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6.C. - Page 100 of 196 CITY OF REDWOOD CITY NOTES TO THE BASIC FINANCIAL STATEMENTS For the Fiscal Year Ended June 30, 2020 NOTE 9 — EMPLOYEE BENEFITS (CONTINUED) A. Pension Plan, Continued Contributions — Section 20814(C) of the California Public Employees' Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for both Plans are determined annually on an actuarial basis as of June 30 by Ca1PERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Net Pension Liability: The City's net pension liability for each Plan is measured as the total pension liability, less the pension plan's fiduciary net position. The net pension liability of each Plan is measured as of June 30, 2019, using an annual actuarial valuation as of June 30, 2018 rolled forward to June 30, 2019 using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is shown below. Actuarial Assumptions — The total pension liabilities in the June 30, 2019 actuarial valuation were determined using the following assumptions: Valuation Date Measurement Date Actuarial Cost Method Actuarial Assumptions: Discount Rate Inflation Payroll Growth Salary Increases Investment Rate of Return Mortality Post Retirement Benefit Increase Miscellaneous Safety June 30, 2018 June 30, 2018 June 30, 2019 June 30, 2019 Entry -Age Normal Cost Method 7.500% 2.500% 2.750% 7.500% 2.500% 2.750% Varies by Entry Age and Service 7.00%(1) 7.00%(1) Derived using Ca1PERS' Membership Data for all Funds (2). The lesser of contract COLA or 2.50% until Purchasing Power Protection Allowance Floor on Purchasing Power applies, 2.50% thereafter. (1) Net of pension plan investment and administrative expenses, including inflation. (2) The probabilities of mortality are based on the 2017 Ca1PERS Experience Study for the period from 1997 to 2015. Pre -retirement and post-retirement mortality rates include 15 years of projected mortality improvement using 90% of Scale MP -2016 published by the Society of Actuaries. For more details on this table, please refer to the Ca1PERS Experience Study and Review of Actuarial Assumptions report from December 2017 that can be found on the Ca1PERS website. The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2018 valuation were based on the results of a December 2017 actuarial experience study for the period 1997 to 2015. Further details of the Experience Study can be found on the Ca1PERS website. 68 187