By Daniel Borenstein | [email protected] | Bay Area News Group PUBLISHED: February 13, 2019 at 5:10 am | UPDATED: February 13, 2019 at 7:40 am Despite nearly a decade of economic growth since the end of the Great Recession, the nation’s largest public pension system remains badly underfunded with only about two-thirds of the assets it should now have. It’s time for the California Public Employees’ Retirement System to address one of the causes of the shortfall: It should stop relying on unrealistically optimistic investment-return forecasts to help bankroll the retirement of 1.9 million state and local government workers and family members. CalPERS is currently in the middle of a three-year lowering of its assumed investment-earnings rate, from 7.5 percent annually to 7 percent. But that’s still not low enough. The pension system’s staff and board members should know that. Their outside consultant warned them in 2016 that the best average annual return they could expect over the next 10 years was 6.2 percent. For the sake of taxpayers and government workers, it’s time to further reduce the critical investment-earnings assumption. To understand the significance of the assumed rate of return, keep in mind that public pensions are funded from… Read full this story
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