Merced County (Calif.) Employees' Retirement Association lowered its actuarially assumed rate of return to 6.75%.
The $1.2 billion pension fund's board approved lowering the rate from 7% at its board meeting Thursday, said Kristen Santos, retirement plan administrator.
Ms. Santos said the board decided to lower the rate because investment consultant Meketa Investment Group's long-term investment return expectations are below 7%.
Separately, Meketa is currently conducting an asset allocation review, and the board is considering adding a private debt target of no more than 5%, Ms. Santos said. How that would be funded has yet to be determined. The board plans to make a decision regarding any asset allocation changes at its scheduled Oct. 28 meeting.
The pension fund's current target allocation is 21% domestic equities; 18% domestic fixed income; 15% private equity; 10% each hedge funds and international equities; 8% each emerging markets equities and real estate; and 5% each opportunistic credit and real assets.
