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Actuaries recommend higher police pension contribution; fire fund remains pay-as-you-go
Summary
Foster & Foster presented the police and fire pension valuations, recommending a police contribution of roughly $3.5 million (about a 5.7% increase) and noting the fire fund remains pay-as-you-go; the committee signaled consensus to move forward and will bring a formal statutory contribution report to the board.
Foster & Foster presented the village's annual actuarial evaluation of the police and fire pension funds, reporting an increase in the recommended police pension contribution and generally improving funded status driven by positive investment performance and sustained municipal contributions.
Carol and Heidi of Foster & Foster summarized the valuation: the police pension fund reported actuarial assets and a recommended contribution of roughly $3.5 million for the next year, an increase of about 5.67% from the prior recommendation. The fire pension remains funded on a pay-as-you-go basis with an annual cost of about $48,000 tied to a long-standing annuity for the remaining beneficiary.
Actuarial presenters described smoothing methods that spread gains and losses over multiple years and explained the difference between market value and actuarial (smoothed) value. They highlighted that active membership rose slightly, that a discrete retirement this year increased near-term costs, and that a newly reported spousal data point raised liabilities where a surviving spouse is considerably younger. Presenters noted no changes to the valuation assumptions this cycle, but a consolidated 2022 experience study update is pending adoption and could lead to future assumption changes.
Committee members discussed the county's public-facing figures (PEX tax bill displays) that report a larger unfunded liability; Foster & Foster said county reports use different assumptions and generalized multipliers and do not directly adopt the plan-level actuarial detail. The finance committee indicated consensus to proceed with the recommended required contributions for police and fire and directed staff to prepare the formal statutory report for board action.
Staff said it will present a formal contribution-acceptance report to the village board as required by statute; no formal board vote on the contributions occurred yet at the finance committee meeting.
