Kentucky pensions chair wants more conservative assumptions
FRANKFORT, Ky. – The newly elected chairman of the Kentucky Retirement Systems Board of Trustees says look for the board to make certain conservative assumptions next month that will paint an even grimmer – but realistic – outlook of the systems' financial condition.
"What I think you'll see is we're going to be more conservative..." John Farris said in an interview after a KRS board meeting Thursday. "I've taken a deep dive into the numbers and I would say that I have to call into question the numbers that were approved in prior years."
Farris questioned key assumptions used by the board in the past, such as that the government's payroll would grow at a rate of about 4 percent – a key factor in projecting how much money the systems will get in the future from the contributions of employees. "But actually payroll growth has been flat or negative," Farris said.
He also said that the rate assumed that would be earned on investments, now at 6.75 or 7.5 percent for the various plans in KRS, is too high. Actual returns for the last three years have been about 5 percent, he said. "And I think at our May meeting you'll see a number closer to 5 percent," adopted as the new assumed rate of return, Farris said.
Read more: http://www.courier-journal.com/story/news/politics/ky-governor/2017/04/20/pensions-chair-wants-more-conservative-assumptions/100558040/