Market forces compel KPERS to cut assumed investment return to 7%, down from 7.75%

TOPEKA — The Kansas Public Employee Retirement System’s board of trustees bowed to souring market conditions Friday by lowering the assumed rate of return for the investment portfolio to 7% and bring the projection more in line with other major U.S. public pension system estimates.

The Kansas system’s 7.75% had been the highest among comparable systems across the nation, with the average of large pension plans set at 6.99%. KPERS’ consultants recommended trustees shrink the annual projection to 6.75%. Harsh investment performance since December has pushed the system’s actual annual rate of return closer to 3%.

KPERS’ board, which has a fiduciary responsibility to make a reasonable investment return assumption and to make certain benefits were paid, released a statement saying the change wouldn’t alter benefits received by retirees. The statement assured members “benefits are safe and unchanged.”

There was reluctance among some KPERS’ trustees and Republican legislative leaders to lower the assumption, because slashing the projection would inflate the unfunded liability. However, sticking with an unrealistic figure could leave future generations of KPERS employers or members to pay much more to meet liabilities.

Read more: https://kansasreflector.com/briefs/market-forces-compel-kpers-to-cut-assumed-investment-return-to-7-down-from-7-75/