The Department of Insurance has announced that they will resume production of suggested tax levy reports effective September 24, 2012. You may recall that the DOI suspended this function for fiscal year 2011 in order to come into compliance with Public Act 96-1495 which made significant changes to the manner in which actuarial calculations are performed under the Statute. Notably, the minimum employer contribution will now be calculated using the projected unit credit cost method.
In addition, the process to comply with P.A. 96-1495 includes an update to the actuarial assumptions used in producing the recommended tax levies. Significantly, the DOI has assumed new rates of return for police and firefighter pension funds. The new rate of return assumptions are as follows:
Fund Net Asset Value Assumed Rate of Return
Under $2.5 million 5%
$2.5 million – $5 million 6%
$5 million – $10 million 6.5%
Over $10 million 6.75%
The DOI states that these updated actuarial assumptions will most likely result in higher annual employer contribution requirements.
The DOI reports that Article 3 and Article 4 funds with annual statements that have been filed and accepted by the DOI by October 12, 2012, will have a suggested levy produced and available no later than November 30, 2012. Recall also that these funds have the option of utilizing the DOI recommended levy or retaining an independent enrolled actuary to determine the recommended levy.