In a bizarre twist of fate, the rumors have started to fly out of PERS headquarters, that the PERB and Mercer have agreed that the assumed interest rate - the one that determines employer contributions, Tier 1 minimum guarantees, and the actuarial factors, should be increased to no less than 8.1%, which is in line with Mercer's estimates of the next 20 years' returns. This will improve the funded status since the assumption will allow valuations to rise, while not costing an arm and a leg. After years of rumors that PERS would drop the assumed rate, the latest employer rate analysis led Mercer to suggest to staff that a small rise in the assumption would allow employer rates to drop slightly going forward without breaking the bank. This topic will be on the agenda in the May Board meeting and will be finalized in July.
PERS sources say that this is the only way the Board can get the employers and the members "off their backs" and reduce the number of whiny phone calls they have been getting ever since rumors started to fly that the Board might lower the rate. "If we could stop all the whining, sniveling, and complaining about the assumed rate, we can get our work done in a timely manner" said a PERS representative. "We spend so much time holding members' hands and reassuring them that we aren't mean, nasty, and devious, that we could recover at least 3 FTE to deal with the latest cow pies the Legislature is about to hand us, not to mention doing all of the ridiculous 'validations' required by law since the beginning of 2010."