published: Sunday, July 15, 2012

League of Cities offers Avon Park pension plan option

By CHRISTOPHER TUFFLEY

christopher.tuffley@newssun.com

AVON PARK -- One option for providing a retirement plan for the city's police and fire fighters is to contract with the Florida League of Cities municipal pension trust fund.

Essentially this means outsourcing the fund and its administration and relinquishing local control.

Paul Shamoun, an account executive for the League, presented an brief overview of his organization's program at the city council's special meeting Wednesday.

Shamoun said the Florida League of Cities pension fund began in 1983 and collectively manages plans for Florida municipalities. Each municipality agrees to abide by the terms of the master trust agreement.

The fund encompasses 199 plans, of which 133 are Defined Contribution Plans, 48 Defined Benefit plans and 15 Other Post Employment Benefit Plans.

Shamoun said there were more than 5,500 participants in total and $360 million in assets.

The plan is overseen by a board of trustees and an investment advisory committee.

Investment management, performance monitoring, custodial banking, record keeping and actuarial services are bundled into a full-service administration.

According to Shamoun, the municipal pension fund "has a high quality bias and makes conservative investments to seek long-term growth of capital, consistent returns and avoiding extreme volatility in the market valuation.

"Big spikes in the market, mean big spikes in the budget," he said. Typically, the pension plan assumes a 7.5 percent return on investments.

One of the biggest advantages to the League's pension plan is the economy of scale, Shamoun said. Another is lowered administrative costs.

He said Avon Park police officers could expect $27,000 to $28,000 in administration savings and firefighters would see approximately $25,000.

By state statute, it is up to the to board of trustees of the Avon Park police and fire pension fund to decide on the pension fund's future.

The city council, on the other hand, has the right to decide whether or not to contract law enforcement services to another organization.

According to the Florida constitution, however, electors have the ultimate say when transferring power from the local to the county -- i.e. from police department to sheriff's office.