Ohio Police & Fire Pension Fund, Columbus, is lowering its assumed rate of return to 8% from 8.25%, said David Graham, pension fund spokesman, in an email.
The $15.3 billion fund's board approved the new rate at its Oct. 25 meeting following a scheduled five-year review of actuarial assumptions. In the review, the pension fund found that with the new assumption, it would still comply with Ohio state regulation requiring a funding period of 30 years or less. The new assumption complies with a funding period of 28 years.
"Outstanding investment performance the past five years, in combination with the impact of the significant pension reforms enacted in 2012, have enabled us to be in compliance with the state of Ohio's funding mandate for the third year in a row," said John Gallagher, the pension fund's executive director, in a news release emailed by Mr. Graham. "The board of trustees and staff will continue to advocate for the stability and strengthening of the pension fund that, absent Social Security participation for public safety employees here in Ohio, is the primary source of their retirement income."
As of Jan. 1, the funding ratio of the plan was 69.8%, according to the valuation.
As of Sept. 30, the pension fund's actual allocation was 21.2% international equities, 19.8% domestic equities, 14% high-yield bonds, 10.9% real estate, 9.6% fixed income, 8% global inflation-protected securities, 7.2% master limited partnerships, 6.8% private markets, 2.1% timber and 0.4% cash.
Long-term targets, established in June, are 23% core fixed income; 17% U.S. inflation-protected securities; 16% each domestic and international equities; 12% real estate; 8% each master limited partnerships, private markets and real assets; 7% high-yield bonds; and 5% private credit. The targets equal 120% because the pension fund has 20% leverage on the portfolio.