HomeMy WebLinkAboutLetter 6-12-09October 29, 2007
Ms. Sandra Elenberg
Pension Administrator
City of Miami GESE Retirement Trust
2901 Bridgeport Avenue
Coconut Grove, Florida 33133
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COST FOR MANAGEMENT EMPLOYEES TRANSFERRING FROM ICMA DEFINED
CONTRIBUTION PLAN TO THE MIAMI GESE RETIREMENT SYSTEM
Dear Sandra:
We have completed the calculation of the cost impact associated with the transfer of certain City of
Miami management employees from the defined contribution plan administered by ICMA to the Miami
GESE Retirement System. We understand that transferring individuals will receive service back to their
date of employment with the City under the GESE system in exchange for the transfer of the
individual's ICMA account balance to GESS. For purposes of this cost study, we treated the account
balance to be transferred as employee contributions.
The cost of this change to the GESE system, assuming that all eligible employees transfer, is
summarized below:
• Number of employees transferring 50
• Total Annual Compensation $6,675,677
• ICMA Account Balances to be Transferred to GESE 5,455,334
• Increase in Normal Cost 798,480
• Increase in Unfunded Actuarial Accrued Liability 955,682
• 30 -Year Amortization of Increase in Unfunded Liability 85,693
• Increase in contribution 884,173
The contribution for the 2007/2008 fiscal year for the GESE system in the absence of any transfers from
ICMA is $22,762,902 or 30.11% of covered payroll. If all of the employees currently in the ICMA plan
were to transfer to GESE, the contribution would increase to $23,647,075 or 28.74% of payroll.
Assuming that actual experience is reasonably related to the actuarial assumptions, the contribution
requirement in future years is expected to continue at approximately that level.
200 Galleria Parkway NW, Suite 1900 • Atlanta, GA 30339-5945
770.955.2488 - 770.933.8336 (fax)
Ms. Sandra Elenberg
October 29, 2007
Page 2
This cost study was conducted as of October 1, 2006 using the same actuarial assumptions and methods
used for the 2006 valuation, including an assumed interest rate of 8.10% and the 1983 GAM mortality
table set back 2 years. As noted above, the contribution increase was determined on the basis of a 30 -
year amortization of the increase in unfunded actuarial accrued liability.
The cost information summarized above is based on total benefits expected to be earned by transferring
employees. Roughly 9% of the contribution increase would actually be attributed to the Excess Plan as
the result of compensation and projected benefits in excess of relevant IRS limits applicable to the
funded GESE plan.
We understand that each individual currently participating in the ICMA plan will have the option to
transfer to the GESE system or remain with the ICMA plan. In order to assist you and City management
in evaluating the potential impact of these elections, we have developed a listing of the increase in
contribution for each employee eligible to transfer along with the employment and account balance data
provided by the City for this study (see attached Exhibit).
Please call Micki Taylor (770.916.4196) or me (770.916.4138) if you have any comments or questions
on these results.
Very truly yours,
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James J. Donofrio, FSA
Principal
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Copy to: Micki Taylor (Buck Consultants)
PARetirement\Miami GESE Retirenent\2007\Correspodence\Cost for Mgmt Ees Transferring from ICMA DCP to Miami GESE Retirement System
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