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  1. 1. Santa Barbara County Employees’ Retirement System Request for Proposals Actuarial Consultant The Santa Barbara County Employees’ Retirement System (SBCERS) is seeking a full service actuarial consultant with the intention of entering into a three-year contract. PROPOSAL PROCESS Your complete proposal must be received via US Mail no later than 5:00 p.m. Pacific Standard Time on October 13, 2006. Proposals received past the deadline and/or proposals that are incomplete or do not meet the minimum standards will be automatically disqualified. All interested firms should submit a response to this Request for Proposal (RFP) with three hard copies and a disk in Microsoft Word format. Additional information may be requested at any time from bidding organizations, and addenda to the RFP may be issued at any time during the bid process. SELECTION CONSIDERATIONS The criteria identified below are considered by SBCERS to be of greatest importance in selecting the new consulting actuary. Specific response, comment or clarification may be offered to the extent that any of these issues are not fully addressed in the written response. The ordering of these criteria does not signify the magnitude of importance. • Qualification and experience of the firm and the key personnel assigned to the project • Ability to offer superior account management support • Strong references • Clarity, brevity, and focus of the proposal in addressing issues and requirements unique to SBCERS • Reasonableness of costs to services All requested and official correspondence should be addressed as follows: Oscar Peters, Administrator Santa Barbara County Employees’ Retirement System 3916 State St., Ste 210 Santa Barbara, CA 93105 More information can be found at the SBCERS web site – Questions can be directed to Oscar Peters, Retirement Administrator at opeters@co.santa-barbara or telephone (805) 568-2998.
  2. 2. BACKGROUND SBCERS is a defined benefit public retirement system serving the employees of the County of Santa Barbara, There are approximately 4,500 active members and 2,600 beneficiaries in the System. The plan provides retirement benefits to County employees, court employees, and employees of eight special districts. The plan is established and administered according to the County Employees Retirement Law of 1937 (Government Code Sections 31450-31899.10). Active members make mandatory contributions to the plan based on age at entry. The system currently administers three active retirement plans: one safety plan with three tiers, one general member plan with two tiers, and a special district general plan with two tiers. In addition, there is a closed non-contributory tier for general members, and in 2008 an enhanced safety plan with two tiers will be implemented. Vested employees are entitled to purchase up to five years of additional retirement credit (ARC). The plan also provides a premium offset for retirees who participate in the county sponsored health plans. Members participating in a sponsored plan are eligible for $15 per month per year of service; members not participating receive a taxable cash allowance of $4 per month per year of service. A Retirement Administrator, who is responsible to a policy-setting nine-member Board of Retirement, administers SBCERS. The System does not have a staff actuary. The successful bidder will provide one annual valuations of the defined benefit plan. The actuarial consultant will be responsible for affirming the validity of benefit calculations. This latter task is usually done as part of the annual valuation to assure that the retirement information management system (PensionGold) has not been corrupted. Occasionally, special calculations are required to validate the benefit and its components. It is expected this service will be included in the consulting fee. A detailed list of contract services and deliverables is shown below. CONTRACT SERVICES AND DELIVERABLES The consulting actuary shall perform tasks, which include, but shall not be limited to the following: A. General Duties: 1. Load and reconcile all the data in the SBCERS database. SBCERS will furnish the consulting actuary with all data and statistical information deemed necessary to perform specified contract services, provided the data is available in the records and files of the Fund.
  3. 3. 2. Treat all member information as confidential. The consulting actuary is to treat as confidential all data provided by SBCERS for purposes of the contract and as it applies to all data created, gathered, generated or acquired with the contract. 3. Seek written consent prior to public release of information resulting from the engagement. With respect to any publicity given to the actuarial services provided under terms of the resulting contract, the consulting actuary shall identify SBCERS as the sponsoring agency and shall not release any information without prior approval of the Retirement Administrator or appointed designee. This information includes, but is not limited to, press releases, research, and reports. 4. Communicate directly to the Administrator (or appointed designees). SBCERS expects the consulting actuary to route all requests, reports and all other communication that use SBCERS’ database through the Administrator. 5. Document discussion ideas, issues, and extended services. Share responsibility with SBCERS for documenting in writing all ideas and issues raised in discussions and meetings. The lead consulting actuary must review, approve, and sign all price quotations for extended services, final reports, correspondence regarding actuarial assumptions and other technical issues. 6. Perform all services within the scope of the contract under the direct supervision of a qualified actuary. An approved actuary must be regularly engaged in the business of providing actuarial services and have at least 15 years experience with major public employee retirement systems or designation as a Fellow in the American Academy of Actuaries. The firm’s choice of a consulting actuary must be an employee of the firm. SBCERS reserves the right to reject the firm’s choice of a consulting actuary and may terminate the contract if a consulting actuary, acceptable to the SBCERS Board of Retirement, cannot be made available by the firm. B. Valuation Services: 1. Conduct annual valuation of plan assets and liabilities. These services must be delivered in final report form no later than October 31st each year. All information necessary for a public employer retirement system defined benefit plan must be included.
  4. 4. 2. Conduct one experience study within the term of the contract. The SBCERS generally does an experience study once every three years. The results of the experience study when adopted by the Board of retirement provide the underlying assumptions used for future actuarial valuations. 3. Annually provide an actuarial certification of the member benefit calculations provided by Pension Gold. The SBCERS as part of the annual audit desires to have the actuary certify the benefit calculations of 15 members who have retired in the last fiscal year C. Consultation and Advisory Services: 1. Provide actuarial consultation and advisory services. These services may be delivered in meetings or by telephone calls and written correspondence. SBCERS expects these services may include public testimony to committees, boards, commissions, and legislators on any technical, policy, legal or administrative issues arising during the course of SBCERS operations. The consulting actuary should be readily accessible to SBCERS Administrator by telephone within one working day and will be available for meetings within five (5) working days of a request. SBCERS expects the consulting actuary to attend a minimum of three (3) meetings per contract year to give presentations and/or answer questions, including one meeting with the Board of Retirement to review the annual actuarial valuation. SBCERS also expects the consulting actuary to be available for educational discussions with the Board of Retirement and/or SBCERS employees. The consulting actuary must have the ability to discuss actuarial theory and other matters in lay terms. 2. Prepare various actuarial operating tables and factors. From time to time, these tables and factors may be required for operation of the system. These tools include, but are not limited to, mortality tables, option tables for annuitants, present value factors, survivor benefit factors, and PC programs for service purchase calculations, IRS Section 415 Excess Benefit calculations, required reserve figures, and present value calculations. 3. Prepare actuarial cost estimates of proposed legislation. The consulting actuary shall provide timely financial impact estimates of planned statutory amendments as requested by
  5. 5. SBCERS Administrator. In general, there seldom more than two of these requests per year. 4. Recommend possible improvements in SBCERS financing and benefit structure. Throughout the duration of the contract, the consulting actuary will inform SBCERS of any new developments in the retirement industry and their effect on the financing and benefit structure of a retirement system. The consulting actuary should keep the Board of Retirement and the Administrator apprised of current trends and advancements within the actuarial profession. 5. Assist in establishing actuarial specifications for the Fund’s data files. From time to time, SBCERS may ask the consulting actuary to provide feedback on the content of the data files and make suggestions for modifications to ensure that the full range of data needed for costing proposed ordinance or legislation, performing actuarial valuations, and reviewing experience studies is maintained. 6. Provide advice on special benefit cases. SBCERS may occasionally request that the consulting actuary review individual benefit applications (e.g., complex marriage dissolutions) and perform complex computations related to these cases. 7. Determine annual cost-of-living increase to the retirement benefits and maintain COLA bank for retired members. The consulting actuary shall, no later than April of each year, determine the Consumer Price Index for the Los Angeles- Anaheim-Riverside area for the purpose of providing a COLA to eligible retirees. The differences between the actual CPI and the maximum COLA of 3% are “banked.” D. Experience Analysis, Projection Valuations, Demographic Studies, and Actuarial Audit: Note: SBCERS anticipates the consulting actuary to perform the services identified below on an as needed basis. SBCERS encourages the firm to separately bid for these services, rather than include these services in the cost projection for the services detailed within sections A, B, and C above. 1. Prepare projection valuation studies of the Plan. When requested, conduct projection valuation studies for SBCERS
  6. 6. defined benefit plan or the Health and Welfare plan. Analyze and report results to the Board of Retirement. 2. Prepare actuarial cost estimates for plan changes. The SBCERS benefits are subject to negotiations under collective bargaining agreements. These studies will be paid for by the plan sponsors. In pricing this please provide the hourly charges that you would apply for the various levels of staff that could be assigned to this project. 3. Prepare actuarial cost estimates for distribution of excess earnings. The CERL gives the Board of Retirement discretion to enhance certain benefits of retired members from excess earnings. This estimate could involve several components of the retired benefits and be run once a year. These calculations will be done on a stand alone basis and billed as a special project. ________________________________________________________________ QUESTIONNAIRE Respond fully to each of the following questions. Corporate Identity 1. Provide your company’s name and address, and the primary RFP contact’s name, telephone number, fax number and e-mail address. Provide the address of the office that will service this account. 2. Give a brief history of your firm’s involvement in the actuarial consulting business, including the year of organization, current ownership, and affiliations. Are ownership changes planned or anticipated at this time? 3. How many years has your firm provided actuarial consulting services to public pension plans?
  7. 7. 4. What do you consider to be your firm’s consulting specialties, strengths, and limitations? What services, if any, does your firm offer clients in addition to actuarial consulting services? 5. Has any officer or principal of your organization been involved in litigation relating to consulting activities? If so, provide a brief explanation and indicate the current status of the proceedings. 6. How many full service actuarial accounts does your firm have? How many are public employee retirement systems? How many systems established under the California County Employee Retirement Law are current clients? 7. How many relationships have been added in the last five years? 8. How many actuarial services accounts were lost in each of the last five years? What was the reason(s) for each account lost? 9. Provide levels of coverage for fidelity bonds, errors and omissions coverage, and other fiduciary coverage that your firm carries; include the name and address of the coverage provider and a copy of proof of coverage. 10. Describe your plans for managing the future growth of your firm in terms of: A. Total number of accounts that will be accepted. B. Plans for additions to professional staff and approximate timing in relation to anticipated growth in the number of accounts. Personnel 11. List the name and location of the primary individual(s) who would be responsible for our account and provide brief biographies including titles, functions, academic credentials, and relevant experience. Identify and explain the role of back-up personnel. How many clients are assigned to each person named above? 12. What policies are in effect to control the workload as it relates to the number of clients serviced by each consultant? Is there a limit on the number of accounts that a consultant may handle? 13. What incentives are provided to attract and retain top quality employees at your firm? 14. Describe the turnover in key professional personnel in each of the last five years. Indicate the number of people lost in the following areas: (a) actuaries (b) key technical personnel.
  8. 8. Services Provided 15. List all standard services provided in a typical pension plan full service actuarial consulting relationship. Include a description of the research and other technical resources, including on-line databases and computer based analytical tools that you make available to your clients. 16. Describe the services of your organization that distinguish your firm from your competitors. Convincingly and briefly explain why your firm is the most qualified for this engagement. 17. Briefly summarize your philosophy relating to the consultant’s relationship with Boards, Staff, Counsel, etc. 18. Provide a list of representative clients, noting the public pension funds included on the list. 19. Describe your firm’s ability to provide periodic updates regarding federal legislation and/or IRS Rules or Revenue Rulings that may affect the operation of the system and the payment of benefits. 20. Describe the media your firm uses to inform clients of changes in pending federal legislation or regulations. 21. List references for three public pension funds with assets each in excess of $1 billion for whom the primary consultant and principal assistant to be assigned to the SBCERS account have provided actuarial consulting. For each reference include client name, address, telephone number, and name of contact person. 22. Include as an addendum item a sample of your firm’s actuarial reports. Fees 23. Provide your fee schedule, bundled and unbundled. Break out the fee structure to reflect separate pricing for: 1) Actuarial valuation, investigation and report for each year of the three-year contract period for retirement benefits including the Gains and Loss analysis for each year of the three-year contract period. 2) Actuarial valuation, investigation and report for each year of the three-year contract period for health subsidy benefits.
  9. 9. 3) One plan experience study covering a three-year period beginning July 1, 2006 plus any necessary changes in operational tables as a result of adopting new actuarial assumptions recommended by the plan experience study. 4) Computation of the annual Cost of Living adjustment and updating the actuarial “bank” for cost of living benefits. 5) One study of the assets and liabilities of the supplemental Death Benefit Plan and annual premium recommendations. 6) An annual validation of benefit calculations of the retirement member information management system (PensionGold). 7) A PC based computer program compatible with Microsoft applications to calculate Additional Retirement Credit cost and benefit. 8) Computation of optional benefits not programmed in the retired member information System. 9) Consulting services for the three-year contract period. Miscellaneous Include any other information that is believed to be pertinent but not specifically requested elsewhere in this RFP.