determination of the accrued liability and the actuarially determined contribution requires the use of assumptions regarding future economic and demographic experience. Risk measures, as illustrated in this report, are intended to aid in the understanding of the effects of future experience differing from the assumptions used in the course of the actuarial valuation. Risk measures may also help with illustrating the potential volatility in the accrued liability and the actuarially determined contribution that result from the differences between actual experience and the actuarial assumptions.
Future actuarial measurements may differ significantly from the current measurements presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions due to changing conditions; 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, or additional cost or contribution requirements based on the Plan’s funded status); and changes in plan provisions or applicable law. The scope of an actuarial valuation does not include an analysis of the potential range of such future measurements.
Examples of risk that may reasonably be anticipated to significantly affect the plan’s future financial condition include:
1. Investment risk – actual investment returns may differ from the expected returns;
2. Asset/Liability mismatch – changes in asset values may not match changes in liabilities, thereby altering the gap between the accrued liability and assets and consequently altering the funded status and contribution requirements;
3. Contribution risk – actual contributions may differ from expected future contributions. For example, actual contributions may not be made in accordance with the plan’s funding policy or material changes may occur in the anticipated number of covered employees, covered payroll, or other relevant contribution base;
4. Salary and Payroll risk – actual salaries and total payroll may differ from expected, resulting in actual future accrued liability and contributions differing from expected;
5. Longevity risk – members may live longer or shorter than expected and receive pensions for a period of time other than assumed;
6. Other demographic risks – members may terminate, retire or become disabled at times or with benefits other than assumed resulting in actual future accrued liability and contributions differing from expected.
The effects of certain trends in experience can generally be anticipated. For example, if the investment return since the most recent actuarial valuation is less (or more) than the assumed rate, the cost of the plan can be expected to increase (or decrease). Likewise, if longevity is improving (or worsening), increases (or decreases) in cost can be anticipated.
The computed contribution shown on page 1 may be considered as a minimum contribution that complies with the Board’s funding policy. The timely receipt of the actuarially determined contributions is critical
to support the financial health of the plan. Users of this report should be aware that contributions made at the actuarially determined rate do not necessarily guarantee benefit security.
PLAN MATURITY MEASURES
Risks facing a pension plan evolve over time. A young plan with virtually no investments and paying few benefits may experience little investment risk. An older plan with a large number of members in pay status and a significant trust may be much more exposed to investment risk. Generally accepted plan maturity measures include the following:
20242023
Ratio of the market value of assets to payroll*0.20.2
Ratio of actuarial accrued liability to payroll*0.30.3
Ratio of actives to retirees and beneficiaries00
Ratio of net cash flow to market value of assets(1.7%)(1.3%)
Duration of the actuarial accrued liability7.067.27
*A gross City payroll of $27,000,000 (estimated) for calendar years 2024 and 2023 were used to determine the plan maturity measures as a ratio to payroll.
RATIO OF MARKET VALUE OF ASSETS TO PAYROLL
The relationship between assets and payroll is a useful indicator of the potential volatility of contributions. For example, if the market value of assets is 2.0 times the payroll, a return on assets 5% different than assumed would equal 10% of payroll. A higher (lower) or increasing (decreasing) level of this maturity measure generally indicates a higher (lower) or increasing (decreasing) volatility in plan sponsor contributions as a percentage of payroll.
RATIO OF ACTUARIAL ACCRUED LIABILITY TO PAYROLL
The relationship between actuarial accrued liability and payroll is a useful indicator of the potential volatility of contributions for a fully funded plan. A funding policy that targets a funded ratio of 100% is expected to result in the ratio of assets to payroll and the ratio of liability to payroll converging over time.
The ratio of liability to payroll may also be used as a measure of sensitivity of the liability itself. For example, if the actuarial accrued liability is 2.5 times the payroll, a change in liability 2% other than assumed would equal 5% of payroll. A higher (lower) or increasing (decreasing) level of this maturity measure generally indicates a higher (lower) or increasing (decreasing) volatility in liability (and also plan sponsor contributions) as a percentage of payroll.
RATIO OF ACTIVES TO RETIREES AND BENEFICIARIES
A young plan with many active members and few retirees will have a high ratio of active to retirees. A mature open plan may have close to the same number of actives to retirees resulting in a ratio near 1.0. A super‐mature or closed plan may have significantly more retirees than actives resulting in a ratio below 1.0.
RATIO OF NET CASH FLOW TO MARKET VALUE OF ASSETS
A positive net cash flow means contributions exceed benefits and expenses. A negative cash flow means existing funds are being used to make payments. A certain amount of negative net cash flow is generally expected to occur when benefits are prefunded through a qualified trust. Large negative net cash flows as a percent of assets may indicate a super‐mature plan or a need for additional contributions.
DURATION OF ACTUARIAL ACCRUED LIABILITY
The duration of the actuarial accrued liability may be used to approximate the sensitivity to a 1% change in the assumed rate of return. For example, duration of 10 indicates that the liability would increase approximately 10% if the assumed rate of return were lowered 1%.
ADDITIONAL RISK ASSESSMENT
Additional risk assessment is outside the scope of the annual actuarial valuation. Additional assessment may include scenario tests, sensitivity tests, stochastic modeling, stress tests, and a comparison of the present value of accrued benefits at low‐risk discount rates with the actuarial accrued liability. We recommend that the Board conduct additional risk assessment of the investment return assumption.
LOW-DEFAULT-RISK OBLIGATION MEASURE
Actuarial Standards of Practice No. 4 (ASOP No. 4) was revised and reissued in December 2021 by the Actuarial Standards Board (ASB). It includes a new calculation called a low‐default‐risk obligation measure (LDROM) to be prepared and issued annually for defined benefit pension plans. The transmittal memorandum for ASOP No. 4 includes the following explanation:
“The ASB believes that the calculation and disclosure of this measure provides appropriate, useful information for the intended user regarding the funded status of a pension plan. The calculation and disclosure of this additional measure is not intended to suggest that this is the “right” liability measure for a pension plan. However, the ASB does believe that this additional disclosure provides a more complete assessment of a plan’s funded status and provides additional information regarding the security of benefits that members have earned as of the measurement date.”
The following information has been prepared in compliance with this new requirement. Unless otherwise noted, the measurement date, actuarial cost methods, and assumptions used are the same as for the funding valuation covered in this actuarial valuation report.
A. Low‐default‐risk Obligation Measure of benefits earned as of the measurement date: $8,452,934
B. Discount rate used to calculate the LDROM: 3.81% based on Bond Buyer “20‐Bond GO Index” as of September 26, 2024
C. Other significant assumptions that differ from those used for the funding valuation: none
D. Actuarial cost method used to calculate the LDROM: Individual Entry‐Age Actuarial Cost Method
E. Valuation procedures to value any significant plan provisions that are difficult to measure using traditional valuation procedures, and that differ from the procedures used in the funding valuation: none
F. Commentary to help the intended user understand the significance of the LDROM with respect to the funded status of the plan, plan contributions, and the security of participant benefits: The LDROM is a market‐based measurement of the pension obligation. It estimates the amount the plan would need to invest in low risk securities to provide the benefits with greater certainty. This measure may not be appropriate for assessing the need for or amount of future contributions. This measure may not be appropriate for assessing the sufficiency of plan assets to cover the estimated cost of settling the plan’s benefit obligation.
The difference between the two measures (Valuation and LDROM) is one illustration of the savings the sponsor anticipates by taking on the risk in a diversified portfolio.
RECENT HISTORY OF PLAN CHANGES
1. Ordinance 0‐2003‐01 is effective January 22, 2003, and provides for the following:
The early retirement reduction not to exceed 3% per year early.
The pre‐retirement death benefit is the accrued benefit, payable at normal retirement date.
The Normal Retirement Date is the earlier of age 57 with 5 years of service, age 55 with 10 years of service, or age 52 with 25 years of service.
Ordinance 0‐2003‐21 is effective October 1, 2002, and provides for a $220 per month subsidy, with 120 payments guaranteed, to participants retiring on or after October 1, 2002.
These changes are reflected in the October 1, 2002 results.
2. As of 10/1/03 the assumed rate of return on plan assets was changed from 7.75% annually, net of investment expenses to 7.25% annually, net of investment expenses.
3. Ordinance No 0‐2006‐04 is effective January 25, 2006, and provides for a share plan that distributes excess premium tax revenue to active participants, retirees and beneficiaries of retirees.
4. As of 10/1/06, the assumed mortality rates were changed from the 1983 Group Annuity Mortality Table, to the 1994 Group Annuity Mortality Table.
5. As of 10/1/10, the assumed rate of return on plan assets was changed from 7.25% annually, net of investment expenses to 7.0% annually, net of investment expenses.
6. As of 10/1/11, the amortization period on all outstanding bases has been reduced to 20 years. The amortization period for the current base and future bases will be reduced by two years each year until the amortization period is 12 years, and then by one year each year thereafter.
7. As of 10/1/13, the mortality rates were changed from the 1994 Group Annuity Mortality (GAM) table for males and females to the RP‐2000 Combined Healthy Participant Mortality Tables, using projection scale AA to anticipate future mortality improvement. The assumed rate of investment return was changed from 7.00% net of investment expenses, to 6.75% net of investment expenses.
8. As of 10/1/16, the mortality rates were changed from the RP‐2000 Combined Healthy Participant Mortality Tables, using projection scale AA to the mortality rates used by the Florida Retirement System (FRS) for Special Risk Class members. This change was made in compliance with Florida House Bill 1309, which requires all public pension plans in Florida to use the same mortality rates used in either of the last two actuarial valuation reports of FRS. In addition, the amortization period will be reduced by two years each year until the amortization period is 8 years, and then by one year each year thereafter.
9. As of 10/1/18, the assumed rate of investment return was changed from 6.75% net of investment expenses, to 6.50% net of investment expenses.
10. As of 10/1/20, the mortality rates were updated to reflect the mortality assumptions adopted by FRS after a 2019 experience study and used in the July 1, 2019 FRS Actuarial Valuation. The assumed rate of investment return was lowered from 6.50% net of investment expenses to 6.00% net of investment expenses.
11. As of 10/1/22, all future bases will be amortized over 5 years.
SECTION II VALUATION RESULTS
COMPARATIVE SUMMARY OF VALUATION RESULTS
AS OF OCTOBER 1 2024
Disabilities, Beneficiaries and Vested Terminations2626
Covered Annual Payroll$
Long Range Cost
B.Actuarial Present Value of Projected Benefits$7,241,091$7,466,641
C.Actuarial Present Value of Future Normal Costs
D.Actuarial Accrued Liability (AAL): B ‐ C7,241,0917,466,641
E.Valuation Assets6,444,5696,123,099
F.Unfunded Actuarial Accrued Liability (UAAL): D – E796,5221,343,542
Current Cost
G.Payment Required to Amortize UAAL$740,422$711,705
H.Employer Normal Cost (for current year, exclusive of funding toward UAAL)79,72868,538
I.Fiscal Year to which Contributions Apply10/1/24 to 9/30/25 10/1/23 to 9/30/24
J.Total Required City and State Contribution832,907**791,438*
K.Estimated Available Premium Tax Refund233,874233,874
* Reflects $564,431 payment on 10/3/2023 and mid‐August timing on the State contribution. ** Reflects $557,564 payment on 10/1/2024 and mid‐August timing on the State contribution.
DERIVATION OF NORMAL COST
A.Entry Age Normal Costs for Benefits
1.Service Retirement Benefits$0$0
2.Vesting Benefits00
3.Disability Benefits00
4.Preretirement Death Benefits00
5.Return of Contributions00
6.Total00
B.Normal Cost for Administrative Expense79,72868,538
C.Expected Member Contributions00
D.Total Employer Normal Costs: (A)+(B) ‐ (C)79,72868,538
PRESENT VALUE OF PROJECTED BENEFITS AS OF OCTOBER 1
A.Present Value of Future Salaries$0$0
B.Present Value of Projected Benefits
1.
2. Inactive Members
a.Service Retirees6,238,5616,428,241
b.Disability Retirees454,937471,753
c.Beneficiaries Receiving Benefits547,593566,647
d.Terminated Vested Members00
e.Total7,241,0917,466,641
3. Grand Total7,241,0917,466,641 20242023
LIQUIDATION OF THE UNFUNDED ACTUARIAL ACCRUED LIABILITY
The Unfunded Actuarial Accrued Liability (UAAL) is being amortized as a level dollar amount over the number of years remaining in the amortization period. Details relating to the UAAL are as follows: Payment
* Reflects combining bases and amortizing over a 20‐year period starting October 1, 2011. In subsequent valuations, the amortization periods for new and existing bases were reduced by two years each year, until the amortization period reached 8 years on October 1, 2017, marking the final year to reduce the amortization periods by two years. All bases established on or after October 1, 2022 will be amortized over 5 years. Year 2024$796,522 202559,467 202634,937 20278,935 20280 Projected UAAL
CHAPTER REVENUE
Increments in Chapter revenue over that received in 1998 must first be used to fund the cost of compliance with minimum benefits. As of the valuation date, the Plan needed the following cost‐related changes in order to comply with minimum benefit requirements:
None
Paragraph 185.35(1)(b), Florida Statutes allows a plan which has met the minimum benefit requirements to set up a share plan and to allocate premium tax money into that plan. A share plan is currently in effect under which amounts received in excess of $233,874 are allocated to members.
Actuarial Confirmation of the Used of State Chapter Money
1. Base Amount Previous Plan Year$233,874
2 Amount Received for Previous Plan Year943,247
3. Benefit Improvements Made in Previous Plan Year0
4 Excess Funds for Previous Plan Year: (2) ‐ (1) ‐ (3)709,373
5. Accumulated Excess at Beginning of Previous Year50,496
6 Prior Excess Used in Previous Plan Year709,373
7. Accumulated Excess as of Valuation Date (Available for Benefit Improvements): (4) + (5) ‐ (6)50,496
8. Share Plan Base Amount This Plan Year: (1) + (3)233,874
City of Tamarac Police Officers' Pension Trust Fund
The assumptions used to anticipate mortality, employment turnover, investment income, expenses, salary increases, and other factors have been based on long‐range trends and expectations. Actual experience can vary from these expectations. The variance is measured by the gain or loss for the period involved. If significant long‐term experience reveals consistent deviation from what has been expected and that deviation is expected to continue, the assumptions should be modified.
Experience Gain / (Loss) for the Year Ended 2024
1.Prior Year's UAAL$1,343,542
2.Employer Normal Cost68,538
3.Interest on (1) and (2)84,725
4.Contributions for This Period a.State233,874 b.City557,564 c.Total791,438
7.Change in UAAL due to a.Revision in Assumptions or Methods0 b.Plan Amendments0
8.This Year's Expected UAAL After Changes: (6) + (7)670,159
9.This Year's Actual UAAL After Changes796,522
10.Net Actuarial Gain / (Loss): (8) ‐ (9)(126,363)
11.Gain / (Loss) Due to Investments71,389
12.Gain / (Loss) Due to Other Sources: (10) ‐ (11)(197,752)
of Tamarac Police Officers' Pension Trust Fund
The net actuarial gains (losses) for the past ten years have been computed as follows:
9/30/2024$(126,363)
9/30/2023205,645
9/30/2022(197,536)
9/30/2021124,445
9/30/2020(119,221)
9/30/2019(135,762)
9/30/2018(33,260)
9/30/2017697,085
9/30/2016(136,542)
9/30/2015(127,460)
The fund earnings assumption has a considerable impact on the cost of the Plan so it is important that it is in line with the actual experience. The following table and graph show the actual fund earnings (based on the actuarial value of assets) compared to the assumed rates of return for the last ten years:
Investment Rate of Return
9/30/247.2%6.00%
9/30/235.16.00
9/30/224.36.00
9/30/219.16.00
9/30/207.46.50
9/30/197.36.50
9/30/186.86.75
9/30/176.76.75
9/30/165.86.75
9/30/157.36.75
History of Investment Return
FASB NO. 35 INFORMATION
AS OF OCTOBER 1
A.Number of Members Included in the Calculations
20242023
1.Retirees & Beneficiaries Currently Receiving Benefits (incl. DROP) & Terminated Employees Entitled to Benefits But Not Yet Receiving them.2626
2.Current Employees: None (Closed Plan)N/A N/A
B.Statement of Accumulated Plan Benefits
1.Actuarial present value of accumulated vested plan benefits
a. Participants currently receiving benefits$7,241,091$7,466,641
b. Other participants00
c. Total7,241,0917,466,641
2.Actuarial present value of accumulated non‐ vested plan benefits00
3.Total actuarial present value of accumulated plan benefits7,241,0917,466,641
C.Statement of Change in Accumulated Plan Benefits
1.Actuarial present value of accumulated plan benefits as of beginning of year7,466,6418,120,451
2.Increase (decrease) during year attributable to:
a. Plan Amendment00
b. Change in assumptions/methods00
c. Benefits paid and contributions refunded(825,598)(853,051)
d. Other, including benefits accumulated and interest600,048199,241
e. Net Increase(225,550)(653,810)
3.Actuarial present value of accumulated plan benefits as of end of year7,241,0917,466,641
D.Assumed rate of return6.00%6.00%
E.Market Value of Assets$6,606,654$5,818,574
F.Funded Ratio91.2%77.9%
SCHEDULE OF CHANGES IN THE EMPLOYER’S NET PENSION LIABILITY AND RELATED RATIOS
SCHEDULE OF THE EMPLOYER’S NET PENSION LIABILITY
GASB Statement No. 67 TotalPlan Net PositionNet Pension Liability FY EndingPensionPlan NetNet Pension as
*These figures are estimates only. Actual figures will be provided after the end of the fiscal year.
SCHEDULE OF CONTRIBUTIONS
GASB Statement No. 67
ActuariallyContributionActual Contribution FY EndingDeterminedActualDeficiencyCoveredas a % of September 30,ContributionContribution(Excess)PayrollCovered
NOTES TO SCHEDULE OF CONTRIBUTIONS
GASB Statement No. 67
Valuation Date: October 1, 2024
NotesActuarially determined contribution rates are calculated as of October 1, 2024, which is one year prior to the end of the fiscal year in which contributions are reported.
Methods and Assumptions Used to Determine Contribution Rates:
Actuarial Cost MethodEntry Age Normal
Amortization MethodLevel Dollar, Closed
Remaining Amortization Period5 years
Asset Valuation Method4‐ year smoothed market
Salary IncreasesNA
Inflation2.00%
Investment Rate of Return6.00%
Retirement AgeNA
Mortality:PUB‐ 2010 Headcount Weighted Safety Healthy Retiree Mortality Table, with separate rates for males and females and ages set forward one year, with mortality improvements projected to all future years after 2010 using Scale MP ‐ 2018. For males, the base mortality rates are based on the Below Median Healthy table. These are the same rates used for Special Risk Class members in the July 1, 2023 Actuarial Valuation of the Florida Retirement System (FRS). Florida Statutes Chapter 112.63(1)(f) mandates the use of the mortality tables used in either of the two most recently published actuarial valuation reports of FRS.
Other Information:
NotesSee Discussion of Valuation Results on Page 1.
Beginning with 2016 the Actuarially Determined Contribution and the Actual Contribution amounts include the "excess" portion of the State Contribution which goes into the Share Plan.
City of Tamarac Police Officers' Pension Trust Fund
Actuarial Valuation as of October 1, 2024
SINGLE DISCOUNT RATE
GASB Statement No. 67
A single discount rate of 6.00% was used to measure the total pension liability. This single discount rate was based on the expected rate of return on pension plan investments of 6.00%. The projection of cash flows used to determine this single discount rate assumed that employer contributions will be made based on the actuarially determined contribution. Based on these assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long‐term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
Regarding the sensitivity of the net pension liability to changes in the single discount rate, the following presents the plan’s net pension liability, calculated using a single discount rate of 6.00%, as well as what the plan’s net pension liability would be if it were calculated using a single discount rate that is 1‐percentage‐point lower or 1‐percentage‐point higher:
Sensitivity of the Net Pension Liability to the Single Discount Rate Assumption*
*These figures are estimates only. Actual figures will be provided after the end of the fiscal year.
FUNDING
ASSETS
ACTUARIAL COST METHODS AND ASSUMPTIONS AS OF OCTOBER 1, 2024
COST METHODS
Entry Age Normal Actuarial Cost Method
The Actuarial Value of Assets phases in the difference between the expected actuarial value and actual market value of assets at the rate of 25% per year. The Actuarial Value of Assets will be further adjusted to the extent necessary to fall within the corridor whose lower limit is 80% of the Market Value of plan assets and whose upper limit is 120% of the Market Value of plan assets.
AMORTIZATION of UAAL
INVESTMENT EARNINGS
Level dollar amount over 5 years for bases established on or after October 1, 2022 and over 1 year for bases established prior to October 1, 2022.
ASSUMPTIONS
6.00% per direction from the Board of Trustees. The 6.00% rate is net of investment‐related expenses, compounded annually.
ADMINISTRATIVE EXPENSES
Actual non‐investment expenses paid during the previous year.
RATES
PUB‐2010 Headcount Weighted Safety Retiree Mortality Table, with separate rates for males and females and ages set forward one year, with mortality improvements projected to all future years after 2010 using Scale MP‐2018. For males, the base mortality rates are based on the Below Median Healthy Tables.
For disabled retirees, the mortality table is 80% of the PUB‐2010 Headcount Weighted General Disabled Retiree Mortality Table, and 20% of the PUB‐2010 Headcount
13TH CHECK
Weighted Safety Disabled Retiree Mortality Table, both with separate rates for males and females, with no provision being made for future mortality improvements.
These are the same rates used for Special Risk Class members in the July 1, 2023 Actuarial Valuation of the Florida Retirement System (FRS). Florida Statutes Chapter 112.63(1)(f) mandates the use of the mortality tables used in either of the two most recently published actuarial valuation reports of FRS.
A 13th check is payable based on actuarial gains, if there are accumulated gains. Due to the size of the accumulated loss, it is assumed that the 13th check is unlikely to be paid during the remaining duration of the Plan.
CHANGES SINCE LAST VALUATION None.
RATIONALE FOR ASSUMPTIONS
The size of the covered group is not large enough to provide statistically significant mortality experience; however, the mortality tables used by FRS are reasonable for valuation purposes.
Since there are no longer any active members, there are no other decrements which are applicable to valuing the Plan.
GLOSSARY OF TERMS
Actuarial Accrued Liability (AAL)
Actuarial Assumptions
Actuarial Cost Method
The difference between the Actuarial Present Value of Future Benefits, and the Actuarial Present Value of Future Normal Costs.
Assumptions about future plan experience that affect costs or liabilities, such as: mortality, withdrawal, disablement, and retirement; future increases in salary; future rates of investment earnings; future investment and administrative expenses; characteristics of members not specified in the data, such as marital status; characteristics of future members; future elections made by members; and other items.
A procedure for allocating the Actuarial Present Value of Future Benefits between the Actuarial Present Value of Future Normal Costs and the Actuarial Accrued Liability.
Actuarial Equivalent Of equal Actuarial Present Value, determined as of a given date and based on a given set of Actuarial Assumptions.
Actuarial Present Value (APV)
Actuarial Present Value of Future Benefits (APVFB)
The amount of funds required to provide a payment or series of payments in the future. It is determined by discounting the future payments with an assumed interest rate and with the assumed probability each payment will be made.
The Actuarial Present Value of amounts which are expected to be paid at various future times to active members, retired members, beneficiaries receiving benefits, and inactive, nonretired members entitled to either a refund or a future retirement benefit. Expressed another way, it is the value that would have to be invested on the valuation date so that the amount invested plus investment earnings would provide sufficient assets to pay all projected benefits and expenses when due.
Actuarial Valuation
Actuarial Value of Assets
The determination, as of a valuation date, of the Normal Cost, Actuarial Accrued Liability, Actuarial Value of Assets, and related Actuarial Present Values for a plan. An Actuarial Valuation for a governmental retirement system typically also includes calculations of items needed for compliance with GASB No. 67.
The value of the assets as of a given date, used by the actuary for valuation purposes. This may be the market or fair value of plan assets or a smoothed value in order to reduce the year‐to‐year volatility of calculated results, such as the funded ratio and the actuarially determined contribution (ADC).
Amortization Method
Amortization Payment
Amortization Period
Closed Amortization Period
A method for determining the Amortization Payment. Under the Level Dollar method, the Amortization Payment is one of a stream of payments, all equal, whose Actuarial Present Value is equal to the UAAL.
That portion of the plan contribution or ADC which is designed to pay interest on and to amortize the Unfunded Actuarial Accrued Liability.
The period used in calculating the Amortization Payment.
A specific number of years that is reduced by one each year, and declines to zero with the passage of time. For example, if the amortization period is initially set at 20 years, it is 19 years at the end of one year, 18 years at the end of two years, etc.
Employer Normal Cost
Experience Gain/Loss
Funded Ratio
GASB
GASB No. 67 and GASB No. 68
Normal Cost
Unfunded Actuarial Accrued Liability
Valuation Date
The portion of the Normal Cost to be paid by the employer. This is equal to the Normal Cost less expected member contributions plus administrative expenses.
A measure of the difference between actual experience and that expected based upon a set of Actuarial Assumptions, during the period between two actuarial valuations. To the extent that actual experience differs from that assumed, Unfunded Actuarial Accrued Liabilities emerge which may be larger or smaller than projected. Gains are due to favorable experience, e.g., the assets earn more than projected, salaries do not increase as fast as assumed, members retire later than assumed, etc. Favorable experience means actual results produce actuarial liabilities not as large as projected by the actuarial assumptions. On the other hand, losses are the result of unfavorable experience, i.e., actual results that produce Unfunded Actuarial Accrued Liabilities which are larger than projected.
The ratio of the Actuarial Value of Assets to the Actuarial Accrued Liability.
Governmental Accounting Standards Board.
These are the governmental accounting standards that set the accounting rules for public retirement systems and the employers that sponsor or contribute to them. Statement No. 68 sets the accounting rules for the employers that sponsor or contribute to public retirement systems, while Statement No. 67 sets the rules for the systems themselves.
The annual cost assigned, under the Actuarial Cost Method, to the current plan year.
The difference between the Actuarial Accrued Liability and Actuarial Value of Assets.
The date as of which the Actuarial Present Value of Future Benefits are determined. The benefits expected to be paid in the future are discounted to this date.
SECTION III TRUST FUND
ACTUARIAL VALUE OF ASSETS SEPTEMBER 30
A.Preliminary Valuation Assets at Beginning of Year$6,123,099$5,903,177
B.Contributions and Miscellaneous Income1,500,8111,483,013
C.Benefit Payments and Administrative Expenses1,614,6991,560,465
D.Actual
E.Expected
F.Excess
G.Recognition of Excess Earnings Over 4 Years
1. From This Year134,5005,262
2. From One Year Ago5,262(251,932)
3. From Two Years Ago(251,932)183,559
4. From Three Years Ago183,5598,618
5. Total71,389(54,493)
H.Preliminary
I.Valuation Assets must be within the range of 80% to 120% of Market Value 1. 80% of Market Value5,285,3244,654,860 2. 120% of Market Value7,927,9856,982,289
The investment earnings recognized in the Actuarial Value of assets is computed as the sum of items (E) and (G5) plus (I) minus (H) minus last year (I) plus last year (H) for a total of:435,358297,374
INVESTMENT RATE OF RETURN
The investment rate of return has been calculated on the following bases:
Net Market Value Basis ‐ interest, dividend, realized gains (losses) and unrealized appreciation (depreciation) minus investment expenses divided by the weighted average of the market value of the fund during the year. This figure is normally called the Net Total Rate of Return.
Valuation Asset Basis ‐ investment earnings recognized in the Actuarial Value of Assets divided by the weighted average of the Actuarial Value of Assets during the year.
Average Compounded Rate of Return for Last 10 Years6.66.7 Investment Rate of Return
Average Compounded Rate of Return for Last 5 Years7.26.6
SECTION IV
MEMBERS STATISTICS
RECONCILIATION OF MEMBERSHIP DATA FROM 10/1/23 TO 10/1/24
A.Active Members
Closed Plan
Number Included in Last Valuation0
B.Terminated Vested Members
Number Included in This Valuation0
C.Service Retirees, Disability Retirees and Beneficiaries
1Number Included in Last Valuation26
2Additions from Terminated Vested Members0
3Deaths Resulting in No Further Payments0
4Deaths Resulting in New Survivor Benefits0
5End of Certain Period ‐ No Further Payments0
6Other ‐ New Survivor Payments following Retiree Death0
7Number Included in This Valuation26
SECTION V
SUMMARY OF PLAN PROVISIONS
SUMMARY OF PLAN PROVISIONS
as of October 1, 2024
LAST ORDINANCE INCLUDED: 0‐2021‐017
A. Ordinances
Plan established under the Code of Ordinances for the City of Tamarac Police Officers’, Florida, Chapter 16, Articles VII and VIII, and was most recently amended under Ordinance No. 0‐2021‐017 passed and adopted on April 14, 2021. The Plan is also governed by certain provisions of Part VII, Chapter 112, Florida Statutes (F.S.) and the Internal Revenue Code.
B. Effective Date
June 1, 1975
C. Plan Status
Closed.
D. Plan Year
October 1 through September 30.
E. Type of Plan
Qualified, governmental defined benefit retirement plan; for GASB purposes it is a single employer plan.
F. Eligibility Requirements
First day of employment.
G. Credited Service
Years and completed months since last day of hire. Includes BSO service starting 7/1/89.
H. Earnings
Total Compensation.
I. Final Average Earnings (FAE)
Average total compensation for the highest five years preceding retirement or termination.
J. Normal Retirement
Eligibility: Earlier of age 57 with 5 years of service, age 55 with 10 years of service, or age 52 with 25 years of service.
Benefit: 3% times AME times years and completed months of continuous service with the City.
Normal Form of Benefit: Life Annuity with 120 monthly payments guaranteed; other options are also available.
VARIABLE
COLA: Each participant receiving normal retirement benefits shall be eligible for an extra payment of up to 2% of the annual benefit amount paid or payable for the year. Such benefit shall be funded solely by actuarial gains from the corresponding year, if there are accumulated gains.
SUBSIDY: For participants retiring on or after 10/1/02, $220 per month, with 120 payments guaranteed.
SHARE PLAN: Excess premium tax revenues from the state are allocated annually among eligible participants on the basis of years of service.
K. Early Retirement
Eligibility: Age 50 with 10 years of service.
Benefit: Benefit accrued to Early Retirement Date payable at Normal Retirement Date, or reduced 3% per year early and payable immediately.
Normal Form of Benefit: Life Annuity with 120 monthly payments guaranteed; other options are also available.
VARIABLE COLA: N/A.
SUBSIDY: For participants retiring on or after 10/1/02, $220 per month, with 120 payments guaranteed.
SHARE PLAN: Excess premium tax revenues from the state are allocated annually among eligible participants on the basis of years of service.
L. Delayed Retirement
Benefit continues to accrue. Special buy‐back was offered to active participants whose benefits were previously frozen due to reaching retirement age.
M. Service Connected Disability
Eligibility: Permanent incapacity incurred in the line of duty.
Benefit: The following benefits are payable until normal retirement age, at which time the retirement benefit starts, unless the participant had 10 or more years of service or the disability was service connected, in which case the greater of the disability benefit or the retirement benefit will be payable:
The monthly benefit shall equal the greater of:
1. the participant’s accrued benefit, or
2. current monthly base pay minus 100% City Long Term Disability Benefit, 100% Social Security, and 100% Worker’s Compensation, provided the benefit paid does not exceed 75% of the employees average monthly salary, or
3. 42% of Average Monthly Compensation.
Normal Form of Benefit: Life Annuity with 120 monthly payments guaranteed; other options are also available.
VARIABLE
COLA: N/A.
SUBSIDY: For participants retiring on or after 10/1/02, $220 per month, with 120 payments guaranteed.
SHARE PLAN: N/A.
N. Non‐Service Connected Disability
Eligibility: Other permanent incapacity incurred after 2 years of service, if not at early or normal retirement age.
Benefit: The following benefits are payable until normal retirement age, at which time the retirement benefit starts, unless the participant had 10 or more years of service or the disability was service connected, in which case the greater of the disability benefit or the retirement benefit will be payable:
2‐9 Years of Service – The monthly benefit shall equal the current monthly base pay minus 100% city Long Term Disability Benefit and 100% Social Security, provided the benefit paid does not exceed 20% of participant’s average monthly salary.
N. Non‐Service Connected Disability
10 Years of Service – The monthly benefit shall equal the greater of:
1. the participant’s accrued retirement benefit, or 2. current monthly base pay minus 100% City Long Term Disability Benefit and 100% Social Security, provided the benefit paid does not exceed 35% of police officers average monthly salary, or 3. 25% of Average Monthly Compensation.
Normal Form of Benefit: 2‐9 Years of Service – Life Annuity
10+ Years of Service – Life Annuity with 120 monthly payments guaranteed; other options are also available.
VARIABLE COLA: N/A.
SUBSIDY: For participants retiring on or after 10/1/02, $220 per month, with 120 payments guaranteed.
SHARE PLAN: N/A.
O. Pre‐Retirement Death
Eligibility: All vested participants, whether or not still in active employment.
Benefit: Greatest of:
1. 100% or the value of the participant’s accrued benefit, or 2. 100% survivorship annuity, or 3. participant’s total accumulated contributions.
Normal Form of Benefit: Benefit is paid as a life annuity to the spouse or designated beneficiary.
VARIABLE COLA: N/A.
SHARE PLAN: Excess premium tax revenues from the state are allocated annually among eligible participants on the basis of years of service.
P. Post Retirement Death
Benefit determined by the form of benefit elected upon retirement. A lump sum will be made of any excess of accumulated Employee Contributions over pension payments actually made.
Q. Optional Forms
In lieu of electing the Normal Form of benefit, the optional forms of benefits available to all retirees are Single Life Annuity option and the 50%, 75% or 100% Joint and Survivor options.
R. Vested Termination
Eligibility: A participant has earned a non‐forfeitable right to Plan benefits after the completion of 5 years of Credited Service if they elect to leave their accumulated contributions in the fund.
Benefit: Vested % of normal retirement benefit accrued to date of termination, payable at normal retirement date. All police officers who terminate employment may elect a refund of their own contributions with 5% interest in lieu of any other benefit payable from the Plan.
Normal Form of Benefit: Life Annuity with 120 monthly payments guaranteed; other options are also available.
VARIABLE
COLA: Each participant receiving normal retirement benefits shall be eligible for an extra payment of up to 2% of the annual benefit amount paid or payable for the year. Such benefit shall be funded solely by actuarial gains from the corresponding year, if there are accumulated gains.
SUBSIDY: For participants retiring on or after 10/1/02, $220 per month, with 120 payments guaranteed.
SHARE PLAN: Excess premium tax revenues from the state are allocated annually among eligible participants on the basis of years of service.
S. Refunds
Eligibility: All police officers.
Benefit: Refund of their own contributions with a 5% interest in lieu of any other benefit payable from the Plan.
T. Participant Contributions
5% of earnings. The City shall “pick‐up” and pay participant contributions in lieu of after‐tax payroll deductions.
U. Employer Contributions
City: Remaining amount necessary to pay Normal Cost plus amortization of Unfunded Past Service Liability.
State: Premium tax refund.
V. Cost of Living Increases
Not Applicable.
W. 13th Check
Each participant receiving normal retirement benefits shall be eligible for an extra payment of up to 2% of the annual benefit amount paid or payable for the year. Such benefit shall be funded solely by actuarial gains from the corresponding year, if there are accumulated gains.
X. Deferred Retirement Option Plan
Not Applicable.
Y. Other Ancillary Benefits
There are no ancillary retirement type benefits not required by statutes but which might be deemed a City of Tamarac Police Officers’ Pension Trust Fund liability if continued beyond the availability of funding by the current funding source.
Z. Changes from Previous Valuation
None.
STATE REQUIREMENTS
1. An electronic copy of this Report is to be submitted to the Division of Retirement by the actuary via the online reporting portal for Florida’s local government pension plans which are subject to the reporting and disclosure requirements of Part VII of Chapter 112, Florida Statutes.
2. Contributions to the System ‐
(a) Employee contributions must be deposited to the fund on at least a monthly basis.
(b) City contributions must be deposited to the fund on at least a quarterly basis.
(c) Premium tax refunds and any other revenues collected for this Plan must be deposited within 5 days of receipt by the City.
3. Information for employees ‐
(a) A written plan description, is to be distributed to each member every two years.
(b) Pertinent actuarial and financial information is to be included as part of the written plan description distributed to members.
