HomeMy WebLinkAboutLetter 5 9-10-09bucka onsu Itan ns At
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September 26, 2007
Ms. Sandra Elenberg
Pension Administrator
City of Miami GESE Retirement Trust
2901 Bridgeport Avenue
Coconut Grove, Florida 33133
Cost Impact of Changing Optional Allowances With Spouse Beneficiary
Dear Sandra:
In our letter of September 20, we suggested that the Board consider changing the benefit reduction
factor for members that choose Option 2 (equal payment spouse annuity) and Option 3 (one-half
payment spouse option). Currently, the ordinance calls for a reduction of 10% for retiring members
choosing Option 2 and who name their spouse as beneficiary and a reduction of 2% for those who
choose Option 3. Our review indicates that an actuarial equivalent reduction would be closer to 5% for
Option 2 and I% for Option 3.
This change would increase the required contribution for the GESE system by $103,000 per year. Our
calculation is based on the member data and actuarial assumptions used for the 2006 valuation. In
addition, we used information provided by the Fund office with regard to the utilization of Options 2
and 3. The increase in unfunded actuarial accrued liability of $691,000 is being amortized over a period
of 30 years in the contribution increase cited above.
The suggested change would have a similar minor impact on the cost of the excess plan and the staff
plan.
Please let me know if you need any further information.
Very truly yours,
James J. Donofrio
JJD:sjh
Copy to: Micki Taylor — Buck Consultants
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