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INDIAN RIVER COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS - CONTINUED Year Ended September 30, 1988 a. Firefighters Pension Plan In October, 1981, the South Indian River County Fire District took over opera- tions of the City of Vero Beach's Fire Department. Full-time firemen were given the option of joining the Florida Retirement System or remaining in the City's plan. Twenty full-time firemen and all of the volunteers elected to remain in the City's plan. Those who joined the Florida Retirement System received refunds of their contributions from the City's plan. The City has by Statute retained fiduciary responsibility for this PERS. Employer contributions to the PEAS are made by the County. Benefits vest after 10 years of service. Firefighters who retire at the earlier of age fifty-five and ten years of contributing service or age Eifty-two and twenty-five years of contributing service are entitled to an annual retirement benefit, payable monthly for life, in an amount equal to 2.50 percent of their base compensation over the highest five years of employment, multipled by credited service. The PERS also provides death and disability benefits. These benefits and other requirements are established by State Statute and City of Vero Beach ordinance. The firefighters are required to contribute 7 percent of their compensation. The PERS also receives contributions from the State for insurance premium refunds. The County is required to contribute the remaining amount necessary to pay the annual normal cost plus an amount sufficient to fund any unfunded accrued liability over 40 years. Funding Status and Progress - The amount shown as the "pension benefit obliga- tion" is a standardized disclosure measure of the present value of pension bene- fits, adjusted for the effects of projected salary increases and step -rate bene- fits, estimated to be payable in the future as a result of employee service to date. The measure is intended to help users assess the funding status of the PEAS on a going -concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among employers. The measure is the actuarial present value of credited projected benefits and is independent of the funding method used to determine contributions to the PERS. The pension benefit obligations were computed as a part of actuarial valuations performed as of January 1, 1988. Significant actuarial assumptions used in the valuation include (a) a rate of return on the investment of present and future assets compounded annually of 6 1/2Y, and (b) projected salary increases of 79 a year compounded annually attributable to inflation. 42.