agenda - keys energy services€¦ · 15/01/2019 · agenda utility board of the city of key west,...

AGENDA UTILITY BOARD OF THE CITY OF KEY WEST, FL

OTHER POST EMPLOYMENT BENEFITS (OPEB) / PENSION WORKSHOP 5:00 P.M. –TUESDAY, JANUARY 15, 2019

1. Pledge of Allegiance

2. Invocation

3. Roll Call

4. Set Agenda

5. Pension Overview as of 12/31/18 a. Participants b. Financial c. Actuarial

6. Other Post-Employment Benefits (OPEB) Overview a. Description b. Financial

7. Pension Governance a. Defining Documents b. Review of Trustee Makeup

8. Pension Plan Administration a. Delineation of Duties b. Review of Supporting Roles

Retirement System for the General Employees For the Nine Months Ended September 30, 2018 of the Utility Board of the City of Key West Preliminary Unaudited Financial Statements Financial Executive Summary

The Change in Plan Net Position Restricted for Pension Benefits for the nine months ended September 30, 2018 was an increase of $4,967,948 compared to an increase of $7,528,695 for the nine months ended September 30, 2017. Total Net Position Restricted for Pension Benefits was $96,597,425 at September 30, 2018 compared to $88,445,267 at September 30, 2017. The fair market value of investments was $95,682,566 at September 30, 2018 compared to $87,203,657 at September 30, 2017. Net investment income was $6,659,102 for the nine months ended September 30, 2018 compared to net investment income of $8,969,906 for the same period of the prior year.

Page 1 of 5

Retirement System for General Employees of the Utility Board of the City of Key West

2018 2017

AssetsCash 414,066$ 793,714$

Receivables:Interest 75,600 92,840 Pending Trades 155,595 170,995 Misc Receivable - - Utility Board Contributions - - Total Receivables 231,195 263,835

Prepaid Expenses & Benefits 507,724 454,828

Investments:Cash and Cash Equivalents 1,185,382 885,080 Mutual Fund - Domestic Stock Index 16,303,686 9,403,119 Mutual Fund - International Stock Index 5,399,220 5,313,479 Mutual Fund - Global Bond 3,864,654 3,941,377 Mutual Fund - Asset Allocation Fund 4,652,529 4,482,884 Mutual Fund - International Stock Fund 6,068,163 5,455,642 Common Stock 40,043,270 39,049,153 Bonds and Notes 10,016,920 10,575,949 Real Estate Investment 8,378,745 7,986,917

Total Investments 95,912,570 87,093,600

Total Assets 97,065,555 88,605,977

Liabilities: Accrued Expenses & Benefits 6,932 6,932 Pending Trades Payable 461,198 153,778

Total Liabilities 468,130 160,710

Net Position Restricted for Pension Benefits 96,597,425$ 88,445,267$

Statements of Fiduciary Net Position

As of September 30,

(Preliminary - Unaudited)

Page 2 of 5

Retirement System for General Employees of the Utility Board of the City of Key West

2018 2017Increase

(Decrease)

Additions:Employer Contributions 3,016,204$ 2,845,029$ 171,175$ Miscellaneous Revenue 4,902 2,178 2,724

3,021,106 2,847,207 173,899 Investment Income:

Net Appreciation in Fair Value of Investments 5,224,654 7,763,710 (2,539,056) Interest 277,595 266,891 10,704 Dividends 1,064,836 893,074 171,762 Real Estate 278,358 279,117 (759)

6,845,443 9,202,792 (2,357,349) Less Investment Expenses (186,341) (232,886) 46,545

Net Investment Income/(Loss) 6,659,102 8,969,906 (2,310,804)

Total Additions 9,680,208 11,817,113 (2,136,906)

Deductions:Benefits 4,691,450 4,258,313 433,137 Administrative Expenses 20,809 30,105 (9,296)

Total Deductions 4,712,259 4,288,418 423,841

Net Increase/(Decrease) 4,967,948 7,528,695 (2,560,747)

Net Position Restricted for Pension Benefits:Beginning of Year 91,629,477 80,916,572 10,712,905

End of Period 96,597,425$ 88,445,267$ 8,152,158$

(Preliminary - Unaudited)Statement of Changes in Fiduciary Net Position

For the Nine Months Ended September 30,

Page 3 of 5

Galliard Cap Mgmt Sawgrass

Advisory Research

Vanguard Domestic Stock MF

Vanguard International

Stock MFGlobal Bond

MF Dana Intercontinental *American Core

Realty *

BlackRock Multi Asset

MF

Westwood Opportunity

MF

WCM Focused International Growth Fund Fred Alger Cambiar

Vanguard Equity

Income MF BrandywineChecking/ Bogdahn Total

Cash and Cash Equivalents 164,473$ 350,496$ -$ 211$ 2$ 1$ -$ -$ -$ 9,133$ -$ -$ 229,338$ 379,359$ -$ 52,369$ 1,185,382$ Mutual Fund - Domestic Stock Index Fund - - - 10,615,168 - - - - - - - - - - 5,688,518 - 16,303,686 Mutual Fund - Intl Stock Index Fund - - - - 5,399,220 - - - - - - - - - - - 5,399,220 Mutual Fund - Global Bond Fund - - - - - 3,864,654 - - - - - - - - - - 3,864,654 Mutual Fund - Asset Allocation Fund - - - - - - - - - 2,296,856 2,355,673 - - - - - 4,652,529 Mutual Fund - Intl Stock Fund - - - - - - - - - - - 6,068,163 - - - - 6,068,163 Common Stock - 11,235,009 - - - - - - - - - - 12,173,851 10,825,384 - 5,809,026 40,043,270 International Equities - - - - - - - - - - - - - - - - - Bonds and Notes 10,016,920 - - - - - - - - - - - - - - - 10,016,920 Real Estate - - - - - - - 4,855,955 3,522,790 - - - - - - - 8,378,745

Total Investments 10,181,393$ 11,585,505$ -$ 10,615,379$ 5,399,222$ 3,864,655$ -$ 4,855,955$ 3,522,790$ 2,305,989$ 2,355,673$ 6,068,163$ 12,403,189$ 11,204,743$ 5,688,518$ 5,861,395$ 95,912,570$

Interest/Dividends Receivable 55,175 5,218 - - - - - - - - - - 1,890 10,289 - 3,028 75,600 Pending Trades Receivable 9,734 - - - - - - - 42,645 - - - 73,289 29,927 - - 155,595 Pending Trades Payable (49,254) - - - - - - - - (9,133) - - (30,250) (372,561) - - (461,198) Total Fund Balance 10,197,048$ 11,590,723$ -$ 10,615,379$ 5,399,222$ 3,864,655$ -$ 4,855,955$ 3,565,435$ 2,296,856$ 2,355,673$ 6,068,163$ 12,448,118$ 10,872,398$ 5,688,518$ 5,864,423$ 95,682,566$

Percentage to Total Investments 10.7% 12.1% 0.0% 11.1% 5.6% 4.0% 0.0% 5.1% 3.7% 2.4% 2.5% 6.3% 13.0% 11.4% 5.9% 6.1% 100.0%

Investment Income/(Loss) (83,857)$ 1,517,306$ -$ 1,016,314$ (173,610)$ (6,963)$ (907,231)$ 361,350$ 197,135$ 21,349$ 35,649$ 331,654$ 1,983,402$ 1,039,580$ 307,523$ 1,040,475$ (20,974)$ 6,659,102$

Percentage to Total Income/(Loss) -1.3% 22.8% 0.0% 15.3% -2.6% -0.1% -13.6% 5.4% 3.0% 0.3% 0.5% 5.0% 29.8% 15.6% 4.6% 15.6% -0.3% 100.0%


Advisory Research



Stock MF Global Bond MF Dana IntercontinentalAmerican Core

Realty


MF


MF


Vanguard Equity


Cash and Cash Equivalents 82,024$ 173,150$ -$ -$ 3$ 2$ -$ 1$ 109,739$ -$ -$ 8,699$ -$ -$ 36,273$ 475,189$ 885,080$ Mutual Fund - Domestic Stock Index Fund - - - - 9,403,119 - - - - - - - - - - - 9,403,119 Mutual Fund - Intl Stock Index Fund - - - - - 5,313,479 - - - - - - - - - - 5,313,479 Mutual Fund - Global Bond Fund - - - - - - - 3,941,377 - - - - - - - - 3,941,377 Mutual Fund - Asset Allocation Fund - - - - - - - - - - - 2,238,092 2,244,792 - - - 4,482,884 Mutual Fund - Intl Stock Fund - - - - - - - - - - - - - 5,455,642 - - 5,455,642 Common Stock - 9,735,680 - - - - - - 10,324,037 - - - - - 10,035,829 8,953,607 39,049,153 International Equities - - - - - - - - - - - - - - - - - Bonds and Notes 10,575,949 - - - - - - - - - - - - - - - 10,575,949 Real Estate - - - - - - - - - 4,541,970 3,444,947 - - - - - 7,986,917

Total Investments 10,657,973$ 9,908,830$ -$ -$ 9,403,122$ 5,313,481$ -$ 3,941,378$ 10,433,776$ 4,541,970$ 3,444,947$ 2,246,791$ 2,244,792$ 5,455,642$ 10,072,102$ 9,428,796$ 87,093,600$

Interest/Dividends Receivable 52,561 5,990 - - - - - - 17,997 - - - - - 2,848 13,444 92,840 Pending Trades Receivable 24,962 - - - - - - - - - 41,862 - - - 104,171 - 170,995 Pending Trades Payable (80,565) - - - - - - - - - - (8,699) - - (64,514) - (153,778) Total Fund Balance 10,654,931$ 9,914,820$ -$ -$ 9,403,122$ 5,313,481$ -$ 3,941,378$ 10,451,773$ 4,541,970$ 3,486,809$ 2,238,092$ 2,244,792$ 5,455,642$ 10,114,607$ 9,442,240$ 87,203,657$

Percentage to Total Investments 12.2% 11.4% 0.0% 0.0% 10.8% 6.1% 0.0% 4.5% 12.0% 5.2% 4.0% 2.6% 2.6% 6.3% 11.6% 10.8% 100.0%

Investment Income/(Loss) 278,199$ 1,295,840$ 89,494$ -$ 1,151,033$ 944,476$ -$ 175,023$ 813,120$ 230,503$ 180,046$ 150,908$ 154,012$ 1,084,599$ 1,959,628$ 502,132$ (39,107)$ 8,969,906$

Percentage to Total Income/(Loss) 3.1% 14.4% 1.0% 0.0% 12.8% 10.5% 0.0% 2.0% 9.1% 2.6% 2.0% 1.7% 1.7% 12.1% 21.8% 5.6% -0.4% 100.0%

2017

2018

Retirement System for General Employees of the Utility Board of the City of Key West Schedule of Investments at Fair Value

September 30, 2018 and 2017

Page 4 of 5

Utility Board of the City of Key WestSchedule of Investment Income

For the Nine Months Ended September 30, 2018 and 2017

Galliard

Cap Mgmt SawgrassAdvisory Research



Stock MFGlobal Bond

MF Dana Intercontinental American Core

Realty


MF


MF


Vanguard Equity

Income MF Brandywine

Checking/ AndCo/BONY/

Salem Total

Net Appreciation (Depreciation) of Investments (266,323)$ 842,661$ -$ 759,915$ (272,628)$ (139,796)$ (2,856,462)$ 219,418$ 94,370$ (66,161)$ 692$ 331,654$ 945,004$ 239,334$ 229,617$ 879,694$ -$ 940,989$ Gain/(Loss) on Sale of Investments (55,359) 526,476 - 121,752 - - 1,898,436 (14,820) 31,031 - - - 973,336 690,308 - 112,505 - 4,283,665 Interest 250,541 4,424 - 207 - - 349 - - - - - 2,862 4,746 - 336 14,129 277,595 Dividends - 177,801 - 134,440 99,018 132,833 67,827 - - 87,510 34,957 - 80,047 117,527 77,906 54,970 - 1,064,836 Real Estate Income - - - - - - - 177,320 101,038 - - - - - - - - 278,358 Total Investment Activity (71,141) 1,551,362 - 1,016,314 (173,610) (6,963) (889,850) 381,918 226,439 21,349 35,649 331,654 2,001,249 1,051,915 307,523 1,047,505 14,129 6,845,443

Investment Fees (12,716) (34,056) - - - - (17,382) (20,568) (29,304) - - - (17,847) (12,335) - (7,030) (35,103) (186,341)

Total Net Investment Income (83,857)$ 1,517,306$ -$ 1,016,314$ (173,610)$ (6,963)$ (907,231)$ 361,350$ 197,135$ 21,349$ 35,649$ 331,654$ 1,983,402$ 1,039,580$ 307,523$ 1,040,475$ (20,974)$ 6,659,102$


Advisory Research



Stock MF Global Bond MF Dana IntercontinentalAmerican Core

Realty


MF


MF


Vanguard Equity


Net Appreciation (Depreciation) of Investments 55,140$ 780,059$ (1,117,677)$ -$ 1,030,430$ 847,230$ -$ 81,796$ 15,704$ 49,421$ 81,100$ 75,024$ 125,068$ 1,084,599$ 1,620,377$ 462,190$ -$ 5,190,461$ Gain/(Loss) on Sale of Investments (20,047) 434,227 1,187,416 - - - - - 647,876 24,343 25,864 - - - 290,198 (16,628) - 2,573,249 Interest 256,393 1,045 296 - - - - - 395 - - - - - 517 1,173 7,072 266,891 Dividends - 112,166 40,024 - 120,603 97,246 - 93,227 180,165 - - 75,884 28,944 - 79,837 64,978 - 893,074 Real Estate Income - - - - - - - - - 177,308 101,809 - - - - - - 279,117 Total Investment Activity 291,486 1,327,497 110,059 - 1,151,033 944,476 - 175,023 844,140 251,072 208,773 150,908 154,012 1,084,599 1,990,929 511,713 7,072 9,202,792

Investment Fees (13,287) (31,657) (20,565) - - - - - (31,020) (20,569) (28,727) - - - (31,301) (9,581) (46,179) (232,886)

Total Net Investment Income 278,199$ 1,295,840$ 89,494$ -$ 1,151,033$ 944,476$ -$ 175,023$ 813,120$ 230,503$ 180,046$ 150,908$ 154,012$ 1,084,599$ 1,959,628$ 502,132$ (39,107)$ 8,969,906$

2018

2017

Retirement System for General Employees of the

Page 5 of 5

October 17, 2018 Board of Trustees c/o Mr. Jack Wetzler Assistant General Manager and Chief Financial Officer Utility Board of the City of Key West 1001 James Street Key West, Florida 33041-6100 Re: Experience Study Dear Trustees: Gabriel, Roeder, Smith & Company is pleased to provide the results of an Experience Study for the Retirement System for General Employees of the Utility Board of the City of Key West (System). The purpose of our Report is to assist in assumption selection for future actuarial valuations by comparing actual to expected experience over a recent period of time and review economic assumptions based on current economic environment and forecasts. This Experience Study covers the five-year period - January 1, 2013 through December 31, 2017. Based upon the results, certain changes in actuarial assumptions for actuarial valuation purposes are recommended. The Table of Contents, which immediately follows, sets out the material contained in this Report. This Experience Study is based upon assumptions regarding future events, which may or may not materialize and based upon System provisions as outlined in our most recent January 1, 2018 Actuarial Valuation Report. The member census data and financial data incorporated includes information as of the January 1, 2018 Actuarial Valuation Report. Should you have reason to believe the assumptions used are unreasonable, System provisions are incorrectly described, important and relevant System provisions are not described or conditions have changed since the date of the calculations, you should contact the undersigned prior to relying on information in this Experience Study. As you may be aware, in the event more than one assumption change is being considered, it is important to note separate valuations cannot generally be added together to produce the total. The total can be considerably greater or less than the sum of the parts due to interaction of various System provisions, actuarial assumptions and actuarial methods with each other.

Board of Trustees October 17, 2018 Page Two

This Experience Study is intended to describe the estimated future financial effects of the proposed assumption changes on the System. Future actuarial measurements may differ significantly from the current measurements presented in our Report due to such factors as the following: System experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period); and changes in System provisions or applicable law. Due to the limited scope of the actuary’s assignment, the actuary did not perform an analysis of the potential range of such future measurements. Our Report should not be relied on for any purpose other than the purpose described in the primary communication. Determinations of the financial results associated with the benefits described in this Report in a manner other than the intended purpose may produce significantly different results. This Experience Study has been prepared by actuaries who have substantial experience valuing public employee retirement systems. To the best of our knowledge the information contained in this Report is accurate and fairly presents the actuarial position of the Fund as of the date of this Experience Study. All calculations have been made in conformity with generally accepted actuarial principles and practices, with the Actuarial Standards of Practice issued by the Actuarial Standards Board and with applicable statutes. Our Report may be provided to parties other than the Board only in its entirety and only with the permission of an approved representative of the Board. The signing actuaries are independent of both the System and Utility Board. The undersigned are Members of the American Academy of Actuaries and meet the qualification standards of the American Academy of Actuaries to render the actuarial opinions contained in this Report. We are available to respond to any questions with regards to matters covered in this Report. Respectfully submitted, GABRIEL, ROEDER, SMITH & COMPANY

Lawrence F. Wilson, A.S.A., E.A., M.A.A.A., F.C.A Senior Consultant and Actuary

Shelly L. Jones, A.S.A., M.A.A.A., F.C.A Senior Analyst and Actuary

Retirement System for General Employees of

the Utility Board of the City of Key West 3

EXPERIENCE STUDY

SUMMARY OF FINDINGS

The five-year period (January 1, 2013 to December 31, 2017) covered by this Experience Study provided sufficient data to form a basis for recommending updates in the following demographic and financial assumptions used in the Actuarial Valuation of the Retirement System.

Recommended changes in actuarial assumptions resulting from this Experience Study including the cost as a percentage of projected covered annual payroll ($9,210,384) are summarized below. Please note: the amortization period for the change in actuarial accrued liability resulting from modeled assumption changes is 30 years.)

Update the future salary increase assumption to reflect lower than expected observed salary increase experience and to better reflect future anticipated salary increase experience.

Cost

- 1.3%

Update assumed rates of future withdrawal to reflect generally lower than expected observed withdrawal experience and to better reflect future anticipated withdrawal experience.

Cost

0.2%

Update assumed rates of future retirement to reflect lower than expected observed retirement experience and to better reflect future anticipated retirement experience.

Cost

- 0.7%

Update investment return assumption to 7.25% (includes price inflation of 2.60%) to better reflect anticipated future investment experience.

Cost

+ 3.6%

Combined effect of updated salary increase assumptions, rates of future withdrawal, rates of future retirement and investment return assumption of 7.25% (includes price inflation of 2.60%):

Cost

+ 1.8%



EXPERIENCE STUDY RESULTS The methodology, basic results and conclusions of the five-year experience study of the actuarial assumptions are described below. Methodology The expected salaries at the end of each year were obtained by use of the salary scale assumption (4.50% - 10.00%) used in the January 1, 2018 Actuarial Valuation. The resulting expected salaries were then compared with the actual salaries reported. The number of members exposed to risk during each period was tabulated (exposure) and the expected incidence of withdrawal (vested and non-vested) and retirement were obtained by use of the withdrawal and retirement rates employed in the most recent Actuarial Valuation. The actual number of separations and retirees were tabulated and compared with those expected.



EXPERIENCE STUDY RESULTS

Rates of Salary Increase

Observed rates of pay increases were lower than those expected based upon the current pay increase assumptions. Compensation during the first two years and any years with partial pay were not included in the analysis. We propose the rates be re-grouped as few exposures under age 25 did not provide statistically significant results under age 25. Additionally, we propose to split the age 45 - 54 group into two age groups from age 45 - 49 and from age 50 - 54 as those groups were statistically significant and showed differing experience within each age group. The proposed salary increase assumptions as follows:

Current Salary Increase Schedule

Assumed Promotion Total Assumed Promotion Total

Age Wage & Current Age Wage & Proposed

Inflation Seniority Rates Inflation Seniority Rates

Under 25 3.50% 6.50% 10.00% Under 35 3.25% 3.75% 7.00%

25 - 34 3.50% 4.00% 7.50% 35 - 44 3.25% 1.75% 5.00%

35 - 44 3.50% 2.50% 6.00% 45 - 49 3.25% 1.75% 5.00%

45 - 54 3.50% 1.50% 5.00% 50 - 54 3.25% 0.75% 4.00%

55 & Over 3.50% 1.00% 4.50% 55 & Over 3.25% 0.75% 4.00%

SALARY INCREASES

Proposed Salary Increase Schedule




Rates of Withdrawal The actual number of withdrawals was slightly lower than the total number of expected withdrawals under the assumed rates of withdrawal used in the latest Actuarial Valuation. We recommend updating the rates as follows:

Service Unisex Rates Service Unisex Rates

0 10.0% 0 9.0%

1 9.0% 1 8.1%

2 8.0% 2 7.2%

3 6.0% 3 5.4%

4 4.0% 4 3.6%

5+ 3.5% 5+ 3.3%

WITHDRAWAL RATES

Expected Current Expected Proposed




Rates of Retirement

The actual number of retirements observed was lower than the total number of expected retirees under the assumed rates of retirement used in the latest Actuarial Valuation. Retirements at younger ages were slightly higher than expected while retirements at later ages were slightly lower than expected. We propose retirement rates as follows:

Age Rates

Under 55 5.0%

55 - 58 15.0%

59 - 60 30.0%

61 - 62 10.0%

63 - 69 15.0%

70 100.0%

* Under the current assumption, employees who

attain age 50 with 30 years of service after each

valuation date are assumed to retire no later

than age 50 with 30 years of service. Employees

who have reached age 70 or age 50 with 30 years

of service as of each valuation date are assumed

to remain employed for an additional year.

CURRENT RETIREMENT RATES*

Age Rates

Under 55 6.5%

55 - 58 15.0%

59 - 60 30.0%

61 - 62 5.0%

63 - 69 5.0%

70 100.0%

Age Rates

Under 50 50.0%

50 + 100.0%

PROPOSED RETIREMENT RATES

Less than 30 Years of Service

30 Years of Service



EXPERIENCE INVESTIGATION RESULTS

Rates of Mortality We recommend no changes to the assumed mortality rates for healthy or disabled lives, which are currently based upon the assumptions used by the Florida Retirement System (FRS) as required under F.S., Chapter 2015-157.




Investment Return and Inflation

Economic assumptions include long-term rates of investment return (net after investment expenses), inflation and wage inflation (the across-the-board portion of salary increases). Unlike demographic activities, economic activities do not lend themselves to analysis solely on the basis of internal historical patterns because both salary increases and investment return are more affected by external forces; namely inflation (both wage and price), general productivity changes and the local economic environment which defy accurate long-term prediction. Estimates of economic activities are generally selected on the basis of the expectations in an inflation-free environment and then both are increased by some provision for long-term inflation.

If wage inflation and/or productivity increases are higher than expected, it will probably result in both actual rates of salary increases and investment return which exceed the assumed rates. Salaries increasing faster than expected produce unexpected liabilities. Investment return exceeding the assumed rates (whether due to manager performance, change in the mix of assets, or general market conditions) results in unanticipated assets. To the extent that inflation, productivity, and other factors have about the same effect on both sides of the balance sheet, these additional assets and liabilities can offset one another over the long-term. Wage Inflation. The average rate of increase in National Average Earnings over the 60 years ending December 31, 2017 is higher than the current 3.50% assumption (see schedule on page 11). The difference between the long-term averages and more recent experience is related to the excess rates of price and wage inflation during the 1970s, which most observers do not expect to see repeated. When the decade of high inflation is factored out, long term national averages are just above 4.0%. More recently, during the last five years annual wage inflation has averaged 3.0%. We recommend reducing the current long term wage inflation assumption to 3.25%. Inflation. The average rate of increase in Consumer Price Index over the 60 years ending December 31, 2017 is higher than the current 2.75% assumption. The difference between the long-term averages and more recent experience is related to the excess rates of price and wage inflation during the 1970s, which most observers do not expect to see continue. We recommend an inflation assumption of 2.60%. Investment Return and Spread. The current asset portfolio for the retirement program is a diversified mix of equity and fixed income investments. Real market returns (the spread between recognized net investment return and inflation) for balanced portfolios have averaged 5.2% over the last 60 years (see schedule on page 11). Only hindsight will tell whether a particular combination of economic assumptions is optimal. If future economic patterns are as favorable as in the 1980’s and 1990’s, this spread would prove to be conservative. If, on the other hand, the investment markets produce lower real returns, contribution rate increases will become likely at some future date.




Investment Return and Inflation

INVESTMENT RETURN EXPERIENCE

This Table sets forth the results of an analysis made of investment yields on the assets held under the Retirement System for General Employees of the Utility Board of the City of Key West. The basic sources for this analysis were the Statements provided by the System.

Smoothed

Calendar Market Actuarial Assumed Rate

Year Value Yield Value Yield of Return

2017 15.8% 8.6% 7.5%

2016 6.6% 7.9% 7.5%

2015 (0.7%) 7.7% 7.5%

2014 5.1% 10.5% 7.5%

2013 21.0% 12.8% 8.0%

2012 13.5% 3.6% 8.0%

2011 1.2% 2.6% 8.0%

2010 11.5% 3.8% 8.0%

2009 18.4% 10.8% 8.0%

2008 (21.9%) (7.0%) 8.0%

Last 3 Years 7.0% 8.1% 7.5%

Last 5 Years 9.3% 9.5% 7.6%

Last 10 Years 6.3% 6.0% 7.8%

Investment Return



APPENDIX TABLE I

COMPARISON OF ACTUAL AND EXPECTED

ANNUAL MEMBER SALARIES

Age Prior Year Expected % Incr Actual % Incr Proposed Expected

Under 35 $6,804,462 $7,318,696 7.56% $7,277,871 6.96% 7.00% $7,280,774

35 - 44 8,032,147 8,514,076 6.00% 8,304,416 3.39% 5.00% 8,433,754

45 - 49 9,542,344 10,019,461 5.00% 9,922,781 3.99% 5.00% 10,019,461

50 - 54 6,588,914 6,918,360 5.00% 6,790,170 3.05% 4.00% 6,852,471

55 & Over 7,655,948 8,000,466 4.50% 7,954,154 3.90% 4.00% 7,962,186

Total 38,623,815 40,771,059 5.56% 40,249,392 4.21% 4.98% 40,548,646

ANNUAL SALARY INCREASES

By Age



APPENDIX TABLE II

COMPARISON OF ACTUAL AND EXPECTED

TERMINATIONS

Years of

Service Exposure

Current

Assumed

Rates

Expected

Withdrawals

Actual

Withdrawals

Actual

Rates

Proposed

Withdrawal

Rates

Expected

Withdrawals (with

Proposed Rates)

0 17 10.0% 1.7 0 0.0% 9.0% 1.5

1 29 9.0% 2.6 3 10.3% 8.1% 2.3

2 17 8.0% 1.4 0 0.0% 7.2% 1.2

3 17 6.0% 1.0 1 5.9% 5.4% 0.9

4 19 4.0% 0.8 2 10.5% 3.6% 0.7

5+ 286 3.5% 10.0 9 3.1% 3.3% 9.4

Total 385 4.5% 17.5 15 3.9% 4.2% 16.1

WITHDRAWAL EXPERIENCE



APPENDIX TABLE III

COMPARISON OF ACTUAL AND EXPECTED RETIREMENTS

Current Proposed Expected

Assumed Actual Actual Retirement Retirements

Age Exposure Rates Ret.'s Rates Rates (New Rates)

Under 55 121 5.0% 6.1 10 8.3% 6.5% 7.9

55 - 58 57 15.0% 8.6 8 14.0% 15.0% 8.6

59 - 60 12 30.0% 3.6 4 33.3% 30.0% 3.6

61 - 62 8 10.0% 0.8 0 0.0% 5.0% 0.4

63 - 69 34 15.0% 5.1 2 5.9% 5.0% 1.7

70 + 5 100.0% 5.0 2 40.0% 100.0% 5.0

Subtotal 237 12.3% 29.1 26 11.0% 11.4% 27.1

50 and Under 2 5.0% 0.1 2 100.0% 50.0% 1.0

50 + 18 100.0% 18.0 9 50.0% 100.0% 18.0

Subtotal 20 100.0% 18.1 11 55.0% 95.0% 19.0

Total 257 18.4% 47.2 37 14.4% 17.9% 46.1

Expected

Ret.'s

RETIREMENT EXPERIENCE

Less than 30 Years of Service

30 Years of Service

NOTE 15 – POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS (OPEB) General Information About Post Employment Health Care benefits: KEYS implemented GASB No. 75, “Accounting and Financial Reporting for Post-Employment Benefits Other Than Pensions (OPEB)” for certain post-employment health care benefits effective fiscal year ended September 30, 2018. The most recent actuarial study is as of October 1, 2017. Plan Description - KEYS does not have a separate Trust Fund or equivalent arrangement to administer OPEB benefits. Benefits Provided – In addition to providing pension benefits, KEYS provides life insurance and health care benefits including prescription drug coverage, to retired employees. These benefits are provided pursuant to KEYS’ personnel policies as adopted and amended by the Utility Board. KEYS is not required to provide contributions to this benefit by any statutory, contractual or other authority. KEYS employees hired before June 9, 1999 are eligible for these benefits, at a cost determined by the Utility Board, if they qualify for retirement status while working for KEYS. NOTE 15 – OPEB (continued) Currently, the Utility Board does not require these retirees to contribute to the monthly premium for retiree coverage. The entire monthly premium for retiree coverage is paid by KEYS. KEYS employees hired after June 9, 1999, who attain retirement eligibility, have the opportunity to purchase health insurance through KEYS insurance provider and must pay at the same rate KEYS pays for its active members. These and similar benefits for active employees are administered through a third party administrator. The costs of the monthly contributions to fund the plan and OPEB costs are included in these financial statements. Participants Covered – At September 30, 2018 the following participants were covered by the benefit terms: Retirees currently receiving benefits 141Active employees hired before June 9, 1999 24Active employees & Board Members hired after June 9, 1999 104

Total Participants Covered 269 Funding Policy – KEYS follows a pay as you go funding policy contributing an amount to provide for its portion of current year benefit costs, as well as amounts to establish a reserve for costs incurred but not yet reported. The benefits provided, funding levels, and participant contribution amounts are determined through recommendations by KEYS staff with assistance from outside consultants, and by action of the Utility Board. There are no assets accumulated in a trust. During FY2018, the premium for retirees’ health care benefits was $921.26 per month. If a retiree is eligible for Medicare, they are required to enroll in the Medicare program as their primary coverage as soon as they are eligible, thereby reducing KEYS costs. Retirees may choose to purchase and pay for coverage for spouses or domestic partners.

Actuarial Assumptions – The total OPEB liability was determined by an actuarial valuation as of October 1, 2017 using the following assumptions: Measurement Date October 1, 2017 Inflation 2.75% Discount Rate 3.5% Projected salary increases 4.5% - 10.0% Healthcare cost trends rates Based on Getzen Model starting at 8% gradually decreasing

to an ultimate rate of 4.4% in 2040 Retirees’ share of benefit Varies from 0% to 100% of blended health

insurance premium related costs rates Healthy members based on various RP-2000 mortality tables with varying Collar adjustments and generational mortality improvements with Scale BB. Disabled Employees based on RP-2000 Disabled mortality tables setback 4 years for males and set forward 2 years for females and no projected improvements. Experience Study - The actuarial assumptions used in the October 1, 2017 valuation are based on the results of an Experience Study for the five-year period ended December 31, 2012 under the Retirement System for General Employees of the Utility Board of the City of Key West. Discount Rate – For plans that do not have a GASB compliant trust, the discount rate equals the tax-exempt municipal bond rate based on an index of 20-year general obligation bonds with an Average AA credit rating as of the measurement date. A discount rate of 3.5% was used to measure the October 1, 2017 Total OPEB Liability. A discount rate of 3.10% was used for the beginning of the measurement period. These rates are based on the Fidelity 20-Year Municipal GO AA Index – daily rate closest or equal to but not later than the respective measurement dates.

Sensitivity of the Total OPEB Liability to the Discount Rate Assumption –

Measurement date: 10/1/2017Current

1% Decrease Discount Rate 1% IncreaseDiscount Rate 2.50% 3.50% 4.50%Total OPEB Liability 66,938,967$ 57,269,047$ 49,630,914$

Sensitivity of the Total OPEB Liability to the Trend Rate Assumption –

Measurement date: 10/1/2017

Current1% Decrease Discount Rate 1% Increase

Trend Rates 7.0% to 3.4% 8.0% to 4.4% 9.0% to 5.4%Total OPEB Liability 49,971,864$ 57,269,047$ 66,355,385$ Schedule of Changes in Net OPEB Liability and Related Ratios:

Valuation Date 10/1/2017Measurement Date 10/1/2017Reporting Date 9/30/2018

A. Total OPEB Liability (TOL)Service Cost 1,051,009$ Interest 2,651,415 Benefit Changes 0 Difference Between Actual and Expected Experience (8,417,519) Assumption Changes (21,346,490) Benefit Payments (2,278,362) Net Change in Total OPEB Liability (28,339,947) Total OPEB Liability (TOL) - (beginning of year) 85,608,994 Total OPEB Liability (TOL) - (end of year) 57,269,047$

B. Covered Employee Payroll 9,311,241$

C. TOL as Percentage of Covered Employee Payroll: (A)/(B) 615.05% Update procedures were used to roll forward TOL from prior valuation of October 1, 2015 to October 1, 2016 to obtain the beginning of year TOL. Changes in benefit terms: None Changes of assumptions:

Measurement Date October 1, 2017 October 1, 2016Discount Rate 3.50% 3.10%Excise Tax Load 9.80% 12.70%Health Care Trend 8.0% to 4.4% in 2040+ 9.0% to 4.5% in 2024+

OPEB Expense for Fiscal Year Ending September 30, 2018 (3,557,090)$

Summary of Outstanding Deferred Inflows and Outflows of Resources as of September 30, 2018

Deferred Outflows Deferred Inflows of Resources of Resources

-$ $ 6,364,466 Changes of assumptions or other inputs - 16,140,029 Total -$ 22,504,495$

Projected Deferred Outflow for Amounts paid by KEYS for OPEB Benefits and AdministrativeExpenses after the Measurement Date to be Recognized in OPEB expense for Fiscal Year EndingSeptember 30, 2019

Projected OPEB Benefits 1,942,033$ Projected Adminstrative Expenses 5,764 Total Deferred Outflow 1,947,797$

Year ending Amount9/30/2019 (7,259,514)$ 9/30/2020 (7,259,514) 9/30/2021 (7,259,514) 9/30/2022 (725,953) 9/30/2023 - Thereafter -

Differences between actual and expected experience

Summary of Deferred Outflows and (Inflows) of Resources that will be Recognized in the Pension

Enabling Act

CHAPTER 69-1191

House Bill No. 2946 Section 14. PENSION PLAN: The Utility Board created by this act is hereby authorized and empowered to establish, adopt, provide, operate, maintain and assist in the support of a pension system or plan for the relief or social security of disabled or retired officers and employees of said Utility Board, and to delegate authority for the handling and perpetuation of such a plan or system to designated officials or employees of said Utility Board, or a special committee created for such purposes. Further, said Utility Board shall have power to make contracts of insurance with any insurance company authorized to transact business in the State of Florida, insuring its officers and employees or any class or classes thereof under a policy or policies of group insurance covering life, health, or accident insurance, or any two or more of such classes of insurance, and may contract with any company granting annuities or pensions and authorized to transact business within the State of Florida for the pensioning of such officers and employees or any class or classes thereof; and provide for any money necessary to pay premiums or charges incidental to the carrying on of such policies or contracts or for the support of a pension system, and the action of its predecessor Utility Board in connection with the pensions now in effect is hereby ratified, validated and confirmed.

Utility Board Approved October 25, 2017

THE RETIREMENT SYSTEM

FOR THE GENERAL EMPLOYEES

OF THE UTILITY BOARD

OF THE CITY OF KEY WEST, FLORIDA

1001 James Street

P.O. Box 6100

Key West, Florida 33041-6100

Phone: (305) 295-1000 / Fax: (305) 295-1005

TABLE OF CONTENTS

Page

-i-

ARTICLE ONE THE RETIREMENT SYSTEM ............................................................ 1

ARTICLE TWO DEFINITIONS ........................................................................................ 1

2.01 Accumulated Contributions ................................................................................... 1

2.02 Accrued Benefit ..................................................................................................... 1

2.03 Actuarial Equivalent .............................................................................................. 1

2.04 Career Average Compensation .............................................................................. 2

2.05 Code ....................................................................................................................... 2

2.06 Compensation ........................................................................................................ 2

2.07 Credited Service ..................................................................................................... 2

2.08 Early Retirement Age ............................................................................................ 2

2.09 Employee ............................................................................................................... 2

2.10 Final Average Compensation ................................................................................. 2

2.11 Fund ....................................................................................................................... 3

2.12 Management ........................................................................................................... 3

2.13 Member .................................................................................................................. 3

2.14 Normal Retirement Age ......................................................................................... 3

2.15 Pension Plan Administrator ................................................................................... 3

2.16 Plan Year ................................................................................................................ 3

2.17 System .................................................................................................................... 3

2.18 Trustee.................................................................................................................... 3

2.19 Union...................................................................................................................... 3

2.20 Utility Board .......................................................................................................... 3

ARTICLE THREE MEMBERSHIP AND MEMBER CONTRIBUTIONS ...................... 3

3.01 Eligibility for Membership .................................................................................... 3

3.02 Required Union Member Contributions ................................................................ 4

3.03 Required Management Member Contributions ..................................................... 4

3.04 Refund of Accumulated Contributions .................................................................. 4

ARTICLE FOUR RETIREMENT BENEFITS .................................................................. 5

4.01 Normal Retirement Benefits .................................................................................. 5

4.02 Termination Retirement Benefit ............................................................................ 5

TABLE OF CONTENTS (continued)

Page

-ii-

4.03 Disability Retirement Benefit ................................................................................ 7

4.04 Optional Methods of Retirement Benefits ............................................................. 8

4.05 Manner of Making Payments ................................................................................. 9

4.06 Monthly Benefits ................................................................................................... 9

4.07 Minimum Benefit ................................................................................................... 9

4.08 Limitations ............................................................................................................. 9

4.09 Benefit Adjustments............................................................................................... 9

4.10 Required Beginning Date ..................................................................................... 10

ARTICLE FIVE DEATH BENEFITS ............................................................................. 10

5.01 General ................................................................................................................. 10

5.02 Service Connected Death ..................................................................................... 10

5.03 Non-Service Connected Death ............................................................................. 12

5.04 Minimum Benefit ................................................................................................. 13

5.05 Limitations ........................................................................................................... 13

5.06 Monthly Benefits ................................................................................................. 13

ARTICLE SIX LIMITATIONS ON BENEFITS ......................................................... 13

6.01 Errors.................................................................................................................... 13

6.02 Rights to Trust Assets .......................................................................................... 13

6.03 RESERVED ......................................................................................................... 13

6.04 Maximum Benefits............................................................................................... 13

ARTICLE SEVEN PLAN FUNDING ................................................................................. 14

7.01 Contributions........................................................................................................ 14

7.02 Payment to Fund .................................................................................................. 14

7.03 Plan Expenses ...................................................................................................... 14

7.04 System Benefit ..................................................................................................... 15

7.05 Forfeitures ............................................................................................................ 15

ARTICLE EIGHT TRUST AND TRUSTEES ................................................................... 15

8.01 Appointment of Trustees...................................................................................... 15

8.02 Terms of Office .................................................................................................... 15

8.03 Rules and Decisions ............................................................................................. 15


Page

-iii-

8.04 Administrative Functions ..................................................................................... 15

8.05 Fund Administration ............................................................................................ 16

8.06 Fund Investment................................................................................................... 17

8.07 Fund Audit ........................................................................................................... 17

8.08 Exculpation .......................................................................................................... 17

ARTICLE NINE AMENDMENTS AND TERMINATION .......................................... 17

9.01 Amendments ........................................................................................................ 18

9.02 Termination .......................................................................................................... 18

9.03 Liquidation of the Fund ....................................................................................... 18

ARTICLE TEN MISCELLANEOUS ............................................................................. 19

10.01 Legality ................................................................................................................ 19

10.02 Non-guarantee of Employment ............................................................................ 19

10.03 Forfeiture of Benefits ........................................................................................... 19

10.04 Non-alienation of Benefits ................................................................................... 19

10.05 Construction ......................................................................................................... 19

10.06 Governing Laws ................................................................................................... 19

10.07 Qualified Military Service ................................................................................... 19

10.08 Direct Transfers of Eligible Rollover Distributions............................................. 19

10.09 Mandatory Distributions ...................................................................................... 21

10.10 Use of Electronic Media ...................................................................................... 21

ARTICLE ELEVEN PRESERVATION OF BENEFITS PLAN…………………………21

11.1 Creation and Effective Date of Preservation of Benefits Plan………….……….21

11.2 Definitions……………………………………………………………………….22

11.3 Preservation of Benefits ………………………………………………………....22

11.4 Administration…………………………………………………………….……..22

11.5 Determination of Funding Amount Needed……………………………….…….22

11.6 Benefit Amount…………………………………………………………..………23


Page

-iv-

11.7 Additional Funding………………………………………………………… …23

11.8 IRS Section 415 (m)……………………………………………………………23

1

ARTICLE ONE

THE RETIREMENT SYSTEM

It is deemed to be in the best interest of the Utility Board of the City of Key West, Florida

(“Utility Board”) that it continues The Retirement System for the General Employees of The

Utility Board of the City of Key West, Florida (“System”), a defined benefit pension plan

originally established with an effective date of April 9, 1954, and is amended in its entirety, as

provided herein, effective January 1, 2011, unless otherwise noted herein or otherwise required

by applicable law. The System is a "governmental plan'' within the meaning of Section 414(d) of

the Code, and as such, is exempt from the Employee Retirement Income Security Act of 1974, as

amended.

The benefits of former Employees of the Utility Board (or their beneficiaries) shall be

determined under the System as in effect at the time of the Employee's termination of service.

Except to the extent necessary to carry out the provisions of the preceding sentence, all prior

Resolutions of the Utility Board or of the Trustees are hereby repealed. The benefits of all

Employees on the date this Resolution is adopted, and of all persons hired or re-employed after

that date, shall be determined under the System as it is in effect by this Resolution or as it may be

amended.

The Internal Revenue Service is requiring that the System be amended and restated for

legislative changes. This amended and restated System document is intended to comply with the

applicable provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001

(“EGTRRA”), the final Code Section 415 regulations, the Pension Protection Act of 2006

(“PPA”), the Heroes Earnings Assistance and Relief Tax Act (“HEART”) and the applicable

provisions of various administrative pronouncements promulgated by the Internal Revenue

Service.

ARTICLE TWO

DEFINITIONS

For the purpose of the System, the following terms shall have the following meanings:

2.01 Accumulated Contributions means the sum of all amounts deducted from a

Member's Compensation and contributed to the Fund. The term Accumulated Contributions shall

not include any contributions made by the Utility Board for Management or Union Members

regardless of whether or not such contributions were made prior to or after the date this

paragraph was added to the System.

2.02 Accrued Benefit means the monthly benefit payable at or after Normal Retirement

Age, as determined under the System’s formula.

2.03 Actuarial Equivalent means equality in value of the aggregate amounts expected

to be received under different forms of payment. Actuarially equivalent amounts will be

determined based on the 1994 Group Annuity Reserving Table, projected to 2002, based on a

2

fixed blend of 50% male morality rates, per IRS Revenue Ruling 2001-62, with interest at eight

(8%) where the age shall be set forward five (5) years for disabled lives.

2.04 Career Average Compensation means the average annual Compensation earned

by a Member from date of participation to termination of service. Compensation is calculated

using the Member’s base hourly rate in effect each pay period, multiplied by the corresponding

hours earned during that pay period, less any hours that are considered “leave without pay” or

are otherwise excluded from Compensation by Section 2.06.

2.05 Code means the Internal Revenue Code of 1986, as amended.

2.06 Compensation means a member's base compensation (hourly rate each pay period,

multiplied by 80 hours). Effective upon approval by the Utility Board in 2017 for Members

under Section 2.04 and on January 1, 2020 for Members under Section 2.10, Compensation

means a member's base compensation (hourly rate in effect each pay period multiplied by the

corresponding hours earned during that pay period). However, Compensation shall not include

overtime (except as provided below), commissions, bonuses, expense allowances and any hours

that are considered "leave without pay", as defined in the books and records of the Utility

Board. The annual Compensation of each member is taken into account for determining the

benefits provided under the system and shall not exceed the annual compensation limit of

Section 401(a) (17) of the Code, as in effect on the first day of the Plan Year. This limit shall be

adjusted by the Secretary of the Treasury to reflect increases in the cost of living, as provided in

Section 401(a) (17) (b) of the Code; provided, however, that the dollar increase in effect on

January 1 of any calendar year is effective for plan year beginning in such calendar year. If a

Plan determines annual Compensation over a Plan Year that contains fewer than 12 calendar

months (a "short Plan Year"), then the Compensation limit for such "short Plan Year" is equal to

the Compensation limit for the calendar year in which the "short Plan Year" begins multiplied by

the ratio obtained by dividing the number of full months in the "short Plan Year" by 12.

So that Members who are assigned to work a 12-hour shift will not be penalized by receiving

credit for having worked less than 2080 hours in a calendar year, a limited number of overtime

hours actually worked in a payroll period shall be counted each calendar year, at the Member’s

base compensation (straight time) rate of pay, to ensure each Member who worked a 12-hour

shift gets pension credit for having actually worked 2080 hours each calendar year (which shall

become 2088 hours each calendar year for those members entitled to a Final Average

Compensation benefit, effective January 1, 2020).

2.07 Credited Service means the total number of completed years and months of active

service a Member performs from the later of: April 9, 1954; or such Member’s Date of Hire (or

probationary period) to the earlier of: such Member’s date of termination; or retirement. Buy-

back for Credited Service is permitted under the following circumstance: Members who were

employed on or before June 30, 1979, were permitted to buy Credited Service for the period of

employment from August 16, 1943 to April 9, 1954. Except with respect to a Member entitled to

Credited Service as both an Employee and a Member of the Utility Board, Credited Service is

limited to 30 years. However, Members with thirty (30) or more years of Credited Service as of

November 23, 1998, will be limited to thirty-five (35) years of Credited Service. Credited

Service for an elected official will be 4 years upon completion of a 4-year term and Credited

Service for a Utility Board Chairman will be 2 years upon completion of a 2-year term.

3

2.08 Early Retirement Age means the earlier of the day the Member attains age fifty-

five (55) and completes ten (10) years of Credited Service or the day the Member completes

twenty (20) years of Credited Service.

2.09 Employee means any regular and any permanent officer or Employee of the

Utility Board as well as every Member of the Utility Board effective as of the date of election to

the Utility Board. Individuals who perform services for the Employer as an independent

contractor shall be excluded from the System, even if a governmental agency retroactively

reclassifies such individual(s) as an Employee(s).

2.10 Final Average Compensation means the average annual compensation earned by a

member during the highest five years out of the last ten years of service immediately preceding

termination of service or retirement. Compensation is calculated using the member’s base hourly

rate each pay period, multiplied by 80 hours, less any hours that are considered “leave without

pay.”

Effective January 1, 2020, Final Average Compensation means the average annual

Compensation earned by a Member during the highest 10,440 hours out of the last 20,880 hours

of service (which shall be determined using the highest 130.5 payroll periods of the last 261

payroll periods) immediately preceding termination of service or retirement. Compensation is

calculated using the Member’s base hourly rate in effect each pay period multiplied by the

corresponding hours earned during that pay period, less any hours that are considered “leave

without pay,” or are otherwise excluded from compensation by Section 2.06.

2.11 Fund means the trust fund established under Article Seven, which shall hold all

assets of the System.

2.12 Management means those Employees whose positions are not covered by the

Union Contract.

2.13 Member means any Employee who becomes a Member of the System as provided

in Article Three.

2.14 Normal Retirement Age means the earlier of the day the Member attains age sixty

(60) and completes ten (10) years of Credited Service or the day the Member completes thirty

(30) years of Credited Service, regardless of age. For all Employees who were System Members

on or before November 13, 2008, Normal Retirement Age means the earlier of the day the

Member attains age sixty (60) or the day the Member completes thirty (30) years of Credited

Service, regardless of age.

2.15 Pension Plan Administrator shall be the Board of Trustees. In addition to other

duties, the Pension Plan Administrator shall have full responsibility for compliance with any

reporting and disclosure requirements applicable to the System.

2.16 Plan Year means a twelve (12) consecutive month period ending every December

31st.

2.17 System means the Utility Board of Key West, Florida Retirement System as set

forth herein.

2.18 Trustee means a person appointed or elected as provided in Section 8.01.

4

2.19 Union means those Employees whose positions are covered by the Union

Contract.

2.20 Utility Board means the Utility Board of the City of Key West, Florida.

ARTICLE THREE

MEMBERSHIP AND MEMBER CONTRIBUTIONS

3.01 Eligibility for Membership. Every person who was a Member under the System as

in effect immediately before Resolution No. 40 was adopted shall continue as a Member. All

persons who became Employees on or after February 19, 1992, until October 1, 2003 shall

become Members immediately. Any new Employees hired after October 1, 2003, will not be

eligible for Membership in the System until after their probationary period has been completed,

as defined in the books and records of the Utility Board, and the Employee is made a regular

full-time Employee. All persons who became Employees because of their election as a Member

to the Utility Board shall be retroactively eligible for Membership effective as of the date of

election.

3.02 Required Union Member Contributions. The Utility Board shall contribute the

entire eight and one-half percent (8.5%) of each Union Member's Compensation to the Fund.

These contributions shall be paid monthly into the Fund so as to make the System non-

contributory.

3.03 Required Management Member Contributions.

(a) The Utility Board shall contribute eight and one-half percent (8.5%) of each

Management Member's Compensation to the Fund. These contributions shall be paid monthly

into the Fund by the Utility Board.

(b) With respect to a Member who is first eligible to participate in the System as of

the effective date of Resolution No. 50 (March 29, 1993), because of his election as a Member

of the Utility Board, the Utility Board Member shall contribute such amount of money as may

be determined by the Actuary so as to fund such Member's benefit retroactive to the date of

election of such Member as a Member of the Utility Board. After the effective date of this

Resolution, the Utility Board shall contribute eight and one-half percent (8.5%) of each

Member's Compensation or other compensation derived as a Member of the Utility Board to the

Fund. The requirement to contribute eight and one-half percent (8.5%) of such Member's

Compensation shall apply equally to all Members who are eligible to participate because of

their election as a Member of the Utility Board regardless of the date of election. These

contributions shall not be deducted from such Member's Compensation and shall be paid

monthly into the Fund by the Utility Board.

3.04 Refund of Accumulated Contributions.

(a) Each Member who terminates service with the Utility Board with less than five

(5) years of Credited Service and who is not entitled to a retirement death benefit under Articles

four or five, shall receive a return of an amount equal to Accumulated Contributions multiplied

by 1.01% within ninety (90) days after termination of service, unless he elects to come under

the provisions of subparagraph (c) below.

5

(b) Each Member with more than five (5) years Credited Service shall receive an

amount equal to Accumulated Contributions multiplied by 1.03% within ninety (90) days after

termination of service, unless he elects to come under the provisions of subparagraph (c) below.

If the Member receives the amount specified in the preceding sentence, he shall lose all right

thereafter to receive a credit for his years of Credited Service as of his termination date, except

as provided in subparagraph (e) below.

(c) In lieu of receiving a return of his Accumulated Contributions as provided above,

the Member may elect to leave his Accumulated Contributions in the Fund for a period of three

years pending re-employment. If the Member is re-employed by the Utility Board within the

three-year period, he shall receive credit for his years of Credited Service as of his last

termination date. The Member may withdraw his Accumulated Contributions during the three

year period, but in such event he shall lose all right thereafter to receive a credit for his years of

Credited Service as of his last termination date, except as provided in subparagraph (e) below.

(d) If the Member is not re-employed by the Utility Board within three years, then

the Trustees shall return his Accumulated Contributions multiplied by 1.01% or 1.03%,

depending on the number of years of Credited Service.

(e) A former Member who takes a refund of Accumulated Contributions and who is

later re-employed by the Utility Board within three years of his termination of service shall have

the right to repay the Fund. The repayment must be made within ninety (90) days of re-

employment. The repayment shall be the amount refunded plus the greater of; interest, at the

rate of eight percent (8%) per year; or the rate of return earned by the Fund during the period of

time in which he took his refund and was not employed by the Utility Board. Upon such re-

payment, the Member shall receive credit for his years of Credited Service as of his last

termination date.

ARTICLE FOUR

RETIREMENT BENEFITS

4.01 Normal Retirement Benefits.

(a) For employees hired on or after June 1, 2010, the annual normal retirement

benefit for every Member shall be an amount equal to two percent (2.0%) of Career Average

Compensation times years of Credited Service. For employees hired on or before May 31, 2010,

the annual normal retirement benefit for every Member shall be an amount equal to two point

four percent (2.4%) of Final Average Compensation times years of Credited Service. Such

Member shall receive a monthly benefit equal to 1/12 of the annual normal retirement benefit

commencing on the first day of the month following such Member’s termination of service with

the Utility Board.

(b) Unless another form of benefit is elected under Section 4.04, the normal

retirement benefit, as it may be supplemented, shall be paid to the Member monthly for his

lifetime only and shall cease upon his death or re-employment to the Utility Board. If a Member

dies before the start of his benefit payments, he shall not receive any retirement benefit unless

such benefit, if any, is payable under Article Five (5).

6

(c) Except as set forth in Section 4.01(d), any Member who is re-employed and who

has been receiving benefits before being rehired shall have his normal retirement benefit

reduced (but not below the amount he has previously received) by the Actuarial Equivalent of

any such earlier payments, provided that no such reduction may be made for disability

payments previously paid.

(d) For purposes of this Section, the fact that a Member is eligible to participate in

the System by virtue of his election as a Member of the Utility Board shall not be considered re-

employment and the provisions of Section 4.01(c) shall not be operative to reduce the normal

retirement benefit by the Actuarial Equivalent of any prior payments which such Member

received by virtue of his participation as a retired Employee of the System.

4.02 Termination Retirement Benefit.

(a) Every Member who is not eligible for a normal retirement benefit on his

termination of service shall have his termination retirement benefit, if any, determined under

this Section.

(b) For Employees hired on or after June 1, 2010, the annual termination retirement

benefit shall be an amount equal to two percent (2.0%) of Career Average Compensation times

years of Credited Service times the Member’s vested percentage. For Employees hired on or

before May 31, 2010, the annual termination retirement benefit shall be an amount equal to two

point four percent (2.4%) of the Final Average Compensation times years of Credited Service

times the Member’s vested percentage. A Member's vested percentage shall be as follows:

Years of Credited Service Vested Percentage

Less than 5

5 but less than 6

6 but less than 7

7 but less than 8

8 but less than 9

9 but less than 10

10 or more

0%

25%

30%

40%

60%

80%

100%

Notwithstanding the foregoing, the vested percentage of an Employee’s Accrued

Benefit will become one hundred percent (100%) vested and non-forfeitable upon the

attainment of Normal Retirement Age.

(c) Any Member who terminates service for any reason other than death or disability

who has completed less than five (5) years of Credited Service will not be entitled to any

benefit. Any Member who separates from service of any reason other than death or disability

who has completed five (5) or more years of Credited Service will receive his/her accrued

retirement benefit when the Member reaches age sixty (60) and would have completed ten (10)

years of Credited Service or when the Member would have completed thirty (30) years of

Credited Service if the Member had remained continuously employed.

A Member who terminates service after (a) attainment of age fifty-five (55) and

completion of ten (10) years of Credited Service or (b) completion of twenty (20) years

of Credited Service, regardless of age shall be entitled to an early retirement benefit equal

to the accrued benefit reduced by 5% per year for each year benefits commence before

7

normal retirement age. A Member who terminates service before attainment of age fifty-

five (55) who has completed ten (10) years of Credited Service shall be entitled to an

early retirement benefit equal to the accrued benefit upon attainment of age fifty-five (55)

reduced by 5% per year for each year of benefits commence before normal retirement

age. Notwithstanding the above, a Member who terminates service on or after attainment

of age sixty (60) shall be entitled to the vested accrued benefit payable immediately

without reduction, provided however, that any Member who attains age sixty (60)

without any vested percentage will not receive a benefit from the System.

(d) Except as set forth is Section 4.02(e), any Member who is re-employed and who

has been receiving benefits before being rehired shall have his termination retirement benefit

reduced (but not below the amount he was previously receiving) by the Actuarial Equivalent of

any such earlier payments, provided that no such reduction shall be made for disability

retirement benefits previously paid.

(e) For purposes of this Section, the fact that a Member is eligible to participate in


employment and the provisions of Section 4.02(d) shall not be operative to reduce the

termination retirement benefit by the Actuarial Equivalent of any prior payments which such

Member received by virtue of his participation as a retired Employee of the System.

4.03 Disability Retirement Benefit.

(a) Each Member who becomes totally and permanently disabled, as determined by

the Trustees under subparagraph (c) below, after he/she has at least ten (10) years of Credited

Service may upon application and approval receive a disability retirement benefit instead of

termination retirement benefit. The benefit shall be paid regardless of whether the disability was

service connected. For this purpose, total and permanent disability means a physical or mental

condition of the Member resulting from a bodily injury or disease or mental disorder which

renders him/her incapable of continuing as an Employee at the Utility Board or any other

employer and which disability is expected to be permanent. In addition, an Employee who is

physically or mentally unable to continue performing in his/her present occupation, but is able

to perform another type of work, will not qualify for disability benefits.

(b) For Employee hired on or after June 1, 2010, the annual disability retirement

benefit shall be an amount equal to the greater of (1) two percent (2.0%) of Career Average

Compensation paid to the Member multiplied by the Member’s years of Credited Service or (2)

twenty percent (20%) of the average actual annual Compensation earned by the Member from

date of participation through date of disability. For Employees hired on or before May 31, 2010,

the annual disability retirement benefit shall be an amount equal to the greater of: (1) two point

four percent (2.4%) of average actual Compensation earned by the Member for the three (3)

years immediately preceding disability, multiplied by the Member's years of Credited Service;

or (2) twenty percent (20%) of the average actual annual Compensation paid to the Member for

the three (3) years immediately preceding disability. The disability retirement benefit shall be

decreased on an actuarial basis to reflect any worker's compensation or similar injury disability

payments made, which may be required by law. Such decrease may result in no disability

benefit being payable to a Member under the System.

(c) For a Member to be entitled to a disability retirement benefit, he/she must apply

in writing to the Trustees and provide along with the disability request a physician’s report and

8

statement by two different Florida-licensed physicians at the Employees own expense who have

treated and/or evaluated the Member for their disabling condition to attest to their total and

permanent disability. The Trustees may also arrange for a physical examination(s) by a

physician(s) of their choice to determine the validity whether or not to grant the disability

request. The physicians' reports shall be given due consideration by the Trustees in arriving at

their decision concerning the disabled status of a Member. The decision of the Trustees

concerning the disabled status of a Member shall be final. The disability retirement benefit will

commence on the first of the month following final approval (e.g., final approval February 15,

2010, effective benefit date March 1, 2010).

Any Member receiving a disability retirement benefit shall be required to provide an

annual recertification, at their own expense, of their total and permanent disability to the

Pension Plan Administrator. This recertification is due on each anniversary of the

effective date of the disability retirement benefit. The reason for this recertification is to

determine whether the Member remains totally and permanently disabled. The

recertification process will be as follows:

1. The Pension Plan Administrator will mail the following recertification forms,

certified, return receipt requested, to the disabled Member:

Disabled Retiree's Report of Continuing Disability. This form must

be completed by the Member and returned within sixty (60) days

from the date of mailing. The form requests the medical status

since the date of disability retirement.

Physician's Report of Reexamination. This form must be

completed by a physician chosen by the Member and returned

within 60 days from the date of mailing.

2. The Pension Board of Trustees, may, in its sole discretion also arrange for a

medical examination(s) by a physician(s) of the Utility Board's choice to

determine whether the Member remains permanently and totally disabled.

3. It is the sole responsibility of the disabled retiree to provide the information to the

Pension Plan Administrator in a timely manner. If a disabled retiree fails to

provide the requested information within sixty (60) days, the Member will receive

a second request giving thirty 30 days to comply. Information not returned within

a total of ninety 90 days may subject the Member to termination or suspension of

the disability benefit. Should any Member refuse to submit to a required

examination/reexamination, the Member's disability benefit shall cease.

The disability retirement benefit does not allow a Member to receive disability

benefits while employed. It is the responsibility of the disabled Member to notify

the Pension Plan Administrator immediately if the disabled Member returns to

any type of employment with any employer. Upon reemployment or recovery,

disability benefits will be terminated and regular retirement benefits would be

calculated.

(d) Except as set forth is Section 4.03(e), any Member who is re-employed and who

has been receiving benefits before being rehired shall have his termination retirement benefit

9

reduced (but not below the amount he was previously receiving) by the Actuarial Equivalent of

any such earlier payments, provided that no such reduction shall be made for disability

retirement benefits previously paid.

(e) For purposes of this Section, the fact that a Member is eligible to participate in


employment and the provisions of Section 4.03(d) shall not be operative to reduce the disability

retirement benefit by the Actuarial Equivalent of any prior payments which such Member

received by virtue of his participation as a retired Employee of the System.

4.04 Optional Methods of Retirement Benefits. Each Member eligible for a retirement

benefit may elect to have his benefit payable under any one of the options set forth below in lieu

of a life annuity defined in Section 4.01(b). The value of optional retirement benefits shall be

Actuarially Equivalent to the value of benefits otherwise payable. The optional methods are as

follows:

OPTION 1: Joint and Last Survivor Option.

This option provides a Member with a decreased retirement benefit during his

lifetime with such decreased retirement benefit (or a designated fraction thereof, i.e.,

50%, 75% and 100%) continued after his death for the lifetime of another person.

The decrease will be based on the benefit amount immediately preceding the

Member's death. This option shall be void if the other person dies before the

Member.

OPTION 2: Ten Year Certain Option.


lifetime, but provides that if a Member dies before he has received the benefit for

one hundred twenty (120) months, his beneficiary will receive the same monthly

benefit for the remainder of the 120 month period.

OPTION 3: Joint and Last Survivor Option with Pop-Up Feature.


lifetime with such decreased retirement benefit (or a designated fraction thereof, i.e.,

50%, 75% and 100%) continued after his death for the lifetime of another person.

The decrease will be based on the benefit amount immediately preceding the

Member’s death. However, under this option, if such other person dies before the

Member, the benefit paid during the remaining lifetime of such Member shall

increase to the amount payable under the normal form of payment.

OPTION 4: Other Agreed Upon Options.

4.05 Manner of Making Payments. Whenever a court has appointed a guardian of the

property, or any other person to manage the financial affairs of any person entitled to receive any

payment of a benefit or installment thereof, the Trustees shall, upon verification of the entry of a

court order, make payments to the guardian of the property, or any other person appointed by

court order to manage the financial affairs of any person entitled to receive any payment of a

benefit or installment thereof. Any payment of a benefit or installment thereof in accordance

with the provisions of this Section shall be a complete discharge of any liability for the making

of such payment under the provisions of the System.

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4.06 Monthly Benefits. All benefits paid under this Article, except as provided in

Section 4.07, shall be paid on a monthly basis.

4.07 Minimum Benefit. The benefits actually paid by the System under this Article to

or with respect to a Member shall aggregate no less than the value of the Member's Accumulated

Contributions determined as of the date of the Member's termination of service. If at that time the

benefit ceases (or the Member's death, before benefits begin) the value of the Employee’s

Accumulated Contributions exceeds the total of all benefit payments made, the Member or his

estate or beneficiary, as the case may be, shall be paid in a lump sum the amount of such excess.

4.08 Limitations. The provisions of Article Six shall apply to all benefits provided

under this Article and thereby may reduce or eliminate a benefit described in this Article.

4.09 Benefit Adjustments. Commencing January 1, 2001, and every calendar year

thereafter, benefits being paid to retirees of the System will be increased by three percent (3%).

Should recommendations from the System's actuarial or financial advisors determine that this

cost of living adjustment needs to be eliminated or decreased, it shall be within the discretion of

the Trustees to do so. If a retiree begins receiving retirement benefits on January 1, the retiree

will receive the cost of living adjustment set forth in this Section effective the same January 1 on

which he retired.

4.10 Required Beginning Date. Notwithstanding anything in the System to the

contrary, all distributions under the System shall comply with Section 401(a)(9) of the Code and

the Regulations thereunder, as prescribed by the Commissioner in Revenue Rulings, Notices, and

other guidance published in the Internal Revenue Bulletin, to the extent that said provisions

apply to governmental plans under Section 414(d) of the Code, and shall be made in accordance

with the following requirements:

(i) Any benefit paid to a Member shall commence on the later of:

(A) April 1 of the year following the calendar in which the Member

retires; or

(B) April 1 of the year immediately following the calendar year in

which the Member reaches age 70½.

(ii) Distributions of a Member’s benefits will be made in accordance with

Sections 1.401(a)(9)-2 through 1.401(a)(9)-9 of the IRS Regulations, and such other rules

thereunder as may be prescribed by the Secretary of the Treasury, to the extent that said

provisions apply to governmental plans under Section 414(d) of the Code.

(iii) Notwithstanding anything contained herein to the contrary, payments

under the System to a Beneficiary due to Member’s death shall satisfy the incidental

death benefit requirements and all other applicable provisions of Section 401(a)(9)(G) of

the Code, the regulations issued thereunder, and such other rules thereunder as may be

prescribed by the Secretary of the Treasury, including IRS Notice 2007-7, to the extent

that said provisions apply to governmental plans under Section 414(d) of the Code.

11

ARTICLE FIVE

DEATH BENEFITS

5.01 General. The benefits payable under this Article shall not be paid in addition to

any other benefits but shall be paid in lieu of any other benefits.

5.02 Service Connected Death.

(a) If a Member dies and worker’s compensation death benefits become payable, a

service connected death benefit will be paid. This service connected death benefit will be

calculated as follows: the greater of (1) seventy-five percent (75%) of the normal retirement

benefit the Member would have received if he had continued as an Employee at the same rate of

pay in effect when he died, until he would have become eligible for a normal retirement benefit

or (2) seventy-five percent (75%) of the Member’s accrued retirement benefit at the time of the

Member’s death. Each Member shall be allowed to elect one of the following two options for

the payment of this service connected death benefit, provided however, that Option 2 is only

available if the Member has children under the age of twenty-one (21) or under the age of

twenty-five (25) provided the dependent child is a full-time student in college or disabled under

Social Security:

1. The domestic partner or spouse will receive the benefit as

calculated in 5.02 (a) above, for their lifetime; or

2. The benefit will be the greater of (1) the normal retirement benefit

the Member would have received if he had continued as an

Employee at the same rate of pay in effect when he died, until he

would have become eligible for a normal retirement benefit or (2)

the Member’s accrued benefit at the time of the Member’s death,

to either: 1) the domestic partner or spouse; or 2) the children until

the last child turns twenty-one (21) or turns twenty-five (25)

provided the dependent child is a full-time student in college or

disabled under Social Security. When the last child turns twenty-

one (21) or turns twenty-five (25) provided the dependent child is a

full-time student in college or disabled under Social Security, the

benefit will reduce to the greater of (1) sixty percent (60%) of the

normal retirement benefit the Member would have received if he

had continued as an Employee at the same rate of pay in effect

when he died, until he would have become eligible for a normal

retirement benefit or (2) sixty percent (60%) of the Member’s

accrued retirement benefit at the time of the Member’s death,

payable to the domestic partner or spouse for their lifetime.

(b) In the absence of an election by the Member, immediately upon the death of the

Member, the greater of (1) seventy-five percent (75%) of the normal retirement benefit the

Member would have received if he had continued as an Employee at the same rate of pay in

effect when he died, until he would have become eligible for a normal retirement benefit or (2)

seventy-five percent (75%) of the Member’s accrued retirement benefit at the time of the

Member’s death, will be paid to the surviving domestic partner or spouse, if any, or if none,

then to the Member’s children under the age of twenty-one (21), or under the age of twenty-five

12

(25) provided the dependent child is a full-time student in college or disabled under Social

Security in equal parts. Within ninety (90) days from the date of death, the surviving domestic

partner or spouse, if any, or if none, then the Member’s children under the age of twenty-one

(21) or under the age of twenty-five (25) provided the dependent child is a full-time student in

college or disabled under Social Security, shall elect one of the options provided for in (1) or (2)

of this Section 5.02, provided however, that Option 2 is only available if the Member has

children under the age of twenty-one (21) or under the age of twenty-five (25) provided the

dependent child is a full-time student in college or disabled under Social Security.

(c) Whenever the benefit is paid to the child, and when there is more than one child

and the oldest turns twenty-one (21) or turns twenty-five (25) provided the dependent child is a

full-time student in college or disabled under Social Security, the total benefit being paid will

not be reduced until the youngest child turns twenty-one (21) or turns twenty-five (25) provided

the dependent child is a full-time student in college or disabled under Social Security.

(d) Payments will commence as soon as administratively practicable, but will be

effective on the day following death.

5.03 Non-Service Connected Death.

(a) If a Member dies while an employee and death benefits are not payable under

Section 5.02, a non-service connected death benefit as follows: the greater of (1) seventy-five

percent (75%) of the normal retirement benefit the Member would have received if he had

continued as an Employee at the same rate of pay in effect when he died, until he would have

become eligible for a normal retirement benefit or (2) seventy-five percent (75%) of the

Member’s accrued retirement benefit at the time of the Member’s death. Each Member shall be

allowed to elect one of the following two options for the payment of this non-service connected

death benefit, provided however, that Option 2 is only available if the Member has children

under the age of twenty-one (21) or under the age of twenty-five (25) provided the dependent

child is a full-time student in college or disabled under Social Security:

1. The domestic partner or spouse will receive the benefit as

calculated in 5.03(a) above, for their lifetime; or

2. The benefit will be the greater of (1) the normal retirement benefit

the Member would have received if he had continued as an

Employee at the same rate of pay in effect when he died, until he

would have become eligible for a normal retirement benefit or (2)

the Member’s accrued retirement benefit at the time of the

Member’s death, to either 1) the domestic partner or spouse; or (2)

the children until the last child turns twenty-one (21) or turns

twenty-five (25) provided the dependent child is a full-time student

in college or disabled under Social Security. When the last child

turns twenty-one (21) or turns twenty-five (25) provided the

dependent child is a full-time student in college or disabled under

Social Security, the benefit will drop to sixty percent (60%) of the

normal retirement benefit the Member would have received if he

had continued as an Employee at the same rate of pay in effect

when he died, until he would have become eligible for a normal

13

retirement benefit payable to the domestic partner or spouse for

their lifetime.

(b) In the absence of an election by the Member, immediately upon the death of the

Member, the greater of (1) seventy-five percent (75%) of the normal retirement benefit the

Member would have received if he had continued as an employee at the same rate of pay in

effect when he died, until he would have become eligible for a normal retirement benefit or (2)

seventy-five percent (75%) of the Member’s accrued retirement benefit at the time of the

Member’s death, will be paid to the surviving domestic partner or spouse, if any, or if none,

then to the Member’s children under the age of twenty-one (21) or under the age of twenty-five

(25) provided the dependent child is a full-time student in college or disabled under Social

Security, in equal parts. Within ninety (90) days from the date of death, the surviving domestic

partner or spouse, if any, or if none, then the Member’s children under the age of twenty-one

(21), or under the age of twenty-five (25) provided the dependent child is a full-time student in

college or disabled under Social Security shall elect one of the options provided for in (1) or (2)

of this Section 5.03 provided however, that Option 2 is only available if the Member has

children under the age of twenty-one (21) or under the age of twenty-five (25) provided the

dependent child is a full-time student in college or disabled under Social Security.

(c) When there is more than one child and the oldest turns twenty-one (21) or turns

twenty-five (25) provided the dependent child is a full-time student in college or disabled under

Social Security, the total benefit being paid will not be reduced until the youngest child turns

twenty-one (21) or turns twenty-five (25) provided the dependent child is a full-time student in

college or disabled under Social Security.

(d) Payments will commence as soon as administratively practicable, but will be

effective on the day following death.

5.04 Minimum Benefit. The benefits actually paid by the System under this Article

with respect to a Member's death shall aggregate no less than the value of the Member's

Accumulated Contributions determined as of the date of the Member's death. If at the time the

benefit ceases the value of the Accumulated Contributions exceeds the total of all benefit

payments made, the Member's beneficiary shall be paid in a lump sum the amount of such

excess.

5.05 Limitations. The provisions of Article Six shall apply to all benefits provided

under this Article and may thereby reduce or eliminate a benefit described in this Article.

5.06 Monthly Benefits. All benefits payable under this Article, except as provided in

Section 5.04 shall be paid on a monthly basis. Each month the beneficiary or beneficiaries shall

be paid one-twelfth (1/12) of the total payment otherwise determined under this Article.

ARTICLE SIX

LIMITATIONS ON BENEFITS

6.01 Errors. Should any change or error in records reveal that any Member or

beneficiary is receiving from the System more or less than he would be entitled to receive had

14

the records been correct, then on discovery of any such error the Trustees shall correct same and

as far as practical shall direct that future payments be adjusted in such manner that the Actuarial

Equivalent of the benefit to which the Member or beneficiary was correctly entitled shall be paid.

6.02 Rights to Trust Assets. No Employee or other person shall have any right to, or

interest in, any assets of the Fund upon termination of service or otherwise, except as provided

from time to time under the System, and then only to the extent of the benefits payable under the

System to such Employee or other person out of the Fund. All payments of benefits as provided

for in the System shall be made solely out of the Fund and none of the fiduciaries under the

System shall be liable in any manner for such payments of benefits.

6.03 RESERVED.

6.04 Maximum Benefits

(a) Section 415 of the Code Limitation. The benefits otherwise payable to a Member

or a beneficiary under the System and, where relevant, the Accrued Benefit of a Member, shall

be limited to the extent required by the provisions of Section 415 of the Code. For purposes of

this Section, the Limitation Year shall mean the 12 month period beginning January 1st and

ending December 31st. To the extent applicable, the provisions of Section 415 of the Code are

hereby incorporated by reference into this System.

(b) No Actuarial Adjustment for COLA. No actuarial adjustment to the benefit shall

be made for the COLA provided by Section 4.09, provided the form of benefit is not subject to

§ 417(e)(3) of the Code and otherwise satisfies the limitations of this Section 6.04 and in no

event will the amount payable under the form of benefit in any limitation year exceed the limits

of this Section 6.04 applicable at the annuity starting date, as increased in subsequent years

pursuant to § 415(d) of the Code. For this purpose, the dollar limit of § 415(b) of the Code shall

be automatically adjusted beginning with the first limitation year following a Member’s

severance of employment, in accordance with § 415(d) of the Code. This provision is effective

as of February 12, 2014.

(c) Additional Limitation on Pension Benefits. Notwithstanding anything herein to

the contrary:

1. The normal retirement benefit or pension payable to a Retiree who

becomes a Member of the Fund and who has not previously

participated in such Fund, on or after January 1, 1980, shall not

exceed one hundred percent (100%) of his Average Final

Compensation. However, nothing contained in the Section shall

apply to supplemental retirement benefits or to pension increases

attributable to cost-of-living allowances or adjustments.

2. No Member of the Fund shall be allowed to receive a retirement

benefit or pension which is in part or in whole based upon any

service with respect to which the Member is already receiving, or

will receive in the future, a retirement benefit or pension from a

different employer's retirement fund or plan. This restriction does

not apply to social security benefits or federal benefits under

Chapter 67, Title 10, U.S. Code.

15

ARTICLE SEVEN

PLAN FUNDING

7.01 Contributions. Members shall make such contributions to the Fund as required

under the System. The Utility Board shall pay into the Fund annually such amounts as

determined on a reasonable actuarial basis, as approved by the Utility Board, to fund System

benefits. For the purpose of determining the Actuarial Equivalent of any benefit hereunder, such

benefit shall equal any benefit having the same present value on the date payment commences.

7.02 Payment to Fund. All Member and Utility Board contributions shall be paid to

and held in the Fund.

7.03 Plan Expenses. The reasonable expenses of the administrations of the System may

be paid from the Fund to the extent not paid by the Utility Board.

7.04 System Benefit. All benefits under the System shall be paid from the Fund

according to the terms of the System in effect from time to time.

7.05 Forfeitures. Any amounts forfeited in accordance with the provisions of the

System shall not inure to the benefit of any other Member, but shall be used solely to reduce the

Utility Board's future contributions under the System.

ARTICLE EIGHT

TRUST AND TRUSTEES

8.01 Appointment of Trustees. There shall be fourteen (14) Trustees, consisting of the

General Manager/CEO of the Utility Board, ten (10) Employees and three (3) retirees,

hereinafter referred to as the Pension Board of Trustees, except as provided hereinafter. The

Trustees who are Employees shall be elected by the Employees, provided that at least one (1)

Employee/Trustee shall be selected from each department. The Retirees shall elect three (3)

retiree representatives. The Pension Board of Trustees shall elect a Chairperson and a Vice-

Chairperson from the 14 Member Board.

8.02 Terms of Office. The General Manager/CEO shall serve as Trustee during his/her

term of office and his/her successor shall automatically become a Trustee.

Trustees may serve any number of terms, whether or not consecutive. Except to the extent

otherwise provided in a prior Plan document, all terms will be for four (4) years. If a Trustee

should resign from his/her position as Trustee, his/her remaining term should be filled

immediately and a special election shall take place. The initial term of office for the third (3)

retiree trustee shall be until March 31, 2019 and all subsequent terms shall be for four years.

There are three trustees who had been elected as employee representatives, and who retired on

December 31, 2015. Those Trustees will be allowed to complete the terms to which they have

been elected. In addition, the departments from which they were elected will hold a new election

to elect a new employee representative. The terms of office for these 3 employee representatives

will be effective upon completion of the election until when the term of the person who was

elected to the position (and has since retired) was scheduled to end.

16

Effective as of April 10, 2013, if a Trustee should move or be transferred to another department,

he/she will be permitted to finish his/her term for that department. That Trustee can run for a

Trustee position in their new department when the term becomes open for election.

8.03 Rules and Decisions. The Trustees shall adopt rules of procedure and maintain a

record of their proceedings. Seven Trustees shall constitute a quorum at any meeting and each

Trustee shall be entitled to one vote. A majority of Trustees present and voting shall be necessary

for a decision by the Trustees.

8.04 Administrative Functions. The Trustees shall administer the System, and in so

doing shall:

(a) Observe the operations of the System.

(b) Make recommendations for changes and improvement of the System.

(c) Determine and authorize all claims and entitlements to benefit payments.

(d) Determine, by means of uniform rules, all questions concerning Credited Service

and Membership in the System.

(e) Maintain accurate records of Credited Service for each Member.

(f) Have actuarial valuations and studies of the System performed.

(g) Render, or have prepared, a complete accounting of the financial and other

transactions of the System.

(h) Appoint such agents or counsel as may be deemed advisable to operations of the

System.

(i) Do and perform such acts as may, in the opinion of the Trustees, be deemed

advisable to the proper operation of the System.

8.05 Fund Administration. The Trustees shall be responsible for the custody and

management of the Fund and shall make distributions from the Fund in accordance with the

terms of the System. In carrying out these responsibilities, the Trustees shall have the power:

(j) To sell, exchange, convey, transfer or dispose of, and also grant options with

respect to, any property, whether real or personal, at any time held by them, and any sale may be

made by private contract or by public auction, and for cash or upon credit, or partly for cash and

partly upon credit, as the Trustees, may deem best, and no person dealing with the Trustees shall

be bound to see the application of the purchase money or to inquire into the validity, expediency

or propriety of any such sale or other disposition.

(k) To maintain, manage, operate, repair and improve or lease for any period any

real or personal property held by them.

17

(l) To compromise, compound and settle any debt or obligation due to them as

Trustees hereunder, and to reduce the rate of interest on, to extend or otherwise modify, or to

foreclose upon default, or otherwise enforce any such obligation.

(m) To vote in person or by proxy on any stocks bonds or other securities held by

them; to exercise any options appurtenant to any stocks, bonds or other securities for the

converse thereof into other stocks, bonds or securities or to exercise any rights to subscribe for

additional stocks, bonds or other securities and make any and all necessary payments therefore;

to join in, or to dissent from, and to oppose, the reorganization, liquidation, sale or merger of

corporations or properties in which they may be interested as Trustees, upon such terms and

conditions as they may deem wise.

(n) To make, execute, and acknowledge and deliver any and all deeds, leases

assignments and instruments.

(o) To cause any investments from time to time held by them to be registered in, or

transferred into the names of the System for the Utility Board or the names of their nominees.

However, the books and the records of the Trustees shall at all times show that all such

investments are part of the Fund, provided that the consent of the Investment Committee is first

obtained as to the appointment of any custodian of Fund assets.

(p) For the purpose of investing in and holding title to real or personal property or

part of interest therein located outside the state of Florida, to appoint one or more individuals or

corporations as a co-trustee or sub-trustee or to join with one or more individuals or corporations

(including themselves) acting as Trustees of other pension trusts, profit sharing trusts or

Employee benefit trusts in the establishments of one or more sub-trusts; such co-trustees or sub-

trustees, upon being appointed shall act with such one or more than one or all of the powers,

authorities, discretion, duties and functions of the Trustee under the System and as such shall be

designated in the instrument establishing such sub-trust including without limitation by the

reference thereto power to receive and hold property, real or personal, or part interest therein,

leaseholds, mortgages, and other interests in realty, situated in any State in which the co-trust or

sub-trustee is authorized to act as trustee of pension trusts, profit sharing trusts or other

Employee benefit trusts; and to pay the reasonable expenses and compensation of such co-trustee

or sub-trustee, provided that the consent of the Investment Committee is first obtained as to the

appointment of any sub-trustee or co-trustee.

(q) To cause the purchase of insurance policies or contracts to provide all or any part

of the benefits contemplated by the System.

(r) To do all acts whether or not expressly authorized which they may deem

necessary or proper for the protection of the property held in the fund.

8.06 Fund Investment. The Fund shall be invested and reinvested in such securities or

real or personal property, wherever situated and of whatsoever kind, as may be approved by the

Trustees, including but not limited to stocks, common or preferred, bonds and mortgages

(including those of the Utility Board) and other evidences of indebtedness or ownership,

although the same may not be of the character permitted for investment by fiduciaries under the

laws of the State of Florida. The Trustees, through their agents or otherwise, may retain in cash

and keep unproductive of income such amount of the Fund as they may deem advisable, having

due regard for the cash requirements of the System. In making investments and reinvestments, as

18

authorized by the provisions of the System, the Trustees or such person, persons, agency or

entity acting pursuant to authority granted by the Trustee shall exercise the judgment and care

under the circumstances then prevailing which a person of ordinary prudence, discretion and

intelligence exercise in the management of their own affairs, not in regard to speculation but in

regard to the permanent disposition of their own funds, considering the probable income

therefrom as well as the probable safety of their capital.

8.07 Fund Audit. The Utility Board shall engage the services of a Certified Public

Accountant to perform a certified audit of the Fund each year. The cost of such audit shall be the

responsibility of the Utility Board.

8.08 Exculpation. No Trustee shall be liable for the making of retention or sale of any

investment made as permitted herein, and no Trustee shall be liable for any loss or diminution of

the fund, except in cases of a Trustee's own negligence, willful misconduct or lack of good faith.

ARTICLE NINE

AMENDMENTS AND TERMINATION

9.01 Amendments. The Utility Board reserves the right to make, from time to time, any

amendments to the System which do not cause any part of the Fund to be used for, or diverted to,

any purpose other than the exclusive benefit of Members or their beneficiaries; provided

however, that the Utility Board make any amendment determines necessary or desirable, with or

without retroactive effect, so long as such amendment does not violate the Code or other

applicable law. If the System is amended in its application to any Member benefiting hereunder,

the amount of benefits which at the time of any such amendment shall have accrued to and

vested in such Member shall not be affected hereby, except to the extent that the assets of the

Fund are inadequate. All such amendments shall be made by formal Resolution of the Utility

Board.

9.02 Termination. Upon termination of the System for any reason, or upon the

complete discontinuance of contributions, the rights of all Members to benefits accrued to the

date of such termination or discontinuance, including any amounts credited to a Member’s

account, if applicable, are nonforfeitable, to the extent then funded. The Trustees shall liquidate

the Fund in accordance with Section 9.03.

9.03 Liquidation of the Fund. If terminated, the Trustees shall continue to administer

the System in accordance with the provisions in effect at the time of termination for the sole

benefit of the then Members, any beneficiaries then receiving retirement benefits, and any

Member entitled to receive benefits in the future under one of the options selected by any

Member.

In the event of termination, the Fund shall be allocated as follows:

(a) First, all Members shall receive a return of contributions they have made,

without interest or premium.

19

(b) Second, the assets shall be used to provide for those already receiving benefits

and those who are then eligible for a normal retirement benefit.

(c) Third, the assets shall be used to provide the benefits to those who have either:

1. attained age fifty-five (55) with ten (10) or more years of Credited

Service; or

2. attained twenty (20) or more years of Credited Service.

(d) The assets shall be used to provide benefits, to the extent vested before

termination of the System, to Members not previously provided for above, and

(e) Any remaining assets shall be used to pay all other benefits which have accrued

under the System. The allocation of assets under the Fund shall be carried out through payment

of the benefits provided hereunder as they become due, or by the transfer of such assets to any

retirement system replacing this System, providing that full vesting of benefits under this

System are provided and fully maintained under new such retirement system. Any allocation of

assets made by the Trustees in accordance with the provisions hereunder shall be final and

binding on all persons entitled to benefits under this System. Any funds remaining in the fund,

after all the benefits provided hereunder have been paid, shall revert to the Utility Board.

ARTICLE TEN

MISCELLANEOUS

10.01 Legality. If any part of the System is declared illegal, the remainder of the

System shall not thereby be invalidated. All provisions of any Resolution of the Utility Board

inconsistent with the provisions of this Resolution are hereby repealed to the extent of such

inconsistencies.

10.02 Non-guarantee of Employment. Nothing contained in the System shall be

construed as a contract of employment between the Utility Board and any Employee, or as a

right of any Employee to be continued in the employment of the Utility Board or as a limitation

of the right of the Utility Board to discharge any of its Employees, with or without cause.

10.03 Forfeiture of Benefits. Any Member who engages in any illegal act which is a

detriment to or causes injury or loss to the Utility Board in any material respect shall forfeit any

right to benefits under the System. If a Member ceases to be an Employee, and at that time owes

money to the Utility Board, the benefits to which the Member may be entitled may, at the

discretion of the Utility Board, be paid to the Utility Board in satisfaction of such obligation.

10.04 Non-alienation of Benefits. No benefit provided herein shall be assignable nor

shall it be subject to attachment, garnishment, execution or to any other legal process, except

that, subsequent to termination of employment and prior to a refund, a Member may voluntarily

assign such funds and a portion thereof to the Utility Board or any of its recognized agencies, for

the satisfaction of lawfully contracted obligations.

10.05 Construction. The masculine gender shall include the feminine gender and the

singular may include the plural, unless the context clearly indicates to the contrary. The words

"hereof", "herein" and "hereunder", and similar compounds of the word "here" shall mean and

20

refer to the entire System and not to any particular provision or Section. All headings of articles,

sections or subparagraphs are inserted for ease of reference and are not to be used in construing

the System.

10.06 Governing Laws. Except as otherwise required by the Code, the System shall be

construed, interpreted and enforced according to its terms and the laws of the State of Florida.

10.07 Qualified Military Service. Notwithstanding any other provision of the System to

the contrary, contributions, benefits, and service credit with respect to qualified military service,

as defined in Section 414(u) of the Code, shall be provided in accordance with Section 414(u) of

the Code, USERRA and the HEART Act and the rules adopted by the Pension Board of

Trustees.

10.08 Direct Transfers of Eligible Rollover Distributions

(a) Rollover Distributions. Notwithstanding any other provision of the System to the

contrary, a "distributee" may elect, at the time and in the manner prescribed by the Utility

Board, to have any portion or all of an "eligible rollover distribution" paid directly to an

"eligible retirement plan" specified by the "distributee" in a direct rollover. For purposes of this

section, the following definitions shall apply:

1. "Distributee" means a Member or former Member, the Member's

surviving spouse, and the Member's spouse or former spouse who

is the alternate payee under a domestic relations order, who is

entitled to receive a portion of the Member's benefit.

Effective for Plan Years beginning on and after January 1, 2007, a

non-spouse beneficiary, may elect to directly rollover an eligible

distribution to an IRA, a Roth IRA or an individual retirement

annuity under Section 408(b) of the Code that is established on

behalf of the designated beneficiary as an inherited IRA, pursuant

to the provisions of Section 402(c)(11) of the Code. In order to be

able to roll over the distribution, the distribution otherwise must

satisfy the definition of “eligible rollover distribution”. In addition,

the determination of any required minimum distribution under

Section 401(a)(9) of the Code that is ineligible for rollover shall be

made in accordance with IRS guidance.

2. "Eligible retirement plan" An eligible retirement plan is an IRA

described in Section 408(a) of the Code, an individual retirement

annuity described in Section 408(b) of the Code, an annuity plan

described in Section 403(a) of the Code, an annuity Contract

described in Section 403(b) of the Code, an eligible plan under

Section 457 of the Code that agrees to separately account for such

transferred amounts and which is maintained by a state, political

subdivision of a state or an agency or instrumentality of a state or

political subdivision of a state or a qualified trust described in

Section 401(a) of the Code that accepts the distributee’s “eligible

rollover distribution”. For distributions made after December 31,

2007, an eligible retirement plan shall include a Roth IRA as

21

defined under Section 408A of the Code. The definition of eligible

retirement plan shall also apply in the case of a distribution to a

surviving spouse, or to a Spouse or former Spouse who is the

alternate payee under a court order.

3. "Eligible rollover distribution" An eligible rollover distribution is

any distribution of all or any portion of the Member’s benefit,

except that an eligible rollover distribution does not include: any

distribution that is one of a series of substantially equal periodic

payments (not less frequently than annually) made for the life (or

life expectancy) of the distributee or the joint lives (or joint life

expectancies) of the distributee and the distributee’s designated

Beneficiary, or for a specified period of ten years or more; any

distribution to the extent such distribution is required under

Section 401(a)(9) of the Code; the portion of any distribution that

is not includible in gross income (determined without regard to the

exclusion for net unrealized appreciation with respect to employer

securities); and any distribution made to satisfy Section 415 of the

Code.

4. “Direct rollover” A direct rollover is a payment by the System to

the eligible retirement plan specified by the distributee.

(b) Rollovers or Transfers into the Fund.

The fund will accept, solely for the purpose of purchasing Credited

Service as provided herein, permissible Member requested transfers of funds from

other retirement or pension plans, Member rollover cash contributions and/or

direct cash rollovers of distributions as following:

1. Transfers and Direct Rollovers or Member Rollover Contributions

from Other Plans. The Fund will accept either a direct rollover of

an eligible rollover distribution or a Member contribution of an

eligible rollover distribution from a qualified plan described in

Sections 401(a) or 403(a) of the Code, from an annuity contract

described in Section 403(b) of the Code or from an eligible plan

under Section 457(b) of the Code which is maintained by a state,

political subdivision of a state, or any agency or instrumentality of

a state or political subdivision of a state. The Fund will also accept

legally permissible Member requested transfers of funds from

other retirement or pension plans.

2. Member Rollover Contributions from IRAs. The Fund will accept

a Member rollover contribution of the portion of a distribution

from an individual retirement account or annuity described in

Section 408(a) or 408(b) of the Code that is eligible to be rolled

over and would otherwise be included in gross income.

10.09 Mandatory Distributions. Notwithstanding any other provision of the Plan to the

contrary, a Member must consent to receipt of any distribution in excess of $1,000 that

constitutes an “eligible rollover distribution” (as defined in Section 10.8(a)(3) and that is made to

22

a Member before the Member attains the later of age sixty-two (62) or Normal Retirement Age

(See Section 3.04 and Section 4.07).

10.10 Use of Electronic Media. The Utility Board or the Pension Plan Administrator

may use telephonic or electronic media to satisfy any notice requirements required by this

System, to the extent permissible under the Code (or other generally applicable guidance). In

addition, a Member’s consent, if required, may be provided through telephonic or electronic

means, to the extent permissible under the Code (or other generally applicable guidance). The

Utility Board or the Pension Plan Administrator also may use telephonic or electronic media to

conduct System transactions such as enrolling Members, and other transactions, to the extent

permissible under the Code (or other generally applicable guidance).

ARTICLE ELEVEN

PRESERVATION OF BENEFITS PLAN

11.1 Creation and Effective Date of a Preservation of Benefits Plan. A preservation of

benefits plan is hereby established to allow eligible members of the (“Plan”) to receive those

retirement benefits to which they would otherwise be entitled to pursuant to Resolutions of the

Utility Board as amended, if not for the benefit limitation contained in Section 415 of the

Internal Revenue Code and the Plan. This Article is effective as of February 12, 2014.

11.2 Definitions. All definitions contained in Article Two of the Plan Document are

applicable to the preservation of benefits Account, unless differently defined in this section.

Maximum benefit means the retirement benefit a member is entitled to receive

from the retirement system in any month after giving effect to any provision of a

qualified plan designed to conform to section 415 of the Internal Revenue Code of 1986,

as amended.

Preservation of Benefits Plan participant means any member whose retirement

benefit is determined on the basis of the retirement system without regard to limitations

set forth in this division that exceed the maximum benefit under section 415 of the

Internal Revenue Code of 1986, as amended.

Preservation of Benefits Plan means the unfunded plan created by the Utility

Board to provide benefits to members that would be provided under the retirement

system, but for the limitations imposed by section 415 of the Internal Revenue Code of

1986, as amended.

Unrestricted benefit means the monthly retirement benefit, including, but not

limited to, periodic increases provided in 4.09 that a member, spouse, child or other

23

beneficiary, would receive under the terms of the retirement system of the Utility Board,

except for the restrictions contained in this division.

11.3 Preservation of Benefits. The excess retirement benefits above the limits

permitted by the Internal Revenue Code shall be as follows:

(a) Funded from the General Fund of the Utility; and

(b) Paid annually concurrently with the Utility Board’s annual contribution to

normal pension costs, which shall cause the Utility Board to realize a reduction in normal

pension costs in the same amount; and

(c) Be deposited into a separate account established to receive the Utility

Board’s excess retirement benefit contributions, which accounts shall be separate and

apart from the accounts established to receive the Utility Board’s normal pension

contribution for the Plan.

11.4 Administration. The Board of Trustees of The Retirement System for the General

Employees of the Utility Board of the City of Key West, Florida is appointed as the committee to

administer the Preservation of Benefits Plan for the retirees.

11.5 Determination of Funding Amount Needed. The actuaries for the Board of

Trustees of The Retirement System for the General Employees of the Utility Board of the City of

Key West, Florida shall calculate the amounts necessary to fund the defined benefit plan giving

effect to the reductions caused by implementation of Section 415 of the Internal Revenue Code.

11.6 Benefit Amount. The unrestricted excess benefits shall be paid to each eligible

Preservation of Benefits Plan participant on a monthly basis in an amount equal to the difference

between the allowable pension to be paid under the Internal Revenue Code and the amount of the

defined benefit that would otherwise be paid if not for the benefit limitations.

11.7 Additional Funding. Should additional retirements occur during the year where

the eligible member's retirement benefit exceeds the Section 415 limits, the actuaries shall

calculate the additional excess benefit amount required for the remainder of the fiscal year and

should such amount exceed the amount available from the funds provided for the fiscal year, the

Board of trustees shall notify the Utility Board of the additional funds required. Upon the Utility

Board’s receipt of notice of the additional funds required, the Utility Board shall forward the

additional funds required. The requirement for additional funds paid by the Utility Board shall be

reflected as a reduction in the Utility Board’s contribution of normal pension costs for the

following year.

24

11.8 IRC Section 415 (m). This Preservation of Benefits Plan is intended to be a

“qualified governmental excess benefit arrangement” described in Section 415(m) of the code

and shall be administered in a manner consistent with those requirements.

IN WITNESS WHEREOF, this Plan has been executed this ___ day of _________, 2017.

The Retirement System for the General Employees of the Utility Board of Key West, Florida

By:__________________________________

Harry Bethel, Chairman

RETIREMENT SYSTEM FOR THE GENERAL EMPLOYEES OF THE UTILITY BOARD

OF THE CITY OF KEY WEST, FLORIDA

SUMMARY PLAN DESCRIPTION

Approved: December 12, 2017

TABLE OF CONTENTS

PAGE

Introduction 1

1 What is the official name of the Plan? 2

2 What type of Plan is this? 2

3 How is the Plan administered? 2

4 Who administers the Plan? 3

5 What are the legal documents creating the Plan? 3

6 Are there relevant provisions of collective bargaining agreements? 3

7 Who is the custodian and what does it do? 4

8 How is the Plan Funded? 4

9 Who are the Investment Managers and what do they do? 4

10 Who are members of the Plan? 4

11 Who are the beneficiaries of the Plan? 5

12 What is credited service? 5

13 What happens if I leave employment with the Utility Board and then become re-employed? 5

14 What is my Normal Retirement Date? 6

15 May I retire earlier? 6

16 May I continue working past my Normal Retirement Date? 7

17 What will be my normal retirement benefit? 7

18 What is my accrued benefit? 8

19 What will be my benefit if I decide to retire early? 9

20 If I leave employment, other than by reason of retirement, disability or death, will I be entitledto a benefit?


9

21 What will be my late retirement benefit if I decide to retire after my Normal Retirement Date? 10

22 Does the Plan pay a cost-of-living adjustment? 10

23 What will happen if I become disabled? 11

24 Will my survivors receive anything if I die? 12

25 Is my return of contributions taxable? 13

26 How will I receive my benefit? 13

27 May the Plan be amended or terminated? 14

28 Important Notice 14

29 Do I have responsibilities under the Plan? 17

30 How do I make a claim for benefits? 18

31 Claims Review Procedure 19

32 Report of Financial and Actuarial Information 21


INTRODUCTION

This document is intended to be a plain language summary of the administration and

benefits provided by the Retirement System for the General Employees of the Utility Board of

the City of Key West, Florida (the Plan).

This Summary Plan Description is a brief description of your Plan and your rights,

obligations and benefits under the Plan. This Summary Plan Description is not meant to interpret,

extend or change the provisions of your Plan in any way. Further, this Summary Plan Description

does not constitute a contract for retirement benefits. The provisions of your Plan may only be

determined accurately by reading the actual Plan document, which consists of resolutions of the

Utility Board of the City of Key West, the applicable provisions of Chapters 112, Part VII and the

Internal Revenue Code.

A copy of your Plan is on file at the Plan Administrator’s office and may be read by you,

your beneficiaries or your legal representatives at any time during normal business hours. If you

have any questions regarding either your Plan or this Summary Plan Description, you should ask

your Plan’s Administrator. In the event of any discrepancy between this Summary Plan

Description and the actual provisions of the Plan, the Plan shall govern.


This Summary Plan Description is provided to you to give you a description of the

Retirement System for the General Employees of the Utility Board of the City of Key West only,

and is not a description of any other benefit. Your employer may provide you with other benefits

upon your retirement; if you desire any information about those benefits you should be able to

obtain that information by contacting your Human Resources Office.

1. What is the official name of the Plan?

The official name of the Plan is the Retirement System for the General Employees of the

Utility Board of the City of Key West, Florida.

2. What type of Plan is this?

This is a defined benefit plan which means that should you meet the requirements, you

will receive, upon retirement, a guaranteed percentage of your covered salary times your years

of credited service.

3. How is the Plan administered?

Customarily, the Plan is administered by a fourteen member Board of Trustees. Ten of

the Trustees must be current employees, all of whom are elected by employees. There are three

retiree Trustees, who are elected by the current retirees. The General Manager and CEO serves

as Trustee during his or her term of office at which time he or she is replaced by the successor.


There were three trustees who had been elected as employee representatives, who retired on

December 31, 2015. Those Trustees have been allowed to complete the terms to which they

were elected. The current members of the Board of Trustees are:

Retiree Representatives

Harry Bethel, Sr, Chairman

Larry Thompson

Tony Bethel

Trustees who retired on December 31, 2015 and were permitted to complete their term of

office

David Price

Eddie Garcia

Employee Representatives

Jesse Perloff

Susan Ham

Frankie Webb

Gricell Owen

Joey Diaz

Fred Culpepper

Brittani Harden

Catherine Nix


Dan Sabino

General Manager and CEO

Lynne Tejeda

In accordance with Florida law, the Chairperson is the registered agent for service of

process and his business address is 1001 James Street, Key West, Florida 33040. In the absence

of the Chairperson, any member of the Board of Trustees is subject to service of process.

4. Who administers the Plan?

The Plan is administered by the Board of Trustees. The Plan engages the services of

accountants, attorneys, actuaries, investment managers and performance monitors as advisors.

Should you have any questions regarding your benefits, you may contact the Plan Administrator,

(to be inserted)

5. What are the legal documents creating the Plan?


The actual Plan is set forth by resolution of the Utility Board of the City of Key West.

Additionally, the Plan is governed by Chapter 112, Part VII, of the Florida Statutes and certain

provisions of the Internal Revenue Code.

6. Are there relevant provisions of collective bargaining agreements?

Certain employees covered by the Plan are members of the collective bargaining unit

represented by the IBEW Local 1990. The current collective bargaining agreement between the

unit and the Employer covers the period May 1, 2015 through April 30, 2017.

7. Who is the custodian and what does it do?

The custodian is hired by the Board of Trustees and currently is Salem Trust. The

custodian of the Plan is responsible for the safekeeping of securities owned by the Pension Fund.

8. How is the Plan Funded?

Contributions on behalf of Members are made by the Utility Board and are a percentage

of each Member’s covered payroll determined annually by actuarial valuation.

The Utility Board is responsible for the financial soundness of the Plan.

9. Who are the Investment Managers and what do they do?


The investment managers are responsible for selecting the securities to be bought and

sold by the Pension Fund, in accordance with the Investment Policy established by the Board of

Trustees. The current investment managers are: Sawgrass Capital Management, Dana

Investment Advisors, Westwood Inc., American Core Realty Intercontinental Real Estate

Corporation, Galliard Capital Management, Fred Alger, WCM Focused International, Templeton

Global, Black Rock, Vanguard, Cambiar Investors.

10. Who are members of the Plan?

All full‐time employees, following completion of a probationary period and qualified

Utility Board Members of the Utility Board of the City of Key West, Florida are members of the

Plan. In addition, all retirees, disabled members and terminated vested employees are members

of the Plan.

11. Who are the beneficiaries of the Plan?

Beneficiaries are each qualified person designated by you to the Human Resources

Department utilizing the proper Beneficiary Election Form to receive any payments that may

become payable by the Plan upon your death. Utilizing the proper Benefit Election Form, you

can change your beneficiary anytime up to the time of retirement.

12. What is credited service?


Your Credited Service is that amount equal to your total length of service following

completion of your probationary period with the Utility Board as a full‐time employee or qualified

Utility Board Member. Credited Service is used to compute the amount of pension benefits you

are entitled to when you retire, to determine whether you are eligible for certain benefits and to

determine whether you are vested.

13. What happens if I leave employment with the Utility Board and then become

reemployed?

If you terminate employment with the Utility Board and later return to work for the Utility

Board, you will again become a member of the Plan, but will only be given credit for previous

service under the following conditions:

If you leave the employ of the Utility Board, you may voluntarily leave your

contributions, if any, in the Fund for a period of three (3) years pending the possibility

of being rehired.

If you leave your contributions, if any, in the Fund, and if you are not reemployed

within three (3) years, your contributions will be returned.

If you choose to withdraw your contributions, if any, and you are reemployed, you will

not receive credit for the years or the parts of years for which you have withdrawn


your contributions, if any, unless you have repaid into the Fund the amount you have

withdrawn, plus interest at the rate of 8% or the rate of return earned by the Fund

(whichever is greater) during the period from the date of the refund to the date of the

repayment. You shall have ninety (90) days after reemployment to make any

repayment.

14. What is my Normal Retirement Date?

If you were a member on or before November 13, 2008, your Normal Retirement Date is

the date you attain age 60 or complete thirty (30) years of credited service regardless of your

age. Otherwise your Normal Retirement Date is the date you attain age 60 and complete ten

(10) years of credited service or you complete thirty (30) years of credited service.

15. May I retire earlier?

Yes, you may retire at your Early Retirement Date, which is the date you reach age 55 and

complete ten (10) years of credited service or when you have completed twenty (20) years of

credited service regardless of age. You may retire at any time following the earlier of these dates

with reduced benefits as described later. Your early retirement benefit will be reduced by 5% for

each year your early retirement benefit commencement date precedes your normal retirement

date.


16. May I continue working past my Normal Retirement Date?

If you continue working past your Normal Retirement Date, the date you stop working

will be your Late Retirement Date.

17. What will be my normal retirement benefit?

The monthly benefit you will receive if you continue in employment until your Normal

Retirement Date is called your Normal Retirement Benefit.

If you were hired prior to June 1, 2010, the amount of your Normal Retirement Benefit is

2.4% of your average final monthly compensation times your credited service (maximum 30

years) as of your Normal Retirement Date.

Your average final monthly compensation is your average monthly pensionable earnings

earned during the highest five (5) years of the last ten (10) years of service immediately preceding

your retirement. Starting January 1, 2020, your average monthly pensionable earnings will

be your Final Average Compensation earned by you during the highest 10,440 hours of service

out of the last 20,880 hours of service (which will be determined using the highest 130.5 payroll

periods of the last 261 payroll periods) immediately preceding termination of service or

retirement. It does not matter when this money is paid to you. What matters is when you earned

it. Compensation is calculated using your base hourly rate in effect each pay period multiplied by


the corresponding hours earned during that pay period. Compensation does not include hours

that are considered leave without pay or are otherwise excluded, such as overtime, commissions,

bonuses and expense allowances. However, if you are assigned to work a twelve hour shift, a

limited number of overtime hours actually worked in a payroll period will be counted each

calendar year, at the straight time rate of pay, to ensure each member who worked a 12 hour

shift receives pension credit for actually having worked a full calendar year.

If you were hired on or after June 1, 2010, the amount of your Normal Retirement Benefit

is 2.0% of career average monthly compensation times your credited service as of your Normal

Retirement Date. Beginning October 25, 2017, compensation is calculated using your base hourly

rate in effect each pay period, multiplied by the corresponding hours earned during that pay

period, regardless of when paid. Not included are hours considered leave without pay or are

otherwise excluded, such as overtime, commissions, bonuses and expense allowances. However,

if you are assigned to work a twelve hour shift, a limited number of overtime hours actually

worked in a payroll period will be counted each calendar year, at the straight time rate of pay, to

ensure each member who worked a 12 hour shift receives pension credit for actually having

worked a full calendar year.


Provided however, that your maximum retirement income cannot exceed the lesser of

100% of your average final compensation or $275,000 for 2018, subject to adjustment as

provided under the Internal Revenue Code.

As an example of your Normal Retirement Benefit, if you were hired prior to June 1, 2010

and your average final monthly compensation at your Normal Retirement Date is equal to $4,000,

and your credited service is equal to thirty (30) years, then your calculation would be as follows:

2.4% multiplied by your average final monthly compensation times your years of

credited service =

0.024 x $4,000 = $96.00

$96.00 x 30 years Credited Service = $2,880.00

per month

The retirement benefit is paid to you for the rest of your life or until you again become an

employee of the Utility Board (however, see the section on How Will I Receive My Benefit for

available optional forms of payment).

18. What is my accrued benefit?


The portion of your Normal Retirement Benefit that you have earned at any point in time

is called your Accrued Benefit. Your Accrued Benefit is computed in the same way as the Normal

Retirement Benefit, except you use your present average final monthly compensation (if you

were hired prior to June 1, 2010) and credited service or present career average monthly

compensation (if you were hired on or after June 1, 2010) and credited service. The Accrued

Benefit is a monthly amount, which starts on your Early Retirement Date (in a reduced amount),

age 60 or Normal Retirement Date.

19. What will be my benefit if I decide to retire early?

If you decide to retire early, you may receive your Early Retirement Benefit immediately

or on a deferred basis.

A deferred Early Retirement Benefit means a benefit that does not begin until the date

you reach your normal retirement date and is paid for the rest of your life.

An immediate Early Retirement Benefit means a benefit that begins on your Early

Retirement Date and is paid for the rest of your life, but you must elect to do so and your benefit

will be reduced by 5% for each year the benefit is paid prior to your Normal Retirement Date. If

you retire at age 60 and it is prior to your Normal Retirement Date, your Early Retirement Benefit

will equal your vested Accrued Benefit payable immediately.


20. If I leave employment, other than by reason of retirement, disability or death, will I be

entitled to a benefit?

You may receive a deferred vested retirement benefit based upon the calculation of your

average final monthly compensation (if you were hired prior to June 1, 2010) and credited service

or career average monthly compensation (if you were hired on or after June 1, 2010) and credited

service at the date of termination times the percentage listed below.

The following table shows your percentage vested based upon your number of years of

credited service:

Years of Credited Service

Vested

Percentage

Less than 5

5 but less than 6

6 but less than 7

7 but less than 8

8 but less than 9

9 but less than 10

10 or more

0%

25%

30%

40%

60%

80%

100%


21. What will be my late retirement benefit if I decide to retire after my Normal Retirement

Date?

The amount of your monthly Late Retirement Benefit is calculated and paid in the same

way as the Normal Retirement Benefit. However, your average final monthly compensation (if

you were hired prior to June 1, 2010) and credited service or career average monthly

compensation (if you were hired on or after June 1, 2010) and credited service as of your actual

retirement date are used in the calculation.

22. Does the Plan pay a cost‐of‐living adjustment?

Beginning on January 1, 2001 and for each year thereafter, benefits paid to retirees will

be increased by 3%. Please note the Trustees have discretion to eliminate any cost‐of‐living

adjustment based upon actuarial or financial factors.

23. What will happen if I become disabled?

If you become totally and permanently disabled as provided by the Plan and you have

completed at least ten (10) years of credited service you may be eligible for a disability benefit

regardless of whether the disability is service related. You must immediately contact the Plan

Administrator for details on how to apply for disability benefits. The application for these


benefits must be made in writing to the Board of Trustees and be accompanied by a physician’s

report and statement by two (2) Florida licensed doctors. The Board of Trustees may arrange for

further examination by its own physician. Upon receiving a disability pension, you will be

required to provide completed annual recertification forms showing that you are still totally and

permanently disabled. These forms will be sent to you by the Plan Administrator and must be

returned within sixty (60) days of mailing.

If you were hired before June 1, 2010, the amount of your monthly disability benefits will

be calculated as it is for normal retirement based upon your credited service and your average

monthly pensionable compensation for the three (3) years immediately preceding your disability.

If you were hired on or after June 1, 2010, the amount of your monthly disability benefits will be

calculated as it is for normal retirement based upon your credited service and your career

average monthly compensation.

However, if you were hired before June 1, 2010, your minimum monthly disability benefit

you will receive is 20% of the final three (3) year average basic monthly compensation at the date

of your disability. If you were hired on or after June 1, 2010 your minimum monthly disability

benefit you will receive is 20% of your career average monthly compensation.


These benefits will be offset by any benefits payable under Workers Compensation or a

similar injury or disability benefit.

Should you become employed in any capacity with any employer, or found to be no longer

disabled by a medical provider, your disability benefits will be terminated and your regular

retirement benefits will be calculated.

24. Will my survivors receive anything if I die?

If you die while still employed, a death benefit will be payable to your spouse, domestic

partner or children under 21 years of age (25 years of age provided the child is a full‐time student

in college or disabled under Social Security), as elected by you utilizing the proper benefit election

form available from the Human Resources Department. You may elect either Option 1 or Option

2 below. Option 2 is only available if you have children less than 21 years of age (25 years of age

provided the child is a full‐time student in college or disabled under Social Security).

Option 1 – 75% of the projected benefit you would have received had you continued

employment until your normal retirement date at your current rate of pay payable during the

remaining lifetime of your spouse or domestic partner.

Option 2 – 100% of the projected benefit you would have received had you continued

employment until your normal retirement date at your current rate of pay payable until your


youngest child is 21 years of age (25 years of age provided the child is a full‐time student in college

or disabled under Social Security). Upon attainment of age 21 (age 25 provided the child is a full‐

time student in college or disabled under Social Security) by your youngest child, 60% of the

projected benefit will be payable during the remaining lifetime of your spouse or domestic

partner.

After Retirement

If you were receiving a form of retirement payment which provided for a survivor’s

benefit to be paid after death, your Beneficiary will receive payments following your death. A

later page describes the various forms of retirement payments.

25. Is my return of contributions taxable?

At the time that you ask for your return of contributions, you will be furnished with a

special tax notice as published by the IRS that will explain, in detail, your various options and the

tax consequences of each decision. We suggest that you seek professional tax advice.

26. How will I receive my benefit?


Unless you elect otherwise before your retirement, you will receive a monthly life annuity

with the final payment due in the month in which your death occurs.

Instead of the monthly life annuity, you may be able to select an optional form of benefit.

The options which may be available to you are:

OPTION I ‐ Joint and Survivor Annuity

You may elect to receive a reduced optional retirement benefit during your lifetime, with

such decreased retirement benefit (or a designated fraction thereof) continued after your death

for the lifetime of your chosen beneficiary.

OPTION II ‐ Ten Year Certain Option

You may elect to receive a decreased retirement benefit during your lifetime but if you

die prior to receiving benefits for 120 months, your designated beneficiary will receive that same

monthly benefit for the remainder of the 120 months.

OPTION III ‐ Joint and Survivor Annuity with Pop‐Up Option

You may elect to receive a reduced optional retirement benefit during your lifetime, with

such decreased retirement benefit (or a designated fraction thereof) continued after your death

for the lifetime of your chosen beneficiary. If your chosen beneficiary dies before you, your


monthly benefit will increase to the unreduced amount payable under the normal form of

payment, life annuity, payable for the remainder of your lifetime.

27. May the Plan be amended or terminated?

Yes.

28. Important Notice

There are certain circumstances which may result in the disqualification, ineligibility,

denial, loss, forfeiture, suspension or deferral of your benefits in this Plan. The following is a list

of these circumstances:

a. If you terminate employment before reaching the Normal or Early Retirement

Date and you do not have at least five (5) years of Credited Service, no benefits

will be payable except for a return of your own contributions, if any, without

interest.

b. No credit is allowed either for benefit accrual or vesting purposes for any period

in which you are not considered a regular full‐time, non‐probationary employee.

c. Your retirement benefit will not be payable until your actual retirement date, even

if you continue to work beyond the Normal Retirement Date.

d. In the event that this Plan terminates and the available Plan assets are less than

the value of all Accrued Benefits, then your Accrued Benefit may be reduced.


e. Payment of your benefits may be subject to an income deduction order made

pursuant to a state domestic relations law. Your benefits may not be assignable

in any other circumstance, other than a voluntary assignment by you to pay

toward a contracted obligation to the Utility Board.

f. Your Accrued Benefit may be forfeited if you are convicted of certain specified

offenses as provided by State law (Chapter 112.3173 F.S.).

The specified offenses are:

Committing, aiding or abetting of an embezzlement of public funds;

Committing, aiding or abetting of any theft by a public officer or employee

from the Utility Board;

Bribery in connection with the employment of a public officer or

employee;

Any felony specified in Chapter 838, Florida Statutes;

The committing of an impeachable offense;

The committing of any felony by a public officer or employee who, willfully

and with intent to defraud the public or the public agency for which the

public officer or employee acts or in which he or she is employed of the

right to receive the faithful performance of his or her duty as a public

officer or employee, realizes or obtains, or attempts to realize or obtain, a

profit, gain, or advantage for himself or herself or for some other person


through the use or attempted use of the power, rights, privileges, duties,

or position of his or her public office or employment position.

The committing on or after October 1, 2008, of any felony defined in

§800.04, Florida Statutes, against a victim younger than 16 years of age, or

any felony defined in Chapter 794, Florida Statutes against a victim

younger than 18 years of age, by a public officer or employee through the

use or attempted use of power, rights, privileges, duties, or position of his

or her public office or employment position.

g. If you engage in any illegal act which causes a detriment to or injury or loss to the

Utility Board in any material respect, you shall forfeit any rights to benefits under

the Plan. If you are no longer an employee of the Utility Board and owe money to

the Utility Board, your benefits may be paid to the Utility Board toward

satisfaction of that obligation.

h. If you fail to properly file all necessary information and applications as required by

the Board of Trustees, then you may be denied benefits.

i. In no event can your annual retirement benefit from the Plan or your

compensation considered exceed the legal limit for benefits and compensation

established by the Internal Revenue Service.

j. Failure to provide information that the Board of Trustees deems necessary or

desirable to administer the Plan may result in reduction or cessation of any

benefits otherwise payable.


k. Portions of your Plan benefits may be subject to Federal income tax when paid to

you or your beneficiary. The Board of Trustees will withhold payment for taxes

from your benefits or you may pay the taxes yourself along with your personal

income tax.

l. If you withdraw your contributions, if any, no further Plan benefits are payable.

m. You will not be entitled to receive disability benefits if you do not provide

satisfactory proof of actual and continued disability. Disability retirement is

subject to the approval of the Board of Trustees based upon established methods

and procedures.

n. You are not entitled to receive any disability benefits if the Board of Trustees finds

that your disability is a result of:

Excessive and habitual use of drugs, intoxicants, or alcohol,

Injury or disease sustained while willfully and illegally participating in fights,

riots or civil insurrections,

Injury or disease sustained while committing a crime,

Injury or disease sustained while serving in the armed forces,

Injury or disease sustained after termination of employment with the Plan, or

Injury or disease sustained while working for anyone other than the Plan and

arising out of such employment.


Any disqualified Member, who has received benefits from the Plan in excess of his

contributions, if any, shall be required to repay the Plan. The Board may implement

legal action necessary to recover such funds.

29. Do I have responsibilities under the Plan?

a. Retain this Summary Plan Description with your other important papers for later

reference or for replacement by updated versions and supplemental notices, if

any.

b. Upon completing eligibility requirements complete a Beneficiary Election Form,

obtained from the Human Resources Department.

c. Keep your Beneficiary Election Form updated in your personnel file to express

your wishes.

d. If you terminate employment, check to see if you are entitled to a deferred Vested

Retirement Benefit and the date payable.

e. If you should terminate employment with rights to a deferred Vested Retirement

Benefit, then, shortly before the date on which it is to begin, you are required to

contact and notify the Administrator to begin such payments.

f. Upon your retirement under Early or Normal Retirement, complete the form

necessary to indicate whether you desire an Optional Form of Benefit, and if so,

which option you choose.

30. How do I make a claim for benefits?


Claims for benefits under the Plan must be filed in writing with the Plan Administrator. If

you are eligible for any benefits from this Plan, and you request it, you will be provided with a

notification form showing the amount of your benefit and options, if any, and the earliest date

on which such benefit is payable. Prior to your normal retirement date, you will be allowed on

one occasion, at no cost to you, to receive an estimated calculation of pension benefits. The

administrative charge for this estimate is paid on your behalf, but if you obtain a second estimate,

it will be at your expense.

If your claim for benefits is denied, you are entitled to a full and fair review of that

decision. You will receive written notification if your claim has been wholly or partly denied. This

notice will be provided to you within a reasonable period of time, after the receipt of your claim

by the Plan Administrator. The written notice must contain the following information:

a. The specific reason or reasons for the denial;

b. Specific reference to those Plan provisions on which the denial is based;

c. A description of any additional information or material necessary to correct your

claim and an explanation of why such material or information is necessary; and

d. Appropriate information as to the steps to be taken if you or your Beneficiary

wishes to submit your claim for review.


If notice of the denial of a claim is not furnished to you in accordance with the above

within a reasonable period of time, your claim shall be deemed denied. You will then be

permitted to proceed to the review stage described in the following paragraphs.

If your claim has been denied, and you wish to submit your claim for review, you must

follow the Claims Review Procedure.

31. Claims Review Procedure

a. Upon the denial of your claim for benefits you may file your claim for review, in

writing, with the Plan Administrator.

b. You must file the claim for review no later than 60 days after you have received

written notification of the denial of your claim for benefits.

c. You may review all pertinent documents relating to the denial of your claim and

submit any issues and comments, in writing, to the Plan Administrator.

d. Your claim for review must be given a full and fair review. If your claim is denied,

the Plan Administrator will provide you with written notice of this denial.


e. The Board of Trustee’s decision on your claim for review shall be communicated

to you in writing and shall include specific references to the pertinent Plan

provisions on which the decision was based.

f. If the Board of Trustee’s decision on review is not furnished to you within the time

limitations described above, your claim shall be deemed denied on review.


REPORT OF FINANCIAL AND ACTUARIAL INFORMATION


RETIREMENT SYSTEM FOR GENERAL EMPLOYEES OF

THE UTILITY BOARD OF THE CITY OF KEY WEST

Report of Financial and Actuarial Information

01/01/2017

A. Participant Data

1. Active participants 126

2. Retired participants and beneficiaries

receiving benefits 172

3. Disabled participants receiving benefits 8

4. Terminated vested participants 26

5. Annual payroll of active participants $ 9,667,989

6. Annual benefits payable to those currently

receiving benefits $ 5,704,371

B. Value of Assets

1. Smoothed Actuarial Value $ 84,366,073

2. Market Value $ 80,916,572

C. Liabilities


1. Actuarial present value of future expected

benefit payments for active members

a. Retirement benefits $ 46,529,171

b. Vesting benefits 1,686,887

c. Death benefits 1,080,674

d. Disability benefits 1,168,616

e. Total $ 50,465,348

2. Actuarial present value of future expected benefit

payments for terminated vested members $ 2,032,022

3. Actuarial present value of future expected benefit

payments for members currently receiving benefits

a. Service retired $ 63,807,222

b. Disability retired 1,808,865

c. Beneficiaries 6,249,854

d. Total $ 71,865,941


RETIREMENT SYSTEM FOR GENERAL EMPLOYEES OF

THE UTILITY BOARD OF THE CITY OF KEY WEST

Report of Financial and Actuarial Information

4. Total actuarial present value of future

expected benefit payments $ 124,363,311

5. Actuarial accrued liability $ 111,918,376

6. Unfunded actuarial liability $ 27,552,303

D. Statement of Accumulated Plan Benefits

1. Actuarial present value of accumulated vested

System benefits

a. Participants currently receiving benefits $ 71,865,941

b. Other participants 30,860,723

c. Total $ 102,726,664

2. Actuarial present value of accumulated non‐

vested System benefits 889,500

3. Total actuarial present value of accumulated

System benefits $ 103,616,164


E. Pension Cost

1. Total normal cost $ 1,714,785

2. Payment required to amortize unfunded liability 2,089,452

3. Interest adjustment 142,659

4. Total required contribution $ 3,946,896

5. Item 4 as a percentage of payroll 40.8%

6. Estimated employee contributions $ 0


8. Net amount payable by the Utility Board $ 3,946,896


J:\WPDocs\22014.001 Key West General Employees' Retirement System\SPD\FINAL for Distributionv.1.docx

PENSION BOARD OF TRUSTEES

RETIREMENT SYSTEM FOR THE GENERAL EMPLOYEES OF THE UTILITY BOARD OF THE CITY OF KEY WEST, FLORIDA

Name – Term Expiration Current - 16 Members – As Of 4/1/19 – 14 Members

RETIREE’S REPRESENTATIVE – 5 [2 temporary] Harry Bethel, Sr.- Chairman - 03/31/19

Larry Thompson - 03/31/22 Sylvia Adams – 3/31/19 David Price –3/31/19 Eddie Garcia –3/31/19

Executive, Human Resources & Communications (1)

Finance, Information Services, Fleets, Facilities, Purchasing & Warehouse (2)

Gricel Owens – 3/31/21 Jesse Perloff – 3/31/21 Brittani Harden – Vice Chair – 3/31/21

Engineering & Control Center (2) Transmission & Distribution – (2) Alvaro Rodriguez – 3/31/19 Fred Culpepper – 3/31/19 James Robinson – 3/31/22 Joey Diaz – 3/31/22

Customer Service and Meters (2) Generation (1)

Erica Zarate – 3/31/19 Dan Sabino – 3/31/19 Catherine Nix – 3/31/22

REQUIRED MEMBER – (1) General Manager & CEO

Lynne Tejeda

Ron Cohen, Plan Counsel Larry Wilson, GRS Actuary Tim Nash AndCo Investment Consultant Salem Trust - Custodian Cherry, Bekaert & Holland, Auditors Jack Wetzler – Secretary/Treasurer/Temporary Plan Administrator

PEN-011 Updated: September 24, 2012

Utility Board vs. Board of Trustees Responsibilities The Utility Board shall: 1) Select and Engage the Auditor 2) Approve Resolutions amending the Retirement Plan Document upon thorough review of the Impact Statement 3) Approve the Investment Policy as recommended by the Board of Trustees 4) Approve the Annual Actuarial valuation 5) Approve Pension Audit/Comprehensive Financial Report 6) Monitor Financial Statements with bi annual reports 7) Review Actions taken by the Trustees with bi annual reports The Board of Trustees shall: 1) Maintain and Administer the Retirement Plan Document 2) Maintain and Administer the Summary Plan Document 3) Review and reissue the Retirement Plan Document and the Summary Plan document every two years 4) Maintain, Review and Approve the Investment Policy Annually 5) Approve the Annual Actuarial valuation 6) Approve Resolutions for amending the Retirement Plan Document as a method of recommending approval to the Utility Board 7) Request Actuary to prepare Impact Study prior to any changes to the Retirement Plan Document and review and approve said study 8) Interview and Appoint an Investment Consultant 9) Interview and Appoint a Plan Attorney 10) Interview and Appoint an Actuarial Services Firm 11) Interview and Approve the Money Manager(s) based on Investment Consultant’s recommendations 12) Ensure Compliance with the Investment Policy 13) Approve Minutes 14) Approve Disbursements Reports 15) Approve appropriate expenses of the Board of Trustees following the Procurement Policy 16) Regularly review Pension Plan Financial statements 17) Determine and authorize all claims and entitlements to benefit payments 18) Approve Experience Studies Updated at Pension Meeting 8/8/11

Former Procedures and Responsibilities of the Pension Plan Administrator – to be parsed to several employees:

Human Resources & Communications Department Staff Assistant: Prepare all meeting advertisements Attend all meetings for the Pension Board of Trustees Prepare the final agenda and assemble the agenda packet Record/take minutes for all trustee meetings [usually 4 per year] and workshops Post minutes on website Obtain executed minutes and file Coordinate elections [circulate ballots, tally results, publish results] Prepare appropriate correspondence and mailings to trustees and others Coordinate Trustee related travel (in the event multiple trustees are travelling otherwise the

individual staff assistant will coordinate travel) Human Resources Records Coordinator:

Obtain employee request for retirement calculations forms Discuss benefit calculation options with employee Respond to records requests for all but Trustees

Assistant General Manager & CFO: Schedule meetings and workshops, attempting to have a quorum Prepare draft the agendas Prepare Agenda Item (AIS) Sheets complete with all documentation Review minutes prepared by staff assistant Implement administrative changes Process employee requests for benefit calculations Coordinate employee requests for benefit calculations Preparation and maintenance of resolutions and amendments Monitor bank account to ensure adequate balances for projected disbursements Maintenance of investment policy Provide information and technical assistance when needed Coordinate completion of Board of Election Form 1F Coordinate all activities with actuaries, attorneys, auditors, investment consultant, money

managers & trustees Trustee training Respond to records requests from trustees & all other inquiries Approve invoices for all vendors (money managers, custodian, investment consultant, actuary,

etc.) for payment [obtain 2nd approval from Finance] Prepare checks Enter checks into FSB “Positive Pay” for validation/protection & respond to all exceptions Maintain disbursement report Maintain term vested schedule Coordinate with HR commencement of term benefit payments Coordinate annual actuarial evaluation Coordinate periodic impact statements with actuary Every two years, work with attorney to prepare a Summary Plan Document Every five years, work with actuary to conduct an Experience Study [provide necessary

documents] Annually, in January, update the ethics commission website to ensure current trustee data Annually, update the Ethics CVommission website for Utility Board & Pension Annually, follow up with all trustees to ensure they file their ettics commission forms by July 1st