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Other Post -Employment Benefit Programs of the City of ° " <br />Actuarial Valuation as of July 1, 2015 <br />Basic Valuation Results <br />(Concluded) <br />This primary reasons for the increase in the UAAL are: <br />• The vast majority of the increase in the AAL, $19,169,000, arises out of the <br />requirement to begin recognizing the implicit subsidy of medical coverage for current <br />and future retirees prior to becoming eligible for Medicare; in developing this liability, <br />we added assumptions regarding expected claims cost by age and gender; <br />• A $2,852,000 increase in the AAL due to a change in discount rates used to develop <br />the OPEB liability, from 7.5% to 7.28%; and <br />• A $4,821,000 increase in the AAL due to revised assumptions for future service and <br />disability retirements and other terminations (withdraw'hl;, prior to retirement, based on <br />the 2014 CalPERS retirement plan experience study covering Cityemployees; mortality <br />rates and mortality improvement rates were also updated, <br />Other changes included: <br />• Modest adjustments (decreases) to the percentage ,of future retirees,, ((Aber than those <br />in Tier 1) expected to electcaver6g"fdr the'f7lselves;nd their spouse in retirement. <br />Together resulted in roughly a $220,0,00 decrease, In th&AAL; <br />• Refinement of the projection of"the expected excise tax relating to retirees for high cost <br />health coverage, accounting for a $402,000 inorease in the AAL; and <br />Favorable plan experience relative td. -our prior assumptions, resulting in a $3,036,000 <br />decrease in the UAAL. Plan experience includes .factors such as changes in plan <br />membership, retiree ekotions and change's in.medki l premiums and limits on benefits <br />other than previously projected.. <br />Plan experience also includes asset.performance relative to the expected contributions <br />and rate of::retum. Actual plan assets were somewhat higher than projected, primarily <br />because contributions to CER8T were larger than we projected during this two year <br />period. The return on trust assets appears to be slightly better than the expected long <br />term rate of return of 7,50/7 per year; with the actual return closer to 8.5% per year over <br />this period. <br />Bckmore: <br />