Actuary presents preliminary 2025 valuations; recommends PUB-2010 mortality tables, estimates $1.3M MMO impact

Chiron actuaries presented preliminary pension valuation results as of Jan. 1, 2025, and recommended the board consider updating its mortality assumptions to the Society of Actuaries’ PUB-2010 public-sector tables (below-median safety version, “B”) with generational improvement. Karen, actuary with Chiron, told trustees the change would align Allentown with a growing number of public plans that use mortality tables built on public-sector experience.

Key preliminary figures presented by Chiron included: actuarial liabilities of approximately $268 million for the Police plan with an unfunded actuarial liability of about $27 million; approximately $107 million in liabilities for the Fire plan with about $13 million unfunded; and roughly $7.7 million in liabilities for the O&E plan with an unfunded balance under $1 million. Chiron showed market and actuarial asset values and noted that the funds’ smoothed (actuarial) funded ratios were near 90% for Police and Fire and slightly below 90% for O&E on the valuation dates.

Chiron recommended moving to PUB-2010 B tables (public-sector base) and to project mortality improvement using MP-2021 at 50% (consistent with actuarial guidance). Karen summarized the projected financial effect of that mortality-table change: actuarial liabilities would increase by roughly 2% for Police and Fire (about 2–3% overall) and about 3% for O&E; the change would reduce reported funded ratios modestly (for example, Police from ~90% to ~88%) and would increase the estimated minimum municipal obligation (MMO) across the plans by about $1.3 million in aggregate.

Karen emphasized that mortality is an actuarial assumption that boards adopt; Chiron made the recommendation but did not impose a change. “This table is based solely on public-sector participants,” she said, noting the Society of Actuaries released public-sector tables in 2019 and updated them more recently. Chiron also said most plans are taking a cautious approach to discount-rate changes this year amid market uncertainty, and that mortality is the more pressing assumption to consider now.

Trustees discussed a separate data issue raised during the valuation for Fire: the actuarial liability for Fire included a loss driven by higher-than-expected pay items tied to overtime. Chiron reported the apparent source of that liability increase was the treatment of overtime in the calculation of final average pay; Chiron said the valuation used the interpretation of plan provisions and the data supplied by the city and that the city and plan administrators are working to clarify plan language and historical practice. Chiron quantified the actuarial liability increase (a net loss) tied to that issue at about $7.8 million in the liability-side experience analysis; trustees discussed that clarification and confirmed the city would update ordinance/plan wording and data processes as needed.

No formal change of mortality assumptions was adopted at the meeting; Chiron noted the board must decide by the MMO notification timeline in late summer and encouraged trustees to continue the discussion in advance of the August/September decision deadlines. Trustees asked for follow-up materials and confirmed they would review the proposed PUB-2010 recommendation and the projected $1.3 million MMO impact before making a final determination.

Ending: Chiron will prepare final valuation materials and follow-up analyses; trustees will consider mortality-table adoption and related ordinance clarifications ahead of the MMO notification deadline.