HomeMy WebLinkAboutDocumentation_Pension Joint_Tab 02_02/24/2009Gabriel Roeder Smith & Company One East Broward Blvd. 954.527.1616 phone
Consultants ~ Actuanes Suite 505 954525.0083 fax
Ft. Lauderdale, FL 3 3301-1 872 www.gabrielroeder.com
February 3, 2009
Ms. Lori McWilliams
Village of Tequesta
345 Tequesta Drive
Tequesta, FL 33469-0273
Re: Actuarial Studies for the Village's Pension Plans
Dear Lori:
The Boards of Trustees for the two Pension Plans have asked us to submit a proposal to prepare an
analysis of several iteii~s.
Actuarial Assumptions
We have recormnended that changes be made in both Plans in terms of the assumed rate of investment
return and updated mortality rates. We also feel that the salary increase assumption for the Public Safety
Plan needs to be raised.
Our Report will show the effect on costs and liabilities of changes in each assumption as well as all
changes combined.
Funding Method
We will discuss the possibility of changing the funding method from the Aggregate method to the Entry
Age method. The impact on annual required contributions of changing the funding method will be
included in the Report.
We will additionally provide you with a survey of funding methods used by other Florida plans.
Asset Smoothing Method
Each Plan is now using market value as the actuarial value of assets. We will discuss the financial effect
of using a so-called asset smoothing method which would dampen the fluctuations in cost from year to
year.
History of Required Village Contributions
We will extract from our files the required and actual Village contribution for each Plan for the past
several years. This schedule will include both the dollar amounts and percent of covered payroll.
We will provide some graphs showing the distribution of required contributions by Florida cities so the
Boards can see how Tequesta compares.
Our analysis will be based on member data as of October 1, 2008. We will also use plan asset values as
of December 31, 2008 in order to take into account losses that have occurred in the December quarter.
Ms. Lori McWilliams
February 3, 2009
Page 2
Fees and Timing
Our estimated fees are: $4,000 to $4,500 for the Public Safety Plan and $3,000 to $3,500 for the General
Employees Plarr. The not-to-exceed amounts are $5,000 for Public Safety and $4,000 for General. These
fees include a meeting with the Boards, on the same day, in Tequesta.
Our Report will be completed between March 15"' and March 31"
Please let us know if we are authorized to proceed by the Boards.
VVe welcome your questions and cu~rLncrrts.
Sincereiy yours,
J. Stephen Palmquist, ASA
Senior Consultant and Actuary
JSP/lgs
Gabriel Roeder Smith & Company