Mortality rates were updated to be based on the Pub-2010 Healthy Retiree Mortality Tables
with credibility adjustments for each group (police and fire combined) and projected fully
generational mortality improvements using Scale MP-2019.
Actuarial assumptions also reflect benefit changes resulting from CH 340 laws of 2019
(HB 616), which grants a one-time, 1.5% COLA on the first $50,000 of an annual pension
benefit to members who retired on or before July 1, 2014, or any beneficiaries of such
member who is receiving a survivorship pension benefit. The COLA will take effect on the
retired member’s first anniversary date of retirement occurring after July 1, 2020. The
adjustment shall become a permanent addition to the member’s base retirement allowance.
The actuarial assumptions used in the June 30, 2019 valuation were based on the results of
the most recent actuarial experience study, which was for the period July 1, 2016 — June 30,
2019.
Target Allocations
The long-term expected rate of return on pension plan investments was selected from a
best estimate range determined using the building block approach. Under this method, an
expected future real return range 1s calculated separately for each asset class. These ranges
are combined to produce the long-term expected rate of return by weighting the expected
future real rates of return net of investment expenses by the target asset allocation
percentage and by adding expected inflation. The target allocation and best estimates of
arithmetic real rates of return for each major class are summarized in the following table:
Weighted Average
Average Long-
Target Term Expected
Allocation Real Rate of
Asset Class Percentage Return
Large cap equities 22.50 % 3.71%
Small’mid cap equities 7.50 4.15%
Total domestic equities 30,90
Int'l equities (unhedged) 13.00 3.96%
Emerging int'l equities 7.00 6.20%
Total international equities 20.00
Core bonds 9.00 0.42%
Global multi-sector fixed income 10.00 1,66%
Absolute return fixed income 6.00 0.92%
Total fixed income 25.00
Private equity 10.00 TAY
Private debt 5.00 4.81%
Total alternative investments 15.00
Real estate 10.00 2.95%
Total 100.00 %
80
