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Police Actuarial Valuation Report 2006VILLAGE OF OAK BR00K OAK BR00K POLICE PENS10N FUND Actuarial Valuation Report Forthe Year Begiming January l,2006 And Ending December 31,2006 Timothy W. Sharpe, Actuary, Geneva, IL (630) 262-4600 TABLE OF CONTENTS Introduction Sll―ary ofResults Actuarial Valuation ofAssets Asset Changes DuFing Prior Year Noll.lal COSt Accmed Liability Tax Levy Requirement Stl―aFy OfPlan Participants Duration P■leCted Pension Papents Sll―ary ofPlan Provisions Acmmal MethOd Actuarial Assmptions GASB Statements No.25&27 Disclosllre Pa鰺346789 10 11 12 12 13 14 15 16 E 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 1,2006, and ending December 31,2006. v The valuation results reported herein are based on plan provisions in effect as of January !,2006, the employee data furnished by the Village, the financial data provided by the Fund's trustee and b 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 31,2005, 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. Respec」飩11ly subnlitted, ‐ タ ーし4 Timothy Wo Sharpe,EA,MAAA~ Ellrolled ActuO No.05‐4384 7∠//` -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 (0 new members, 0 terminations, 0 retirements, 0 incidents of disability, annual payroll increase 6.3yo, average salary increased 6.3%). - There were no unexpected changes with respect to the Fund's investnents from the prior year (annual investnent return 4.68%). > The Village's Tax Levy Requirement has increased from $496,121last year to $554,767 this year (11.8%). The increase in the Tax Levy is due to the increase in salaries and the investment return was less than expected. The Percent Funded has decreased from 89.1o/o last year to 86.3% this year. -4- SUMMARY OFIuSULTS(Continued) Tax Levy Requirement Tax Levy as a Percentage of Payroll VillageNormal 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 2006 554,767 $ 18.59% as of JanuaFy l 2006 370,090 281,021 28,683,431 24,752,561 3,930,870 184,677 2005 496,121 17.66% 2005 358,478 264,452 27,106,938 24,157,442 2,949,496 137,643 TAX LEVY REQU:REMENT as of December 31 86.3% 2,984,609 $ |12006 []2005 89。1% 2,808,631 -5- ACTUARIAL VALUA■ON OF ASSETS Cash and Equivalents Certificates of Deposit Govemment Securities Mutual Funds Interest Receivable Miscellaneous Receivable/(Payable) Actuarial Value of Assets as of January l 2006 357,778 98,193 13,869,557 10,293,243 137,230 (3.440) 24_752.561 2005 368,815 100,154 14,083,032 9,482,425 126,332 (3.316) 24_157.442 SuMMARY OF ASSETS As Of January l=2006 ″15% ′04% I Cash and Equivalents I certificates of oeposit ! Government Securities I Mutual Funds -6- ASSET CHANGES DURING PRIOR YEAR Trust Balance as of January 1,2005 Contibutions Village Employee Total Payments Benefit Payments Expenses Total Investment Income Trust Balance as of January 1,2006 Approximate Annual Rate of Return S30 325 320 星315 菫 310 35 30 497,650 279.258 1,248,695 63.961 ASSET CHANGES DUR:NG PR:OR YEAR 24,157,442 776,908 1,312,656 1.1303867 24.752.561 4.73% I Tru6t Balance as of January 1, 2(xl5 I contributions I Payments n lnvestnantlncome I Trust Balance as of January 1, 2006 -7- ヽ NORMAL COST The Nomal Cost is the actuarial present value ofthe portion ofthe proJected beneflts that are こ expected to accrue during the year based upon the acmrial valuation method and acmrial assumptiolls employed h the valuatioll. ‐ as of January l 2006 2005 Total Nomal Cost $ 651,111 $ 622,930 L Anticipated Employee Contributiolls 281.021 264.452 - Village Nomal Cost 370_090 358478 _ Nomal Cost Payroll S 2,984,609 $ 2,808,631 _ Village Nomal Cost Rate 12.400/0 12.76% Total NoHnal Cost Rate 21.82% 22.18% し NORMAL COST As OfJanuary l,2006 5680/0 I Micipatea Employee contributions I Village t{ormal 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 Unfirnded 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 Unfirnded Accrued Liability(Surplus) Percent Funded 2006 12,393,2960 1,509,448 14,589,155 191,5320 16,290,135 28,683,431 24.752.561 3.930^870 86.3% I fotat Accrued Liability I Actuaria! Value of Asiets f Unnrnaed lccrued Liability/(Surplus) 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。1% ACCRUED L:AB:LITγ As Of January l,2006 -9- _ TAX LEVY REQIINMENT The Tax Levy Requrementis dete..1.ined as the annual contrlbution necessary to ind the _ noll■lal cost,plus the alnount to alnortize the llniШ ded accnled liability as a level percentage of payroll over a fo■y(40)year period which commenced in 1993. _ For Year Ending Decellnber 3 1 2006 2005 Vill疑 :e No....al COSt as ofBegillmng ofYear S 370,090 S 358,478 ~ Amortization ofUnhnded 184.677 137.643 Accmed Liability/(Surplus) Tax Levy Requlrement as ofEnd ofYear 554.767 496.121 Amual Payroll $ 2,984,609 $ 2,808,631 Tax Levy Rcquirement 18.59% 17.66% as a Percentage ofPayr011 TAX LEVY REQU:REMENT For Fiscal Vear Ending December 31,2006 3330/0 I vittage Normal Cost I Amortization of UAU(S) -10¨ SUMMARY OF PLAN PARTICIPANTS The actuarial valuation ofthe Plan is based upon the employee data fumished by the lVillage. _ The info.1..ation provided for Active participants included: Nalne _ Sex Date ofBirth Date ofHire _ Compe―tion Employee Contributions ― The info.11.ation provided for lnactive participants included: Nalne ― Sex Date ofBirth Date ofPension Collllnencementt Monthly Pension Beneit Fo.1.10fPapent ~ Membership 2006 2006 2005 2005 Cllrrent Employees ~ Vested 25 22 Nonvested 重 20 _ Tota1 2 42 hactive Participants Amual Beneflts Amual Beneflts Children O $ 0 0 $ 0 E)isabled Employees 4 84,776 4 84,776 ~ Retired Employees 23 1,143,684 23 1,112,687 Suttiving Spouses l 19,476 1 19,476 - Tel.1.inated Vesteds Ω Q Q Ω Total 墾 1‐247.936 里 1_216_939 Annual Payroll S 2,984,609 $ 2,808,631 SUMMARY OF PLAN PARTICIPANTS(Continued) Age and Service DistributiOn O-4 5-9 10-14 15…19 20-24SeⅣlce Age 20-24 25-29 30‐34 35-39 40-44 45-49 50-54 55-59 60+ Total Salary Total Salary 1 50,386 8 59,554 8 63,038 8 70,987 8 71,553 3 81,567 5 67,4190 1 82,496 42 67.517 25-293611111 生 ⊥上 2 旦 上 73,535 72,878 81,303 67,799 82,496 旦 過 57,091 66,344 Average Age: 37.8 Average Service: ll.7 DURATION KyearS)Active Members:17.l Retired Members: 9。3 All Members:12.7 PROJECTED PENSION PAYMENTS 2006 $1,474,145 2007 $1,517,288 2008 $1,548,777 2009 $1,562,144 I zoosI zoozI zooa n zoosI zoro 2010 $1,567,634 PROJECTED PENS:ON PAYMENTS ‐12- 2006‐2010 30+ STIMMARY OF PLAN PROVISIONS The Plan Provisions have not been changed from the prior year. The Vitlage 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 gteater 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 l,lg77, 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 originally granted pension. Beginning with increases granted on or after July 1, 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 (9.917o) 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- ACTUARIAL METHODS The Actuanal Methods used for dete.11.ining the Tax Levy and GASB Statellnents No.25`し 27 flnancial disclosllre have not been changed J辟 oln the p五 or year。「Fhe Actuanal Method employed for this valuation is as follows: Entr.v 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 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. ‐14- ACTUARIAL ASSIIMPTIONS The Actuarial Assumptions used for detellllining the Tax Levy Requirement and GASB Statements No.25&,27 Disclosllre lbぱ bllllation are the salne and have not been changed i計 om the p五 or year.The Acmrial Assunptions employed forthis valuation are as follows: _ Valuation Date January l,2006 Asset Valuation Method Market Value hvestnent Rel則 rn 7.50% Salary Scale 5。25% Mo鹿 1lity 1984 Unisex Pensioners Mortality Table ― Withdrawal Graduated Rates _ Disability Graduated Rates Retirement Graduated Rates(100%by Age 62) Marital Status 850/O Married,Spouse Same Age Plan Expenses None ― Salnole Amual Rates Per 100 Participants 墨 MOrtalitv Withdrawal Disabilitv 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 INFORMA■ON Thc Goverrllnental Accolmting Standards Board(GASB)isSued statements No。25&27 that _ established generally accepted accoulting principles for the amual flnancial staternents for deflned beneflt pension plans. The required info.11lation is as follows: _ Membership in the plan consisted ofthe following as o■ December 31.2005 Deccmber 31.2004 ~ Retirees and beneflcianes 28 28 receiving beneflts _ Te....inated plan membcrs entitled 0 0 to but not yet receivmg beneflts Active vested plan rnembers 25 22 Active nonvested plan inembers 17 20 Total 型 型 ~ Nllmber ofparticipating cmployers l l SCHEDULE OF FUNDING PROGMSS UAAL asa _ Acmrial Actuarial Accrued Uぜ 血ded PerCentage Actuarial Value of Liability(AAL) AAL Flnded Covered ofCovered Valuation Assets ―Entry Age (UAAL) Ratio Payroll Payroll ― Date 色戯 ω (b‐ハ (a/b) 血主 ((b‐ハ/C) 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% 12/31/05 24,752,561 28,683,431 3,930,870 86.30/0 2,984,609 131.7% -16‐ GASB STATEMENTS NO.25&27 DISCLOSUREINFORMA■ON(Continueの 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 mE―YEAR TR□ND INFORMATION December 31.2005 497,65000 497,650 497.650000 December 31。2004 449,65200 449,652 449.652000 Fiscal Year Ending 12/31/03 12/31/04 12/31/05 Amual Penslon Cost(APC) 483,197 449,652 497,650 Percenセ 喝eofAPC Contributcd 100.0% 100.0% 100.0% Net Pension Obligation 0 0 0 -17- -18- GASB STATEMENTS NO.25&27 DISCLOSURE INFORMATION(Continued) 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 16.67% 9.91% 497,650 497,650 12/31/2005 Enty age Level percentage ofpay,closed 29 years Market 7.50% 5。25% 3.00% 3.00%per year 16.010/0 Sarne 449,652 449,652 12/31/2004 Same Salne 30 years Salne Sme Salne Salne Salne