Accountants analyzing Niles’ police and fire pension funds are recommending increased funding for firefighter pensions and a decrease for police pensions.
Because firefighters are living longer and police officers are living shorter lives than the last time a study of this type was completed, accountants with the firm Lauterbach & Amen recommended a contribution increase of $415,232 to the firefighters pension fund over last year’s contribution and recommended a $61,651 contribution decrease to the police pension fund.
Accountants delivered a presentation on pensions with those recommendations to village trustees at last week’s village board meeting.
Police and fire pension boards are semi-autonomous, independent local boards managing pension funds. Although the police pension board and fire pension board manage investments and set property tax levies for their respective funds, rules regarding benefit payments, such as retirement age, employee contribution levels and survivor benefits are set by state legislators. Police and firefighter contributions are locked in by state law at 9.45% of payroll.
State rule changes, and local underfunding in years past, led to both funds not being fully funded. Recent studies of the two pension funds by Lauterbach & Amen further adjusted the assumed funding levels for both funds using data collected through April 15, 2015.
The study also looked at the demographics of current and retired firefighters and police officers and values of assets in investment portfolios for both funds.
The police fund’s rate of return on investments performed better than fire’s with a net increase of 3.3% on investments, less administrative expenses, for an increase of $839,301. This brought net police assets available for pensions to $28.2 million.
The firefighter fund’s rate of return on investments did not perform as well as police with a net increase of 2.9% on investments, less administrative expenses, for an increase of $611,670. This brought net fire department assets available for pensions to $28 million.
In an attempt to compensate for past underfunding of pensions, Niles trustees approved a 0.25% sales tax increase dedicated to both make up for underfunding of pensions and pay for a large flood control projects.