CITY EMPLOYEE PENSION PLANS The City of Sanibel contributes to two separate pension plans established for its employees : a ) GENERAL EMPLOYEES RETIREMENT PLAN : A Defined Benefit Plan i ) Funding : the amount of funds the City and employees must contribute each year is a percent of payroll determined by the State of Florida Division of Retirement . Employee contribution is fixed at 4.4 % of payroll . The City’s contribution is variable depending on the current year’s cost for benefits yet to be funded plus an a mount sufficient to amortize the Unfunded Accrued Liability over no more than 30 years . However , this year the City amortization period has been shortened to 20 years to stem t he growing Unfunded Actuarial Accrued Liability . Thus the City’s contribution has been determined to be a minimum of 23.5 % of payroll for fiscal 2008 / 2009 ( approximately $ 1,200,000 ) . ii ) Benefits : At normal retirement an employ ee is entitled to 3.0 % of average compensation times credited service with a maximum of 30 years of credited service . There is a 2.75 % automatic COLA payment increase following 3 years of retirement . b ) POLICE OFFICERS RETIREMENT PLAN : A Defined Benefit Pl an . i ) Funding : the amount of funds the City and employees must contribute each year is a percent of payroll determined by the State of Florida Division of Retirement . The State of Florida makes a small contribution to this Plan ( ~ 2.5 % of payroll ) . Employe e contribution is fixed at 7.9 % of payroll . This year the City is required to fund this Plan at an increased rate of 29.7 % of payroll for 2009 / 2010 ( approximately $ 620,000 ) since the amortization period for this Plan has also been shortened to 20 years . i i ) Benefits : At retirement an officer is entitled to 3 % of average final compensation times credited service ( up to a maximum of 90 % of average final compensation ) . There is a 3 % automatic COLA annually following retirement . GENERAL EMPLOYEES POLICE Co nsultants Reports Oct . 1 , 2007 Oct . 1 , 2008 Oct . 1 , 2007 Oct . 1 , 2008 Total Accrued Liability ( b ) $ 18,698,245 $ 21,420,310 $ 12,596,035 $ 13,735,278 Total Assets ( a ) $ 11,333,284 $ 10,189,041 $ 7,927,016 $ 7,114,158 Unfunded Actuarial Accrued Liability ( UA AL ) ( b - a ) $ 7,364,960 $ 9,824,067 $ 4,783,278 $ 5,685,416 Funded ratio ( a / b ) 60.61 % 54.14 % 62.03 % 59.61 % Funded termination ratio 85 % 60 % 92.2 % 72.5 % Rate of Return on Investments 13.3 % - 13.2 % 13.57 % - 12.00 % Assumed rate of return 7.5 % 7.5 % 8.0 % 8.0 % C overed payroll $ 5,190,903 $ 5,448,952 $ 2,047,406 $ 2,089,004 City’s contribution for next year ( % of payroll ) $ 858,029 ( 15.4 % ) $ 1,200,000 ( 23.5 % ) estimated $ 500,504 ( 22.7 % ) $ 620,434 ( 29.7 % ) estimated Thus the City will have to contribute a minimum of $ 1,820,434 to the Plans this year . There appears to be some interest in increasing the contribution this year to further reduce the Unfunded Liability ( UL ) The concept is that the UL is an obligation incurred for current services and should be paid for by t he public who are the beneficiaries of those services .
