NASHUA AIRPORT AUTHORITY
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
For the Year Ended June 30, 2021
Actuarial Assumptions
The total pension liability was determined by a roll forward of the actuarial valuation as of June 30, 2019,
using the following actuarial assumptions:
Inflation 2.00%
Wage inflation 2.75% (2.25% for Teachers )
Salary increases 5.60%, average, including inflation
Investment rate ofretum 6.75%, net of pension plan investment expense,
including inflation
Mortality rates were 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.
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, 2015 — June 30, 2019.
The following assumptions were changed in the current year:
Reduced the assumed rate of investment return from 7.25% ta 6.75%
Reduced the discount rate from 7.25% to 6.75%
Reduced wage inflation from 3.25% to 2.75% (2.25% for teachers)
Reduced price inflation from 2.5% to 2.0%
Updated demographic assumptions, including merit and longevity salary increases, disability rates,
retirement rates, and mortality tables (specifically the new public pension plan mortality tables)
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 is
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. Following is a table presenting target
allocations and geometric real rates of return for each asset class:
Weighted Average Long-Tenn
Asset Class Target Allocation Expected Real Rate of Return
Domestic equity 30% 3.71-4. 15%
Intemational equity 20% 3.96-6.20%
Fixed income 25% 0.42-1.66%
Altemative investments 15% 4.81-7.71%
Real estate 10% 2.95%
Total 100%
Discount Rate
The discount rate used to measure the collective pension liability was 6.75%. The projection of cash flows
used to determine the discount rate assumed that plan member contributions will be made at the current
