The board of trustees for the state’s Public Employees’ Retirement System (PERS) made an important, if unheralded, move recently when it voted unanimously to use a somewhat more realistic projection of its rate of return on investments
This matters because an overly optimistic projection can mask a coming decrease in the solvency of the fund, which is already severely under-capitalized.
PERS, the retirement plan for most state, county, city, and school district employees, will plan on its investments earning 7.55 percent rather than the previous expectation of 7.75 percent
That’s still short of the change recommended by PERS’ actuary, Cavanaugh Macdonald Consulting.
The firm recommended the board lower the expected rate of return to 7 percent. The PERS board ignored the actuary’s recommendation in 2018 that it be lowered to 7.5 percent.