2023d ABC Board Minutes - Laserfiche WebLink

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i ORANGE COUNTY ALCOHOLIC BEVERAGE CONTROL BOARD (a component unit of Orange County Government) NOTES TO FINANCIAL STATEMENTS June 30,2023 and 2022 3. DETAIL NOTES ON ALL FUNDS[cont'd] Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions[cont'd] The plan currently uses mortality tables that vary by age, gender, employee group (i.e., general, law enforcement officer), and health status (i.e., disabled and healthy). The current mortality rates are based on published tables and based on studies that cover significant portions of the U.S. population. The healthy mortality rates also contain a provision to reflect future mortality improvements. Valuations were based on the results of an actuarial experience study for the period of January 1,2014 through December 31,2020. Future ad hoc COLA amounts are not considered to be substantively automatic and are,therefore,not included in the measurement. The projected long-term investment returns and inflation assumptions are developed through review of current and historical capital markets data, sell-side investment research, consultant whitepapers, and historical performance of investment strategies. Fixed income return projections reflect current yields across the U.S. Treasury yield curve and market expectations of forward yields projected and interpolated for multiple tenors and over multiple year horizons. Global public equity return projections are established through analysis of the equity risk premium and the fixed income return projections. Other asset categories and strategies return projections reflect the foregoing and historical data analysis. These projections are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class,as of June 30,2023,are summarized in the following table: Long-Term Expected Asset Class Target Allocation Real Rate of Return Fixed Income 29.0% 1.4% Global Equity 42.0% 5.3% Real Estate 8.0% 4.3% Alternatives 8.0% 8.9% Credit 7.0% 6.0% Inflation Protection 6.0% 4.0% Total 100.0% The information above is based on thirty (30)-year expectations developed with the consulting actuary for the 2018 asset liability and investment policy study for the North Carolina Retirement Systems,including LGERS. The long-term nominal rates of return underlying the real rates of return are arithmetic annualized figures. The real rates of return are calculated from nominal rates by multiplicatively subtracting a long-term inflation assumption of 3.00%.All rates of return and inflation are annualized. �I i -24-