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6.G. - Pagf Redwood 187 <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 />B. Post Employment Benefits, Continued <br />Net OPEB Liability <br />The City's net OPEB liability was measured as of June 30, 2017 and the total OPEB liability used to <br />calculate the net OPEB liability was determined by an actuarial valuation dated June 30,2017, based on <br />the following actuarial methods and assumptions: <br />Actuarial Assumption <br />Discount Rate <br />Inflation <br />Salary Increases <br />Investment Rate of Return <br />Mortality Rate (1) <br />Pre -Retirement Turnover (2) <br />Healthcare Trend Rate <br />Notes: <br />6.75% <br />2.75% per annum <br />Aggregate -3% <br />6.75% <br />Derived using CaIPERS' Membership Data <br />for all funds <br />Derived using CaIPERS' Membership Data <br />for all funds <br />Non -Medicare - 6.25% for 2018, decreasing <br />to an ultimate rate of 4.75% in 2021 and <br />later years <br />Medicare - 6.45% for 2018, decreasing to an <br />ultimate rate of 4.75% in 2021 and later <br />years <br />(1) Pre -retirement mortality information was derived from data collected during 1997 to 2011 CalPERS <br />Experience Study dated January 2014 and post-retirement mortality information was derived from the 2007to <br />2011 CalPERS Experience Study. The Experience Study Reports may be accessed on the CalPERS website <br />www.calpers.ca.gov under Forms and Publications <br />The long-term expected rate of return on OPEB plan investments was determined using a building- block <br />method in which expected future real rates of return (expected returns, net of OPEB plan investment <br />expense and inflation) are developed for each major asset class. These ranges are combined to produce <br />the long-term expected rate of return by weighting the expected future real rates of return by the target <br />asset allocation percentage and by adding expected inflation. The target allocation and best estimates of <br />arithmetic real rates of return for each major asset class are summarized in the following table: <br />Investment Class <br />Global Equity <br />Fixed Income <br />Treasury Inflation -Protected Securities (TIPS) <br />Commodities <br />Real Estate Investment Trusts <br />TOTAL <br />74 <br />Target Allocation Long -Term Expected <br />Real Rate of Return <br />57.00% <br />4.82% <br />27.00% <br />1.47% <br />5.00% <br />1.29% <br />3.00% <br />0.84% <br />8.00% <br />3.76% <br />100.00% <br />280 <br />