HomeMy WebLinkAboutStaff Report 2308-18603.Accept California Public Employees’ Retirement System (CalPERS) Pension Annual
Valuation Reports as of June 30, 2022 Presentation
Finance Committee
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: Administrative Services
Meeting Date: September 19, 2023
Report #:2308-1860
TITLE
Accept California Public Employees’ Retirement System (CalPERS) Pension Annual Valuation
Reports as of June 30, 2022
RECOMMENDATION
Staff recommends that the Finance Committee review and recommend that Council accept the
June 30, 2022 CalPERS Annual Valuation reports for the Miscellaneous and Safety Pension
Plans.
EXECUTIVE SUMMARY
The June 30, 2022 CalPERS Annual Valuation report is used to inform the development of the
upcoming FY 2025 Adopted Budget and FY 2025 - 2034 Long Range Financial Forecast (LRFF).
The CalPERS annual reports estimate total employer pension costs of $64.9 million in FY 2025, a
$5.4 million or 9.1% increase over prior year levels of $59.5 million. This increase is primarily due
to CalPERS investment loss of -6.1% as compared to target levels of 6.8% for the period ending
June 30, 2022. This loss was preceded by a significant investment gain of +21.3% for the period
ending June 30, 2021. This gain triggered the CalPERS Risk Mitigation Policy, and reduction of the
discount rate from 7.0% to 6.8%. These investment gains and losses nearly offset the impacts to
the City’s funded status, increasing and decreasing funded levels by approximately 10% over the
past two years; 63.5% (FY 2023), 73.3% (FY 2024), and 63.8% (FY 2025). The City’s Unfunded
Accrued Liability (UAL) is $553.3 million.
Consistent with the Retiree Benefit Policy, the City continues to contribute beyond the required
employer contribution to the City’s 115 Pension Trust. In total, $54.4 million in planned
contributions (principal) will have been made to the Pension Trust since inception in FY 2017
through June 30, 2023 ($36.8 million, or 68% of the total, is from the General Fund). These
additional funds are not factored into the CalPERS reports, when included the City’s funded status
increases by 3.6%, from 63.8% to 67.3%. In accordance with the Policy, staff expects that the
Pension Trust will accumulate sufficient balances within the next several years to begin
Additional Discretionary Payments (ADPs) to CalPERS for amounts in the Pension Trust that
exceed the one-year required annual payment.
BACKGROUND
Table 1: City of Palo Alto Pension Benefit Plans and Tiers
Miscellaneous Safety: Fire Safety: Police
Tier 1 2.7%/service year worked;
eligibility starting at the age
of 55 (2.7% @ 55)
3.0%/service year worked;
eligibility starting at the age of
50 (3.0% @ 50)
3.0%/service year worked;
eligibility starting at the age
of 50 (3.0% @ 50)
Tier 2 Effective July 16, 2010:
2.0%/service year worked,
eligibility starting at age 60
(2.0% @ 60)
Effective June 7, 2012:
3.0%/service year worked,
eligibility starting at age 55
(3.0% @ 55)
Effective December 6, 2012:
3.0%/service year worked,
eligibility starting at age 55
(3.0% @ 55)
Tier 3
“PEPRA”*
Effective January 1, 2013:
2.0%/service year worked;
eligibility starting at age 62
(2.0% at 62)
Effective January 1, 2013:
2.7%/service year worked;
eligibility starting at age 57
(2.7% at 57)
Effective January 1, 2013:
2.7%/service year worked;
eligibility starting at age 57
(2.7% at 57)
* Under the California Public Employees’ Pension Reform Act (PEPRA), the benefit calculation is limited by a maximum salary of
$175,250 in 2023 for both the Miscellaneous and Safety plans, therefore it is calculated based on service years but cannot exceed
the $175,250. The final salary calculation is based on the average of the highest three years.
benefit1. The City expects lower costs as employees in Tier 1 and Tier 2 are replaced with PEPRA
employees as retirements and turnover occurs. Attachment A outlines the number of employees
in each tier by pension plan and employee group. As of September 2023, nearly 55% of
employees are in PEPRA plans.
▪Reduction to the discount rate from 7.0 to 6.8% based on the CalPERS Risk Mitigation
Policy;
▪New actuarial assumptions, including a reduction for price inflation from 2.5 to 2.3%; and
▪New asset allocation to add 5% leverage and increase private asset (private equity, real
assets, and private debt) allocations from 21% to 33%
1 The PEPRA employee contribution for the Miscellaneous group increased 1.00%, from 6.25% to 7.25% in the June
30, 2021 valuation (FY 2024). This is the first rate increase for the PEPRA Miscellaneous members since the
inception of the plan. The PEPRA employee contribution for the Safety group is 11.75%. The most recent change
for the Safety plan occurred in the June 30, 2018 valuation (FY 2021), resulting in a 1.00% increase from 10.75% to
11.75%.
Long-term Financial Planning
The City has taken several proactive steps to address rising pension costs and long-term liabilities,
including cost-sharing in labor agreements2, establishing an irrevocable Section 115 Pension
Trust (“Pension Trust”3) and adopting a policy that guides financial planning of retirement
benefits. The City initially contributed to the Pension Trust in FY 2017 on an ad-hoc basis, using
one-time savings or excess revenues. Beginning in FY 2019, the City Council directed staff to use
a more conservative discount rate as compared to CalPERS for the Normal Cost (NC) portion of
the payment, and transferring the additional (“supplemental”) funding beyond CalPERS required
employer contributions to the Pension Trust4. This practice was reinforced in the development
of a funding policy, as adopted by the City Council in FY 20215 and modified in FY 20236; beginning
in FY 2024 this rate is 5.3% as compared to CalPERS 6.8%. Additionally, one-time contributions
continue to be made each year if excess revenues or unspent savings are available, subject to
City Council approval. As part of policy goals, the City seeks to reach a 90% funded status by FY
2036.
Every four years, the City’s pension policy requires that staff consult with an actuary to inform
the City Council of progress the City has made towards achieving a 90% funded status goal and
assess and respond to changes impacting the City’s retiree benefit plans. This comprehensive
review was most recently completed in FY 2023 and resulted in several policy revisions, most
notably reducing the discount rate used to calculate supplemental contributions from 6.2% to
5.3% and extending actuary reporting from 3 to 4 years to align with the CalPERS ALM Study.
Additionally, the title of the policy was revised from the Pension Policy to the Retiree Benefit
Policy to recognize actions approved by the City Council to proactively plan for retiree healthcare
plans in a similar manner to pensions (CMR 2212-0513). The most recent actuary analysis projects
that the City will meet a 90% funded goal by FY 2034 (Miscellaneous plan) and FY 2036-37 (Safety
plan); the City’s practice of transmitting excess one-time savings will help reach these goals
sooner.
2 Agreements include provisions for employees to pick-up a portion of the employer contribution for normal cost:
Safety Group: Fire Chiefs Association (FCA), International Association of Fire Fighters (IAFF), and Police
Management Association (PMA) at 4.0%, Palo Alto Peace Officers’ Association (PAPOA) at 3.5%
Miscellaneous Group: Service Employees International Union (SEIU) at 2.0%, Management, Professionals & Council
Appointees (MGMT) and Utilities Management & Professionals (UMPAPA) at 1.0%
3 City Council, January 23, 2017, CMR 7553: https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-
reports/reports/city-manager-reports-cmrs/year-archive/2017/7553.pdf
4 City Council, October 29, 2018, CMR 9740: https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-
reports/reports/city-manager-reports-cmrs/year-archive/2018/9740.pdf
5 City Council, November 30, 2020, CMR 11722: https://www.cityofpaloalto.org/files/assets/public/agendas-
minutes-reports/reports/city-manager-reports-cmrs/year-archive/2020-2/id-
11722.pdf#:~:text=The%20overarching%20goal%20of%20a,order%20to%20fund%20proactive%20contributions.
6 City Council, February 6, 2023, CMR 2212-0513:
https://recordsportal.paloalto.gov/Weblink/DocView.aspx?id=82218
The next comprehensive reporting is expected to occur in FY 2027. However, this policy and the
funding elements within it are subject to modification at any time by the City Council. Consistent
with prior years, any changes to the budget or financial planning of retiree benefits in interim
years will be implemented at the time of City Council approval and formalized in the policy
document in the next comprehensive reporting period.
ANALYSIS
TABLE 2: CalPERS Current and Projected Employer Contributions*
Miscellaneous FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
NC (%)**10.6 11.7 11.3 11.0 10.7 10.5 10.2 9.9
UAL (%)32.3 33.1 36.1 34.5 31.3 31.9 34.4 34.2
Misc. ADC (% payroll)42.9%44.8%47.4%45.5%42.0%42.4%44.6%44.1%
NC ($)9.7 10.2 10.1 10.1 10.1 10.2 10.2 10.1
UAL ($)**29.7 28.7 32.2 31.6 29.5 31.0 34.3 35.0
Total ADC ($M)$39.5 $38.8 $42.3 $41.7 $39.6 $41.2 $44.5 $45.2
Safety FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
NC (%)**20.6 22.6 22.2 21.5 20.9 20.3 19.7 19.0
UAL (%)50.6 51.4 60.9 63.0 64.8 65.9 69.8 69.5
Safety ADC (% payroll)71.1%74.0%83.1%84.5%85.7%86.2%89.5%88.5%
NC ($)6.1 6.3 6.0 6.0 6.0 6.0 6.0 5.9
UAL ($)**14.9 14.4 16.6 17.6 18.6 19.5 21.2 21.6
Safety ADC ($M)$20.9 $20.7 $22.6 $23.6 $24.6 $25.5 $27.2 $27.6
TOTAL ADC ($M)$60.4 $59.5 $64.9 $65.3 $64.2 $66.6 $71.6 $72.7
* This table does not include cost savings for prepayment of the UAL, which confers 3.2% or $1.6 million savings, or
provisions in labor agreements for employees to pay a portion of employer normal costs; Miscellaneous groups pay
1-2% and Safety groups pay 3-4%. These savings will be included in the FY 2025 Base Budget.
** The City makes payments to CalPERS for NC as a percentage of payroll and for UAL as a flat dollar rate. For
illustrative purposes, this table uses CalPERS estimates to restate the total ADC (NC and UAL) in respective terms.
FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Actual (%)4.7 21.3 -6.1 5.8*----
Target (%)7.0 6.8 6.8 6.8 6.8 6.8 6.8 6.8
*This CalPERS report does not consider the preliminary 5.8% return on investments for the period ending June 30,
20237. The estimated impact from this return will be included in the FY 2025 – 2034 LRFF.
Pension Plan’s Funded Status
The funded status is a measure of how well funded, or how “on track” a plan is with respect to
assets versus accrued liabilities. As of June 30, 2022, the funded status of the overall Public
Employee’s Retirement Fund (PERF) decreased an estimated 9.2% over the prior year, from
7 CalPERS Reports Preliminary 5.8% Investment Return for 2022-23 Fiscal Year
81.2% to projected levels of 72.0%8. This rate is higher than the City’s funded status of 65.8% for
Miscellaneous and 60.0% for Safety. Table 4 details the City’s June 30, 2022 funded status for the
Miscellaneous and Safety plans. The total unfunded pension liability increased from $391.9
million as of June 30, 2021 to $553.3 million as of June 30, 2022. This represents an increase of
$161.4 million, or 41.2% over the prior year. This significant change is predominantly due to a
significant investment return of 21.3% earned in 2021; this resulted in favorable outcomes for
the City’s plans and triggered the CalPERS Risk Mitigation Policy to decrease to the discount rate
from 7.0% to 6.8%. As shown in the table below, these gains are nearly offset by the investment
loss of -6.1% in the June 30, 2022 valuation.
TABLE 4: CalPERS Projected Unfunded Accrued Liability (UAL)
As of
June 30,
2019
As of
June 30,
2020
As of
June 30,
2021
As of
June 30,
2022
Miscellaneous UAL 294,703,569 317,116,346 236,033,956 340,518,738
Miscellaneous Funded Status 66.1%65.1%75.3%65.8%
Safety UAL 182,221,129 193,301,713 155,885,841 212,812,272
Safety Funded Status 61.3%60.3%69.4%60.0%
TOTAL Unfunded Accrued Liability $476,924,698 $510,418,059 $391,919,797 $553,331,510
Total Unfunded Accrued Liability
Change Year over Year
4.7%7.0%-23.2%41.2%
8 2022 Annual Review of Funding Levels and Risks - CalPERS
https://www.calpers.ca.gov/docs/board-agendas/202211/financeadmin/item-6a-01_a.pdf
the agency’s discretion. These optional payments serve to reduce the UAL and future required
contributions. Over the next several years, staff expects that the Pension Trust will accumulate
sufficient balance to begin making ADPs.
FISCAL/RESOURCE IMPACT
STAKEHOLDER ENGAGEMENT
ENVIRONMENTAL REVIEW
ATTACHMENTS
APPROVED BY:
Attachment A:
City of Palo Alto Pension Plan Benefit Levels Enrollment by Plan and Employee Group
City Council & Council Appointees 6 9 IAFF 83 81
Tier 1 1 1 Tier 1 34 40
Tier 2 2 3 Tier 2 8 9
Tier 3 3 5 Tier 3 41 32
Management and Professional 189 186 Fire Chief's Association 4 5
Tier 1 66 72 Tier 1 4 5
Tier 2 31 32 Tier 2 0 0
Tier 3 92 82 Tier 3 0 0
Service Employees' International 525 490 Fire Management 3 2
Tier 1 156 167 Tier 1 3 2
Tier 2 44 47 Tier 2 0 0
Tier 3*325 276 Tier 3 0 0
Utilities Management 45 42 PAPOA 66 63
Tier 1 30 30 Tier 1 22 27
Tier 2 5 Tier 2 4 4
Tier 3 10 8 Tier 3 40 32
Police Management Association 6 6
Tier 1 6 6
Tier 2 0 0
Tier 3 0 0
Police Management 1 1
Tier 1 0 0
Tier 2 1 1
Tier 3 0 0
Grand Total Miscellaneous Plans 765 727 Grand Total Safety Plans 163 158
Tier 1 253 270 Tier 1 69 80
Tier 2 82 86 Tier 2 13 14
Tier 3 430 371 Tier 3 81 64
Tiered Percentage Miscellaneous Plans Tiered Percentage Safety Plans
Tier 1 33.1%37.1%Tier 1 42.3%50.6%
Tier 2 10.7%11.8%Tier 2 8.0%8.9%
Tier 3 56.2%51.0%Tier 3 49.7%40.5%
Tier Definitions Tier Definitions
Tier 1 2.7% @ 55 Tier 1 3.0% @ 50
Tier 2 2% @ 60 Tier 2 3% @ 55
Tier 3 2% @ 62 Tier 3 2.7% @ 57
*Includes Police Trainee and Limited Hourly FTE
Safety Plans
Employee GroupEmployee CountEmployee Group
Miscellaneous Plans
4
Employee Count
Sept 2023 Sept 2022Sept 2023 Sept 2022
California Public Employees’ Retirement System
Actuarial Office
400 Q Street, Sacramento, CA 95811 | Phone: (916) 795-3000 | Fax: (916) 795-2744
888 CalPERS (or 888-225-7377) | TTY: (877) 249-7442 | www.calpers.ca.gov
July 2023
Miscellaneous Plan of the City of Palo Alto (CalPERS ID: 6373437857 )
Annual Valuation Report as of June 30, 2022
Dear Employer,
Attached to this letter is the June 30, 2022 actuarial valuation report for the rate plan noted above. Provided in this
report is the determination of the minimum required employer contributions for fiscal year (FY) 2024-25. In
addition, the report contains important information regarding the current financial status of the plan as well as projections
and risk measures to aid in planning for the future.
Actuarial valuations are based on assumptions regarding future plan experience including investment return and payroll
growth, eligibility for the types of benefits provided, and longevity among retirees. The CalPERS Board of Administrati on
(board) adopts these assumptions after considering the advice of CalPERS actuarial and investment teams and other
professionals. Each actuarial valuation reflects all prior differences between actual and assumed experience and adjusts
the contribution requirements as needed. This valuation is based on an investment return assumption of 6.8%, which
was adopted by the board in November 2021. Other assumptions used in this report are those recommended in the
CalPERS Experience Study and Review of Actuarial Assumptions report from November 2021.
Required Contributions
The table below shows the minimum required employer contributions and the PEPRA member rate for FY 2024-25 along
with an estimate of the required employer contribution for FY 2025-26. Employee contributions other than cost sharing
(whether paid by the employer or the employee) are in addition to the results shown below. The required employer
contributions in this report do not reflect any cost sharing arrangement between the agency and the employees.
Fiscal Year Employer Normal
Cost Rate
Employer Amortization of
Unfunded Accrued Liability
PEPRA Member
Contribution Rate
2024 -25 11.34% $32,190,210 7.25%
Projected Results
2025 -26 11.0% $31,593,000 TBD
The actual investment return for FY 2022-23 was not known at the time this report was prepared. The projections above
assume the investment return for that year would be 6.8%. To the extent the actual investment return for FY 2022-
23 differs from 6.8%, the actual contribution requirements for FY 2025-26 will differ from those shown above.
For additional details regarding the assumptions and methods used for these projections , please refer to the “Projected
Employer Contributions” in the “Highlights and Executive Summary” section. This section also contains projected required
contributions through FY 2029-30.
Changes from Previous Year’s Valuations
There are no significant changes in actuarial assumptions or policies in the 202 2 actuarial valuation. There may be
changes specific to the plan such as contract amendments and funding changes.
Further descriptions of general changes are included in the “Highlights and Executive Summary” section and in Appendix
A, “Actuarial Methods a nd Assumptions.” The effects of any changes on the required contributions are included in the
“Reconciliation of Required Employer Contributions” section.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
Miscellaneous Plan of the City of Palo Alto
(CalPERS ID: 6373437857)
Annual Valuation Report as o f June 30, 2022
Page 2
Questions
A CalPERS actuary is available to answer questions about this report. Other questions may be directed to the Customer
Contact Center at (888)-CalPERS or (888-225-7377).
Sincerely,
SCOTT TERANDO, ASA, EA, MAAA, FCA, CFA
Chief Actuary, CalPERS
RANDALL DZIUBEK, ASA, MAAA
Deputy Chief Actuary, Valuation Services , CalPERS
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
Actuarial Valuation
as of June 30, 2022
for the
Miscellaneous Plan
of the
City of Palo Alto
(CalPERS ID : 6373437857)
(Rate Plan ID: 8)
Required Contributions
for Fiscal Year
July 1, 2024 – June 30, 2025
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
Table of Contents
Actuarial Certification 1
Highlights and Executive Summary
Introduction 3
Purpose 3
Required Contributions 4
Additional Discretionary Employer Contributions 5
Funded Status – Funding Policy Basis 6
Projected Employer Contributions 7
Cost 8
Changes Since the Prior Year’s Valuation 9
Subsequent Events 9
Assets
Reconciliation of the Market Value of Assets 11
Asset Allocation 12
CalPERS History of Investment Returns 13
Liabilities and Contributions
Development of Accrued and Unfunded Liabilities 15
(Gain) / Loss Analysis 6/30/21 - 6/30/22 16
Schedule of Amortization Bases 17
Amortization Schedule and Alternatives 19
Reconciliation of Required Employer Contributions 21
Employer Contribution History 22
Funding History 22
Normal Cost by Benefit Group 23
PEPRA Member Contribution Rates 24
Risk Analysis
Future Investment Return Scenarios 26
Discount Rate Sensitivity 27
Mortality Rate Sensitivity 27
Maturity Measures 28
Maturity Measures History 29
Funded Status – Termination Basis 30
Plan’s Major Benefit Provisions
Plan’s Major Benefit Options 32
Appendix A – Actuarial Methods and Assumptions
Actuarial Data A-1
Actuarial Methods A-1
Actuarial Assumptions A-4
Miscellaneous A-24
Appendix B – Principal Plan Provisions B-1
Appendix C – Participant Data
Summary of Valuation Data C-1
Active Members C-2
Transferred and Separated Members C-3
Retired Members and Beneficiaries C-4
Appendix D – Glossary D-1
(CY) FIN JOB INSTANCE ID : 416785 (PY) FIN JOB INSTANCE ID : 404975 REPORT ID: 417319
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 1
Actuarial Certification
To the best of my knowledge, this report is complete and accurate and contains sufficient information to
disclose, fully and fairly, the funded condition of the Miscellaneous Plan of the City of Palo Alto and satisfies
the actuarial valuation requirements of Government Code section 7504 . This valuation and related validation
work was performed by the CalPERS Actuarial Office and is based on the member and financial data as of
June 30, 2022 provided by the various CalPERS databases and the benefits under this plan with CalPERS
as of the date this report was produced.
It is my opinion that the valuation has been perform ed in accordance with generally accepted actuarial
principles, in accordance with standards of practice prescribed by the Actuarial Standards Board, and that the
assumptions and methods, as prescribed by the CalPERS Board of Administration , are internally consistent
and reasonable for this plan .
The undersigned is an actuary who satisfies the Qualification Standards for Actuaries Issuing Statements of
Actuarial Opinion in the United States with regard to pensions.
DAVID CLEMENT , ASA, MAAA, EA
Senior Actuary, CalPERS
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
Highlights and Executive Summary
• Introduction
• Purpose
• Required Contributions
• Additional Discretionary Employer Contributions
• Funded S tatus – Funding Policy Basis
• Projected Employer Contributions
• Cost
• Changes Since the Prior Year’s Valuation
• Subsequent Events
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 3
Introduction
This report presents the results of the June 30, 2022 actuarial valuation of the Miscellaneou s Plan of the City
of Palo Alto of the California Public Employees’ Retirement System (CalPERS). This actuarial valuation sets
the minimum required contributions for fiscal year (FY) 2024-25 .
Purpose
This report documents the results of the actuarial valuation prepared by the CalPERS Actuarial Office using
data as of June 30, 2022. The purpose of the valuation is to:
• Set forth the assets and accrued liabilities of this rate plan as of June 30, 2022 ;
• Determine the minimum required employer contributions for this rate plan for FY July 1, 2024 through
June 30, 2025;
• Determine the required member contribution rate for FY July 1, 2024 through June 30, 2025 for
employees subject to the California Public Employees' Pension Reform Act of 2013 (PEPRA); and
• Provide actuarial information as of June 30, 2022 to the CalPERS Board of Administration (board)
and other interested parties.
The pension funding information presented in this report should not be used in financial reports subject to
Governmental Accounting Standards Board (GASB) Statement No. 68 for an Agent Employer Defined Benefit
Pension Plan. A separate accounting valuation report for such purposes is available from CalPERS and details
for ordering are available on the CalPERS website (www.calpers.ca.gov).
The measurements shown in this actuarial valuation may not be applicable for other purposes. The agency
should contact the plan actuary before disseminating any portion of this report for any reason that is not
explicitly described above.
Future actuarial measurements may differ significantly from the current measurements presented in this report
due to such factors as the following: plan experience differing from that anticipated by the economic or
demographic assumptions; changes in economic or demographic assumptions; changes in actuarial policies;
changes in plan provisions or applicable law; and differences between the required contributions determined
by the valuation and the actual contributions made by the agency.
Assessment and Disclosure of Risk
This report includes the following risk disclosures consistent with the guidance of Actuarial Standards of
Practice No. 51 and recommended by the California Actuarial Advisory Panel (CAAP) in the Model Disclosure
Elements document:
• A “Scenario Test,” projecting future results under different investment income returns.
• A “Sensitivity Analysis,” showing the impact on curren t valuation results using alternative discount
rates 5.8% and 7.8%.
• A “Sensitivity Analysis,” showing the impact on current valuation results assuming rates of mortality
are 10% lower or 10% higher than our current post-retirement mortality assumptions adopted in
2021.
• Plan maturity measures indicating how sensitive a plan may be to the risks noted above.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 4
Required Contributions
Fiscal Year
Required Employer Contributions 2024-25
Employer Normal Cost Rate 11.34%
Plus
Required Payment on Amortization Bases $32,190,210
Paid either as
1) Monthly Payment $2,682,518
Or
2) Annual Prepayment Option* $31,148,575
Required PEPRA Member Contribution Rate
7.25%
The total minimum required employer contribution is the sum of the Plan’s Employer Normal Cost Rate
(expressed as a percentage of payroll and paid as payroll is reported) plus the Employer Unfunded Accrued
Liability (UAL) Contribution Amount (billed monthly (1) or prepaid annually (2) in dollars).
* Only the UAL portion of the employer contribution can be prepaid (which must be received in full no
later than July 31).
For additional detail regarding the determination of the required contribution for PEPRA members, see
”PEPRA Member Contribution Rates” in the “Liabilities and Contributions” section. Required member
contributions for Classic members can be found in A ppendix B.
Fiscal Year Fiscal Year
2023-24 2024-25
Normal Cost Contribution as a Percentage of Payroll
Total Normal Cost 19.28% 18.86%
Employee Contribution 1 7.55% 7.52%
Employer Normal Cost2 11.73% 11.34%
Projected Annual Payroll for Contribution Year $86,604,632 $89,292,382
Estimated Employer Contributions Based On
Projected Payroll
Total Normal Cost $16,697,373 $16,840,543
Offset Due to Employee Contribution s 6,538,650 6,714,787
Employer Normal Cost 10,158,723 10,125,756
Unfunded Liability Contribution 28,654,772 32,190,210
% of Projected Payroll (illustrative only) 33.09% 36.05%
Estimated Total Employer Contributio n $38,813,495 $42,315,966
% of Projected Payroll (illustrative only) 44.82% 47.39%
1 For classic members, this is the percentage specified in the Public Employees’ Retirement Law , net of any reduction from
the use of a modified formula or other factors. For PEPRA members, the member contribution rate is based on 50% of
the normal cost. A development of PEPRA member contribution rate s can be found in the “Liabilities and Contributions”
section. Employee cost sharing is not shown in this report.
2 The Employer Normal Cost is a blended rate for all benefit groups in the plan. For a breakout of normal cost by benefit
group, see “Normal Cost by Benefit Group” in the “Liabilities and Contributions” section.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 5
Additional Discretionary Employer Contributions
The minimum required employer contribution towards the Unfunded Accrued Liability (UAL) for this rate plan
for FY 2024-25 is $32,190,210. CalPERS allows agencies to make additional discretionary payments (ADPs)
at any time and in any amount. These optional payments serve to reduce the UAL and future required
contributions and can result in significant long -term savings. Agencies can also use ADPs to stabilize annual
contributions as a fixed dollar amount, percent of payroll or percent of revenue.
Provided below are select ADP options for consideration. Making such an ADP during FY 2024-25 does not
require an ADP be made in any future year, nor does it change the remaining amortization period of any
portion of unfunded liability. For information on permanent changes to amortization periods, see the
“Amortization Schedule and Alternatives” section of the report.
Agencies considering making an ADP should contact CalPERS for additional information.
Minimum Required Employer Contribution for Fiscal Year 2024-25
Estimated
Normal Cost
Minimum UAL
Payment
ADP Total UAL
Contribution
Estimated Total
Contribution
$10,125,756 $32,190,210 $0 $32,190,210 $42,315,966
Alternative Fiscal Year 2024 -25 Employer Contributions for Greater UAL Reduction
Funding
Horizon
Estimated
Normal Cost
Minimum UAL
Payment
ADP1 Total UAL
Contribution
Estimated Total
Contribution
15 years $10,125,756 $32,190,210 $2,172,542 $34,362,752 $44,488,508
10 years $10,125,756 $32,190,210 $12,522,200 $44,712,410 $54,838,166
5 years $10,125,756 $32,190,210 $44,701,145 $76,891,355 $87,017,111
1 The ADP amounts are assumed to be made in the middle of the fiscal year. A payment made earlier or later in the fiscal
year would have to be less or more than the amount shown to have the same effect on the UAL amortization.
Note that the calculations above are based on the projected Unfunded Accrued Liability as of June 30, 2024
as determined in the June 30, 2022 actuarial valuation. New unfunded liabilities can emerge in future years
due to assumption or method changes, changes in plan provisions , and actuarial experience different than
assumed. Making an ADP illustrated above for the indicated number of years wi ll not result in a plan that is
exactly 100% funded in the indicated number of years. Valuation results will vary from one year to the next
and can diverge significantly from projections over a period of several years.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 6
Funded Status – Funding Policy Basis
The table below provides information on the current funded status of the plan under the funding policy. The
funded status for this purpose is based on the market value of assets relative to the funding target produced
by the entry age actuarial cost method and actuarial assumptions adopted by the board. The actuarial cost
method allocates the total expected cost of a member’s projected benefit (Present Value of Benefits ) to
individual years of service (the Normal Cost). The value of the projected bene fit that is not allocated to future
service is referred to as the Accrued Liability and is the plan’s funding target on the valuation date. The
Unfunded Accrued Liability (UAL) equals the funding target minus the assets. The UAL is an absolute
measure of funded status and can be viewed as employer debt. The funded ratio equals the assets divided
by the funding target. The funded ratio is a relative measure of the funded status and allows for comparisons
between plans of different sizes.
A funded ratio of 100% (UAL of $0) implies that the funding of the plan is on target and that future contributions
equal to the normal cost of the active plan members will be sufficient to fully fund all retirement benefits if
future experience matches the actuarial assumptions. A funded ratio of less than 100% (positive UAL ) implies
that in addition to normal costs, payments toward the UAL will be required . Plans with a funded ratio greater
than 100% have a negative UAL (or surplus) but are required under current law to continue contributing the
normal cost in most cases, preserving the surplus for future contingencies.
Calculations for the funding target reflect the expected long -term investment return of 6.8%. If it were known
on the valuation date that future investment returns will average something greater/less than the expected
return, calculated normal costs and accrued liabilities provided in this report would be less/greater than the
results shown. Therefore, for example, if actual average future returns are less than the expected return,
calculated normal costs and UAL contributions will not be sufficient to fully fund all retirement benefits. Und er
this scenario, required future normal cost contributions will need to increase from those provided in this report,
and the plan will develop unfunded liabilities that will also add to required future contributions. For illustrative
purposes, funded status es based on a 1% lower and higher average future investment return (discount rate)
are as follows:
The “Risk Analysis” section of the report provides additional information regarding the sensitivity of valuation
results to the expected investment return and other factors. Also provided in that section are measures of
funded status that are appropriate for assessing the sufficiency of plan assets to cover estimated termination
liabilities.
June 30, 2021 June 30, 2022
1. Present Value of Benefits $1,083,646,563 $1,124,275,326
2. Entry Age Accrued Liability 956,179,582 996,201,108
3. Market Value of Assets (MVA) 720,145,626 655,682,370
4. Unfunded Accrued Liability (UAL) [(2) – (3)] $236,033,956 $340,518,738
5. Funded Ratio [(3) / (2)] 75.3% 65.8%
1% Lower
Average Return
Current
Assumption
1% Higher
Average Return
Discount Rate 5.8% 6.8% 7.8%
1. Present Value of Benefits $1,299,317,998 $1,124,275,326 $985,690,703
2. Entry Age Accrued Liability 1,123,588,565 996,201,108 890,776,314
3. Market Value of Assets (MVA) 655,682,370 655,682,370 655,682,370
4. Unfunded Accrued Liability (UAL) [(2) – (3)] $467,906,195 $340,518,738 $235,093,944
5. Funded Ratio [(3) / (2)] 58.4% 65.8% 73.6%
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 7
Projected Employer Contributions
The table below shows the required and projected employer contributions (before cost sharing) for the next
six fiscal years. The projection assumes that all actuarial assumptions will be realized and that no further
changes to assumptions, contributions, b enefits, or funding will occur during the projection period. In particular,
the investment return beginning with FY 2022-23 is assumed to be 6.80% per year, net of investment and
administrative expenses. The projected normal cost percentages below reflect that the normal cost is expected
to continue to decline over time as new employees are hired into lower cost benefit tiers. Future contribution
requirements may differ signifi cantly from those shown below. The actual long -term cost of the plan will depend
on the actual benefits and expenses paid and the actual investment experience of the fund.
Required
Contribution
Projected Future Employer Contributions
(Assumes 6.80% Retur n for Fiscal Year 2022-23 and Beyond)
Fiscal Year 2024-25 2025-26 2026-27 2027-28 2028-29 2029-30
Normal Cost % 11.34% 11.0% 10.7% 10.5% 10.2% 9.9%
UAL Payment $32,190,210 $31,593,000 $29,495,000 $31,001,000 $34,284,000 $35,021,000
Total as a % of Payroll* 47.39% 45.5% 42.0% 42.4% 44.6% 44.1%
Projected Payroll $89,292,382 $91,792,568 $94,362,761 $97,004,918 $99,721,056 $102,513,246
*Illustrative only and based on the projected payroll shown.
For ongoing plans, investment gains and losses are amortized using a 5 -year ramp up. For more information,
please see “Amortization of Unfunded Actuarial Accrued Liability” under “Actuarial Methods” in Appendix A.
This method phases in the impact of the change in UAL over a 5 -year period in order to reduce employer cost
volatility from year to year. As a result of this methodology, dramatic changes in the required employer
contributions in any one year are less likely. However, required contributions can change gradually and
significantly over the next five years. In years when there is a large investment loss , the relatively small
amortization payments during the ramp up period could result in contributions that are less than interest on
the UAL (i.e. negative amortization) while the contribution impact of the increase in the UAL is phased in.
For projected contributions under alternate investment return scenarios, please see the “Fut ure Investment
Return Scenarios” in the “Risk Analysis” section. Our online pension plan projection tool, Pension Outlook, is
available in the Employers section of the CalPERS website. Pension Outlook can help plan and budget
pension costs under various scenarios.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 8
Cost
Actuarial Determination of Plan Cost
Contributions to fund the plan are comprised of two components:
• Normal Cost, expressed as a percentage of total active payroll
• Amortization of the Unfunded Accrued Liability (UAL), expressed as a dollar amount
For fiscal years prior to 2017 -18, the Amortization of UAL component was expressed as a percentage of total
active payroll. Starting with FY 2017-18, the Amortization of UAL component is expressed as a dollar amount
and invoiced on a monthly basis. There is an option to prepay this amount during July of each fiscal year.
The Normal Cost component is expressed as a percentage of active payroll with employer and employee
contributions payable as part of the regular payroll reporting process.
The determination of both components requires complex actuarial calculations. The calculations are based on
a set of actuarial assumptions which can be divi ded into two categories:
• Demographic assumptions (e.g., mortality rates, retirement rates, employment termination rates,
disability rates)
• Economic assumptions (e.g., future investment earnings, inflation, salary growth rates)
These assumptions reflect C alPERS’ best estimate of future experience of the plan and are long term in nature.
We recognize that all assumptions will not be realized in any given year. For example, the investment earnings
at CalPERS have averaged 6.9% over the 20 years ending June 30, 2022, yet individual fiscal year returns
have ranged from -23.6% to +21.3%. In addition, CalPERS reviews all actuarial assumptions by conducting
in-depth experience studies every four years, with the most recent experience study completed in 2021.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 9
Changes Since the Prior Year’s Valuation
Benefits
The standard actuarial practice at CalPERS is to recognize mandated legislative benefit changes in the first
annual valuation following the effective date of the legislation. Voluntary benefit changes by plan amendment
are generally included in the first valuation that is prepared after the amendment becomes effective, even if the
valuation date is prior to the effective date of the amendment.
This valuation generally reflects plan changes by amendments effective before the date of the report. Please
refer to the “Plan’s Major Benefit Options” and Appendix B for a summary of the plan provisions used in this
valuation. The effect of any mandate d benefit changes or plan amendments on the unfunded liability is shown
in the “(Gain) / Loss Analysis 6/30/21 – 6/30/22” and the effect on the employer contribution is sho wn in the
“Reconciliation of Required Employer Contributions.” It should be noted that no change in liability or contribution
is shown for any plan changes which were already included in the prior year’s valuation.
In 2022, SB 1168 increased the standard retiree lump sum death benefit from $500 to $2,000 for any death
occurring on or after July 1, 2023. The impact, if any, is included in plan changes in the “(Gain) / Loss Analysis
6/30/21 – 6/30/22” and the “Reconciliation of Required Employer Contributions.”
Actuarial Methods and Assumptions
There are no significant changes to the actuarial methods or assumptions for the June 30, 2022 actuarial
valuation.
Subsequent Events
This actuarial valuation report reflects fund investment return through June 30, 2022 and statutory/regulatory
changes and board actions through January 2023.
During the time period between the valuation date and the publication of this report, inflation has been
significantly higher than the expected inflation of 2.3% per annum. Since inflation influences cost -of-living
increases for retirees and beneficiaries and active member pay increases, higher inflation is likely to put at least
some upward pressure on contribution requirements and downward pressure on the funded status in the June
30, 2023 valuation. The actual impact of higher inflation on future valuation results will depend on, among other
factors , how long higher inflation persists. At this time, we continue to believe the long -term inflation assumption
of 2.3% is appropriate.
To the best of our knowledge, there have been no other subsequent events that could materially a ffect current
or future certifications rendered in this report.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
Assets
• Reconciliation of the Market Value of Assets
• Asset Allocation
• CalPERS History of Investment Returns
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 11
Reconciliation of the Market Value of Assets
1. Market Value of Assets as of 6/30/21 including Receivables $720,145,626
2. Change in Receivables for Service Buybacks (141,752)
3. Employer Contributions 33,219,255
4. Employee Contributions 7,176,475
5. Benefit Payments to Retirees and Beneficiaries (49,667,957)
6. Refunds (258,396)
7. Transfers 0
8. Service Credit Purchase (SCP) Payments and Interest 391,106
9. Administrative Expenses (564,746)
10. Miscellaneous Adjustments 0
11. Investment Return (Net of Investment Expenses) (54,617,241)
12. Market Value of Assets as of 6/30/22 including Receivables $655,682,370
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 12
Asset Allocation
CalPERS adheres to an Asset Allocation Strategy which establishes asset class allocation policy targets and
ranges and manages those asset class allocations within their policy ranges. CalPERS Investment Belief No.
6 recognizes that strategic asset allocation is the dominant determinant of portfolio risk and return.
The asset allocation shown below reflects the allocation of the Public Employees’ Retirement Fund (PERF) in
its entirety. The assets for City of Palo Alto Miscellaneous Plan are a subset of the PERF and are invested
accordingly.
On November 17, 2021, the board adopted changes to the strategic asset allocation . The new allocation was
effective July 1, 2022, and is shown below , expressed as a percentage of total assets.
Strategic Asset Allocation Policy Targets
Asset Class
Actual
Allocation
9/30/2022
Policy Target
Allocation
effective
7/1/2022
Global Public Equity
Market Capitalization Weighted 33.7% 30.0%
Factor Weighted 12.6% 12.0%
Private Equity 11.6% 13.0%
Income
Treasuries 3.9% 5.0%
Mortgage-backed Securities 5.6% 5.0%
Investment Grade Corporates 5.8% 10.0%
High Yield Bonds 4.6% 5.0%
Emerging Market Sovereign Bonds 2.1% 5.0%
Total Fund Income 1.5% -
Real Assets 17.1% 15.0%
Private Debt 1.8% 5.0%
Other Trust Level 3.8% -
Leverage
Strategic (0.3%) (5.0%)
Active (3.8%) -
Total Fund 100.00% 100.0%
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 13
CalPERS History of Investment Returns
The following is a chart with the 20 -year historical annual returns of the PERF for each fiscal year ending on
June 30 as reported by the Investment Office. Investment returns reported are net of investment expenses
but without reduction for administrative expenses. The assumed rate of return, however, is net of both
investment and administrative expenses. Also, the Investment Office uses a three-month lag on private equity
and real assets for investment performance reporting purposes. This can lead to a timing difference in the
returns below and those used for financial reporting purposes. The investment gain or loss calculation in this
report relies on final assets that have been au dited and are appropriate for financial reporting. Because of
these differences, the effective investment return for funding purposes can be higher or lower than the return
reported by the Investment Office shown here.
* As reported by the Investment Office with a 3-month lag on private equity and real assets.
The table below shows annualized investment returns of the PERF for various time periods ending on June
30, 2022 (figures reported are net of investment expenses but without reduction for administrative expenses).
These returns are the annual rates that if compounded over the indicated number of years would equate to
the actual time -weighted investment performance o f the PERF. It should be recognized that in any given year
the rate of return is volatile. The portfolio has an expected volatility of 12.1% per year based on the most
recent Asset Liability Management study. The realized volatility is a measure of the ris k of the portfolio
expressed as the standard deviation of the fund’s total monthly return distribution, expressed as an annual
percentage. Due to their volatile nature, when looking at investment returns, it is more instructive to look at
returns over long er time horizons.
History of CalPERS Compound Annual Rates of Return and Volatilities
1 year 5 year 10 year 20 year 30 year
Compound Annual Return -6.1% 6.7% 7.7% 6.9% 7.7 %
Realized Volatility – 8.3% 7.1% 8.5% 8.6%
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
Liabilities and Contributions
• Development of Accrued and Unfunded Liabilities
• (Gain) / Loss Analysis 6/30/21 - 6/30/22
• Schedule of Amortization Bases
• Amortization Schedule and Alternatives
• Reconciliation of Required Employer Contributions
• Employer Contribution History
• Funding History
• Normal Cost by Benefit Group
• PEPRA Member Contribution Rates
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 15
Development of Accrued and Unfunded Liabilities
June 30, 2021 June 30, 2022
1. Present Value of Projected Benefits
a) Active Members $425,818,364 $423,700,971
b) Transferred Members 43,056,289 44,952,241
c) Separated Members 20,009,393 20,770,710
d) Members and Beneficiaries Receiving Payments 594,762,517 634,851,404
e) Total $1,083,646,563 $1,124,275,326
2. Present Value of Future Employer Normal Costs $77,169,423 $73,008,925
3. Present Value of Future Employee Contributions $50,297,558 $55,065,293
4. Entry Age Accrued Liability
a) Active Members [(1a) - (2) - (3)] $298,351,383 $295,626,753
b) Transferred Members (1b) 43,056,289 44,952,241
c) Separated Members (1c) 20,009,393 20,770,710
d) Members and Beneficiaries Receiving Payments (1d) 594,762,517 634,851,404
e) Total $956,179,582 $996,201,108
5. Market Value of Assets (MVA) $720,145,626 $655,682,370
6. Unfunded Accrued Liability (UAL) [(4e) - (5)] $236,033,956 $340,518,738
7. Funded Ratio [(5) / (4e)] 75.3% 65.8%
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 16
(Gain)/Loss Analysis 6/30/21 – 6/30/22
To calculate the cost requirements of the plan, assumptions are made about future events that affect the
amount and timing of benefits to be paid and assets to be accumulated. Each year , actual experience is
compared to the expected experience based on the actuarial assumptions. This results in actuarial gains or
losses, as shown below.
1. Total (Gain)/Loss for the Year
a) Unfunded Accrued Liability (UAL) as of 6/30/21 $236,033,956
b) Expected payment on the UAL during 20 21-22 24,989,511
c) Interest through 6/30/22 [.068 x (1a) - ((1.068)½ - 1) x (1b)] 15,214,640
d) Expected UAL before all other changes [(1a) - (1b) + (1c)] 226,259,085
e) Change due to plan changes 1 813,699
f) Change due to AL Significant Increase 0
g) Change due to assumption change 0
h) Change due to method change 0
i) Change due to discount rate change with Funding Risk Mitigation 0
j) Expected UAL after all other changes [(1d) + (1e) + (1f) + (1g) + (1h) + (1i)] 227,072,784
k) Actual UAL as of 6/30/22 340,518,7 38
l) Total (Gain)/Loss for 20 21-22 [(1k) - (1j)] $113,445,954
2. Investment (Gain)/Loss for the Year
a) Market Value of Assets as of 6/30/21 $720,145,626
b) Prior fiscal year receivables (791,379)
c) Current fiscal year receivables 649,626
d) Contributions received 40,395,730
e) Benefits and refunds paid (49,926,353)
f) Transfers, SCP payments and interest, and m iscellaneous adjustments 391,106
g) Expected return at 6.8 % per year 49,491,069
h) Expected assets as of 6/30/22 [(2a) + (2b) + (2c) + (2d) + (2e) + (2f) + (2g)] 760,355,426
i) Actual Market Value of Assets as of 6/30/22 655,682,370
j) Investment (Gain)/Loss [(2h) - (2i)] $104,673,056
3. Non-Investment (Gain)/Loss for the Year
a) Total (Gain)/Loss (1l) $113,445,954
b) Investment (Gain)/Loss (2j) 104,673,056
c) Non-Investment (Gain)/Loss [(3a) - (3b)] $8,772,898
1 Includes the effect, if any, of SB 1168, which increased the standard post -retirement lump sum death benefit from $500
to $2,000 for deaths occurring on or after July 1, 2023.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 17
Schedule of Amortization Bases
Below is the schedule of the plan’s amortization bases. Note that there is a two -year lag between the valuation date and the start of the contribution year.
• The assets, liabilities, and funded status of the plan are measured as of the valuation date: June 30, 2022 .
• The required employer contributions determined by the valuation are for the fiscal year beginning two years after the valuati on date: FY 2024-25.
This two -year lag is necessary due to the amount of time needed to extract and test the membership and financial data, and the need to provide public agencies
with their required employer contribution well in advance of the start of the fiscal year.
The Unfunded Accrued Liability (UAL) is used to determine the employer contribution and therefore must be rolled forward two years from the valuation date to the
first day of the fiscal year for which the contribution is being determined. The UAL is rolled forward each year by subtracting the expected payment on the UAL for
the fiscal year and adjusting for interest. The expected payment on the UAL for a fiscal year is equal to the Expected Employ er Contrib ution for the fiscal year minus
the Expected Normal Cost for the year. The Employer Contribution for the first fiscal year is determined by the actuarial val uation two years ago and the contribution
for the second year is from the actuarial valuation one year ago. Additional discretionary payments are reflected in the Expected Payments column in the fiscal year
they were made by the agency.
Reason for Base
Date
Est.
Ramp
Level
2024-25
Ramp
Shape
Escala-
tion
Rate
Amort.
Period
Balance
6/30/22
Expected
Payment
2022-23
Balance
6/30/23
Expected
Payment
2023-24
Balance
6/30/24
Minimum
Required
Payment
2024-25
Assumption Change 6/30/03 No Ramp 2.80% 1 6,809,609 2,449,156 4,741,605 2,496,841 2,483,697 2,566,754
Method Change 6/30/04 No Ramp 2.80% 2 (626,108) (172,252) (490,671) (175,518) (342,649) (180,433)
Benefit Change 6/30/05 No Ramp 2.80% 2 13,871,168 3,816,163 10,870,629 3,888,537 7,591,259 3,997,417
Assumption Change 6/30/09 No Ramp 2.80% 7 20,206,981 2,721,766 18,768,272 2,760,473 17,191,729 2,837,767
Special (Gain)/Loss 6/30/09 No Ramp 2.80% 17 16,503,569 1,265,112 16,318,393 1,270,929 16,114,614 1,306,515
Special (Gain)/Loss 6/30/10 No Ramp 2.80% 18 1,377,882 102,127 1,366,036 102,505 1,352,994 105,376
Assumption Change 6/30/11 No Ramp 2.80% 9 10,216,764 1,169,285 9,703,117 1,183,563 9,139,787 1,216,703
Special (Gain)/Loss 6/30/11 No Ramp 2.80% 19 (58,525) (4,204) (58,160) (4,216) (57,758) (4,334)
(Gain)/Loss 6/30/12 No Ramp 2.80% 20 26,036,777 1,816,581 25,929,949 1,820,158 25,812,160 1,871,123
Payment (Gain)/Loss 6/30/12 No Ramp 2.80% 20 3,088,520 215,485 3,075,848 215,910 3,061,875 221,955
(Gain)/Loss 6/30/13 100% Up/Down 2.80% 21 81,532,102 5,863,997 81,016,191 5,880,343 80,448,305 6,044,993
(Gain)/Loss 6/30/14 100% Up/Down 2.80% 22 (51,969,710) (3,630,062) (51,752,196) (3,637,070) (51,512,649) (3,738,908)
Assumption Change 6/30/14 100% Up/Down 2.80% 12 42,358,063 4,539,546 40,547,059 4,589,850 38,560,921 4,718,366
(Gain)/Loss 6/30/15 100% Up/Down 2.80% 23 32,325,372 2,197,103 32,252,921 2,199,492 32,173,075 2,261,077
(Gain)/Loss 6/30/16 100% Up/Down 2.80% 24 37,158,677 2,461,912 37,141,227 2,462,580 37,121,900 2,531,532
Assumption Change 6/30/16 100% Up/Down 2.80% 14 14,027,662 1,336,473 13,600,377 1,348,739 13,131,361 1,386,503
(Gain)/Loss 6/30/17 100% Up/Down 2.80% 25 (20,691,210) (1,084,301) (20,977,651) (1,354,707) (21,004,122) (1,392,639)
Assumption Change 6/30/17 100% Up/Down 2.80% 15 15,311,650 1,128,841 15,186,252 1,422,767 14,748,572 1,462,604
Assumption Change 6/30/18 100% Up/Down 2.80% 16 28,168,786 1,536,570 28,496,309 2,063,437 28,301,618 2,651,517
Method Change 6/30/18 100% Up/Down 2.80% 16 5,456,425 297,641 5,519,868 399,697 5,482,156 513,611
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 18
Schedule of Amortization Bases (continued)
Reason for Base
Date
Est.
Ramp
Level
2024-25
Ramp
Shape
Escala-
tion
Rate
Amort.
Period
Balance
6/30/22
Expected
Payment
2022-23
Balance
6/30/23
Expected
Payment
2023-24
Balance
6/30/24
Minimum
Required
Payment
2024-25
(Gain)/Loss 6/30/18 100% Up/Down 2.80% 26 (6,377,320) (251,096) (6,551,485) (334,277) (6,651,530) (429,546)
Investment (Gain)/Loss 6/30/19 80% Up Only 0.00% 17 2,661,124 111,311 2,727,047 163,968 2,743,035 218,624
Non-Investment (Gain)/Loss 6/30/19 No Ramp 0.00% 17 5,695,285 533,753 5,530,962 524,400 5,365,131 524,400
Investment (Gain)/Loss 6/30/20 60% Up Only 0.00% 18 15,807,466 346,261 16,524,533 679,278 16,946,208 1,018,917
Non-Investment (Gain)/Loss 6/30/20 No Ramp 0.00% 18 10,369,938 948,061 10,095,329 931,019 9,819,658 931,019
Assumption Change 6/30/21 No Ramp 0.00% 19 1,261,726 (716,088) 2,087,558 187,721 2,035,513 187,721
Net Investment (Gain) 6/30/21 40% Up Only 0.00% 19 (76,580,956) 0 (81,788,461) (1,758,018) (85,533,269) (3,516,036)
Non-Investment (Gain)/Loss 6/30/21 No Ramp 0.00% 19 (7,014,170) 0 (7,491,134) (673,629) (7,304,375) (673,629)
Risk Mitigation 6/30/21 No Ramp 0.00% 0 23,839,778 (690,815) 26,174,799 27,050,107 0 0
Risk Mitigation Offset 6/30/21 No Ramp 0.00% 0 (24,508,240) 0 (26,174,799) (27,050,107) 0 0
Benefit Change 6/30/22 No Ramp 0.00% 20 813,699 (8,454) 877,767 (8,691) 946,437 85,107
Investment (Gain)/Loss 6/30/22 20% Up Only 0.00% 20 104,673,056 0 111,790,824 0 119,392,600 2,566,307
Non-Investment (Gain)/Loss 6/30/22 No Ramp 0.00% 20 8,772,898 0 9,369,455 0 10,006,578 899,827
Total 340,518,738 28,299,872 334,427,770 28,646,081 327,564,831 32,190,210
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 20 Page 19
Amortization Schedule and Alternatives
The amortization schedule on the previous page shows the minimum contributions required according to the
CalPERS amortization policy. Many agencies have expressed a desire for a more stable pattern of payments
or have indicated interest in paying off the unfunded accrued liabilities more quickly than required. As such,
we have provided alternative amortization schedules to help analyze the current amortization schedule and
illustrate the potential savings of accelerating unfunded liability payments.
Shown on the following page are future year amortization payments based on 1) the current amortization
schedule reflecting the individual bases and remaining periods shown on the p revious page, and 2) alternative
“fresh start” amortization schedules using two sample periods that would both result in interest savings relative
to the current amortization schedule. To initiate a fresh s tart, please contact the plan actuary.
The curren t amortization s chedule typically contains both positive and negative bases. Positive bases result
from plan changes, assumption changes, method changes or plan experience that increase unfunded liability.
Negative bases result from plan changes, assumptio n changes, method changes, or plan experience that
decrease unfunded liability. The combination of positive and negative bases within an amortization schedule
can result in unusual or problematic circumstances in future years, such as:
• When a negative payment would be required on a positive unfunded actuarial liability; or
• When the payment would completely amortize the total unfunded liability in a very short time period,
and results in a large change in the employer contribution requirement.
In any year when one of the above scenarios occurs, the actuary will consider corrective action such as
replacing the existing unfunded liability bases with a single “fresh start” base and amortizing it over an
appropriate period.
The current amortization s chedule o n the following page may appear to show that, based on the current
amortization bases, one of the above scenarios will occur at some point in the future. It is impossible to know
today whether such a scenario will in fact arise since there will be addition al bases added to the amortization
schedule in each future year. Should such a scenario arise in any future year, the actuary will take appropriate
action based on guidelines in the CalPERS amortization policy.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 20
Amortization Schedule and Alternatives (continued)
Alternative Schedules
Current Amortization
Schedule 15 Year Amortization 10 Year Amortization
Date Balance Payment Balance Payment Balance Payment
6/30/2024 327,564,831 32,190,210 327,564,831 34,362,752 327,564,831 44,712,410
6/30/2025 316,572,562 31,592,710 314,327,368 34,362,752 303,631,608 44,712,410
6/30/2026 305,450,298 29,495,052 300,189,757 34,362,752 278,070,926 44,712,409
6/30/2027 295,739,531 31,000,609 285,090,789 34,362,752 250,772,119 44,712,410
6/30/2028 283,812,524 34,283,697 268,965,091 34,362,752 221,616,992 44,712,409
6/30/2029 267,681,604 35,020,559 251,742,845 34,362,752 190,479,317 44,712,409
6/30/2030 249,692,275 35,778,047 233,349,487 34,362,753 157,224,280 44,712,410
6/30/2031 229,696,856 33,113,813 213,705,379 34,362,752 121,707,900 44,712,409
6/30/2032 211,095,073 32,640,938 192,725,473 34,362,753 83,776,407 44,712,410
6/30/2033 191,717,058 30,561,881 170,318,932 34,362,752 43,265,571 44,712,409
6/30/2034 173,169,920 29,585,223 146,388,748 34,362,753
6/30/2035 154,370,894 28,139,807 120,831,310 34,362,752
6/30/2036 135,787,288 25,714,771 93,535,967 34,362,753
6/30/2037 118,446,130 24,489,347 64,384,540 34,362,752
6/30/2038 101,192,177 23,181,389 33,250,817 34,362,753
6/30/2039 84,116,651 22,206,845
6/30/2040 66,887,124 21,620,834
6/30/2041 49,091,596 17,182,830
6/30/2042 34,672,384 13,902,561
6/30/2043 22,662,630 21,904,380
6/30/2044 1,566,807 1,619,202
6/30/2045
6/30/2046
6/30/2047
6/30/2048
6/30/2049
Total 555,224,705 515,441,285 447,124,095
Interest Paid 227,659,874 187,876,454 119,559,264
Estimated Savings 39,783,420 108,100,610
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 21
Reconciliation of Required Employer Contributions
Normal Cost (% of Payroll)
1. For Period 7/1/23 – 6/30/24
a) Employer Normal Cost 11.73%
b) Employee contribution 7.55%
c) Total Normal Cost 19.28%
2. Changes since the prior year annual valuation
a) Effect of demographic experience (0.43%)
b) Effect of plan changes 0.01%
c) Effect of discount rate change due to Funding Risk Mitigation 0.00%
d) Effect of assumption changes 0.00%
e) Effect of method changes 0.00%
f) Net effect of the changes above [sum of (a) through (e)] (0.42%)
3. For Period 7/1/24 – 6/30/25
a) Employer Normal Cost 11.34%
b) Employee contribution 7.52%
c) Total Normal Cost 18.86%
Employer Normal Cost Change [(3a) – (1a)] (0.39%)
Employee Contribution Change [(3b) – (1b)] (0.03%)
Unfunded Liability Contribution ($)
1. For Period 7/1/23 – 6/30/24 28,654,772
2. Changes since the prior year annual valuation
a) Effect of adjustments to prior year’s amortization schedule 0
b) Effect of elimination of amortization bases 0
c) Effect of progression of amortization bases 1 (15,803)
d) Effect of investment (gain)/loss during prior year2 2,566,307
e) Effect of non -investment (gain)/loss during prior year 899,827
f) Effect of re-amortizing existing bases due to Funding Risk Mitigation 0
g) Effect of Golden Handshake 0
h) Effect of plan changes 85,107
i) Effect of AL Significant Increase (Government Code section 20791) 0
j) Effect of assumption changes 0
k) Effect of adjustments to the amortization schedule (e.g., Fresh Start) 0
l) Effect of method change 0
m) Net effect of the changes above [sum of (a) through (l)] 3,535,438
3. For Period 7/1/24 – 6/30/25 [(1) + (2m)] 32,190,210
The amounts shown for the period 7/1/23 – 6/30/24 may be different if a prepayment of unfunded actuarial
liability is made or a plan change became effective after the prior ye ar’s actuarial valuation was performed.
1 Includes scheduled escalation in individual amortization base payments due to the 5 -year ramp and payroll growth
assumption used in the pre-2019 amortization policy.
2 The unfunded liability contribution for the investment (gain)/loss during the year prior to the valuation date is 20% of the
“full” annual requirement due to the 5-year ramp. Increases to this amount that occur during the ramp period will be
included in line c ) for each of the next four years.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 22
Employer Contribution History
The table below provides a recent history of the required and discretionary employer contributions for the plan.
The required amounts are based on the actuarial valuation from two years prior without subsequent
adjustments, if any. Additional discretionary payments before July 1, 201 8 or after June 30, 2023 are not
included.
Fiscal
Year
Employer
Normal Cost
Unfunded Rate
Unfunded Liability
Payment ($)
Additional Discretionary
Payments
2015 - 16 10.358% 17.336% N/A N/A
2016 - 17 10.334% 18.556% N/A N/A
2017 - 18 10.039% N/A 15,765,273 N/A
2018 - 19 10.217% N/A 18,392,618 0
2019 - 20 10.716% N/A 21,287,260 0
2020 - 21 11.487% N/A 23,432,860 0
2021 - 22 10.95% N/A 26,358,094 0
2022 - 23 10.58% N/A 29,715,229 0
2023 - 24 11.73% N/A 28,654,772
2024 - 25 11.34% N/A 32,190,210
Funding History
The table below shows the recent history of actuarial accrued liability, market value of assets, unfunded
accrued liability, funded ratio and annual covered payroll.
[]
Valuation
Date
Accrued
Liability
(AL)
Market Value of
Assets (MVA)
Unfunded
Accrued
Liability (UAL)
Funded
Ratio
Annual
Covered
Payroll
6/30/2013 $602,540,178 $412,227,784 $190,312,394 68.4% $64,439,680
6/30/2014 666,978,627 475,566,994 191,411,633 71.3% 67,802,942
6/30/2015 696,699,220 477,031,099 219,668,121 68.5% 71,574,823
6/30/2016 730,382,476 468,702,245 261,680,231 64.2% 75,345,962
6/30/2017 772,526,669 511,805,893 260,720,776 66.3% 78,476,098
6/30/2018 831,958,865 547,102,617 284,856,248 65.8% 80,363,405
6/30/2019 868,716,440 574,012,871 294,703,569 66.1% 78,848,216
6/30/2020 909,429,635 592,313,289 317,116,346 65.1% 84,892,137
6/30/2021 956,179,582 720,145,626 236,033,956 75.3% 79,718,988
6/30/2022 996,201,108 655,682,370 340,518,738 65.8% 82,193,044
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 23
Normal Cost by Benefit Group
The table below displays the Total Normal Cost broken out by benefit group for FY 2024-25. The Total Normal
Cost is the annual cost of service accrual for the fiscal year for active employees and can be viewed as the
long-term contribution rate for the benefits contracted. Generally, the normal c ost for a benefit group subject
to more generous benefit provisions will exceed the normal cost for a group with less generous benefits.
However, based on the characteristics of the members (particularly when the number of actives is small), this
may not b e the case. Future measurements of the Total Normal Cost for each group may differ significantly
from the current values due to such factors as: changes in the demographics of the group, changes in
economic and demographic assumptions, changes in plan bene fits or applicable law.
Plan
Identifier Benefit Group Name
Total Normal
Cost
FY 2024-25
Number of
Actives
Payroll on
6/30/2022
8 Miscellaneous First Level 23.46% 275 $34,513,403
26004 Miscellaneous PEPRA Level 14.56% 352 $35,805,612
30157 Miscellaneous Second Level 18.88% 85 $11,874,029
Plan Total 18.86% 712 $82,193,044
Note that if a Benefit Group above has multiple bargaining units, each of which has separately contracted for
different benefits such as Employer Paid Member Contributions, then the Normal Cost shown for the
respective benefit level does not reflect those differences. Additionally, if a Second Level Benefit Group
amended to the same benefit formula as a First Level Benefit Group, their Normal Costs may be dissimilar
due to demographic or other po pulation differences. For questions in these situations, please contact the plan
actuary.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 24
PEPRA Member Contribution Rates
The California Public Employees’ Pension Reform Act of 2013 (“PEPRA”) established new benefit formulas,
final compensation period, an d contribution requirements for “new” employees (generally those first hired into
a CalPERS-covered position on or after January 1, 2013). In accordance with Government Code section
7522.30(b), “new members … shall have an initial contribution rate of at l east 50% of the normal cost rate.”
The normal cost for the plan is dependent on the benefit levels, actuarial assumptions , and demographics of
the plan, particularly members’ entry age into the plan. Should the total normal cost of the plan change by
more than 1% from the base total normal cost established for the plan, the new member rate shall be 50% of
the new normal cost rounded to the nearest quarter percent .
The table below shows the determination of the PEPRA m ember contribution rates effective July 1, 2024,
based on 50 % of the total normal cost rate for each respective plan as of the June 30, 2022 valuation.
Basis for Current Rate Rates Effective July 1, 2024
Plan
Identifier Benefit Group Name
Total
Normal
Cost
Member
Rate
Total
Normal
Cost Change
Change
Needed
Member
Rate
26004 Miscellaneous PEPRA
Level 14.250% 7.25% 14.56% 0.310% No 7.25%
For purposes of setting member rates, it is preferable to determine total normal cost using a large active
population so that the rate remains relatively stable. While each CalPERS non -pooled plan has a sufficiently
large active population for this purpose, the PEPRA active popul ation by itself may not be sufficiently large.
The total PEPRA normal cost will be determined based on the plan’s PEPRA membership only if the number
of members covered under the PEPRA formula meets either:
1. 50% of the active population, or
2. 25% of the active population and 100 or more PEPRA members
Until one of these conditions is met, the plan’s total PEPRA normal cost will be determined using the entire
active plan population (both PEPRA and Classic) based on the PEPRA benefit provisions. For this reason,
the PEPRA member contribution rate determined in the table above may not equal 50% of the total normal
cost of the PEPRA group shown on the “Normal Cost by Benefit Group” page.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
Risk Analysis
• Future Investment Return Scenarios
• Discount Rate Sensitivity
• Mortality Rate Sensitivity
• Maturity Measures
• Maturity Measures History
• Funded Status – Termination Basis
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 26
Future Investment Return Scenarios
Analysis using the investment return scenarios from the Asset Liability Management process completed in
2021 was performed to determine the effects of various future investment returns on required employer
contributions. The projections below reflect the impact of the CalPERS Funding Risk Mitigation policy. The
projected normal cost rates reflect that the rates are anticipated to decline over time as new employees are
hired into lower-cost benefit tiers. The projections also assume that all other actuarial assumptions will be
realized and that no further ch anges in assumptions, contributions, benefits, or funding will occur.
The first table shows projected contribution requirements if the fund were to earn either 3.0% or 10.8%
annually. These alternate investment returns were chosen because 90% of long -term average returns are
expected to fall between them over the 20 -year period ending June 30, 2042.
Assumed Annual Return
FY 2022-23
through FY 2041 -42
Projected Employer Contributions
FY 2025 -26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30
3.0% (5th percentile)
Normal Cost Rate 11.0% 10.7% 10.5% 10.2% 9.9%
UAL Contribution $32,200,000 $31,329,000 $34,694,000 $40,483,000 $44,386,000
10.8% (95th percentile)
Normal Cost Rate 11.3% 11.2% 11.2% 11.1% 11.1%
UAL Contribution $30,998,000 $27,776,000 $27,542,000 $28,373,000 $25,936,000
Required contributions outside of this range are also possible. In particular, whereas it is unlikely that
investment returns will average less than 3.0% or greater than 10.8% over a 20 -year period, the likelihood of
a single investment return less than 3.0% or greater than 10.8% in any given year is much greater. The
following analysis illustrates the effect of an extreme, single year investment return.
The portfolio has an expected volatility (or standard deviation) of 12.0% per year. Accordingly, in any given
year there is a 16% probability that the annual return will be -5.2% or less and a 2.5% probability that the
annual return will be -17.2% or less. These returns represent one and two standard deviations below the
expected return of 6.8%.
The following table shows the effect of a one or two standard deviation investment loss in FY 2022-23 on the
FY 2025-26 contribution requirements. Note that a single -year investment gain or loss decreases or increases
the required UAL contribution amount incrementally for each of the next five years, not just one, due to the 5 -
year ramp in the amortization policy. However, the contribution requirements beyond the first year are also
impacted by investment returns beyond the first year. Historically, significant downturns in the market are often
followed by higher than average returns. Such investment gains would offset the impact of these single year
negative returns in years beyond FY 2025-26.
Assumed Annual Return for
Fiscal Year 2022-23
Required
Employer
Contributions
Projected
Employer
Contributions
FY 2024-25 FY 2025-26
(17.2%) (2 standard deviation loss)
Normal Cost Rate 11.34% 11.0%
UAL Contribution $32,190,210 $35,427,000
(5.2%) (1 standard deviation loss)
Normal Cost Rate 11.34% 11.0%
UAL Contribution $32,190,210 $33,510,000
• Without investment gains (returns higher than 6.8%) in year FY 2023-24 or later, projected
contributions rates would continue to rise over the next four years due to the continued phase -in of
the impact of the illustrated investment loss in FY 2022-23.
• The Pension Outlook Tool can be used to model projected contributions for these scen arios beyond
FY 2025-26 as well as to model other investment return scenarios .
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 27
Discount Rate Sensitivity
The discount rate assumption is calculated as the sum of the assumed real rate of return and the assumed
annual price inflation, currently 4.5% and 2.3%, respectively. Changing either the price inflation assumption
or the real rate of return assumption will change the discount rate. The sensitivity of the valuation results to
the discount rate assumption depends on which component of the discount rate is changed. Shown below are
various valuation results as of June 30, 2022 assuming alternate discount rates by changing the two
components independently. Results are shown using the current discount rate of 6.8% as well as alternate
discount rates of 5.8% and 7.8%. The rates of 5.8% and 7.8% were selected since they illustrate the impact
of a 1.0% increase or decrease to th e 6.8% assumption.
Sensitivity to the Real Rate of Return Assumption
As of June 30, 2022
1% Lower
Real Return Rate
Current
Assumptions
1% Higher
Real Return Rate
Discount Rate 5.8% 6.8% 7.8%
Price Inflation 2.3% 2.3% 2.3%
Real Rate of Return 3.5% 4.5% 5.5%
a) Total Normal Cost 23.91% 18.86% 15.05%
b) Accrued Liability $1,123,588,565 $996,201,108 $890,776,314
c) Market Value of Assets $655,682,370 $655,682,370 $655,682,370
d) Unfunded Liability/(Surplus) [(b) - (c)] $467,906,195 $340,518,738 $235,093,944
e) Funded Ratio 58.4% 65.8% 73.6%
Sensitivity to the Price Inflation Assumption
As of June 30, 2022
1% Lower
Inflation Rate
Current
Assumptions
1% Higher
Inflation Rate
Discount Rate 5.8% 6.8% 7.8%
Price Inflation 1.3% 2.3% 3.3%
Real Rate of Return 4.5% 4.5% 4.5%
a) Total Normal Cost 19.84% 18.86% 17.14%
b) Accrued Liability $1,028,323,053 $996,201,108 $919,881,614
c) Market Value of Assets $655,682,370 $655,682,370 $655,682,370
d) Unfunded Liability/(Surplus) [(b) - (c)] $372,640,683 $340,518,738 $264,199,244
e) Funded Ratio 63.8% 65.8% 71.3%
Mortality Rate Sensitivity
The following table looks at the change in the June 30, 2022 plan costs and funded status under two different
longevity scenarios, namely assuming rates of post-retirement mortality are 10% lower or 10% higher than
our current mortality assumptions adopted in 2021 . This type of analysis highlights the impact on the plan of
a change in the mortality assumption .
As of June 30, 2022 10% Lower
Mortality Rates
Current
Assumptions
10% Higher
Mortality Rates
a) Total Normal Cost 19.19% 18.86% 18.56%
b) Accrued Liability $1,017,813,423 $996,201,108 $976,376,784
c) Market Value of Assets $655,682,370 $655,682,370 $655,682,370
d) Unfunded Liability/(Surplus) [(b) - (c)] $362,131,053 $340,518,738 $320,694,414
e) Funded Ratio 64.4% 65.8% 67.2%
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 28
Maturity Measures
As pension plans mature they become more sensitive to risks. Understanding plan maturity and how it affects
the ability of a pension plan sponsor to tolerate risk is important in understanding how the pension plan is
impacted by investment return volatility, other economic varia bles and changes in longevity or other
demographic assumptions. One way to look at the maturity level of CalPERS and its plans is to look at the
ratio of a plan’s retiree liability to its total liability. A pension plan in its infancy will have a very low ratio of
retiree liability to total liability. As the plan matures, the ratio increases. A mature plan will often have a ratio
above 60%-65%.
Ratio of Retiree Accrued Liability to
Total Accrued Liability June 30, 2021 June 30, 2022
1. Retiree Accrued Liability 594,762,517 634,851,404
2. Total Accrued Liability 956,179,582 996,201,108
3. Ratio of Retiree AL to Total AL [(1) / (2)] 62% 64%
Another measure of the maturity level of CalPERS and its plans is the ratio of actives to retirees, also called
the s upport ratio. A pension plan in its infancy will have a very high ratio of active to retired members. As the
plan matures and members retire, the ratio declines. A mature plan will often have a ratio near or below one.
To calculate the support ratio for the rate plan, retirees and beneficiaries receiving a continuance are each
counted as one, even though they may have only worked a portion of their careers as an active member of
this rate plan. For this reason, the support ratio, while intuitive, may be less info rmative than the ratio of retiree
liability to total accrued liability above. For comparison, the support ratio for all CalPERS public agency plans
is 0.82 and is calculated consistently with how it is for the individual rate plan . Note that to calculate the support
ratio for all public agency plans , a retiree with service from more than one CalPERS agency is counted as a
retiree more than once .
Support Ratio June 30, 2021 June 30, 2022
1. Number of Actives 723 712
2. Number of Retirees 1,276 1,320
3. Support Ratio [(1) / (2)] 0.57 0.54
The actuarial calculations supplied in this communication are based on various assumptions about long -term
demographic and economic behavior. Unless these assumptions (e.g., terminations, deaths, disabilities,
retirements, salary growth, investment return) are exactly realized each year, there will be differences on a
year-to-year basis. The year-to-year differences between actual experience and the assumptions are called
actuarial gains and losses and serve to lower or raise required employer contributions from one year to the
next. Therefore, employer contributions will inevitably fluctuate, especially due to the ups and downs of
investment returns.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 29
Maturity Measures (continued)
Asset Volatility Ratio
Shown in the table below is the asset volatility ratio (AVR), which is the ratio of market value of assets to
payroll. Plans that have a higher AVR experience more volatile employer contributions (as a percentage of
payroll) due to investment return. For e xample, a plan with AVR of 8 may experience twice the contribution
volatility due to investment return volatility than a plan with AVR of 4. It should be noted that this ratio is a
measure of the current situation. It increases over time but generally tend s to stabilize as a plan matures.
Liability Volatility Ratio
Also shown in the table below is the liability volatility ratio (LVR), which is the ratio of accrued liability to payroll.
Plans that have a higher LVR experience more volatile employer contrib utions (as a percentage of payroll)
due to changes in liability. For example, a plan with LVR of 8 is expected to have twice the contribution volatility
of a plan with LVR of 4 when there is a change in accrued liability, such as when there is a change in actuarial
assumptions. It should be noted that this ratio indicates a longer -term potential for contribution volatility, since
the AVR, described above, will tend to move closer to the LVR as the funded ratio approaches 10 0%.
Contribution Volatility June 30, 2021 June 30, 2022
1. Market Value of Assets without Receivables $719,354,248 $655,032,743
2. Payroll 79,718,988 82,193,044
3. Asset Volatility Ratio (AVR) [(1) / (2)] 9.0 8.0
4. Accrued Liability $956,179,582 $996,201,108
5. Liability Volatility Ratio (LVR) [(4) / (2)] 12.0 12.1
Maturity Measures History
Valuation Date
Ratio of
Retiree Accrued Liability
to
Total Accrued Liability Support Ratio
Asset
Volatility
Ratio
Liability
Volatility
Ratio
6/30/2017
57%
0.74
6.5
9.8
6/30/2018
57%
0.72
6.8
10.4
6/30/2019
61%
0.65
7.3
11.0
6/30/2020
60%
0.64
7.0
10.7
6/30/2021
62%
0.57
9.0
12.0
6/30/2022
64%
0.54
8.0
12.1
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 30
Funded Status – Termination Basis
The funded status measured on a termination basis is an estimate of the financial position of the plan had the
contract with CalPERS been terminated as of June 30, 2022. The accrued liability on a termination basis
(termination liability) is calculated differently from the plan’s ongoing funding liability. For th e termination
liability calculation, both compensation and service are frozen as of the valuation date and no future pay
increases or service accruals are assumed. This measure of funded status is no t appropriate for assessing
the need for future employer contributions in the case of an ongoing plan, that is, for an employer that
continues to provide CalPERS retirement benefits to active employees. Unlike the actuarial cost method used
for ongoing pla ns, the termination liability is the present value of the benefits earned through the valuation
date.
A more conservative investment policy and asset allocation strategy was adopted by the board for the
Terminated Agency Pool. The Terminated Agency Pool h as limited funding sources since no future employer
contributions will be made. Therefore, expected benefit payments are secured by risk -free assets and benefit
security for members is increased while limiting the funding risk. However, this asset allocati on has a lower
expected rate of return than the remainder of the PERF and consequently, a lower discount rate assumption.
The lower discount rate for the Terminated Agency Pool results in higher liabilities for terminated plans.
The effective termination discount rate will depend on actual market rates of return for risk -free securities on
the date of termination. As market discount rates are variable , the table below shows a range for the
termination liability based on the lowest and highest interest rat es observed during an approximate 19-month
period from 12 months before the valuation date to seven months after.
Discount Rate: 1.75%
Price Inflation: 2.50%
Discount Rate: 4.50%
Price Inflation: 2.75%
Market
Value of
Assets (MVA)
Termination
Liability1,2
Funded
Ratio
Unfunded
Termination
Liability
Termination
Liability1,2
Funded
Ratio
Unfunded
Termination
Liability
$655,682,370 $1,928,816,055 34.0% $1,273,133,685 $1,267,916,892 51.7% $612,234,522
1 The termination liabilities calculated above include a 5% contingency load. The contingency load and other actuarial
assumptions can be found in Appendix A.
2 The discount rate used for termination valuations is a weighted average of the 10 -year and 30-year U.S. Treasury yields
where the weights are based on matching asset and liability durations as of the termination date. The discount rates used
in the table are based on 20-year Treasury bonds, rounded to the nearest quarter percentage point, which is a good
proxy for most plans. The 20-year Treasury yield was 3.38% on June 30, 2022, the valuation date.
In order to terminate the plan, first contact our Pension Contract Services unit to initiate a Resolution of Intent
to Terminate. The completed Resolution will allow the plan actuary to provide a preliminary termination
valuation with a more up -to-date estimate of the plan liabilities. Before beginning this process, please consult
with the plan actuary.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
Plan’s Major Benefit Provisions
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 32
Plan’s Major Benefit Options
Shown below is a summary of the major optional benefits for which the agency has contracted. A description of principal standard and optional plan provisions is
in Appendix B.
Benefit Group
Member Category Misc Misc Misc Misc Misc Misc Misc
Demographics
Actives No Yes Yes Yes Yes No No
Transfers/Separated Yes Yes Yes Yes Yes No No
Receiving Yes Yes Yes Yes Yes Yes Yes
Benefit Group Key 105391 105393 107485 111264 200040 200044 200045
Benefit Provision
Benefit Formula 2% @ 55 2.7% @ 55 2% @ 60 2% @ 62 2% @ 62
Social Security Coverage No No No No No
Full/Modified Full Full Full Full Full
Employee Contribution Rate 8.00% 7.00% 7.25% 7.25%
Final Average Compensation Period One Year One Year One Year Three Year Three Year
Sick Leave Credit No No No No No
Non-Industrial Disability Standard Standard Standard Standard Standard
Industrial Disability No No No No No
Pre-Retirement Death Benefits
Optional Settlement 2 No No No No No
1959 Survivor Benefit Level Level 1 Level 1 Level 1 Level 1 Level 1
Special No No No No No
Alternate (firefighters) No No No No No
Post-Retirement Death Benefits
Lump Sum $2000 $2000 $2000 $2000 $2000 $2000 $2000
Survivor Allowance (PRSA) No No No No No No No
COLA 2% 2% 2% 2% 2% 2% 2%
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 33
Plan’s Major Benefit Options (continued)
Shown below is a summary of the major optional benefits for which the agency has contracted. A description of principal standard and optional plan provisions is
in Appendix B.
Benefit Group
Member Category Misc
Demographics
Actives No
Transfers/Separated No
Receiving Yes
Benefit Group Key 200046
Benefit Provision
Benefit Formula
Social Security Coverage
Full/Modified
Employee Contribution Rate
Final Average Compensation Period
Sick Leave Credit
Non-Industrial Disability
Industrial Disability
Pre-Retirement Death Benefits
Optional Settlement 2
1959 Survivor Benefit Level
Special
Alternate (firefighters)
Post-Retirement Death Benefits
Lump Sum $2000
Survivor Allowance (PRSA) No
COLA 2%
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
Appendices
• Appendix A – Actuarial Methods and Assumptions
• Appendix B – Principal Plan Provisions
• Appendix C – Participant Data
• Appendix D – Glossary
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
Appendix A
Actuarial Methods and Assumptions
• Actuarial Data
• Actuarial Methods
• Actuarial Assumptions
• Miscellaneous
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-1
Actuarial Data
As stated in the Actuarial Certification, the data which serves as the basis of this valuation has been obtained
from the various CalPERS databases. We have reviewed the valuation data and believe that it is reasonable
and appropriate in aggregate. We are unaware of any potential data issues that would have a material effect
on the results of this valuation, except that data does not always contain the latest salary information for former
members no w in reciprocal systems and does not recognize the potential for unusually large salary deviation
in certain cases such as elected officials. Therefore, salary information in these cases may not be accurate.
These situations are relatively infrequent, howe ver, and generally do not have a material impact on the
required employer contributions.
Actuarial Methods
Actuarial Cost Method
The actuarial cost method used is the Entry Age Actuarial Cost Method. Under this method, projected benefits
are determined for all members and the associated liabilities are spread in a manner that produces level
annual cost as a percentage of pay in each year from the member’s entry age to their assumed retirement
age on the valuation date. The cost allocated to the current f iscal year is called the normal cost.
The actuarial accrued liability for active members is then calculated as the portion of the total cost of the plan
allocated to prior years. The actuarial accrued liability for members currently receiving benefits and for
members entitled to deferred benefits is equal to the present value of the benefits expected to be paid. No
normal costs are applicable for these participants.
CalPERS uses an in -house proprietary actuarial model for calculating plan costs. We believe this model is fit
for its intended pu rpose and meets all applicable Actuarial Standards of Practice. Furthermore, the actuarial
results of our model are independently confirmed periodically by outside auditing actuaries. The actuarial
assumptions used are internally consistent and the generat ed results are reasonable.
Amortization of Unfunded Actuarial Accrued Liability
The excess of the total actuarial accrued liability over the market value of plan assets is called the unfunded
actuarial accrued liability (UAL). Funding requirements are d etermined by adding the normal cost and a
payment toward the UAL. The UAL payment is equal to the sum of individual amortization payments, each
representing a different source of UAL for a given measurement period.
Amortization payments are determined acc ording to the CalPERS amortization policy. The board adopted a
new policy effective for the June 30, 2019 actuarial valuation. The new policy applies prospectively only;
amortization bases (sources of UAL) established prior to the June 30, 2019 valuation w ill continue to be
amortized according to the prior policy.
Prior Policy (Bases Established prior to June 30, 2019)
Amortization payments are determined as a level percentage of payroll whereby the payment increases each
year at an escalation rate. Gains or losses are amortized over a fixed 30 -year period with a 5 -year ramp up at
the beginning and a 5 -year ramp down at the end of the amortization period. All changes in liability due to plan
amendments (other than golden handshakes) are amortized over a 20 -year period with no ramp. Changes in
actuarial assumptions or changes in actuarial methodology are amortized over a 20 -year period with a 5 -year
ramp up at the beginning and a 5 -year ramp down at the end of the amortization period. Changes in unfunded
accrued liability due to a Golden Handshake will be amortized over a period of five years. Bases established
prior to June 30, 2013 may be amortized differently. A summary is provided in the following table:
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-2
Driver
Source
(Gain)/Loss
Assumption/Method
Change
Benefit
Change
Golden
Handshake Investment
Non-
investment
Amortization
Period 30 Years 30 Years 20 Years 20 Years 5 Years
Escalation Rate
- Active Plans
- Inactive Plans
2.80%
0%
2.80%
0%
2.80%
0%
2.80%
0%
2.80%
0%
Ramp Up 5 5 5 0 0
Ramp Down 5 5 5 0 0
The 5-year ramp up means that the payments in the first four years of the amortization period are 20%, 40%,
60% and 80% of the “full” payment which begins in year five. The 5 -year ramp down means that the reverse
is true in the final four years of the amortization period.
Current Policy (Bases Established on or after June 30, 2019)
Amortization payments are determined as a level dollar amount. Investment gains or losses are amortized
over a fixed 20 -year period with a 5 -year ramp u p at the beginning of the amortization period. Non -investment
gains or losses are amortized over a fixed 20 -year period with no ramps. All changes in liability due to plan
amendments (other than golden handshakes) are amortized over a 20 -year period with n o ramps. Changes
in actuarial assumptions or changes in actuarial methodology are amortized over a 20 -year period with no
ramps. Changes in unfunded accrued liability due to a Golden Handshake are amortized over a period of five
years. A summary is provide d in the table below:
Source
(Gain)/Loss
Assumption/
Method
Change
Benefit
Change
Golden
Handshake Investment
Non-
investment
Amortization Period 20 Years 20 Years 20 Years 20 Years 5 Years
Escalation Rate 0% 0% 0% 0% 0%
Ramp Up 5 0 0 0 0
Ramp Down 0 0 0 0 0
Exceptions for Inconsistencies
An exception to the amortization rules above is used whenever their application results in inconsistencies. In
these cases, a “fresh start” approach is used. This means that the current unfunded actuarial liability is
projected and amortized over a set number of years. For example, a fresh start is needed in the following
situations:
• When a negative payment would be required on a positive unfunded actuarial liability; or
• When the payment would completely a mortize the total unfunded liability in a very short time period,
and results in a large change in the employer contribution requirement .
It should be noted that the actuary may determine that a fresh start is necessary under other circumstances.
In all cases of a fresh start, the period is set by the actuary at what is deemed appropriate; however, the period
will not be greater than 20 years.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-3
Exceptions for Plans in Surplus
If a surplus exists (i.e., the Market Value of Assets exceeds the plan’s acc rued liability) any prior
amortization layers shall be considered fully amortized, and the surplus shall not be amortized.
In the event of any subsequent unfunded liability, a Fresh Start shall be used with an amortization period of
20 years or less.
Exceptions for Small Amounts
Where small unfunded liabilities are identified in annual valuations which result in small payment amounts,
the actuary may shorten the remaining period for these bases.
• When the balance of a single amortization base has an abso lute value less than $250, the
amortization period is reduced to one year.
• When the entire unfunded liability is a small amount , the actuary may perform a Fresh Start and
use an appropriate amortization period.
Exceptions for Inactive Plans
The following exceptions apply to plans classified as Inactive. These plans have no active members and no
expectation to have active members in the future.
• Amortization of the unfunded liability is on a “level dollar” basis rather than a “level percent of pay”
basis. For amortization layers, which utilize a ramp up and ramp down, the “ultimate” payment is
constant.
• Actuarial judgment will be used to shorten amortization periods for Inactive plans with existing periods
that are deemed too long given the duration of the liability. The specific demographics of the plan will
be used to determine if shorter periods may be more appropriate.
Exceptions for Inactive Agencies
For a public agency with no active members in any CalPERS rate plan, the unfunded liability shall be
amortized over a closed amortization period of no more than 15 years.
Asset Valuation Method
The Actuarial Value of Assets is set equal to the m arket value of assets. Asset values include accounts
receivable.
PEPRA Normal Cost Rate Methodology
Per Government Code s ection 7522.30(b), the “normal cost rate” shall mean the annual actuarially determined
normal cost for the plan of retirement benefits provided to the new member and shall be established based on
actuarial assumptions used to determine the liabilities and costs as part of the annual actuarial valuation. The
plan of retirement benefits shall include any elements that would impact the actuarial determination of the
normal cost, including, but not limited to, the retirement formula, eligibility and vesting criteria, ancillary benefit
provisions, and any automatic cost-of-living adjustments as determined by the public retirement system.
For purposes of setting member rates, it is preferable to determine total normal cost using a large activ e
population so that the rate remains relatively stable. While each CalPERS non -pooled plan has a sufficiently
large active population for this purpose, the PEPRA active population by itself may not be sufficiently large.
The total PEPRA normal cost will b e determined based on the plan’s PEPRA membership only if the number
of members covered under the PEPRA formula meets either:
1. 50% of the active population, or
2. 25% of the active population and 100 or more PEPRA members
Until one of these conditions is met, the plan’s total PEPRA normal cost will be determined using the entire
active plan population (both PEPRA and Classic) based on the PEPRA benefit provisions.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-4
Actuarial Assumptions
In 2021, CalPERS completed its most recent asset liability management study incorporating actuarial
assumptions and strategic asset allocation. In November 2021, the board adopted changes to the asset
allocation that increased the expected volatility of returns. The adopted asset alloca tion was expected to have
a long-term blended return that continued to support a discount rate assumption of 6.80%. The board also
approved several changes to the demographic assumptions that more closely aligned with actual experience.
For more details a nd additional rationale for the selection of the actuarial assumptions, please refer to the
CalPERS Experience Study and Review of Actuarial Assumptions report from November 2021 that can be
found on the CalPERS website under: Forms and Publications. Click on “View All” and search for Experience
Study.
All actuarial assumptions (except the discount rates used for the accrued liability on a termination basis)
represent an estimate of future experience rather than observations of the estimates inherent in ma rket data.
Economic Assumptions
Discount Rate
The prescribed discount rate assumption, adopted by the board on November 17, 2021, is 6.80%
compounded annually (net of investment and administrative expenses) as of June 30, 2022.
Termination Liability Discount Rate
The current discount rate assumption used for termination valuations is a weighted average of the
10-year and 30-year U.S. Treasury yields where the weights are based on matc hing asset and liability
durations as of the termination date.
The accrued liabilities on a termination basis in this report are calculated using an observed range of
market interest rates. This range is based on the lowest and highest 20 -year Treasury bond observed
during an approximate 19-month period from 12 months before the valuation date to seven months
after. The 20-year Treasury bond has a similar duration to most plan liabilities and serves as a good
proxy for the termination discount rate. The 20 -year Treasury yield was 3.38% on June 30, 2022 .
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-5
Salary Growth
Annual increases vary by category, entry age, and duration of service. A sample of assumed
increases are shown below. Wage inflation assumption in the valuation year (2.80% for 2022) is
added to these factors for total salary growth.
Public Agency Miscellaneous
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.0764 0.0621 0.0521
1 0.0663 0.0528 0.0424
2 0.0576 0.0449 0.0346
3 0.0501 0.0381 0.0282
4 0.0435 0.0324 0.0229
5 0.0378 0.0276 0.0187
10 0.0201 0.0126 0.0108
15 0.0155 0.0102 0.0071
20 0.0119 0.0083 0.0047
25 0.0091 0.0067 0.0031
30 0.0070 0.0054 0.0020
Public Agency Fire
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.1517 0.1549 0.0631
1 0.1191 0.1138 0.0517
2 0.0936 0.0835 0.0423
3 0.0735 0.0613 0.0346
4 0.0577 0.0451 0.0284
5 0.0453 0.0331 0.0232
10 0.0188 0.0143 0.0077
15 0.0165 0.0124 0.0088
20 0.0145 0.0108 0.0101
25 0.0127 0.0094 0.0115
30 0.0112 0.0082 0.0132
Public Agency Police
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.1181 0.1051 0.0653
1 0.0934 0.0812 0.0532
2 0.0738 0.0628 0.0434
3 0.0584 0.0485 0.0353
4 0.0462 0.0375 0.0288
5 0.0365 0.0290 0.0235
10 0.0185 0.0155 0.0118
15 0.0183 0.0150 0.0131
20 0.0181 0.0145 0.0145
25 0.0179 0.0141 0.0161
30 0.0178 0.0136 0.0179
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-6
Salary Growth (continued)
Public Agency County Peace Officers
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.1238 0.1053 0.0890
1 0.0941 0.0805 0.0674
2 0.0715 0.0616 0.0510
3 0.0544 0.0471 0.0387
4 0.0413 0.0360 0.0293
5 0.0314 0.0276 0.0222
10 0.0184 0.0142 0.0072
15 0.0174 0.0124 0.0073
20 0.0164 0.0108 0.0074
25 0.0155 0.0094 0.0075
30 0.0147 0.0083 0.0077
Schools
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.0275 0.0275 0.0200
1 0.0422 0.0373 0.0298
2 0.0422 0.0373 0.0298
3 0.0422 0.0373 0.0298
4 0.0388 0.0314 0.0245
5 0.0308 0.0239 0.0179
10 0.0236 0.0160 0.0121
15 0.0182 0.0135 0.0103
20 0.0145 0.0109 0.0085
25 0.0124 0.0102 0.0058
30 0.0075 0.0053 0.0019
• The Miscellaneous salary scale is used for Local Prosecutors.
• The Police salary scale is used for Other Safety, Local Sheriff, and School Police.
Price Inflation
2.30% compounded annually.
Wage Inflation
2.80% compounded annually (used in projecting individual salary increases).
Payroll Growth
2.80% compounded annually (used in projecting the payroll over which the unfunded liability is
amortized for level percent of payroll bases ). This assumption is used for all plans with active
members.
Non-valued Potential Additional Liabilities
The potential liability loss for a cost-of-living increase exceeding the 2.30% price inflation assumption
and any potential liability loss from future member service purchases that are not reflected in the
valuation.
Miscellaneous Loading Factors
Credit for Unused Sick Leave
Total years of service is increased by 1% for those plans that have adopted the provision of providing
Credit for Unused Sick Leave.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-7
Conversion of Employer Paid Member Contributions (EPMC)
Total years of service is increased by the Employee Contribution Rate for those plans with the
provision providing for the Conversion of Employer Paid Member Contributions (EPMC) during the
final compensation period.
Norris Decision (Best Factors)
Employees hired prior to July 1, 1982 have projected benefit amounts increased in order to reflect
the use of “Best Factors” in the ca lculation of optional benefit forms. This is due to a 1983 Supreme
Court decision, known as the Norris decision, which required males and females to be treated equally
in the determination of benefit amounts. Consequently, anyone already employed at that t ime is given
the best possible conversion factor when optional benefits are determined. No loading is necessary
for employees hired after July 1, 1982.
Termination Liability
The termination liabilities include a 5% contingency load. This load is for unfor eseen improvements
in mortality.
Demographic Assumptions
Pre -Retirement Mortality
The mortality assumptions are based on mortality rates resulting from the most recent CalPERS
Experience Study adopted by the CalPERS Board in November 2021. For purposes of the mortality
rates, the rates incorporate generational mortality to capture on -going mortality improvement.
Generational mortality explicitly assumes that members born more recently will live longer than the
members born before them thereby capturing the mortality improvement seen in the past and
expected continued improvement. For more details, please refer to the 2021 experience study report
that can be found on the CalPERS website .
Rates vary by age and gender are shown in the table below. This tab le only contains a sample of the
2017 base table rates for illustrative purposes. The non -industrial death rates are used for all plans.
The industrial death rates are used for Safety plans (except for local Safety members described in
Section 20423.6 where the agency has not specifically contracted for industrial death benefits.)
Miscellaneous Safety
Non-Industrial Death Non-Industrial Death Industrial Death
(Not Job-Related) (Not Job-Related) (Job-Related)
Age Male Female Male Female Male Female
20 0.00039 0.00014 0.00038 0.00014 0.00004 0.00002
25 0.00033 0.00013 0.00034 0.00018 0.00004 0.00002
30 0.00044 0.00019 0.00042 0.00025 0.00005 0.00003
35 0.00058 0.00029 0.00048 0.00034 0.00005 0.00004
40 0.00075 0.00039 0.00055 0.00042 0.00006 0.00005
45 0.00093 0.00054 0.00066 0.00053 0.00007 0.00006
50 0.00134 0.00081 0.00092 0.00073 0.00010 0.00008
55 0.00198 0.00123 0.00138 0.00106 0.00015 0.00012
60 0.00287 0.00179 0.00221 0.00151 0.00025 0.00017
65 0.00403 0.00250 0.00346 0.00194 0.00038 0.00022
70 0.00594 0.00404 0.00606 0.00358 0.00067 0.00040
75 0.00933 0.00688 0.01099 0.00699 0.00122 0.00078
80 0.01515 0.01149 0.02027 0.01410 0.00225 0.00157
• The pre -retirement mortality rates above are for 2017 and are projected generationally for future
years using 80% of the Society of Actuaries’ Scale MP -2020.
• Miscellaneous plans usually have industrial death rates set to zero unless the agency has
specifically contracted for industrial death benefits. If so, each non -industria l death rate shown
above will be split into two components : 99% will become the non -industrial death rate and 1%
will become the industrial death rate.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-8
Post-Retirement Mortality
Rates vary by age, type of retirement, and gender. See sample rates in table below. These rates are
used for all plans.
Service Retirement
Non-Industrial Disability Industrial Disability
(Not Job-Related) (Job-Related)
Age Male Female Male Female Male Female
50 0.00267 0.00199 0.01701 0.01439 0.00430 0.00311
55 0.00390 0.00325 0.02210 0.01734 0.00621 0.00550
60 0.00578 0.00455 0.02708 0.01962 0.00944 0.00868
65 0.00857 0.00612 0.03334 0.02276 0.01394 0.01190
70 0.01333 0.00996 0.04001 0.02910 0.02163 0.01858
75 0.02391 0.01783 0.05376 0.04160 0.03446 0.03134
80 0.04371 0.03403 0.07936 0.06112 0.05853 0.05183
85 0.08274 0.06166 0.11561 0.09385 0.10137 0.08045
90 0.14539 0.11086 0.16608 0.14396 0.16584 0.12434
95 0.24665 0.20364 0.24665 0.20364 0.24665 0.20364
100 0.36198 0.31582 0.36198 0.31582 0.36198 0.31582
105 0.52229 0.44679 0.52229 0.44679 0.52229 0.44679
110 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000
The post-retirement mortality rates above are for 2017 and are projected generationally for future
years using 80% of the Society of Actuaries’ Scale MP-2020.
Marital Status
For active members, a percentage who are married upon retirement is assumed according to the
member category as shown in the following table.
Member Category Percent Married
Miscellaneous Member 70%
Local Police 85%
Local Fire 85%
Other Local Safety 70%
School Police 85%
Local County Peace Officers 75%
Age of Spouse
It is assumed that female spouses are 3 years younger than male spouses. This assumption is used
for all plans.
Separated Members
It is assumed that separated members refund immediately if non -vested. Separated members who
are vested are assumed to retire at age 59 for Miscellaneous members and age 54 for Safety
members.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-9
Termination with Refund
Rates vary by entry age and service for Miscellaneous plans. Rates vary by service for Safety plans.
See sample rates in tables below.
Public Agency Miscellaneous
Duration of
Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40 Entry Age 45
Male Female Male Female Male Female Male Female Male Female Male Female
0 0.1851 0.1944 0.1769 0.1899 0.1631 0.1824 0.1493 0.1749 0.1490 0.1731 0.1487 0.1713
1 0.1531 0.1673 0.1432 0.1602 0.1266 0.1484 0.1101 0.1366 0.1069 0.1323 0.1037 0.1280
2 0.1218 0.1381 0.1125 0.1307 0.0970 0.1183 0.0815 0.1058 0.0771 0.0998 0.0726 0.0938
3 0.0927 0.1085 0.0852 0.1020 0.0727 0.0912 0.0601 0.0804 0.0556 0.0737 0.0511 0.0669
4 0.0672 0.0801 0.0616 0.0752 0.0524 0.0670 0.0431 0.0587 0.0392 0.0523 0.0352 0.0459
5 0.0463 0.0551 0.0423 0.0517 0.0358 0.0461 0.0292 0.0404 0.0261 0.0350 0.0230 0.0296
10 0.0112 0.0140 0.0101 0.0129 0.0083 0.0112 0.0064 0.0094 0.0048 0.0071 0.0033 0.0049
15 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
20 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
25 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
30 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
35 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
• The police termination and refund rates are also used for Public Agency Local Prosecutors,
Other Safety, Local Sheriff, and School Police.
Public Agency Safety
Duration of
Service Fire Police County Peace Officer
Male Female Male Female Male Female
0 0.1022 0.1317 0.1298 0.1389 0.1086 0.1284
1 0.0686 0.1007 0.0789 0.0904 0.0777 0.0998
2 0.0441 0.0743 0.0464 0.0566 0.0549 0.0759
3 0.0272 0.0524 0.0274 0.0343 0.0385 0.0562
4 0.0161 0.0349 0.0170 0.0206 0.0268 0.0402
5 0.0092 0.0214 0.0113 0.0128 0.0186 0.0276
10 0.0015 0.0000 0.0032 0.0047 0.0046 0.0038
15 0.0000 0.0000 0.0000 0.0000 0.0023 0.0036
20 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
25 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
30 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
35 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-10
Termination with Refund (continued)
Schools
Duration of
Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40 Entry Age 45
Male Female Male Female Male Female Male Female Male Female Male Female
0 0.2054 0.2120 0.1933 0.1952 0.1730 0.1672 0.1527 0.1392 0.1423 0.1212 0.1318 0.1032
1 0.1922 0.2069 0.1778 0.1883 0.1539 0.1573 0.1300 0.1264 0.1191 0.1087 0.1083 0.0910
2 0.1678 0.1859 0.1536 0.1681 0.1298 0.1383 0.1060 0.1086 0.0957 0.0934 0.0853 0.0782
3 0.1384 0.1575 0.1256 0.1417 0.1042 0.1155 0.0829 0.0893 0.0736 0.0774 0.0643 0.0656
4 0.1085 0.1274 0.0978 0.1143 0.0800 0.0925 0.0622 0.0707 0.0542 0.0620 0.0462 0.0533
5 0.0816 0.0991 0.0732 0.0887 0.0590 0.0713 0.0449 0.0539 0.0383 0.0476 0.0317 0.0413
10 0.0222 0.0248 0.0200 0.0221 0.0163 0.0174 0.0125 0.0128 0.0094 0.0100 0.0063 0.0072
15 0.0106 0.0132 0.0095 0.0113 0.0077 0.0083 0.0058 0.0052 0.0040 0.0039 0.0021 0.0026
20 0.0059 0.0065 0.0050 0.0054 0.0035 0.0036 0.0021 0.0019 0.0010 0.0009 0.0000 0.0000
25 0.0029 0.0034 0.0025 0.0029 0.0018 0.0020 0.0010 0.0012 0.0005 0.0006 0.0000 0.0000
30 0.0012 0.0015 0.0011 0.0013 0.0011 0.0011 0.0010 0.0009 0.0005 0.0005 0.0000 0.0000
35 0.0006 0.0007 0.0006 0.0007 0.0005 0.0006 0.0005 0.0005 0.0003 0.0002 0.0000 0.0000
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-11
Termination with Vested Benefits
Rates vary by entry age and service for Miscellaneous plans. Rates vary by service for Safety plans.
See sample rates in tables below.
Public Agency Miscellaneous
Duration of
Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40
Male Female Male Female Male Female Male Female Male Female
5 0.0381 0.0524 0.0381 0.0524 0.0358 0.0464 0.0334 0.0405 0.0301 0.0380
10 0.0265 0.0362 0.0265 0.0362 0.0254 0.0334 0.0244 0.0307 0.0197 0.0236
15 0.0180 0.0252 0.0180 0.0252 0.0166 0.0213 0.0152 0.0174 0.0119 0.0132
20 0.0141 0.0175 0.0141 0.0175 0.0110 0.0131 0.0079 0.0087 0.0000 0.0000
25 0.0084 0.0108 0.0084 0.0108 0.0064 0.0076 0.0000 0.0000 0.0000 0.0000
30 0.0047 0.0056 0.0047 0.0056 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
35 0.0038 0.0041 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
• After termination with vested benefits, a Miscellaneous member is assumed to retire at age 59
and a Safety member at age 54.
• The Police termination with vested benefits rates are also used for Public Agency Local
Prosecutors, Other Safety, Local Sheriff, and School Police.
Schools
Duration of
Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40
Male Female Male Female Male Female Male Female Male Female
5 0.0359 0.0501 0.0359 0.0501 0.0332 0.0402 0.0305 0.0304 0.0266 0.0272
10 0.0311 0.0417 0.0311 0.0417 0.0269 0.0341 0.0228 0.0265 0.0193 0.0233
15 0.0193 0.0264 0.0193 0.0264 0.0172 0.0220 0.0151 0.0175 0.0123 0.0142
20 0.0145 0.0185 0.0145 0.0185 0.0113 0.0141 0.0080 0.0097 0.0000 0.0000
25 0.0089 0.0123 0.0089 0.0123 0.0074 0.0093 0.0000 0.0000 0.0000 0.0000
30 0.0057 0.0064 0.0057 0.0064 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
35 0.0040 0.0049 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
Public Agency Safety
Duration of
Service Fire Police County Peace Officer
Male Female Male Female Male Female
5 0.0089 0.0224 0.0156 0.0272 0.0177 0.0266
10 0.0066 0.0164 0.0113 0.0198 0.0126 0.0189
15 0.0048 0.0120 0.0083 0.0144 0.0089 0.0134
20 0.0035 0.0088 0.0060 0.0105 0.0063 0.0095
25 0.0024 0.0061 0.0042 0.0073 0.0042 0.0063
30 0.0012 0.0031 0.0021 0.0037 0.0021 0.0031
35 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-12
Non-Industrial (Not Job-Related) Disability
Rates vary by age and gender for Miscellaneous plans. Rates vary by age and category for Safety
plans.
Miscellaneous Fire Police County Peace Officer Schools
Ag
e Male Female
Male and
Female
Male and
Female Male and Female Male Female
20 0.0001 0.0000 0.0001 0.0001 0.0001 0.0000 0.0002
25 0.0001 0.0001 0.0001 0.0001 0.0001 0.0000 0.0002
30 0.0002 0.0003 0.0001 0.0001 0.0001 0.0002 0.0002
35 0.0004 0.0007 0.0001 0.0002 0.0003 0.0005 0.0004
40 0.0009 0.0012 0.0001 0.0002 0.0006 0.0010 0.0008
45 0.0015 0.0019 0.0002 0.0003 0.0011 0.0019 0.0015
50 0.0015 0.0019 0.0004 0.0005 0.0016 0.0027 0.0021
55 0.0014 0.0013 0.0006 0.0007 0.0009 0.0024 0.0017
60 0.0012 0.0009 0.0006 0.0011 0.0005 0.0020 0.0010
• The Miscellaneous non -industrial disability rates are used for Local Prosecutors.
• The police non-industrial disability rates are also used for Other Safety, Local Sheriff, and School
Police.
Industrial (Job-Related) Disability
Rates vary by age and category.
Age Fire Police County Peace Officer
20 0.0001 0.0000 0.0004
25 0.0002 0.0017 0.0013
30 0.0006 0.0048 0.0025
35 0.0012 0.0079 0.0037
40 0.0023 0.0110 0.0051
45 0.0040 0.0141 0.0067
50 0.0208 0.0185 0.0092
55 0.0307 0.0479 0.0151
60 0.0438 0.0602 0.0174
• The police industrial disability rates are also used for Local Sheriff and Other Safety.
• 50% of the police industrial disability rates are used for School Police.
• 1% of the police industrial disability rates are used for Local Prosecutors.
• Normally, rates are zero for Miscellaneous plans unless the agency has specifically contracted
for industrial disability benefits. If so, each Miscellaneous non-industrial disability rate will be split
into two components: 50% will become the non -industrial disability rate and 50% will become
the industrial disability rate.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-13
Service Retirement
Retirement rates vary by age, service, and formula, except for the Safety Half Pay at 55 and 2% at
55 formulas, where retirement rates vary by age only.
Public Agency Miscellaneous 1.5% at 65
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.008 0.011 0.013 0.015 0.017 0.019
51 0.007 0.010 0.012 0.013 0.015 0.017
52 0.010 0.014 0.017 0.019 0.021 0.024
53 0.008 0.012 0.015 0.017 0.019 0.022
54 0.012 0.016 0.019 0.022 0.025 0.028
55 0.018 0.025 0.031 0.035 0.038 0.043
56 0.015 0.021 0.025 0.029 0.032 0.036
57 0.020 0.028 0.033 0.038 0.043 0.048
58 0.024 0.033 0.040 0.046 0.052 0.058
59 0.028 0.039 0.048 0.054 0.060 0.067
60 0.049 0.069 0.083 0.094 0.105 0.118
61 0.062 0.087 0.106 0.120 0.133 0.150
62 0.104 0.146 0.177 0.200 0.223 0.251
63 0.099 0.139 0.169 0.191 0.213 0.239
64 0.097 0.136 0.165 0.186 0.209 0.233
65 0.140 0.197 0.240 0.271 0.302 0.339
66 0.092 0.130 0.157 0.177 0.198 0.222
67 0.129 0.181 0.220 0.249 0.277 0.311
68 0.092 0.129 0.156 0.177 0.197 0.221
69 0.092 0.130 0.158 0.178 0.199 0.224
70 0.103 0.144 0.175 0.198 0.221 0.248
Public Agency Miscellaneous 2% at 60
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.010 0.011 0.014 0.014 0.017 0.017
51 0.017 0.013 0.014 0.010 0.010 0.010
52 0.014 0.014 0.018 0.015 0.016 0.016
53 0.015 0.012 0.013 0.010 0.011 0.011
54 0.006 0.010 0.017 0.016 0.018 0.018
55 0.012 0.016 0.024 0.032 0.036 0.036
56 0.010 0.014 0.023 0.030 0.034 0.034
57 0.006 0.018 0.030 0.040 0.044 0.044
58 0.022 0.023 0.033 0.042 0.046 0.046
59 0.039 0.033 0.040 0.047 0.050 0.050
60 0.063 0.069 0.074 0.090 0.137 0.116
61 0.044 0.058 0.066 0.083 0.131 0.113
62 0.084 0.107 0.121 0.153 0.238 0.205
63 0.173 0.166 0.165 0.191 0.283 0.235
64 0.120 0.145 0.164 0.147 0.160 0.172
65 0.138 0.160 0.214 0.216 0.237 0.283
66 0.198 0.228 0.249 0.216 0.228 0.239
67 0.207 0.242 0.230 0.233 0.233 0.233
68 0.201 0.234 0.225 0.231 0.231 0.231
69 0.152 0.173 0.164 0.166 0.166 0.166
70 0.200 0.200 0.200 0.200 0.200 0.200
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-14
Service Retirement
Public Agency Miscellaneous 2% at 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.014 0.014 0.017 0.021 0.023 0.024
51 0.013 0.017 0.017 0.018 0.018 0.019
52 0.013 0.018 0.018 0.020 0.020 0.021
53 0.013 0.019 0.021 0.024 0.025 0.026
54 0.017 0.025 0.028 0.032 0.033 0.035
55 0.045 0.042 0.053 0.086 0.098 0.123
56 0.018 0.036 0.056 0.086 0.102 0.119
57 0.041 0.046 0.056 0.076 0.094 0.120
58 0.052 0.044 0.048 0.074 0.106 0.123
59 0.043 0.058 0.073 0.092 0.105 0.126
60 0.059 0.064 0.083 0.115 0.154 0.170
61 0.087 0.074 0.087 0.107 0.147 0.168
62 0.115 0.123 0.151 0.180 0.227 0.237
63 0.116 0.127 0.164 0.202 0.252 0.261
64 0.084 0.138 0.153 0.190 0.227 0.228
65 0.167 0.187 0.210 0.262 0.288 0.291
66 0.187 0.258 0.280 0.308 0.318 0.319
67 0.195 0.235 0.244 0.277 0.269 0.280
68 0.228 0.248 0.250 0.241 0.245 0.245
69 0.188 0.201 0.209 0.219 0.231 0.231
70 0.229 0.229 0.229 0.229 0.229 0.229
Public Agency Miscellaneous 2.5% at 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.014 0.017 0.027 0.035 0.046 0.050
51 0.019 0.021 0.025 0.030 0.038 0.040
52 0.018 0.020 0.026 0.034 0.038 0.037
53 0.013 0.021 0.031 0.045 0.052 0.053
54 0.025 0.025 0.030 0.046 0.057 0.068
55 0.029 0.042 0.064 0.109 0.150 0.225
56 0.036 0.047 0.068 0.106 0.134 0.194
57 0.051 0.047 0.060 0.092 0.116 0.166
58 0.035 0.046 0.062 0.093 0.119 0.170
59 0.029 0.053 0.072 0.112 0.139 0.165
60 0.039 0.069 0.094 0.157 0.177 0.221
61 0.080 0.077 0.086 0.140 0.167 0.205
62 0.086 0.131 0.149 0.220 0.244 0.284
63 0.135 0.135 0.147 0.214 0.222 0.262
64 0.114 0.128 0.158 0.177 0.233 0.229
65 0.112 0.174 0.222 0.209 0.268 0.273
66 0.235 0.254 0.297 0.289 0.321 0.337
67 0.237 0.240 0.267 0.249 0.267 0.277
68 0.258 0.271 0.275 0.207 0.210 0.212
69 0.117 0.208 0.266 0.219 0.250 0.270
70 0.229 0.229 0.229 0.229 0.229 0.229
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-15
Service Retirement
Public Agency Miscellaneous 2.7% at 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.011 0.016 0.022 0.033 0.034 0.038
51 0.018 0.019 0.023 0.032 0.031 0.031
52 0.019 0.020 0.026 0.035 0.034 0.037
53 0.020 0.020 0.025 0.043 0.048 0.053
54 0.018 0.030 0.040 0.052 0.053 0.070
55 0.045 0.058 0.082 0.138 0.208 0.278
56 0.057 0.062 0.080 0.121 0.178 0.222
57 0.045 0.052 0.071 0.106 0.147 0.182
58 0.074 0.060 0.074 0.118 0.163 0.182
59 0.058 0.067 0.086 0.123 0.158 0.187
60 0.087 0.084 0.096 0.142 0.165 0.198
61 0.073 0.084 0.101 0.138 0.173 0.218
62 0.130 0.133 0.146 0.187 0.214 0.249
63 0.122 0.140 0.160 0.204 0.209 0.243
64 0.104 0.124 0.154 0.202 0.214 0.230
65 0.182 0.201 0.242 0.264 0.293 0.293
66 0.272 0.249 0.273 0.285 0.312 0.312
67 0.182 0.217 0.254 0.249 0.264 0.264
68 0.223 0.197 0.218 0.242 0.273 0.273
69 0.217 0.217 0.217 0.217 0.217 0.217
70 0.227 0.227 0.227 0.227 0.227 0.227
Public Agency Miscellaneous 3% at 60
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.015 0.020 0.025 0.039 0.040 0.044
51 0.041 0.034 0.032 0.041 0.036 0.037
52 0.024 0.020 0.022 0.039 0.040 0.041
53 0.018 0.024 0.032 0.047 0.048 0.057
54 0.033 0.033 0.035 0.051 0.049 0.052
55 0.137 0.043 0.051 0.065 0.076 0.108
56 0.173 0.038 0.054 0.075 0.085 0.117
57 0.019 0.035 0.059 0.088 0.111 0.134
58 0.011 0.040 0.070 0.105 0.133 0.162
59 0.194 0.056 0.064 0.081 0.113 0.163
60 0.081 0.085 0.133 0.215 0.280 0.333
61 0.080 0.090 0.134 0.170 0.223 0.292
62 0.137 0.153 0.201 0.250 0.278 0.288
63 0.128 0.140 0.183 0.227 0.251 0.260
64 0.174 0.147 0.173 0.224 0.239 0.264
65 0.152 0.201 0.262 0.299 0.323 0.323
66 0.272 0.273 0.317 0.355 0.380 0.380
67 0.218 0.237 0.268 0.274 0.284 0.284
68 0.200 0.228 0.269 0.285 0.299 0.299
69 0.250 0.250 0.250 0.250 0.250 0.250
70 0.245 0.245 0.245 0.245 0.245 0.245
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-16
Service Retirement
Public Agency Miscellaneous 2% at 62
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.000 0.000 0.000 0.000 0.000 0.000
51 0.000 0.000 0.000 0.000 0.000 0.000
52 0.005 0.008 0.012 0.015 0.019 0.031
53 0.007 0.011 0.014 0.018 0.021 0.032
54 0.007 0.011 0.015 0.019 0.023 0.034
55 0.010 0.019 0.028 0.036 0.061 0.096
56 0.014 0.026 0.038 0.050 0.075 0.108
57 0.018 0.029 0.039 0.050 0.074 0.107
58 0.023 0.035 0.048 0.060 0.073 0.099
59 0.025 0.038 0.051 0.065 0.092 0.128
60 0.031 0.051 0.071 0.091 0.111 0.138
61 0.038 0.058 0.079 0.100 0.121 0.167
62 0.044 0.074 0.104 0.134 0.164 0.214
63 0.077 0.105 0.134 0.163 0.192 0.237
64 0.072 0.101 0.129 0.158 0.187 0.242
65 0.108 0.141 0.173 0.206 0.239 0.300
66 0.132 0.172 0.212 0.252 0.292 0.366
67 0.132 0.172 0.212 0.252 0.292 0.366
68 0.120 0.156 0.193 0.229 0.265 0.333
69 0.120 0.156 0.193 0.229 0.265 0.333
70 0.120 0.156 0.193 0.229 0.265 0.333
Service Retirement
Public Agency Fire Half Pay at 55 and 2% at 55
Age Rate
Age Rate
50 0.016 56 0.111
51 0.000 57 0.000
52 0.034 58 0.095
53 0.020 59 0.044
54 0.041 60 1.000
55 0.075
Public Agency Police Half Pay at 55 and 2% at 55
Age Rate
Age Rate
50 0.026 56 0.069
51 0.000 57 0.051
52 0.016 58 0.072
53 0.027 59 0.070
54 0.010 60 0.300
55 0.167
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-17
Service Retirement
Public Agency Police 2% at 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.018 0.077 0.056 0.046 0.043 0.046
51 0.022 0.087 0.060 0.048 0.044 0.047
52 0.020 0.102 0.081 0.071 0.069 0.075
53 0.016 0.072 0.053 0.045 0.042 0.046
54 0.006 0.071 0.071 0.069 0.072 0.080
55 0.009 0.040 0.099 0.157 0.186 0.186
56 0.020 0.051 0.108 0.165 0.194 0.194
57 0.036 0.072 0.106 0.139 0.156 0.156
58 0.001 0.046 0.089 0.130 0.152 0.152
59 0.066 0.094 0.119 0.143 0.155 0.155
60 0.177 0.177 0.177 0.177 0.177 0.177
61 0.134 0.134 0.134 0.134 0.134 0.134
62 0.184 0.184 0.184 0.184 0.184 0.184
63 0.250 0.250 0.250 0.250 0.250 0.250
64 0.177 0.177 0.177 0.177 0.177 0.177
65 1.000 1.000 1.000 1.000 1.000 1.000
• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police,
and Other Safety.
Service Retirement
Public Agency Fire 2% at 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.054 0.054 0.056 0.080 0.064 0.066
51 0.020 0.020 0.021 0.030 0.024 0.024
52 0.037 0.037 0.038 0.054 0.043 0.045
53 0.051 0.051 0.053 0.076 0.061 0.063
54 0.082 0.082 0.085 0.121 0.097 0.100
55 0.139 0.139 0.139 0.139 0.139 0.139
56 0.129 0.129 0.129 0.129 0.129 0.129
57 0.085 0.085 0.085 0.085 0.085 0.085
58 0.119 0.119 0.119 0.119 0.119 0.119
59 0.167 0.167 0.167 0.167 0.167 0.167
60 0.152 0.152 0.152 0.152 0.152 0.152
61 0.179 0.179 0.179 0.179 0.179 0.179
62 0.179 0.179 0.179 0.179 0.179 0.179
63 0.179 0.179 0.179 0.179 0.179 0.179
64 0.179 0.179 0.179 0.179 0.179 0.179
65 1.000 1.000 1.000 1.000 1.000 1.000
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-18
Service Retirement
Public Agency Police 3% at 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.019 0.053 0.045 0.054 0.057 0.061
51 0.002 0.017 0.028 0.044 0.053 0.060
52 0.002 0.031 0.037 0.051 0.059 0.066
53 0.026 0.049 0.049 0.080 0.099 0.114
54 0.019 0.034 0.047 0.091 0.121 0.142
55 0.006 0.115 0.141 0.199 0.231 0.259
56 0.017 0.188 0.121 0.173 0.199 0.199
57 0.008 0.137 0.093 0.136 0.157 0.157
58 0.017 0.126 0.105 0.164 0.194 0.194
59 0.026 0.146 0.110 0.167 0.195 0.195
60 0.155 0.155 0.155 0.155 0.155 0.155
61 0.210 0.210 0.210 0.210 0.210 0.210
62 0.262 0.262 0.262 0.262 0.262 0.262
63 0.172 0.172 0.172 0.172 0.172 0.172
64 0.227 0.227 0.227 0.227 0.227 0.227
65 1.000 1.000 1.000 1.000 1.000 1.000
• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School
Police, and Other Safety.
Service Retirement
Public Agency Fire 3% at 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.003 0.006 0.013 0.019 0.025 0.028
51 0.004 0.008 0.017 0.026 0.034 0.038
52 0.005 0.011 0.022 0.033 0.044 0.049
53 0.005 0.034 0.024 0.038 0.069 0.138
54 0.007 0.047 0.032 0.051 0.094 0.187
55 0.010 0.067 0.046 0.073 0.134 0.266
56 0.010 0.063 0.044 0.069 0.127 0.253
57 0.135 0.100 0.148 0.196 0.220 0.220
58 0.083 0.062 0.091 0.120 0.135 0.135
59 0.137 0.053 0.084 0.146 0.177 0.177
60 0.162 0.063 0.099 0.172 0.208 0.208
61 0.598 0.231 0.231 0.231 0.231 0.231
62 0.621 0.240 0.240 0.240 0.240 0.240
63 0.236 0.236 0.236 0.236 0.236 0.236
64 0.236 0.236 0.236 0.236 0.236 0.236
65 1.000 1.000 1.000 1.000 1.000 1.000
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-19
Service Retirement
Public Agency Police 3% at 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.124 0.103 0.113 0.143 0.244 0.376
51 0.060 0.081 0.087 0.125 0.207 0.294
52 0.016 0.055 0.111 0.148 0.192 0.235
53 0.072 0.074 0.098 0.142 0.189 0.237
54 0.018 0.049 0.105 0.123 0.187 0.271
55 0.069 0.074 0.081 0.113 0.209 0.305
56 0.064 0.108 0.113 0.125 0.190 0.288
57 0.056 0.109 0.160 0.182 0.210 0.210
58 0.108 0.129 0.173 0.189 0.214 0.214
59 0.093 0.144 0.204 0.229 0.262 0.262
60 0.343 0.180 0.159 0.188 0.247 0.247
61 0.221 0.221 0.221 0.221 0.221 0.221
62 0.213 0.213 0.213 0.213 0.213 0.213
63 0.233 0.233 0.233 0.233 0.233 0.233
64 0.234 0.234 0.234 0.234 0.234 0.234
65 1.000 1.000 1.000 1.000 1.000 1.000
• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School
Police, and Other Safety.
Service Retirement
Public Agency Fire 3% at 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.095 0.048 0.053 0.093 0.134 0.175
51 0.016 0.032 0.053 0.085 0.117 0.149
52 0.013 0.032 0.054 0.087 0.120 0.154
53 0.085 0.044 0.049 0.089 0.129 0.170
54 0.038 0.065 0.074 0.105 0.136 0.167
55 0.042 0.043 0.049 0.085 0.132 0.215
56 0.133 0.103 0.075 0.113 0.151 0.209
57 0.062 0.048 0.060 0.124 0.172 0.213
58 0.124 0.097 0.092 0.153 0.194 0.227
59 0.092 0.071 0.078 0.144 0.192 0.233
60 0.056 0.044 0.061 0.131 0.186 0.233
61 0.282 0.219 0.158 0.198 0.233 0.260
62 0.292 0.227 0.164 0.205 0.241 0.269
63 0.196 0.196 0.196 0.196 0.196 0.196
64 0.197 0.197 0.197 0.197 0.197 0.197
65 1.000 1.000 1.000 1.000 1.000 1.000
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-20
Service Retirement
Public Agency Police 2% at 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.040 0.040 0.040 0.040 0.040 0.080
51 0.028 0.028 0.028 0.028 0.040 0.066
52 0.028 0.028 0.028 0.028 0.043 0.061
53 0.028 0.028 0.028 0.028 0.057 0.086
54 0.028 0.028 0.028 0.032 0.069 0.110
55 0.050 0.050 0.050 0.067 0.099 0.179
56 0.046 0.046 0.046 0.062 0.090 0.160
57 0.054 0.054 0.054 0.072 0.106 0.191
58 0.060 0.060 0.060 0.066 0.103 0.171
59 0.060 0.060 0.060 0.069 0.105 0.171
60 0.113 0.113 0.113 0.113 0.113 0.171
61 0.108 0.108 0.108 0.108 0.108 0.128
62 0.113 0.113 0.113 0.113 0.113 0.159
63 0.113 0.113 0.113 0.113 0.113 0.159
64 0.113 0.113 0.113 0.113 0.113 0.239
65 1.000 1.000 1.000 1.000 1.000 1.000
• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School
Police, and Other Safety.
Service Retirement
Public Agency Fire 2% at 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.005 0.005 0.005 0.005 0.008 0.012
51 0.006 0.006 0.006 0.006 0.009 0.013
52 0.012 0.012 0.012 0.012 0.019 0.028
53 0.033 0.033 0.033 0.033 0.050 0.075
54 0.045 0.045 0.045 0.045 0.069 0.103
55 0.061 0.061 0.061 0.061 0.094 0.140
56 0.055 0.055 0.055 0.055 0.084 0.126
57 0.081 0.081 0.081 0.081 0.125 0.187
58 0.059 0.059 0.059 0.059 0.091 0.137
59 0.055 0.055 0.055 0.055 0.084 0.126
60 0.085 0.085 0.085 0.085 0.131 0.196
61 0.085 0.085 0.085 0.085 0.131 0.196
62 0.085 0.085 0.085 0.085 0.131 0.196
63 0.085 0.085 0.085 0.085 0.131 0.196
64 0.085 0.085 0.085 0.085 0.131 0.196
65 1.000 1.000 1.000 1.000 1.000 1.000
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-21
Service Retirement
Public Agency Police 2.5 % at 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.050 0.050 0.050 0.050 0.050 0.100
51 0.038 0.038 0.038 0.038 0.055 0.089
52 0.038 0.038 0.038 0.038 0.058 0.082
53 0.036 0.036 0.036 0.036 0.073 0.111
54 0.036 0.036 0.036 0.041 0.088 0.142
55 0.061 0.061 0.061 0.082 0.120 0.217
56 0.056 0.056 0.056 0.075 0.110 0.194
57 0.060 0.060 0.060 0.080 0.118 0.213
58 0.072 0.072 0.072 0.079 0.124 0.205
59 0.072 0.072 0.072 0.083 0.126 0.205
60 0.135 0.135 0.135 0.135 0.135 0.205
61 0.130 0.130 0.130 0.130 0.130 0.153
62 0.135 0.135 0.135 0.135 0.135 0.191
63 0.135 0.135 0.135 0.135 0.135 0.191
64 0.135 0.135 0.135 0.135 0.135 0.287
65 1.000 1.000 1.000 1.000 1.000 1.000
• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School
Police, and Other Safety.
Service Retirement
Public Agency Fire 2.5 % at 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.007 0.007 0.007 0.007 0.010 0.015
51 0.008 0.008 0.008 0.008 0.012 0.018
52 0.016 0.016 0.016 0.016 0.025 0.038
53 0.042 0.042 0.042 0.042 0.064 0.096
54 0.057 0.057 0.057 0.057 0.088 0.132
55 0.074 0.074 0.074 0.074 0.114 0.170
56 0.066 0.066 0.066 0.066 0.102 0.153
57 0.090 0.090 0.090 0.090 0.139 0.208
58 0.071 0.071 0.071 0.071 0.110 0.164
59 0.066 0.066 0.066 0.066 0.101 0.151
60 0.102 0.102 0.102 0.102 0.157 0.235
61 0.102 0.102 0.102 0.102 0.157 0.236
62 0.102 0.102 0.102 0.102 0.157 0.236
63 0.102 0.102 0.102 0.102 0.157 0.236
64 0.102 0.102 0.102 0.102 0.157 0.236
65 1.000 1.000 1.000 1.000 1.000 1.000
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-22
Service Retirement
Public Agency Police 2.7 % at 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.050 0.050 0.050 0.050 0.050 0.100
51 0.040 0.040 0.040 0.040 0.058 0.094
52 0.038 0.038 0.038 0.038 0.058 0.083
53 0.038 0.038 0.038 0.038 0.077 0.117
54 0.038 0.038 0.038 0.044 0.093 0.150
55 0.068 0.068 0.068 0.091 0.134 0.242
56 0.063 0.063 0.063 0.084 0.123 0.217
57 0.060 0.060 0.060 0.080 0.118 0.213
58 0.080 0.080 0.080 0.088 0.138 0.228
59 0.080 0.080 0.080 0.092 0.140 0.228
60 0.150 0.150 0.150 0.150 0.150 0.228
61 0.144 0.144 0.144 0.144 0.144 0.170
62 0.150 0.150 0.150 0.150 0.150 0.213
63 0.150 0.150 0.150 0.150 0.150 0.213
64 0.150 0.150 0.150 0.150 0.150 0.319
65 1.000 1.000 1.000 1.000 1.000 1.000
• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School
Police, and Other Safety.
Service Retirement
Public Agency Fire 2.7 % at 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.007 0.007 0.007 0.007 0.010 0.015
51 0.008 0.008 0.008 0.008 0.013 0.019
52 0.016 0.016 0.016 0.016 0.025 0.038
53 0.044 0.044 0.044 0.044 0.068 0.102
54 0.061 0.061 0.061 0.061 0.093 0.140
55 0.083 0.083 0.083 0.083 0.127 0.190
56 0.074 0.074 0.074 0.074 0.114 0.171
57 0.090 0.090 0.090 0.090 0.139 0.208
58 0.079 0.079 0.079 0.079 0.122 0.182
59 0.073 0.073 0.073 0.073 0.112 0.168
60 0.114 0.114 0.114 0.114 0.175 0.262
61 0.114 0.114 0.114 0.114 0.175 0.262
62 0.114 0.114 0.114 0.114 0.175 0.262
63 0.114 0.114 0.114 0.114 0.175 0.262
64 0.114 0.114 0.114 0.114 0.175 0.262
65 1.000 1.000 1.000 1.000 1.000 1.000
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-23
Service Retirement
Schools 2% at 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.003 0.004 0.006 0.007 0.010 0.010
51 0.004 0.005 0.007 0.008 0.011 0.011
52 0.005 0.007 0.008 0.009 0.012 0.012
53 0.007 0.008 0.010 0.012 0.015 0.015
54 0.006 0.009 0.012 0.015 0.020 0.021
55 0.011 0.023 0.034 0.057 0.070 0.090
56 0.012 0.027 0.036 0.056 0.073 0.095
57 0.016 0.027 0.036 0.055 0.068 0.087
58 0.019 0.030 0.040 0.062 0.078 0.103
59 0.023 0.034 0.046 0.070 0.085 0.109
60 0.022 0.043 0.062 0.095 0.113 0.141
61 0.030 0.051 0.071 0.103 0.124 0.154
62 0.065 0.098 0.128 0.188 0.216 0.248
63 0.075 0.112 0.144 0.197 0.222 0.268
64 0.091 0.116 0.138 0.180 0.196 0.231
65 0.163 0.164 0.197 0.232 0.250 0.271
66 0.208 0.204 0.243 0.282 0.301 0.315
67 0.189 0.185 0.221 0.257 0.274 0.287
68 0.127 0.158 0.200 0.227 0.241 0.244
69 0.168 0.162 0.189 0.217 0.229 0.238
70 0.191 0.190 0.237 0.250 0.246 0.254
Schools 2% at 62
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.000 0.000 0.000 0.000 0.000 0.000
51 0.000 0.000 0.000 0.000 0.000 0.000
52 0.004 0.007 0.010 0.011 0.013 0.015
53 0.004 0.008 0.010 0.013 0.014 0.016
54 0.005 0.011 0.015 0.018 0.020 0.022
55 0.014 0.027 0.038 0.045 0.050 0.056
56 0.013 0.026 0.037 0.043 0.048 0.055
57 0.013 0.027 0.038 0.045 0.050 0.055
58 0.017 0.034 0.047 0.056 0.062 0.069
59 0.019 0.037 0.052 0.062 0.068 0.076
60 0.026 0.053 0.074 0.087 0.097 0.108
61 0.030 0.058 0.081 0.095 0.106 0.119
62 0.053 0.105 0.147 0.174 0.194 0.217
63 0.054 0.107 0.151 0.178 0.198 0.222
64 0.053 0.105 0.147 0.174 0.194 0.216
65 0.072 0.142 0.199 0.235 0.262 0.293
66 0.077 0.152 0.213 0.252 0.281 0.314
67 0.070 0.139 0.194 0.229 0.255 0.286
68 0.063 0.124 0.173 0.205 0.228 0.255
69 0.066 0.130 0.183 0.216 0.241 0.270
70 0.071 0.140 0.196 0.231 0.258 0.289
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-24
Miscellaneous
Internal Revenue Code Section 415
The limitations on benefits imposed by Internal Revenue Code Section 415 are taken into account in this
valuation. Each year the impact of any changes in this limitation since the prior valuation is included and
amortized as part of the actuarial gain or loss base. This results in lower contributions for those employers
contributing to the Replaceme nt Benefit Fund and protects CalPERS from prefunding expected benefits in
excess of limits imposed by federal tax law. The Section 415(b) dollar limit for the 2022 calendar year is
$245,000.
Internal Revenue Code Section 401(a)(17)
The limitations on compensation imposed by Internal Revenue Code Section 401(a)(17) are taken into
account in this valuation. Each year, the impact of any changes in the compensation limitation since the prior
valuation is included and amortized as part of the actuarial gain or loss base. The compensation limit for
classic members for the 2022 calendar year is $305,000.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
Appendix B
Principal Plan Provisions
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix B
Miscellaneous Plan of the City of Palo Alto
Principal Plan Provisions
B-1
The following is a description of the principal plan provisions used in calculating costs and liabilities. We have indicated
whether a plan provision is standard or optional. Standard benefits are applicable to all members while optional benefits
vary among employers. Optional benefits that apply to a single period of time, such as Golden Handshakes, have not
been included. Many of the statements in this summary are general in nature, and are intended to provide an easily
understood summary of the Public Em ployees’ Retirement Law and the California Public Employees’ Pension Reform
Act of 2013 . The law itself governs in all situations.
Service Retirement
Eligibility
A classic CalPERS member or PEPRA Safety member becomes eligible for Service Retirement upon attainment of
age 50 with at least 5 years of credited service (total service across all CalPERS employers, and with certain other
retirement systems with which Ca lPERS has reciprocity agreements). For employees hired into a plan with the 1.5%
at age 65 formula, eligibility for service retirement is age 55 with at least 5 years of service. PEPRA Miscellaneous
members become eligible for service retirement upon attai nment of age 52 with at least 5 years of service.
Benefit
The service retirement benefit is a monthly allowance equal to the product of the benefit factor, years of service , and
final compensation.
· The benefit factor depends on the benefit formula specified in the agency’s contract. The table below shows the
factors for each of the available formulas. Factors vary by the member’s age at retirement. Listed are the factors
for retirement at whole year ages:
Miscellaneous Plan Formulas
Retirement
Age 1.5% at 65 2% at 60 2% at 55 2.5% at 55 2.7% at 55 3% at 60 PEPRA
2% at 62
50 0.5000% 1.092% 1.426% 2.000% 2.000% 2.000% N/A
51 0.5667% 1.156% 1.522% 2.100% 2.140% 2.100% N/A
52 0.6334% 1.224% 1.628% 2.200% 2.280% 2.200% 1.000%
53 0.7000% 1.296% 1.742% 2.300% 2.420% 2.300% 1.100%
54 0.7667% 1.376% 1.866% 2.400% 2.560% 2.400% 1.200%
55 0.8334% 1.460% 2.000% 2.500% 2.700% 2.500% 1.300%
56 0.9000% 1.552% 2.052% 2.500% 2.700% 2.600% 1.400%
57 0.9667% 1.650% 2.104% 2.500% 2.700% 2.700% 1.500%
58 1.0334% 1.758% 2.156% 2.500% 2.700% 2.800% 1.600%
59 1.1000% 1.874% 2.210% 2.500% 2.700% 2.900% 1.700%
60 1.1667% 2.000% 2.262% 2.500% 2.700% 3.000% 1.800%
61 1.2334% 2.134% 2.314% 2.500% 2.700% 3.000% 1.900%
62 1.3000% 2.272% 2.366% 2.500% 2.700% 3.000% 2.000%
63 1.3667% 2.418% 2.418% 2.500% 2.700% 3.000% 2.100%
64 1.4334% 2.418% 2.418% 2.500% 2.700% 3.000% 2.200%
65 1.5000% 2.418% 2.418% 2.500% 2.700% 3.000% 2.300%
66 1.5000% 2.418% 2.418% 2.500% 2.700% 3.000% 2.400%
67 & up 1.5000% 2.418% 2.418% 2.500% 2.700% 3.000% 2.500%
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix B
Miscellaneous Plan of the City of Palo Alto
Principal Plan Provisions
B-2
Safety Plan Formulas
Retirement Age Half Pay at 55* 2% at 55 2% at 50 3% at 55 3% at 50
50 1.783% 1.426% 2.000% 2.400% 3.000%
51 1.903% 1.522% 2.140% 2.520% 3.000%
52 2.035% 1.628% 2.280% 2.640% 3.000%
53 2.178% 1.742% 2.420% 2.760% 3.000%
54 2.333% 1.866% 2.560% 2.880% 3.000%
55 & Up 2.500% 2.000% 2.700% 3.000% 3.000%
* For this formula, the benefit factor also varies by entry age. The factors shown are for members with an entry age of
35 or greater. If entry age is less than 35, then the age 55 benefit factor is 50% divided by the difference between age
55 and entry ag e. The benefit factor for ages prior to age 55 is the same proportion of the age 55 benefit factor as in
the above table.
PEPRA Safety Plan Formulas
Retirement Age 2% at 57 2.5% at 57 2.7% at 57
50 1.426% 2.000% 2.000%
51 1.508% 2.071% 2.100%
52 1.590% 2.143% 2.200%
53 1.672% 2.214% 2.300%
54 1.754% 2.286% 2.400%
55 1.836% 2.357% 2.500%
56 1.918% 2.429% 2.600%
57 & Up 2.000% 2.500% 2.700%
• The years of service is the amount credited by CalPERS to a member while he or she is employed in this group
(or for other periods that are recognized under the employer’s contract with CalPERS). For a member who has
earned service with multiple CalPERS employers, the benefit from each employer is calculated separately
according to each employer’s contract, and then added together for the total allowance. An agency may contract
for an optional benefit where any unused sick leave accumulated at the time of retirement will be co nverted to
credited service at a rate of 0.004 years of service for each day of sick leave.
• The final compensation is the monthly average of the member’s highest 36 or 12 consecutive months’ full -time
equivalent monthly pay (no matter which CalPERS emplo yer paid this compensation). The standard benefit is 36
months. Employers had the option of providing a final compensation equal to the highest 12 consecutive months
for classic plans only. Final compensation must be defined by the highest 36 consecutive m onths’ pay under the
1.5% at 65 formula. PEPRA members have a cap on the annual salary that can be used to calculate final
compensation for all new members based on the Social Security contribution and benefit base. For employees
that participate in Social Security this cap is $134,974 for 2022 and for those employees that do not participate in
Social Security the cap for 2022 is $161,969 . Adjustments to the caps are permitted ann ually based on changes
to the CPI for all urban consumers.
• PEPRA benefit formulas have no Social Security offsets and Social Security coverage is optional . For Classic
benefit formulas, e mployees must be covered by Social Security with the 1.5% at 65 form ula. Social Security is
optional for all other Classic benefit formulas. For employees covered by Social Security, the modified formula is
the standard benefit. Under this type of formula, the final compensation is offset by $133.33 (or by one third if the
final compensation is less than $400). Employers may contract for the full benefit with Social Security that will
eliminate the offset applicable to the final compensation. For employees not covered by Social Security, the full
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix B
Miscellaneous Plan of the City of Palo Alto
Principal Plan Provisions
B-3
benefit is paid with no offsets. Auxiliary organizations of the CSUC system may elect reduced contribution rates,
in which case the offset is $317 if members are not covered by Social Security or $513 if members are covered by
Social Security.
• The Miscellaneous and PEPRA Safety service retirement benefit is not capped. The Classic Safety service
retirement benefit is capped at 90% of final compensation.
Vested Deferred Retirement
Eligibility for Deferred Status
A CalPERS member becomes eligi ble for a deferred vested retirement benefit when he or she leaves employment,
keeps his or her contribution account balance on deposit with CalPERS, and has earned at least 5 years of credited
service (total service across all CalPERS employers, and with certain other retirement systems with which CalPERS
has reciprocity agreements).
Eligibility to Start Receiving Benefits
The CalPERS classic members and PEPRA Safety members become eligible to receive the deferred retirement benefit
upon satisfying the eligibility requirements for deferred status and upon attainment of age 50 (55 for employees hired
into a 1.5% at 65 plan). PEPRA Miscellaneous members become eligible to receive the deferred retirement benefit
upon satisfying the eligibility requirements for deferred status and upon attainment of age 52.
Benefit
The vested deferred retirement benefit is the same as the service retirement benefit, where the benefit factor is based
on the member’s age at allowance commencement. For members who have earned service with multiple CalPERS
employers, the benefit from each employer is calculated separately according to each employer’s contract, and then
added together for the total allowance.
Non -Industrial (Non -Job Related) Disability Retirement
Eligibility
A CalPERS member is eligible for Non -Industrial Disability Retirement if he or she becomes disabled and has at least
5 years of credited service (total service across all CalPERS employers, and with certain other retirement systems with
which CalPERS has reciprocity agreements). There is no special age requirement. Disabled means the member is
unable to perform his or her job because of an illness or injury, which is expected to be permanent or to last indefinitely.
The illness or injury does not have to be job related. A CalPERS member must be actively employed by any CalPERS
employer at the time of disability in order to be eligible for this benefit.
Standard Benefit
The standard Non-Industrial Disability Retirement benefit is a monthly allowance equal t o 1.8% of final compensation,
multiplied by service, which is determined as follows:
• Service is CalPERS credited service, for members with less than 10 years of service or greater than 18.518 years
of service; or
• Service is CalPERS credited service plus the additional number of years that the member would have worked until
age 60, for members with at least 10 years but not more than 18.518 years of service. The maximum benefit in
this case is 33⅓% of final compensation.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix B
Miscellaneous Plan of the City of Palo Alto
Principal Plan Provisions
B-4
Improved Benefit
Employers have the option of providing the improved Non -Industrial Disability Retirement benefit. This benefit provides
a monthly allowance equal to 30% of final compensation for the first 5 years of service, plus 1% for each additional
year of service to a maximum of 50% of final compensation.
Members who are eligible for a larger service retirement benefit may choose to receive that benefit in lieu of a disability
benefit. Members eligible to retire, and who have attai ned the normal retirement age determined by their service
retirement benefit formula, will receive the same dollar amount for disability retirement as that payable for service
retirement. For members who have earned service with multiple CalPERS employers, the benefit attributed to each
employer is the total disability allowance multiplied by the ratio of service with a particular employer to the total CalPERS
service.
Industrial (Job Related) Disability Retirement
This is a standard benefit for Safety m embers except those described in Section 20423.6. For excluded Safety
members and all Miscellaneous members, employers have the option of providing this benefit. An employer may
choose to provide the increased benefit option or the improved benefit option.
Eligibility
An employee is eligible for Industrial Disability Retirement if he or she becomes disabled while working, where disabled
means the member is unable to perform the duties of the job because of a work -related illness or injury, which is
expected to be permanent or to last indefinitely. A CalPERS member who has left active employment within this group
is not eligible for this benefi t, except to the extent described below.
Standard Benefit
The standard Industrial Disability Retirement benefit is a monthly allowance equal to 50% of final compensation.
Increased Benefit (75% of Final Compensation)
The increased Industrial Disability Retirement benefit is a monthly allowance equal to 75% of final compensation for
total disability.
Improved Benefit (50% to 90% of Final Compensation)
The improved Industrial Disability Retirement benefit is a monthly allowance equal to the Workman’s Co mpensation
Appeals Board permanent disability rate percentage (if 50% or greater, with a maximum of 90%) times the final
compensation.
For a CalPERS member not actively employed in this group who became disabled while employed by some other
CalPERS employer, the benefit is a return of accumulated member contributions with respect to employment in this
group. With the standard or increased benefit, a member may also choose to receive the annuitization of the
accumulated member contributions.
If a member is eligible for service retirement and if the service retirement benefit is more than the industrial disability
retirement benefit, the member may choose to receive the larger benefit.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix B
Miscellaneous Plan of the City of Palo Alto
Principal Plan Provisions
B-5
Post-Retirement Death Benefit
Standard Lump Sum Payment
Upon the death of a retiree, a one -time lump sum payment of $500 will be made to the retiree’s designated survivor(s),
or to the retiree’s estate. The lump sum payment amount increases to $2,000 for any death occurring on or after
July 1, 2023 due to SB 1168.
Optional Lump Sum Payment
In lieu of the standard lump sum death benefit, e mployers have the option of providing a lump sum death benefit of
$600, $3,000, $4,000 or $5,000.
Form of Payment for Retirement Allowance
Standard Form of Payment
Generally, the retirement allowance is paid to the retiree in the form of an annuity for as long as he or she is alive. The
retiree may choose to provide for a portion of his or her allowance to be paid to any designated beneficiary after the
retiree’s death. C alPERS provides for a variety of such benefit options, which the retiree pays for by taking a reduction
in his or her retirement allowance. Such reduction takes into account the amount to be provided to the beneficiary and
the probable duration of payments (based on the ages of the member and beneficiary) made subsequent to the
member’s death.
Improved Form of Payment (Post-Retirement Survivor Allowance)
Employers have the option to contract for the post-retirement survivor allowance.
For retirement allowances with respect to service subject to a modified Classic formula, 25% of the retirement allowance
will automatically be continued to certain statutory beneficiaries upon the death of the retiree, without a reduction in the
retiree’s allowance. For retirement allowances with respect to service subject to a PEPRA formula or a full or
supplemental Classic formula, 50% of the retirement allowance will automatically be continued to certain statutory
beneficiaries upon the death of the retiree, without a reduction in the retiree’s allowance. This additional benefit is
referred to as post-retirement survivor allowance (PRSA) or simply as survivor continuance.
In other words, 25% or 50% of the allowance, the continuance portion, is paid to the retiree for as long as he or she is
alive, and that same amount is continued to the retiree’s spouse (or if no eligible spouse, to unmarried child(ren) until
they attain age 18; or, if no eligible child(ren), to a qualifying dependent parent) for the rest of his or her lifetime. Thi s
benefit will not be discontinued in the event the spouse remarries.
The remaining 75% or 50% of the retirement allowance, which may be referred to as the option portion of the benefit,
is paid to the retiree as an annuity for as long as he or she is alive. Or, the retiree may choose to provide for som e of
this option portion to be paid to any designated beneficiary after the retiree’s death. Benefit options applicable to the
option portion are the same as those offered with the standard form. The reduction is calculated in the same manner
but is applied only to the option portion.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix B
Miscellaneous Plan of the City of Palo Alto
Principal Plan Provisions
B-6
Pre-Retirement Death Benefits
Basic Death Benefit
This is a standard benefit.
Eligibility
An employee’s beneficiary (or estate) may receive the basic death benefit if the member dies while actively employed.
A CalPERS member must be actively employed with the CalPERS employer providing this benefit to be eligible for this
benefit. A member’s survivor who is eligible for any other pre -retirement death benefit may choose to receive that death
benefit instead of this basic death benefit.
Benefit
The basic death benefit is a lump sum in the amount of the member’s accumulated contributions, where interest is
credited annually at the greater of 6% or the prevailing discount rate through the date of death, plus a lump sum in the
amount of one month's salary for each completed year of current service, up to a maximum of six months' salary. For
purposes of this benefit, one month's salary is defined as the member's average monthly full -time rate of compensation
during the 12 months preceding death.
1957 Survivor Benefit
This is a standard benefit.
Eligibility
An employee’s eligible survivor(s) may receive the 1957 Survivor benefit if the member dies while actively employed,
has attained at least age 50 fo r classic and PEPRA Safety members and age 52 for PEPRA Miscellaneous members,
and has at least 5 years of credited service (total service across all CalPERS employers and with certain other
retirement systems with which CalPERS has reciprocity agreements). A CalPERS member must be actively employed
with the CalPERS employer providing this benefit to be eligible for this benefit. An eligible survivor means the surviving
spouse to whom the member was married at least one year before death or, if there is no eligible spouse, to the
member's unmarried child(ren) under age 18. A member’s survivor who is eligible for any other pre -retirement death
benefit may choose to receive that death benefit instead of this 1957 Survivor benefit.
Benefit
The 1957 Survivor b enefit is a monthly allowance equal to one -half of the unmodified service retirement benefit that
the member would have been entitled to receive if the member had retired on the date of his or her death. If the benefit
is payable to the spouse, the benefit is discontinued upon the death of the spouse. If the benefit is payable to dependent
child(ren), the benefit will be discontinued upon death or attainment of age 18, unless the child(ren) is disabled. The
total amount paid will be at least equal to the ba sic death benefit.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix B
Miscellaneous Plan of the City of Palo Alto
Principal Plan Provisions
B-7
Optional Settlement 2 Death Benefit
This is an optional benefit.
Eligibility
An employee’s eligible survivor may receive the Optional Settlement 2 Death benefit if the member dies while actively
employed, has attained at least age 50 for classic and PEPRA Safety members and age 52 for PEPRA Miscellaneous
members, and has at least 5 years of credited service (total service across all CalPERS employers and with certain
other retirement systems with which CalPERS has reciprocity agreements). A CalPERS member who is no longer
actively employed with any CalPERS employer is not eligible for this benefit. An eligible survivor means the surviving
spouse to whom the member was married at least one year before death. A member’s survivor who is eligible for any
other pre-retirement death benefit may choose to receive that death benefit instead of this Optional Settlement 2 D eath
benefit.
Benefit
The Optional Settlement 2 Death benefit is a monthly allowance equal to the service retirement benefit that the member
would have received had the member retired on the date of his or her death and elected 100% to continue to the el igible
survivor after the member’s death. The allowance is payable as long as the surviving spouse lives, at which time it is
continued to any unmarried child(ren) under age 18, if applicable. The total amount paid will be at least equal to the
basic death benefit.
Special Death Benefit
This is a standard benefit for Safety members except those described in Section 20423.6. For excluded Safety
members and all Miscellaneous members, employers have the option of providing this benefit.
Eligibility
An employee’s eligible survivor(s) may receive the special death benefit if the member dies while actively employed
and the death is job -related. A CalPERS member who is no longer actively employed with any CalPERS employer is
not eligible for this benefit. An eligible survivor means the surviving spouse to whom the member was married prior to
the onset of the injury or illness that resulted in death. If there is no eligible spouse, an eligible survivor mean s the
member's unmarried child(ren) under age 22. An eligible survivor who chooses to receive this benefit will not receive
any other death benefit.
Benefit
The special death benefit is a monthly allowance equal to 50 % of final compensation and will be increased whenever
the compensation paid to active employees is increased but ceasing to increase when the member would have attained
age 50. The allowance is payable to the surviving spouse until death at which time the allowance is continued to any
unmarried child(ren) under age 22. There is a guarantee that the total amount paid will at least equal the basic death
benefit.
If the member’s death is the result of an accident or injury caused by external violence or physical force incurred in the
performance of the member’s duty, and there are eligible surviving child(ren) (eligible means unmarried child(ren) under
age 22) in addition to an eligible spouse, then an additional monthly allowance is paid equal to the following:
• if 1 eligible child: 12.5% of final compensation
• if 2 eligible children: 20.0% of final compensation
• if 3 or more eligible children: 25.0% of final compensation
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix B
Miscellaneous Plan of the City of Palo Alto
Principal Plan Provisions
B-8
Alternate Death Benefit for Local Fire Members
This is an optional benefit available only to local fi re members.
Eligibility
An employee’s eligible survivor(s) may receive the alternate death benefit in lieu of the basic death benefit or the 1957
Survivor benefit if the member dies while actively employed and has at least 20 years of total CalPERS service. A
CalPERS member who is no longer actively employed with any CalPERS employer is not eligible for this benefit. An
eligible survivor means the surviving spouse to whom the member was married prior to the onset of the injury or illness
that resulted in death. If there is no eligible spouse, an eligible survivor means the member's unmarried child(ren) under
age 18.
Benefit
The Alternate Death benefit is a monthly allowance equal to the service retirement benefit that the member would have
received had the member retired on the date of his or her death and elect ed Optional Settlement 2. (A retiree who
elects Optional Settlement 2 receives an allowance that has been reduced so that it will continue to be paid after his or
her death to a surviving beneficiary.) If the member has not yet attained age 50, the benefit is equal to that which would
be payable if the member had retired at age 50, based on service credited at the time of death. The allowance is
payable as long as the surviving spouse lives, at which time it is continued to any unmarried child(ren) under ag e 18, if
applicable. The total amount paid will be at least equal to the basic death benefit.
Cost-of-Living Adjustments (COLA)
Standard Benefit
Retirement and survivor allowances are adjusted each year in May for cost of living, beginning the second calendar
year after the year of retirement. The standard cost-of-living adjustment (COLA) is 2%. Annual adjustments are
calculated by first determinin g the lesser of 1) 2% compounded from the end of the year of retirement or 2) actual rate
of price inflation. The resulting increase is divided by the total increase provided in prior years. For any given year, the
COLA adjustment may be less than 2% (when the rate of price inflation is low), may be greater than the rate of price
inflation (when the rate of price inflation is low after several years of high price inflation) or may even be greater than
2% (when price inflation is high after several years of low price inflation).
Improved Benefit
Employers have the option of providing a COLA of 3 %, 4%, or 5%, determined in the same manner as described above
for the standard 2 % COLA. An improved COLA is not available with the 1.5% at 65 formula.
Purchasing Power Protection Allowance (PPPA)
Retirement and survivor allowances are protected against price inflation by PPPA. PPPA benefits are cost-of-living
adjustments that are intended to maintain an individual’s allowance at 80 % of the initial allowance at retirement adjusted
for price inflation since retirement. The PPPA benefit will be coordinated with o ther cost-of-living adjustments provided
under the plan.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix B
Miscellaneous Plan of the City of Palo Alto
Principal Plan Provisions
B-9
Employee Contributions
Each employee contributes toward his or her retirement based upon the retirement formula. The standard employee
contribution is as described below.
• The percent contributed below the monthly compensation breakpoint is 0 %.
• The monthly compensation breakpoint is $0 for full and supplemental formula members and $133.33 for
employees covered by the modified formula.
• The percent contributed above the monthly compensation breakpoint depends upon the benefit formula, as
shown in the table below.
Benefit Formula Percent Contributed above the
Breakpoint
Miscellaneous, 1.5% at 65 2%
Miscellaneous, 2% at 60 7%
Miscellaneous, 2% at 55 7%
Miscellaneous, 2.5% at 55 8%
Miscellaneous, 2.7% at 55 8%
Miscellaneous, 3% at 60 8%
Miscellaneous, 2% at 62 50% of the Total Normal Cost
Miscellaneous, 1.5% at 65 50% of the Total Normal Cost
Safety, Half Pay at 55 Varies by entry age
Safety, 2% at 55 7%
Safety, 2% at 50 9%
Safety, 3% at 55 9%
Safety, 3% at 50 9%
Safety, 2% at 57 50% of the Total Normal Cost
Safety, 2.5% at 57 50% of the Total Normal Cost
Safety, 2.7% at 57 50% of the Total Normal Cost
The employer may choose to “pick -up” these contributions for classic members (Employer Paid Member Contributions
or EPMC). EPMC is prohibited for new PEPRA members.
An employer may also include Employee Cost Sharing in the contract, where employees agree to share the cost of the
employer contribution. These contrib utions are paid in addition to the member contribution.
Auxiliary organizations of the CSU system may elect reduced contribution rates, in which case the offset is $317 and
the contribution rate is 6 % if members are not covered by Social Security. If memb ers are covered by Social Security,
the offset is $513 and the contribution rate is 5 %.
Refund of Employee Contributions
If the member’s service with the employer ends, and if the member does not satisfy the eligibility conditions for any of
the retirement benefits above, the member may elect to receive a refund of his or her employee contributions, which
are credited with 6% interest compounded annually.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix B
Miscellaneous Plan of the City of Palo Alto
Principal Plan Provisions
B-10
1959 Survivor Benefit
This is a pre -retirement death benefit available only to members not covered by Social Security. Any agency joining
CalPERS subsequent to 1993 is required to provide this benefit if the members are not covered by Social Security. The
benefit is optional fo r agencies joining CalPERS prior to 1994. Levels 1, 2 , and 3 are now closed. Any new agency or
any agency wishing to add this benefit or increase the current level may only choose the 4 th or Indexed Level.
This benefit is not included in the results presented in this valuation. More information on this benefit is available on the
CalPERS website.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
Appendix C
Participant Data
• Summary of Valuation Data
• Active Members
• Transferred and Separated Members
• Retired Members and Beneficiaries
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix C
Miscellaneous Plan of the City of Palo Alto
Participant Data
C-1
Summary of Valuation Data
June 30, 2021 June 30, 2022
1. Active Members
a) Counts 723 712
b) Average Attained Age
45.60 45.72
c) Average Entry Age to Rate Plan 34.59 34.98
d) Average Years of Credited Service 11.10 10.80
e) Average Annual Covered Pay $110,261 $115,440
f) Annual Covered Payroll 79,718,988 82,193,044
g) Projected Annual Payroll for Contribution Year 86,604,632 89,292,382
h) Present Value of Future Payroll 722,368,530 741,723,892
2. Transferred Members
a) Counts 386 387
b) Average Attained Age 46.36 46.05
c) Average Years of Credited Service 3.42 3.57
d) Average Annual Covered Pay $132,366 $134,373
3. Separated Members
a) Counts 463 479
b) Average Attained Age 47.53 47.49
c) Average Years of Credited Service 2.97 2.95
d) Average Annual Covered Pay $75,408 $77,863
4. Retired Members and Beneficiaries
a) Counts 1,276 1,320
b) Average Attained Age 70.67 70.84
c) Average Annual Benefits $37,887 $39,406
d) Total Annual Benefits $48,343,485 $52,016,069
5. Active to Retired Ratio [(1a) / (4a)] 0.57 0.54
Counts of members included in the valuation are counts of the records processed by the valuation. Multiple records
may exist for those who have service in more than one valuation group. This does not result in double counting of
liabilities.
Average Annual Benefits represents benefit amounts payable by this plan only. Some members may have service with
another agency and would therefore have a larger total benefit than would be included as part of the average shown
here.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix C
Miscellaneous Plan of the City of Palo Alto
Participant Data
C-2
Active Members
Counts of members included in the valuation are counts of the recor ds processed by the valuation. Multiple records
may exist for those who have service in more than one valuation group. This does not result in double counting of
liabilities.
Distribution of Active Members by Age and Service
Years of Service at Valuation Date
Attained
Age 0-4 5-9 10-14 15-19 20-24 25+ Total
15-24 3 0 0 0 0 0 3
25-29 49 7 0 0 0 0 56
30-34 64 30 3 0 0 0 97
35-39 27 31 19 0 1 0 78
40-44 31 30 24 16 8 4 113
45-49 22 20 18 11 17 5 93
50-54 11 19 18 15 21 14 98
55-59 19 16 15 11 15 21 97
60-64 5 7 10 12 8 12 54
65 and Over 1 3 5 5 4 5 23
All Ages 232 163 112 70 74 61 712
Distribution of Average Annual Salaries by Age and Service
Years of Service at Valuation Date
Attained
Age 0-4 5-9 10-14 15-19 20-2 4 25+
Average
Salary
15-24 $82,124 $0 $0 $0 $0 $0 $82,124
25-29 90,320 106,538 0 0 0 0 92,347
30-34 96,373 102,267 118,401 0 0 0 98,877
35-39 106,978 120,231 123,812 0 71,971 0 115,897
40-44 102,188 123,819 125,870 118,740 133,682 122,111 118,239
45-49 118,932 118,294 112,277 122,435 123,772 136,300 119,739
50-54 102,134 135,164 133,140 121,436 134,890 149,72 6 131,005
55-59 96,932 143,393 130,941 120,139 122,402 127,416 123,025
60-64 111,471 99,054 138,511 131,428 110,836 119,570 121,009
65 and Over 148,242 72,086 97,715 101,344 84,147 128,922 101,782
Average $99,929 $118,978 $124,855 $121,051 $123,480 $131,496 $115,440
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix C
Miscellaneous Plan of the City of Palo Alto
Participant Data
C-3
Transferred and Separated Members
Distribution of Transfers to Other CalPERS Plans by Age, Service, and average Salary
Years of Service at Valuation Date
Attained
Age 0-4 5-9 10-14 15-19 20-24 25+ Total
Average
Salary
15-24 0 0 0 0 0 0 0 $0
25-29 14 1 0 0 0 0 15 102,503
30-34 39 5 0 0 0 0 44 110,217
35-39 48 8 2 0 0 0 58 129,995
40-44 53 10 8 1 1 0 73 130,939
45-49 43 11 4 3 1 1 63 140,114
50-54 39 13 1 4 0 0 57 153,299
55-59 29 8 1 1 0 0 39 144,394
60-64 18 2 4 0 0 0 24 132,678
65 and Over 10 3 1 0 0 0 14 152,570
All Ages 293 61 21 9 2 1 387 $134,373
Distribution of Separated Participants with Funds on Deposit by Age, Service , and average Salary
Years of Service at Valuation Date
Attained Age 0-4 5-9 10-14 15-19 20-2 4 25+ Total
Average
Salary
15-24 0 0 0 0 0 0 0 $0
25-29 11 0 0 0 0 0 11 74,687
30-34 46 5 1 0 0 0 52 84,857
35-39 59 9 0 1 0 0 69 86,420
40-44 59 10 4 0 0 0 73 79,813
45-49 64 10 6 0 0 1 81 84,511
50-54 52 16 2 2 1 0 73 79,881
55-59 46 11 2 0 0 0 59 62,436
60-64 27 4 2 1 0 0 34 66,970
65 and Over 23 4 0 0 0 0 27 60,567
All Ages 387 69 17 4 1 1 479 $77,863
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix C
Miscellaneous Plan of the City of Palo Alto
Participant Data
C-4
Retired Members and Beneficiaries
Distribution of Retirees and Beneficiaries by Age and Retirement Type*
Attained Age
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death After
Retirement Total
Under 30 0 0 0 0 0 1 1
30-34 0 0 0 0 0 1 1
35-39 0 0 0 0 0 3 3
40-44 0 0 2 0 0 1 3
45-49 0 0 2 0 0 1 3
50-54 27 3 2 0 0 0 32
55-59 109 7 2 1 0 3 122
60-64 205 10 2 0 0 11 228
65-69 220 10 1 0 0 10 241
70-74 209 8 0 0 0 22 239
75-79 191 9 2 0 0 21 223
80-84 98 2 1 0 0 22 123
85 and Over 58 4 0 0 0 39 101
All Ages 1,117 53 14 1 0 135 1,320
Distribution of Average Annual Disbursements to Retirees and Beneficiaries by Age and Retirement Type*
Attained
Age
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death After
Retirement Average
Under 30 $0 $0 $0 $0 $0 $38,203 $38,203
30-34 0 0 0 0 0 14,986 14,986
35-39 0 0 0 0 0 9,386 9,386
40-44 0 0 937 0 0 13,030 4,968
45-49 0 0 292 0 0 114,610 38,398
50-54 21,917 9,595 1,292 0 0 0 19,473
55-59 42,858 16,075 736 18,263 0 18,640 39,834
60-64 43,633 14,750 1,056 0 0 18,574 40,783
65-69 49,193 14,016 13,019 0 0 17,797 46,281
70-74 45,652 17,886 0 0 0 28,374 43,132
75-79 39,409 21,766 10,632 0 0 23,592 36,949
80-84 35,920 20,438 2,164 0 0 32,393 34,763
85 and Over 34,596 22,957 0 0 0 24,2 83 30,153
All Ages $42,637 $16,994 $3,220 $18,263 $0 $25,382 $39,406
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix C
Miscellaneous Plan of the City of Palo Alto
Participant Data
C-5
Retired Members and Beneficiaries (continued)
Distribution of Retirees and Beneficiaries by Years Retired and Retirement Type*
Years
Retired
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death After
Retirement Total
Under 5 Yrs 303 2 2 0 0 50 357
5-9 199 2 2 1 0 26 230
10-14 280 11 4 0 0 23 318
15-19 165 11 3 0 0 16 195
20-24 105 10 2 0 0 10 127
25-29 40 8 1 0 0 4 53
30 and Over 25 9 0 0 0 6 40
All Years 1,117 53 14 1 0 135 1,320
Distribution of Average Annual Disbursements to Retirees and Beneficiaries by Years Retired and Retirement
Type*
Years
Retired
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death After
Retirement Average
Under 5 Yrs $43,931 $9,148 $1,922 $0 $0 $24,967 $40,845
5-9 37,470 14,111 297 18,263 0 21,953 35,106
10-14 54,063 12,781 311 0 0 34,800 50,565
15-19 40,541 18,443 11,424 0 0 24,008 37,490
20-24 34,972 22,947 1,478 0 0 24,163 32,646
25-29 20,735 23,374 2,164 0 0 16,847 20,490
30 and Over 21,190 10,468 0 0 0 18,976 18,446
All Years $42,637 $16,994 $3,220 $18,263 $0 $25,382 $39,406
* Counts of members do not include alternate payees receiving benefits while the member is still working. Therefore,
the total counts may not match information on C -1 of the report. Multiple records may exist for those who have service
in more than one coverage group. This does not result in double counting of liabilities .
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
Appendix D
Glossary
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix D
Miscellaneous Plan of the City of Palo Alto
Glossary
D -1
Glossary
Accrued Liability (Actuarial Accrued Liability)
The Present Value of Benefits minus the present value of future Normal Cost or the Present Value of Benefits
allocated to prior years. Different actuarial cost methods and different assumptions will lead to different measures
of Accrued Liability.
Actuarial Assumptions
Assumptions made about certain events that will affect pension costs. Assumptions generally can be broken down
into two categories: demographic and economic. Demographic assumptions include such things as mortality,
disability, and retirement rates. Economic assumptio ns include discount rate, wage inflation, and price inflation.
Actuarial Methods
Procedures employed by actuaries to achieve certain funding goals of a pension plan. Actuarial methods include
an actuarial cost method, an amortization policy, and an asset valuation method.
Actuarial Valuation
The determination as of a valuation date of the Normal Cost, Accrued Liability, and related actuarial present values
for a pension plan. These valuations are performed annually or when an employer is contemplating a change in
plan provisions.
Actuary
A business professional proficient in mathematics and statistics who measures and manages risk. A public
retirement system actuary in California perform s actuarial valuation s necessary to properly fund a pension plan
and disclose its liabilities and must satisfy the Qualification Standards for Actuaries Issuing Statements of Actuarial
Opinion in the United States with regard to pensions.
Amortization Bases
Separate payment schedules for different portions of the Unfunded Accrued Liability (UAL). The total UAL of a rate
plan can be segregated by cause. The impact of such individual causes on the UAL are quantified at the time of
their occurrence, resulting in new amortization bases. Each base is separately amortized and pa id for over a
specific period of time. Generally, in an actuarial valuation, the separate bases consist of changes in UAL due to
contract amendments, actuarial assumption changes, method changes, and/or gains and losses.
Amortization Period
The number of years required to pay off an Amortization Base.
Classic Member (under PEPRA)
A member who joined a public retirement system prior to January 1, 2013 and who is not defined as a new member
under PEPRA. (See definition of New Member below.)
Discount Rate
This is the rate used to discount the expected future benefit payments to the valuation date to determine the
Projected Value of Benefits. Different discount rates will produce different measures of the Projected Value of
Benefits. The discount rate for funding purposes is based on the assumed long -term rate of return on plan assets,
net of investment and administrative expenses. This rate is called the “actuarial interest rate” in Section 20014 of
the California Public Employees’ Retirement Law.
Entry Age
The earliest age at which a plan member begins to accrue benefits under a defined benefit pension plan. In most
cases, this is the age of the member on their date of hire.
Entry Age Actuarial Cost Method
An actuarial cost method that allocates the cost of the projected benefits on an individual basis as a level percent
of earnings for the individual between entry age and retirement age. This method yields a total normal cost rate,
expressed as a percentage of payroll, which is des igned to remain level throughout the member’s career.
Fresh Start
A Fresh Start is when multiple amortization bases are combined into a single base and amortized over a new
Amortization Period.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix D
Miscellaneous Plan of the City of Palo Alto
Glossary
D -2
Glossary (continued)
Funded Ratio
Defined as the Market Value of Assets divided by the Accrued Liability. Different actuarial cost methods and
different assumptions will lead to different measures of Funded Ratio. The Funded Ratio with the Accrued Liability
equal to the funding target is a measure of how well funded a rate plan is. A ratio greater than 100% means the
rate plan has more assets than the funding target and the employer need only contribute the Normal Cost . A ratio
less than 100% means assets are less than the funding target an d contributions in addition to Normal Cost are
required.
Funded Status
Any comparison of a particular measure of plan assets to a particular measure of pension obligations. The methods
and assumptions used to calculate a funded status should be consistent with the purpose of the measurement.
Funding Target
The Accrued Liability measure upon which the funding requirements are based. The funding target is the Accrued
Liability under the Entry Age Actuarial Cost Method using the assumptions adopted by the bo ard.
GASB 68
Statement No. 68 of the Governmental Accounting Standards Board. The accounting standard governing a state
or local governmental employer’s accounting and financial reporting for pensions.
New Member (under PEPRA)
A new member includes an individual who becomes a member of a public retirement system for the first time on
or after January 1, 2013, and who was not a member of another public retirement system prior to that date, and
who is not subject to reciprocity with another public retirem ent system.
Normal Cost
The portion of the Present Value of Benefits allocated to the upcoming fiscal year for active employees. Different
actuarial cost methods and different assumptions will lead to different measures of Normal Cost. The Normal Cost
under the Entry Age Actuarial Cost Method , using the assumptions adopted by the board , plus the required
amortization of the UAL, if any, make up the required contributions.
PEPRA
The California Public Employees’ Pension Reform Act of 2013 .
Present Value of Benefits (PVB)
The total dollars needed as of the valuation date to fund all benefits earned in the past or expected to be earned
in the future for current members.
Traditional Unit Credit Actuarial Cost Method
An actuarial cost method that sets the Accrued Liability equal to the Present Value of Benefits assuming no future
pay increases or service accruals. The Traditional Unit Credit Cost Method is used to measure the accrued liability
on a termination basis.
Unfunded Accrued Liability (UAL)
The Accrued Liability minus the Market Value of Assets. If the UAL for a rate plan is positive, the employer is
required to make contributions in excess of the Normal Cost.
Attachment B: CalPERS Miscellaneous Valuation as of June 30, 2022
California Public Employees’ Retirement System
Actuarial Office
400 Q Street, Sacramento, CA 95811 | Phone: (916) 795-3000 | Fax: (916) 795-2744
888 CalPERS (or 888-225-7377) | TTY: (877) 249-7442 | www.calpers.ca.gov
July 2023
Safety Plan of the City of Palo Alto (CalPERS ID: 6373437857 )
Annual Valuation Report as of June 30, 2022
Dear Employer,
Attached to this letter is the June 30, 2022 actuarial valuation report for the rate plan noted above. Provided in this
report is the determination of the minimum required employer contributions for fiscal year (FY) 2024-25. In
addition, the report contains important information regarding the current financial status of the plan as well as projections
and risk measures to aid in planning for the future.
Actuarial valuations are based on assumptions regarding future plan experience including investment return and payroll
growth, eligibility for the types of benefits provided, and longevity among retirees. The CalPERS Board of Administrati on
(board) adopts these assumptions after considering the advice of CalPERS actuarial and investment teams and other
professionals. Each actuarial valuation reflects all prior differences between actual and assumed experience and adjusts
the contribution requirements as needed. This valuation is based on an investment return assumption of 6.8%, which
was adopted by the board in November 2021. Other assumptions used in this report are those recommended in the
CalPERS Experience Study and Review of Actuarial Assumptions report from November 2021.
Required Contributions
The table below shows the minimum required employer contributions and the PEPRA member rate for FY 2024-25 along
with an estimate of the required employer contribution for FY 2025-26. Employee contributions other than cost sharing
(whether paid by the employer or the employee) are in addition to the results shown below. The required employer
contributions in this report do not reflect any cost sharing arrangement between the agency and the employees.
Fiscal Year Employer Normal
Cost Rate
Employer Amortization of
Unfunded Accrued Liability
PEPRA Member
Contribution Rate
2024 -25 22.21% $16,551,519 11.75%
Projected Results
2025 -26 21.5% $17,597,000 TBD
The actual investment return for FY 2022-23 was not known at the time this report was prepared. The projections above
assume the investment return for that year would be 6.8%. To the extent the actual investment return for FY 2022-
23 differs from 6.8%, the actual contribution requirements for FY 2025-26 will differ from those shown above.
For additional details regarding the assumptions and methods used for these projections , please refer to the “Projected
Employer Contributions” in the “Highlights and Executive Summary” section. This section also contains projected required
contributions through FY 2029-30.
Changes from Previous Year’s Valuations
There are no significant changes in actuarial assumptions or policies in the 202 2 actuarial valuation. There may be
changes specific to the plan such as contract amendments and funding changes.
Further descriptions of general changes are included in the “Highlights and Executive Summary” section and in Appendix
A, “Actuarial Methods a nd Assumptions.” The effects of any changes on the required contributions are included in the
“Reconciliation of Required Employer Contributions” section.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
Safety Plan of the City of Palo Alto
(CalPERS ID: 6373437857)
Annual Valuation Report as o f June 30, 2022
Page 2
Questions
A CalPERS actuary is available to answer questions about this report. Other questions may be directed to the Customer
Contact Center at (888)-CalPERS or (888-225-7377).
Sincerely,
SCOTT TERANDO, ASA, EA, MAAA, FCA, CFA
Chief Actuary, CalPERS
RANDALL DZIUBEK, ASA, MAAA
Deputy Chief Actuary, Valuation Services , CalPERS
Attachment C: CalPERS Safety Valuation as of June 30, 2022
Actuarial Valuation
as of June 30, 2022
for the
Safety Plan
of the
City of Palo Alto
(CalPERS ID : 6373437857)
(Rate Plan ID: 5080)
Required Contributions
for Fiscal Year
July 1, 2024 – June 30, 2025
Attachment C: CalPERS Safety Valuation as of June 30, 2022
Table of Contents
Actuarial Certification 1
Highlights and Executive Summary
Introduction 3
Purpose 3
Required Contributions 4
Additional Discretionary Employer Contributions 5
Funded Status – Funding Policy Basis 6
Projected Employer Contributions 7
Cost 8
Changes Since the Prior Year’s Valuation 9
Subsequent Events 9
Assets
Reconciliation of the Market Value of Assets 11
Asset Allocation 12
CalPERS History of Investment Returns 13
Liabilities and Contributions
Development of Accrued and Unfunded Liabilities 15
(Gain) / Loss Analysis 6/30/21 - 6/30/22 16
Schedule of Amortization Bases 17
Amortization Schedule and Alternatives 19
Reconciliation of Required Employer Contributions 21
Employer Contribution History 22
Funding History 22
Normal Cost by Benefit Group 23
PEPRA Member Contribution Rates 24
Risk Analysis
Future Investment Return Scenarios 26
Discount Rate Sensitivity 27
Mortality Rate Sensitivity 27
Maturity Measures 28
Maturity Measures History 29
Funded Status – Termination Basis 30
Plan’s Major Benefit Provisions
Plan’s Major Benefit Options 32
Appendix A – Actuarial Methods and Assumptions
Actuarial Data A-1
Actuarial Methods A-1
Actuarial Assumptions A-4
Miscellaneous A-24
Appendix B – Principal Plan Provisions B-1
Appendix C – Participant Data
Summary of Valuation Data C-1
Active Members C-2
Transferred and Separated Members C-3
Retired Members and Beneficiaries C-4
Appendix D – Glossary D-1
(CY) FIN JOB INSTANCE ID : 416684 (PY) FIN JOB INSTANCE ID : 399048 REPORT ID: 416776
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 1
Actuarial Certification
To the best of my knowledge, this report is complete and accurate and contains sufficient information to
disclose, fully and fairly, the funded condition of the Safety Plan of the City of Palo Alto and satisfies the
actuarial valuation requirements of Government Code section 7504 . This valuation and related validation work
was performed by the CalPERS Actuarial Office and is based on the member and financial data as of June
30, 2022 provided by the various CalPERS databases and the benefits under this plan with CalPERS as of
the date this report was produced.
It is my opinion that the valuation has been perform ed in accordance with generally accepted actuarial
principles, in accordance with standards of practice prescribed by the Actuarial Standards Board, and that the
assumptions and methods, as prescribed by the CalPERS Board of Administration , are internally consistent
and reasonable for this plan .
The undersigned is an actuary who satisfies the Qualification Standards for Actuaries Issuing Statements of
Actuarial Opinion in the United States with regard to pensions.
DAVID CLEMENT , ASA, MAAA, EA
Senior Actuary, CalPERS
Attachment C: CalPERS Safety Valuation as of June 30, 2022
Highlights and Executive Summary
• Introduction
• Purpose
• Required Contributions
• Additional Discretionary Employer Contributions
• Funded S tatus – Funding Policy Basis
• Projected Employer Contributions
• Cost
• Changes Since the Prior Year’s Valuation
• Subsequent Events
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 3
Introduction
This report presents the results of the June 30, 2022 actuarial valuation of the Safety Plan of the City of Palo
Alto of the California Public Employees’ Retirement System (CalPERS). This actuarial valuation sets the
minimum required contributions for fiscal year (FY) 2024 -25.
Purpose
This report documents the results of the actuarial valuation prepared by the CalPERS Actuarial Office using
data as of June 30, 2022. The purpose of the valuation is to:
• Set forth the assets and accrued liabilities of this rate plan as of June 30, 2022 ;
• Determine the minimum required employer contributions for this rate plan for FY July 1, 2024 through
June 30, 2025;
• Determine the required member contribution rate for FY July 1, 2024 through June 30, 2025 for
employees subject to the California Public Employees' Pension Reform Act of 2013 (PEPRA); and
• Provide actuarial information as of June 30, 2022 to the CalPERS Board of Administration (board)
and other interested parties.
The pension funding information presented in this report should not be used in financial reports subject to
Governmental Accounting Standards Board (GASB) Statement No. 68 for an Agent Employer Defined Benefit
Pension Plan. A separate accounting valuation report for such purposes is available from CalPERS and details
for ordering are available on the CalPERS website (www.calpers.ca.gov).
The measurements shown in this actuarial valuation may not be applicable for other purposes. The agency
should contact the plan actuary before disseminating any portion of this report for any reason that is not
explicitly described above.
Future actuarial measurements may differ significantly from the current measurements presented in this report
due to such factors as the following: plan experience differing from that anticipated by the economic or
demographic assumptions; changes in economic or demographic assumptions; changes in actuarial policies;
changes in plan provisions or applicable law; and differences between the required contributions determined
by the valuation and the actual contributions made by the agency.
Assessment and Disclosure of Risk
This report includes the following risk disclosures consistent with the guidance of Actuarial Standards of
Practice No. 51 and recommended by the California Actuarial Advisory Panel (CAAP) in the Model Disclosure
Elements document:
• A “Scenario Test,” projecting future results under different investment income returns.
• A “Sensitivity Analysis,” showing the impact on curren t valuation results using alternative discount
rates 5.8% and 7.8%.
• A “Sensitivity Analysis,” showing the impact on current valuation results assuming rates of mortality
are 10% lower or 10% higher than our current post-retirement mortality assumptions adopted in
2021.
• Plan maturity measures indicating how sensitive a plan may be to the risks noted above.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 4
Required Contributions
Fiscal Year
Required Employer Contributions 2024-25
Employer Normal Cost Rate 22.21%
Plus
Required Payment on Amortization Bases $16,551,519
Paid either as
1) Monthly Payment $1,379,293
Or
2) Annual Prepayment Option* $16,015,933
Required PEPRA Member Contribution Rate
11.75%
The total minimum required employer contribution is the sum of the Plan’s Employer Normal Cost Rate
(expressed as a percentage of payroll and paid as payroll is reported) plus the Employer Unfunded Accrued
Liability (UAL) Contribution Amount (billed monthly (1) or prepaid annually (2) in dollars).
* Only the UAL portion of the employer contribution can be prepaid (which must be received in full no
later than July 31).
For additional detail regarding the determination of the required contribution for PEPRA members, see
”PEPRA Member Contribution Rates” in the “Liabilities and Contributions” section. Required member
contributions for Classic members can be found in A ppendix B.
Fiscal Year Fiscal Year
2023-24 2024-25
Normal Cost Contribution as a Percentage of Payroll
Total Normal Cost 32.45% 32.14%
Employee Contribution 1 9.86% 9.93%
Employer Normal Cost2 22.59% 22.21%
Projected Annual Payroll for Contribution Year $27,969,318 $27,164,524
Estimated Employer Contributions Based On
Projected Payroll
Total Normal Cost $9,076,044 $8,730,678
Offset Due to Employee Contribution s 2,757,775 2,697,437
Employer Normal Cost 6,318,269 6,033,241
Unfunded Liability Contribution 14,376,181 16,551,519
% of Projected Payroll (illustrative only) 51.40% 60.93%
Estimated Total Employer Contributio n $20,694,450 $22,584,760
% of Projected Payroll (illustrative only) 73.99% 83.14%
1 For classic members, this is the percentage specified in the Public Employees’ Retirement Law , net of any reduction from
the use of a modified formula or other factors. For PEPRA members, the member contribution rate is based on 50% of
the normal cost. A development of PEPRA member contribution rate s can be found in the “Liabilities and Contributions”
section. Employee cost sharing is not shown in this report.
2 The Employer Normal Cost is a blended rate for all benefit groups in the plan. For a breakout of normal cost by benefit
group, see “Normal Cost by Benefit Group” in the “Liabilities and Contributions” section.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 5
Additional Discretionary Employer Contributions
The minimum required employer contribution towards the Unfunded Accrued Liability (UAL) for this rate plan
for FY 2024-25 is $16,551,519. CalPERS allows agencies to make additional discretionary payments (ADPs)
at any time and in any amount. These optional payments serve to reduce the UAL and future required
contributions and can result in significant long -term savings. Agencies can also use ADPs to stabilize annual
contributions as a fixed dollar amount, percent of payroll or percent of revenue.
Provided below are select ADP options for consideration. Making such an ADP during FY 2024-25 does not
require an ADP be made in any future year, nor does it change the remaining amortization period of any
portion of unfunded liability. For information on permanent changes to amortization periods, see the
“Amortization Schedule and Alternatives” section of the report.
Agencies considering making an ADP should contact CalPERS for additional information.
Minimum Required Employer Contribution for Fiscal Year 2024-25
Estimated
Normal Cost
Minimum UAL
Payment
ADP Total UAL
Contribution
Estimated Total
Contribution
$6,033,241 $16,551,519 $0 $16,551,519 $22,584,760
Alternative Fiscal Year 2024 -25 Employer Contributions for Greater UAL Reduction
Funding
Horizon
Estimated
Normal Cost
Minimum UAL
Payment
ADP1 Total UAL
Contribution
Estimated Total
Contribution
20 years $6,033,241 $16,551,519 $2,533,863 $19,085,382 $25,118,623
15 years $6,033,241 $16,551,519 $5,713,243 $22,264,762 $28,298,003
10 years $6,033,241 $16,551,519 $12,419,128 $28,970,647 $35,003,888
5 years $6,033,241 $16,551,519 $33,268,929 $49,82 0,448 $55,853,689
1 The ADP amounts are assumed to be made in the middle of the fiscal year. A payment made earlier or later in the fiscal
year would have to be less or more than the amount shown to have the same effect on the UAL amortization.
Note that the calculations above are based on the projected Unfunded Accrued Liability as of June 30, 2024
as determined in the June 30, 2022 actuarial valuation. New unfunded liabilities can emerge in future years
due to assumption or method changes, changes in plan provisions , and actuarial experience different than
assumed. Making an ADP illustrated above for the indicated number of years wi ll not result in a plan that is
exactly 100% funded in the indicated number of years. Valuation results will vary from one year to the next
and can diverge significantly from projections over a period of several years.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 6
Funded Status – Funding Policy Basis
The table below provides information on the current funded status of the plan under the funding policy. The
funded status for this purpose is based on the market value of assets relative to the funding target produced
by the entry age actuarial cost method and actuarial assumptions adopted by the board. The actuarial cost
method allocates the total expected cost of a member’s projected benefit (Present Value of Benefits ) to
individual years of service (the Normal Cost). The value of the projected bene fit that is not allocated to future
service is referred to as the Accrued Liability and is the plan’s funding target on the valuation date. The
Unfunded Accrued Liability (UAL) equals the funding target minus the assets. The UAL is an absolute
measure of funded status and can be viewed as employer debt. The funded ratio equals the assets divided
by the funding target. The funded ratio is a relative measure of the funded status and allows for comparisons
between plans of different sizes.
A funded ratio of 100% (UAL of $0) implies that the funding of the plan is on target and that future contributions
equal to the normal cost of the active plan members will be sufficient to fully fund all retirement benefits if
future experience matches the actuarial assumptions. A funded ratio of less than 100% (positive UAL ) implies
that in addition to normal costs, payments toward the UAL will be required . Plans with a funded ratio greater
than 100% have a negative UAL (or surplus) but are required under current law to continue contributing the
normal cost in most cases, preserving the surplus for future contingencies.
Calculations for the funding target reflect the expected long -term investment return of 6.8%. If it were known
on the valuation date that future investment returns will average something greater/less than the expected
return, calculated normal costs and accrued liabilities provided in this report would be less/greater than the
results shown. Therefore, for example, if actual average future returns are less than the expected return,
calculated normal costs and UAL contributions will not be sufficient to fully fund all retirement benefits. Und er
this scenario, required future normal cost contributions will need to increase from those provided in this report,
and the plan will develop unfunded liabilities that will also add to required future contributions. For illustrative
purposes, funded status es based on a 1% lower and higher average future investment return (discount rate)
are as follows:
The “Risk Analysis” section of the report provides additional information regarding the sensitivity of valuation
results to the expected investment return and other factors. Also provided in that section are measures of
funded status that are appropriate for assessing the sufficiency of plan assets to cover estimated termination
liabilities.
June 30, 2021 June 30, 2022
1. Present Value of Benefits $580,099,122 $599,795,526
2. Entry Age Accrued Liability 509,225,515 531,613,942
3. Market Value of Assets (MVA) 353,339,674 318,801,170
4. Unfunded Accrued Liability (UAL) [(2) – (3)] $155,885,841 $212,812,772
5. Funded Ratio [(3) / (2)] 69.4% 60.0%
1% Lower
Average Return
Current
Assumption
1% Higher
Average Return
Discount Rate 5.8% 6.8% 7.8%
1. Present Value of Benefits $692,956,444 $599,795,526 $525,890,982
2. Entry Age Accrued Liability 600,383,281 531,613,942 474,937,662
3. Market Value of Assets (MVA) 318,801,170 318,801,170 318,801,170
4. Unfunded Accrued Liability (UAL) [(2) – (3)] $281,582,111 $212,812,772 $156,136,492
5. Funded Ratio [(3) / (2)] 53.1% 60.0% 67.1%
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 7
Projected Employer Contributions
The table below shows the required and projected employer contributions (before cost sharing) for the next
six fiscal years. The projection assumes that all actuarial assumptions will be realized and that no further
changes to assumptions, contributions, b enefits, or funding will occur during the projection period. In particular,
the investment return beginning with FY 2022-23 is assumed to be 6.80% per year, net of investment and
administrative expenses. The projected normal cost percentages below reflect that the normal cost is expected
to continue to decline over time as new employees are hired into lower cost benefit tiers. Future contribution
requirements may differ signifi cantly from those shown below. The actual long -term cost of the plan will depend
on the actual benefits and expenses paid and the actual investment experience of the fund.
Required
Contribution
Projected Future Employer Contributions
(Assumes 6.80% Retur n for Fiscal Year 2022-23 and Beyond)
Fiscal Year 2024-25 2025-26 2026-27 2027-28 2028-29 2029-30
Normal Cost % 22.21% 21.5% 20.9% 20.3% 19.7% 19.0%
UAL Payment $16,551,519 $17,597,000 $18,598,000 $19,461,000 $21,176,000 $21,647,000
Total as a % of Payroll* 83.14% 84.5% 85.7% 86.2% 89.5% 88.5%
Projected Payroll $27,164,524 $27,925,131 $28,707,034 $29,510,831 $30,337,135 $31,186,574
*Illustrative only and based on the projected payroll shown.
For ongoing plans, investment gains and losses are amortized using a 5 -year ramp up. For more information,
please see “Amortization of Unfunded Actuarial Accrued Liability” under “Actuarial Methods” in Appendix A.
This method phases in the impact of the change in UAL over a 5 -year period in order to reduce employer cost
volatility from year to year. As a result of this methodology, dramatic changes in the required employer
contributions in any one year are less likely. However, required contributions can change gradually and
significantly over the next five years. In years when there is a large investment loss , the relatively small
amortization payments during the ramp up period could result in contributions that are less than interest on
the UAL (i.e. negative amortization) while the contribution impact of the increase in the UAL is phased in.
For projected contributions under alternate investment return scenarios, please see the “Fut ure Investment
Return Scenarios” in the “Risk Analysis” section. Our online pension plan projection tool, Pension Outlook, is
available in the Employers section of the CalPERS website. Pension Outlook can help plan and budget
pension costs under various scenarios.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 8
Cost
Actuarial Determination of Plan Cost
Contributions to fund the plan are comprised of two components:
• Normal Cost, expressed as a percentage of total active payroll
• Amortization of the Unfunded Accrued Liability (UAL), expressed as a dollar amount
For fiscal years prior to 2017 -18, the Amortization of UAL component was expressed as a percentage of total
active payroll. Starting with FY 2017-18, the Amortization of UAL component is expressed as a dollar amount
and invoiced on a monthly basis. There is an option to prepay this amount during July of each fiscal year.
The Normal Cost component is expressed as a percentage of active payroll with employer and employee
contributions payable as part of the regular payroll reporting process.
The determination of both components requires complex actuarial calculations. The calculations are based on
a set of actuarial assumptions which can be divided into two categories:
• Demographic assumptions (e.g., mortality rates, retir ement rates, employment termination rates,
disability rates)
• Economic assumptions (e.g., future investment earnings, inflation, salary growth rates)
These assumptions reflect CalPERS’ best estimate of future experience of the plan and are long term in nat ure.
We recognize that all assumptions will not be realized in any given year. For example, the investment earnings
at CalPERS have averaged 6.9% over the 20 years ending June 30, 2022, yet individual fiscal year returns
have ranged from -23.6% to +21.3%. In addition, CalPERS reviews all actuarial assumptions by conducting
in-depth experience studies every four years, with the most recent experience study completed in 2021.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 9
Changes Since the Prior Year’s Valuation
Benefits
The standard actuarial practice at CalPERS is to recognize mandated legislative benefit changes in the first
annual valuation following the effective date of the legislation. Voluntary benefit changes by plan amendment
are generally included in the first valuation that is prepared after the amendment becomes effective, even if the
valuation date is prior to the effective date of the amendment.
This valuation generally reflects plan changes by amendment s effective before the date of the report. Please
refer to the “Plan’s Major Benefit Options” and Appendix B for a summary of the plan provisions used in this
valuation. The effect of any mandated benefit changes or plan amendments on the unfunded liabilit y is shown
in the “(Gain) / Loss Analysis 6/30/21 – 6/30/22” and the effect on the employer contribution is shown in the
“Reconciliation of Required Employer Contributions.” It should be noted that no change in liability or contribution
is shown for any plan changes which were already included in the prior year’s valuation.
In 2022, SB 1168 increased the standard retiree lump sum death benefit from $500 to $2,000 for any de ath
occurring on or after July 1, 2023. The impact, if any, is included in plan changes in the “(Gain) / Loss Analysis
6/30/21 – 6/30/22” and the “Reconciliation of Required Employer Contributions.”
Actuarial Methods and Assumptions
There are no significant changes to the actuarial methods or assumptions for the June 30, 2022 actuarial
valuation.
Subsequent Events
This actuarial valuation report reflects fund investment return through June 30, 2022 and statutory/regulatory
changes and board actions through January 2023.
During the time period between the valuation date and the publication of this report, inflation has been
significantly higher than the expected inflation of 2.3% per annum. Since inflat ion influences cost-of-living
increases for retirees and beneficiaries and active member pay increases, higher inflation is likely to put at least
some upward pressure on contribution requirements and downward pressure on the funded status in the June
30, 2023 valuation. The actual impact of higher inflation on future valuation results will depend on, among other
factors , how long higher inflation persists. At this time, we continue to believe the long -term inflation assumption
of 2.3% is appropriate.
To the best of our knowledge, there have been no other subsequent events that could materially affect current
or future certifications rendered in this report.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
Assets
• Reconciliation of the Market Value of Assets
• Asset Allocation
• CalPERS History of Investment Returns
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 11
Reconciliation of the Market Value of Assets
1. Market Value of Assets as of 6/30/21 including Receivables $353,339,674
2. Change in Receivables for Service Buybacks (84,794)
3. Employer Contributions 17,375,750
4. Employee Contributions 3,449,168
5. Benefit Payments to Retirees and Beneficiaries (28,274,011)
6. Refunds (81,312)
7. Transfers 0
8. Service Credit Purchase (SCP) Payments and Interest 115,492
9. Administrative Expenses (276,998)
10. Miscellaneous Adjustments 0
11. Investment Return (Net of Investment Expenses) (26,761,799)
12. Market Value of Assets as of 6/30/22 including Receivables $318,801,170
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 12
Asset Allocation
CalPERS adheres to an Asset Allocation Strategy which establishes asset class allocation policy targets and
ranges and manages those asset class allocations within their policy ranges. CalPERS Investment Belief No.
6 recognizes that strategic asset allocation is the dominant determinant of portfolio risk and return.
The asset allocation shown below reflects the allocation of the Public Employees’ Retirement Fund (PERF) in
its entirety. The assets for City of Palo Alto Safety Plan are a subset of the PERF and are invested accordingly.
On November 17, 2021, the board adopted changes to the strategic asset allocation . The new allocation was
effective July 1, 2022, and is shown below , expressed as a percentage of total assets.
Strategic Asset Allocation Policy Targets
Asset Class
Actual
Allocation
9/30/2022
Policy Target
Allocation
effective
7/1/2022
Global Public Equity
Market Capitalization Weighted 33.7% 30.0%
Factor Weighted 12.6% 12.0%
Private Equity 11.6% 13.0%
Income
Treasuries 3.9% 5.0%
Mortgage-backed Securities 5.6% 5.0%
Investment Grade Corporates 5.8% 10.0%
High Yield Bonds 4.6% 5.0%
Emerging Market Sovereign Bonds 2.1% 5.0%
Total Fund Income 1.5% -
Real Assets 17.1% 15.0%
Private Debt 1.8% 5.0%
Other Trust Level 3.8% -
Leverage
Strategic (0.3%) (5.0%)
Active (3.8%) -
Total Fund 100.00% 100.0%
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 13
CalPERS History of Investment Returns
The following is a chart with the 20 -year historical annual returns of the PERF for each fiscal year ending on
June 30 as reported by the Investment Office. Investment returns reported are net of investment expenses
but without reduction for administrative expenses. The assumed rate of return, however, is net of both
investment and administrative expenses. Also, the Investment Office uses a three-month lag on private equity
and real assets for investment performance reporting purposes. This can lead to a timing difference in the
returns below and those used for financial reporting purposes. The investment gain or loss calculation in this
report relies on final assets that have been au dited and are appropriate for financial reporting. Because of
these differences, the effective investment return for funding purposes can be higher or lower than the return
reported by the Investment Office shown here.
* As reported by the Investment Office with a 3-month lag on private equity and real assets.
The table below shows annualized investment returns of the PERF for various time periods ending on June
30, 2022 (figures reported are net of investment expenses but without reduction for administrative expenses).
These returns are the annual rates that if compounded over the indicated number of years would equate to
the actual time -weighted investment performance o f the PERF. It should be recognized that in any given year
the rate of return is volatile. The portfolio has an expected volatility of 12.1% per year based on the most
recent Asset Liability Management study. The realized volatility is a measure of the ris k of the portfolio
expressed as the standard deviation of the fund’s total monthly return distribution, expressed as an annual
percentage. Due to their volatile nature, when looking at investment returns, it is more instructive to look at
returns over long er time horizons.
History of CalPERS Compound Annual Rates of Return and Volatilities
1 year 5 year 10 year 20 year 30 year
Compound Annual Return -6.1% 6.7% 7.7% 6.9% 7.7 %
Realized Volatility – 8.3% 7.1% 8.5% 8.6%
Attachment C: CalPERS Safety Valuation as of June 30, 2022
Liabilities and Contributions
• Development of Accrued and Unfunded Liabilities
• (Gain) / Loss Analysis 6/30/21 - 6/30/22
• Schedule of Amortization Bases
• Amortization Schedule and Alternatives
• Reconciliation of Required Employer Contributions
• Employer Contribution History
• Funding History
• Normal Cost by Benefit Group
• PEPRA Member Contribution Rates
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 15
Development of Accrued and Unfunded Liabilities
June 30, 2021 June 30, 2022
1. Present Value of Projected Benefits
a) Active Members $201,248,509 $195,734,582
b) Transferred Members 11,933,851 12,803,675
c) Separated Members 4,365,437 6,422,761
d) Members and Beneficiaries Receiving Payments 362,551,325 384,834,508
e) Total $580,099,122 $599,795,526
2. Present Value of Future Employer Normal Costs $46,706,711 $44,207,523
3. Present Value of Future Employee Contributions $24,166,896 $23,974,061
4. Entry Age Accrued Liability
a) Active Members [(1a) - (2) - (3)] $130,374,902 $127,552,998
b) Transferred Members (1b) 11,933,851 12,803,675
c) Separated Members (1c) 4,365,437 6,422,761
d) Members and Beneficiaries Receiving Payments (1d) 362,551,325 384,834,508
e) Total $509,225,515 $531,613,942
5. Market Value of Assets (MVA) $353,339,674 $318,801,170
6. Unfunded Accrued Liability (UAL) [(4e) - (5)] $155,885,841 $212,812,772
7. Funded Ratio [(5) / (4e)] 69.4% 60.0%
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 16
(Gain)/Loss Analysis 6/30/21 – 6/30/22
To calculate the cost requirements of the plan, assumptions are made about future events that affect the
amount and timing of benefits to be paid and assets to be accumulated. Each year , actual experience is
compared to the expected experience based on the actuarial assumptions. This results in actuarial gains or
losses, as shown below.
1. Total (Gain)/Loss for the Year
a) Unfunded Accrued Liability (UAL) as of 6/30/21 $155,885,841
b) Expected payment on the UAL during 20 21-22 12,612,914
c) Interest through 6/30/22 [.068 x (1a) - ((1.068)½ - 1) x (1b)] 10,178,450
d) Expected UAL before all other changes [(1a) - (1b) + (1c)] 153,451,377
e) Change due to plan changes 1 253,631
f) Change due to AL Significant Increase 0
g) Change due to assumption change 0
h) Change due to method change 0
i) Change due to discount rate change with Funding Risk Mitigation 0
j) Expected UAL after all other changes [(1d) + (1e) + (1f) + (1g) + (1h) + (1i)] 153,705,008
k) Actual UAL as of 6/30/22 212,812,772
l) Total (Gain)/Loss for 20 21-22 [(1k) - (1j)] $59,107,764
2. Investment (Gain)/Loss for the Year
a) Market Value of Assets as of 6/30/21 $353,339,674
b) Prior fiscal year receivables (315,183)
c) Current fiscal year receivables 230,389
d) Contributions received 20,824,918
e) Benefits and refunds paid (28,355,324)
f) Transfers, SCP payments and interest, and m iscellaneous adjustments 115,492
g) Expected return at 6.8 % per year 24,201,468
h) Expected assets as of 6/30/22 [(2a) + (2b) + (2c) + (2d) + (2e) + (2f) + (2g)] 370,041,435
i) Actual Market Value of Assets as of 6/30/22 318,801,170
j) Investment (Gain)/Loss [(2h) - (2i)] $51,240,265
3. Non-Investment (Gain)/Loss for the Year
a) Total (Gain)/Loss (1l) $59,107,764
b) Investment (Gain)/Loss (2j) 51,240,265
c) Non-Investment (Gain)/Loss [(3a) - (3b)] $7,867,499
1 Includes the effect, if any, of SB 1168, which increased the standard post -retirement lump sum death benefit from $500
to $2,000 for deaths occurring on or after July 1, 2023.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 17
Schedule of Amortization Bases
Below is the schedule of the plan’s amortization bases. Note that there is a two -year lag between the valuation date and the start of the contribution year.
• The assets, liabilities, and funded status of the plan are measured as of the valuation date: June 30, 2022 .
• The required employer contributions determined by the valuation are for the fiscal year beginning two years after the valuati on date: FY 2024-25.
This two -year lag is necessary due to the amount of time needed to extract and test the membership and financial data, and the need to provide public agencies with their
required employer contribution well in advance of the start of the fiscal year.
The Unfunded Accrued Liability (UAL) is used to determine the employer contribution and therefore must be rolled forward two years from the valuation date to the first
day of the fiscal year for which the contribution is being determined. The UAL is rolled forward each year by subtracting the expected payment on the UAL for the fiscal
year and adjusting for interest. The expected payment on the UAL for a fiscal year is equal to the Expected Employer Contrib ution for the fiscal year minus the Expected
Normal Cost for the year. The Employer Contribution for the first fiscal year is determined by the actuarial valuation two ye ars ago and the contribution for the second year
is from the actuarial valuation one year ago. Additional discretionary payments are reflected in the Expected Payments column in the fiscal year they were made by the
agency.
Reason for Base
Date
Est.
Ramp
Level
2024-25
Ramp
Shape
Escala-
tion
Rate
Amort.
Period
Balance
6/30/22
Expected
Payment
2022-23
Balance
6/30/23
Expected
Payment
2023-24
Balance
6/30/24
Minimum
Required
Payment
2024-25
Fresh Start 6/30/04 No Ramp 2.80% 12 (850,991) (80,904) (825,249) (81,654) (796,981) (83,940)
Benefit Change 6/30/05 No Ramp 2.80% 2 74,762 20,568 58,590 20,958 40,915 21,545
Assumption Change 6/30/09 No Ramp 2.80% 7 5,802,175 781,520 5,389,068 792,634 4,936,384 814,828
Special (Gain)/Loss 6/30/09 No Ramp 2.80% 17 8,822,826 676,330 8,723,831 679,440 8,614,890 698,464
Special (Gain)/Loss 6/30/10 No Ramp 2.80% 18 4,247,663 314,831 4,211,145 315,998 4,170,938 324,846
Assumption Change 6/30/11 No Ramp 2.80% 9 5,243,586 600,116 4,979,965 607,444 4,690,845 624,453
Special (Gain)/Loss 6/30/11 No Ramp 2.80% 19 2,431,266 174,649 2,416,103 175,143 2,399,398 180,047
(Gain)/Loss 6/30/12 No Ramp 2.80% 20 45,320,063 3,161,972 45,134,116 3,168,199 44,929,090 3,256,908
Payment (Gain)/Loss 6/30/12 No Ramp 2.80% 20 1,583,426 110,475 1,576,930 110,693 1,569,767 113,792
(Gain)/Loss 6/30/13 100% Up/Down 2.80% 21 45,228,467 3,252,947 44,942,274 3,262,015 44,627,249 3,353,351
(Gain)/Loss 6/30/14 100% Up/Down 2.80% 22 (30,379,980) (2,122,029) (30,252,827) (2,126,125) (30,112,795) (2,185,657)
Assumption Change 6/30/14 100% Up/Down 2.80% 12 20,259,185 2,171,192 19,393,011 2,195,252 18,443,073 2,256,719
(Gain)/Loss 6/30/15 100% Up/Down 2.80% 23 16,787,901 1,141,046 16,750,275 1,142,287 16,708,808 1,174,271
(Gain)/Loss 6/30/16 100% Up/Down 2.80% 24 19,880,785 1,317,182 19,871,449 1,317,539 19,861,109 1,354,431
Assumption Change 6/30/16 100% Up/Down 2.80% 14 7,436,659 708,521 7,210,137 715,024 6,961,491 735,044
(Gain)/Loss 6/30/17 100% Up/Down 2.80% 25 (1,202,130) (62,996) (1,218,772) (78,707) (1,220,309) (80,910)
Assumption Change 6/30/17 100% Up/Down 2.80% 15 10,087,985 743,730 10,005,367 937,381 9,717,004 963,628
(Gain)/Loss 6/30/18 100% Up/Down 2.80% 26 (3,338,044) (131,430) (3,429,206) (174,969) (3,481,572) (224,835)
Assumption Change 6/30/18 100% Up/Down 2.80% 16 15,611,699 851,597 15,793,219 1,143,598 15,685,317 1,469,523
Method Change 6/30/18 100% Up/Down 2.80% 16 3,600,085 196,380 3,641,944 263,716 3,617,061 338,875
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 18
Schedule of Amortization Bases (continued)
Reason for Base
Date
Est.
Ramp
Level
2024-25
Ramp
Shape
Escala-
tion
Rate
Amort.
Period
Balance
6/30/22
Expected
Payment
2022-23
Balance
6/30/23
Expected
Payment
2023-24
Balance
6/30/24
Minimum
Required
Payment
2024-25
Investment (Gain)/Loss 6/30/19 80% Up Only 0.00% 17 1,678,846 70,224 1,720,435 103,444 1,730,521 137,925
Non-Investment (Gain)/Loss 6/30/19 No Ramp 0.00% 17 6,925,027 649,002 6,725,224 637,630 6,523,586 637,630
Investment (Gain)/Loss 6/30/20 60% Up Only 0.00% 18 7,994,866 175,127 8,357,533 343,555 8,570,801 515,333
Non-Investment (Gain)/Loss 6/30/20 No Ramp 0.00% 18 1,539,603 140,757 1,498,832 138,226 1,457,904 138,226
Assumption Change 6/30/21 No Ramp 0.00% 19 2,210,026 (315,607) 2,686,469 241,577 2,619,493 241,577
Net Investment (Gain) 6/30/21 40% Up Only 0.00% 19 (36,577,727) 0 (39,065,012) (839,690) (40,853,663) (1,679,381)
Non-Investment (Gain)/Loss 6/30/21 No Ramp 0.00% 19 (6,605,970) 0 (7,055,176) (634,427) (6,879,285) (634,426)
Risk Mitigation 6/30/21 No Ramp 0.00% 0 12,812,230 (372,743) 14,068,669 14,539,137 0 0
Risk Mitigation Offset 6/30/21 No Ramp 0.00% 0 (13,172,912) 0 (14,068,669) (14,539,137) 0 0
Benefit Change 6/30/22 No Ramp 0.00% 20 253,631 0 270,878 0 289,298 26,015
Investment (Gain)/Loss 6/30/22 20% Up Only 0.00% 20 51,240,265 0 54,724,603 0 58,445,876 1,256,276
Non-Investment (Gain)/Loss 6/30/22 No Ramp 0.00% 20 7,867,499 0 8,402,489 0 8,973,858 806,961
Total 212,812,772 14,172,457 212,637,645 14,376,181 212,240,071 16,551,519
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 20 Page 19
Amortization Schedule and Alternatives
The amortization schedule on the previous page shows the minimum contributions required according to the
CalPERS amortization policy. Many agencies have expressed a desire for a more stable pattern of payments
or have indicated interest in paying off the unfunded accrued liabilities more quickly than required. As such,
we have provided alternative amortization schedules to help analyze the current amortization schedule and
illustrate the potential savings of accelerating unfunded liability payments.
Shown on the following page are future year amortization payments based on 1) the current amortization
schedule reflecting the individual bases and remaining periods shown on the p revious page, and 2) alternative
“fresh start” amortization schedules using two sample periods that would both result in interest savings relative
to the current amortization schedule. To initiate a fresh s tart, please contact the plan actuary.
The current amortization s chedule typically contains both positive and negative bases. Positive bases result
from plan changes, assumption changes, method changes or plan experience that increase unfunded liability.
Negative bases result from plan changes, assu mption changes, method changes, or plan experience that
decrease unfunded liability. The combination of positive and negative bases within an amortization schedule
can result in unusual or problematic circumstances in future years, such as:
• When a negative payment would be required on a positive unfunded actuarial liability; or
• When the payment would completely amortize the total unfunded liability in a very short time period,
and results in a large change in the employer contribution requirement.
In any year when one of the above scenarios occurs, the actuary will consider corrective action such as
replacing the existing unfunded liability bases with a single “fresh start” base and amortizing it over an
appropriate period.
The current amortization s chedule on the following page may appear to show that, based on the current
amortization bases, one of the above scenarios will occur at some point in the future. It is impossible to know
today whether such a scenario will in fact arise since there will be add itional bases added to the amortization
schedule in each future year. Should such a scenario arise in any future year, the actuary will take appropriate
action based on guidelines in the CalPERS amortization policy.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 20
Amortization Schedule and Alternatives (continued)
Alternative Schedules
Current Amortization
Schedule 15 Year Amortization 10 Year Amortization
Date Balance Payment Balance Payment Balance Payment
6/30/2024 212,240,071 16,551,519 212,240,071 22,264,762 212,240,071 28,970,647
6/30/2025 209,567,379 17,597,314 203,663,081 22,264,762 196,732,946 28,970,647
6/30/2026 205,632,178 18,597,702 194,502,856 22,264,762 180,171,336 28,970,647
6/30/2027 200,395,541 19,460,614 184,719,736 22,264,762 162,483,537 28,970,647
6/30/2028 193,911,045 21,175,721 174,271,363 22,264,762 143,592,967 28,970,647
6/30/2029 185,213 ,140 21,647,397 163,112,501 22,264,762 123,417,839 28,970,646
6/30/2030 175,436,330 22,132,272 151,194,836 22,264,762 101,870,803 28,970,647
6/30/2031 164,493,607 21,642,140 138,466,770 22,264,762 78,858,567 28,970,646
6/30/2032 153,313,303 21,563,948 124,873,196 22,264,762 54,281,500 28,970,646
6/30/2033 141,453,542 20,667,164 110,355,259 22,264,762 28,033,193 28,970,647
6/30/2034 129,714,091 20,335,939 94,850,102 22,264,762
6/30/2035 117,518,657 19,712,228 78,290,594 22,264,762
6/30/2036 105,138,505 18,654,176 60,605,040 22,264,761
6/30/2037 93,009,937 18,050,897 41,716,869 22,264,762
6/30/2038 80,680,077 17,402,609 21,544,301 22,264,761
6/30/2039 68,181,755 16,929,709
6/30/2040 55,322,262 16,719,876
6/30/2041 41,805,171 14,067,326
6/30/2042 30,110,174 12,447,608
6/30/2043 19,293,799 16,220,975
6/30/2044 3,842,360 2,221,540
6/30/2045 1,807,810 992,372
6/30/2046 905,183 935,453
6/30/2047
6/30/2048
6/30/2049
Total 375,726,499 333,971,428 289,706,467
Interest Paid 163,486,428 121,731,357 77,466,396
Estimated Savings 41,755,071 86,020,032
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 21
Reconciliation of Required Employer Contributions
Normal Cost (% of Payroll)
1. For Period 7/1/23 – 6/30/24
a) Employer Normal Cost 22.59%
b) Employee contribution 9.86%
c) Total Normal Cost 32.45%
2. Changes since the prior year annual valuation
a) Effect of demographic experience (0.31%)
b) Effect of plan changes 0.00%
c) Effect of discount rate change due to Funding Risk Mitigation 0.00%
d) Effect of assumption changes 0.00%
e) Effect of method changes 0.00%
f) Net effect of the changes above [sum of (a) through (e)] (0.31%)
3. For Period 7/1/24 – 6/30/25
a) Employer Normal Cost 22.21%
b) Employee contribution 9.93%
c) Total Normal Cost 32.14%
Employer Normal Cost Change [(3a) – (1a)] (0.38%)
Employee Contribution Change [(3b) – (1b)] 0.07%
Unfunded Liability Contribution ($)
1. For Period 7/1/23 – 6/30/24 14,376,181
2. Changes since the prior year annual valuation
a) Effect of adjustments to prior year’s amortization schedule 0
b) Effect of elimination of amortization bases 0
c) Effect of progression of amortization bases 1 86,086
d) Effect of investment (gain)/loss during prior year2 1,256,276
e) Effect of non -investment (gain)/loss during prior year 806,961
f) Effect of re-amortizing existing bases due to Funding Risk Mitigation 0
g) Effect of Golden Handshake 0
h) Effect of plan changes 26,015
i) Effect of AL Significant Increase (Government Code section 20791) 0
j) Effect of assumption changes 0
k) Effect of adjustments to the amortization schedule (e.g., Fresh Start) 0
l) Effect of method change 0
m) Net effect of the changes above [sum of (a) through (l)] 2,175,338
3. For Period 7/1/24 – 6/30/25 [(1) + (2m)] 16,551,519
The amounts shown for the period 7/1/23 – 6/30/24 may be different if a prepayment of unfunded actuarial
liability is made or a plan change became effective after the prior ye ar’s actuarial valuation was performed.
1 Includes scheduled escalation in individual amortization base payments due to the 5 -year ramp and payroll growth
assumption used in the pre-2019 amortization policy.
2 The unfunded liability contribution for the investment (gain)/loss during the year prior to the valuation date is 20% of the
“full” annual requirement due to the 5-year ramp. Increases to this amount that occur during the ramp period will be
included in line c ) for each of the next four years.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 22
Employer Contribution History
The table below provides a recent history of the required and discretionary employer contributions for the plan.
The required amounts are based on the actuarial valuation from two years prior without subsequent
adjustments, if any. Additional discretionary payments before July 1, 201 8 or after June 30, 2023 are not
included.
Fiscal
Year
Employer
Normal Cost
Unfunded Rate
Unfunded Liability
Payment ($)
Additional Discretionary
Payments
2015 - 16 18.627% 23.305% N/A N/A
2016 - 17 18.977% 26.449% N/A N/A
2017 - 18 18.900% N/A 7,127,885 N/A
2018 - 19 19.397% N/A 8,421,191 0
2019 - 20 20.194% N/A 10,019,332 0
2020 - 21 21.566% N/A 11,210,740 0
2021 - 22 21.52% N/A 13,282,515 0
2022 - 23 20.58% N/A 14,860,807 0
2023 - 24 22.59% N/A 14,376,181
2024 - 25 22.21% N/A 16,551,519
Funding History
The table below shows the recent history of actuarial accrued liability, market value of assets, unfunded
accrued liability, funded ratio and annual covered payroll.
[]
Valuation
Date
Accrued
Liability
(AL)
Market Value of
Assets (MVA)
Unfunded
Accrued
Liability (UAL)
Funded
Ratio
Annual
Covered
Payroll
6/30/2013 $338,666,499 $233,417,363 $105,249,136 68.9% $21,258,082
6/30/2014 367,478,634 264,145,000 103,333,634 71.9% 21,274,021
6/30/2015 377,934,524 259,169,591 118,764,933 68.6% 21,186,275
6/30/2016 392,911,774 249,886,581 143,025,193 63.6% 21,268,028
6/30/2017 422,062,152 267,871,162 154,190,990 63.5% 23,485,510
6/30/2018 451,111,924 280,399,741 170,712,183 62.2% 23,613,222
6/30/2019 471,338,133 289,117,004 182,221,129 61.3% 25,488,331
6/30/2020 487,159,688 293,857,975 193,301,713 60.3% 27,097,526
6/30/2021 509,225,515 353,339,674 155,885,841 69.4% 25,745,571
6/30/2022 531,613,942 318,801,170 212,812,772 60.0% 25,004,764
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 23
Normal Cost by Benefit Group
The table below displays the Total Normal Cost broken out by benefit group for FY 2024-25. The Total Normal
Cost is the annual cost of service accrual for the fiscal year for active employees and can be viewed as the
long-term contribution rate for the benefits contracted. Generally, the normal cost for a benefit group subject
to more generous benefit provisions will exceed the normal cost for a group with less generous benefits.
However, based on the characteristics of the members (particularly when the number of actives is small), this
may not be the case. Future measurements of the Total Normal Cost for each group may differ significantly
from the current valu es due to such factors as: changes in the demographics of the group, changes in
economic and demographic assumptions, changes in plan benefits or applicable law.
Plan
Identifier Benefit Group Name
Total Normal
Cost
FY 2024-25
Number of
Actives
Payroll on
6/30/2022
5080 Safety Police First Level 38.56% 33 $6,581,185
25006 Safety Fire PEPRA Level 20.75% 33 $4,057,736
25007 Safety Police PEPRA Level 27.59% 29 $4,134,152
30705 Safety Fire First Level 31.92% 1 $167,312
30706 Safety Fire Second Level 34.40% 46 $7,824,255
30707 Safety Fire Third Level 30.89% 9 $1,329,422
30708 Safety Police Second Level 43.63% 5 $910,702
Plan Total 32.14% 156 $25,004,764
Note that if a Benefit Group above has multiple bargaining units, each of which has separately contracted for
different benefits such as Employer Paid Member Contributions, then the Normal Cost shown for the
respective benefit level does not reflect those differences. Additionally, if a Second Level Benefit Group
amended to the same benefit formula as a First Level Benefit Group, their Normal Costs may be dissimilar
due to demographic or other population differences. For questions in these situations, pleas e contact the plan
actuary.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 24
PEPRA Member Contribution Rates
The California Public Employees’ Pension Reform Act of 2013 (“PEPRA”) established new benefit formulas,
final compensation period, and contribution requirements for “new” employees (generally tho se first hired into
a CalPERS-covered position on or after January 1, 2013). In accordance with Government Code section
7522.30(b), “new members … shall have an initial contribution rate of at least 50% of the normal cost rate.”
The normal cost for the pla n is dependent on the benefit levels, actuarial assumptions , and demographics of
the plan, particularly members’ entry age into the plan. Should the total normal cost of the plan change by
more than 1% from the base total normal cost established for the pl an, the new member rate shall be 50% of
the new normal cost rounded to the nearest quarter percent .
The table below shows the determination of the PEPRA m ember contribution rates effective July 1, 2024,
based on 50 % of the total normal cost rate for each respective plan as of the June 30, 2022 valuation.
Basis for Current Rate Rates Effective July 1, 2024
Plan
Identifier Benefit Group Name
Total
Normal
Cost
Member
Rate
Total
Normal
Cost Change
Change
Needed
Member
Rate
25006 Safety Fire PEPRA
Level 23.540% 11.75% 23.89% 0.350% No 11.75%
25007 Safety Police PEPRA
Level 23.540% 11.75% 23.89% 0.350% No 11.75%
For purposes of setting member rates, it is preferable to determine total normal cost using a large active
population so that the rate remains relatively stable. While each CalPERS non -pooled plan has a sufficiently
large active population for this purpose, the PEPRA active population by itself may not be sufficiently large.
The total PEPRA normal cost w ill be determined based on the plan’s PEPRA membership only if the number
of members covered under the PEPRA formula meets either:
1. 50% of the active population, or
2. 25% of the active population and 100 or more PEPRA members
Until one of th ese conditions is met, the plan’s total PEPRA normal cost will be determined using the entire
active plan population (both PEPRA and Classic) based on the PEPRA benefit provisions. For this reason,
the PEPRA member contribution rate determined in the table above may not equal 50% of the total normal
cost of the PEPRA group shown on the “Normal Cost by Benefit Group” page.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
Risk Analysis
• Future Investment Return Scenarios
• Discount Rate Sensitivity
• Mortality Rate Sensitivity
• Maturity Measures
• Maturity Measures History
• Funded Status – Termination Basis
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 26
Future Investment Return Scenarios
Analysis using the investment return scenarios from the Asset Liability Management process completed in
2021 was performed to determine the effects of various future investment returns on required employer
contributions. The projections below reflect the impact of the CalPERS Funding Risk Mitigation policy. The
projected normal cost rates reflect that the rates are anticipated to decline over time as new employees are
hired into lower-cost benefit tiers. The projections also assume that all other actuarial assumptions will be
realized and that no further changes in assumptions, contributions, benefits, or funding will occur.
The first table shows projected contribution requirements if the fund were to earn either 3.0% or 10.8%
annually. These alternate investment returns were chosen because 90% of long -term average returns are
expected to fall between them over the 20 -year period ending June 30, 2042.
Assumed Annual Return
FY 2022-23
through FY 2041 -42
Projected Employer Contributions
FY 2025 -26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30
3.0% (5th percentile)
Normal Cost Rate 21.5% 20.9% 20.3% 19.7% 19.0%
UAL Contribution $17,891,000 $19,482,000 $21,236,000 $24,147,000 $26,125,000
10.8% (95th percentile)
Normal Cost Rate 21.9% 21.7% 21.5% 21.2% 21.0%
UAL Contribution $17,301,000 $17,752,000 $17,786,000 $18,346,000 $17,334,000
Required contributions outside of this range are also possible. In particular, whereas it is unlikely that
investment returns will average less than 3.0% or greater than 10.8% over a 20 -year period, the likelihood of
a single investment return less than 3.0% or greater than 10.8% in any given year is much greater. The
following analysis illustrates the effect of an extreme, single year investment return.
The portfolio has an expected volatility (or standard deviation) of 12.0% per year. Accordingly, in any given
year there is a 16% probability that the annual return will be -5.2% or less and a 2.5% probability that the
annual return will be -17.2% or less. These returns represent one and two standard deviations below the
expected return of 6.8%.
The fol lowing table shows the effect of a one or two standard deviation investment loss in FY 2022-23 on the
FY 2025-26 contribution requirements. Note that a single -year investment gain or loss decreases or increases
the required UAL contribution amount incrementally for each of the next five years, not just one, due to the 5 -
year ramp in the amortization policy. However, the contribution requirements beyond the first year are also
impacted by investment returns beyond the first year . Historically, significant downturns in the market are often
followed by higher than average returns. Such investment gains would offset the impact of these single year
negative returns in years beyond FY 2025-26.
Assumed Annual Return for
Fiscal Year 2022-23
Required
Employer
Contributions
Projected
Employer
Contributions
FY 2024-25 FY 2025-26
(17.2%) (2 standard deviation loss)
Normal Cost Rate 22.21% 21.5%
UAL Contribution $16,551,519 $19,453,000
(5.2%) (1 standard deviation loss)
Normal Cost Rate 22.21% 21.5%
UAL Contribution $16,551,519 $18,525,000
• Without investment gains (returns higher than 6.8%) in year FY 2023-24 or later, projected
contributions rates would continue to rise over the next four years due to the continued phase -in of
the impact of the illustrated investment loss in FY 2022-23.
• The Pension Outlook Tool can be used to model projected contributions for these scenarios beyond
FY 2025-26 as well as to model other investment return scenarios .
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 27
Discount Rate Sensitivity
The discount rate assumption is calculated as the sum of the assumed real rate of return and the assumed
annual price inflation, currently 4.5% and 2.3%, respectively. Changing either the price infla tion assumption
or the real rate of return assumption will change the discount rate. The sensitivity of the valuation results to
the discount rate assumption depends on which component of the discount rate is changed. Shown below are
various valuation resu lts as of June 30, 2022 assuming alternate discount rates by changing the two
components independently. Results are shown using the current discount rate of 6.8% as well as alternate
discount rates of 5.8% and 7.8%. The rates of 5.8% and 7.8% were selected since they illustrate the impact
of a 1.0% increase or decrease to the 6.8% assumption.
Sensitivity to the Real Rate of Return Assumption
As of June 30, 2022
1% Lower
Real Return Rate
Current
Assumptions
1% Higher
Real Return Rate
Discount Rate 5.8% 6.8% 7.8%
Price Inflation 2.3% 2.3% 2.3%
Real Rate of Return 3.5% 4.5% 5.5%
a) Total Normal Cost 40.57% 32.14% 25.73%
b) Accrued Liability $600,383,281 $531,613,942 $474,937,662
c) Market Value of Assets $318,801,170 $318,801,170 $318,801,170
d) Unfunded Liability/(Surplus) [(b) - (c)] $281,582,111 $212,812,772 $156,136,492
e) Funded Ratio 53.1% 60.0% 67.1%
Sensitivity to the Price Inflation Assumption
As of June 30, 2022
1% Lower
Inflation Rate
Current
Assumptions
1% Higher
Inflation Rate
Discount Rate 5.8% 6.8% 7.8%
Price Inflation 1.3% 2.3% 3.3%
Real Rate of Return 4.5% 4.5% 4.5%
a) Total Normal Cost 33.76% 32.14% 29.16%
b) Accrued Liability $549,273,397 $531,613,942 $490,636,290
c) Market Value of Assets $318,801,170 $318,801,170 $318,801,170
d) Unfunded Liability/(Surplus) [(b) - (c)] $230,472,227 $212,812,772 $171,835,120
e) Funded Ratio 58.0% 60.0% 65.0%
Mortality Rate Sensitivity
The following table looks at the change in the June 30, 2022 plan costs and funded status under two different
longevity scenarios, namely assuming rates of post-retirement mortality are 10% lower or 10% higher than
our current mortality assumptions adopted in 2021 . This type of analysis highlights the impact on the plan of
a change in the mortality assumption .
As of June 30, 2022 10% Lower
Mortality Rates
Current
Assumptions
10% Higher
Mortality Rates
a) Total Normal Cost 32.61% 32.14% 31.71%
b) Accrued Liability $541,893,157 $531,613,942 $522,148,801
c) Market Value of Assets $318,801,170 $318,801,170 $318,801,170
d) Unfunded Liability/(Surplus) [(b) - (c)] $223,091,987 $212,812,772 $203,347,631
e) Funded Ratio 58.8% 60.0% 61.1%
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 28
Maturity Measures
As pension plans mature they become more sensitive to risks. Understanding plan maturity and how it affects
the ability of a pension plan sponsor to tolerate risk is important in understanding how the pension plan is
impacted by investment return volatility, other economic variables and changes in longevity or other
demographic assumptions. One way to look at the maturity level of CalPERS and its plans is to look at the
ratio of a plan’s retiree liability to its total liability. A pension plan in its infanc y will have a very low ratio of
retiree liability to total liability. As the plan matures, the ratio increases. A mature plan will often have a ratio
above 60%-65%.
Ratio of Retiree Accrued Liability to
Total Accrued Liability June 30, 2021 June 30, 2022
1. Retiree Accrued Liability 362,551,325 384,834,508
2. Total Accrued Liability 509,225,515 531,613,942
3. Ratio of Retiree AL to Total AL [(1) / (2)] 71% 72%
Another measure of the maturity level of CalPERS and its plans is the ratio of actives to retirees, also called
the s upport ratio. A pension plan in its infancy will have a very high ratio of active to retired members. As the
plan matures and members retire, the ratio declines. A mature plan will often have a ratio near or below one.
To calculate the support ratio for the rate plan, retirees and beneficiaries receiving a continuance are each
counted as one, even though they may have only worked a portion of their careers as an active member of
this rate plan. For this reason, the support ratio, while intuitive, may be less info rmative than the ratio of retiree
liability to total accrued liability above. For comparison, the support ratio for all CalPERS public agency plans
is 0.82 and is calculated consistently with how it is for the individual rate plan . Note that to calculate the support
ratio for all public agency plans , a retiree with service from more than one CalPERS agency is counted as a
retiree more than once .
Support Ratio June 30, 2021 June 30, 2022
1. Number of Actives 163 156
2. Number of Retirees 443 453
3. Support Ratio [(1) / (2)] 0.37 0.34
The actuarial calculations supplied in this communication are based on various assumptions about long -term
demographic and economic behavior. Unless these assumptions (e.g., terminations, deaths, disabilities,
retirements, salary growth, investment return) are exactly realized each year, there will be differences on a
year-to-year basis. The year-to-year differences between actual experience and the assumptions are called
actuarial gains and losses and serve to lower or raise required employer contributions from one year to the
next. Therefore, employer contributions will inevitably fluctuate, especially due to the ups and downs of
investment returns.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 29
Maturity Measures (continued)
Asset Volatility Ratio
Shown in the table below is the asset volatility ratio (AVR), which is the ratio of market value of assets to
payroll. Plans that have a higher AVR experience more volatile employer contributions (as a percentage of
payroll) due to investment return. For example, a plan with AVR of 8 may experience twice the contribution
volatility due to investment return volatility than a plan with AVR of 4. It should be noted that this ratio is a
measure of the current situation. It increases over time but generally tends to stabilize as a plan matures.
Liability Volatility Ratio
Also shown in the table below is the liability volatility ratio (LVR), which is the ratio of accrued liability to payroll.
Plans that have a higher LVR experience more volatile employer contributions (as a percentage of payroll)
due to changes in liability. For example, a plan with LVR of 8 is expected to have twice the contribution volatility
of a plan with LVR of 4 when there is a change in accrued liability, such as when there is a change in actuarial
assumptions. It should be noted that this ratio indicates a longer -term potential for contribution volatility, since
the AVR, described above, will tend to move closer to the LVR as the funded ratio approaches 10 0%.
Contribution Volatility June 30, 2021 June 30, 2022
1. Market Value of Assets without Receivables $353,024,492 $318,570,781
2. Payroll 25,745,571 25,004,764
3. Asset Volatility Ratio (AVR) [(1) / (2)] 13.7 12.7
4. Accrued Liability $509,225,515 $531,613,942
5. Liability Volatility Ratio (LVR) [(4) / (2)] 19.8 21.3
Maturity Measures History
Valuation Date
Ratio of
Retiree Accrued Liability
to
Total Accrued Liability Support Ratio
Asset
Volatility
Ratio
Liability
Volatility
Ratio
6/30/2017
72%
0.40
11.4
18.0
6/30/2018
74%
0.39
11.9
19.1
6/30/2019
71%
0.39
11.3
18.5
6/30/2020
71%
0.40
10.8
18.0
6/30/2021
71%
0.37
13.7
19.8
6/30/2022
72%
0.34
12.7
21.3
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 30
Funded Status – Termination Basis
The funded status measured on a termination basis is an estimate of the financial position of the plan had the
contract with CalPERS been terminated as of June 30, 2022 . The accrued liability on a termination basis
(termination liability) is calculated differently from the plan’s ongoing funding liability. For th e termination
liability calculation, both compensation and service are frozen as of the valuation date and no future pay
increases or service accruals are assumed. This measure of funded status is no t appropriate for assessing
the need for future employer contributions in the case of an ongoing plan, that is, for an employer that
continues to provide CalPERS retirement benefits to active employees. Unlike the actuarial cost method used
for ongoing pla ns, the termination liability is the present value of the benefits earned through the valuation
date.
A more conservative investment policy and asset allocation strategy was adopted by the board for the
Terminated Agency Pool. The Terminated Agency Pool h as limited funding sources since no future employer
contributions will be made. Therefore, expected benefit payments are secured by risk -free assets and benefit
security for members is increased while limiting the funding risk. However, this asset allocati on has a lower
expected rate of return than the remainder of the PERF and consequently, a lower discount rate assumption.
The lower discount rate for the Terminated Agency Pool results in higher liabilities for terminated plans.
The effective termination discount rate will depend on actual market rates of return for risk -free securities on
the date of termination. As market discount rates are variable , the table below shows a range for the
termination liability based on the lowest and highest interest rat es observed during an approximate 19-month
period from 12 months before the valuation date to seven months after.
Discount Rate: 1.75%
Price Inflation: 2.50%
Discount Rate: 4.50%
Price Inflation: 2.75%
Market
Value of
Assets (MVA)
Termination
Liability1,2
Funded
Ratio
Unfunded
Termination
Liability
Termination
Liability1,2
Funded
Ratio
Unfunded
Termination
Liability
$318,801,170 $1,083,027,176 29.4% $764,226,006 $698,102,676 45.7% $379,301,506
1 The termination liabilities calculated above include a 5% contingency load. The contingency load and other actuarial
assumptions can be found in Appendix A.
2 The discount rate used for termination valuations is a weighted average of the 10 -year and 30-year U.S. Treasury yields
where the weights are based on matching asset and liability durations as of the termination date. The discount rates used
in the table are based on 20-year Treasury bonds, rounded to the nearest quarter percentage point, which is a good
proxy for most plans. The 20-year Treasury yield was 3.38% on June 30, 2022, the valuation date.
In order to terminate the plan, first contact our Pension Contract Services unit to initiate a Resolution of Intent
to Terminate. The completed Resolution will allow the plan actuary to provide a preliminary termination
valuation with a more up -to-date estimate of the plan liabilities. Before beginning this process, please consult
with the plan actuary.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
Plan’s Major Benefit Provisions
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 32
Plan’s Major Benefit Options
Shown below is a summary of the major optional benefits for which the agency has contracted. A description of principal standard and optional plan provisions is
in Appendix B.
Benefit Group
Member Category Police Fire Fire Police Fire Fire Police
Demographics
Actives Yes Yes Yes Yes No Yes Yes
Transfers/Separated Yes Yes Yes Yes No Yes Yes
Receiving Yes Yes Yes No Yes Yes Yes
Benefit Group Key 105397 105398 105400 111263 111265 111268 111269
Benefit Provision
Benefit Formula 3% @ 50 3% @ 50 3% @ 50 2.7% @ 57 3% @ 55 3% @ 55
Social Security Coverage No No No No No No
Full/Modified Full Full Full Full Full Full
Employee Contribution Rate 9.00% 9.00% 9.00% 11.75% 9.00% 9.00%
Final Average Compensation Period One Year One Year One Year Three Year Three Year Three Year
Sick Leave Credit No No No No No No
Non-Industrial Disability Standard Standard Standard Standard Standard Standard
Industrial Disability Standard Standard Standard Standard Standard Standard
Pre-Retirement Death Benefits
Optional Settlement 2 No Yes Yes No Yes No
1959 Survivor Benefit Level Level 1 Level 1 Level 1 Level 1 Level 1 Level 1
Special Yes Yes Yes Yes Yes Yes
Alternate (firefighters) No No No No No No
Post-Retirement Death Benefits
Lump Sum $2000 $2000 $2000 $2000 $2000 $2000 $2000
Survivor Allowance (PRSA) No No No No No No No
COLA 2% 2% 2% 2% 2% 2% 2%
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 33
Plan’s Major Benefit Options (continued)
Shown below is a summary of the major optional benefits for which the agency has contracted. A description of principal standard and optional plan provisions is
in Appendix B.
Benefit Group
Member Category Police Fire Police Fire Fire Fire Fire
Demographics
Actives No Yes Yes No No No No
Transfers/Separated No Yes Yes No No No No
Receiving Yes No Yes Yes Yes Yes Yes
Benefit Group Key 112652 112653 217220 217221 217224 217225 217226
Benefit Provision
Benefit Formula 2.7% @ 57 2.7% @ 57
Social Security Coverage No No
Full/Modified Full Full
Employee Contribution Rate 11.75% 11.75%
Final Average Compensation Period Three Year Three Year
Sick Leave Credit No No
Non-Industrial Disability Standard Standard
Industrial Disability Standard Standard
Pre-Retirement Death Benefits
Optional Settlement 2 Yes No
1959 Survivor Benefit Level Level 1 Level 1
Special Yes Yes
Alternate (firefighters) No No
Post-Retirement Death Benefits
Lump Sum $2000 $2000 $2000 $2000 $2000 $2000 $2000
Survivor Allowance (PRSA) No No No No No No No
COLA 2% 2% 2% 2% 2% 2% 2%
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation - June 30, 2022
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 34
Plan’s Major Benefit Options (continued)
Shown below is a summary of the major optional benefits for which the agency has contracted. A description of principal standard and optional plan provisions is
in Appendix B.
Benefit Group
Member Category Police Police Police Police
Demographics
Actives No No No No
Transfers/Separated No No No No
Receiving Yes Yes Yes Yes
Benefit Group Key 217231 217234 217235 217236
Benefit Provision
Benefit Formula
Social Security Coverage
Full/Modified
Employee Contribution Rate
Final Average Compensation Period
Sick Leave Credit
Non-Industrial Disability
Industrial Disability
Pre-Retirement Death Benefits
Optional Settlement 2
1959 Survivor Benefit Level
Special
Alternate (firefighters)
Post-Retirement Death Benefits
Lump Sum $2000 $2000 $2000 $2000
Survivor Allowance (PRSA) No No No No
COLA 2% 2% 2% 2%
Attachment C: CalPERS Safety Valuation as of June 30, 2022
Appendices
• Appendix A – Actuarial Methods and Assumptions
• Appendix B – Principal Plan Provisions
• Appendix C – Participant Data
• Appendix D – Glossary
Attachment C: CalPERS Safety Valuation as of June 30, 2022
Appendix A
Actuarial Methods and Assumptions
• Actuarial Data
• Actuarial Methods
• Actuarial Assumptions
• Miscellaneous
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-1
Actuarial Data
As stated in the Actuarial Certification, the data which serves as the basis of this valuation has been obtained
from the various CalPERS databases. We have reviewed the valuation data and believe that it is reasonable
and appropriate in aggregate. We are unaware of any potential data issues that would have a material effect
on the results of this valuation, except that data does not always contain the latest salary information for former
members no w in reciprocal systems and does not recognize the potential for unusually large salary deviation
in certain cases such as elected officials. Therefore, salary information in these cases may not be accurate.
These situations are relatively infrequent, howe ver, and generally do not have a material impact on the
required employer contributions.
Actuarial Methods
Actuarial Cost Method
The actuarial cost method used is the Entry Age Actuarial Cost Method. Under this method, projected benefits
are determined for all members and the associated liabilities are spread in a manner that produces level
annual cost as a percentage of pay in each year from the member’s entry age to their assumed retirement
age on the valuation date. The cost allocated to the current f iscal year is called the normal cost.
The actuarial accrued liability for active members is then calculated as the portion of the total cost of the plan
allocated to prior years. The actuarial accrued liability for members currently receiving benefits and for
members entitled to deferred benefits is equal to the present value of the benefits expected to be paid. No
normal costs are applicable for these participants.
CalPERS uses an in -house proprietary actuarial model for calculating plan costs. We believe this model is fit
for its intended pu rpose and meets all applicable Actuarial Standards of Practice. Furthermore, the actuarial
results of our model are independently confirmed periodically by outside auditing actuaries. The actuarial
assumptions used are internally consistent and the generat ed results are reasonable.
Amortization of Unfunded Actuarial Accrued Liability
The excess of the total actuarial accrued liability over the market value of plan assets is called the unfunded
actuarial accrued liability (UAL). Funding requirements are d etermined by adding the normal cost and a
payment toward the UAL. The UAL payment is equal to the sum of individual amortization payments, each
representing a different source of UAL for a given measurement period.
Amortization payments are determined acc ording to the CalPERS amortization policy. The board adopted a
new policy effective for the June 30, 2019 actuarial valuation. The new policy applies prospectively only;
amortization bases (sources of UAL) established prior to the June 30, 2019 valuation w ill continue to be
amortized according to the prior policy.
Prior Policy (Bases Established prior to June 30, 2019)
Amortization payments are determined as a level percentage of payroll whereby the payment increases each
year at an escalation rate. Gains or losses are amortized over a fixed 30 -year period with a 5 -year ramp up at
the beginning and a 5 -year ramp down at the end of the amortization period. All changes in liability due to plan
amendments (other than golden handshakes) are amortized over a 20 -year period with no ramp. Changes in
actuarial assumptions or changes in actuarial methodology are amortized over a 20 -year period with a 5 -year
ramp up at the beginning and a 5 -year ramp down at the end of the amortization period. Changes in unfunded
accrued liability due to a Golden Handshake will be amortized over a period of five years. Bases established
prior to June 30, 2013 may be amortized differently. A summary is provided in the following table:
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-2
Driver
Source
(Gain)/Loss
Assumption/Method
Change
Benefit
Change
Golden
Handshake Investment
Non-
investment
Amortization
Period 30 Years 30 Years 20 Years 20 Years 5 Years
Escalation Rate
- Active Plans
- Inactive Plans
2.80%
0%
2.80%
0%
2.80%
0%
2.80%
0%
2.80%
0%
Ramp Up 5 5 5 0 0
Ramp Down 5 5 5 0 0
The 5-year ramp up means that the payments in the first four years of the amortization period are 20%, 40%,
60% and 80% of the “full” payment which begins in year five. The 5 -year ramp down means that the reverse
is true in the final four years of the amortization period.
Current Policy (Bases Established on or after June 30, 2019)
Amortization payments are determined as a level dollar amount. Investment gains or losses are amortized
over a fixed 20 -year period with a 5 -year ramp u p at the beginning of the amortization period. Non -investment
gains or losses are amortized over a fixed 20 -year period with no ramps. All changes in liability due to plan
amendments (other than golden handshakes) are amortized over a 20 -year period with n o ramps. Changes
in actuarial assumptions or changes in actuarial methodology are amortized over a 20 -year period with no
ramps. Changes in unfunded accrued liability due to a Golden Handshake are amortized over a period of five
years. A summary is provide d in the table below:
Source
(Gain)/Loss
Assumption/
Method
Change
Benefit
Change
Golden
Handshake Investment
Non-
investment
Amortization Period 20 Years 20 Years 20 Years 20 Years 5 Years
Escalation Rate 0% 0% 0% 0% 0%
Ramp Up 5 0 0 0 0
Ramp Down 0 0 0 0 0
Exceptions for Inconsistencies
An exception to the amortization rules above is used whenever their application results in inconsistencies. In
these cases, a “fresh start” approach is used. This means that the current unfunded actuarial liability is
projected and amortized over a set number of years. For example, a fresh start is needed in the following
situations:
• When a negative payment would be required on a positive unfunded actuarial liability; or
• When the payment would completely a mortize the total unfunded liability in a very short time period,
and results in a large change in the employer contribution requirement .
It should be noted that the actuary may determine that a fresh start is necessary under other circumstances.
In all cases of a fresh start, the period is set by the actuary at what is deemed appropriate; however, the period
will not be greater than 20 years.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-3
Exceptions for Plans in Surplus
If a surplus exists (i.e., the Market Value of Assets exceeds the plan’s acc rued liability) any prior
amortization layers shall be considered fully amortized, and the surplus shall not be amortized.
In the event of any subsequent unfunded liability, a Fresh Start shall be used with an amortization period of
20 years or less.
Exceptions for Small Amounts
Where small unfunded liabilities are identified in annual valuations which result in small payment amounts,
the actuary may shorten the remaining period for these bases.
• When the balance of a single amortization base has an abso lute value less than $250, the
amortization period is reduced to one year.
• When the entire unfunded liability is a small amount , the actuary may perform a Fresh Start and
use an appropriate amortization period.
Exceptions for Inactive Plans
The following exceptions apply to plans classified as Inactive. These plans have no active members and no
expectation to have active members in the future.
• Amortization of the unfunded liability is on a “level dollar” basis rather than a “level percent of pay”
basis. For amortization layers, which utilize a ramp up and ramp down, the “ultimate” payment is
constant.
• Actuarial judgment will be used to shorten amortization periods for Inactive plans with existing periods
that are deemed too long given the duration of the liability. The specific demographics of the plan will
be used to determine if shorter periods may be more appropriate.
Exceptions for Inactive Agencies
For a public agency with no active members in any CalPERS rate plan, the unfunded liability shall be
amortized over a closed amortization period of no more than 15 years.
Asset Valuation Method
The Actuarial Value of Assets is set equal to the m arket value of assets. Asset values include accounts
receivable.
PEPRA Normal Cost Rate Methodology
Per Government Code s ection 7522.30(b), the “normal cost rate” shall mean the annual actuarially determined
normal cost for the plan of retirement benefits provided to the new member and shall be established based on
actuarial assumptions used to determine the liabilities and costs as part of the annual actuarial valuation. The
plan of retirement benefits shall include any elements that would impact the actuarial determination of the
normal cost, including, but not limited to, the retirement formula, eligibility and vesting criteria, ancillary benefit
provisions, and any automatic cost-of-living adjustments as determined by the public retirement system.
For purposes of setting member rates, it is preferable to determine total normal cost using a large activ e
population so that the rate remains relatively stable. While each CalPERS non -pooled plan has a sufficiently
large active population for this purpose, the PEPRA active population by itself may not be sufficiently large.
The total PEPRA normal cost will b e determined based on the plan’s PEPRA membership only if the number
of members covered under the PEPRA formula meets either:
1. 50% of the active population, or
2. 25% of the active population and 100 or more PEPRA members
Until one of these conditions is met, the plan’s total PEPRA normal cost will be determined using the entire
active plan population (both PEPRA and Classic) based on the PEPRA benefit provisions.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-4
Actuarial Assumptions
In 2021, CalPERS completed its most recent asset liability management study incorporating actuarial
assumptions and strategic asset allocation. In November 2021, the board adopted changes to the asset
allocation that increased the expected volatility of returns. The adopted asset alloca tion was expected to have
a long-term blended return that continued to support a discount rate assumption of 6.80%. The board also
approved several changes to the demographic assumptions that more closely aligned with actual experience.
For more details a nd additional rationale for the selection of the actuarial assumptions, please refer to the
CalPERS Experience Study and Review of Actuarial Assumptions report from November 2021 that can be
found on the CalPERS website under: Forms and Publications. Click on “View All” and search for Experience
Study.
All actuarial assumptions (except the discount rates used for the accrued liability on a termination basis)
represent an estimate of future experience rather than observations of the estimates inherent in ma rket data.
Economic Assumptions
Discount Rate
The prescribed discount rate assumption, adopted by the board on November 17, 2021, is 6.80%
compounded annually (net of investment and administrative expenses) as of June 30, 2022.
Termination Liability Discount Rate
The current discount rate assumption used for termination valuations is a weighted average of the
10-year and 30-year U.S. Treasury yields where the weights are based on matc hing asset and liability
durations as of the termination date.
The accrued liabilities on a termination basis in this report are calculated using an observed range of
market interest rates. This range is based on the lowest and highest 20 -year Treasury bond observed
during an approximate 19-month period from 12 months before the valuation date to seven months
after. The 20-year Treasury bond has a similar duration to most plan liabilities and serves as a good
proxy for the termination discount rate. The 20 -year Treasury yield was 3.38% on June 30, 2022 .
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-5
Salary Growth
Annual increases vary by category, entry age, and duration of service. A sample of assumed
increases are shown below. Wage inflation assumption in the valuation year (2.80% for 2022) is
added to these factors for total salary growth.
Public Agency Miscellaneous
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.0764 0.0621 0.0521
1 0.0663 0.0528 0.0424
2 0.0576 0.0449 0.0346
3 0.0501 0.0381 0.0282
4 0.0435 0.0324 0.0229
5 0.0378 0.0276 0.0187
10 0.0201 0.0126 0.0108
15 0.0155 0.0102 0.0071
20 0.0119 0.0083 0.0047
25 0.0091 0.0067 0.0031
30 0.0070 0.0054 0.0020
Public Agency Fire
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.1517 0.1549 0.0631
1 0.1191 0.1138 0.0517
2 0.0936 0.0835 0.0423
3 0.0735 0.0613 0.0346
4 0.0577 0.0451 0.0284
5 0.0453 0.0331 0.0232
10 0.0188 0.0143 0.0077
15 0.0165 0.0124 0.0088
20 0.0145 0.0108 0.0101
25 0.0127 0.0094 0.0115
30 0.0112 0.0082 0.0132
Public Agency Police
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.1181 0.1051 0.0653
1 0.0934 0.0812 0.0532
2 0.0738 0.0628 0.0434
3 0.0584 0.0485 0.0353
4 0.0462 0.0375 0.0288
5 0.0365 0.0290 0.0235
10 0.0185 0.0155 0.0118
15 0.0183 0.0150 0.0131
20 0.0181 0.0145 0.0145
25 0.0179 0.0141 0.0161
30 0.0178 0.0136 0.0179
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-6
Salary Growth (continued)
Public Agency County Peace Officers
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.1238 0.1053 0.0890
1 0.0941 0.0805 0.0674
2 0.0715 0.0616 0.0510
3 0.0544 0.0471 0.0387
4 0.0413 0.0360 0.0293
5 0.0314 0.0276 0.0222
10 0.0184 0.0142 0.0072
15 0.0174 0.0124 0.0073
20 0.0164 0.0108 0.0074
25 0.0155 0.0094 0.0075
30 0.0147 0.0083 0.0077
Schools
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.0275 0.0275 0.0200
1 0.0422 0.0373 0.0298
2 0.0422 0.0373 0.0298
3 0.0422 0.0373 0.0298
4 0.0388 0.0314 0.0245
5 0.0308 0.0239 0.0179
10 0.0236 0.0160 0.0121
15 0.0182 0.0135 0.0103
20 0.0145 0.0109 0.0085
25 0.0124 0.0102 0.0058
30 0.0075 0.0053 0.0019
• The Miscellaneous salary scale is used for Local Prosecutors.
• The Police salary scale is used for Other Safety, Local Sheriff, and School Police.
Price Inflation
2.30% compounded annually.
Wage Inflation
2.80% compounded annually (used in projecting individual salary increases).
Payroll Growth
2.80% compounded annually (used in projecting the payroll over which the unfunded liability is
amortized for level percent of payroll bases ). This assumption is used for all plans with active
members.
Non-valued Potential Additional Liabilities
The potential liability loss for a cost-of-living increase exceeding the 2.30% price inflation assumption
and any potential liability loss from future member service purchases that are not reflected in the
valuation.
Miscellaneous Loading Factors
Credit for Unused Sick Leave
Total years of service is increased by 1% for those plans that have adopted the provision of providing
Credit for Unused Sick Leave.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-7
Conversion of Employer Paid Member Contributions (EPMC)
Total years of service is increased by the Employee Contribution Rate for those plans with the
provision providing for the Conversion of Employer Paid Member Contributions (EPMC) during the
final compensation period.
Norris Decision (Best Factors)
Employees hired prior to July 1, 1982 have projected benefit amounts increased in order to reflect
the use of “Best Factors” in the ca lculation of optional benefit forms. This is due to a 1983 Supreme
Court decision, known as the Norris decision, which required males and females to be treated equally
in the determination of benefit amounts. Consequently, anyone already employed at that t ime is given
the best possible conversion factor when optional benefits are determined. No loading is necessary
for employees hired after July 1, 1982.
Termination Liability
The termination liabilities include a 5% contingency load. This load is for unfor eseen improvements
in mortality.
Demographic Assumptions
Pre -Retirement Mortality
The mortality assumptions are based on mortality rates resulting from the most recent CalPERS
Experience Study adopted by the CalPERS Board in November 2021. For purposes of the mortality
rates, the rates incorporate generational mortality to capture on -going mortality improvement.
Generational mortality explicitly assumes that members born more recently will live longer than the
members born before them thereby capturing the mortality improvement seen in the past and
expected continued improvement. For more details, please refer to the 2021 experience study report
that can be found on the CalPERS website .
Rates vary by age and gender are shown in the table below. This tab le only contains a sample of the
2017 base table rates for illustrative purposes. The non -industrial death rates are used for all plans.
The industrial death rates are used for Safety plans (except for local Safety members described in
Section 20423.6 where the agency has not specifically contracted for industrial death benefits.)
Miscellaneous Safety
Non-Industrial Death Non-Industrial Death Industrial Death
(Not Job-Related) (Not Job-Related) (Job-Related)
Age Male Female Male Female Male Female
20 0.00039 0.00014 0.00038 0.00014 0.00004 0.00002
25 0.00033 0.00013 0.00034 0.00018 0.00004 0.00002
30 0.00044 0.00019 0.00042 0.00025 0.00005 0.00003
35 0.00058 0.00029 0.00048 0.00034 0.00005 0.00004
40 0.00075 0.00039 0.00055 0.00042 0.00006 0.00005
45 0.00093 0.00054 0.00066 0.00053 0.00007 0.00006
50 0.00134 0.00081 0.00092 0.00073 0.00010 0.00008
55 0.00198 0.00123 0.00138 0.00106 0.00015 0.00012
60 0.00287 0.00179 0.00221 0.00151 0.00025 0.00017
65 0.00403 0.00250 0.00346 0.00194 0.00038 0.00022
70 0.00594 0.00404 0.00606 0.00358 0.00067 0.00040
75 0.00933 0.00688 0.01099 0.00699 0.00122 0.00078
80 0.01515 0.01149 0.02027 0.01410 0.00225 0.00157
• The pre -retirement mortality rates above are for 2017 and are projected generationally for future
years using 80% of the Society of Actuaries’ Scale MP -2020.
• Miscellaneous plans usually have industrial death rates set to zero unless the agency has
specifically contracted for industrial death benefits. If so, each non -industria l death rate shown
above will be split into two components : 99% will become the non -industrial death rate and 1%
will become the industrial death rate.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-8
Post-Retirement Mortality
Rates vary by age, type of retirement, and gender. See sample rates in table below. These rates are
used for all plans.
Service Retirement
Non-Industrial Disability Industrial Disability
(Not Job-Related) (Job-Related)
Age Male Female Male Female Male Female
50 0.00267 0.00199 0.01701 0.01439 0.00430 0.00311
55 0.00390 0.00325 0.02210 0.01734 0.00621 0.00550
60 0.00578 0.00455 0.02708 0.01962 0.00944 0.00868
65 0.00857 0.00612 0.03334 0.02276 0.01394 0.01190
70 0.01333 0.00996 0.04001 0.02910 0.02163 0.01858
75 0.02391 0.01783 0.05376 0.04160 0.03446 0.03134
80 0.04371 0.03403 0.07936 0.06112 0.05853 0.05183
85 0.08274 0.06166 0.11561 0.09385 0.10137 0.08045
90 0.14539 0.11086 0.16608 0.14396 0.16584 0.12434
95 0.24665 0.20364 0.24665 0.20364 0.24665 0.20364
100 0.36198 0.31582 0.36198 0.31582 0.36198 0.31582
105 0.52229 0.44679 0.52229 0.44679 0.52229 0.44679
110 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000
The post-retirement mortality rates above are for 2017 and are projected generationally for future
years using 80% of the Society of Actuaries’ Scale MP-2020.
Marital Status
For active members, a percentage who are married upon retirement is assumed according to the
member category as shown in the following table.
Member Category Percent Married
Miscellaneous Member 70%
Local Police 85%
Local Fire 85%
Other Local Safety 70%
School Police 85%
Local County Peace Officers 75%
Age of Spouse
It is assumed that female spouses are 3 years younger than male spouses. This assumption is used
for all plans.
Separated Members
It is assumed that separated members refund immediately if non -vested. Separated members who
are vested are assumed to retire at age 59 for Miscellaneous members and age 54 for Safety
members.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-9
Termination with Refund
Rates vary by entry age and service for Miscellaneous plans. Rates vary by service for Safety plans.
See sample rates in tables below.
Public Agency Miscellaneous
Duration of
Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40 Entry Age 45
Male Female Male Female Male Female Male Female Male Female Male Female
0 0.1851 0.1944 0.1769 0.1899 0.1631 0.1824 0.1493 0.1749 0.1490 0.1731 0.1487 0.1713
1 0.1531 0.1673 0.1432 0.1602 0.1266 0.1484 0.1101 0.1366 0.1069 0.1323 0.1037 0.1280
2 0.1218 0.1381 0.1125 0.1307 0.0970 0.1183 0.0815 0.1058 0.0771 0.0998 0.0726 0.0938
3 0.0927 0.1085 0.0852 0.1020 0.0727 0.0912 0.0601 0.0804 0.0556 0.0737 0.0511 0.0669
4 0.0672 0.0801 0.0616 0.0752 0.0524 0.0670 0.0431 0.0587 0.0392 0.0523 0.0352 0.0459
5 0.0463 0.0551 0.0423 0.0517 0.0358 0.0461 0.0292 0.0404 0.0261 0.0350 0.0230 0.0296
10 0.0112 0.0140 0.0101 0.0129 0.0083 0.0112 0.0064 0.0094 0.0048 0.0071 0.0033 0.0049
15 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
20 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
25 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
30 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
35 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
• The police termination and refund rates are also used for Public Agency Local Prosecutors,
Other Safety, Local Sheriff, and School Police.
Public Agency Safety
Duration of
Service Fire Police County Peace Officer
Male Female Male Female Male Female
0 0.1022 0.1317 0.1298 0.1389 0.1086 0.1284
1 0.0686 0.1007 0.0789 0.0904 0.0777 0.0998
2 0.0441 0.0743 0.0464 0.0566 0.0549 0.0759
3 0.0272 0.0524 0.0274 0.0343 0.0385 0.0562
4 0.0161 0.0349 0.0170 0.0206 0.0268 0.0402
5 0.0092 0.0214 0.0113 0.0128 0.0186 0.0276
10 0.0015 0.0000 0.0032 0.0047 0.0046 0.0038
15 0.0000 0.0000 0.0000 0.0000 0.0023 0.0036
20 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
25 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
30 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
35 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-10
Termination with Refund (continued)
Schools
Duration of
Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40 Entry Age 45
Male Female Male Female Male Female Male Female Male Female Male Female
0 0.2054 0.2120 0.1933 0.1952 0.1730 0.1672 0.1527 0.1392 0.1423 0.1212 0.1318 0.1032
1 0.1922 0.2069 0.1778 0.1883 0.1539 0.1573 0.1300 0.1264 0.1191 0.1087 0.1083 0.0910
2 0.1678 0.1859 0.1536 0.1681 0.1298 0.1383 0.1060 0.1086 0.0957 0.0934 0.0853 0.0782
3 0.1384 0.1575 0.1256 0.1417 0.1042 0.1155 0.0829 0.0893 0.0736 0.0774 0.0643 0.0656
4 0.1085 0.1274 0.0978 0.1143 0.0800 0.0925 0.0622 0.0707 0.0542 0.0620 0.0462 0.0533
5 0.0816 0.0991 0.0732 0.0887 0.0590 0.0713 0.0449 0.0539 0.0383 0.0476 0.0317 0.0413
10 0.0222 0.0248 0.0200 0.0221 0.0163 0.0174 0.0125 0.0128 0.0094 0.0100 0.0063 0.0072
15 0.0106 0.0132 0.0095 0.0113 0.0077 0.0083 0.0058 0.0052 0.0040 0.0039 0.0021 0.0026
20 0.0059 0.0065 0.0050 0.0054 0.0035 0.0036 0.0021 0.0019 0.0010 0.0009 0.0000 0.0000
25 0.0029 0.0034 0.0025 0.0029 0.0018 0.0020 0.0010 0.0012 0.0005 0.0006 0.0000 0.0000
30 0.0012 0.0015 0.0011 0.0013 0.0011 0.0011 0.0010 0.0009 0.0005 0.0005 0.0000 0.0000
35 0.0006 0.0007 0.0006 0.0007 0.0005 0.0006 0.0005 0.0005 0.0003 0.0002 0.0000 0.0000
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-11
Termination with Vested Benefits
Rates vary by entry age and service for Miscellaneous plans. Rates vary by service for Safety plans.
See sample rates in tables below.
Public Agency Miscellaneous
Duration of
Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40
Male Female Male Female Male Female Male Female Male Female
5 0.0381 0.0524 0.0381 0.0524 0.0358 0.0464 0.0334 0.0405 0.0301 0.0380
10 0.0265 0.0362 0.0265 0.0362 0.0254 0.0334 0.0244 0.0307 0.0197 0.0236
15 0.0180 0.0252 0.0180 0.0252 0.0166 0.0213 0.0152 0.0174 0.0119 0.0132
20 0.0141 0.0175 0.0141 0.0175 0.0110 0.0131 0.0079 0.0087 0.0000 0.0000
25 0.0084 0.0108 0.0084 0.0108 0.0064 0.0076 0.0000 0.0000 0.0000 0.0000
30 0.0047 0.0056 0.0047 0.0056 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
35 0.0038 0.0041 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
• After termination with vested benefits, a Miscellaneous member is assumed to retire at age 59
and a Safety member at age 54.
• The Police termination with vested benefits rates are also used for Public Agency Local
Prosecutors, Other Safety, Local Sheriff, and School Police.
Schools
Duration of
Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40
Male Female Male Female Male Female Male Female Male Female
5 0.0359 0.0501 0.0359 0.0501 0.0332 0.0402 0.0305 0.0304 0.0266 0.0272
10 0.0311 0.0417 0.0311 0.0417 0.0269 0.0341 0.0228 0.0265 0.0193 0.0233
15 0.0193 0.0264 0.0193 0.0264 0.0172 0.0220 0.0151 0.0175 0.0123 0.0142
20 0.0145 0.0185 0.0145 0.0185 0.0113 0.0141 0.0080 0.0097 0.0000 0.0000
25 0.0089 0.0123 0.0089 0.0123 0.0074 0.0093 0.0000 0.0000 0.0000 0.0000
30 0.0057 0.0064 0.0057 0.0064 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
35 0.0040 0.0049 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
Public Agency Safety
Duration of
Service Fire Police County Peace Officer
Male Female Male Female Male Female
5 0.0089 0.0224 0.0156 0.0272 0.0177 0.0266
10 0.0066 0.0164 0.0113 0.0198 0.0126 0.0189
15 0.0048 0.0120 0.0083 0.0144 0.0089 0.0134
20 0.0035 0.0088 0.0060 0.0105 0.0063 0.0095
25 0.0024 0.0061 0.0042 0.0073 0.0042 0.0063
30 0.0012 0.0031 0.0021 0.0037 0.0021 0.0031
35 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-12
Non-Industrial (Not Job-Related) Disability
Rates vary by age and gender for Miscellaneous plans. Rates vary by age and category for Safety
plans.
Miscellaneous Fire Police County Peace Officer Schools
Ag
e Male Female
Male and
Female
Male and
Female Male and Female Male Female
20 0.0001 0.0000 0.0001 0.0001 0.0001 0.0000 0.0002
25 0.0001 0.0001 0.0001 0.0001 0.0001 0.0000 0.0002
30 0.0002 0.0003 0.0001 0.0001 0.0001 0.0002 0.0002
35 0.0004 0.0007 0.0001 0.0002 0.0003 0.0005 0.0004
40 0.0009 0.0012 0.0001 0.0002 0.0006 0.0010 0.0008
45 0.0015 0.0019 0.0002 0.0003 0.0011 0.0019 0.0015
50 0.0015 0.0019 0.0004 0.0005 0.0016 0.0027 0.0021
55 0.0014 0.0013 0.0006 0.0007 0.0009 0.0024 0.0017
60 0.0012 0.0009 0.0006 0.0011 0.0005 0.0020 0.0010
• The Miscellaneous non -industrial disability rates are used for Local Prosecutors.
• The police non-industrial disability rates are also used for Other Safety, Local Sheriff, and School
Police.
Industrial (Job-Related) Disability
Rates vary by age and category.
Age Fire Police County Peace Officer
20 0.0001 0.0000 0.0004
25 0.0002 0.0017 0.0013
30 0.0006 0.0048 0.0025
35 0.0012 0.0079 0.0037
40 0.0023 0.0110 0.0051
45 0.0040 0.0141 0.0067
50 0.0208 0.0185 0.0092
55 0.0307 0.0479 0.0151
60 0.0438 0.0602 0.0174
• The police industrial disability rates are also used for Local Sheriff and Other Safety.
• 50% of the police industrial disability rates are used for School Police.
• 1% of the police industrial disability rates are used for Local Prosecutors.
• Normally, rates are zero for Miscellaneous plans unless the agency has specifically contracted
for industrial disability benefits. If so, each Miscellaneous non-industrial disability rate will be split
into two components: 50% will become the non -industrial disability rate and 50% will become
the industrial disability rate.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-13
Service Retirement
Retirement rates vary by age, service, and formula, except for the Safety Half Pay at 55 and 2% at
55 formulas, where retirement rates vary by age only.
Public Agency Miscellaneous 1.5% at 65
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.008 0.011 0.013 0.015 0.017 0.019
51 0.007 0.010 0.012 0.013 0.015 0.017
52 0.010 0.014 0.017 0.019 0.021 0.024
53 0.008 0.012 0.015 0.017 0.019 0.022
54 0.012 0.016 0.019 0.022 0.025 0.028
55 0.018 0.025 0.031 0.035 0.038 0.043
56 0.015 0.021 0.025 0.029 0.032 0.036
57 0.020 0.028 0.033 0.038 0.043 0.048
58 0.024 0.033 0.040 0.046 0.052 0.058
59 0.028 0.039 0.048 0.054 0.060 0.067
60 0.049 0.069 0.083 0.094 0.105 0.118
61 0.062 0.087 0.106 0.120 0.133 0.150
62 0.104 0.146 0.177 0.200 0.223 0.251
63 0.099 0.139 0.169 0.191 0.213 0.239
64 0.097 0.136 0.165 0.186 0.209 0.233
65 0.140 0.197 0.240 0.271 0.302 0.339
66 0.092 0.130 0.157 0.177 0.198 0.222
67 0.129 0.181 0.220 0.249 0.277 0.311
68 0.092 0.129 0.156 0.177 0.197 0.221
69 0.092 0.130 0.158 0.178 0.199 0.224
70 0.103 0.144 0.175 0.198 0.221 0.248
Public Agency Miscellaneous 2% at 60
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.010 0.011 0.014 0.014 0.017 0.017
51 0.017 0.013 0.014 0.010 0.010 0.010
52 0.014 0.014 0.018 0.015 0.016 0.016
53 0.015 0.012 0.013 0.010 0.011 0.011
54 0.006 0.010 0.017 0.016 0.018 0.018
55 0.012 0.016 0.024 0.032 0.036 0.036
56 0.010 0.014 0.023 0.030 0.034 0.034
57 0.006 0.018 0.030 0.040 0.044 0.044
58 0.022 0.023 0.033 0.042 0.046 0.046
59 0.039 0.033 0.040 0.047 0.050 0.050
60 0.063 0.069 0.074 0.090 0.137 0.116
61 0.044 0.058 0.066 0.083 0.131 0.113
62 0.084 0.107 0.121 0.153 0.238 0.205
63 0.173 0.166 0.165 0.191 0.283 0.235
64 0.120 0.145 0.164 0.147 0.160 0.172
65 0.138 0.160 0.214 0.216 0.237 0.283
66 0.198 0.228 0.249 0.216 0.228 0.239
67 0.207 0.242 0.230 0.233 0.233 0.233
68 0.201 0.234 0.225 0.231 0.231 0.231
69 0.152 0.173 0.164 0.166 0.166 0.166
70 0.200 0.200 0.200 0.200 0.200 0.200
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-14
Service Retirement
Public Agency Miscellaneous 2% at 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.014 0.014 0.017 0.021 0.023 0.024
51 0.013 0.017 0.017 0.018 0.018 0.019
52 0.013 0.018 0.018 0.020 0.020 0.021
53 0.013 0.019 0.021 0.024 0.025 0.026
54 0.017 0.025 0.028 0.032 0.033 0.035
55 0.045 0.042 0.053 0.086 0.098 0.123
56 0.018 0.036 0.056 0.086 0.102 0.119
57 0.041 0.046 0.056 0.076 0.094 0.120
58 0.052 0.044 0.048 0.074 0.106 0.123
59 0.043 0.058 0.073 0.092 0.105 0.126
60 0.059 0.064 0.083 0.115 0.154 0.170
61 0.087 0.074 0.087 0.107 0.147 0.168
62 0.115 0.123 0.151 0.180 0.227 0.237
63 0.116 0.127 0.164 0.202 0.252 0.261
64 0.084 0.138 0.153 0.190 0.227 0.228
65 0.167 0.187 0.210 0.262 0.288 0.291
66 0.187 0.258 0.280 0.308 0.318 0.319
67 0.195 0.235 0.244 0.277 0.269 0.280
68 0.228 0.248 0.250 0.241 0.245 0.245
69 0.188 0.201 0.209 0.219 0.231 0.231
70 0.229 0.229 0.229 0.229 0.229 0.229
Public Agency Miscellaneous 2.5% at 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.014 0.017 0.027 0.035 0.046 0.050
51 0.019 0.021 0.025 0.030 0.038 0.040
52 0.018 0.020 0.026 0.034 0.038 0.037
53 0.013 0.021 0.031 0.045 0.052 0.053
54 0.025 0.025 0.030 0.046 0.057 0.068
55 0.029 0.042 0.064 0.109 0.150 0.225
56 0.036 0.047 0.068 0.106 0.134 0.194
57 0.051 0.047 0.060 0.092 0.116 0.166
58 0.035 0.046 0.062 0.093 0.119 0.170
59 0.029 0.053 0.072 0.112 0.139 0.165
60 0.039 0.069 0.094 0.157 0.177 0.221
61 0.080 0.077 0.086 0.140 0.167 0.205
62 0.086 0.131 0.149 0.220 0.244 0.284
63 0.135 0.135 0.147 0.214 0.222 0.262
64 0.114 0.128 0.158 0.177 0.233 0.229
65 0.112 0.174 0.222 0.209 0.268 0.273
66 0.235 0.254 0.297 0.289 0.321 0.337
67 0.237 0.240 0.267 0.249 0.267 0.277
68 0.258 0.271 0.275 0.207 0.210 0.212
69 0.117 0.208 0.266 0.219 0.250 0.270
70 0.229 0.229 0.229 0.229 0.229 0.229
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-15
Service Retirement
Public Agency Miscellaneous 2.7% at 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.011 0.016 0.022 0.033 0.034 0.038
51 0.018 0.019 0.023 0.032 0.031 0.031
52 0.019 0.020 0.026 0.035 0.034 0.037
53 0.020 0.020 0.025 0.043 0.048 0.053
54 0.018 0.030 0.040 0.052 0.053 0.070
55 0.045 0.058 0.082 0.138 0.208 0.278
56 0.057 0.062 0.080 0.121 0.178 0.222
57 0.045 0.052 0.071 0.106 0.147 0.182
58 0.074 0.060 0.074 0.118 0.163 0.182
59 0.058 0.067 0.086 0.123 0.158 0.187
60 0.087 0.084 0.096 0.142 0.165 0.198
61 0.073 0.084 0.101 0.138 0.173 0.218
62 0.130 0.133 0.146 0.187 0.214 0.249
63 0.122 0.140 0.160 0.204 0.209 0.243
64 0.104 0.124 0.154 0.202 0.214 0.230
65 0.182 0.201 0.242 0.264 0.293 0.293
66 0.272 0.249 0.273 0.285 0.312 0.312
67 0.182 0.217 0.254 0.249 0.264 0.264
68 0.223 0.197 0.218 0.242 0.273 0.273
69 0.217 0.217 0.217 0.217 0.217 0.217
70 0.227 0.227 0.227 0.227 0.227 0.227
Public Agency Miscellaneous 3% at 60
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.015 0.020 0.025 0.039 0.040 0.044
51 0.041 0.034 0.032 0.041 0.036 0.037
52 0.024 0.020 0.022 0.039 0.040 0.041
53 0.018 0.024 0.032 0.047 0.048 0.057
54 0.033 0.033 0.035 0.051 0.049 0.052
55 0.137 0.043 0.051 0.065 0.076 0.108
56 0.173 0.038 0.054 0.075 0.085 0.117
57 0.019 0.035 0.059 0.088 0.111 0.134
58 0.011 0.040 0.070 0.105 0.133 0.162
59 0.194 0.056 0.064 0.081 0.113 0.163
60 0.081 0.085 0.133 0.215 0.280 0.333
61 0.080 0.090 0.134 0.170 0.223 0.292
62 0.137 0.153 0.201 0.250 0.278 0.288
63 0.128 0.140 0.183 0.227 0.251 0.260
64 0.174 0.147 0.173 0.224 0.239 0.264
65 0.152 0.201 0.262 0.299 0.323 0.323
66 0.272 0.273 0.317 0.355 0.380 0.380
67 0.218 0.237 0.268 0.274 0.284 0.284
68 0.200 0.228 0.269 0.285 0.299 0.299
69 0.250 0.250 0.250 0.250 0.250 0.250
70 0.245 0.245 0.245 0.245 0.245 0.245
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-16
Service Retirement
Public Agency Miscellaneous 2% at 62
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.000 0.000 0.000 0.000 0.000 0.000
51 0.000 0.000 0.000 0.000 0.000 0.000
52 0.005 0.008 0.012 0.015 0.019 0.031
53 0.007 0.011 0.014 0.018 0.021 0.032
54 0.007 0.011 0.015 0.019 0.023 0.034
55 0.010 0.019 0.028 0.036 0.061 0.096
56 0.014 0.026 0.038 0.050 0.075 0.108
57 0.018 0.029 0.039 0.050 0.074 0.107
58 0.023 0.035 0.048 0.060 0.073 0.099
59 0.025 0.038 0.051 0.065 0.092 0.128
60 0.031 0.051 0.071 0.091 0.111 0.138
61 0.038 0.058 0.079 0.100 0.121 0.167
62 0.044 0.074 0.104 0.134 0.164 0.214
63 0.077 0.105 0.134 0.163 0.192 0.237
64 0.072 0.101 0.129 0.158 0.187 0.242
65 0.108 0.141 0.173 0.206 0.239 0.300
66 0.132 0.172 0.212 0.252 0.292 0.366
67 0.132 0.172 0.212 0.252 0.292 0.366
68 0.120 0.156 0.193 0.229 0.265 0.333
69 0.120 0.156 0.193 0.229 0.265 0.333
70 0.120 0.156 0.193 0.229 0.265 0.333
Service Retirement
Public Agency Fire Half Pay at 55 and 2% at 55
Age Rate
Age Rate
50 0.016 56 0.111
51 0.000 57 0.000
52 0.034 58 0.095
53 0.020 59 0.044
54 0.041 60 1.000
55 0.075
Public Agency Police Half Pay at 55 and 2% at 55
Age Rate
Age Rate
50 0.026 56 0.069
51 0.000 57 0.051
52 0.016 58 0.072
53 0.027 59 0.070
54 0.010 60 0.300
55 0.167
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-17
Service Retirement
Public Agency Police 2% at 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.018 0.077 0.056 0.046 0.043 0.046
51 0.022 0.087 0.060 0.048 0.044 0.047
52 0.020 0.102 0.081 0.071 0.069 0.075
53 0.016 0.072 0.053 0.045 0.042 0.046
54 0.006 0.071 0.071 0.069 0.072 0.080
55 0.009 0.040 0.099 0.157 0.186 0.186
56 0.020 0.051 0.108 0.165 0.194 0.194
57 0.036 0.072 0.106 0.139 0.156 0.156
58 0.001 0.046 0.089 0.130 0.152 0.152
59 0.066 0.094 0.119 0.143 0.155 0.155
60 0.177 0.177 0.177 0.177 0.177 0.177
61 0.134 0.134 0.134 0.134 0.134 0.134
62 0.184 0.184 0.184 0.184 0.184 0.184
63 0.250 0.250 0.250 0.250 0.250 0.250
64 0.177 0.177 0.177 0.177 0.177 0.177
65 1.000 1.000 1.000 1.000 1.000 1.000
• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police,
and Other Safety.
Service Retirement
Public Agency Fire 2% at 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.054 0.054 0.056 0.080 0.064 0.066
51 0.020 0.020 0.021 0.030 0.024 0.024
52 0.037 0.037 0.038 0.054 0.043 0.045
53 0.051 0.051 0.053 0.076 0.061 0.063
54 0.082 0.082 0.085 0.121 0.097 0.100
55 0.139 0.139 0.139 0.139 0.139 0.139
56 0.129 0.129 0.129 0.129 0.129 0.129
57 0.085 0.085 0.085 0.085 0.085 0.085
58 0.119 0.119 0.119 0.119 0.119 0.119
59 0.167 0.167 0.167 0.167 0.167 0.167
60 0.152 0.152 0.152 0.152 0.152 0.152
61 0.179 0.179 0.179 0.179 0.179 0.179
62 0.179 0.179 0.179 0.179 0.179 0.179
63 0.179 0.179 0.179 0.179 0.179 0.179
64 0.179 0.179 0.179 0.179 0.179 0.179
65 1.000 1.000 1.000 1.000 1.000 1.000
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-18
Service Retirement
Public Agency Police 3% at 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.019 0.053 0.045 0.054 0.057 0.061
51 0.002 0.017 0.028 0.044 0.053 0.060
52 0.002 0.031 0.037 0.051 0.059 0.066
53 0.026 0.049 0.049 0.080 0.099 0.114
54 0.019 0.034 0.047 0.091 0.121 0.142
55 0.006 0.115 0.141 0.199 0.231 0.259
56 0.017 0.188 0.121 0.173 0.199 0.199
57 0.008 0.137 0.093 0.136 0.157 0.157
58 0.017 0.126 0.105 0.164 0.194 0.194
59 0.026 0.146 0.110 0.167 0.195 0.195
60 0.155 0.155 0.155 0.155 0.155 0.155
61 0.210 0.210 0.210 0.210 0.210 0.210
62 0.262 0.262 0.262 0.262 0.262 0.262
63 0.172 0.172 0.172 0.172 0.172 0.172
64 0.227 0.227 0.227 0.227 0.227 0.227
65 1.000 1.000 1.000 1.000 1.000 1.000
• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School
Police, and Other Safety.
Service Retirement
Public Agency Fire 3% at 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.003 0.006 0.013 0.019 0.025 0.028
51 0.004 0.008 0.017 0.026 0.034 0.038
52 0.005 0.011 0.022 0.033 0.044 0.049
53 0.005 0.034 0.024 0.038 0.069 0.138
54 0.007 0.047 0.032 0.051 0.094 0.187
55 0.010 0.067 0.046 0.073 0.134 0.266
56 0.010 0.063 0.044 0.069 0.127 0.253
57 0.135 0.100 0.148 0.196 0.220 0.220
58 0.083 0.062 0.091 0.120 0.135 0.135
59 0.137 0.053 0.084 0.146 0.177 0.177
60 0.162 0.063 0.099 0.172 0.208 0.208
61 0.598 0.231 0.231 0.231 0.231 0.231
62 0.621 0.240 0.240 0.240 0.240 0.240
63 0.236 0.236 0.236 0.236 0.236 0.236
64 0.236 0.236 0.236 0.236 0.236 0.236
65 1.000 1.000 1.000 1.000 1.000 1.000
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-19
Service Retirement
Public Agency Police 3% at 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.124 0.103 0.113 0.143 0.244 0.376
51 0.060 0.081 0.087 0.125 0.207 0.294
52 0.016 0.055 0.111 0.148 0.192 0.235
53 0.072 0.074 0.098 0.142 0.189 0.237
54 0.018 0.049 0.105 0.123 0.187 0.271
55 0.069 0.074 0.081 0.113 0.209 0.305
56 0.064 0.108 0.113 0.125 0.190 0.288
57 0.056 0.109 0.160 0.182 0.210 0.210
58 0.108 0.129 0.173 0.189 0.214 0.214
59 0.093 0.144 0.204 0.229 0.262 0.262
60 0.343 0.180 0.159 0.188 0.247 0.247
61 0.221 0.221 0.221 0.221 0.221 0.221
62 0.213 0.213 0.213 0.213 0.213 0.213
63 0.233 0.233 0.233 0.233 0.233 0.233
64 0.234 0.234 0.234 0.234 0.234 0.234
65 1.000 1.000 1.000 1.000 1.000 1.000
• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School
Police, and Other Safety.
Service Retirement
Public Agency Fire 3% at 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.095 0.048 0.053 0.093 0.134 0.175
51 0.016 0.032 0.053 0.085 0.117 0.149
52 0.013 0.032 0.054 0.087 0.120 0.154
53 0.085 0.044 0.049 0.089 0.129 0.170
54 0.038 0.065 0.074 0.105 0.136 0.167
55 0.042 0.043 0.049 0.085 0.132 0.215
56 0.133 0.103 0.075 0.113 0.151 0.209
57 0.062 0.048 0.060 0.124 0.172 0.213
58 0.124 0.097 0.092 0.153 0.194 0.227
59 0.092 0.071 0.078 0.144 0.192 0.233
60 0.056 0.044 0.061 0.131 0.186 0.233
61 0.282 0.219 0.158 0.198 0.233 0.260
62 0.292 0.227 0.164 0.205 0.241 0.269
63 0.196 0.196 0.196 0.196 0.196 0.196
64 0.197 0.197 0.197 0.197 0.197 0.197
65 1.000 1.000 1.000 1.000 1.000 1.000
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-20
Service Retirement
Public Agency Police 2% at 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.040 0.040 0.040 0.040 0.040 0.080
51 0.028 0.028 0.028 0.028 0.040 0.066
52 0.028 0.028 0.028 0.028 0.043 0.061
53 0.028 0.028 0.028 0.028 0.057 0.086
54 0.028 0.028 0.028 0.032 0.069 0.110
55 0.050 0.050 0.050 0.067 0.099 0.179
56 0.046 0.046 0.046 0.062 0.090 0.160
57 0.054 0.054 0.054 0.072 0.106 0.191
58 0.060 0.060 0.060 0.066 0.103 0.171
59 0.060 0.060 0.060 0.069 0.105 0.171
60 0.113 0.113 0.113 0.113 0.113 0.171
61 0.108 0.108 0.108 0.108 0.108 0.128
62 0.113 0.113 0.113 0.113 0.113 0.159
63 0.113 0.113 0.113 0.113 0.113 0.159
64 0.113 0.113 0.113 0.113 0.113 0.239
65 1.000 1.000 1.000 1.000 1.000 1.000
• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School
Police, and Other Safety.
Service Retirement
Public Agency Fire 2% at 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.005 0.005 0.005 0.005 0.008 0.012
51 0.006 0.006 0.006 0.006 0.009 0.013
52 0.012 0.012 0.012 0.012 0.019 0.028
53 0.033 0.033 0.033 0.033 0.050 0.075
54 0.045 0.045 0.045 0.045 0.069 0.103
55 0.061 0.061 0.061 0.061 0.094 0.140
56 0.055 0.055 0.055 0.055 0.084 0.126
57 0.081 0.081 0.081 0.081 0.125 0.187
58 0.059 0.059 0.059 0.059 0.091 0.137
59 0.055 0.055 0.055 0.055 0.084 0.126
60 0.085 0.085 0.085 0.085 0.131 0.196
61 0.085 0.085 0.085 0.085 0.131 0.196
62 0.085 0.085 0.085 0.085 0.131 0.196
63 0.085 0.085 0.085 0.085 0.131 0.196
64 0.085 0.085 0.085 0.085 0.131 0.196
65 1.000 1.000 1.000 1.000 1.000 1.000
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-21
Service Retirement
Public Agency Police 2.5 % at 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.050 0.050 0.050 0.050 0.050 0.100
51 0.038 0.038 0.038 0.038 0.055 0.089
52 0.038 0.038 0.038 0.038 0.058 0.082
53 0.036 0.036 0.036 0.036 0.073 0.111
54 0.036 0.036 0.036 0.041 0.088 0.142
55 0.061 0.061 0.061 0.082 0.120 0.217
56 0.056 0.056 0.056 0.075 0.110 0.194
57 0.060 0.060 0.060 0.080 0.118 0.213
58 0.072 0.072 0.072 0.079 0.124 0.205
59 0.072 0.072 0.072 0.083 0.126 0.205
60 0.135 0.135 0.135 0.135 0.135 0.205
61 0.130 0.130 0.130 0.130 0.130 0.153
62 0.135 0.135 0.135 0.135 0.135 0.191
63 0.135 0.135 0.135 0.135 0.135 0.191
64 0.135 0.135 0.135 0.135 0.135 0.287
65 1.000 1.000 1.000 1.000 1.000 1.000
• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School
Police, and Other Safety.
Service Retirement
Public Agency Fire 2.5 % at 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.007 0.007 0.007 0.007 0.010 0.015
51 0.008 0.008 0.008 0.008 0.012 0.018
52 0.016 0.016 0.016 0.016 0.025 0.038
53 0.042 0.042 0.042 0.042 0.064 0.096
54 0.057 0.057 0.057 0.057 0.088 0.132
55 0.074 0.074 0.074 0.074 0.114 0.170
56 0.066 0.066 0.066 0.066 0.102 0.153
57 0.090 0.090 0.090 0.090 0.139 0.208
58 0.071 0.071 0.071 0.071 0.110 0.164
59 0.066 0.066 0.066 0.066 0.101 0.151
60 0.102 0.102 0.102 0.102 0.157 0.235
61 0.102 0.102 0.102 0.102 0.157 0.236
62 0.102 0.102 0.102 0.102 0.157 0.236
63 0.102 0.102 0.102 0.102 0.157 0.236
64 0.102 0.102 0.102 0.102 0.157 0.236
65 1.000 1.000 1.000 1.000 1.000 1.000
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-22
Service Retirement
Public Agency Police 2.7 % at 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.050 0.050 0.050 0.050 0.050 0.100
51 0.040 0.040 0.040 0.040 0.058 0.094
52 0.038 0.038 0.038 0.038 0.058 0.083
53 0.038 0.038 0.038 0.038 0.077 0.117
54 0.038 0.038 0.038 0.044 0.093 0.150
55 0.068 0.068 0.068 0.091 0.134 0.242
56 0.063 0.063 0.063 0.084 0.123 0.217
57 0.060 0.060 0.060 0.080 0.118 0.213
58 0.080 0.080 0.080 0.088 0.138 0.228
59 0.080 0.080 0.080 0.092 0.140 0.228
60 0.150 0.150 0.150 0.150 0.150 0.228
61 0.144 0.144 0.144 0.144 0.144 0.170
62 0.150 0.150 0.150 0.150 0.150 0.213
63 0.150 0.150 0.150 0.150 0.150 0.213
64 0.150 0.150 0.150 0.150 0.150 0.319
65 1.000 1.000 1.000 1.000 1.000 1.000
• These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School
Police, and Other Safety.
Service Retirement
Public Agency Fire 2.7 % at 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.007 0.007 0.007 0.007 0.010 0.015
51 0.008 0.008 0.008 0.008 0.013 0.019
52 0.016 0.016 0.016 0.016 0.025 0.038
53 0.044 0.044 0.044 0.044 0.068 0.102
54 0.061 0.061 0.061 0.061 0.093 0.140
55 0.083 0.083 0.083 0.083 0.127 0.190
56 0.074 0.074 0.074 0.074 0.114 0.171
57 0.090 0.090 0.090 0.090 0.139 0.208
58 0.079 0.079 0.079 0.079 0.122 0.182
59 0.073 0.073 0.073 0.073 0.112 0.168
60 0.114 0.114 0.114 0.114 0.175 0.262
61 0.114 0.114 0.114 0.114 0.175 0.262
62 0.114 0.114 0.114 0.114 0.175 0.262
63 0.114 0.114 0.114 0.114 0.175 0.262
64 0.114 0.114 0.114 0.114 0.175 0.262
65 1.000 1.000 1.000 1.000 1.000 1.000
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-23
Service Retirement
Schools 2% at 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.003 0.004 0.006 0.007 0.010 0.010
51 0.004 0.005 0.007 0.008 0.011 0.011
52 0.005 0.007 0.008 0.009 0.012 0.012
53 0.007 0.008 0.010 0.012 0.015 0.015
54 0.006 0.009 0.012 0.015 0.020 0.021
55 0.011 0.023 0.034 0.057 0.070 0.090
56 0.012 0.027 0.036 0.056 0.073 0.095
57 0.016 0.027 0.036 0.055 0.068 0.087
58 0.019 0.030 0.040 0.062 0.078 0.103
59 0.023 0.034 0.046 0.070 0.085 0.109
60 0.022 0.043 0.062 0.095 0.113 0.141
61 0.030 0.051 0.071 0.103 0.124 0.154
62 0.065 0.098 0.128 0.188 0.216 0.248
63 0.075 0.112 0.144 0.197 0.222 0.268
64 0.091 0.116 0.138 0.180 0.196 0.231
65 0.163 0.164 0.197 0.232 0.250 0.271
66 0.208 0.204 0.243 0.282 0.301 0.315
67 0.189 0.185 0.221 0.257 0.274 0.287
68 0.127 0.158 0.200 0.227 0.241 0.244
69 0.168 0.162 0.189 0.217 0.229 0.238
70 0.191 0.190 0.237 0.250 0.246 0.254
Schools 2% at 62
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.000 0.000 0.000 0.000 0.000 0.000
51 0.000 0.000 0.000 0.000 0.000 0.000
52 0.004 0.007 0.010 0.011 0.013 0.015
53 0.004 0.008 0.010 0.013 0.014 0.016
54 0.005 0.011 0.015 0.018 0.020 0.022
55 0.014 0.027 0.038 0.045 0.050 0.056
56 0.013 0.026 0.037 0.043 0.048 0.055
57 0.013 0.027 0.038 0.045 0.050 0.055
58 0.017 0.034 0.047 0.056 0.062 0.069
59 0.019 0.037 0.052 0.062 0.068 0.076
60 0.026 0.053 0.074 0.087 0.097 0.108
61 0.030 0.058 0.081 0.095 0.106 0.119
62 0.053 0.105 0.147 0.174 0.194 0.217
63 0.054 0.107 0.151 0.178 0.198 0.222
64 0.053 0.105 0.147 0.174 0.194 0.216
65 0.072 0.142 0.199 0.235 0.262 0.293
66 0.077 0.152 0.213 0.252 0.281 0.314
67 0.070 0.139 0.194 0.229 0.255 0.286
68 0.063 0.124 0.173 0.205 0.228 0.255
69 0.066 0.130 0.183 0.216 0.241 0.270
70 0.071 0.140 0.196 0.231 0.258 0.289
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix A
Actuarial Methods and Assumptions
A-24
Miscellaneous
Internal Revenue Code Section 415
The limitations on benefits imposed by Internal Revenue Code Section 415 are taken into account in this
valuation. Each year the impact of any changes in this limitation since the prior valuation is included and
amortized as part of the actuarial gain or l oss base. This results in lower contributions for those employers
contributing to the Replacement Benefit Fund and protects CalPERS from prefunding expected benefits in
excess of limits imposed by federal tax law. The Section 415(b) dollar limit for the 2022 calendar year is
$245,000.
Internal Revenue Code Section 401(a)(17)
The limitations on compensation imposed by Internal Revenue Code Section 401(a)(17) are taken into
account in this valuation. Each year, the impact of any changes in the compensation limitation since the prior
valuation is included and amortized as part of the actuarial gain or loss base. The compensation limit for
classic members for the 2022 calendar year is $305,000.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
Appendix B
Principal Plan Provisions
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix B
Safety Plan of the City of Palo Alto
Principal Plan Provisions
B-1
The following is a description of the principal plan provisions used in calculating costs and liabilities. We have indicated
whether a plan provision is standard or optional. Standard benefits are applicable to all members while optional benefits
vary among employers. Optional benefits that apply to a single period of time, such as Golden Handshakes, have not
been included. Many of the statements in this summary are general in nature, and are intended to provide an easily
understood summary of the Public Employees’ Retirement Law and the California Public Employees’ Pension Reform
Act of 2013 . The law itself govern s in all situations.
Service Retirement
Eligibility
A classic CalPERS member or PEPRA Safety member becomes eligible for Service Retirement upon attainment of
age 50 with at least 5 years of credited service (total service across all CalPERS employers, and with certain other
retirement systems with which Ca lPERS has reciprocity agreements). For employees hired into a plan with the 1.5%
at age 65 formula, eligibility for service retirement is age 55 with at least 5 years of service. PEPRA Miscellaneous
members become eligible for service retirement upon attai nment of age 52 with at least 5 years of service.
Benefit
The service retirement benefit is a monthly allowance equal to the product of the benefit factor, years of service , and
final compensation.
· The benefit factor depends on the benefit formula specified in the agency’s contract. The table below shows the
factors for each of the available formulas. Factors vary by the member’s age at retirement. Listed are the factors
for retirement at whole year ages:
Miscellaneous Plan Formulas
Retirement
Age 1.5% at 65 2% at 60 2% at 55 2.5% at 55 2.7% at 55 3% at 60 PEPRA
2% at 62
50 0.5000% 1.092% 1.426% 2.000% 2.000% 2.000% N/A
51 0.5667% 1.156% 1.522% 2.100% 2.140% 2.100% N/A
52 0.6334% 1.224% 1.628% 2.200% 2.280% 2.200% 1.000%
53 0.7000% 1.296% 1.742% 2.300% 2.420% 2.300% 1.100%
54 0.7667% 1.376% 1.866% 2.400% 2.560% 2.400% 1.200%
55 0.8334% 1.460% 2.000% 2.500% 2.700% 2.500% 1.300%
56 0.9000% 1.552% 2.052% 2.500% 2.700% 2.600% 1.400%
57 0.9667% 1.650% 2.104% 2.500% 2.700% 2.700% 1.500%
58 1.0334% 1.758% 2.156% 2.500% 2.700% 2.800% 1.600%
59 1.1000% 1.874% 2.210% 2.500% 2.700% 2.900% 1.700%
60 1.1667% 2.000% 2.262% 2.500% 2.700% 3.000% 1.800%
61 1.2334% 2.134% 2.314% 2.500% 2.700% 3.000% 1.900%
62 1.3000% 2.272% 2.366% 2.500% 2.700% 3.000% 2.000%
63 1.3667% 2.418% 2.418% 2.500% 2.700% 3.000% 2.100%
64 1.4334% 2.418% 2.418% 2.500% 2.700% 3.000% 2.200%
65 1.5000% 2.418% 2.418% 2.500% 2.700% 3.000% 2.300%
66 1.5000% 2.418% 2.418% 2.500% 2.700% 3.000% 2.400%
67 & up 1.5000% 2.418% 2.418% 2.500% 2.700% 3.000% 2.500%
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix B
Safety Plan of the City of Palo Alto
Principal Plan Provisions
B-2
Safety Plan Formulas
Retirement Age Half Pay at 55* 2% at 55 2% at 50 3% at 55 3% at 50
50 1.783% 1.426% 2.000% 2.400% 3.000%
51 1.903% 1.522% 2.140% 2.520% 3.000%
52 2.035% 1.628% 2.280% 2.640% 3.000%
53 2.178% 1.742% 2.420% 2.760% 3.000%
54 2.333% 1.866% 2.560% 2.880% 3.000%
55 & Up 2.500% 2.000% 2.700% 3.000% 3.000%
* For this formula, the benefit factor also varies by entry age. The factors shown are for members with an entry age of
35 or greater. If entry age is less than 35, then the age 55 benefit factor is 50% divided by the difference between age
55 and entry ag e. The benefit factor for ages prior to age 55 is the same proportion of the age 55 benefit factor as in
the above table.
PEPRA Safety Plan Formulas
Retirement Age 2% at 57 2.5% at 57 2.7% at 57
50 1.426% 2.000% 2.000%
51 1.508% 2.071% 2.100%
52 1.590% 2.143% 2.200%
53 1.672% 2.214% 2.300%
54 1.754% 2.286% 2.400%
55 1.836% 2.357% 2.500%
56 1.918% 2.429% 2.600%
57 & Up 2.000% 2.500% 2.700%
• The years of service is the amount credited by CalPERS to a member while he or she is employed in this group
(or for other periods that are recognized under the employer’s contract with CalPERS). For a member who has
earned service with multiple CalPERS employers, the benefit from each employer is calculated separately
according to each employer’s contract, and then added together for the total allowance. An agency may contract
for an optional benefit where any unused sick leave accumulated at the time of retirement will be co nverted to
credited service at a rate of 0.004 years of service for each day of sick leave.
• The final compensation is the monthly average of the member’s highest 36 or 12 consecutive months’ full -time
equivalent monthly pay (no matter which CalPERS emplo yer paid this compensation). The standard benefit is 36
months. Employers had the option of providing a final compensation equal to the highest 12 consecutive months
for classic plans only. Final compensation must be defined by the highest 36 consecutive m onths’ pay under the
1.5% at 65 formula. PEPRA members have a cap on the annual salary that can be used to calculate final
compensation for all new members based on the Social Security contribution and benefit base. For employees
that participate in Social Security this cap is $134,974 for 2022 and for those employees that do not participate in
Social Security the cap for 2022 is $161,969 . Adjustments to the caps are permitted ann ually based on changes
to the CPI for all urban consumers.
• PEPRA benefit formulas have no Social Security offsets and Social Security coverage is optional . For Classic
benefit formulas, e mployees must be covered by Social Security with the 1.5% at 65 form ula. Social Security is
optional for all other Classic benefit formulas. For employees covered by Social Security, the modified formula is
the standard benefit. Under this type of formula, the final compensation is offset by $133.33 (or by one third if the
final compensation is less than $400). Employers may contract for the full benefit with Social Security that will
eliminate the offset applicable to the final compensation. For employees not covered by Social Security, the full
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix B
Safety Plan of the City of Palo Alto
Principal Plan Provisions
B-3
benefit is paid with no offsets. Auxiliary organizations of the CSUC system may elect reduced contribution rates,
in which case the offset is $317 if members are not covered by Social Security or $513 if members are covered by
Social Security.
• The Miscellaneous and PEPRA Safety service retirement benefit is not capped. The Classic Safety service
retirement benefit is capped at 90% of final compensation.
Vested Deferred Retirement
Eligibility for Deferred Status
A CalPERS member becomes eligi ble for a deferred vested retirement benefit when he or she leaves employment,
keeps his or her contribution account balance on deposit with CalPERS, and has earned at least 5 years of credited
service (total service across all CalPERS employers, and with certain other retirement systems with which CalPERS
has reciprocity agreements).
Eligibility to Start Receiving Benefits
The CalPERS classic members and PEPRA Safety members become eligible to receive the deferred retirement benefit
upon satisfying the eligibility requirements for deferred status and upon attainment of age 50 (55 for employees hired
into a 1.5% at 65 plan). PEPRA Miscellaneous members become eligible to receive the deferred retirement benefit
upon satisfying the eligibility requirements for deferred status and upon attainment of age 52.
Benefit
The vested deferred retirement benefit is the same as the service retirement benefit, where the benefit factor is based
on the member’s age at allowance commencement. For members who have earned service with multiple CalPERS
employers, the benefit from each employer is calculated separately according to each employer’s contract, and then
added together for the total allowance.
Non -Industrial (Non -Job Related) Disability Retirement
Eligibility
A CalPERS member is eligible for Non -Industrial Disability Retirement if he or she becomes disabled and has at least
5 years of credited service (total service across all CalPERS employers, and with certain other retirement systems with
which CalPERS has reciprocity agreements). There is no special age requirement. Disabled means the member is
unable to perform his or her job because of an illness or injury, which is expected to be permanent or to last indefinitely.
The illness or injury does not have to be job related. A CalPERS member must be actively employed by any CalPERS
employer at the time of disability in order to be eligible for this benefit.
Standard Benefit
The standard Non-Industrial Disability Retirement benefit is a monthly allowance equal t o 1.8% of final compensation,
multiplied by service, which is determined as follows:
• Service is CalPERS credited service, for members with less than 10 years of service or greater than 18.518 years
of service; or
• Service is CalPERS credited service plus the additional number of years that the member would have worked until
age 60, for members with at least 10 years but not more than 18.518 years of service. The maximum benefit in
this case is 33⅓% of final compensation.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix B
Safety Plan of the City of Palo Alto
Principal Plan Provisions
B-4
Improved Benefit
Employers have the option of providing the improved Non -Industrial Disability Retirement benefit. This benefit provides
a monthly allowance equal to 30% of final compensation for the first 5 years of service, plus 1% for each additional
year of service to a maximum of 50% of final compensation.
Members who are eligible for a larger service retirement benefit may choose to receive that benefit in lieu of a disability
benefit. Members eligible to retire, and who have attai ned the normal retirement age determined by their service
retirement benefit formula, will receive the same dollar amount for disability retirement as that payable for service
retirement. For members who have earned service with multiple CalPERS employers, the benefit attributed to each
employer is the total disability allowance multiplied by the ratio of service with a particular employer to the total CalPERS
service.
Industrial (Job Related) Disability Retirement
This is a standard benefit for Safety m embers except those described in Section 20423.6. For excluded Safety
members and all Miscellaneous members, employers have the option of providing this benefit. An employer may
choose to provide the increased benefit option or the improved benefit option.
Eligibility
An employee is eligible for Industrial Disability Retirement if he or she becomes disabled while working, where disabled
means the member is unable to perform the duties of the job because of a work -related illness or injury, which is
expected to be permanent or to last indefinitely. A CalPERS member who has left active employment within this group
is not eligible for this benefit, except to the extent described below.
Standard Benefit
The standard Industrial Disability Retirement ben efit is a monthly allowance equal to 50% of final compensation.
Increased Benefit (75% of Final Compensation)
The increased Industrial Disability Retirement benefit is a monthly allowance equal to 75% of final compensation for
total disability.
Improved Benefit (50% to 90% of Final Compensation)
The improved Industrial Disability Retirement benefit is a monthly allowance equal to the Workman’s Compensation
Appeals Board permanent disability rate percentage (if 50% or greater, with a maximum of 90%) time s the final
compensation.
For a CalPERS member not actively employed in this group who became disabled while employed by some other
CalPERS employer, the benefit is a return of accumulated member contributions with respect to employment in this
group. With the standard or increased benefit, a member may also choose to receive the annuitization of the
accumulated member contributions.
If a member is eligible for service retirement and if the service retirement benefit is more than the industrial disability
retirement benefit, the member may choose to receive the larger benefit.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix B
Safety Plan of the City of Palo Alto
Principal Plan Provisions
B-5
Post-Retirement Death Benefit
Standard Lump Sum Payment
Upon the death of a retiree, a one -time lump sum payment of $500 will be made to the retiree’s designated survivor(s),
or to the retiree’s estate. The lump sum payment amount increases to $2,000 for any death occurring on or after
July 1, 2023 due to SB 1168.
Optional Lump Sum Payment
In lieu of the standard lump sum death benefit, e mployers have the option of providing a lump sum death benefit of
$600, $3,000, $4,000 or $5,000.
Form of Payment for Retirement Allowance
Standard Form of Payment
Generally, the retirement allowance is paid to the retiree in the form of an annuity for as long as he or she is alive. The
retiree may choose to provide for a portion of his or her allowance to be paid to any designated beneficiary after the
retiree’s death. CalPERS provides for a variety of such benefit options, which the retiree pays for by taking a reduction
in his or her retirement allowance. Such reduction takes into account the amount to be provided to the beneficiary and
the probable duration of payments (based on the ages of the member and beneficiary) made subsequent to the
member’s death.
Improved Form of Payment (Post-Retirement Survivor Allowance)
Employers have the option to contract for the post-retirement survivor allowance.
For retirement allowances with respect to service subject to a modified Classic formula, 25% of the retirement allowance
will automatically be continued to certain statutory beneficiaries upon the death of the retiree, without a reduction in the
retiree’s allowance. For retirement allowances with respect to service subject to a PEPRA formula or a full or
supplemental Classic formula, 50% of the retirement allowance will automatically be continued to certain statutory
beneficiaries upon the death of the retiree, without a reduction in the retiree’s allowance. This additional benefit is
referred to as post-retirement survivor allowance (PRSA) or simply as survivor continuance.
In other words, 25% or 50% of the allowance, the continuance portion, is paid to the retiree for as long as he or she is
alive, and that same amount is continued to the retiree’s spouse (or if no eligible spouse, to unmarried child(ren) until
they attain age 18; or, if no eligible child(ren), to a qualifying dependent parent) for the rest of his or her lifetime. Thi s
benefit will not be discontinued in the event the spouse remarries.
The remaining 75% or 50% of the retirement allowance, which may be referred to as the option portion of the benefit,
is paid to the retiree as an annuity for as long as he or she is alive. Or, the retiree may choose to provide for som e of
this option portion to be paid to any designated beneficiary after the retiree’s death. Benefit options applicable to the
option portion are the same as those offered with the standard form. The reduction is calculated in the same manner
but is applied only to the option portion.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix B
Safety Plan of the City of Palo Alto
Principal Plan Provisions
B-6
Pre-Retirement Death Benefits
Basic Death Benefit
This is a standard benefit.
Eligibility
An employee’s beneficiary (or estate) may receive the basic death benefit if the member dies while actively employed.
A CalPERS member must be actively employed with the CalPERS employer providing this benefit to be eligible for this
benefit. A member’s survivor who is eligible for any other pre -retirement death benefit may choose to receive that death
benefit instead of this basic death benefit.
Benefit
The basic death benefit is a lump sum in the amount of the member’s accumulated contributions, where interest is
credited annually at the greater of 6% or the prevailing discount rate through the date of death, plus a lump sum in the
amount of one month's salary for each completed year of current service, up to a maximum of six months' salary. For
purposes of this benefit, one month's salary is defined as the member's average monthly full -time rate of compensation
during the 12 months preceding death.
1957 Survivor Benefit
This is a standard benefit.
Eligibility
An employee’s eligible survivor(s) may receive the 1957 Survivor benefit if the member dies while actively employed,
has attained at least age 50 fo r classic and PEPRA Safety members and age 52 for PEPRA Miscellaneous members,
and has at least 5 years of credited service (total service across all CalPERS employers and with certain other
retirement systems with which CalPERS has reciprocity agreements). A CalPERS member must be actively employed
with the CalPERS employer providing this benefit to be eligible for this benefit. An eligible survivor means the surviving
spouse to whom the member was married at least one year before death or, if there is no eligible spouse, to the
member's unmarried child(ren) under age 18. A member’s survivor who is eligible for any other pre -retirement death
benefit may choose to receive that death benefit instead of this 1957 Survivor benefit.
Benefit
The 1957 Survivor b enefit is a monthly allowance equal to one -half of the unmodified service retirement benefit that
the member would have been entitled to receive if the member had retired on the date of his or her death. If the benefit
is payable to the spouse, the benefit is discontinued upon the death of the spouse. If the benefit is payable to dependent
child(ren), the benefit will be discontinued upon death or attainment of age 18, unless the child(ren) is disabled. The
total amount paid will be at least equal to the ba sic death benefit.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix B
Safety Plan of the City of Palo Alto
Principal Plan Provisions
B-7
Optional Settlement 2 Death Benefit
This is an optional benefit.
Eligibility
An employee’s eligible survivor may receive the Optional Settlement 2 Death benefit if the member dies while actively
employed, has attained at least age 50 for classic and PEPRA Safety members and age 52 for PEPRA Miscellaneous
members, and has at least 5 years of credited service (total service across all CalPERS employers and with certain
other retirement systems with which CalPERS has reciprocity agreements). A CalPERS member who is no longer
actively employed with any CalPERS employer is not eligible for this benefit. An eligible survivor means the surviving
spouse to whom the member was married at least one year before death. A member’s survivor who is eligible for any
other pre-retirement death benefit may choose to receive that death benefit instead of this Optional Settlement 2 D eath
benefit.
Benefit
The Optional Settlement 2 Death benefit is a monthly allowance equal to the service retirement benefit that the member
would have received had the member retired on the date of his or her death and elected 100% to continue to the el igible
survivor after the member’s death. The allowance is payable as long as the surviving spouse lives, at which time it is
continued to any unmarried child(ren) under age 18, if applicable. The total amount paid will be at least equal to the
basic death benefit.
Special Death Benefit
This is a standard benefit for Safety members except those described in Section 20423.6. For excluded Safety
members and all Miscellaneous members, employers have the option of providing this benefit.
Eligibility
An employee’s eligible survivor(s) may receive the special death benefit if the member dies while actively employed
and the death is job -related. A CalPERS member who is no longer actively employed with any CalPERS employer is
not eligible for this benefit. An eligible survivor means the surviving spouse to whom the member was married prior to
the onset of the injury or illness that resulted in death. If there is no eligible spouse, an eligible survivor mean s the
member's unmarried child(ren) under age 22. An eligible survivor who chooses to receive this benefit will not receive
any other death benefit.
Benefit
The special death benefit is a monthly allowance equal to 50 % of final compensation and will be increased whenever
the compensation paid to active employees is increased but ceasing to increase when the member would have attained
age 50. The allowance is payable to the surviving spouse until death at which time the allowance is continued to any
unmarried child(ren) under age 22. There is a guarantee that the total amount paid will at least equal the basic death
benefit.
If the member’s death is the result of an accident or injury caused by external violence or physical force incurred in the
performance of the member’s duty, and there are eligible surviving child(ren) (eligible means unmarried child(ren) under
age 22) in addition to an eligible spouse, then an additional monthly allowance is paid equal to the following:
• if 1 eligible child: 12.5% of final compensation
• if 2 eligible children: 20.0% of final compensation
• if 3 or more eligible children: 25.0% of final compensation
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix B
Safety Plan of the City of Palo Alto
Principal Plan Provisions
B-8
Alternate Death Benefit for Local Fire Members
This is an optional benefit available only to local fi re members.
Eligibility
An employee’s eligible survivor(s) may receive the alternate death benefit in lieu of the basic death benefit or the 1957
Survivor benefit if the member dies while actively employed and has at least 20 years of total CalPERS service. A
CalPERS member who is no longer actively employed with any CalPERS employer is not eligible for this benefit. An
eligible survivor means the surviving spouse to whom the member was married prior to the onset of the injury or illness
that resulted in death. If there is no eligible spouse, an eligible survivor means the member's unmarried child(ren) under
age 18.
Benefit
The Alternate Death benefit is a monthly allowance equal to the service retirement benefit that the member would have
received had the member retired on the date of his or her death and elect ed Optional Settlement 2. (A retiree who
elects Optional Settlement 2 receives an allowance that has been reduced so that it will continue to be paid after his or
her death to a surviving beneficiary.) If the member has not yet attained age 50, the benefit is equal to that which would
be payable if the member had retired at age 50, based on service credited at the time of death. The allowance is
payable as long as the surviving spouse lives, at which time it is continued to any unmarried child(ren) under ag e 18, if
applicable. The total amount paid will be at least equal to the basic death benefit.
Cost-of-Living Adjustments (COLA)
Standard Benefit
Retirement and survivor allowances are adjusted each year in May for cost of living, beginning the second calendar
year after the year of retirement. The standard cost-of-living adjustment (COLA) is 2%. Annual adjustments are
calculated by first determinin g the lesser of 1) 2% compounded from the end of the year of retirement or 2) actual rate
of price inflation. The resulting increase is divided by the total increase provided in prior years. For any given year, the
COLA adjustment may be less than 2% (when the rate of price inflation is low), may be greater than the rate of price
inflation (when the rate of price inflation is low after several years of high price inflation) or may even be greater than
2% (when price inflation is high after several years of low price inflation).
Improved Benefit
Employers have the option of providing a COLA of 3 %, 4%, or 5%, determined in the same manner as described above
for the standard 2 % COLA. An improved COLA is not available with the 1.5% at 65 formula.
Purchasing Power Protection Allowance (PPPA)
Retirement and survivor allowances are protected against price inflation by PPPA. PPPA benefits are cost-of-living
adjustments that are intended to maintain an individual’s allowance at 80 % of the initial allowance at retirement adjusted
for price inflation since retirement. The PPPA benefit will be coordinated with o ther cost-of-living adjustments provided
under the plan.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix B
Safety Plan of the City of Palo Alto
Principal Plan Provisions
B-9
Employee Contributions
Each employee contributes toward his or her retirement based upon the retirement formula. The standard employee
contribution is as described below.
• The percent contributed below the monthly compensation breakpoint is 0 %.
• The monthly compensation breakpoint is $0 for full and supplemental formula members and $133.33 for
employees covered by the modified formula.
• The percent contributed above the monthly compensation breakpoint depends upon the benefit formula, as
shown in the table below.
Benefit Formula Percent Contributed above the
Breakpoint
Miscellaneous, 1.5% at 65 2%
Miscellaneous, 2% at 60 7%
Miscellaneous, 2% at 55 7%
Miscellaneous, 2.5% at 55 8%
Miscellaneous, 2.7% at 55 8%
Miscellaneous, 3% at 60 8%
Miscellaneous, 2% at 62 50% of the Total Normal Cost
Miscellaneous, 1.5% at 65 50% of the Total Normal Cost
Safety, Half Pay at 55 Varies by entry age
Safety, 2% at 55 7%
Safety, 2% at 50 9%
Safety, 3% at 55 9%
Safety, 3% at 50 9%
Safety, 2% at 57 50% of the Total Normal Cost
Safety, 2.5% at 57 50% of the Total Normal Cost
Safety, 2.7% at 57 50% of the Total Normal Cost
The employer may choose to “pick -up” these contributions for classic members (Employer Paid Member Contributions
or EPMC). EPMC is prohibited for new PEPRA members.
An employer may also include Employee Cost Sharing in the contract, where employees agree to share the cost of the
employer contribution. These contrib utions are paid in addition to the member contribution.
Auxiliary organizations of the CSU system may elect reduced contribution rates, in which case the offset is $317 and
the contribution rate is 6 % if members are not covered by Social Security. If memb ers are covered by Social Security,
the offset is $513 and the contribution rate is 5 %.
Refund of Employee Contributions
If the member’s service with the employer ends, and if the member does not satisfy the eligibility conditions for any of
the retirement benefits above, the member may elect to receive a refund of his or her employee contributions, which
are credited with 6% interest compounded annually.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix B
Safety Plan of the City of Palo Alto
Principal Plan Provisions
B-10
1959 Survivor Benefit
This is a pre -retirement death benefit available only to members not covered by Social Security. Any agency joining
CalPERS subsequent to 1993 is required to provide this benefit if the members are not covered by Social Security. The
benefit is optional for agencies joining CalPERS prior to 1994. Levels 1, 2, and 3 are now closed. Any new agency or
any agency wishing to add this benefit or increase the current level may only choose the 4 th or Indexed Level.
This benefit is not included in the results presented in this valuation. More information on this benefit is available on the
CalPERS website.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
Appendix C
Participant Data
• Summary of Valuation Data
• Active Members
• Transferred and Separated Members
• Retired Members and Beneficiaries
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix C
Safety Plan of the City of Palo Alto
Participant Data
C-1
Summary of Valuation Data
June 30, 2021 June 30, 2022
1. Active Members
a) Counts 163 156
b) Average Attained Age
41.75 41.39
c) Average Entry Age to Rate Plan 29.97 29.90
d) Average Years of Credited Service 11.90 11.54
e) Average Annual Covered Pay $157,948 $160,287
f) Annual Covered Payroll 25,745,571 25,004,764
g) Projected Annual Payroll for Contribution Year 27,969,318 27,164,524
h) Present Value of Future Payroll 237,286,623 232,634,743
2. Transferred Members
a) Counts 56 61
b) Average Attained Age 43.73 42.17
c) Average Years of Credited Service 4.08 4.02
d) Average Annual Covered Pay $142,019 $143,998
3. Separated Members
a) Counts 51 56
b) Average Attained Age 43.18 43.68
c) Average Years of Credited Service 2.79 3.29
d) Average Annual Covered Pay $93,180 $97,247
4. Retired Members and Beneficiaries
a) Counts 443 453
b) Average Attained Age 69.38 69.30
c) Average Annual Benefits $61,705 $64,469
d) Total Annual Benefits $27,335,456 $29,204,669
5. Active to Retired Ratio [(1a) / (4a)] 0.37 0.34
Counts of members included in the valuation are counts of the records processed by the valuation. Multiple records
may exist for those who have service in more than one valuation group. This does not result in double counting of
liabilities.
Average Annual Benefits represents benefit amounts payable by this plan only. Some members may have service with
another agency and would therefore have a larger total benefit than would be included as part of the average shown
here.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix C
Safety Plan of the City of Palo Alto
Participant Data
C-2
Active Members
Counts of members included in the valuation are counts of the recor ds processed by the valuation. Multiple records
may exist for those who have service in more than one valuation group. This does not result in double counting of
liabilities.
Distribution of Active Members by Age and Service
Years of Service at Valuation Date
Attained
Age 0-4 5-9 10-14 15-19 20-24 25+ Total
15-24 2 0 0 0 0 0 2
25-29 21 0 0 0 0 0 21
30-34 11 7 1 0 0 0 19
35-39 8 14 6 3 0 0 31
40-44 1 6 10 7 3 0 27
45-49 0 5 4 4 16 0 29
50-54 0 0 1 5 7 2 15
55-59 1 1 0 3 2 2 9
60-64 0 1 0 1 0 0 2
65 and Over 0 0 0 0 0 1 1
All Ages 44 34 22 23 28 5 156
Distribution of Average Annual Salaries by Age and Service
Years of Service at Valuation Date
Attained
Age 0-4 5-9 10-14 15-19 20-2 4 25+
Average
Salary
15-24 $102,177 $0 $0 $0 $0 $0 $102,177
25-29 121,473 0 0 0 0 0 121,473
30-34 111,583 151,605 171,254 0 0 0 129,469
35-39 129,788 157,029 177,643 199,250 0 0 158,075
40-44 141,127 162,571 172,036 190,815 202,066 0 176,993
45-49 0 181,967 162,486 204,891 199,467 0 192,097
50-54 0 0 142,028 175,953 163,445 168,265 166,829
55-59 160,148 167,473 0 166,625 171,704 195,937 173,642
60-64 0 154,519 0 152,571 0 0 153,545
65 and Over 0 0 0 0 0 167,312 167,312
Average $120,961 $160,791 $170,429 $186,314 $188,757 $179,143 $160,287
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix C
Safety Plan of the City of Palo Alto
Participant Data
C-3
Transferred and Separated Members
Distribution of Transfers to Other CalPERS Plans by Age , Service, and average Salary
Years of Service at Valuation Date
Attained
Age 0-4 5-9 10-14 15-19 20-24 25+ Total
Average
Salary
15-24 0 0 0 0 0 0 0 $0
25-29 3 0 0 0 0 0 3 104,085
30-34 8 2 0 0 0 0 10 139,746
35-39 8 1 1 0 0 0 10 132,738
40-44 12 5 1 1 0 0 19 144,943
45-49 6 2 0 1 0 0 9 130,731
50-54 4 2 0 0 0 0 6 175,475
55-59 2 1 0 0 0 0 3 174,912
60-64 1 0 0 0 0 0 1 238,725
65 and Over 0 0 0 0 0 0 0 0
All Ages 44 13 2 2 0 0 61 $143,998
Distribution of Separated Participants with Funds on Deposit by Age, Service , and average Salary
Years of Service at Valuation Date
Attained Age 0-4 5-9 10-14 15-19 20-2 4 25+ Total
Average
Salary
15-24 0 0 0 0 0 0 0 $0
25-29 1 0 0 0 0 0 1 106,483
30-34 6 1 0 0 0 0 7 114,983
35-39 9 1 1 0 0 0 11 95,583
40-44 16 2 2 0 0 0 20 92,450
45-49 1 3 1 1 0 0 6 129,898
50-54 3 1 0 0 0 0 4 95,541
55-59 4 0 0 0 0 0 4 62,456
60-64 2 1 0 0 0 0 3 74,236
65 and Over 0 0 0 0 0 0 0 0
All Ages 42 9 4 1 0 0 56 $97,247
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix C
Safety Plan of the City of Palo Alto
Participant Data
C-4
Retired Members and Beneficiaries
Distribution of Retirees and Beneficiaries by Age and Retirement Type*
Attained Age
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death After
Retirement Total
Under 30 0 0 1 0 0 2 3
30-34 0 0 0 0 0 0 0
35-39 0 0 0 0 0 1 1
40-44 0 0 5 0 0 0 5
45-49 0 0 6 0 0 0 6
50-54 22 1 12 0 0 0 35
55-59 42 0 12 0 0 2 56
60-64 51 1 23 0 2 0 77
65-69 37 1 19 0 1 4 62
70-74 26 1 16 0 0 7 50
75-79 26 0 14 0 0 9 49
80-84 30 1 19 0 0 13 63
85 and Over 20 0 15 0 0 11 46
All Ages 254 5 142 0 3 49 453
Distribution of Average Annual Disbursements to Retirees and Beneficiaries by Age and Retirement Type*
Attained
Age
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death After
Retirement Average
Under 30 $0 $0 $52,027 $0 $0 $32,472 $38,990
30-34 0 0 0 0 0 0 0
35-39 0 0 0 0 0 29,533 29,533
40-44 0 0 74,865 0 0 0 74,865
45-49 0 0 55,877 0 0 0 55,877
50-54 66,263 95 54,268 0 0 0 60,260
55-59 78,301 0 88,781 0 0 39,361 79,156
60-64 101,178 37,083 77,299 0 55,881 0 92,036
65-69 73,386 2,344 78,401 0 30,196 47,273 71,396
70-74 88,336 19,540 47,737 0 0 31,074 65,952
75-79 60,791 0 38,188 0 0 39,226 50,372
80-84 52,179 16,236 42,221 0 0 44,435 47,008
85 and Over 39,331 0 27,851 0 0 32,884 34,046
All Ages $74,217 $15,060 $58,198 $0 $47,320 $38,209 $64,469
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix C
Safety Plan of the City of Palo Alto
Participant Data
C-5
Retired Members and Beneficiaries (continued)
Distribution of Retirees and Beneficiaries by Years Retired and Retirement Type*
Years
Retired
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death After
Retirement Total
Under 5 Yrs 53 0 14 0 0 21 88
5-9 39 1 16 0 0 7 63
10-14 54 1 23 0 0 4 82
15-19 36 0 14 0 1 7 58
20-24 27 0 15 0 1 7 50
25-29 24 1 14 0 0 0 39
30 and Over 21 2 46 0 1 3 73
All Years 254 5 142 0 3 49 453
Distribution of Average Annual Disbursements to Retirees and Beneficiaries by Years Retired and Retirement
Type*
Years
Retired
Service
Retirement
Non-
Industrial
Disability
Industrial
Disability
Non-
Industrial
Death
Industrial
Death
Death After
Retirement Average
Under 5 Yrs $74,393 $0 $76,343 $0 $0 $36,795 $65,731
5-9 76,222 2,344 70,163 0 0 15,642 66,780
10-14 99,342 95 96,125 0 0 28,474 93,772
15-19 75,148 0 70,232 0 59,282 51,537 70,838
20-24 65,095 0 51,755 0 52,480 57,440 59,769
25-29 47,544 37,083 52,967 0 0 0 49,223
30 and Over 46,057 17,888 29,579 0 30,196 37,769 34,344
All Years $74,217 $15,060 $58,198 $0 $47,320 $38,209 $64,469
* Counts of members do not include alternate payees receiving benefits while the member is still working. Therefore,
the total counts may not match information on C -1 of the report. Multiple records may exist for those who have service
in more than one coverage group. This does not result in double counting of liabilities .
Attachment C: CalPERS Safety Valuation as of June 30, 2022
Appendix D
Glossary
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix D
Safety Plan of the City of Palo Alto
Glossary
D -1
Glossary
Accrued Liability (Actuarial Accrued Liability)
The Present Value of Benefits minus the present value of future Normal Cost or the Present Value of Benefits
allocated to prior years. Different actuarial cost methods and different assumptions will lead to different measures
of Accrued Liability.
Actuarial Assumptions
Assumptions made about certain events that will affect pension costs. Assumptions generally can be broken down
into two categories: demographic and economic. Demographic assumptions include such things as mortality,
disability, and retirement rates. Economic assumptions include discount rate, wage inflation, and price inflation.
Actuarial Methods
Procedures employed by actuaries to achieve certain funding goals of a pension plan. Actuarial methods incl ude
an actuarial cost method, an amortization policy, and an asset valuation method.
Actuarial Valuation
The determination as of a valuation date of the Normal Cost, Accrued Liability, and related actuarial present values
for a pension plan. These valuations are performed annually or when an employer is contemplating a change in
plan provisions.
Actuary
A business professional proficient in mathematics and statistics who measures and manages risk. A public
retirement system actuary in California perform s actuarial valuation s necessary to properly fund a pension plan
and disclose its liabilities and must satisfy the Qualification Standards for Actuaries Issuing Statements of Actuarial
Opinion in the United States with regard to pensions.
Amortization Bases
Separate payment schedules for different portions of the Unfunded Accrued Liability (UAL). The total UAL of a rate
plan can be segregated by cause. The impact of such individual causes on the UAL are quantified at the time of
their occurrence, re sulting in new amortization bases. Each base is separately amortized and paid for over a
specific period of time. Generally, in an actuarial valuation, the separate bases consist of changes in UAL due to
contract amendments, actuarial assumption changes, m ethod changes, and/or gains and losses.
Amortization Period
The number of years required to pay off an Amortization Base.
Classic Member (under PEPRA)
A member who joined a public retirement system prior to January 1, 2013 and who is not defined as a new member
under PEPRA. (See definition of New Member below.)
Discount Rate
This is the rate used to discount the expected future benefit payments to the valuation date to determine the
Projected Value of Benefits. Different discount rates will produce different measures of the Projected Value of
Benefits. The discount rate for funding purposes is based on the assumed long -term rate of return on plan assets,
net of investment and administrative expenses. This rate is called the “actuari al interest rate” in Section 20014 of
the California Public Employees’ Retirement Law.
Entry Age
The earliest age at which a plan member begins to accrue benefits under a defined benefit pension plan. In most
cases, this is the age of the member on their date of hire.
Entry Age Actuarial Cost Method
An actuarial cost method that allocates the cost of the projected benefits on an individual basis as a level percent
of earnings for the individual between entry age and retirement age. This method yields a total normal cost rate,
expressed as a percentage of payroll, which is designed to remain level throughout the member’s career.
Fresh Start
A Fresh Start is when multiple amortization bases are combined into a single base and amortized over a new
Amortization Period.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
CalPERS Actuarial Valuation – June 30, 2022 Appendix D
Safety Plan of the City of Palo Alto
Glossary
D -2
Glossary (continued)
Funded Ratio
Defined as the Market Value of Assets divided by the Accrued Liability. Different actuarial cost methods and
different assumptions will lead to different measures of Funded Ratio. The Funded Ratio with the Accrued Liability
equal to the funding target is a measure of how well funded a rate plan is. A ratio greater than 100% means the
rate plan has more assets than the funding target and the employer need only contribute the Normal Cost . A ratio
less than 100% means assets are less than the funding target and contributions in addition to Normal Cost are
required.
Funded Status
Any comparison of a particular measure of plan assets to a particular measure of pension obligations. The methods
and assumptions used to calculate a funded status should be consistent with the purpose of the measurement.
Funding Target
The Accrued Liability measure upon which the funding requirements are based. The funding target is the Accrued
Liability under the Entry Age Actuarial Cost Method using the assumptions adopted by the board.
GASB 68
Statement No. 68 of the Governmental Accounting Standards Board. The accounting standard governing a state
or local governmental employer’s accounting and financial reporting for pensions.
New Member (under PEPRA)
A new member includes an individual who becomes a member of a public retirement system for the first time on
or after January 1, 2013, and who was not a member of another public retirement system prior to that date, and
who is not subject to reciprocity with another public retirement system.
Normal Cost
The portion of the Present Value of Benefits allocated to the upcoming fiscal year for active employees. Different
actuarial cost methods and different assumptions will lead to different measures of Normal Cost. The Normal Cost
under the Entry Ag e Actuarial Cost Method , using the assumptions adopted by the board , plus the required
amortization of the UAL, if any, make up the required contributions.
PEPRA
The California Public Employees’ Pension Reform Act of 2013 .
Present Value of Benefits (PVB)
The total dollars needed as of the valuation date to fund all benefits earned in the past or expected to be earned
in the future for current members.
Traditional Unit Credit Actuarial Cost Method
An actuarial cost method that sets the Accrued Liability equal to the Present Value of Benefits assuming no future
pay increases or service accruals. The Traditional Unit Credit Cost Method is used to measure the accrued liability
on a termination basis.
Unfunded Accrued Liability (UAL)
The Accrued Liability minus the Market Value of Assets. If the UAL for a rate plan is positive, the employer is
required to make contributions in excess of the Normal Cost.
Attachment C: CalPERS Safety Valuation as of June 30, 2022
September 19, 2023
Transmittal of CalPERS Annual Valuation ReportsAs of June 30, 2022
1
Finance Committee
Item #3
Purpose of Tonight’s Overview
2
Tonight’s meeting transmits the CalPERS annual valuations
used to inform the FY 2025 budget and financial planning of
pension benefits:
•Funding sources & terminology
•Status of pension plans
•Current and projected employer contributions
•Expected changes in future reporting
•Next steps in the budget process
GOAL: Accept the June 30, 2022 CalPERS Valuation Reports
California Public Employees’
Retirement System (CalPERS)
Annual Valuation Reports as of
June 30, 2022
Pension Funding Sources & Terminology
3
The June 30, 2022 CalPERS valuations will inform pension expense in
the FY25 –34 Long Range Financial Forecast (LRFF) and FY25 Budget
*Not contemplated
in CalPERS Valuations
CalPERS Employee
Contributions
(12%)
Tier 1, 2, PEPRA
(% payroll)
55% of staff in PEPRA
Cost-sharing in
Labor Agreements*
Employees pay a
portion of Employer
Normal Cost (NC)
CalPERS Employer
Contributions
(32%)
Normal Cost (NC)
“pay-go” for current
employees
(% payroll)
+
Unfunded Accrued
Liability (UAL)
“catch-up” payments to
amortize liability
($ flat rate)
CalPERS Investment
Earnings
(56%)
Plans impacted when
actual earnings differ
from assumptions
-6.1% vs.
+6.8% target
for the period ending
June 30, 2022
Pension
Trust Fund*
$58.4M
Additional
Discretionary
Payments
(ADPs) to UAL
Expected to
occur in next 1-2
years
CalPERS 6/30/22 Valuation Reports –Summary
•No significant changes to CalPERS actuarial assumptions or policies
•$64.9M Total Employer Contribution in FY 2025 (est.), a $5.4M or 9.1% increase from prior year
$16.1M Normal Cost (est.)+$48.8M UAL (total UAL balance is $553.3M)
•Investment loss of -6.1% as compared to +6.8% target
•Impact from investment returns phased-in over five years (ramp-up) and 20 year amortization
•Investment return fluctuations over past two years nearly offsets changes to funded status
4
June 30, 2020
(FY 2023)
June 30, 2021
(FY 2024)
June 30, 2022
(FY 2025)
Actual Investment Return 4.7%21.3%-6.1%
Target Investment Return 7.0%6.8%*6.8%
Over/(Under) Target (2.3)%14.5%(12.9)%
Pension Plan Funded Status 63.5%73.3%63.8%
*Investment gain triggered the CalPERS Risk Mitigation Policy, reducing the discount rate from 7.0% to 6.8%
CalPERS Employer Contributions –NC & UAL (% Payroll)
5
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
Safety 74.0%83.1%84.5%85.7%86.2%89.5%88.5%
Safety Adjusted*84.8%86.1%86.8%90.1%89.2%
Miscellaneous 44.8%47.4%45.5%42.0%42.4%44.6%44.1%
Misc. Adjusted*45.7%42.4%42.9%45.2%44.7%
*For demonstrative purposes, the forecast is restated using the CalPERS Pension Outlook Tool to adjust for the 5.8% preliminary
investment return as of June 30, 2023. These rates are estimates and do not reflect actual outcomes.
CalPERS –Total Unfunded Accrued Liability (UAL) ($ Millions)
6
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
Safety $170.7 $182.2 $193.3 $155.9 $212.8
Miscellaneous $284.9 $294.7 $317.1 $236.0 $340.5
Total
($ Million)$455.6 $476.9 $510.4 $391.9 $553.3
Funded Status 63.7%64.4%63.5%73.3%63.8%
$100
$200
$300
$400
$500
+21.3%
Investment
Return
-6.1%
Investment
Return 67.6% Funded Status
once adjusted for
Pension Trust balance
of $58.4M as of June
30, 2023
Actuary projects
90% funded status by
FY36 (Misc.) and
FY36-37 (Safety);
one-time
contributions will help
achieve policy goals
sooner
CalPERS Valuation Reports –Expected Changes
Significant Changes Expected to Impact Future Reporting
•CalPERS preliminary 5.8% investment return for the period ending June 30, 2023
•Lower than 6.8% target (CalPERS); and
•Higher than 5.3% assumed in the budget (Retiree Benefit Policy)
•New labor agreements with all groups (through FY 2026)
•Cost of living adjustments (COLA’s)
•Market adjustments
•Other terms (e.g.additional step, specialty pays, etc.)
•FY 2023-24 staffing additions
•Increased full-time staffing from 1,018 FTE to 1,063 FTE, a +45 FTE or +4.4% change
7
Next Steps and Action
8
FY 2025 to FY 2034 Long Range Financial Forecast (LRFF)
Review 10-year financial outlook based on approved service levels and alternative scenarios.The financial
implications of these reports and input from the Finance Committee and City Council are used to inform the
development of the upcoming budget. Staff will include:
•Pension Trust contributions at 5.3% discount rate (6.8% CalPERS), per the Retiree Benefit Policy
•Estimates for expected changes, such as the 5.8% preliminary investment return on June 30, 2023
FY 2025 Proposed Budget Deliberations
Several meetings are held with the Finance Committee during May to facilitate a detailed review of the
Proposed Budget and incorporate opportunities for community input in the decision-making process. Revisions
recommended by the Finance Committee are included as amendments to the Proposed Budget.
FY 2025 Budget Adoption
The City Council reviews the Proposed Budget, as amended by the Finance Committee, for final revisions and
adoption.
ACTION: Accept the June 30, 2022 CalPERS Valuation Reports
DECEMBER/
JANUARY
MAY
JUNE