CalPERS has decided NOT to lower its investment assumption rate, leaving it at7.75%.

While some hail the decision as protecting already hurting local governments from contributing more money to the fund, others point out that this only prolongs the ‘inevitable.’

The chief actuary recommended that the rate, which assumes a higher-than-likely return on investments, be lowered by a quarter point. Others, like former Assemblyman Joe Nation, are advocating the rate be dropped as low as 6%.

CalSTRS has already lowered its assumption rate from 8% to 7.75%.

From the Santa Rosa Press Democrat:

The board of the nation’s largest public pension fund voted 7-3 Wednesday to leave unchanged its expected investment return rate, which has been set at 7.75 percent since 2004.

The California Public Employees’ Retirement System began reviewing its assumed rate of return about a year ago, after the fund lost about a quarter of its value in the economic downturn. Its chief actuary had recommended reducing the rate of return to 7.5 percent.

The decision was viewed by some as good news to local governments, because if the pension fund reduced expected lower returns, then cities and schools that rely on CalPERS for their pensions would have to further increase their annual pension payments.

Read the full article here.