SD County Cuts Assumed Rate of Return to 8%

June 4, 2010 ( – San Diego County and active county employees will have to pay more into the county’s pension plan after the plan cut its annual assumed rate of return from 8.25% to 8%.

A news release from the San Diego County Employees Retirement Association (SDCERA) said officials made the change in response to “changes in the financial markets that reduce the likelihood of returns at the 8.25% rate, the assumed rate SDCERA used for the past 13 years.”

A new asset allocation model is designed to generate returns higher than the previous portfolio while minimizing exposure to potential losses from market fluctuations; and, the assumed rate of return sets a prudent target that recognizes the portfolio’s ability to generate returns in a variety of economic environments, the news release said.

The assumptions the Board uses are based on demographics such as retirement age, salary growth, life expectancy in retirement, and economic factors such as how much the plan’s investments will earn, the announcement said.