San Mateo County Employees’ Retirement Association, Redwood City, Calif., lowered its assumed rate of return to 7% from 7.25%, the $3.5 billion pension fund announced on its website Thursday.
“Both SamCERA’s actuary (Milliman) and investment consultant (Verus) do not anticipate SamCERA’s portfolio to earn above 7.0% in the near term, but on a longer horizon both project exceeding the assumed rate of return,” the pension fund said in the announcement. “In the coming years, lowering the rate will add to the financial strength and stability of the retirement fund by mitigating the effects of future returns that are lower than current expectations.”
The new rate will be incorporated into the pension fund’s actuarial valuation as of June 30.
Lowering the assumed rate of return also results in increased employer and employee contribution rates. The employer increase is expected to be less than 2.3%. For the most part, member increases are expected to be less than 0.5%, the announcement said.
Pension fund officials were not immediately available for additional information.
