Fort Walton Beach — Annual Comprehensive Financial Report, September 30, 2023 — reading text

net of investment related expenses Inflation: 2.50% Termination rates: Age-based rates. Sample rates as follows: Sample Ages Probability 25 7.724% 30 7.397% 35 6.858% 40 6.113% 45 5.163% 50 4.316% 55 4.371% 60 5.631% Disability rates: Age-based rates. Sample rates as follows: Sample Ages Probability 20 0.07% 30 0.11% 40 0.19% 50 0.51% 60 1.66% 95  CITY OF FORT WALTON BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION NOTES TO THE SCHEDULE OF PENSION CONTRIBUTIONS (UNAUDITED) – CONTINUED GENERAL EMPLOYEES’ RETIREMENT FUND Salary increases: Age-based increase table, as follows: Age Increase* Under 25 6.50% 25-34 5.50% 35-44 4.50% 45+ 3.50% *Increase shown is inclusive of a 3% wage inflationary assumption. Retirement age: 100% probability of retirement upon attaining age 62 and ten years of service, along with probabilities of retiring with a subsidized benefit prior to age 62 at the following rates: Age Probability 52 4.218% 53 4.249% 54 4.293% 55 4.371% 56 4.500% 57 4.688% 58 4.941% 59 5.258% 60 5.631% 61 6.053% Cost of living increase: 2.50% per year beginning at retirement Payroll growth: None (closed plan) for purposes of amortizing the Unfunded Actuarial Accrued Liability. Actuarial asset All assets are valued at fair value with an adjustment made to uniformly spread method: actuarial investment gains and losses (as measured by actual fair value investment return against expected fair value investment return) over a five-year period. 96  CITY OF FORT WALTON BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION NOTES TO THE SCHEDULE OF PENSION CONTRIBUTIONS (UNAUDITED) POLICE OFFICERS’ RETIREMENT FUND Valuation Date: October 1, 2021 Notes: Actuarially determined contribution rates are calculated as of October 1, which is two years prior to the end of the fiscal year in which contributions are reported. Methods and Assumptions Used to Determine Contribution Rates: Funding method: Entry-Age Normal Actuarial Cost Method Mortality rates: Healthy lives: Female: PubS.H-2010 (Below Median) for Employees, set forward one year Male: PubS.H-2010 (Below Median) for Employees, set forward one year Disabled lives: Female: 80% PubG.H-2010 for Disabled Retirees / 20% PubS.H-2010 for Disabled Retirees Male: 80% PubG.H-2010 for Disabled Retirees / 20% PubS.H-2010 for Disabled Retirees Interest rate: 7.00% per year, compounded annually, net of investment related expenses Retirement age: Member Age Retirement Probability 50-51 5.0% 52-54 25.0% 55-56 10.0% 57 33.3% 58-59 50.0% 60+ 100.0% In addition to the above table, 100% are assumed to retire upon completion of 25 years of service at the age of 60. Early retirement: Service Years Retirement Probability 25 50.0% 26+ 100.0% Cost-of-living increase: 2.50% per year beginning at retirement Payroll growth: None Actuarial asset All assets are valued at fair value with an adjustment made to uniformly spread method: actuarial investment gains and losses (as measured by actual fair value investment return against expected fair value investment return) over a five-year period. 97  CITY OF FORT WALTON BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION NOTES TO THE SCHEDULE OF PENSION CONTRIBUTIONS (UNAUDITED) – CONTINUED POLICE OFFICERS’ RETIREMENT FUND Marital assumption: 100% of active members are assumed to be married, with husbands 3 years older than wives. Salary increases: Service Years Assumption Less than 1 10.0% 1-4 6.5% 5-9 6.0% 10-14 5.5% 15-19 4.5% 20+ 3.5% In addition to the table on the previous page, projected salary at retirement is increased 20% to account for non-regular compensation. Disability rate: % Becoming Disabled During the Age Year 20 0.28% 25 0.30% 30 0.36% 35 0.46% 40 0.60% 45 1.02% 50 2.00% 55 3.10% 60 4.18% It is assumed that 75% of disablements are service-related. Termination rate: Service Years Termination Probability Less than 2 15.0% 2-4 12.0% 5-6 10.0% 7-9 2.0% 10 8.0% 11 7.5% 12 7.0% 13 6.5% 14-19 6.0% 20+ 2.0% 98  CITY OF FORT WALTON BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION NOTES TO THE SCHEDULE OF PENSION CONTRIBUTIONS (UNAUDITED) FIREFIGHTERS’ RETIREMENT FUND Valuation Date: October 1, 2021 Notes: Actuarially determined contribution rates are calculated as of October 1, which is two years prior to the end of the fiscal year in which contributions are reported. Methods and Assumptions Used to Determine Contribution Rates: Actuarial cost method: Entry Age Normal Actuarial Cost Method Mortality rates: Healthy lives: Female: PubS.H-2010 (Below Median) for Employees,set forward one year. Male: PubS.H-2010 (Below Median) for Employees,set forward one year Disabled lives: Female: 80% PubG.H-2010 for Disabled Retirees / 20% PubS.H-2010 for Disabled Retirees Male: 80% PubG.H-2010 for Disabled Retirees / 20% PubS.H-2010 for Disabled Retirees Interest rate: 7.00% per year compounded annually, net of investment related expenses Disability rate: See table below; it is assumed that 75% of disablements and active Member deaths are service related. Termination rate: See table below; assumed rates were approved in conjunction with an actuarial experience study dated June 2017. Salary increases: See table below; assumed rates were approved in conjunction with an actuarial experience study dated June 2017. Cost-of-living increase: 3.00% per year beginning at age 58 Payroll growth: 1.49% per year, in compliance with Part VII of Chapter 112, Florida Statutes Actuarial asset All assets are valued at fair value with an adjustment made to uniformly spread method: actuarial investment gains and losses (as measured by actual fair value investment return against expected fair value investment return) over a five-year period. Salary increases: Service Years Increase 0 12.0% 1-9 6.0% 10+ 5.0% 99  CITY OF FORT WALTON BEACH, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION NOTES TO THE SCHEDULE OF PENSION CONTRIBUTIONS (UNAUDITED) – CONTINUED FIREFIGHTERS’ RETIREMENT FUND Disability rate: Age Disability Rate 20 0.14% 25 0.15% 30 0.18% 35 0.23% 40 0.30% 45 0.51% 50 1.00% 55 1.55% 60