HomeMy WebLinkAbout2006-10-02 - Agendas - Final Firemen's Pension and Relief Fund
Special Meeting Agenda
October 2, 2006
A meeting of the Fayetteville Firemen's Pension and Relief Fund will be held at
2:00 PM on October 2, 2006 in Room 326 of the City Administration Building
1. Old Business:
• Extension of temporary COLA
FAYETTIP-d V ILLE
THE CITY OF FAYETTEVILLE, ARKANSAS
KIT WILLIAMS,CITY ATTORNEY
DAVID WHITAKER, ASST.CITY ATTORNEY
DEPARTMENTAL CORRESPONDENCE LEGAL DEPARTMENT
TO: Firefighters Pension and Relief Board
FROM: Kit Williams, City Attorney
DATE: August 31, 2006
RE: A Resolution To Authorize The Expenditure Of The Fayetteville
Firefighters Pension And Relief Fund Moneys To Pay For A Cash Flow
Projection Evaluation Study By The Arkansas Fire & Police Pension
Board
As members of the Board of Trustees of the Firefighters Pension and
Relief Board, you owe a fiduciary duty to all pensioners to manage the
Pension Fund so that any "proposed increase in pension and relief fund
benefits will not result in the deterioration of actuarial soundness . . .."
A.C.A. §24-11-101 Legislative intent
"No benefit enhancement . . . shall be implemented if it would
cause the publicly supported retirement system's unfunded
actuarial accrued liabilities to exceed a thirty-year
amortization."
A.C.A. 24-10-106 Limitation on benefit increase
This Board of Trustees is required to report to the City Council every
year in January concerning the soundness of its fund.
"The board of trustees shall report to the council or city
commission the condition of the pension fund on the first
regular meeting in January of each year." A.C.A. §24-11-412
Report required
If this .Board increases benefits to such anextent that the assets of the
fund become exhausted, the remaining beneficiaries shall have their benefits
reduced pro rata.
"If at any time there should not be sufficient money in the
fund to pay each person the full amount to which he or she
may, be entitled, the beneficiaries shall be paid by prorating
the und available among them." A.C.A. §24-11-416 Pro
rata share
Since the actuary has already determined the fund is not actuarially
sound, his prediction is that the fund will be exhausted during the lifetimes
of you or your beneficiary members. Any enhancement of benefits will
hasten the day every member of this Pension Fund will have his or her
benefits dramatically and permanently reduced. Acting as fiduciaries for
every beneficiary, your duty should be to try to avoid that benefit reduction
day and to try to preserve this pension fund and not allow its "deterioration
of actuarial soundness."
Attached please find three pages of 2005 Actuarial Valuation dated
July 3, 2006.
ARKANSAS FIRE & POLICE PENSION REVIEW BOARD
620 W.3rd, Suite 200
Little.Rock, Arkansas 72201-2212
Telephone: (501) 682-1745
To: Board of Trustees Toll-Free: (866) 859-1745
FAYETTEVILLE Fire Pension and Relief Fund Fax (501} 682-1751
ernail: info@topfi-prb.com -
From: David B. Clark website: www.lopfi-prb.com
Executive Director
Re: 2005 Actuarial Valuation
Date: July 3, 2006
In accordance with State law the actuary under contract to this office periodically tests all
local fire and police pension fiords for actuarial soundness. The 2005 actuarial study for
your fund is enclosed. The financial tests for the fiord are designed to answer the
following questions:
YES NO
"1. Is there enough income to the pension
fund to fully fund it(see page 4)?
2. . Are current assets sufficient to cover 97%
of all accrued actuarial liabilities (see page 10),
OR are there enough assets to cover all active
member contnbutions, all payments to current
beneficiaries and 1000/9 of fidure,payments
earned by active members (see page 11)?
3. Is the pension fund considered actuarial
sound under State law?
SCM MED
x -
EXHIBIT 2
COSTS AND LIABILITIES
December 31, 2005
A Normal Cost Dollar Percent
(Cost to fund current active members) Amount of
1 Regular Retirement Benefits $ 0 I3lA
2 Voluntary Temlination Benefits
0 N/A
3 Survivors' Benefits 0 N/A
4 Disability Benefits 0 N/A
TOTAL
0 N/A
B Actuarial Accrued Liability
1 Active Lives
Regular Retirement Benefits $ 0
Voluntary Termination Benefits 0
Survivors' Benefits . 0
Disability Benefits 0
TOTAL ACTIVE LIVES $ 0
2 Deferred Retirement tion
DROP Accounts $ 989,000
Future DROP Payments &Pensions 43,3622179
TOTAL DROP $ 5,351,179 ;=}
3 :Inactive Lives
Retirees $ I23,8259128
Disability Retirees 519,450
Widows &Children 1,4231,840
TOTAL.INACTIVE LIVES $ 145,7681,418
4 Total Liability $ 203,1193,597
C Assets $ 10,243,228
-D Unfunded Actuarial Accreted Liability $ 91,876,369
5
EXHIBIT 4
COMPARISON WITH PRIOR YEARS
This exhibit compares.current valuation results with those of prior years.
Full Paid Actuarial Computed
Active Members Employer Contnbution Total Plan,.
Unfunded Normal
Valuation Annual Percent Dollar Actuarial Cost Funded
Date No. Payroll of Pay Amount Assets Liability Percent Percent
12/3111984 45 807,438 27.7% 223,455 3,078,619 1,193,660 22.1% 72.1%
12/31/1986 37 7232894 29.6% 213,935 4,006,484 1,379,340 21.8% 74.4%
12/31/1987 38 788,348 313% 246,479 4,4603948 1,455,161 23.4% 75.41/6
12/31/1989 . 27 639,962 36.0% 230,328 5,189,846 1;976,463 26.6% 72.4%
12/31/1991 23 585,898 33.3% 195,273 5,999,964 1,427,422 25.5% 80.8%
12/31/1993 22 620,116 25.2% 1563484 7,271,255 5442779 25.4% 93.0%
12/31/1995 * 21 676,847 25.6% - 173,401 8,897,591 148,392 29.8% 98.4%
12/31/1997 * 17 608,602 55.9% 339,974 103,797,686 1,295,764 38.0% 89.3%
12/31/1999 10 367,188 53.7% 197,315 12,352,474 588,369 37.7% 95.510
12/31/2001 * 6 234,765 405.5% 952,076 12,920,017 4,319,925 55.4% 74.9%
12/31/2003 * 1 52,016 3270.0% 1,700,905 11,936,657 7,897,191 54.6% 602%
12/31/2005 * 0 0 0.0% 23095,694 10;243,228 9,876,369 0.00/0 50.9%
*Benefits or assumptions changed
Note Normal cost prior to 12/31/89 is net of 6%employee contributions.
Part-Paid( Actuarial
Volunteer Computed
Valuation Active Employer
Date Members Contrrbution
12/31/1984 1 274 =
12/31!1986 0 0 =
12/31/1987_ * 0 0
12/31/1989 0 0
12/31/1991 0 .0
12/31/1993 0 0
12/31/1995 *- 0 0
12/31/1997 * 0 0
12/31/1999 0 0
12/31/2001 * 0 3;123
12/31/2003 * 0 14,8.07
12/31/2005 * 0 18,412
10