SDCERS' Experience Study Results in Adjustments

Date: Oct 13, 2011


SDCERS’ actuary performs an Experience Study every three to five years to evaluate the entire set of actuarial assumptions used in the valuation process. Evaluating the assumptions and making minor “course corrections” on these 30+ year, long-term assumptions is standard fiduciary best practice for actuarial reporting and funding. 

Following a thorough and thoughtful discussion at their July 8, 2011 meeting and again on September 30, 2011, the SDCERS Board voted to approve our actuary’s recommendation for selected changes to the long-term assumptions used in preparing the annual actuarial valuation. Specifically, the assumed rate of return (also referred to as SDCERS’s discount rate) was reduced from 7.75% to 7.50%. The 7.50% rate is in line with current regulatory trends and what other pension systems across the country are doing.  

The general wage inflation rate was also lowered from 4.00% to 3.75%. For the City and Airport only, there was an additional assumption of a two-year freeze on inflationary pay increases.This wage assumption is more in line with expected trends from the respective plan sponsors.

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