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Police Actuarial Valuation Report 2011VILLAGE OF OAK BR00K OAK BR00K POLICE PENS10N FUND Actuarial Valuation Report For the Year Beginning January l, 20ll And Ending December 3l,20ll Timothy ltr. 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 ) 4 6 7 8 9 l0 ll t2 t2 13 I4 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,,2011, and ending December 31,2011. The valuation results reported herein are based on plan provisions in effect as of January l,20ll, 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 certit/ that this report is complete and accurate and fairly presents the actuarial position of the Fund as of December 31,2010, 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. _ Timothy Wo Sharpe,EA,MAAA EIlrolled Actuary No.08‐4384 ~ ャ4/し // ‐3- Date SUMMARY OF RESULTS The provisions of Public Act 096-1495 are reflected in this actuarial report, including changes to benefit provisions (page l3), the actuarial methods (page 14), and the amortization period and method (page l0). There was a change with respect to Actuarial Assumptions from the prior year to reflect revised expectations with respect to future interest rates, salary increases, and retirement ages. The interest rate assumption has been decreased to 6.75%from7.00%u and the salary increase assumption has been reduced to 3.75o/o from 4.00%. 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 -4.2yo, average salary increase -4.2%). - There were no unexpected changes with respect to the Fund's investments from the prior year (annual investment return 9.43%). The Village's Tax Levy Requirement has decreased from $973,4931ast year to $696,330 this year (285%). The decrease in the Tax Levy is due to many of the changes referenced above, and also * due to the salary increases were less than assumed and the investment return was greater than assumed. The Percent Funded has increased from 71.8% last year to 75.3oh this year. ¨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 Unfunded Accrued Liability(Surplus) Amortization of Unfunded Accrued Liability(Surplus) Percent Funded Annual Payroll For Year Ending Decellnber 3 1 2011 696,330 $ 21。18% as of January l 2011 425,952 325,847 37,723,719 28,421,357 9,302,362 270,378 2010 973,493 28.36% 2010 384,230 327,126 36,801,319 26,391,636 10,409,683 589,263 75。3% 3,288,064 71.7% 3,433,002 TAX LEW REQU:REMENT as of December 31 ‐5- Sl,200 Sl,000 S800 S600 3400 S200 30 _ ACTUARIAL VALUATION OF ASSETS as of ― January l 2011 2010 _ Cash andヽ 4oney Markets S l,281,118 $ 1,236,816 Certiflcates ofDeposit 0 605,028 Goverlment Securities 15,128,081 14,183,464 Mutual Funds ll,896,359 10,249,304 1nterest Receivable 132,252 127,867 Miscellaneous Rece市 able/(Payable) (16.452) (10.843) Actuarial Valuc ofAssets S 28_421.357 $ 26_391_636 SUMMARY OF ASSETS As Of January l,2011 働 :鮮 鮮 534% -6… ASSET CHANGES DURING PRIOR YEAR Trust Balance as of January 1,2010 Contributions Village Employee Total Payments Benefit Payments Expenses Total Investment Income Trust Balance as of January 1,2011 Approximate Annual Rate of Retum 944,808 330.207 1,682,802 33.827 I Trust Balance a3 ofJanuary 1,2OlO ! contributions ! Payments E lnvestment lncome ! Trust Balance as of January 1, 2011 26,391,636 1,275,015 1,716,629 2.471,335 28_421_357 9.44% ASSET CHANGES DUR:NG PR10R YEAR -7¨ _ NORNIAL COST Thc No....al COSt is the actuarial prescnt value ofthe portion ofthe prdected bencits that are _ cxpcctcd to accrue during the year based upon the actuarial valuation rnethod and actuarial assumptions employcd in thc valuation. Total Normal Cost Anticipated Employee Contributions as of January l 2011 2010 $ 751,799 $ 711,356 325.847 327.126 ~ Village Nollllal COSt 425 952 384_230 - No..1lal COSt Payroll $ 3,288,064 $ 3,433,002 - Village Normal Cost Rate Total Normal Cost Rate 12.95% 22.86% ! lnticipated Employeo contributions ! vitlage Normal Cost 11.19% 20。72% NORMAL COST As OfJanuary l,2011 567% 433% -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 2011 16,835,1290 2,436,039 18,023,219 181,878 247.454 20,888,590 37,723,719 28。421.357 9302_362 75。3% I fotat Accrued Liability I Actuarial value of Assets ! Unfunded Accrued Liabilityr(Surplus) 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% ACCRUED L:AB:L:Tγ As Of」anuary l,2011 S40 S30 S20 310 30 -9- TAX LEVY REQUIREMENT The Tax Levy Requirement is determined as the annual contribution necessary to fund the normal cost, plus the amount to amortize the excess (if any) of ninety percent (90%) of the accrued liability over the actuarial value of assets as a level percentage of payroll over a thirty (30) year period which commenced in 2011. Prior to 2011, the amortization amount was equal to the amount to amortize the unfunded accrued liability as a level percentage of payroll over a forty (40) year period which commenced in 1993. Village Normal Cost as of Beginning of Year $ Amortization of Unfunded Accrued Liability(Surplus) Tax Levy Requirement as of End of Year Annual Payroll Tax Levy Requirement as a Percentage ofPayroll 696.330 3,288,064 21.18% TAX LEW REQU:REMENT For Fiscai Year Ending December 31,2011 For Year Ending December 31 2011 425,952 $ 270,378 2010 384,230 589.263 973_493 3,433,002 28。36%$I Vittage Normat Co3t I Amortization of UAU(S) ‐10- SUMMARY OF PLAN PARTICIPANTS The actuarial valuation ofthe Plan is based upon the cmployee data fumished by the Village. _ The info.1.lation provided for Active participants included: Nalne ― Sex Date ofBirth Date ofHire ― Compensation Employee Contributions ~ The info.11lation provided for lnactive participants included: Nalne~ Sex Date ofBirth Date of Pension Colrmencement ヽlonthly Pension Beneflt Fo.111 0fPayment Membership 2011 2011 2010 2010 Current Employees VeSted 34 29 Nonvested 7 12~ Total 生 生 _ Inactive Participants Amual Bencflts Amual Bcneflts Children O $ 0 0 $ 0 _ E)isabled Emp10yees 5 153,716 5 153,387 Retired Employees 26 1,513,213 26 1,467,018 Surviving Spouses l 19,476 1 19,476 Tellllinated Vestcds 1 40.597 ■ 40.597 Tota1 1■ 1_727_002 1■ 1_680_478 Amual Payroll $ 3,288,064 $ 3,433,002 SUMMARY OF PLAN PARTICIPANTS (Continued) A2e and Service 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+ Total Salary 4 63,138 9 75,224 8 75,287 8 86,486 7 86,705 3 99,752 2 79,060 2015 $2,230,892 Total i 2■142■2生 80_197 Salary 60,105 75,453 78,400 92,118 89,176 116,883 79,060 Average Age: 39.8 Average Service: 13.7 DURATION(yearS) Act市 c Members:20.4 Retired Members: 9.l All Members: 14.1 PROJECTED PENSION PAYMENTS 2011 $1,944,489 2012 $2,057,466 2013 $2,054,324 2014 $2,099,261 I zorrI zorzI zorsJ zo't+! zors PROJECTED PENS:ON PAYMENTS 2011‐2015 SUMMARY OF PLAN PROVISIONS 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, 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 maximwn of (75oh) 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 (9.9lYo) 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. For Employees hired after January l,20ll, the Normal Retirement age is attainment of age 55 and completion of 10 years of service; Early Retirement age is attainment of age 50, completion of 10 years of service and the Early Retirement Factor is 6oh per year; the Employee's Accrued Benefit is based on the Employee's final 8-year average salary not to exceed $106,800 (as indexed); Cost-of-living adjustments are simple increases (not compounded) of the lesser of 3o/o or 50%o of CPI beginning the later of the anniversary date and age 60; Surviving Spouse's Benefits are 662l3Yo of the Employee's benefit at the time of death. -13- ACTUARIAL METHODS The Actuarial Methods employed for this valuation is as follows: Proiected Unit Credit Cost Method (for years beginning on or after 2011) Under the Projected Unit Credit Cost Method, the Normal Cost is the present value of the projected benefit (including projected salary increases) earned during the year. The Accrued Liability is the present value of the projected benefit (including projected salary increases) earned as of the actuarial valuation date. 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. Entry Age Normal Cost Method (for years beginning prior to 201l) 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 greater of a) the sum of the Normal Costs for all active participants, and b) 175% of the total payroll of 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 ASSUMPTIONS The Actuarial Assulnptions used for detellllining the Tax Levy Requirement and GASB _ Statements No.258ι 27 Disclosllre lnfollllation are the salne and have been changed from the prior year(diSCussion at page 4).The Actuarial Assumptions employcd for this valuation are as follows: Valuation Date January l,2011 Asset Valuation Method ヽ4arket Value ― Investinent Retum 6.75% 、 Salary Scale 3.75% Ⅳlortality 1984 Unisex Pensioners Ⅳlortality Table Withdrawal Graduated Rates Disability Graduated Rates ~ Retirement Graduated Rates(100%by Age 62) _ Marital Status 850/0ヽ 4arried,Spouse Sarne Age Plan Expenscs None Smole Amual Rates Per 100 Participants _ △璧 MO■alitv 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 INFORNIATION The Goverlmental Accounting Standards Board(GASB)isSued statements No。25&27 that … established generally accepted accounting principles fbr the annual flnancial statemcnts for deflned beneflt pension plans. The required infollllation is as follows: _ 卜4embership in the plan consisted ofthe following as o全 December 31.2010 December 31、2009 ~ Retirees and beneflcianes 32 32 receiving beneflts _ Te.11linated plan nlembers entitled l l to but not yet receiving bencflts Active vestcd plan rnembers 34 29 Active nonvested plan members ヱ ユ Totd 型 型 ~ Nurnber ofparticipating employers l l _ SCHEDULE OF FUNDING PROGMSS UAAL asa ― Actuarial Actuarial Accrued Unfunded Percentage Actuarial Value of Liability(AAL) AAL Funded Covered ofCovered Valuation Assets ―Entry Agc (UAAL) Ratio Payroll Payroll~ Date 0 0 (b‐め (a/b) 0 ((b―aヽ /Cヽ 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% 12/31/10 28,421,357 38,718,877 10,297,520 73.40/0 3,288,064 313。2% -16… -17¨ GASB STATEMENTS NO.25&27 DISCLOSURE INFOm4ATION(Continued) ANNUAL PENSION COST AND NET PENSION OBLIGATIttN 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 TttND INFORNIIATION December 31.2010 944,80800 944,808 944、80800 Ω December 31.2009 958,64100 958,641 958.64100 0_ Fiscal Yearm 12/31/08 12/31/09 12/31/10 Amual Pcnslon Cost(APC) 617,619 958,641 944,808 Percentage of APC Contributed 100.0% 100.0% 100.0% Net Pension Obligation 0 0 0 GASB STATEMENTS NO.25&27 DISCLOSURE INFORNIATION(Continued) FLINDING 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 28.73% 9。91% 944,808 944,808 12/31/2010 Entry age Level percentage ofpay,closed 30 years Market 6.75% 3.75% 3.00% 3.00%per year 27.92% Salnc 958,641 958,641 12/31/2009 Salne Sarne 24 years Salne 7.00% 4.00% Same Sarne …18-