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ASSUMPTIONS & PROVISIONSWelcome to the Davie Police Officers' Pension Plan - Assumptions & Provisions Page. As a participant in the Davie Police Officers' Pension Plan, you are included in a program of benefits to help you meet your financial needs in retirement, or in the event of disability or death. The purpose of this booklet is to give you a brief description of benefits available to you under your pension plan.

Table XII
Actuarial Assumptions and Actuarial Cost Method

1. Mortality:

For healthy participants, the RP-2000 Mortality Table was used with separate rates for males and females.

For disabled participants, the 1985 Pension Disability Table was used with separate rates for males and females.

No provision was made for future mortality improvement.

50% of all pre-retirement deaths are assumed to be duty related.

2. Interest to be Earned by Fund:

7.60%, compounded annually, net of investment expenses.

3. Allowances for Expenses or Contingencies:

Estimated by net of investment fees paid during previous year.

4. Employee Withdrawal Rates:

Withdrawal rates were used in accordance with tables per the following illustrative example:

  Withdrawal Rates
Per 100 Employees
Age Male Female
20 8.4 14.0
25 5.6 8.4
30 3.9 5.6
35 2.8 3.9
40 1.7 2.8
45 1.1 1.7
50 0.2 1.1
55 & over 0.0 0.0

5. Assumptions on Pensionable Overtime Hours

Each member is assumed to continue to work the same number of overtime hours as in the most recent plan year, subject to the 300 hours maximum, for each future year.

6. Disability Rates:

The 1985 Disability Study - Class 1 with separate male and female rates were used. 75% of disabilities assumed to be service incurred, 25% assumed to be non-service incurred.

7. Salary Increase Factors:

Current salaries were assumed to increase at a rate of 5.5% per year until retirement.

8. Rates of Retirement:

The following are the retirement rates assumed for the participants eligible for retirement:

Participants with
20 or more years
of Benefit Service
Yrs Of Svc  Percentage Retiring 
20 65%
21-24 50%
25 + 100%
Participants with
less than 20 years
of Benefit Service
Age  Percentage Retiring 
50-54 25%
55-59 50%
60 + 100%

However, active participants eligible for retirement that have less than 20 years of Benefit Service as of the valuation date are assumed to have a minimum of one year future service.

9. Asset Valuation Method:

The actuarial value of assets is determined by smoothing the differences between actual investment earnings and assumed investment return over three (3) years. This method was adopted effective October 1, 2007 with no phase-in. The resulting value would then be limited to between 80% and 120% of market value.

10. Actuarial Cost Method:

Normal Retirement, Termination, Disability and Pre-Retirement Death Benefits: Entry-Age-Actuarial Cost Method.

Under this method the normal cost for each active employee is the amount which is calculated to be a level percentage of pay that would be required annually from his date of hire to his retirement age to fund his estimated benefits, assuming the plan had always been in effect. The normal cost for the plan is the sum of the individual normal costs for all active participants. The actuarial accrued liability as of any valuation date for each active employee or inactive employee who is eligible to receive benefits under the plan is the excess of the actuarial present value of estimated future benefits over the actuarial present value of current and future normal costs. The unfunded actuarial accrued liability as of any valuation date is the excess of the actuarial accrued liability over the actuarial value of assets of the plan.

11. Marriage Assumptions:

100% of active participants were assumed married, with husbands three (3) years older than wives.

12. Valuation of Normal Form of Payment:

The normal form of payment is valued as an unreduced joint and 60% survivor annuity benefit for married members. For unmarried members, the normal form of payment is valued as a ten year certain and life annuity.

13. Changes from October 1, 2013 Actuarial Valuation:

The actuarial assumptions on mortality table, fund investment return, salary increases, and allowances for expenses have been revised in this valuation. The assumed fund investment return was changed from 7.90% to 7.60%, (net of investment expenses), compounded annually. The assumed future salary increases was changed from 6.25% per year to 5.50% per year. The rates in the termination table were reduced by 20% and the mortality table was changed from GAM83 to RP-2000. The changes were made to better reflect expected plan experience. The allowances for expenses changed from gross of investment fees to net of investment fees.