PERA’s retirement plans show positive trend in 30-year projections
February 6, 2019
Legislatively required 30-year projections of estimated funding status show a positive trend for PERA’s plans under current assumptions. PERA’s three largest plans all project to be fully funded, meaning assets will equal accrued liabilities, within the next 20 years.
The projections were based on plan assumptions, assets, and member data as of July 1, 2018. Actual investment returns since July 1, 2018 have been positive, but below the assumed 7.5 percent rate of return. As a result, an updated forecast would delay the projected full funding dates by a few years.
The projections also show what would happen if the investment returns were 6.0 percent or 9.0 percent—the current assumed rate of 7.5 percent plus or minus 1.5 percent. Results under those scenarios vary considerably. Worth noting is that the only sensitivity analysis done in these reports are the investment returns. No other expectations are changed. For example, if investment returns are persistently low, there is no corresponding adjustment in the projections to reflect the mitigating result caused by possible lower salary increases or inflation.
The full reports are available.
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