City of Raleigh
The target allocation and best estimates of arithmetic real rates of return for each major asset class as of June 30,
2015 are summarized in the following table:
Expected Real Rate
The information above is based on 30 year expectations developed with the consulting actuary for the 2014 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.
The discount rate used to measure the total pension liability was 7.25%. The projection of cash
flows used to determine the discount rate assumed that contributions from plan members will be made at the
current contribution rate and that contributions from employers will be made at statutorily required rates,
actuarially determined. Based on these assumptions, the pension plan’s fiduciary net position was projected to be
available to make all projected future benefit payments of the current plan members. Therefore, the long‐term
expected rate of return on pension plan investments was applied to all periods of projected benefit payments to
determine the total pension liability.
Sensitivity of the City’s Proportionate Share of the Net Pension Asset to Changes in the Discount Rate
following presents the City’s proportionate share of the net pension asset calculated using the discount rate of 7.25
percent, as well as what the City’s proportionate share of the net pension asset or net pension liability would be if
it were calculated using a discount rate that is one percentage point lower (6.25 percent) or one percentage point
higher (8.25 percent) than the current rate:
1 % Decrease
Cityʹs proportionate share of the net
pension liability (asset)
Pension Plan Fiduciary Net Position.
Detailed information about the pension plan’s fiduciary net position is
available in the separately issued Comprehensive Annual Financial Report (CAFR) for the State of North Carolina.