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Police Actuarial Valuation Report 2005ⅥLLAGE OF OAK BR00K OAK BR00K POLICE PENSION FUND Actuarial Valuation RePort For the Year Beginning January 1, 2005 And Ending December 31,2005 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 Method Actuarial Assumptions GASB Statements No. 25 &27 Disclosure Paee J 4 6 7 8 9 l0 ll t2 t2 l3 t4 15 l6 INTRODUCTION Police-sworn personnel of the Village of Oak Brook are covered by the Police 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, 2005, and ending December 31,2005- The valuation results reported herein are based on plan provisions in effect as of January 1,2005, 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 certiry that this report is complete and accurate and fairly presents the actuarial position of the Fund as of December 31,2004, 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, .'A:-' / Timothy W. Sharpe, EA, MAAA Enrolled Actuary No. 05-4384 C/ノ イ●/ノ を '~ -3¨ SUMMARY OF RESULTS There has been 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 increased ftom7.25%oto 7.50o/o. The salary increase assumption has been _ increased from 5.00% to 5.25o/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 (3 new members, 0 terminations, 4 retirements, 0 incidents of disability, annual payroll increase -l.\yo, average salary increased 6.3%). There were no unexpected changes with respect to the Fund's investments from the prior year _ (annual investment return 8.04%). The Village's Tax Levy Requirement has increased from $469,806 last year to $496,121 this year (5.6%). The increase in the Tax Levy is due to the increase in average salaries and the number of retirements occurring during the year The Percent Funded has decreased slightly from 89.4% last year to 89.1% this year. A summary of the effects of the changes to the Actuarial Assumptions is as follows: The change in the interest rate assumption decreased the Normal Cost $37,043, decreased the Accrued Liability $794,912,and decreased the Ta< Levy Requirement $69,507. The change in the salary increase assumption increased the Normal Cost $21,491, increased the Accrued Liability $l52,2o2,and increased the Tax Levy Requirement$24,512. The impact of all the changes decreased the Normal Cost $15,552, decreased the Accrued Liability $642,7l1,and decreased the Tax Levy Requirement $44,995. ‐4- SUMMARY OF RESULTS(Continued) Ta,r 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 December 31 2005 496,121 $ 17.66% as of January l 2005 358,478 264,452 27,106,938 24,157,442 2,949,496 137,643 2004 469,806 16.46% 2004 348,213 269,391 25,499,316 22,790,550 2,708,766 121,593 89。1% 2,808,631 89。4% 2,854,299 TAX LEVY REQU:REMENT I zoos D zool as of December 31 ‐5-$$ _ ACTUARIAL VALUATION OF ASSETS as of ― January l 2005 2004 _ Cash and Equivalents $ 368,815 $ 337,029 … Certiflcates ofDeposit 100,154 100,928 Govement Secunties 14,083,032 13,673,013 Mutual Funds 9,482,425 8,537,601 1nterest Receivable 126,332 141,979 Miscellaneous Rece市 able/(Payable) (3.316) Ω Actuarial Vduc ofAssets S 24.157_442 $ 22_790.550 SUMMARY OF ASSETS As Of January l,2005 ■Cash and Equivabnts ■Ce籠 ■Cates of DepOs■ ■GovemIItent Secuttes □Mutuai Funds ‐6- ASSET CHANGES DURING PRIOR YEAR Trust Balance as of January 1,2004 Contributions Village Employee Total Payments Benefit Payments Expenses Total Investment Income Trust Balance as of January 1,2005 Approximate Annual Rate of Return S30 325 320 星S15 巨 S10 55 30 449,652 271.295 1,103,002 65,943 ASSET CHANGES DUR:NG PR:OR YEAR 22,790,551 720,947 1,168,945 1、814.889 24.157.442 8.04% ! Truat Balance a3 of January 1, 2lxt4 I Contributlons ! eayments E lnvertnent lncome I Trust Bal.nce as of January 1, 2005 -7- LL NORMALCOST L 耽鋼 響』庶椛1器 糊 副 紺 識認 ru鵬Ⅷ肥認後霞 L ttSmptionsemployedhthevaluation。as of January l L 2005 2004 Total No....al COSt $ 622,930 $ 617,604L Anticipated Employee Contributions 264.452 269、391L 358_478 348.213 $ 2,808,631 $ 2,854,299 Village Nolll.al COSt ~ Nollllal COSt Payron ― Village Norllnal Cost Rate _ Total No.11.al COSt Rate 12.20% 21.64% NORMAL COST As Of January l,2005 575% 12.76% 22。18% I Anticipated Employee Contributions f vtltage Nomal cost -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 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 2005 10,865,6970 1,483,881 14,562,354 195,0060 16,241,241 27,106,938 24.157、442 2_949.496 89。10/0 ! Totar Accrued Llabiliv ! Actuarial value of Asse{s ! UntunaeA lccrued Laabilityr(SurplG, 2004 12,877,5030 1,502,875 10,916,603 202,3350 12,621,813 25,499,316 22.790.550 2_708_766 89。4% ACCRUED L:ABILITγ As Of January l,2005 -9- ― TAX LEVY REQUIREMENT The Tax Levy Requirementis dete.1.lined as the amual contribution necessary to m the ― no....al cost,plus the a■lount to allnortize the―ded accnled liability as a level percentage of payroll over a forty(40)year period which commenced in 1993. ~ For Year Ending December 31 2005 2004 Village Normal Cost as of Beginning of Year $ 358,478 $ 348,213 Amortization ofUttded 137.643 121.593 Accrued Liability/(Surplus) Tax Levy Requirement as ofEnd ofYear 496.121 469.806 $ 2,808,631 S 2,854,299 17.66%16.46% Annual Payroll Tax Levy Requirement as a Percentage ofPayroll I vittage Normal cost I Amortlzatlon of UAU(SI TAX LEVY REQU:REMENT For Fiscal Year Ending December 31,2005 -10- ― SUMMARY OF PLAN PARTICIPANTS The actuarial valuation ofthe Plan is based upon the employee data仙 面shed by the Village. ― The info..1.ation provided for Active participants included: Narne~ Sex Date ofBirth Date ofHire~ Compensation Employee Contributions The info.1.lation provided for hactive participants included: Name Sex Date ofBirth _ Date ofPension Comencernent Monthly Pension Beneflt Fom ofPayment Membership 2005 2005 2004 2004 Cllrrent Employees vested 22 25 Nonvested 20 18~ Total 生 生 _ Inactive Participants Amual Beneflts Amual Beneits Children O $ 0 0 $ 0 _ E)isabled Employees 4 84,776 4 84,776 Retired Employees 23 1,112,687 18 825,527 Surviving Spouses l 19,476 1 19,476 Te.1.linated Vesteds Ω Ω Q Q T∝d 墾 1_216.939 塑 929。779 AmualPa.yroll $ 2,808,631 $ 2,854,299 _ ‐11‐ SUMMARY OF PLAN PARTICIPANTS(Continued) Age and Service Distribution 0-4 5-9 10-14 15-19 20…24 25-29 30+1511211■84■2■■152,907 64,055 69,561 68,716 72,406 68,518 79,727 Servlce Age 20-24 25‐29 30-34 35‐39 40‐44 45‐49 50…54 55‐59 Total Salary Total Salary 1 47,022 9 54,048 10 61,935 7 66,985 8 72,025 2 63,728 4 65,863 1 79,727 42 63.537 Average Age: 36.8 Average Service: 10.7 DURATION(yearS)Active Members: 16.7 Retired Members: 9.4 All Memberま 12.3 PROJECTED PENSION PAYMENTS 2005 $1,399,064 2006 $1,443,277 2007 $1,486,828 2008 $1,517,981 I zoosI zoosI zooz E 2oosI zoog 2009 $1,531,339 PROJECTED PENSiON PAYMENTS 2005‐2009 32,000 。 01,500 冒 Sl,000 3500 00 -12‐2 SUMMARY OF PLAN PROVISIONS The Plan Provisions have not been changed from the prior year. The Village of Oak Brook Police Pension Fund was created and is administered as prescribed by "Article 3. Police 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 (2.5%) of final salary for each year of service up to (30) years, to a maximum of (75%) of such salary. Employees with at least (8) years but less than (20) years of credited service may retire at or after age (60) and receive a reduced benefit of (2.5%) of final salary for each year of service. Surviving spouses receive the greater of (50%) of final salary or the employee's retirement benefit. 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, bV Q%) of the originally granted pension. Beginning with increases granted on or after July l, 1993, the second and subsequent automatic annual increases shall be calculated as (3%) of the amount of the pension payable at the time of the increase. Employees are required to contribute (9.91o/o) of their base salary to the Police Pension Plan. If an employee leaves covered employment with less than (20) years of service, accumulated employee contributions may be refunded without accumulated interest. -13- ‐14- 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 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 benifits under the plan. The Normal Cost for the plan is determined as the sum of the Normal Costs for 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. ― ACTUARIAL ASSUMPTIONS The Acmrial Assmptions used for detel.1.ining the Tax Levy Requirement and GASB~ Statements No。258ι 27 Disclosllre lnfollllation are the sarne and have been changed J〕om the p五 or year(diSCussion at page 4).The Actuarial Assumptions employed for this valuation are as follows: Valuation Date January l,2005 Asset Valuation Method Market Value ~ Investment Rel測 『n 7.50% _ Salary Scale 5。25% Mortality 1984 Unisex Pensioners Mortality Table Withdrawal Graduated Rates Disability Graduated Rates ~ Retirement Graduated Rates(100%by Age 62) ― Marital Status 850/O Married,Spouse Sarne Age Plan Expenses None Samole Amual Rates Per 100 Participants _ ム璧 MO■alit1/ Withdra、val DisabiliⅣ Retirement 20 0.13 11.00 0.05 30 0.11 4.16 0。26 40 0.21 1。19 0.71 50 0.56 1.59 20.00 60 1.43 83.33 62 1.59 100・ 00 _ …15- ― GASB STATEMENTS NO.25&27 DISCLOSURE INFORNIATION The Govemental Accolmting Standards Board(GASB)isSued statements No.25&27 that ― established generally accepted accounting principles for the armual inancial statements for deflned beneflt pension plans. The required infolll.ation is as follows: ~ Membership in the plan consisted ofthe following as of December 31.2004 December 313 2003 Retirees and beneflciaries 28 23 receiving beneflts ~ Te.11linated plan rnembers entitled 0 0 to but not yet receiving beneflts _ Active vested plan rnembers 22 25 Active nonvested plan rnembers 20 18 Totd 型 ≦ Nllmber ofparticipating employers l l ― SCHEDULE OF FUNDING PROGuSS UAAL asa~ Actuarial Actuanal Accrued Unf肛 nded Percentage Actuarial Value of Liability(AAL) AAL Fllnded Covered of Covered Valuation Assets ―Entry Age (UAAL) Ratio Payroll Payroll~ Datc O ■2 (b‐a)(a/b) 0 ((b…a)/c) 12/31/02 20,521,085 23,581,098 3,060,013 87.00/0 2,736,034 111.8% - 12/31/03 22,790,550 25,499,316 2,708,766 89.40/0 2,854,299 94.9% 12/31/04 24,157,442 27,106,938 2,949,496 89。10/0 2,808,631 105.0% -16- -17- 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 THREE―YEAR TREND INFORMATION Dccember 31.2004 449,65200 449,652 449.65200 Ω December 31,2003 483,19600 483,196 483.196000 Fiscal Year Endi鯉 12/31/02 12/31/03 12/31/04 Annual Penslon Cost(APC) 338,565 483,197 449,652 Percentage ofAPC Contributed 100.0% 100。0% 100.0% Net Pension Oblieation 0 0 0 GASB STATEMENTS NO.25&27 DISCLOSUtt INFORMATION(Continued) FIINDING 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 refurn* Projected salary increases* *Includes inflation at Cost-of-living adj ustments 16.010/0 9。91% 449,652 449,652 12/31/2004 Entry age Level percentage ofpay,closed 29 years Market 7.50% 5.25% 3.00% 3.00%per year 16.93% Salne 483,197 483,197 12/31/2003 Salne Salne 30 years Salne 7.25% 5.00% Salne SaFne -18¨