Public Safety Personnel Retirement System Correction Officers ...
Public Safety Personnel Retirement System
Correction Officers Retirement Plan
Elected Officials’ Retirement Plan
3010 E. Camelback, Suite 200
Phoenix, AZ 85016
Table of Contents
I. Purpose, Minimum Qualifications, and Scope of Services………………………….….1
II. Administrative and Proposal Submission Information. …………………..……..….…5
IV. Required Appendices………………………………………………………………..14
PUBLIC SAFETY PERSONNEL RETIREMENT SYSTEM ACTUARIAL VALUATION RFP
PURPOSE, MINIMUM QUALIFICATIONS, AND SCOPE OF SERVICES
1. This Request for Proposal (“RFP”) is issued by the Pubic Safety Personnel
Retirement System (“PSPRS” or “System”) for the purpose of hiring a full
service actuarial consultant. The consulting actuary shall perform tasks,
which include, but are not limited to the following: 1) Conduct annual
valuation of plan(s) assets and liabilities; 2) Provide actuarial consultation
and advisory services; 3) Prepare actuarial cost estimates of proposed
legislation; 4) Prepare various actuarial operating tables and factors;
5) Recommend possible improvements in financing and benefit structure;
6) Prepare a periodic experience study of the plan(s); 7) Prepare projection
valuation studies of the plan(s); and, 8) Prepare all necessary reports. It is
anticipated that the term of the contract will be three years.
2. PSPRS, through its Governing Board (called the Fund Manager), administers
three plans – PSPRS, Correction Officers Retirement Plan (“CORP”) and the
Elected Officials’ Retirement Plan (“EORP”). PSPRS and CORP are multiple
employer, contributory defined benefit public employee pension plans. PSPRS
covers approximately 29,000 active, inactive, and retired members and
annuitants with 229 participating employers. A consolidated or aggregated
actuarial valuation for PSPRS is conducted on an annual basis. Additionally,
all employers receive a separate actuarial valuation specific to their member
group(s) on an annual basis.
CORP covers approximately 17,000 active, inactive, and retired members and
annuitants with 24 participating employers. A consolidated or aggregated
actuarial valuation for CORP is conducted on an annual basis. Additionally, all
employers receive a separate actuarial valuation specific to their member group(s)
on an annual basis.
EORP is a cost sharing, contributory defined benefit public employee pension
plan. EORP covers approximately 1,800 active, inactive and retired members and
annuitants. A consolidated or aggregated actuarial valuation for EORP is
conducted on an annual basis.
The System and Plans were created under Arizona Revised Statutes Title 38.
Complete background information, including applicable statutes, summary of
benefits, the System’s Fiscal Year (FY) 2008 Actuarial Valuation Reports and
FY2008 Comprehensive Annual Financial Reports may be obtained from the
System’s Web site www.psprs.com
3. This RFP is posted on PSPRS’ Web site at www.psprs.com. Proposals
will be accepted from any firm that meets the Minimum Qualifications as
stated below and is willing and able to provide the services outlined in this
B. MINIMUM QUALIFICATIONS
To be considered as the Actuary for the purpose stated above, the firm must meet
all of the following Minimum Qualifications. Failure to do so shall result in
rejection of the proposal. As used in this RFP, the term “Primary Actuary” shall
refer to the lead and most senior actuary to be assigned to and provide direct
services to PSPRS. The term “Supporting Actuary” shall refer to less senior
actuaries that will support the Primary Actuary in providing direct services to
1. The firm must be a professional actuarial services firm that provides actuarial
valuation, experience investigations, actuarial valuations, and pension
2. The firm must have been in existence as a business entity performing such
services for a minimum of three years.
3. The firm must have all necessary permits and licenses. Liability insurance must
be in full force at the time the proposal is submitted and throughout the term
of the Contract.
4. Within the past three years, the firm must have had a minimum of three public
pension clients, (with each client with at least 40,000 members and
annuitants), that engaged the firm for such services as valuation assignments,
experience analysis and/or actuarial valuation assignments.
5. The Primary Actuary and any Supporting Actuary must be either a Fellow,
enrolled, or have ten years of pension consulting experience.
6. The Primary Actuary performing the services under the Contract must have a
minimum of ten years of experience as an actuary providing pension
consulting services, experience analysis, valuation assignments, and actuarial
valuation assignments for multiple-employer public retirement systems with
memberships of at least 40,000 members and annuitants.
7. Any Supporting Actuary performing services under the Contract must have five
years of experience as an actuary providing pension consulting services,
experience analysis, valuation assignments, and actuarial valuation
assignments for multi-employer public retirement systems with memberships
of at least 40,000 members and annuitants.
8. The firm must provide its own work facilities, equipment, supplies, and support
staff to perform the required services.
C. SCOPE OF SERVICES
All services described in this section shall apply to the PSPRS, CORP and EORP
1. The actuarial valuations should cover the following:
a. Perform an annual actuarial valuation of the System and Plans as of
June 30, 2009 to determine the contribution rates (normal cost plus
past service amortization) and the current condition of the System and
Plans using generally recognized actuarial procedures and actuarial
assumptions adopted by the Fund Manager (governing board).
Valuation reports should contain the following at a minimum:
1. Transmittal letter
2. Brief summary of benefits
3. Actuarial certification
4. Summary of actuarial assumptions
5. Actuarial balance sheet
6. Schedule of actuarial gains & losses
7. Aggregate Contribution requirements needed to meet actuarial
standards expressed using Normal Cost, Past Service
Amortization to derive Total Employer Cost less statutorily set
employee contributions to determine net employer contribution
8. Analysis of change in unfunded past service liabilities by the
a. Accrual of assumed interest
b. Accrual of normal cost
c. Payment of contributions
d. Changes in valuation assumptions
e. Changes in benefit provisions
f. Addition/deletion of employers
g. Risk experience gain/loss
9. Brief explanation of any significant increase or decrease in
contribution requirements compared to previous reports
10. Statistical tables including, but not limited to Summary of
active members, Summary of retirees and beneficiaries, and
Active member tabulated by attained age groups and years of
11. GASB 25 and 43/45 Calculation of Annual Required
Contribution and related information
b. Perform a five year experience study, if needed, to compile and analyze
the actual economic and demographic experience of the System and
Plans in order to determine the appropriate actuarial assumptions to be
used in the annual actuarial valuations. The demographic experience
includes the following: withdrawal rates, retirement rate (including
Deferred Retirement Option Plan), disability rates and mortality rates.
1. February 16, 2009—RFP ISSUED
2. March 9, 2009—INQUIRES—Inquires and requests for interpretation or
clarification of the RFP from potential bidders will be accepted only in
writing, as mailed, e-mailed or faxed, and only if received no later than 4 p.m.
Mountain time, March 9, 2009. Mail, e-mail, or fax requests to:
Public Safety Personnel Retirement System
Attn: James Hacking
3010 E. Camelback, Suite 200
Phoenix, AZ 85016
3. March 23, 2009—RESPONSES TO INQUIRIES—Responses to and addenda
resulting from requests for interpretation shall be posted on the PSPRS web
site by 4 p.m. Mountain time, March 23, 2009.
4. April 1, 2009—PROPOSALS DUE—Proposals must be received by 4 p.m.
Mountain time, April 1, 2009.
5. April 16–24, 2009—FINALIST INTERVIEWS—Members of the Operations
Sub-Committee (or a special ad hoc Subcommittee) of the Fund Manager will
interview finalist firms at PSPRS’ office during the period of April 16-24,
2009. PSPRS may choose to hold additional interviews at the firms’ offices.
6. Post April 27, 2009 (Tentative)—ANNOUNCEMENT OF SELECTION—The
System will notify all firms that submitted a proposal of its Actuary selection,
which shall be subject to successful Contract negotiation with the selected
ADMINISTRATIVE AND PROPOSAL SUBMISSION INFORMATION
A. INSTRUCTIONS FOR SUBMITTING PROPOSALS
1. Firms responding to this RFP must provide answers to the questions posed in
Section III of this RFP. All proposals must be complete in every respect
and must answer concisely and clearly all questions proposed by the RFP.
Late proposals will not be accepted, and will be returned to the provider.
2. Proposals shall be submitted with a letter providing factual and verifiable
support that the firm meets all of the Minimum Qualifications listed in
Section I.B of this RFP, and that the firm is able and willing to provide the
type and level of services required to fulfill the mandate proposed in this
RFP. The firm must include in the letter a restatement of each of the
Minimum Qualifications as shown in Section I.B of this RFP, followed by
factual and verifiable information supporting the firm’s satisfaction of
3. The letter and the offer made by the proposal, and any clarifications to that
proposal, shall be signed by an officer of the offering firm or a designated
agent empowered to bind the firm in a Contract. The cover letter must also
identify any sections of the proposal that the firm is identifying as
4. Proposals should follow the order of questions as they are asked in Section III
of this RFP. In response to each question asked in Section III, restate the
main question (denoted by a number or a letter) in bold font followed by
your answers stated in regular font. Responses should be thorough and
answer the specific question asked, including the issues addressed in any
bullet points following a question.
5. In preparation of the proposal, please use Word format for text and Excel
format for spreadsheets, single-spaced with 1-inch page margins. Font
should be 12-point, preferably Times New Roman.
6. Supporting material must be clearly referenced to the appropriate question.
Information and materials which are strictly promotional in nature should
not be used. The submission of such material may serve to disqualify the
firm from further consideration.
7. Verbal communication with PSPRS Fund Manager, Operation Sub-Committee
members, and PSPRS staff during the selection process is greatly
discouraged. Firms will be given the opportunity to submit written
requests for clarification of questions or terms contained in the RFP. In all
cases, written communications will override verbal communications.
8. Proposals must be received no later than 4 p.m. Mountain Time, April 1, 2009.
9. A firm must submit 6 hard copies, plus one copy on CD or electronic format, of
its proposal to PSPRS at the following address:
Public Safety Personnel Retirement System
Attn: Tracey Peterson
3010 E. Camelback Road, Suite 200
Phoenix, AZ 85016
B. REJECTION OF PROPOSALS
1. PSPRS reserves the right to reject any or all proposals in whole or in part, due
to noncompliance with the requirements of this RFP or for any other
reason. PSPRS will not pay for any information herein requested, nor is it
liable for any costs incurred by the submitting firms.
2. Firms whose proposals do not meet the minimum requirements will be so
notified. After evaluation of the proposals and approval by the PSPRS
Fund Manager of the firm recommended, all firms having submitted
proposals will be notified of the successful firm.
3. PSPRS reserves the right not to hire or to defer the hiring of a firm for these
C. ARIZONA STATUTES AND RULES
The terms and conditions of this RFP and the resulting Contract shall be
construed in accordance with the laws of Arizona. Whenever differences exist
between federal and state statutes or regulations affecting this procurement,
interpretation shall be in the direction of that which is most beneficial to the
interests of the State of Arizona and this System.
D. SIGNATURE OF ACTUARY
The offer made by the proposal, and any clarifications to that proposal, shall be
signed by an officer of the offering firm or a designated agent empowered to bind
the firm in a Contract.
E. PSPRS CONTRACT SIGNATORY
James M. Hacking, PSPRS Administrator.
F. CONTRACT AWARD
PSPRS reserves the right to award this Contract not necessarily to the firm with
the lowest fee and cost proposal, but to the firm which will provide the best match
to the requirements of the RFP. The successful firm will be determined in
accordance with the evaluation criteria defined by PSPRS.
G. EVALUATION OF PROPOSALS
The Operations Sub-Committee (or a special ad hoc Subcommittee) of the Fund
Manager will evaluate and score proposals received, select finalist firms, conduct
finalist interviews, and recommend one specific finalist firm to the full PSPRS
Fund Manager. The Subcommittee will consist of representative members of
PSPRS’ Fund Manager. The Administrator and Chief Operations Officer will
assist the subcommittee. Finalist firms will be interviewed at the PSPRS’ offices.
Determination of which firms to interview is the sole discretion of the Sub-
Committee. PSPRS’ Fund Manager will make the final Actuary selection.
H. EVALUATION CRITERIA
Proposals will be evaluated using the following criteria:
1. The Firm’s Organization, Experience, and Resources 25%
2. The Project Team’s Relevant Experience 30%
3. The Firm’s Methodology 25%
4. The Firm’s Fee Proposal 20%
I. THE RESULTING CONTRACT
The Contract shall be a combination of the specifications, terms, and conditions of
the RFP, any written clarifications or changes made to this RFP, the offer
contained in the successful proposal, and any additional contractual terms and
conditions agreed to mutually and in writing by the parties.
J. TERM OF CONTRACT
The Contract shall be for a three-year period commencing July 1, 2009.
The proposal must answer the following questions:
A. ORGANIZATION AND OWNERSHIP
1. Provide the following information:
Date of Response:
Name of Firm:
Primary Contact Person:
2. Describe the background and ownership of the firm. Describe any material
changes in organization structure or ownership that have occurred in the
past five years.
• Year firm was formed and began providing actuarial consulting services
to institutional clients.
• The ownership structure. Indicate all entities that have an ownership
stake in the firm (name and percentage).
• Affiliated companies or joint ventures.
• Recent or planned changes to the ownership or organization structure.
• Transition plans for retirement of key executives.
• Importance of actuarial consulting services to your parent company’s (if
applicable) or your firm’s overall business strategy.
• Percentage of parent company’s (if applicable) or your firm’s revenues
from actuarial consulting services.
3. Provide as Appendix B one organization chart that diagrams the ownership of
your firm and any interrelationships between the parent-subsidiary,
affiliate, and joint venture entities.
4. Provide as Appendix C another organization chart that depicts the structure of
the actuarial consulting group and that identifies this group’s key people
and the people that will be involved in providing direct services to PSPRS.
5. List the locations of each of the firm’s offices from which actuarial consulting
services are provided. For each office, provide the function(s) performed and the
number of professionals in that office. Indicate which office would be
primarily responsible for servicing the PSPRS account.
6. Provide as Appendix D the latest two years’ audited financial reports for your
firm. Provide any additional information necessary to demonstrate
financial stability, including total revenue, net income/(loss), assets,
liabilities, and net worth for each year.
7. Describe the firm’s objectives with respect to future growth. What
products/services will be emphasized or de-emphasized in the future?
What are the firm’s expectations for its products, and how does it plan to
manage the future growth of these products? Discuss how the firm plans to
make sure that future growth does not compromise the quality of your
existing actuarial consulting services. Include in your answer how you
plan to manage growth in your client/actuarial consultant ratio.
8. Discuss in general the firm’s competitive advantage over other firms in the
actuarial consulting industry and in the actuarial valuation service area.
Why should PSPRS hire your firm?
9. Over the past five years, has your organization or any officer or principal been
involved in any business litigation or other legal proceedings related to
any actuarial consulting activities or actuarial auditing services? If so,
provide a brief explanation and indicate the current status.
10. Has your firm, within the last ten years, been censured or fined by any
regulatory body? If so, please indicate the dates and describe the situation.
11. Is the firm affiliated with any other firm(s) offering non-actuarial services that
could represent conflicts of interest? If yes, briefly describe your firm’s
policies and procedures for doing business with these affiliates while
safeguarding against conflicts of interest.
12. Do you, your parent company, or any affiliated company have any business
relationships with Rodwan Consulting (PSPRS’ current retained actuary),
NEPC (PSPRS’ general investment consultant), or Kutak Rock (PSPRS’
external legal counsel)? If so, describe that relationship.
13. List and describe any professional relationship your firm or any of your
actuarial consulting group staff have with any member of the PSPRS Fund
Manager, staff, or the PSPRS’ plan sponsor (members of the Arizona
General Assembly and the Governor of the State of Arizona).
14. Has anyone in your firm provided any gifts, travel expenses, entertainment, or
meals to any member of the PSPRS’ Fund Manager, or PSPRS staff in the
last twelve months? If yes, describe the expense and the purpose.
B. ACTUARIAL SERVICES STAFFING
1. How many actuaries does your firm employ?
2. Describe in general the background of the professionals in the firm’s actuarial
consulting services group:
• Are they brought in from outside of the firm or promoted to their
positions from within the organization?
• For those recruited from the outside, what prior experience and
educational credentials are generally sought?
• What percentage are currently Fellows of the Society of Actuaries?
• What ongoing educational programs are economically supported and/or
required? If economic support is offered, state the extent of this.
3. For the key executives and professionals in the actuarial consulting group,
including the Primary Actuary and all Secondary Actuaries that would be
assigned to PSPRS, provide a table that identifies the following
• Responsibilities within the firm. If a person has multiple
responsibilities, indicate the percentage of time spent on each
function in a footnote to the table
• Years of relevant experience
• Years with the firm
• Degrees and professional designations
• Institution awarding each degree and designation
• Publications authored
4. How long has the current group of key executives and professionals in your
actuarial consulting group been together?
5. For the Primary Actuary and all Secondary Actuaries that will directly provide
services to PSPRS, provide biographies and label these as Appendix E.
6. For the Primary Actuary and all Secondary Actuaries, state the length of time
these individuals have all worked together as a team.
7. For the Primary Actuary and all Secondary Actuaries, list their actuarial
valuation assignments for the past five years. Include for each assignment
the date of the final valuation report, whether the Actuary served as the
primary or secondary Actuary, and the client’s name and size (number of
pension plan members and annuitants).
8. For the Primary Actuary and all Secondary Actuaries that will directly provide
services to PSPRS, state the role each would play in providing the
required PSPRS services.
9. State for the Primary Actuary and each Secondary Actuaries the total number
of clients currently assigned to these individuals; describe whether the
assignment is for general actuarial services or actuarial valuation services.
10. For the Primary Actuary and all Secondary Actuaries, state whether any of
these individuals are affiliated with any other business entity or activity
that could pose a potential conflict of interest with their PSPRS
assignments. If so, provide details on the entity or activity.
11. For the Primary Actuary assigned to the PSPRS account, state their experience
making presentations to/testifying before state legislatures or committees
thereof on behalf of clients. Include the year of the presentations.
12. Describe your compensation and incentive program for actuaries in your firm.
How are actuaries evaluated and rewarded? What incentives are provided
to attract and retain superior individuals? Identify the percentage of
compensation which is:
• Base salary
• Performance bonus
• Equity incentives
• Do you offer direct ownership, phantom stock, profit sharing, and/or
• Who is eligible to participate?
• On what basis are these incentives determined—is compensation tied to
success factors such as client base growth, performance, or other
factors? Please list and indicate the weight of each in determining total
• How does your compensation structure/levels compare with other firms
in the industry?
13. Discuss the causes and impact of any executive and professional staff turnover
(departures or hiring/promotions) in the actuarial consulting group that has
occurred in the last five years. Provide a table listing all of the
professionals that have departed from that group over the past five years.
For each individual, provide the following information:
• Date of departure
• Years with the firm
• Reason for leaving the firm
• Name of replacement
14. Does the firm have a transition plan to deal with the possible sudden departure
of key professionals within the group? Describe the plan.
1. Describe the specific methodology to be used for the required scope of work
identified in Section I.C of this RFP.
2. Provide a timeline for completion of the work identified in Section I.C of this
RFP. Include proposed dates for each key stage or event of the project,
indicate dates by which your firm must have specific input data from
PSPRS or its retained actuary, and indicate points in the project when your
firm would plan to meet with PSPRS staff at our office.
3. Describe your firm’s theory and methodology used in recommending an
appropriate actuarial cost method for a public pension fund.
4. Describe your firm’s theory and methodology for development of actuarial
assumptions (except for the interest rate assumption, which is addressed
5. Describe the methodology you use to formulate a pension fund’s actuarial
interest rate assumption. How may this methodology differ from client to
client? Under what circumstances would you recommend PSPRS change
its interest rate assumption?
6. Describe your firm’s approach to recommendations regarding the amortization
of unfunded liabilities.
7. Describe your approach to measuring funded status and funding progress in
order to facilitate the assessment of trends over several valuations of a
8. Describe the capabilities of your valuation system(s) and your computer system
9. Describe your quality control processes for actuarial valuation reports and
recommendations. How are these services monitored and reviewed?
10. Provide as Appendix F one recent actuarial valuation report as provided to an
D. RELEVANT EXPERIENCE
1. Complete the following table, reporting only those client relationships where
actuarial valuation services similar to this mandate have been or are being
12/31/04 12/31/05 12/31/06 12/31/07 12/31/08
Total number of actuarial valuation clients
Total number of public pension plan actuarial valuation clients
2. For all current public pension plan clients, state the client’s name, the first year
of your initial Contract with the plan, and their asset and membership size
as of June 30, 2008. Designate by asterisk which of these clients are multi-
3. Provide the name, title, address, and telephone number for the following six
client references for whom your firm has provided either full service
actuarial consulting or actuarial valuation services similar to this mandate,
as specified in each question:
• The client for whom your firm most recently completed an actuarial
• The client that most recently terminated your firm’s full-service actuarial
• The client with the longest full-service actuarial consulting relationship
with your firm.
• A multi-employer public pension plan client for whom your firm has
provided full-service actuarial consulting for at least three years.
• A full-service actuarial consulting client that has been assigned for at
least two years to the Primary Actuary proposed for the PSPRS
• The client for whom the Primary Actuary most recently completed an
4. List all pension plan clients that have terminated their actuarial service
contracts with your firm in the last five years. Include the client firm’s
name, size (number of pension plan members and annuitants), date of
contract termination, and reason(s) for contract termination.
5. Within the last five years, has your firm been notified by any actuarial
consulting services client that your firm is in default of its contract, or that
conditions exist endangering continuation of that contract? If so, state the
client firm’s name, year the notice was received, reasons for the notice,
and resolution or current status of the relationship.
6. Provide the names of all public pension plan clients for whom you have
performed actuarial valuations within the last five years.
7. Have your firm’s actuarial consulting service products been audited by another
actuarial firm within the last five years? If so, state the number of such
valuations and whether any resulted in revisions to your clients’ annual
valuation results, actuarial assumptions, or actuarial cost methods.
1. Would your firm propose to use any subcontracts in the provision of the
required PSPRS services? If so, describe the specific services that would
be subcontracted, the name of the subcontractor, the cost to your firm of
these services, and how you would control the quality of services
2. Does your firm use internal or external legal expertise, or both? If external is
used, state its source and nature.
3. What investments has the firm made in information technology?
4. Do you have plans/arrangements in place for alternative work sites should
either your headquarters facility or the facility that will primarily provide
services to PSPRS become inoperative because of fire, earthquake, etc.?
Briefly describe your emergency and disaster recovery plans. Include in
your description your disaster recovery plans related to client data files.
5. Please describe the levels of coverage for errors and omissions insurance and
any fiduciary or professional liability insurance your firm carries. Is the
coverage on a per-client basis, or is the dollar figure applied to the firm as
a whole? List the insurance carriers.
6. How does the firm monitor and measure actuarial client satisfaction and
actuarial valuation satisfaction?
7. Describe the resources your firm has that specifically address the needs of
public fund clients.
1. Describe how fees are determined for your firm’s actuarial valuation services.
2. How are fees billed (billing periods and prospective versus arrears)?
3. The proposed fee should include administrative, third-party, travel, and all
Appendix A—Letter evidencing firm’s satisfaction of minimum qualifications, ability
and willingness to provide required services, and validating proposal for 180 days from
date that the proposal is due.
Appendix B—Organization chart reflecting firm’s ownership and relationship to parent
and affiliates (if any).
Appendix C—Organization chart of firm’s actuarial consulting group.
Appendix D—Firm’s latest two years’ audited financial statements.
Appendix E—Biographies of Primary Actuary and all Secondary Actuaries to be
assigned to the PSPRS account.
Appendix F—Sample actuarial valuation report for existing client.