LETTER: Let’s look at public pension investment targets
Your Nov. 2 “ramp up the risk” editorial on public pensions bypasses one important issue — annual investment return assumptions. The chosen investment return used within annual actuarial calculations should be based upon reasonable projections for investment market conditions. It has been unrealistic for at least the past 10 years to select and project an investment return exceeding 7 percent. Perhaps 5.5 percent might have even have been in order.
Assuming a lower investment return rate would increase the amount of the unfunded plan liability, but it would greatly reduce the pressure to seek riskier investment alternatives. Those alternatives are not appropriate for government retirement plans.