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7.A - Page 20 <br />discount rate reduction from 7.5 percent to 7.0 percent over three years beginning in FY <br />2018-19. Investment earnings affect how much future benefit payments can be funded by <br />investment income rather than by City and employee contributions. If the investment <br />return is lower than expected, employers are required to contribute more. The average <br />CalPERS investment return for the past five years is 8.8 percent, and for the last decade, <br />the return has averaged 4.4 percent. Actuaries had assumed that the return would be 7.5 <br />percent. <br />Lowering the discount rate has increased the City's pension liability. As described earlier <br />in this report, the City's annual required payments will increase from $24.3 million in FY <br />2018-19 to $36.4 million over the next five years and will continue to increase through FY <br />2024-25 for miscellaneous employees, and through FY 2030-31 for safety employees, in <br />order to pay down this liability. These projections are at a 50 percent confidence level, <br />meaning there is a 50 percent likelihood that the cost could be lower, and a 50 percent <br />likelihood that the cost could be higher. <br />CAPERS' Projected Contributions (in thousands) <br />$45,000 <br />$39,955 <br />$40,000 $38,253 <br />$36,355 <br />$35,000 $33,782 <br />$30,908 <br />$30,000 $27,700 <br />$24,340 <br />$25,000 <br />$21,245 <br />$20,000 <br />$15,000 <br />$10,000 <br />$5,000 <br />FY 2017-18 FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY 2022-23 FY 2023-24 FY 2024-25 <br />Safety Miscellaneous Total City PERS Liability <br />As previously mentioned, as of June 30, 2015 (the most recent assessment by PERS) <br />the City has an unfunded pension liability of $238.8 million, up from $194.3 million a year <br />earlier, an increase of 23 percent. The Preliminary Five -Year Forecast includes <br />anticipated General Fund contributions towards the City's pension liability beyond the <br />