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CITY OF ROSEVILLE, MINNESOTA <br /> NOTES TO FINANCIAL STATEMENTS <br /> December 31, 2016 <br /> <br /> <br /> <br /> <br />Long-Term <br />Target Expected Real <br />Asset Class Allocation Rate of Return <br />Domestic Stocks 45% 5.50% <br />International Stock 15% 6.00% <br />Bonds 18% 1.45% <br />Alternative Assets 20% 6.40% <br />Cash 2% 0.50% <br />Total 100% <br /> F. Discount Rate <br /> <br />The discount rate used to measure the total pension liability in 2016 was 7.5%, a reduction <br />from the 7.9% used in 2015. The projection of cash flows used to determine the discount rate <br />assumed that contributions from Plan members and employers will be made at rates set in <br />Minnesota Statutes. Based on those assumptions, the fiduciary net position of the General <br />Employees Fund was projected to be available to make all projected future benefit payments <br />of current Plan members. Therefore, the long-term expected rate of return on pension plan <br />investments was applied to all periods of projected benefit payments to determine the total <br />pension liability. <br /> <br />In the Police and Fire Fund, the fiduciary net position was projected to be available to make <br />all projected future benefit payments of current plan members through June 30, 2056. <br />Beginning in fiscal years ended June 30, 2057 for the Police and Fire Fund, when projected <br />benefit payments exceed the funds’ projected fiduciary net position, benefit payments were <br />discounted at the municipal bond rate of 2.85% based on an index of 20-year general <br />obligation bonds with an average AA credit rating at the measurement date. An equivalent <br />single discount rate of 5.60% for the Police and Fire Fund was determined that produced <br />approximately the same present value of projected benefits when applied to all years of <br />projected benefits as the present value of projected benefits using 7.50% applied to all years <br />of projected benefits through the point of asset depletion and 2.85% after. <br /> <br /> <br /> G . P e n s i o n L i a b i l i t y S e n s i t i v i t y <br /> <br />The following table presents the City's proportionate share of the net pension liability for all <br />plans it participates in, calculated using the discount rate disclosed in the preceding paragraph, <br />as well as what the City's proportionate share of the net pension liability would be if it were <br />calculated using a discount rate 1 percentage point lower or 1 percentage point higher than the <br />current discount rate: <br /> <br />68 <br />Item 8: Attachment D