Actuaries recommend lowering long‑term return assumption to 6.75% and phasing it in over four years

Actuaries for the Nebraska Public Employees Retirement Systems presented the system's experience study to the Legislature's Retirement Systems Committee and recommended lowering NPERS' long‑term investment return assumption to 6.75%, to be phased in over four years.

The recommendation, delivered by Brent Bannister of Cap Knott MacDonald, comes as the actuaries reviewed economic and demographic assumptions that underlie NPERS' actuarial valuations. Bannister told the committee, “Assumptions do not affect what a plan costs; they may affect what the contributions are in a given year.” He said the recommended 6.75% long‑term return reflects the system's current asset allocation and a 2.35% inflation assumption the actuaries proposed keeping unchanged.

Why it matters: the assumed investment return is a primary driver of actuarial contribution rates. Lowering the assumed return means the actuarial rate generally rises, which can reduce the contribution margin between what statutes or…