City of Hallandale Beach Retirement Plan

Actuarial ReviewMarch 17, 2014

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October 1, 2012 Valuation Review

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Basic Funding Equation

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The Annual Required Contribution (ARC) for the 2013 and 2014 fiscal year is $3,940,595 and $3,659,156.

• The 2013 ARC is equal to 53.46% of estimated participant compensation.

• The 2014 ARC is equal to 48.83% of estimated participant compensation.

• Expected employee contributions for the 2013 fiscal year are $221,137.

• Expected employee contributions for the 2014 fiscal year are $224,795.

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Analysis of Actuarial Experience• Total Normal Cost increased from $ 3,895,351 for the 2013 fiscal

year to $3,636,595 for the 2014 fiscal year. As a percentage of estimated payroll, the decrease was from 52.85% to 48.53%.

• Participant salaries were slightly lower than expected. The expected increase for active participants was 5.02%; the actual increase was 4.61%.

• The actuarial value of plan assets increased approximately 9.41% due to investment earnings assuming mid-year cash flow. We anticipated an increase of 7.25%. The market value of assets increased approximately 8.9%.

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• Smooth unexpected investment return over 4 years

• Reduces volatility of ARC

Development of Actuarial Value of Assets

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Development of Actuarial Value of Assets continued….

a) Market Value of Assets as of 10/01/2012 $36,956,563

b) Contributions/Transfers 4,629,717

c) Benefit payments (2,189,188)

d) Expenses (52,260)

e) Expected Interest on (a, b, c, and d) 2,767,309

f) Expected Value of Assets as of 10/01/2013 (a+b+c+d+e)

42,112,141

g) Market Value of Assets as of 10/01/2013 42,758,149

h) Current year excess appreciation/(shortfall) (g-f) 646,008

i) Adjustments to market value (sum of deferred amounts) 1,584,652

j) Actuarial value of assets (g-i) 41,173,497

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Deferred Asset Gains/(Losses)

Plan Year

Allocation Year 2010 2011 2012 2013

2010 $213,464

2011 $213,464 $(503,819)

2012 $213,463 $(503,819) $801,983

2013 $213,463 $(503,819) $801,983 $161,502

2014 $(503,818) $801,982 $161,502

2015 $801,982 $161,502

2016 $161,502

Total $853,854 $(2,015,275) $3,207,930 $646,008

Deferred $0 $(503,818) $1,603,964 $484,506

Adjustment to market value (sum of deferred amounts) $1,584,652

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Valuation History

Deposit calculations are based on the plan’s actuarial funding method and the City’s funding policy. The City’s funding policy has been to calculate the Annual Required Contribution equal to the City’s Normal Cost.

Plan Year Beginning 10/1/2013 10/1/2012 10/1/2011 10/1/2010

Total Normal Cost

(% of Estimated Payroll)

$3,636,595

(48.53%)

$3,895,351

(52.85%)

$3,491,371

(46.81%)

$3,379,069

(42.17%)

Employee Normal Cost $224,795 $221,137 $223,757 $224,223

Employer Normal Cost $3,411,800 $3,674,214 $3,267,614 $3,154,846

Annual Required Contribution

(% of Estimated Payroll)

$3,659,156

(48.8%)

$3,940,595

(53.5%)

$3,512,685

(47.1%)

$3,391,459

(45.3%)

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Funded Status

• Present Value of Accrued Benefits: The comparison uses the asset values divided by the present value of all benefits accrued to date. The liability measure does not include a provision for future service accruals or salary increases.

• Present Value of Future Benefits: Ultimately, the plan will need to fund the Present Value of Future Benefits. This present value assumes future salary increases and service credits. It is the present value of the projected benefit payable at retirement for each current plan participant.

The funded status is a measurement of the plan’s assets compared to the benefit liabilities. The value of these benefit liabilities on either an “accrued” or “projected” basis.

Another measure that we have not shown includes the plan termination liabilities. The actual cost to terminate the plan would be based on annuity purchase rates at the time of termination.

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Plan Year Beginning 10/1/2013 10/1/2012 10/1/2011 10/1/2010

Plan Assets

• Market Value

• Actuarial Value *

$42,758,149

$41,173,497

$37,804,428

$36,192,655

$31,026,638

$32,766,978

$29,592,676

$32,088,033

Present Value of Accrued Bens

• Funded % (Market Value)

• Funded % (Actuarial Value)

$48,869,792

87%

84%

$46,052,116

82%

79%

$41,548,860

75%

79%

$39,943,354

74%

80%

Present Value of Proj. Bens

• Funded % (Market Value)

• Funded % (Actuarial Value)

* Limited to 120% MVA

$63,584,992

67%

65%

$61,025,913

62%

59%

$55,583,324

56%

59%

$54,511,310

54%

59%

Funded Status

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Actuarial HistoryPlan Year Beginning 10/1/2013 10/1/2012

Liability (Accumulated Plan Benefits)

• Active

• Vested Terminated/DROP

• Retired

• Total

$20,996,093

6,062,296

21,811,403

$48,869,792

$20,911,483

5,788,676

19,351,957

$46,052,116

Liability (PV Projected Plan Benefits)

• Active

• Vested Terminated/DROP

• Retired

• Total

$35,711,293

6,062,296

21,811,403

$63,584,992

$35,885,280

5,788,676

19,351,957

$61,025,913

Asset Information

• Market

• City Contributions

•Pension Payment

$42,758,149 $37,804,428

$3,391,459

$2,189,188

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Actuarial HistoryPlan Year Beginning 10/1/2013 10/1/2012 10/1/2011 10/1/2010

Lives Covered

• Active

• Vested Terminated/DROP

• Retired

• Total

142

70

134

346

151

72

128

351

158

70

126

354

165

71

123

359

Salary Increases

• Actual

• Expected

4.6%

5.0%

7.5%

5.5%

3.1%

5.6%

1.2%

5.6%

Investment Return

• Market

• Actuarial

8.94%

9.41%

17.78%

6.67%

0.70%

0.53%

10.63%

0.54%

Defined Benefit Plan Sponsors are in a Challenging Environment

Plan Sponsor

Law changes

Accounting Changes

Market Conditions

Administrative Complexity

Forecasting & Projections

Plan Design Review

Asset Liability Modeling

Frozen Plan Solutions

Bundled Services

Principal Financial

Group