Ordinance 2024-611 - Laserfiche WebLink

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CITY OF SUNNY ISLES BEACH, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2023 NOTE 7 — EMPLOYMENT RETIREMENT SYSTEM (CONTINUED) PENSION PLAN— FRS (CONTINUED) The long-term expected rate of return on Pension Plan investments was not based on historical returns, but, instead, was based on a forward-looking capital market economic model. The allocation policy's description of each asset class was used to map the target allocation to the asset classes shown below. Each asset class assumption is based on a consistent set of underlying assumptions and includes an adjustment for the inflation assumption. The target allocation and best estimates of arithmetic and geometric real rates of return for each major asset class are summarized in the following table: Total 100% Assumed Inflation - Mean 2.4% 1.4% Discount Rate The discount rate used to measure the total pension liability was 6.70%. The Pension Plan's fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the discount rate for calculating the total pension liability is equal to the long-term expected rate of return. 56 Compound Annual Annual Target Arithmetic (Geometric) Standard Asset Class Allocation Return Return Deviation Cash 1.0% 2.9% 2.9% 1.1% Fixed income 19.8% 4.5% 4.4% 3.4% Global equity 54.0% 8.7% 7.1% 18.1% Real estate 10.3% 7.6% 6.6% 14.8% Private equity 11.1% 11.9% 8.8% 26.3% Strategic investments 3.8% 6.3% 6.1% 7.7% Total 100% Assumed Inflation - Mean 2.4% 1.4% Discount Rate The discount rate used to measure the total pension liability was 6.70%. The Pension Plan's fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the discount rate for calculating the total pension liability is equal to the long-term expected rate of return. 56