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Fire Actuarial Valuation Report 2007VILLAGE OF OAK BR00K OAK BR00K FIREFIGHTERS PENS10N FUND Actuarial Valuation Report For the Year Beginning January l, 2007 And Ending December 31,2007 Timothy W. Sharpe, Actuary, Geneva, IL (630) 262-0600 TABLE OF CONTENTS Introduction Summary of Results Actuarial Valuation of Assets Asset Changes During Prior Year Normal Cost Accrued Liability Tax Levy Requirement Summary of Plan Participants Duration Projected Pension Payments Summary of Plan Provisions Actuarial Methods Actuarial Assumptions GASB Statements No. 25 &27 Disclosure Paqe J 4 6 7 8 9 10 11 t2 t2 l3 t4 l5 t6 INTRODUCTION Fire-swom 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,,2007, and ending December 31,2007. The valuation results reported herein are based on plan provisions in effect as of January 1,2007, 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 certifi/ that this report is complete and accurate and fairly presents the actuarial position of the Fund as of December 31,2006, 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. Respectfully submitted, ``ヽTimothy W.Sharpc,EA,MAAA EIlrollcd Actuary No.05-4384 74ろ -3- Date - 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 (1 new member, 0 terminations, 0 retirements, 1 incident of disability, annual payroll increase 5.Uyo, average salary increase 6.0%). > There were no unexpected changes with respect to the Fund's investments from the prior year (annual investment return 9.44%). The Village's Tax Levy Requirement has increased from $577,661last year to $584,629 this year (1.2%). The increase in the Tax Levy is due to the increase in salaries and was offset due to the L investment retum was greater than expected. The Percent Funded has increased from TT.lohlast year to 78.8% this year. -4- SUMMARY OF RESULTS(Continucd) Tax Levy Requirement Tax Levy as a Percentage ofPayroll Village Normal Cost Anticipated Employee Contributions Accrued Liability Actuarial Value of Assets Unfunded Accrued Liability(Surplus) Amortization of Unfunded Accrued Liability(Surplus) Percent Funded Annual Payroll For Ycar Ending Decernber 31 2007 584,629 $ 22.81% as of January l 2007 305,357 230,249 27,373,120 21,567,521 5,805,599 279,272 2006 577,661 23.68% 2006 297,359 219,185 26,016,602 20,053,194 5,963,408 280,302 78.8% 2,563,057 77.1% 2,439,899 lzoot E zoos TAX LEVY REQUIREMENT ‐5- $700 t600 o 1500 E E gloo B $roo* $zoo 9100 i0 _ ACTUARIAL VALUATION OF ASSETS as of~ January l 2007 2006 - Cash and Equivalcnts $ 834,882 $ 540,343 _ Goverrment Securities 10,834,098 9,952,771 NIIutual Funds 9,806,769 9,463,206 1nterest Receivable 97,738 99,172 Miscellaneous Rece市 able/(Payable) (5.966) (2.298) Actuarial Value ofAssets S 21.567.521 $ 20_053.194 SUMMARY OF ASSETS 457% 3.9o/o : --.-t 4 lcasrrandEquivatentg - -6- ASSET CHANGES DURING PRIOR YEAR Trust Balance as of January I ,2006 Contributions Village Employee Total Payments Benefit Payments Expenses Total Investment Income Trust Balance as of January I ,2007 Approximate Annual Rate of Return S25 S20 :S15 =S10 35 30 584,388 235.053 1,137,883 55。988 I frust Balance a! of January 1, 2005 I Contributions ! Payments I lnvestment lncome ! Truet Balanco as of January l, 2007 20,053,194 819,441 1,193,871 1.888。757 21.567.521 9。51% ASSET CHANGES DURING PR:OR YEAR -7- _ NORNIIAL COST ・ The Nollllal COSt is the actuarial prescnt value ofthe portion ofthe pr●ected bencflts that are ― cxpected to accrue during thc year based upon the actuarial valuation lnethod and actuarial assumptions employed in the valuation. ~ as of January l 2007 2006 Total Normal Cost $ 535,606 $ 516,544 Anticipated Employee Contributions 230.249 219.185 297.359Village Normal Cost r- Normal Cost Payroll ! Village Normal Cost Rate E Total Normal Cost Rate 305.357 $ 2,563,057 $ 2,439,899 H.91% 20。90% I Anticipated Employee Contributlons ! vittage Normal cost 12.19% 21.17% NORMAL COST 570% -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. Accrued Liability Active Employees Children Annuities Disability Annuities Retirement Annuities Surviving Spouse Annuities Terminated Vested Annuities Total Annuities Total Accrued Liability Actuarial Value of Assets Untunded Accrued Liability(Surplus) Percent Funded ACCRUED LiAB:L!TY S30 S25 S20 S15 S10 S5 SO as of January l 2007 $ 11,601,687 $ 14,034 7,004,860 7,660,3200 1.092.219 15,771,433 27,373,120 215567.521 5_805_599 78.8% I total Accrued Liability I Actuarial Value of Asseta ! Unfunded Accrued Liability/(Surplus) 2006 10,971,613 14,263 6,270,749 7,673,5000 1.086.477 15,044,989 26,016,602 20.053.194 5_963_408 77.10/0 -9- _ TAX LEVY REQUIREMENT Thc Tax Levy Requircmcntis detellllincd as the annual contribution ncccssary to fund the ― nollllal cost,plus the allnount to alnortizc the unfunded accrued liabilil′as a level percentage of payroll over a forty(40)ycar period which commenced in 1993. ― For Year Ending Dccclnber 31 2007 2006 Village No■11lal COSt as of Begirlning of Year $ 305,357 $ 297,359 Amortization of Unfunded 279、272 280,302 Accrued Liability/(Surplus) Tax Levy Requircment as ofEnd ofYcar 584.629 577.661 Annual Payroll $ 2,563,057 $ 2,439,899 Tax Levy Requiremcnt 22.81% 23.68% as a Percentage of Payroll TAX LEVY REQUIREMENT 478% ! viltage Normal cost I Amortization of UAU(S) -10- _ SUMMARY OF PLAN PARTICIPANTS The actuarial valuation ofthe Plan is based upon thc cmployee data fumished by thc Village. ― The infollllation provided for Activc participants included: Nmc ― Sex Date ofBirth Date ofI―Iire~ Compcnsation Employee Contributions ~ The infollllation providcd for lnactivc participants included: Name Sex Date ofBirth _ Date ofPcnsion Comllncnccmcnt NIIonthly Pcnsion Beneflt Fon■ofPayment Membership 2007 2007 2006 2006 Current Employees Vested 18 19 Nonvcstcd 16 15 Total ■生 望 ~ Inactive Participants Allllual Beneflts Alllnual Beneflts Children 9 $ 2,460 9 $ 2,434 _ E)isabled Employees 15 521,646 14 468,708 Retired Employees 14 663,708 14 639,793 _ Survlving Spouscs 0 0 0 0 Terllninated Vestcds 1 67.308 1 67.308 TotJ 里 1.255_122 里 1.178.243 Annual Payroll $ 2,563,057 $ 2,439,899 SUNIIMARY OF PLAN PARTICIPANTS(Continucd) Age and Service Distribution O‐4 5-9 10-14 15‐19 20‐24 25-29Servlce Age 25…29 30-34 35-39 40-44 45-49 50-54 55-59 60+ 2007 $1,722,337 2008 $1,733,778 2009 $1,744,93431 生 93,140 2010 Sl,903,215 I zoot I zooa I zoosI zoro Azotl. Total Salary 4 58,029 6 62,979 6 65,084 5 68,614 3 86,649 5 75,909 4 89,393 1 94,582 塁 71_624 2011 $1,960,149 Total _8_8≦11重 Salary 53,958 68,454 73,905 81,145 81,145 79,606 Average Age: 41.6 Average Service: 13.7 DURATION(yearS) Act市 e Members: 14.2 Retired Members: 9。3 All Members: 11.4 PROJECTED PENSION PAYMENTS PROJECTED PENS:ON PAYMENTS -12- 30+ 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 Under" 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 increasedby (lll2) of (2.5%) of such monthly salary for each additional month of service over (20) years up to (30) years, to a maximum of (75%) of such monthly salary. Employees with at least (10) years but less than (20) years of credited service may retire at or after age (60) and receive a reduced benefit ranging from (15%) of final salary for (10) years of service to (45.6%) for 19 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 (I2%) 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, 1977, shall be increased annually, following the first anniversary date of retirement and be paid 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 contribfie (9.455o/o) 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. - l3- 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: Entry Age Normal 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. -14¨ _ ACTUARIAL ASSUMPTIONS The Actuarial Assumptions uscd for dctcrlnining the Tax Levy Requircrncnt and GASB ― Statements No.25&27 Disclosure lnfollllation are thc samc and have not been changed from the prior year. The Actuarial Assumptions employcd for this valuation are as fbllows: ~ Valuation Date January l,2007 - Asset Valuation Method ⅣIarket Valuc _ Investment Returl1 7.50% _ Salary Scalc 5.25% Ⅳlortality 1984 Unisex Pensioners Ⅳlortality Tablc Withdrawal Graduated Rates Disability Graduated Rates Retirement Graduatcd Rates(100%by Agc 69) ヽ/1arital Status 850/0ヽ 4arried,Spouse Salne Age Plan Expenses Nonc ― Sample Annual Ratcs Per 100 Participants △匹 MO■alitv Withdrawal Disabilitv Rctircmcnt _ 20 0.13 3.97 0.02 30 0.11 1.46 0.25 40 0.21 0.42 0.65 50 0.56 1.66 19.18 60 1.43 27.77 69 3.21 100.00 - -15- GASB STATEMENTS NO. 25 &,27 DISCLOSURE INFORMATION The Governmental Accounting Standards Board (GASB) issued Statements No. 25 &27 that established generally accepted accounting principles for the annual financial statements for defined benefit pension plans. The required information is as follows: Membership in the plan consisted of the following as of: Dcccmbcr 31.2006 December 31.2005 Retirees and beneficiaries receiving benefits Terminated plan members entitled to but not yet receiving benefits Active vested plan members Active nonvested plan members Total Number of participating employers SCHEDULE OF FUNDING PROGMSS Actuarial Valuation Datc 12/31/04 12/31/05 12/31/06 Actuarial Value of AssctsO 19,395,277 20,053,194 21,567,521 Actuarial Accrued Liability(AAL) ―Entry Agc ω 24,131,120 26,016,602 27,373,120 381 18 16 ■1Unfunded AAL (UAAL) (b…a) 4,735,843 5,963,408 5,805,599 371 19 15m1 Covered Payroll0 2,298,601 2,439,899 2,563,057 UAAL asa Pcrccntage of Covercd Payroll ((b―a)/c) 206.0% 244.4% 226.5% Funded Ratio (a/b) 80.4% 77.1% 78.8% -16- GASB STATEMENTS NO.25&27 DISCLOSURE INFORNIATION(Continucd) ANNUAL PENSION COST AND NET PENSION OBLIGATION Annual required contribution Interest on net pension obligation Adjustment 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 THREE―YEAR TREND INFORNIATION Dccembcr 31.2006 584,38800 584,388 584.388000 Dccember 31.2005 490,24400 490,244 490.24400 Ω Fiscal Year Ending 12/31/04 12/31/05 12/31/06 Annual Penslon Cost(APC) 490,612 490,244 584,388 Pcrcentagc ofAPC Contributed 100.0% 100.0% 100.00/0 Net Pension Obligation 0 0 0 -17- GASB STATEMENTS NO.25&27 DISCLOSURE INFORNIATION(Continucd) FUNDING POLICY AND ANNUAL 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 22.8000/0 9。455% 584,388 584,388 12/31/2006 Entry agc Level pcrccntage ofpay,closcd 27 years Market 7.50% 5.25% 3.00% 3.00%per year 20.0930/0 Salne 490,244 490,244 12/31/2005 Same Salne 28 years Sarnc Same Same Same Same -18¨