HomeMy WebLinkAbout2000-01-27 - Agendas - FinalFAYETTEVILLE
TRE CITY OF FAYETTEVILLE, ARKANSAS
FIRE PENSION
AGENDA
JANUARY 27, 2000
A meeting of the Fayetteville Fire Pension and Relief Board will be held on January 27, 2000 at
11:00 a.m. in Room 326 of the City Administration Building located at 113 West Mountain
Street, Fayetteville, Arkansas.
1. Approval of the pension list.
2. Approval of the minutes
1. Amend motion to include dollar amount to transfer to Merrill Lynch.
3. Investment Report
4. Approval of Retirement Application
1. Kenneth Miller -Benefit amount $2,129.57 per month
2. Thomas E. Warford- Benefit amount $1,659.70 per month
113 WEST MOUNTAIN 72701 501 521-7700
FAX 501 575-8257
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MINUTES OF A MEETING
OF THE
FAYETTEVILLE FIRE PENSION AND RELIEF FUND
DECEMBER 30, 1999
A meeting of the Fayetteville Fire Pension and Relief Fund Board was held on December 30,
1999 at 11:00 a.m. in Room 326 of the City Administration Building located at 113 W. Mountain
Street, Fayetteville, Arkansas.
PRESENT: Mayor Hanna, Darrell Judy, Pete Reagan, Marion Doss, Ronnie Wood, and Heather
Woodruff.
ABSENT: John Dill.
MINUTES
Mr. Regan moved to approve the minutes. Mr. Judy seconded the motion. Upon roll call the
motion carried unanimously.
PENSION LIST
• Mr. Reagan moved to approve the pension list. Mr. Judy seconded the motion. Upon roll call
the motion carried unanimously
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INVESTMENT REPORT
No investments report.
STATE INSURANCE TURNBACK
Mr. Reagan requested a letter be written to the State questioning why they had not sent the
Turnback monies earlier. He noted the Board normally received the money in August.
Mr. Reagan moved to give the money to Merrill Lynch for them to manage. Mr. Doss seconded
the motion. Upon roll call the motion carried unanimously.
Mayor Hanna asked if they needed any of the money for the day to day operations of the fund.
Mr. Reagan stated it looked like they had enough money to carry them until February of 2000. If
not, it was easy for them to transfer more money.
The meeting adjourned at 11:10 a.m.
r ' D3 ARKANSAS FIRE & POLICE PENSION REVIEW BOARD
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MEMORANDUM
TO: LOCAL PENSION FUND BOARDS OF TRUSTEES
P0. DRAWER 34164
LITTLE ROCK, ARKANSAS 72203
TELEPHONE (501) 682-1745
FAX: (501) 682.1751
FROM: ARKANSAS FIRE AND POLICE PENSION REVIEW BOARD
CATHYRN E. HINSHAW, EXECUTIVE DIRECTOR
RE: INCREASING BENEFITS FROM LOCAL PENSION FUNDS
DATE: January, 2000
There are two methods by which a local pension fund may
increase benefits to its members. The first is legislation which
mandates an increase. The second is by securing an actuarial
valuation which demonstrates that a pension fund can support the
cost of the increased benefit over a defined period of years.
Police and fire pension funds are required by law to process all
benefit increase requests through the Arkansas Fire and Police
Pension Review Board.
If you wish to process a benefit increase through the
Pension Review Board, please use the following:
1. The local Board of Trustees must adopt a resolution
to raise benefits to the new amount. The resolution must be
signed by at least 6 of the 7 members of the Board of Trustees.
Additionally, the Board of Trustees must submit a copy of
the minutes of the pension board meeting at which the resolution
was adopted, showing which members of the Board voted for
applying for the benefit increase, and which voted against the
resolution. The Secretary of the Board of Trustees must certify
the minutes as correct.
2. The resolution must state how much the increase
would be and to whom it would apply - current retirants only;
future retirants only; current and future retirants; current
surviving spouses and/or children; future surviving spouses
and/or children; current and future spouses and/or children;
current and future retirants, spouses, and children. (Police
pension funds may include dependent parents.)
3 -The completed resolution should be mailed to:
Arkansas Fire and Police Pension Review Board
P. 0. Drawer 34164
Little Rock, Arkansas 72203
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4. The pension fund'will be sent a bill for the
actuarial valuation and the pension fund should return a check
promptly for that amount to the above address, payable to
"Arkansas Local Police and Fire Retirement System". If.a pension
fund has never changed its benefits before, the fee is $475 for
the first benefit proposal, and $250 for each additional
proposal. If a pension fund has already made benefit changes,
the fee is $675 for the first benefit increase proposal, and $250
for each additional proposal. A pension fund with 50 or more
participants may use a cash flow projection valuation to secure a
benefit increase. The cost of a cash flow analysis is $1,975.
Regardless of the type of benefit increase request, no actuarial
work will be processed until the fee is received.
5. Volunteer pension funds may, if they wish, submit a
proposal to increase benefits to a specified amount and may also
request that if the first proposal cannot be approved, that the
actuary find the highest monthly benefit amount which can be paid
by the pension fund. This is called the "random.search"
proposal. The "random search" service is provided for two
categories of volunteer plans: Standard benefit and non-standard
benefit plans.
• A. STANDARD BENEFIT PLANS (Never Raised Benefits)
The requirements for this procedure are:
1) The first part of the proposal must request a new rate
which is some multiple of $5, not to exceed $95 ($60,
$65, $70, $75, $80, $85, $90, $95).
2) The resolution from the local board of trustees must
state that if the first proposal cannot be approved,
the board wishes the actuary to compute the next
highest monthly benefit which can be paid. (The
actuary will do the computation in increments of $5).
3) The fee for this type of proposal is $500.
B. NON STANDARD BENEFIT PLANS
The requirements for this procedure are:
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1) The resolution from the local board of trustees must
state that if the first proposal cannot be approved,
the board wishes the actuary to compute the next
highest monthly benefit which can be paid. (The
actuary will do the computation in increments of $5).
• 2) The fee for this type of proposal is $975.
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If the Board of Trustees implements a benefit structure
resulting from a random search, the Board may not apply for
another random search for a 4 year period.
6. Once a check and any additional information needed
on the fund has been received, it will be submitted to the
actuary. Actuarial valuations for benefit increases take 10-12
weeks.
7. When the valuation results are received, the
Executive Director shall certify to the local Board whether or
not the increased benefit can be given.
8. When an increase is granted, a copy of the
resolution, actuarial valuation, and the Executive Director's
certification must be filed by the local Board with the
circuit and city clerks of the 'county and city in which the
pension fund is located.
9. The standards by which a benefit increase proposal
will be evaluated are attached (PRB Rule #4).
ARKANSAS FIRE AND POLICE PENSION REVIEW BOARD
BOARD RULE ff4 Date Approved : May 30, 1985
As Amended : July 18, 1995
DEFINITION OF "ACTUARIAL SOUNDNESS"
Under law, the financial objectives of the local pension plans shall be to establish and
receive contributions which will remain approximately level from year to year and will not have to
be increased for future generations of citizens. The law specifies that this objective is achieved
when contributions received each year by a pension fund are sufficient both, (1) to fully cover the
costs of benefit commitments being made to employees for their service being rendered in such
year and, (2) to make a level payment which, if paid annually over a reasonable period of fixture
years, will fully cover the unfunded costs of benefit commitments for service previously rendered:
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1. The financial objectives discussed above must be met in order for a fund to be considered
"actuarially sound".
2. All computations of actuarial condition shall be based upon assumptions of future financial
experiences and funding methods which are either established by or approved by the
Pension Review Board.
3. From the date of the adoption of this Board rule, the tests described below shall be used to
evaluate benefit increase requests from the local funds and to determine if pension
recipients are eligible for benefits mandated by law for pension funds which are
"actuarially sound".
A fire or police pension fund that is designated as "actuarially sound" must meet one of the
following:
1. The Contribution Test and the Short Condition Test; or
2. The Contribution Test and the Funded Percentage Test; or
3. Cash Flow Projection Valuation.
Contribution Test
The contributions made to the Fund must be equal to or more than the actuarially computed
contributions to pay for the Fund's proposed total benefits. Such computed contributions shall
consist of
• 1. Normal cost; and
2. An amortization of unfunded accrued liabilities over a period of future years, which period
is defined in the table below.
Arkansas Fire and Police Pension Review Board
Board Rule #4 as amended July 18, 1995 - page 2
Short Condition Test
The Pension Fund's current assets (cash and investments) must be sufficient to cover.
1. Active member contributions on deposit; and
2. The proposed total liabilities for future benefits to present retired lives and inactive
members; and
3. A portion of the proposed total liabilities for service already rendered by active members.
The portion is defined in the table below.
Funded Percentage Test
The Pension Fund's current assets (cash and investments) must be sufficient to cover a portion of
the proposed total liabilities of all participants of the Pension Fund. The portion is defined in the
table below.
Testing Amortization of Amortization of Active Funded
Dates as of Unfunded Active Unfunded Retiree Liability -Short Percentage
January 1 . Liabilities LiabilitiesCondition Tcst DS
1994 18 9 55% 82%
199516 8 60% 84%
1996
14 7 65°i. 86% ...
1997 12 6 70% 88%
1998 10 5 75% 90%
1999 9 5 80% 92%
2000 8 5 85% 94%
2001 7 5 9034 95%
2002 6 5 95% . 96%
2003 &aier 5 5 100% 97%
Cash Flow Projection Valuation
If the Pension Fund has 50 or more participants, the Fund may show actuarial soundness using a
Cash Flow Projection Valuation. This valuation will project the assets, future income, and future
benefit obligations. of the Pension Fund. The assumptions used in this valuation shall be based
upon the same assumptions used by the Pension Review Board for regularly scheduled valuations.
The Cash Flow Valuation must show that the current assets projected with future income will.;
always be sufficient to cover all benefit obligations. A Cash Flow Valuation is not required de' be
done on a regular basis, but will only be completed when requested by the Fund and at the
expense of the Pension Fund.