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Actuary outlines valuation results and effects of firefighters plan closure and assumption changes
Summary
Brad Armstrong presented the Oct. 1, 2019 actuarial valuations, explained assumption changes, the firefighter interlocal agreement with Jacksonville, and a plan to amortize the unfunded liability over a multi-year schedule that the city will fund.
Brad Armstrong, the plan actuary, reviewed the October 1, 2019 valuations used to set contribution requirements for fiscal year 2021 and explained how subsequent events and assumption changes affect near-term funding.
Armstrong said his valuations are measured as of Oct. 1, 2019, and noted a period of market turbulence since that measurement date; he advised the board the financial position for Oct. 1, 2020 is not yet known. He confirmed the boards funding objective is to amortize unfunded accrued liability with the long-term target of 100% funded and that Florida practice differs across jurisdictions; "We set up the basis based on what we know as of the valuation. We're definitely on a schedule to pay those down throughout the amortization periods," he said.
Armstrong described a recent interlocal agreement by which Jacksonville consolidated firefighter services: most firefighters elected to remain in a plan administered by the City of Jacksonville and the city of Jacksonville Beach committed to pay off the existing unfunded liability on a level-dollar schedule over roughly 10 years. Armstrong said the fire plan's discount rate was set to 7% to match the receiving plan's assumption; he noted the fire plan's funded ratio moved materially because of multiple assumption changes and the plan closure.
The actuary also explained a recent and planned step-down in the investment return assumption: the general and police plans used 7.6% for the 10/01/2019 valuation and were scheduled to step down to 7.5% in the future; the actuary and trustee discussion noted this change reduces funded ratios even when investments show gains. Armstrong said the Florida Retirement System mortality table adoption for the next valuation projects shorter life expectancies and should be a "tailwind" improving funded ratios when applied.
Trustees voted to accept the actuarial valuation reports by board roll-call votes. Armstrong noted he would provide supplemental projections describing the firefighter plan closure impact and the funding schedule to staff for distribution.
