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Fire Actuarial Valuation Report 2006ⅥLLAGE OF OAK BR00K OAK BR00K FIREFIGHTERS PENSION FUND Acmrial Valuation Report Forthe Year Beginning January l,2006 And Ending December 31,2006 Timothy W. Sharpe, Actuary, Geneva, IL (630) 262-0600 TABLE OF CONTENTS lntroduction Summary of Results Actuarial Valuation of Assets Asset Changes During Prior Year Normal Cost Accrued Liability Tax Levy Requirement Summary of Plan Participants Duration Proj ected Pension Payments Summary of Plan Provisions Actuarial Methods Actuarial Assumptions GASB Statements No. 25 &.27 Disclosure Pase 3 4 6 7 8 9 10 l1 t2 t2 13 t4 15 l6 INTRODUCTION Fire-sworn personnel of the Village of Oak Brook are covered by the Firefighters Pension Plan that is a defined-benefit, single-employer pension plan. The purpose of this report is to disclose the Tax Levy Requirement and GASB Statements No. 25 &27 financial information and related actuarial information for the year beginning January 1,2006, and ending December 31,2046. The valuation results reported herein are based on plan provisions in effect as of January 1,2006, the employee data furnished by the Village, the financial dataprovided by the Fund's trustee and the actuarial methods and assumptions described later in this report. I hereby certifr that this report is complete and accurate and fairly presents the actuarial position of the Fund as of December 31, 2005, in accordance with generally accepted actuarial principles and procedures. In my opinion, the assumptions used are reasonably related to the experience of the Plan and to reasonable expectations. Respectfu lly submitted, !:r L Timothy W. Sharpe, EA, MAAA Enrolled Actuary No. 054384 v/", /oe Date -3- SUMMARY OF RESULTS There were no changes with respect to Plan Provisions, Actuarial Methods, or Actuarial Assumptions from the prior year. There were no unexpected changes with respect to the participants included in this actuarial valuation (3 new members, 0 terminations, 2 retirements, 0 incidents of disability, annual payroll increase 6.10/o, average salary increase 7.5%)- There were no tmexpected changes with respect to the Fund's investments from the prior year (annual investment return 5.45%). The Village's Tax Levy Requirement has increased from $492,598 last year to $577,661 this year (17.3%). The increase in the Tax Levy is due to the increase in salaries, the investment return was less than expected, and there were two service transfers during the year. The Percent Funded has decreased from 80.4o/o last year to 77 .lo/o this year. ‐4- SUMMARY OF MSULTS(Continued) Tax Levy Requirement Tax Levy as a Percentage ofPayroll Village No....al COSt Anticipated Entployee Contributions Acmed Liability Actuarial Value ofAssets Unded Accrued Liability/(Surplu⇒ Amortization ofUnhmded Accrued Liability/(SuFpluS) Percent Fmded Annual Payroll For Year Ending December 31 2006 577,661 $ 23.68% as of January l 2006 297,359 219,185 26,016,602 20,053,194 5,963,408 280,302 2005 492,598 21.430/0 2005 272,616 206,492 24,131,120 19,395,277 4,735,843 219,982 TAX LEVY REQU:REMENT as of December 31 77.1% 2,439,899 $ I 2006I zoos 80。4% 2,298,601 -5-$ ACTUARIAL VALUATION OF ASSETS Cash and Equivalents Govemment Securities Mutual Funds Interest Receivable Miscellaneous Receivable/(Payable) - Actuarial Value of Assets as of January l 2006 $ 540,343 $ 547,746 9,952,771 9,430,095 9,463,206 9,331,550 99,172 (2.298) 87,940 (2.054) SUMMARY OF ASSETS $ 20_053.194 $ 19_395_277 ! Castr and Equivalents ! Government Securities E ilutual Funds As OfJanuary 1, 2006 -6- ASSET CHANGES DURING PRIOR YEAR Trust Balance as of January 1,2005 Contributions Village Employee Total Payments Benefit Payments Expenses Total Investment Income Trust Balance as of January 1,20M Approximate Annual Rate of Return 325 320 雀315 =S10 35 30 ASSET CHANGES DUR:NC PR:OR YEAR 490,244 231、399 1,084,486 45.298 ! Trust Balance ar of January 1, 20Os f Contributions ! Payments I lnvesBnent lncome ! Trust Balance as of January 1, 2006 19,395,277 721,643 1,129,784 1.066.058 20.053.194 5.55% -7- NORMAL COST The Normal Cost is the actuarial present value of the portion of the projected benefits that are > expected to accrue during the year based upon the actuarial valuation method and actuarial assumptions employed in the valuation. - asof January 1 2006 2005 Total No.11lal COSt $ 516,544 $ 479,108 ~ Anticipated Employee Contributions 219、185 206.492 ‐ Village Nomal Cost _ No...lal COSt Payroll _ Village Nomal Cost Rate Total Nomal Cost Rate 297.359 272_616 S 2,439,899 $ 2,298,601 12.19% 21.17% I Ar*icipated Employeo contributions I village Normal cost 11.86% 20。84% NORMAL COST As Of January l,2006 576% -8¨ ACCRUED LIABILITY The Accrued Liability is the actuarial present value of the portion of the projected benefits that has been accrued as of the valuation date based upon the actuarial valuation method and actuarial assumptions employed in the valuation. The Unfunded Accrued Liability is the excess of the Accrued Liability over the Actuarial Value of Assets. as of January l Accrlled Liability Active Employces Children Amuities Disability huities Retiremcnt Amu■ies Sllrviving Spouse Amuities Te....inated Vcsted Amuities Total Amuities Total Accrued Liability Actuarial Vduc ofAssets Unnded Accrlled Liability/cSurphs) Percent Fmded 2006 10,971,613 14,263 6,270,749 7,673,5000 1.086.477 15,044,989 26,016,602 20.0539194 5^963.408 77.10/0 I fotat Accrued Liability ! Actuarlat value of A3sets ! UnftrnOea lccrued Liabilityr(Surplus)$2005 10,870,398 9,599 6,247,951 7,003,17200 13,260,722 24,131,120 19、395.272 4_735_843 80.4% ACCRUED LiAB:LITY As Of January l,2006 330 325 S20 S15 310 35 30 ‐9- TAX LEVY REQIIIREMENT The Tax Levy Requiremcntis detc....ined as the almual contHbution nccessary to ind the _ noll■■al cost,plus the alnount to allnortize the llnfunded accrued liability as a level percentage of payroll over a fottF(40)year pc五 od which commencedin 1993. For Year Ending December 31 2006 2005 VillageNormalCostasofBeginningofYear$297,359$272,616 Amortization of Unfunded > Accrued Liability(Surplus) 280,302 219.982 577.661 492.598 $ 2,439,899 $ 2,298,601 23.68%21.43% Tax Levy Requirement as of End of Year Annual Payroll Tax Levy Requirement as a Percentage ofPayroll TAX LEVY REQUIREMENT For Fiscai Vear Ending December 31,2006 485% 5150/0 I vittage Normal cost ! Amoffzation of UAU(S) -10- SUMMARY OFPLAN P俎 ⅡCIPANTS The actuarial valuation ofthc Plan is based upon the employec data ttrlllished by the Villagc。 _ Thc infollllation providcd fbr Activc participants included: Nalne _ Sex Date of Birth Date ofHire_ Compensation Employee Contributions ― The info.11lation providcd for lnactive participants included: Narne~ Sex Date ofBirth Date ofPension Corllmencement ― Monmy Pension Beneflt Fo..11 0fPayment Membership 2006 2006 2005 2005 Current Employees ~ Vested 19 19 Nonvested 15 14 - Total m エ _ hactive Participants Amual Beneflts Amual Beneflts Children 9 $ 2,434 7 $ 1,680 _ E)isabled Employees 14 468,708 14 463,642 Retired Employees 14 639,793 13 574,072 S―iving Spollses 0 0 0 0 Te.11linated Vestds 1 67.308 Q Q Total ユ8 1.178.243 34 1.039.394 Amllal Payroll $ 2,439,899 $ 2,298,601 SIIMMARY OF PLAN PARTICIPANTS(Continued) Agc and Service Distribution O-4 5-9 10-14 15-19 20-24 25-29 30+Servlce Age 25-29 30-34 35-39 40-44 45‐49 50-54 55-59331 2006 $1,606,286 Total Salary 5 56,082 6 56,729 5 65,956 4 65,739 4 80,408 6 71,749 4 88,1380 14 68.182 SalaFy 49,894 64,922 70,720 旦 2 ≦ 生 84,636 72,115 88,138 Average Age: 41.2 Average Service: 13.5 DURAT10N KyearS)Act市 e Members:14.3 Retired Members: 9。4 All Members:11.5 PROJECTED PENS10N PAYMENTS ヱ 2007 $1,667,550 $1,678,957 PROJECTED PENSiON PAYMENTS 2009 $1,690,473 I zooe I zoot I 2oo8 n zoog I zoro 2010 $1,846,503 2006‐2010 -12-2 SUMMARY OF PLAN PROVISIONS The Plan Provisions have been changed from the prior year increasing the surviving spouse benefit and increasing the Employees contribution rate. The Village of Oak Brook Firefighters Pension Fund was created and is administered as prescribed by "Article 4. Firefighters'Pension Fund - Municipalities 500,000 and fJnder" of the Illinois Pension Code (Illinois Compiled Statutes,1992, Chapter 40). A brief summary of the plan provisions is provided below. Employees attaining the age of (50) or more with (20) or more years of creditable service are entitled to receive an annual retirement benefit of one-half of the salary attached to the rank held on the last day of service. The pension shall be increased by (l/12) of (2.5%) of such monthly salary for each additional month of service over (20) years up to (30) years, to a maximum of (75o/o) of such monthly salary. Employees with at least (10) years but less than (20) years of credited service may retire at or aftei age (60) and receive a reduced benefit ranging from (15%) of final salary for (10) years of service to (45.6%) for l9 years of service. Surviving spouses receive (100%) of final salary for fatalities resulting from an act of duty, or otherwise the greater of $a%) of final salary or the monthly retirement pension that the deceased firefighter was receiving at the time of death. Surviving children receive (12%) of final salary. The maximum family survivor benefit is (75%) of final salary. Employees disabled in the line of duty receive (65%) of final salary. The monthly pension of a covered employee who retired with (20) or more years of service after January l,lg17, shall k increased annually, following the first anniversary date of retirement and bepaid upon reaching the age of at least (55) years, by (3%) of the amount of the pension payable at the time of the increase. Employees are required to contribute (9.455Yo) of their base salary to the Firefighters' Pension plan. if an employee leaves covered employment with less than twenty (20) years of service, accumulated employee contributions may be refunded without accumulated interest. -13- ACTUARIAL METHODS The Actuarial Methods used for determining the Tax Levy and GASB Statements No.25 &27 financial disclosure have not been changed from the prior year. The Actuarial Method employed for this valuation is as follows: Entrv Ase Nonnal Cost Method Under the Entry Age Normal Cost Method the Normal Cost for each participant is computed as the level percentage of pay which, if paid from the earliest age the participant is eligible to enter the plan until retirement or termination, will accumulate with interest to sufficiently fund all benefits under the plan. The Normal Cost for the plan is determined as the greater of a) the sum of the Normal Costs for all active participants, and b) 17 .5% of the total payroll of all active participants. The Accrued Liability is the theoretical amount that would have accumulated had annual contributions equal to the Normal Cost been paid. The Unfunded Accrued Liability is the excess of the Accrued Liability over the plan's assets. Experience gains or losses adjust the Unfunded Accrued Liability. -t4- ACTUARIAL ASSIIMP「ΠONS The Actuarial AssuttptiOns used for detell.lining the Tax Levy Requirementand GASB Statements No.258ι 27 Disclosllre hfo■1..ation are the salllc and have not been changed i計 om the prior year.The Acmmal Assmptions employed for this valuation are as follows: ' Valuation Date January l,2006 Asset Valuation Method Market Value hvestment Retuビ n 7.50% Salary Scale 5.25% Mortality 1984 Unisex Pensioners Mortality Table Withdrawal CIraduated Rates Disability Graduatcd Rates Retirement Gradmted Rates(100%by Age 69) Marital Status 85% Married, Spouse Same Age Plan ExPenses None Saln,le Annual Rates Per 100 Participants △照 MOltalitv Withdrawal Disabilitv Retirement 20 0.13 3.97 0.02 30 0.11 1・ 46 0.25 40 0.21 0.42 0。65 50 0。56 60 1.43 69 3.21 1.66 19。18 27.77 100.00 …15¨ GASB STATEMENTS NO.25&27 DISCLOSURE INFORMATION The Governmental Accolmting Standards Board(GASB)isSued statements No.25&27 that _ established generally accepted accounting pHnciples for thc amual inallcid stttements for defmed beneflt pension plans. The required infomation is as follows: _ Membership in the plan consisted ofthe fbllowing as o全 Dccember 31.2005 Deccmber 31.2004 ~ Retirees and beneflciarles 37 34 receivlng beneflts _ Ternllnated plan membcrs entitled 1 0 to but not yet receiving beneflts Active vested plan lnembers 19 19~ Active llollVeSted plan members 亜 里 TOtd ≧ ⊆ ― Nmber ofparticipating employers l l SCHEDULE OF FUNDING PROGuSS UAAL asa Acmrial ActuaFial Accrued Unded Percentage Actuanal Valuc of Liability(AAL) AAL Fllnded Covered ofCovered Valuation Assets ―Entry Age (UAAL) Ratio Payroll Payroll Date ω ω (b―め (a/b) 0 “ b―ハ/C) 12/31/03 18,254,770 22,439,963 4,185,193 81.30/0 2,156,811 194.0% 12/31/04 19,395,277 24,131,120 4,735,843 80.40/0 2,298,601 206.0% 12/31/05 20,053,194 26,016,602 5,963,408 77.10/0 2,439,899 244.4% -16- GASB STATEMENTS NO.25&27 DISCLOSUtt INFORMATION(Continue0 ANNUAL PENSION COST AND NET PENSION OBLIGATION Annual required contribution lnterest on net pension obligation Adjustnent to annual required contribution Annual pension cost Contributions made Increase (decrease) in net pension obligation Net pension obligation beginning of year Net pension obligation end of year THttE―YEAR TREND INFORMAT10N D∝ember 31.2005 490,24400 490,244 490,244000 December 31.2004 490,61200 490,612 490.61200 Ω Fiscal Year Ending 12/31/03 12/31/04 12/31/05 Amual Penslon Cost(APC) 481,887 490,612 490,244 Percentage ofAPC Contributed 100.0% 100.0% 100.0% Net Pension Obligation 0 0 0 -17- GASB STATEMENTS NO.25&27 DISCLOSUu INFORMATION(Continued) FIINDING POLICY AND AblNUAL PENSION COST Contribution rates: Village Plan members Annual pension cost Contributions made Actuarial valuation date Actuarial cost method Amortization period Remaining amortization period Asset valuation method Actuarial assumptions : Investment rate of return* Projected salary increases* *Includes inflation at Cost-of-living adj ustments 20.093% 9.45s% 490,2M 490,244 1213U2005 Entry age Level percentage ofpay, closed 28 years Market 7.50% 5。25% 3.00% 3.00%per year 21.344% Sarne 490,612 490,612 12/31/2004 Same Sarne 29 years Sarne Sallne Sarne Sarne Salne -18-