ACFR - FY2020 5-28-21 FINAL - Flipbook - Page 89
NOTES TO FINANCIAL STATEMENTS
CITY OF EUSTIS, FLORIDA
(Continued)
Note 5 - Pension Plans (Continued)
Police and Fire Defined Benefit Pension Plans
Investments Held
Investments are reported at Fair Market Value. Securities traded on a national or
international exchange are valued at the last reported sales price at current exchange
rates. Investments that do not have an established market are reported at estimated fair
value.
Authorized investments are governed by Florida Statutes and each Plan’s investment
policy. All plan investments are held by an outside third party custodian who determines
what instruments to purchase based on the plan’s investment policy. Investments held
and the return earned are reviewed quarterly by the pension board of the respective plan.
Both the Police Officer and Firefighters’ Pension Plans did not hold investments in any
one organization that represents 5% or more of the Plan’s fiduciary net position.
For the year ended September 30, 2020 the net of pension plan investment expense,
was 7.25% and 7.80% for the Police Officers’ and for Firefighters’ plan, respectively. The
money-weighted rate of return 12.74% expresses investment performance, net of
investment expense, adjusted for the changing amounts actually invested.
Long Term Expected Rate of Return
The long-term expected rate of return on pension plan investments was determined using
a building-block method in which best-estimate ranges of expected future real rates of
return (expected returns, net of pension plan investment expenses and inflation) are
developed for each major asset class. These ranges are combined to produce the long
term expected rate of return by weighting the expected future real rates of return by the
target asset allocation percentage and by adding expected inflation. Best estimates of
arithmetic real rates of return for each major asset class included in both the police
officers’ and firefighters’ pension plan’s target asset allocation as of September 30, 2020
Long Term
Expected
Rate of
Return
Target
Allocation
Asset Class
Domestic Equity
International Equity
Domestic Fixed Income
Real Estate
GTAA
Target
Allocation
Police
60.00%
10.00%
30.00%
0
0
Fire
7.50%
8.50%
2.50%
0
0
72
Long Term
Expected
Rate of
Return
45.00%
15.00%
25.00%
10.00%
5.00%
7.50%
8.50%
2.50%
4.50%
3.50%
