Company: EAI
Filing Date: 2025-02-18
Form Type: 10-K
Source: 0000065984-25-000012
Chunk: 402

Company: ENTERGY ARKANSAS, LLC
Filing Date: 2025-02-18
Form: 10-K
Item: Item 7
Chunk 402
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 inflation and, with respect to capped costs under the plan, the effects of general inflation.  Entergy reviews actual recent cost trends and projected future trends in establishing its health care cost trend rates.

Expected long-term rate of return on plan assets

In determining its expected long-term rate of return on plan assets used in the calculation of benefit plan costs, Entergy reviews past performance, current and expected future asset allocations, and capital market assumptions of its investment consultant and some of its investment managers.  Entergy conducts periodic asset/liability studies in order to set its target asset allocations.

In 2023, Entergy implemented a new asset allocation strategy for its pension assets, based on the funded status of each plan within the trust.  The new strategy no longer focuses on targeting an overall asset allocation for the trust, but rather a target asset allocation for each plan within the trust that adjusts dynamically based on the funded status.  The ultimate asset allocation for each plan is expected to be attained when the plan is 110% funded.  The 2024 weighted-average target pension asset allocation is 35% equity and 65% fixed income securities, of which 61% is long duration fixed income.

In 2017, Entergy implemented a new asset allocation strategy for its non-taxable and taxable other postretirement assets, based on the funded status of each sub-account within each trust.  The new strategy no longer focuses on targeting an overall asset allocation for each trust, but rather a target asset allocation for each sub-account within each trust that adjusts dynamically based on the funded status.  This strategy was reaffirmed based upon an asset/liability study in 2024.  The 2024 weighted-average target postretirement asset allocation is 24% equity and 76% fixed income securities.

See Note 11 to the financial statements for discussion of the current asset allocations for Entergy’s pension and other postretirement assets.

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Table of ContentsEntergy Corporation and SubsidiariesManagement’s Financial Discussion and Analysis

Costs and Sensitivities

The estimated 2025 and actual 2024 qualified pension and other postretirement costs and related underlying assumptions and sensitivities are shown below:

CostsEstimated 20252024(In Millions)Qualified pension cost $85.3$391.5 (a)Other postretirement income($29.4)($24.3)Assumptions20252024Discount ratesQualified pension Service cost5.75%5.08%Interest cost5.46%4