Friday, July 31, 2015

PERS Board lowers pension investment return assumption; increased costs coming

Oregonian
July 31st, 2015


The board of Oregon's public pension fund voted Friday to reduce its key actuarial assumption – the system's assumed earnings rate - from 7.75 percent to 7.5 percent to reflect lower expected returns from its investments.
That's bad news for public employers and taxpayers. Investment have historically provided more than 70 percent of the cash needed to fund retirement benefits. The reduced assumption will increase the system's funding deficit and require higher contributions from public employers and taxpayers. It also means a small reduction in benefits for some older PERS members.
The system's actuary, Milliman Inc. has also adopted new mortality assumptions to reflect the fact that retirees are living longer, a change that will put more upward pressure on system costs.

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