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CITY OF ST. ANTHONY, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2017 <br /> <br /> <br /> <br /> <br />ACTUARIAL ASSUMPTIONS <br /> <br />The total pension liability in the December 31, 2017 actuarial valuation was determined using the <br />following actuarial assumptions, applied to all periods included in the measurement: <br /> <br />Investment rate of return 5.75% <br />Projected salary increases N/A <br />Inflation 2.75% <br />Cost-of-living adjustments None <br />Age of service retirement 50 <br />Post retirement benefit increase None <br />Mortality assumptions for pre-retirement, post-retirement and disability are as follows: <br /> <br />Healthy pre-retirement – RP 2014 employee generational mortality projected with mortality <br />improvement scale MP-2016, from a base year of 2006. <br /> <br />Healthy post-retirement – RP 2014 annuitant generational mortality projected with mortality <br />improvement scale MP-2016 from a base year of 2006. Male rates adjusted by a factor of 0.96. <br /> <br />Disabled – RP 2014 annuitant generational mortality table projected with mortality improvement <br />scale MP-2016 from a base year of 2006. Male rates are adjusted by a factor of 0.96. <br /> <br /> The long-term expected rate of return on pension plan investments was determined using a building- <br />block method in which best-estimates of expected future real rates of return (expected returns, net of <br />pension plan investment expense and inflation) are developed for each major asset class. These <br />asset class estimates are combined to produce the portfolio long-term expected rate of return by <br />weighting the expected future real rates of return by the current asset allocation percentage (or target <br />allocation, if available) and by adding expected inflation. All results are then rounded to the nearest <br />quarter percentage point. <br /> <br /> The best-estimate of expected future real rates of return were developed by aggregating data from <br />several published capital market assumption surveys and deriving a single best-estimate based on <br />the average survey values. These capital market assumptions reflect both historical market <br />experience as well as diverse views regarding anticipated future returns. The expected inflation <br />assumption was developed based on an analysis of historical experience blended with forward- <br />looking expectations available in market data. <br /> <br />72