Discussion and Review of FY 2026-2027 Budget

City of Tiffin Notes to Basic Financial Statements NOTE 4 – PENSION PLAN (CONTINUED) F. Actuarial Assumptions The total pension liability (asset) in the June 30, 2024, actuarial valuation was determined using the following actuarial assumptions applied to all periods included in the measurement: Rate of inflation 2.60% per annum. (effective June 30, 2017) Rates of salary increase 3.25% to 16.25% average, including inflation. (effective June 30, 2017) Rates vary by membership group. Long-term investment rate of return 7.00% compounded annually, net of investment (effective June 30, 2017) expense, including inflation. Wage growth 3.25% per annum, based on 2.6% inflation (effective June 30, 2017) and 0.65% real wage inflation. The actuarial assumptions used in the June 30, 2024, valuation were based on the results of a quadrennial experience study dated July 1, 2017, through June 30, 2021. Mortality rates used in the 2024 valuation were based on the PubG-2010 mortality tables with future mortality improvements modeled using Scale MP-2021. The 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 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: Long-Term Target Expected Real Asset Class Allocation Rate of Return Domestic equity 21.0 % 3.52 % International equity 13.0 5.18 Global smart beta equity 5.0 4.12 Core plus fixed income 25.5 3.04 Public credit 3.0 4.53 Cash 1.0 1.69 Private equity 17.0 8.89 Private real assets 9.0 4.25 Private credit 5.5 6.62 Total 100.0 % 26