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Fire Actuarial Valuation Report 2010VILLAGE OF OAK BR00K OAK BR00K FIIEFIGHTERS PENSION FUND Actuarial Valuation Report For the Year Beginning January l, 2010 And Ending December 31, 2010 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 Page J 4 6 7 8 9 t0 11 12 l2 13 l4 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 1,2010, and ending December 31,2010. The valuation results reported herein are based on plan provisions in effect as of January 1,2010, the employee data furnished by the Village, the financial data provided by the Fund's trustee and the actuarial methods and assumptions described later in this report. I hereby certi8/ that this report is complete and accurate and fairly presents the actuarial position of the Fund as of December 3I,2009, 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, Timothy W. Sharpe, EA, MAAA Enrolled Actuary No. 08-4384 r/t∠ Date -3- E SUMMARY OF RESULTS There was a change with respect to Actuarial Assumptions from the prior year to reflect revised expectations with respect to future salary increases. The salary increase assumption has been reduced ftom 4.25o/o to 4.00%o. 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, although salaries were increased 4oh to reflect the pending contract (1 new member, I termination, 3 retirements, 0 incidents of disability, annual payroll increase -8.0oA, average salary increase 7.5%). There were no unexpected changes with respect to the Fund's investments from the prior year (annual investment return -12.49%). The Village's Tax Levy Requirement has increased slightly from $991,993 last year to $1,009,401 this year (1.8%). The increase in the Tax Levy is due to the increase in average salaries, and was offset due to the investment return was greater than assumed and the change in the actuarial assumptions. The Percent Funded has increased from 61.2% last year to 63.3% this year. A summary of the effects of the changes to the Actuarial Assumptions is as follows: The change in the salary increase assumption decreased the Normal Cost $19,252, decreased the Accrued Liability $119,661, and decreased the Tax Levy Requirement$9,372. ¨4- SUMMARY OF RESULTS (Continued) Tax Levy Requirement Tax Levy as a Percentage of Payroll 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 Dcccmber 31 2010 1,009,401 $ 39.22% as of January l 2010 327,721 233,983 32,813,804 20,779,262 12,034,542 681,680 2009 991,993 35.37% 2009 340,904 254,384 31,239,022 19,118,652 12,120,370 651,089 63.30/0 2,573,691 61.2% 2,804,818 TAX LEVY REQU:REMENT as of December 31 I zoro E zooa …5… Sl,200 Sl,000 S800 S600 S400 3200 30 * ACTUARIAL VALUATION OF ASSETS Cash and Equivalents Certificates of Deposit Government Securities E Mutual Funds Interest Receivable Miscellaneous Receivable/(Payable) Actuarial Value of Assets as of January l 2010 2009 $ 688,889 $ 384,571 103,902 101,323 10,162,201 11,889,308 9,728,939 6,639,826 109,939 (6.315) SUMMARY OF ASSETS As Of January l,2010 470% ′33% 100,857 `5.526) ! Casn and Money Markets ! certificates of Deposit ! Govemment Securities E Mutual Funds $ 20_779_262 $ 19_118.652 05% -6- ASSET CHANGES DURING PRIOR YEAR Trust Balance as ofJanuary l, 2009 Contributions Village Employee Total Payments Benefit Payments Expenses Total Investment Income Trust Balance as of January l, 2010 Approximate Annual Rate of Return 839,550 225。963 1,714,463 27.062 ASSET CHANGES DURINC PR!OR YEAR 19,118,652 1,065,513 1,741,526 2.336.623 20_779_262 12.44% ! Trust Balance as of January l, 2008 I contributiong ! Payments I lnvestment lncome I Trust Balance as of January 1, 2010 -7- ,し NORMAL COST I The Nolll.al COSt is the actuarial present value ofthe portion ofthe proJected beneflts that are L expected to accrue during the year based upon the actuanal valuation lnethod and actuanal 、 assuα I)tions employed in the valuation. ヽ as of January l ‐ 2010 2009 Total Normal Cost Village Normal Cost - Normal Cost Payroll ! Village Normal Cost Rate Total Normal Cost Rate Anticipated Employee Contributions 233.983 $ 561,704 $ 595,288 327.721 254.384 340.904 $ 2,573,691 $ 2,804,818 NORMAL COST As Of January l,2010 583% 12.730/0 21.82% I Anticipated Employee Contributions I vittage Normal cost 12.15% 21。22% -8‐ 417% 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 1 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 2010 10,421,407 19,864 8,057,201 14,315,33200 22,392,397 32,813,804 20.779.262 12_034_542 63.30/0 I Totel Accrued Liability I Actuarial Value of A38ets ! Unfunded Accrued Liability/(Surplus) 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% ACCRUED L:AB:L:TY As Of January l,2010 -9- TAX LEVY REQUIREMENT The Tax Lely 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 (40) year period which commenced in 1993. For Year Ending December 31 2010 2009 Village NoHllal Cost as ofBegiming ofYear S 327,721 $ 340,904 Amortization ofUnhnded 681.680 651.089 )｀ Accmed Liability/(Surplus)Ll Tax LevyRequirementas ofEndofYear l.009.401 991_993 し Amual Payroll $ 2,573,691 $ 2,804,818)LTax Levy Requirement as a Percentage ofPayroll 39.22% TAX LEW REQU:REMENT For Fisca:Year Ending December 31,2010 35。37% -10- I vittage Normal cost I Amortization of UAU(S) _ SUⅣIMARY OF PLAN PARTICIPANTS The actuarial valuation ofthc Plan is based upon the employee data fbmished by the Village. 一 The infollllation provided for Active participants included: Narne~ Sex Date of Birth Date ofHire｀ Compensation Employee Contributions ~ The infollllation provided for lnactive participants includcd: Narne Sex Date of Birth _ Date ofPension Commencement Monthly Pension Beneflt Folll1 0fPayment Membership 2010 2010 2009 2009 Current Employccs Vested 15 16 Nonvested 旦 19 Tota1 12 1■ ~ Inactive Participants Alllnual Beneflts Annual Bencflts Children 13 $ 3,310 14 $ 3,848 - E)isabled Employees 16 619,847 16 599,961 Retired Employees 20 1,166,227 16 833,225 _ Survlving Spouses 0 0 0 0 Terminated Vesteds Q 0 1 55。193 Totd 翌 1_789_384 里 1_492_227 Annual Payroll $ 2,573,691 $ 2,804,818 SUMMARY OF PLAN PARTICIPANTS(Continued) Age and Scrvice Distribution O-4 5-9 10-14 15-19 20-24Servlce Agc 20-24 25-29 30-34 35…39 40-44 45¨49 50…54 55-59 60+233243231Total 旦 2生 重 Salary 62,796 73,033 78,247 91,491 2 塁≧ 77.334 79,781 25-29 ■ 2 72,250 110,647 30+Total Salary 2 61,712 7 71,468 7 67,191 7 80,705 3 87,464 3 107,174 3 77,271 Average Age: 40.8 Average Service: 11.8 DURATION(ycarS) Act市 e Mcmbers: 16.O Retired Members: 9.4 All Mcmbers: 11.5 PROJECTED PENSION PAYMENTS 2010 $2,104,086 2011 $2,148,987 2012 $2,207,790 2013 $2,257,720 2014 $2,258,730 PROJECTED PENS10N PAYMENTS I zoroI zot'rI zotz E zots lzolt -12- 2010‐20142 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 (lllinois 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 (ll12) 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 (54%) 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 (9.455oh) of their base salary to the Firefighters' Pension Plan. tf 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 Lery 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 asi 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 sumb 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 the Tax Levy Requirement and GASB ― Statements No.25&271)isclosure lnfollllation are the samc and have been changed frorn the prior year(diSCussion at page 4).The Actuarial Assumptions employed for this valuation arc as follows: Valuation Date January l,2010 Asset Valuation IVIethod Market Value lnvestinent Rctum 7.00% ~ Salary Scale 4.00% ~ Mortality 1984 Unisex Pcnsioners Mortality Tablc ― Withdrawal Graduated Rates _ Disability Graduated Rates Retiremcnt Graduatcd Rates(100%by Age 69) ヽlarital Status 850/O Marricd,Spouse Same Age Plan Expenses None △璧 MO■alitv 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 1.66 19.18 - 60 1.43 27.77 69 3.21 100.00 -15- _ GASB STATEMENTS NO.25&27 DISCLOSUM INFORMATION Thc Goverllmental Accounting Standards Board(GASB)isSued statements No.25&27 that _ establishcd gcnerally accepted accounting principles for the annual flnancial statements for deflned beneflt pcnsion plans. The required infollllation is as fo1lows: 一 Membership in the plan consisted ofthe following as of Decembcr 31.2009 Dccember 31.2008 Rctirees and bcncflciaries 49 46 recciving beneflts ― Tellllinated plan lnembers entitled 0 1 to but not yet receiving bcneits Active vested plan rnembers 15 16 Active nonvested plan lnembcrs 17 19 Totd 塁 塁 Number ofparticipating employers l l ― SCHEDULE ttF FUNDING PROGRESS UAAL asa~ Actuarial Actuarial Accrued Unfは nded Percentage Actuanal Value of Liability(AAL) AAL Fllnded Covered ofCovered Valuation Assets ―Entry Age (UAAL) Ratio Payroll Payroll~ Dtte 0 0 (b―a)(a/b) 0 ((b―a)/C) 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 2,804,818 432.10/0 12/31/09 20,779,262 32,813,804 12,034,542 63.30/0 2,573,691 467.6% -16- GASB STATEMENTS NO.25&27 DISCLOSURE 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 THttE―YEAR TttND INFORⅣlATION Dccember 31.2009 839,55000 839,550 839,55000 Ω December 31.2008 671,68300 671,683 671.68300 ‐Q…17- Fiscal Year Ending 12/31/07 12/31/08 12/31/09 Annual Penslon Cost(APC) 564,945 671,683 839,550 Percentage ofAPC Contributed 100.0% 100.0% 100.0% Net Pension Obligation 0 0 0 GASB STATEMENTS NO.25&27 DISCLOSUu INFORNIIATION(Continucd) FLINDING PttLICY AND A―AL 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-o f-living adj ustments 32.620% 23.947% 9.455% Salne 839,550 671,683 839,550 671,683 12/31/2009 12/31/2008 Entry agc Salne Levcl percentage ofpay,closed Salne Z{years 25years Market Same 7.00% 4.00% 3.00% 3.00%per year Salne 4.250/0 Samc Samc -18¨