City of Oakwood, Ohio
Notes to the Basic Financial Statements
For The Fiscal Year Ended December 31, 2024
| Weighted Average | ||
|---|---|---|
| Long‐Term Expected | ||
| Target | Real Rate of Return | |
| Asset Class | Allocation | (Geometric) |
| Fixed Income | 24.00% | 2.85% |
| Domestic Equities | 21.00 | 4.27 |
| Real Estate | 13.00 | 4.46 |
| Private Equity | 15.00 | 7.52 |
| International Equities | 20.00 | 5.16 |
| Risk Parity | 2.00 | 4.38 |
| Other investments | 5.00 | 3.46 |
| Total | 100.00% |
Discount Rate
The discount rate used to measure the total pension liability for the current year was 6.9 percent for the traditional plan and the combined plan. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and those of the contributing employers are made at the contractually required rates, as actuarially determined. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefits payments of current plan members. Therefore, the long‐term expected rate of return on pension plan investments for the traditional pension plan, combined plan and member‐directed plan was applied to all periods of projected benefit payments to determine the total pension liability.
Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate
The following table presents the City’s proportionate share of the net pension liability calculated using the current period discount rate assumption of 6.9 percent, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is one‐percentage‐point lower (5.9 percent) or one‐percentage‐point higher (7.9 percent) than the current rate:
| Discount Rate | Proportionate share of the net pension liability |
|---|---|
| 1% Decrease (5.90%) | $12,236,734 |
| Current Discount Rate (6.90%) | $7,772,964 |
| 1% Increase (7.90%) | $4,060,404 |
Actuarial Assumptions – OP&F
The total pension liability is determined by OP&F actuaries in accordance with GASB Statement No.67, as part of their annual valuation. Actuarial valuations of an ongoing retirement plan involve estimates of the value of reported amounts and assumptions about probability of occurrence of events far into the future. Examples include assumptions about future employment mortality, salary increases, disabilities, retirements, and employment terminations. Actuarially determined amounts are subject to continual review and potential modifications, as actual results are compare with past expectations and new estimates are made about the future. Assumptions considered were: withdrawal rates, disability retirement, service retirement, DROP elections, mortality, percent married and forms of payment, DROP interest rate, CPI‐based COLA, investment returns, salary increases and payroll growth. The changes in assumptions are being amortized over the estimated remaining useful life of the participants which was 6.03 years at December 31, 2023.