b'Rate of Salary Increases PENSION BENEFIT Inflation at 2.50% per year; plus 0.50% across the board increases; plus the following MeritBALANCE SHEETand Promotion increases based on years of service.Years ofAdditionalCostoflivingadjustmentsandindividualsalary Service Salary Increase assumptions are used to project the dollar amount Less than 1 9.00% ofbenefitstobepaid.Thetotalliabilityisthen 1 - 2 7.00% reducedtotodaysdollartermsusingtheinvest-2 - 3 6.50% ment rate of return assumption. Once the liabilities of the System are computed, the valuation study 3 - 4 5.50% projects the member and employer contributions 4 - 5 4.00% expected to be received using the individual salary 5 - 6 2.75% increase assumptions. The contributions are then 6 - 9 2.00% reducedtotodaysdollartermsusingtheinvest-9 - 10 2.50% ment rate of return assumption.10 - 11 1.90% The projected future contributions are considered 11 - 12 1.80% assetsoftheSystem,alongwithassetscurrently 12 - 13 1.70% invested by the System. For purposes of determin-13 - 14 1.60% ing the contributions to the System, any investment 14 - 15 2.00% gains and losses established after July 1, 2008, will 15 - 16 1.40% berecognizedoveraseven-yearperiodandthe 16 - 17 1.30% actuarial value of assets will be further adjusted, if necessary, to be within 40% of the market value of 17 - 19 1.20% assets.19 - 20 1.60%20 - 25 1.00% TheActuarialBalanceSheetcomparingthe 25 & Over 0.90% Systems assets and liabilities as of June 30, 2024 is available on page 116.Investment Rate of ReturnInflation 2.50%Plus Portfolio Expected Real5.80% UNFUNDEDRate of ReturnLess Expense Adjustment (0.10%) ACTUARIALLess Adjustment to Expected(0.75%) ACCRUED LIABILITYGeometric Real Rate of ReturnLess Risk Adjustment (0.45%)Net Investment Return* 7.00% An Unfunded Actuarial Accrued Liability (UAAL) of a retirement system occurs when a systems actuar-*Net of investment expenses only ial liability is greater than the actuarial value of its The investment return assumption is comprisedassets, yielding a funded ratio less than 100%. As of oftwoprimarycomponents:inflationandrealJune 30, 2024, the Actuarial Balance Sheet on page rate of investment return, adjusted for expenses116showstheUAALforpensionbenefitsforall and risk. tiers to be approximately $68 million. The UAAL for health insurance premium subsidy benefits for all tiers is approximately $887 million.110 LAFPP ANNUAL REPORT 2024'