One-third of 100 largest public pensions reduced interest rate assumptions in latest reported fiscal year, Milliman study finds
As of
An in-depth analysis by Milliman, however, estimates these plans' total liabilities could be even higher. Based on the market's consensus views that long-term investment returns have been declining, the study recalibrated total pension liability for each plan using independently determined interest rate assumptions. For this study, we use the term "interest rate" to indicate the assumption the plan sponsor has chosen to determine contribution amounts, and the term "discount rate" to indicate the rate used to measure liabilities for financial reporting purposes. In aggregate, Milliman estimates the recalibrated TPL for the Milliman 100 plans is
"In this low-interest-rate environment, market expectations on investment returns have been falling faster than plan sponsors can reassess rates," said
While plan sponsors report a median discount rate of 7.50% (with a spread of 6.50%-8.50%), Milliman's assessment of the expected real return for each plan's investments puts the median rate at 6.71%-lower than all but six of the 100 sponsor-reported rates. Despite one-third of the plans lowering their discount rates since the last study, this gap between sponsor-reported and independently determined rates continues to widen, indicating further reductions in discount rates will be likely in the coming years.
To view the Milliman 100 Public Pension Funding Study, go to http://www.milliman.com/ppfs/. To receive regular updates of Milliman's pension funding analysis, contact us at [email protected].
About Milliman
Milliman is among the world's largest providers of actuarial and related products and services. The firm has consulting practices in healthcare, property & casualty insurance, life insurance and financial services, and employee benefits. Founded in 1947, Milliman is an independent firm with offices in major cities around the globe. For further information, visit milliman.com.
About the Milliman Public Pension Funding Study
This Milliman Public Pension Funding Study is based on the most recently available Comprehensive Annual Financial Reports, which reflect measurement dates ranging from
View original content with multimedia:http://www.prnewswire.com/news-releases/one-third-of-100-largest-public-pensions-reduced-interest-rate-assumptions-in-latest-reported-fiscal-year-milliman-study-finds-300546418.html
SOURCE
Florida and Texas Buck National Defect Risk Trend, According to First American Loan Application Defect Index
Assault on Obamacare creates ‘unique challenges’ in Washington state as enrollment starts
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News