Firemen's Annuity and Benefit Fund of Chicago, Illinois ... - Fabf.org

Funding Status
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
The actuarial assets, actuarial liabilities and funding status for the Plan are provided below:
Actuarial Values
(in millions)
December 31,
Increase/(Decrease) in
2006 2005 Dollars Percent
Actuarial assets $ 1,264.5 $ 1,203.7 $ 60.8 5.05%
Actuarial liabilities 3,133.1 2,882.9 250.2 8.68
Unfunded actuarial liabilities $ 1,868.6 $ 1,679.2 $ 189.4 11.28%
Funded ratio 40.36% 41.75%
Investments
Actuarial assets increased slightly from $1.20 billion in 2005 to $1.26 billion in 2006 ($60.8
million; +5.1%) due to the strong investment gains of 2006 were offset by the required five year
actuarial smoothing of gains and losses from current and prior years.
Actuarial liabilities increased from $2.88 billion in 2005 to $3.13 billion in 2006 ($250.2 million;
+8.68%), as the impact of court decisions, and increasing salary levels resulting from the new 2006
contract between the City of Chicago and Local 2 were recognized.
The funded ratio is one indicator of the financial strength of the Plan, measuring the ratio of net
assets available to meet the actuarially determined future liabilities of the Plan. The decrease in the
funded ratio from 41.75% in 2005 to 40.36% in 2006 was due primarily to the increased actuarial
liabilities resulting from higher salaries provided by the recently enacted 2006 contract and actual
contributions received are significantly less than the actual required contribution.
The performance of the Plan’s investments, as shown by major asset class, is provided below:
Investment Results
For the Years Ended December 31,
10
2006 2005
Equities 18.4% 12.5%
S & P 500 – benchmark 15.8% 4.9%
Fixed income 7.6% 3.1%
Lehman Bros. Aggregate - benchmark 3.8% 2.4%
Total Fund 15.5% 10.7%
The value of the Plan’s investments, including cash and cash equivalents, increased from $1.173 billion in
2005 to $1.311 billion in 2006, an increase of $138.3 million (+11.8%). Strong performance across all asset
classes contributed to the increase in value. Total return for the entire investment portfolio in 2006 was
15.5%, compared with 10.7% in 2005.