Cavanaugh Macdonald’s initial analysis of the current pension proposal uses assumptions that are very different from those in its annual valuation reports, including significant changes in retirement patterns and an investment return assumption very different from the rate recently approved by the TRS Board. The request for the recalculation recognizes that there will be certain assumption changes based upon the pension proposal, but the changes by Cavanaugh MacDonald regarding assumed investment returns and future retirement patterns were significant departures from those used in prior valuations.
|Barre3 Ft. Thomas. This is an advertisement.|
“The actuarial assumptions in Cavanaugh Macdonald’s most recent report are significantly different from those in the actuarial calculations provided to our consultants during the planning process," said State Budget Director John Chilton.
|Public Pension Oversight Board co-chair Sen. Joe Bowen, R-Owensboro, asks for further explanation about the ramifications on the state’s upcoming budget if a pension reform bill is not passed this year (LRC, 11-2-17).|
Actuarial calculations help to inform policy makers as they consider proposals in the legislative process. Neither Cavanaugh Macdonald nor any other firm sets policy for Kentucky. Firms need to provide the full scope of information necessary to help understand how the future might look. There is no one single scenario that can be known in advance, and a recalculation of the analysis based upon the request provided by Director Chilton will provide a more complete picture of what the possible outcomes will be realized from the pension proposal.
PHOTO: Sen. Chris McDaniel, R-Taylor Mill, poses a question to the state budget director about the pension reform bill during a meeting of the Public Pension Oversight Board. (LRC, 11-2-17).