The funded status of the Chicago Policemen's Annuity and Benefit Fund fell to 22.3% as of Dec. 31, compared to 23.8% in for year-end 2018, the results of an annual actuarial valuation showed.
Among the reasons for the decline in CPABF's funded status was the shift to a 6.75% assumed rate of return beginning in 2020, down from 7.2%, as well as updated mortality tables, said Lance Weiss, senior consultant at actuary Gabriel, Roeder, Smith & Co., during a meeting Friday of the $2.4 billion fund's board of trustees.
The unfunded liability of the defined benefit plan will decrease — "at a very gradual rate" — because an Illinois statute requires that Chicago make actuarially determined contributions to the pension fund beginning in 2021, Alex Rivera, a GRS senior consultant, told trustees during the meeting, held by conference call. Previous annual contributions, including in 2020, were based on a fixed-dollar value, he said.
Mr. Rivera said the funding schedule dictated by the statute will bring the funded status of the policemen's defined benefit plan to 90% in 2055. He stressed to the board that there still would be a funding gap at that point. He said the schedule to improve the plan's funded status to 90% rather than 100% was not standard within the pension community.
By GRS' estimates, CPABF's funded status should rise to 22.95% in 2020.
The board approved the actuarial valuation as presented.