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Fire Actuarial Valuation Report 2019Village of Oak Brook Firefighters' Pension Fund GASB Nos. 67 & 68 Repori as of FiscalYear Ending December 31, 2019 Table of Contents Actuarial Certifi calion Summary Statement of Fiduciary Nel Position Statement of Changes in Fiduciary Net Position Schedule ot Changes in Nel Pension Liabllity and Related Ratios Pension Expense Deferred Oumows of Resources and Deferred lnflows of Resources Rolated to Ponsions Rate of Relurn Discount Rate and Net Pension Liability Sensitivity Schedule of Contributions Actuarial Assumptions for Total Pension Liablllty Actuarial Assumptlons for Actuarially Determined Contributions Plan Provisions356789 10 12 13 14 15 16 18 2lPage ⑪∩yhO rt Village of Oak Brook Firelighters' Pension Fund GASB Nos.67 & 68 Report as of FiscalYear Ending December 31, 2019 Actuarial Certifi cation This report is prepared in accordance with our underslanding of GASB Nos. 67 8 68 for the purpose of disclosing pension plans in financial stalements. Delerminations ,or purposes other than meeting these requirements may be significantly different from the results contained in this report. The information presented in this report is based on: ' the actuarial assumptions included in this reporti. the plan provisions;. participant information fumished to us by the Plan Adminislrator;. asset information furnished to us by the Plan Trustee. We have reviewed the provided data for reasonableness when compared to prior information provided, but have not audited the data. Where relevant data may be missing, we may have made assumptions we believe are reasonable for the purpose of the measurement. We are not aware of any significanl issues with and have relied on the data provided. Any errors in the data provided may result in a different result than those provided in this report. The interest rate, other economic assumptions, and demographic assumptions have been selected by the plan sponsor wilh our recommendations. The assumptions used, in our opinion, are reasonable and represent a reasonable expectation of future experience under the plan. All calculations have been made in accordance with generally accepted actuarial principles and practice. A summary ot any assumplions not included in this report, the plan provisions and the parlicipant information is included in the Actuarial Valualion Reporl for funding purposes. Future actuarial measurements may differ significantly from lhe currenl measurements presented in this report due to such factors as lhe tollowing:. plan experience differing trom thal anlicipaled by the economic or demographic assumptions;. changes in economic or demographic assumptions;. increases or decreases expected as part of the natural operation of the methodology used for lhese measurements (such as the end of an amortization period or addilional cost or contribution requirements based on the plan's funded status); and. changes in plan provisions or applicable law. We did not perform an analysis of lhe potential range of future measurements due to the limited scope of our engagement. 31Pag 咽∋∩yhO rt Village of Oak Brook Firefighters, pension Fund GASB Nos. 67 & 68 Report as of Fiscal Year Ending Decembet 31,2O1g Actuarial Certification The undersigned are compliant with the continuing educalion requirements of lhe Qualification Standards for Actuaries lssuing Statemenls ofActuarial Opinion in the United States. To our knowledge there have been no significant events prior to the cunent year's measurement date or as of the date of this report which could materially affect the results contained herein. Neither Nyhart nor any of its employees have any relationships with the plan or plan sponsor which could impair or appear to impair the objeclivity of this report. Nyhart ′ ノ κ (`′ ´」 く ζ 「 口‐ 1:::::111‐ ‐‐― ・ く 03′17/2020 M ke Zurek,EA,MAAA Scott Cavin,FSA,EA,MAAA 41 ①∩yhO rt Vi:lage of Oak Brook Firenghters'Pension Fund CASB Nos 67&68 Report as of Fisca!Year Ending December 31,2019 Summary Net Pension Liability The components of the net pension liability at December 31 Total pension liability Plan Iiduciary nel position Net pension liability Plan fiduciary net position as a percent of the total pension liability Pension Expense for the FiscalYear Ended December 31 Aqluarial Aggumptions The total pension liability was determined using the following actuarial assumptions lnflation Salary increases, including inflation lnvestment rate of return, including inflation, and net of investmenl expense Plan MembeBhlp The total pension liability was determined based on the plan membership as of December 31 lnactive plan members and beneliciaries currently receiving benefits lnactive plan members entitled to but nol yet receiving benefits Active plan members Total members 12′31′2019 12′31′2018 52,392.619 (30,896.236) 51,305,132 (26,401,169) 21,496,383 5897% 2,243,611 24.903,963 5146% 2,696,701 250% 375% 675% 250% 375% 675% 51 ①∩yhOrt Vi∥age of Oak Brook Firenghters'Pension Fund CASB Nos 67&68 RepOrt as of Fiscal Year Ending December 31,2019 Statement of Fiduciary Net Position Assets Cash and deposits Securities lending cash collateral Total cash Receivables: Contributions Due from broker for investments sold lnvestment income Other Total receivables lnvestments: Money Market Mutual Funds Fixed lncome Stock Equities Mutual Funds Total investments Total assets Liablllties Payables: lnvestment management fees Due to broker ror investments purchased Collateral payable for securilies lending Other Total liabilities Net posiiion restricted tor pensions 12′31′2019 12′31′2018 613,5530 613.553 $ 00 75,790 1,469 77.259 25,050 10,742,3120 14.959,739 25,727,101 26.417,91300 16,744 $ 16,744 S 26,401,169 14,9000 14,90000 73,304 1,478 74,782 448,973 11,405,4490 18,969,936 30,824,358 30,914,040000 17,804 17,804 30,896,236 61 q∋∩yhort village ot Oak Brook Firefighters' Pension Fund GASB Nos. 67 & 58 Report as of Fiscal Year Ending December 31, 2019 Statement of Changes in Fiduciary Net Position 12′31′2019 12′31′2018 Addiiions Contributions: Employer Member Nonemployer contdbuting entitY Total contributions lnvestment income: Net increase in fair value of investments lnterest and dividends Less investment expense, other than ,rom securities lending Net income other than from securities lending Secudties lending income Less securities lending expense Net income from securities lending Net inveslment income Other Totaladditions Deductions Benefit payments, including retunds of member contributions Administrative expense Other Total deductions Nel increase in net position Net position restricted for pensions Beginning of year End of year 2,150,924 308,1760 2,064,689 300,0870 S 2,459,100 $ 4,162,938 866,114 (57.520) S 4,971,53200 $ 0 S 4,971,5320 7,430,632 2,889,667 45,8980 2,935,565 4,495,067 26,401,169 30,896,236 $ 2,364,776 S (2,426,050) 1.226,211 (55,650) S (1,255,489)00S 0 $ (1,255,489)01,109,287 2,756,038 45,5690 2.801.607 (4,692,320) 28,093,489 26.401.169 71 q∋∩yho rt Village of Oak Brook Firefighters' Pension Fund GASB Nos. 67 & 68 Report as of Fiscal Year Ending December 31, 2019 Schedule of Changes in Net Pension Liabiliiy and Related Ratios 12′31′2019 12′31′2018 12′31′2017 12′31′2016 12′31′2015 Total pension liability Service cost lnterest Changes of benefit terms Differences between expected and actual experience Changes of assumptions Benefit payments, including refunds of member contributions Net change in total pension liability Total pension liability - beginning Total pension liability - ending (a) Plan fiduciary net position Contributions - employer Contributions - member Contributions - nonemployer contributing member Net investment income Benefit payments, including refunds of member contributions Administrative expenses Other Net change in plan flduciary net position Plan liduciary net position - beginning Plan fiduciary net position - ending (b) Net pension liability - ending (a) - (b) Plan fiduciary net positaon as a percentage of the total pension liability Covered-employee payroll Net pension liability as percentage of covered- employee payroll 52,392,619 $51,305,132 $50,1E1,210 $49,274,222 $ 807,975 $ 3,420,108 64,337 (139,992) (175,274) (2,889,667) 786,115 S 3,347,2780 (96,554) (156,879) (2,756,038) 782,892 $ 3,287,8750 (768,292) 300,225 (2,695,712) 756.771 S 3,229,6500 (569,891) 90,432 (2,645,270) 746,748 3,040,3010 163,758 1.474.675 (2,615,406) 1,087,487 51,305,132 1,123,922 50,181,210 906,988 49,274,222 861,692 48,412,530 2,810,076 45,602,454 2,150,924 308,1760 4,971.532 (2,889,667) (45,898)02,064,689 300,0870 (1,255,489) (2,756,038) (45,569)02,080,231 295,4770 3,459,107 (2,695,712) (41,034)01,801,476 273,7750 1,794,320 (2,645,270) (40,567)048,412,530 1,414,530 269,3490 (256,565) (2.645,406) (46.350)04,495,067 26,401,169 (1,692,320) 23.093,489 3,098,069 24,995,420 1,183,734 23,811,686 (1,234,442) 25,046,128 30,896,236 $26,401,169 $28,093,489 $24,995,420 S 23,811,686 21,496,383 t ,4roxrd3 5897% 3,179,407 $ 67611% S 22,087,721 5598% $ 3,085,809 71578% 24,278,802 5073% 2,918,844 83180% 24,600,344 4918% 2,812,001 87485% 5146% 3,187,983 781 18% 81 咽∋∩yhO rt Vi∥age of Oak Brook Firenghters'Pension Fund CASB Nos 67&68 RcPort as of Fiscal Year Ending December 31,2019 Penslon Expense 12′31′2019 12′31′2018Fiscal year ending Service cost lnterest on tolal pension liability Proiected eamings on pension plan investmenls Changes of benefit terms Employee c,ontributions Pension plan administrative expense Other changes culrent period recognition of deferred outflows/(inflows) of r€sources Differences between Expected & Actual Experience in measurement ot th€ Total Pension Liability Changes of assumptions Differences between Prorected & Actual Eamings on Pension Plan lnvestments Total 807,975 3,420,108 (1,765,998) 64,337 (308,176) 45,8980 (289,195) 297,871 (29,209) 786,115 3,347,278 (1,881,567)0(300,087) 45,5690 (254,195) 341,690 611.898 2,243,611 2.696.701 9 1 q∋∩yho rt village of Oak Brook Firefighlers' Pension Fund GASB Nos.67 & 68 Report as of FiscalYear Ending December 31,2019 Deferred Outflows of Resources and Deferred lnflows of Resources Related to Pensions Differences between expected and actual experience in measurement o, the total pension liability for flscal year ending: lnitial Balance lnitial Amortization Period Annual Recognition 12′31/2019 Balance December 31,2019 Decembe「31 2018 December 31,2017 December 31,2016 December 31,2015$$$$$$$$$$$$$SS(139,992) (96.554) (768,292) (569,891) 163.758 1nitial Balanoe 4.O 5.0 5.0 5.0 50 lnitial Amortization Period (34,998) (19,311) (153.658) (113.978) 32,750 (104,994) (57,932) (307,318) (113,979)0Changes in assumptions for fiscalyear ending: (289,195) Annual Recognition (584,223) 12′31′2019 Balance December 31,2019 December 31,2018 December 31,2017 December 31,2016 December 31,2015$$S$$$$$$$$$$$$(175,274) (156,879) 300,225 90,432 1,474,675 40 50 50 50 50 (43,819) (31.376) 60,045 18.086 294,935 (131,455) (94,127) 120,090 18,0880 Differences between projected and actual earnings on pension plan investments for liscal year ending: lnitial Balance lnitial Amortization Period 297 ,871 Annual Recognition (87,404) 12′31′2019 Ba:ance December 31,2019 December 31,2018 December 31,2017 December 31.2016 December 31,2015$$$$$$$$$$SSS$$(3,205,534) 3,137,056 (1,784,101) (207.638) 1,914,175 50 50 50 50 50 (641,107) 627.411 (356,820) (41,528) 382,835 (2,564,427) 1,882,234 (713,641) (41,526)0(29,209)(1,437,360) 101P n(le ⑪∩yhOrヒ Village of Oak Brook Firefighters' Pension Fund GASB Nos.67 & 68 Report as of Fiscalyear Ending December 31,2019 Deferred Outtlows of Resources and Deferred lnflows of Resources Relaled to pensions Deferred Outflows Deferred lnflows of Resources of Resources Differences be●veen expected and actual experience $ O S (584,223) Changes of Assumptions s 138,178 S (225,582) Net difference between prolected and actual eamings on pension plan investments s l.882,234 $ (3,319,594) $ 2,020,412 s (4,129,399) The balances as of December 31,201 9 ofthe defered outnows/1in10WS)of reSOurces w∥l be recogni2ed in pensiOn expense forthe nscal year ending December 31 2020 2021 2022 2023 2024 Thereafter $(731,050) S(593,636) S(143,195) $(641,106) $0 $0 '111r':1 .r r 咽∋∩yhOrヒ Village of Oak Brook Firefighlers' Pension Fund GASB Nos. 67 & 68 Report as of Fiscal Year Ending December 3'1, 2019 Rate ot Return The long-term expected rate of return on pension plan investmenls was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These expecled future real rates of return are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the targel assel allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation as of December 31 , 2019 are summarized in the following table: Asset class Target allocation Long-term expected real rate of return Money lrarket Mutual Funds Fixed lncome Stock Equities Mutual Funds Cash 20% 370% 00% 610% 00% Tota1 loo o% 050●/. 250% 550% 550% 000% Long-term expected rate of return is 6.75%. l\roney-weighted rate o, return is '19.01%. 121 ⑪∩yhO rt village of Oak Brook Firefighters' Pension Fund GASB Nos.67 & 68 Report as of FiscalYear Ending December 31,2019 Discount Rate and Net Pension Liability Sensitivity Discounl rate The discount rate used to measure the total pension liability was 6.75olo. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that contributions will be made at rates equal to the difference between actuarially determined contributjon rates and the member rate. Professional judgment on future contributions has been applied in those cases where conlribution patterns deviate Irom lhe actuarially determined rates. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all proiected future benefit payments oI current plan members. Theretore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the not pension liability to changes in the discount rato The following presents the net pension liability, calculated using the discount rate of 6.75%, as well as whal the nel pension liability would be it it were calculated using a discounl rate that is 1-percentage-point lower (5.75%) or 'l -percentage-point higher (7.75%) than the current rate: 17o Decrease Current Discount 17o lncrease (575%) Rate(675%) (775%) Net pension liability S 28,319.507 S 21,496,383 S 15,883,412 131 ①∩yhO rt Village of Oak Brook Firefighters' Pension Fund GASB Nos.67 & 68 Report as of FiscalYear Ending December 31,2019 Schedule of Contribulions Actuarially determined contribution Contributions in relation to the actuarially determined contribution Coniribution defi ciency (excess) Covered-employee payroll Contributions as a percentage of covered-employee payroll Actuarially determined contribution Contributions in relation to the actuarially determined contribution Contribution deliciency (excess) covered-employee payroll Contributions as a percentage of covered-employee payroll 2,150,924 2,150,924 2,064.689 2,064,689 2,080,231 2,080,231 2,015,441 1,801,476 1,826,637 1,414.5300 3,187,983 6747%03,085,809 6691%02,918,844 7127% 2012 213,965 2,812,001 6406% 412,107 2,818,219 5019% 2013 2011 1,698,405 1,570,742 1,144,966 1,057,081 1,072,568 4,001,528 978,767 995110 127,663 2,674,017 5874% 87,885 2,762,080 3827% 71,040 2,687,097 3727% {16,343) 2,668,624 3729°/O 141 q∋∩yhort 2017 Village of Oak Brook Firefighters' Pension Fund GASB Nos. 67 & 68 Report as of Fiscal Year Ending Decamber 31, 20'19 Actuarial Assumptions for Total Pension Liability The total pension liability as of December 31, 2019 was determined using the following actuarial assumptions: Actuarial Cosl Method Entry Age Method Asset Method Market Value of Assets lnteresl Rates Discount Rate Expected Long Term Rate of Return Municipal Bond Rate lnflation Annual Pay lncreases Measuremeni Date 675% 675% N′A250% 375% December 31,2019 Ad‐hoc Cost‐of‐living:ncreases 30%(125%for those hired on or aFter」anuary l,2011) Morta:ity Rates Hea:thy RP‐2014 Morta1ly Table with a blue∞∥ar adlustment,wnh generational improvement scale MPη 019 app∥ed from 2013 Disab!●d l15%ofthe RP‐2014 Morta∥ty Table with a b!ue comar adlustment,with genera“onal improvement scale MPセ 019 app∥ed from 2013 A::other demographic asstlmptions As descttbed in the assumptions section ofthe actuanal deterrnined contribution Experience Study An acluarial experience study was provided October 5, 2017 to the Department Of lnsurance renecting expenence fOr the years 2011 ‐ 2016 from numerous Funds valued by the Department oflnsurance,including the Vi:lage of Oak Brook 151 q∋∩yhort village of Oak Brook Firefighters' Pension Fund GASB Nos.67I68 Report as of FiscalYear Ending December 31,2019 Actuarial Assumptions for Actuarially Determined Contributions Actuarial Cost Method Amortization Meihod Asset Method lnterest Rates lnflation Entry Age Normal Cost Method Closed level percentage of payroll amortization of 100% of the Unfunded Actuarial Accrued Liability using a 2.50o/o payroll growth assumption over the period ending on December 31, 2O4O (22-yea( amoiization in 2019) 5 year smoothing of assets gains and losses 6.75%, net of investment expenses 2.50v. Annual Pay lncreases 3.75o/o Ad-hoc Cost-of-living lncreases 3.0% (1 .25% for those hired on or after January 1 , 201 'l ) Mortality Rates Heallhy RP-2014 Mortality Table with a blue collar adjustmenl, with generational improvement scale MP-2018 applied from 2013 Disabled 115% ot the RP-2014 Mortality Table with a blue collar adjustment, with generalional improvement scale MP-2018 applied from 2013 20% of service deaths are assumed to be in the line of duty Retirement Rates Recommended rates from the 2017 lDOl experience study: Tler l Age Rate 50‐51 100/O 52-53 12% 54-55 15% 56‐59 20% 60‐62 25% 63‐64 33% 65‐69 50% 70+ 100% Tier ll Age Rate 50‐54 3% 55 30% 56-59 20% 60‐62 25% 63‐64 33% 65‐69 50% 70+ 100% 161Page 咽∋∩yhO rt Village ot Oak Brook Firetighters' Pension Fund GASB Nos. 67 & 68 Report as of Fiscal Year Ending December 31, 2019 Actuarial Assumptions for Actuarially Determined Contributions Disability Rates Termination Rates Marital Status and Ages Expense Load Recommended rates from the 2017 lDOl experience study. Sample rates include: Age Rate 00100/. 0068% 0420% 0000% 80% of disabilities are assumed to be in the line of duty. Recommended rates from the 2017 lDOl experience study. Sample rates include: 40 110% 50 100% 80%of participants are assumed marrled with female spouses 3 years younger Equalto the administrative expenses pald in the prio「year 171 CD∩yhOrし Village of Oak Brook Firetighiers' Pension Fund GASB Nos. 57 & 68 Report as of Fiscal Year Ending December 31, 2019 Plan Provisions E:igibility for Participation Firefighters of the V∥lage of Oak Brook Accrual of BeneFlts For employees hired prior to January 1, 2011, the normal retirement benefit is equal to 50% of the final salary plus 2.5% of any service over 20 years (with a maximum of 30) times the final salary. There is a minimum benelit ot $1 ,000 per month. The benefit is paid as a 100% joint and survivor benefil with the spouse, children under 18, or dependent parents of the participant as the survivor. For employees hired on or after January 1, 201 1, the normal retiremenl benefit is equal to 2.5% of the final average salary times benefit service (maximum 30 years). The benelit is paid as a 66.677o joint and survivor benefit wilh the spouse, children unde|l8, or dependent parents of the participant as the survivor. Benefits Normal Retirement EIig b∥ity For employees hired prior to January 1, 201 '1, the normal retirement date is the first day of the month on or after completion of 20 years of service and attainment of age 50. For employees hired on or after January 1, 20'11, the normal retirement date is the first day of the month on or after completion of 10 years of service and attainment of age 55. Unreduced Accrued Benefit payable immediately.Benefit Ea∥y Retirement Eligibi∥ty For employees hired prior to」anuary l,201l and terminating with less than 20 years or service For employees hired on or after January l,201l who has attained age 50 and has 10 years of service Benent Forthose hired pnortO」anuary l,2011,a reduced Accrued Benent sha:l be paid at age 60 based on the schedule below Fo「those hired on Or ater」anuary l,2011,the Accrued Benentis reduced by o 5%for each month priorto age 55 Benent service Accrual Percentage Beneft Service Acc「ual Percentage 10 150% 15 300% 11 176% 16 336% 12 204% 17 374% 13 234% 18 414% 14 266% 19 456% q)∩yhorヒ Village ot Oak Brook Firefighters' Pension Fund GASB Nos. 67 & 68 Reporl as of Fiscal Year Ending December 31, 2019 Plan Provisions Termination Eligibility Participants terminating before 20 years of service. Benelit Refund of Contribulions Disabi:ity in The Line of Duty E∥glblity Benent Disabi:ity Not:n The Line of Duty 日igibi∥ty BeneFt Death Notin the Line of Duty E∥gib∥ity Benent For participants who become disabled in the line of duty. The grealer of 65% of the final salary or the accrued benefit For participants who become disabled outside of the line o, duty. 50% of the final salary Death:n the Line of Duty E∥gib∥ity Fo「participants who die in the∥ne or duty Benent The beneFtis 100%of lnal salary pald to the survivo「 For participants who die outside of the line of duty. For those hired before January 1, 2011 and greater than 20 years of service, a benelt of 100% of the accrued benefit is paid to the survivor. For those with more than '10 years of service, but less than 20 years of service, a benefit of 50% of the ,inal salary is paid to the survivor. For those hired on or after January 1, 201'1, a benefit equal to the greater ol 54n/o ol final salary and 66-2l3yo of the accrued benefil is paid to the survivor. Compensation Final Salary is the salary attached to the rank held on the last day of service, or one year prior to the lasl day, whichever is greater. Final Average Salary is the average monthly salary obtained by dividing the total salary ol the firefighler during the 48 consecutive months of service within the last 60 months of service in which the total salary was the highest by the number of monlhs of service in that period. Salary will not exceed $106,800 adjusted from January 1, 201 I with the lesser oI 3% and 50% ('100% elfective 1/1/2020) of the CPI on November 1. 191 q∋∩yhort Village of Oak Brook Firelighters' Pension Fund GASB Nos. 67 & 68 Reporl as of Fiscal Year Ending December 31, 2019 Plan Provisions Credited Service For Vesting and Benelit Accrual purposes, pension service credit is based on elapsed time from hire. Employee Contribulions 9.455% of Compensation COLA Eligibiity All Participants Benefit For employees hired prior to January 1, 2011 a compound COLA of 3% is granted each year after altainment of age 55 and 'l year ol payments For employees hired alter or on January 1, 201'l a simple COLA of the lesser of 3% and 50% ofthe CPI on November I is granted each year after attainment of age 60 and 1 year of payments. For disabled employees, a simple COLA is available after attainment of age 60 and 1 year of payments. For employees hired prior to January 1, 2011 the COLA is 3%. For employees hired after or on January 1, 2011, the COLA is the lesser of 3% and 50% of the CPI on Novembe|l. Plan Provlslons Not lncluded We are not aware of any plan provisions not included in the valuation. Adrustments Made for Subsequent Events We are not aware of any event following the measuremeni date and prior to the date ol this report that would materially impact the results of lhis report. 20 lPa9e ①∩yhOrし