1. Town of Palm Beach Review of Pension Plans Pension Boards Meeting August 18, 2009

2. Purpose & Scope of Project  Review Town’s 3 Pension Plans (General Employees, Police, Fire)  Review Town’s retiree medical benefits  Confer with Pension Plan Boards regarding ideas and comments  Develop cost savings options  Estimate amount of cost savings for each option  Compare Town’s pension and retiree medical benefits to local market 2

3. 3 Consulting Team  Lead Actuaries  Jose Fernandez, ASA,EA, FCA, MAAA  Ed Macdonald, ASA, FCA, MAAA  Todd Green  Team Experience  Jose Fernandez - 28 years  Ed Macdonald - 23 years  Todd Green – 12 Years

4. 4 Our Clients State Clients  Alabama  Colorado  Connecticut  Georgia  Kentucky  Mississippi  Montana  Ohio  South Carolina  Virginia

5. 5 Our Clients Local Clients  Charlotte, NC – Firefighters  Cincinnati, OH  Cobb County, GA  Fort Lauderdale, FL  Hollywood, FL – Firefighters  Hollywood, FL – Police  Jefferson County, AL  Lexington-Fayette County, KY – Firefighters and Police  Miami, FL  Pensacola, FL

6. 6 Benefit Financing C + I = B + E Contributions Investment Income Benefits Paid Expenses (administration) ======== CIBECIBE  Basic Retirement Funding Equation

7. 7 Current Status of Town’s Pension Plans

8. 8 Pension & Retiree Medical Benefits Survey  Palm Beach County employers in FRS  Palm Beach County governmentals  Private employers in local marketplace  Benchmark Town’s benefits  Investigate pension changes other employers are considering

9. 9 Options to Consider  Florida Retirement System (FRS)  Terminate or freeze current plans – all employees join FRS  Close current plans to new members – all new hires join FRS and employees in current plans may stay or move to FRS  Limitation on buying past service  Lose future tax premium distributions  No member contributions

10. 10 Options to Consider  Two-tier Pension Plans  Reduce benefits prospectively for all plan members  Reduce benefits prospectively for future hires  May lose future tax premium distributions  Hybrid Plan  Defined benefit plan with reduced benefits, plus  Defined contribution plan  Defined Contribution Plan  Hybrid or Defined Contribution Plan covering new employees only, current employees would keep existing pension plans

11. 11 Options to Consider  Changes to Existing Pension Plans  COLA  Retirement age (20 and out, Rule of 65)  Benefit multiplier  Limit overtime in pension pay  Eliminate 13 th check (police and fire)  Share plan (fire)  Highest average pay period

12. 12 Options to Consider  Increase member contributions to pension plans  Fixed contribution rate increase  Variable member contribution rate based on total cost of plans  Increased pay in exchange for lower benefits

13. 13 Approach to Project  Gather ideas from Town and Pension Boards  Generate ideas for benefit changes and financing of pension plans  Analyze plan design alternatives and possible benefit changes  Evaluate short and long term financial impact  Work with plans’ actuary Gabriel Roeder Smith to estimate cost impact  Implications of benefit changes – competitive with marketplace, retention, recruitment

14. 14 Approach to Project  Present preliminary findings to Town for discussion  Financial and human resources impact of changes  Pros and cons of alternatives  Consequences of changes  Additional scenarios to evaluate  Present final report to Town and pension boards

15. 15 Timetable  Draft report by the end of October  Present final report to Town Council at December meeting