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Assumes discount rate continues at 7.0% <br />Total Pension Costs (mil.) <br />=General Fund _% of Tot Exp <br />$35 incl $24M pymt 35% <br />$30 to CaIPERS 300% <br />a <br />$25 25% w <br />N � <br />C <br />? $20 20% LL <br />o $15 15% c <br />F w <br />a $10 10% M <br />0 <br />r <br />$5 5% o <br />0 <br />$0 „ 0% <br />00 02 04 06 08 1012 141618 20 22 24 26 28 30 32 3436 <br />Assumes discount rate declines to 6.0% <br />Total Pension Costs (mil.) <br />O General Fund _% of Tot Exp <br />$35 incl $24M pymt 35% <br />$30 to CaIPERS 30% <br />a <br />_$25 25% w <br />0 <br />C <br />$20 20% LL <br />m <br />'o $15 15% <br />a � <br />$10 — 10% M <br />0 <br />$5 5% o <br />a <br />$0 0% <br />00 02 04 06 081012141618 20 22 24 26 28 30 32 34 36 <br />A 6% discount rate phased in over 20 years <br />adds $68M in costs through FY37 <br />29 <br />•Assumption Rationale <br />Stronger Economy Maintain 7.0% is the status quo (but Cal PERS efforts <br />current 7.0% to reduce rate volatility will require less <br />rate investment risk and thus lower returns) <br />Moderate Economy Phase -in to • Investment advisors forecast 6.2% average <br />6.0% over 20 return over next decade; John Bartel <br />years projects decline to 6% over 20 years <br />Weaker Economy Phase -in to • Extending trend of discount rate decline <br />6.0% over 10 over past 27 years yields 6% in 10 years <br />years <br />