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PENINSULA AIRPORT COMMISSION
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2023
23
Note 9—Defined benefit pension plan (continued)
Inflation
2.50% General
Employees – Salary increases, including inflation
3.50 – 5.35%
Public safety employees with hazardous duty benefits
– Salary increases, including inflation
3.50 – 4.75%
Investment rate of return, net of pension plan
investment expense, including inflation
6.75%*
* Administrative expenses as a percent of the market value of assets for the last experience study were found to be
approximately 0.06% of the market assets for all the VRS plans. This would provide an assumed investment rate
for U.S. GAAP purposes of slightly more than the assumed 6.75%. However, since the difference was minimal, and
a more conservative 6.75% investment return assumption provided a projected plan net position that exceeded the
projected benefit payments, the long-term expected rate of return on investments was assumed to be 6.75% to
simplify preparation of pension liabilities.
Mortality Rates: General Employees – 25% of deaths are assumed to be service related. Public Safety
Employees – 45% of deaths are assumed to be service related. Mortality is projected using the applicable
RP-2014 Mortality Table Projected to 2020 with various setbacks or set forwards for both males and females.
The actuarial assumptions used in the June 30, 2023 valuation were based on the results of an actuarial
experience study for the period from July 1, 2016 through June 30, 2020, except the change in the discount rate,
which was based on VRS Board action effective as of July 1, 2023. Changes to the actuarial assumptions as a
result of the experience study are as follows:
General Employees:
Mortality Rates (Preretirement, postretirement, healthy, and disabled) – updated to a more current
mortality table (RP-2014 projected to 2020)
Retirement Rates – lowered rates at older ages and changed final retirement from 70 to 75
Withdrawal Rates – adjusted rates to better fit experience at each year age and service through 9 years
of service
Disability Rates – lowered rates
Line of Duty Disability – increased rate from 14% to 15%
Discount Rate – decreased rate from 7.00% to 6.75%
Public Safety Employees:
Mortality Rates (Preretirement, postretirement, healthy, and disabled) – updated to a more current
mortality table (RP-2014 projected to 2020)
Retirement Rates – increased age 50 rates at older ages and lowered rates at older ages
Withdrawal Rates – adjusted rates to better fit experience at each year age and service through 9 years
of service
Disability Rates – adjusted rates to better fit experience
Line of Duty Disability – decreased rate from 60% to 45%
Discount Rate – decrease rate from 7.00% to 6.75%
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