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Police Actuarial Valuation Report 2012VILLAGE OF OAK BR00K OAK BR00K POLICE PENS10N FUND Actuarial Valuation Report For the Year Beginning January l, 2012 And Ending December 31,2012 η “ ο′″″Sttα ψθ,И ε′ “ αり Gθ ′θνα,瓦 “ 3の 262-θ 6θ θ 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 10 ll t2 t2 l3 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 1,2012, and ending December 31,2012. The valuation results reported herein are based on plan provisions in effect as of January 1,2012, 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 31,2011, 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,~ τア//ど _ Timothy W.Sharpc,EA,MAAA Ellrolled Actuary No。11‐4384 ダ/各 ∠′L-3- Datc 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 (1 new member, 0 terminations, I retirement, I incident of disability, annual payroll increase 0.7yo, average salary increase 3.0%). There were no unexpected changes with respect to the Fund's investments from the prior year (annual investment return 2.42%). The Village's Tax Levy Requirement has decreased from $696,330 last year to $953,636 this year (37.0%). The increase in the Tax Levy is due to the increase in the amortization percentage to l0O% (from 90oh) andthe investment return was less than assumed. The Percent Funded has - decreased from 7 5 .3oh last year to 73 .2o/o this year. -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 Untunded Accrued Liability(Surplus) Amortization of Unfunded Accrued Liability(Surplus) Percent Funded Annual Payroll For Year Ending December 31 2012 953,636 $ 28。80% as of January l 2012 422,178 328,120 39,763,597 29,126,294 10,637,303 531,458 2011 696,330 21.18% 2011 425,952 325,847 37,723,719 28,421,357 9,302,362 270,378 73.2% 3,310,998 75.3% 3,288,064 TAX LEVY REQU:REMENT as of December 31 lzo'rz E zott -5- Sl,200 Sl,000 S800 S600 3400 S200 SO ACTUARIAL VALUATION OF ASSETS as of _ January l 2012 2011 Cash and Moneyヽ larkets S l,242,371 $ 1,281,118 Goverrment Securities ll,793,260 15,128,081 Corporate Bonds 3,728,067 0 Equities l,286,163 0 ⅣIutual Funds 9,729,326 11,896,359 1nterest Receivable 148,045 132,252 NIliscellancous Receivable/(Payable) (4.248) (16、452) Market Valuc ofAssets 27_922_9R3 S 28_421_357 ~ Actuarial Value ofAssets S 29,126,294 FYE 2011(G)/L:$1,504,139 SUMMARY OF ASSETS As Of January l,2012 350% -6- ASSET CHANGES DURING PRIOR YEAR Trust Balance as of January I ,2011 Contributions Village Employee Total Payments Benefit Payments Expenses Total Investment Income Trust Balance as of January 1,2012 Approximate Annual Rate of Return 674,170 315.143 1,832,491 39、703 ! Trust Balance as of January 1, 201 1 ! Contributions ! Payments E lnvestment lncome ! Trust Balance as of January l, 2012 28,421,357 989,314 1,872,194 384.506 27_922_9R3 1.37% ASSET CHANGES DUR:NG PR10R YEAR -7- NORNIAL COST The Nolll.al COSt is the actuarial present value ofthe portion ofthe prttccted beneflts that are _ expected to accrue during the year based upon thc actuarial valuation inethod and actuarial assumptions employcd in the valuation. ― as of January l 2012 2011 Total Nonmal Cost $ 750,298 $ 751,799 Anticipated Employee Contributions 328.120 325.847 i Village Normal Cost L Normal Cost Payroll E Village Normal Cost Rate i, Total Normal Cost Rate 422_178 425_952 $ 3,310,998 $ 3,288,064 12.75% 22.66% ! Anticipated Employee Contributions ! vittage Normal cost 12.95% 22.860/0 NORMAL COST As Of」anuary l,2012 563% 437% …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. 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 Untunded Accrued Liability/(Surplus) Percent Funded as of January 2012 16,593,9610 3,304,958 19,423,072 177,449 264.157 23,169,636 39,763,597 29。126.294 10_637_303 73.2% I fotat Accrued Liability ! Actuariat Value of Asset3 ! Unfunded Accrued Liability/(Surplus) 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% ACCRUED L:AB:L:TY As OfJanuary l,2012 S50 340 330 S20 S10 30 …9- TAX LEVY REQUIREMENT The Public Act 096-1495 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 201l, plus an adjustment for interest. Prior to 2071, the amortization amount was equal to the amount to amortize the unfunded accrued liability as a level percentage of payroll over a forty (a0) year period which commenced in 1993. Beginning in20l2, the amortization percentage was increased to one hundred percent (100%). Village Normal Cost as of Beginning of Year $ Amortization of Unfunded Accrued Liability'(Surplus) Tax Levy Requirement as of End of Year For Year Ending Decernber 31 2012 422,178 $ 531.458 Annual Payroll Tax Levy Requirement as a Percentage ofPayroll Public Act 096-1495 Tax Levy Requirement 1) Normal Cost (PUC) 2) Accrued Liability (PUC) 3) Amortization Payment 4) PA 096-1495 Tax Levy Requirement (l+3) 953.636 3,310,998 28.80% 422,178 39,763,597 332,792 754,970 2011 425,952 270.378 696_330 3,288,064 21.18% -10- SUMMARY OF PLAN PARTICIPANTS The actuarial valuation ofthe Plan is based upon the employee data fbmished by the Village. _ The infollllation provided for Active participants included: Nalne _ Sex Date of Birth Date ofHire _ Compensation Ernployee Contributions ― The infollllation provided for lnactive participants included: Name~ Sex Date of Birth Date of Pcnsion Conllnencemcnt~ ヽ4onthly Pension Beneflt Folll1 0f Paymcnt NIlembership 2012 2012 2011 2011 Current Employees ~ Vested 32 34 Nonvested 8 7 - Tota1 40_ 生 _ Inactive Participants Amual Beneflts Annual Beneflts Children O S 0 0 $ 0 E)isabled Employees 6 205,460 5 153,716 Retired Employees 27 1,639,960 26 1,513,213 Surviving Spouses l 19,476 1 19,476 ~ Te.1.linated Vesteds ■ 40.597 1 40.597 Total l' 1_905^493 1■ 1^727_002 Annual Payroll $ 3,310,998 $ 3,288,064 SUMMARY OF PLAN PARTICIPANTS(Continued) AQe and Service Dist五 bution O-4 5…9 10-14 15-19 20-24 25-29221122143 重 二 12 重 旦 皇 73,921 77,972 80,410 91,074 92,323 Servlce Age 20-24 25-29 30-34 35-39 40-44 45…49 50-54 55-59 60+ Total Salary 30+Total Salary 2 64,063 8 75,419 10 77,811 7 85,863 6 89,356 4 105,636 3 80,564 2 坐Q 82_775 81,397 Average Age: 40.7 Average Service: 13.9 DURATION(yearS) Act市 e Members: 17.9 Retired Members: 8.6 All Membcrs: 12.5 PROJECTED PENSION PAYMENTS 2012 $2,160,751 2013 $2,156,379 2014 $2,198,878 2015 $2,325,937 I zotzI zot Azorl E zors! zote 2016 $2,441,305 PROJECTED PENSiON PAYMENTS 13,000 s2,500 € $2,ooo c! sr,sooof tr,ooo 3500 to 2012‐2016 -12- 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, 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 maximtm of (75Yo) 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. For Employees hired after January 1,2011, the Normal Retirement age is attainment of age 55 and completion of l0 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 5Oo/o of CPI beginning the later of the anniversary date and age 60; Surviving Spouse's Benefits are 66 2l3o/o of the Employee's benefit at the time of death. …13- ACTUARIAL METHODS The Actuarial Methods employed for this valuation are as follows: Projected Unit Credit Cost Method (for years beginning on or after 2011 for PA 096-1495) 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) eamed 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 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) 17.5% 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 Assumptions used for detellllining the Tax Levy Requirement and GASB _ Statements No.25&27 Disclosure lnfol11lation arc the same and have not been changed from the p五 or yearo The Actuarial Assumptions employed for this valuation are as fbllows: ― Valuation Date January l,2012 _ Asset Valuation Method 5-year Averageヽ 4arket Value lnvestinent Retum 6.75% Salary Scale 3.75% ヽ4ortality 1984 Unisex Pensioncrs Mortality Table ~ Withdrawal Graduated Rates _ Disability Graduated Rates Retirement Graduated Rates(100%by Agc 62) ヽ4arital Status 85%Married,Spouse Same Age Plan Expenses None ~ Samole Amual Rates Per 100 Participants Att 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 INFORMATION The Governmental Accounting Standards Board (GASB) issued Statements No. 25 &27 that established generally accepted accounting principles for the annual financial statements for defined benefit pension plans. The required information is as follows: Membership in the plan consisted of the following as of: December 31.201I December 31.2010 Retirees and benefi ciaries receiving benefits Terminated plan members entitled to but not yet receiving benefits Active vested plan members Active nonvested plan members Total Number of participating employers SCHEDULE OF FUNDING PROGuSS Actuanal Valuation Date 12/31/09 12/31/10 12/31/11 Actuarial Value of AssetsO 26,391,636 28,421,357 27,922,983 Actuarial Accrued Liability(AAL) ―Entry AgeO 36,801,319 38,718,877 40,706,989 341 328 五1 Unhded AAL (UAAL) (b―a) 10,409,683 10,297,520 12,784,006 Covcred Payroll0 3,433,002 3,288,064 3,310,998 UAAL asa Percentage ofCovercd Payroll ((b‐aヽ /cヽ 303.2% 313.20/0 386.1% Funded Ratio fa/b) 71.7% 73.4% 68.6% -16- 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 THME―YEAR TREND INFORNIIATION December 31.2011 885,33900 885,339 674.170 211,1690 211_169 December 31.2010 944,80800 944,808 944.80800 Ω ‐17¨ Fiscal Year Endin2 12/31/09 12/31/10 12/31/11 Annual Penslon Cost(APC) 958,641 944,808 885,339 Percentage ofAPC Contributed 100.0% 100.0% 76.10/0 Net Penslon ObliQationOO 211,169 GASB STATEMENTS NO.25&27 DISCLOSURE INFORNIIATION(Continued) FttDING PttLICY 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 20.36% 9.91% 885,339 674,170 t2l3ll20tl Entry age Level percentage ofpay, closed 29 years Market 6.75% 3.75% 3.00% 3.00%per year 28.730/0 Salne 944,808 944,808 12/31/2010 Salnc Salne 30 years Same Same Same Sallne Sarne -18-