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Police Actuarial Valuation Report 2010VILLAGE OF OAK BR00K OAK BR00K POLICE PENS10N 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 Method Actuarial Assumptions GASB Statements No. 25 &27 Disclosure Page J 4 6 7 8 9 t0 11 t2 t2 13 t4 15 t6 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 1,2010, 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 fumished 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 certit/ that this report is complete and accurate and fairly presents the actuarial position of the Fund as of December 37,2009, 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, 7. Timothy W. Sharpe, EA, MAAA Enrolled Actuary No. 08-4384 { /, /,, Date -3- 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 from 4.25oh to 4.00oh. 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 increased2Yo to reflect the pending contract (0 new members, 0 terminations, 0 retirements, 0 incidents of disability, annual payroll increase 3.\yo, average salary increase 3.8%). There were no unexpected changes with respect to the Fund's investments from the prior year (annual investment return 10.13%). The Village's Tax Lery Requirement has decreased slightly from $993,8421ast year to $973,493 this year (2.0%). The decrease in the Tax Levy is due to the investment return was greater than assumed and the change in the actuarial assumptions. The Percent Funded has increased from 69.0% last year to 71.8o/o 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 $26,815, decreased the Accrued Liability $226,179, and decreased the Tax Levy Requirement $25,064. -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 Decennber 31 2010 973,493 $ 28.36% as of January l 2010 384,230 327,126 36,801,319 26,391,636 10,409,683 589,263 2009 993,842 29,98% 2009 407,394 315,083 35,266,292 24,349,249 10,917,043 586,448 71.7% 3,433,002 69.0% 3,314,574 TAX LEVY REQU:REMENT I zoto E zoog as of December 31 -5-$Sl,200 Sl,000 3800 S600 3400 3200 30 _ ACTUARIAL VALUATION OF ASSETS as of ― January l 2010 2009 _ Cash and Equivalents S l,236,816 $ 976,094 _ Certiflcates of Deposit 605,028 199,044 Goverlment Securitics 14,183,464 16,398,745 Mutual Funds lo,249,304 6,644,815 1nterest Receivable 127,867 144,278 NIliscellaneous Receivable/(Payable) (10,843) (13.727) Actuarial Value ofAssets S 26.391_636 $ 24.349_249 SUMMARY OF ASSETS As Of」anuary l,2010 540% ‐6- ASSET CHANGES DURING PRIOR YEAR Trust Balance as of January l, 2009 Contributions Village Employee Total Payments Benefit Payments Expenses Total Investment Income Trust Balance as of January 1,2010 Approximate Annual Rate of Return 958,641 316.883 1,638,301 25。806 ASSET CHANGES DUR!NG PR10R YEAR 24,349,249 1,275,524 1,664,106 2.430、969 26_391_636 10.06% ! Trust Balance as of January 1, 2009 I contributions ! Payments E lnvestment lncome ! Trust Balance as of January 1, 2010 -7- NORNIAL COST The Nollllal COSt is the actuarial present valuc ofthc portion ofthe praected beneflts that are expected to accrue during the year bascd upon the actuarial valuation inethod and actuarial assumptions employed in the valuation. Total Normal Cost Anticipated Employee Contributions Village Normal Cost Normal Cost Payroll Village Normal Cost Rate Total Normal Cost Rate as of January l 2010 711,356 $ 327.126 384_230 3,433,002 $ 11.19% 20.72% I Anticipated Employee Contributions ! vittage Normal cost 2009 722,477 315.083 407_394 3,314,574 12.29% 21.80% NORMAL COST As Of January l,2010 5400/o …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 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 Unfunded Accrued Liability(Surplus) Percent Funded 2010 16,298,0260 2,371,420 17,729,485 182,958 219.430 20,503,293 36,801,319 26.391.636 10^409_683 71.7% I rotat Accrued Liability I Actuarial Value of Assets I Unfunded Accru6d Liability/(Surplus) 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% ACCRUED L:AB:L:TY As Of January l,2010 ‐9- _ TAX LEVY REQUIREMENT The Tax Levy Requircmcnt is dctellllincd as the annual contribution necessary to fund the _ nollllal cost,plus the amount to amortizc thc unfundcd accrued liability as a levcl pcrccntage of payroll over a fo●√(40)year pcriod which commenced in 1993. ― For Year Ending December 31 2010 2009 Village Nollllal COSt as ofBeginning ofYcar $ 384,230 $ 407,394 Amortization of Unfunded 589.263 586.448 Accrued Liability/(Surplus) Tax Levy Requircment as ofEnd of Year 973_493 993.842 Annual Payroll Tax Levy Requirelnent as a Percentage ofPayroll ヽ $ 3,433,002 $ 3,314,574 28.36% TAX LEVY REQUIREMENT For Fiscal Year Ending December 31,2010 29.98% 'o u"'"Qb,, u",. ! x*'*,;"i,",'ir,,, -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 2010 2010 2009 2009 Current Employees - Vested 29 27 Nonvested 12 14 Total 4L 4L - Inactive Participants Annual Benefits Annual Benefits Children 0$ 0 0$ 0 Disabled Employees 5 153,387 5 152,635 Retired Employees 26 1,467,018 26 1,428,652 Surviving Spouses 1 19,476 I 19,476 Terminated Vesteds -L 40.597 I 40"597 Total 33 L6StutZS A1 L641l50 AnnualPayroll $ 3,433,002 $ 3"314,574 SUMMARY OF PLAN PARTICIPANTS(Continued) Age and Service Distribution O-4 5-9 10-14 15-19 20-24 25-29Servlce Agc 20…24 25-29 30…34 35-39 40-44 45-49 50-54 55-59 60+183151121Total 二 塁 旦 42旦 Salary 58,349 76,586 77,731 93,552 90,574 92,990 Averagc Age: 38.8 Average Service: 12.7 DURATION(yearS)Act市 e Members: 18.l Retired Membcrs: PROJECTED PENSION PAYMENTS 30+Total Salary 4 60,911 11 73,681 9 81,129 7 84,979 7 97,867 1 76,992 2 79,875 4■ 80_511 9.3 Allレ lellnbcrs: 13.2 2010 Sl,755,700 2011 $1,911,510 2012 $2,032,160 2013 $2,029,464 I zoro lzo't'r lzorz E zotrI zott 2014 $2,077,500 PROJECTED PENSiON PAYMENTS -12- 2010‐20142 > 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 (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, 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 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. …13- …14- 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 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. ヽ _ ACTUARIAL ASSUMPTIONS The Actuarial Assumptions used for dctennining the Tax Le、γ Rcquirelment and GASB _ Statemcnts No.25&5 27 Disclosure lnfollllation are the same and have bcen changed frorn the prior year(diSCussion at pagc 4).The Actuarial Assumptions employed for this valuation are as follows: Valuation Datc January l,2010 Assct Valuation NIlcthod Markct Value ― Invcstment Rcturl1 7.00% Salary Scale 4.00% Ⅳlortality 1984 Uniscx Pensioncrs Mortality Table Withdrawal Graduated Rates Disability Graduated Ratcs ~ Retirement Graduated Rates(100%by Age 62) _ 卜4arital Status 85%MaTicd,Spouse Samc Age Plan Expcnses Nonc Samplc Amud Rttes Per 100 Participants _ △巽 MO■alitv Withdrawal Disabilitv Rctirement 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 INFOttATION The Goverlmcntal Accounting Standards Board(GASB)isSued statements No.25&27 that _ established generally accepted accounting principles fbr the annual flnancial statements fbr deflned bencflt pension plans. The required inforllnation is as fbllows: _ 卜4cmbership in the plan consisted ofthe following as o食 Deccmber 31.2009 Deccmber 31、2008 Retirees and beneflciarics 32 32 receiving beneflts ― Tellllinated plan nlembers entitled l l to but not yet rcceiving beneflts Active vestcd plan lncmbers 29 27 Active nonvcsted plan inembers 12 14 Total ヱ4 24 ~ Number ofparticipating employcrs l l _ SCHEDULE OF FUNDING PROGMSS UAAL asa 一 Actuarial Actuarial Accrued Unhnded PerCentage Actuarial Value of Liability(AAL) AAL Funded Covcrcd of Covercd Valuation Asscts ―Entry Age (UAAL) Ratio Payroll Payroll~ Datc 0 0 (b―ハ (a/b) 0 壼b―ayCヽ 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% 12/31/09 26,391,636 36,801,319 10,409,683 71.70/0 3,433,002 303.2% -16- GASB STATEMENTS NO.25&27 DISCLttSUtt INFORNIATION(Continued) ANNUAL PENSION COST AND NET PENSION OBLIGATION Annual required contribution lnterest 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 THME―YEAR TREND INFORMATION December 31.2009 958,64100 958,641 958.64100 Ω December 31、2008 617,61900 617,619 617.61900 Ω -17- Fiscal Year Ending 12/31/07 12/31/08 12/31/09 Annual Penslon Cost(APC) 564,283 617,619 958,641 Percentagc of APC Contributed 100,0% 100.0% 100.0% Net Pension Obligation 0 0 0 GASB STATEMENTS NO.25&27 DISCLOSUM INFORMATION(Continued) FUNDING POLICY AND AblNUAL 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 retum* Projected salary increases* *Includes inflation at Cost-of-living adj ustments 27.92% 9.91% 958,641 958,641 12/31/2009 Entry age Lcvel percentage ofpay,closed 24 years Market 7.00% 4.00% 3.00% 3.00%per year 18.630/0 Same 617,619 617,619 12/31/2008 Same Sallne 25 years Same Smc 4.25% Sallne Smc …18-