CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025
NOTE 12 - PENSION PLAN (CONTINUED)
Employees Covered
At June 30, 2023, the following employees were covered by the benefit terms for all Plans:
Inactive employees or beneficiaries currently receiving benefits 196
Inactive employees entitled to but not yet receiving benefits 97
Active employees 128
Total 421
Contributions
Section 20814(c) of the California Public Employees' Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for both Plans are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.
B. Net Pension Liability
The City's net pension liability for the Plan is measured as the total pension liability, less the pension plan's fiduciary net position. The net pension liability of Plan is measured as of June 30, 2024, using an annual actuarial valuation as of June 30, 2023, as of June 30, 2024, and as of June 30, 2024, using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is shown below.
Actuarial Assumptions
The total pension liabilities in the June 30, 2024 actuarial valuations were determined using the following actuarial assumptions:
Valuation dateJune 30, 2023
Measurement dateJune 30, 2024
Actuarial cost methodEntry age normal
Actuarial assumptions:
Discount rate6.90%
Inflation2.30%
Payroll Growth2.80%
Projected Salary IncreaseVaries by Entry Age and Service
Investment Rate of Return6.8% Net of Pension Plan Investment and Administrative Expenses; includes Inflation
Mortality rate table*Derived using CalPERS' membership data for all funds
*The mortality table used was developed based on CalPERS-specific data. The probabilities of mortality are based on the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. Mortality rates incorporate full generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. For more details on this table, please refer to the 2021 experience study report from November 2021 that can be found on the CalPERS website.