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.Costoflivingadjustmentsandindividual Years ofAdditionalsalaryassumptionsareusedtoprojectthe Service Salary Increase dollar amount of benefits to be paid. The total Less than 1 9.00% liability is then reduced to todays dollar terms 1 - 2 7.00% using the investment rate of return assump-2 - 3 6.50% tion.OncetheliabilitiesoftheSystemare 3 - 4 5.50% computed,thevaluationstudyprojectsthe 4 - 5 4.00% member and employer contributions expect-5 - 6 2.75% ed to be received using the individual salary 6 - 9 2.00% increaseassumptions.Thecontributionsare then reduced to todays dollar terms using the 9 - 10 2.50% investment rate of return assumption.10 - 11 1.90%11 - 12 1.80% Theprojectedfuturecontributionsare 12 - 13 1.70% considered assets of the System, along with 13 - 14 1.60% assets currently invested by the System. For purposes of determining the contributions to 14 - 15 2.00% the System, any investment gains and losses 15 - 16 1.40% established after July 1, 2008, are recognized 16 - 17 1.30% overaseven-yearperiodandtheactuarial 17 - 19 1.20% value of assets is further adjusted, if necessary, 19 - 20 1.60% to be within 40% of the market value of assets.20 - 25 1.00% TheActuarialBalanceSheetcomparingthe 25 & Over 0.90% Systems assets and liabilities as of June 30, 2025 is available on page 116.Investment Rate of ReturnInflation 2.50%Plus Portfolio Expected Real Rate5.80% UNFUNDEDof Return ACTUARIAL Less Expense Adjustment (0.10%)Less Adjustment to Expected(0.75%) ACCRUED LIABILITYGeometric Real Rate of ReturnLess Risk Adjustment (0.45%) AnUnfundedActuarialAccruedLiability Net Investment Return* 7.00% (UAAL) of a retirement system occurs when a systems actuarial liability is greater than the *Net of investment expenses onlyactuarial value of its assets, yielding a funded The investment return assumption is comprised ofratio less than 100%. As of June 30, 2025, the two primary components: inflation and real rate ofActuarial Balance Sheet on page 116 shows the investment return, adjusted for expenses and risk. UAAL for pension benefits for all tiers to be a surplus of $(158) million. The UAAL for health insurancepremiumsubsidybenefitsforall tiers is approximately $961 million.110 LAFPP ANNUAL REPORT 2025'