## Public pension assumed rate of return

The assumed rate of return is one of the major actuarial assumptions underlying pension fund valuations. It influences the calculation of a plan’s total liabilities and drives the required When it comes to public pension plans’ assumed rates of return, what is rare today was quite common less than 10 years ago. Only three of 129 public plans tracked by the National Association of State Retirement Administrators have assumed rates of return at 8%. The report noted that the median assumed rate of return among public pension funds is 7.25% as of February, based on data compiled by the National Association of State Retirement Administrators. The California Public Employees' Retirement System board voted on Wednesday to lower the pension plan's expected rate of return from investment to 7 percent by 2020, a decision that comes after For years, many pension funds assumed they would earn an average 8 percent annually from their investments. It was a reasonable expectation for a while. But times have changed.

## The $311 billion California Public Employees' Retirement System saw its funded status fall four percentage points to 69% and reduced its assumed investment rate of return to 7% from 7.5%. Given

1 Feb 2020 typical public pension fund, the accuracy of the return assumption because the average rate of assumed inflation has been dropping more. These assets are held in trust and invested to pre-fund the cost of pension benefits. public pension fund investment returns requires a focus on the long- term. 14 May 2019 The average assumed rate of return for public funds is 7.3%, according to a survey by the National Association of Retirement Administrators. 30 Sep 2019 An 8% assumed rate of return was once common among state pension plans; now it is rare. 19 May 2019 rate of return assumptions and the associated investment risks borne by public That is because the compound returns depend on a public pension funds' It means that positive returns, above the return assumption, 13 Dec 2019 Issue: Public pension systems like TRS are required to set a forward-looking “ assumed long-term rate of investment return” periodically in order 14 Nov 2018 Kentucky's Non-Hazardous Employee Retirement System pension registered the lowest assumed rate of return at 5.25%, and was the only

### 14 May 2019 The average assumed rate of return for public funds is 7.3%, according to a survey by the National Association of Retirement Administrators.

In November 2018, the estimated median assumed rate of return for U.S. public pension investments was 7.38 percent. Yet a 2018 study of 44 state pension 14 Jul 2019 State and local government pension plans are immensely important economic institutions to the assumed rate of return on risky plan assets.

### The $311 billion California Public Employees' Retirement System saw its funded status fall four percentage points to 69% and reduced its assumed investment rate of return to 7% from 7.5%. Given

State and Local Governments' Pension Assets as a Percentage of Liabilites,. Calculated Using using a discount rate based on the expected rate of return on the plans' removing the effect of the median assumed rate of infla- tion.)12 That 16 Feb 2019 Assuming such a high rate of return makes a pension plan appear better funded. Lowering the assumed rate of return makes a plan appear 19 Feb 2019 One reason why the unfunded liability has risen is because the Commonwealth has reduced the assumed rate of return on pension fund 26 Feb 2019 State Treasurer Dale Folwell says the state pension plan Folwell also reduced the assumed rate of return slightly from its previous 7.2 6 Feb 2019 Stop allowing public pensions to calculate the present value of their liabilities using the expected rate of return assumed to be generated on This is similar to what many public pension plans did as risk-free rates fell. □ Lower assumed return: In this scenario, instead of investing in risker assets in 3 Aug 2018 The Teacher Retirement System of Texas, or TRS, recently lowered its assumed rate of return for its pension fund from 8 percent to 7.25 percent

## 4 Dec 2018 And public pensions' assumed real rates of investment return are at record levels. For CalPERS, a 1 percentage point cut in assumed inflation

27 Apr 2017 At the same time, CalPERS reduced its assumed investment rate of return from 7.5 percent to 7 percent. Given CalPERS' ten-year annualized 3 Nov 2019 Public pension plans use an assumed return based on their historic performance to calculate their future liabilities, instead of the discount rate 27 Jul 2019 Future returns projected on Oregon's public pension system investment key funding assumption, maintaining their assumed rate of return on measure the range of employer contributions, including the minimum and maximum over 10 and 20 years where the assumed rate of return is achieved, 16 Dec 2019 And what needs to happen to achieve the 7.25% return assumption? assumed rate of return and is awful news for US public pension funds. Such pension funds have set their assumed rates of return above the inflation rate. Additionally, in light of the risk of pensioners outliving their actuarial lifespan,

Unfunded Public Pension Liabilities Top $6 Trillion free rate of return assumption) of state-‐administered pension plans now exceed $6 trillion—an increase of. State and Local Governments' Pension Assets as a Percentage of Liabilites,. Calculated Using using a discount rate based on the expected rate of return on the plans' removing the effect of the median assumed rate of infla- tion.)12 That 16 Feb 2019 Assuming such a high rate of return makes a pension plan appear better funded. Lowering the assumed rate of return makes a plan appear 19 Feb 2019 One reason why the unfunded liability has risen is because the Commonwealth has reduced the assumed rate of return on pension fund