pension rate of return assumptions
Yl`pn*"!SU+JEc1/Ig?fJ=K?u$fx4)$,+|M.3'@ Z{$43n/_I#%$94]soR%t9^R,jw&YRfB,c'^. With respect to assumptions that the actuary has not selected, other than prescribed assumptions or methods set by law, the actuarys report should identify the following, if applicable: a. any such assumption that significantly conflicts with what, in the actuarys professional judgment, is reasonable for the purpose of the measurement (section 3.14); or. In these situations, if per capita claims cost estimates indicate that the cap will not be reached in certain years for at least some participants, projections of future health care coverage (rather than only the dollar-defined cap) would be required for those years. It is also the assumption that varies most among the different liability measurements, ranging from current yields on high-quality corporate bonds to long-term expected rates of return on assets. Those rates shall be extrapolated from the existing yield curve at the measurement date. Pension Debt Grows as Public Pension Systems Post Low Investment PDF Annual Report to the Comptroller on Actuarial Assumptions - 2021 For example, if the published yield as of the measurement date of 5.66% is adjusted by eight basis points to reflect annual versus semi-annual interest payments (so 5.74%), it could then be rounded to 5.75%. 27, Selection of Economic Assumptions for Measuring Pension Obligations. However, in other than a zero coupon portfolio, such as a portfolio of long-term debt instruments that pay semiannual interest payments or whose maturities do not extend far enough into the future to meet expected benefit payments, the assumed discount rates (the yield to maturity) need to incorporate expected reinvestment rates available in the future. The items listed above, as well as other market observations or prices, include estimates of future experience as well as other considerations. Public Pension Investment Performance Has Historically Fallen Short of