CITY COUNCIL MEETING DATE: 10/06/2026
AGENDA REPORT AGENDA HEADING: Consent Calendar
AGENDA TITLE:
Consider receiving the California Public Employees’ Retirement System (CalPERS) Actuarial Valuation Report (AVR) as of June 30, 2025.
RECOMMENDED COUNCIL ACTIONS:
1. Receive and file the CalPERS Actuarial Valuation Report (AVR) as of June 30, 2025.
FISCAL IMPACT: None
Amount Budgeted: N/A
Additional Appropriation: N/A
Account Number(s): N/A
ORIGINATED BY: James O'Neill, Senior Administrative Analyst JO Robert Moya, Deputy Director of Finance RM
REVIEWED BY: Vina Ramos, Director of Finance VR
APPROVED BY: Ara Mihranian, AICP, City Manager
ATTACHED SUPPORTING DOCUMENTS:
A. Actuarial Valuation Report as of June 30, 2025 (Page A-1) B. CalPERS press release on preliminary investment return (Page B-1) BACKGROUND:
Each year, as legally required, CalPERS prepares AVRs to determine the current funded status and following fiscal year’s employer contribution requirements for each of the City’s pension plans. In 2024, CalPERS began reporting the City’s three rate plans into a single AVR rather than issuing a separate report for each plan. That consolidated format continues with the June 30, 2025 valuation (Attachment A).
CalPERS administers the City’s three pension plans:
• Miscellaneous Plan (Tier 1)
• Miscellaneous Second Tier Plan (Tier 2)
• Public Employees’ Pension Reform Act (PEPRA) Miscellaneous Plan (Tier 3) 1 CITYOF RANCHO PALOS VERDES
This AVR presents valuations as of June 30, 2025 and establishes the City’s minimum required employer contributions for FY 2027-28. As with prior valuations, there is a twoyear lag between the valuation date and the fiscal year for which contribution requirements are set. The two-year lag allows CalPERS to receive final fiscal year data from cities and complete the actuarial valuation used to set contribution rates. The report also incorporates the investment experience through June 30, 2025 and the actuarial assumption changes adopted by the CalPERS Board in November 2025.
Key highlights to report:
• The June 30, 2025 valuation now reflects CalPERS’ 11.6% investment return for FY 2024-25. The City’s allocated investment gain reduced the Unfunded Accrued Liability (UAL) by approximately $2.4 million, partially offset by non-investment experience and assumption changes.
o Non-investment losses occur when actual experience, such as retirement and mortality trends, differs from actuarial assumptions. These factors resulted in approximately $0.8 million in losses.
• The City’s funded ratio increased from 71.9% to 76.2%, while the UAL decreased from $17.7 million to $15.9 million as of June 30, 2025. • Based on the City’s current CalPERS Pension Outlook modeling scenario, which incorporates the 11.6% investment return for FY 2024-25, the preliminary 14.8% investment return for FY 2025-26, the City’s $100,000 Additional Discretionary Payment (ADP) annually, and a 6.8% assumed investment return thereafter, the City is projected to reach approximately 90% funded status by FY 2028-29. This represents an improvement from the prior projection of achieving funded status by FY 2033-34 and would place the City approximately two years ahead of the FY 2030-31 funding goal. It is important to note that the funded percentage may vary from year to year as investment returns and other factors change. • CalPERS continues to provide a single consolidated UAL for the City’s three rate plans while maintaining separate normal cost rates for Tier 1, Tier 2, and PEPRA members.
• For FY 2027-28, the City’s required minimum UAL payment is $1,767,011, which represents a 5% increase over the $1,680,864 UAL payment in FY 2026-27. The projected normal cost for FY 2027-28 is $903,647, which represents a 22% increase over the projected normal cost of $737,474 in FY 2026-27. The increase in projected normal costs is primarily driven by projected growth and fewer vacancies. Normal costs are the value of benefits allocated to the upcoming year for active members and is expressed as a percentage of pensionable payroll.
The AVR is presented in accordance with the City Council’s goal of transparency and efficiency and the City’s Pension Plan Guidelines, and is also reviewed by the Finance Advisory Committee (FAC) as part of its ongoing pension oversight responsibilities.
On September 10, the FAC received and filed the report on the AVR, along with CalPERS’ press release announcing its preliminary investment return (Attachment B). The FAC commented on the thoroughness of the report and acknowledged that, while the higher 2 than anticipated return remains preliminary, it is an encouraging development for the City’s UAL and its progress toward the City Council’s goal of achieving a 90% funded status by FY 2030-31.
The following is a summary of the staff report presented below:
1. CalPERS AVR Report June 30, 2025 for background and analysis
2. CalPERS UAL Amortization Schedules and analysis
3. UAL Contribution History and Analysis
4. Additional Information:
o CalPERS FY 2025-26 Preliminary Investment Return
o Active Member and Payroll Distribution
o Pension Plan Guidelines
DISCUSSION:
1. CalPERS AVR Report June 30, 2025
The latest valuation determines the funded status of the City’s consolidated Miscellaneous Risk Pool plans as of June 30, 2025 and establishes the minimum required employer contributions for FY 2027-28. The two-year gap between the valuation date and contribution fiscal year allows CalPERS time to validate membership and financial data and provides agencies sufficient lead time for budgeting. CalPERS also includes projected employer contributions to assist with long-term planning; however, future amounts remain subject to actual investment, demographic, assumption, and payroll experience.
Changes Since the Prior Year’s Valuation
The 2025 valuation incorporates several changes from the prior year. On November 19, 2025, the CalPERS Board adopted new actuarial assumptions following its Experience Study and Review of Actuarial Assumptions. Among the changes, • The price inflation assumption increased from 2.3% to 2.5%. • The wage inflation assumption increased from 2.8% to 3.0%.
These assumption changes are reflected in the FY 2027-28 contribution requirements.
The Board retained the 6.8% discount rate.
CalPERS also changed terminology in the 2025 valuation by using “Fair Value of Assets” in place of “Market Value of Assets.” This is a terminology change only and does not represent a change in methodology. The report also adds a consolidated plan identifier for the City’s combined rate plans.
Basis of Actuarial Valuation
The AVR reflects fund investment experience through June 30, 2025, as well as statutory changes, regulatory changes, and CalPERS Board actions through January 2026. 3 Subsequent Events
The Asset Liability Management review and Experience Study referenced in last year’s report have now been completed and are reflected in the June 30, 2025 valuation.
CalPERS also notes that amended risk-pool regulations approved in 2025 and 2026 may allow certain larger pooled plans to become non-pooled beginning with the June 30, 2026 valuation. Based on the City’s current active-member count, this change does not presently require the City’s plan to leave the pool.
Funding Risk Mitigation Policy
CalPERS preliminary FY 2025-26 investment return of 14.8% exceeds its 6.8% discount rate by 8.0 percentage points, triggering review under CalPERS Funding Risk Mitigation Policy. This does not automatically reduce the discount rate. Instead, the CalPERS Board will consider whether a change is warranted. If CalPERS lowers the discount rate, the change could increase the City’s actuarial liabilities and future contribution requirements, partially offsetting the benefit of the FY 2025-26 investment return. However, any such change would not affect the City's FY 2027-28 contribution requirements, which are based on the June 30, 2025 AVR.
Required Contributions
As noted, the 2025 valuation sets the minimum required contributions for FY 2027-28.
Contributions to fund the pension plans are comprised of two components:
1. Normal Cost, expressed as a percentage of total active payroll, and;
2. Amortization of the Unfunded Accrued Liability (UAL), expressed as a dollar amount.
More specifically, the Normal Cost represents the value of benefits allocated to the upcoming year for active members and is expressed as a percentage of pensionable payroll. The UAL is the difference between the plan’s Accrued Liability (AL) and Fair Value of Assets. When the AL exceeds plan assets, the resulting UAL is amortized in accordance with CalPERS policy.
Table 1 summarizes the FY 2027-28 normal cost rates and the consolidated minimum UAL payment. Because the UAL is now reported only on a consolidated basis, it is not allocated among the individual benefit tiers. The calculated normal cost amounts shown below apply the FY 2027-28 rates to payroll reported as of June 30, 2025 and therefore are estimates; actual normal cost dollars will vary with actual payroll.
Table 1. Minimum Required Employer Contributions FY 2027-28 Benefit
Plan
Normal Cost
Rate
Payroll as of
6/30/2025
Estimated
Normal Cost
Minimum
UAL Payment
Total Estimated
Contribution
Tier 1 14.67% $1,790,877 $262,722 * $1,767,011 Tier 2 10.41% $1,691,978 $176,135 * 4 Benefit
Plan
Normal Cost
Rate
Payroll as of
6/30/2025
Estimated
Normal Cost
Minimum
UAL Payment
Total Estimated
Contribution
Tier 3
(PEPRA) 8.05% $5,773,790 $464,790 *
Total $9,256,645 $903,647 * $1,767,011 $2,670,658
*Calculated using the FY 2027-28 employer normal cost rates and payroll reported as of June 30, 2025.
CalPERS separately provides an illustrative estimated normal cost of $951,206 based on projected payroll for FY 2027-28.
Using payroll as of June 30, 2025, the estimated normal cost is $903,647. The amount is provided for illustrative purposes using the payroll reported in the AVR as of the valuation date. Because actual FY 2027-28 payroll will differ from the June 30, 2025 payroll, CalPERS separately provided an illustrative FY 2027-28 normal cost estimate of $951,206 based on projected payroll. When combined with the minimum UAL payment of approximately $1.8 million, the resulting estimated employer contribution is approximately $2.7 million.
The City traditionally prepays the UAL portion of the employer contribution to reduce cost.
For FY 2027-28, the monthly-payment UAL requirement is $1,767,011, while the annual prepayment option is $1,709,833, producing savings of $57,178, or approximately 3.2%, if paid by July 31.
Chart 1. Minimum Required Employer Contributions – FY 2018-19 to FY 2027-28 Change in CalPERS Valuation Projections: 2024 vs 2025
The 2024 AVR projected a minimum UAL of approximately $1,754,000 million for FY 2027-28. The 2025 AVR establishes the actual minimum UAL payment for 2027-28 at $1,767,000 million, an increase of approximately $13,000, or 0.7% from the prior projection. This comparison measures the differences between the amount previously projected for FY 2027-28 and the amount now established by CalPERS for the same $1.2 $1.2
$1.5 $1.6 $1.7 $1.8
$2.0
$2.2 $2.4
$2.7
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 $ in Millions
MINIMUM REQUIRED EMPLOYER CONTRIBUTIONS
Est Normal Cost UAL Payment Total Est. Contribution
5 I
-
fiscal year. Table 2 illustrates the FY 2027-28 UAL payment comparison of prior projection and the current requirement.
Table 2. FY 2027-28 UAL Payment: Prior Projection vs. Current Requirement 2024 AVR
Projection
2025 AVR
Requirement Change % Change
FY 2027-28
Consolidated
UAL Payment
$1,754,000 $1,767,011 +$13,011 +0.7%
The small variance indicates that the FY 2027-28 UAL payment established in the 2025 AVR is generally consistent with the amount projected in the prior valuation. Because CalPERS now report a single consolidated UAL for the City’s three rate plans, no tierlevel allocation of the UAL is presented.
Separately, the City’s required employer contributions increased from FY 2026-27 to 2027-28. The consolidated UAL payment increases from approximately $1.7 million to $1.8 million, an increase of about $86,000 or 5.1%. Employer normal cost rates also increased modestly for each of the City’s three rate plans. Table 3 shows these changes and how they represent the year-over-year change in required contributions, rather than the variance from the prior CalPERS projection.
Table 3. Year-Over-Year Change in Required Employer Contributions Benefit Plan
FY 2026-27
(2024 AVR)
FY 2027-28
(2025 AVR) Net Change
Tier 1 Normal Cost Rate 14.16% 14.67% +0.51 pts
Tier 2 Normal Cost Rate 10.18% 10.41% +0.23 pts
Tier 3 (PEPRA) Normal Cost Rate 7.93% 8.05% +0.12 pts
Consolidated UAL Payment $1,680,864 $1,767,011 +$86,147 The increase in required contributions reflects updated actuarial assumptions and plan experience incorporated into the June 30, 2025 valuation. In particular, the 2025 AVR incorporates revised actuarial assumptions adopted by the CalPERS Board in November 2025, including increases in the price inflation and wage inflation assumptions, while retaining the 6.8% discount rate.
Projected Future City Contributions
The 2025 AVR reflects the 11.6% investment return earned in FY 2024-25. CalPERS’ projections in the report assume a 6.8% annual investment return beginning in FY 2025-
26. Subsequent to preparation of the AVR, CalPERS announced a preliminary net investment return of 14.8% for FY 2025-26. CalPERS has stated that this return does not affect the required FY 2027-28 contributions; its impact will be reflected in the June 30, 2026 valuation that sets FY 2028-29 contributions.
The latest AVR projects the City’s UAL payment to rise to approximately $1.9 million in FY 2028-29 before gradually declining under the assumed 6.8% investment return. These 6 projections do not reflect the subsequently announced 14.8% preliminary return for FY 2025-26.
Because actual investment returns and demographic experience will differ from assumptions, contribution requirements for FY 2028-29 and beyond may vary materially from the projections shown in Table 4.
Table 4. Projected Minimum UAL Payments
FY 2027-28 Projected
FY 2028-29 FY 2029-30 FY 2030-31 FY 2031-32 FY 2032-33
From 2023 AVR $1,729,000 $1,920,000 $1,964,000 $2,001,000 Not Included Not Included From 2024 AVR Projected
$1,754,000 $1,918,000 $1,933,000 $1,943,000 $1,980,000 Not Included From 2025 AVR $1,767,011 $1,872,000 $1,827,000 $1,776,000 $1,754,000 $1,744,000 % Change from
previous year 5.9% -2.4% -2.8% -1.2% -0.6%
Chart 2. Projected Minimum UAL Payments
Under the 2025 AVR assumptions, the minimum UAL payment is projected to increase by about 5.9% in FY 2028-29 and then begin declining gradually through FY 2032-33.
Over the full projection period, the UAL payment decreases slightly from about $1.77 million in FY 2027-28 to $1.74 million in FY 2032-33. The subsequently announced 14.8% preliminary FY 2025-26 return is expected to improve future valuation results, but the magnitude and timing will not be known until the June 30, 2026 valuation is completed.
Funded Status as of June 30, 2025
Table 5 compares the City’s consolidated funded status from the June 30, 2024 and June 30, 2025 valuations. Effective with the 2025 AVR, CalPERS uses the term Fair Value of Assets (FVA) for the asset measure used in the funding-policy calculation.
The funded status is based on Fair Value of Assets relative to the plan’s Accrued Liability (AL), which represents the plan’s actuarial funding target as of the valuation date. A $1.77 $1.87 $1.83 $1.78 $1.75 $1.74
$0.0
$0.5
$1.0
$1.5
$2.0
2027-28 2028-29 2029-30 2030-31 2031-32 2032-33
$ in Millions
PROJECTED MINIMUM UAL PAYMENTS
7 funded ratio of 100% indicates that current assets equal the actuarial funding target; a funded ratio below 100% indicates that UAL payments are required in addition to normal cost contributions.
Table 5 shows the breakdown from last year’s AVR to the latest AVR. As shown, this indicated the improvement in both the City’s UAL and funded ratio despite continued growth in the actuarial liability.
Table 5. Funded Status as of June 30, 2025
June 30, 2024 June 30, 2025 Change
Accrued Liability (AL) $62.8 M $66.8 M +$4.0 M
Fair Value of Assets (FVA) $45.2 M $50.9 M +$5.7 M
Unfunded Accrued Liability (UAL) $17.7 M $15.9 M -$1.8 M Funded Ratio 71.9% 76.2% +4.3 pts
As of June 30, 2025, the City’s Accrued Liability was $66.8 million and Fair Value of Assets totaled $50.9 million, resulting in a UAL of $15.9 million. Compared with the prior valuation, the UAL decreased by approximately $1.8 million, or 10.0%, and the funded ratio increased from 71.9% to 76.2%, a 4.3 percentage-point improvement.
Funding History and Analysis
Chart 3 illustrates the City’s AL, FVA, UAL, and funded ratio over the 10 valuation years ending June 30, 2025 provided by CalPERS. The data is presented in aggregate to show the overall funding trend for the City’s pension plans.
Chart 3. Funding History – Valuation Ending 6/30/2016 to 6/30/2025 Over the 10 valuation years ending June 30, 2025, the City’s AL grew at an average annual rate of approximately 6.8%, while FVA grew at approximately 7.6%. The stronger 71% 74% 73% 73% 72%
81%
70% 70% 72%
76%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
$0
$10
$20
$30
$40
$50
$60
$70
$80
Millions
Accrued Liability Fair Value of Assets (FVA)
Unfunded Accrued Liability (UAL) Funded Ratio
8 - -
- -0-
asset growth over this period helped the funded ratio improve to 76.2% in the latest valuation. Despite the year-to-year volatility, liabilities continue to exceed assets, and the City retains a UAL.
Over the same 10-year period, the UAL increased at an average annual rate of approximately 4.5%, although it declined significantly in the latest year. The average funded ratio over the 10-year period was approximately 73.3%. The improvement in the 2025 valuation demonstrates the benefit of above-assumption investment experience, while also illustrating that future results remain sensitive to market performance and actuarial assumptions.
Breakdown of Accrued Liability
For additional insight, Table 6 provides a breakdown of the City’s Accrued Liability by member status as reported in the 2025 AVR.
Table 6. Breakdown of Accrued Liability as of June 30, 2025 in millions 2024 Total 2025Total Change ($) Change (%)
Active Members $16.0 $18.3 +$2.3 +14%
Transferred Members $7.9 $8.8 +$0.9 +12%
Separated Members $3.2 $2.5 -$0.7 -23%
Member / Beneficiaries
Receiving Payments
$35.7 $37.2 +$1.5 +4%
Total $62.8 $66.8 +$4.0 +6%
2. CalPERS UAL Amortization Schedules
This section focuses on the long-term implications of the City’s remaining UAL. The UAL decreased from $17.7 million as of June 30, 2024 to $15.9 million as of June 30, 2025.
Although the latest year reflects meaningful improvement, the UAL remains above the levels reported earlier in the 10-year period and requires continued long-term planning.
Chart 4 on the next page compares the City’s annual UAL with CalPERS investment returns. Over the 1-year period shown, annual investment returns averaged approximately 7.4%, compared with CalPERS’ current 6.8% assumed rate. The chart illustrates how year-to-year investment volatility can materially influence pension funding results over time.
[continued on next page]
9 Chart 4. Annual UAL and Investment Return History
Source: CalPERS Annual Actuarial Valuation Reports
FAC’s Recommendation of ADP in 2023
In 2023, the FAC recommended an accelerated strategy for reducing the City’s UAL that included consideration of an ADP of up to $1.6 million in FY 2023-24, subject to available General Fund resources. In light of competing financial priorities such as the landslide emergency costs and other significant capital needs, the City Council did not move forward with the proposed ADP strategy at that time. In May 2025, the FAC subsequently recommended a $100,000 ADP, which was approved by the City Council and incorporated into the FY 2025-26 Adopted Budget. Since then, the City continues to fund $100,000 of ADP and included in the adopted budget in FY 2026-27.
Schedule of Amortization Bases
The UAL is made up of several gain and loss bases that collectively determine the total balance at the end of each valuation period. Individual bases represent the City’s allocated share of the risk pool’s experience and assumption change for each period and are added to the City’s consolidated amortization schedule. For example, an investment gain occurs when CalPERS experiences an investment return above the 6.8% discount rate. In the 2025 AVR, the 11.6% investment return resulted in an investment gain allocated to the City of approximately $2.4 million, which helped reduce the UAL.
Differences in non-investment experience also result in either a gain or loss base. The non-investment experience occurs when demographic assumptions, such as retirement or mortality rates, differ from actuarial assumptions. For example, the cost of benefits $10.7 $10.6
$12.3 $13.0
$14.2
$9.9
$16.7
$17.9 $17.7
$15.9
0.6%
11.2%
8.6%
6.7%
4.7%
21.3%
-6.1%
5.8%
9.3%
11.6%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
$0
$5
$10
$15
$20
$ in Millions
Unfunded Accrued Liability (UAL) Investment Return
10 D
- -0-
increases for retirees living longer than assumed, and in turn, raises contribution requirements. This scenario is viewed as a non-investment loss. In the 2025 AVR, the City was allocated approximately $0.7 million in non-investment losses and approximately $0.1 million from changes in actuarial assumptions, which partially offset the investment gain. Ultimately, each gain or loss base is added and amortized accordingly in accordance with the CalPERS’ amortization policy.
Table 7 summarizes the UAL roll-forward and expected payments reflected in the 2025 AVR. The schedule includes the City’s FY 2025-26 ADP made before April 30, 2026.
Table 7. Summary of UAL Amortization Schedules
BALANCE
6/30/2025
EXPECTED
PAYMENT
2025-26
BALANCE
6/30/26
EXPECTED
PAYMENT
2026-27
BALANCE
6/30/27
REQUIRED
PAYMENT
2027-28
$15,878,293 $1,633,796 $15,269,584 $1,672,183 $14,579,814 $1,767,011 The total UAL was $15.9 million as of June 30, 2025. For contribution-setting purposes, CalPERS rolls the UAL forward two years to June 30, 2027, when the balance is projected at approximately $14.6 million before the FY 2027-28 required payment. Future balances assume investment returns and other experience consistent with CalPERS assumptions and will change as actual experience emerges.
Analysis of CalPERS UAL Amortization Schedules
This section provides an overview of the City’s current CalPERS UAL amortization schedule and compares alternative payment approaches available to the City. The analysis considers the projected cost and duration of the existing schedule, CalPERS’ illustrative 10-year and 5-year Fresh Start alternatives, and the use of ADPs, highlighting the tradeoff between higher near-term contributions and potential long-term interest savings.
Default Amortization Schedules
The current amortization schedule begins with a projected UAL balance of approximately $14.6 million as of June 30, 2027. Under the existing amortization bases and current assumptions, CalPERS projects total future UAL payments of approximately $21.6 million, including about $7.0 million of interest. The existing bases are scheduled to be fully amortized during FY 2043-44; however, new gains and losses will continue to create new bases in future valuations.
Table 8. 2025 Estimated Default Amortization Schedules
in millions Totals
Principal $14.6
Interest $7.0
Total $21.6
11 ------
The current schedule is based on the City making minimum contributions in accordance with CalPERS’ amortization policy. CalPERS also provides alternative schedules to illustrate how faster repayment could reduce interest costs and provide a more stable payment pattern.
Alternative Amortization Schedules
The first alternative presented by CalPERS is a Fresh Start, which replaces the existing layered amortization bases with a new level-dollar schedule over a shorter period. The 2025 AVR illustrates 10-year and 5-year Fresh Start alternatives, both of which require higher annual UAL payments but reduce total interest costs.
Table 9. Alternate Amortization Schedules (Fresh Start) in millions Current Schedule 10-Year Fresh Start 5-Year Fresh Start Total $21.6 $19.9 $17.1
Interest $7.0 $5.3 $2.5
Estimated Savings $0 $1.7 $4.5
Under the illustrative alternatives, a 10-year Fresh Start would require annual UAL payments of approximately $2.0 million and is estimated to save about $1.7 million relative to the current schedule. A 5-year Fresh Start would require annual UAL payments of approximately $3.4 million and is estimated to save about $4.5 million. A Fresh Start is a permanent restructuring of existing amortization bases; future actuarial gains or losses would still create new bases.
A second approach is to make Additional Discretionary Payments (ADPs) without permanently changing the amortization schedule. The 2025 AVR provides illustrative FY 2027-28 scenarios showing the additional payment needed to make the current UAL repayment pace comparable to a 10-year or 5-year horizon.
Table 10. Alternative FY 2027-28 Employer Contributions (in millions) Funding Horizon
Estimated
Normal
Cost
Minimum
UAL
Payment
ADP
Amount
Total UAL
Contribution
Estimated Total
Contribution
Current / 11.9 years $1.0 $1.8 $0.00 $1.8 $2.7
10 years $1.0 $1.8 $0.2 $2.0 $2.9
5 years $1.0 $1.8 $1.7 $3.4 $4.4
The current FY 2027-28 UAL payment of about $1.8 million is projected to reduce the UAL by approximately $0.8 million after interest and would repay the existing UAL balance in about 11.9 years if that payment were held constant and no new UAL emerged.
The illustrative 10-year scenario requires an ADP of approximately $0.2 million, while the 12 5-year scenario requires an ADP of approximately $1.7 million. ADPs remain optional and do not obligate the City to make similar payments in future years.
3. UAL Contribution History and Analysis
To provide additional perspective, Chart 5 uses CalPERS AVR data to illustrate required UAL contributions from FY 2018-19 through FY 2027-28 and the latest projected payments through FY 2032-33. Over the 10-year historical period, the required UAL payment increased at an average annual rate of approximately 12.4%.
Chart 5. UAL Contribution History and Projected Payments Source: CalPERS Annual Actuarial Valuation Reports
Based on the current amortization schedule, payments on the existing UAL bases extend through FY 2043-44. Future valuations will add new gain or loss bases as actual experience differs from assumptions, so the ultimate payment period and amounts will continue to change.
ADDITIONAL INFORMATION:
CalPERS FY 2025-26 Preliminary Investment Return
On July 13, 2026, CalPERS announced a preliminary net investment return of 14.8% for the fiscal year ending June 30, 2026. The return exceeded the 6.8% assumed rate by 8.0 percentage points and was the highest CalPERS annual return in five years. CalPERS reported that the estimated funded status of the overall Public Employees’ Retirement Fund (PERF) increased to 85%, up from 79% at the end of FY 2024-25.
CalPERS has stated that the 14.8% preliminary return has no impact on the City’s required FY 2027-28 employer or member contributions. The investment gain will instead $0.62 $0.74 $0.86 $1.00 $1.14 $1.07
$1.30
$1.51
$1.68 $1.77 $1.87 $1.83 $1.78 $1.75 $1.74
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$ in Millions
Required Contributions 2025 AVR Projected UAL Payments
13 El ■
be reflected in the June 30, 2026 actuarial valuation, which will set the City’s FY 2028-29 contribution requirements. Preliminary total-fund annualized returns through June 30, 2026 are shown below.
Table 11. Preliminary CalPERS Investment Results through June 30, 2026 1 Year 5 Year 10 Year 20 Year PERF Funded Status
Preliminary Results 14.8% 6.83% 8.57% 6.81% 85%
Active Member and Payroll Distribution
Table 12 summarizes active members, retirees and beneficiaries, and covered payroll as of June 30, 2025. Total active membership increased from 89 to 96, while annual covered payroll increased from $7.6 million to $9.3 million. Tier 1 includes 17 active members, Tier 2 includes 10 active members, and Tier 3 (PEPRA) includes 69 active members. PEPRA members now represent approximately 71.9% of active membership and 62.4% of covered payroll. The AVR also reports 128 retirees and beneficiaries receiving payments, consisting of 122 Classic members and six PEPRA members, compared with 123 retirees and beneficiaries in the prior valuation.
Table 12. Active Member and Payroll Distribution by Tier Tier 1 Tier 2 Tier 3 Total by
Status
Active Members 17 10 69 96
Retirees & Beneficiaries 122 Classic, combined 6 128
Covered Payroll $1.8 M $1.7 M $5.8 M $9.3 M
Percent of Active Members 17.7% 10.4% 71.9% 100%
Pension Plan Guidelines
In accordance with the 2020-21 City Council Goals under “Government Efficiency and Transparency,” the purpose of the pension guidelines is to proactively manage ongoing contributions to the City’s pension plans and UAL.
The two primary goals established by the pension guidelines are:
1. To stabilize annual contributions and mitigate long-term impacts from the City’s UAL, and;
2. To achieve and maintain a 90% funding level for City pension plans over the next seven to ten years ending in FY 2030-31.
The guidelines also established the Employee Pension Plan Service Fund (EPSF) as a mechanism to help manage pension contribution volatility and support additional payments when appropriate. The FY 2026-27 adopted budget includes a $0.4 million transfer to the EPSF, consistent with the City’s long-term approach to pension funding. 14 The 2025 AVR now reflects the City’s first ADP, totaling $119,736 in FY 2025-26. This payment reduced the UAL beyond the minimum required contribution and is incorporated into the latest amortization schedule. Future ADPs may continue to be considered in light of available resources, the City’s funding goal, and the relative benefit of accelerating UAL repayment.
Based on the City’s current CalPERS Pension Outlook modeling scenario, which incorporates the 11.6% investment return for FY 2024-25, the preliminary 14.8% investment return for FY 2025-26, the City’s $100,000 additional ADP annually, and a
6.8% assumed investment return thereafter, the City is projected to reach approximately 90% funded status by June 30, 2029 (FY 2028-29). This represents an improvement from the prior projection of FY 2033-34 and would place the City approximately two years ahead of the FY 2030-31 funding goal. Staff will continue to closely monitor the City’s pension funding status through the annual CalPERS valuation process, and the Finance Advisory Committee will continue to review the City’s position annually, including opportunities to further reduce the UAL when resources are available and in consideration of other competing City priorities.
CONCLUSION:
The 2025 AVR presents the City’s pension funded status as of June 30, 2025 and establishes minimum required employer contributions for FY 2027-28. The City’s UAL decreased to $15.9 million from $17.7 million, while the funded ratio increased to 76.2% from 71.9%. The minimum FY 2027-28 UAL payment is $1.77 million, and the employer normal cost rates are 14.67% for Tier 1, 10.41% for Tier 2, and 8.05% for PEPRA members.
The improvement in funded status was driven primarily by favorable FY 2024-25 investment experience. The City was allocated an investment gain of approximately $2.4 million, partially offset by a $0.7 million non-investment loss and approximately $0.1 million from assumption changes. Under the current amortization schedule, the projected $14.6 million UAL balance as of June 30, 2027 would require approximately $21.6 million in future payments, including $7.0 million of interest, absent future experience changes.
These findings show meaningful progress while reinforcing the need for continued longterm pension planning. The City’s funded ratio improved by 4.3 percentage points in one year and the UAL declined by roughly 10%. In addition, CalPERS’ subsequently announced 14.8% preliminary return for FY 2025-26 is favorable for future valuations, although it does not change the FY 2027-28 contribution requirements established by this AVR. Based on the current CalPERS Pension Outlook modeling scenario, the City is projected to reach approximately 90% funded status by FY 2028-29, an improvement from the prior FY 2033-34 projection and ahead of the FY 2030-31 goal established in the Pension Plan Guidelines.
Staff will continue to monitor the City’s pension funding status annually and the City’s pension position and potential funding strategies as resources allow and in consideration of other competing City priorities.
15 ALTERNATIVES:
In addition to Staff’s recommendations, the following alternative action is available for the City Council’s consideration:
1. Take other action as deemed appropriate.
16 California Public Employees’ Retirement System
Actuarial Office
400 Q Street, Sacramento, CA 95811 | Phone: (916) 795-3000 | Fax: (916) 795-2744 888 CalPERS (or 888-225-7377) | TTY: (877) 249-7442 | www.calpers.ca.gov July 2026
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool (CalPERS ID: 3846845523) Annual Valuation Report as of June 30, 2025
Dear Employer,
Attached to this letter is Section 1 of the June 30, 2025, actuarial valuation report for the plan noted above. Provided in this report is the determination of the minimum required employer contributions for fiscal year (FY) 2027-28. In addition, the report contains important information regarding the current financial status of the plan as well as projections and risk measures to aid in planning for the future.
Because this plan is in a risk pool, the following valuation report has been separated into two sections:
• Section 1 contains specific information for the following rate plan(s) including the development of the current and projected employer contributions.
o 1107, Miscellaneous First Tier Plan
o 23274, Miscellaneous Second Tier Plan
o 26567, PEPRA Miscellaneous Plan
• Section 2 contains the Miscellaneous Risk Pool information as of June 30, 2025.
Section 2 can be found on the CalPERS website in the Forms & Publications section. Search for “Risk Pool” and from the results list download the Miscellaneous Risk Pool Actuarial Valuation Report for June 30, 2025.
Required Contributions
The table below shows the minimum required employer contributions and member contribution rates for FY 2027-28 along with an estimate of the required employer Unfunded Accrued Liability (UAL) contribution for FY 2028-29. The required employer and member contributions in this report do not reflect any cost sharing arrangement between the agency and the employees.
Fiscal Year Rate
Plan
Employer
Normal Cost
Rate
Member
Contribution
Rate
Fiscal Year
Employer Amortization of
Unfunded Accrued
Liability
2027-28 1107 14.67% 8.00% 2027-28 $1,767,011
23274 10.41% 7.00%
26567 8.05% 7.75% Projected
(Estimated)
2028-29 $1,872,000
The actual investment return for FY 2025-26 was not known at the time this report was prepared. The projected UAL payment above assumes the investment return for that year would be 6.8%. To the extent the actual investment return for FY 2025-26 differs from 6.8%, the actual UAL contribution requirement for FY 2028-29 will differ from that shown above.
For additional information on future contribution requirements, please refer to Projected Employer Contributions. This section also contains projected required contributions through FY 2032-33.
Changes from Previous Year’s Valuations
On November 19, 2025, the CalPERS Board of Administration (board) adopted new actuarial assumptions based on the recommendations in the November 2025 CalPERS Experience Study and Review of Actuarial Assumptions. This study reviewed the retirement rates, termination rates, mortality rates, rates of salary increase, the inflation assumption, and various other assumptions for public agencies. These new assumptions are incorporated in this actuarial valuation and impact the required contributions for FY 2027-28.
In addition, the board adopted changes to the CalPERS Total Fund Investment Policy, which provides the framework for the management of CalPERS assets. The board adopted a discount rate of 6.80%, which is unchanged from the prior year’s valuation, and an increase in the price inflation assumption from 2.30% to 2.50% per year.
A-1
j'~-CalPERS
CalPERS Actuarial Valuation - June 30, 2025
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool CalPERS ID: 3846845523
Besides the above-noted changes, there may also be changes specific to the plan such as contract amendments and funding changes such as additional discretionary payments and amortization schedule fresh starts.
A consolidated plan identifier has been added to the cover page of the report. As a result of the combination of some or all of the employer’s rate plans in the Miscellaneous Risk Pool effective with the prior year’s valuation, there is now one consolidated UAL value and actuarial valuation report for the group of component rate plans. This single identifier, set equal to the identifier of the component rate plan to which the UAL is attached, is intended to make it easier to identify a specific group of rate plans, the associated UAL, and the actuarial report.
PEPRA Member Contribution Rate
The employee contribution rate for PEPRA members can change based on the results of the actuarial valuation. See Member Contribution Rates for more information.
Report Navigation Features
The valuation report has a number of features to ease navigation and allow the reader to find specific information more quickly. The tables of contents are “clickable.” This is true for the main table of contents that follows the title page and the intermediate tables of contents at the beginning of sections. The Adobe navigation pane on the left can also be used to skip to specific exhibits.
There are a number of links throughout the document in blue text. Links that are internal to the document are not underlined, while underlined links will take you to the CalPERS website. Examples are shown below.
Internal Bookmarks CalPERS Website Links
Required Employer Contributions Required Employer Contribution Search Tool Member Contribution Rates Public Agency PEPRA Member Contribution Rates Summary of Key Valuation Results Pension Outlook Overview Funded Status – Funding Policy Basis Interactive Summary of Public Agency Valuation Results Projected Employer Contributions Public Agency Actuarial Valuation Reports Questions
A CalPERS actuary is available to answer questions about this report. Other questions may be directed to the Customer Contact Center at 888 CalPERS (or 888-225-7377).
Sincerely,
Randall Dziubek, ASA, MAAA
Deputy Chief Actuary, Valuation Services, CalPERS
Fritzie Dorais, ASA, MAAA
Deputy Chief Actuary, Special Programs, CalPERS
Scott Terando, ASA, EA, MAAA, FCA, CFA
Chief Actuary, CalPERS
Alex Grunder, ASA, MAAA
Senior Actuary, CalPERS
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~ JP !kt~ Dov- •
~~- ~1-e_
California Public Employees’ Retirement System
Actuarial Valuation for the
Rate Plans of the City of Rancho Palos
Verdes in the
Miscellaneous Risk Pool
as of June 30, 2025
Consolidated Plan ID: 26567
(CalPERS ID: 3846845523)
(Rate Plan IDs: 1107, 23274, 26567)
Required Contributions for Fiscal Year
July 1, 2027 — June 30, 2028
A-3
Table of Contents
Section 1 – Employer Specific Information
Actuarial Certification....................................................................................................................................1 Highlights and Executive Summary .............................................................................................................2 Introduction ..................................................................................................................................................3 Purpose of Section 1....................................................................................................................................3 Summary of Key Valuation Results..............................................................................................................4 Changes Since the Prior Year’s Valuation ...................................................................................................5 Subsequent Events ......................................................................................................................................5 Liabilities and Contributions.........................................................................................................................6 Determination of Required Contributions .....................................................................................................7 Required Employer Contributions ................................................................................................................8 Member Contribution Rates .......................................................................................................................10 Breakdown of Entry Age Accrued Liability..................................................................................................11 Allocation of Plan’s Share of Pool’s Experience.........................................................................................11 Development of the Plan’s Share of Pool’s Assets ....................................................................................11 Funded Status – Funding Policy Basis.......................................................................................................12 Additional Employer Contributions .............................................................................................................13 Projected Employer Contributions..............................................................................................................14 Schedule of Amortization Bases ................................................................................................................15 Amortization Schedule and Alternatives.....................................................................................................17 Employer Contribution History....................................................................................................................19 Funding History ..........................................................................................................................................19 Risk Analysis................................................................................................................................................20 Future Investment Return Scenarios..........................................................................................................21 Discount Rate Sensitivity............................................................................................................................22 Mortality Rate Sensitivity ............................................................................................................................23 Maturity Measures......................................................................................................................................23 Maturity Measures History..........................................................................................................................24 Funded Status – Termination Basis ...........................................................................................................25 Funded Status – Low-Default-Risk Basis ...................................................................................................26 Supplementary Information ........................................................................................................................27 Normal Cost by Benefit Group ...................................................................................................................28 Summary of Valuation Data .......................................................................................................................29 Status of PEPRA Transition .......................................................................................................................30 Surcharge for Class 1 Benefits...................................................................................................................30 Plan's Major Benefit Options ......................................................................................................................31 Section 2 – Miscellaneous Risk Pool Actuarial Information Section 2 may be found on the CalPERS website in the Forms & Publications section.
A-4
Section 1
California Public Employees’ Retirement System
Employer Specific Information
for the
Rate Plans of the
City of Rancho Palos Verdes
in the Miscellaneous Risk Pool
(CalPERS ID: 3846845523)
(Rate Plan IDs: 1107, 23274, 26567)
A-5
CalPERS Actuarial Valuation - June 30, 2025
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool CalPERS ID: 3846845523
Rate Plans belonging to the Miscellaneous Risk Pool Page 1 Actuarial Certification
It is our opinion that the valuation has been performed in accordance with generally accepted actuarial principles as well as the applicable Standards of Practice promulgated by the Actuarial Standards Board. While this report, consisting of Section 1 and Section 2, is intended to be complete, our office is available to answer questions as needed. All of the undersigned are actuaries who satisfy the Qualification Standards for Actuaries Issuing Statements of Actuarial Opinion in the United States of the American Academy of Actuaries with regard to pensions. The actuaries responsible for this report and their respective responsibilities are as follows.
Actuarial Methods and Assumptions
It is our opinion that the assumptions and methods, as recommended by the Chief Actuary and adopted by the CalPERS Board of Administration, are internally consistent and reasonable for this plan.
Randall Dziubek, ASA, MAAA
Deputy Chief Actuary, Valuation Services, CalPERS
Fritzie Dorais, ASA, MAAA
Deputy Chief Actuary, Special Programs, CalPERS
Scott Terando, ASA, EA, MAAA, FCA, CFA
Chief Actuary, CalPERS
Actuarial Data and Rate Plan Results
The assumptions and methods in this report are the responsibility of the CalPERS Chief Actuary and Deputy Chief Actuaries named above. These were established pursuant to their responsibility for setting actuarial policy and are relied upon without independent assessment of the reasonableness of the assumptions and methods, as such an evaluation would have required substantial additional work beyond the scope of this assignment. To the best of my knowledge and having relied upon the information in Section 2 of this report, this report is complete and accurate and contains sufficient information to disclose, fully and fairly, the funded condition of the rate plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool and satisfies the actuarial valuation requirements of Government Code section 7504. This valuation and related validation work was performed by the CalPERS Actuarial Office. The valuation was based on the member and financial data as of June 30, 2025, provided by the various CalPERS databases and the benefits under this plan with CalPERS as of the date this report was produced. Section 1 of this report is based on the member and financial data for City of Rancho Palos Verdes, while Section 2 is based on the corresponding information for all agencies participating in the Miscellaneous Risk Pool to which the plan belongs.
Alex Grunder, ASA, MAAA
Senior Actuary, CalPERS
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Highlights and Executive Summary
• Introduction 3
• Purpose of Section 1 3
• Summary of Key Valuation Results 4
• Changes Since the Prior Year’s Valuation 5
• Subsequent Events 5
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CalPERS Actuarial Valuation - June 30, 2025
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool CalPERS ID: 3846845523
Rate Plans belonging to the Miscellaneous Risk Pool Page 3 Introduction
This report presents the results of the June 30, 2025, actuarial valuation of the rate plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool of the California Public Employees’ Retirement System (CalPERS). This actuarial valuation sets the minimum required contributions for fiscal year (FY) 2027-28.
Purpose of Section 1
This Section 1 report for rate plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool of CalPERS was prepared by the Actuarial Office using data as of June 30, 2025. This report contains actuarial information for the following rate plan(s).
• 1107, Miscellaneous First Tier Plan
• 23274, Miscellaneous Second Tier Plan
• 26567, PEPRA Miscellaneous Plan
The purpose of the valuation is to:
• Set forth the assets and accrued liabilities of these rate plans as of June 30, 2025; • Determine the minimum required employer contributions for these rate plans for FY July 1, 2027, through June 30, 2028;
• Determine the required member contribution rate for FY July 1, 2027, through June 30, 2028, for employees subject to the California Public Employees' Pension Reform Act of 2013 (PEPRA); and • Provide actuarial information as of June 30, 2025, to the CalPERS Board of Administration (board) and other interested parties.
The pension funding information presented in this report should not be used in financial reports subject to Governmental Accounting Standards Board (GASB) Statement No. 68 for a Cost Sharing Employer Defined Benefit Pension Plan. A separate accounting valuation report for such purposes is available on the CalPERS website (www.calpers.ca.gov).
The measurements shown in this actuarial valuation may not be applicable for other purposes. The agency should contact a CalPERS actuary before disseminating any portion of this report for any reason that is not explicitly described above.
Future actuarial measurements may differ significantly from the current measurements presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; changes in actuarial policies; changes in plan provisions or applicable law; and differences between the required contributions determined by the valuation and the actual contributions made by the agency.
Assessment and Disclosure of Risk
This report includes the following risk disclosures consistent with the guidance of the Actuarial Standards of Practice:
• A “Scenario Test,” projecting future results under different investment income returns. • A “Sensitivity Analysis,” showing the impact on current valuation results using alternative discount rates of 5.8% and
7.8%.
• A “Sensitivity Analysis,” showing the impact on current valuation results assuming rates of mortality are 10% lower or 10% higher than our current post-retirement mortality assumptions adopted in 2025. • Plan maturity measures indicating how sensitive a plan may be to the risks noted above. • The funded status on a termination basis.
• A low-default-risk obligation measure (LDROM) of benefit costs accrued as of the valuation date.
A-8
CalPERS Actuarial Valuation - June 30, 2025
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool CalPERS ID: 3846845523
Rate Plans belonging to the Miscellaneous Risk Pool Page 4 Summary of Key Valuation Results
Below is a brief summary of key valuation results along with page references where more detailed information can be found.
Required Employer Contributions — page 8
Fiscal Year
2026-27
Fiscal Year
2027-28
Employer Normal Cost Rates
Rate Plan 1107 14.16% 14.67%
Rate Plan 23274 10.18% 10.41%
Rate Plan 26567 7.93% 8.05%
Unfunded Accrued Liability (UAL) Contribution Amount $1,680,864 $1,767,011 Paid either as
Option 1) 12 Monthly Payments of $140,072.00 $147,250.92 Option 2) Annual Prepayment in July $1,626,473 $1,709,833 Member Contribution Rates — page 10
Fiscal Year
2026-27
Fiscal Year
2027-28
Rate Plan 1107 8.00% 8.00%
Rate Plan 23274 7.00% 7.00%
Rate Plan 26567 7.75% 7.75%
Projected Employer Contributions — page 14
Normal Cost
(% of payroll) Annual
Fiscal
Year
Rate Plan
1107
Rate Plan
23274
Rate Plan
26567 UAL Payment
2028-29 14.7% 10.4% 8.1% $1,872,000
2029-30 14.7% 10.4% 8.1% $1,827,000
2030-31 14.7% 10.4% 8.1% $1,776,000
2031-32 14.7% 10.4% 8.1% $1,754,000
2032-33 14.7% 10.4% 8.1% $1,744,000
Funded Status — Funding Policy Basis — page 12
June 30, 2024 June 30, 2025
Entry Age Accrued Liability (AL) $62,848,046 $66,776,051 Fair Value of Assets (Assets) 45,195,988 50,897,758
Unfunded Accrued Liability (UAL) [AL – Assets] $17,652,058 $15,878,293 Funded Ratio [Assets ÷ AL]
$62,848,046.00
71.9% 76.2%
Summary of Valuation Data — page 29
June 30, 2024 June 30, 2025
Active Member Count 89 96
Annual Covered Payroll $7,608,660 $9,256,645
Transferred Member Count 86 92
Separated Member Count 136 134
Retired Members and Beneficiaries Count 123 128
A-9
CalPERS Actuarial Valuation - June 30, 2025
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool CalPERS ID: 3846845523
Rate Plans belonging to the Miscellaneous Risk Pool Page 5 Changes Since the Prior Year’s Valuation
Investment Policy and Discount Rate
On November 19, 2025, the board adopted changes to the CalPERS Total Fund Investment Policy, which provides the framework for the management of CalPERS assets. Consistent with that policy, the board also adopted a discount rate of 6.80% for use in this valuation, which is unchanged from the prior year’s valuation.
Actuarial Methods and Other Assumptions
On November 19, 2025, the board adopted new actuarial assumptions based on the recommendations in the November 2025 CalPERS Experience Study and Review of Actuarial Assumptions. This study assessed various assumptions including retirement rates, termination rates, mortality rates, rates of salary increase, and inflation. New assumptions stemming from the study are incorporated in this actuarial valuation and affect required contributions for fiscal year 2027-28. Among the changes were an increase in the price inflation assumption from 2.30% to 2.50% per year and an increase in the wage inflation assumption from 2.80% to 3.00% per year.
Plan Assets
Plan assets are measured at fair value. In the prior year’s actuarial valuation report the term Market Value of Assets was used to describe the asset value used for funding purposes. The Actuarial Office has used this term interchangeably with Fair Value of Assets. Effective with the June 30, 2025, valuation, CalPERS will exclusively use the term Fair Value of Assets in actuarial reports. This is a change in terminology and does not represent any change in methodology.
Benefits
The standard actuarial practice at CalPERS is to recognize mandated legislative benefit changes in the first annual valuation following the effective date of the legislation. For pooled rate plans, voluntary benefit changes by plan amendment are generally included in the first valuation with a valuation date on or after the effective date of the amendment.
Please refer to the Plan’s Major Benefit Options in this report and Appendix B of the Section 2 Report for a summary of the plan provisions used in this valuation.
Plan Identification
A consolidated plan identifier has been added to the cover page of the report. As a result of the combination of some or all of the employer’s rate plans in the Miscellaneous Risk Pool effective with the prior year’s valuation, there is now one consolidated Unfunded Accrued Liability (UAL) value and actuarial valuation report for the group of component rate plans. This single identifier, set equal to the identifier of the component rate plan to which the UAL is attached, is intended to make it easier to identify a specific group of rate plans, the associated UAL, and the actuarial report.
Amendments to Regulations Regarding Participation in Risk Pools On September 17, 2025, the board approved amendments to pooling regulations, which were endorsed by the Office of Administrative Law on May 12, 2026. Beginning with the June 30, 2026, actuarial valuation, it will be possible for pooled plans to be removed from the risk pool and become non-pooled plans. The general rule is that if an employer sponsors a pooled plan with at least 150 but less than 200 active members as of the valuation date, the employer may elect to remove that plan from the risk pool. If the plan has at least 200 active members, the plan will be automatically removed. More information can be found in Regulatory Actions on the CalPERS website under the heading Participation in Risk Pools.
Subsequent Events
This actuarial valuation report reflects fund investment return through June 30, 2025, as well as statutory changes, regulatory changes and board actions through January 2026.
The 2025 annual benefit limit under Internal Revenue Code (IRC) section 415(b) and annual compensation limits under IRC section 401(a)(17) and Government Code section 7522.10 were used for this valuation and are assumed to increase 2.5% per year based on the price inflation assumption. The actual 2026 limits, determined in October 2025, are not reflected.
To the best of our knowledge, there have been no subsequent events that could materially affect current or future certifications rendered in this report.
A-10
Liabilities and Contributions
• Determination of Required Contributions 7
• Required Employer Contributions 8
• Member Contribution Rates 10
• Breakdown of Entry Age Accrued Liability 11
• Allocation of Plan’s Share of Pool’s Experience 11
• Development of the Plan’s Share of Pool’s Assets 11
• Funded Status – Funding Policy Basis 12
• Additional Employer Contributions 13
• Projected Employer Contributions 14
• Schedule of Amortization Bases 15
• Amortization Schedule and Alternatives 17
• Employer Contribution History 19
• Funding History 19
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CalPERS Actuarial Valuation - June 30, 2025
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool CalPERS ID: 3846845523
Rate Plans belonging to the Miscellaneous Risk Pool Page 7 Determination of Required Contributions
Contributions to fund the plan are determined by an actuarial valuation performed each year. The valuation employs complex calculations based on a set of actuarial assumptions and methods. See Appendix A in Section 2 for information on the assumptions and methods used in this valuation. The valuation incorporates all plan experience through the valuation date and sets required contributions for the fiscal year that begins two years after the valuation date.
Contribution Components
Two components comprise required contributions:
• Normal Cost — expressed as a percentage of pensionable payroll • Unfunded Accrued Liability (UAL) Contribution — expressed as a dollar amount Normal Cost represents the value of benefits allocated to the upcoming year for active employees. If all plan experience exactly matched the actuarial assumptions, normal cost would be sufficient to fully fund all benefits. The employer and employees each pay a share of the normal cost with contributions payable as part of the regular payroll reporting process. The contribution rate for Classic members is set by statute based on benefit formula whereas for PEPRA members it is based on 50% of the total normal cost.
When plan experience differs from the actuarial assumptions, UAL emerges. The new UAL may be positive or negative. If the total UAL is positive (i.e., accrued liability exceeds assets), the employer is required to make contributions to pay off the UAL over time. This is called the UAL Contribution component. There is an option to prepay this amount during July of each fiscal year, otherwise it is paid monthly.
In measuring the UAL each year, plan experience is split by source. Common sources of UAL include investment experience different than expected, non-investment experience different than expected, assumption changes and benefit changes. Each source of UAL (positive or negative) forms a base that is amortized, or paid off, over a specified period of time in accordance with the CalPERS Actuarial Amortization Policy. The UAL Contribution is the sum of the payments on all bases. See the Schedule of Amortization Bases section of this report for an inventory of existing bases and Appendix A in Section 2 for more information on the amortization policy.
A-12
CalPERS Actuarial Valuation - June 30, 2025
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool CalPERS ID: 3846845523
Rate Plans belonging to the Miscellaneous Risk Pool Page 8 Required Employer Contributions
The required employer contributions in this report do not reflect any cost sharing arrangement between the agency and the employees. For employee contribution rates, see Member Contribution Rates.
Fiscal Year
Required Employer Contributions 2027-28
Employer Normal Cost Rate
Classic Rate Plan 1107 14.67%
Classic Rate Plan 23274 10.41%
PEPRA Rate Plan 26567 8.05%
Plus
Unfunded Accrued Liability (UAL) Contribution Amount† $1,767,011 Paid either as
1) Monthly Payment $147,250.92
Or
2) Annual Prepayment Option‡ $1,709,833
The total minimum required employer contribution is the sum of the Plan’s Employer Normal Cost Rate (expressed as a percentage of payroll and paid as payroll is reported) and the Unfunded Accrued Liability (UAL) Contribution Amount (billed monthly (1) or prepaid annually (2) in dollars).
†The required UAL contribution does not take into account any additional discretionary payment made after April 30, 2026. ‡Only the UAL portion of the employer contribution can be prepaid (which must be received in full no later than July 31).
Development of Normal Cost as a Percentage of Payroll
Fiscal Year Fiscal Year
2026-27 2027-28
Classic Rate Plan 1107
Base Total Normal Cost for Formula 21.41% 21.86%
Surcharge for Class 1 Benefits1 0.72% 0.78%
Plan's Total Normal Cost 22.13% 22.64%
Offset Due to Employee Contributions2(7.97%) (7.97%)
Employer Normal Cost for Rate Plan 1107 14.16% 14.67%
Classic Rate Plan 23274
Base Total Normal Cost for Formula 17.12% 17.35%
Surcharge for Class 1 Benefits1 0.00% 0.00%
Plan's Total Normal Cost 17.12% 17.35%
Offset Due to Employee Contributions2(6.94%) (6.94%)
Employer Normal Cost for Rate Plan 23274 10.18% 10.41%
1 See Surcharge for Class 1 Benefits in the supplementary information section of this report. 2 This is the expected employee contributions, taking into account individual benefit formula and any offset from the use of a modified formula, divided by projected annual payroll. For member contribution rates above the breakpoint for each benefit formula, see Member Contribution Rates.
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CalPERS Actuarial Valuation - June 30, 2025
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool CalPERS ID: 3846845523
Rate Plans belonging to the Miscellaneous Risk Pool Page 9 Required Employer Contributions (continued)
Development of Normal Cost as a Percentage of Payroll (continued) Fiscal Year Fiscal Year
2026-27 2027-28
PEPRA Rate Plan 26567
Base Total Normal Cost for Formula 15.68% 15.80%
Surcharge for Class 1 Benefits1 0.00% 0.00%
Plan's Total Normal Cost 15.68% 15.80%
Offset Due to Employee Contributions2(7.75%) (7.75%)
Employer Normal Cost for Rate Plan 26567 7.93% 8.05%
1 See Surcharge for Class 1 Benefits in the supplementary information section of this report. 2 This is the expected employee contributions, taking into account individual benefit formula and any offset from the use of a modified formula, divided by projected annual payroll. For member contribution rates above the breakpoint for each benefit formula, see Member Contribution Rates.
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CalPERS Actuarial Valuation - June 30, 2025
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool CalPERS ID: 3846845523
Rate Plans belonging to the Miscellaneous Risk Pool Page 10 Member Contribution Rates
The required member contributions in this report do not reflect any cost sharing arrangement between the agency and the employees.
Classic Members
Each member contributes toward their retirement based upon the retirement formula. The standard Classic member contribution rate above the breakpoint, if any, is as described below.
Benefit Formula
Percent Contributed
above the Breakpoint
Miscellaneous, 1.5% at age 65 2%
Miscellaneous, 2% at age 60 7%
Miscellaneous, 2% at age 55 7%
Miscellaneous, 2.5% at age 55 8%
Miscellaneous, 2.7% at age 55 8%
Miscellaneous, 3% at age 60 8%
Auxiliary organizations of the CSU system may elect reduced contribution rates for Miscellaneous members, in which case the contribution rate above the breakpoint is 6% if members are not covered by Social Security and 5% if they are.
PEPRA Members
The California Public Employees’ Pension Reform Act of 2013 (PEPRA) established new benefit formulas, final compensation period, and contribution requirements for “new” employees (generally those first hired into a CalPERS-covered position on or after January 1, 2013). In accordance with Government Code Section 7522.30(b), “new members … shall have an initial contribution rate of at least 50% of the normal cost rate.” The normal cost rate for the plan is dependent on the benefit levels, actuarial assumptions and demographics of the risk pool, particularly members’ entry age. Should the total normal cost rate of the plan change by more than 1% from the base total normal cost rate established for the plan, the new member rate shall be 50% of the new normal cost rate rounded to the nearest quarter percent.
The table below shows the determination of the PEPRA member contribution rates effective July 1, 2027, based on 50% of the total normal cost rate as of the June 30, 2025, valuation.
Basis for Current Rate Rates Effective July 1, 2027
Rate Plan
Identifier Benefit Group Name
Total
Normal
Cost
Member
Rate
Total
Normal
Cost
Change
in Normal
Cost
Adj.
Needed
Member
Rate
26567 PEPRA Miscellaneous Plan 15.43% 7.75% 15.80% 0.37% No 7.75% A-15
CalPERS Actuarial Valuation - June 30, 2025
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool CalPERS ID: 3846845523
Rate Plans belonging to the Miscellaneous Risk Pool Page 11 Breakdown of Entry Age Accrued Liability
Active Members $18,275,857
Transferred Members 8,818,074
Separated Members 2,479,900
Members and Beneficiaries Receiving Payments 37,202,220 Total $66,776,051
Allocation of Plan’s Share of Pool’s Experience
It is the policy of CalPERS to ensure equity within the risk pools by allocating the pool’s experience gains/losses and assumption changes in a manner that treats each employer equitably and maintains benefit security for the members of the System while minimizing substantial variations in employer contributions. The pool’s experience gains/losses and impact of assumption/method changes is allocated to the plan as follows:
1. Plan’s Accrued Liability $66,776,051
2. Projected UAL Balance at 6/30/2025 17,513,209
3. Other UAL Adjustments (Golden Handshake, Prior Service Purchase, etc.) 0
4. Adjusted UAL Balance at 6/30/2025 for Asset Share 17,513,209
5. Pool’s Accrued Liability1 26,128,329,326
6. Sum of Pool’s Individual Plan UAL Balances at 6/30/20251 5,408,106,113
7. Pool’s 2024-25 Investment (Gain)/Loss1(1,023,922,845)
8. Pool’s 2024-25 Non-Investment (Gain)/Loss1 254,352,784
9. Plan’s Share of Pool’s Investment (Gain)/Loss: [(1) - (4)] ÷ [(5) - (6)] × (7) (2,434,402)
10. Plan’s Share of Pool’s Non-Investment (Gain)/Loss: (1) ÷ (5) × (8) 650,048
11. Plan’s New (Gain)/Loss as of 6/30/2025: (9) + (10) (1,784,354)
12. Increase in Pool’s Accrued Liability due to Change in Assumptions1 58,472,717
13. Plan’s Share of Pool’s Change in Assumptions: (1) ÷ (5) × (12) 149,438
14. Increase in Pool’s Accrued Liability due to Funding Risk Mitigation1 0
15. Plan’s Share of Pool’s Change due to Funding Risk Mitigation: (1) ÷ (5) × (14) 0
16. Offset due to Funding Risk Mitigation 0
17. Plan’s Investment (Gain)/Loss: (9) – (16) (2,434,402) 1 Does not include plans that transferred to the pool on the valuation date.
Development of the Plan’s Share of Pool’s Assets
18. Plan’s UAL: (2) + (3) + (11) + (13) + (15) $15,878,293
19. Plan’s Share of Pool’s Fair Value of Assets: (1) - (18) $50,897,758 For a reconciliation of the pool’s Fair Value of Assets, information on the fund’s asset allocation and a history of CalPERS investment returns, see Section 2, which can be found on the CalPERS website (www.calpers.ca.gov).
A-16
CalPERS Actuarial Valuation - June 30, 2025
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool CalPERS ID: 3846845523
Rate Plans belonging to the Miscellaneous Risk Pool Page 12 Funded Status – Funding Policy Basis
The table below provides information on the current funded status of the plan under the funding policy. The funded status for this purpose is based on the fair value of assets relative to the funding target produced by the entry age actuarial cost method and actuarial assumptions adopted by the board. The actuarial cost method allocates the total expected cost of a member’s projected benefit (Present Value of Benefits) to individual years of service (the Normal Cost). The value of the projected benefit that is not allocated to future service is referred to as the Accrued Liability and is the plan’s funding target on the valuation date. The Unfunded Accrued Liability (UAL) equals the funding target minus the assets. The UAL is an absolute measure of funded status and can be viewed as employer debt. The Funded Ratio equals the assets divided by the funding target. The funded ratio is a relative measure of the funded status and allows for comparisons between plans of different sizes.
June 30, 2024 June 30, 2025
1. Present Value of Benefits $75,665,121 $82,968,724
2. Entry Age Accrued Liability 62,848,046 66,776,051
3. Fair Value of Assets 45,195,988 50,897,758
4. Unfunded Accrued Liability (UAL) [(2) – (3)] $17,652,058 $15,878,293
5. Funded Ratio [(3) ÷ (2)] 71.9% 76.2%
A funded ratio of 100% (UAL of $0) implies that the funding of the plan is on target and that future contributions equal to the normal cost of the active plan members will be sufficient to fully fund all retirement benefits if future experience matches the actuarial assumptions. A funded ratio of less than 100% (positive UAL) implies that in addition to normal costs, payments toward the UAL will be required. Plans with a funded ratio greater than 100% have a negative UAL (or surplus) but are required under current law to continue contributing the normal cost in most cases, preserving the surplus for future contingencies.
Calculations for the funding target reflect the expected long-term investment return of 6.8%. If it were known on the valuation date that future investment returns will average something greater/less than the expected return, calculated normal costs and accrued liabilities provided in this report would be less/greater than the results shown. Therefore, for example, if actual average future returns are less than the expected return, calculated normal costs and UAL contributions will not be sufficient to fully fund all retirement benefits. Under this scenario, required future normal cost contributions will need to increase from those provided in this report, and the plan will develop unfunded liabilities that will also add to required future contributions. For illustrative purposes, funded statuses based on a 1% lower and higher average future investment return (discount rate) are as follows:
1% Lower
Average Return
Current
Assumption
1% Higher
Average Return
Discount Rate 5.8% 6.8% 7.8%
1. Entry Age Accrued Liability $76,064,604 $66,776,051 $59,193,663
2. Fair Value of Assets 50,897,758 50,897,758 50,897,758
3. Unfunded Accrued Liability (UAL) [(1) – (2)] $25,166,846 $15,878,293 $8,295,905
4. Funded Ratio [(2) ÷ (1)] 66.9% 76.2% 86.0%
The Risk Analysis section of the report provides additional information regarding the sensitivity of valuation results to the expected investment return and other factors. Also provided in that section are measures of funded status that are appropriate for assessing the sufficiency of plan assets to cover estimated termination liabilities.
A-17
CalPERS Actuarial Valuation - June 30, 2025
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool CalPERS ID: 3846845523
Rate Plans belonging to the Miscellaneous Risk Pool Page 13 Additional Employer Contributions
The CalPERS amortization policy provides a systematic methodology for paying down a plan’s unfunded accrued liability (UAL) over a reasonable period of years. The projected schedule of required payments for this plan under the amortization policy is provided in Amortization Schedule and Alternatives. Certain aspects of the policy such as 1) layered amortization bases (positive and negative) with different remaining payoff periods, and 2) the phase-in of required payments toward investment gains and losses, can result in volatility in year-to-year projected UAL payments. Provided below is information on how an Additional Discretionary Payment (ADP), together with your required UAL payment of $1,767,011 for FY 2027-28, may better accomplish your agency’s specific objectives with regard to either smoothing out projected future payments or achieving a greater reduction in UAL than would otherwise occur when making only the minimum required payment. Such additional payments are allowed at any time and can also result in significant long-term savings.
Fiscal Year 2027-28 Employer Contribution Versus Agency Funding Objectives The interest-to-payment ratio for the FY 2027-28 minimum required UAL payment is 53%, which means the required payment of $1,767,011 includes $932,341 of interest cost and results in a $834,670 reduction in the UAL, as can be seen in Amortization Schedule and Alternatives (see columns labelled Current Amortization Schedule). If the interest-to-payment ratio is close to 100%, and the reduction in the UAL is small, it may indicate that required contributions will be increasing in the coming years, which would be shown in Projected Employer Contributions. An alternative metric that provides similar information about the FY 2027-28 required UAL payment is the number of years it would take that payment, if held constant, to pay off the existing UAL (note: actual required UAL payments will vary each year). An annual payment of $1,767,011 would pay off the current UAL in
11.9 years (ignoring any unexpected changes in UAL occurring after June 30, 2025). If the agency would like their FY 2027-28 payment toward the UAL to be consistent with a faster pace for reaching 100% funded, an ADP can be added to the required minimum payment.
Provided below are select ADP options for consideration. Making such an ADP during FY 2027-28 does not require an ADP be made in any future year, nor does it change the remaining amortization period of any portion of unfunded liability. For information on permanent changes to amortization periods, see Amortization Schedule and Alternatives. Agencies considering making an ADP should contact CalPERS for additional information.
Fiscal Year 2027-28 Employer Contributions — Illustrative Scenarios If the Annual UAL
Payment Each
Year Were…
The Current
UAL Would be
Paid Off in…
This Would
Require an ADP1
in FY 2027-28 of…
Plus the Estimated
Normal Cost of…
Estimated Total
Contribution
$1,767,011 11.9 years $0 $951,206 $2,718,217
1,990,136 10 years 223,125 951,206 2,941,342
3,422,412 5 years 1,655,401 951,206 4,373,618
1 The ADP amounts are assumed to be made in the middle of the fiscal year. A payment made earlier or later in the fiscal year would have to be less or more than the amount shown to have the same effect on the UAL amortization.
The calculations above are based on the projected UAL as of June 30, 2027, as determined in the June 30, 2025, actuarial valuation. New unfunded liabilities can emerge in future years due to assumption or method changes, changes in plan provisions, and actuarial experience different than assumed. Making an ADP illustrated above for the indicated number of years will not result in a plan that is exactly 100% funded in the indicated number of years. Valuation results will vary from one year to the next and can diverge significantly from projections over a period of several years.
Additional Discretionary Payment History
The following table provides a recent history of actual ADPs made to the plan through April 30, 2026.
Fiscal
Year ADP FiscalYear ADP
2019-20 $0 2023-24 $0
2020-21 0 2024-25 0
2021-22 0 2025-26 119,736
2022-23 0
A-18
CalPERS Actuarial Valuation - June 30, 2025
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool CalPERS ID: 3846845523
Rate Plans belonging to the Miscellaneous Risk Pool Page 14 Projected Employer Contributions
The table below shows the required and projected employer contributions (before cost sharing) for the next six fiscal years. The projection assumes that all actuarial assumptions will be realized and that no further changes to assumptions, contributions, benefits, or funding will occur during the projection period. In particular, the investment return beginning with FY 2025-26 is assumed to be 6.80% per year, net of investment and administrative expenses. Future contribution requirements may differ significantly from those shown below. The actual long-term cost of the plan will depend on the actual benefits and expenses paid and the actual investment experience of the fund.
The normal cost rates for each rate plan are assumed to remain constant. The employer normal cost rate for pooled plans is relatively constant from year to year when there are no assumption changes. Beginning with the June 30, 2026, actuarial valuation, it will be possible for pooled plans to be removed from the risk pool, in which case the employer normal cost would be based only on the members of that plan and will be different than the projections below. Plans with at least 200 active members on a valuation date will be automatically removed from the risk pool.
If the normal cost rates do remain constant, the employer contribution amounts will vary due to changes in payroll. The actuarial valuation does not include payroll beyond the valuation date. For the most realistic projections, the employer should apply projected payroll amounts to the rates below based on the most recent information available, such as current payroll as well as any plans to fill vacancies or add or remove positions.
Required
Contribution
Projected Future Employer Contributions
(Assumes 6.80% Return for Fiscal Year 2025-26 and Beyond) 2027-28 2028-29 2029-30 2030-31 2031-32 2032-33
Rate Plan
Identifier
Covered
Payroll
June 30, 2025
Normal Cost Rates (Percentage of Payroll)
1107 $1,790,877 14.67% 14.7% 14.7% 14.7% 14.7% 14.7%
23274 1,691,978 10.41% 10.4% 10.4% 10.4% 10.4% 10.4%
26567 5,773,790 8.05% 8.1% 8.1% 8.1% 8.1% 8.1%
UAL Payment $1,767,011 $1,872,000 $1,827,000 $1,776,000 $1,754,000 $1,744,000 Unlike the normal cost rates, the required UAL payments are expected to vary significantly from the projections above due to experience, particularly investment experience. For projected contributions under alternate investment return scenarios, please see the Future Investment Return Scenarios exhibit. Our online pension plan projection tool, Pension Outlook, is available in the Employers section of the CalPERS website. Pension Outlook can help plan and budget pension costs under various scenarios.
For ongoing plans, investment gains and losses are amortized using an initial 5-year ramp. For more information, please see Amortization of Unfunded Actuarial Accrued Liability in Appendix A of the Section 2 Report. This method phases in the impact of the change in UAL over a 5-year period in order to reduce employer cost volatility from year to year. As a result of this methodology, dramatic changes in the required employer contributions in any one year are less likely. However, required contributions can change gradually and significantly over the next five years. In years when there is a large investment loss, the relatively small amortization payments during the initial ramp period could result in contributions that are less than interest on the UAL (i.e. negative amortization) while the contribution impact of the increase in the UAL is phased in.
A-19
CalPERS Actuarial Valuation - June 30, 2025
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool CalPERS ID: 3846845523
Rate Plans belonging to the Miscellaneous Risk Pool Page 15 Schedule of Amortization Bases
Below is the schedule of the plan’s amortization bases. Note that there is a two-year lag between the valuation date and the start of the contribution year. • The assets, liabilities and funded status of the plan are measured as of the valuation date: June 30, 2025. • The required employer contributions determined by the valuation are for the fiscal year beginning two years after the valuation date: FY 2027-28.
This two-year lag is necessary due to the amount of time needed to extract and test the membership and financial data, and the need to provide public agencies with their required employer contribution well in advance of the start of the fiscal year.
The Unfunded Accrued Liability (UAL) is used to determine the employer contribution and therefore must be rolled forward two years from the valuation date to the first day of the fiscal year for which the contribution is being determined. The UAL is rolled forward each year by subtracting the expected payment on the UAL for the fiscal year and adjusting for interest. The expected payment on the UAL for FY 2025-26 is based on the actuarial valuation two years ago, adjusted for additional discretionary payments made on or before April 30, 2026, if necessary, and the expected payment for FY 2026-27 is based on the actuarial valuation one year ago.
Reason for Base
Date
Est.
Ramp
Level
2027-28
Ramp
Shape
Escalation
Rate
Amort.
Period
Balance
6/30/25
Expected
Payment
2025-26
Balance
6/30/26
Expected
Payment
2026-27
Balance
6/30/27
Minimum
Required
Payment
2027-28
Investment (Gain)/Loss 6/30/13 100% Up/Dn 2.80% 18 3,979,500 310,394 3,929,332 319,085 3,866,771 328,020 Non-Investment (Gain)/Loss 6/30/13 100% Up/Dn 2.80% 18 (36,704) (2,863) (36,241) (2,943) (35,664) (3,025) Share of Pre-2013 Pool UAL 6/30/13 No Ramp 2.80% 9 3,447,218 389,128 3,279,488 400,024 3,089,092 411,225 Assumption Change 6/30/14 100% Up/Dn 2.80% 9 1,508,446 201,523 1,402,758 207,166 1,284,052 212,967 Investment (Gain)/Loss 6/30/14 100% Up/Dn 2.80% 19 (2,943,446) (221,174) (2,915,030) (227,367) (2,878,282) (233,734) Non-Investment (Gain)/Loss 6/30/14 100% Up/Dn 2.80% 19 3,361 253 3,328 260 3,286 267 Investment (Gain)/Loss 6/30/15 100% Up/Dn 2.80% 20 1,910,626 138,678 1,897,233 142,561 1,878,916 146,552 Non-Investment (Gain)/Loss 6/30/15 100% Up/Dn 2.80% 20 (161,509) (11,723) (160,377) (12,051) (158,829) (12,388) Assumption Change 6/30/16 100% Up/Dn 2.80% 11 647,346 73,278 615,637 75,330 579,651 77,439 Investment (Gain)/Loss 6/30/16 100% Up/Dn 2.80% 21 2,382,734 167,455 2,371,705 172,144 2,355,080 176,964 Non-Investment (Gain)/Loss 6/30/16 100% Up/Dn 2.80% 21 (306,691) (21,554) (305,271) (22,157) (303,131) (22,778) Assumption Change 6/30/17 100% Up/Dn 2.80% 12 799,873 84,456 766,984 86,821 729,415 89,252 Investment (Gain)/Loss 6/30/17 100% Up/Dn 2.80% 22 (1,302,569) (88,829) (1,299,344) (91,316) (1,293,330) (93,873) Non-Investment (Gain)/Loss 6/30/17 100% Up/Dn 2.80% 22 (69,355) (4,730) (69,183) (4,862) (68,863) (4,998) Assumption Change 6/30/18 100% Up/Dn 2.80% 13 1,386,590 137,507 1,338,773 141,357 1,283,725 145,315 Investment (Gain)/Loss 6/30/18 100% Up/Dn 2.80% 23 (418,754) (27,765) (418,536) (28,542) (417,500) (29,341) Method Change 6/30/18 100% Up/Dn 2.80% 13 386,389 38,318 373,064 39,391 357,724 40,494 Non-Investment (Gain)/Loss 6/30/18 100% Up/Dn 2.80% 23 214,320 137,389 86,910 5,927 86,695 6,093 Investment (Gain)/Loss 6/30/19 100% Up Only 0.00% 14 191,317 19,338 184,342 19,338 176,893 19,338 Non-Investment (Gain)/Loss 6/30/19 No Ramp 0.00% 14 175,160 17,705 168,774 17,705 161,954 17,705 A-20
CalPERS Actuarial Valuation - June 30, 2025
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool CalPERS ID: 3846845523
Rate Plans belonging to the Miscellaneous Risk Pool Page 16 Schedule of Amortization Bases (continued)
Reason for Base
Date
Est.
Ramp
Level
2027-28
Ramp
Shape
Escalation
Rate
Amort.
Period
Balance
6/30/25
Expected
Payment
2025-26
Balance
6/30/26
Expected
Payment
2026-27
Balance
6/30/27
Minimum
Required
Payment
2027-28
Investment (Gain)/Loss 6/30/20 100% Up Only 0.00% 15 941,843 75,066 928,312 93,833 894,466 93,833 Non-Investment (Gain)/Loss 6/30/20 No Ramp 0.00% 15 151,307 14,789 146,312 14,789 140,978 14,789 Assumption Change 6/30/21 No Ramp 0.00% 16 177,859 16,863 172,526 16,863 166,831 16,863 Net Investment (Gain) 6/30/21 100% Up Only 0.00% 16 (4,544,073) (273,219) (4,570,714) (364,292) (4,505,048) (455,366) Non-Investment (Gain)/Loss 6/30/21 No Ramp 0.00% 16 (208,175) (19,737) (201,934) (19,737) (195,268) (19,737) Investment (Gain)/Loss 6/30/22 80% Up Only 0.00% 17 6,387,813 262,585 6,550,818 393,878 6,589,224 525,171 Non-Investment (Gain)/Loss 6/30/22 No Ramp 0.00% 17 880,553 81,207 856,508 81,207 830,828 81,207 Partial Fresh Start 6/30/22 80% Up Only 0.00% 17 953,330 39,188 977,658 58,783 983,390 78,378 Investment (Gain)/Loss 6/30/23 60% Up Only 0.00% 18 307,276 6,604 321,346 13,210 329,546 19,814 Non-Investment (Gain)/Loss 6/30/23 No Ramp 0.00% 18 1,041,609 93,666 1,015,640 93,665 987,906 93,665 Investment (Gain)/Loss 6/30/24 40% Up Only 0.00% 19 (1,199,276) 0 (1,280,827) (27,531) (1,339,472) (55,062) Non-Investment (Gain)/Loss 6/30/24 No Ramp 0.00% 19 829,291 0 885,683 79,644 863,602 79,644 Assumption Change 6/30/25 No Ramp 0.00% 20 149,438 0 159,600 0 170,453 15,328 Investment (Gain)/Loss 6/30/25 20% Up Only 0.00% 20 (2,434,402) 0 (2,599,941) 0 (2,776,737) (59,685) Non-Investment (Gain)/Loss 6/30/25 No Ramp 0.00% 20 650,048 0 694,251 0 741,460 66,675 Total 15,878,293 1,633,796 15,269,584 1,672,183 14,579,814 1,767,011 The (gain)/loss bases are the plan’s allocated share of the risk pool’s (gain)/loss for the fiscal year as disclosed in Allocation of Plan’s Share of Pool’s Experience earlier in this report. These (gain)/loss bases will be amortized in accordance with the CalPERS amortization policy in effect at the time the base was established.
A-21
CalPERS Actuarial Valuation - June 30, 2025
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool CalPERS ID: 3846845523
Rate Plans belonging to the Miscellaneous Risk Pool Page 17 Amortization Schedule and Alternatives
The amortization schedule on the previous page(s) shows the minimum contributions required according to the CalPERS amortization policy. Each year, many agencies express a desire for a more stable pattern of payments or indicate interest in paying off the unfunded accrued liabilities more quickly than required. As such, we have provided alternative amortization schedules to help analyze the current amortization schedule and illustrate the potential savings of accelerating unfunded liability payments.
Shown on the following page are future year amortization payments based on 1) the current amortization schedule reflecting the individual bases and remaining periods shown on the previous page, and 2) alternative “fresh start” amortization schedules using two sample periods that would both result in interest savings relative to the current amortization schedule. To initiate a fresh start, please contact a CalPERS actuary.
The current amortization schedule typically contains both positive and negative bases. Positive bases result from plan changes, assumption changes, method changes or plan experience that increase unfunded liability. Negative bases result from plan changes, assumption changes, method changes, or plan experience that decrease unfunded liability. The combination of positive and negative bases within an amortization schedule can result in unusual or problematic circumstances in future years, such as:
• When a negative payment would be required on a positive unfunded actuarial liability; or • When the payment would completely amortize the total unfunded liability in a very short time period, and results in a large change in the employer contribution requirement.
In any year when one of the above scenarios occurs, the actuary will consider corrective action such as replacing the existing unfunded liability bases with a single “fresh start” base and amortizing it over an appropriate period.
The current amortization schedule on the following page may appear to show that, based on the current amortization bases, one of the above scenarios will occur at some point in the future. It is impossible to know today whether such a scenario will in fact arise since there will be additional bases added to the amortization schedule in each future year. Should such a scenario arise in any future year, the actuary will take appropriate action based on guidelines in the CalPERS Actuarial Amortization Policy.
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CalPERS Actuarial Valuation - June 30, 2025
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool CalPERS ID: 3846845523
Rate Plans belonging to the Miscellaneous Risk Pool Page 18 Amortization Schedule and Alternatives (continued)
Alternative Schedules
Current Amortization
Schedule 10 Year Amortization 5 Year Amortization
Date Balance Payment Balance Payment Balance Payment
6/30/2027 14,579,814 1,767,011 14,579,814 1,990,136 14,579,814 3,422,412 6/30/2028 13,745,144 1,871,849 13,514,554 1,990,136 12,034,381 3,422,411 6/30/2029 12,745,371 1,826,774 12,376,856 1,990,136 9,315,860 3,422,412 6/30/2030 11,724,191 1,776,081 11,161,794 1,990,136 6,412,478 3,422,412 6/30/2031 10,685,960 1,753,945 9,864,108 1,990,136 3,311,666 3,422,411 6/30/2032 9,600,007 1,743,647 8,478,179 1,990,136
6/30/2033 8,450,851 1,731,693 6,998,007 1,990,136
6/30/2034 7,235,904 1,699,198 5,417,184 1,990,137
6/30/2035 5,971,927 1,641,570 3,728,864 1,990,137
6/30/2036 4,681,554 1,004,771 1,925,738 1,990,136
6/30/2037 3,961,528 929,473
6/30/2038 3,270,358 849,464
6/30/2039 2,614,873 786,110
6/30/2040 1,980,286 744,405
6/30/2041 1,345,646 622,015
6/30/2042 794,335 493,644
6/30/2043 338,198 349,508
6/30/2044
6/30/2045
6/30/2046
6/30/2047
6/30/2048
6/30/2049
Total 21,591,158 19,901,362 17,112,058
Interest Paid 7,011,344 5,321,548 2,532,244
Estimated Savings 1,689,796 4,479,100
A-23
CalPERS Actuarial Valuation - June 30, 2025
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool CalPERS ID: 3846845523
Rate Plans belonging to the Miscellaneous Risk Pool Page 19 Employer Contribution History
The table below provides a recent history of the employer contribution requirements for the plan, as determined by the annual actuarial valuation. Changes due to prepayments or plan amendments after the valuation report was finalized are not reflected.
Employer Normal Cost Rate
Valuation
Date
Contribution
Year
Rate Plan
1107
Rate Plan
23274
Rate Plan
26567
Unfunded Liability
Payment
06/30/2016 2018-19 10.609% 7.634% 6.842% $615,542
06/30/2017 2019-20 11.432% 8.081% 6.985% 744,967
06/30/2018 2020-21 12.361% 8.794% 7.732% 863,939
06/30/2019 2021-22 12.20% 8.65% 7.59% 1,002,749
06/30/2020 2022-23 12.21% 8.63% 7.47% 1,141,678
06/30/2021 2023-24 14.06% 10.10% 7.68% 1,070,317
06/30/2022 2024-25 14.13% 10.15% 7.87% 1,295,856
06/30/2023 2025-26 14.18% 10.19% 7.96% 1,510,617
06/30/2024 2026-27 14.16% 10.18% 7.93% 1,680,864
06/30/2025 2027-28 14.67% 10.41% 8.05% 1,767,011
Funding History
The table below shows the recent history of the actuarial accrued liability, share of the pool’s fair value of assets, unfunded accrued liability, funded ratio and annual covered payroll.
Valuation
Date
Accrued
Liability
Share of Pool’s
Fair Value of
Assets
Unfunded
Accrued Liability
(UAL)
Funded
Ratio
Annual
Covered
Payroll
06/30/2016 $36,986,435 $26,330,118 $10,656,317 71.2% $5,997,450 06/30/2017 40,915,699 30,299,314 10,616,385 74.1% 6,283,821 06/30/2018 45,330,477 33,034,043 12,296,434 72.9% 6,573,264 06/30/2019 47,909,161 34,931,168 12,977,993 72.9% 6,310,553 06/30/2020 50,237,999 36,060,334 14,177,665 71.8% 6,076,490 06/30/2021 53,033,027 43,149,040 9,883,987 81.4% 6,257,934 06/30/2022 56,335,335 39,683,917 16,651,418 70.4% 6,670,412 06/30/2023 59,211,296 41,323,098 17,888,198 69.8% 6,953,481 06/30/2024 62,848,046 45,195,988 17,652,058 71.9% 7,608,660 06/30/2025 66,776,051 50,897,758 15,878,293 76.2% 9,256,645 A-24
Risk Analysis
• Future Investment Return Scenarios 21
• Discount Rate Sensitivity 22
• Mortality Rate Sensitivity 23
• Maturity Measures 23
• Maturity Measures History 24
• Funded Status – Termination Basis 25
• Funded Status – Low-Default-Risk Basis 26
A-25
CalPERS Actuarial Valuation - June 30, 2025
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool CalPERS ID: 3846845523
Rate Plans belonging to the Miscellaneous Risk Pool Page 21 Future Investment Return Scenarios
Analysis using the investment return scenarios from the Asset Liability Management process completed in 2025 was performed to determine the effects of various future investment returns on required employer UAL contributions. The CalPERS Funding Risk Mitigation Policy stipulates that when the investment return exceeds the discount rate by at least 2% the board will consider adjustments to the discount rate. The projections below use a discount rate of 6.8% for all scenarios even though an annual return of 11.6% is high enough to trigger a board discussion on the discount rate. The projections also assume that all other actuarial assumptions will be realized and that no further changes in assumptions, contributions, benefits, or funding will occur.
The employer normal cost rates are not affected by Investment returns, and since no future assumption changes are being reflected, the projected employer normal cost rates for every future investment return scenario are the same as those shown earlier in this report. See Projected Employer Contributions for more information on projecting the employer normal cost.
The first table shows projected UAL contribution requirements if the fund were to earn either 1.9% or 11.6% annually. These alternate investment returns were chosen because 90% of long-term average returns are expected to fall between them over the 20-year period ending June 30, 2045.
Assumed Annual Return
FY 2025-26
through FY 2044-45
Projected Employer UAL Contributions
2028-29 2029-30 2030-31 2031-32 2032-33
1.9% (5th percentile) $1,933,000 $2,011,000 $2,147,000 $2,376,000 $2,682,000
11.6% (95th percentile) $1,812,000 $1,640,000 $1,389,000 $0 $0 Required UAL contributions outside of this range are also possible. In particular, whereas it is unlikely that investment returns will average less than 1.9% or greater than 11.6% over a 20-year period, the likelihood of a single investment return less than
1.9% or greater than 11.6% in any given year is much greater. The following analysis illustrates the effect of an extreme, single year investment return.
The portfolio has an expected volatility (or standard deviation) of 12.7% per year. Accordingly, in any given year there is a 16% probability that the annual return will be -5.9% or less and a 2.5% probability that the annual return will be -18.6% or less. These returns represent one and two standard deviations below the expected return of 6.8%.
The following table shows the effect of one and two standard deviation investment losses in FY 2025-26 on the FY 2028-29 contribution requirements. Note that a single-year investment gain or loss decreases or increases the required UAL contribution amount incrementally for each of the next five years, not just one, due to the 5-year ramp in the amortization policy. However, the contribution requirements beyond the first year are also impacted by investment returns beyond the first year. Historically, significant downturns in the market are often followed by higher than average returns. Such investment gains would offset the impact of these single year negative returns in years beyond FY 2028-29.
Assumed Annual Return for
Fiscal Year 2025-26
Required Employer
UAL Contributions
Projected Employer
UAL Contributions
2027-28 2028-29
(18.6%) (2 standard deviation loss) $1,767,011 $2,188,000 (5.9%) (1 standard deviation loss) $1,767,011 $2,030,000 • Without investment gains (returns higher than 6.8%) in FY 2026-27 or later, projected contributions rates would continue to rise over the next four years due to the continued phase-in of the impact of the illustrated investment loss in FY 2025-26.
• The Pension Outlook Tool can be used to model projected contributions for these scenarios beyond FY 2028-29 as well as to model other investment return scenarios.
A-26
CalPERS Actuarial Valuation - June 30, 2025
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool CalPERS ID: 3846845523
Rate Plans belonging to the Miscellaneous Risk Pool Page 22 Discount Rate Sensitivity
The discount rate assumption is calculated as the sum of the assumed real rate of return and the assumed annual price inflation, currently 4.3% and 2.5%, respectively. Changing either the price inflation assumption or the real rate of return assumption will change the discount rate. The sensitivity of the valuation results to the discount rate assumption depends on which component of the discount rate is changed. Shown below are various valuation results as of June 30, 2025, assuming alternate discount rates by changing the two components independently. Results are shown using the current discount rate of
6.8% as well as alternate discount rates of 5.8% and 7.8%. The rates of 5.8% and 7.8% were selected since they illustrate the impact of a 1.0% increase or decrease to the 6.8% assumption.
Sensitivity to the Discount Rate Due to Varying the Real Rate of Return Assumption As of June 30, 2025
1% Lower
Real Return Rate
Current
Assumptions
1% Higher
Real Return Rate
Discount Rate 5.8% 6.8% 7.8%
Price Inflation 2.5% 2.5% 2.5%
Real Rate of Return 3.3% 4.3% 5.3%
a) Total Normal Cost
Rate Plan 1107 28.63% 22.64% 18.10%
Rate Plan 23274 21.64% 17.35% 14.05%
Rate Plan 26567 19.87% 15.80% 12.71%
b) Accrued Liability $76,064,604 $66,776,051 $59,193,663 c) Fair Value of Assets $50,897,758 $50,897,758 $50,897,758 d) Unfunded Liability/(Surplus) [(b) - (c)] $25,166,846 $15,878,293 $8,295,905 e) Funded Ratio 66.9% 76.2% 86.0%
Sensitivity to the Discount Rate Due to Varying the Price Inflation Assumption As of June 30, 2025
1% Lower
Price Inflation
Current
Assumptions
1% Higher
Price Inflation
Discount Rate 5.8% 6.8% 7.8%
Price Inflation 1.5% 2.5% 3.5%
Real Rate of Return 4.3% 4.3% 4.3%
a) Total Normal Cost
Rate Plan 1107 24.24% 22.64% 20.80%
Rate Plan 23274 18.59% 17.35% 15.89%
Rate Plan 26567 16.95% 15.80% 14.46%
b) Accrued Liability $70,444,501 $66,776,051 $62,837,224 c) Fair Value of Assets $50,897,758 $50,897,758 $50,897,758 d) Unfunded Liability/(Surplus) [(b) - (c)] $19,546,743 $15,878,293 $11,939,466 e) Funded Ratio 72.3% 76.2% 81.0%
A-27
CalPERS Actuarial Valuation - June 30, 2025
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool CalPERS ID: 3846845523
Rate Plans belonging to the Miscellaneous Risk Pool Page 23 Mortality Rate Sensitivity
The following table looks at the change in the June 30, 2025, plan costs and funded status under two different longevity scenarios, namely assuming rates of post-retirement mortality are 10% lower or 10% higher than our current mortality assumptions adopted in 2025. This type of analysis highlights the impact on the plan of a change in the mortality assumption.
As of June 30, 2025
10% Lower
Mortality Rates
Current
Assumptions
10% Higher
Mortality Rates
a) Total Normal Cost
Rate Plan 1107 23.00% 22.64% 22.30%
Rate Plan 23274 17.66% 17.35% 17.06%
Rate Plan 26567 16.08% 15.80% 15.54%
b) Accrued Liability $68,138,817 $66,776,051 $65,523,748 c) Fair Value of Assets $50,897,758 $50,897,758 $50,897,758 d) Unfunded Liability/(Surplus) [(b) - (c)] $17,241,059 $15,878,293 $14,625,990 e) Funded Ratio 74.7% 76.2% 77.7%
Maturity Measures
As pension plans mature they become more sensitive to risks. Understanding plan maturity and how it affects the ability of a pension plan sponsor to tolerate risk is important in understanding how the pension plan is impacted by investment return volatility, other economic variables and changes in longevity or other demographic assumptions.
Since it is the employer that bears the risk, it is appropriate to perform this analysis on a pension plan level considering all rate plans. The following measures include only the rate plans covered in this report. One way to look at the maturity level of CalPERS and its plans is to look at the ratio of a plan’s retiree liability to its total liability. A pension plan in its infancy will have a very low ratio of retiree liability to total liability. As the plan matures, the ratio increases. A mature plan will often have a ratio above 60%-65%.
Ratio of Retiree Accrued Liability to
Total Accrued Liability June 30, 2024 June 30, 2025
1. Retiree Accrued Liability $35,712,609 $37,202,220
2. Total Accrued Liability $62,848,046 $66,776,051
3. Ratio of Retiree AL to Total AL [(1) ÷ (2)] 57% 56%
Another measure of the maturity level of CalPERS and its plans is the ratio of actives to retirees, also called the support ratio. A pension plan in its infancy will have a very high ratio of active to retired members. As the plan matures and members retire, the ratio declines. A mature plan will often have a ratio near or below one.
To calculate the support ratio for the rate plan, retirees and beneficiaries receiving a continuance are each counted as one, even though they may have only worked a portion of their careers as an active member of this rate plan. For this reason, the support ratio, while intuitive, may be less informative than the ratio of retiree liability to total accrued liability above.
Support Ratio June 30, 2024 June 30, 2025
1. Number of Actives 89 96
2. Number of Retirees 123 128
3. Support Ratio [(1) ÷ (2)] 0.72 0.75
A-28
CalPERS Actuarial Valuation - June 30, 2025
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool CalPERS ID: 3846845523
Rate Plans belonging to the Miscellaneous Risk Pool Page 24 Maturity Measures (continued)
The actuarial calculations supplied in this communication are based on various assumptions about long-term demographic and economic behavior. Unless these assumptions (e.g., terminations, deaths, disabilities, retirements, salary increases, investment return) are exactly realized each year, there will be differences on a year-to-year basis. The year-to-year differences between actual experience and the assumptions are called actuarial gains and losses and serve to lower or raise required employer contributions from one year to the next. Therefore, employer contributions will inevitably fluctuate, especially due to the ups and downs of investment returns.
Asset Volatility Ratio
Shown in the table below is the asset volatility ratio (AVR), which is the ratio of fair value of assets to payroll. Plans that have a higher AVR experience more volatile employer contributions (as a percentage of payroll) due to investment return. For example, a plan with an AVR of 8 may experience twice the contribution volatility due to investment return volatility than a plan with an AVR of 4. It should be noted that this ratio is a measure of the current situation. It increases over time but generally tends to stabilize as a plan matures.
Liability Volatility Ratio
Also shown in the table below is the liability volatility ratio (LVR), which is the ratio of accrued liability to payroll. Plans that have a higher LVR experience more volatile employer contributions (as a percentage of payroll) due to changes in liability. For example, a plan with an LVR of 8 is expected to have twice the contribution volatility of a plan with an LVR of 4 when there is a change in accrued liability, such as when there is a change in actuarial assumptions. It should be noted that this ratio indicates a longer-term potential for contribution volatility, since the AVR, described above, will tend to move closer to the LVR as the funded ratio approaches 100%.
Contribution Volatility June 30, 2024 June 30, 2025
1. Fair Value of Assets $45,195,988 $50,897,758
2. Payroll $7,608,660 $9,256,645
3. Asset Volatility Ratio (AVR) [(1) ÷ (2)] 5.9 5.5
4. Accrued Liability $62,848,046 $66,776,051
5. Liability Volatility Ratio (LVR) [(4) ÷ (2)] 8.3 7.2 Maturity Measures History
Valuation Date
Ratio of
Retiree Accrued Liability
to
Total Accrued Liability Support Ratio
Asset
Volatility
Ratio
Liability
Volatility
Ratio
06/30/2017 46% 1.25 4.8 6.5
06/30/2018 50% 1.24 5.0 6.9
06/30/2019 55% 1.03 5.5 7.6
06/30/2020 56% 0.92 5.9 8.3
06/30/2021 58% 0.82 6.9 8.5
06/30/2022 58% 0.78 5.9 8.4
06/30/2023 57% 0.76 5.9 8.5
06/30/2024 57% 0.72 5.9 8.3
06/30/2025 56% 0.75 5.5 7.2
A-29
CalPERS Actuarial Valuation - June 30, 2025
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool CalPERS ID: 3846845523
Rate Plans belonging to the Miscellaneous Risk Pool Page 25 Funded Status – Termination Basis
The funded status measured on a termination basis is an estimated range for the financial position of the plan had the contract with CalPERS been terminated as of June 30, 2025. The accrued liability on a termination basis (termination liability) is calculated differently from the plan’s ongoing funding liability. For the termination liability calculation, both compensation and service are frozen as of the valuation date and no future pay increases or service accruals are assumed. This measure of funded status is not appropriate for assessing the need for future employer contributions in the case of an ongoing plan, that is, for an employer that continues to provide CalPERS retirement benefits to active employees. Unlike the actuarial cost method used for ongoing plans, the termination liability is the present value of the benefits earned through the valuation date.
A more conservative investment policy and asset allocation strategy was adopted by the board for the Terminated Agency Pool.
The Terminated Agency Pool has limited funding sources since no future employer contributions will be made. Therefore, expected benefit payments are secured by risk-free assets and benefit security for members is increased while limiting the funding risk. However, this asset allocation has a lower expected rate of return than the remainder of the PERF and consequently, a lower discount rate assumption. The lower discount rate for the Terminated Agency Pool results in higher liabilities for terminated plans.
The discount rate used for actual termination valuations is a weighted average of the 10-year and 30-year Treasury yields where the weights are based on matching asset and liability durations as of the termination date. The discount rates used in the following analysis are based on 20-year Treasury bonds, which is a good proxy for most plans. The discount rate upon contract termination will depend on actual Treasury rates on the date of termination, which varies over time, as demonstrated below.
Valuation
Date
20-Year
Treasury Rate
6/30/2016 1.86%
6/30/2017 2.61%
6/30/2018 2.91%
6/30/2019 2.31%
6/30/2020 1.18%
Valuation
Date
20-Year
Treasury Rate
6/30/2021 2.00%
6/30/2022 3.38%
6/30/2023 4.06%
6/30/2024 4.61%
6/30/2025 4.79%
As Treasury rates are variable, the table below shows a range for the termination liability using discount rates 1% below and above the 20-year Treasury rate on the valuation date. The price inflation assumption is the 20-year Treasury breakeven inflation rate, that is, the difference between the 20-year inflation indexed bond and the 20-year fixed-rate bond.
The Fair Value of Assets also varies with interest rates and will fluctuate depending on other market conditions on the date of termination. Since it is not possible to approximate how the assets will change in different interest rate environments, the results below use the plan’s share of the pool’s Fair Value of Assets as of the valuation date.
Discount Rate: 3.79%
Price Inflation: 2.47%
Discount Rate: 5.79%
Price Inflation: 2.47%
1. Termination Liability1 $95,916,463 $72,316,063
2. Fair Value of Assets 50,897,758 50,897,758
3. Unfunded Termination Liability [(1) – (2)] $45,018,705 $21,418,305
4. Funded Ratio [(2) ÷ (1)] 53.1% 70.4%
1 The termination liabilities calculated above include a 5% contingency load. The contingency load and other actuarial assumptions can be found in Appendix A of the Section 2 report.
In order to terminate, first contact our Pension Contract Services unit to initiate a Resolution of Intent to Terminate. The completed Resolution will allow a CalPERS actuary to provide a preliminary termination valuation with a more up-to-date estimate of the plan’s assets and liabilities. Before beginning this process, please consult with a CalPERS actuary.
A-30
CalPERS Actuarial Valuation - June 30, 2025
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool CalPERS ID: 3846845523
Rate Plans belonging to the Miscellaneous Risk Pool Page 26 Funded Status – Low-Default-Risk Basis
Actuarial Standard of Practice (ASOP) No. 4, Measuring Pension Obligations and Determining Pension Plan Costs or Contributions, requires the disclosure of a low-default-risk obligation measure (LDROM) of benefit costs accrued as of the valuation date using a discount rate based on the yields of high quality fixed income securities with cash flows that replicate expected benefit payments. Conceptually, this measure represents the level at which financial markets would value the accrued plan costs, and would be approximately equal to the cost of a portfolio of low-default-risk bonds with similar financial characteristics to accrued plan costs.
As permitted in ASOP No. 4, the Actuarial Office uses the Entry Age Actuarial Cost Method to calculate the LDROM. This methodology is in line with the measure of “benefit entitlements” calculated by the Bureau of Economic Analysis and used by the Federal Reserve to report the indebtedness due to pensions of plan sponsors and, conversely, the household wealth due to pensions of plan members.
As shown below, the discount rate used for the LDROM is 5.58%, which is the Standard FTSE Pension Liability Index1 discount rate as of June 30, 2025.
Selected Measures on a Low-Default-Risk Basis June 30, 2025 Discount Rate 5.58%
1. Accrued Liability – Low-Default-Risk Basis (LDROM)
a) Active Members $22,330,509
b) Transferred Members 11,190,366
c) Separated Members 2,875,359
d) Members and Beneficiaries Receiving Payments 41,990,575 e) Total $78,386,809
2. Fair Value of Assets 50,897,758
3. Unfunded Accrued Liability – Low-Default-Risk Basis [(1e) – (2)] $27,489,051
4. Unfunded Accrued Liability – Funding Policy Basis 15,878,293
5. Present Value of Unearned Investment Risk Premium [(3) – (4)] $11,610,758 The difference between the unfunded liabilities on a low-default-risk basis and on the funding policy basis represents the present value of the investment risk premium that must be earned in future years to keep future contributions for currently accrued plan costs at the levels anticipated by the funding policy.
Benefit security for members of the plan relies on a combination of the assets in the plan, the investment income generated from those assets, and the ability of the plan sponsor to make necessary future contributions. If future returns fall short of 6.8%, benefit security could be at risk without higher than currently anticipated future contributions.
The funded status on a low-default-risk basis is not appropriate for assessing the sufficiency of plan assets to cover the cost of settling the plan’s benefit obligations (see Funded Status – Termination Basis), nor is it appropriate for assessing the need for future contributions (see Funded Status – Funding Policy Basis). 1 This index is based on a yield curve of hypothetical AA-rated zero-coupon corporate bonds whose maturities range from 6 months to 30 years. The index represents the single discount rate that would produce the same present value as discounting a standardized set of liability cash flows for a fully open pension plan using the yield curve. The liability cash flows are reasonably consistent with the pattern of benefits expected to be paid from the entire Public Employees’ Retirement Fund for current and former plan members. A different index, hence a different discount rate, may be needed to measure the LDROM for a subset of the fund, such as a single rate plan or a group of retirees.
A-31
Supplementary Information
• Normal Cost by Benefit Group 28
• Summary of Valuation Data 29
• Status of PEPRA Transition 30
• Surcharge for Class 1 Benefits 30
• Plan's Major Benefit Options 31
A-32
CalPERS Actuarial Valuation - June 30, 2025
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool CalPERS ID: 3846845523
Rate Plans belonging to the Miscellaneous Risk Pool Page 28 Normal Cost by Benefit Group
The table below displays the Total Normal Cost broken out by benefit group for FY 2027-28. The Total Normal Cost is the annual cost of service accrual for the fiscal year for active employees and can be viewed as the long-term contribution rate for the benefits contracted. Generally, the normal cost for a benefit group subject to more generous benefit provisions will exceed the normal cost for a group with less generous benefits. Future measurements of the Total Normal Cost for each group may differ significantly from the current values due to such factors as changes in economic and demographic assumptions, changes in plan benefits, or changes in applicable law.
Rate
Plan
Identifier Benefit Group Name
Total Normal
Cost
FY 2027-28
Offset due to
Employee
Contributions
FY 2027-28
Employer
Normal Cost
FY 2027-28
Number
of
Actives
Payroll on
6/30/2025
1107 Miscellaneous First Tier Plan 22.64% 7.97% 14.67% 17 $1,790,877 23274 Miscellaneous Second Tier
Plan 17.35% 6.94% 10.41% 10 1,691,978
26567 PEPRA Miscellaneous Plan 15.80% 7.75% 8.05% 69 5,773,790 Total 96 $9,256,645
Note that if a Benefit Group above has multiple bargaining units, each of which has separately contracted for different benefits such as Employer Paid Member Contributions, then the Normal Cost shown for the respective benefit level does not reflect those differences.
A-33
CalPERS Actuarial Valuation - June 30, 2025
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool CalPERS ID: 3846845523
Rate Plans belonging to the Miscellaneous Risk Pool Page 29 Summary of Valuation Data
The table below shows a summary of the plan’s member data upon which this valuation is based:
June 30, 2024 June 30, 2025
Active Members
Counts 89 96
Average Attained Age 44.2 43.9
Average Entry Age to Rate Plan 37.3 36.8
Average Years of Credited Service 6.1 6.2
Average Annual Covered Pay $85,491 $96,423
Annual Covered Payroll $7,608,660 $9,256,645
Present Value of Future Payroll $76,362,565 $96,230,801 Transferred Members
Counts 86 92
Separated Members
Counts 136 134
Retired Members and Beneficiaries*
Counts 123 128
Average Annual Benefits $22,647 $22,961
Total Annual Benefits $2,785,579 $2,939,061
Counts of members included in the valuation are counts of the records processed by the valuation. Multiple records may exist for those who have service in more than one valuation group. This does not result in double counting of liabilities.
Average Annual Benefits represents benefit amounts payable by this plan only. Some members may have service in another plan and would therefore have a larger total benefit than would be included as part of the average shown here. * Values include community property settlements
A-34
CalPERS Actuarial Valuation - June 30, 2025
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool CalPERS ID: 3846845523
Rate Plans belonging to the Miscellaneous Risk Pool Page 30 Status of PEPRA Transition
The California Public Employees' Pension Reform Act of 2013 (PEPRA), which took effect in January 2013, changed CalPERS retirement benefits and placed compensation limits on new members joining CalPERS on or after January 1, 2013. One of the objectives of PEPRA was to improve the ability of employers to manage the costs of retirement benefits for their members.
While such changes can reduce future benefit costs in a meaningful way, the full impact on employer contributions will not occur until all active members are subject to the rules and provisions of PEPRA. The table below illustrates the status of this transition as of June 30, 2025.
Classic PEPRA
PEPRA
as a Percent
of Total
Active Members
Count 27 69 71.9%
Average Attained Age 50.6 41.3
Average Entry Age 35.1 37.5
Average Years of Credited Service 13.6 3.3
Average Annual Covered Payroll $128,995 $83,678
Annual Covered Payroll $3,482,855 $5,773,790 62.4%
Present Value of Future Payroll $29,454,947 $66,775,854 69.4% Transferred Members
Count 44 48 52.2%
Separated Members
Count 89 45 33.6%
Retired Members and Beneficiaries Receiving Payments
Count 122 6 4.7%
Average Annual Benefit $23,732 $7,294
Total Annual Benefits $2,895,297 $43,764 1.5%
Accrued Liabilities
Active Members $14,216,138 $4,059,719 22.2%
Transferred Members 7,112,375 1,705,699 19.3%
Separated Members 2,238,763 241,137 9.7%
Retired Members and Beneficiaries 36,609,708 592,512 1.6% Total $60,176,984 $6,599,067 9.9%
Surcharge for Class 1 Benefits
This plan has the following Class 1 benefit provisions which result in the surcharges indicated:
Class 1 benefit provisions
Rate Plan
1107
Rate Plan
23274
Rate Plan
26567
One Year Final Compensation (FAC 1) 0.78% N/A N/A
Surcharge for Class 1 Benefits 0.78% 0.00% 0.00%
A-35
CalPERS Actuarial Valuation - June 30, 2025
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool CalPERS ID: 3846845523
Rate Plans belonging to the Miscellaneous Risk Pool Page 31 Plan's Major Benefit Options
Shown below is a summary of the major optional benefits for which the agency has contracted. A description of principal standard and optional plan provisions is in Section 2.
Rate Plan 1107 Benefit Group
Member Category Misc Misc Misc
Demographics
Actives No Yes No
Transfers/Separated Yes Yes No
Receiving Yes Yes Yes
Benefit Group Key 103140 103141 207228
Benefit Provision
Benefit Formula 2% @ 55 2.5% @ 55
Social Security Coverage No No
Full/Modified Full Full
Employee Contribution Rate 8.00%
Final Average Compensation Period One Year One Year
Sick Leave Credit Yes Yes
Non-Industrial Disability Standard Standard
Industrial Disability No No
Pre-Retirement Death Benefits
Optional Settlement 2 Yes Yes
1959 Survivor Benefit Level Level 4 Level 4
Special No No
Alternate (firefighters) No No
Post-Retirement Death Benefits
Lump Sum $2,000 $2,000 $2,000
Survivor Allowance (PRSA) No No No
COLA 2% 2% 2%
A-36
CalPERS Actuarial Valuation - June 30, 2025
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool CalPERS ID: 3846845523
Rate Plans belonging to the Miscellaneous Risk Pool Page 32 Plan's Major Benefit Options (Continued)
Shown below is a summary of the major optional benefits for which the agency has contracted. A description of principal standard and optional plan provisions is in Section 2.
Rate Plan 23274 Benefit Group
Member Category Misc
Demographics
Actives Yes
Transfers/Separated Yes
Receiving Yes
Benefit Group Key 110655
Benefit Provision
Benefit Formula 2% @ 60
Social Security Coverage No
Full/Modified Full
Employee Contribution Rate 7.00%
Final Average Compensation Period Three Year
Sick Leave Credit Yes
Non-Industrial Disability Standard
Industrial Disability No
Pre-Retirement Death Benefits
Optional Settlement 2 Yes
1959 Survivor Benefit Level Level 4
Special No
Alternate (firefighters) No
Post-Retirement Death Benefits
Lump Sum $2,000
Survivor Allowance (PRSA) No
COLA 2%
A-37
CalPERS Actuarial Valuation - June 30, 2025
All Rate Plans of the City of Rancho Palos Verdes in the Miscellaneous Risk Pool CalPERS ID: 3846845523
Rate Plans belonging to the Miscellaneous Risk Pool Page 33 Plan's Major Benefit Options (Continued)
Shown below is a summary of the major optional benefits for which the agency has contracted. A description of principal standard and optional plan provisions is in Section 2.
Rate Plan 26567 Benefit Group
Member Category Misc
Demographics
Actives Yes
Transfers/Separated Yes
Receiving Yes
Benefit Group Key 110656
Benefit Provision
Benefit Formula 2% @ 62
Social Security Coverage No
Full/Modified Full
Employee Contribution Rate 7.75%
Final Average Compensation Period Three Year
Sick Leave Credit Yes
Non-Industrial Disability Standard
Industrial Disability No
Pre-Retirement Death Benefits
Optional Settlement 2 Yes
1959 Survivor Benefit Level Level 4
Special No
Alternate (firefighters) No
Post-Retirement Death Benefits
Lump Sum $2,000
Survivor Allowance (PRSA) No
COLA 2%
A-38
Section 2
California Public Employees’ Retirement System
Risk Pool Actuarial Valuation Information
Section 2 may be found on the CalPERS website
in the Forms & Publications section
A-39
Home Newsroom CalPERS News
CalPERS Posts 14.8% Preliminary Investment Return for Fiscal Year 2025-26 CalPERS Posts 14.8%
Preliminary Investment
Return for Fiscal Year 2025-
26 July 13, 2026
Communications & Stakeholder Relations
Office of Public Affairs
(916) 795-3991 – [email protected]
SACRAMENTO, Calif. — Strong performance in both its public and private equity portfolios helped the California Public Employees’ Retirement System (CalPERS) achieve a preliminary net investment return of 14.8% for the 12-month period ending June 30, 2026, the pension system reported Monday.
The 2025-26 fiscal year return exceeded both last year’s 11.6% performance and the assumed 6.8% rate of return set by the CalPERS Board of Administration. It is also CalPERS’ highest mark in five years and represents a four-year trend of higher year-over-year results.
The Public Employees’ Retirement Fund (PERF) had $637.1 billion in assets as of June 30 and a funded status of 85%, up from 79% at the end of fiscal year 2024-25.
When Chief Executive Officer Marcie Frost arrived at CalPERS in October 2016, the PERF was 68% funded. The funded status Menu
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represents the total assets in the fund compared with the pension benefits it is obligated to pay in the future.
“Our team has maintained a disciplined approach to building the health of the pension system, and our improved funded status shows this effort is paying off for our 2.4 million members,” Frost said. “We will maintain this focus as we build toward full funding, resisting external distractions that could increase costs or force us to forgo investment returns.”
In recent years, CalPERS has increasingly diversified its portfolio into alternative investment categories such as private equity and private debt, which have the potential to deliver higher returns than the overall market while spreading risk.
Public equity produced the highest preliminary return with a 24.1% gain, reflecting a strong finish for the stock market. Private equity achieved a preliminary return of 17%.
Private equity returns have risen steadily since a 2022 strategy overhaul by Anton Orlich, who in June was promoted from Managing Investment Director of Private Equity to Deputy Chief Investment Officer for Private Markets. Orlich refocused CalPERS’ private equity strategy on manager selection, lower-cost structures, and diversification toward companies in venture, growth, and middlemarket buyout.
This month, CalPERS launched its Total Portfolio Approach, approved by the board in November 2025. It gives the investment team more flexibility to evaluate each investment strategy for its potential to benefit the entire fund, rather than sticking to set allocations for each asset class.
“Our total portfolio approach will mean we will be focusing more on the best investments for the whole portfolio level, rather than just for any individual asset class,” said Chief Investment Officer Stephen Gilmore, who previously oversaw a similar approach at the New Zealand Superannuation Fund. We will regularly and publicly measure the performance of our active approach compared with a standard reference portfolio of 75% global equities and 25% U.S. 9/3/26, 4:48 PM CalPERS Posts 14.8% Preliminary Investment Return for Fiscal Year 2025-26 | CalPERS B-2
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Treasury bonds, ensuring that we are really delivering value for our members.”
Preliminary total fund annualized returns for the five-year period ending June 30, 2026, stood at 6.83%; the 10-year period at 8.57%; and the 20-year period at 6.81%.
Asset Class (by size) Net Rate of Return (in percent)
Public Equity 24.1%
Fixed Income 5.9%
Private Equity 17.0%
Real Assets 6.3%
Private Debt 11.0%
Private market asset valuations lag one quarter and are as of March 31, 2026.
CalPERS investment and finance staff and outside experts will review the portfolio’s performance in the next few months to finalize the fiscal year returns for 2025-26.
The ending value of the PERF for fiscal year 2025-26 will be based on additional factors beyond investment returns, including employer and employee contributions, monthly payments to retirees, and various investment fees.
Once finalized, the fiscal year-end market value of CalPERS’ assets is used to set contribution rates for the State of California and school districts in the 2027-28 fiscal year and for contracting counties, cities, and special districts in the 2028-29 fiscal year.
Under the current provisions of the CalPERS Funding Risk Mitigation Policy, the board is provided the option of lowering the discount rate 1 1
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when investment returns exceed the established 6.8% discount rate.
The Board is scheduled to consider the matter in September.
Please review the annual investment report (PDF) for a
comprehensive overview of the fund’s assets.
Media Availability
CalPERS senior leaders will be available virtually on Monday, July 13 at approximately 12:00 p.m. PT to discuss the investment returns.
Among those scheduled to speak are:
Chief Executive Officer Marcie Frost
Chief Investment Officer Stephen Gilmore
Deputy Chief Investment Officer, Private Markets, Anton Orlich Credentialed media can email [email protected] for login information.
About CalPERS
CalPERS is the largest defined-benefit public pension in the U.S., with
2.4 million members. Since 1932, CalPERS has provided retirement security for state, school, and public agency employees who invest their life’s work in public service. In 1962, CalPERS expanded its services to include health benefits and now offers quality health plan coverage for more than 1.5 million members and their families.
Updated: July 13, 2026
We serve those who serve California.
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