Actuarial Valuation Report as of July 1, 2000
Section 5 - Description of Actuarial Cost Method and Actuarial Assumptions used in Valuation

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Valuation Date: July 1, 1999
Method of Valuation: The "Entry-Age-Normal" Cost Method of Valuation, based on the "level percentage of pay" concept.
Mortality: The 1983 Group Annuity Mortality Table, sex-distinct.
Interest: Fund assets are assumed to produce an investment return as follows: 7.25% per annum, compounded annually
Salary Scale: Annual salary of active Police Officers is assumed to increase 3.75% per annum, compounded annually with additional one-time increases of 8.9% after one year of service and 15.3% after completing five years of service.
Employee Turnover Scale: Police Officers are assumed to terminate their Service due to causes other than retirement, death or disability in accordance with the following schedule:


Employee Withdrawal Rate Per 1,000 Employees

Age
Males
Females

25 85 85

30 70 85

35 45 59

40 29 38

45 17 24

50 9 14

55 3 5

60 and over 3 3
Assumed Retirement Age: Based on the table noted below. Participants who first attain retirement after age 50 are assumed to retire at a rate of the greater of (a) 43% or (b) the rate at their age of first retirement eligibility in the table noted below. Each subsequent rates are based on the table below.

Rate of Retirement

Age
20 Yrs. of Service at
Age 50
Age
20 Yrs. of Service
at Age 50

50 43.00% 58 37.78%

51 28.00% 59 46.67%

52 6.00% 60 55.56%

53 19.00% 61 64.45%

54 32.00% 62 73.34%

55 45.00% 63 82.23%

56 20.00% 64 91.12%

57 28.89% 65 100.00%
Incidence of Disability Retirement Rates: Active Police Officers are assumed to become disabled in accordance with the following schedule:


Employee Disablement Rate Per 1,000 Employees

Age
Males
Females

25 3 3

30 4 4

35 7 7

40 10 10

45 15 15

50 25 25

55 45 45

60 63 63

65 82 82
Post-Disability Mortality: According to the 1983 Group annuity Mortality Table, sex-distinct.
Plan Administrative Expenses: No special provisions were made for plan administrative expenses in the costs. It is assumed they are to be met directly or alternatively are included in the rate of fund earnings.
Ancillary Plan Benefits: Ancillary benefits are valued on an advanced funding basis which effectively produces "level annual" contribution requirements.
Actuarial Value of Pension Plan Assets: The current market value of assets (including discounted contributions due for prior Plan Years and not received as of the valuation date) is reduced (increased) for the current year and each of two succeeding years, by a portion of the gain/(loss) in market value during the prior year. Such gain/(loss) is determined as the excess/(deficit) of the current market value of assets over the market value of assets as of the prior year, increased to reflect interest at the actuarial rate and adjusted to reflect contributions and benefit payments during the prior year. The portion of such gain/(loss) by which the current market value of assets is reduced (increased) shall be 75% in the current year; 50% in the first succeeding year and 25% in the second succeeding year. The initial market-related value of assets was established as of July 1, 1998 to be equal to the market value of assets as of such date.
Description of Employee Data Provided: Data for active and inactive Police Officers as of the valuation date were provided by the City of Champaign (the Plan Sponsor) in the form of listings.
Description of Any Employees Excluded From Valuations and/or Any Plan Provisions Not Considered in the Valuations:
  • Based on the information provided to Watson Wyatt Worldwide, and, in our opinion, no otherwise eligible employees were excluded from the July 1,1999 valuation of the Pension Plan.
  • In Watson Wyatt Worldwide's opinion, all Plan provisions involving any significant Plan benefits of any type have been properly included and valued in the July 1, 1999 actuarial valuation.
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