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8.A. - Page 38 of 51 Required Contribution Projected Future Employer Contributions Contribution Rates 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 Miscellaneous 10.4% 10.1% 9.9% 9.7% 9.4% 9.2% Safety 23.5 22.6 22.3 21.9 21.6 21.3 Source: PERS Actuarial Reports July 2019. PERS has announced an investment return of 4.7% for Fiscal Year 2019-20 and as a result, the actual contribution requirements can be expected to differ from the projections above. For more information with respect to the City's Pension Plan obligations, see Note (9) to the City's audited financial statements attached hereto as Exhibit A -I. Recent Changes by PERS. At its April 17, 2013, meeting, PERS' Board of Administration (the "Board of Administration") approved a recommendation to change the PERS amortization and smoothing policies. Prior to this change, PERS employed an amortization and smoothing policy that spread investment returns over a 15 -year period with experienced gains and losses paid for over a rolling 30 -year period. After this change, PERS will employ an amortization and smoothing policy that will pay for all gains and losses over a 20 -year period with a five-year ramp -up, and five-year ramp -down, period. The new amortization and smoothing policy was used for the first time in the June 30, 2014, actuarial valuations in setting employer contribution rates for fiscal year 2016-17. On February 18, 2014, the PERS Board approved new demographic actuarial assumptions based on a 2013 study of recent experience. The largest impact, applying to all benefit groups, is a new 20 -year mortality projection reflecting longer life expectancies and that longevity will continue to increase. Because retirement benefits will be paid out for more years, the cost of those benefits will increase as a result. The Board of Administration also assumed earlier retirements for Police 3%@50, Fire 3%@55, and Miscellaneous 2.7%@55 and 3%@60, which will increase costs for those groups. As a result of these changes, rates will increase beginning in fiscal year 2016-17 (based on the June 30, 2014 valuation) with full impact in fiscal year 2020-21. On November 18, 2015, the PERS Board adopted a funding risk mitigation policy intended to incrementally lower its discount rate — its assumed rate of investment return — in years of good investment returns, help pay down the pension fund's unfunded liability, and provide greater predictability and less volatility in contribution rates for employers. The policy establishes a mechanism to reduce the discount rate in years when investment returns outperform the existing discount rate, currently 7.0%. PERS expects that reducing the volatility of investment returns will increase the long-term sustainability of PERS pension benefits for members. In February 2017, the PERS Board revised the funding risk mitigation policy. The revisions include suspension of the policy until fiscal year 2020-21, and a decrease of the required first excess investment return threshold from 4 to 2 percent. More information about the funding risk mitigation policy can be accessed through PERS' web site at the following website address: https://www.calpers.ca.gov. The reference to this Internet website is provided for reference and convenience only. The information contained within the website may not be current, has not been reviewed by the City and is not incorporated in this Official Statement by reference. ATTY/AGR/2020.264/PRELIMINARY OFFICIAL STATEMENT — WASTEWATER REV: 11-18-2020 EI Page 16 of 29 704