City of Hallandale Beach Retirement Plan

Actuarial ReviewJune 1, 2011

2

October 1, 2010 Valuation Review

3

Basic Funding Equation

4

The Annual Required Contribution (ARC) for the 2010 and 2011 fiscal year is $ 3,290,953 and $3,391,459.

• The 2010 ARC is equal to 42.19% of estimated participant compensation.

• The 2011 ARC is equal to 45.34% of estimated participant compensation.

• Expected employee contributions for the 2011 fiscal year are $224,223.

5

Analysis of Actuarial Experience• Total Normal Cost increased from $ 2,872,280 for the 2009 fiscal

year to $3,295,353 for the 2010 fiscal year. As a percentage of estimated payroll, the increase was from 39.19% to 42.25%.

• Participant salaries were lower than expected. The expected increase for active participants was 5.62%; the actual increase was 1.22%. This experience produced an actuarial gain.

• The actuarial value of plan assets increased approximately 0.5% due to investment earnings assuming mid-year cash flow. We anticipated an increase of 7.5%. The market value of assets decreased approximately 10.6%.

• Total assumption review is planned for the next valuation report. Two main assumptions will be the Mortality and valuation Interest Rate.

6

• Smooth unexpected investment return over 4 years

• Reduces volatility of ARC

Development of Actuarial Value of Assets

7

Development of Actuarial Value of Assets continued….

a) Market Value of Assets as of 10/01/2009 $25,537,551

b) Contributions/Transfers 2,394,463

c) Benefit payments (1,793,489)

d) Expenses (41,207)

e) Expected Interest on (a, b, c, and d) 1,928,672

f) Expected Value of Assets as of 10/01/2010 (a+b+c+d+e)

28,025,990

g) Market Value of Assets as of 10/01/2010 28,879,844

h) Current year excess appreciation/(shortfall) (g-f) 853,854

i) Adjustments to market value (sum of deferred amounts) (2,495,357)

j) Actuarial value of assets (g-i) 31,375,201

8

Deferred Asset Gains/(Losses)

Plan Year

Allocation Year 2007 2008 2009 2010

2007 $277,008

2008 $277,007 $(1,824,126)

2009 $277,007 $(1,824,126) $(655,811)

2010 $277,007 $(1,824,126) $(655,811) $213,464

2011 $(1,824,126) $(655,811) $213,464

2012 $(655,810) $213,464

2013 $213,464

Total $1,108,029 $(7,296,504) $(2,623,243) $853,854

Deferred $0 $(1,824,126) $(1,311,621) $640,390

Adjustment to market value (sum of deferred amounts) $(2,495,357)

9

Valuation History

Deposit calculations are based on the plan’s actuarial funding method and the City’s funding policy. The City’s funding policy has been to calculate the Annual Required Contribution equal to the City’s Normal Cost.

Plan Year Beginning 10/1/2010 10/1/2009 10/1/2008 10/1/2007

Total Normal Cost

(% of Estimated Payroll)

$3,379,069

(42.17%)

$3,295,353

(42.25%)

$2,872,280

(39.19%)

$2,036,207

(35.55%)

Employee Normal Cost $224,223 $234,001 $219,884 $171,834

Employer Normal Cost $3,154,846 $3,061,352 $2,652,396 $1,864,373

Annual Required Contribution

(% of Estimated Payroll)

$3,391,459

(45.3%)

$3,290,953

(42.2%)

$2,851,326

(38.9%)

$2,008,862

(35.1%)

10

Funded Status

• Present Value of Accrued Benefits: The comparison uses the asset values divided by the present value of all benefits accrued to date. The liability measure does not include a provision for future service accruals or salary increases.

• Present Value of Future Benefits: Ultimately, the plan will need to fund the Present Value of Future Benefits. This present value assumes future salary increases and service credits. It is the present value of the projected benefit payable at retirement for each current plan participant.

The funded status is a measurement of the plan’s assets compared to the benefit liabilities. The value of these benefit liabilities on either an “accrued” or “projected” basis.

Another measure that we have not shown includes the plan termination liabilities. The actual cost to terminate the plan would be based on annuity purchase rates at the time of termination.

11

Plan Year Beginning 10/1/2010 10/1/2009 10/1/2008 10/1/2007

Plan Assets

• Market Value

• Actuarial Value *

$29,592,676

$32,088,033

$25,537,551

$30,645,061

$25,824,801

$30,818,192

$30,275,710

$29,573,983

Present Value of Accrued Bens

• Funded % (Market Value)

• Funded % (Actuarial Value)

$39,943,354

74%

80%

$37,092,178

69%

83%

$34,664,464

74%

89%

$31,921,045

95%

93%

Present Value of Proj. Bens

• Funded % (Market Value)

• Funded % (Actuarial Value)

* Limited to 120% MVA

$54,511,310

54%

59%

$52,574,884

49%

58%

$50,081,373

52%

62%

$43,056,262

70%

69%

Funded Status

12

Actuarial HistoryPlan Year Beginning 10/1/2010 10/1/2009 10/1/2008 10/1/2007

Lives Covered

• Active

• Vested Terminated/DROP

• Retired

• Total

165

71

123

359

170

72

121

363

161

68

119

348

145

72

117

334

Salary Increases

• Actual

• Expected

1.2%

5.6%

2.4%

5.6%

18.0%

5.6%

2.4%

5.6%

Investment Return

• Market

• Actuarial

10.63%

0.54%

(2.72)%

(1.88)%

(16.20)%

2.52%

11.89%

8.64%