Public pension systems often resist making changes to their plan’s investment assumptions because doing so can come with a high price tag for the state and/or local governments. As a result of this political dynamic, the opportune time to make adjustments to a public pension plan’s investment return assumptions could be after a year of high market returns—when plans have excess or unexpected asset growth.
Last year, 2021, was one such year. Last fiscal year, most public pension plans saw record-breaking investment returns. In 2022, these pension plans have the opportunity to update their investment return rate assumptions.
Discount rates
