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HomeMy WebLinkAboutBack-Up DocumentsCavanaugh Macdonald CONSULTING,LLC The experience and dedication you deserve January 12, 2022 Mr. Edgard Hernandez Administrator Miami General Employees' and Sanitation Employees' Retirement Trust 2901 Bridgeport Avenue Coconut Grove, FL 33133 Actuarial Impact Statement — Add Executives Dear Edgard: We are writing to report on the actuarial impact to the Miami General Employees' and Sanitation Employees' Retirement Trust ("Trust") of adding Executives who are currently excluded from membership in the plan. The employees impacted are summarized in the table below. The average age and service are as of October 1, 2020. We have prepared the results under two scenarios, the first assumes the members will be granted all prior service from their date of hire. The second assumes that the members below will not be granted prior service credit. There are two employees who were hired prior to October 1, 2010 and will have some elements of the benefit structure in effect on September 30, 2010. Executives Number 52 Compensation Average Age Average Service $7,604,477 45.1 2.8 We have shown the impact of adding the additional active members in the attached exhibit. The methods and assumptions used in our studies are outlined below: (1) The studies are based on the October 1, 2020 actuarial valuation of the Trust. (2) The assumed valuation interest rate (investment return) is 7.45% per year. 3550 Busbee Pkwy, Suite 250, Kennesaw, GA 30144 Phone (678) 388-1700 • Fax (678) 388-1730 www.CavMacConsulting.com Offices in Kennesaw, GA • Bellevue, NE Mr. Edgard Hernandez January 12, 2022 Page 2 (3) The increase in the unfunded accrued liability attributed to active members is amortized as a level percentage of payroll over a 20- year period assuming total payroll will increase by 3.00% per year. Future actuarial results may differ significantly from the current results presented in this impact statement due to such factors as plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period or additional cost or contribution requirements based on the plan's funded status); and changes in plan provisions or applicable law. Since the potential impact of such factors is outside the scope of a normal actuarial impact study, an analysis of the range of results is not presented herein. We note that as we are preparing this report, the world is in the midst of a pandemic. We have considered available information but do not believe that there is yet sufficient data to warrant the modification of any of our assumptions prior to the upcoming experience study. In order to prepare the results in this report, we have utilized appropriate actuarial models that were developed for this purpose. These models use assumptions about future contingent events along with recognized actuarial approaches to develop the needed results. As with any analysis, there are additional risks that the Trust will face. If the market value of earnings is different than anticipated, the results noted in this letter will differ. This actuarial study was prepared and completed by myself or under my direct supervision and I acknowledge responsibility for the results. To the best of my knowledge, the results are complete and accurate and, in my opinion, the techniques and assumptions used are reasonable and comply with the requirements and intent of s. 14, Art. X of the State Constitution, with Part VII, Chapter 112, and s. 112.64, Florida Statutes. Mr. Edgard Hernandez January 12, 2022 Page 3 This actuarial study was prepared and completed by myself or under my direct supervision and I acknowledge responsibility for the results. To the best of my knowledge, the results are complete and accurate and, in my opinion, the techniques and assumptions used are reasonable and comply with the requirements and intent of s. 14, Art. X of the State Constitution, with Part VII, Chapter 112, and s. 112.64, Florida Statutes. Please do not hesitate to contact us if you have any questions. Sincerely, (41--cf2 in' • Todd B. Green, ASA, EA, FCA, MAAA Micki R. Taylor, ASA, EA, FCA, MAAA President Consulting Actuary Enrolled Actuary No. 20-8883 Enrolled Actuary No. 20-5975 Miami General Employees' and Sanitation Employees' Retirement Trust Impact of Adding Executives with Prior Service Based on the October 1, 2020 Actuarial Valuation (1) 10/1/2020 Valuation Results (2) 10/1/2020 Valuation Results Adding Executives With Prior Service (3) 10/1/2020 Valuation Results Add. Executives Witho Prior Service Actuarial Accrued Liability Actuarial Value of Assets Unfunded Actuarial Accrued Liability Increase in Unfunded Actuarial Accrued Liability $1,103,331,979 $770,592,433 $332,739,546 $1,106,334,250 $770,592,433 $335,741,817 City Contributions to GESE for Fiscal Year Beginning October 1, 2021 Normal Cost (including custodial expenses) Amortization of Unfunded Liability Total Required City Contribution Payable October 1, 2021 Total Increase in Required City Contribution Payable October 1, 2021 Total Increase in Required City Contribution Fiscal Year 2021-2022 Payable Quarterly $7,241,262 $47,008,514 $54,249,776 $3,002,271 $7,252,158 $47,242,556 $54,494,714 $244,93 8 $251,577 $1,103,431,821 $770,592,433 $332,839,388 $99,842 $7,290,220 $47,016,297 $54,306,517 $56,741 $58,279 Cavanaugh Macdonald CONSULTING,LLC The experience and dedication you deserve January 20, 2022 Mr. Edgard Hernandez Administrator Miami General Employees' and Sanitation Employees' Retirement Trust 2901 Bridgeport Avenue Coconut Grove, FL 33133 Actuarial Impact Statement Dear Edgard: We are writing to report on the actuarial impact to the Miami General Employees' and Sanitation Employees' Retirement Trust ("Trust"). The proposed changes modify some elements of the plan provisions for current active members of the Trust. The members impacted are summarized in the table below as of October 1, 2021. The impact does not include members who have retired or terminated employment. AFSCME Local 871 Members Non - Bargaining Members Number 182 190 Compensation $8,533,376 $18,550,517 Average Age 51.1 47.3 Average Service 11.3 11.4 3550 Busbee Pkwy, Suite 250, Kennesaw, GA 30144 Phone (678) 388-1700 • Fax (678) 388-1730 www.CayMacConsulting.com Offices in Kennesaw, GA • Bellevue, NE to Mr. Edgard Hernandez January 20, 2022 Page 2 The proposed changes are noted below effective on or after October 1, 2021. These changes were reflected in the October 1, 2021 valuation for AFSCME 1907 active members. (1) Member retirement allowance shall not exceed the lesser of 100% of the Member's average final compensation or an annual allowance of $120,000 as of retirement or DROP entry based on the normal form of benefit in effect on the date of retirement for Members eligible to retire as of October 1, 2012. (2) Effective October 1, 2022, Member retirement allowance shall not exceed the lesser of 100% of the Member's average final compensation or $100,000 as of retirement or DROP entry based on the normal form of benefit in effect on the date of retirement for Members who were not eligible to retire as of October 1, 2012. The methods and assumptions used in our studies are outlined below: (1) The studies are based on the October 1, 2021 actuarial valuation of the Trust. (2) The assumed valuation interest rate (investment return) is 7.45% per year. (3) The increase in the unfunded accrued liability attributed to active members is amortized as a level percentage of payroll over a 20-year period assuming total payroll will increase by 3.00% per year. Future actuarial results may differ significantly from the current results presented in this impact statement due to such factors as plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period or additional cost or contribution requirements based on the plan's funded status); and changes in plan provisions or applicable law. Since the potential impact of such factors is outside the scope of a normal actuarial impact study, an analysis of the range of results is not presented herein. We note that as we are preparing this report, the world is in the midst of a pandemic. We have considered available information but do not believe that there is yet sufficient data to warrant the modification of any of our assumptions prior to the upcoming experience study. In order to prepare the results in this report, we have utilized appropriate actuarial models that were developed for this purpose. These models use assumptions about future contingent events along with recognized actuarial approaches to develop the needed results. Mr. Edgard Hernandez January 20, 2022 Page 3 As with any analysis, there are additional risks that the Trust will face. If the market value of earnings is different than anticipated, the results noted in this letter will differ. This actuarial study was prepared and completed by myself or under my direct supervision and I acknowledge responsibility for the results. To the best of my knowledge, the results are complete and accurate and, in my opinion, the techniques and assumptions used are reasonable and comply with the requirements and intent of s. 14, Art. X of the State Constitution, with Part VII, Chapter 112, and s. 112.64, Florida Statutes. Please do not hesitate to contact us if you have any questions. Sincerely, Todd B. Green, ASA, EA, FCA, MAAA President Enrolled Actuary No. 20-8883 Enc. Micki R. Taylor, ASA, EA, FCA, MAAA Consulting Actuary Enrolled Actuary No. 20-5975 Miami General Employees' and Sanitation Employees' Retirement Trust Cost Impact of Maximum Benefit Increase Based on the October 1, 2021 Actuarial Valuation 10/1/2021 Valuation Results Change Maximum Benefit for Non - Bargaining and+ AFSCME Local 871 Actives Actuarial Accrued Liability Actuarial Value of Assets Unfunded Actuarial Accrued Liability Increase in Unfunded Actuarial Accrued Liability City Contributions to GESE for Fiscal Ye Normal Cost (including custodial expenses) Amortization of Unfunded Liability Total Required City Contribution Payable October 1, 2022 Total Increase in Required City Contribution Payable October 1, 2022 Total Increase in Required City Contribution Fiscal Year 2022-2023 Payable Quarterly $1,135,791,592 $846,320,353 $289,471,239 ar Beginning October 1, 2022 $6,987,231 $46,777,900 $53,765,131 $1,142,103,519 $846 320 353 $295,783,166 $6,311,927 $7,184,795 $47,269,945 $54,454,740 $689,609 $708,301