Lisle police pension fund shows modest improvement to 73% funded; actuary warns of 2040 payment volatility

An actuarial valuation presented to the Lisle Village Board on Oct. 20 showed the village’s police pension fund improved its funded ratio to 73 percent from 71.6 percent a year earlier, but still carries an unfunded actuarial accrued liability (UAAL) the actuary estimated at about $18.3 million.

Heidi Andorfer, an enrolled actuary with Foster & Foster Actuaries and Consultants, presented the May 1, 2025 valuation and said the improvement reflects positive investment returns and reductions in active membership. Andorfer noted the valuation uses a five‑year smoothing method for asset gains and losses to reduce year‑to‑year volatility. The report shows a total normal cost of $916,000 (the value of pension benefits being earned for one year of service) and member contributions of about $391,000 (9.91% of payroll).

“Your funded status improved year over year — from 71.6% up to 73% — so we’re moving in the right direction,” Andorfer said.

Andorfer explained drivers of the recommended contribution, including the village’s amortization method for the UAAL (scheduled to reach 100% by 2040 under current policy) and a payroll‑growth assumption that mechanically increases the amortization payment over time. She described two alternative approaches the board might consider to reduce future volatility: a rolling amortization (re‑amortize the balance over a fixed period each year) or a layered approach (establish new amortization “layers” for successive gains/losses).

The actuarial presentation noted some unfavorable experience items in the valuation year: fewer-than-expected inactive deaths (which increases liabilities) and higher-than-expected disablement activity. Those losses were partially offset by positive investment returns on a smoothed basis.

On plan changes, Andorfer said there are discussions about possible Tier 2 benefit changes; Foster & Foster plans to deliver a projection of the effect of such changes within about a week. Andorfer also said a broader assumption study is likely in 2027 but did not anticipate large swings in liability solely from that study.

Board members asked about timing and methods. Andorfer said the 6.75% interest (discount) assumption appears reasonable based on multi‑year results and that continued full contributions should move the UAAL toward zero by 2040 under the current policy assumptions.

No formal board action was recorded on the valuation itself during the Oct. 20 meeting; the presentation was informational and available to the board and public.

Key numbers from the valuation (rounded to whole dollars where provided): - Funded ratio: 73.0% (up from 71.6% last year) - Unfunded actuarial accrued liability: about $18,300,000 - Total normal cost: $916,000 - Member contributions: approximately $391,000 (9.91% of payroll)

The actuary recommended the board and staff remain attentive to policy choices and amortization methods as the 2040 funding target approaches to avoid concentration of payment volatility in later years.