A CalPERS panel on Tuesday voted to keep the $230.1 billion system's assumed rate of return at 7.75%.
Alan Milligan, chief actuary of the California Public Employees' Retirement System, Sacramento, had recommended a reduction to 7.5%, but added that “it would still be prudent” to keep the current rate of 7.75%.
“There is no one right answer,” he said in an interview Tuesday. “It was a prudent decision” by the Benefits and Program Administration Committee.
He said the committee had to view the issue with a wider perspective than the return forecast alone, given California's budget crisis.
Mr. Milligan said the rate is based on a 20-year projection.
CalPERS' full board still must vote on keeping the 7.75% rate at its meeting Wednesday, but George Diehr, chairman of the committee and a member of the board, said approval is expected.
“The two rates were so close, and we can always revisit the issue in another year,” Mr. Diehr said in an interview.
A small increase in contributions from state and municipal employers will still be necessary, ranging from 0.3% to 1.3%, according to Mr. Milligan. The increases for state employers would be effective July 1; municipal governments' increases would be effective July 1, 2012.
A lower assumed rate would have been felt by municipal public safety agencies, whose percentage of employer payroll going toward pensions would have risen by 3% to 5%, according to Mr. Milligan's pre-meeting report. The state would see between an estimated 1.7% and 2.3% increase in employer contributions.