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6.G. - Pa Reed Of T$i7 <br />City <br />Notes to the Basic Financial Statements <br />For the fiscal year ended June 30, 2018 <br />NOTE 9 — EMPLOYEE BENEFITS (CONTINUED) <br />A. Pension Plan, Continued <br />Actuarial Assumptions — The total pension liabilities in the June 30, 2017 actuarial valuation were <br />determined using the following assumptions: <br />Valuation Date <br />Measurement Date <br />Actuarial Cost Method <br />Actuarial Assumptions: <br />Discount Rate <br />Inflation <br />Salary Increases <br />Investment Rate of Return <br />Mortality (1) <br />Post Retirement Benefit Increase <br />Miscellaneous Safety <br />June 30, 2016 June 30, 2016 <br />June 30, 2017 June 30, 2017 <br />Entry -Age Normal Cost Method <br />7.15% 7.15% <br />2.75% 2.75% <br />Varies by Entry Age and Service <br />7.50% 7.50% <br />Derived using CAPERS' Membership Data for all <br />Contract COLA up to 2.75% until Purchasing Power <br />Protection Allowance Floor on Purchasing Power <br />applies, 2.75% thereafter <br />(1) The mortality table used was developed based on CalPERS' specific data. The table includes 20 years of <br />mortality improvements using Society of Actuaries Scale BB. <br />The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2016 <br />valuation were based on the results of a January 2014 actuarial experience study for the period 1997 to <br />2011. Further details of the Experience Study can be found on the CalPERS website. <br />Discount Rate — The discount rate used to measure the total pension liability was 7.15% for each Plan. <br />To determine whether the municipal bond rate should be used in the calculation of a discount rate for <br />each plan, CalPERS stress tested plans that would most likely result in a discount rate that would be <br />different from the actuarially assumed discount rate. Based on the testing, none of the tested plans run <br />out of assets. Therefore, the current 7.15% discount rate is adequate and the use of the municipal bond <br />rate calculation is not necessary. The long term expected discount rate of 7.15% will be applied to all <br />plans in the Public Employees Retirement Fund. The stress test results are presented in a detailed report <br />that can be obtained from the CalPERS website. <br />The long-term expected rate of return on pension plan investments was determined using a building- <br />block method in which best -estimate ranges of expected future real rates of return (expected returns, <br />net of pension plan investment expense and inflation) are developed for each major asset class. <br />69 275 <br />