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Ordinance No. 2023-003CC/. �LER�" N-r CITY OF CLERMONT — ORDINANCE NO.2023-003 1 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF 2 CLERMONT, LAKE COUNTY, FLORIDA, AMENDING THE CITY OF 3 CLERMONT FIREFIGHTERS' PENSION TRUST FUND, AS ADOPTED 4 BY ORDINANCE NO. 304-C; PROVIDING PLAN BENEFIT REVISIONS; 5 PROVIDING FOR CONFLICT, SEVERABILITY, CODIFICATION, 6 ADMINISTRATIVE CORRECTION OF SCRIVENERS ERROR, 7 PUBLICATION AND AN EFFECTIVE DATE. 8 WHEREAS, the City of Clermont Firefighters are presently provided pension and certain 9 other benefits under Ordinance No. 304-C; 10 WHEREAS, the City and the IAFF Local 4350 have agreed in collective bargaining to 11 certain changes in Pension benefits, member contributions, and use of State Chapter 175 money; 12 WHEREAS, the Pension Board has recommended a clarification to the definition of salary 13 regarding the application of certain IRS salary limits; and 14 WHEREAS, the City Council desires to amend the provisions of the Firefighters' 15 Retirement Plan to implement the collective bargaining agreement and the recommended 16 clarification; 17 NOW, THEREFORE BE IT ORDAINED, by the City Council of the City of Clermont, 18 Lake County, Florida that: (note: strikethrough indicates removed words and underlined indicates 19 added): 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 SECTION 1: That Chapter 46, Pensions and Retirement, Article IV, Firefighters' Retirement Plan, Sec. 46-101, of the Code of Ordinances of the City of Clermont, is hereby amended to read as follows: Sec. 46-101. - Definitions. (a) As used herein, unless otherwise defined or required by the context, the following words and phrases shall have the meaning indicated: Salary means the fixed monthly remuneration paid a firefighter plus all tax deferred, tax sheltered, or tax exempt items of income derived from elective employee payroll deductions or salary reductions; where, as in the case of volunteer firefighter, remuneration is based on actual services rendered, salary will be total cash remuneration received yearly for such services, prorated on a monthly basis. The remuneration paid to a firefighter by the city for a plan year excludes bonuses. Effective October 1, 2019, the amount of annual overtime compensation that may be included in the calculation of a retirement benefit shall be limited to the first 300 hours of overtime paid per calendar year. The amount of the accrued unused sick or annual leave payment at retirement that may be included in the retirement benefit shall be the lesser of (a) the total value of accrued unused sick or annual leave that would have been paid to the member based on years of service as of February 14, 2014; or (b) the actual amount of accrued unused sick or annual leave paid to the member at retirement, regardless of whether the amount of sick or annual leave �CC� �LEKI- ONT CITY OF CLERMONT — ORDINANCE NO.2023-003 41 was, at some time prior to retirement, reduced below the amount on February 14, 42 2014. 43 Compensation in excess of the limitations set forth in Section 401(a)(17) of the 44 code as of the first day of the plan year shall be disregarded for any purpose, 45 including employee contributions or any benefit calculations. The annual 46 compensation of each member taken into account in determining benefits or 47 employee contributions for any plan year beginning on or after January 1, 2002, 48 may not exceed $200,000.00, as adjusted for cost -of -living increases in accordance 49 with code Section 401(a)(17)(B). Compensation means compensation during the 50 fiscal year, and the fiscal year is considered the determination period. The cost- 51 of -living adjustment in effect for a calendar year applies to annual compensation 52 for the determination period that begins with or within such calendar year. If the 53 determination period consists of fewer than 12 months for all members, the annual 54 compensation limit is an amount equal to the otherwise applicable annual 55 compensation limit multiplied by a fraction, the numerator of which is the number 56 of months in the short determination period, and the denominator of which is 12 as 57 provided for in Treas. Reg. Section 1.401(a)(17)-1(b)(3)(iii)(B). If the 58 compensation for any prior determination period is taken into account in 59 determining a member's contributions or benefits for the current plan year, the 60 compensation for such prior determination period is subject to the applicable annual 61 compensation limit in effect for that prior period. The limitation on compensation 62 for an "eligible employee" shall not be less than the amount which was allowed to 63 be taken into account hereunder as in effect on July 1, 1993. "Eligible employee" 64 is an individual who was a member before the first plan year beginning after 65 December 31, 1995. 66 SECTION 2: 67 That Chapter 46, Pensions and Retirement, Article IV, Firefighters' Retirement Plan, Sec. 46-105, 68 of the Code of Ordinances of the City of Clermont, is hereby amended to read as follows: 69 Sec. 46-105. — Contributions. 70 a. Member contributions. 71 (1) Amount. 72 (a) Member contributions will be made as follows: 73 i. Effective the first full payroll period following January 24, 2023, 74 each member of the system shall be required to make regular 75 contributions to the fund in the amount of five and one-half 76 (5.5%) percent of their salary. 77 ii. Prior to January 24, 2023, each Ewh member of the system was 78 shall be required to make regular contributions to the fund in the 79 amount of four percent of their his salary. 80 b) Member contributions withheld by the city on behalf of the member 81 shall be deposited with the board immediately after each pay period. CC CEEOON-r CITY OF CLERMONT ORDINANCE NO.2023-003 82 The contributions made by each member to the fund shall be 83 designated as employer contributions pursuant to Section 414(h) of 84 the code. Such designation is contingent upon the contributions 85 being excluded from the members' gross income for Federal Income 86 Tax purposes. For all other purposes of the system, such 87 contributions shall be considered to be member contributions. 88 (2) Method. Such contributions shall be made by payroll deduction. 89 b. State contributions. Any monies received or receivable by reason of laws of the 90 State of Florida, for the express purpose of funding and paying for retirement 91 benefits for firefighters of the city shall be deposited in the fund comprising part of 92 this system immediately and under no circumstances more than five days after 93 receipt by the city. Effective with the monies received from the State of Florida 94 for the distribution received for calendar year 2021 in Fiscal Year 2022. no 95 further monies will be used to fund the Supplemental benefit in accordance 96 with Sec. 46-129 and all future State contributions will be used by the City to 97 offset its contribution. 98 C. City contributions. So long as this system is in effect, the city shall make quarterly 99 contributions to the fund in an amount equal to the required city contribution as 100 shown by the applicable actuarial valuation of the system. 101 d. Other. Private donations, gifts and contributions may be deposited to the fund, but 102 such deposits must be accounted for separately and kept on a segregated 103 bookkeeping basis. Funds arising from these sources may be used only for 104 additional benefits for members, as determined by the board, and may not be used 105 to reduce what would have otherwise been required city contributions. 106 SECTION 3: 107 That Chapter 46, Pensions and Retirement, Article IV, Firefighters' Retirement Plan, Sec. 46-106, 108 of the Code of Ordinances of the City of Clermont, is hereby amended to read as follows: 109 Sec. 46-106. — Benefit amounts and eligibility. 110 (a) Normal retirement age and date. A member's normal retirement age is the earlier 111 of the attainment of age 55 and the completion of ten years of credited service, or 112 the completion of 20 years of credited service, regardless of age. Each member shall 113 become 100 percent vested in his accrued benefit at normal retirement age. A 114 member's normal retirement date shall be the first day of the month coincident with 115 or next following the date the member retires from the city after attaining normal 116 retirement age. 117 (b) Normal retirement benefit. 118 For full-time firefighters: A full-time firefighter member retiring hereunder on or after 119 his normal retirement date shall receive a monthly benefit which shall commence on d CLER%NT CITY OF CLERMONT �.� ORDINANCE NO.2023-003 120 the first day of the month coincident with or next following his retirement and be 121 continued thereafter during member's lifetime, ceasing upon death, but with 120 122 monthly payments guaranteed in any event. 123 (a) The monthly retirement benefit shall equal the sum of two and one -quarter 124 percent of average final compensation times years of credited service earned 125 prior to October 1, 2002 and three percent of average final compensation times 126 years of credited service earned on and after October 1, 2002. 127 (b) For retirements on and after January 24, 2023, the retirement benefit for 128 each member's 22"d year of credited service shall equal 75% of the 129 average final compensation at 22 years). 130 (1) For years of service earned after the 22"d year of a member's 131 service, the monthly retirement benefit shall equal the sum of two 132 percent of average final compensation times vears of credited 133 service up to a maximum of 100%. 134 (c) Notwithstanding the foregoing, in no event shall the monthly benefit be 135 less than two and three-guarters percent of average final compensation 136 times all years of credited service up to a maximum of 100%. 137 For volunteer firefighters: A volunteer firefighter member retiring hereunder on or 138 after his normal retirement date shall receive a monthly benefit which shall commence 139 on the first day of the month coincident with or next following his retirement and be 140 continued thereafter during member's lifetime, ceasing upon death, but with 120 141 monthly payments guaranteed in any event. The monthly retirement benefit shall 142 equal the greater of: 143 (1) Five dollars a year multiplied by the years of credited volunteer service, or 144 (2) The sum of two and one -quarter percent of average final compensation times years 145 of credited service earned prior to October 1, 2002 and three percent of average 146 final compensation times years of credited service earned on and after October 1, 147 2002. 148 The normal retirement benefit of a volunteer firefighter that changes status from a 149 volunteer firefighter to a full-time firefighter shall be the sum of the accrued benefit 150 as a volunteer firefighter and the accrued benefit as a full-time firefighter. 151 ***** 152 SECTION 4: 153 That Chapter 46, Pensions and Retirement, Article IV, Firefighters' Retirement Plan, Sec. 46-129, 154 of the Code of Ordinances of the City of Clermont, is hereby amended to read as follows: 155 Sec. 46-129. — Supplemental benefit component for special benefits; chapter 175 share 156 accounts. 157 Effective with the Chapter 175 money received for calendar year 2021 in Fiscal Year 158 2022, the city shall use 100 percent of all future Chapter 175 annual distributions to fund the CC CLEOONT CITY OF CLERMONT 7- ORDINANCE NO.2023-003 159 normal cost of the pension plan. Effective October 1, 2022, the Supplemental benefit will no 160 longer be funded and no new share accounts will be created for any firefighters hired after 161 the effective date; however, any forfeitures of Chapter 175 money within the Supplemental 162 benefit share accounts on and after October 1, 2021 will be reallocated to the members who 163 are actively employed as of September 30, 2021 and have an existing share account balance. 164 These forfeitures will be allocated in accordance with subsection (4) of this section 46-129. 165 There was established, effective January 24, 2017, an additional plan component to provide 166 special benefits in the form of a supplemental retirement, termination, death and disability benefit 167 to be in addition to the benefits provided for in the previous sections of this plan, such benefit to 168 be funded solely and entirely by F.S. ch. 175, premium tax monies for each plan year which are 169 allocated to this supplemental component as provided for in F.S. § 175.351. Effective January 24, 170 2017 and ending with the Chapter 175 money received for calendar year 2020, the city shall 171 we used 100 percent of all fttwe Chapter 175 annual distributions up to the amount received in 172 the 2012 calendar year ($188,967.00) and 50 percent of any future annual amount in excess of the 173 2012 calendar year distribution to fund the normal cost of the pension plan. The remaining 50 174 percent of the Chapter 175 money received prior to the distribution for calendar year 2021 175 in excess of the 2012 calendar year distribution was shall be allocated 176 to this supplemental component ("share plan"), and was shall be fut4 e" allocated to the members 177 and DROP participants as follows: 178 (1) Individual member share accounts. The board shall create individual "member share 179 accounts" for all actively employed plan members and DROP participants and maintain 180 appropriate books and records showing the respective interest of each member or DROP 181 participant hereunder. Each member or DROP participant shall have a member share 182 account for his share of the F.S. ch. 175 tax revenues described above, forfeitures and 183 income and expense adjustments relating thereto. The board shall maintain separate 184 member share accounts, however, the maintenance of separate accounts is for accounting 185 purposes only and a segregation of the assets of the trust fund to each account shall not be 186 required or permitted. 187 (2) Share account funding. 188 a. Individual member share accounts were established as of January 24, 2017 for 189 all members and DROP participants who were actively employed as of January 190 24, 2017. Individual member share accounts shall be credited with an allocation 191 as provided for in the following subsection (3) of any premium tax monies 192 which have been allocated to the share plan for that plan year, beginning with 193 the plan year ending September 30, 2015. 194 b. Any forfeitures as provided in subsection (4), shall be used as part of future 195 allocations to the individual member share accounts in accordance with the 196 formula set forth in subsection (3)a. 197 (3) Allocation of monies to share accounts. 198 a. Allocation of Chapter 175 contributions. dw CLERWON-r CITY OF CLERMONT ORDINANCE NO.2023-003 199 1. Initial allocation. Effective January 24, 2017, the amount of any premium 200 tax monies allocated to the share plan were allocated to individual member 201 share accounts based on their completed months of credited service in 202 proportion to the combined completed months of credited service of all 203 participants. 204 All premium tax monies allocated to the share plan in any subsequent plan 205 year shall be allocated as provided for in this subsection. Available premium 206 tax monies shall be allocated to individual member share accounts at the 207 end of each plan year on September 30 (a "valuation date"). To be eligible 208 for a distribution, an individual member must be employed on September 209 30. 210 2. Annual allocations. On each valuation date, each current actively employed 211 member of the plan not participating in the DROP, each DROP participant 212 and each retiree who retires or DROP participant who has terminated DROP 213 participation in the plan year ending on the valuation date (including each 214 disability retiree), or beneficiary of a deceased member (not including 215 terminated vested persons) who is otherwise eligible for an allocation as of 216 the valuation date shall receive a share allocation as follows: 217 (i) The total funds subject to allocation on each valuation date shall be 218 divided equally among those persons eligible for an allocation and 219 allocated to the member share account of those eligible for an 220 allocation. 221 (ii) Re-employed retirees shall be deemed new employees and shall 222 receive an allocation based solely on the credited service in the 223 reemployment period. 224 b. Allocation of investment gains and losses. On each valuation date, each 225 individual member share account shall be adjusted to reflect the net earnings 226 or losses resulting from investments during the year. The net earnings or 227 losses allocated to the individual member share accounts shall be the same 228 percentage which is earned or lost by the total plan investments, including 229 realized and unrealized gains or losses, net of brokerage commissions, 230 transaction costs and management fees. 231 Net earnings or losses are determined as of the last business day of the fiscal 232 year, which is the valuation date, and are debited or credited as of such date. 233 For purposes of calculating net earnings or losses on a member's share 234 account pursuant to this subsection, brokerage commissions, transaction 235 costs, and management fees for the immediately preceding fiscal year shall 236 be determined for each year by the investment consultant pursuant to 237 contracts with fund managers as reported in the custodial statement. The 238 investment consultant shall report these annual contractual fees to the board. 239 The investment consultant shall also report the net investment return for Sc CITY OF CLERMONT CLER%N-r ORDINANCE NO.2023-003 240 each manager and the net investment return for the total plan assets. 241 C. Allocation of costs, fees and expenses. The board of trustees shall pay all 242 costs and expenses for the management and operation for the current fiscal 243 year and shall set aside as much of the income as it considers advisable as a 244 reserve for expenses for the next fiscal year. 245 d. No right to allocation. The fact of allocation or credit of an allocation to a 246 member's share account by the board shall not vest in any member, any 247 right, title, or interest in the assets of the trust or in the Chapter 175 tax 248 revenues except at the time or times, to the extent, and subject to the terms 249 and conditions provided in this section. 250 e. Members and drop participants shall be provided annual statements setting 251 forth their share account balance as of the end of the plan year. 252 (4) Forfeitures. Any member who has less than five years of service credit and who is not 253 otherwise eligible for payment of benefits after termination of employment with the city as 254 provided for in subsection (5) shall forfeit his individual member share account. Forfeited 255 amounts shall be included and used as part of the Chapter 175 tax revenues for future 256 allocations to individual member share accounts on each valuation date in accordance with 257 the formula set forth in subsection (3)a. 258 (5) Eligibility for benefits. Any member (or his beneficiary) or DROP participant who 259 terminates employment as a firefighter with the city or who dies, upon application filed 260 with the board, shall be entitled to be paid the value of his individual member share account, 261 subject to the following criteria: 262 a. Retirement benefit. 263 1. A member shall be entitled to 100 percent of the value of his share account 264 upon normal or early retirement pursuant to section 46-106, or if the 265 member enters the DROP, upon termination of employment. 266 2. Such payment shall be made as provided in subsection (6). 267 b. Termination benefit. 268 1. In the event that a member's employment as a firefighter is terminated by 269 reason other than retirement, death or disability, he shall be entitled to 270 receive 100 percent of the value of his share account, but only if he is either 271 partially or totally vested in accordance with section 46-109. 272 2. Such payment shall be made as provided in subsection (6). 273 c. Disability benefit. 274 1. In the event that a member is determined to be eligible for either an in -line CC cLANT CITY OF CLERMONT ORDINANCE NO.2023-003 275 of duty disability benefit pursuant to section 46-108(a) or a not -in -line of 276 duty disability benefit pursuant to section 46-108(c), he shall be entitled to 277 100 percent of the value of his share account. 278 2. Such payment shall be made as provided in subsection (6). 279 d. Death benefit. 280 1. In the event that a member or DROP participant dies while actively 281 employed as a firefighter, 100 percent of the value of his member share 282 account shall be paid to his designated beneficiary as provided in section 283 46-107. 284 2. Such payment shall be made as provided in subsection (6). 285 (6) Payment of benefits. If a member or DROP participant terminates employment for any 286 reason or dies and he or his beneficiary is otherwise entitled to receive the balance in the 287 member's share account, the member's share account shall be valued by the plan's actuary 288 on the next valuation date as provided for in subsection (3) above, following termination 289 of employment. Payment of the calculated share account balance shall be payable as soon 290 as administratively practicable following the valuation date, but not later than 150 days 291 following the valuation date and shall be paid in one lump sum payment. No optional forms 292 of payments shall be permitted. 293 (7) Benefits not guaranteed. All benefits payable under this section 46-129 shall be paid only 294 from the assets accounted for in individual member share accounts. Neither the city nor the 295 board shall have any duty or liability to furnish any additional funds, securities or other 296 assets to fund share account benefits. Neither the board nor any trustee shall be liable for 297 the making, retention, or sale of any investment or reinvestment made as herein provided, 298 nor for any loss or diminishment of the member share account balances, except due to his 299 or its own negligence, willful misconduct or lack of good faith. All investments shall be 300 made by the board subject to the restrictions otherwise applicable to fund investments. 301 (8) Notional account. The member share account is a notional account, used only for the 302 purpose of calculation of the share distribution amount. It is not a separate account in the 303 system. There is no change in the system's assets, and there is no distribution available to 304 the member or DROP participant until the member's or DROP participant's termination 305 from employment. The member or DROP participant has no control over the investment 306 of the share account. 307 (9) No employer discretion. The share account benefit is determined pursuant to a specific 308 formula which does not involve employer discretion. 309 (10) Maximum additions. Notwithstanding any other provision of this Section, annual 310 additions under this section shall not exceed the limitations of Section 415(c) of the code 311 pursuant to the provisions of section 46-115(k). 312 (11)IRC limit. The share account distribution, along with other benefits payable from the 313 system, is subject to limitation under Internal Revenue Code Section 415(b). d✓ CLEOOI-- CITY OF CLERMONT �� ORDINANCE NO.2023-003 314 (12) Use for permissive service purchase. Vested members may use their share account 315 balance to purchase permissive service as defined in sections 46-126 and 46-127 of this 316 system. The transfer of these funds does not convert the share account funds to employee 317 contributions under this system. 318 SECTION 5: CONFLICT 319 All ordinances or parts of ordinances, all City Code sections or parts of City Code sections, and 320 all resolutions or parts of resolutions in conflict with this Ordinance are hereby repealed to the 321 extent of such conflict. SECTION 6: SEVERABILITY 322 If any portion of this Ordinance is declared invalid, the invalidated portion shall be severed from 323 the remainder of the Ordinance, and the remainder of the Ordinance shall continue in full force 324 and effect as if enacted without the invalidated portion, except in cases where such continued 325 validity of the remainder would clearly and without doubt contradict or frustrate the intent of the 326 Ordinance as a whole. 327 SECTION 7: CODIFICATION 328 The text of Sections 1 through 4 of this Ordinance shall be codified as a part of the Clermont City 329 Code. The codifier is authorized to make editorial changes not effecting the substance of this 330 Ordinance by the substitution of "Article" for "Ordinance", "Section" for "Paragraph", or otherwise 331 to take such editorial license. SECTION 8: ADMINISTRATIVE CORRECTION OF SCRIVENERS ERROR 332 Regardless of whether such inclusion in the Code as described in Section 5 is accomplished, 333 sections of the Ordinance may be re -numbered or re -lettered and the correction of typographical 334 and/or scrivener's errors which do not affect the intent may be authorized by the City Manager or 335 designee, without need of public hearing, by filing a corrected or re -codified copy of same with 336 the City Clerk. SECTION 9: PUBLICATION AND EFFECTIVE DATE 337 This Ordinance shall be published as provided by law and it shall become law and shall take effect 338 immediately upon its Second Reading and Final Passage. (9 CLE - M, CITY OF CLERMONT ��d ORDINANCE NO.2023-003 PASSED AND ADOPTED by the City Council of the City of Clermont, Lake County, Florida on this 24th day of January, 2023. Tim Murry, M yor Tracy Ackroyd Howe, MMC City Clerk LEGAL IN FORM AND VALID AS ADOPTED: r D �'s City Atto Retifement Flan fof the Fifefighters Of the City of (lefmnt Artuarial Valuation As of 0ttober1,1011 Determines the Contribution for the 1013/14 f is(a I Year _= SOUTHERN _= ACTUARIAL mow, SERVICES Table of(owots EaLe Discussion Funding Results Table I -A Minimum Required Contribution Table I-B Sensitivity Analysis 1-3 Table I-C Gain and Loss Analysis 1-4 Table I-D Present Value of Future Benefits 1-5 Table I-E Present Value of Accrued Benefits 1-6 Table I-F Present Value of Vested Benefits 1-7 Table I-G Entry Age Normal Accrued Liability 1-8 Accounting Results GASB 068 Supplement as of September 30, 2022 Assets Table 11-A Actuarial Value of Assets Table II-B Market Value of Assets 11-2 Table II-C Investment Return II-3 Table II-D Asset Reconciliation II-4 Table II-E Historical Trust Fund Detail II-5 Table Il-F Other Reconciliations 11-6 Table II-G Historical Chapter 175/185 Contributions II-7 Data Table III -A Summary of Participant Data Table I11-13 Data Reconciliation III-2 Table 111-C Active Participant Data 111-3 Table III-D Active Age -Service Distribution II1-4 Table III-E Active Age -Service -Salary Table 111-5 Table II1-F Inactive Participant Data I11-6 Table III-G Projected Benefit Payments 111-7 Methods & Assumptions Table IV -A Summary of Actuarial Methods and Assumptions IV-1 Table IV-B Changes in Actuarial Methods and Assumptions IV-3 Plan Provisions Table V-A Summary of Plan Provisions V-1 Table V-B Summary of Plan Amendments V-6 Dis(ussion August 2, 2023 Introduction This report presents the results of the October 1, 2022 actuarial valuation for the Retirement Plan for the Firefighters of the City of Clermont. The report is based on the participant data and asset information provided by the pension plan administrator and, except for a cursory review for reasonableness including a comparison to the data provided for the previous valuation, we have not attempted to verify the accuracy of this information. The primary purpose of this report is to provide a summary of the funded status of the plan as of October 1, 2022 and to determine the minimum required contribution under Chapter 112, Florida Statutes, for the 2023/24 plan year. In addition, this report provides a projection of the long-term funding requirements of the plan, statistical information concerning the assets held in the trust, statistical information concerning the participant population, and a summary of any recent plan changes. The liabilities and cost presented in this report are based on numerous assumptions concerning the cost of benefits to be provided in the future, long-term investment returns, and the future demographic experience of the current participants. Anyone referring to this report should remember that the cost developed herein is only an estimate of the true cost of providing post -employment pension benefits. No one can predict with certainty whether the true cost will be higher or lower than the cost presented in this report. The calculated cost is entirely dependent upon the assumptions that are described in Table IV -A. If any of the assumptions is changed, then the cost shown in this report will change accordingly. Likewise, if any of the assumptions is not completely realized, then the cost shown in this report will change in the future. Certain assumptions play a bigger role than others in determining the cost of the post -employment pension benefits. In some cases, relatively small changes in a particular assumption can have a dramatic impact on the anticipated cost of benefits. Although a thorough analysis of the impact of such changes is beyond the scope of this report, Table I-B illustrates the impact that alternative long-term investment returns would have on the normal cost rate. Minimum Required Contribution Table I -A shows the development of the minimum required contribution for the 2023/24 plan year. The minimum required contribution rate is 37.88% of covered payroll, which represents an increase of 23,84% of payroll from the prior valuation. The normal cost rate is 36.97%, which is 23.02% greater than the normal cost rate that was developed in the prior valuation. Table I-C provides a breakdown of the sources of change in the normal cost rate. Significantly, the rate increased by 18.96°/o of payroll due to investment losses, increased by another 4.25% of payroll due to demographic experience, and decreased by 0.19% of payroll due to the plan amendment that is described below. The market value of assets lost 16.69% during the 2021/22 plan year, whereas a 7.00% annual investment return was required to maintain a stable contribution rate. Pdge 1 dis(ussian Chapter 112, Florida Statutes, sets forth the rules concerning the minimum required contribution for public pension plans within the state. Essentially, the City must contribute an amount equal to the annual normal cost of the plan plus an adjustment as necessary to reflect interest on any delayed payment of the contribution beyond the valuation date. On this basis, the City's 2023/24 minimum required contribution will be equal to 37.88% multiplied by the total pensionable earnings for the 2023/24 plan year for the active employees who are covered by the plan and reduced by the portion of the Chapter 175/185 contribution that is allowed to be recognized during the 2023/24 plan year. As of the valuation date, ail of the Chapter 175J185 contribution is allowed to be used as an offset to the City's minimum required contribution, Based on the current assets, participant data, and actuarial assumptions and methods that are used to value the plan, the present-day value of the total long-term funding requirement is $43,684,255. As illustrated in Table I -A, current assets are sufficient to cover $25,308,882 of this amount, the employer's 2022/23 expected contribution will cover $922,563 of this amount, the employer's 2023/24 expected contribution will cover $2,551,351 of this amount, and future employee contributions are expected to cover $1,955,159 of this amount, leaving $12,946,300 to be covered by future employer funding beyond the 2023/24 fiscal year. Again, demographic and investment experience that differs from that assumed will either increase or decrease the future employer funding requirement. Full -Time Versus Volunteer Employees The plan covers both full-time and volunteer firefighters of the City of Clermont. Throughout this report, we have shown various demographic and statistical information for the active employee group as a whole. However, this information may be misleading since the annual plan compensation varies widely between full-time and volunteer firefighters. In particular, the annual compensation increases that are shown in Table III-C are dramatically inflated because from year- to-year there are some employees who move from volunteer status to full-time status and whose compensation as a full- time firefighter may be 10 to 20 times their compensation as a volunteer firefighter. Refund of Participant Contributions It is our understanding that there are 63 participants who are due a refund of their contributions with interest. We have estimated the accumulated amount of their refunds to be $48,680 as of October 1, 2022. The vast majority of these individuals are owed less than $50, with the average amount owed equal to $773. If possible, we recommend that the accumulated contributions be distributed to these individuals in order to simplify the administration of the plan and to reduce future administrative costs. Advance Employer Contribution The City has made contributions to the plan in excess of the minimum amount that was required to be contributed pursuant to Chapter 112. In this report, the excess contributions are referred to as an "advance employer contribution." As of October 1, 2022, the advance employer contribution is $687,432, which reflects the advance employer contribution Page Z Disrossioo as of October 1, 2021 plus $628,640 of actual employer contributions in excess of the minimum required contribution for the 2.021/22 plan year, as shown in Table II-F, The City may apply all or any portion of the advance employer contribution towards the minimum required contribution for the 2022/23 plan year or for any later plan year. The minimum required contribution for that plan year will be reduced dollar -for -dollar by the amount of the advance employer contribution that is applied in this manner. Alternatively, at any time, the City may apply ail or any portion of the advance employer contribution as an extra contribution in excess of the minimum required contribution. Immediate application of the entire balance of the advance employer contribution as of October 1, 2022 would reduce the minimum required contribution rate for the 2023/24 plan year to 35.95% of payroll. Plan Amendment Since the previous valuation, the plan has been amended by Ordinance No. 2023-003. This ordinance made the following changes to the plan: (1 ) Effective the first full payroll period after January 24, 2023, the employee contribution rate was increased from 4.00% of pensionable earnings to 5.50%; (2) Effective with the monies received pursuant to Chapter 175 for 2022, the City is allowed to use 100% of the Chapter 175 distribution as an offset to the otherwise required contribution and participation in the share plan is frozen; (3) Effective for retirements on and after October 1, 2022, the benefit formula multiplier for those participants who have earned at least 22 years of service is equal to 75% plus 3.00% for each year of service in excess of 22 years; and (4) The minimum retirement benefit is equal to 2.75% of average earnings for each year of service to a maximum of 100% of average earnings. This amendment decreased the normal cost rate by 0.19% of payroll. Identification and Assessment of Risk The liabilities and cost presented in this report are based on numerous assumptions concerning the cost of benefits to be provided in the future, long-term investment returns, and the future demographic experience of the current participants. Anyone referring to this report should remember that the cost developed herein is only an estimate of the true cost of providing post -employment pension benefits. No one can predict with certainty whether the true cost will be higher or lower than the cost presented in this report. The calculated cost is entirely dependent upon the assumptions that are described in Table IV -A. If any of the assumptions is changed, then the cost shown in this report will change accordingly. Likewise, there is always a risk that, should these assumptions not be realized, the liabilities of the plan, Discussion the contributions required to fund the plan, and the funded status of the plan may be significantly different than the amounts shown in this report. Although a thorough analysis of the risk of not meeting the assumptions is beyond the scope of this report, this discussion is intended to identify the significant risks faced by the plan. In some cases, a more detailed review of the risks, including numerical analysis, may be appropriate to help the plan sponsor and other interested parties assess the specific impact of not realizing certain assumptions. For example, Table 1-6 illustrates the impact that alternative long-term investment returns would have on the contribution rate. Note that this report is not intended to provide advice on the management or reduction of the identified risks nor is this report intended to provide investment advice. The most significant risk faced by most defined benefit pension plans is investment risk, i.e. the risk that long-term investment returns will be less than assumed. Other related risks include a risk that, if the investments of the plan decline dramatically over a short period of time (such as occurred with many pension plans in 2008), the plan's assets may not have sufficient time to recover before benefits become due. Even if the assets of the plan grow in accordance with the assumed investment return over time, if benefit payments are expected to be large in the short-term (for example, if the plan provides an actuarial equivalent lump sum payment option and a large number of participants are expected to become entitled to such a lump sum in the near future), the plan's assets may not be sufficient to support such a high level of benefit payments. We have provided a 10-year projection of the expected benefit payments in Table II I-G to help the Trustees in formulating an investment policy that is expected to provide an investment return that meets both the short- and long-term cash flow needs of the pension plan. Another source of risk is demographic experience. This is the risk that participants will receive salary increases that are different than the amount assumed, that participants will retire, become disabled, or terminate their employment at a rate that is different than assumed, and that participants will live longer than assumed, just to cite a few examples of the demographic risk faced by the plan. Although for most pension plans, the demographic risk is not as significant as the investment risk, particularly in light of the fact that the mortality assumption includes a component for future life expectancy increases, the demographic risk can nevertheless be a significant contributing factor to liabilities and contribution rates that become higher than anticipated. A third source of risk is the risk that the plan sponsor (or other contributing entities) will not make, or will not have the ability to make, the contributions that are required to keep the plan funded at a sufficient level. Material changes in the number of covered employees, covered payroll, and, in some cases, hours worked by active participants can also significantly impact the plan's liabilities and the level of contributions received by the plan. Finally, an actuarial funding method has been used to allocate the gap between projected liablities and assets to each year in the future. The contribution rate under some funding methods is higher during the early years of the plan and then is lower during the later years of the plan. Other funding methods provide for lower contribution rates initially, with increasing contribution rates over time. The Trustees have adopted the aggregate funding method for this plan, which is expected to result in a contribution rate that is level as a percentage of payroll over the working life of the plan's active participants. A brief description of the actuarial funding method is provided in Table IV -A. Page 4 _ �` aistussian Contents of the Report Tables i-a through I-G provide a detailed breakdown of various liability amounts by type of benefit and by participant group. Tables II -A through II-F provide information concerning the assets of the trust fund. Tables III -A through III-G provide statistical information concerning the plan's participant population. In particular, Table III-G gives a 10-year projection of the cash that is expected to be required from the trust fund in order to pay benefits to the current group of participants. Finally, Tables IV -A through V-B provide a summary of the actuarial assumptions and methods that are used to value the plan's benefits and of the relevant plan provisions as of October 1, 2022, as well as a summary of the changes that have occurred since the previous valuation report was prepared. Certification This actuarial valuation was prepared by me 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 meet the requirements and intent of Chapter 112, Florida Statutes. There is no benefit or expense to be provided by the plan and/or paid from the plan's assets for which liabilities or current costs have not been established or otherwise taken into account in the valuation. All known events or trends which may require a material change in plan costs or required contribution rates have been taken into account in the valuation. For the firm, Charles T. Carr Consulting Actuary Southern Actuarial Services Company, Inc. Enrolled Actuary No. 23-04927 The individual above is a member of the American Academy of Actuaries and meets the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion contained herein, Funding Results Minimum Required Contribution 2022/23 Employer 2023/24 Employer ion 51 -mployer iding 46,300 0% 20% 40% 60% 80% 100% Table I -A Future Employee Funding $1,955,159 For the 2023124 Plan Year Present Value of Future Benefits $40,425,458 Present Value of Future Administrative Expenses $707,446 Actuarial Value of Assets ($25,308,882) Present Value of Future Employee Contributions ($1,955,159) Present Value of Future Normal Costs $13,868,863 Present Value of Future Payroll $37,510,078 Normal Cost Rate = 36,9737% Expected Payroll x $6,384,519 Normal Cost $2,360,593 Adjustment to Reflect Semi -Monthly Employer Contributions $84,202 Expected Employer Contribution for the 2022/23 Plan Year ($922,563) Remaining Contribution Due/(Credit) for the 2022/23 Plan Year $1,522,232 x 0.07 One Year's Interest Chargel(Credit) on the Remaining Contribution $106,556 Preliminary Employer Contribution for the 2023/24 Plan Year $2,551,351 Expected Payroll for the 2023/24 Plan Year = $6, 735,668 Minimum Required Contribution Rate 1 37.88% (The actual contribution should be based on the minimum required contribution rate multiplied by the actual payroll for the year.) Pagel-1 = Minimum Required Contribution runding Results Table I -A (continued) The minimum required contribution rate of 37.88% includes both the City contribution and the allowable Chapter 175 contribution. In addition, employees are required to contribute 5.50% of pensionable earnings. The actual City contribution rate is expected to be approximately 33.7% based on the allowable Chapter 175 contribution for the previous year. The chart below shows the expected contribution rate by source for the 2022/23 plan year based on the expected payroll. A comparative chart shows the contribution rate by source for the previous plan year. For the 2023124 Plan Year Chapter 175 Employee Contribution Contribution 4.18% 5.50% For the 2022123 Plan Year Pay l-Z Employee Contribution 5.00% Chapter 175 Contribution 4.41 % City Contribution A n n A W _funding Results Sensitivity Analysis Current Normal Cost Normal Cast Rate if Rate Normal Cost Rate if Assets 80% 70% 60% 50% 40% 30% 20% 10% 0% The lime above illustrates the sensitivity of the normal cost rate to changes in the long-term investment return. Page 1-3 luudln� Results Gain and Loss Analysis Previous normal cost rate 13.95% Increase (decrease) due to investment gains and losses 18,96% Increase (decrease) due to demographic experience 4.25% Increase (decrease) due to plan amendments -0.19% Increase (decrease) due t❑ actuarial assumption changes 0.00% Increase (decrease) due to actuarial method changes 0.00% Current normal cost rate 36.97% Page 1-4 Table I-C Funding Results Present Value of Future Benefits Table I-D Old Assumptions Old Assumptions New Assumptions w/o Amendment w1 Amendment wl Amendment Actively Employed Participants Retirement benefits $34,800,012 $35,173,778 $35,173,778 Termination benefits $1,137,239 $1,137,239 $1,137,239 Disability benefits $156,362 $156,362 $156,362 Death benefits $78,647 $78,647 $78,647 Refund of employee contributions $14,950 $16,509 $16,509 Sub -total $36,187,210 $36,562,535 $36,562,535 Deferred Vested Participants Retirement benefits $635,100 $635,100 $635,100 Termination benefits $0 $0 $0 Disability benefits $0 $0 $0 Death benefits $0 $0 $0 Refund of employee contributions $0 $0 $0 Sub -total $635,100 $635,100 $635,100 Dore a Refund of Contributions $48,680 $48,680 $48,680 Deferred Beneficiaries $0 $0 $0 Retired Participants Service retirements $2,685,215 $2,685,215 $2,685,215 Disability retirements $493,928 $493,928 $493,928 Beneficiaries receiving $0 $0 $0 DROP participants $0 $0 $0 Sub -total $3,179,143 $3,179,143 $3,179,143 Grand Total 40.050.133 4 42 4 4 4 Present Value of Future Payroll $37,510,078 $37,510,078 $37,510,078 Present Value of Future Employee Contribs. $1,500,404 $1,955,159 $1,955,159 Present Value of Future Employer Contribs. $13,941,724 $13,868,863 $13,868,863 Pages-5 Funding Results Present Value of Accrued Benefits Table I-E Old Assumptions Old Assumptions New Assumptions w/o Amendment wl Amendment wl Amendment Actively Employed Particl ants Retirement benefits $19,147,641 $19,521,407 $19,521,407 Termination benefits $569,973 $569,973 $569,973 Disability benefits $102,607 $102,607 $102,607 Death benefits $38,810 $38,810 $38,810 Refund of employee contributions $9,864 $9,864 $9,864 Sub -total $19,868,895 $20,242,661 $20,242,661 Deferred Vested Participants Retirement benefits $635,100 $635,100 $635,100 Termination benefits $0 $0 $0 Disability benefits $0 $0 $0 Death benefits $0 $0 $0 Refund of employee contributions $0 $0 $0 Sub -total $635,100 $635,100 $635,100 Dore a Refund of Contributions $48,680 $48,680 $48,680 Deferred Beneficiaries $0 $0 $0 Refired Participants Service retirements $2,685,215 $2,685,215 $2,685,215 Disability retirements $493,928 $493,928 $493,928 Beneficiaries receiving $0 $0 $0 DROP participants $0 $0 $0 Sub -total $3,179,143 $3,179,143 $3,179,143 Grand Total 12y3m 1 241 4 Funded Percentage 109.54% 107.84°Io 107.840/. (Note: Funded percentage is equal to the ratio of the usable portion of the market value of assets divided by the present value of accrued benefits.) Pagel-6 lunding Results Present Value of Vested Benefits Table I-F Old Assumptions Old Assumptions New Assumptions w/o Amendment wl Amendment wl Amendment Actively Employed Participants Retirement benefits $17,230,999 $17,604,765 $17,604,765 Termination benefits $497,939 $497,939 $497,939 Disability benefits $97,757 $97,757 $97,757 Death benefits $34,905 $34,905 $34,905 Refund of employee contributions $48,725 $48,725 $48,725 Sub -total $17,910,325 $18,284,091 $18,284,091 Deferred Vested Partic�nants Retirement benefits $635,100 $635,100 $635,100 Termination benefits $0 $0 $0 Disability benefits $0 $0 $0 Death benefits $0 $0 $0 Refund of employee contributions $0 $0 $0 Sub -total $635,100 $635,100 $635,100 Dire a Refund of Contributions $48,680 $48,680 $48,680 Deferred Beneficiaries $0 $0 $0 Retired Participants Service retirements $2,685,215 $2,685,215 $2,685,215 Disability retirements $493,928 $493,928 $493,928 Beneficiaries receiving $0 $0 $0 DROP participants $0 $0 $0 Sub -total $3,179,143 $3,179,143 $3,179,143 Grand Total IL1,773,2A4 22 147 14 22.147.D14 Page 1-7 = Entry Age Normal Accrued Liability Old Assumptions Old Assumptions wlo Amendment wl Amendment Funding Results Table I-G New Assumptions wl Amendment Actively Employed Participants Retirement benefits $23,423,640 $23,797,406 $23,797,406 Termination benefits $668,873 $668,873 $668,873 Disability benefits $90,228 $90,228 $90,228 Death benefits $46,450 $46,450 $46,450 Refund of employee contributions $8,768 $9,075 $9,075 Sub -total $24,237,959 $24,612,032 $24,612,032 ❑eferred Vested Participants Retirement benefits $635,100 $635,100 $635,100 Termination benefits $0 $0 $0 Disability benefits $0 $0 $0 Death benefits $0 $0 $0 Refund of employee contributions $0 $0 $0 Sub -total $635,100 $635,100 $635,100 Due a Refund of Contributions $48,680 $48,680 $48,680 Deferred Beneficiaries $0 $0 $0 Retired Participants Service retirements $2,685,215 $2,685,215 $2,685,215 Disability retirements $493,928 $493,928 $493,928 Beneficiaries receiving $0 $0 $0 DROP participants $0 $0 $0 Sub -total $3,179,143 $3,179,143 $3,179,143 Grand Total U 28.474.955 2 4T4 Page1-8 Assets Actuarial Value of Assets Market Value of Assets as of October 1, 2022 $25,996,314 Minus DROP account balances $0 Minus advance employer contributions ($687,432) Minus excess Chapter 175/185 contributions $0 Actuarial Value of Assets as of October 1, 2022 25 Historical Actuarial Value of Assets October 1, 2013 $6,938,479 October 1, 2014 $8,319,434 October 1, 2015 $8,989,537 October 1, 2016 $10,744,542 October 1, 2017 $13,641,834 October 1, 2018 $16,128,326 October 1, 2019 $18,965,755 October 1, 2020 $22,771,575 October 1, 2021 $29,132,570 October 1, 2022 $25,308,882 Page 1I-1 Table li-A Assets Market Value of Assets As of October 1, 2022 Market Value of Assets 25 99B 314 Cash $1,281,162 Fixed income mutual funds $8,529,713 Equity mutual funds $16,132,413 Real estate investment fund $1,057,014 Share plan assets ($989,892) Accounts payable ($14,096) Historical Market Value of Assets October 1, 2013 $8,048,897 October 1, 2014 $9,483,819 October 1, 2015 $10,378,279 October 1, 201E $11,977,627 October 1, 2017 $13,647,332 October 1, 2018 $16,128, 326 October 1, 2919 $18,988,865 October 1, 2020 $22,771, 575 October 1, 2021 $29,191, 362 October 1, 2022 $25,996,314 Pdge Il-2 0 Assets Investment Return 25% 20% 15% 10% 5°l0 0% .5% •10% -20% Page I1-3 Table II-C 2012113 2013114 2014115 2015116 2016117 2017118 2018119 2019120 2020121 2021 /22 ■ Market Value Return Annual Investment Returns ■4Adu2621 Value Return �AAssumed Return Market Actuarial Plan Value Value Assumed Year Return Return Return 2012/13 11.97% 13.99% 7.50% 2013/14 8.37% 9.68% 7.50% 2014/15 -0.33% -0.38% 7.50% 2015/16 7.98% 9.09% 7.50% 2016/17 13.32% 5.80% 7.50% 2017/18 7.40% 7.41 % 7.50% 2018119 7.32% 7.32% 7.00% 2019/20 11.48% 11.61 % 7.00% 2020121 20.650/. 20.52°/a 7.000/. 2021122 -16.69% -16.90% 7.00% 10yr. Avg, 6.69% 6.36% 7.30% Assets Asset Reconciliation Table II-D Market Value Actuarial Value As of October 1, 2021 $29,191,362 $29,132,570 Increases Due To: Employer Contributions Chapter 175/185 Contributions Employee Contributions Service Purchase Contributions Total Contributions Interest and Dividends Realized Gains (Losses) Unrealized Gains (Losses) Total Investment Income Other Income Total Income Decreases Due To: Monthly Benefit Payments Refund of Employee Contributions DROP Credits Total Benefit Payments Investment Expenses Administrative Expenses Advance Employer Contribution Excess Chapter 175/185 Contribution "total Expenses As of October 1, 2022 Page II-G $1, 259, 258 $540,247 $324,115 $0 $2,123,620 $970,823 $0 ($5,974,807) ($5,003,984) $0 ($2,880,364) ($190,826) $0 ($190,826) ($22,074) ($101,784) ($314,&84) $25,996,314 $1,259,258 $540,247 $324,115 $0 $2,123,620 ($5,026,058) ($2,902,438) ($190,826) $0 $0 ($190,826) ($101,784) ($628,640) $0 ($921,258) $25,308,882 Assets Historical Trust Fund Detail Income Table ll-E Service Realized Unrealized Plan Employer Chapter Employee Purchase Interest/ Gains/ Gains ! Other Year Contribs. Contribs. Contribs. Contribs. Dividends Losses Losses Income 2012/13 $605,037 $188,967 $29,277 $0 $0 $0 $839,115 $0 2013114 $497,088 $171,712 $86,520 $0 $0 $0 $704,467 $0 2014115 $639,772 $187,585 $141,632 $0 $0 $0 -$32,699 $0 2015116 $276,343 $215,476 $279,064 $0 $0 $0 $858,135 $0 2016117 $619,491 $178,209 $238,784 $0 $0 $0 $1,599,687 $0 2017118 $1,087,587 $191,170 $200,118 $0 $0 $0 $1,063,078 $0 2018119 $1,386,390 $199,124 $211,614 $20,321 $0 $0 $1,239,130 $0 2019120 $1,649,080 $0 $220,098 $0 $0 $0 $2,267,101 $0 2020/21 $1,419,947 $221,613 $241,273 $75,000 $650,936 $0 $4,232,766 $0 2021122 $1,259,258 $540,247 $324,115 $0 $970,823 $0 -$5,974,807 $0 Expenses Other Actuarial Ad 'ustments Monthly Transfer to Advance Excess Plan Benefit Contrib. Admin. Invest, Share DROP Employer Chapter Year Payments Refunds Expenses Expenses Plan Credits Contribs. Contribs, 20*13 $388,835 $7,299 $28,489 $0 $0 $0 $198,226 $0 2013M4 $601 $155 $24,109 $0 $0 $0 $53,967 $0 2014/15 $601 $344 $40,885 $0 $0 $0 $224,357 $0 2015/16 $601 $723 $28,346 $0 $0 $0 -$155,657 $0 2016117 $601 $3,912 $49,761 $0 $0 $0 -$315,396 -$912,192 2017/18 $14,242 $10,878 $35,839 $0 $2,203 $0 -$5,498 $0 2018119 $96,189 $3,516 $96,335 $0 $10,157 $23,110 $0 $0 2019/20 $288,092 $0 $65,477 $0 $0 $0 $0 $0 2020/21 $267,916 $15,434 $83,741 $19,655 $35,002 $0 $58,792 $0 2021/22 $190,826 $0 $101,784 $22,074 $0 $0 $628,640 $0 Note: Information was not available to separate the investment expenses from the investment income prior to October 1, 2020 nor was information available to separate the investment income by source. Pagel)-5 Assets Other Reconciliations Advance Employer Contribution Advance Employer Contribution as of October 1, 2021 $58,792 Additional Employer Contribution $1,799,505 Minimum Required Contribution ($1,170,865) Net Increase in Advance Employer Contribution $628,640 Advance Employer Contribution as of October 1, 2022 $687,432 Excess Chapter 1751195 Contribution Excess Chapter 175/185 Contribution as of October 1, 2021 $0 Additional Chapter 175/185 Contribution $540,247 Allowable Chapter 175/185 Contribution ($540,247) Transfer to Share Plan $0 Net Increase in Excess Chapter 175/185 Contribution $0 Excess Chapter 175/185 Contribution as of October 1, 2022 $0 DROP Account Reconciliation DROP Balance as of October 1, 2021 DROP Benefits Paid DROP Investment Return DROP Expense Charge Net DROP Credit $0 $0 $0 $0 $0 ❑ROP Balance as of October 1, 2022 $0 Pdge II-6 Table li-F Assets Historical Chapter 175/185 Contributions Table II-G Total Accumulated Excess Chapter 1751185 Contribution I $n Chapter 175 Chapter 175 Regular Supplemental Chapter 185 Allowable Distribution Distribution Distribution Amount 1998 Distribution $29,264 $0 $0 ($25,316) 1999 Distribution $34,044 $15,978 $0 ($36,664) 2000 Distribution $32,659 $19,425 $0 ($36,664) 2001 Distribution $39,992 $17,162 $0 ($36,664) 2002 Distribution $48,913 $22,170 $0 ($67,747) 2003 Distribution $58,515 $27,254 $0 ($62,157) 2004 Distribution $72,111 $35,142 $0 ($62,157) 2005 Distribution $80,458 $41,648 $0 ($62,157) 2006 Distribution $93,915 $48,281 $0 ($62,157) 2007 Distribution $133,073 $64,363 $0 ($62,157) 2008 Distribution $155,350 $48,391 $0 ($62,157) 2009 Distribution $165,178 $9,847 $0 ($60,656) 2010 Distribution $157,013 $8,172 $0 ($58,981) 2011 Distribution $178,611 $5,998 $0 ($56,807) 2012 Distribution $183,327 $5,640 $0 ($188,967) 2013 Distribution $169,639 $2,073 $0 ($171,712) 2014 Distribution $181,292 $6,293 $0 ($187,585) 2015 Distribution $215,476 $0 $0 ($215,476) 2016 Distribution $178,209 $0 $0 ($178,209) 2017 Distribution $193,373 $0 $0 ($191,170) 2018 Distribution $209,281 $0 $0 ($199,124) 2019 Distribution $0 $0 $0 $0 2020 Distribution $221,613 $0 $0 ($186,611) 2021 Distribution $540,247 $0 $0 ($540,247) Interest Adjustment $11, 706 Transfer to Share Plan ($959,554) Page 11-7 Summary of Participant Data Participant Distribution by Status Table 111-A As of October 1, 2022 Actively Emi)loyed Particii)ants Active Participants 81 DROP Participants 0 Inactive Participants + Deferred Vested Participants 9 *J Due a Refund of Contributions 63 'N Deferred Beneficiaries 0 Participants Receiving a Benefit 1 Service Retirements 5 N Disability Retirements 1 + Beneficiaries Receiving 0 Total Participants 159 Number of Participants included in Prior Valuations Active DROP Inactive Retired Total October 1, 2013 NIA NIA NIA NIA NIA October 1, 2014 58 0 62 1 121 October 1, 2015 NIA NIA NIA NIA NIA October 1, 2016 57 0 60 1 118 October 1, 2017 N/A N/A NIA NIA NIA October 1, 2018 72 0 62 3 137 October 1, 2019 NIA N/A NIA NIA NIA October 1, 2020 78 0 68 7 153 October 1, 2021 79 0 69 6 154 October 1, 2022 81 0 72 6 159 PdgC 111-1 Ma Data Reconciliation October 1, 2021 Chan e in Status Re-employed Terminated Retired Participation Ended Transferred Out Cashed Out Died Participation Began Newly Hired Transferred in New Beneficiary Other Adjustment October 1, 2022 Page111-2 Deferred Due a Def. Service Disabled Benef. Active DROP Vested Refund Benef. Retiree Retiree Rec'v, Total 79 0 8 61 0 5 1 0 154 (2) 4 81 0 9 63 0 5 1 4 1 0 159 Data Active Participant Data Gender Mix 4% 96% Male ■ Female October 1, 2013 October 1, 2014 October 1, 2015 October 1, 2016 October 1, 2017 October 1, 2018 October 1, 2019 October 1, 2020 October 1, 2021 October 1, 2022 page III-3 Table 111-C As of October 1, 2022 Average Age Average Service Total Annualized Compensation for the Prior Year Total Expected Compensation for the Current Year Average Increase in Compensation for the Prior Year Expected Increase in Compensation for the Current Year Actual vs. Expected Salary Increases Active Participant Statistics From Prior Valuations Average Expected Average Average Average Salary Age Service Salary Increase NIA 35.2 NIA 37.4 NIA 36.9 N/A 37.2 37.8 38.5 NIA 7.1 NIA 9.4 NIA 8.6 NIA 8.2 9.0 9.6 NIA $52, 271 NIA $66,667 NIA $67,732 N/A $69,285 $75,702 $85,006 5.50% 5.50% 5.50% 5.50% 5.50% 5.50% 5.50% 5.50% Average A ctual Salary Increase 34.78% -0.51 % 5.31% 7.69% 9.80% 8.44% 12.38% -0.41 % 5.50% 11.36% 5.50% 13.81 % 38.5 years 9.6 years $6,885,472 $6,384,519 13.81 % 5.50% Data Active Age -Service Distribution Table III-D w _ w dub ARIP _ Under25 M 25 to 29 WmP 30 to 34 I ! 40 & up 35 to 39dw 1 35 to 39 40 to 44 4w 4w 30 to 34 45 to 49 W 1 25 to 29 20 to 24 50 to 54 40 15 to 19 55to59 40 10to14 Age 60 to 64 5 to 9 Years of Service 1to4 65 & up Under 1 ❑ Eligible to retire ■ May be eligible to retire ■ Not eligible to refire Page III-4 Data Active Age -Service -Salary Table Table III-E Attained Age Completed Years of Service Under 1 1 to 4 5 to 9 10 to 14 15 to 19 20 to 24 25 to 29 30 to 34 35 to 39 40 & up Total Under 25 0 2 0 0 0 0 0 0 0 0 2 Avg.Pay 0 48,794 0 0 0 0 0 0 0 0 48,794 25 to 29 2 11 1 0 0 0 0 0 0 0 14 Avg.Pay 47,259 56,549 67,944 0 0 0 0 0 0 0 56,036 30 to 34 2 5 2 2 0 0 0 0 0 0 11 Avg.Pay 46,773 58,489 90,500 108,275 0 0 0 0 0 0 71,231 35 to 39 0 1 6 5 9 0 0 0 0 0 21 Avg.Pay 0 46,590 74,999 95,360 101,725 0 0 0 0 0 89,948 40 to 44 0 1 2 2 6 0 0 0 0 0 13 Avg.Pay 0 66,398 91,791 98,323 108,141 0 0 0 0 0 100,904 45 to 49 0 2 1 1 5 0 0 0 0 0 9 Avg.Pay 0 68,509 72,892 93,134 106,958 0 0 0 0 0 93,093 50 to 54 0 1 0 1 3 1 0 0 0 0 6 Avg.Pay 0 54,396 0 96,623 107,729 147,475 0 0 0 0 103,613 55 to 59 0 2 0 0 0 1 0 0 0 0 3 Avg.Pay 0 96,924 0 0 0 162,880 0 0 0 0 118,909 60 to 64 0 0 0 0 1 0 0 0 0 0 1 Avg.Pay 0 0 0 0 79,547 0 0 0 0 0 79,547 65&up 0 0 1 0 0 0 0 0 0 0 1 Avg.Pay 0 0 123,390 0 0 0 0 0 0 0 123,390 Total 4 25 13 11 28 2 0 a 0 0 81 Avg.Pay 47,016 60,413 82,984 98,160 104,545 155,178 0 0 0 0 85,006 Page Ilf-5 Ddtd Inactive Participant Data Under 25 25-29 30-34 35-39 40-44 45-49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 Over 74 Page III-6 Table III-F 0 9 2 3 Age at Retirement ■ Service Retirements * Disability Retirements ■ DROP Participants Average Monthly Benefit Service Retirements $3, 731.67 Disability Retirements $3,647.12 Beneficiaries Receiving Not applicable DROP Participants Not applicable Deferred Vested Participants $708,48 Deferred Beneficiaries Not applicable Data Projected Benefit Payments $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 pdge111-7 Table III-G A ctual For the period October 1, 2021 through September 30, 2022 $190,826 Pralected For the period October 1, 2022 through September 30, 2023 $659,639 For the period October 1, 2023 through September 30, 2024 $1,007,596 For the period October 1, 2024 through September 30, 2025 $1,257,752 For the period October 1, 2025 through September 30, 2026 $1,467,603 For the period October 1, 2026 through September 30, 2027 $1,735,687 For the period October 1, 2027 through September 30, 2028 $2,198,765 For the period October 1, 2028 through September 30, 2029 $2,575,699 For the period October 1, 2029 through September 30, 2030 $2,608,185 For the period October 1, 2030 through September 30, 2031 $2,825,515 For the period October 1, 2031 through September 30, 2032 $2,898,237 Methods � Assumptions Summary of Actuarial Methods and Assumptions Table IV -A NOTE: The following assumptions and methods have been selected and approved by the Board of Trustees based in part on the advice of the plan's enrolled actuary in accordance with the authority granted to the Board under the pension ordinances and State law. 1. Actuarial Cost Method Aggregate cost method. Under this actuarial cost method, a funding cost is developed for the plan as a level percentage of payroll. The level funding percentage is calculated as the excess of the total future benefit liability over accumulated assets and future employee contributions, with this excess spread over the expected future payroll for current active participants. The normal cost is equal to the level funding percentage multiplied by the expected payroll for the year immediately following the valuation date. The actuarial accrued liability is equal to the accumulated assets. Therefore, under the aggregate cast method, no unfunded accrued liability is developed. 2. Asset Method The actuarial value of assets is equal to the market value of assets. 3. Interest or Discount) Rate 7.00% per annum 4. 5alary Increases Plan compensation is generally assumed to increase at the rate of 5.50% per annum, unless actual plan compensation is known for a prior plan year. 5. Decrements • Pre -retirement mortality: Sex -distinct rates set forth in the PUB-2010 Headcount -Weighted Employee Mortality Table for public safety employees (Below Median table for males), with full generational improvements in mortality using Scale MP-2018 and with ages set forward one year page IV-1 Methods & Assumptions Summary of Actuarial Methods and Assumptions Table IV -A (continued) • Post -retirement mortality; For non -disabled retirees, sex -distinct rates set forth in the PUB-2010 Headcount -Weighted Healthy Retiree Mortality Table for public safety employees (Below Median table for males), with full generational improvements in mortality using Scale MP-2018 and with ages set forward one year; for disabled retirees, sex -distinct rates set forth in the PUB-2010 Headcount -Weighted Disabled Retiree Mortality Table (80% general employee rates plus 20% public safety employee rates), with full generational improvements in mortality using Scale MP-2018 • Disability: Age -based rates of disability were assumed, ranging from 0,03% at age 20, 0.04% at age 30, 0.07% at age 40, and 0.18% at age 50; 75% of all disabilities are assumed to be service -related. • Termination: Age -based rates of termination were assumed, ranging from 4.30% at age 20, 3.70% at age 30, 2.80% at age 40, and 0.00% at age 50. • Retirement; Retirement is assumed to occur at normal retirement age, except that those individuals who are eligible for early retirement at ages 52 through 54 are assumed to retire at the rate of 20% per year, 6. Form of Payment Future retirees have been assumed to select the 10-year certain and life annuity. 7. Expenses The total projected benefit liability has been loaded by 1.75% to account for anticipated administrative expenses. In addition, the interest rate set forth in item 3. above is assumed to be net of investment expenses and commissions. Page IN Methods & Assumptions Changes in Actuarial Methods and Assumptions Table IV-B No assumptions or methods were changed since the completion of the previous valuation. The following additional assumption and method changes were made during the past 10 years: (1) Effective October 1, 2020, the mortality basis was changed from the RP-2000 Blue Collar Mortality Table with generational improvements in mortality using Scale BB to selected PUB-2010 Mortality Tables with generational improvements in mortality using Scale MP-2018. (2) Effective October 1, 2018, the interest (or discount) rate was decreased from 7.50% per annum to 7.00% per annum. (3) Effective October 1, 2018, the mortality basis was changed from the RP-2000 Combined Mortality Table to the RP-2000 Blue Collar Mortality Table, both with full generational improvements in mortality using Scale BB. (4) Effective October 1, 2016, the mortality basis was changed from a 2007 projection of the RP-2000 Mortality Table for annuitants to a full generational projection using Scale BB of the RP-2000 Combined Mortality Table as required by State law. Pdge IN Plan Provisions Summary of Plan Provisions I, Benefit Formula Table V-A For the period prior to October 1, 2022 and for those individuals who have earned less than 22 years of service: 2.25% of Average Monthly Earnings multiplied by Credited Service earned prior to October 1, 2002 plus 3.00% of Average Monthly Earnings multiplied by Credited Service earned on and after October 1, 2002 For the period after September 30, 2022 with respect to those individuals who have earned at least 22 years of service: 75% of Average Monthly Earnings plus 3.00% of Average Monthly Earnings multiplied by Credited Service earned in excess of 22 years (The minimum benefit is equal to 2, 75% of Average Monthly Eamings multiplied by Credited Service to a maximum of 100% of Average Monthly Earnings. The benefit formula is applied separately to periods of service as a full- time firefighter and as a volunteer firefighter. in addition, volunteer firefighters receive a minimum monthly benefit equal to $5.00 for each year of credited service eamed as a volunteer.) 2. Service Retirement Normal retirement: Age 55 with at least 10 years of credited service; or Any age with at least 20 years of credited service Early retirement: Age 50 with at least 10 years of credited service (Note: In the case of early retirement, the participant's benefit is reduced by 3% for each year by which the participant's early retirement age precedes his normal retirement age.) 3. Disability Retirement The disability benefit is a monthly 10-year certain and life annuity equal to the larger of the monthly accrued benefit or either 42% of average monthly earnings (for service -based disability) or 25% of average monthly earnings (for non -service disability), but offset as necessary to preclude the total of the participant's worker's compensation, disability benefit, and other City -financed disability or salary continuation benefit (excluding social security benefits) from exceeding his average monthly earnings. The participant must have earned at least 10 years of credited service in order to be eligible for a non -service disability. The participant may convert his disability benefit into any of the optional forms of payment that are otherwise available under the plan. Plan Provisions Summary of Plan Provisions Disability Retirement (continued) Table V-A (continued) (A participant is disabled if he is found to have a mental or physical condition resulting from bodily injury, disease, or a mental disorder that renders him incapable of employment as a firefighter. However, a participant will not be eligible for a disability benefit if his disability is caused by excessive and habitual use of drugs, intoxicants, or narcotics; by injury or disease sustained while serving in the armed forces; by injury or disease sustained while willfully and illegally participating in fights, riots, or civil insurrections, or while committing a crime; by injury or disease sustained after termination of employment; or by an injury or disease sustained while working for another employer and arising from such employment.) 4. Deferred Vested Retirement A vested participant who terminates employment before becoming eligible for retirement receives a deferred vested retirement benefit payable at the participant's early or normal retirement age. If the benefit is payable prior to normal retirement age, then the benefit is reduced by 3% for each year by which the participant's early retirement age precedes his normal retirement age. A non -vested participant who terminates employment receives his accumulated contributions. 5. Vesting An employee becomes 100% vested upon the attainment of 10 years of credited service. Alternatively, an employee becomes 50% vested upon the attainment of five years of credited service and becomes an additional 10% vested for each additional whole year of credited service earned in excess of five years. 6. Pre -Retirement Death Benefit If a participant dies prior to retirement in the line of duty, the participant's surviving spouse (or, if there is no surviving spouse or if the surviving spouse later dies, the participant's children under the age of 18 or the participant's unmarried children under the age of 25 if a full-time student) will receive 100% of the participant's monthly salary as of his date of death for the rest of his or her life (or in equal shares until the children are no longer eligible). If such a participant does not have a surviving spouse or eligible child, then the participant's named beneficiary will receive a 10-year certain annuity equal to the greater of the monthly accrued benefit or 42% of the participant's average monthly earnings as of his date of death. Page v-1 Plan Provisions Summary of Plan Provisions Table V-A (continued) Pre -Retirement Death Benefit (continued) If a vested participant dies prior to retirement other than in the line of duty, the participant's beneficiary receives a 10-year certain annuity equal to the vested portion of the participant's monthly accrued benefit payable beginning at the participant's early or normal retirement age. At the beneficiary's election and upon approval by the Board of Trustees, an actuarially equivalent benefit is payable at any time following the participant's death. In any event, the pre -retirement death benefit guarantees at least the return of the participant's accumulated contributions. If a non -vested participant dies prior to retirement other than in the Iine of duty, the participant's beneficiary receives the participant's accumulated contributions. 7. Form of Payment Actuarially increased single life annuity (optional); 10-year certain and life annuity (normal form of payment); Actuarially reduced 50% joint and contingent annuity (optional); Actuarially reduced 66z/3% joint and contingent annuity (optional); Actuarially reduced 75% joint and contingent annuity (opfional); Actuarially reduced 100% joint and contingent annuity (optional); or Actuarially equivalent single lump sum distribution (automatic and only available if the single sum value of the participant's benefit is less than or equal to $5, 000 or if the monthly benefit is less than $100) (Note: All forms of payment guarantee at least the return of the participant's accumulated contributions. ✓=urthermore, a participant may change his joint annuitant up to two times after retirement subject to an actuarially equivalent adjustment.) PageV-3 Pldn Provisions Summary of Plan Provisions 8. Average Monthly Earnings Table V-A (continued) Average monthly earnings during the highest five years of compensation out of the 10 years immediately preceding the determination date or career average earnings, if greater. With respect to full-time firefighters, earnings include fixed monthly compensation, plus payments for unused leave accrued prior to February 12, 2014 and overtime (limited to 300 hours per year after February 11, 2014). With respect to volunteer firefighters, earnings include total cash remuneration. Earnings cannot exceed the maximum amount allowed under Internal Revenue Code (IRC) section 401(a)(17). 9. Credited Service The elapsed time from the participant's date of hire until his date of termination, retirement, or death calculated to the nearest number of completed months of service. In the case of a full-time firefighter, prior service as a volunteer firefighter is counted for vesting and eligibility purposes only. (Participants as of November 25, 2003 may purchase up to five additional years of credited service with another governmental entity, including prior military service, by paying into the plan the foil actuarial cost thereof during the three- to six-month period following November 25, 2003. All other participants may purchase such service credit at any time before their separation from service with the City. In either case, service will not be granted carder this plan for which the participant will receive a retirement benefit under another pension plan,) 14. Employee Contribution Employees must contribute 4.00% of basic salary prior to the first full payroll period that occurs after January 24, 2023 and 5.50% thereafter. Employee contributions are accumulated with interest at the rate of 5,00% per annum. 11. City Contribution The City is required to make periodic contributions at least on a quarterly basis as determined under Chapter 112, Florida Statutes. pdgc V-4 Plan Provisions Summary of Plan Provisions Table V-A (continued) 12. Deferred Retirement Option Plan [DROP] A DROP is available to those participants who have attained their normal retirement age, whereby the participant's monthly retirement benefit is accumulated on his behalf in a DROP account while he continues in active employment with the City. Individuals may participate in the DROP for a period of 12 to 60 months and neither earn additional benefits nor make the required employee contribution during the period of their DROP participation. DROP participants are considered to be retired for all other purposes under the plan and are not eligible for disability or pre -retirement death benefits. DROP accounts earn interest at the rate of 6.50% per annum compounded monthly. 13. Participant Requirement All full-time and volunteer firefighters of the City of Clermont automatically become participants in the plan on their date of hire. 14. Actuarial Equivalence Based on 7.00% interest per annum and the unisex mortality table promulgated by the internal Revenue Service (IRS) for purposes of Internal Revenue Code (IRC) section 417(e)(3) 15. Plan Effective Date The plan was originally effective on October 1, 1979. PageM PIdn Provisions Summary of Plan Amendments Table V-B Since the completion of the previous valuation, ordinance No. 2023-003 was adopted. This ordinance makes the following changes to the plan; (1) Effective the first full payroll period after January 24, 2023, the employee contribution rate was increased from 4,00% of pensionable earnings to 5,50%; (2) Effective with the monies received pursuant to Chapter 175 for 2022, the City is allowed to use 100% of the Chapter 175 distribution as an offset to the otherwise required contribution and participation in the share plan is frozen; (3) Effective for retirements on and after October 1, 2022, the benefit formula multiplier for those participants who have earned at least 22 years of service is equal to 75% plus 3.00% far each year of service in excess of 22 years; and (4) The minimum retirement benefit is equal to 2.75% of average earnings for each year of service to a maximum of 100% of average earnings, The following additional plan amendments were adopted during the past 10 years and were reflected in prior valuation reports. (1) Ordinance 2018-33 was adopted on September 25, 2018 to be effective that date. This ordinance clarifies several sections of the share plan. (2) Ordinance 2017-08 was adopted on April 11, 2017 to be effective that date. This ordinance clarified that purchased service will count towards vesting; added a fine -of -duty death benefit equal to 100% of the participant's monthly salary payable for life to the participant's surviving spouse or, if the participant has no surviving spouse, payable until age 18 (or age 25 if a full-time student) to the participant's surviving dependent children or, if the participant has neither a surviving spouse nor any dependent children, the line -of -duty death benefit is equal to the greater of the participant's accrued benefit or 42% of the member's average monthly earnings; clarifies that a participant may enter the DROP at any time after he has met the eligibility requirements for the DROP; and implements a share plan to receive Chapter 175 contributions in excess of the amount that the City is allowed to use as an offset to the minimum required contribution each year. (3) Ordinance 2014-10 was adopted on March 11, 2014 to be effective that date. This ordinance made several changes to the plan. First, unused sick or annual leave, as well as overtime in excess of 300 hours per year, is excluded from plan compensation after February 11, 2014. Second, for retirements after February 10, 2014, the normal retirement age was reduced to the earlier of age 55 with at 10 years of service or any age with at least 20 years of service. Finally, the employee contribution rate was increased from 1.00% to 4.00% effective February 10, 2014. Page V-6