Public-sector pension plans are getting more realistic with their interest rate assumptions, increasing plan liabilities and reducing funded ratios in 2013, according to a study from Milliman.
The median interest rate used by the plans decreased from 8 percent in the Milliman 2012 Public Pension Funding Study to 7.75 percent in the 2013 study.
According to Milliman, the drop is in line with a generally declining market consensus on long-term investment returns. For the Milliman study, the author of the 2013 report used a 7.47 percent rate instead of the 7.65 percent rate it used in the 2012 study.
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