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Return targets slide, spread out

The distribution of the assumed rates of return used by public pension funds expanded in the five years from 2012 to 2017, according to a recent survey of plan documents by Pensions & Investments of the 100 largest U.S. public funds. While the range of the return assumptions used for actuarial purposes has grown, the rates used have declined in the period, with only a handful more than 8% in 2017 and a few sliding below 7% and 6%.

The data also show a slight negative correlation in that plans that are better funded can afford to have lower return assumptions.