Kansas Public Employees Retirement System, Topeka, lowered its assumed rate of return to 7.75% from 8%, said an announcement on the $17 billion pension fund’s website.
The change was made to reflect the current market environment and put the pension fund more in line with its peers, according to the announcement.
The change will result in a 6% increase in unfunded liabilities to roughly $9.4 billion and a 1 percentage point decline in the plan’s funding ratio to 66%, said a spokeswoman in an e-mail. Employer contributions will also rise slightly for local employers and police and fire, starting in 2019.
Employee contributions are set by state statue and unaffected by the change.
The pension fund returned a gross 0.7% for the fiscal year ended June 30, below its benchmark return of 1.2%.
For the three, five, 10 and 25 years ended June 30, the pension fund returned an annualized 7.3%, 7.4%, 6.2%, and 8.5%, respectively, ahead of its benchmark returns of 7%, 7%, 6.1% and 7.8% in each of those periods.
