The actuarial assumptions used in the June 30, 2021 valuation were based on the results of an economic assumption study dated March 24, 2017 and a demographic assumption study dated June 28, 2018.
Mortality rates used in the 2021 valuation were based on RP-2014 Employee and Health Annuitant Tables with MP-2017 generational adjustments.
I he long-term expected rate of return on IPERS' investments was determined using a building-block method in which best-estimate ranges of expected future real rates (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:
| Asset Class | Asset Allocation | Long-Term Expected Real Rate of Return |
|---|
| Domestic equity | 22.0% | 4.43% |
|---|
| International equity | 17.5 | 6.01 |
|---|
| Global smart beta equity | 6.0 | 5.10 |
|---|
| Core plus fixed income | 26.0 | 0.29 |
|---|
| Public credit | 4.0 | 2.08 |
|---|
| Cash | 1.0 | (0.25) |
|---|
| Private equity | 13.0 | 9.51 |
|---|
| Private real assets | 7.5 | 4.63 |
|---|
| Private credit | 3.0 | 2.87 |
|---|
| 100% | |
|---|
Discount Rate – The discount rate used to measure the total pension liability (asset) was 7.00%. The projection of cash flows used to determine the discount rate assumed that employee contributions will be made at the contractually required rate and that contributions from the County will be made at contractually required rates, actuarially determined. Based on those assumptions, IPERS' fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on IPERS' investments was applied to all periods of projected benefit payments to determine the total pension liability (asset).
Sensitivity of the County's Proportionate Share of the Net Pension Liability (Asset) to Changes in the Discount Rate – The following presents the County's proportionate share of the net pension liability (asset) calculated using the discount rate of 7.00%, as well as what the County's proportionate share of the net pension liability (asset) would be if it were calculated using a discount rate that is 1% lower (6.00%) or 1% higher (8.00%) than the current rate.
| downarrow% Decrease (6.00%) | Discount Rate (7.00%) | 1% Increase (8.00%) |
|---|
| County's proportionate share of the net pension liability (asset) | 7,513,096 | (7,158,407) | (19,447,646) |