Loading...
Police Actuarial Valuation Report 2009VILLAGE OF OAK BR00K OAK BR00K POLICE PENS10N FUND Actuarial Valuation Report For the Year Beginning January l, 2009 And Ending December 31,2009 Timothy IA. 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 Page aJ 4 6 7 8 9 10 11 t2 t2 13 t4 15 t6 TNTRODUCTION 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 1,2009, 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 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 certifu 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- (- L Timothy W. Sharpe, EA, MAAA Enrolled Actuary No. 08-4384 f冷 イ1 …3- Datc 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 from7.50Yoto 7.00oh, and the salary increase assumption has been reduced from 5.25o/o to 4.25o/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, 2 retirements, 0 incidents of disability, annual payroll _ increase 5.2yo, average salary increased 6.0%). There were no unexpected changes with respect to the Fund's investments from the prior year (annual investment return -10.9I%). The Village's Tax Ler,y Requirement has increased from $591,493 last year to $993,842 this year (68.0%). The increase in the Tax Lery 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 86.6% last year to 69.0%o this year. b 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 $83,105, increased the Accrued Liability $I,982,376, and increased the Tax Levy Requirement$165,429. The change in the salary increase assumption decreased the Normal Cost $99,657, decreased the Accrued Liability $807,494, and decreased the Tax Levy Requirement$92,024. The impact of all the changes decreased the Normal Cost $16,552, increased the Accrued Liability $1,174,882, and increased the Tax Levy Requirement $73,405. -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 Untunded Accrued Liability(Surplus) Amortization of Unfunded Accrued Liability(Surplus) Percent Funded Annual Payroll For Year Ending December 31 2009 993,842 $ 29.98% as of January l 2009 407,394 315,083 35,266,292 24,349,249 10,917,043 586,448 2008 591,493 18.60% 2008 373,739 299,445 32,129,429 27,827,838 4,301,591 217,754 69.0% 3,314,574 86.60/0 3,180,282 TAX LEVY REQU:REMENT as of December 31 I zoog E zoos -5-$Sl,200 Sl,000 S800 S600 S400 3200 00 _ ACTUARIAL VALUATION OF ASSETS as of _ January l 2009 2008 _ Cash and Equivalents $ 976,094 $ 293,636 Certiflcates ofDeposit 199,044 99,767 Govement Securities 16,398,745 15,628,866 Mutual Funds 6,644,815 11,592,095 1nterest Receivable 144,278 220,852 Miscellaneous Rcce市 able/(Payable) (13.727) (7.378) Actuarial Value ofAssets S 24_349_249 $ 27.827_838 ~ SUMMARY OF ASSETS As OfJanuary 1,2009 677% _ -6- 4.0o/o 0.8o/o I Castr and Equivalents ! Certificates of Deposit I Govemment Securities I Mutual Funds ASSET CHANGES DURING PRIOR YEAR Trust Balance as of January l, 2008 Contributions Village Employee Total Payments Benefit Payments Expenses Total Investment Income Trust Balance as of January 1,2009 Approximate Annual Rate of Return 617,619 329.065 1,503,647 74、430 ASSET CHANGES DUR:NG PR:OR YEAR 27,827,838 946,684 1,578,077 (2.847.196) 24.349.249 -10.35% ! Trust Balance as of January 1, 2008 ! Contributions ! Payments I lnvestment lncome ! Trust Balance as of January 1, 2009 -7- NORNIIAL COST The Norlnal Costis the actuarial present value ofthc portion ofthc pr輌 ected bencflts that are _ expected to accrue during the year based upon the actuarial valuation mcthod and actuarial assumptions employed in the valuation. ― as of January l 2009 2008 Total Nollllal COSt $ 722,477 $ 673,184 ~ Anticipatcd Employee Contributions 315.083 299、445 ~ Village Nomal Cost 407_394 373_739 - Norlnal Cost Payroll l$ 3,314,574 $ 3,180,282 、 Village Norlnal Cost Rate 12.290/0 11.750/0 Total Nomal Cost Rate 21.800/0 21.17% NORMAL COST As Of January l,2009 5640/0 ! Anticipatod Employee Contributions ! vittage Normal 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 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 Unfunded Accrued Liability(Surplus) Percent Funded 2009 14,694,9700 2,363,629 17,815,519 187,099 205.075 20,571,322 35,266,292 24、349.249 10.917_043 69.0% I rotat Accrued Liability ! Actuarial value of Assets ! Unfunded Accrued Liability/(Surplus) 2008 14,292,7800 2,240,300 15,241,713 184,276 170.360 17,836,649 32,129,429 27.827.838 4_301.591 86.6% ACCRUED L:ABIL:TY As Of January l,2009 ‐9- _ TAX LEVY uQUIREMENT The Tax Levy Rcquirementis deterlnined as the annual contribution necessary to ind the _ nollllal cost,plus thc aFnOunt to amortizc the unfundcd accrued liability as a lcvel percentagc of payroll over a fo“′(40)year period which commenced in 1993. … For Year Ending Decellnbcr 3 1 2009 2008 Village Norlnal Cost as ofBcgirlning of Ycar S 407,394 $ 373,739 Amortization ofUnfunded 586.448 217.754 Accrued Liability/(Surplus) Tax Lew Requircment as of End of Ycar 993_842 591_493 Annual Payroll Tax Lely Requirement as a Percentage ofPayroll $ 3,314,574 $ 3,180,282 29.98% TAX LEVY REQU!REMENT For Fiscal Year Ending December 31,2009 18.60% 卸 1%柵 鼈 動 -10- SUMMARY OF PLAN PARTICIPANTS The actuarial valuation of the Plan is based upon the employee data furnished by the Village. The information provided for Active participants included: Name Sex Date of Birth Date of Hire Compensation Employee Contributions The information provided for Inactive participants included: Name Sex Date of Birth Date of Pension Commencement Monthly Pension Benefit Form of Payment Membership 2009 2009 2008 2008 Current EmPloYees Vested 27 26 Nonvested 14 14 Total 4L 4Q Inactive Participants Annual Benefits Annual Benefits Children 0$ 0 0$ 0 DisabledEmployees 5 152,635 5 151,884 Retired Employees 26 1,428,652 24 1,250,143 Surviving SPouses I 19,476 I 19'476 Terminated Vesteds -L 40^597 -L 40'597 Total 3i 1^G1L360 1t 1A52J90 AnnualPayroll $ 3,314,574 $ 3,180,282 SUMMARY OF PLAN PARTICIPANTS (Continued) Age and SeⅣice Distribution O‐4 5…9 10-14 15-19 20…24 25-29Servlce Age 20-24 25-29 30‐34 35-39 40‐44 45‐49 50-54 55-59 60+142141Total ヱ 11 2 2 4 ■ Salary 57,698 76,141 76,068 83,898 95,974 88,856 Average Age: 37.8 Average Sewice: 11.7 DURATION(yearS) Act市 c Members: 11.4 Retired Members: PROJECTED PENSION PAYMENTS Total Salary 1 54,544 5 62,740 10 72,002 9 81,008 8 82,230 5 95,364 1 75,482 2 75,982 4■ 77.547 9.2 All Ⅳlcmbers: 10.1 2009 $1,707,139 2010 Sl,713,762 2011 $1,870,097 2012 $1,990,876 I zoosI zorot zott l) zolzI zotg 2013 Sl,988,602 PROJECTED PENS:ON PAYMENTS -12- 2009…2013 30+ 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 maximwrt of (75o/o) 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 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 (9.91o/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. -1 3- -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 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. ACTUARIAL ASSUMPTIONS The Actuarial Assumptions used for dcterllnining thc Tax Lcvy Requirement and GASB _ Statements No。25&27 Disclosure lnfollllation are the sallne and have been changed frorn the prior year(diSCussion at page 4).The Actuarial Assurnptions cmployed for this valuation arc as fo1lows: Valuation Date January l,2009 Asset Valuation NIlethod ⅣIarket Valuc ― Invcstllnent Returl1 7.00% Salary Scale 4.25% Ⅳlortality 1984 Uniscx Pensioners Ⅳlortality Table Withdrawal Graduated Rates Disability Graduated Rates ~ Retirement Graduated Ratcs(100%by Age 62) _ Ⅳlarital Status 85%Ⅳlarried,Spouse Same Age Plan Expcnses None Samde Amud Rttcs Per 100 Partidpants _ 量 MOrtalitv Withdrawal Disabiliw Retiremcnt 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 DISCLOSUu INFORNIATION The Goverlmental Accounting Standards Board(GASB)isSued statements No.25&27 that _ established generally accepted accounting principlcs for the annual flnancial statements for deflned beneflt pension plans. The required infollllation is as follows: _ ⅣLmbership in the plan consisted ofthe fonowing as of December 31.2008 December 31、2007 Retirees and beneflciaries 32 30 receiving beneflts ― Tellllinated plan members entitled l l to but not yet receiving beneflts Active vested plan rnembers 27 26 Active nonvested plan members 14 14 Totd 型 ユ~ Nllmber ofparticipating employers l l _ SCHEDULE OF FUNDING PROGuSS UAAL asa ― Actuarial Actuarial Accrued Unfunded Percentage Actuarial Value of Liability(AAL) AAL Funded Covered ofCovered Valuation Assets ―Entry Age (UAAL) Ratio Payroll Payroll~ Dtte 0 0 (b…a)(a/b) 0 “ b―a)/C｀ 12/31/06 26,414,388 30,625,818 4,211,430 86.20/0 3,162,857 133.2% - 12/31/07 27,827,838 32,129,429 4,301,591 86.60/0 3,180,282 135.3% 12/31/08 24,349,249 35,266,292 10,917,043 69.00/0 3,314,574 329.4% -16- -17- GASB STATENIIENTS NO.25&27 DISCLOSURE INFORⅣIATION(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 TREND INFORNIATION December 31.2008 617,61900 617,619 617.61900 Ω December 31.2007 564,28300 564,283 564.28300 Ω Fiscal Year Endin2 12/31/06 12/31/07 12/31/08 Annual Penslon Cost(APC) 549,750 564,283 617,619 Percentage ofAPC Contributed 100.0% 100.0% 100.0% Net Pension Obligation 0 0 0 GASB STATEMENTS NO.25&27 DISCLOSURE INFORNIATION(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 adj ustments 18.63% 9.91% 617,619 617,619 t213U2008 Entry age Level percentage ofpay, closed 25 years Market 7.00% 4.25% 3.00% 3.00%per year 17.740/0 Same 564,283 564,283 12/31/2007 Sarne Sarne 26 ycars Salne 7.50% 5.25% Same Same -18-