HomeMy WebLinkAbout2009-03-12 - Agendas - Final Fayetteville Fireman's Pension and Relief Fund
Meeting Date 3 Q
Adjourn Time
Attendee*:
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Subject: Subject: /r(, • / i�{
Motion To: Motion To: w�
Motion By: Motion By: p� Q
Seconded: Seconded:
Mayor Jordan Mayor Jordan 11-�
Marion Doss f/ Marion Doss (/
Pete Reagan ✓ Pete Reagan
Gene Warford ✓ Gene Warford ✓
Ronnie Wood Ronnie Wood 1�
Sondra Smith t/ Sondra Smith
Subject: Subject: d 4 nif
Motion To: ®/Q//I fON Motion To:
Motion B Motion By:
Seconded: Seconded:
Mayor Jordan Al Mayor Jordan
Marion Doss t/ Marion Doss t/
Pete Reagan ✓ Pete Reagan
Gene Warford ✓ Gene Warford y-
Ronnie Wood !, /� Ronnie Wood ✓
Sondra Smith ,(V Sondra Smith
Fayetteville Fireman's Pension and Relief Fund
Meeting Date 342 _Q 9
Adjourn Time
Attendees:
Subject: 70 (if rcrV_ r ,r_, Subject:
Motion To: 71 �4'. r� Motion To:
Motion By: ds�{tis Motion By:
Seconded: Seconded:
Mayor Jordan Mayor Jordan
Marion Doss VIII Marion Doss
Pete Reagan Al Pete Reagan
Gene Warford w Gene Warford
Ronnie Wood Ronnie Wood
Sondra Smith Sondra Smith
3'5 i
Subject: Subject:
Motion To: Motion To:
Motion By: Motion By:
Seconded: Seconded:
Mayor Jordan Mayor Jordan
Marion Doss Marion Doss
Pete Reagan Pete Reagan
Gene Warford Gene Warford
Ronnie Wood Ronnie Wood
Sondra Smith Sondra Smith
Lioneld Jordan Chairman
Sondra E.Smith Secretary
Marion Doss Position 1/Retired aye evl e
Pete Reagan Position 2/Retired
Gene Warford Position 3/Retired
Ron Wood Position 4/Retired A R K A N S A S
Special Firemen's Pension and Relief Fund
Meeting Agenda
March 12, 2009
A special meeting of the Fayetteville Firemen's Pension and Relief Fund will be held at
6:00 PM on March 12, 2009 in Room 326 of the City Administration Building.
Welcome Mayor Lioneld Jordan
New Business:
1. Discussion on the membership directive
2. Steps that need to be taken to sustain the plan
Reports:
1. Current Market Balance
2. Osborn, Carreiro & Associates, Inc. Actuarial Study March 11, 2009
Page 1 of 2
Sondra Smith - MEMBERSHIP DIRECTIVE
From: "Pat Boudrey" <patboudrey@cox.net>
To: <Undisclosed-Recipient:;>
Date: 3/7/2009 12:03 PM
Subject: MEMBERSHIP DIRECTIVE
FAYETTEVILLE FIRE DEPARTMENT RETIREES-MEMBERSHIP DIRECTIVE
The Membership of the FFD closed pension plan (old plan) met Thursday night March
05 in Fayetteville at the Christian Life Cathedral. After a lengthy meeting the
members unanimously directed several things.
1. The Pension Board call a special meeting with them as soon as possible.
2. The Pension Board start communications immediately with LOPFI (State Pension Plan).
3. The Membership directed the Pension Board to make cuts in benefits necessary to keep
their plan from going solvent (broke).
4. The Pension Board is directed to make plans for four scenarios to be sent to the
State at the projected cost of $2200.00. Among the variables for scenarios the
Board will include one that will keep the widow benefits, with the same cuts as
necessary for the pensioners. The Pension Board will send a scenario
that will include the 3% COLA (cost of living adjustment) that the LOPFI Pension
plan affords its members. A scenario will address the older retirees so the percentage
cuts will not take their retirement.
5. The Membership directed Jan Judy to meet with Mayor Jordan and discuss the
position of the City in relation to the pension plan.
Jan Judy has reported to me that Mayor Jordan and Paul Becker, Finance Director
were very supportive of the Fireman and will do all they can to send the pension
plan to LOPFI. There might be a possibility that the city could help with some of
the administrative cost involved, but NO OTHER ADDITIONAL CITY MONIES will
be spent on the plan. Mayor Jordan also expressed he would like to have a minimum
dollar amount in place, that no benefit would fall below, after cuts.
The City has been waiting on the directive to cut benefits before any action could
take place on their part. The Fayetteville City Council has the final vote on the plan
going to LOPFI. Paul Becker is going to Little Rock Tuesday to meet with the
State Pension Board and hopes to have a report for the meeting.
6. The Membership directed me to contact the Pension Board members and give them
all the above directives, which I have done. We would like to thank Christian Life
Cathedral for the use of their wonderful facility.
THE MEETING REQUESTED BY THE MEMBERSHIP HAS BEEN CALLED BY MAYOR
file://C:\Documents and Settings\ssmith\Local Settings\Temp\XPgrpwise\49B2628BFAYETTEVILLECI... 3/11/2009
Page 2 of 2
LIONELD JORDAN FOR THURSDAY, MARCH 12 6:00 P.M. CITY HALL ROOM 326.
The building is handicap accessible and anyone needing a ride please call.
pat boudrey
FFD Retirees Communications
479-466-5302
file://C:\Documents and Settings\ssmith\Local Settings\Temp\XPgrpwise\49B2628BFAYETTEVILLECI... 3/11/2009
Firemen's Pension
Month Year Market Value January 31, 2008 through March 6, 2009
January 2008 8,331,001.74 Market Value
February 2008 8,159,962.56
March 2008 7,572,560.37 January 31, 2008 8,331,001.74
April 2008 7,649,520.42 March 6, 2009 4,809,458.89
May 2008 7,634,063.17
June 12008 7,405,297.17 Difference 3,521,542.85
July 2008 7,256,178.35
August 2008 7,258,904.45
September 2008 6,670,002.49
October 2008 5,931,569.04
November 2008 5,648,256.42
December 2008 5,788,379.27
January 2009 5,388,215.88
February 2009 5,059,099.21
March 6 2009 4,809,458.89
Fire Pension account Page 1 of 1
Sondra Smith - Fire Pension account
From: "Tina Lamb" <tina@longerinv.com>
To: "Sondra Smith" <ssmith@ci.fayetteville.ar.us>
Date: 3/9/2009 4:11 PM
Subject: Fire Pension account
CC: 'Blaine Longer" <elaine@longerinv.com>, <elainelonger@att.blackberry.net>
Dear Sondra:
The total market value of the Fayetteville Fire Pension and Relief Fund account was $4,809,458.89 as of March 6,
2009. Of this amount, $1,051,642.37 was held in cash.
Year-to-date, the stock market has declined 24.3%. During that time, the equity component of the Fire Pension account
declined 24%, with the total account down 11.9% because we have been defensively postured. Distributions from the
account have amounted to $313,000 since the start of the year.
We appreciate the opportunity to assist. Please let us know if you have additional questions or if we can help in any
way.
Sincerely,
Tina M. Lamb, RP
Client Services Manager
Longer Investments Inc.
P.O. Box 1269
Fayetteville, Arkansas 72702
(479) 443-5851
(800) 827-7710
tina@longerinv.com
This email and any files transmitted with it are confidential and intended solely for the entity or individual to whom they are addressed.If you have received this email in
error,destroy it Iininediately.
file://C:\Documents and Settings\ssmith\Local Settings\Temp\XPgrpwise\49B53FB3FAYET'I'EVILLECI... 3/12/2009
Longer Investments Inc.
PORTFOLIO APPRAISAL
Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86
Februaiy28, 2009
Unit 'Total Market Pct. Unit Annual Car.
Quantity Security Cost Cost Price Value Assets Income Income Yield
50,000 Federal farm Credit 100.00 50,000.00 101.22 50,609.37 1.0 3.375 1,687.50 34
Bank(Call 11-18-09 a,
100, IX)
3.375%Due I I-18-I I
250,000 Fcdcml Home Loan 100.00 250,000.00 , 105.50 263,750.00 5.2 5.000 12,500.00 5.0
Bank(Call 10-1-10 rD
100, IX)
5,000%Due 10-01-12
100000 federal I tome Loan 100.00 100,000.00 100.72 100,721.40 2.0 6.000 6,000.00 6.0
Mortgage Corp.(Call
4-28-09 r 100,
quarterly)
6.000%Due 04-28-16
200,000 Federal Home Loan 100.00 200,000.00 106.81 213,625.00 4.2 6.000 12,000.00 6,0
Bank(Call 1-3-12 0,
100, IX)
6.000%Due 07-03-17
55,556 Federal Home Loan 100.00 55,555.56 98.37 54,652.78 L] 5.000 2,777.78 5.0
Bank(Call since
2-13-09 rH 100,CC)
5.000%Due 02-13-18
Accrued Interest 15,002 26 0.3
1,295,029.56 1,348,635.06 26.7 61,133.28 4.7
Alternative Investments
4,880 Central Fund of Canada 11,67 56,936.42 11.77 57,437.60 L 1 0.010 48.80 0.1
Ltd
1,350 strectTRACKS Cold 98.02 132,328.49 92.63 125,05050 2.5 0.000 0.00 0.0
Shares
189264.91 182,488.10 3.6 48.80 0.0
Cash and Equivalents
Dividends Accrued 7,04928 7,04928 0.1 0.000 0.00 0.0
Money Minket 1,025,284.57 1,025,284.57 20.3 0.076 777.17 0.1
Restricted Cash 120,649.91 120,649.91 2.4 0.076 91.45 0.1
1,152,983.76 1,152,983.76 22.8 868.62 0.1
Certificate of Deposit
100,000 Westernbank PRCD 100.00 100,000.00 101.65 101,654.50 2.0 3.400 3,400.00 3.4
(NC)FDIC-Insured -
3.400%Due 06-24-10
Accrued Interest 37.26 0.0
100,000.00 101,69176 2.0 3,40000 3.4
TOTAL PORTFOLIO 5,721,930.93 5,059,099.21 100.0 170,714.02 3.0
3
Longer Investments Inc.
PORTFOLIO APPRAISAL
Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86
Januag 31, 2008
Unit Total Market Pct Unit Annual Car.
Quantity Security Cost Cost Price Value Assets Income laconic Yield
100,000 Federal l Tome Loan 100.00 100,000.00 10353 103,534.80 1.2 6.000 6,000.00 6.0
Mortgage Corp.(Call
4-28-09 a 100,
quarterly)
6.000%Due 04-28-16
210,000 Ped Nat'l Mortgage 100.00 210,000.00 102.22 214,659.37 2.6 6.000 12,600.00 6.0
Assoc(Call 10-24-08
n 100,quarterly)
6.000%Due 10-24-16
200,000 Federal Home Loan 100.00 200,000.00 108.4) 216,812.50 2.6 6.000 12,000.00 6.0
Bank(Call 1-3-12 @
100, IX)
6.000%Due 07-03-17
125,000 Federal home Loan 100.00 125,000.00 100.00 125,000.00 1.5 5.000 6,250.00 5.0
Bank(Call 2-13-09 r
100,CC)
5.000%Due 02-13-18
Accrued Interest 43,753.78 0.5
3,160,029.56 3,272,844.31 39.3 164,933.97 5.2
'Treasury Bills
500,000 U.S.Treasury Bill Due 99.76 498,781.25 100.00 500,000.00 GO 3.312 16,5%00 3.3
2-7-08 3.312%Y M
498,781.25 500,000.00 6.0 16,56000 3.3
Cash and Equivalents
Dividends Accrued 2,237.50 2,237.50 0.0 0.000 0.00 0.0
Money Market 229,521.53 229,521.53 2.8 0,462 1,060.39 0.5
231,759.03 231,759.03 2.8 1,060.39 0.5
TOTAL PORTFOLIO 7,713,509.72 8,331,001.74 100.0 277,753.84 3.6
4
Osborn, Carreiro & Associates, Inc. One Union National Plaza,Suite1690
124 West Capitol Avenue
2201
ACTUARIES • CONSULTANTS - ANALYSTS Little Rock, Arkansas
(501)376.804-804
3
FAX(501)376-7547
March 11, 2009
Fayetteville Fire Pension and Relief Fund
c/o Ms. Sondra Smith, City Clerk
113 West Mountain
Fayetteville, AR 72701
RE: Fayetteville Firefighters Pension Fund
Ladies and Gentlemen:
i
This report presents the results of our January 1, 2008 actuarial study of the assets and liabilities
of the Fayetteville Fire Pension and Relief Fund (the"Pension Fund"), including asset
information for December 31,2008. This report goes beyond the present value of the liabilities
calculated in the regular valuation to show the timing and development of the income and
expense streams. These streams are then reviewed with various benefit proposals under
consideration.
The purpose of this report is to project the income and expense streams under various scenarios.
We are also asked to discuss various options available. The major findings of this report were
given in person during meetings held on February 11, 2009.
PROCESS
We prepared a cash flow analysis. We first project out the benefit payments from the Pension
Fund for the next 50 years. Next,the contribution income to the fund was projected. This
contribution income includes the 6%member contribution,the 6% city match, local millage
contributions, and insurance premium taxes. Exhibit I details the assumptions we made
regarding these contributions. Note that in the 2003 legislative session, the methodology for
allocating insurance premium taxes was changed. This report reflects that change.
Once the benefit payout and contribution income projections were prepared, 7% investment
return was added. The benefit payout stream was also projected based on the current plan and
the proposals. Exhibit 1 shows the results.
Osborn, Carreiro & Associates, Inc.
Fayetteville Fire Pension—p2 ACTUARIES CONSULTANTS ANALYSTS
March 11, 2009
CURRENT STATUS OF FUND
If no changes are made, the Pension Fund is expected to deplete its assets in 15 to 20 years from
now. We also received from the Fund's investment consultant the unaudited asset amount as of
December 31, 2008, which was$5,788,379. Taking this severe economic downturn into
account, the Fund is projected to deplete it assets in about 10 years. Both of these projections are
based on the level investment return of 7%per year after 2008. A chart of results and graph are
included in the report.in Exhibit 1. Please note these are the same charts and graphs presented
during our meeting.
We also prepared a simulation of the plan assets using a portfolio structure that mirrors the
current investment police and structure of the plan. Roughly half of the simulated results showed
that the plan would be depleted in 15 to 20 years, which validates our other projection.
Therefore, we would conclude that without some significant change in the income or payout, the
plan will run out of money.
BENEFIT DECREASE
We were asked to look at possible benefit decreases and the effect they would have on the
projections. Any decrease in the payouts, would serve to reduce the risk that the plan's assets
would be depleted. These decreased payout scenarios were completed with no change in other
income sources. We found that a 10% decrease in benefits improved the projection, but still left
the plan with too high of a risk of running out of money. A 20%decrease in benefits reduced the
risk of ruin(or complete depletion of assets) to less than 5%of the results. This would typically
be an acceptable level of risk.
Please note that these projections of reduced benefits were for the purpose of our discussion. I
am not an attorney and as actuary to the Pension Review Board, I have no authority to
recommend a reduction in benefits. If the plan wishes to further pursue this as an option, I would
suggest working with your attorney. This course of action would have significant legal hurdles
to cross and to my knowledge has not been done in Arkansas history.
CONSOLIDATION WITH LOPFI
We also discussed in our meeting and questions after the meeting have arisen concerning
consolidation with LOPFI. If any fund wishes to consolidate with the LOPFI system, they must
first request a consolidation study from the LOPFI actuary and David Clark discussed that and
the cost with the local board at our meeting. If the fund decides to consolidate, then the city
must agree in writing that they will pay the actuarially calculated cost of the consolidated plan.
The benefit structure remains as it was before consolidation and the benefits are now guaranteed
by the LOPFI system because of the guaranteed employer,contributions.
Osborn, Carreiro & Associates, Inc.
Fayetteville Fire Pension—p 2 ACTUARIES CONSULTANTS ANALYSTS
March 11, 2009
Although we are not the actuaries for the LOPFI system, we do understand how those
calculations are made and we gave a rough estimate of what the calculated contribution and the
increased city out of pocket cost would be under different scenarios which are shown below.
These amounts give you the relative magnitude of moving in this direction. I would reiterate that
if the fund wishes to pursue any form of consolidation that the cost of the study is worth knowing
the exact amount of contribution that the city would be required to make.
Estimated Current Net City
Contribution Local Income Out of
To LOPFI Sources Pocket
Current Plan,No COLA $1,000,000 $550,000 $ 450,000
Current Plan, 3%compound COLA 1,550,000 550,000 1,000,000
10% Benefit Decrease, No COLA 850,000 550,000 300,000
10% Benefit Decrease, 3% compound COLA 1,350,000 550,000 800,000
20% Benefit Decrease, No COLA 1 725,000 550,000 175,000
20% Benefit Decrease, 3% compound COLA 1,150,000 550,000 600,000
Note that the results shown in this study are projections, and not predictions. The results of our
projections depend, of course, upon the actuarial assumptions being met. The actual results
WILL vary on a year-by-year basis from the projections. Because of the size of the group, some
of the results may vary materially from these projections. This report is based on the participant
and financial data you supplied to the Arkansas Fire and Police Pension Review Board. We did
not audit this data, although we did review it for reasonableness and consistency. The purpose of
this report was described earlier. This report is not intended for any other purpose or for use by
persons who are not familiar with such matters.
If you have any questions or comments, please let me know.
Sincerely,
Jod�Carreiro, A.S.A., M.A.A.A.
Actuary
TABLE OF CONTENTS
EXHIBIT 1 PROJECTION OF FUTURE CITY OUTLAYS
EXHIBIT 2 SUMMARY OF FINANCIAL INFORMATION
EXHIBIT 3 DATA PROFILES
EXHIBIT 4 SUMMARY OF THE PLAN'S PROVISIONS
EXHIBIT 5 ACTUARIAL ASSUMPTIONS
EXHIBIT 1
PROJECTION OF ASSET LEVELS
There are two charts followed by several graphs of results of the asset level projections. These
are based on two sets of assumptions:
(1) Using the plan provisions in effect on January 1, 2008 and the assumptions used by
the Arkansas Fire and Police Pension Review Board that were used in the December
31, 2007 actuarial valuation, This includes the new interest and mortality
assumptions. This chart and graph are labeled as"Current Plan".
(2) Using the sante assumptions in (1)above,with an addition information that the
assets as of December 31, 2008 were about$5,788,379.
The graphs show that the current income will NOT maintain the fund under each scenario. The
graphs also show an area around the most likely scenario line that represents other possible
results tested. This range of reasonable results represents 50% of all possible results found
under a simulation.
i
In addition to the assumptions listed in Exhibit 5,the following assumptions were also made:
(1) The local millage was assumed to produce $400,000 in income per year increasing
2%per year. This amount averaged just less than $400,000 over the past three
years.
(2) The City's matching contribution was assumed to be 6%of covered payroll.
(3) The actual insurance premium tax turnback of$146,031 was used for 2008. The
overall premium tax was spread much thinner this year and the larger cities, like
Fayetteville, were hit the hardest. Since the premium tax allocation is now based on
the cost of the plan as defined by the calculated contribution, we projected the
calculated contribution in future years. Then we assumed that the same percentage
of that calculated contribution, 7%, that was received for 2008 would be received in
future years.
(4) The DROP accounts were credited interest based on the projected actuarial value of
assets.
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EXHIBIT 2
SUMMARY OF FINANCIAL INFORMATION
(Items D-E determined by Osborn, Carreiro and Associates, Inc.)
Year Ended Year Ended Year Ended
A. INCOME 12/3 1/2005 12/31/2006 12/31/2007
I Employee Contributions $ 23,439 $ 11,863 $ 6,987
2 Employer Contributions
Employer/Court Fines/Other 46,878 25,854 13,973
Insurance Tax 225,492 151,560 150,067
Local Millage 339,416 370,649 388,877
3 Other Income
Guarantee Fund 0 0 0
LOPFI Subsidy 0 0 0
Police Supplement(Act 1452 of 1999) 0 0 0
Future Supplement(Act 1373 of 2003) 24,480 27,060 38,917
Other Income/Donations 176 540 1,044
Adjustment to prior year 0 0 0
asset value
4 Net Investment Income 522,344 615,846 637,620
TOTAL INCOME $ 1,182,225 $ 1,203,372 $ 1,237,485
B. EXPENSES
1 Administrative $ 5,886 $ 10,341 $ 3,855
2 Benefits Paid
Monthly Benefits 1,097,427 1,281,954 1,430,646
Police Supplements 0 0 0
Future Supplements 24,390 26,749 38,766
DROP Payouts 458,082 838,944 4,589
3Refunds 0 0 0
TOTAL EXPENSES $ 1,585,785 $ 2,157,988 $ 1,477,856
6
EXHIBIT 2(Continued)
C ASSETS(at book value) 12/31/2005 12/31/2006 _ 12/31/2007
1 Cash&Checking Accounts $ 0 $ 0 $ 0
2 Bank Deposits 48,506 4,575 81,779
3 Savings and Loan Deposits 0 0 0
4 Other Cash Equivalents 234,940 288,565 181,873
5 US Govt. Securities 3,441,988 3,144,570 3,285,030
6 Non-US Govt Securities 0 0 0
7 Mortgages 0 0 0
8 Corporate Bonds 533,910 533,910 315,394
9 Common Stocks 4,873,882 4,185,381 4,136,988
10 Other 57,944 79,530 65,476
11 Payables (100) (17) (70,457)
TOTAL ASSETS $ 9,191,070 $ 8,236,454 $ 7,996,083
D. RATIO OF ASSETS TO
ANNUAL EXPENSES: 5.8 3.8 5.4
E. NET INVESTMENT RETURN: 5.7% 7.3% 8.2%
(Book Value Basis)
7
Exhibit 2(Continued)
12/31/2003 12131/2004 12/31/2005 12131/2006 12/31/2007
F. TOTAL MARKET VALUE
1. Market Value,end of year 10,625,689 10,373,147 9,636,034 8,961,980 8,725,231
(Used for GASB calculations, page 9)
2. Market Value,beginning of year 9,735,746 10,625,689 10,373,147 9,636,034 8,961,980
G. DEVELOPMENT OF ACTUARIAL VALUE OF ASSETS
1. Actuarial Value of Assets, beginning of yea 12,167,731 11,936,657 11,133,205 10,243,226 8,999,200
2. Non Investment Net Cash Flow (364,615) (835,398) (925,904) (1,570,462) (877,991)
3. Development of Investment Income
(a) Total Market Investment Income(F1-F2-G2 1,254,558 582,856 188,791 896,408 641,242
(b) Amount for Immediate Recognition (6%G1 730,064 716,199 667,992 614,594 539,952
(c) Amount for Phased In Recognition (a-b) 524,494 (133,343) (479,201) 281,814 101,290
(d) Phased In Recognition
Current year: 20%of 3(c) 104,899 (26,669) (95,840) 56,363 20,258
First Prior Year (326,911) 104,899 (26,669) (95,840) 56,363
Second Prior Year (287,546) (326,911) 104,899 (26,669) (95,840)
Third Prior Year (148,026) (287,546) (326,911) 104,899 (26,659)
Fourth Prior Year 61,061 (148,026) (287,546) (326,911) 104,899
Total Phased In Recognition (596,523) (684,253) (632,067) (288,158) 59,011
(a) Actuarial Value Investment Income 133,541 31,947 35,925 326,435 598,963
(3(b)+3(d))
4. Actuarial Value of Assets, End of year
(1 +2+3(e)) 11,936,657 11,133,205 10,243,226 8,999,200 8,720,172
5. Net Investment Return on the 1.1% 0.3% 0.3% 3.5% 7.0%
Actuarial Value of Assets
Note: The Pension Review Board's Board Rule#11 first applies this methodology to determine the Actuarial Value
of Assets for the 12/31/99 actuarial valuation report. Different methods were used to determine the Actuarial
Value of Assets for the 12/31/98 and earlier reports.
8
Exhibit 3
Employee Profile
Employee data needed for the valuation was obtained from the records furnished by
the Arkansas Fire and Police Pension Review Board. The following table shows a
detailed breakdown of the present participants by the number of participants and
total salary.
Actives
_ Years gfgerviee
30 and
Age 0-5 5-10 10.15_ 15-20 20-25 25-30_ _ Over Total
Under Count 0 0 0 0 0 0 0 0
25 __ Salary 0 0 0 0 0 0 0 , ; t , 01
25-29 Count 0 0 0 0 0 0 0 .
Salary 0 0 0 0 0 _ 0 0 ` •= '.a
30-34 Count 0 0 0 0 0 0 0 =0
Salary 0 0 0 0 0 0 0
35-39 Count 0 0 0 0 0 0 0 ; `0
z �<:ex
Salary0 0 0 0 0 0 0 _. , 0
- -- — - - --
40-44 Count 0 0 0 0 0 0 O k 0
Salary 0 0 0 0 0 0 0
45-49 Count 0 0 0 0 0 0 0 '"� , ',`0
Salary - 0 0 0 0 0 0 0 0
50-54 Count 0 0 0 0 0 0 0 0
u
Salary 0 0 0 0 0 _ 0 _ 00
VX
55-59 Count 0 0 0 0 0 0 0 -XAW U
Salary 0 0 0 0 0 —0 -_ _— 0 ;-'r:a'-;
60-64 Count 0 0 0 0 0 0 0 ;' y A_
_ Salary 0 _ 0 0 _ 0 _ 0 __ 0 _ 0 0.
65 & Count 0 0 0 0 0 0 0 ;`: 0
Over Salary 0 0 0 0 0 0 O A
Unknown Count 0 0 0 0 0 0 0 :0
Age Salary 0 0 0 0 0 0 0
Total Count 0 0 0 0 0 0 0 `*` 0
Salary 0 0 0 _ 0 0 0 _ 0 01
9
Exhibit 3
Employee Profile
Employee data needed for the valuation was obtained from the records furnished by the
Arkansas Fire and Police Pension Review Board. The following table shows a detailed
breakdown of the present participants by the number of participants.
Volunteers/Part-Paid Actives
Years ofService _
30 and
A e _ 0-5 5-10 10-15 15-20 20-25 25-30 Over Total
---- — ----..
Under Count 0 0 0 0 0 0 0 0
25
- - - - - —
25-299 Count 0 0 0 0 0 0 0 0
L35-39
4 Count --
--- 0 0 0 0 0 0 0 i '0
Count 0 0 00 0 0 0t. ' 0
-44 Count 0 0 0 0 0 0 0 0
45-49 Count 0 0 0 0 0 0 0 :.r': 0
50-54 Count 0 0 0 0 0 0 0 0
I
55-59 Count 0 0 0 0 0 0 0 ." 0
60-64 Count 0 0 --o---o--- 0 0 0 0
65 & Count 0 0 0 0 0 0 O r 0
Over l r
Unknow Count--- - 0 0 0 0 0 0 0 ` 0
Ase _�-- c.
Total Count 0 0 0 0 0 0 0 0
10
Exhibit 3
Inactive Profile
Employee data needed for the valuation was obtained from the records furnished by the
Arkansas Fire and Police Pension Review Board. The following table shows a detailed
breakdown of the present payees by the number of payees and total annual benefit.
Retirees and Survivors
Years Since Retirement
------------- --
10 and
Age 0-1 1-2 2-3 3-4 4-5 5-10 Over Total
Under Count 0 0 0 0 0 0 1 1
40 Benefit 0 0 0 0_ 0 0 2.9,220 21IL20
40-44 Count 0 0 0 0 0 01,A" 0
Benefit0 0 0 0 0 0 0 ; : ° 0
45-49 1 Count 0 1 I 0 0 3
Benefit 0 49,452 43,766 0 0 76,111 0 ( +29
50-54 Count 0 0 1 2 I I 0 t '-+
Benefit_ _ 0 0 49,864 _ 84,648 31,423 35,865 0 3&109-
55-59
0;55-59 Count 0 0 0 0 1 7 1 ,;. '9
i v '`
Benefit 0 0 0 0 45,310 222,524 21,467 f, Ol
------ ---------- - -------
60-64 Count 0 0 0 0 0 1 8 9
.<
Benefit 0 0 0 0 _ 0 _53,089 183,442 ':230531
65-69 Count 0 0 1 0 0 0 9 10
_ Benefit 0 0 73,302 _0 0 0 _176,180 ;:•4982
70-74 Count 0 0 0 0 0 I 4x $
Benefit 0 0 0 0 0 40,207 46,715 „ 2
75-79 Count 0 0 0 0 0 0 5 'S
Benefit 0 0 0 0 0 0 66,795 -"-6795
80-84 Count 0 0 0 0 0 0 7 7
Benefit 0 0 0 0 0 0 32 111
85 & Count 0 0 0 0 0 0 5 '1
Over Benefit 0 _ 0 0 0 0 0 15,113 I 113
Unknown] Count 0 0 0 0 0 0 0
Age l Benefit 0 _ 0 0 0 0 00 0-
Total Count— 0 - 1 3 T 2 -- 2 13 -- ll2 ,61
452
Benefit 0 49, 166,932 84,645 76,733 427,796 571,043 1 '16,604
This includes 48 retirees with annual benefit of $1,203,222 .
This includes 2 disableds with annual benefit of $40,110 .
This includes 11 survivors with annual benefit of $133,272 .
11
Exhibit 3
Deferred Retirement Option Plan Profile
Employee data needed for the valuation was obtained from the records furnished by the Arkansas Fire and
Police Pension Review Board. The following table shows a detailed breakdown of the current
participants on DROP by the number of participants and total annual DROP benefit.
DROP Participants
Years Since Electing DROP
Mtge 0-1 1-2 2-3 3-4 4-5 5-10 _Total
Under Count 0 0 0 0 0 0 0
40 I Benefit 0 0 0 0 0 0 , 0
40-44T—un
Cot o 0 0 0 0 0 0
Benefit 0 _ 0 0 0 0 o � a;, 0
45-49 Count 0 0 0 0 1 0 1
Benefit 0 0 0 0 43,766 0 ,•1;'`93,166
— – -- --
50-54 Count 0 0 0 0 0 0 0
Benefit 0 0 0 0 0 0 4 :' 0.
55-59 Count 0 0 0 0 1 0 '`'' ''1
Benefit 0 0 __ 0 0 48,927 0 r .'A ;4?7
60-64 Count 0 0 0 0 0 0 - 0
Benefit 0 0 0 0 0 0 �`' 0
65-69 Count 0 0 0 0 0 0 a' ' 0
Benefit _ 0 0 0 0 _0 0 ;,< -`_..i 0
70-74 Count 0 0 0 0 0 0 0
Benefit 0 0 0 0 0
75 & Count 0 0 0 0 0 0 ' '0
Over Benefit _ 0 0 0 0 0 0 i 0
nknowd Count 0 0 0 0 0 �0 # . :D
Age Benefit_ _ 0 _ 0 0 0 0 O
Total Count 0 0 0 0 2 0 2
Benefit 0 0 0 0 02,693 0 92;693
12
EXHIBIT 4
PRINCIPLE PROVISIONS OF THE PLAN
EMPLOYEE Member of Fire Department
EMPLOYER Fayetteville Fire Department
MEMBERSHIP Condition of Employment. Firefighters hired after 1982 must join the
statewide Local Police and Firefighters Retirement System
CREDITABLE SERVICE Determined on basis of service since employment
CONTRIBUTIONS
m Io ee 6.00% of salary. Volunteers contribute$12/year. Refundable if member
terminates before retirement eligibility.
Employer 1. Matching contribution equal to employee contribution
2. State Insurance Premium Tax to nback
3. Local Millage
FINAL SALARY Salary attached to the rank of the member at time of retirement, based on
regularly scheduled work-week.
DEFERRED RETIREMENT This plan has elected to participate in the Deferred Retirement Option Plan
OPTION PLAN effective January 25, 1996. Members who elect to participate have a
DROP account that is increased by the monthly amount of their retirement
as if they had retired as of the date DROP was elected. Has not elected
coverage under Act 1457 of 1999.
RETIREMENT BENEFITS
Eligibility 20 Years of Service regardless of age.
Benefit 90%of Final Salary,but not less than$4,200. ($1,200/year for volunteer/
part-paid). If service exceeds 20 years, the annual benefit is increased by
$240 for each year over 20, up to$1,200/year extra. ($120 for each year
over 20 up to$600/year for volunteer/part-paid).
If service is more than 25 years, member receives an extra 1.25% (for each
year over 25) of Final Salary,payable once the retiree reaches age 60. The
benefit cannot exceed 100%of Final Salary.
13
EXHIBIT 4(Continued)
DEATH BENEFITS
Eligibility Death before 20 Years of Service not occurring while performing work in
gainful employment outside the fire department, or death after 20 years.
Benefit 1. Widow receives same amount as member is receiving or eligible
for.
2. Each child under age 19 receives$1,500/year, ($300/year for
volunteer/part-paid). If no surviving spouse,child receives
spouse's benefit to age 19.
DISABILITY BENEFITS
ElisAility Permanent physical or mental disability not acquired while performing
work in gainful employment outside the fire department.
Benefit Full Paid Non-duty disability
Retirement benefit but not less than$4,200/year.
Full Paid Duty related disability
Retirement benefit but not less than 65%of Final Salary and not
less than $4,200/year.
14
EXHIBIT 5
ACTUARIAL METHODS AND ASSUMPTIONS
The assumptions for this valuation have been selected in accordance with Actuarial Standards of Practice No. 27.
The asset valuation method is prescribed in Arkansas Code Annotated 24-11-207. This prescribed asset valuation
method directly impacts the investment return assumption. The assumed salary growth is restricted by A.C.A. 24-
11-205 in relation to the investment return assumption.
ACTUARIAL,COST METHOD The "entry age normal'cost method has been used.
PRE-RETIREMENT MORTALITY Deaths have been projected on the basis of the 1983 Group
Annuity Table for Males,set back five years for females.
Mortality rates at a few sample ages are:
Age Mortality rate per 1.000
25 0.464
35 0.860
45 2.183
55 6,131
The 1971 Group Annuity Table for Males, set back five years for
females was used before the 12/31/2007 Valuation.
POST RETIREMENT MORTALITY The 1983 Group Annuity Mortality Table was used. For females,
the male table was used with a five-year setback. The life
expectancy according to this table is as follows:
Age Males Females
55 24.87 29.23
65 16.74 20.68
The 1971 Group Annuity Table for Males, set back five years for
females was used before the 12/31/2007 Valuation.
VOLUNTARY TERMINATIONS Annual termination rates at a few sample ages are:
Age Termination rate per 1.000
20 40
25 35
30 29
35 15
40 6
45 5
50 5
55 5
15
EXHIBIT 5(continued)
When a person had less than 4 years of service, we assumed that
his chances of voluntary termination were a multiple of thereafter
rates, with the following multiples being used:
1st year 2.85
2nd year 2.00
3rd year 1.50
4th year 1.15
ASSUMED INVESTMENT RETURN 7.0% (was 6.0%before 2007 valuation)
DISABILITIES We continued the disability rates used in prior reports. Disability
rates at a few sample ages are:
Age Disability rate per 1,000
20 0.8
25 0.8
30 0.8
35 0.8
40 2.0
45 2.6
50 4.9
55 8.9
60 14.1
One third of the disabilities were assumed to be service related.
For mortality after disability, we assumed rates based on the
Eleventh Actuarial Valuation of the Railroad Retirement System,
for occupational disabilities
ASSET VALUATION See Exhibit 2,Part G
16
EXHIBIT 5 (continued)
SALARY GROWTH We have used the salary scale used in prior reports. Annual
assumed growth at a few sample ages is:
ANNUAL SALARY INCREASE
Age Base Merit Total
20 4.0% 4.0% 8.0%
25 4.0% 3.2% 7.2%
30 4.0% 2.8% 6.8%
35 4.0% 2.5% 6.5%
40 4.0% 2.2% 6.2%
45 4.0% 1.7% 5.7%
50 4.0% 1.2% 5.2%
55 4.0% 0.7% 4.7%
60 4.0% 0.2% 4.2%
EXPECTED RETIREMENT AND DROP Since the plan allows full benefits at ages younger than the
PATTERN traditional "65",an assumption that will have an important impact
is what percentage of people who are eligible for this early
retirement will actually take advantage of it.
This will depend on intangible things such as the economy,health,
financial ability to retire,Social Security eligibility,and work
patterns. Based on recent experience,we are using the following
assumed rates:
Retirement rate per 1,000
Age Retirement DROP
40-59 100 200
60+ 1,000 0
Note: A member was assumed to be eligible for retirement
or DROP after attaining age 40 with 20 years of
service. It is also assumed that twice the normal
number will retire or elect DROP in the first year of
eligibility.
17