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Fire Actuarial Valuation Report 2009Actu可 VILLAGE OF OAK BR00K OAK BR00K FIREFIGHTERS PENS10N FUND Actuarial Valuation Report For the Year Beginning January l, 2009 And Ending December 31,2009 Timothy ll. 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 Proj ected Pension Payments Summary of Plan Provisions Actuarial Methods Actuarial Assumptions GASB Statements No. 25 &27 Disclosure Page J 4 6 1 8 9 l0 ll 12 12 l3 t4 15 t6 b 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 1,2009, and ending December 31,2009. The valuation results reported herein are based on plan provisions in effect as of January 1,2009, the employee data fumished by the Village, the financial data provided by the Fund's trustee andb the actuarial methods and assumptions described later in this report. I hereby certiff that this report is complete and accurate and fairly presents the actuarial position of the Fund as of December 31, 2008, 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, .-"-Z/_r< > Timothy W. Sharpe, EA, MAAA Enrolled Actuary No. 08-4384 r/r/t ‐3- Date _ SUMMARY OF RESULTS There was a change with respect to Actuarial Assumptions from the prior year to reflect revised expectations with respect to future interest rates and salary increases. The interest rate assumption has been reduced from 7 .50o/o to 7 .00Yo, and the salary increase assumption has been reduced from 5.25oh to 4.25Yo. There were no changes with respect to Plan Provisions or Actuarial Methods from the prior year. > There were no unexpected changes with respect to the participants included in this actuarial valuation (2 new members, 0 terminations, 0 retirements, 0 incidents of disability, annual payroll increase 5.2yo, average salary increase 6.0%). There were no unexpected changes with respect to the Fund's investments from the prior year (annual investment return -12.7 4%). The Village's Tax Levy Requirement has increased from $648,1 86 last year to $991,993 this year (53.0%). The increase in the Tax Levy is due to the increase in salaries, the investment retum was much less than expected, and the change in the actuarial assumptions. The Percent Funded has decreased from 77 .6% last year to 6l.2yo this year. A summary of the effects of the changes to the Actuarial Assumptions is as follows: The change in the interest rate assumption increased the Normal Cost $65,432, increased the Accrued Liability $1,565,162, and increased the Tax Levy Requirement $120,961. The change in the salary increase assumption decreased the Normal Cost $77,593, decreased the Accrued Liability 5456,125, and decreased the Tax Lely Requirement $43,205. The impact of all the changes decreased the Normal Cost $12,161, increased the Accrued Liability $1,109,037, and increased the Tax Lery Requirement$'77,756. -4- SUMMARY OF RESULTS(Continued) 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 Year Ending December 31 2009 991,993 $ 35。37% as of January l 2009 340,904 254,384 31,239,022 19,118,652 12,120,370 651,089 2008 648,186 25.10% 2008 329,175 231,957 28,968,184 22,473,402 6,494,782 319,011 61.2% 2,804,818 77.6% 2,582,069 TAX LEVY REQU:REMENT as of December 31 -5- Sl,200 31,000 S800 S600 1400 S200 30 ACTUARIAL VALUATION OF ASSETS Cash and Equivalents _ Certificates of Deposit Government Securities Mutual Funds Interest Receivable Miscellaneous Receivable/(Payable) Actuarial Value of Assets as of January l 2009 2008 $ 384,571 $ 1,378,426 101,323 11,889,308 11,970,696 6,639,826 9,032,721 SUMMARY OF ASSETS As Of January l,2009 109,939 (6.315) ! Certificates of Deposit ! Government Securitieg E Mutual Funds 100,927 (9,368) $ 19_118_652 $ 22.473.402 349%____I〕 )1“.ご 「:i:明 ' .cash and Equivalents -6- ASSET CHANGES DURING PRIOR YEAR Trust Balance as ofJanuary l,2008 Contributions Village Employee Total Payments Beneflt Payments Expenses Total lnvestlnent lncome Trust Balance as ofJanuary l,2009 Approximate Alllnual Rate ofReturll 671,683 254.614 1,436,646 57.582 ASSET CHANGES DURING PR:OR YEAR 22,473,402 926,297 1,494,228 (2.786.819) 19_118_652 ‐12.560/0 ! Truat Balance as of January 1, 2008 I Contributions ! Payments E lnvestment lncome ! Trust Balance as of January 1, 2009 -7¨ NORNIAL COST The Nolll.al COSt is thc actuarial present value ofthe portion ofthc praected bcncits that arc _ expected to accrue during the ycar based upon the actuarial valuation rnethod and actuarial assurnptions employed in the valuation. Total Normal Cost Anticipated Employee Contributions as of January l 2009 2008 $ 595,288 $ 561,132 Village Normal Cost Normal Cost Payroll rr Village Normal Cost Rate Total Normal Cost Rate $ 2,804,818 $ 2,582,069 254.384 340_904 12.15% 21.22% I Anticipated Employee Contributions ! vittage Normal cost 231.957 329_175 12.75% 21.73% NORMAL COST As Of」anuary l,2009 573% 4270/O -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 I 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 Unfunded Accrued Liability/(Surplus) Percent Funded 2009 12,404,924 22,249 8,072,637 9,781,0030 958.209 18,834,098 31,239,022 19、118.652 12_120_370 61.2% ! fotat Accrued Liability I Actuarial value of Asseta ! Unfunded Accrued Liability/(Surplus) 2008 10,893,933 22,899 7,712,208 9,438,4640 900.680 18,074,251 28,968,184 22.473.402 6_494_782 77.6% ACCRUED L:AB:L:TY As OfJanuary l,2009 S35 S30 S25 S20 S15 S10 S5 30 -9- TAX LEVY REQUIREMENT The Tax Levy Requirement is determined as the annual contribution necessary to fund the normal cost, plus the amount to amortize the unfunded accrued liability as a level percentage of payroll over a forty (a0) year period which commenced in 1993. For Year Ending December 3l 2009 2008 Village NorIInal Cost as ofBegirlning ofYear $ 340,904 $ 329,175 Amortization of Unfunded 651.089 319.011 Accrued Liability/(SurpluS) Tax Levy Requiremcnt as of End of Year 991_993 648.186 $ 2,804,818 $ 2,582,069 35.370/0 25.10% Annual Payroll Tax Levy Requirement as a Percentage ofPayroll TAX LEVY REQU:REMENT For Fiscai Year Ending December 31,2009 65611lll11lliIII1344% :熙 T堀 里illlぶ L(s) -10- _ SUMMARY OF PLAN PARTICIPANTS The actuarial valuation ofthc Plan is based upon the employee data fbmished by the Village. _ Thc infollllation provided for Active participants included: Name ― Scx Datc ofBirth Date of Hire ― Compensation Employee Contributions ~ The infollllation provided for lnactivc participants included: Narne~ Sex Date of Birth Date ofPension Conlrnencement NIIonthly Pension Beneflt Folll1 0f Payment NIlembership 2009 2009 2008 2008 Current Employees Vested 16 16 Nonvested 19 17~ Total 五 五 一 Inactive Participants Alllnual Beneflts Arlnual Bcneflts Childrcn 14 $ 3,848 14 $ 3,661 _ E)isabled Employees 16 599,961 16 582,183 Retired Employees 16 833,225 16 810,386 _ urvlvlng Spouscs 0 0 0 0 Tellllinated Vestcds 1 55、193 1 55、193 Tot」 生 1_492_227 里 1_451^423 Annual Payroll $ 2,804,818 $ 2,582,069 SUMMARY OF PLAN PARTICIPANTS(Continued) Age and SeⅣice Distribution O-4 5-9 10-14 15-19 20-24 25-29Servlcc Age 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55…59 60+ 2009 $1,901,092 2010 $2,052,969 2011 $2,095,601 2012 $2,145,669 Total Salary 3 60,554 9 67,412 5 65,779 6 78,570 4 90,438 2 86,041 5 92,408 1 105,918 2013 $2,187,167 Total曇 2二 重 ⊥生 旦 塑 76_871 Salary 60,483 73,057 72,951 87,680 70,858 95,345 106,211 Average Age: 41.3 Average SeⅣice: 12.7 DURATION(yearS) Act市 e Members: 10.2 Rctired Members: 9.2 All Membcrs: 9.6 PROJECTED PENSION PAYMENTS PROJECTED PENS:ON PAYMENTS ! zoosI zoroI zotr Zzo'rzI zotr -12- 2009‐2013 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 (1112) 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 ( I 5%) of final salary for ( 1 0) 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 1, 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 contribute (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. -1 3- 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 sumt 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 used for detellllining thc Tax Lcvy Requirelnent and GASB _ Statements No.25∂ぅ27]Disclosure lnfollllation arc the same and have been changcd from the prior ycar(diSCussion at page 4).The Actuarial Assumptions employed for this valuation are as follows: Valuation Date Janua7 1,2009 Asset Valuationヽ 4cthod Markct Valuc lnvestincnt Returl1 7.00% ~ Salary Scalc 4.250/0 - Mortality 1984 Unisex Pensioners Mortality Table _ Withdrawal Graduated Rates _ Disabiliサ Graduated Rates Retircment Graduated Rates(100%by Age 69) Ⅳlarital Status 85%ヽ4arried,Spousc Salnc Agc Plan Expcnses Nonc Samole AШ lual Rates Per 100 Participants 量 MOrtalitv Withdrawal Disabilitv Retircment 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: 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 December 31.2008 Dcccmber 31.2007 46 46 _ SCHEDULE OF FUNDING PROGRESS UAAL asa Actuarial Actuarial Accrued Unfunded Percentage Actuarial Value of Liability(AAL) AAL Fundcd Covercd ofCovered Valuation Asscts ¨Entry Agc (UAAL) Ratio Payroll PayToll Date 0 0 (b―a) (a/b) 0 ((b―a)/C｀ 12/31/06 21,567,521 27,373,120 5,805,599 78.80/0 2,563,057 226.5% 12/31/07 22,473,402 28,968,184 6,494,782 77.60/0 2,582,069 251.5% 12/31/08 19,118,652 31,239,022 12,120,370 61.20/0 2,804,818 432.10/0l16 19 _8211 16 17m1 -16- …17- GASB STATEMENTS NO.25&27 DISCLOSUM INFORMATION(Continued) 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 INFORMATION Decembcr 31.2008 671,68300 671,683 671.68300 Ω December 31.2007 564,94500 564,945 564,94500 Ω Fiscal Year Ending 12/31/06 12/31/07 12/31/08 Annual Penslon Cost(APC) 584,388 564,945 671,683 Percentage of APC Contributed 100.0% 100.00/0 100.0°/o Net Pension Obligation 0 0 0 GASB STATEMENTS NO.25&27 DISCLOSURE INFORNIATIttN(Continucd) FⅧDING 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 adjustments 23.9470/0 9.455% 671,683 671,683 12/31/2008 Entry age Lcvel pcrcentage ofpay,closed 25 years Market 7.00% 4.25% 3.00% 3.00%per year 21.880% Same 564,945 564,945 12/31/2007 Same Same 26 years Same 7.500/0 5.250/0 Same Salne ‐18¨