11-07-1973 Regular MeetingPENSION BOARD MEETING
A meeting of the Miami Shores Village Pension Board was held in the
office of the Village Manager, Mr. McIntyre, at 7:OOPM on the evening
of Wednesday, November 7th 1973.
The following were present:
Mayor James Condit
John McIntyre
John Fletcher
Jim Glaid
Absent: Michael Franco
Dean Miller
Ann Vigneron
Harry Smenner
After much discussion regarding the cost of living increase for present
retirees, Mr. Miller made a motion and Ann Vigneron seconded it, to
recommend to council #5 of Wyatt Company's letter of September 13th ( one
time 5% cost of living adjustment, with a minimum increase of $10.00 per
month). The motion passed unanimously.
Minutes of the July 26th and the August 27th pension board meetings were
read and approved.
The board then discussed the matter of Steve Tong's vested pension amount,
and as to whether it should or could be based on the 19 or 20 years service.
After discussing reports from the Wyatt Company and our attorney, Mr. Anderson,
a motion was made by Ann Vigneron and seconded by John Fletcher to accept
the Wyatt Company's report on Steve Tong based on 20 years credited service.
The motion was then passed.
A brief discussion was held on the possibility of increasing the maximum entry
age in the plan from 45 to 50 as outlined in Wyatt's letter of November 2,
1973. The change would permit certain key personnel to join the plan and
would also make the plan more consistent and up to date with many other
plans in the area.
It was suggested by Mr. Smenner and several others concurred, that a meeting
be held sometime in the future where a member of the Actuary can review
briefly our entire plan and a question and answer session could follow.
Approved:
aA44.4
`Chairman
fJ
Respectfully submitted
CHICAGO
CLEVELAND
DALLAS
DETROIT
FORT WORTH
HONOLULU
HOUSTON
LOS ANGELES
THE COMPANY
ACTUARIES AND EMPLOYEE BENEFIT CONSULTANTS
9595 NORTH KENDALL DRIVE
MIAMI, FLORIDA 33156
(305) a74-6o9O November 2, 1973
Mr. James Glaid
Finance Director
Miami Shores Village
10050 N. E. 2nd Avenue
Miami Shores, Florida 33128
Dear Mr. Glaid:
MIAMI
NEW YORK
PHILADELPHIA
SAN FRANCISCO
WASHINGTON
OTTAWA
TORONTO
The purpose of this letter is to present the results of a
Special Study of Miami Shores Village Pension Plan, in which Sec-
tion 4, Subpart (b) would be changed to allow anyone under the age
of 50 at the time of completion of one year of service, to enter the
plan. The current plan has a maximum entry age of 45.
On October 25, 1973 and October 31, 1973, you furnished to
me by telephone, the information on the six people who were less than
50 years old who would be affected by this change to the pension plan.
Using the same valuation assumptions as were used in our January 1,
1973 actuarial valuation of the retirement plan, it is estimated that
the addition of these six individuals to the plan would increase the
City's cost by approximately $4,500.
It should be noted that this cost figure includes only em-
ployees hired prior to October 1, 1973 who were under 50 years of age
on October 1, 1973 and does not include anyone hired prior to that
date who was over the age of 50 on October 1, 1973. It should also
be remembered that the future cost of this change would depend entire-
ly upon the entry ages of future new entrants into the City's employ-
ment.
If you have any questions concerning the above, or if we may
be of further assistance with this matter, please do not hesitate to
let us know.
Sincerely,
Larry H. Weitzner, A.S.A.
LHW/rd Associate Actuary
CHICAGO
CLEVELAND
DALLAS
OETNOIT
FONT WORTH
HONOLULU
HOUSTON
LOS ANGELES
THE fifi' COMPANY
ACTUARIES AND EMPLOYEE SCAMPI? CONSULTANTS
•SS• NORTH SENO/ILL DRIVE
MIAMI. FLORIDA 3.11••
September 7, 1973 '
Mr. James A. Glaid
Finance Director
Miami 'Shores Village
10050 N.E. 2nd Avenue
Miami Shores, Florida 33138
Dear Mr. Glaid:
(so•) 874-5050
Re: Termination of Stephen Tong
The purpose of this letter is to furnish you with our.
opinion concerning the calculation of termination benefit for
Stephen Tong. Mr. Tong was awarded a termination benefit, under
Ordinance #366 which amended Sub -Section (a) of Section 12 which
was amended to read as follows:
"Members shall, by virtue of the payment of
contributions required to be paid to this Plan,
receive a vested interest in the accrued benefits
earned by such members upon (1) completion of 20
years of service ..,"' •
The question being raised is the definition of "Service"—
as used in the paragraph above, Mr. Tong was allowed to aquire
an additional year of service by working only one (1) day during
July, 1973, and this additional year gave him the 20•years re-
quired to complete his vested interest. The term "Service" is
defined in Section 3(f) as follows, " °Service° means employment
as en employee for which compensation is paid by the .Village."
The method used to calculate the retirement income due
Mr. Tong, is set forth under Section 6(c) and is stated as fol-
lows:
"The amount of monthly retirement annuity
to which a member shell be entitled, shall be
equal to 2% of the monthly average final com-
pensation multiplied by the years of creditable
service, not to exceed'30 years of service,"
MIAMI
NEW YORII
PHILADELPHIA
SAN FRANCISCO
WASHINGTON
OTTAWA
TORONTO
1
Mr. James A. Glaid September 7, 1973
Miami Shores Village Page Two
The questionable words in the paragraph above are "creditable
service." Related to the definition of "creditable service" is whether
or not Mr. Tong's final year of service, as awarded by the Village,
should be counted as "creditable service." As defined in Section 3(j)
" 'Creditable service' means 'membership service' plus 'prior service°
•for which credit is allowed." As Section 3(h) defines membership serv-
ice, " 'Membership service' means service rendered while a member of
the Pian for which credit is allowed." Section 5 of the Plan which is
entitled, Creditable Service, states this concerning membership service:
"(a) After the effective date, 'e11 service of a
member since he last became a member with respect to
which contributions are made, shell count as membership
service."
This definition would appear to lead us beck to our definition
of service which is set forth above, and would seem to include all em-
ployment as an employee for the Village, for which compensation is paid
by the Village.
Based on the above quoted sections of the Pension Plan, it is
our non -legal opinion, that Stephen Tong is vested and due a monthly
termination retirement income, calculated with 20.000 years of credit-
able service. In addition, we would advise that the Village present
this question to their legal council for his opinion.
If you have any questions regarding the above, please do not
hesitate to contact us.
RJM/LHW/jb
Sincerely,
R. Fames Meth}n
Consultant and Manager
Larry H. 'Wei zner, A.S.A.
Assoc ate ctuar
y
MIAMI SHORES PENSION PLAN
Calculation of Termination Benefit
1. Name Stephen W. Tong
2. Date of birth January 7, 1920
3. Date of employment July 27, 1953
4. Termination date August 1, 1973
5. Date payments commence February 1, 1975
6. Credited service at August 1, 1973 20.000 years
7. Age of participant as of termination date 53.583 years
8. Age of participant as of date payments
commence 55.083 years
9. Final monthly compensation $ 963.02
Basic Compensa- No. of
Year tion paid Months
1972 $ 9,065.00 7
1971 8 12,696.16 12
1970 S 11,227.74 12
1969 $ 10,759.95 12
1968$ 10,045.95 12
1967 3,986.61 5
57,781.41 60
10. Accrued monthly retirement income at termination date
(a) 2% (.020) x $963.02 = $ 19.26
(b) Item 6 x Item 10(a) =
$ 385.20
11. Actuarial reduction factor for male age 55,083
years ,561+0
12. Monthly termination retirement income payable for
life, first payment payable on February 1, 1975
.5640 x $385.2o
217.25
THE aria/ ia/ COMPANY
C/
Based on information supplied by the Village and the provisions
of the plan, the monthly termination retirement income payable to Stephen
W. Tong is $217.25. The first payment is due on February 1, 1975 with
subsequent payments due on the first day of each succeeding month and the
last payment being the payment due in the month in which death occurs.
The provisions of the plan also provide the option of a monthly retire-
ment income of $385.20, the payment of which is deferred to February 1,
1982 with subsequent payments due on the first day of each succeeding
month and the last payment being due in the month in which death occurs.
Prepared by: �REarSIte
Robert B.E. Glasgow
Actuarial Assistant
Certified by: THE WYATT,COMPANY
Actuaries for Plan
Reviewed by:
THE °Va COMPANY
Larry H. W itzner, A.S. .
Associate Actuary
CHICAGO
CLEVELAND
DALLAS
DETROIT
FORT WORTH
HONOLULU
HOUSTON
LOS ANGELES
THE COMPANY
ACTUARIES AND EMPLOYEE BENEFIT CONSULTANTS
0505 NORTH KENDALL DRIVE
MIAMI, FLORIDA 33188
(3080 274-9080
Mr. J. A. Glaid
Director of Finance
Miami Shores Village
10050 N. E. Second Avenue
Miami Shores, Florida 33131
September 13, 1973
Re: Proposed Increases in Fixed Retirement Benefits
Dear Mr. Glaid:
We are pleased to enclose Table A which sets forth the
results of a special study of several -proposed alternatives which the
Village could use to increase the retirement benefits a participant
of the retirement plan receives following his normal retirement date.
There are eleven (11) different proposed alternatives
listed in Table A. These proposals can be summarized as follows:
Proposal #1: Adjust a retiree's benefits yearly by
the percent change in the Consumer
Price Index for that year; but such
adjustment shall not exceed 1% per
year.
Proposal #2: Adjust a retiree's benefits yearly by
the percent change in the Consumer
Price Index for the year, but such
adjustment shall not exceed 1-1/2%
per year.
Proposal #3: Adjust a retiree's benefits yearly by
the percent change in the Consumer
Price Index for the year, but such
adjustments shall not exceed .2% per
year.
Proposal #4: A one time 5% increase in benefits to
currently retired participants only.
MIAMI
NEW YORK
PHILADELPHIA
SAN FRANCISCO
WASHINGTON
OTTAWA
TORONTO
Mr. J. A. Glaid Page Two
Miami Shores Village September 13, 1973
Proposal #5:
Proposal #6:
Proposal #7:
Proposal #8:
Proposal #9:
A one time 5% increase in benefits to
currently retired participants only
with this increase in benefits being
at least $10.00 per month.
A combination
A combination
A combination
A combination
Proposal #10: A combination
Proposal #11: A combination
of Proposal #1 and #4.
of Proposal #2 and #4.
of Proposal #3 and A.
of Proposal #1 and #5.
of Proposal #2 and #5.
of Proposal #3 and #5.
In our proposals listed above, we have tied the yearly
increases in benefits to the Consumer Price Index. In the past, for
the purpose intended, this has been the most widely used index. How-
ever, there are two other indexes that you may wish to consider using,
they are:
(1) Wholesale Price Index
(2) Gross National product implicity price deflator
It should be noted that the costs listed that are re-
lated to increases in a cost -of -living index were calculated, assuming
the maximum increase (i.e., 1%, 1-1/2%, or 2%) per year. Therefore,
these costs would be slightly overstated if the index failed to rise
our assumed amount in any one year.
The figures which are listed in Table A are:
(1)
The proposed alternatives to increase. the re-
tirement benefits for employees .of Miami Shores
Village.
(2) The contribution levels which the Village must
make to support the proposed increase -s..
(3)
The contribution levels expressed:as a percent-
age of the present contribution level determined
in the January 1, 1973 actuarial valuation of
the Miami Shores Village Pension Plan. The
amount of this contribution was $73,086.
Mr. J. A. Glaid
Miami Shores Village
Page Three
September 13, 1973
If you have any questions regarding the above or the en-
closed Table A, or if you would like additional investigations in the
area`of increasing, fixed retirement benefits, please do not hesitate
to let us know.
Sincerely,
-&414%1117fc-4:S '1.4"Slrh"."
Larry H. Weitzner, A.S.A.
Associate Actuary
/Jb
Enclosure
Table A
MIAMI SHORES 'VILLAGE
PROPOSED INCREASES IN FIXED RETIREMENT BENEFITS
Proposed
Alternative
to Increase
Benefit to
Retirees
Contribution New Contribution
Level Required Level Expressed
to Fund the as a Percentage
Increase and of the Present
Present Benefit Contribution
Level Level
1. 1% Increase per Year to Both
Active and Retired * $ 87,247 19.4%
2. 1-1/2% Increase per Year to Both
Active and Retired * • $ 95,045 30.0%
3. 2% Increase per Year to Both
Active and Retired .* . $ 103,432 41.5%
4. A One Time 5% Increase to Currently
Retired Only $ 74,498 1.9%
5. A One Time 5% Increase to Currently
Retired Only with Minimum Increase
of $10.00 per month $ 74,832 2.49E
6. A One Time 5% Increase to Currently
Retired and 1% Increase per Year •
to Both Active and Retired * $ 88,773 21.5%
7. A One Time 5% Increase to Currently
Retired and 1-1/2% Increase per
Year to Both Active and Retired * $ 96,634 32.2%
8. A One Time 5% Increase to Currently
Retired and 2% Increase per Year
to Both Active and Retired *
A One Time 5% Increase with $10.00 per
Month Minimum to Currently Retired
and 1% Increase per Year to Both
Active and Retired *
106 A One Time 5% Increase with $10.00 per
Month Minimum to Currently Retired
and 1-1/2% Increase per Year to Both
Active and Retired * • •
$ 105,087
143.8%
$ 89,130 22.0%
$ 97,002 32.7%
'INC WaalCOMPANY
Table A
MIAMI SHORES VILLAGE
PROPOSED INCREASES IN FIXED RETIREMENT BENEFITS
Proposed
Alternative
to Increase
Benefit to
Retirees
11. A One Time 5% Increase with $10.00
per Month Minimum to Currently
Retired and 2% Increase per Year
to Both Active and Retired *
Contribution
Level Required
to Fund the
Increase and
Present Benefit
Level
$ 105,469
New Contribution
Level Expressed
as a Percentage
of the Present
Contribution
Level
44.3%
* Yearly increase is limited by rise for that year in chosen cost -of -living
index.
/G of COMPANY
CNICAOO
CLEVELAND
DALLAS
OCTROIT
FORT WORTH
HONOLULU
HOUSTON
LOS ANGELS'
THE Waie COMPANY
ACTUARIC- AND CMPLOYCC •CNCFIT CONSULTANTS
•111/ NORTH SCNOALL ORM
MIAM% FLORIDA 33151
September 7, 1973
Mr. James A. Glaid
Finance. Director
Miami'Shores Village
10050 N.E. 2nd Avenue
Miami Shores, Florida 33138
Dear Mr. Glaid:
(jos) 174-41O.O
Re: Termination of Stephen Tone
The purpose of this letter is to furnish you with our
opinion concerning the calculation of termination benefit for
Stephen Tong. Mr. Tong was awarded a termination benefit, under
Ordinance #3366 which amended Sub -Section (a) of Section 12 which
was amended to read as follows:
"Members shall, by virtue of the payment of
contributions required to be paid to this Plan,
receive a vested interest in the accrued benefits
earned by such members upon (1) completion of 20
years of service ..."'
The question being raised is the definition of "Service"
as used in the paragraph above. Mr. Tong. was allowed to squire.
an additional year of service by working only one (1) day during
July, 1973, and this additional year gave him the 20•years re-
quired to complete his vested interest. The term "Service" is
defined in Section 3(f) as follows, " 'Service' means employment
as an employee for which compensation is paid by the Village."
The method used to calculate the retirement income due
Mr. Tong, is set forth under Section 6(c) and is stated as fol -
"The amount of monthly retirement annuity
to which a member shall be entitled, shall be
equal to 2% of the monthly average final com-
pensation multiplied by the years of creditable
service, not to exceed 30 years of service."
MIAMI
NtW TONS
PHILADtL/MIA
SAN FRANCISCO
WASHINGTON
OTTAWA
TORONTO
Mr. James A. Glaid September 7, 1973
Miami Shores Village � Page Two
The questionable words in the paragraph above are "creditable
service." Related to the definition of "creditable service" is whether
or not Mr. Tong's final year of service, as awarded by the Village,
should be counted as "creditable service." As defined in Section 3(j).
" 'Creditable service' means 'membership service' plus 'prior service'.
.for which credit is allowed." As Section 3(h) defines membership serv-
ice, " 'Membership service' means service rendered while a member of
the Plan for which credit is allowed." Section 5 of the Plan which is
entitled, Creditable Service, states this concerning membership service:
"(a) After the.effective date, ell service of a
member since he last became a member with respect to
which contributions are made, shall count as membership
service."
This definition would appear to lead us back to our definition
of service which is set forth above, and would seem to include all em-
ployment as en employee for the Village, for which compensation is paid
by the Village.
Based on the above quoted sections of the Pension Plan, it is
our non -legal opinion, that Stephen Tong is vested and due a monthly
termination retirement income, calculated with 20.000 years of credit-
able service. In addition, we would advise that the Village present
this question to their legal council for his opinion.
If you have any questions regarding the above, please do not
hesitate to contact us.
Sincerely,
rflll/.T(AI
R. dames Methn
Consultant a Manager
Larry H. Wei zner, A.S.A.
Associate c awry
WM/LW/A