For Immediate Release: June 9, 2020
Contact: Marty Karlon, Public Information Officer, (603) 410-3594; public_relationsidinhrs.org
NHRS Trustees Reduce Assumed Rate of Return
Rate change is part of several adjustments to actuarial assumptions
CONCORD, NH — The Board of Trustees of the New Hampshire Retirement System (NHRS&, the retirement system}
voted June 9, 2020, to adopt revised actuarial assumptions based on the results of a four-year experience study
conducted by its consulting actuary. In an accompanying vote, the Board voted to reduce the retirement system's
investment assumption, lowering the assumed rate of return from 7.25 percent to 6.75 percent,
The new assumptions, which better reflect the retirement system's actual and anticipated experience, will be used in
the actuarial valuation for the fiscal year ending June 30, 2019. By statute, this valuation will be used by the Board in
September to determine employer contribution rates for fiscal years 2022 and 2023, Overall, the changes to actuarial
assumptions approved this year are expected to Increase in 2022-23 employer contribution rates.
“The trustees have a legal obligation as fiduciaries to adopt actuarially reasonable assumptions, including the
assumed rate of return. The decision to adopt these assumptions is consistent with the Board's duty fo act in the best
interests of the retirement system's members and beneficiaries," said NHRS Executive Director George P. Lagos. “In
taking this action, the Board is responding responsibly to capital market projections, anticipated continued low, long-
term interest rates, and other economic and demographic data points that are key to projecting the pension system's
liabilities.”
The Board's decision to conduct an experiance study, which was recommended by GRS Consulting (GRS}, the
Tetirement system’s independent actuary, was made in December 2019. Lagos noted that “This study is based upon
actuarial experience for the period July 1, 2015, fo June 30, 2019, and does not take info consideration any market
volatility or potential economic impact related to the coronavirus (COVID-19) pandemic.”
Aciuaries conduct experience studies an a regular basis to assess the extent fo which their assumptions refiect plan
experience. New Hampshire iaw requires the retirement system's actuary to conduct an experience study at least
once every five years.
GRS calculates NHRS’ funded ratio, unfunded actuarial accrued liability (UAAL), and employer contribution rates
based on assumptions aboui many future events, such as the age when members will retire, their rate of salary
growth, how long they will live etter retirement, and how much the plan’s investments will earn, These assumptions
are based on detailed statistical models in accordance with national Actuarial Standards of Practice. However, they
are not facts; no one can predict future events. When the assumptions don't match the actual experience, there can
be an actuarial gain or loss. Put simply, gains reduce employer contribution rates, losses increase employer
contribution rates.
The New Hampshire Constitution (Part |, Article 36-a) requires NHRS Trustees to set actuarially sound empioyer
