Page 107 - 2018 Comprehensive Annual Financial Report - City of Winston-Salem

Concentrations. The pension plan does not hold 5% or more of the pension plan’s duciary net position (other than those issued
or explicitly guaranteed by the U.S. government) in any one organization.
Rate of Return. For the year ended June 30, 2018, the annual money-weighted rate of return on pension plan investments, net of
pension plan investment expense was 9.40%. The money-weighted rate of return expresses investment performance, net of
investment expense, adjusted for the changing amounts actually invested.

Net Pension Liability
The components of the net pension liability of the City as of June 30, 2018 are as follows:
Total pension liability $ 22,535,005
Plan duciary net position (10,254,316)
Net pension liability $ 12,280,689
Plan duciary net position as a percentage of total pension liability 45.5%

At June 30, 2018, the City reported a net pension liability of $12,280,689. The net pension liability was measured as of June 30, 2018.
The total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of January 1, 2018.
The total pension liability was then rolled forward to the measurement date of June 30, 2018.
Actuarial Assumptions. The total pension liability was determined by an actuarial valuation as of January 1, 2018, using the
following actuarial assumptions, applied to all periods included in the measurement:
In ation rate 2.75%
Salary increases 3.75% to 6.25%, based on years of service
Investment rate of return 7.25%, net of investment expense and including in ation
Interest on contributions 4.00% per year

Mortality rates were based on RP 2000 Tables, with 1 year setback for Males and apply projection scale BB to 2027 for future
improvements in life expectancy, 50% of these rates apply for preretirement deaths.
Post Disability Mortality – RP 2000 (Disabled Retirees Table)
The actuarial method was entry age.

The actuarial assumptions used in the January 1, 2018 valuation were based on the results of an actuarial experience study covering
the 2012 to 2016 time period. All assumptions were reviewed in 2017.
Changes in Actuarial Assumptions. The following assumption changes were made since the prior valuation:

1. Update of mortality table from 2017 Table to RP 2000 Table.
2. Salary increases updated.
3. Actuarial experience study completed.
The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-
estimates of expected future real rates of return (expected returns, net of pension plan investment expense and in ation) are
developed for each 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 in ation. This is then modi ed
through a Monte-Carlo simulation process, by which a (downward) risk adjustment is applied to the baseline expected return.

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