{"id":169,"date":"2021-05-27T15:36:25","date_gmt":"2021-05-27T22:36:25","guid":{"rendered":"https:\/\/oregoncommentary.com\/?p=169"},"modified":"2021-11-19T22:28:14","modified_gmt":"2021-11-19T22:28:14","slug":"pers-actuaries-demand-cut-in-assumed-rate-of-return","status":"publish","type":"post","link":"https:\/\/oregoncommentary.com\/index.php\/2021\/05\/27\/pers-actuaries-demand-cut-in-assumed-rate-of-return\/","title":{"rendered":"PERS Actuaries Demand Cut in Assumed Rate of Return"},"content":{"rendered":"<div class=\"fusion-fullwidth fullwidth-box fusion-builder-row-1 fusion-flex-container nonhundred-percent-fullwidth non-hundred-percent-height-scrolling\" style=\"--awb-border-radius-top-left:0px;--awb-border-radius-top-right:0px;--awb-border-radius-bottom-right:0px;--awb-border-radius-bottom-left:0px;--awb-flex-wrap:wrap;\" ><div class=\"fusion-builder-row fusion-row fusion-flex-align-items-flex-start fusion-flex-content-wrap\" style=\"max-width:1248px;margin-left: calc(-4% \/ 2 );margin-right: calc(-4% \/ 2 );\"><div class=\"fusion-layout-column fusion_builder_column fusion-builder-column-0 fusion_builder_column_1_1 1_1 fusion-flex-column\" style=\"--awb-bg-size:cover;--awb-width-large:100%;--awb-margin-top-large:0px;--awb-spacing-right-large:1.92%;--awb-margin-bottom-large:0px;--awb-spacing-left-large:1.92%;--awb-width-medium:100%;--awb-spacing-right-medium:1.92%;--awb-spacing-left-medium:1.92%;--awb-width-small:100%;--awb-spacing-right-small:1.92%;--awb-spacing-left-small:1.92%;\"><div class=\"fusion-column-wrapper fusion-flex-justify-content-flex-start fusion-content-layout-column\"><div class=\"fusion-text fusion-text-1\" style=\"--awb-text-transform:none;\"><p>In uncharacteristically blunt language, the actuaries for the Public Employee Retirement System have literally demanded that the PERS board reduce its assumed rate of return on PERS investments, stating \u201cin our opinion it is necessary to lower the long-term future investment return assumption by at least 0.20% from the current 7.20% assumption. We recommend lowering it further to better reflect the current range of outlooks.\u201d<\/p>\n<p>This comes after the actuaries sharply lowered their projection for future investment returns, from 6.87 percent in 2019 to 6.27 percent. Even the advisor to the Oregon Investment Council predicted sharply lower returns, forecasting 6.6 percent, down from 7.32 percent in 2019.<\/p>\n<p>The actuaries had already stated at the March 29 board meeting that \u201ca disclaimer would be required under Actuarial Standards of Practice (ASOPs) if the assumption significantly conflicts<em>\u00a0<\/em>with what the actuary considers reasonable.\u201d<\/p>\n<p>With the board\u2019s current assumed rate now so far above projected returns, PERS\u2019s actuaries are clearly deeply concerned about the health of the system and have laid out the clear expectation that they will not tolerate a timid action such as the one that occurred the last time the board reviewed its assumed rate of return in 2019.<\/p>\n<p>At the 2019 meeting, new chairperson Sadhana Shenoy cast the deciding vote in a rare split decision to keep the assumed rate unchanged. This was after three consecutive rate setting cycles where the board, under then-chairman John Thomas, steadily reduced the assume rate from 8.0 percent to 7.2 percent.<\/p>\n<p>I attended that 2019 meeting, and the actuaries were clearly uncomfortable with it. But the high forecast for future returns from the Investment Council\u2019s advisor held sway with chairperson Shenoy.<\/p>\n<p>I have been\u00a0<a href=\"https:\/\/oregoncommentary.com\/index.php\/2019\/08\/03\/pers-crisis-looms-as-politicians-pers-board-dither\/\">writing about<\/a>\u00a0the danger of such a high assumed rate for some time, and I\u00a0<a href=\"https:\/\/oregoncommentary.com\/index.php\/2019\/06\/03\/time-to-eat-our-spinach-pers-board-must-lower-assumed-rate-of-return-and-raise-employer-rates\/\">addressed the PERS board in 2019<\/a>\u00a0to urge a rate reduction. I am very heartened that finally the actuaries feel they must flex their muscles to ensure this board does not make another ill-advised decision and further endanger the system.<\/p>\n<\/div><\/div><\/div><\/div><\/div>","protected":false},"excerpt":{"rendered":"","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-169","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/oregoncommentary.com\/index.php\/wp-json\/wp\/v2\/posts\/169","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/oregoncommentary.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/oregoncommentary.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/oregoncommentary.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/oregoncommentary.com\/index.php\/wp-json\/wp\/v2\/comments?post=169"}],"version-history":[{"count":2,"href":"https:\/\/oregoncommentary.com\/index.php\/wp-json\/wp\/v2\/posts\/169\/revisions"}],"predecessor-version":[{"id":317,"href":"https:\/\/oregoncommentary.com\/index.php\/wp-json\/wp\/v2\/posts\/169\/revisions\/317"}],"wp:attachment":[{"href":"https:\/\/oregoncommentary.com\/index.php\/wp-json\/wp\/v2\/media?parent=169"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/oregoncommentary.com\/index.php\/wp-json\/wp\/v2\/categories?post=169"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/oregoncommentary.com\/index.php\/wp-json\/wp\/v2\/tags?post=169"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}