Company: SOJE
Filing Date: 2025-02-20
Form Type: 10-K
Source: 0000092122-25-000018
Chunk: 1294

Company: SOUTHERN CO
Filing Date: 2025-02-20
Form: 10-K
Item: Item 8
Chunk 1294
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%Annual salary increase4.60 4.60 4.60 4.60 4.60 4.60 2023Assumptions used to determine benefit obligations:Southern CompanyAlabama PowerGeorgia PowerMississippi PowerSouthern PowerSouthern Company GasPension plansDiscount rate5.07 %5.08 %5.06 %5.06 %5.14 %5.05 %Annual salary increase4.60 4.60 4.60 4.60 4.60 4.60 Other postretirement benefit plansDiscount rate4.99 %5.01 %4.98 %4.98 %5.06 %4.98 %Annual salary increase4.60 4.60 4.60 4.60 4.60 4.60 The Registrants estimate the expected rate of return on pension plan and other postretirement benefit plan assets using a financial model to project the expected return on each current investment portfolio. The analysis projects an expected rate of return on each of the different asset classes in order to arrive at the expected return on the entire portfolio relying on each trust's target asset allocation and reasonable capital market assumptions. The financial model is based on four key inputs: anticipated returns by asset class (based in part on historical returns), each trust's target asset allocation, an anticipated inflation rate, and the projected impact of a periodic rebalancing of each trust's portfolio. The Registrants set the expected rate of return assumption using an arithmetic mean which represents the expected simple average return to be earned by the pension plan assets over any one year. The Registrants believe the use of the arithmetic mean is more compatible with the expected rate of return's function of estimating a single year's investment return.

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    Table of Contents                                Index to Financial StatementsCOMBINED NOTES TO FINANCIAL STATEMENTS

An additional assumption used in measuring the accumulated other postretirement benefit obligations (APBO) was a weighted average medical care cost trend rate. The weighted average medical care cost trend rates used in measuring the APBO for the Registrants at December 31, 2024 were as follows:Initial Cost Trend RateUltimate Cost Trend RateYear That Ultimate Rate is ReachedPre-658.00 %4.50 %2033Post-65 medical5.50 4.50 2033Post-65 prescription11.00 4.50