b'LOS ANGELES FIRE AND POLICE PENSION SYSTEM NOTES TO FINANCIAL STATEMENTS JUNE 30, 2025 AND 2024NOTE 15COMMITMENTS AND CONTINGENCIES (Continued)Current Status of the Retiree Medical SubsidyLAFPP provides a subsidy frozen at the 2011 levels to current and future retired members who chose not to opt-in and contribute an additional 2% of their salaries to avoid the Freeze Ordinance.For members who opted-in to pay the 2% contribution, LAFPP will continue to abide by its fiduciary duty to follow LAAC4.1154(e) as written. Specifically, LAFPP continues to set and implement the retiree health insurance premium subsidy increases in the same manner as it did prior to the 2011 Freeze Ordinance, and will do so until a final judgment is rendered in Phase One of the consolidated LAPPL Action I and LAPPL Action II. This means that the LAFPP Board continues to exercise its discretion provided under the Los Angeles Administrative Code to set the subsidy up to and including the medical trend rate or 7%, whichever is lower, until the courts render final judgment. NOTE 16RISKS AND UNCERTAINTIESThe System invests in various investment securities.Investment securities are exposed to various risks such as interest rate, market, and credit risks.Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and such changes could materially affect the amounts reported in the Statements of Fiduciary Net Position.Asofthedateofthisreport,investmentmarketscontinuetoexperienceincreasedvolatilityduetocontinued investor optimism about artificial intelligence and potential productivity gains versus concerns about global inflation rates, geopolitical tensions, slowing economic growth, and the path of interest rates. As a result, the Plans investment portfolio has experienced volatility in fair market value. However, because the values of the Plans investments haveand will fluctuate in response to changing market conditions, the amount of gains or losses that will be recognized in subsequent periods, if any, cannot be determined. The value of the Plans investments has a direct impact on its funded status. As a result of any declines in market value the Plan Sponsor may need to make greater cash contributions to fund the Plan in the future. However, the actual impact, if any, on future required contributions or Plan liquidity cannot be determined at this time. 56 SECTION 2FINANCIALS 71'