The purpose of this memorandum is to introduce and summarize a proposed ordinance amending the City of New Port Richey Firefighter’s Retirement System. With the adoption by the Florida Legislature of Chapter 2015-39, Laws of Florida, and changes to the Internal Revenue Code (IRC) and its associated Regulations, as well as guidance from the Internal Revenue Service (IRS), the following amendments to the pension plan are proposed:

1.       Section 17-36, Definitions, is being amended for IRC changes and requirements, to amend the definitions of:

a.       Actuarial Equivalent – to amend the definition to incorporate the Mortality Table and interest rate currently being used by the Plan’s actuary.

b.      Credited Service – to clarify IRC regulations on leave conversions.

c.       Firefighter – to update a reference in Florida Statutes.

d.      Spouse – to clarify the definition in accordance with a recent US Supreme Court ruling.

2.       Section 17-40, Contributions, is being amended by adding subsection (d) Other.

3.       Section 17-41, Benefit amounts and eligibility, is being amended to change the Normal Retirement Date to include IRC required language regarding Normal Retirement Age and Normal Retirement Date and add subsection (c) Required distribution date.

4.       Section 17-43, Disability, is being amended to more clearly identify those individuals who may be eligible to apply for a disability pension who have been terminated by the City due to medical reasons. Subsection (g), Workers’ Compensation, is also being amended to clearly identify the new minimum benefit accrual rate of 2.75%, as provided for in Chapter 175, Florida Statutes.

5.       Section 17-50, Maximum Pension, has had several subsections amended to comply with IRC changes.

6.       Section 17-50.10, Prior Fire Service, subsection (5), is being amended to correct a reference.

7.       Section 17-50.15, Deferred Retirement Option Plan, is being amended in accordance with recent direction from the IRS in connection with the issuance of several recent Favorable Determination Letters to clarify investment returns on DROP accounts and add several sections clarifying the DROP provisions as required by the IRS.

The proposed Ordinance includes amended provisions regarding when interest is calculated and paid, which will avoid a participant’s forfeiture of interest accrued during the first or second month of the quarter should the member terminate DROP participation at the end of the first or second month of the quarter.

Foster and Foster, the City’s actuarial consultants, have determined that adoption of the proposed ordinance will have no impact on the assumptions used in determining the funding requirements of the program.  It is the opinion of Foster and Foster that a formal Actuarial Impact Statement is not required in support of this ordinance as the changes do not result in a change in the valuation results.