HomeMy WebLinkAboutStaff Report 2512-5712CITY OF PALO ALTO
Finance Committee
Regular Meeting
Tuesday, September 15, 2026
Agenda Item
1.Accept California Public Employees’ Retirement System (CalPERS) Pension Annual
Valuation Reports as of June 30, 2025; CEQA Status—Not a Project. Staff Presentation
Finance Committee
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: Administrative Services
Meeting Date: September 15, 2026
Report #:2512-5712
TITLE
Accept California Public Employees’ Retirement System (CalPERS) Pension Annual Valuation
Reports as of June 30, 2025; CEQA Status—Not a Project.
RECOMMENDATION
Staff recommends that the Finance Committee review and recommend that Council accept the
California Public Employees’ Retirement System (CalPERS) Pension Annual Valuation Reports as
of June 30, 2025 for the Miscellaneous and Safety Plans.
EXECUTIVE SUMMARY
The June 30, 2025 CalPERS Annual Valuation report is used to inform the development of the
upcoming FY 2028 Budget process and FY 2028 – 2037 Long Range Financial Forecast (LRFF).
This report estimates total employer contribution costs of $71.3 million in FY 2028, an increase
of $0.2 million or 0.3% from estimated employer contribution cost of $71.1 million in FY 2027.
Despite CalPERS investment gains of 11.6% (FY 2025) and 9.3% (FY 2024), this was preceded by
significant market volatility that triggered the CalPERS Risk Mitigation Policy. As a result the
discount rate was reduced from 7.0% to 6.8%. Overall, the City’s combined funded status (not
adjusted for the City’s Pension Trust) is projected to be 70.8% in FY 2028 as compared to 66.0%
in FY 2027 and 64.0% in FY 2026.
The Unfunded Accrued Liability (UAL) is $504.5 million. This amount is reduced to $373.5
million or 78.4% funded status once adjusted for the City’s Pension Trust, which has $131.0
million of contributions/principal and net earnings as of June 30, 2026. In total, planned
contributions (principal) of $101.8 million to the Pension Trust have been made through FY
2026 ($65.5 million, or 64.4% of the total, is from the General Fund). Contributions to this Trust
continue in alignment with the City’s goal to reach 90% funded by FY 2036.
In comparing the CalPERS current and projected rates in the June 30, 2025 valuation with the
prior year’s valuation, which was used to inform the FY 2027-2036 long-range financial forecast,
the estimated reduction in Actuarial Determined Contribution (ADC) for FY 2028 is $1.7 million
for all plans citywide, which is subject to more refined budget development.
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
$191,679 in 2026 for both the Miscellaneous and Safety plans, therefore it is calculated based on service years but cannot
exceed the maximum amount. The final salary calculation is based on the average of the highest three years.
valuation reports included for review as part of this memo will be used to inform the FY 2028 –
FY 2037 Long Range Financial Forecast (LRFF) and the FY 2028 budget development process.
The calculations for annual employer contributions are based on a set of actuarial assumptions
for demographic (e.g., mortality, retirement, termination, and disability rates) and economic
factors (e.g., investment returns, inflations, salary growth). These assumptions reflect CalPERS’
best estimate for future experience of the plans and are long term in nature. Valuation results
will vary from one year to the next due to assumption or method changes, changes in plan
provisions, and actuarial experience that is different than anticipated such as investment
returns that do not meet the CalPERS 6.8% target.
Maintaining the discount rate at 6.8%;
New actuarial assumptions, including an increase for price inflation from 2.3% to 2.5%
and total wage inflation from 2.8% to 3.0%; and
Increased portfolio risk with the adoption of a Total Portfolio Approach and a 75%/25%
equity-to-bond reference portfolio (Previously, it was Strategic Asset Allocation
Approach and 72% equities and 28% bonds as of November 2025).
1. In alignment with City policy, the
1 City Council, February 6, 2023; SR #2212-0513,
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=82218&dbid=0&repo=PaloAlto&searchid=ca2b5a16
-b6c5-4fc0-84ec-8affafd4c45d
Retiree Benefit Policy review presented to the Finance Committee in November 2026. This will
include collaboration with an outside actuary, transmittal of pertinent results from the CalPERS
ALM, and any proposed amendments to the policy. The City’s Retiree Benefit Policy and
impacts of the preliminary ALM were used to inform recommended budget balancing strategies
presented to the Finance Committee on November 18, 2025 including a recommendation that
funds in the Section 115 Pension Trust Fund (Pension Trust) held by the Public Agency
Retirement Services (PARS) be transmitted to CalPERS. Continued implementation of this policy
was incorporated into the development of the FY 2027-2036 LRFF and the FY 2027 Adopted
Operating Budget.
3, and
adopting a Retiree Benefit Funding 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 2023 (CMR
2212-05136). Most notably, these modifications included reducing the discount rate used to
calculate supplemental contributions from 6.2% to 5.3% (compared to the CalPERS discount
rate of 6.8%) and extending actuary reporting from three to four 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. 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.
3 City Council, January 23, 2017; SR #7553, https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-
minutes-reports/reports/city-manager-reports-cmrs/year-archive/2017/7553.pdf
4 City Council, October 29, 2018; SR #9740, https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-
minutes-reports/reports/city-manager-reports-cmrs/year-archive/2018/9740.pdf
5 City Council, November 30, 2020; SR #11722, https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-
minutes-reports/reports/city-manager-reports-cmrs/year-archive/2020-2/id-11722.pdf
6 City Council, February 6, 2023; SR #2212-0513,
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=82218&dbid=0&repo=PaloAlto&searchid=ca2b5a16
-b6c5-4fc0-84ec-8affafd4c45d
City’s retiree benefit plans. The most recent City pension actuary analysis encompassing the
CalPERS assets/liabilities and the Pension Trust conducted in 2025 projects that the City will
meet a 90% funded goal for all plans by FY 2032-33 (not adjusted for the Pension Trust) or by
FY 2031-32 (adjusted for the Pension Trust)11.
ANALYSIS
11 Finance Committee, November 18, 2025; SR #2511-5392,
https://cityofpaloalto.primegov.com/viewer/preview?id=0&type=8&uid=f496f38a-e4f0-4e74-aa7d-f3ffec5e308d
2029, FY 2030 and FY 2031, respectively. Based upon the returns and amortizations, the ADC
peaks in FY 2029 and then declines.
TABLE 2: CalPERS Current and Projected Employer Contributions*
Miscellaneous FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033
NC (%)**10.9%10.5%10.4%10.1%9.9%9.6%9.4%9.2%
UAL (%)32.8%27.2%25.3%26.1%24.8%23.7%21.4%20.5%
Total ADC
(% payroll)
43.7%37.6%35.7%36.2%34.7%33.3%30.8%29.7%
NC ($)$10.9 12.3 12.7 12.8 12.9 12.9 13.0 13.1
UAL ($)**$32.8 31.8 31.1 33 32.4 31.7 29.6 29.1
Total ADC ($M)$43.7 $44.1 $43.8 $45.8 $45.3 $44.6 $42.6 $42.2
Safety FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033
NC (%)**20.6%19.6%19.7%19.0%18.4%17.8%17.2%16.7%
UAL (%)61.1%62.8%55.8%57.1%54.9%52.8%51.3%49.6%
Total ADC
(% payroll)
81.7%82.4%75.5%76.1%73.3%70.6%68.5%66.3%
NC ($)$6.3 6.4 7.1 7.1 7.1 7.1 7.0 7.0
UAL ($)**$18.5 20.5 20.3 21.4 21.2 21.0 21.0 20.9
Total ADC ($M)$24.8 $27.0 $27.4 $28.5 $28.3 $28.1 $28.0 $27.9
Total (Misc. &
Safety)
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033
NC ($)$17.1 18.7 19.9 19.9 20.0 20.0 20.0 20.1
UAL ($)**$51.3 52.3 51.4 54.4 53.6 52.7 50.6 50.0
Total ADC ($M)$68.5 71.1 71.3 74.3 73.6 72.7 70.6 70.1
* This table does not include cost savings for prepayment of the UAL, which confers 3.2% or $1.7 million in 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 continue to be included in budget development.
** 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.
TABLE 3: CalPERS Investment Returns
Returns as of 6/30/17 6/30/18 6/30/19 6/30/20 6/30/21 6/30/22 6/30/23 6/30/24 6/30/25 6/30/26
Used to develop FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029
Actual (%)11.2 8.6 6.7 4.7 21.3 (6.1)5.8 9.3 11.6 14.8*
Target (%)7.25 7.0 7.0 7.0 6.8 6.8 6.8 6.8 6.8 6.8
*This CalPERS report does not consider the preliminary 14.8% return on investments for the period ending June
30, 2026 (6.8 percent target)[5]. The estimated impact from this return will be included in long-term financial
planning.
TABLE 4: FY 2027 - 2036 Long-Range Financial Forecast – Pension Rates by Plan *
Plan Type FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032
Miscellaneous 37.6%37.6%39.0%38.3%37.5%34.6%
Safety 82.4%75.5%76.1%73.3%70.6%68.5%
*Total ADC as % of payroll as of the June 30, 2024 valuation
In comparing the CalPERS current and projected rates (Table #2) in the June 30, 2025 valuation
with the prior year’s valuation, which was used to inform the previous FY 2027-2036 LRFF
(Table #4), these new pension projected rates align and are favorable compared to the prior
long-range projections within 2% to 4% for the Miscellaneous Plan and within 6% to 10% for the
Safety Plan between FY 2027 and FY 2032. Note that only the next fiscal year (FY 2028) are
definite rates, while the next years are projections, subject to change with annual actuarial
reports especially future investment returns. The estimated reduction in ADC for fiscal year FY
2028 is $1.7 million for all plans citywide, which is subject to more refined budget development.
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, 2025, the funded status of the overall Public
Employee’s Retirement Fund (PERF) increased from 75.0% to projected levels of 79.0%[6]. This
rate is higher than the City’s funded status of 73.8% for Miscellaneous and 65.2% for Safety.
Table 5 details the City’s June 30, 2025 funded status for the Miscellaneous and Safety plans.
The total unfunded pension liability decreased from $573.5 million as of June 30, 2023 to
$566.4 million as of June 30, 2024. This represents a decrease of $7.1 million, or 1.2%
compared to the prior year. This change was predominantly due to investment returns. When
investment returns come in lower than anticipated, this increases the City’s unfunded liability.
Conversely, when investment returns come in higher than anticipated this favorably impacts
the City’s plans.
TABLE 5: CalPERS Projected Unfunded Accrued Liability
As of
June 30, 2021
As of
June 30, 2022
As of
June 30, 2023
As of
June 30, 2024
As of
June 30, 2025
Miscellaneous $236,033,956 340,518,738 349,828,105 339,818,201 294,630,629
Misc. Funded Status 75.3%65.8 66.3 68.7 73.8
Safety $155,885,841 212,812,772 223,707,130 226,573,506 209,856,279
Safety Funded Status 69.4%60.0%59.7%61.1%65.2%
TOTAL UNFUNDED
PENSION LIABILITY
$391,919,797 $553,331,510 $573,535,235 $566,391,707 $504,486,908
% Change from Prior Yr $-23.2%41.2%3.7%-1.2%-10.9%
TOTAL FUNDED STATUS %
(CalPERS only)
73.3%63.8%64.0%66.0%70.8%
Section 115 Trust (PARS)2.7%3.8%5.3%6.6%7.6%
TOTAL FUNDED STATUS %
(including Trust)
75.9%67.6%69.3%72.6%78.4%
Pension Trust Status
In total, planned contributions (principal) of $101.8 million to the Pension Trust will have been
made since inception in FY 2017 through FY 2026 ($65.5 million, or 64.4% of the total, is from
the General Fund). The Pension Trust is invested in a Balanced portfolio, earning 15.5%, 12.6%,
and 11.5% for the years ending June 30, 2026, 2025, and 2024 respectively. The annualized five-
year return as of July 2026 is 6.85%. The total balance of $131.0 million as of June 30, 2026
includes contributions of $101.8 million and net earnings since inception of $29.2 million. The
Pension Trust is not factored into the CalPERS reports funded status; however, when included
the City’s combined funded status is 78.4%.
The Retirement Benefit Policy indicates that the City make Additional Discretionary Payments
(ADPs) from the Pension Trust to CalPERS for amounts that exceed the one-year minimum
employer contribution. CalPERS allows agencies to make ADPs at any time and in any amount at
the agency’s discretion. These optional payments serve to reduce the UAL and future required
contributions.
FISCAL/RESOURCE IMPACT
This report and feedback from the City Council will be used to inform the development of the
FY 2028–2037 LRFF, the FY 2028 Budget, and other long-term financial planning. As previously
noted, the estimated reduction in ADC for fiscal year FY 2028 is $1.7 million for all plans
citywide, which is subject to more refined budget development. Staff will continue to update
the City Council and incorporate information as it becomes available. Below is a timeline for
anticipated reporting:
November: Four-Year Palo Alto Retiree Benefit Policy Review
STAKEHOLDER ENGAGEMENT
ENVIRONMENTAL REVIEW
ATTACHMENTS
APPROVED BY:
Employee Group Employee Group
Q3 2026 Q3 2025 Q3 2026 Q3 2025
City Council & Council Appointees 9 8 IAFF 94 87
Tier 1 1 1 Tier 1 25 28
Tier 2 1 2 Tier 2 9 9
Tier 3 6 5 Tier 3 60 50
Management & Professional 230 218 Fire Chiefs' Association 4 4
Tier 1 45 54 Tier 1 4 4
Tier 2 41 36 Tier 2 0 0
Tier 3 144 128 Tier 3 0 0
Service Employees' International 557 556 Fire Management 4 4
Tier 1 107 127 Tier 1 4 4
Tier 2 37 38 Tier 2 0 0
Tier 3 413 391 Tier 3 0 0
Utilities Management 45 45 PAPOA 68 67
Tier 1 23 25 Tier 1 13 15
Tier 2 6 8 Tier 2 0 1
Tier 3 16 12 Tier 3 55 51
Police Management Association 7 7
Tier 1 7 7
Tier 2 0 0
Tier 3 0 0
Police Management 1 2
Tier 1 1 1
Tier 2 0 1
Tier 3 0 0
Grand Total Miscellaneous Plans 840 827 Grand Total Safety Plans 178 171
Tier 1 176 207 Tier 1 54 59
Tier 2 85 84 Tier 2 9 11
Tier 3 579 536 Tier 3 115 101
Tiered Percentage Miscellaneous Plans Tiered Percentage Safety Plans
Tier 1 21.0% 25.0% Tier 1 30.3% 34.5%
Tier 2 10.1% 10.2% Tier 2 5.1% 6.4%
Tier 3 68.9% 64.8% Tier 3 64.6% 59.1%
Tier Definitions Tier Definitions
Tier 1 2.7% @ 55 Tier 1 3% @ 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
Attachment A:
City of Palo Alto Pension Plan Benefit Levels Enrollment by Plan and Employee Group as of Third Quarter
Miscellaneous Plans Safety Plans
Employee Count Employee Count
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 2026
Miscellaneous Plan of the City of Palo Alto (CalPERS ID: 6373437857)
Annual Valuation Report as of June 30, 2025
Dear Employer,
Attached to this letter is the June 30, 2025, actuarial valuation report for the plan noted above. Provided in this report is the
determination of the minimum required employer contributions for fiscal year (FY) 2027-28. 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.
Required Contributions
The table below shows the minimum required employer contributions and the PEPRA member contribution rates for FY 2027-28
along with an estimate of the employer contribution requirements for FY 2028-29. The required employer and member
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
2027-28 10.36% $31,091,460 7.25%
Projected Results
2028-29 10.1% $33,033,000 TBD
The actual investment return for FY 2025-26 was not known at the time this report was prepared. The projected UAL payment
above assumes the investment return for that year would be 6.8%. To the extent the actual investment return for FY 2025-26
differs from 6.8%, the actual UAL contribution requirement for FY 2028-29 will differ from that shown above. For additional
information on future contribution requirements , please refer to Projected Employer Contributions. This section also contains
projected required contributions through FY 2032-33.
Changes from Previous Year’s Valuations
On November 19, 2025, the CalPERS Board of Administration (board) adopted new actuarial assumptions based on the
recommendations in the November 2025 CalPERS Experience Study and Review of Actuarial Assumptions. This study
reviewed the retirement rates, termination rates, mortality rates, rates of salary increase, inflation assumption , and various other
assumptions for public agencies. These new assumptions are incorporated in this actuarial valuation and impact the required
contributions for FY 2027-28.
In addition, the board adopted changes to the CalPERS Total Fund Investment Policy, which provides the framework for the
management of CalPERS assets. The board adopted a discount rate of 6.80%, which is unchanged from the prior year’s
valuation, and an increase in the price inflation assumption from 2.30% to 2.50% per year.
Besides the above noted changes, there may also be changes specific to the plan such as contract amendments and funding
changes such as additional discretionary payments and amortization schedule fresh starts .
PEPRA Member Contribution Rate
The employee contribution rate for PEPRA members can change based on the results of the actuarial valuation. See Member
Contribution Rates for more information.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 2
Report Navigation Features
The valuation report has a number of features to ease navigation and allow the reader to find specific information more quickly.
The tables of contents are “clickable.” This is true for the main table of contents that follows the title page and the intermediate
tables of contents at the beginning of sections. The Adobe navigation pane on the left can also be used to skip to specific
exhibits.
There are a number of links throughout the document in blue text. Links that are internal to the document are not underlined,
while underlined links will take you to the CalPERS website. Examples are shown below.
Internal Bookmarks CalPERS Website Links
Required Employer Contributions Required Employer Contribution Search Tool
Member Contribution Rates Public Agency PEPRA Member Contribution Rates
Summary of Key Valuation Results Pension Outlook Overview
Funded Status – Funding Policy Basis Interactive Summary of Public Agency Valuation Results
Projected Employer Contributions Public Agency Actuarial Valuation Reports
Further descriptions of general changes are included in the Highlights and Executive Summary section and in Appendix A -
Actuarial Methods and Assumptions. The effects of any changes on the required contributions are included in the Reconciliation
of Required Employer Contributions section.
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,
Matthew Biggart, ASA, MAAA
Actuary, CalPERS
Randall Dziubek, ASA, MAAA
Deputy Chief Actuary, Valuation Services, CalPERS
Fritzie Dorais, ASA, MAAA
Deputy Chief Actuary, Special Programs, CalPERS
Scott Terando, ASA, EA, MAAA, FCA, CFA
Chief Actuary, CalPERS
California Public Employees’ Retirement System
Actuarial Valuation for the
Miscellaneous Plan
of the City of Palo Alto
as of June 30, 2025
(CalPERS ID: 6373437857)
(Rate Plan ID: 8)
Required Contributions for Fiscal Year
July 1, 2027 — June 30, 2028
CY Fin Job Instance ID: 517364 PY Fin Job Instance ID: 464138 Report ID: 517368
Table of Contents
Actuarial Certification .................................................................................................................................................................. 1
Highlights and Executive Summary ............................................................................................................................................ 2
Introduction ................................................................................................................................................................................. 3
Purpose ...................................................................................................................................................................................... 3
Summary of Key Valuation Results ............................................................................................................................................ 4
Changes Since the Prior Year’s Valuation .................................................................................................................................. 5
Subsequent Events..................................................................................................................................................................... 5
Assets ............................................................................................................................................................................................ 6
Reconciliation of the Fair Value of Assets .................................................................................................................................. 7
Asset Allocation .......................................................................................................................................................................... 8
CalPERS History of Investment Returns .................................................................................................................................... 9
Liabilities and Contributions ..................................................................................................................................................... 10
Determination of Required Contributions .................................................................................................................................. 11
Development of Accrued and Unfunded Liabilities ................................................................................................................... 12
Required Employer Contributions ............................................................................................................................................. 13
Member Contribution Rates ...................................................................................................................................................... 14
Funded Status – Funding Policy Basis ..................................................................................................................................... 15
Additional Employer Contributions ............................................................................................................................................ 16
Projected Employer Contributions ............................................................................................................................................ 17
(Gain)/Loss Analysis 6/30/24 – 6/30/25 .................................................................................................................................... 18
Schedule of Amortization Bases ............................................................................................................................................... 19
Amortization Schedule and Alternatives ................................................................................................................................... 21
Reconciliation of Required Employer Contributions .................................................................................................................. 23
Employer Contribution History .................................................................................................................................................. 24
Funding History......................................................................................................................................................................... 24
Risk Analysis .............................................................................................................................................................................. 25
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
Funded Status – Low-Default-Risk Basis ................................................................................................................................. 31
Supplementary Information ....................................................................................................................................................... 32
Normal Cost by Benefit Group .................................................................................................................................................. 33
Summary of Valuation Data ...................................................................................................................................................... 34
Status of PEPRA Transition ...................................................................................................................................................... 35
Plan's Major Benefit Options ..................................................................................................................................................... 36
Appendix A - Actuarial Methods and Assumptions ................................................................................................................. 38
Appendix B - Principal Plan Provisions .................................................................................................................................... 65
Appendix C - Participant Data ................................................................................................................................................... 76
Appendix D - Glossary ............................................................................................................................................................... 81
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 1
Actuarial Certification
It is our opinion that the valuation has been performed in accordance with generally accepted actuarial principles as well as the
applicable Standards of Practice promulgated by the Actuarial Standards Board. While this report is intended to be complete,
our office is available to answer questions as needed. All of the undersigned are actuaries who satisfy the Qualification
Standards for Actuaries Issuing Statements of Actuarial Opinion in the United States of the American Academy of Actuaries with
regard to pensions. The actuaries responsible for this report and their respective responsibilities are as follows.
Actuarial Methods and Assumptions
It is our opinion that the assumptions and methods, as recommended by the Chief Actuary and adopted by the CalPERS Board
of Administration, are internally consistent and reasonable for this plan.
Randall Dziubek, ASA, MAAA
Deputy Chief Actuary, Valuation Services, CalPERS
Scott Terando, ASA, EA, MAAA, FCA, CFA
Chief Actuary, CalPERS
Fritzie Dorais, ASA, MAAA
Deputy Chief Actuary, Special Programs, CalPERS
Actuarial Data and Rate Plan Results
The assumptions and methods in this report are the responsibility of the CalPERS Chief Actuary and Deputy Chief Actuaries
named above. These were established pursuant to their responsibility for setting actuarial policy and I relied upon them without
independent assessment of the reasonableness of the assumptions and methods, as such an evaluation would have required
substantial additional work beyond the scope of this assignment. 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. The valuation was based on the member and financial data as
of June 30, 2025, provided by the various CalPERS databases and the benefits under this plan with CalPERS as of the date this
report was produced.
Matthew Biggart, ASA, MAAA
Actuary, CalPERS
Highlights and Executive Summary
• Introduction 3
• Purpose 3
• Summary of Key Valuation Results 4
• Changes Since the Prior Year’s Valuation 5
• Subsequent Events 5
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 3
Introduction
This report presents the results of the June 30, 2025, actuarial valuation of the Miscellaneous 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) 2027-28.
Purpose
This report documents the results of the actuarial valuation prepared by the CalPERS Actuarial Office using data as of June 30,
2025. This report contains actuarial information for the following rate plan(s).
• 8, Miscellaneous First Level
• 30157, Miscellaneous Second Level
• 26004, Miscellaneous PEPRA Level
The purpose of the valuation is to:
• Set forth the assets and accrued liabilities of this rate plan as of June 30, 2025;
• Determine the minimum required employer contributions for this rate plan for FY July 1, 2027, through June 30, 2028;
• Determine the required member contribution rate for FY July 1, 2027, through June 30, 2028, for employees subject
to the California Public Employees' Pension Reform Act of 2013 (PEPRA); and
• Provide actuarial information as of June 30, 2025, 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 a
CalPERS 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 the Actuarial Standards of Practice:
• A “Scenario Test,” projecting future results under different investment income returns.
• A “Sensitivity Analysis,” showing the impact on current valuation results using alternative discount rates of 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 2025.
• Plan maturity measures indicating how sensitive a plan may be to the risks noted above.
• The funded status on a termination basis.
• A low-default-risk obligation measure (LDROM) of benefit costs accrued as of the valuation date.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 4
Summary of Key Valuation Results
Below is a brief summary of key valuation results along with page references where more detailed information can be found.
Required Employer Contributions — page 13
Fiscal Year
2026-27
Fiscal Year
2027-28
Employer Normal Cost Rate 10.48% 10.36%
Unfunded Accrued Liability (UAL) Contribution Amount $31,802,552 $31,091,460
Paid either as
Option 1) 12 Monthly Payments of $2,650,213 $2,590,955
Option 2) Annual Prepayment in July $30,773,461 $30,085,379
Member Contribution Rates — page 14
Fiscal Year
2026-27
Fiscal Year
2027-28
Classic Member Contribution Rate 7.00%/8.00% 7.00%/8.00%
PEPRA Member Contribution Rate 7.25% 7.25%
Projected Employer Contributions — page 17
Fiscal Year Normal Cost
(% of payroll)
Annual
UAL Payment
2028-29 10.1% $33,033,000
2029-30 9.9% $32,426,000
2030-31 9.6% $31,716,000
2031-32 9.4% $29,607,000
2032-33 9.2% $29,134,000
Funded Status – Funding Policy Basis — page 15
June 30, 2024 June 30, 2025
Entry Age Accrued Liability (AL) $1,085,448,984 $1,126,070,057
Fair Value of Assets (Assets) 745,630,783 831,439,428
Unfunded Accrued Liability (UAL) [AL – Assets] $339,818,201 $294,630,629
Funded Ratio [Assets ÷ AL] 68.7% 73.8%
Summary of Valuation Data — page 34
June 30, 2024 June 30, 2025
Active Member Count 833 833
Annual Covered Payroll $107,807,296 $112,499,318
Transferred Member Count 393 420
Separated Member Count 504 507
Retired Members and Beneficiaries Count 1,364 1,393
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 5
Changes Since the Prior Year’s Valuation
Investment Policy and Discount Rate
On November 19, 2025, the board adopted changes to the CalPERS Total Fund Investment Policy, which provides the
framework for the management of CalPERS assets. Consistent with that policy, the board also adopted a discount rate of 6.80%
for use in this valuation, which is unchanged from the prior year’s valuation.
Actuarial Methods and Other Assumptions
On November 19, 2025, the board adopted new actuarial assumptions based on the recommendations in the November 2025
CalPERS Experience Study and Review of Actuarial Assumptions. This study assessed various assumptions including
retirement rates, termination rates, mortality rates, rates of salary increase, and inflation. New assumptions stemming from the
study are incorporated in this actuarial valuation and affect required contributions for fiscal year 2027-28. Among the changes
were an increase in the price inflation assumption from 2.30% to 2.50% per year, and an increase in the wage inflation
assumption from 2.80% to 3.00% per year.
Plan Assets
Plan assets are measured at fair value. In the prior year’s actuarial valuation report the term Market Value of Assets was us ed to
describe the asset value used for funding purposes. The Actuarial Office has used this term interchangeably with Fair Value o f
Assets. Effective with the June 30, 2025, valuation, CalPERS will exclusively use the term Fair Value of Assets in actuarial
reports. This is a change in terminology and does not represent any change in methodology.
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. For rate plans that are not in a risk pool (non -pooled), benefit changes by contract
amendment are generally included in the first valuation that is prepared after the amendment becomes effective, even if the
effective date of the amendment is after the valuation date.
Please refer to the Plan’s Major Benefit Options and Appendix B - Principal Plan Provisions for a summary of the plan provisions
used in this valuation. The effect of any mandated benefit changes or plan amendments on the unfunded liability is shown in t he
(Gain)/Loss Analysis 6/30/24 – 6/30/25 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.
Subsequent Events
This actuarial valuation report reflects fund investment return through June 30, 202 5, as well as statutory changes, regulatory
changes and board actions through January 2026.
The 2025 annual benefit limit under Internal Revenue Code (IRC) section 415(b) and annual compensation limits under IRC
section 401(a)(17) and Government Code section 7522.10 were used for this valuation and are assumed to increase 2.5% per
year based on the price inflation assumption. The actual 2026 limits, determined in October 2025, are not reflected.
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.
Assets
• Reconciliation of the Fair Value of Assets 7
• Asset Allocation 8
• CalPERS History of Investment Returns 9
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 7
Reconciliation of the Fair Value of Assets
Plan assets are measured at fair value. In addition, CalPERS does not use an asset valuation method to smooth the effect of
market volatility on asset values. All current, historical and projected asset values used in this report are the Fair Value of
Assets.
1. Fair Value of Assets as of 6/30/24 including Receivables* $745,630,783
2. Change in Receivables for Service Buybacks (115,598)
3. Employer Contributions 42,310,713
4. Employee Contributions 10,243,335
5. Benefit Payments to Retirees and Beneficiaries (57,851,591)
6. Refunds (352,043)
7. Transfers 0
8. Service Credit Purchase (SCP) Payments and Interest 131,109
9. Administrative Expenses (610,658)
10. Miscellaneous Adjustments 0
11. Investment Return (Net of Investment Expenses) 92,053,378
12. Fair Value of Assets as of 6/30/25 including Receivables* $831,439,428
* Note that the reserve against deficiency, established pursuant to Government Code section 20174, and the reserve for fiduciar y self-
insurance have been excluded from the assets used for funding purposes, since those assets are generally not available for the payment of
benefits.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 8
Asset Allocation
The asset allocation shown below reflects the allocation of the Public Employees’ Retirement Fund (PERF) in its entirety on the
valuation date. The assets for City of Palo Alto Miscellaneous Plan are a subset of the PERF and are invested accordingly.
Asset Class
Allocation as of
June 30, 2025
Public Equity 38.9%
Private Equity 17.7%
Income 30.3%
Real Assets 13.1%
Private Debt 3.8%
Total Fund
Opportunistic 0.1%
Low Liquidity Enhanced Return 2.1%
Other 0.1%
Total Fund Financing
Active (2.3%)
Strategic (3.8%)
Total Fund 100.0%
On November 19, 2025, the board adopted a Total Portfolio Approach, which does not specify a target for each asset
classification. Instead, there is an equity-bonds Reference Portfolio that sets the market risk exposure, captures passive returns,
and becomes the singular total fund performance benchmark. The Reference Portfolio adopted by the board is 75% equities and
25% bonds. Consistent with this framework, the discount rate is based on the Reference Portfolio and the associated active risk
limit adopted by the board.
For more information on the portfolio as of the valuation date, see the Trust Level Review as of June 30, 2025 and the
Investment Section of the CalPERS 2024-25 Annual Comprehensive Financial Report, which are available on the CalPERS
website.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 9
CalPERS History of Investment Returns
The following is a chart with 20 years of 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 lagged private asset valuations for investment performance reporting purposes. This can lead to a timing difference
in private asset influence on performance 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 audited and are appropriate for financial reporting.
Because of these differences, the effective investment return for funding purposes in a single year can be higher or lower than
the return reported by the Investment Office shown here.
History of Investment Returns (2006 through 2025)
* As reported by the Investment Office with lagged private valuations and without any reduction for administrative expenses.
The table below shows annualized investment returns of the PERF for various time periods ending on June 30, 2025. These
returns are the annual rates that if compounded over the indicated number of years would equate to the actual time -weighted
investment performance of the PERF. It should be recognized that the annual rate of return is volatile, as the chart above
illustrates, so when looking at investment returns, it is informative to look at average returns over longer time horizons.
PERF Realized Rates of Return as of June 30, 2025
1 year 3 year 5 year 10 year 20 year 30 year
11.6% 8.9% 8.0% 7.1% 6.7% 7.6%
Liabilities and Contributions
• Determination of Required Contributions 11
• Development of Accrued and Unfunded Liabilities 12
• Required Employer Contributions 13
• Member Contribution Rates 14
• Funded Status – Funding Policy Basis 15
• Additional Employer Contributions 16
• Projected Employer Contributions 17
• (Gain)/Loss Analysis 6/30/24 – 6/30/25 18
• Schedule of Amortization Bases 19
• Amortization Schedule and Alternatives 21
• Reconciliation of Required Employer Contributions 23
• Employer Contribution History 24
• Funding History 24
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 11
Determination of Required Contributions
Contributions to fund the plan are determined by an actuarial valuation performed each year. The valuation employs complex
calculations based on a set of actuarial assumptions and methods. See Appendix A for information on the assumptions and
methods used in this valuation. The valuation incorporates all plan experience through the valuation date and sets required
contributions for the fiscal year that begins two years after the valuation date.
Contribution Components
Two components comprise required contributions:
• Normal Cost — expressed as a percentage of pensionable payroll
• Unfunded Accrued Liability (UAL) Contribution — expressed as a dollar amount
Normal Cost represents the value of benefits allocated to the upcoming year for active employees. If all plan experience exac tly
matched the actuarial assumptions, normal cost would be sufficient to fully fund all benefits. The employer and employees eac h
pay a share of the normal cost with contributions payable as part of the regular payroll reporting process. The contribution rate
for Classic members is set by statute based on benefit formula whereas for PEPRA members it is based on 50% of the total
normal cost.
When plan experience differs from the actuarial assumptions, UAL emerges. The new UAL may be positive or negative. If the
total UAL is positive (i.e., accrued liability exceeds assets), the employer is required to make contributions to pay off the UAL
over time. This is called the UAL Contribution component. There is an option to prepay this amount during July of each fiscal
year, otherwise it is paid monthly.
In measuring the UAL each year, plan experience is split by source. Common sources of UAL include investment experience
different than expected, non-investment experience different than expected, assumption changes, and benefit changes. Each
source of UAL (positive or negative) forms a base that is amortized, or paid off, over a specified period of time in accordan ce
with the CalPERS Actuarial Amortization Policy. The UAL Contribution is the sum of the payments on all bases. See the
Schedule of Amortization Bases section of this report for an inventory of existing bases and Appendix A for more information on
the amortization policy.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 12
Development of Accrued and Unfunded Liabilities
June 30, 2024 June 30, 2025
1. Present Value of Projected Benefits
a) Active Members $500,299,849 $511,672,750
b) Transferred Members 50,315,737 55,744,213
c) Separated Members 24,294,459 22,278,718
d) Members and Beneficiaries Receiving Payments 670,851,688 708,865,341
e) Total $1,245,761,733 $1,298,561,022
2. Present Value of Future Employer Normal Costs $88,353,448 $94,309,239
3. Present Value of Future Employee Contributions $71,959,301 $78,181,726
4. Entry Age Accrued Liability
a) Active Members [(1a) - (2) - (3)] $339,987,100 $339,181,785
b) Transferred Members (1b) 50,315,737 55,744,213
c) Separated Members (1c) 24,294,459 22,278,718
d) Members and Beneficiaries Receiving Payments (1d) 670,851,688 708,865,341
e) Total $1,085,448,984 $1,126,070,057
5. Fair Value of Assets $745,630,783 $831,439,428
6. Unfunded Accrued Liability (UAL) [(4e) - (5)] $339,818,201 $294,630,629
7. Funded Ratio [(5) ÷ (4e)] 68.7% 73.8%
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 13
Required Employer Contributions
The required employer contributions in this report do not reflect any cost sharing arrangement between the agency and the
employees.
Fiscal Year
Required Employer Contributions 2027-28
Employer Normal Cost Rate 10.36%
Plus
Unfunded Accrued Liability (UAL) Contribution Amount $31,091,460
Paid either as
1) Monthly Payment $2,590,955
Or
2) Annual Prepayment Option* $30,085,379
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) and the 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 Member Contribution Rates see the following page.
Fiscal Year Fiscal Year
2026-27 2027-28
Normal Cost Contribution as a Percentage of Payroll
Total Normal Cost1 17.93% 17.78%
Offset due to Employee Contributions2 (7.45%) (7.42%)
Employer Normal Cost 10.48% 10.36%
Projected Annual Payroll for Contribution Year $117,119,039 $122,931,042
Estimated Employer Contributions Based on Projected Payroll
Total Normal Cost $20,999,444 $21,857,139
Expected Employee Contributions (8,725,368) (9,121,483)
Employer Normal Cost $12,274,076 $12,735,656
Unfunded Liability Contribution $31,802,552 $31,091,460
% of Projected Payroll (illustrative only) 27.15% 25.29%
Estimated Total Employer Contribution
$44,076,628 $43,827,116
% of Projected Payroll (illustrative only) 37.63% 35.65%
1 The Total 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.
2 This is the expected employee contributions, taking into account individual benefit formula and any offset from the use
of a modified formula, divided by projected annual payroll. For member contribution rates above the breakpoint for each
benefit formula, see Member Contribution Rates.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 14
Member Contribution Rates
The required member contributions in this report do not reflect any cost sharing arrangement between the agency and the
employees.
Classic Members
Each member contributes toward their retirement based upon the retirement formula. The standard Classic member contribution
rate above the breakpoint, if any, is as described below.
Benefit Formula
Percent Contributed
above the Breakpoint
Miscellaneous, 1.5% at age 65 2%
Miscellaneous, 2% at age 60 7%
Miscellaneous, 2% at age 55 7%
Miscellaneous, 2.5% at age 55 8%
Miscellaneous, 2.7% at age 55 8%
Miscellaneous, 3% at age 60 8%
Auxiliary organizations of the CSU system may elect reduced contribution rates for Miscellaneous members, in which case the
contribution rate above the breakpoint is 6% if members are not covered by Social Security and 5% if they are.
PEPRA Members
The California Public Employees’ Pension Reform Act of 2013 (“PEPRA”) established new benefit formulas, final compensation
period, and 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 least 50% of the normal cost rate.” The normal cost rate 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
rate of the plan change by more than 1% from the base total normal cost rate established for the plan, the new member rate
shall be 50% of the new normal cost rate rounded to the nearest quarter percent.
The table below shows the determination of the PEPRA member contribution rates effective July 1, 2027, based on 50% of the
total normal cost rate for each respective rate plan as of the June 30, 2025, valuation.
Basis for Current Rate Rates Effective July 1, 2027
Rate Plan
Identifier Benefit Group Name
Total
Normal
Cost
Member
Rate
Total
Normal
Cost
Change
in
Normal
Cost
Adj.
Needed
Member
Rate
26004 Miscellaneous PEPRA
Level 14.250% 7.25% 14.66% 0.410% No 7.25%
For a description of the methodology used to determine the Total Normal Cost for this purpose, see PEPRA Normal Cost Rate
Methodology in Appendix A.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 15
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 fair 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
benefit 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 siz es.
June 30, 2024 June 30, 2025
1. Present Value of Benefits $1,245,761,733 $1,298,561,022
2. Entry Age Accrued Liability 1,085,448,984 1,126,070,057
3. Fair Value of Assets 745,630,783 831,439,428
4. Unfunded Accrued Liability (UAL) [(2) – (3)] $339,818,201 $294,630,629
5. Funded Ratio [(3) ÷ (2)] 68.7% 73.8%
A funded ratio of 100% (UAL of $0) implies that the funding of the plan is on target and that future contributions equal to t he
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 tow ard
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 ave rage
future returns are less than the expected return, calculated normal costs and UAL contributions will not be sufficient to ful ly fund
all retirement benefits. Under this scenario, required future normal cost contributions will need to increase from those prov ided in
this report, and the plan will develop unfunded liabilities that will also add to required future contributions. For illustrative
purposes, funded statuses based on a 1% lower and higher average future investment return (discount rate) are as follows:
1% Lower
Average Return
Current
Assumption
1% Higher
Average Return
Discount Rate 5.8% 6.8% 7.8%
1. Present Value of Benefits $1,506,636,103 $1,298,561,022 $1,135,071,001
2. Entry Age Accrued Liability 1,269,121,453 1,126,070,057 1,007,569,035
3. Fair Value of Assets 831,439,428 831,439,428 831,439,428
4. Unfunded Accrued Liability (UAL) [(2) – (3)] $437,682,025 $294,630,629 $176,129,607
5. Funded Ratio [(3) ÷ (2)] 65.5% 73.8% 82.5%
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 appropriat e
for assessing the sufficiency of plan assets to cover estimated termination liabilities.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 16
Additional Employer Contributions
The CalPERS amortization policy provides a systematic methodology for paying down a plan’s unfunded accrued liability (UAL)
over a reasonable period of years. The projected schedule of required payments for this plan under the amortization policy is
provided in Amortization Schedule and Alternatives. Certain aspects of the policy such as 1) layered amortization bases
(positive and negative) with different remaining payoff periods, and 2) the phase -in of required payments toward investment
gains and losses, can result in volatility in year-to-year projected UAL payments. Provided below is information on how an
Additional Discretionary Payment (ADP), together with your required UAL payment of $31,091,460 for FY 2027-28, may better
accomplish your agency’s specific objectives with regard to either smoothing out projected future payments or achieving a
greater reduction in UAL than would otherwise occur when making only the minimum required payment. Such additional
payments are allowed at any time and can also result in significant long-term savings.
Fiscal Year 2027-28 Employer Contribution Versus Agency Funding Objectives
The interest-to-payment ratio for the FY 2027-28 minimum required UAL payment is 54%, which means the required payment of
$31,091,460 includes $16,766,533 of interest cost and results in a $14,324,927 reduction in the UAL, as can be seen in
Amortization Schedule and Alternatives (see columns labelled Current Amortization Schedule). If the interest-to-payment ratio is
close to 100%, and the reduction in the UAL is small, it may indicate that required contributions will be increasing in the coming
years, which would be shown in Projected Employer Contributions. An alternative metric that provides similar information about
the FY 2027-28 required UAL payment is the number of years it would take that payment, if held constant, to pay off the existing
UAL (note: actual required UAL payments will vary each year). An annual payment of $31,091,460 would pay off the current
UAL in 12.3 years (ignoring any unexpected changes in UAL occurring after June 30, 2025). If the agency would like their FY
2027-28 payment toward the UAL to be consistent with a faster pace for reaching 100% funded, an ADP can be added to the
required minimum payment.
Provided below are select ADP options for consideration. Making such an ADP during FY 2027-28 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 Amortization Schedule and Alternatives. Agencies considering
making an ADP should contact CalPERS for additional information.
Fiscal Year 2027-28 Employer Contributions — Illustrative Scenarios
If the Annual UAL
Payment Each
Year Were…
The Current
UAL Would be
Paid Off in…
This Would
Require an ADP1
in FY 2027-28 of…
Plus the Estimated
Normal Cost of…
Estimated Total
Contribution
$31,091,460 12.3 years $0 $12,735,656 $43,827,116
35,743,290 10 years 4,651,830 12,735,656 48,478,946
61,467,275 5 years 30,375,815 12,735,656 74,202,931
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.
The calculations above are based on the projected UAL as of June 30, 2027, as determined in the June 30, 2025, 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 year s
will not result in a plan that is exactly 100% funded in the indicated number of years. Valuation results will vary from one ye ar to
the next and can diverge significantly from projections over a period of several years.
Additional Discretionary Payment History
The following table provides a recent history of actual ADPs made to the plan.
Fiscal
Year ADP Fiscal
Year ADP
2018-19 $0 2022-23 $0
2019-20 0 2023-24 0
2020-21 0 2024-25 0
2021-22 0 2025-26 6,075,000
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 17
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,
benefits, or funding will occur during the projection period. In particular, the investment return beginning with FY 2025-26 is
assumed to be 6.80% per year, net of investment and administrative expenses. 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.
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 significantly from those shown
below. The actuarial valuation does not include payroll beyond the valuation date. For the most realistic projections, the
employer should apply projected payroll amounts to the rates below based on the most recent information available, such as
current payroll as well as any plans to fill vacancies or add or remove positions.
Required
Contribution
Projected Future Employer Contributions
(Assumes 6.80% Return for Fiscal Year 2025-26 and Beyond)
2027-28 2028-29 2029-30 2030-31 2031-32 2032-33
Normal Cost % 10.36% 10.1% 9.9% 9.6% 9.4% 9.2%
UAL Payment $31,091,460 $33,033,000 $32,426,000 $31,716,000 $29,607,000 $29,134,000
Total as a % of Payroll* 35.65% 36.2% 34.7% 33.3% 30.8% 29.7%
Projected Payroll $122,931,042 $126,618,973 $130,417,542 $134,330,069 $138,359,971 $142,510,771
*Illustrative only and based on the projected payroll shown.
The required UAL payments are expected to vary significantly from the projections above due to experience, particularly
investment experience. For projected contributions under alternate investment return scenarios, please see the Future
Investment Return Scenarios exhibit. 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.
For ongoing plans, investment gains and losses are amortized using an initial 5-year ramp. For more information, please see
Amortization of Unfunded Actuarial Accrued Liability 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 initial ramp 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.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 18
(Gain)/Loss Analysis 6/30/24 – 6/30/25
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 6/30/24 $339,818,201
b) Expected payment on the UAL during 2024-25 32,190,210
c) Interest through 6/30/25 [0.068 x (1a) - ((1.068)½ - 1) x (1b)] 22,031,170
d) Expected UAL before all other changes [(1a) - (1b) + (1c)] 329,659,161
e) Change due to plan changes 0
f) Change due to AL Significant Increase 0
g) Change due to assumption changes (704,263)
h) Change due to method changes 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)] 328,954,898
k) Actual UAL as of 6/30/25 294,630,629
l) Total (Gain)/Loss for 2024-25 [(1k) - (1j)] ($34,324,269)
2. Investment (Gain)/Loss for the Year
a) Fair Value of Assets as of 6/30/24 $745,630,783
b) Prior fiscal year receivables (274,142)
c) Current fiscal year receivables 158,545
d) Contributions received 52,554,048
e) Benefits and refunds paid (58,203,635)
f) Transfers, SCP payments and interest, and miscellaneous adjustments 131,109
g) Expected return at 6.8% per year 51,576,177
h) Expected assets as of 6/30/25 [(2a) + (2b) + (2c) + (2d) + (2e) + (2f) + (2g)] 791,572,885
i) Actual Fair Value of Assets as of 6/30/25 831,439,428
j) Investment (Gain)/Loss [(2h) - (2i)] ($39,866,543)
3. Non-Investment (Gain)/Loss for the Year
a) Total (Gain)/Loss (1l) ($34,324,269)
b) Investment (Gain)/Loss (2j) (39,866,543)
c) Non-Investment (Gain)/Loss [(3a) - (3b)] $5,542,274
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 19
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, 2025.
• The required employer contributions determined by the valuation are for the fiscal year beginning two years after the valuati on date: FY 2027-28.
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 FY 2025-26 is based on the actuarial valuation two years ago, adjusted for additional discretionary payments, if
necessary, and the expected payment for FY 2026-27 is based on the actuarial valuation one year ago.
Reason for Base
Date
Est.
Ramp
Level
2027-28
Ramp
Shape
Escala-
tion
Rate
Amort.
Period
Balance
6/30/25
Expected
Payment
2025-26
Balance
6/30/26
Expected
Payment
2026-27
Balance
6/30/27
Minimum
Required
Payment
2027-28
Method Change 6/30/04 No Ramp 2.80% 0 (179,482) (185,484) 0 0 0 0
Benefit Change 6/30/05 No Ramp 2.80% 0 3,976,371 4,109,344 0 0 0 0
Assumption Change 6/30/09 No Ramp 2.80% 4 15,428,102 8,876,667 7,303,703 1,626,980 6,118,967 1,672,536
Special (Gain)/Loss 6/30/09 No Ramp 2.80% 14 15,860,202 1,343,097 15,550,684 1,380,704 15,181,255 1,419,364
Special (Gain)/Loss 6/30/10 No Ramp 2.80% 15 1,336,098 108,326 1,315,004 111,359 1,289,341 114,477
Assumption Change 6/30/11 No Ramp 2.80% 6 8,503,902 1,250,770 7,789,571 1,285,792 6,990,472 1,321,794
Special (Gain)/Loss 6/30/11 No Ramp 2.80% 16 (57,207) (4,455) (56,493) (4,580) (55,601) (4,708)
(Gain)/Loss 6/30/12 No Ramp 2.80% 17 25,633,692 1,923,514 25,388,945 1,977,372 25,071,896 2,032,739
Payment (Gain)/Loss 6/30/12 No Ramp 2.80% 17 3,040,705 228,170 3,011,673 234,559 2,974,064 241,126
(Gain)/Loss 6/30/13 100% Up/Dn 2.80% 18 79,671,647 6,214,252 78,667,257 6,388,252 77,414,750 6,567,123
(Gain)/Loss 6/30/14 100% Up/Dn 2.80% 19 (51,151,569) (3,843,597) (50,657,746) (3,951,218) (50,019,123) (4,061,852)
Assumption Change 6/30/14 100% Up/Dn 2.80% 9 36,306,911 4,850,480 33,763,097 4,986,293 30,905,949 5,125,910
(Gain)/Loss 6/30/15 100% Up/Dn 2.80% 20 32,024,155 2,324,387 31,799,681 2,389,470 31,492,683 2,456,376
(Gain)/Loss 6/30/16 100% Up/Dn 2.80% 21 37,030,001 2,602,415 36,858,599 2,675,283 36,600,237 2,750,191
Assumption Change 6/30/16 100% Up/Dn 2.80% 11 12,591,425 1,425,325 11,974,653 1,465,235 11,274,696 1,506,261
(Gain)/Loss 6/30/17 100% Up/Dn 2.80% 22 (20,993,192) (1,431,633) (20,941,221) (1,471,719) (20,844,289) (1,512,927)
Assumption Change 6/30/17 100% Up/Dn 2.80% 12 14,239,960 1,503,557 13,654,440 1,545,657 12,985,597 1,588,935
(Gain)/Loss 6/30/18 100% Up/Dn 2.80% 23 (6,659,924) (441,574) (6,656,458) (453,938) (6,639,979) (466,648)
Assumption Change 6/30/18 100% Up/Dn 2.80% 13 27,485,942 2,725,759 26,538,075 2,802,080 25,446,880 2,880,538
Method Change 6/30/18 100% Up/Dn 2.80% 13 5,324,156 527,992 5,140,550 542,776 4,929,181 557,974
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 20
Schedule of Amortization Bases (continued)
Reason for Base
Date
Est.
Ramp
Level
2027-28
Ramp
Shape
Escala-
tion
Rate
Amort.
Period
Balance
6/30/25
Expected
Payment
2025-26
Balance
6/30/26
Expected
Payment
2026-27
Balance
6/30/27
Minimum
Required
Payment
2027-28
Investment (Gain)/Loss 6/30/19 100% Up Only 0.00% 14 2,703,626 273,280 2,605,054 273,280 2,499,779 273,280
Non-Investment (Gain)/Loss 6/30/19 No Ramp 0.00% 14 5,188,024 524,400 4,998,873 524,400 4,796,860 524,400
Investment (Gain)/Loss 6/30/20 100% Up Only 0.00% 15 17,045,560 1,358,556 16,800,671 1,698,195 16,188,133 1,698,195
Non-Investment (Gain)/Loss 6/30/20 No Ramp 0.00% 15 9,525,242 931,019 9,210,805 931,019 8,874,987 931,019
Assumption Change 6/30/21 No Ramp 0.00% 16 1,979,929 187,720 1,920,567 187,721 1,857,167 187,721
Net Investment (Gain) 6/30/21 100% Up Only 0.00% 16 (87,715,916) (5,274,054) (88,230,175) (7,032,072) (86,962,596) (8,790,090)
Non-Investment (Gain)/Loss 6/30/21 No Ramp 0.00% 16 (7,104,917) (673,629) (6,891,896) (673,630) (6,664,388) (673,629)
Benefit Change 6/30/22 No Ramp 0.00% 17 922,842 85,107 897,642 85,107 870,729 85,107
Investment (Gain)/Loss 6/30/22 80% Up Only 0.00% 17 124,859,170 5,132,615 128,045,340 7,698,922 128,796,043 10,265,230
Non-Investment (Gain)/Loss 6/30/22 No Ramp 0.00% 17 9,757,107 899,827 9,490,672 899,827 9,206,120 899,827
Investment (Gain)/Loss 6/30/23 60% Up Only 0.00% 18 5,726,348 123,086 5,988,538 246,172 6,141,354 369,258
Non-Investment (Gain)/Loss 6/30/23 No Ramp 0.00% 18 11,839,644 1,064,663 11,544,474 1,064,663 11,229,232 1,064,663
Investment (Gain)/Loss 6/30/24 40% Up Only 0.00% 19 (19,524,071) 0 (20,851,708) (448,201) (21,806,435) (896,402)
Non-Investment (Gain)/Loss 6/30/24 No Ramp 0.00% 19 15,044,678 0 16,067,716 1,444,866 15,667,137 1,444,866
Assumption Change 6/30/25 No Ramp 0.00% 20 (704,263) 0 (752,153) 0 (803,299) (72,236)
Investment (Gain)/Loss 6/30/25 20% Up Only 0.00% 20 (39,866,543) 0 (42,577,468) 0 (45,472,736) (977,423)
Non-Investment (Gain)/Loss 6/30/25 No Ramp 0.00% 20 5,542,274 0 5,919,149 0 6,321,651 568,465
Total 294,630,629 38,739,902 274,630,115 30,430,626 261,856,714 31,091,460
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 21
Amortization Schedule and Alternatives
The amortization schedule on the previous page(s) shows the minimum contributions required according to the CalPERS
amortization policy. Each year, many agencies express a desire for a more stable pattern of payments or indicate 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 th e
individual bases and remaining periods shown on the previous 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 start, please contact a CalPERS actuary.
The current amortization schedule 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, assumption changes, method changes, or plan experience that decrease unfunded liability. The combination of
positive and negative bases within an amortization sc hedule 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 existin g
unfunded liability bases with a single “fresh start” base and amortizing it over an appropriate period.
The current amortization schedule 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 additional 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 Actuarial Amortization Policy.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 22
Amortization Schedule and Alternatives (continued)
Alternative Schedules
Current Amortization
Schedule 10 Year Amortization 5 Year Amortization
Date Balance Payment Balance Payment Balance Payment
6/30/2027 261,856,714 31,091,460 261,856,714 35,743,290 261,856,714 61,467,275
6/30/2028 247,531,787 33,032,523 242,724,394 35,743,290 216,140,177 61,467,275
6/30/2029 230,226,790 32,426,253 222,291,077 35,743,290 167,314,916 61,467,276
6/30/2030 212,371,595 31,716,385 200,468,294 35,743,290 115,169,536 61,467,275
6/30/2031 194,035,858 29,606,885 177,161,562 35,743,289 59,478,271 61,467,275
6/30/2032 176,633,332 29,134,009 152,269,973 35,743,290
6/30/2033 158,536,124 27,054,953 125,685,755 35,743,289
6/30/2034 141,356,886 26,078,295 97,293,811 35,743,290
6/30/2035 124,018,776 24,632,878 66,971,214 35,743,289
6/30/2036 106,995,431 22,207,844 34,586,681 35,743,289
6/30/2037 91,320,628 20,982,417
6/30/2038 75,846,345 19,674,462
6/30/2039 60,671,505 18,699,918
6/30/2040 45,471,908 18,113,903
6/30/2041 29,844,351 13,675,901
6/30/2042 17,740,530 10,395,634
6/30/2043 8,203,612 8,477,948
6/30/2044
6/30/2045
6/30/2046
6/30/2047
6/30/2048
6/30/2049
Total 397,001,668 357,432,896 307,336,376
Interest Paid 135,144,954 95,576,182 45,479,662
Estimated Savings 39,568,772 89,665,292
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 23
Reconciliation of Required Employer Contributions
Normal Cost (% of Payroll)
1. For Period 7/1/26 – 6/30/27
a) Employer Normal Cost 10.48%
b) Employee contribution 7.45%
c) Total Normal Cost 17.93%
2. Changes since the prior year annual valuation
a) Effect of demographic experience (0.39%)
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 0.24%
e) Effect of method changes 0.00%
f) Net effect of the changes above [sum of (a) through (e)] (0.15%)
3. For Period 7/1/27 – 6/30/28
a) Employer Normal Cost 10.36%
b) Employee contribution 7.42%
c) Total Normal Cost 17.78%
Employer Normal Cost Change [(3a) – (1a)] (0.12%)
Employee Contribution Change [(3b) – (1b)] (0.03%)
Unfunded Liability Contribution ($)
1. For Period 7/1/26 – 6/30/27 31,802,552
2. Changes since the prior year annual valuation
a) Effect of adjustments to prior year’s amortization schedule (1,371,926)
b) Effect of elimination of amortization bases 0
c) Effect of progression of amortization bases1 1,142,028
d) Effect of investment (gain)/loss during prior year2 (977,423)
e) Effect of non-investment (gain)/loss during prior year 568,465
f) Effect of re-amortizing existing bases due to Funding Risk Mitigation 0
g) Effect of Golden Handshake 0
h) Effect of plan changes 0
i) Effect of AL Significant Increase (Government Code section 20791) 0
j) Effect of assumption changes (72,236)
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)] (711,092)
3. For Period 7/1/27 – 6/30/28 [(1) + (2m)] 31,091,460
The amounts shown for the period 7/1/26 – 6/30/27 may be different if a prepayment of unfunded actuarial liability is made or a
plan change became effective after the prior year’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.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 24
Employer Contribution History
The table below provides a 10-year history of the employer contribution requirements for the plan, as determined by the annual
actuarial valuation. Changes due to prepayments or plan amendments after the valuation report was finalized are not reflected.
Valuation
Date
Contribution
Year
Employer
Normal Cost Rate
Unfunded Liability
Payment
06/30/2016 2018-19 10.217% $18,392,618
06/30/2017 2019-20 10.716% 21,287,260
06/30/2018 2020-21 11.487% 23,432,860
06/30/2019 2021-22 10.95% 26,358,094
06/30/2020 2022-23 10.58% 29,715,229
06/30/2021 2023-24 11.73% 28,654,772
06/30/2022 2024-25 11.34% 32,190,210
06/30/2023 2025-26 10.90% 32,780,459
06/30/2024 2026-27 10.48% 31,802,552
06/30/2025 2027-28 10.36% 31,091,460
Funding History
The table below shows the recent history of the actuarial accrued liability, fair value of assets, unfunded accrued liability, funded
ratio and annual covered payroll.
Valuation
Date
Accrued
Liability Fair Value of
Assets
Unfunded
Accrued
Liability (UAL)
Funded
Ratio
Annual
Covered
Payroll
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
6/30/2023 1,037,247,281 687,419,176 349,828,105 66.3% 91,956,169
6/30/2024 1,085,448,984 745,630,783 339,818,201 68.7% 107,807,296
6/30/2025 1,126,070,057 831,439,428 294,630,629 73.8% 112,499,318
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
• Funded Status – Low-Default-Risk Basis 31
CalPERS Actuarial Valuation - June 30, 2025
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 2025 was performed
to determine the effects of various future investment returns on required employer UAL contributions. The CalPERS Funding
Risk Mitigation Policy stipulates that when the investment return exceeds the discount rate by at least 2%, the board will
consider adjustments to the discount rate. The projections below use a discount rate of 6.8% for all scenarios even though an
annual return of 11.6% is high enough to trigger a board discussion on the discount rate. 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 employer normal cost rates are not affected by investment returns, and since no future assumption changes are being
reflected, the projected employer normal cost rates for every future investment return scenario are the same as those shown
earlier in this report. See Projected Employer Contributions for more information on projecting the employer normal cost.
The first table shows projected UAL contribution requirements if the fund were to earn either 1.9% or 11.6% 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, 2045.
Assumed Annual Return
FY 2025-26
through FY 2044-45
Projected Employer UAL Contributions
2028-29 2029-30 2030-31 2031-32 2032-33
1.9% (5th percentile) $34,031,000 $35,436,000 $37,758,000 $39,709,000 $44,335,000
11.6% (95th percentile) $32,054,000 $29,383,000 $25,406,000 $0 $0
Required UAL contributions outside of this range are also possible. In particular, whereas it is unlikely that investment returns
will average less than 1.9% or greater than 11.6% over a 20-year period, the likelihood of a single investment return less than
1.9% or greater than 11.6% 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 12.7% per year. Accordingly, in any given year there is a 16%
probability that the annual return will be -5.9% or less and a 2.5% probability that the annual return will be -18.6% or less. These
returns represent one and two standard deviations below the expected return of 6.8%.
The following table shows the effect of one and two standard deviation investment losses in FY 2025-26 on the FY 2028-29
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 2028-29.
Assumed Annual Return for
Fiscal Year 2025-26
Required Employer
UAL Contributions
Projected Employer
UAL Contributions
2027-28 2028-29
(18.6%) (2 standard deviation loss) $31,091,460 $38,210,000
(5.9%) (1 standard deviation loss) $31,091,460 $35,621,000
• Without investment gains (returns higher than 6.8%) in FY 2026-27 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 2025-26.
• The Pension Outlook Tool can be used to model projected contributions for these scenarios beyond FY 2028-29 as
well as to model other investment return scenarios.
CalPERS Actuarial Valuation - June 30, 2025
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 4.3% and 2.5%, 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, 2025, 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 Discount Rate Due to Varying the Real Rate of Return Assumption
As of June 30, 2025
1% Lower
Real Return Rate
Current
Assumptions
1% Higher
Real Return Rate
Discount Rate 5.8% 6.8% 7.8%
Price Inflation 2.5% 2.5% 2.5%
Real Rate of Return 3.3% 4.3% 5.3%
a) Total Normal Cost 22.51% 17.78% 14.20%
b) Accrued Liability $1,269,121,453 $1,126,070,057 $1,007,569,035
c) Fair Value of Assets $831,439,428 $831,439,428 $831,439,428
d) Unfunded Liability/(Surplus) [(b) - (c)] $437,682,025 $294,630,629 $176,129,607
e) Funded Ratio 65.5% 73.8% 82.5%
Sensitivity to the Discount Rate Due to Varying the Price Inflation Assumption
As of June 30, 2025
1% Lower
Price Inflation
Current
Assumptions
1% Higher
Price Inflation
Discount Rate 5.8% 6.8% 7.8%
Price Inflation 1.5% 2.5% 3.5%
Real Rate of Return 4.3% 4.3% 4.3%
a) Total Normal Cost 19.06% 17.78% 16.29%
b) Accrued Liability $1,183,455,480 $1,126,070,057 $1,062,296,332
c) Fair Value of Assets $831,439,428 $831,439,428 $831,439,428
d) Unfunded Liability/(Surplus) [(b) - (c)] $352,016,052 $294,630,629 $230,856,904
e) Funded Ratio 70.3% 73.8% 78.3%
Mortality Rate Sensitivity
The following table looks at the change in the June 30, 2025, 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 2025. This type of analysis highlights the impact on the plan of a change in the mortality assumption.
As of June 30, 2025 10% Lower
Mortality Rates
Current
Assumptions
10% Higher
Mortality Rates
a) Total Normal Cost 18.09% 17.78% 17.49%
b) Accrued Liability $1,151,253,509 $1,126,070,057 $1,103,000,706
c) Fair Value of Assets $831,439,428 $831,439,428 $831,439,428
d) Unfunded Liability/(Surplus) [(b) - (c)] $319,814,081 $294,630,629 $271,561,278
e) Funded Ratio 72.2% 73.8% 75.4%
CalPERS Actuarial Valuation - June 30, 2025
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 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 t otal liability.
A pension plan in its infancy will have a very low ratio of retiree liability to total liability. As the plan matur es, 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, 2024 June 30, 2025
1. Retiree Accrued Liability $670,851,688 $708,865,341
2. Total Accrued Liability $1,085,448,984 $1,126,070,057
3. Ratio of Retiree AL to Total AL [(1) ÷ (2)] 62% 63%
Another measure of the maturity level of CalPERS and its plans is the ratio of actives to retirees, also called the support 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 informative than the ratio of retiree liability to total accrued liability above.
Support Ratio June 30, 2024 June 30, 2025
1. Number of Actives 833 833
2. Number of Retirees 1,364 1,393
3. Support Ratio [(1) ÷ (2)] 0.61 0.60
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 29
Maturity Measures (continued)
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 increases, investm ent
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.
Asset Volatility Ratio
Shown in the table below is the asset volatility ratio (AVR), which is the ratio of fair 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 an AVR of 8 may experience twice the contribution volatility due to investment return volatility than a plan with an
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. Pl ans 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 an LVR of 8 is expected to have twice the contribution volatility of a plan with an 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 100%.
Contribution Volatility June 30, 2024 June 30, 2025
1. Fair Value of Assets without Receivables $745,356,641 $831,280,883
2. Payroll 107,807,296 112,499,318
3. Asset Volatility Ratio (AVR) [(1) ÷ (2)] 6.9 7.4
4. Accrued Liability $1,085,448,984 $1,126,070,057
5. Liability Volatility Ratio (LVR) [(4) ÷ (2)] 10.1 10.0
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
6/30/2023
63%
0.56
7.5
11.3
6/30/2024
62%
0.61
6.9
10.1
6/30/2025
63%
0.60
7.4
10.0
CalPERS Actuarial Valuation - June 30, 2025
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 estimated range for the financial position of the plan had the contract
with CalPERS been terminated as of June 30, 2025. The accrued liability on a termination basis (termination liability) is
calculated differently from the plan’s ongoing funding liability. For the 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 not appropriate for assessing the need for future employer c ontributions 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 plans, 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 has 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 allocation 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 discount rate used for actual termination valuations is a weighted average of the 10 -year and 30-year Treasury yields where
the weights are based on matching asset and liability durations as of the termination date. The discount rates used in the
following analysis are based on 20-year Treasury bonds, which is a good proxy for most plans. The discount rate upon contract
termination will depend on actual Treasury rates on the date of termination, which varies over time, as demonstrated below.
Valuation 20-Year Valuation 20-Year
Date Treasury Rate Date Treasury Rate
06/30/2016 1.86% 06/30/2021 2.00%
06/30/2017 2.61% 06/30/2022 3.38%
06/30/2018 2.91% 06/30/2023 4.06%
06/30/2019 2.31% 06/30/2024 4.61%
06/30/2020 1.18% 06/30/2025 4.79%
As Treasury rates are variable, the table below shows a range for the termination liability using discount rates 1% below and
above the 20-year Treasury rate on the valuation date. The price inflation assumption is the 20-year Treasury breakeven
inflation rate, that is, the difference between the 20-year inflation indexed bond and the 20-year fixed-rate bond.
The Fair Value of Assets also varies with interest rates and will fluctuate depending on other market conditions on the date of
termination. Since it is not possible to approximate how the assets will change in different interest rate environments, the results
below use the Fair Value of Assets as of the valuation date.
Discount Rate: 3.79%
Price Inflation: 2.47%
Discount Rate: 5.79%
Price Inflation: 2.47%
1. Termination Liability1 $1,561,350,438 $1,201,864,662
2. Fair Value of Assets 831,439,428 831,439,428
3. Unfunded Termination Liability [(1) – (2)] $729,911,010 $370,425,234
4. Funded Ratio [(2) ÷ (1)] 53.3% 69.2%
1 The termination liabilities calculated above include a 5% contingency load. The contingency load and other actuarial
assumptions can be found in Appendix A.
In order to terminate the plan, first contact our Pension Contract Services unit to initiate a Resolution of Intent to Termin ate. The
completed Resolution will allow a CalPERS actuary to provide a preliminary termination valuation with a more up-to-date
estimate of the plan’s assets and liabilities. Before beginning this process, please consult with a CalPERS actuary.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 31
Funded Status – Low-Default-Risk Basis
Actuarial Standard of Practice (ASOP) No. 4, Measuring Pension Obligations and Determining Pension Plan Costs or
Contributions, requires the disclosure of a low-default-risk obligation measure (LDROM) of benefit costs accrued as of the
valuation date using a discount rate based on the yields of high quality fixed income securities with cash flows that replicate
expected benefit payments. Conceptually, this measure represents the level at which financial markets would value the accrued
plan costs, and would be approximately equal to the cost of a portfolio of low -default-risk bonds with similar financial
characteristics to accrued plan costs.
As permitted in ASOP No. 4, the Actuarial Office uses the Entry Age Actuarial Cost Method to calculate the LDROM. This
methodology is in line with the measure of “benefit entitlements” calculated by the Bureau of Economic Analysis and used by t he
Federal Reserve to report the indebtedness due to pensions of plan sponsors and, conversely, the household wealth due to
pensions of plan members.
As shown below, the discount rate used for the LDROM is 5.58%, which is the Standard FTSE Pension Liability Index1 discount
rate as of June 30, 2025.
Selected Measures on a Low-Default-Risk Basis June 30, 2025
Discount Rate 5.58%
1. Accrued Liability – Low-Default-Risk Basis (LDROM)
a) Active Members $412,228,536
b) Transferred Members 70,796,141
c) Separated Members 26,388,441
d) Members and Beneficiaries Receiving Payments 795,114,597
e) Total $1,304,527,715
2. Fair Value of Assets 831,439,428
3. Unfunded Accrued Liability – Low-Default-Risk Basis [(1e) – (2)] $473,088,287
4. Unfunded Accrued Liability – Funding Policy Basis 294,630,629
5. Present Value of Unearned Investment Risk Premium [(3) – (4)] $178,457,658
The difference between the unfunded liabilities on a low-default-risk basis and on the funding policy basis represents the present
value of the investment risk premium that must be earned in future years to keep future contributions for currently accrued plan
costs at the levels anticipated by the funding policy.
Benefit security for members of the plan relies on a combination of the assets in the plan, the investment income generated f rom
those assets and the ability of the plan sponsor to make necessary future contributions. If future returns fall short of 6.8%,
benefit security could be at risk without higher than currently anticipated future contributions.
The funded status on a low-default-risk basis is not appropriate for assessing the sufficiency of plan assets to cover the cost of
settling the plan’s benefit obligations (see Funded Status – Termination Basis), nor is it appropriate for assessing the need for
future contributions (see Funded Status – Funding Policy Basis).
1 This index is based on a yield curve of hypothetical AA-rated zero-coupon corporate bonds whose maturities range from 6 months to 30
years. The index represents the single discount rate that would produce the same present value as discounting a standardized set of
liability cash flows for a fully open pension plan using the yield curve. The liability cash flows are reasonably consistent with the pattern of
benefits expected to be paid from the entire Public Employees’ Retirement Fund for current and former plan members. A different index,
hence a different discount rate, may be needed to measure the LDROM for a subset of the fund, such as a single rate plan or a group of
retirees.
Supplementary Information
• Normal Cost by Benefit Group 33
• Summary of Valuation Data 34
• Status of PEPRA Transition 35
• Plan's Major Benefit Options 36
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 33
Normal Cost by Benefit Group
The table below displays the Total Normal Cost broken out by benefit group for FY 2027-28. 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 values due to such factors as changes in economic and demographic assumptions,
changes in plan benefits, or changes in applicable law.
Rate
Plan
Identifier Benefit Group Name
Total
Normal
Cost
FY 2027-28
Offset due to
Employee
Contributions
FY 2027-28
Employer
Normal
Cost1
FY 2027-28
Number
of
Actives
Payroll on
6/30/2025
8 Miscellaneous First Level 23.49% 8.00% 15.49% 207 $31,719,128
30157 Miscellaneous Second Level 19.88% 7.00% 12.88% 84 14,771,281
26004 Miscellaneous PEPRA Level 14.66% 7.25% 7.41% 542 66,008,909
Plan Total 17.78% 7.42% 10.36% 833 $112,499,318
1 The employer normal cost for individual rate plans is provided for illustrative purposes only. The employer normal cost rate for
contribution purposes is the blended rate shown in the Plan Total row and is the employer normal cost contribution rate that applies to the
covered payroll of members in every rate plan shown above.
Note that if a Benefit Group above has multiple bargaining units, each of which has separately contracted for different benef its
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, please contact a CalPERS actuary.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 34
Summary of Valuation Data
June 30, 2024 June 30, 2025
1. Active Members
a) Counts 833 833
b) Average Attained Age
45.17 45.19
c) Average Entry Age to Rate Plan 35.61 35.66
d) Average Years of Credited Service 9.47 9.39
e) Average Annual Covered Payroll $129,421 $135,053
f) Annual Covered Payroll $107,807,296 $112,499,318
g) Projected Annual Payroll for Contribution Year $117,119,039 $122,931,042
h) Present Value of Future Payroll $977,355,440 $1,064,103,508
2. Transferred Members
a) Counts 393 420
b) Average Attained Age 46.08 45.93
c) Average Years of Credited Service 3.68 3.68
d) Average Annual Covered Payroll $146,064 $149,549
3. Separated Members
a) Counts 504 507
b) Average Attained Age 47.81 47.99
c) Average Years of Credited Service 3.03 2.87
d) Average Annual Covered Payroll $80,559 $83,071
4. Retired Members and Beneficiaries Receiving Payments
a) Counts 1,364 1,393
b) Average Attained Age 71.49 71.78
c) Average Annual Benefits $41,180 $42,666
d) Total Annual Benefits $56,169,453 $59,433,141
5. Active to Retired Ratio [(1a) ÷ (4a)] 0.61 0.60
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.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 35
Status of PEPRA Transition
The California Public Employees' Pension Reform Act of 2013 (PEPRA), which took effect in January 2013, changed
CalPERS retirement benefits and placed compensation limits on new members joining CalPERS on or after January 1, 2013.
One of the objectives of PEPRA was to improve the ability of employers to manage the costs of retirement benefits for their
members. While such changes can reduce future benefit costs in a meaningful way, the full impact on employer contributions
will not occur until all active members are subject to the rules and provisions of PEPRA. The table below illustrates the status
of this transition as of June 30, 2025.
Classic PEPRA
PEPRA
as a Percent
of Total
Active Members
Count 291 542 65.1%
Average Attained Age 53.07 40.96
Average Entry Age 34.24 36.41
Average Years of Credited Service 18.70 4.40
Average Annual Covered Payroll $159,761 $121,788
Annual Covered Payroll $46,490,409 $66,008,909 58.7%
Present Value of Future Payroll $316,792,953 $747,310,555 70.2%
Transferred Members
Count 234 186 44.3%
Separated Members
Count 287 220 43.4%
Retired Members and Beneficiaries Receiving Payments
Count 1,373 20 1.4%
Average Annual Benefit $43,086 $13,787
Total Annual Benefits $59,157,409 $275,731 0.5%
Accrued Liabilities
Active Members $283,046,768 $56,135,017 16.6%
Transferred Members 47,461,051 8,283,162 14.9%
Separated Members 18,954,044 3,324,674 14.9%
Retired Members and Beneficiaries 705,224,788 3,640,553 0.5%
Total $1,054,686,651 $71,383,406 6.3%
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 36
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 stand ard and optional plan provisions is in
Appendix B.
Benefit Group
Member Category Misc Misc Misc Misc Misc Misc Misc
Demographics
Actives No Yes Yes No 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%
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 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Survivor Allowance (PRSA) No No No No No No No
COLA 2% 2% 2% 2% 2% 2% 2%
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 37
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 stand ard and optional plan provisions is in
Appendix B.
Benefit Group
Member Category Misc
Demographics
Actives No
Transfers/Separated No
Receiving Yes
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 $2,000
Survivor Allowance (PRSA) No
COLA 2%
Appendix A - Actuarial Methods and Assumptions
• Actuarial Data 39
• Actuarial Methods 39
• Actuarial Assumptions 43
• Miscellaneous 64
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 39
Actuarial Data
As stated in the Actuarial Certification, the data which serves as the basis of this valuation has been obtained from the var ious
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 doe s
not always contain the latest salary information for former members now 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, however, and generally do not have a material impact o n
the required employer contributions.
Actuarial Methods
Actuarial Cost Method
With one exception, the actuarial cost method used in this valuation is the Entry Age Actuarial Cost Method. This method is
used to calculate the required employer contributions and the PEPRA member contribution rate. Under this method, the cost of
the projected benefits is allocated on an individual basis as a level percent of earnings for the individual between entry age and
retirement age. The portion allocated to the year following the valuation date is the normal cost. 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.
The actuarial accrued liability for active members is then calculated as the present value of benefits minus the present value of
future normal cost, or the portion of the total present value of benefits 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 benef its
expected to be paid. No normal costs are applicable for these participants.
To calculate the accrued liability on termination basis, this valuation use d the Traditional Unit Credit Actuarial Cost Method. This
method differs from the entry age method only for active members where the accrued liability is the present value of benefits
assuming no future pay increases or service accruals.
Amortization of Unfunded Actuarial Accrued Liability
The excess of the total actuarial accrued liability over the fair value of plan assets is called the unfunded actuarial accrued
liability (UAL). Funding requirements are determined 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 according to the CalPERS Actuarial 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 will continue to be amortized according to the prior policy.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 40
Amortization of Unfunded Actuarial Accrued Liability (continued)
Prior Policy (Bases Established on or after June 30, 2013, and 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 are amortized over a period of five
years (20 years prior to June 30, 2014). A summary is provided in the following table:
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 up 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 no 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 provided in the table below:
Driver
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
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.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 41
Amortization of Unfunded Actuarial Accrued Liability (continued)
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 se t
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 amortize 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.
Exceptions for Plans in Surplus
If a surplus exists (i.e., the Fair Value of Assets exceeds the plan’s accrued 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 les s.
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 absolute 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 fair value of assets. Asset values include accounts receivable.
PEPRA Normal Cost Rate Methodology
Per Government Code section 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 form ula,
eligibility and vesting criteria, ancillary benefit provisions, and any automatic cost-of-living adjustments as determined by the
public retirement system.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 42
PEPRA Normal Cost Rate Methodology (continued)
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 enough yet. The total PEPRA normal cost for each PEPRA
benefit tier will be determined based on the entire active plan population (both PEPRA and Classic) only until 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
Once one of these conditions is met, the total PEPRA normal cost for each PEPRA benefit tier will be determined using the
entire active PEPRA population.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 43
Actuarial Assumptions
In 2025, CalPERS completed its most recent asset liability management study incorporating actuarial assumptions and strategic
asset allocation. In November 2025, the board adopted changes to the asset allocation that increased the expected volatility of
returns. The adopted asset allocation 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 and additional rationale for the selection of the actuarial assumptions, please refer to the 2025 CalPERS
Experience Study and Review of Actuarial Assumptions 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 and price inflation assumption used for the accrued liability on a termination
basis and the interest rate used for the low-default-risk obligation measure) represent an estimate of future experience rather
than observations of the estimates inherent in market data.
Economic Assumptions
Discount Rate
The prescribed discount rate assumption, adopted by the board on November 1 9, 2025, is 6.80% compounded annually (net of
investment and administrative expenses) as of June 30, 2025. Following the adoption of the Total Portfolio Approach (TPA), the
discount rate is no longer based on a traditional building-block method tied to fixed target allocations for individual major asset
classes. Instead, the long-term expected rate of return on assets is determined using a holistic total-fund framework. Expected
future real rates of return (expected returns, net of pension plan investment expense and inflation) are derived from a board -
adopted Reference Portfolio (comprising a 75% global equity and 25% bond mix) that sets the baseline market risk, combined
with expected additional returns generated through active portfolio construction and asset classes outside of the reference
portfolio. The current assumption has been reviewed for this valuation and is based on capital market assumptions and the total
fund risk profile developed by the Investment Office in 2025.
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 matching asset and liability durations as of the termination date. The accrued
liabilities on a termination basis in this report use discount rates that are based on the 20 -year Treasury rate on the valuation
date.
To illustrate the impact of the variability of interest rates, the accrued liabilities on a termination basis in this report use discount
rates 1% below and 1% above the 20-year Treasury rate on the valuation date. The 20-year Treasury rate was 4.79% on June
30, 2025.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 44
Salary Increases
Annual increases vary by category, entry age, and duration of service. A sample of assumed increases due to seniority, merit
and promotion are shown below. Assumed wage inflation is combined with these factors to develop the total expected salary
increases.
Public Agency Miscellaneous
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.0715 0.0578 0.0443
1 0.0641 0.0507 0.0380
2 0.0574 0.0445 0.0326
3 0.0514 0.0391 0.0279
4 0.0460 0.0343 0.0240
5 0.0412 0.0301 0.0205
10 0.0237 0.0156 0.0095
15 0.0166 0.0106 0.0076
20 0.0125 0.0083 0.0049
25 0.0095 0.0065 0.0031
30 0.0072 0.0051 0.0020
Public Agency Fire
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.1574 0.1551 0.0682
1 0.1244 0.1161 0.0555
2 0.0983 0.0869 0.0451
3 0.0777 0.0651 0.0367
4 0.0614 0.0488 0.0298
5 0.0486 0.0365 0.0242
10 0.0205 0.0153 0.0087
15 0.0182 0.0134 0.0102
20 0.0161 0.0118 0.0120
25 0.0143 0.0104 0.0141
30 0.0127 0.0091 0.0166
Public Agency Police
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.1228 0.1030 0.0621
1 0.0975 0.0809 0.0511
2 0.0774 0.0635 0.0421
3 0.0615 0.0498 0.0346
4 0.0488 0.0391 0.0285
5 0.0387 0.0307 0.0234
10 0.0194 0.0163 0.0134
15 0.0190 0.0150 0.0130
20 0.0186 0.0138 0.0126
25 0.0182 0.0128 0.0122
30 0.0178 0.0118 0.0119
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 45
Salary Increases (continued)
Public Agency County Peace Officers
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.1096 0.0980 0.0754
1 0.0892 0.0789 0.0594
2 0.0726 0.0635 0.0468
3 0.0591 0.0511 0.0369
4 0.0482 0.0411 0.0291
5 0.0392 0.0331 0.0229
10 0.0167 0.0142 0.0071
15 0.0163 0.0126 0.0066
20 0.0159 0.0112 0.0062
25 0.0155 0.0100 0.0058
30 0.0151 0.0089 0.0054
Schools
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.0000 0.0000 0.0000
1 0.0516 0.0460 0.0377
2 0.0471 0.0410 0.0327
3 0.0431 0.0365 0.0282
4 0.0396 0.0325 0.0242
5 0.0366 0.0290 0.0207
10 0.0269 0.0176 0.0136
15 0.0206 0.0144 0.0108
20 0.0148 0.0103 0.0080
25 0.0113 0.0092 0.0067
30 0.0054 0.0051 0.0026
• 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
2.50% compounded annually.
Termination Liability Price Inflation
The breakeven inflation rate for 20-year Treasuries on the valuation date, 2.47%.
Wage Inflation
3.00% compounded annually. This is used in projecting individual salary increases.
Payroll Growth
2.80% compounded annually. This is used as the escalation rate of the amortization payments on level percent of payroll
amortization bases, that is, on any amortization bases established prior to 2019 for plans that currently have active members.
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.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 46
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 calculation 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 time 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 unforeseen 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 2025. For purposes of the mortality rates, the rates incorporate generational mortality to
capture ongoing 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 2025 CalPERS Experience Study and Review of Actuarial
Assumptions report that can be found on the CalPERS website.
Rates vary by age and gender. This table only contains a sample of the 2017 base table rates for illustrative purposes. The n on-
industrial death rates are used for all plans. The industrial death rates are used for Safety plans, except for local Safety
members described in Government Code section 20423.6 where the agency has not specifically contracted for industrial death
benefits.
Miscellaneous Safety
Non-Industrial Death
(Not Job-Related)
Non-Industrial Death
(Not Job-Related)
Industrial Death
(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-2021.
• Miscellaneous plans usually have industrial death rates set to zero unless the agency has specifically contracted for
industrial death benefits. If so, each non-industrial 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.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 47
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
(Not Job-Related)
Industrial Disability
(Job-Related)
Age Male Female Male Female Male Female
50 0.00266 0.00197 0.01701 0.01424 0.00430 0.00308
55 0.00390 0.00328 0.02210 0.01753 0.00621 0.00556
60 0.00578 0.00458 0.02708 0.01983 0.00944 0.00878
65 0.00857 0.00608 0.03334 0.02252 0.01394 0.01176
70 0.01333 0.00989 0.04001 0.02854 0.02163 0.01819
75 0.02391 0.01777 0.05376 0.04099 0.03446 0.03078
80 0.04371 0.03401 0.07936 0.06051 0.05853 0.05121
85 0.08274 0.06166 0.11561 0.09312 0.10137 0.07977
90 0.14539 0.11086 0.16608 0.14301 0.16584 0.12331
95 0.24664 0.20364 0.24664 0.20364 0.24664 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-2021.
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 60 for Miscellaneous members and age 54 for Safety members.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 48
Termination with Refund
Rates vary by entry age and service for Miscellaneous plans. Rates vary by service for Safety plans. See sample rates in tabl es
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 0.1757 0.1809 0.1698 0.1779 0.1600 0.1729 0.1502 0.1678 0.1404 0.1628 0.1433 0.1665
1 0.1448 0.1539 0.1378 0.1492 0.1261 0.1413 0.1144 0.1334 0.1027 0.1255 0.1053 0.1270
2 0.1151 0.1262 0.1084 0.1211 0.0973 0.1125 0.0862 0.1040 0.0751 0.0955 0.0772 0.0954
3 0.0876 0.0986 0.0820 0.0940 0.0728 0.0863 0.0636 0.0785 0.0543 0.0708 0.0559 0.0700
4 0.0633 0.0724 0.0590 0.0687 0.0519 0.0624 0.0447 0.0562 0.0376 0.0499 0.0387 0.0490
5 0.0432 0.0495 0.0400 0.0467 0.0347 0.0421 0.0294 0.0375 0.0240 0.0329 0.0249 0.0321
10 0.0096 0.0120 0.0088 0.0112 0.0074 0.0099 0.0060 0.0085 0.0046 0.0072 0.0044 0.0066
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 Public Agency Miscellaneous termination and refund rates are also used for Public Agency Local Prosecutors.
Public Agency Safety
Duration of
Service Fire Police County Peace Officer
Male Female Male Female Male Female
0 0.1112 0.1430 0.1298 0.1301 0.1077 0.1302
1 0.0717 0.1059 0.0789 0.0848 0.0750 0.0962
2 0.0442 0.0760 0.0460 0.0528 0.0514 0.0697
3 0.0262 0.0525 0.0263 0.0313 0.0350 0.0494
4 0.0151 0.0346 0.0154 0.0178 0.0238 0.0342
5 0.0087 0.0215 0.0098 0.0101 0.0163 0.0230
10 0.0017 0.0000 0.0031 0.0034 0.0039 0.0035
15 0.0000 0.0000 0.0000 0.0000 0.0020 0.0028
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
• The police termination and refund rates are also used for Other Safety, Local Sheriff, and School Police.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 49
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 0.1931 0.2047 0.1808 0.1885 0.1604 0.1615 0.1400 0.1345 0.1340 0.1167 0.1281 0.0989
1 0.1866 0.2047 0.1725 0.1863 0.1489 0.1555 0.1253 0.1248 0.1158 0.1074 0.1062 0.0900
2 0.1659 0.1870 0.1520 0.1690 0.1286 0.1390 0.1053 0.1090 0.0950 0.0940 0.0847 0.0790
3 0.1379 0.1601 0.1253 0.1441 0.1043 0.1174 0.0833 0.0907 0.0740 0.0788 0.0646 0.0670
4 0.1081 0.1301 0.0975 0.1167 0.0798 0.0945 0.0622 0.0722 0.0546 0.0635 0.0471 0.0548
5 0.0809 0.1010 0.0724 0.0905 0.0582 0.0728 0.0441 0.0552 0.0384 0.0491 0.0328 0.0430
10 0.0205 0.0248 0.0184 0.0220 0.0150 0.0174 0.0116 0.0127 0.0089 0.0103 0.0062 0.0078
15 0.0096 0.0136 0.0087 0.0118 0.0071 0.0088 0.0055 0.0057 0.0040 0.0044 0.0024 0.0031
20 0.0055 0.0070 0.0046 0.0059 0.0033 0.0042 0.0019 0.0024 0.0009 0.0012 0.0000 0.0000
25 0.0025 0.0039 0.0022 0.0033 0.0017 0.0023 0.0011 0.0014 0.0006 0.0007 0.0000 0.0000
30 0.0012 0.0019 0.0012 0.0017 0.0013 0.0013 0.0014 0.0010 0.0007 0.0005 0.0000 0.0000
35 0.0006 0.0010 0.0006 0.0008 0.0007 0.0007 0.0007 0.0005 0.0003 0.0002 0.0000 0.0000
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 50
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 tabl es
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 0.0393 0.0505 0.0393 0.0505 0.0376 0.0447 0.0359 0.0388 0.0317 0.0375
10 0.0270 0.0348 0.0270 0.0348 0.0256 0.0326 0.0242 0.0303 0.0199 0.0240
15 0.0187 0.0251 0.0187 0.0251 0.0172 0.0217 0.0157 0.0183 0.0125 0.0140
20 0.0147 0.0183 0.0147 0.0183 0.0115 0.0138 0.0083 0.0092 0.0000 0.0000
25 0.0086 0.0112 0.0086 0.0112 0.0069 0.0081 0.0000 0.0000 0.0000 0.0000
30 0.0054 0.0060 0.0054 0.0060 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
35 0.0035 0.0048 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
• The Public Agency Miscellaneous termination with vested benefits rates are also used for Public Agency Local
Prosecutors.
Public Agency Safety
Duration of
Service Fire Police County Peace Officer
Male Female Male Female Male Female
5 0.0089 0.0224 0.0156 0.0257 0.0177 0.0266
10 0.0066 0.0164 0.0113 0.0184 0.0126 0.0189
15 0.0048 0.0120 0.0082 0.0131 0.0089 0.0134
20 0.0035 0.0088 0.0060 0.0094 0.0063 0.0095
25 0.0024 0.0061 0.0042 0.0067 0.0042 0.0063
30 0.0012 0.0031 0.0021 0.0034 0.0021 0.0031
35 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 60 and a Safety
member at age 54.
• The Police termination with vested benefits rates are also used for 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 0.0385 0.0494 0.0385 0.0494 0.0364 0.0412 0.0344 0.0329 0.0297 0.0285
10 0.0326 0.0438 0.0326 0.0438 0.0281 0.0353 0.0236 0.0268 0.0199 0.0241
15 0.0222 0.0281 0.0222 0.0281 0.0189 0.0234 0.0157 0.0187 0.0128 0.0157
20 0.0162 0.0198 0.0162 0.0198 0.0125 0.0156 0.0087 0.0113 0.0000 0.0000
25 0.0094 0.0134 0.0094 0.0134 0.0079 0.0107 0.0000 0.0000 0.0000 0.0000
30 0.0061 0.0074 0.0061 0.0074 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
35 0.0037 0.0050 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 51
Non-Industrial (Not Job-Related) Disability
Rates vary by age.
Age Miscellaneous Safety
20 0.0000 0.0000
25 0.0000 0.0000
30 0.0003 0.0003
35 0.0005 0.0003
40 0.0010 0.0005
45 0.0018 0.0007
50 0.0025 0.0008
55 0.0019 0.0012
60 0.0017 0.0028
• The Miscellaneous non-industrial disability rates are used for Local Prosecutors and Schools.
• The Safety non-industrial disability rates are used for Police, Fire, County Peace Officer, 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 0.0043
40 0.0023 0.0110 0.0062
45 0.0036 0.0141 0.0081
50 0.0146 0.0185 0.0106
55 0.0307 0.0479 0.0151
60 0.0503 0.0602 0.0174
• The County Peace Officer industrial disability rates are also used for Local Sheriff and Other Safety.
• 80% of the County Peace Officer industrial disability rates are used for School Police.
• 1% of the County Peace Officer 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.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 52
Service Retirement
Retirement rates vary by age, service, and formula.
Public Agency Miscellaneous 1.5% at age 65
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.005 0.012 0.014 0.020 0.023 0.023
51 0.012 0.014 0.014 0.018 0.020 0.020
52 0.009 0.012 0.014 0.019 0.021 0.021
53 0.009 0.012 0.014 0.020 0.024 0.024
54 0.011 0.014 0.017 0.025 0.030 0.030
55 0.012 0.023 0.033 0.060 0.084 0.084
56 0.014 0.022 0.032 0.053 0.071 0.071
57 0.016 0.025 0.033 0.053 0.070 0.070
58 0.022 0.026 0.036 0.057 0.074 0.074
59 0.023 0.035 0.044 0.065 0.086 0.086
60 0.037 0.043 0.054 0.078 0.095 0.114
61 0.038 0.055 0.073 0.093 0.116 0.139
62 0.055 0.076 0.090 0.110 0.127 0.136
63 0.075 0.097 0.112 0.133 0.149 0.167
64 0.076 0.104 0.114 0.142 0.163 0.176
65 0.103 0.135 0.154 0.184 0.202 0.211
66 0.133 0.170 0.179 0.198 0.207 0.203
67 0.137 0.181 0.190 0.203 0.203 0.203
68 0.146 0.176 0.178 0.191 0.191 0.191
69 0.124 0.163 0.171 0.184 0.184 0.184
70 0.197 0.197 0.197 0.197 0.197 0.197
Public Agency Miscellaneous 2% at age 60
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.006 0.014 0.016 0.023 0.027 0.027
51 0.014 0.016 0.017 0.021 0.023 0.023
52 0.010 0.014 0.017 0.022 0.025 0.025
53 0.010 0.014 0.017 0.023 0.028 0.028
54 0.013 0.016 0.020 0.029 0.035 0.035
55 0.014 0.027 0.039 0.071 0.099 0.099
56 0.017 0.026 0.038 0.062 0.083 0.083
57 0.019 0.029 0.039 0.062 0.082 0.082
58 0.026 0.031 0.042 0.067 0.087 0.087
59 0.027 0.041 0.052 0.077 0.101 0.101
60 0.044 0.050 0.064 0.092 0.112 0.134
61 0.045 0.065 0.086 0.109 0.136 0.164
62 0.065 0.089 0.106 0.129 0.149 0.160
63 0.088 0.114 0.132 0.157 0.175 0.197
64 0.089 0.122 0.134 0.167 0.192 0.207
65 0.121 0.159 0.181 0.216 0.238 0.248
66 0.157 0.200 0.210 0.233 0.244 0.239
67 0.161 0.213 0.223 0.239 0.239 0.239
68 0.172 0.207 0.209 0.225 0.225 0.225
69 0.146 0.192 0.201 0.216 0.216 0.216
70 0.232 0.232 0.232 0.232 0.232 0.232
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 53
Service Retirement (continued)
Public Agency Miscellaneous 2% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.007 0.014 0.017 0.023 0.028 0.028
51 0.015 0.016 0.018 0.021 0.024 0.024
52 0.010 0.015 0.017 0.022 0.025 0.025
53 0.010 0.016 0.019 0.026 0.030 0.030
54 0.014 0.019 0.023 0.033 0.041 0.041
55 0.016 0.031 0.046 0.083 0.116 0.116
56 0.023 0.034 0.049 0.081 0.107 0.107
57 0.025 0.039 0.053 0.083 0.109 0.109
58 0.032 0.040 0.053 0.085 0.112 0.112
59 0.034 0.050 0.064 0.095 0.126 0.126
60 0.056 0.065 0.083 0.118 0.145 0.173
61 0.046 0.066 0.088 0.113 0.140 0.170
62 0.095 0.129 0.155 0.186 0.216 0.232
63 0.115 0.149 0.171 0.204 0.226 0.256
64 0.101 0.137 0.151 0.187 0.216 0.233
65 0.149 0.195 0.223 0.265 0.293 0.307
66 0.212 0.268 0.282 0.315 0.329 0.323
67 0.188 0.249 0.260 0.279 0.279 0.279
68 0.203 0.243 0.245 0.264 0.264 0.264
69 0.161 0.211 0.221 0.238 0.238 0.238
70 0.275 0.275 0.275 0.275 0.275 0.275
Public Agency Miscellaneous 2.5% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.009 0.018 0.023 0.031 0.037 0.037
51 0.019 0.021 0.023 0.027 0.031 0.031
52 0.012 0.018 0.023 0.028 0.033 0.033
53 0.014 0.020 0.026 0.035 0.041 0.041
54 0.017 0.023 0.029 0.041 0.050 0.050
55 0.024 0.049 0.071 0.128 0.179 0.179
56 0.030 0.046 0.068 0.111 0.146 0.146
57 0.031 0.048 0.066 0.104 0.138 0.138
58 0.040 0.049 0.064 0.103 0.135 0.135
59 0.039 0.059 0.075 0.110 0.145 0.145
60 0.060 0.069 0.087 0.126 0.153 0.183
61 0.050 0.072 0.095 0.121 0.151 0.182
62 0.096 0.131 0.157 0.189 0.220 0.236
63 0.099 0.129 0.149 0.177 0.197 0.222
64 0.099 0.134 0.149 0.184 0.212 0.229
65 0.131 0.172 0.196 0.233 0.258 0.269
66 0.210 0.266 0.279 0.312 0.326 0.319
67 0.183 0.242 0.253 0.272 0.272 0.272
68 0.184 0.220 0.222 0.240 0.240 0.240
69 0.158 0.207 0.217 0.234 0.234 0.234
70 0.267 0.267 0.267 0.267 0.267 0.267
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 54
Service Retirement (continued)
Public Agency Miscellaneous 2.7% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.008 0.016 0.020 0.027 0.033 0.033
51 0.017 0.019 0.021 0.026 0.029 0.029
52 0.012 0.018 0.023 0.028 0.033 0.033
53 0.013 0.019 0.025 0.034 0.039 0.039
54 0.018 0.025 0.031 0.044 0.053 0.053
55 0.030 0.060 0.088 0.158 0.221 0.221
56 0.036 0.054 0.080 0.131 0.174 0.174
57 0.034 0.052 0.070 0.111 0.147 0.147
58 0.046 0.055 0.074 0.119 0.157 0.157
59 0.042 0.062 0.079 0.117 0.154 0.154
60 0.066 0.077 0.096 0.139 0.170 0.202
61 0.053 0.077 0.102 0.132 0.164 0.199
62 0.093 0.127 0.152 0.184 0.213 0.228
63 0.104 0.134 0.155 0.184 0.205 0.231
64 0.096 0.130 0.144 0.178 0.205 0.221
65 0.155 0.202 0.231 0.275 0.304 0.318
66 0.199 0.252 0.265 0.296 0.309 0.303
67 0.176 0.233 0.244 0.262 0.262 0.262
68 0.188 0.225 0.227 0.245 0.245 0.245
69 0.165 0.216 0.227 0.244 0.244 0.244
70 0.256 0.256 0.256 0.256 0.256 0.256
Public Agency Miscellaneous 3% at age 60
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.009 0.019 0.023 0.031 0.037 0.037
51 0.021 0.023 0.025 0.030 0.034 0.034
52 0.013 0.018 0.023 0.029 0.033 0.033
53 0.013 0.019 0.025 0.034 0.039 0.039
54 0.016 0.022 0.028 0.040 0.048 0.048
55 0.015 0.031 0.045 0.081 0.114 0.114
56 0.022 0.033 0.048 0.080 0.105 0.105
57 0.024 0.038 0.052 0.082 0.108 0.108
58 0.034 0.041 0.055 0.089 0.116 0.116
59 0.032 0.049 0.062 0.093 0.121 0.121
60 0.096 0.112 0.141 0.204 0.249 0.295
61 0.058 0.085 0.112 0.143 0.179 0.216
62 0.104 0.141 0.169 0.203 0.237 0.254
63 0.106 0.138 0.158 0.188 0.210 0.236
64 0.100 0.136 0.151 0.187 0.215 0.232
65 0.161 0.211 0.241 0.287 0.317 0.332
66 0.220 0.278 0.292 0.327 0.341 0.334
67 0.185 0.245 0.256 0.275 0.275 0.275
68 0.191 0.229 0.231 0.249 0.249 0.249
69 0.163 0.214 0.224 0.241 0.241 0.241
70 0.278 0.278 0.278 0.278 0.278 0.278
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 55
Service Retirement (continued)
Public Agency Miscellaneous 2% at age 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 0.008 0.013 0.015 0.019 0.023 0.023
53 0.009 0.014 0.016 0.023 0.026 0.026
54 0.012 0.015 0.019 0.026 0.033 0.033
55 0.013 0.025 0.037 0.066 0.092 0.092
56 0.016 0.025 0.036 0.060 0.080 0.080
57 0.018 0.027 0.037 0.059 0.077 0.077
58 0.023 0.028 0.036 0.059 0.077 0.077
59 0.023 0.033 0.042 0.063 0.083 0.083
60 0.035 0.041 0.050 0.074 0.090 0.107
61 0.037 0.053 0.070 0.090 0.113 0.137
62 0.055 0.076 0.091 0.109 0.127 0.136
63 0.071 0.091 0.105 0.126 0.140 0.158
64 0.070 0.097 0.107 0.132 0.153 0.165
65 0.102 0.133 0.153 0.181 0.201 0.210
66 0.139 0.176 0.185 0.207 0.215 0.212
67 0.145 0.192 0.201 0.216 0.216 0.216
68 0.158 0.191 0.192 0.207 0.207 0.207
69 0.138 0.180 0.189 0.203 0.203 0.203
70 0.212 0.212 0.212 0.212 0.212 0.212
Public Agency Police Half Pay at age 55 and 2% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.015 0.020 0.031 0.037 0.054 0.060
51 0.006 0.027 0.034 0.031 0.045 0.060
52 0.055 0.025 0.033 0.037 0.055 0.059
53 0.014 0.014 0.030 0.040 0.062 0.071
54 0.064 0.029 0.036 0.039 0.073 0.103
55 0.031 0.039 0.070 0.118 0.156 0.191
56 0.037 0.051 0.068 0.101 0.127 0.150
57 0.061 0.063 0.077 0.105 0.119 0.119
58 0.091 0.070 0.078 0.101 0.112 0.112
59 0.135 0.083 0.084 0.103 0.113 0.113
60 0.066 0.086 0.094 0.115 0.126 0.126
61 0.120 0.120 0.120 0.120 0.120 0.120
62 0.140 0.140 0.140 0.140 0.140 0.140
63 0.150 0.150 0.150 0.150 0.150 0.150
64 0.140 0.140 0.140 0.140 0.140 0.140
65 1.000 1.000 1.000 1.000 1.000 1.000
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 56
Service Retirement (continued)
Public Agency Fire Half Pay at age 55 and 2% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.007 0.009 0.014 0.017 0.025 0.027
51 0.003 0.015 0.020 0.019 0.026 0.035
52 0.034 0.015 0.020 0.023 0.033 0.036
53 0.014 0.014 0.030 0.040 0.062 0.071
54 0.071 0.033 0.040 0.043 0.081 0.115
55 0.024 0.031 0.055 0.093 0.123 0.151
56 0.033 0.045 0.060 0.090 0.113 0.133
57 0.075 0.075 0.093 0.127 0.143 0.143
58 0.070 0.053 0.059 0.077 0.086 0.086
59 0.122 0.076 0.077 0.094 0.103 0.103
60 0.067 0.087 0.095 0.116 0.127 0.127
61 0.121 0.121 0.121 0.121 0.121 0.121
62 0.140 0.140 0.140 0.140 0.140 0.140
63 0.136 0.136 0.136 0.136 0.136 0.136
64 0.163 0.163 0.163 0.163 0.163 0.163
65 1.000 1.000 1.000 1.000 1.000 1.000
Public Agency Police 2% at age 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.023 0.030 0.046 0.055 0.081 0.090
51 0.009 0.040 0.051 0.047 0.067 0.090
52 0.083 0.038 0.049 0.056 0.082 0.088
53 0.021 0.021 0.045 0.060 0.093 0.106
54 0.096 0.043 0.054 0.058 0.109 0.154
55 0.046 0.059 0.105 0.177 0.234 0.286
56 0.056 0.077 0.101 0.152 0.190 0.224
57 0.092 0.093 0.116 0.157 0.178 0.178
58 0.137 0.104 0.117 0.151 0.168 0.168
59 0.201 0.125 0.126 0.155 0.169 0.169
60 0.099 0.130 0.141 0.173 0.189 0.189
61 0.180 0.180 0.180 0.180 0.180 0.180
62 0.210 0.210 0.210 0.210 0.210 0.210
63 0.226 0.226 0.226 0.226 0.226 0.226
64 0.211 0.211 0.211 0.211 0.211 0.211
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.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 57
Service Retirement (continued)
Public Agency Fire 2% at age 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.010 0.014 0.021 0.025 0.037 0.040
51 0.005 0.023 0.030 0.028 0.039 0.053
52 0.051 0.023 0.030 0.035 0.050 0.054
53 0.021 0.021 0.045 0.060 0.093 0.106
54 0.107 0.049 0.060 0.065 0.122 0.173
55 0.036 0.046 0.083 0.140 0.184 0.225
56 0.050 0.068 0.089 0.135 0.168 0.198
57 0.110 0.113 0.140 0.190 0.215 0.215
58 0.105 0.080 0.089 0.116 0.129 0.129
59 0.183 0.114 0.115 0.140 0.154 0.154
60 0.101 0.131 0.142 0.175 0.191 0.191
61 0.182 0.182 0.182 0.182 0.182 0.182
62 0.210 0.210 0.210 0.210 0.210 0.210
63 0.204 0.204 0.204 0.204 0.204 0.204
64 0.246 0.246 0.246 0.246 0.246 0.246
65 1.000 1.000 1.000 1.000 1.000 1.000
Public Agency Police 3% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.021 0.029 0.045 0.054 0.081 0.089
51 0.009 0.039 0.051 0.047 0.066 0.088
52 0.082 0.037 0.049 0.055 0.081 0.088
53 0.021 0.021 0.045 0.059 0.093 0.105
54 0.096 0.043 0.054 0.058 0.110 0.155
55 0.046 0.059 0.107 0.179 0.237 0.289
56 0.057 0.078 0.103 0.154 0.193 0.227
57 0.093 0.096 0.118 0.160 0.181 0.181
58 0.137 0.105 0.117 0.152 0.168 0.168
59 0.202 0.125 0.126 0.155 0.169 0.169
60 0.100 0.130 0.142 0.174 0.190 0.190
61 0.182 0.182 0.182 0.182 0.182 0.182
62 0.213 0.213 0.213 0.213 0.213 0.213
63 0.224 0.224 0.224 0.224 0.224 0.224
64 0.213 0.213 0.213 0.213 0.213 0.213
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.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 58
Service Retirement (continued)
Public Agency Fire 3% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.010 0.014 0.020 0.025 0.037 0.040
51 0.005 0.023 0.030 0.028 0.039 0.052
52 0.050 0.023 0.030 0.034 0.050 0.053
53 0.021 0.021 0.045 0.060 0.093 0.105
54 0.107 0.049 0.060 0.065 0.123 0.174
55 0.037 0.046 0.084 0.142 0.187 0.228
56 0.050 0.069 0.091 0.137 0.171 0.201
57 0.113 0.115 0.141 0.192 0.218 0.218
58 0.105 0.080 0.089 0.116 0.129 0.129
59 0.183 0.114 0.115 0.141 0.154 0.154
60 0.101 0.131 0.143 0.175 0.191 0.191
61 0.183 0.183 0.183 0.183 0.183 0.183
62 0.213 0.213 0.213 0.213 0.213 0.213
63 0.203 0.203 0.203 0.203 0.203 0.203
64 0.248 0.248 0.248 0.248 0.248 0.248
65 1.000 1.000 1.000 1.000 1.000 1.000
Public Agency Police 3% at age 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.082 0.075 0.131 0.190 0.256 0.322
51 0.061 0.058 0.102 0.149 0.202 0.254
52 0.039 0.071 0.101 0.139 0.181 0.222
53 0.016 0.040 0.086 0.133 0.184 0.235
54 0.059 0.068 0.084 0.105 0.175 0.280
55 0.043 0.055 0.098 0.165 0.218 0.266
56 0.065 0.088 0.117 0.175 0.220 0.259
57 0.110 0.111 0.137 0.187 0.212 0.212
58 0.177 0.135 0.151 0.196 0.218 0.218
59 0.279 0.174 0.176 0.216 0.235 0.235
60 0.121 0.158 0.172 0.211 0.230 0.230
61 0.205 0.205 0.205 0.205 0.205 0.205
62 0.211 0.211 0.211 0.211 0.211 0.211
63 0.208 0.208 0.208 0.208 0.208 0.208
64 0.246 0.246 0.246 0.246 0.246 0.246
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.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 59
Service Retirement (continued)
Public Agency Fire 3% at age 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.041 0.037 0.065 0.094 0.127 0.159
51 0.033 0.031 0.055 0.081 0.109 0.137
52 0.024 0.042 0.060 0.082 0.107 0.132
53 0.010 0.026 0.056 0.086 0.119 0.152
54 0.041 0.047 0.058 0.073 0.121 0.192
55 0.029 0.038 0.068 0.114 0.151 0.184
56 0.050 0.068 0.089 0.134 0.168 0.198
57 0.085 0.087 0.108 0.147 0.166 0.166
58 0.169 0.128 0.144 0.186 0.207 0.207
59 0.225 0.140 0.142 0.173 0.189 0.189
60 0.112 0.146 0.158 0.195 0.212 0.212
61 0.219 0.219 0.219 0.219 0.219 0.219
62 0.238 0.238 0.238 0.238 0.238 0.238
63 0.229 0.229 0.229 0.229 0.229 0.229
64 0.195 0.195 0.195 0.195 0.195 0.195
65 1.000 1.000 1.000 1.000 1.000 1.000
Public Agency Police 2% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.015 0.020 0.031 0.037 0.055 0.060
51 0.006 0.027 0.034 0.031 0.045 0.060
52 0.055 0.025 0.033 0.037 0.055 0.059
53 0.014 0.014 0.030 0.040 0.062 0.071
54 0.064 0.029 0.036 0.039 0.073 0.103
55 0.031 0.039 0.070 0.118 0.156 0.191
56 0.037 0.051 0.068 0.101 0.127 0.150
57 0.061 0.063 0.077 0.105 0.119 0.119
58 0.091 0.070 0.078 0.101 0.112 0.112
59 0.135 0.083 0.084 0.103 0.113 0.113
60 0.066 0.086 0.094 0.115 0.126 0.126
61 0.120 0.120 0.120 0.120 0.120 0.120
62 0.140 0.140 0.140 0.140 0.140 0.140
63 0.150 0.150 0.150 0.150 0.150 0.150
64 0.140 0.140 0.140 0.140 0.140 0.140
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.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 60
Service Retirement (continued)
Public Agency Fire 2% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.007 0.009 0.014 0.017 0.025 0.027
51 0.003 0.015 0.020 0.019 0.026 0.035
52 0.034 0.015 0.020 0.023 0.033 0.036
53 0.014 0.014 0.030 0.040 0.062 0.071
54 0.071 0.033 0.040 0.043 0.081 0.115
55 0.024 0.031 0.055 0.093 0.123 0.151
56 0.033 0.045 0.060 0.090 0.113 0.133
57 0.073 0.075 0.093 0.127 0.143 0.143
58 0.070 0.053 0.059 0.077 0.086 0.086
59 0.122 0.076 0.077 0.094 0.103 0.103
60 0.067 0.087 0.095 0.116 0.127 0.127
61 0.121 0.121 0.121 0.121 0.121 0.121
62 0.140 0.140 0.140 0.140 0.140 0.140
63 0.136 0.136 0.136 0.136 0.136 0.136
64 0.163 0.163 0.163 0.163 0.163 0.163
65 1.000 1.000 1.000 1.000 1.000 1.000
Public Agency Police 2.5% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.023 0.030 0.046 0.055 0.082 0.090
51 0.009 0.040 0.051 0.047 0.067 0.090
52 0.083 0.038 0.049 0.056 0.082 0.088
53 0.021 0.021 0.045 0.060 0.093 0.106
54 0.096 0.043 0.054 0.058 0.109 0.154
55 0.046 0.059 0.107 0.178 0.236 0.287
56 0.057 0.078 0.102 0.153 0.191 0.226
57 0.092 0.094 0.117 0.158 0.179 0.179
58 0.138 0.105 0.118 0.152 0.169 0.169
59 0.203 0.125 0.127 0.156 0.170 0.170
60 0.099 0.129 0.141 0.173 0.189 0.189
61 0.180 0.180 0.180 0.180 0.180 0.180
62 0.210 0.210 0.210 0.210 0.210 0.210
63 0.226 0.226 0.226 0.226 0.226 0.226
64 0.210 0.210 0.210 0.210 0.210 0.210
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.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 61
Service Retirement (continued)
Public Agency Fire 2.5% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.010 0.014 0.021 0.025 0.037 0.040
51 0.005 0.023 0.030 0.028 0.039 0.053
52 0.051 0.023 0.030 0.035 0.050 0.054
53 0.021 0.021 0.045 0.060 0.093 0.106
54 0.107 0.049 0.060 0.065 0.122 0.173
55 0.036 0.046 0.084 0.141 0.186 0.227
56 0.050 0.069 0.090 0.136 0.170 0.200
57 0.112 0.114 0.140 0.191 0.217 0.217
58 0.106 0.080 0.090 0.116 0.130 0.130
59 0.184 0.114 0.116 0.142 0.155 0.155
60 0.100 0.131 0.142 0.174 0.190 0.190
61 0.182 0.182 0.182 0.182 0.182 0.182
62 0.210 0.210 0.210 0.210 0.210 0.210
63 0.204 0.204 0.204 0.204 0.204 0.204
64 0.245 0.245 0.245 0.245 0.245 0.245
65 1.000 1.000 1.000 1.000 1.000 1.000
Public Agency Police 2.7% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.023 0.030 0.046 0.055 0.082 0.090
51 0.009 0.040 0.051 0.047 0.067 0.090
52 0.083 0.038 0.049 0.056 0.082 0.088
53 0.021 0.021 0.045 0.060 0.093 0.106
54 0.096 0.043 0.054 0.058 0.109 0.154
55 0.046 0.059 0.107 0.178 0.236 0.287
56 0.057 0.078 0.102 0.153 0.191 0.226
57 0.092 0.094 0.117 0.158 0.179 0.179
58 0.138 0.105 0.118 0.152 0.169 0.169
59 0.203 0.125 0.127 0.156 0.170 0.170
60 0.099 0.129 0.141 0.173 0.189 0.189
61 0.180 0.180 0.180 0.180 0.180 0.180
62 0.210 0.210 0.210 0.210 0.210 0.210
63 0.226 0.226 0.226 0.226 0.226 0.226
64 0.210 0.210 0.210 0.210 0.210 0.210
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.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 62
Service Retirement (continued)
Public Agency Fire 2.7% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.010 0.014 0.021 0.025 0.037 0.040
51 0.005 0.023 0.030 0.028 0.039 0.053
52 0.051 0.023 0.030 0.035 0.050 0.054
53 0.021 0.021 0.045 0.060 0.093 0.106
54 0.107 0.049 0.060 0.065 0.122 0.173
55 0.036 0.046 0.084 0.141 0.186 0.227
56 0.050 0.069 0.090 0.136 0.170 0.200
57 0.112 0.114 0.140 0.191 0.217 0.217
58 0.106 0.080 0.090 0.116 0.130 0.130
59 0.184 0.114 0.116 0.142 0.155 0.155
60 0.100 0.131 0.142 0.174 0.190 0.190
61 0.182 0.182 0.182 0.182 0.182 0.182
62 0.210 0.210 0.210 0.210 0.210 0.210
63 0.204 0.204 0.204 0.204 0.204 0.204
64 0.245 0.245 0.245 0.245 0.245 0.245
65 1.000 1.000 1.000 1.000 1.000 1.000
Schools 2% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.003 0.004 0.005 0.007 0.009 0.009
51 0.002 0.005 0.007 0.008 0.009 0.010
52 0.006 0.006 0.008 0.009 0.011 0.012
53 0.006 0.008 0.011 0.011 0.014 0.014
54 0.007 0.009 0.012 0.015 0.018 0.020
55 0.011 0.021 0.032 0.049 0.064 0.084
56 0.011 0.023 0.034 0.050 0.067 0.089
57 0.015 0.023 0.035 0.051 0.061 0.080
58 0.021 0.029 0.039 0.055 0.073 0.096
59 0.028 0.034 0.044 0.064 0.081 0.101
60 0.021 0.042 0.059 0.085 0.105 0.135
61 0.029 0.049 0.067 0.094 0.115 0.148
62 0.065 0.095 0.120 0.165 0.193 0.238
63 0.061 0.101 0.133 0.183 0.211 0.260
64 0.086 0.109 0.129 0.171 0.189 0.226
65 0.172 0.166 0.199 0.228 0.251 0.276
66 0.214 0.204 0.242 0.277 0.302 0.319
67 0.158 0.176 0.230 0.268 0.289 0.294
68 0.169 0.163 0.196 0.225 0.248 0.263
69 0.148 0.161 0.200 0.230 0.241 0.234
70 0.162 0.197 0.252 0.300 0.274 0.283
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 63
Service Retirement (continued)
Schools 2% at age 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 0.006 0.006 0.007 0.008 0.010 0.010
53 0.005 0.007 0.009 0.010 0.012 0.012
54 0.006 0.007 0.010 0.012 0.015 0.017
55 0.009 0.017 0.027 0.041 0.053 0.069
56 0.009 0.020 0.030 0.043 0.058 0.077
57 0.013 0.020 0.030 0.044 0.052 0.069
58 0.017 0.024 0.032 0.045 0.059 0.078
59 0.024 0.030 0.039 0.056 0.071 0.089
60 0.019 0.038 0.053 0.076 0.093 0.120
61 0.025 0.042 0.058 0.081 0.099 0.128
62 0.058 0.084 0.107 0.147 0.172 0.212
63 0.052 0.087 0.115 0.158 0.182 0.224
64 0.078 0.098 0.116 0.154 0.170 0.204
65 0.165 0.159 0.191 0.219 0.241 0.265
66 0.220 0.210 0.249 0.285 0.311 0.328
67 0.178 0.199 0.259 0.302 0.326 0.331
68 0.188 0.182 0.218 0.251 0.276 0.292
69 0.152 0.165 0.205 0.237 0.248 0.241
70 0.170 0.207 0.265 0.316 0.288 0.297
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 64
Miscellaneous
Models
The valuation results are based on proprietary actuarial valuation models. The models are centralized and maintained by a
specialized team to achieve a high degree of accuracy and consistency. The Actuarial Office is responsible for confirming the
appropriateness of the inputs (such as participant data, actuarial methods and assumptions, and plan provisions) as well as
performing tests and validating the reasonableness of the output. The results of our models are independently confirmed by
parallel valuations performed by outside actuaries on a periodic basis using their models. In our professional judgment, our
actuarial valuation models produce comprehensive pension funding information consistent with the purposes of the valuation
and have no material limitations or known weaknesses.
Internal Revenue Code Section 415(b)
The limitations on benefits imposed by Internal Revenue Code section 415(b) are taken into account in this valuation. Each
year, the impact of any changes in this limitation other than assumed since the prior valuation is included and amortized as part
of the non-investment gain or loss 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 2025 calendar year is $280,000.
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 other than assumed since the prior valuation is included
and amortized as part of the non-investment gain or loss base. The compensation limit for classic members for the 2025
calendar year is $350,000.
PEPRA Compensation Limits
The limitations on compensation for PEPRA members imposed by Government Code section 7522.10 are taken into account in
this valuation. Each year, the impact of any changes in the compensation limitation other than assumed since the prior valuation
is included and amortized as part of the non-investment gain or loss base. The PEPRA compensation limit for 2025 is $155,081
for members who participate in Social Security and $186,096 for those who do not. The limits are adjusted annually based on
changes to the CPI for all urban consumers.
Appendix B - Principal Plan Provisions
• Service Retirement 66
• Vested Deferred Retirement 68
• Non-Industrial Disability Retirement 68
• Industrial Disability Retirement 69
• Post-Retirement Death Benefit 70
• Form of Payment for Retirement Allowance 70
• Pre-Retirement Death Benefits 71
• Cost-of-Living Adjustments (COLA) 73
• Purchasing Power Protection Allowance (PPPA) 73
• Employee Contributions 74
• Refund of Employee Contributions 74
• 1959 Survivor Benefit 75
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 66
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 amon g
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 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 CalPERS 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 attainment 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 retire ment
at whole year ages:
Miscellaneous Plan Formulas
Retirement
Age
1.5% at
age 65
2% at
age 60
2% at
age 55
2.5% at
age 55
2.7% at
age 55
3% at
age 60
PEPRA
2% at
age 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%
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 67
Classic Safety Plan Formulas
Retirement Age Half Pay at
age 55* 2% at age 55 2% at age 50 3% at age 55 3% at age 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
age. 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 age 57 2.5% at age 57 2.7% at age 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 converted 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 employer 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 months’ pay under the 1.5% at age 65 formula. PEPRA
members have a limit on the annual compensation that can be used to calculate final compensation. The limits are adjusted
annually 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, employees must be covered by Social Security with the 1.5% at age 65 formula. 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 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.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 68
Vested Deferred Retirement
Eligibility for Deferred Status
CalPERS members becomes eligible for a deferred vested retirement benefit when they leave employment, keep their
contribution account balance on deposit with CalPERS, and have 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
age 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 th e
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 Disability Retirement
Eligibility
A CalPERS member is eligible for Non-Industrial (non-job related) 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 w ith
which CalPERS has reciprocity agreements). There is no special age requirement. Disabled means the member is unable to
perform their 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 to 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.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 69
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 se rvice
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 b enefit.
Members eligible to retire, and who have attained 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 wh o
have earned service with multiple CalPERS employers, the benefit attributed to each employer is the total disability allowanc e
multiplied by the ratio of service with a particular employer to the total CalPERS service.
Industrial Disability Retirement
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. An employer may choose to provide the increased
benefit option or the improved benefit option.
Eligibility
An employee is eligible for Industrial (job related) 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 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 Compensation 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 r etirement
benefit, the member may choose to receive the larger benefit.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 70
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, employers 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 r etiree
may choose to provide for a portion of their 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 their 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 retir ee’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 aliv e, 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 their lifetime. This 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 some of this option po rtion to
be paid to any designated beneficiary after the retiree’s death. Benefit options applicable to the option portion are the sam e as
those offered with the standard form. The reduction is calculated in the same manner but is applied only to the option p ortion.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 71
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 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 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 benefit 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 their 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 disa bled. The total amount paid will be at least equal to
the basic death benefit.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 72
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 Death 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 their death and elected 100% to continue to the eligible survivor after the
member’s death. The allowance is payable to the surviving spouse until death, at which time it is continued to any unmarried
child(ren), 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 means 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
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 73
Alternate Death Benefit for Local Fire Members
This is an optional benefit available only to local fire 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 receive d
had the member retired on the date of their death and elected 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 their 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 5 0,
based on service credited at the time of death. The allowance is payable to the surviving spouse until death, at which time it is
continued to any unmarried child(ren), 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
determining 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 l ess
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 age 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 other cost-of-living adjustments provided under the plan.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 74
Employee Contributions
Each employee contributes toward their 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 all PEPRA members and Classic members covered by a full or
supplemental formula and $133.33 for Classic members covered by a 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 age 65 2%
Miscellaneous, 2% at age 60 7%
Miscellaneous, 2% at age 55 7%
Miscellaneous, 2.5% at age 55 8%
Miscellaneous, 2.7% at age 55 8%
Miscellaneous, 3% at age 60 8%
Miscellaneous, 2% at age 62 50% of the Total Normal Cost
Miscellaneous, 1.5% at age 65 50% of the Total Normal Cost
Safety, Half Pay at age 55 Varies by entry age
Safety, 2% at age 55 7%
Safety, 2% at age 50 9%
Safety, 3% at age 55 9%
Safety, 3% at age 50 9%
Safety, 2% at age 57 50% of the Total Normal Cost
Safety, 2.5% at age 57 50% of the Total Normal Cost
Safety, 2.7% at age 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 contributions 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 members 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 their employee contributions, which are credited with 6%
interest compounded annually.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 75
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 opti onal
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 4th 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.
Appendix C - Participant Data
• Active Members 77
• Transferred and Separated Members 78
• Retired Members and Beneficiaries 79
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 77
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 15 0 0 0 0 0 15
25-29 59 2 0 0 0 0 61
30-34 77 40 3 0 0 0 120
35-39 52 43 15 0 0 0 110
40-44 45 21 25 10 3 0 104
45-49 36 28 20 23 18 9 134
50-54 26 15 13 10 18 16 98
55-59 22 13 14 16 10 19 94
60-64 16 9 8 14 3 19 69
65 and Over 7 1 5 7 2 6 28
All Ages 355 172 103 80 54 69 833
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 20-24 25+
Average
Salary
15-24 $94,006 $0 $0 $0 $0 $0 $94,006
25-29 104,873 112,530 0 0 0 0 105,124
30-34 111,090 131,356 150,145 0 0 0 118,822
35-39 119,809 139,605 143,495 0 0 0 130,777
40-44 117,950 133,903 149,129 163,451 128,427 0 133,343
45-49 131,745 151,133 169,900 141,313 165,782 155,129 149,276
50-54 126,258 160,323 151,601 140,398 160,297 176,455 150,724
55-59 128,537 144,732 182,898 153,781 144,828 170,023 153,289
60-64 132,421 121,762 171,668 155,641 105,259 132,587 139,157
65 and Over 111,393 94,905 119,255 130,076 113,715 128,483 120,707
Average $116,736 $139,553 $157,574 $147,984 $152,707 $155,651 $135,053
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 78
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 2 0 0 0 0 0 2 $76,796
25-29 19 0 0 0 0 0 19 125,426
30-34 38 8 0 0 0 0 46 118,821
35-39 50 12 0 0 0 0 62 144,695
40-44 54 10 5 0 1 0 70 153,926
45-49 49 15 8 1 2 1 76 157,602
50-54 43 10 3 4 1 1 62 159,191
55-59 32 11 1 3 0 0 47 174,359
60-64 17 6 3 1 0 0 27 142,925
65 and Over 8 1 0 0 0 0 9 128,972
All Ages 312 73 20 9 4 2 420 $149,549
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 20-24 25+ Total
Average
Salary
15-24 4 0 0 0 0 0 4 $77,247
25-29 10 0 0 0 0 0 10 89,237
30-34 43 3 0 0 0 0 46 84,601
35-39 63 7 3 0 0 0 73 98,549
40-44 55 13 4 1 1 0 74 90,132
45-49 76 9 6 1 0 0 92 85,327
50-54 44 15 4 0 0 0 63 81,307
55-59 50 13 1 0 0 1 65 72,019
60-64 38 8 1 1 0 0 48 72,959
65 and Over 29 3 0 0 0 0 32 62,646
All Ages 412 71 19 3 1 1 507 $83,071
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 79
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 1 0 0 1 2
35-39 0 0 0 0 0 2 2
40-44 0 0 3 0 0 3 6
45-49 0 0 4 0 0 0 4
50-54 28 2 3 0 0 1 34
55-59 87 4 0 1 0 1 93
60-64 199 6 3 0 0 10 218
65-69 226 13 2 0 0 15 256
70-74 235 7 0 0 0 11 253
75-79 190 9 1 0 0 26 226
80-84 149 2 1 0 0 29 181
85 and Over 78 4 0 0 0 35 117
All Ages 1,192 47 18 1 0 135 1,393
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 $40,543 $40,543
30-34 0 0 227 0 0 16,346 8,286
35-39 0 0 0 0 0 8,396 8,396
40-44 0 0 212 0 0 9,269 4,741
45-49 0 0 668 0 0 0 668
50-54 29,376 6,366 1,030 0 0 121,630 28,235
55-59 43,190 28,820 0 19,381 0 11,577 41,976
60-64 51,683 14,150 628 0 0 25,757 48,759
65-69 48,018 16,277 3,616 0 0 19,379 44,381
70-74 48,137 19,663 0 0 0 31,120 46,609
75-79 47,458 19,866 21,384 0 0 28,294 44,039
80-84 38,606 8,317 2,297 0 0 34,249 37,372
85 and Over 34,658 24,661 0 0 0 33,202 33,881
All Ages $45,723 $18,218 $2,190 $19,381 $0 $29,750 $42,666
* 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 cov erage group. This does not
result in double counting of liabilities.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 80
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 269 2 8 0 0 43 322
5-9 268 2 1 1 0 33 305
10-14 169 4 5 0 0 18 196
15-19 272 10 1 0 0 18 301
20-24 125 9 1 0 0 10 145
25-29 55 9 2 0 0 8 74
30 and Over 34 11 0 0 0 5 50
All Years 1,192 47 18 1 0 135 1,393
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 $48,385 $39,236 $1,331 $0 $0 $34,860 $45,353
5-9 43,904 14,644 351 19,381 0 27,626 41,728
10-14 45,055 14,367 323 0 0 33,436 42,221
15-19 56,201 13,130 21,384 0 0 25,651 52,827
20-24 38,227 19,699 1,198 0 0 16,811 35,345
25-29 28,165 24,130 2,112 0 0 24,552 26,580
30 and Over 14,458 15,022 0 0 0 35,504 16,687
All Years $45,723 $18,218 $2,190 $19,381 $0 $29,750 $42,666
* 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.
Appendix D - Glossary
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 82
Glossary
Accrued Liability (Actuarial Accrued Liability)
The portion of the Present Value of Benefits allocated to prior years. It can also be expressed as the Present Value of
Benefits minus the present value of future Normal Cost. 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 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 performs actuarial valuations 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 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, method changes, and/or experience 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
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 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.
CalPERS Actuarial Valuation - June 30, 2025
Miscellaneous Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 83
Glossary (continued)
Funded Ratio
Defined as the Fair 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
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 Fair 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.
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 2026
Safety Plan of the City of Palo Alto (CalPERS ID: 6373437857)
Annual Valuation Report as of June 30, 2025
Dear Employer,
Attached to this letter is the June 30, 2025, actuarial valuation report for the plan noted above. Provided in this report is the
determination of the minimum required employer contributions for fiscal year (FY) 2027-28. 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.
Required Contributions
The table below shows the minimum required employer contributions and the PEPRA member contribution rates for FY 2027-28
along with an estimate of the employer contribution requirements for FY 2028-29. The required employer and member
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
2027-28 19.65% $20,286,655 11.75%
Projected Results
2028-29 19.0% $21,356,000 TBD
The actual investment return for FY 2025-26 was not known at the time this report was prepared. The projected UAL payment
above assumes the investment return for that year would be 6.8%. To the extent the actual investment return for FY 2025-26
differs from 6.8%, the actual UAL contribution requirement for FY 2028-29 will differ from that shown above. For additional
information on future contribution requirements , please refer to Projected Employer Contributions. This section also contains
projected required contributions through FY 2032-33.
Changes from Previous Year’s Valuations
On November 19, 2025, the CalPERS Board of Administration (board) adopted new actuarial assumptions based on the
recommendations in the November 2025 CalPERS Experience Study and Review of Actuarial Assumptions. This study
reviewed the retirement rates, termination rates, mortality rates, rates of salary increase, inflation assumption , and various other
assumptions for public agencies. These new assumptions are incorporated in this actuarial valuation and impact the required
contributions for FY 2027-28.
In addition, the board adopted changes to the CalPERS Total Fund Investment Policy, which provides the framework for the
management of CalPERS assets. The board adopted a discount rate of 6.80%, which is unchanged from the prior year’s
valuation, and an increase in the price inflation assumption from 2.30% to 2.50% per year.
Besides the above noted changes, there may also be changes specific to the plan such as contract amendments and funding
changes such as additional discretionary payments and amortization schedule fresh starts .
PEPRA Member Contribution Rate
The employee contribution rate for PEPRA members can change based on the results of the actuarial valuation. See Member
Contribution Rates for more information.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 2
Report Navigation Features
The valuation report has a number of features to ease navigation and allow the reader to find specific information more quickly.
The tables of contents are “clickable.” This is true for the main table of contents that follows the title page and the intermediate
tables of contents at the beginning of sections. The Adobe navigation pane on the left can also be used to skip to specific
exhibits.
There are a number of links throughout the document in blue text. Links that are internal to the document are not underlined,
while underlined links will take you to the CalPERS website. Examples are shown below.
Internal Bookmarks CalPERS Website Links
Required Employer Contributions Required Employer Contribution Search Tool
Member Contribution Rates Public Agency PEPRA Member Contribution Rates
Summary of Key Valuation Results Pension Outlook Overview
Funded Status – Funding Policy Basis Interactive Summary of Public Agency Valuation Results
Projected Employer Contributions Public Agency Actuarial Valuation Reports
Further descriptions of general changes are included in the Highlights and Executive Summary section and in Appendix A -
Actuarial Methods and Assumptions. The effects of any changes on the required contributions are included in the Reconciliation
of Required Employer Contributions section.
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,
Matthew Biggart, ASA, MAAA
Actuary, CalPERS
Randall Dziubek, ASA, MAAA
Deputy Chief Actuary, Valuation Services, CalPERS
Fritzie Dorais, ASA, MAAA
Deputy Chief Actuary, Special Programs, CalPERS
Scott Terando, ASA, EA, MAAA, FCA, CFA
Chief Actuary, CalPERS
California Public Employees’ Retirement System
Actuarial Valuation for the
Safety Plan
of the City of Palo Alto
as of June 30, 2025
(CalPERS ID: 6373437857)
(Rate Plan ID: 5080)
Required Contributions for Fiscal Year
July 1, 2027 — June 30, 2028
CY Fin Job Instance ID: 516947 PY Fin Job Instance ID: 472008 Report ID: 517459
Table of Contents
Actuarial Certification .................................................................................................................................................................. 1
Highlights and Executive Summary ............................................................................................................................................ 2
Introduction ................................................................................................................................................................................. 3
Purpose ...................................................................................................................................................................................... 3
Summary of Key Valuation Results ............................................................................................................................................ 4
Changes Since the Prior Year’s Valuation .................................................................................................................................. 5
Subsequent Events..................................................................................................................................................................... 5
Assets ............................................................................................................................................................................................ 6
Reconciliation of the Fair Value of Assets .................................................................................................................................. 7
Asset Allocation .......................................................................................................................................................................... 8
CalPERS History of Investment Returns .................................................................................................................................... 9
Liabilities and Contributions ..................................................................................................................................................... 10
Determination of Required Contributions .................................................................................................................................. 11
Development of Accrued and Unfunded Liabilities ................................................................................................................... 12
Required Employer Contributions ............................................................................................................................................. 13
Member Contribution Rates ...................................................................................................................................................... 14
Funded Status – Funding Policy Basis ..................................................................................................................................... 15
Additional Employer Contributions ............................................................................................................................................ 16
Projected Employer Contributions ............................................................................................................................................ 17
(Gain)/Loss Analysis 6/30/24 – 6/30/25 .................................................................................................................................... 18
Schedule of Amortization Bases ............................................................................................................................................... 19
Amortization Schedule and Alternatives ................................................................................................................................... 21
Reconciliation of Required Employer Contributions .................................................................................................................. 23
Employer Contribution History .................................................................................................................................................. 24
Funding History......................................................................................................................................................................... 24
Risk Analysis .............................................................................................................................................................................. 25
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
Funded Status – Low-Default-Risk Basis ................................................................................................................................. 31
Supplementary Information ....................................................................................................................................................... 32
Normal Cost by Benefit Group .................................................................................................................................................. 33
Summary of Valuation Data ...................................................................................................................................................... 34
Status of PEPRA Transition ...................................................................................................................................................... 35
Plan's Major Benefit Options ..................................................................................................................................................... 36
Appendix A - Actuarial Methods and Assumptions ................................................................................................................. 39
Appendix B - Principal Plan Provisions .................................................................................................................................... 66
Appendix C - Participant Data ................................................................................................................................................... 77
Appendix D - Glossary ............................................................................................................................................................... 82
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 1
Actuarial Certification
It is our opinion that the valuation has been performed in accordance with generally accepted actuarial principles as well as the
applicable Standards of Practice promulgated by the Actuarial Standards Board. While this report is intended to be complete,
our office is available to answer questions as needed. All of the undersigned are actuaries who satisfy the Qualification
Standards for Actuaries Issuing Statements of Actuarial Opinion in the United States of the American Academy of Actuaries with
regard to pensions. The actuaries responsible for this report and their respective responsibilities are as follows.
Actuarial Methods and Assumptions
It is our opinion that the assumptions and methods, as recommended by the Chief Actuary and adopted by the CalPERS Board
of Administration, are internally consistent and reasonable for this plan.
Randall Dziubek, ASA, MAAA
Deputy Chief Actuary, Valuation Services, CalPERS
Scott Terando, ASA, EA, MAAA, FCA, CFA
Chief Actuary, CalPERS
Fritzie Dorais, ASA, MAAA
Deputy Chief Actuary, Special Programs, CalPERS
Actuarial Data and Rate Plan Results
The assumptions and methods in this report are the responsibility of the CalPERS Chief Actuary and Deputy Chief Actuaries
named above. These were established pursuant to their responsibility for setting actuarial policy and I relied upon them without
independent assessment of the reasonableness of the assumptions and methods, as such an evaluation would have required
substantial additional work beyond the scope of this assignment. 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. The valuation was based on the member and financial data as
of June 30, 2025, provided by the various CalPERS databases and the benefits under this plan with CalPERS as of the date this
report was produced.
Matthew Biggart, ASA, MAAA
Actuary, CalPERS
Highlights and Executive Summary
• Introduction 3
• Purpose 3
• Summary of Key Valuation Results 4
• Changes Since the Prior Year’s Valuation 5
• Subsequent Events 5
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 3
Introduction
This report presents the results of the June 30, 2025, 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) 2027-28.
Purpose
This report documents the results of the actuarial valuation prepared by the CalPERS Actuarial Office using data as of June 30,
2025. This report contains actuarial information for the following rate plan(s).
• 5080, Safety Police First Level
• 30705, Safety Fire First Level
• 30706, Safety Fire Second Level
• 30707, Safety Fire Third Level
• 30708, Safety Police Second Level
• 25006, Safety Fire PEPRA Level
• 25007, Safety Police PEPRA Level
The purpose of the valuation is to:
• Set forth the assets and accrued liabilities of this rate plan as of June 30, 2025;
• Determine the minimum required employer contributions for this rate plan for FY July 1, 2027, through June 30, 2028;
• Determine the required member contribution rate for FY July 1, 2027, through June 30, 2028, for employees subject
to the California Public Employees' Pension Reform Act of 2013 (PEPRA); and
• Provide actuarial information as of June 30, 2025, 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 a
CalPERS 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 the Actuarial Standards of Practice:
• A “Scenario Test,” projecting future results under different investment income returns.
• A “Sensitivity Analysis,” showing the impact on current valuation results using alternative discount rates of 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 2025.
• Plan maturity measures indicating how sensitive a plan may be to the risks noted above.
• The funded status on a termination basis.
• A low-default-risk obligation measure (LDROM) of benefit costs accrued as of the valuation date.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 4
Summary of Key Valuation Results
Below is a brief summary of key valuation results along with page references where more detailed information can be found.
Required Employer Contributions — page 13
Fiscal Year
2026-27
Fiscal Year
2027-28
Employer Normal Cost Rate 19.64% 19.65%
Unfunded Accrued Liability (UAL) Contribution Amount $20,548,215 $20,286,655
Paid either as
Option 1) 12 Monthly Payments of $1,712,351 $1,690,555
Option 2) Annual Prepayment in July $19,883,300 $19,630,204
Member Contribution Rates — page 14
Fiscal Year
2026-27
Fiscal Year
2027-28
Classic Member Contribution Rate 9.00% 9.00%
PEPRA Member Contribution Rate 11.75% 11.75%
Projected Employer Contributions — page 17
Fiscal Year Normal Cost
(% of payroll)
Annual
UAL Payment
2028-29 19.0% $21,356,000
2029-30 18.4% $21,181,000
2030-31 17.8% $20,959,000
2031-32 17.2% $20,966,000
2032-33 16.7% $20,888,000
Funded Status – Funding Policy Basis — page 15
June 30, 2024 June 30, 2025
Entry Age Accrued Liability (AL) $582,389,782 $603,047,994
Fair Value of Assets (Assets) 355,816,276 393,191,715
Unfunded Accrued Liability (UAL) [AL – Assets] $226,573,506 $209,856,279
Funded Ratio [Assets ÷ AL] 61.1% 65.2%
Summary of Valuation Data — page 34
June 30, 2024 June 30, 2025
Active Member Count 159 172
Annual Covered Payroll $30,132,343 $33,254,975
Transferred Member Count 63 67
Separated Member Count 72 66
Retired Members and Beneficiaries Count 464 464
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 5
Changes Since the Prior Year’s Valuation
Investment Policy and Discount Rate
On November 19, 2025, the board adopted changes to the CalPERS Total Fund Investment Policy, which provides the
framework for the management of CalPERS assets. Consistent with that policy, the board also adopted a discount rate of 6.80%
for use in this valuation, which is unchanged from the prior year’s valuation.
Actuarial Methods and Other Assumptions
On November 19, 2025, the board adopted new actuarial assumptions based on the recommendations in the November 2025
CalPERS Experience Study and Review of Actuarial Assumptions. This study assessed various assumptions including
retirement rates, termination rates, mortality rates, rates of salary increase, and inflation. New assumptions stemming from the
study are incorporated in this actuarial valuation and affect required contributions for fiscal year 2027-28. Among the changes
were an increase in the price inflation assumption from 2.30% to 2.50% per year, and an increase in the wage inflation
assumption from 2.80% to 3.00% per year.
Plan Assets
Plan assets are measured at fair value. In the prior year’s actuarial valuation report the term Market Value of Assets was us ed to
describe the asset value used for funding purposes. The Actuarial Office has used this term interchangeably with Fair Value o f
Assets. Effective with the June 30, 2025, valuation, CalPERS will exclusively use the term Fair Value of Assets in actuarial
reports. This is a change in terminology and does not represent any change in methodology.
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. For rate plans that are not in a risk pool (non -pooled), benefit changes by contract
amendment are generally included in the first valuation that is prepared after the amendment becomes effective, even if the
effective date of the amendment is after the valuation date.
Please refer to the Plan’s Major Benefit Options and Appendix B - Principal Plan Provisions for a summary of the plan provisions
used in this valuation. The effect of any mandated benefit changes or plan amendments on the unfunded liability is shown in t he
(Gain)/Loss Analysis 6/30/24 – 6/30/25 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.
Subsequent Events
This actuarial valuation report reflects fund investment return through June 30, 202 5, as well as statutory changes, regulatory
changes and board actions through January 2026.
The 2025 annual benefit limit under Internal Revenue Code (IRC) section 415(b) and annual compensation limits under IRC
section 401(a)(17) and Government Code section 7522.10 were used for this valuation and are assumed to increase 2.5% per
year based on the price inflation assumption. The actual 2026 limits, determined in October 2025, are not reflected.
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.
Assets
• Reconciliation of the Fair Value of Assets 7
• Asset Allocation 8
• CalPERS History of Investment Returns 9
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 7
Reconciliation of the Fair Value of Assets
Plan assets are measured at fair value. In addition, CalPERS does not use an asset valuation method to smooth the effect of
market volatility on asset values. All current, historical and projected asset values used in this report are the Fair Value of
Assets.
1. Fair Value of Assets as of 6/30/24 including Receivables* $355,816,276
2. Change in Receivables for Service Buybacks (21,629)
3. Employer Contributions 22,119,406
4. Employee Contributions 4,625,560
5. Benefit Payments to Retirees and Beneficiaries (32,510,601)
6. Refunds (335,126)
7. Transfers 0
8. Service Credit Purchase (SCP) Payments and Interest 33,718
9. Administrative Expenses (291,499)
10. Miscellaneous Adjustments 0
11. Investment Return (Net of Investment Expenses) 43,755,610
12. Fair Value of Assets as of 6/30/25 including Receivables* $393,191,715
* Note that the reserve against deficiency, established pursuant to Government Code section 20174, and the reserve for fiduciar y self-
insurance have been excluded from the assets used for funding purposes, since those assets are generally not available for the payment of
benefits.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 8
Asset Allocation
The asset allocation shown below reflects the allocation of the Public Employees’ Retirement Fund (PERF) in its entirety on the
valuation date. The assets for City of Palo Alto Safety Plan are a subset of the PERF and are invested accordingly.
Asset Class
Allocation as of
June 30, 2025
Public Equity 38.9%
Private Equity 17.7%
Income 30.3%
Real Assets 13.1%
Private Debt 3.8%
Total Fund
Opportunistic 0.1%
Low Liquidity Enhanced Return 2.1%
Other 0.1%
Total Fund Financing
Active (2.3%)
Strategic (3.8%)
Total Fund 100.0%
On November 19, 2025, the board adopted a Total Portfolio Approach, which does not specify a target for each asset
classification. Instead, there is an equity-bonds Reference Portfolio that sets the market risk exposure, captures passive returns,
and becomes the singular total fund performance benchmark. The Reference Portfolio adopted by the board is 75% equities and
25% bonds. Consistent with this framework, the discount rate is based on the Reference Portfolio and the associated active risk
limit adopted by the board.
For more information on the portfolio as of the valuation date, see the Trust Level Review as of June 30, 2025 and the
Investment Section of the CalPERS 2024-25 Annual Comprehensive Financial Report, which are available on the CalPERS
website.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 9
CalPERS History of Investment Returns
The following is a chart with 20 years of 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 lagged private asset valuations for investment performance reporting purposes. This can lead to a timing difference
in private asset influence on performance 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 audited and are appropriate for financial reporting.
Because of these differences, the effective investment return for funding purposes in a single year can be higher or lower than
the return reported by the Investment Office shown here.
History of Investment Returns (2006 through 2025)
* As reported by the Investment Office with lagged private valuations and without any reduction for administrative expenses.
The table below shows annualized investment returns of the PERF for various time periods ending on June 30, 2025. These
returns are the annual rates that if compounded over the indicated number of years would equate to the actual time -weighted
investment performance of the PERF. It should be recognized that the annual rate of return is volatile, as the chart above
illustrates, so when looking at investment returns, it is informative to look at average returns over longer time horizons.
PERF Realized Rates of Return as of June 30, 2025
1 year 3 year 5 year 10 year 20 year 30 year
11.6% 8.9% 8.0% 7.1% 6.7% 7.6%
Liabilities and Contributions
• Determination of Required Contributions 11
• Development of Accrued and Unfunded Liabilities 12
• Required Employer Contributions 13
• Member Contribution Rates 14
• Funded Status – Funding Policy Basis 15
• Additional Employer Contributions 16
• Projected Employer Contributions 17
• (Gain)/Loss Analysis 6/30/24 – 6/30/25 18
• Schedule of Amortization Bases 19
• Amortization Schedule and Alternatives 21
• Reconciliation of Required Employer Contributions 23
• Employer Contribution History 24
• Funding History 24
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 11
Determination of Required Contributions
Contributions to fund the plan are determined by an actuarial valuation performed each year. The valuation employs complex
calculations based on a set of actuarial assumptions and methods. See Appendix A for information on the assumptions and
methods used in this valuation. The valuation incorporates all plan experience through the valuation date and sets required
contributions for the fiscal year that begins two years after the valuation date.
Contribution Components
Two components comprise required contributions:
• Normal Cost — expressed as a percentage of pensionable payroll
• Unfunded Accrued Liability (UAL) Contribution — expressed as a dollar amount
Normal Cost represents the value of benefits allocated to the upcoming year for active employees. If all plan experience exac tly
matched the actuarial assumptions, normal cost would be sufficient to fully fund all benefits. The employer and employees eac h
pay a share of the normal cost with contributions payable as part of the regular payroll reporting process. The contribution rate
for Classic members is set by statute based on benefit formula whereas for PEPRA members it is based on 50% of the total
normal cost.
When plan experience differs from the actuarial assumptions, UAL emerges. The new UAL may be positive or negative. If the
total UAL is positive (i.e., accrued liability exceeds assets), the employer is required to make contributions to pay off the UAL
over time. This is called the UAL Contribution component. There is an option to prepay this amount during July of each fiscal
year, otherwise it is paid monthly.
In measuring the UAL each year, plan experience is split by source. Common sources of UAL include investment experience
different than expected, non-investment experience different than expected, assumption changes, and benefit changes. Each
source of UAL (positive or negative) forms a base that is amortized, or paid off, over a specified period of time in accordan ce
with the CalPERS Actuarial Amortization Policy. The UAL Contribution is the sum of the payments on all bases. See the
Schedule of Amortization Bases section of this report for an inventory of existing bases and Appendix A for more information on
the amortization policy.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 12
Development of Accrued and Unfunded Liabilities
June 30, 2024 June 30, 2025
1. Present Value of Projected Benefits
a) Active Members $222,706,736 $237,254,605
b) Transferred Members 14,412,580 15,670,424
c) Separated Members 8,092,929 4,457,154
d) Members and Beneficiaries Receiving Payments 413,652,979 432,087,647
e) Total $658,865,224 $689,469,830
2. Present Value of Future Employer Normal Costs $46,330,486 $51,916,393
3. Present Value of Future Employee Contributions $30,144,956 $34,505,443
4. Entry Age Accrued Liability
a) Active Members [(1a) - (2) - (3)] $146,231,294 $150,832,769
b) Transferred Members (1b) 14,412,580 15,670,424
c) Separated Members (1c) 8,092,929 4,457,154
d) Members and Beneficiaries Receiving Payments (1d) 413,652,979 432,087,647
e) Total $582,389,782 $603,047,994
5. Fair Value of Assets $355,816,276 $393,191,715
6. Unfunded Accrued Liability (UAL) [(4e) - (5)] $226,573,506 $209,856,279
7. Funded Ratio [(5) ÷ (4e)] 61.1% 65.2%
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 13
Required Employer Contributions
The required employer contributions in this report do not reflect any cost sharing arrangement between the agency and the
employees.
Fiscal Year
Required Employer Contributions 2027-28
Employer Normal Cost Rate 19.65%
Plus
Unfunded Accrued Liability (UAL) Contribution Amount $20,286,655
Paid either as
1) Monthly Payment $1,690,555
Or
2) Annual Prepayment Option* $19,630,204
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) and the 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 Member Contribution Rates see the following page.
Fiscal Year Fiscal Year
2026-27 2027-28
Normal Cost Contribution as a Percentage of Payroll
Total Normal Cost1 29.88% 30.06%
Offset due to Employee Contributions2 (10.24%) (10.41%)
Employer Normal Cost 19.64% 19.65%
Projected Annual Payroll for Contribution Year $32,734,993 $36,338,610
Estimated Employer Contributions Based on Projected Payroll
Total Normal Cost $9,781,216 $10,923,386
Expected Employee Contributions (3,352,063) (3,782,849)
Employer Normal Cost $6,429,153 $7,140,537
Unfunded Liability Contribution $20,548,215 $20,286,655
% of Projected Payroll (illustrative only) 62.77% 55.83%
Estimated Total Employer Contribution
$26,977,368 $27,427,192
% of Projected Payroll (illustrative only) 82.41% 75.48%
1 The Total 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.
2 This is the expected employee contributions, taking into account individual benefit formula and any offset from the use
of a modified formula, divided by projected annual payroll. For member contribution rates above the breakpoint for each
benefit formula, see Member Contribution Rates.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 14
Member Contribution Rates
The required member contributions in this report do not reflect any cost sharing arrangement between the agency and the
employees.
Classic Members
Each member contributes toward their retirement based upon the retirement formula. The standard Classic member contribution
rate above the breakpoint, if any, is as described below.
Benefit Formula
Percent Contributed
above the Breakpoint
Safety, Half Pay at age 55 Varies by entry age
Safety, 2% at age 55 7%
Safety, 2% at age 50 9%
Safety, 3% at age 55 9%
Safety, 3% at age 50 9%
PEPRA Members
The California Public Employees’ Pension Reform Act of 2013 (“PEPRA”) established new benefit formulas, final compensation
period, and 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 least 50% of the normal cost rate.” The normal cost rate 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
rate of the plan change by more than 1% from the base total normal cost rate established for the plan, the new member rate
shall be 50% of the new normal cost rate rounded to the nearest quarter percent.
The table below shows the determination of the PEPRA member contribution rates effective July 1, 2027, based on 50% of the
total normal cost rate for each respective rate plan as of the June 30, 2025, valuation.
Basis for Current Rate Rates Effective July 1, 2027
Rate Plan
Identifier Benefit Group Name
Total
Normal
Cost
Member
Rate
Total
Normal
Cost
Change
in
Normal
Cost
Adj.
Needed
Member
Rate
25006 Safety Fire PEPRA
Level 23.540% 11.75% 24.13% 0.590% No 11.75%
25007 Safety Police PEPRA
Level 23.540% 11.75% 24.13% 0.590% No 11.75%
For a description of the methodology used to determine the Total Normal Cost for this purpose, see PEPRA Normal Cost Rate
Methodology in Appendix A.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 15
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 fair 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
benefit 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 siz es.
June 30, 2024 June 30, 2025
1. Present Value of Benefits $658,865,224 $689,469,830
2. Entry Age Accrued Liability 582,389,782 603,047,994
3. Fair Value of Assets 355,816,276 393,191,715
4. Unfunded Accrued Liability (UAL) [(2) – (3)] $226,573,506 $209,856,279
5. Funded Ratio [(3) ÷ (2)] 61.1% 65.2%
A funded ratio of 100% (UAL of $0) implies that the funding of the plan is on target and that future contributions equal to t he
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 tow ard
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 ave rage
future returns are less than the expected return, calculated normal costs and UAL contributions will not be sufficient to ful ly fund
all retirement benefits. Under this scenario, required future normal cost contributions will need to increase from those prov ided in
this report, and the plan will develop unfunded liabilities that will also add to required future contributions. For illustrative
purposes, funded statuses based on a 1% lower and higher average future investment return (discount rate) are as follows:
1% Lower
Average Return
Current
Assumption
1% Higher
Average Return
Discount Rate 5.8% 6.8% 7.8%
1. Present Value of Benefits $798,066,498 $689,469,830 $603,751,785
2. Entry Age Accrued Liability 680,358,840 603,047,994 539,312,268
3. Fair Value of Assets 393,191,715 393,191,715 393,191,715
4. Unfunded Accrued Liability (UAL) [(2) – (3)] $287,167,125 $209,856,279 $146,120,553
5. Funded Ratio [(3) ÷ (2)] 57.8% 65.2% 72.9%
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 appropriat e
for assessing the sufficiency of plan assets to cover estimated termination liabilities.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 16
Additional Employer Contributions
The CalPERS amortization policy provides a systematic methodology for paying down a plan’s unfunded accrued liability (UAL)
over a reasonable period of years. The projected schedule of required payments for this plan under the amortization policy is
provided in Amortization Schedule and Alternatives. Certain aspects of the policy such as 1) layered amortization bases
(positive and negative) with different remaining payoff periods, and 2) the phase -in of required payments toward investment
gains and losses, can result in volatility in year-to-year projected UAL payments. Provided below is information on how an
Additional Discretionary Payment (ADP), together with your required UAL payment of $20,286,655 for FY 2027-28, may better
accomplish your agency’s specific objectives with regard to either smoothing out projected future payments or achieving a
greater reduction in UAL than would otherwise occur when making only the minimum required payment. Such additional
payments are allowed at any time and can also result in significant long-term savings.
Fiscal Year 2027-28 Employer Contribution Versus Agency Funding Objectives
The interest-to-payment ratio for the FY 2027-28 minimum required UAL payment is 62%, which means the required payment of
$20,286,655 includes $12,535,507 of interest cost and results in a $7,751,148 reduction in the UAL, as can be seen in
Amortization Schedule and Alternatives (see columns labelled Current Amortization Schedule). If the interest-to-payment ratio is
close to 100%, and the reduction in the UAL is small, it may indicate that required contributions will be increasing in the coming
years, which would be shown in Projected Employer Contributions. An alternative metric that provides similar information about
the FY 2027-28 required UAL payment is the number of years it would take that payment, if held constant, to pay off the existing
UAL (note: actual required UAL payments will vary each year). An annual payment of $20,286,655 would pay off the current
UAL in 15.1 years (ignoring any unexpected changes in UAL occurring after June 30, 2025). If the agency would like their FY
2027-28 payment toward the UAL to be consistent with a faster pace for reaching 100% funded, an ADP can be added to the
required minimum payment.
Provided below are select ADP options for consideration. Making such an ADP during FY 2027-28 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 Amortization Schedule and Alternatives. Agencies considering
making an ADP should contact CalPERS for additional information.
Fiscal Year 2027-28 Employer Contributions — Illustrative Scenarios
If the Annual UAL
Payment Each
Year Were…
The Current
UAL Would be
Paid Off in…
This Would
Require an ADP1
in FY 2027-28 of…
Plus the Estimated
Normal Cost of…
Estimated Total
Contribution
$20,286,655 15.1 years $0 $7,140,537 $27,427,192
20,385,112 15 years 98,457 7,140,537 27,525,649
26,524,868 10 years 6,238,213 7,140,537 33,665,405
45,614,474 5 years 25,327,819 7,140,537 52,755,011
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.
The calculations above are based on the projected UAL as of June 30, 2027, as determined in the June 30, 2025, 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 year s
will not result in a plan that is exactly 100% funded in the indicated number of years. Valuation results will vary from one ye ar to
the next and can diverge significantly from projections over a period of several years.
Additional Discretionary Payment History
The following table provides a recent history of actual ADPs made to the plan.
Fiscal
Year ADP Fiscal
Year ADP
2018-19 $0 2022-23 $0
2019-20 0 2023-24 0
2020-21 0 2024-25 0
2021-22 0 2025-26 3,925,000
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 17
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,
benefits, or funding will occur during the projection period. In particular, the investment return beginning with FY 2025-26 is
assumed to be 6.80% per year, net of investment and administrative expenses. 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.
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 significantly from those shown
below. The actuarial valuation does not include payroll beyond the valuation date. For the most realistic projections, the
employer should apply projected payroll amounts to the rates below based on the most recent information available, such as
current payroll as well as any plans to fill vacancies or add or remove positions.
Required
Contribution
Projected Future Employer Contributions
(Assumes 6.80% Return for Fiscal Year 2025-26 and Beyond)
2027-28 2028-29 2029-30 2030-31 2031-32 2032-33
Normal Cost % 19.65% 19.0% 18.4% 17.8% 17.2% 16.7%
UAL Payment $20,286,655 $21,356,000 $21,181,000 $20,959,000 $20,966,000 $20,888,000
Total as a % of Payroll* 75.48% 76.1% 73.3% 70.6% 68.5% 66.3%
Projected Payroll $36,338,610 $37,428,768 $38,551,630 $39,708,180 $40,899,425 $42,126,408
*Illustrative only and based on the projected payroll shown.
The required UAL payments are expected to vary significantly from the projections above due to experience, particularly
investment experience. For projected contributions under alternate investment return scenarios, please see the Future
Investment Return Scenarios exhibit. 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.
For ongoing plans, investment gains and losses are amortized using an initial 5-year ramp. For more information, please see
Amortization of Unfunded Actuarial Accrued Liability 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 initial ramp 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.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 18
(Gain)/Loss Analysis 6/30/24 – 6/30/25
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 6/30/24 $226,573,506
b) Expected payment on the UAL during 2024-25 16,551,519
c) Interest through 6/30/25 [0.068 x (1a) - ((1.068)½ - 1) x (1b)] 14,853,500
d) Expected UAL before all other changes [(1a) - (1b) + (1c)] 224,875,487
e) Change due to plan changes 0
f) Change due to AL Significant Increase 0
g) Change due to assumption changes 2,382,226
h) Change due to method changes 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)] 227,257,713
k) Actual UAL as of 6/30/25 209,856,279
l) Total (Gain)/Loss for 2024-25 [(1k) - (1j)] ($17,401,434)
2. Investment (Gain)/Loss for the Year
a) Fair Value of Assets as of 6/30/24 $355,816,276
b) Prior fiscal year receivables (114,617)
c) Current fiscal year receivables 92,987
d) Contributions received 26,744,965
e) Benefits and refunds paid (32,845,727)
f) Transfers, SCP payments and interest, and miscellaneous adjustments 33,718
g) Expected return at 6.8% per year 24,538,322
h) Expected assets as of 6/30/25 [(2a) + (2b) + (2c) + (2d) + (2e) + (2f) + (2g)] 374,265,926
i) Actual Fair Value of Assets as of 6/30/25 393,191,715
j) Investment (Gain)/Loss [(2h) - (2i)] ($18,925,789)
3. Non-Investment (Gain)/Loss for the Year
a) Total (Gain)/Loss (1l) ($17,401,434)
b) Investment (Gain)/Loss (2j) (18,925,789)
c) Non-Investment (Gain)/Loss [(3a) - (3b)] $1,524,355
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 19
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, 2025.
• The required employer contributions determined by the valuation are for the fiscal year beginning two years after the valuati on date: FY 2027-28.
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 FY 2025-26 is based on the actuarial valuation two years ago, adjusted for additional discretionary payments, if
necessary, and the expected payment for FY 2026-27 is based on the actuarial valuation one year ago.
Reason for Base
Date
Est.
Ramp
Level
2027-28
Ramp
Shape
Escala-
tion
Rate
Amort.
Period
Balance
6/30/25
Expected
Payment
2025-26
Balance
6/30/26
Expected
Payment
2026-27
Balance
6/30/27
Minimum
Required
Payment
2027-28
Fresh Start 6/30/04 No Ramp 2.80% 9 (764,429) (86,290) (727,235) (88,706) (685,015) (91,190)
Benefit Change 6/30/05 No Ramp 2.80% 0 21,432 22,149 0 0 0 0
Assumption Change 6/30/09 No Ramp 2.80% 0 4,429,982 4,578,124 0 0 0 0
Special (Gain)/Loss 6/30/09 No Ramp 2.80% 14 8,478,881 718,021 8,313,413 738,126 8,115,916 758,793
Special (Gain)/Loss 6/30/10 No Ramp 2.80% 15 4,118,853 333,942 4,053,826 343,292 3,974,714 352,904
Assumption Change 6/30/11 No Ramp 2.80% 6 4,364,487 751,795 3,884,336 641,171 3,485,859 659,124
Special (Gain)/Loss 6/30/11 No Ramp 2.80% 16 2,376,489 185,089 2,346,812 190,271 2,309,761 195,599
(Gain)/Loss 6/30/12 No Ramp 2.80% 17 44,618,446 3,348,102 44,192,435 3,441,848 43,640,574 3,538,220
Payment (Gain)/Loss 6/30/12 No Ramp 2.80% 17 1,558,914 116,979 1,544,029 120,254 1,524,748 123,621
(Gain)/Loss 6/30/13 100% Up/Dn 2.80% 18 44,196,412 3,447,245 43,639,244 3,543,768 42,944,438 3,642,993
(Gain)/Loss 6/30/14 100% Up/Dn 2.80% 19 (29,901,718) (2,246,855) (29,613,043) (2,309,767) (29,239,722) (2,374,440)
Assumption Change 6/30/14 100% Up/Dn 2.80% 9 17,365,016 2,319,907 16,148,350 2,384,864 14,781,822 2,451,641
(Gain)/Loss 6/30/15 100% Up/Dn 2.80% 20 16,631,467 1,207,150 16,514,889 1,240,951 16,355,452 1,275,697
(Gain)/Loss 6/30/16 100% Up/Dn 2.80% 21 19,811,940 1,392,355 19,720,235 1,431,340 19,582,006 1,471,418
Assumption Change 6/30/16 100% Up/Dn 2.80% 11 6,675,248 755,625 6,348,271 776,783 5,977,194 798,533
(Gain)/Loss 6/30/17 100% Up/Dn 2.80% 22 (1,219,674) (83,176) (1,216,654) (85,505) (1,211,022) (87,899)
Assumption Change 6/30/17 100% Up/Dn 2.80% 12 9,381,908 990,609 8,996,142 1,018,346 8,555,479 1,046,860
(Gain)/Loss 6/30/18 100% Up/Dn 2.80% 23 (3,485,965) (231,130) (3,484,151) (237,602) (3,475,526) (244,255)
Assumption Change 6/30/18 100% Up/Dn 2.80% 13 15,233,253 1,510,670 14,707,926 1,552,968 14,103,164 1,596,451
Method Change 6/30/18 100% Up/Dn 2.80% 13 3,512,814 348,363 3,391,673 358,117 3,252,214 368,144
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 20
Schedule of Amortization Bases (continued)
Reason for Base
Date
Est.
Ramp
Level
2027-28
Ramp
Shape
Escala-
tion
Rate
Amort.
Period
Balance
6/30/25
Expected
Payment
2025-26
Balance
6/30/26
Expected
Payment
2026-27
Balance
6/30/27
Minimum
Required
Payment
2027-28
Investment (Gain)/Loss 6/30/19 100% Up Only 0.00% 14 1,705,659 172,406 1,643,472 172,406 1,577,057 172,406
Non-Investment (Gain)/Loss 6/30/19 No Ramp 0.00% 14 6,308,237 637,630 6,078,244 637,630 5,832,612 637,630
Investment (Gain)/Loss 6/30/20 100% Up Only 0.00% 15 8,621,049 687,110 8,497,193 858,888 8,187,392 858,887
Non-Investment (Gain)/Loss 6/30/20 No Ramp 0.00% 15 1,414,193 138,226 1,367,510 138,227 1,317,651 138,226
Assumption Change 6/30/21 No Ramp 0.00% 16 2,547,963 241,577 2,471,569 241,577 2,389,980 241,577
Net Investment (Gain) 6/30/21 100% Up Only 0.00% 16 (41,896,171) (2,519,071) (42,141,800) (3,358,762) (41,536,361) (4,198,453)
Non-Investment (Gain)/Loss 6/30/21 No Ramp 0.00% 16 (6,691,435) (634,427) (6,490,810) (634,426) (6,276,543) (634,427)
Benefit Change 6/30/22 No Ramp 0.00% 17 282,085 26,015 274,382 26,015 266,155 26,015
Investment (Gain)/Loss 6/30/22 80% Up Only 0.00% 17 61,121,909 2,512,552 62,681,625 3,768,829 63,049,114 5,025,105
Non-Investment (Gain)/Loss 6/30/22 No Ramp 0.00% 17 8,750,134 806,961 8,511,197 806,961 8,256,012 806,961
Investment (Gain)/Loss 6/30/23 60% Up Only 0.00% 18 2,733,264 58,751 2,858,410 117,501 2,931,352 176,252
Non-Investment (Gain)/Loss 6/30/23 No Ramp 0.00% 18 9,892,856 889,601 9,646,220 889,601 9,382,813 889,601
Investment (Gain)/Loss 6/30/24 40% Up Only 0.00% 19 (9,384,480) 0 (10,022,625) (215,433) (10,481,526) (430,867)
Non-Investment (Gain)/Loss 6/30/24 No Ramp 0.00% 19 12,066,468 0 12,886,988 1,158,844 12,565,706 1,158,844
Assumption Change 6/30/25 No Ramp 0.00% 20 2,382,226 0 2,544,217 0 2,717,224 244,342
Investment (Gain)/Loss 6/30/25 20% Up Only 0.00% 20 (18,925,789) 0 (20,212,743) 0 (21,587,210) (464,010)
Non-Investment (Gain)/Loss 6/30/25 No Ramp 0.00% 20 1,524,355 0 1,628,011 0 1,738,716 156,352
Total 209,856,279 22,396,005 200,981,558 19,668,377 194,322,200 20,286,655
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 21
Amortization Schedule and Alternatives
The amortization schedule on the previous page(s) shows the minimum contributions required according to the CalPERS
amortization policy. Each year, many agencies express a desire for a more stable pattern of payments or indicate 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 th e
individual bases and remaining periods shown on the previous 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 start, please contact a CalPERS actuary.
The current amortization schedule 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, assumption changes, method changes, or plan experience that decrease unfunded liability. The combination of
positive and negative bases within an amortization sc hedule 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 existin g
unfunded liability bases with a single “fresh start” base and amortizing it over an appropriate period.
The current amortization schedule 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 additional 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 Actuarial Amortization Policy.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 22
Amortization Schedule and Alternatives (continued)
Alternative Schedules
Current Amortization
Schedule 15 Year Amortization 10 Year Amortization
Date Balance Payment Balance Payment Balance Payment
6/30/2027 194,322,200 20,286,655 194,322,200 20,385,112 194,322,200 26,524,868
6/30/2028 186,571,052 21,355,742 186,469,302 20,385,111 180,124,227 26,524,868
6/30/2029 177,187,988 21,180,694 178,082,408 20,385,112 164,960,792 26,524,868
6/30/2030 167,347,777 20,959,359 169,125,204 20,385,111 148,766,244 26,524,867
6/30/2031 157,067,168 20,966,300 159,558,911 20,385,111 131,470,467 26,524,868
6/30/2032 146,080,307 20,887,504 149,342,110 20,385,111 112,998,577 26,524,868
6/30/2033 134,427,767 20,012,836 138,430,567 20,385,112 93,270,598 26,524,867
6/30/2034 122,886,772 19,681,612 126,777,038 20,385,111 72,201,117 26,524,867
6/30/2035 110,903,289 19,057,900 114,331,070 20,385,112 49,698,912 26,524,868
6/30/2036 98,749,501 17,999,850 101,038,775 20,385,111 25,666,556 26,524,868
6/30/2037 86,862,689 17,396,568 86,842,605 20,385,111
6/30/2038 74,791,027 16,748,283 71,681,096 20,385,112
6/30/2039 62,568,458 16,275,384 55,488,603 20,385,112
6/30/2040 50,003,467 16,065,548 38,195,020 20,385,111
6/30/2041 36,800,906 13,412,998 19,725,475 20,385,112
6/30/2042 25,441,828 11,793,280
6/30/2043 14,984,214 15,485,299
6/30/2044
6/30/2045
6/30/2046
6/30/2047
6/30/2048
6/30/2049
Total 309,565,812 305,776,672 265,248,677
Interest Paid 115,243,612 111,454,472 70,926,477
Estimated Savings 3,789,140 44,317,135
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 23
Reconciliation of Required Employer Contributions
Normal Cost (% of Payroll)
1. For Period 7/1/26 – 6/30/27
a) Employer Normal Cost 19.64%
b) Employee contribution 10.24%
c) Total Normal Cost 29.88%
2. Changes since the prior year annual valuation
a) Effect of demographic experience (0.67%)
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 0.85%
e) Effect of method changes 0.00%
f) Net effect of the changes above [sum of (a) through (e)] 0.18%
3. For Period 7/1/27 – 6/30/28
a) Employer Normal Cost 19.65%
b) Employee contribution 10.41%
c) Total Normal Cost 30.06%
Employer Normal Cost Change [(3a) – (1a)] 0.01%
Employee Contribution Change [(3b) – (1b)] 0.17%
Unfunded Liability Contribution ($)
1. For Period 7/1/26 – 6/30/27 20,548,215
2. Changes since the prior year annual valuation
a) Effect of adjustments to prior year’s amortization schedule (879,838)
b) Effect of elimination of amortization bases 0
c) Effect of progression of amortization bases1 681,594
d) Effect of investment (gain)/loss during prior year2 (464,010)
e) Effect of non-investment (gain)/loss during prior year 156,352
f) Effect of re-amortizing existing bases due to Funding Risk Mitigation 0
g) Effect of Golden Handshake 0
h) Effect of plan changes 0
i) Effect of AL Significant Increase (Government Code section 20791) 0
j) Effect of assumption changes 244,342
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)] (261,560)
3. For Period 7/1/27 – 6/30/28 [(1) + (2m)] 20,286,655
The amounts shown for the period 7/1/26 – 6/30/27 may be different if a prepayment of unfunded actuarial liability is made or a
plan change became effective after the prior year’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.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 24
Employer Contribution History
The table below provides a 10-year history of the employer contribution requirements for the plan, as determined by the annual
actuarial valuation. Changes due to prepayments or plan amendments after the valuation report was finalized are not reflected.
Valuation
Date
Contribution
Year
Employer
Normal Cost Rate
Unfunded Liability
Payment
06/30/2016 2018-19 19.397% $8,421,191
06/30/2017 2019-20 20.194% 10,019,332
06/30/2018 2020-21 21.566% 11,210,740
06/30/2019 2021-22 21.52% 13,282,515
06/30/2020 2022-23 20.58% 14,860,807
06/30/2021 2023-24 22.59% 14,376,181
06/30/2022 2024-25 22.21% 16,551,519
06/30/2023 2025-26 20.61% 18,545,666
06/30/2024 2026-27 19.64% 20,548,215
06/30/2025 2027-28 19.65% 20,286,655
Funding History
The table below shows the recent history of the actuarial accrued liability, fair value of assets, unfunded accrued liability, funded
ratio and annual covered payroll.
Valuation
Date
Accrued
Liability Fair Value of
Assets
Unfunded
Accrued
Liability (UAL)
Funded
Ratio
Annual
Covered
Payroll
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
6/30/2023 555,403,195 331,696,065 223,707,130 59.7% 27,941,899
6/30/2024 582,389,782 355,816,276 226,573,506 61.1% 30,132,343
6/30/2025 603,047,994 393,191,715 209,856,279 65.2% 33,254,975
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
• Funded Status – Low-Default-Risk Basis 31
CalPERS Actuarial Valuation - June 30, 2025
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 2025 was performed
to determine the effects of various future investment returns on required employer UAL contributions. The CalPERS Funding
Risk Mitigation Policy stipulates that when the investment return exceeds the discount rate by at least 2%, the board will
consider adjustments to the discount rate. The projections below use a discount rate of 6.8% for all scenarios even though an
annual return of 11.6% is high enough to trigger a board discussion on the discount rate. 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 employer normal cost rates are not affected by investment returns, and since no future assumption changes are being
reflected, the projected employer normal cost rates for every future investment return scenario are the same as those shown
earlier in this report. See Projected Employer Contributions for more information on projecting the employer normal cost.
The first table shows projected UAL contribution requirements if the fund were to earn either 1.9% or 11.6% 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, 2045.
Assumed Annual Return
FY 2025-26
through FY 2044-45
Projected Employer UAL Contributions
2028-29 2029-30 2030-31 2031-32 2032-33
1.9% (5th percentile) $21,828,000 $22,603,000 $23,813,000 $25,739,000 $28,072,000
11.6% (95th percentile) $20,893,000 $19,743,000 $17,978,000 $15,813,000 $6,357,000
Required UAL contributions outside of this range are also possible. In particular, whereas it is unlikely that investment returns
will average less than 1.9% or greater than 11.6% over a 20-year period, the likelihood of a single investment return less than
1.9% or greater than 11.6% 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 12.7% per year. Accordingly, in any given year there is a 16%
probability that the annual return will be -5.9% or less and a 2.5% probability that the annual return will be -18.6% or less. These
returns represent one and two standard deviations below the expected return of 6.8%.
The following table shows the effect of one and two standard deviation investment losses in FY 2025-26 on the FY 2028-29
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 2028-29.
Assumed Annual Return for
Fiscal Year 2025-26
Required Employer
UAL Contributions
Projected Employer
UAL Contributions
2027-28 2028-29
(18.6%) (2 standard deviation loss) $20,286,655 $23,802,000
(5.9%) (1 standard deviation loss) $20,286,655 $22,579,000
• Without investment gains (returns higher than 6.8%) in FY 2026-27 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 2025-26.
• The Pension Outlook Tool can be used to model projected contributions for these scenarios beyond FY 2028-29 as
well as to model other investment return scenarios.
CalPERS Actuarial Valuation - June 30, 2025
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 4.3% and 2.5%, 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, 2025, 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 Discount Rate Due to Varying the Real Rate of Return Assumption
As of June 30, 2025
1% Lower
Real Return Rate
Current
Assumptions
1% Higher
Real Return Rate
Discount Rate 5.8% 6.8% 7.8%
Price Inflation 2.5% 2.5% 2.5%
Real Rate of Return 3.3% 4.3% 5.3%
a) Total Normal Cost 37.98% 30.06% 24.04%
b) Accrued Liability $680,358,840 $603,047,994 $539,312,268
c) Fair Value of Assets $393,191,715 $393,191,715 $393,191,715
d) Unfunded Liability/(Surplus) [(b) - (c)] $287,167,125 $209,856,279 $146,120,553
e) Funded Ratio 57.8% 65.2% 72.9%
Sensitivity to the Discount Rate Due to Varying the Price Inflation Assumption
As of June 30, 2025
1% Lower
Price Inflation
Current
Assumptions
1% Higher
Price Inflation
Discount Rate 5.8% 6.8% 7.8%
Price Inflation 1.5% 2.5% 3.5%
Real Rate of Return 4.3% 4.3% 4.3%
a) Total Normal Cost 32.28% 30.06% 27.60%
b) Accrued Liability $635,059,431 $603,047,994 $572,370,969
c) Fair Value of Assets $393,191,715 $393,191,715 $393,191,715
d) Unfunded Liability/(Surplus) [(b) - (c)] $241,867,716 $209,856,279 $179,179,254
e) Funded Ratio 61.9% 65.2% 68.7%
Mortality Rate Sensitivity
The following table looks at the change in the June 30, 2025, 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 2025. This type of analysis highlights the impact on the plan of a change in the mortality assumption.
As of June 30, 2025 10% Lower
Mortality Rates
Current
Assumptions
10% Higher
Mortality Rates
a) Total Normal Cost 30.48% 30.06% 29.66%
b) Accrued Liability $615,009,559 $603,047,994 $592,053,833
c) Fair Value of Assets $393,191,715 $393,191,715 $393,191,715
d) Unfunded Liability/(Surplus) [(b) - (c)] $221,817,844 $209,856,279 $198,862,118
e) Funded Ratio 63.9% 65.2% 66.4%
CalPERS Actuarial Valuation - June 30, 2025
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 t otal liability.
A pension plan in its infancy will have a very low ratio of retiree liability to total liability. As the plan matur es, 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, 2024 June 30, 2025
1. Retiree Accrued Liability $413,652,979 $432,087,647
2. Total Accrued Liability $582,389,782 $603,047,994
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 support 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 informative than the ratio of retiree liability to total accrued liability above.
Support Ratio June 30, 2024 June 30, 2025
1. Number of Actives 159 172
2. Number of Retirees 464 464
3. Support Ratio [(1) ÷ (2)] 0.34 0.37
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 29
Maturity Measures (continued)
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 increases, investm ent
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.
Asset Volatility Ratio
Shown in the table below is the asset volatility ratio (AVR), which is the ratio of fair 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 an AVR of 8 may experience twice the contribution volatility due to investment return volatility than a plan with an
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. Pl ans 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 an LVR of 8 is expected to have twice the contribution volatility of a plan with an 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 100%.
Contribution Volatility June 30, 2024 June 30, 2025
1. Fair Value of Assets without Receivables $355,701,659 $393,098,727
2. Payroll 30,132,343 33,254,975
3. Asset Volatility Ratio (AVR) [(1) ÷ (2)] 11.8 11.8
4. Accrued Liability $582,389,782 $603,047,994
5. Liability Volatility Ratio (LVR) [(4) ÷ (2)] 19.3 18.1
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
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
6/30/2023
73%
0.36
11.9
19.9
6/30/2024
71%
0.34
11.8
19.3
6/30/2025
72%
0.37
11.8
18.1
CalPERS Actuarial Valuation - June 30, 2025
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 estimated range for the financial position of the plan had the contract
with CalPERS been terminated as of June 30, 2025. The accrued liability on a termination basis (termination liability) is
calculated differently from the plan’s ongoing funding liability. For the 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 not appropriate for assessing the need for future employer c ontributions 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 plans, 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 has 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 allocation 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 discount rate used for actual termination valuations is a weighted average of the 10 -year and 30-year Treasury yields where
the weights are based on matching asset and liability durations as of the termination date. The discount rates used in the
following analysis are based on 20-year Treasury bonds, which is a good proxy for most plans. The discount rate upon contract
termination will depend on actual Treasury rates on the date of termination, which varies over time, as demonstrated below.
Valuation 20-Year Valuation 20-Year
Date Treasury Rate Date Treasury Rate
06/30/2016 1.86% 06/30/2021 2.00%
06/30/2017 2.61% 06/30/2022 3.38%
06/30/2018 2.91% 06/30/2023 4.06%
06/30/2019 2.31% 06/30/2024 4.61%
06/30/2020 1.18% 06/30/2025 4.79%
As Treasury rates are variable, the table below shows a range for the termination liability using discount rates 1% below and
above the 20-year Treasury rate on the valuation date. The price inflation assumption is the 20-year Treasury breakeven
inflation rate, that is, the difference between the 20-year inflation indexed bond and the 20-year fixed-rate bond.
The Fair Value of Assets also varies with interest rates and will fluctuate depending on other market conditions on the date of
termination. Since it is not possible to approximate how the assets will change in different interest rate environments, the results
below use the Fair Value of Assets as of the valuation date.
Discount Rate: 3.79%
Price Inflation: 2.47%
Discount Rate: 5.79%
Price Inflation: 2.47%
1. Termination Liability1 $882,397,242 $671,799,347
2. Fair Value of Assets 393,191,715 393,191,715
3. Unfunded Termination Liability [(1) – (2)] $489,205,527 $278,607,632
4. Funded Ratio [(2) ÷ (1)] 44.6% 58.5%
1 The termination liabilities calculated above include a 5% contingency load. The contingency load and other actuarial
assumptions can be found in Appendix A.
In order to terminate the plan, first contact our Pension Contract Services unit to initiate a Resolution of Intent to Termin ate. The
completed Resolution will allow a CalPERS actuary to provide a preliminary termination valuation with a more up-to-date
estimate of the plan’s assets and liabilities. Before beginning this process, please consult with a CalPERS actuary.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 31
Funded Status – Low-Default-Risk Basis
Actuarial Standard of Practice (ASOP) No. 4, Measuring Pension Obligations and Determining Pension Plan Costs or
Contributions, requires the disclosure of a low-default-risk obligation measure (LDROM) of benefit costs accrued as of the
valuation date using a discount rate based on the yields of high quality fixed income securities with cash flows that replicate
expected benefit payments. Conceptually, this measure represents the level at which financial markets would value the accrued
plan costs, and would be approximately equal to the cost of a portfolio of low-default-risk bonds with similar financial
characteristics to accrued plan costs.
As permitted in ASOP No. 4, the Actuarial Office uses the Entry Age Actuarial Cost Method to calculate the LDROM. This
methodology is in line with the measure of “benefit entitlements” calculated by the Bureau of Economic Analysis and used by t he
Federal Reserve to report the indebtedness due to pensions of plan sponsors and, conversely, the household wealth due to
pensions of plan members.
As shown below, the discount rate used for the LDROM is 5.58%, which is the Standard FTSE Pension Liability Index1 discount
rate as of June 30, 2025.
Selected Measures on a Low-Default-Risk Basis June 30, 2025
Discount Rate 5.58%
1. Accrued Liability – Low-Default-Risk Basis (LDROM)
a) Active Members $182,823,156
b) Transferred Members 20,145,835
c) Separated Members 5,485,672
d) Members and Beneficiaries Receiving Payments 491,104,775
e) Total $699,559,438
2. Fair Value of Assets 393,191,715
3. Unfunded Accrued Liability – Low-Default-Risk Basis [(1e) – (2)] $306,367,723
4. Unfunded Accrued Liability – Funding Policy Basis 209,856,279
5. Present Value of Unearned Investment Risk Premium [(3) – (4)] $96,511,444
The difference between the unfunded liabilities on a low-default-risk basis and on the funding policy basis represents the present
value of the investment risk premium that must be earned in future years to keep future contributions for currently accrued plan
costs at the levels anticipated by the funding policy.
Benefit security for members of the plan relies on a combination of the assets in the plan, the investment income generated f rom
those assets and the ability of the plan sponsor to make necessary future contributions. If future returns fall short of 6.8%,
benefit security could be at risk without higher than currently anticipated future contributions.
The funded status on a low-default-risk basis is not appropriate for assessing the sufficiency of plan assets to cover the cost of
settling the plan’s benefit obligations (see Funded Status – Termination Basis), nor is it appropriate for assessing the need for
future contributions (see Funded Status – Funding Policy Basis).
1 This index is based on a yield curve of hypothetical AA-rated zero-coupon corporate bonds whose maturities range from 6 months to 30
years. The index represents the single discount rate that would produce the same present value as discounting a standardized set of
liability cash flows for a fully open pension plan using the yield curve. The liability cash flows are reasonably consistent with the pattern of
benefits expected to be paid from the entire Public Employees’ Retirement Fund for current and former plan members. A different index,
hence a different discount rate, may be needed to measure the LDROM for a subset of the fund, such as a single rate plan or a group of
retirees.
Supplementary Information
• Normal Cost by Benefit Group 33
• Summary of Valuation Data 34
• Status of PEPRA Transition 35
• Plan's Major Benefit Options 36
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 33
Normal Cost by Benefit Group
The table below displays the Total Normal Cost broken out by benefit group for FY 2027-28. 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 values due to such factors as changes in economic and demographic assumptions,
changes in plan benefits, or changes in applicable law.
Rate
Plan
Identifier Benefit Group Name
Total
Normal
Cost
FY 2027-28
Offset due to
Employee
Contributions
FY 2027-28
Employer
Normal
Cost1
FY 2027-28
Number
of
Actives
Payroll on
6/30/2025
5080 Safety Police First Level 39.28% 9.00% 30.28% 23 $5,737,474
30705 Safety Fire First Level N/A N/A N/A 0 0
30706 Safety Fire Second Level 34.91% 9.00% 25.91% 36 8,503,691
30707 Safety Fire Third Level 33.60% 9.00% 24.60% 9 1,833,862
30708 Safety Police Second Level 35.89% 9.00% 26.89% 2 553,743
25006 Safety Fire PEPRA Level 20.88% 11.75% 9.13% 50 8,132,633
25007 Safety Police PEPRA Level 27.35% 11.75% 15.60% 52 8,493,573
Plan Total 30.06% 10.41% 19.65% 172 $33,254,976
1 The employer normal cost for individual rate plans is provided for illustrative purposes only. The employer normal cost rate for
contribution purposes is the blended rate shown in the Plan Total row and is the employer normal cost contribution rate that applies to the
covered payroll of members in every rate plan shown above.
Note that if a Benefit Group above has multiple bargaining units, each of which has separately contracted for different benef its
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, please contact a CalPERS actuary.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 34
Summary of Valuation Data
June 30, 2024 June 30, 2025
1. Active Members
a) Counts 159 172
b) Average Attained Age
40.28 40.00
c) Average Entry Age to Rate Plan 29.43 29.85
d) Average Years of Credited Service 10.93 10.15
e) Average Annual Covered Payroll $189,512 $193,343
f) Annual Covered Payroll $30,132,343 $33,254,975
g) Projected Annual Payroll for Contribution Year $32,734,993 $36,338,610
h) Present Value of Future Payroll $282,440,619 $318,372,685
2. Transferred Members
a) Counts 63 67
b) Average Attained Age 42.48 43.27
c) Average Years of Credited Service 4.08 3.89
d) Average Annual Covered Payroll $155,381 $159,195
3. Separated Members
a) Counts 72 66
b) Average Attained Age 43.69 43.68
c) Average Years of Credited Service 2.88 2.29
d) Average Annual Covered Payroll $102,686 $100,197
4. Retired Members and Beneficiaries Receiving Payments
a) Counts 464 464
b) Average Attained Age 69.61 69.68
c) Average Annual Benefits $68,805 $71,719
d) Total Annual Benefits $31,925,393 $33,277,699
5. Active to Retired Ratio [(1a) ÷ (4a)] 0.34 0.37
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.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 35
Status of PEPRA Transition
The California Public Employees' Pension Reform Act of 2013 (PEPRA), which took effect in January 2013, changed
CalPERS retirement benefits and placed compensation limits on new members joining CalPERS on or after January 1, 2013.
One of the objectives of PEPRA was to improve the ability of employers to manage the costs of retirement benefits for their
members. While such changes can reduce future benefit costs in a meaningful way, the full impact on employer contributions
will not occur until all active members are subject to the rules and provisions of PEPRA. The table below illustrates the status
of this transition as of June 30, 2025.
Classic PEPRA
PEPRA
as a Percent
of Total
Active Members
Count 70 102 59.3%
Average Attained Age 48.24 34.34
Average Entry Age 29.55 30.06
Average Years of Credited Service 18.62 4.33
Average Annual Covered Payroll $237,554 $163,002
Annual Covered Payroll $16,628,770 $16,626,205 50.0%
Present Value of Future Payroll $105,576,263 $212,796,422 66.8%
Transferred Members
Count 38 29 43.3%
Separated Members
Count 38 28 42.4%
Retired Members and Beneficiaries Receiving Payments
Count 461 3 0.6%
Average Annual Benefit $71,890 $45,488
Total Annual Benefits $33,141,234 $136,465 0.4%
Accrued Liabilities
Active Members $132,738,956 $18,093,813 12.0%
Transferred Members 13,112,041 2,558,383 16.3%
Separated Members 3,527,855 929,299 20.8%
Retired Members and Beneficiaries 429,636,885 2,450,762 0.6%
Total $579,015,737 $24,032,257 4.0%
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 36
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 stand ard and optional plan provisions is in
Appendix B.
Benefit Group
Member Category Police Fire Fire Police Fire Fire Police
Demographics
Actives Yes Yes No No 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% 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 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Survivor Allowance (PRSA) No No No No No No No
COLA 2% 2% 2% 2% 2% 2% 2%
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 37
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 stand ard and optional plan provisions is in
Appendix B.
Benefit Group
Member Category Fire Police Fire Fire Fire Fire Police
Demographics
Actives Yes Yes No No No No No
Transfers/Separated Yes Yes No No No No No
Receiving No Yes Yes Yes Yes Yes Yes
112653 217220 217221 217224 217225 217226 217231
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 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Survivor Allowance (PRSA) No No No No No No No
COLA 2% 2% 2% 2% 2% 2% 2%
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 38
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 stand ard and optional plan provisions is in
Appendix B.
Benefit Group
Member Category Police Police Police
Demographics
Actives No No No
Transfers/Separated No No No
Receiving Yes Yes Yes
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 $2,000 $2,000 $2,000
Survivor Allowance (PRSA) No No No
COLA 2% 2% 2%
Appendix A - Actuarial Methods and Assumptions
• Actuarial Data 40
• Actuarial Methods 40
• Actuarial Assumptions 44
• Miscellaneous 65
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 40
Actuarial Data
As stated in the Actuarial Certification, the data which serves as the basis of this valuation has been obtained from the var ious
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 doe s
not always contain the latest salary information for former members now 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, however, and generally do not have a material impact o n
the required employer contributions.
Actuarial Methods
Actuarial Cost Method
With one exception, the actuarial cost method used in this valuation is the Entry Age Actuarial Cost Method. This method is
used to calculate the required employer contributions and the PEPRA member contribution rate. Under this method, the cost of
the projected benefits is allocated on an individual basis as a level percent of earnings for the individual between entry age and
retirement age. The portion allocated to the year following the valuation date is the normal cost. 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.
The actuarial accrued liability for active members is then calculated as the present value of benefits minus the present value of
future normal cost, or the portion of the total present value of benefits 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 benef its
expected to be paid. No normal costs are applicable for these participants.
To calculate the accrued liability on termination basis, this valuation use d the Traditional Unit Credit Actuarial Cost Method. This
method differs from the entry age method only for active members where the accrued liability is the present value of benefits
assuming no future pay increases or service accruals.
Amortization of Unfunded Actuarial Accrued Liability
The excess of the total actuarial accrued liability over the fair value of plan assets is called the unfunded actuarial accrued
liability (UAL). Funding requirements are determined 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 according to the CalPERS Actuarial 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 will continue to be amortized according to the prior policy.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 41
Amortization of Unfunded Actuarial Accrued Liability (continued)
Prior Policy (Bases Established on or after June 30, 2013, and 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 are amortized over a period of five
years (20 years prior to June 30, 2014). A summary is provided in the following table:
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 up 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 no 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 provided in the table below:
Driver
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
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.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 42
Amortization of Unfunded Actuarial Accrued Liability (continued)
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 se t
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 amortize 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.
Exceptions for Plans in Surplus
If a surplus exists (i.e., the Fair Value of Assets exceeds the plan’s accrued 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 les s.
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 absolute 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 fair value of assets. Asset values include accounts receivable.
PEPRA Normal Cost Rate Methodology
Per Government Code section 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 form ula,
eligibility and vesting criteria, ancillary benefit provisions, and any automatic cost-of-living adjustments as determined by the
public retirement system.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 43
PEPRA Normal Cost Rate Methodology (continued)
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 enough yet. The total PEPRA normal cost for each PEPRA
benefit tier will be determined based on the entire active plan population (both PEPRA and Classic) only until 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
Once one of these conditions is met, the total PEPRA normal cost for each PEPRA benefit tier will be determined using the
entire active PEPRA population.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 44
Actuarial Assumptions
In 2025, CalPERS completed its most recent asset liability management study incorporating actuarial assumptions and strategic
asset allocation. In November 2025, the board adopted changes to the asset allocation that increased the expected volatility of
returns. The adopted asset allocation 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 and additional rationale for the selection of the actuarial assumptions, please refer to the 2025 CalPERS
Experience Study and Review of Actuarial Assumptions 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 and price inflation assumption used for the accrued liability on a termination
basis and the interest rate used for the low-default-risk obligation measure) represent an estimate of future experience rather
than observations of the estimates inherent in market data.
Economic Assumptions
Discount Rate
The prescribed discount rate assumption, adopted by the board on November 1 9, 2025, is 6.80% compounded annually (net of
investment and administrative expenses) as of June 30, 2025. Following the adoption of the Total Portfolio Approach (TPA), the
discount rate is no longer based on a traditional building-block method tied to fixed target allocations for individual major asset
classes. Instead, the long-term expected rate of return on assets is determined using a holistic total-fund framework. Expected
future real rates of return (expected returns, net of pension plan investment expense and inflation) are derived from a board -
adopted Reference Portfolio (comprising a 75% global equity and 25% bond mix) that sets the baseline market risk, combined
with expected additional returns generated through active portfolio construction and asset classes outside of the reference
portfolio. The current assumption has been reviewed for this valuation and is based on capital market assumptions and the total
fund risk profile developed by the Investment Office in 2025.
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 matching asset and liability durations as of the termination date. The accrued
liabilities on a termination basis in this report use discount rates that are based on the 20 -year Treasury rate on the valuation
date.
To illustrate the impact of the variability of interest rates, the accrued liabilities on a termination basis in this report use discount
rates 1% below and 1% above the 20-year Treasury rate on the valuation date. The 20-year Treasury rate was 4.79% on June
30, 2025.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 45
Salary Increases
Annual increases vary by category, entry age, and duration of service. A sample of assumed increases due to seniority, merit
and promotion are shown below. Assumed wage inflation is combined with these factors to develop the total expected salary
increases.
Public Agency Miscellaneous
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.0715 0.0578 0.0443
1 0.0641 0.0507 0.0380
2 0.0574 0.0445 0.0326
3 0.0514 0.0391 0.0279
4 0.0460 0.0343 0.0240
5 0.0412 0.0301 0.0205
10 0.0237 0.0156 0.0095
15 0.0166 0.0106 0.0076
20 0.0125 0.0083 0.0049
25 0.0095 0.0065 0.0031
30 0.0072 0.0051 0.0020
Public Agency Fire
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.1574 0.1551 0.0682
1 0.1244 0.1161 0.0555
2 0.0983 0.0869 0.0451
3 0.0777 0.0651 0.0367
4 0.0614 0.0488 0.0298
5 0.0486 0.0365 0.0242
10 0.0205 0.0153 0.0087
15 0.0182 0.0134 0.0102
20 0.0161 0.0118 0.0120
25 0.0143 0.0104 0.0141
30 0.0127 0.0091 0.0166
Public Agency Police
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.1228 0.1030 0.0621
1 0.0975 0.0809 0.0511
2 0.0774 0.0635 0.0421
3 0.0615 0.0498 0.0346
4 0.0488 0.0391 0.0285
5 0.0387 0.0307 0.0234
10 0.0194 0.0163 0.0134
15 0.0190 0.0150 0.0130
20 0.0186 0.0138 0.0126
25 0.0182 0.0128 0.0122
30 0.0178 0.0118 0.0119
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 46
Salary Increases (continued)
Public Agency County Peace Officers
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.1096 0.0980 0.0754
1 0.0892 0.0789 0.0594
2 0.0726 0.0635 0.0468
3 0.0591 0.0511 0.0369
4 0.0482 0.0411 0.0291
5 0.0392 0.0331 0.0229
10 0.0167 0.0142 0.0071
15 0.0163 0.0126 0.0066
20 0.0159 0.0112 0.0062
25 0.0155 0.0100 0.0058
30 0.0151 0.0089 0.0054
Schools
Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40)
0 0.0000 0.0000 0.0000
1 0.0516 0.0460 0.0377
2 0.0471 0.0410 0.0327
3 0.0431 0.0365 0.0282
4 0.0396 0.0325 0.0242
5 0.0366 0.0290 0.0207
10 0.0269 0.0176 0.0136
15 0.0206 0.0144 0.0108
20 0.0148 0.0103 0.0080
25 0.0113 0.0092 0.0067
30 0.0054 0.0051 0.0026
• 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
2.50% compounded annually.
Termination Liability Price Inflation
The breakeven inflation rate for 20-year Treasuries on the valuation date, 2.47%.
Wage Inflation
3.00% compounded annually. This is used in projecting individual salary increases.
Payroll Growth
2.80% compounded annually. This is used as the escalation rate of the amortization payments on level percent of payroll
amortization bases, that is, on any amortization bases established prior to 2019 for plans that currently have active members.
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.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 47
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 calculation 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 time 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 unforeseen 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 2025. For purposes of the mortality rates, the rates incorporate generational mortality to
capture ongoing 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 2025 CalPERS Experience Study and Review of Actuarial
Assumptions report that can be found on the CalPERS website.
Rates vary by age and gender. This table only contains a sample of the 2017 base table rates for illustrative purposes. The n on-
industrial death rates are used for all plans. The industrial death rates are used for Safety plans, except for local Safety
members described in Government Code section 20423.6 where the agency has not specifically contracted for industrial death
benefits.
Miscellaneous Safety
Non-Industrial Death
(Not Job-Related)
Non-Industrial Death
(Not Job-Related)
Industrial Death
(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-2021.
• Miscellaneous plans usually have industrial death rates set to zero unless the agency has specifically contracted for
industrial death benefits. If so, each non-industrial 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.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 48
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
(Not Job-Related)
Industrial Disability
(Job-Related)
Age Male Female Male Female Male Female
50 0.00266 0.00197 0.01701 0.01424 0.00430 0.00308
55 0.00390 0.00328 0.02210 0.01753 0.00621 0.00556
60 0.00578 0.00458 0.02708 0.01983 0.00944 0.00878
65 0.00857 0.00608 0.03334 0.02252 0.01394 0.01176
70 0.01333 0.00989 0.04001 0.02854 0.02163 0.01819
75 0.02391 0.01777 0.05376 0.04099 0.03446 0.03078
80 0.04371 0.03401 0.07936 0.06051 0.05853 0.05121
85 0.08274 0.06166 0.11561 0.09312 0.10137 0.07977
90 0.14539 0.11086 0.16608 0.14301 0.16584 0.12331
95 0.24664 0.20364 0.24664 0.20364 0.24664 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-2021.
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 60 for Miscellaneous members and age 54 for Safety members.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 49
Termination with Refund
Rates vary by entry age and service for Miscellaneous plans. Rates vary by service for Safety plans. See sample rates in tabl es
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 0.1757 0.1809 0.1698 0.1779 0.1600 0.1729 0.1502 0.1678 0.1404 0.1628 0.1433 0.1665
1 0.1448 0.1539 0.1378 0.1492 0.1261 0.1413 0.1144 0.1334 0.1027 0.1255 0.1053 0.1270
2 0.1151 0.1262 0.1084 0.1211 0.0973 0.1125 0.0862 0.1040 0.0751 0.0955 0.0772 0.0954
3 0.0876 0.0986 0.0820 0.0940 0.0728 0.0863 0.0636 0.0785 0.0543 0.0708 0.0559 0.0700
4 0.0633 0.0724 0.0590 0.0687 0.0519 0.0624 0.0447 0.0562 0.0376 0.0499 0.0387 0.0490
5 0.0432 0.0495 0.0400 0.0467 0.0347 0.0421 0.0294 0.0375 0.0240 0.0329 0.0249 0.0321
10 0.0096 0.0120 0.0088 0.0112 0.0074 0.0099 0.0060 0.0085 0.0046 0.0072 0.0044 0.0066
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 Public Agency Miscellaneous termination and refund rates are also used for Public Agency Local Prosecutors.
Public Agency Safety
Duration of
Service Fire Police County Peace Officer
Male Female Male Female Male Female
0 0.1112 0.1430 0.1298 0.1301 0.1077 0.1302
1 0.0717 0.1059 0.0789 0.0848 0.0750 0.0962
2 0.0442 0.0760 0.0460 0.0528 0.0514 0.0697
3 0.0262 0.0525 0.0263 0.0313 0.0350 0.0494
4 0.0151 0.0346 0.0154 0.0178 0.0238 0.0342
5 0.0087 0.0215 0.0098 0.0101 0.0163 0.0230
10 0.0017 0.0000 0.0031 0.0034 0.0039 0.0035
15 0.0000 0.0000 0.0000 0.0000 0.0020 0.0028
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
• The police termination and refund rates are also used for Other Safety, Local Sheriff, and School Police.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 50
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 0.1931 0.2047 0.1808 0.1885 0.1604 0.1615 0.1400 0.1345 0.1340 0.1167 0.1281 0.0989
1 0.1866 0.2047 0.1725 0.1863 0.1489 0.1555 0.1253 0.1248 0.1158 0.1074 0.1062 0.0900
2 0.1659 0.1870 0.1520 0.1690 0.1286 0.1390 0.1053 0.1090 0.0950 0.0940 0.0847 0.0790
3 0.1379 0.1601 0.1253 0.1441 0.1043 0.1174 0.0833 0.0907 0.0740 0.0788 0.0646 0.0670
4 0.1081 0.1301 0.0975 0.1167 0.0798 0.0945 0.0622 0.0722 0.0546 0.0635 0.0471 0.0548
5 0.0809 0.1010 0.0724 0.0905 0.0582 0.0728 0.0441 0.0552 0.0384 0.0491 0.0328 0.0430
10 0.0205 0.0248 0.0184 0.0220 0.0150 0.0174 0.0116 0.0127 0.0089 0.0103 0.0062 0.0078
15 0.0096 0.0136 0.0087 0.0118 0.0071 0.0088 0.0055 0.0057 0.0040 0.0044 0.0024 0.0031
20 0.0055 0.0070 0.0046 0.0059 0.0033 0.0042 0.0019 0.0024 0.0009 0.0012 0.0000 0.0000
25 0.0025 0.0039 0.0022 0.0033 0.0017 0.0023 0.0011 0.0014 0.0006 0.0007 0.0000 0.0000
30 0.0012 0.0019 0.0012 0.0017 0.0013 0.0013 0.0014 0.0010 0.0007 0.0005 0.0000 0.0000
35 0.0006 0.0010 0.0006 0.0008 0.0007 0.0007 0.0007 0.0005 0.0003 0.0002 0.0000 0.0000
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 51
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 tabl es
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 0.0393 0.0505 0.0393 0.0505 0.0376 0.0447 0.0359 0.0388 0.0317 0.0375
10 0.0270 0.0348 0.0270 0.0348 0.0256 0.0326 0.0242 0.0303 0.0199 0.0240
15 0.0187 0.0251 0.0187 0.0251 0.0172 0.0217 0.0157 0.0183 0.0125 0.0140
20 0.0147 0.0183 0.0147 0.0183 0.0115 0.0138 0.0083 0.0092 0.0000 0.0000
25 0.0086 0.0112 0.0086 0.0112 0.0069 0.0081 0.0000 0.0000 0.0000 0.0000
30 0.0054 0.0060 0.0054 0.0060 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
35 0.0035 0.0048 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
• The Public Agency Miscellaneous termination with vested benefits rates are also used for Public Agency Local
Prosecutors.
Public Agency Safety
Duration of
Service Fire Police County Peace Officer
Male Female Male Female Male Female
5 0.0089 0.0224 0.0156 0.0257 0.0177 0.0266
10 0.0066 0.0164 0.0113 0.0184 0.0126 0.0189
15 0.0048 0.0120 0.0082 0.0131 0.0089 0.0134
20 0.0035 0.0088 0.0060 0.0094 0.0063 0.0095
25 0.0024 0.0061 0.0042 0.0067 0.0042 0.0063
30 0.0012 0.0031 0.0021 0.0034 0.0021 0.0031
35 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 60 and a Safety
member at age 54.
• The Police termination with vested benefits rates are also used for 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 0.0385 0.0494 0.0385 0.0494 0.0364 0.0412 0.0344 0.0329 0.0297 0.0285
10 0.0326 0.0438 0.0326 0.0438 0.0281 0.0353 0.0236 0.0268 0.0199 0.0241
15 0.0222 0.0281 0.0222 0.0281 0.0189 0.0234 0.0157 0.0187 0.0128 0.0157
20 0.0162 0.0198 0.0162 0.0198 0.0125 0.0156 0.0087 0.0113 0.0000 0.0000
25 0.0094 0.0134 0.0094 0.0134 0.0079 0.0107 0.0000 0.0000 0.0000 0.0000
30 0.0061 0.0074 0.0061 0.0074 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
35 0.0037 0.0050 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 52
Non-Industrial (Not Job-Related) Disability
Rates vary by age.
Age Miscellaneous Safety
20 0.0000 0.0000
25 0.0000 0.0000
30 0.0003 0.0003
35 0.0005 0.0003
40 0.0010 0.0005
45 0.0018 0.0007
50 0.0025 0.0008
55 0.0019 0.0012
60 0.0017 0.0028
• The Miscellaneous non-industrial disability rates are used for Local Prosecutors and Schools.
• The Safety non-industrial disability rates are used for Police, Fire, County Peace Officer, 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 0.0043
40 0.0023 0.0110 0.0062
45 0.0036 0.0141 0.0081
50 0.0146 0.0185 0.0106
55 0.0307 0.0479 0.0151
60 0.0503 0.0602 0.0174
• The County Peace Officer industrial disability rates are also used for Local Sheriff and Other Safety.
• 80% of the County Peace Officer industrial disability rates are used for School Police.
• 1% of the County Peace Officer 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.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 53
Service Retirement
Retirement rates vary by age, service, and formula.
Public Agency Miscellaneous 1.5% at age 65
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.005 0.012 0.014 0.020 0.023 0.023
51 0.012 0.014 0.014 0.018 0.020 0.020
52 0.009 0.012 0.014 0.019 0.021 0.021
53 0.009 0.012 0.014 0.020 0.024 0.024
54 0.011 0.014 0.017 0.025 0.030 0.030
55 0.012 0.023 0.033 0.060 0.084 0.084
56 0.014 0.022 0.032 0.053 0.071 0.071
57 0.016 0.025 0.033 0.053 0.070 0.070
58 0.022 0.026 0.036 0.057 0.074 0.074
59 0.023 0.035 0.044 0.065 0.086 0.086
60 0.037 0.043 0.054 0.078 0.095 0.114
61 0.038 0.055 0.073 0.093 0.116 0.139
62 0.055 0.076 0.090 0.110 0.127 0.136
63 0.075 0.097 0.112 0.133 0.149 0.167
64 0.076 0.104 0.114 0.142 0.163 0.176
65 0.103 0.135 0.154 0.184 0.202 0.211
66 0.133 0.170 0.179 0.198 0.207 0.203
67 0.137 0.181 0.190 0.203 0.203 0.203
68 0.146 0.176 0.178 0.191 0.191 0.191
69 0.124 0.163 0.171 0.184 0.184 0.184
70 0.197 0.197 0.197 0.197 0.197 0.197
Public Agency Miscellaneous 2% at age 60
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.006 0.014 0.016 0.023 0.027 0.027
51 0.014 0.016 0.017 0.021 0.023 0.023
52 0.010 0.014 0.017 0.022 0.025 0.025
53 0.010 0.014 0.017 0.023 0.028 0.028
54 0.013 0.016 0.020 0.029 0.035 0.035
55 0.014 0.027 0.039 0.071 0.099 0.099
56 0.017 0.026 0.038 0.062 0.083 0.083
57 0.019 0.029 0.039 0.062 0.082 0.082
58 0.026 0.031 0.042 0.067 0.087 0.087
59 0.027 0.041 0.052 0.077 0.101 0.101
60 0.044 0.050 0.064 0.092 0.112 0.134
61 0.045 0.065 0.086 0.109 0.136 0.164
62 0.065 0.089 0.106 0.129 0.149 0.160
63 0.088 0.114 0.132 0.157 0.175 0.197
64 0.089 0.122 0.134 0.167 0.192 0.207
65 0.121 0.159 0.181 0.216 0.238 0.248
66 0.157 0.200 0.210 0.233 0.244 0.239
67 0.161 0.213 0.223 0.239 0.239 0.239
68 0.172 0.207 0.209 0.225 0.225 0.225
69 0.146 0.192 0.201 0.216 0.216 0.216
70 0.232 0.232 0.232 0.232 0.232 0.232
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 54
Service Retirement (continued)
Public Agency Miscellaneous 2% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.007 0.014 0.017 0.023 0.028 0.028
51 0.015 0.016 0.018 0.021 0.024 0.024
52 0.010 0.015 0.017 0.022 0.025 0.025
53 0.010 0.016 0.019 0.026 0.030 0.030
54 0.014 0.019 0.023 0.033 0.041 0.041
55 0.016 0.031 0.046 0.083 0.116 0.116
56 0.023 0.034 0.049 0.081 0.107 0.107
57 0.025 0.039 0.053 0.083 0.109 0.109
58 0.032 0.040 0.053 0.085 0.112 0.112
59 0.034 0.050 0.064 0.095 0.126 0.126
60 0.056 0.065 0.083 0.118 0.145 0.173
61 0.046 0.066 0.088 0.113 0.140 0.170
62 0.095 0.129 0.155 0.186 0.216 0.232
63 0.115 0.149 0.171 0.204 0.226 0.256
64 0.101 0.137 0.151 0.187 0.216 0.233
65 0.149 0.195 0.223 0.265 0.293 0.307
66 0.212 0.268 0.282 0.315 0.329 0.323
67 0.188 0.249 0.260 0.279 0.279 0.279
68 0.203 0.243 0.245 0.264 0.264 0.264
69 0.161 0.211 0.221 0.238 0.238 0.238
70 0.275 0.275 0.275 0.275 0.275 0.275
Public Agency Miscellaneous 2.5% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.009 0.018 0.023 0.031 0.037 0.037
51 0.019 0.021 0.023 0.027 0.031 0.031
52 0.012 0.018 0.023 0.028 0.033 0.033
53 0.014 0.020 0.026 0.035 0.041 0.041
54 0.017 0.023 0.029 0.041 0.050 0.050
55 0.024 0.049 0.071 0.128 0.179 0.179
56 0.030 0.046 0.068 0.111 0.146 0.146
57 0.031 0.048 0.066 0.104 0.138 0.138
58 0.040 0.049 0.064 0.103 0.135 0.135
59 0.039 0.059 0.075 0.110 0.145 0.145
60 0.060 0.069 0.087 0.126 0.153 0.183
61 0.050 0.072 0.095 0.121 0.151 0.182
62 0.096 0.131 0.157 0.189 0.220 0.236
63 0.099 0.129 0.149 0.177 0.197 0.222
64 0.099 0.134 0.149 0.184 0.212 0.229
65 0.131 0.172 0.196 0.233 0.258 0.269
66 0.210 0.266 0.279 0.312 0.326 0.319
67 0.183 0.242 0.253 0.272 0.272 0.272
68 0.184 0.220 0.222 0.240 0.240 0.240
69 0.158 0.207 0.217 0.234 0.234 0.234
70 0.267 0.267 0.267 0.267 0.267 0.267
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 55
Service Retirement (continued)
Public Agency Miscellaneous 2.7% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.008 0.016 0.020 0.027 0.033 0.033
51 0.017 0.019 0.021 0.026 0.029 0.029
52 0.012 0.018 0.023 0.028 0.033 0.033
53 0.013 0.019 0.025 0.034 0.039 0.039
54 0.018 0.025 0.031 0.044 0.053 0.053
55 0.030 0.060 0.088 0.158 0.221 0.221
56 0.036 0.054 0.080 0.131 0.174 0.174
57 0.034 0.052 0.070 0.111 0.147 0.147
58 0.046 0.055 0.074 0.119 0.157 0.157
59 0.042 0.062 0.079 0.117 0.154 0.154
60 0.066 0.077 0.096 0.139 0.170 0.202
61 0.053 0.077 0.102 0.132 0.164 0.199
62 0.093 0.127 0.152 0.184 0.213 0.228
63 0.104 0.134 0.155 0.184 0.205 0.231
64 0.096 0.130 0.144 0.178 0.205 0.221
65 0.155 0.202 0.231 0.275 0.304 0.318
66 0.199 0.252 0.265 0.296 0.309 0.303
67 0.176 0.233 0.244 0.262 0.262 0.262
68 0.188 0.225 0.227 0.245 0.245 0.245
69 0.165 0.216 0.227 0.244 0.244 0.244
70 0.256 0.256 0.256 0.256 0.256 0.256
Public Agency Miscellaneous 3% at age 60
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.009 0.019 0.023 0.031 0.037 0.037
51 0.021 0.023 0.025 0.030 0.034 0.034
52 0.013 0.018 0.023 0.029 0.033 0.033
53 0.013 0.019 0.025 0.034 0.039 0.039
54 0.016 0.022 0.028 0.040 0.048 0.048
55 0.015 0.031 0.045 0.081 0.114 0.114
56 0.022 0.033 0.048 0.080 0.105 0.105
57 0.024 0.038 0.052 0.082 0.108 0.108
58 0.034 0.041 0.055 0.089 0.116 0.116
59 0.032 0.049 0.062 0.093 0.121 0.121
60 0.096 0.112 0.141 0.204 0.249 0.295
61 0.058 0.085 0.112 0.143 0.179 0.216
62 0.104 0.141 0.169 0.203 0.237 0.254
63 0.106 0.138 0.158 0.188 0.210 0.236
64 0.100 0.136 0.151 0.187 0.215 0.232
65 0.161 0.211 0.241 0.287 0.317 0.332
66 0.220 0.278 0.292 0.327 0.341 0.334
67 0.185 0.245 0.256 0.275 0.275 0.275
68 0.191 0.229 0.231 0.249 0.249 0.249
69 0.163 0.214 0.224 0.241 0.241 0.241
70 0.278 0.278 0.278 0.278 0.278 0.278
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 56
Service Retirement (continued)
Public Agency Miscellaneous 2% at age 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 0.008 0.013 0.015 0.019 0.023 0.023
53 0.009 0.014 0.016 0.023 0.026 0.026
54 0.012 0.015 0.019 0.026 0.033 0.033
55 0.013 0.025 0.037 0.066 0.092 0.092
56 0.016 0.025 0.036 0.060 0.080 0.080
57 0.018 0.027 0.037 0.059 0.077 0.077
58 0.023 0.028 0.036 0.059 0.077 0.077
59 0.023 0.033 0.042 0.063 0.083 0.083
60 0.035 0.041 0.050 0.074 0.090 0.107
61 0.037 0.053 0.070 0.090 0.113 0.137
62 0.055 0.076 0.091 0.109 0.127 0.136
63 0.071 0.091 0.105 0.126 0.140 0.158
64 0.070 0.097 0.107 0.132 0.153 0.165
65 0.102 0.133 0.153 0.181 0.201 0.210
66 0.139 0.176 0.185 0.207 0.215 0.212
67 0.145 0.192 0.201 0.216 0.216 0.216
68 0.158 0.191 0.192 0.207 0.207 0.207
69 0.138 0.180 0.189 0.203 0.203 0.203
70 0.212 0.212 0.212 0.212 0.212 0.212
Public Agency Police Half Pay at age 55 and 2% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.015 0.020 0.031 0.037 0.054 0.060
51 0.006 0.027 0.034 0.031 0.045 0.060
52 0.055 0.025 0.033 0.037 0.055 0.059
53 0.014 0.014 0.030 0.040 0.062 0.071
54 0.064 0.029 0.036 0.039 0.073 0.103
55 0.031 0.039 0.070 0.118 0.156 0.191
56 0.037 0.051 0.068 0.101 0.127 0.150
57 0.061 0.063 0.077 0.105 0.119 0.119
58 0.091 0.070 0.078 0.101 0.112 0.112
59 0.135 0.083 0.084 0.103 0.113 0.113
60 0.066 0.086 0.094 0.115 0.126 0.126
61 0.120 0.120 0.120 0.120 0.120 0.120
62 0.140 0.140 0.140 0.140 0.140 0.140
63 0.150 0.150 0.150 0.150 0.150 0.150
64 0.140 0.140 0.140 0.140 0.140 0.140
65 1.000 1.000 1.000 1.000 1.000 1.000
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 57
Service Retirement (continued)
Public Agency Fire Half Pay at age 55 and 2% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.007 0.009 0.014 0.017 0.025 0.027
51 0.003 0.015 0.020 0.019 0.026 0.035
52 0.034 0.015 0.020 0.023 0.033 0.036
53 0.014 0.014 0.030 0.040 0.062 0.071
54 0.071 0.033 0.040 0.043 0.081 0.115
55 0.024 0.031 0.055 0.093 0.123 0.151
56 0.033 0.045 0.060 0.090 0.113 0.133
57 0.075 0.075 0.093 0.127 0.143 0.143
58 0.070 0.053 0.059 0.077 0.086 0.086
59 0.122 0.076 0.077 0.094 0.103 0.103
60 0.067 0.087 0.095 0.116 0.127 0.127
61 0.121 0.121 0.121 0.121 0.121 0.121
62 0.140 0.140 0.140 0.140 0.140 0.140
63 0.136 0.136 0.136 0.136 0.136 0.136
64 0.163 0.163 0.163 0.163 0.163 0.163
65 1.000 1.000 1.000 1.000 1.000 1.000
Public Agency Police 2% at age 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.023 0.030 0.046 0.055 0.081 0.090
51 0.009 0.040 0.051 0.047 0.067 0.090
52 0.083 0.038 0.049 0.056 0.082 0.088
53 0.021 0.021 0.045 0.060 0.093 0.106
54 0.096 0.043 0.054 0.058 0.109 0.154
55 0.046 0.059 0.105 0.177 0.234 0.286
56 0.056 0.077 0.101 0.152 0.190 0.224
57 0.092 0.093 0.116 0.157 0.178 0.178
58 0.137 0.104 0.117 0.151 0.168 0.168
59 0.201 0.125 0.126 0.155 0.169 0.169
60 0.099 0.130 0.141 0.173 0.189 0.189
61 0.180 0.180 0.180 0.180 0.180 0.180
62 0.210 0.210 0.210 0.210 0.210 0.210
63 0.226 0.226 0.226 0.226 0.226 0.226
64 0.211 0.211 0.211 0.211 0.211 0.211
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.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 58
Service Retirement (continued)
Public Agency Fire 2% at age 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.010 0.014 0.021 0.025 0.037 0.040
51 0.005 0.023 0.030 0.028 0.039 0.053
52 0.051 0.023 0.030 0.035 0.050 0.054
53 0.021 0.021 0.045 0.060 0.093 0.106
54 0.107 0.049 0.060 0.065 0.122 0.173
55 0.036 0.046 0.083 0.140 0.184 0.225
56 0.050 0.068 0.089 0.135 0.168 0.198
57 0.110 0.113 0.140 0.190 0.215 0.215
58 0.105 0.080 0.089 0.116 0.129 0.129
59 0.183 0.114 0.115 0.140 0.154 0.154
60 0.101 0.131 0.142 0.175 0.191 0.191
61 0.182 0.182 0.182 0.182 0.182 0.182
62 0.210 0.210 0.210 0.210 0.210 0.210
63 0.204 0.204 0.204 0.204 0.204 0.204
64 0.246 0.246 0.246 0.246 0.246 0.246
65 1.000 1.000 1.000 1.000 1.000 1.000
Public Agency Police 3% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.021 0.029 0.045 0.054 0.081 0.089
51 0.009 0.039 0.051 0.047 0.066 0.088
52 0.082 0.037 0.049 0.055 0.081 0.088
53 0.021 0.021 0.045 0.059 0.093 0.105
54 0.096 0.043 0.054 0.058 0.110 0.155
55 0.046 0.059 0.107 0.179 0.237 0.289
56 0.057 0.078 0.103 0.154 0.193 0.227
57 0.093 0.096 0.118 0.160 0.181 0.181
58 0.137 0.105 0.117 0.152 0.168 0.168
59 0.202 0.125 0.126 0.155 0.169 0.169
60 0.100 0.130 0.142 0.174 0.190 0.190
61 0.182 0.182 0.182 0.182 0.182 0.182
62 0.213 0.213 0.213 0.213 0.213 0.213
63 0.224 0.224 0.224 0.224 0.224 0.224
64 0.213 0.213 0.213 0.213 0.213 0.213
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.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 59
Service Retirement (continued)
Public Agency Fire 3% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.010 0.014 0.020 0.025 0.037 0.040
51 0.005 0.023 0.030 0.028 0.039 0.052
52 0.050 0.023 0.030 0.034 0.050 0.053
53 0.021 0.021 0.045 0.060 0.093 0.105
54 0.107 0.049 0.060 0.065 0.123 0.174
55 0.037 0.046 0.084 0.142 0.187 0.228
56 0.050 0.069 0.091 0.137 0.171 0.201
57 0.113 0.115 0.141 0.192 0.218 0.218
58 0.105 0.080 0.089 0.116 0.129 0.129
59 0.183 0.114 0.115 0.141 0.154 0.154
60 0.101 0.131 0.143 0.175 0.191 0.191
61 0.183 0.183 0.183 0.183 0.183 0.183
62 0.213 0.213 0.213 0.213 0.213 0.213
63 0.203 0.203 0.203 0.203 0.203 0.203
64 0.248 0.248 0.248 0.248 0.248 0.248
65 1.000 1.000 1.000 1.000 1.000 1.000
Public Agency Police 3% at age 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.082 0.075 0.131 0.190 0.256 0.322
51 0.061 0.058 0.102 0.149 0.202 0.254
52 0.039 0.071 0.101 0.139 0.181 0.222
53 0.016 0.040 0.086 0.133 0.184 0.235
54 0.059 0.068 0.084 0.105 0.175 0.280
55 0.043 0.055 0.098 0.165 0.218 0.266
56 0.065 0.088 0.117 0.175 0.220 0.259
57 0.110 0.111 0.137 0.187 0.212 0.212
58 0.177 0.135 0.151 0.196 0.218 0.218
59 0.279 0.174 0.176 0.216 0.235 0.235
60 0.121 0.158 0.172 0.211 0.230 0.230
61 0.205 0.205 0.205 0.205 0.205 0.205
62 0.211 0.211 0.211 0.211 0.211 0.211
63 0.208 0.208 0.208 0.208 0.208 0.208
64 0.246 0.246 0.246 0.246 0.246 0.246
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.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 60
Service Retirement (continued)
Public Agency Fire 3% at age 50
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.041 0.037 0.065 0.094 0.127 0.159
51 0.033 0.031 0.055 0.081 0.109 0.137
52 0.024 0.042 0.060 0.082 0.107 0.132
53 0.010 0.026 0.056 0.086 0.119 0.152
54 0.041 0.047 0.058 0.073 0.121 0.192
55 0.029 0.038 0.068 0.114 0.151 0.184
56 0.050 0.068 0.089 0.134 0.168 0.198
57 0.085 0.087 0.108 0.147 0.166 0.166
58 0.169 0.128 0.144 0.186 0.207 0.207
59 0.225 0.140 0.142 0.173 0.189 0.189
60 0.112 0.146 0.158 0.195 0.212 0.212
61 0.219 0.219 0.219 0.219 0.219 0.219
62 0.238 0.238 0.238 0.238 0.238 0.238
63 0.229 0.229 0.229 0.229 0.229 0.229
64 0.195 0.195 0.195 0.195 0.195 0.195
65 1.000 1.000 1.000 1.000 1.000 1.000
Public Agency Police 2% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.015 0.020 0.031 0.037 0.055 0.060
51 0.006 0.027 0.034 0.031 0.045 0.060
52 0.055 0.025 0.033 0.037 0.055 0.059
53 0.014 0.014 0.030 0.040 0.062 0.071
54 0.064 0.029 0.036 0.039 0.073 0.103
55 0.031 0.039 0.070 0.118 0.156 0.191
56 0.037 0.051 0.068 0.101 0.127 0.150
57 0.061 0.063 0.077 0.105 0.119 0.119
58 0.091 0.070 0.078 0.101 0.112 0.112
59 0.135 0.083 0.084 0.103 0.113 0.113
60 0.066 0.086 0.094 0.115 0.126 0.126
61 0.120 0.120 0.120 0.120 0.120 0.120
62 0.140 0.140 0.140 0.140 0.140 0.140
63 0.150 0.150 0.150 0.150 0.150 0.150
64 0.140 0.140 0.140 0.140 0.140 0.140
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.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 61
Service Retirement (continued)
Public Agency Fire 2% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.007 0.009 0.014 0.017 0.025 0.027
51 0.003 0.015 0.020 0.019 0.026 0.035
52 0.034 0.015 0.020 0.023 0.033 0.036
53 0.014 0.014 0.030 0.040 0.062 0.071
54 0.071 0.033 0.040 0.043 0.081 0.115
55 0.024 0.031 0.055 0.093 0.123 0.151
56 0.033 0.045 0.060 0.090 0.113 0.133
57 0.073 0.075 0.093 0.127 0.143 0.143
58 0.070 0.053 0.059 0.077 0.086 0.086
59 0.122 0.076 0.077 0.094 0.103 0.103
60 0.067 0.087 0.095 0.116 0.127 0.127
61 0.121 0.121 0.121 0.121 0.121 0.121
62 0.140 0.140 0.140 0.140 0.140 0.140
63 0.136 0.136 0.136 0.136 0.136 0.136
64 0.163 0.163 0.163 0.163 0.163 0.163
65 1.000 1.000 1.000 1.000 1.000 1.000
Public Agency Police 2.5% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.023 0.030 0.046 0.055 0.082 0.090
51 0.009 0.040 0.051 0.047 0.067 0.090
52 0.083 0.038 0.049 0.056 0.082 0.088
53 0.021 0.021 0.045 0.060 0.093 0.106
54 0.096 0.043 0.054 0.058 0.109 0.154
55 0.046 0.059 0.107 0.178 0.236 0.287
56 0.057 0.078 0.102 0.153 0.191 0.226
57 0.092 0.094 0.117 0.158 0.179 0.179
58 0.138 0.105 0.118 0.152 0.169 0.169
59 0.203 0.125 0.127 0.156 0.170 0.170
60 0.099 0.129 0.141 0.173 0.189 0.189
61 0.180 0.180 0.180 0.180 0.180 0.180
62 0.210 0.210 0.210 0.210 0.210 0.210
63 0.226 0.226 0.226 0.226 0.226 0.226
64 0.210 0.210 0.210 0.210 0.210 0.210
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.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 62
Service Retirement (continued)
Public Agency Fire 2.5% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.010 0.014 0.021 0.025 0.037 0.040
51 0.005 0.023 0.030 0.028 0.039 0.053
52 0.051 0.023 0.030 0.035 0.050 0.054
53 0.021 0.021 0.045 0.060 0.093 0.106
54 0.107 0.049 0.060 0.065 0.122 0.173
55 0.036 0.046 0.084 0.141 0.186 0.227
56 0.050 0.069 0.090 0.136 0.170 0.200
57 0.112 0.114 0.140 0.191 0.217 0.217
58 0.106 0.080 0.090 0.116 0.130 0.130
59 0.184 0.114 0.116 0.142 0.155 0.155
60 0.100 0.131 0.142 0.174 0.190 0.190
61 0.182 0.182 0.182 0.182 0.182 0.182
62 0.210 0.210 0.210 0.210 0.210 0.210
63 0.204 0.204 0.204 0.204 0.204 0.204
64 0.245 0.245 0.245 0.245 0.245 0.245
65 1.000 1.000 1.000 1.000 1.000 1.000
Public Agency Police 2.7% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.023 0.030 0.046 0.055 0.082 0.090
51 0.009 0.040 0.051 0.047 0.067 0.090
52 0.083 0.038 0.049 0.056 0.082 0.088
53 0.021 0.021 0.045 0.060 0.093 0.106
54 0.096 0.043 0.054 0.058 0.109 0.154
55 0.046 0.059 0.107 0.178 0.236 0.287
56 0.057 0.078 0.102 0.153 0.191 0.226
57 0.092 0.094 0.117 0.158 0.179 0.179
58 0.138 0.105 0.118 0.152 0.169 0.169
59 0.203 0.125 0.127 0.156 0.170 0.170
60 0.099 0.129 0.141 0.173 0.189 0.189
61 0.180 0.180 0.180 0.180 0.180 0.180
62 0.210 0.210 0.210 0.210 0.210 0.210
63 0.226 0.226 0.226 0.226 0.226 0.226
64 0.210 0.210 0.210 0.210 0.210 0.210
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.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 63
Service Retirement (continued)
Public Agency Fire 2.7% at age 57
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.010 0.014 0.021 0.025 0.037 0.040
51 0.005 0.023 0.030 0.028 0.039 0.053
52 0.051 0.023 0.030 0.035 0.050 0.054
53 0.021 0.021 0.045 0.060 0.093 0.106
54 0.107 0.049 0.060 0.065 0.122 0.173
55 0.036 0.046 0.084 0.141 0.186 0.227
56 0.050 0.069 0.090 0.136 0.170 0.200
57 0.112 0.114 0.140 0.191 0.217 0.217
58 0.106 0.080 0.090 0.116 0.130 0.130
59 0.184 0.114 0.116 0.142 0.155 0.155
60 0.100 0.131 0.142 0.174 0.190 0.190
61 0.182 0.182 0.182 0.182 0.182 0.182
62 0.210 0.210 0.210 0.210 0.210 0.210
63 0.204 0.204 0.204 0.204 0.204 0.204
64 0.245 0.245 0.245 0.245 0.245 0.245
65 1.000 1.000 1.000 1.000 1.000 1.000
Schools 2% at age 55
Duration of Service
Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
50 0.003 0.004 0.005 0.007 0.009 0.009
51 0.002 0.005 0.007 0.008 0.009 0.010
52 0.006 0.006 0.008 0.009 0.011 0.012
53 0.006 0.008 0.011 0.011 0.014 0.014
54 0.007 0.009 0.012 0.015 0.018 0.020
55 0.011 0.021 0.032 0.049 0.064 0.084
56 0.011 0.023 0.034 0.050 0.067 0.089
57 0.015 0.023 0.035 0.051 0.061 0.080
58 0.021 0.029 0.039 0.055 0.073 0.096
59 0.028 0.034 0.044 0.064 0.081 0.101
60 0.021 0.042 0.059 0.085 0.105 0.135
61 0.029 0.049 0.067 0.094 0.115 0.148
62 0.065 0.095 0.120 0.165 0.193 0.238
63 0.061 0.101 0.133 0.183 0.211 0.260
64 0.086 0.109 0.129 0.171 0.189 0.226
65 0.172 0.166 0.199 0.228 0.251 0.276
66 0.214 0.204 0.242 0.277 0.302 0.319
67 0.158 0.176 0.230 0.268 0.289 0.294
68 0.169 0.163 0.196 0.225 0.248 0.263
69 0.148 0.161 0.200 0.230 0.241 0.234
70 0.162 0.197 0.252 0.300 0.274 0.283
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 64
Service Retirement (continued)
Schools 2% at age 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 0.006 0.006 0.007 0.008 0.010 0.010
53 0.005 0.007 0.009 0.010 0.012 0.012
54 0.006 0.007 0.010 0.012 0.015 0.017
55 0.009 0.017 0.027 0.041 0.053 0.069
56 0.009 0.020 0.030 0.043 0.058 0.077
57 0.013 0.020 0.030 0.044 0.052 0.069
58 0.017 0.024 0.032 0.045 0.059 0.078
59 0.024 0.030 0.039 0.056 0.071 0.089
60 0.019 0.038 0.053 0.076 0.093 0.120
61 0.025 0.042 0.058 0.081 0.099 0.128
62 0.058 0.084 0.107 0.147 0.172 0.212
63 0.052 0.087 0.115 0.158 0.182 0.224
64 0.078 0.098 0.116 0.154 0.170 0.204
65 0.165 0.159 0.191 0.219 0.241 0.265
66 0.220 0.210 0.249 0.285 0.311 0.328
67 0.178 0.199 0.259 0.302 0.326 0.331
68 0.188 0.182 0.218 0.251 0.276 0.292
69 0.152 0.165 0.205 0.237 0.248 0.241
70 0.170 0.207 0.265 0.316 0.288 0.297
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 65
Miscellaneous
Models
The valuation results are based on proprietary actuarial valuation models. The models are centralized and maintained by a
specialized team to achieve a high degree of accuracy and consistency. The Actuarial Office is responsible for confirming the
appropriateness of the inputs (such as participant data, actuarial methods and assumptions, and plan provisions) as well as
performing tests and validating the reasonableness of the output. The results of our models are independently confirmed by
parallel valuations performed by outside actuaries on a periodic basis using their models. In our professional judgment, our
actuarial valuation models produce comprehensive pension funding information consistent with the purposes of the valuation
and have no material limitations or known weaknesses.
Internal Revenue Code Section 415(b)
The limitations on benefits imposed by Internal Revenue Code section 415(b) are taken into account in this valuation. Each
year, the impact of any changes in this limitation other than assumed since the prior valuation is included and amortized as part
of the non-investment gain or loss 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 2025 calendar year is $280,000.
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 other than assumed since the prior valuation is included
and amortized as part of the non-investment gain or loss base. The compensation limit for classic members for the 2025
calendar year is $350,000.
PEPRA Compensation Limits
The limitations on compensation for PEPRA members imposed by Government Code section 7522.10 are taken into account in
this valuation. Each year, the impact of any changes in the compensation limitation other than assumed since the prior valuation
is included and amortized as part of the non-investment gain or loss base. The PEPRA compensation limit for 2025 is $155,081
for members who participate in Social Security and $186,096 for those who do not. The limits are adjusted annually based on
changes to the CPI for all urban consumers.
Appendix B - Principal Plan Provisions
• Service Retirement 67
• Vested Deferred Retirement 69
• Non-Industrial Disability Retirement 69
• Industrial Disability Retirement 70
• Post-Retirement Death Benefit 71
• Form of Payment for Retirement Allowance 71
• Pre-Retirement Death Benefits 72
• Cost-of-Living Adjustments (COLA) 74
• Purchasing Power Protection Allowance (PPPA) 74
• Employee Contributions 75
• Refund of Employee Contributions 75
• 1959 Survivor Benefit 76
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 67
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 amon g
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 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 CalPERS 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 attainment 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 retire ment
at whole year ages:
Miscellaneous Plan Formulas
Retirement
Age
1.5% at
age 65
2% at
age 60
2% at
age 55
2.5% at
age 55
2.7% at
age 55
3% at
age 60
PEPRA
2% at
age 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%
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 68
Classic Safety Plan Formulas
Retirement Age Half Pay at
age 55* 2% at age 55 2% at age 50 3% at age 55 3% at age 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
age. 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 age 57 2.5% at age 57 2.7% at age 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 converted 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 employer 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 months’ pay under the 1.5% at age 65 formula. PEPRA
members have a limit on the annual compensation that can be used to calculate final compensation. The limits are adjusted
annually 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, employees must be covered by Social Security with the 1.5% at age 65 formula. 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 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.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 69
Vested Deferred Retirement
Eligibility for Deferred Status
CalPERS members becomes eligible for a deferred vested retirement benefit when they leave employment, keep their
contribution account balance on deposit with CalPERS, and have 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
age 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 th e
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 Disability Retirement
Eligibility
A CalPERS member is eligible for Non-Industrial (non-job related) 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 w ith
which CalPERS has reciprocity agreements). There is no special age requirement. Disabled means the member is unable to
perform their 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 to 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.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 70
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 se rvice
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 b enefit.
Members eligible to retire, and who have attained 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 wh o
have earned service with multiple CalPERS employers, the benefit attributed to each employer is the total disability allowanc e
multiplied by the ratio of service with a particular employer to the total CalPERS service.
Industrial Disability Retirement
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. An employer may choose to provide the increased
benefit option or the improved benefit option.
Eligibility
An employee is eligible for Industrial (job related) 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 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 Compensation 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 r etirement
benefit, the member may choose to receive the larger benefit.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 71
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, employers 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 r etiree
may choose to provide for a portion of their 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 their 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 retir ee’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 aliv e, 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 their lifetime. This 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 some of this option po rtion to
be paid to any designated beneficiary after the retiree’s death. Benefit options applicable to the option portion are the sam e as
those offered with the standard form. The reduction is calculated in the same manner but is applied only to the option p ortion.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 72
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 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 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 benefit 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 their 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 disa bled. The total amount paid will be at least equal to
the basic death benefit.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 73
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 Death 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 their death and elected 100% to continue to the eligible survivor after the
member’s death. The allowance is payable to the surviving spouse until death, at which time it is continued to any unmarried
child(ren), 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 means 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
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 74
Alternate Death Benefit for Local Fire Members
This is an optional benefit available only to local fire 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 receive d
had the member retired on the date of their death and elected 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 their 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 5 0,
based on service credited at the time of death. The allowance is payable to the surviving spouse until death, at which time it is
continued to any unmarried child(ren), 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
determining 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 l ess
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 age 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 other cost-of-living adjustments provided under the plan.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 75
Employee Contributions
Each employee contributes toward their 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 all PEPRA members and Classic members covered by a full or
supplemental formula and $133.33 for Classic members covered by a 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 age 65 2%
Miscellaneous, 2% at age 60 7%
Miscellaneous, 2% at age 55 7%
Miscellaneous, 2.5% at age 55 8%
Miscellaneous, 2.7% at age 55 8%
Miscellaneous, 3% at age 60 8%
Miscellaneous, 2% at age 62 50% of the Total Normal Cost
Miscellaneous, 1.5% at age 65 50% of the Total Normal Cost
Safety, Half Pay at age 55 Varies by entry age
Safety, 2% at age 55 7%
Safety, 2% at age 50 9%
Safety, 3% at age 55 9%
Safety, 3% at age 50 9%
Safety, 2% at age 57 50% of the Total Normal Cost
Safety, 2.5% at age 57 50% of the Total Normal Cost
Safety, 2.7% at age 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 contributions 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 members 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 their employee contributions, which are credited with 6%
interest compounded annually.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 76
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 opti onal
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 4th 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.
Appendix C - Participant Data
• Active Members 78
• Transferred and Separated Members 79
• Retired Members and Beneficiaries 80
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 78
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 24 3 0 0 0 0 27
30-34 21 14 0 0 0 0 35
35-39 10 7 4 3 0 0 24
40-44 4 3 10 6 2 0 25
45-49 3 3 8 8 6 1 29
50-54 1 1 2 2 1 11 18
55-59 0 0 0 1 6 1 8
60-64 0 0 0 1 1 0 2
65 and Over 0 1 0 0 0 0 1
All Ages 66 32 24 21 16 13 172
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 20-24 25+
Average
Salary
15-24 $134,070 $0 $0 $0 $0 $0 $134,070
25-29 149,842 178,243 0 0 0 0 152,998
30-34 150,870 181,553 0 0 0 0 163,143
35-39 156,238 187,167 189,431 213,195 0 0 177,911
40-44 166,785 180,823 195,155 250,465 253,391 0 206,829
45-49 170,813 183,827 237,029 239,532 245,243 311,570 229,636
50-54 156,608 207,465 198,672 231,788 319,911 255,624 242,043
55-59 0 0 0 254,057 239,532 229,160 240,051
60-64 0 0 0 207,087 243,714 0 225,401
65 and Over 0 183,827 0 0 0 0 183,827
Average $152,504 $183,496 $208,452 $237,302 $248,691 $257,892 $193,343
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 79
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 0 0 0 0 0 0 0 0
30-34 12 0 0 0 0 0 12 120,323
35-39 11 4 0 0 0 0 15 158,970
40-44 6 4 2 1 0 0 13 182,861
45-49 9 2 0 1 0 0 12 156,773
50-54 8 2 0 0 0 0 10 165,803
55-59 2 1 0 0 0 0 3 140,549
60-64 2 0 0 0 0 0 2 249,731
65 and Over 0 0 0 0 0 0 0 0
All Ages 50 13 2 2 0 0 67 $159,195
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 20-24 25+ Total
Average
Salary
15-24 0 0 0 0 0 0 0 $0
25-29 3 0 0 0 0 0 3 107,836
30-34 3 2 0 0 0 0 5 128,722
35-39 19 0 1 0 0 0 20 105,329
40-44 9 1 1 0 0 0 11 100,792
45-49 11 4 1 0 0 0 16 99,869
50-54 2 1 0 0 0 0 3 90,815
55-59 1 0 0 0 0 0 1 83,666
60-64 5 0 0 0 0 0 5 60,602
65 and Over 1 1 0 0 0 0 2 86,783
All Ages 54 9 3 0 0 0 66 $100,197
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 80
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 2 2
30-34 0 0 2 0 0 0 2
35-39 0 0 0 0 0 0 0
40-44 0 0 7 0 0 1 8
45-49 0 0 11 0 0 0 11
50-54 14 0 11 0 0 0 25
55-59 45 1 12 0 0 0 58
60-64 47 0 18 0 1 2 68
65-69 47 2 20 0 2 3 74
70-74 29 0 13 0 0 5 47
75-79 34 1 13 0 0 8 56
80-84 23 0 14 0 0 17 54
85 and Over 23 1 18 0 0 17 59
All Ages 262 5 139 0 3 55 464
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 $34,461 $34,461
30-34 0 0 28,566 0 0 0 28,566
35-39 0 0 0 0 0 0 0
40-44 0 0 79,143 0 0 31,715 73,214
45-49 0 0 68,916 0 0 0 68,916
50-54 90,739 0 73,227 0 0 0 83,034
55-59 72,629 103 83,212 0 0 0 73,568
60-64 100,312 0 91,853 0 62,911 42,544 95,824
65-69 94,635 20,924 83,564 0 45,326 38,587 86,046
70-74 86,435 0 60,206 0 0 41,331 74,382
75-79 84,913 21,567 66,786 0 0 44,402 73,787
80-84 50,585 0 31,300 0 0 50,522 45,565
85 and Over 51,551 18,792 39,809 0 0 33,651 42,256
All Ages $81,847 $16,462 $66,932 $0 $51,188 $41,714 $71,719
* 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 cov erage group. This does not
result in double counting of liabilities.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 81
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 46 0 24 0 0 26 96
5-9 47 0 10 0 0 10 67
10-14 56 1 20 0 0 3 80
15-19 33 1 17 0 0 3 54
20-24 39 0 12 0 1 7 59
25-29 16 1 10 0 1 4 32
30 and Over 25 2 46 0 1 2 76
All Years 262 5 139 0 3 55 464
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 $82,915 $0 $81,550 $0 $0 $42,055 $71,507
5-9 81,077 0 78,059 0 0 25,524 72,335
10-14 103,616 2,496 93,208 0 0 15,147 96,432
15-19 80,525 103 98,000 0 0 42,143 82,405
20-24 81,607 0 75,269 0 62,911 64,629 77,987
25-29 44,877 39,353 43,121 0 55,694 55,225 45,787
30 and Over 58,352 20,180 36,982 0 34,958 50,223 43,891
All Years $81,847 $16,462 $66,932 $0 $51,188 $41,714 $71,719
* 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.
Appendix D - Glossary
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 83
Glossary
Accrued Liability (Actuarial Accrued Liability)
The portion of the Present Value of Benefits allocated to prior years. It can also be expressed as the Present Value of
Benefits minus the present value of future Normal Cost. 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 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 performs actuarial valuations 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 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, method changes, and/or experience 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
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 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.
CalPERS Actuarial Valuation - June 30, 2025
Safety Plan of the City of Palo Alto
CalPERS ID: 6373437857
Page 84
Glossary (continued)
Funded Ratio
Defined as the Fair 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
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 Fair 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.
September 15, 2026 Finance Committee Item #1
Transmittal of
CalPERS Annual
Valuation Reports
As of June 30, 2025
Overview
2
Transmittal of CalPERS annual valuations to inform the
upcoming budget and LRFF:
• Pension funding sources and the 'Pension Buck'
• CalPERS 6/30/25 valuation reports summary
• CalPERS total unfunded accrued liability (UAL) & funded status
• Workforce demographics & PEPRA transition
• Current and projected employer contributions
• Anticipated Outlook
• Next steps
GOAL: Accept the June 30, 2025 CalPERS Valuation Reports
California Public Employees’
Retirement System (CalPERS)
Annual Valuation Reports as of
June 30, 2025
Improves
funded status
by 7.6% to
78.4%
Pension Funding Sources –“Pension Buck” & Terminology
3
The June 30, 2025 CalPERS valuations inform pension expense
in the FY 2028–2037 LRFF and the FY 2028 Proposed Budget.
*Not included in CalPERS Valuation Reports
CalPERS Investment
Earnings
(55%)
Plans impacted
when actual
earnings differ from
assumptions
11.6% vs.
+6.8% target
for the period ending
June 30, 2025)
(14.8% est. June 30, 2026)
CalPERS Employer
Contributions
(34%)
Normal Cost (NC)
“pay-go” for current
employees (% payroll)
+
Unfunded Accrued
Liability (UAL)
“catch-up” payments to
amortize liability
($ flat rate)
CalPERS Employee
Contributions
(11%)
Tier 1, 2, PEPRA
(% Payroll)
68% of staff in PEPRA
(64% prior year)
Cost-sharing in Labor
Agreements
Employees pay a portion of
Employer NC
Pension
Trust Fund*
$131.0M
3
CalPERS 6/30/25 Valuation Reports – Summary
4
*Investment gain triggered CalPERS Risk Mitigation Policy, automatically reducing discount rate from 7.0% to 6.8%. Policy revised in April 2024 to adjust with CalPERS Board decision instead of automatic
change. *June 30, 2026 return is preliminary at 14.8% (informational; funded status N/A until valuation is conducted).
4
6/30/17
(FY 2020)
6/30/18
(FY 2021)
6/30/19
(FY 2022)
6/30/20
(FY 2023)
6/30/21
(FY 2024)
6/30/22
(FY 2025)
6/30/23
(FY 2026)
6/30/24
(FY 2027)
6/30/25
(FY 2028)
6/30/26*
(FY 2029)
Actual Investment
Return 11.2%8.6%6.7%4.7%21.3%*(6.1%)5.8%9.3%11.6%14.8%*
Target Investment
Return 7.25%7.0%7.0%7.0%6.8%*6.8%6.8%6.8%6.8%6.8%
Over / (Under)
Target +3.95%+1.60%(0.30%)(2.30%)+14.50%(12.90%)(1.00%)+2.50%+4.80%+8.00%*
City’s Pension Plan
Funded Status 65.3%64.5%64.4%63.5%73.3%63.8%64.0%66.0%70.8%N/A*
•CalPERS discount rate maintained at 6.80%; new actuarial assumptions adopted from 2025 ALM Study
•$71.3M Total Employer Contribution in FY 2028 (est.), a $0.2M or 0.3% increase from FY 2027
$19.9M Normal Cost (est.) + $51.4M UAL (total UAL balance is $504.5M)
•Investment gain of 11.6% (vs. 6.8% target); phased-in over five years
•Estimated reduction in ADC for FY 2028 is $1.7 million for all plans citywide
CalPERS – Total Unfunded Accrued Liability (UAL) ($ Millions)
5
Unfunded Liability FY 2024 FY 2025 FY 2026 FY 2027 FY 2028
Safety $156 $213 $224 $227 $210
Miscellaneous $236 $341 $350 $340 $295
Total UAL ($M)$392 $553 $574 $566 $504
Funded Status 73.3%63.8%64.0%66.0%70.8%
Section 115 Trust ($M)$39 $58 $85 $110 $131
Funded % w/ Section 115 75.9%67.6%69.3%72.6%78.4%
Section 115 Pension Trust Reduces Net UAL to $373.5M (78.4% Funded)
•Net funded status improves by +7.6 percentage points (from 70.8% to 78.4%)accounting for the $131.0M
Trust balance as of June 30, 2026.
•City is on track to reach its goal of 90% funded status by 2036 and next review of Retiree Benefit Funding
Policy scheduled for November 2026 with Finance Committee.
CalPERS Employer Contributions – NC & UAL (% Payroll)
8
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033
Safety Miscellaneous
FY 2029 Rate Peak: Final year of FY 2022 (-6.1%) loss ramp-in
Rates decline steadily through FY 2033
FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033
Safety 82.4%75.5%76.1%73.3%70.6%68.5%66.3%
Miscellaneous 37.6%35.7%36.2%34.7%33.3%30.8%29.7%
CalPERS Valuation Reports –Anticipated Outlook
8
Preliminary FY 2026 Investment Return (14.8%)
•CalPERS announced an estimated preliminary return of 14.8% for
the fiscal year ending June 30, 2026 (+8.0% above 6.8% target).
•Higher than the 5.3% assumed in City budget (Retiree Benefit
Policy).
•Will be formally recognized in the June 30, 2026 valuation and
begin phasing into employer rates in FY 2029.
CalPERS ALM & Total Portfolio Approach (75/25)
•CalPERS concluded its quadrennial Asset Liability Management
(ALM) review in November 2025.
•Maintained long-term discount rate at 6.80% while updating
inflation assumptions (price inflation to 2.50%, wage inflation to
3.00%).
•Adopted a Total Portfolio Approach with a 75% equity / 25% bond
Reference Portfolio -- while increases potential earnings, this
increases risk.
Legislative Monitoring: Assembly Bill 1383
•AB 1383 is in final legislative stages pending review by the
Governor.
•Would increase PEPRA compensation cap by resetting calculations
to the 2027 federal wage base (current law uses 2013 base).
•Creates new PEPRA safety formulas based on age 55 (e.g., 2.7% @
55) for future service, subject to collective bargaining. Staff will
monitor and model budget impacts if enacted.
Retiree Benefit Policy Review & Further De-Risking
November 2026 Finance Committee
•City comprehensive four-year review of Retiree Benefit Policy.
•Continue review of City Pension and OPEB alignment with Section
115 Trust performance.
•Continue to mitigate CalPERS risks with City’s local policy and
Section 115 Trust.
Next Steps and Action
11
NOV 2026 Review Retiree Benefit Policy & Continue OPEB
Discussion
Finance Committee 4-year policy review; continue OPEB
discussion from May 2026.
DEC / JAN FY 2028 to FY 2037 Long Range Financial Forecast (LRFF)
Review 10-year financial outlook incorporating updated
CalPERS costs and ramp-up.
MAY 2027 FY 2028 Proposed Budget Deliberations
Finance Committee detailed review of Proposed Operating
and Capital Budgets.
JUNE 2027 FY 2028 Budget Adoption
City Council reviews Proposed Budget as amended by Finance
Committee and adopts.
RECOMMENDED ACTION
Staff recommends that the
Finance Committee review and
recommend that the City Council:
ACCEPT the California Public
Employees' Retirement System
(CalPERS) Pension Annual
Valuation Reports as of June 30,
2025.
Transmittal item to formally accept
annual valuation reports in
accordance with City governance.
12
Thank you.