Department of Employee Trust Funds
December 21, 2018
ETF Board Lowers Investment Return Assumption
The ETF Board, acting on the recommendations of its independent consulting actuary, recently updated key economic and demographic assumptions that are used to value the liabilities of the Wisconsin Retirement System. This included reducing the assumed rate of investment return from 7.2% to 7.0%.
The 7.0% assumed rate of investment return will be effective for the 2018 WRS valuation and will be used to determine contribution rates for 2020.
These assumptions are a critical part of any actuarial valuation, which determines the level of contributions necessary to fund promised benefits. To confirm the on-going reasonableness of the assumptions, the ETF Board reviews an actuarial analysis of them on a regular basis. The most current analysis prompted the board to make changes to the assumptions.
Nationally, investment return assumptions have been steadily declining over the last decade. The median assumption nationally among major public pension plans is 7.38%, according to the National Association of State Retirement Administrators.