Actuary presents preliminary valuations; recommends adopting PUB‑2010 mortality table, estimating roughly $1.3M increase in city MMO

Chiron, the pension actuary for Allentown City, presented preliminary Jan. 1, 2025 valuations for the police, fire and O&E pension plans at the May 20 meeting and recommended trustees consider adopting the PUB‑2010 public‑sector mortality tables with a MP‑2021 improvement scale projected at 50%.

Chiron's presenter (Karen) told trustees that PUB‑2010 is a public‑sector mortality table developed from pension participants rather than general population data; the firm said moving from the currently used RP‑2000 blue‑collar tables to PUB‑2010 B (below‑median) for uniform plans and the PUB table B for O&E would increase total actuarial liabilities for the three plans by roughly 2–3 percent and would raise the combined Minimum Municipal Obligation (MMO) by about $1.3 million in Chiron's preliminary estimate. Karen said the change would better align the city's assumptions with recent public‑sector experience and with recent practice in large nearby plans.

Chiron summarized preliminary counts and finances: the police plan's actuarial liability (preliminary) was about $268 million with an unfunded liability near $27 million; the fire plan's liability was presented at about $157 million with an unfunded liability near $13 million; the O&E plan's liability was about $7.7 million with a small unfunded amount. Karen noted smoothing and market‑value conventions used in the actuarial presentation and reminded trustees that actuarial assumptions must be selected by the board and that mortality assumptions are monitored as gains and losses.

Trustees discussed a separate but related data issue: how overtime is treated in the fire plan's pension formula. Chiron staff and city representatives said the city historically provided demographic and plan‑provision data on an ongoing basis and that recent materials clarify that overtime used in the five‑year average calculation has been treated without a 10% cap in administrative practice. The clarification — including a reference to arbitration documents and an earlier city solicitor communication — prompted questions from trustees about whether prior valuations used the same interpretation; Chiron said the new packet language codifies the city's current interpretation and that the valuation uses the data as provided.

No formal vote was taken on mortality tables at the May 20 meeting. Chiron advised the board it could take the proposal under consideration and that any change should be decided in time for the council's MMO notification deadlines (Chiron and staff noted MMO figures must be finalized in the coming months to inform the 2026 city budget). In discussion, trustees asked staff to circulate follow‑up materials and to confirm whether the city would carry any increase in MMO that results from actuarial assumption updates.

Key actuarial estimates and clarifications from the meeting materials and discussion: - Preliminary actuarial liabilities (01/01/2025): Police ~ $268,000,000; Fire ~ $157,000,000; O&E ~ $7,700,000. - Preliminary unfunded actuarial liabilities: Police ~ $27,000,000; Fire ~ $13,200,000; O&E ~ <$1,000,000. - Chiron's illustrative cost impact for moving to PUB‑2010 B + MP‑2021 (50%): estimated aggregate liability increase ~2%; estimated increase in the city's MMO across plans ~ $1,300,000 (preliminary). - Chiron recommended the board consider the PUB‑2010 table and the updated improvement scale because PUB‑2010 reflects public‑sector experience and because mortality improvements have been observed in recent Society of Actuaries publications.

Trustees requested that Chiron provide formal written options and projections for the board to consider at or before the August meeting so the city can meet MMO notification timelines to council.