City of Coral Springs, Florida Notes to Financial Statements Note 14.
Employee Retirement Plans (Continued)
Change in Assumptions Firefighters’ Retirement Plan For the measurement date of September 30, 2020, the following assumptions were changed: • As mandated by Chapter 2015-157, Laws of Florida, the assumed rates of mortality are the rates used in Milliman's July 1, 2019 FRS valuation for special risk employees, updated with appropriate adjustments made based on plan demographics. • Annual assumed rate of investment return was lowered from 7.5% to 7.25%, net of investment related expenses. • Salary increase assumption was changed to a service-based table. • Assumed rates for early, normal retirement, and disability were updated. • Assumed rates of withdrawal were updated from an age-based table to a service-based table. • Assumed administrative expenses were changed from 0.5% of covered payroll to an amount based on the average of actual expenses incurred in the prior two fiscal years. • As a result of Chapter 2019-21, Laws of Florida, granting pre-retirement death or disability benefits as service-incurred if cancer was the cause, the Plan increased the percentage of deaths and disabilities assumed to be service-incurred to 90%. Discount Rate The projection of cash flows used to determine the discount rate assumes plan members will contribute at the current contribution rate and the City will continue to make future contributions at the actuarially determined contribution rate. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability for each Plan. Long-Term Rate of Return The long-term expected rate of return on pension plan investments are developed for each major asset class by weighing the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of real rates of return for each major asset class included in each pension plan’s target asset allocation as of September 30, 2020, are summarized in the following table:
Asset Class Fixed Income Domestic equity: Large cap equity M id/Small cap equity International equity Real estate Alternative investments
General Employees’ Retirement Plan 0.71% 4.86% 5.36% 5.28% 4.39% -
Police Officers’ Retirement Plan
Firefighters’ Retirement Plan
2.50% 7.50%
2.50% 7.50%
8.50% 4.50% 6.29%
8.50% 4.50%
-
79
-
6.00%
