In spring 2016, Sandy Matheson, the executive director of the $14.3 billion Maine Public Employees Retirement System, was panicking.
After earning 2% the previous fiscal year, record low bond yields and global stock market turmoil were dragging the Augusta-based pension's returns even lower — and further away from its 6.9% assumed annual return.
Ms. Matheson modeled government pension payments under a scenario where investments returned 4% a year for four years and then 6.9% thereafter. The result: government contributions would increase every year until 2032, reaching 21% of payroll from 10%.
"My hair was on fire," Ms. Matheson said. "(I was) near hysterical at the thought of what's going to happen if we continue on earning less than our discount rate. We'd just be cutting benefits."