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• 0 2. For those members who have not yet retired, the definition of compensation upon which their pension annuity is based be changed to a percent of total cash compensation including wages, salaries, bonuses, overtime pay and other compensation as reported to the United States Internal Revenue Service on each firefighter's annual W-2 form. Excluded from this calculation are the hump sum payments received at retirement for accumulated vacation and sick leave payments. The currently defined compensation is calculated on the annual base pay of each firefighter. The average compensation used to determine each employee's benefits is based on the highest 3(three) years compensation received as a firefighter at the time of his/her retirement. Lump sum payments for sick and annual leave are exempted from this determination. In support this change in benefits and we are pleased to submit the following. 1. An Actuarial Impact Statement, provided by the plan actuary demonstrating that the State revenue alone received by the plan from insurance premium taxes exceeds the cost of the requested benefits by $17,042.00 according to the actuarial valuation conducted in accordance with the data contained in the most recent actuarial plan valuation dated October 1, 1997. (Note each year this payment increases as the number of insurance policies increases as well as the valuation of the properties covered by fire insurance policies increases.) 2. As of October 1, 1997, the plan owned stocks, bonds, cash and other investments with a market value of $6,267,334.00. As of October 1, 1998 this market value increased to $6,682,790.00. As ofNovember 30, 1998 these investments had grown to $7,185,980.00. This extraordinary growth is in addition to the financial assumptions used by the actuary in October 1997 valuation study. The market value of the assets has grown by $918,646.00 in the period of 13 months. 3. In addition to the growth, the plan received a check from the Division of Retirement for $64,371.23. These monies were from the surplus in funds taken by the State of Florida, from the local plans, for the administrative cost of running the Division of Retirement over the previous years. Consequently, the coverage in owned assets and unforeseen cash payments multiply the coverage that is available to pay for the requested changes. Thus, it is extremely unlikely that any employer contribution would ever be required as a result of the requested changes. In accordance with the revised Chapter 175, Florida Statutes, that became effective October 1, 1998, the board voted unanimously to change the existing investment guidelines to conform to the new state rules. This includes memorializing its existing equities investment limit, at cost, to 50% of the value of the portfolio and further allowing the Investment Manager to invest up to 10% of the plan assets in foreign securities. (See Attached letter of June 18, 1998 from Patricia F. Shoemaker, State of Florida, Division of Retirement). A copy of the suggested new Statement of Investment Policy has been enclosed for your review and comment. The changes in the Investment Policy Statement are not radical, but simply update the prior Statement along with the addition of the ability to invest in selected high quality foreign equities when it is advantageous to do so. The members of the Firemen's Pension Plan sincerely request your review and concurrence with the above stated changes as outlined in the proposed ordinance of the City of Vero Beach. The plan benefit changes are well covered by the plan assets as well as with the increasing contributions from the State of Florida based upon the fire insurance premium tax. The changes requested in the investment policy of the plan represent a conservative realignment to the current practices used in pension management as well as conforming to the rules enacted this year by the Florida legislature. ` Your consideration of these matters is appreciated. FEBRUARY 2, 1999 Thomas R Nason -35- na. rnr 9