We take your expected future benefit payment, now and into the future, and apply those against your OPEB Trust, including future trust contributions.
To the extent that the trust is sufficient to cover all future benefit payments, we will use the long-term rate of return assumption. If they are not sufficient, we use the long-term rate of return assumption where they are sufficient and use the 20 yr. municipal bond index rate to the extent that they are not sufficient.
That present value is then created. We then determine a single equivalent discount rate that would yield the same present value. And that is how the discount rate is determined under GASB 74 and 75.
If you have any questions, feel free to reach out to myself (Parker Elmore), or any of our OPEB consultants at Odyssey Advisors.
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Our telephone number :(855) 401-GAIN (4246)
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