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Indian River County, Florida <br />Board of County Commissioners <br />Notes To Financial Statements <br />Year Ended September 30, 2017 <br />NOTE 12 - RETIREMENT PLAN - Continued <br />Retiree Health Insurance Subsidy (HIS Program) - Continued <br />Actuarial Assumptions: The total pension liability for the HIS Program in the July 1, 2016 actuarial <br />valuation was determined using the following actuarial assumption, applied to all periods included in the <br />measurement: <br />Valuation date: <br />Measurement date: <br />Discount rate: <br />Long-term expected rate of return: <br />Municipal bond rate: <br />Inflation: <br />Salary increase: <br />Mortality <br />Actuarial cost method: <br />July 1, 2016 <br />June 30, 2017 <br />3.58% <br />N/A <br />2.85% <br />2.60% <br />3.25%, average, including inflation <br />Generational RP -2000 with Projections Scale BB <br />Individual Entry Age <br />The actuarial assumptions that determined the total HIS Program pension liability used in the July 1, <br />2016 valuation were based on the results of an actuarial experience study for the period July 1, 2008 <br />through June 30, 2013. <br />The following changes in actuarial assumptions occurred in 2017: <br />• The municipal rate used to determine the total pension liability was increased from 2.85% to 3.58% <br />Discount Rate for HIS Program: In general, the discount rate for calculating the total pension liability is <br />equal to the single rate equivalent to discounting at the long-term expected rate of return for benefit <br />payments prior to the projected depletion date. Because the HIS Program is essentially funded on a pay- <br />as-you-go basis, the depletion date is considered to be immediate. The single equivalent discount rate is <br />equal to the municipal bond rate selected by the plan sponsor. The Bond Buyer General Obligation 20 - <br />Bond Municipal Bond Index was adopted as the applicable municipal bond index. <br />Long -Term Expected Rate of Return: As stated above, the HIS Program is essentially funded on a pay- <br />as-you-go basis. As such, there is no assumption for a long-term expected rate of return on a portfolio, <br />no assumptions for cash flows into and out of the Pension Plan, or assumed asset allocation. <br />300 <br />