MEMORANDUM

To: Mayor and Councilors

Thru: Edward Lavallee, City Manager I:.J- \
From: Laura Sitrin, Director of F i n a n c e ~ / ~
Date: December 1, 2011
RE: Police and Fire Pension Valuations
Attached please find the July 1, 2011 police and fire pension valuations. I strongly
recommend that the Council consider having a joint workshop with the Trust and
Investment Commission where the actuaries from Buck Consultants come and
explain the valuations and funding levels. There are significant changes in pension
reporting on the way including having to record the entire liability on our statement
of net assets. There has also been constant media and public focus on the local
plans. The actuaries may be able to address some of the concerns and questions.
We have made a couple of changes in assumptions this year in preparation of GASB
proposed new pension accounting and reporting standards. The actuarial funding
method was changed from Projected Unit Credit to individual Entry Age Normal.
This actually helped us a little. We eliminated the five-year smoothing of assets and
went with market value. Mortality assumptions were revised because the actuaries
insisted on changing them.
Two new tables have been included in the report which you may find helpful. The
first is an appropriation forecast showing both what the City's annUlil required
contribution will be plus the funded status of the plan. This report can be found on
page 7 of the valuations. The second table is on page 8 and shows the major reasons
for changes in the liability during the last year.
The police pension shows a total liability of $76,570,775 of which $43,693,248 is
funded. The unfunded liability is $32,877,527 and the plan is 57.1% funded. The
annual required contribution for the FY13 budget is increasing by $562,393. '
The fire pension shows a total liability of $82,907,130. There are total assets of
$32,832,334 leaving an unfunded liability of $50,074,796 (a decrease from the prior
year). The City is 39.6% funded in the fire pension and the annual contribution for
FY13 is increasing by $261,970.
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AXerox Company
The City of Newport, Rhode Island
Police Pension System
Actuarial Valuation Report
Prepared as of July 1,2011
November 2011
IblUlckconsultants'
THE CITY OF NEWPORT, RHODE ISLAND
POLICE PENSION SYSTEM
Report of the July 1,2011, Actuarial Valuation
TABLE OF CONTENTS
Page
I. Purpose and Summary I
II. Membership Data I
Ill. Plan Provisions 2
IV. Assets 2
V. Actuarial Methods and Assumptions 2
VI. Funding Policy 2
VII. Analysis of Valuation Results 3
Tables
IA Valuation Results 5
IB Schedule of Funding Progress 6
IC Appropriation Forecast 7
1D Changes in Unfunded Liability for Fiscal Year Ending June 30, 2011 8
IE Development ofNPO for Fiscal Year Ending June 30, 2011 9
2A Distribution of Active Members as ofJuly I, 20II 10
2B Distribution of Retired Members and Beneficiaries as of July 1,2011 II
3 Actuarial Methods and Assumptions 12
4 Outline of Principal Plan Provisions 15
5 Glossary ofTerms 18
Page I
THE CITY OF NEWPORT, RHODE ISLAND
POLICE PENSION SYSTEM
Report of the July 1,2011, Actuarial Valuation
I. Purpose and Summary
This report presents the results of our July I, 20II, actuarial valuation of the City of Newport, Rhode
Island Police Pension System. The valuation was performed at the request of the City of Newport for
purposes of determining annual contribution levels for the City and to develop information regarding
actuarial liabilities required for the City's financial disclosures.
In summary, the recommended City contribution for the 2012-2013 fiscal year is $3,461,972, if
deposited in one lump sum on June 30, 2013. This contribution has been developed based on a 20-
,
year amortization of the unfunded actuarial liability. If the City would prefer to make monthly
contributions at the end of each month, it should contribute $279,031.
The development of the valuation results is shown in Tables IA through 5 and described in more detail on
the following pages.
The valuation reflects combined results for police hired before and after July I, 1984. It is our
understanding that prior to July I, 1998, these groups were segregated with separate actuarial valuations
performed in alternate years.
II. Membership Data
The City furnished data for active and retired members as of July I, 20II. Although we did not audit this
data, we did review it for reasonableness and consistency. Table 2A provides a distribution by age and
service for active members. Table 2B provides a distribution by age and gender for retired members and
beneficiaries.
Page 2
THE CITY OF NEWPORT, RHODE ISLAND
POLICE PENSION SYSTEM
Report of the July 1,2011, Actuarial Valuation
III. Plan Provisions
A summary of the principal benefit provisions recognized for purposes of the valuation is provided in
Table 4. This summary reflects our understanding of the System's benefit provisions based upon
information provided to us by the City.
IV. Assets
The City provided us with the asset information used for purposes of this valuation. According to this
information, the market value of assets attributable to this plan was $43,69,3,248 as of July I, 2011,
compared to $35,525,199 as ofJuly 1,2010. For valuation purposes, assets are valued at market value. It is
our understanding that there are no contributions due for the fiscal year ending June 30, 20II, which were
accrued as ofJune 30, 2011.
V. Actuarial Methods and Assumptions
The actuarial methods and assumptions employed in this valuation are outlined in Table 3. Primary
economic assumptions include 7.50% investment return (net of expenses) and 3.50% weighted-average
salary increases. The individual Entry Age Normal actuarial cost method has been used to determine
liabilities for funding purposes and to determine liabilities for financial disclosure purposes as required by
accounting standards. The mortality assumption uses mortality tables prescribed by the IRS for non-
governmental pension plans, as specified in IRS Regulation 1.430(h)(3)-I. The mortality tables are applied
on a fully generational basis, meaning that continued mortality improvement is reflected. The assumed rate
for Cost ofLiving Adjustments is 3.00%.
Page 3
THE CITY OF NEWPORT, RHODE ISLAND
POLICE PENSION SYSTEM
Report of the July 1,2011, Actuarial Valuation
VI. Funding Policy
It is our understanding that, beginning with the 1996-1997 fiscal year, the City adopted a funding policy
designed to include in its annual contribution an amount that reflects the amortization of the unfunded
actuarial accrued liability over a 30-year period. Beginning with the July I, 2002 valuation, the 30-year
period was reduced by one year and is being stepped down by one year for each valuation going forward.
This policy is intended to satisfy the requirements of GASB Statement No. 27.
Our recommended contribution for 2012-2013 is developed as the 20-year contribution for the fiscal year
of the valuation (2011-2012), projected forward with expected growth in covered payroll.
VII. Analysis of Valuation Results
Valuation results are summarized in Table lA, including a comparison to prior valuation results. Assets
are currently about 57% of accrued liabilities.
The Plan realized an actuarial gain of approximately $5.6 million for the Plan year. Liabilities had a loss of
$0.3 million, which was completely offset by a $5.9 million gain in assets. The Plan's gains and losses are
illustrated with more detail in Table ID.
In addition, several changes were implemented since the last valuation. The actuarial funding method was
changed from Projected Unit Credit to individual Entry Age Normal, and the asset method was changed
from 5 year smoothed actuarial value of assets to market value of assets. In addition, the mortality
assumptions were revised. The net effect of these changes was a $4,055,043 decrease in unfunded liability
and $416,886 increase in normal cost.
The normal cost illustrated in Table IA reflects the long-term cost of the plan absent underfunding. This
cost is about 23.5% ofcurrent payroll.
THE CITY OF NEWPORT, RHODE ISLAND
Date
Page 4
Report of the July 1,2011, Actuarial Valuatiou
This report fairly represents the actuarial position of the City of Newport Police Pension System as of
July 1, 2011, in accordance with generally accepted actuarial principles applied consistently with the
preceding valuation. In our opinion, the actuarial assumptions used to compute actuarial accrued liability
and normal cost are reasonably related to plan experience and to reasonable expectations, and represent our
best estimate of anticipated plan experience.
POLICE PENSION SYSTEM
Daniel Sherman is an Associate of the Society of Actuaries, a Member of the American Academy of
Actuaries and meets the Qualification Standards of the Academy to render the actuarial opinions contained
herein. This report has been prepared in accordance with all applicable Actuarial Standards of Practice, and
we are available to answer questions concerning it.
Respectfully Submitted,
BUCK CONSULTANTS, LLC
Robert P. Lessard
Consultant
Daniel W. Sherman, ASA, MAAA, EA
Director, Consulting Actuary
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Page 5
TABLEIA
THE CITY OF NEWPORT, RHODE ISLAND POLICE PENSION SYSTEM
VALUATION RESULTS
A. Membership Data July I, 2010' July I, 2011
I,
Active Members
a, Number 78 77
b. Expected covered payroll for fiscal
year beginning on the valuation date $ 4,972,175 $ 5,048,815
c. Average pay $ 63,746 $ 65,569
d, Average age 42.5 42,7
e. Average service 15.4 15,1
2. Retired members and beneficiaries
a, Number 116 118
b. Aggregate annual pensiou $ 3,789,778 $ 4,088,826
c, Average annual pension $ 32,670 $ 34,651
d. Average age 67,8 67.7
3,
Deferred vested members
a. Number 0 I
b. Aggregate annual pension N/A $ 24,240
c. Average annual pension N/A $ 24,240
d, Averageage N/A 42.9
B. Basic Valuation Results
I,
Normal cost' $ 778,731 (15,7%) $ 1,185,085 (23.5%)
2. Actuarial accmed liability
a. Active members $ 28,157,259 $ 25,743,812
b. Retirees and Beneficiaries 46,709,589 50,575,217
c. Deferred vested 0 251,746
d. Total $ 74,866,848 $ 76,570,775
3. Valuation assets $ 42,240,992 $ 43,693,248
4. Unfunded actuarial accrued liability $ 32,625,856 $ 32,877,527
July 1,2011 to July 1,2012 to
C, Development of Contribution June 30, 2012 June 30, 2013
1. Contribution for fiscal year of
valuation
a, Normal cost with interest $ 866,436 $ 1,318,555
b. Amortization of unfunded actuarial
accrued liability 2,460,279 2,560,548
2
c. Anticipated employee contributions
with interest (427,136) (417,131)
d, City contribution
assumed deposited June 30 $ 2,899,579 $ 3,461,972
2. Monthly City contribution
beginning July 31 $ 233,703 $ 279,031
1 Percentages in parentheses represent amounts as percentages ofcovered payroll.
2 Amortized over 20 years from the valuation date, with one-year interest adjustment, as a level percentage of payroll,
Page 6
TABLElB
THE CITY OF NEWPl>RT, RHODE ISLAND POLICE PENSION SYSTEM
SCHEDULE OF FUNDINGPROGRESS
(I) (2) (3) (4) (5) (6) (7)
Unfunded UAALasa
Actuarial Actuarial Actuarial Percentage
Valuation Value of Accrued Accrued Funded Covered of Covered
Date Assets Liability Liability Status Payroll Payroll
(2) - (3) (2) / (3) (4)/(6)
June 30, 2002 28,060,710 65,986,217 (37,925,507) 42.53% 3,775,389 (100455%)
June 30, 2003 29,217,703 67,277,252 (38,059,549) 43.43% 4,007,324 (949.75%)
June 30, 2004 33,645,290 58,014,568 (24,369,278) 57.99% 4,383,668 (555.91 %)
June 30, 2005 36,209,737 61,626,704 (25,416,967) 58.76% 4,527,283 (561.42%)
June 30, 2006 39,118,1 17 62,635,048 (23,516,931) 62.45% ,4,757,61 I (494.30%)
June 30, 2007 44,288,895 70,038,232 (25,749,337) 63.24% 4,752,900 (541.76%)
June 30, 2008 41,952,553 68,177,847 (26,225,294) 61.53% 5,129,935 (511.22%)
June 30, 2009 37,852,800 73,443,988 (35,591,188) 51.54% 4,990,094 (713.24%)
June 30, 2010 42,240,992 74,866,848 (32,625,856) 56.42% 4,972,175 (656.17%)
June 30, 201 I 43,693,248 76,570,775 (32,877,527) 57.06% 5,048,815 (65I.I9%)
The following exhibit forecasts the Annual Required Contribution and Funding Ratio under the adopted
funding schedule.
Note that the forecast is based upon an "open group" method. This method assumes that sufficient
employees will be hired each year to keep the number constant. The total payroll of the system is expected
to increase 3.5% per year. Payments are assumed to be made at the end of each year.
The employer total cost is expected to increase until the unfunded accrued liabilities are completely paid
off in 2032, at which time only the normal cost will remain.
Anticipated Annual
Fiscal Year Amortization Employee Required Benefit Funded
Ending In Normal Cost of VAL Contributions Contribution Payments Ratio %
2013 1,318,555 2,560,548 (417,I31) 3,461,972 4,399,231 59.7%
2014 1,364,704 2,650,167 (431,731) 3,583,140 4,642,386 61.1%
2015 1,412,469 2,742,923 (446,842) 3,708,550 4,953,343 62.4%
2016 1,461,905 2,838,925 (462,481) 3,838,349 5,217,463 63.8%
2017 1,513,072 2,938,287 (478,668) 3,972,691 5,450,968 65.3%
2018 1,566,030 3,041,127 (495,421) 4,111,736 5,679,598 66.8%
2019 1,620,841 3,147,566 (512,761) 4,255,646 5,899,783 68.4%
2020 1,677,570 3,257,731 (530,708) 4,404,593 6,134,563 70.1%
2021 1,736,285 3,371,752 (549,283) 4,558,754 6,351,594 71.9%
2022 1,797,055 3,489,763 (568,508) 4,718,310 6,576,303 73.7%
2023 1,859,952 3,611,905 (588,406) 4,883,451 6,808,962 75.7%
2024 1,925,050 3,738,322 (609,000) 5,054,372 7,049,852 77.8%
2025 1,992,427 3,869,163 (630,315) 5,231,275 7,299,265 80.1%
2026 2,062,162 4,004,584 (652,376) 5,414,370 7,557,501 82.4%
2027 2,134,338 4,144,744 (675,209) 5,603,873 7,824,873 85.0%
2028 2,209,040 4,289,810 (698,841) 5,800,009 8,101,705 87.7%
2029 2,286,356 4,439,953 (723,300) 6,003,009 8,388,330 90.5%
2030 2,366,378 4,595,351 (748,616) 6,213,113 8,685,096 93.6%
2031 2,449,201 4,222,044 (774,818) 5,896,427 8,992,361 96.9%
2032 2,534,923 (801,937) 1,732,986 9,310,496 100.0%
2033 2,623,645 (830,005) 1,793,640 9,639,886 100.0%

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TABLEIC
THE CITY OF NEWPORT, RHODE ISLAND POLICE PENSION SYSTEM
APPROPRIATION FORECAST
Page 7
TABLElD
Page 8
THE CITY OF NEWPORT, RHODE ISLAND POLICE PENSION SYSTEM
CHANGES IN UNFUNDED LIABILITY FOR FISCAL YEAR ENDING JUNE 30, 2011
($5,9 I8,226)
446,169
76,229
(I I 1,352)
(258,217)
(122,990)
388,524
320,782
(451,702)
($5,630,783)
Investment
Salary Increases
New Participants
Continuing Actives
Active - Retirements
Active - Terminations
Active - Mortality
Active - Disabilities
Inactive - Mortality and data adjustments
Total (gain)/Ioss
In performing the actuarial valuation, various assumptions are made regarding such factors as mortality,
retirement, disability and withdrawal rates as well as payroll, salary increases and investment returns. A
comparison of the current valuation and the prior valuation is made to determine how closely actual
experience corresponded to anticipated occurrences. This analysis of the system provides insight into the
overall quality ofthe actuarial assumptions and helps explain any change in the annual appropriation.
During the last year, the total unfunded actuarial accrued liability increased by 0.8% to $32,877,527.
However, the plan experienced a gain of approximately $5.6 million. The main cause for the gain was that
investment returns exceeded expectations. The sources of the (gain)/Ioss are as follows:
In addition, changes in the actuarial funding method, asset funding method and mortality assumptions lead
to a $4,055,043 decrease in unfunded liability and $416,886 increase in normal cost.
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-Page 9
TABLE IE
THE CITYOF NEWPORT, RHODE ISLAND POLICE PENSIONSYSTEM
DEVELOPMENT OFNPOFORFISCAL YEAR ENDINGJUNE 30, 2011
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
Annual Annual
Required Pension Cost Increase in End of Year
Val. Int. Amortization Amortization Contribution Actual City Beginning of [(5)+(7)*(2)- NPO NPO
Fiscal Year Rate Years Factor' (ARC) Cont. yearNPO (7)/(4)] [(8)-(6)] [(7)+(9)]
1991-1992 8.00% 30 22.7490 1,638,878 1,858,911 (370,266) 1,625,533 (233,378) (603,644)
1992-1993 8.00% 30 22.7490 1,671,097 1,930,973 (603,644) 1,649,341 (281,632) (885,276)
1993-1994 8.00% 30 22.7490 1,823,577 2,136,173 (885,276) 1,791,670 (344,503) (1,229,779)
1994-1995 8.25% 30 18.4393 2,103,989 2,226,085 (1,229,779) 2,069,225 (156,860) (1,386,639)
1995-1996 8.25% 30 18.4393 2,279,943 2,322,898 (1,386,639) 2,240,745 (82,153) (1,468,792)
1996-1997 8.25% 30 18.4393 2,426,242 1,793,369 (1,468,792) 2,384,722 591,353 (877,439)
1997-1998 8.25% 30 18.4393 2,547,554 2,759,907 (877,439) 2,522,750 (237,157) (1,114,596)
1998-1999 825% 30 18.4393 2,274,548 3,137,686 (1,114,596) 2,243,040 (894,646) (2,009,242)
1999-2000 8.25% 30 18.4393 2,094,752 2,510,675 (2,009,242) 2,037,954 (472,721) (2,481,963)
2000-2001 8.25% 30 20.1557 1,696,189 2,703,167 (2,481,963) 1,614,567 (1,088,600) (3,570,563)
2001-2002 825% 30 20.1557 1,985,197 2,273,062 (3,570,563) 1,867,775 (405,287) _(3,975,850)
2002-2003 8.25% 30 - 20.1557 2,099,345 2,698,300 (3,975,850) 1,968,594 (729,706) (4,705,556)
2003-2004 8.25% 29 19.6866 3,247,875 3,247,875 (4,705,556) 3,098,690 (149,185) (4,854,741)
2004-2005 8.25% 28 19.2064 3,389,486 3,889,486 (4,854,741) 3,241,737 (647,749) (5,502,490)
2005-2006 8.25% 27 15.8723 2,440,649 2,440,649 (5.,502,490) 2,333,367 (107,282) (5,609,772)
2006-2007 8.25% 26 15.5296 2,385,996 2,440,649 (5,609,772) 2,284,421 (156,228) (5,766,000)
2007-2008 8.25% 25 14.8848 2,272,177 2,272,049 (5,766,000) 2,183,857 (88,192) (5,854,192)
2008-2009 8.25% 24 14.5315 2,406,091 2,472,177 (5,854,192) 2,325,982 (146,195) (6,000,387)
2009-2010 8.25% 23 14.1638 2,470,822 2,670,822 (6,000,387) 2,399,432 (271,390) (6,271,777)
2010-2011 7.50% 22 14.1447 3,116,642 3,116,642 (6,271,777) 3,089,660 (26,982) (6,298,759)
3 Amortization factors used for periods prior to 2000-2001 did not r e t l ~ e t future longevity or promotion pay increases.
TABLE2A
THE CITY OF NEWPORT, RHODE ISLAND POLICE PENSION SYSTEM
DISTRIBUTION OF ACTIVE MEMBERS AS OF JULY 1,2011
Page 10
Completed Years ofService
IAge Under 1 1 2 3 4 5t09 10 to 14 15 to 19 20 to 24 25 to 29 30 to 34 35 to 39 40 & un Total
No. No. No. No. No. No. No. No. No. No. No. No. No. No.
!under 25
~ 5 to 29 2 4 I 7
GO to 34 I 2 3 I 7
~ 5 to 39 I 7 3 II
140 to 44 2 8 8 2 20
5to49 I 3 10 I 15
50 to 54 I I 5 6 13
~ 5 to 59 I 1 2
60 to 64 1 I
65 to 69
170 & up I I
h-otal 4 7 13 13 12 19 8 I 77
Average: Age
Service
42.66
15.09
Number of participants: Vested
Non-vested
53
24
Page 11
TABLE2B
THE CITY OF NEWPORT, RHODE ISLAND POLICE PENSION SYSTEM
DISTRIBUTION OF RETIRED MEMBERS AND BENEFICIARIES AS OF JULY 1, 2011
Men Women
Age Number Amount Number Amount
Under40 1 $8,942
40-44 2 84,839 1 $43,022
45-49 4 180,948 1 8,859
50-54 2 113,304
55-59 19 789,221 4 74,485
60-64 15 652,352 4 86,254
65-69 14 648,834 4 60,494
70-74 12 476,874 2 51,712
75 1 66,106 1 25,232
76 1 41,768
77 1 38,964 1 11,183
78
79 2 42,762
80 2 12,266
81
82 3 48,698
83
84 2 95,160 3 41,716
85 1 43,122
I
86 1 12,068
I
87 4 134,077 1 17,415
88 3 66,557
I
89 2 53,514
I 90
~
91
92 1 28,991
I
93
I
94
I
95 1 3,260
96 1 21,102
I
97 1 4,725
I
98
I
99
100

84 $3,499,778 34 $589,048

There is one member entitled to a deferred vested benefit.

THE CITY OF NEWPORT, RHODE ISLAND POLICE PENSION SYSTEM

ACTUARIAL METHODS AND ASSUMPTIONS
Actuarial Cost Method:
Asset Valuation Method:
Actuarial Assumptions:
1. Interest
2. Salary Increases
3. Cost afLivingIncrease
Page 12
TABLE 3
Individual Entry Age Normal actuarial cost method: Under this
method, the actuarial present value of the projected benefits of each
individual included in the valuation is allocated as a level percentage
of the individual's projected compensation between entry age and
assumed exit. The normal cost is the portion of the actuarial present
value allocated to the valuation year. For inactive members, the
actuarial present value of projected benefits is equal to the Present
Value of Benefits. Inactive members do not have a normal cost. The
portion of this actuarial present value not provided for at the
valuation date by the sum of the actuarial value of the assets and
actuarial present value of future normal costs is the unfunded
actuarial accrued liability. The unfunded actuarial accrued liability
represents the excess of the total actuarial accrued liability over the
valuation assets. .
The prior valuation used the Projected Unit Credit actuarial cost
method.
Market value, as reported by the City
The prior valuation reflected the 5 year smoothed actuarial value of
assets.
7.50% per year, net of investment expenses
3.00% per year plus longevity increases of 3.00% after seventh year
of employment and 0.50% for each year of employment thereafter
through the thirty-first year of employment. No longevity increases
are assumed after the thirty-first year of employment.
3.00%
The 1985 Wyatt Pension Disability Table (unisex rates)
Assumed to be paid by the plan sponsor outside the trust
Page 13
Probability ofDisability
0.17%
0.29
0.72
1.21
Probability ofWithdrawal
3.00%
2.25
2.00
1.75
1.50
1.25
1.00
0.75
0.50
0.25
0.00
Probability ofRetirement
5%
2
40
20
100
Years ofService
less than I
I
2
3
4
5
6
7
8
9
10 or more
AttainedAge
25
35
45
55
TABLE 3
(continued)
Rates of disability are based on an employee's age. Selected ages are
listed below. 100% of disabilities are assumed to be non-service
related.
The RP-2000 Combined Mortality Table was the mortality
assumption in the prior valuation.
Mortality tables prescribed by the IRS for non-governmental plans,
as specified in IRS Regulation 1.430(h)(3)- I, applied on a fully
generational basis
Rates ofwithdrawal are based on an employee's length of service, as
follows:
Years ofService
20
21-24
25
26-34
35 or more
b. Disabled Members
4. Mortality
a. Healthy Members
5. Disability
6. Withdrawal
7. Retirement Age
8. Administrative Expenses
9. Benefit and Compensation Limits
10. Marriage / Dependents
II. Valuation Date
Page 14
TABLE 3
(continued)
Benefit limits under Section 415 and compensation limits under
Section 401(a)(l7) of the Internal Revenue Code are assumed to
have no impact on benefits earned under this plan.
75% of active police are assumed to be married. For all participants,
wives are assumed to be three years younger than their husbands.
For purposes of valuing the death benefit, unmarried members are
assumed to have no dependent children at death.
July 1,2011
THE CITY OF NEWPORT, RHODE ISLAND POLICE PENSION SYSTEM
OUTLINE OF PRINCIPAL PLAN PROVISIONS
TABLE 4
July I, 1995
Members who have completed 20 years of service may retire.
Benefit as a Percentage
ofannual Salary
50%
52.5
55
57.5
60
62.5
64
65.5
67
68.5
70
Years ofService
20
21
22
23
24
25
26
27
28
29
30 or more
All members of the police department who contribute to the
pension fund
Page 15
The annual benefit at retirement is equal to the percentage of annual
salary specified in the table below, plus $100 per year for each year
of service over 25 (maximum $1,000). For pension purposes, annual
salary includes regular and longevity pay.
Retirement benefits commence as of the first payroll period after
retirement.
The annual benefit calculated in accordance with the formula In (b)
above is payable monthly for the remainder of the retired member's
life, with 67.5% of the member's benefit payable for the lifetime of
his surviving spouse.
b. Benefit Formula
Most Recent Amendment
a. Eligibility
d. Form of Payment
c. Commencement Date
2. Eligibility'
3. Retirement
1. Effective Dates

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Page 16
TABLE 4
(continued)
Upon tennination of employment after i 0 years of service a member
is eligible for a benefit deferred to retirement age.
2.5% of annual salary multiplied by full years of service at
telmination
20th anniversary of employment
Same as retirement
No benefit prior to completion of 7 years of service. A member who
is disabled with between 7 and 20 years of service is eligible to
receive disability retirement benefits.
Retirement because of a job related mental or physical incapacity
50% of annual salary
66-2/3% of annual salary
Benefits commence as ofthe first payroll period after disability.
Same as retirement
A member who leaves employment prior to completjng 10 years of
service will receive a lump sum payment of his accumulated
contributions.
7. Death before Retirement
- Survivor Annuity Benefits
a. Eligibility
b. Benefit Formula
c. Commencement Date
d. Form of Payment
8. Retiree Cost ofLiving Increase
9. Employee Contributions
Page 17
TABLE 4
(continued)
Death while actively employed
Surviving spouse (or if none, dependent children) receives benefit of
67.5% of annual salary, reduced pro rata if deceased member had
less than 20 years of service.
Benefits commence as of the first payroll period after death.
Monthly life annuity
Pensions for retirees (but not disabled retirees or beneficiaries) are
indexed to the negotiated pay increases'for active police. Terminated
vested members receive 3% annual increases after benefit
commencement.
8% of salary
THE CITY OF NEWPORT, RHODE ISLAND POLICE PENSION SYSTEM
GLOSSARY OF TERMS
1. Present Value ofBenefits
2. Actuarial Cost Method
3. Actuarial Assumptions
4. Actuarial AccruedLiability
5. Normal Cost
6. Assets
7. UnfundedActuarial AccruedLiability
Page 18
TABLES
Represents the dollar value today of all benefits expected to be
earned by current members if all actuarial assumptions are exactly
realized.
The procedure that is used to allocate the present value of benefits
between the liability that is attributable to past service (Actuarial
Accrued Liability) and that attributable to future service.
Estimates made as to the occurrence of certain events that determine
the level of benefits to be provided and how long they will be
provided. The more important actuarifll assumptions include the
investment return on assets, salary increases and the rates of
turnover, disability, retirement and mortality.
The Present Value of Benefits reduced by the present value of future
Normal Costs.
That portion of the Present Value of Benefits that is attributable to
benefits to be earned in the coming year.
Market value of assets of the funds set aside though City and
member contributions to provide for benefits.
In the prior valuation, this value was represented by the actuarial
value of assets, which creates a smoothed value of the market value
of assets by spreading asset returns over the last 5 years.
That portion of the Actuarial Accrued Liability not covered by
Assets.
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The City of Newport, Rhode Island
Fire Pension System
Actuarial Valuation Report
Prepared as of july 1,2011
November 2011
blUlckconsultants

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THE CITY OF NEWPORT, RHODE ISLAND
FIRE PENSION SYSTEM
Report of the July 1,2011, Actuarial Valuation
TABLE OF CONTENTS
Page
I. Purpose and Summary I
II. Membership Data I
III. Plan Provisions 2
IV. Assets 2
V. Actuarial Methods and Assumptions 2
VI. Funding Policy 2
VII. Analysis of Valuation Results 3
Tables
IA Valuation Results 5
IB Schedule of Funding Progress 6
;
IC Appropriation Forecast 7
1D Changes in Unfunded Liability for Fiscal Year Ending June 30, 2011 8
IE Development ofNPO for Fiscal Year Ending June 30, 2011 9
2A Distribution of Active Members as of July 1,2011 10
2B Distribution of Retired Members and Beneficiaries as of July 1,2011 II
3 Actuarial Methods and Assumptions...... 12
4 Outline of Principal Plan Provisions 15
5 Glossary of Terms 18

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THE CITY OF NEWPORT, RHODE ISLAND
FIRE PENSION SYSTEM
Report ofthe July 1,2011, Actuarial Valuation
I. Purpose and Summary
This report presents the results of our July 1,2011, actuarial valuation of the City of Newport, Rhode
Island Fire Pension System. The valuation was performed at the request of the City of Newport for
purposes of determining annual contribution levels for the City and to develop information regarding
actuarial liabilities required for the City's financial disclosures.
In summary, the recommended City contribution for the 2012-2013 fiscal year is $4,822,711, if
.
deposited in one lump sum on June 30, 2013. This contribution has been developed based on a 20-
year amortization of the unfunded actuarial liability. If the City would prefer to make monthly
contributious at the end of each month, it should contribute $388,705 ou July 31,2012 and on the
last day of each of the next eleven months.
The development of the valuation results is shown in Tables lA through 5 and is described in more detail
on the following pages.
The valuation reflects combined results for firefighters hired before and after July 1, 1984. It is our
understanding that prior to July 1, 1998, these groups were segregated with separate actuarial valuations
performed in alternate years.
IL Membership Data
The City furnished data for active and retired members as of July I, 2011. Although we did not audit this
data, we did review it for reasonableness and consistency. Table 2A provides a distribution by age and
service for active members. Table 2B provides a distribution by age and gender for retired members and
beneficiaries.

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THE CITY OF NEWPORT, RHODE ISLAND
FIRE PENSION SYSTEM
Report ofthe July 1,2011, Actuarial Valuation
III. Plan Provisions
A summary of the principal benefit provisions recognized for purposes of the valuation is provided in
Table 4. This' summary reflects our understanding of the System's benefit provisions based upon
information provided to us by the City.
IV. Assets
The City provided us with the asset information used for purposes of this valuation. According to this
information, the market value of assets attributable to this plan was $32,832,334 as of July I, 2011,
compared to $27,072,586 as ofJuly 1,2010. For valuation purposes, assets are valued at market value. It is
our understanding that there are no contributions due for the fiscal year ending June 30, 2011, which were
accrued as ofJune 30, 2011.
V. Actuarial Methods and Assumptions
The actuarial methods and assumptions employed in this valuation are outlined in Table 3. Primary
economic assumptions include 7.50% investment return (net of expenses) and 3.20% weighted-average
salary increases. The individual Entry Age Normal actuarial cost method has been used to determine
liabilities for funding purposes and to determine liabilities for financial disclosure purposes as required by
accounting standards. The mortality assumption uses mortality tables prescribed by the IRS for non-
governmental pension plans, as specified in IRS Regulation 1.430(h)(3)-I. The mortality tables are applied
on a fully generational basis, meaning that continued mortality improvement is reflected. The assumed rate
for Cost of Living Adjustments for those retired prior to August 26, 2011 is 3.00%. For those that retire on
or after August 26, 2011, the annual Cost of Living Adjustment will equal the Bureau of Labor Statistics
CPI for Northeast Urban Wage Earners but will not exceed 3.00% nor be lower than 0.50%.

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THE CITY OF NEWPORT, RHODE ISLAND
FIRE PENSION SYSTEM
Report of the July 1,2011, Actuarial Valuatiou
VI. Funding Policy
It is our understanding that, beginning with the 1996-1997 fiscal year, the City adopted a funding policy
designed to include in its annual contribution an amount that reflects the amortization of the unfunded
actuarial accrued liability over a 30-year period. Beginning with the July 1, 2002 valuation, the 30-year
period was reduced by one year and is being stepped down by one year for each valuation going forward.
This policy is intended to satisfy the requirements of GASB Statement No. 27.
Our recommended contribution for 2012-2013 is developed as the 20-year contribution for the fiscal year
of the valuation (2011-2012), projected forward with expected growth in covered payroll.
VII. Analysis of Valuation Results
Valuation results are summarized in Table lA, including a comparison to prior valuation results. Assets
are currently about 40% of accrued liabilities.
The Plan realized an actuarial gain of approximately $5.6 million for the Plan year. Liabilities had a gain
of $2.1 million, while assets accounted for a $3.5 million gain. The Plan's gains and losses are illustrated
with more detail in Table lD.
In addition, several changes were implemented since the last valuation. The actuarial funding method was
changed from Projected Unit Credit to individual Entry Age Normal, and the asset method was changed
from 5 year smoothed actuarial value of assets to market value of assets. Also, the employee contribution
rate and retirement eligibility changed for all actives, and the cost of living adjustment was changed for
members retiring on or after August 26, 2011. In addition, the mortality assumptions were revised. The net
effect of these changes was a $2,784,952 decrease in unfunded liability and $183,706 increase in normal
cost.
The normal cost illustrated in Table IA reflects the long-term cost of the plan absent underfunding. This
cost is about 23.9% of current payroll.
Date

Page 4
This report fairly represents the actuarial position of the City of Newport Fire Pension System as of July I,
2011, in accordance with generally accepted actuarial principles applied consistently with the preceding
valuation. In our opinion, the actuarial assumptions used to compute actuarial accrued liability and normal
cost are reasonably related to plan experience and to reasonable expectations, and represent our best
estimate ofanticipated plan experience.
THE CITY OF NEWPORT, RHODE ISLAND
FIRE PENSION SYSTEM
Respectfully Submitted,
Daniel Sherman is an Associate of the Society of Actuaries, a Member of the American Academy of
Actuaries and meets the Qualification Standards of the Academy to render the actuarial opinions contained
herein. This report has been prepared in accordance with all applicable Actuarial Standards of Practice, and
we are available to answer questions concerning it.
Report of the July I, 20II, Actuarial Valuation
BUCK CONSULTANTS, LLC
Robert P. Lessard
Consultant
Daniel W. Sherman, ASA, MAAA, EA
Director, Consulting Actuary
THE CITY OF NEWPORT, RHODE ISLAND FIRE PENSION SYSTEM
VALUATION RESULTS
A. Membership Data July I. 2010 July 1,2011
I. Active Members
a. Number 88 84
b. Expected covered payroll for fiscal
year beginning on the valuation date $ 4,996,160 $ 4,891,283
c, Average pay $ 56,775 $ 58,230
d. Average age 43.1 43.6
e. Average service 13.6 14.0
2. Retired members and beneficiaries
a. Number 114 117
b. Aggregate auuual pension $ 4,494,909 $ 4,657,455
c. Average annual pension $ 39,429 $ 39,807
d. Average age 67.5 67.5
3, Deferred vested members
a. Number 1 1
b. Aggregate auuual pensiou $ 18,456 $ 18,456
c. Average annual pension $ 18,456 $ 18,456
d. Average age 50.8 51.8
B. Basic Valuation Results
1. Normal cose $ 938,485 (18.8%) $ 1,167,259 (23.9%)
2. Actuarial accrued liability
8. Active members $ 24,432,727 $ 22,242,609
b. Retirees and Beneficiaries 57,476,525 60,531,947
c. Deferred Vesteds 121.704 132,574
d. Total $ 82,030,956 $ 82,907,130
3. Valuation assets $ 30,820,663 $ 32,832,334
4. Unfunded actuarial accrued liability $ 51,210,293 $ 50,074,796
July 1,2011 to July 1,2012 to
C. Developmeut of Contribution June 30, 2012 June 30. 2013
I. Contribution for fiscal year of
valuation
a. Normal cost with interest $ 1,041,155 $ 1,294,957
b. Amortization ofunfuuded actuarial
accrued liability 3,947,536 3,982,309
2
c. Anticipated employee coutributions
with interest (427,950) (454,555)
d. City contributiou
assumed deposited June 30 $ 4,560,741 $ 4,822,711
2. Monthly City coutribution
begiuuing July 31 $ 367,591 $ 388,705

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I Percentages in parentheses represent amounts as percentages ofcovered payroll.
2 Amortized over 20 years from the valuation date, with oue-year interest adjustment, as a level percentage ofpayroll.
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TABLEIB
THE ClTY OF NEWPORT, RHODE ISLAND FffiE PENSION SYSTEM
SCHEDULE OF FUNDING PROGRESS
(1) (2) (3) (4) (5) (6) (7)
Unfunded UAALasa
Actuarial Actuarial Actuarial Percentage
Value of Accrued Accrued Funded Covered of Covered
Valuation Date Assets Liability Liability Status Payroll Payroll
(2) - (3) (2) / (3) (4)/(6)
June 30, 2002 15,992,660 57,208,592 (41,215,932) 27.95% 4,639,918 (888.29%)
June 30, 2003 17,726,942 61,509,869 (43,782,927) 28.82% 4,763,438 (919.15%)
June 30, 2004 21,427,871 64,260,714 (42,832,843) 33.35% 4,957,989 (863.92%)
June 30, 2005 24,426,065 66,806,255 (42,380,190) 36.56% 4,922,941 (860.87%)
june 30, 2006 27,413,402 68,671,042 (41,257,640) 39.92% 4,827,849 (854.58%)
June 30, 2007 31,256,401 72,036,981 (40,780,580) 43.39% 5,224,518 (780.56%)
June 30, 2008 29,605,715 74,885,370 (45,279,655) 39.53% 4,967,895 (911.45%)
June 30, 2009 27,980,459 78,870,565 (50,890,106) 35.48% 4,910,434 (1036.37%)
June 30, 2010 30,820,663 82,030,956 (51,210,293) 37.57% 4,996,160 (1024.99%)
June 30, 2011 32,832,334 82,907,130 (50,074,796) 39.60% 4,891,283 (1023.76%)
TABLEIC
Page 7
THE CITY OF NEWPORT, RHODE ISLAND FiRE PENSION SYSTEM
APPROPRIATION FORECAST
The following exhibit forecasts the Annual Required Contribution and Funding Ratio under the adopted
funding schedule.
Funded
Ratio %
43.1%
44.9%
46.9%
48.9%
51.0%
53.2%
55.5%
57.9%
60.4%
63.1%
65.9%
68.9%
72.0%
75.3%
78.9%
82.6%
86.7%
90.9%
95.5%
100.0%
100.0%
Benefit
Payments
4,941,445
5,141,795
5,388,349
5,559,386
5,728,214
5,957,919
6,212,740
6,433,396
6,668,314
6,890,252
7,138,911
7,443,453
7,728,497
7,971,926
8,223,022
8,482,028
8,749,191
9,024,770
9,309,028
9,602,240
9,904,687
Annual
Required
Contribution
4,822,711
4,977,038
5,136,304
5,300,665
5,470,286
5,645,335
5,825,986
6,012,417
6,204,814
6,403,368
6,608,276
6,819,741
7,037,973
7,263,188
7,495,610
7,735,470
7,983,005
8,238,462
7,918,407
1,528,979
1,577,906
Anticipated
Employee
Contributions
(454,555)
(469,101)
(484,112)
(499,604)
(515,591)
(532,090)
(549,117)
(566,689)
(584,823)
(603,537)
(622,850)
(642,781)
(663,350)
(684,577)
(706,483)
(729,090)
(752,421)
(776,498)
(801,346)
(826,989)
(853,453)
Amortization
of VAL
3,982,309
4,109,743
4,241,255
4,376,975
4,517,038
4,661,583
4,810,754
4,964,698
5,123,568
5,287,522
5,456,723
5,631,338
5,811,541
5,997,510
6,189,430
6,387,492
6,591,892
6,802,833
6,436,838
Normal Cost
1,294,957
1,336,396
1,379,161
1,423,294
1,468,839
1,515,842
1,564,349
1,614,408 '
1,666,069
1,719,383
1,774,403
1,831,184
1,889,782
1,950,255
2,012,663
2,077,068
2,143,534
2,212,127
2,282,915
2,355,968
2,431,359
Note that the forecast is based upon an "open group" method. This method assumes that sufficient
employees will be hired each year to keep the number constant. The total payroll of the system is expected
to increase 3.2% per year. Payments are assumed to be made at the end of each year.
Fiscal Year
Ending In
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
The employer total cost is expected to increase until the unfunded accrued liabilities are completely paid
off in 2032, at which time only the normal cost will remain.
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Page 8
THE CITY OF NEWPORT, RHODE ISLAND FIRE PENSION SYSTEM
CHANGES IN UNFUNDED LIABILITY FOR FISCAL YEAR ENDING JUNE 30, 2011
In addition, changes in the actuarial funding method, asset funding method, employee contribution rate,
retirement eligibility, cost of living increase and mortality assumptions lead to a $2,784,952 decrease in
unfunded liability and $183,706 increase in normal cost.
($3,495,446)
(227,824)
o
(13)
441,264
(37,920)
678,333
(192,802)
(2.807,811)
($5,642,219)
Investment
Salary Increases
New Participants
Continuing Actives
Active - Retirements
Active - Tenninations
Active - Mortality
Active - Disabilities
Inactive - Mortality and data adjustments
Total (gain)/loss
In perfonning the actuarial valuation, various assumptions are made regarding such factors as mortality,
retirement, disability and withdrawal rates as well as payroll, salary increases and investment returns. A
comparison of the current valuation and the prior valuation is made to determine how closely actual
experience c o ~ e s p o n d e d to anticipated occurrences. This analysis of the system provides insight into the
overall quality of the actuarial assumptions and helps explain any change in the annual appropriation.
During the last year, the total unfunded actuarial accrued liability decreased by 2.2% to $50,074,796. A
major cause for the decrease was that investment returns exceeded expectations. The sources of the
(gain)/Ioss are as follows:

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Page 9
TABLE IE
THE CITY OF NEWPORT, RHODE ISLAND FIRE PENSION SYSTEM
DEVELOPMENT OFNPO FORFISCAL YEARENDINGJUNE 30, 2011
(I) (2) (3) (4) (5) (6) (7) (8) (9) (10)
Annual Annual
Required Pension Cost Increase in End of Year
Val. Int. Amortization Amortization .Contribution Actual City Beginning of [(5)+(7)*(2)- NPO NPO
Fiscal Year Rate Years Factor' (ARC) Cont yearNPO (7)/(4)] [(8)-(6)] [(7)+(9)]
1991-1992 8.00% 30 22.7490 1,877,443 1,106,106 2,713,605 1,975,246 869,140 3,582,745
1992-1993 8.00% 30 22.7490 2,059,946 1,384,427 3,582,745 2,189,076 804,649 4,387,394
1993-1994 8.00% 30 22.7490 2,225,668 1,551,116 4,387,394 2,383,799 832,683 5,220,077
1994-1995 8.25% 30 18.4393 2,576,363 1,736,686 5,220,077 2,723,925 987,239 6,207,316
1995-1996 8.25% 30 18.4393 2,709,621 1,990,018 6,207,316 2,885,090 . 895,072 7,102,388
1996-1997 8.25% 30 18.4393 2,919,663 2,760,163 7,102,388 3,120,434 360,271 7,462,659
1997-1998 8.25% 30 18.4393 3,065,646 3,032,805 7,462,659 3,276,601 243,796 7,706,455
1998-1999 8.25% 30 18.4393 2,961,385 3,189,318 7,706,455 3,179,231 (10,087) 7,696,368
1999-2000 8.25% 30 18.4393 3,003,673 3,860,777 7,696,368 3,221,234 (639,543) 7,056,825
2000-2001 8.25% 30 20.1557 3,281,802 3,567,527 7,056,825 3,513,874 (53,653) 7,003,172
2001-2002 8.25% 30 20.1557 3,106,881 3,977,470 7,003,172 3,337,189 (640,281) 6,362,891
2002-2003 8.25% 30 20.1557 3,285,527 4,062,000 6,362,891 3,494,779 (567,221) 5,795,670
2003-2004 8.25% 29 15.7354 3,317,767 3,317,767 5,795,670 3,427,590 109,823 5,905,493
2004-2005 8.25% 28 15.4540 4,118,543 5,118,543 5,905,493 4,223,612 (894,931) 5,010,562
2005-2006 8.25% 27 15.0842 3,543,234 3,543,235 5,010,562 3,624,432 81,197 5,091,759
2006-2007 8.25% 26 14.7817 3,352,662 3,543,234 5,091,759 3,428,268 (114,966) 4,976,793
2007-2008 8.25% 25 14.4659 3,291,226 3,291,234 4,976,793 3,357,775 66,541 5,043,334
2008-2009 8.25% 24 14.1363 3,310,557 3,491,226 5,043,334 3,369,867 (121,359) 4,921,975
2009-2010 8.25% 23 13.7923 3,781,258 3,981,258 4,921,975 3,830,457 (150,801) 4,771,174
2010-2011 7.50% 22 13.7826 4,359,109 4,359,109 4,771,174 4,370,773 11,664 4,782,838
, Amortization factors used for periods prior to 2000-200I did not reflect future longevity or promotion pay increases.

Page 10
TABLE2A
THE CITYOFNEWPORT, RHODE ISLANDFIRE PENSIONSYSTEM
DISTRIBUTION OF ACTIVE MEMBERS AS OF JULY I, 2011
Completed Years ofService
Ae:e Under 1 1 2 3 4 5 t09 10 to 14 15 to 19 20 to 24 25 to 29 30 to 34 35 to 39 40 & UlJ Total
No. No. No. No. No. No. No. No. No. No. No. No. No. No.

.
to 29 2 1 3
3 4 3 10
to 39 I 4 7 12
'10 to 44 2 I 2 10 5 20
'15 to 49 I 2 3 6 4 16
50 to 54 I 3 5 5 I IS
55 to 59 2 2 I I 6
60 to 64 I I 2
05 to 69
rO&up
trotal 4 7 13 26 18 11 2 2 1 84
Average: Age
Service
43.63
14.04
Number ofparticipants: Vested
Non-vested
60
24
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TABLE2B
.It THE CITY OF NEWPORT, RHODE ISLAND FIRE PENSION SYSTEM
.It
DISTRIBUTION OF RETIRED MEMBERS AND BENEFICIARIES AS OF JULY 1,2011
.It
Men Women
.-
Age Number Amount Number Amount
..
.-
Under 40
.-
40-44 1 $36,735 1 $30,424
45-49
.. 50-54 6 294,370
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55-59 15 735,903 1 26,123
..
60-64 25 1,172,970 2 44,007
65-69 24 1,004,608 4 79,395
.. 70-74 6 262,002 1 21,815
..
75 1 55,684
..
76 2 33,669
77
..
78 3 125,647 1 21,729
..
79 1 6,655
..
80 2 102,648 1 28,090
81 1 60,463 1 24,932
..
82 1 34,936
..
83 2 94,985 2 58,314
84 2 70,640 3 64,713
..
85 2 68,953 2 10,000
..
86 1 28,594
..
87 2 42,033
88
..
89
..
90
..
91 1 16,418
92
..
93
..
94
..
95
96
..
97
..
98
..
99
100
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There is one member entitled to a deferred vested benefit.
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THE CITY OF NEWPORT, RHODE ISLAND FIRE PENSION SYSTEM
ACTUARIAL METHODS AND ASSUMPTIONS

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Actuarial Cost Method:
Asset Valuation Method:
Actuarial Assumptions:
1. Interest
2. Salary Increases
3. Cost ofLiving Increase
Page 12
TABLE 3
Individual Entry Age Normal actuarial cost method: Under this
method, the actuarial present value of the projected benefits of each
individual included in the valuation is allocated as a level percentage
of the individual's projected compensation between entry age and
assumed exit. The normal cost is the portion of the actuarial present
value allocated to the valuation year. For inactive members, the
actuarial present value of projected benefits is equal to the Present
Value of Benefits. Inactive members do not have a normal cost. The
portion of this actuarial present value not provided for at the
valuation date by the sum of the actuarial value of the assets and
actuarial present value of future normal costs is the unfunded
actuarial accrued liability. The unfunded actuarial accrued liability
represents the excess of the total actuarial accrued liability over the
valuation assets.
The prior valuation used the Projected Unit Credit actuarial cost
method.
Market value, as reported by the City
The prior valuation reflected the 5 year smoothed actuarial value of
assets.
7.50% per year, net of investment expenses
3.00% per year plus longevity increases of 3.00% after seventh year
of employment and 0.50% for each year of employment thereafter
through the thirty-first year of employment. No longevity increases
are assumed after the thirty-first year of employment.
Members retired priorto August 26, 2011: 3.00%
Members retired on or after August 26, 2011: Bureau of Labor
Statistics CPI for Northeast Urban Wage Earners, not exceeding
3.00% or less than 0.50%
The increase assumption for all members was 3.00% in the prior
valuation.
The 1985 Wyatt Pension Disability Table (unisex rates)
Assumed to be paid by the plan sponsor outside the trust
Page 13
TABLE 3
(continued)
Probability ofDisability
0.17%
0.29
0.72
1.21
Probability ofWithdrawal
3.00%
2.25
2.00
1.75
1.50
1.25
1.00
0.75
0.50
0.25
0.00
Probability ofRetirement
5%
2
40
20
100
Years ofServke
less than 1
1
2
3
4
5
6
7
8
9
10 or more
Years ofService
20
21-24
25
26-34
35 or more
AttainedAge
25
35
45
55
Mortality tables prescribed by the IRS for non-governmental plans,
as specified in IRS Regulation 1.430(h)(3)-I, applied on a fully
generational basis
Rates of disability are based on an employee's age. Selected ages are
listed below. 90% of disabilities are assumed to be service related.
The RP-2000 Combined Mortality Table was the mortality
assumption in the prior valuation.
Rates of withdrawal are based on an employee's length of service, as
follows:
a. Healthy Members
b. Disabled Members
4. Mortality
5. Disability
6. Withdrawal
7. Retirement Age
8. Administrative Expenses
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9. Benefit and Compensation Limits
10. Marriage / Dependents
II. Valuation Date
Page 14
TABLE 3
(continued)
Benefit limits under Section 415 and compensation limits under
Section 401(a)(l7) of the Internal Revenue Code are assumed to
have no impact on benefits earned under this plan.
90% of active firefighters are assumed to be married. For all
participants, wives are assumed to be three years younger than their
husbands. For purposes of valuing the death benefit, unmarried
members are assumed to have no dependent children at death.
July I, zon
THE CITY OF NEWPORT, RHODE ISLAND FffiE PENSION SYSTEM
OUTLINE OF PRINCIPAL PLAN PROVISIONS
TABLE 4
July 1,2002
All firefighters who contribute to the pension fund
Benefit as a Percentage
ofannual Salary
50%
52
54
56
58
65
66
67
68
69
70
Years ofService
20
21
22
23
24
25
26
27
28
29
30 or more
Members retired prior to July I, 20 II: 20 years of service
In the prior valuation, retirement eligibility for all members was 20
years of service.
Members retired on or after July I, 20II: earlier of attainment of age
58 or completion of 30 years of service
Page 15
The annual benefit at retirement is equal to the percentage of annual
salary specified in the table below, plus $100 per year for each year
of service over 25 (maximum $1,000). For pension purposes, annual
salary includes regular and longevity pay.
Retirement benefits commence as of the first payroll period after
retirement.
The armuaI benefit calculated in accordance with the formula in (b)
above is payable monthly for the remainder of the retired member's
life, with 67.5% of the member's benefit payable for the lifetime of
his surviving spouse.
Most Recent Amendment
b. Benefit Formula
a. Eligibility
d. Form of Payment
c. Commencement Date
2. Eligibility .
1. Effective Dates
3. Retirement
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4. Vested Termination

a. Eligibility

b. Benefit Fonnula

c. Commencement Date

d. Fonn of Payment

5. Disability Retirement

a. Eligibility

b. Benefit Fonnula

1. Non-Service Related

2. Service Related
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3. Regular Retirement
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c. Commencement Date
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d. Fonn of Payment
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6. Non-vested Termination
ofEmployment
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TABLE 4
(continued)
Upon tennination of employment after 10 years of service a member
is eligible for a benefit deferred to retirement age.
2.5% of annual salary multiplied by full years of service at
tennination
25th anniversary of employment
Same as retirement
A member who is retired because of mental or physical incapacity is
eligible to receive disability retirement benefits.
If a member has fewer than 10 years of service, benefit is 25% of
annual salaty. If a member has more than 10 years of service,
benefit is 25% of annual salary plus an additional 2.5% of salary for
each year over 10, up to a maximum of62.5% of salary.
Benefit is 66-2/3% of annual salary
If an employee has 25 or more years of service at disability, his
pension will be the greater ofthe disability or retirement pension.
Benefits commence as ofthe first payroll period after disability.
Same as retirement
A member who leaves employment prior to completing 10 years of
service will receive a lump sum payment of his accumulated
contributions.
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7. Death before Retirement

- Survivor Annuity Benefits
a. Eligibility
b. Benefit Fonnula
c. Commencement Date
d. Fonn of Payment
8. Retiree Cost ofLiving Increase
9. Employee Contributions
Page 17
TABLE 4
(continued)
Death while actively employed
Surviving spouse (or if none, dependent children) receives benefit of
67.5% of annual salary, reduced pro rata if deceased member had
less than 20 years of service.
Benefits commence as ofthe first payroll period after death.
Monthly life annuity
Members retired prior to August 26, 201l:Pensions for retirees and
disabled retirees (but not beneficiaries) are indexed to the negotiated
pay increases for active firefighters. Tenninated vested members
receive 3% annual increases after benefit commencement.
The above provision was in place for all members in the prior
valuation.
Members retired on or after August 26, 20II: For those entitled to
annual increases, they will equal the Bureau of Labor Statistics CPI
for Northeast Urban Wage Earners but will not exceed 3% nor be
lower than 0.5%.
9% of salary
The rate of employee contributions in the prior valuation was 8%.
THE CITY OF NEWPORT, RHODE ISLAND FmE PENSION SYSTEM
GLOSSARY OF TERMS

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1. Present Value ofBenefits

2. Actuarial Cost Method
3. Actuarial Assumptions
4. Actuarial AccruedLiability
5. Normal Cost
6. Assets
7. UnfundedActuarial AccruedLiability
Page 18
TABLES
Represents the dollar value today of all benefits expected to be
earned by current members if all actuarial assumptions are exactly
realized.
The procedure that is used to allocate the present value of benefits
between the liability that is attributable to past service (Actuarial
Accrued Liability) and that attributable to future service.
Estimates made as to the occurrence of certain events that detennine
the level of benefits to be provided and how long they will be
provided. The more important actuarial assumptions include the
investment return on assets, salary increases and the rates of
turnover, disability, retirement and mortality.
The Present Value of Benefits reduced by the present value of future
Normal Costs.
That portion of the Present Value of Benefits that is attributable to
benefits to be earned in the coming year.
Market value of assets of the funds set aside though City and
member contributions to provide for benefits.
In the prior valuation, this value was represented by the actuarial
value of assets, which creates a smoothed value of the market value
of assets by spreading asset returns over the last 5 years.
That portion of the Actuarial Accrued Liability not covered by
Assets.