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CITY OF SAN LEANDRO NOTES TO BASIC FINANCIAL STATEMENTS For The Year Ended June 30, 2024 NOTE 15 – PENSIONS PLAN (Continued) Discount Rate – The discount rate used to measure the total pension liability for each Plan was 6.90%. The projection of cash flows used to determine the discount rate for each Plan assumed that contributions from all plan members in the Public Employees Retirement Fund (PERF) will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, each Plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members for all plans in the PERF. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability for each plan. The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the next 20 years using a building-block approach. The expected rate of return was then adjusted to account for assumed administrative expenses of 10 basis points. The expected real rate of return by asset class are as follows: Assumed Asset Asset Class (1)Allocation Real Return (1),(2) Global Equity-Cap Weighted 30.0%4.54% Global Equity-Non-Cap Weighted 12.0%3.84% Private Equity 13.0%7.28% Treasury 5.0%0.27% Mortgage-backed Securities 5.0%0.50% Investment Grade Corporates 10.0%1.56% High Yield 5.0%2.27% Emerging Market Debt 5.0%2.48% Private Debt 5.0%3.57% Real Assets 15.0%3.21% Leverage -5.0%-0.59% Total 100.0% (1) An expected inflation of 2.30% used for this period. (2) Figures are based on the 2021 Asset Liability Management study. 82