Acton-Boxborough Regional School District Notes to Basic Financial Statements Year Ended June 30, 2024
Investment policy
The pension plan’s policy in regard to the allocation of invested assets is established by PRIT. Plan assets are managed on a total return basis with a long-term objective of achieving a fully funded status for the benefits provided through the pension plan. 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 expense 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 the pension plan’s target asset allocation as of December 31, 2023, are summarized in the following table:
Long-Term Expected Long-Term Expected Asset Allocation Real Rate of Return
Asset Class
Domestic equity…………………………… 22.00% International developed markets equity…… 9.50%
6.29% 6.39% 7.63% 1.72% 3.43% 3.24% 3.72% 2.87% 9.43%
International emerging markets equity…… Core fixed income…………………………
4.50% 15.00%
High-yield fixed income…………………… 9.00%
Real estate…………………………………
10.00%
Timber……………………………………… 4.00%
Hedge funds, GTAA, and risk parity………
10.00%
Private equity……………………………… 16.00%
Total………………………………………
100.00%
Rate of return
For the year ended December 31, 2023, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 10.95%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested .
Discount rate
The discount rate used to measure the total pension liability was 7.15% at December 31, 2023 and December 31, 2022. The projection of cash flows used to determine the discount rate assumed plan
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