CERS actuarial committee adopts GRS economic assumptions, keeps key rates unchanged

The County Employees Retirement System Board of Trustees Actuarial Committee voted to accept GRSrecommended economic assumptions for the upcoming valuation, keeping price inflation at 2.5% and maintaining the current payroll-growth and return-assumption framework.

GRS told the committee it had prepared a memo recommending no changes to the key economic assumptions. "We, in aggregate, developed a 6," the GRS presenter said while comparing their mapped portfolio return to Wilshire's asset-class estimate of 6.18%, and noted the 6.18% figure does not include active-management alpha. GRS explained the payroll-growth assumption is a financing parameter used to amortize the unfunded liability, not a direct determinant of benefit amounts.

The recommendation prompted committee questions about historical alpha and risk. Wilshire, the boardappointed investment consultant, told the committee its compound annual asset-class return for the modeled portfolio is 6.18% and that active management (alpha) was excluded from that figure. Wilshire also reported the portfolio's expected institutional risk moved modestly from roughly 12% to about 11.65% in the current environment.

Lou Cheatham moved to accept GRS's recommendations; Webb seconded the motion. The chair called for a voice vote, and the motion was adopted with no recorded opposition.

Why it matters: The assumptions the committee sets feed into the valuation that determines contribution-rate projections and the path for addressing CERS's unfunded liability. GRS highlighted sensitivity scenarios showing that payroll-growth assumptions can materially affect contribution trajectories over long amortization periods.

The committee did not change the stated assumptions at this meeting and directed staff to proceed under the adopted framework. No implementation tasks or reporting deadlines were specified during the meeting.