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Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2016 NOTE 13 - RETIREMENT PLAN - Continued Retiree Health Insurance Subsidy (HIS) Program - Continued Actuarial Assumptions: The total pension liability for the HIS Program in the July 1, 2016 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Valuation date: Measurement date: Discount rate: Long-term expected rate of return: Municipal bond rate: Inflation: Salary increase: Mortality: Actuarial cost method: July 1, 2016 June 30, 2016 2.85% N/A 2.85% 2.60% 3.25%, average, including inflation Generational RP -2000 with. Projections Scale BB Individual Entry Age The actuarial assumptions that determined the total HIS pension liability used in the July 1, 2016 valuation were based on the results of an actuarial experience study for the period July 1, 2008 through June 30, 2013. Discount Rate for HIS Program: In general, the discount rate for calculating the total pension liability is equal to the single rate equivalent to discounting at the long-term expected rate of return for benefit payments prior to the projected depletion date. Because the HIS Program is essentially funded on a pay-as-you-go basis, the depletion date is considered to be immediate. The single equivalent discount rate is equal to the municipal bond rate selected by the plan sponsor. The Bond Buyer General. Obligation 20 -Bond Municipal Bond Index was adopted as the applicable municipal bond index. Long-term Expected Rate of Return: As stated above, the HIS program is essentially funded on a pay- as-you-go basis. As such, there is no assumption for a long-term expected rate of return on a portfolio, no assumptions for cash flows into and out of the pension plan, or assumed asset allocation. 92