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CalPERS Committee Recommends Reduction of Discount Rate to 7.5 Percent

Board to Vote on Recommendations Tomorrow

March 13, 2012
Today, the CalPERS Pension and Health Benefits Committee met to review two options to lower the discount rate of 7.75 percent to either 7.25 or 7.50 percent. The committee members debated what they called a difficult but necessary decision and ultimately voted (6-2) that a discount rate reduction from 7.75 percent to 7.50 percent is recommended to the board. The full CalPERS board will meet tomorrow, Wednesday, March 14.
 

CalPERS estimates that this discount rate reduction will increase employer rates for miscellaneous employees by 1-to-2 percent and by 2-to-3 percent for public safety starting in FY 2013-14. If the board approves it, the new discount rate would apply to service credit purchases and estimate requests beginning March 15. During today's meeting, CalPERS Actuary Alan Milligan noted that the next scheduled review of the discount rate will be in 2014.

Many public agencies are concerned that this change in the discount rate will cause considerable financial hardship to already financially strapped local budgets.

For more details on CalPERS' actions today, please see its press release.



 
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