Trustees of the Kansas Public Employees Retirement System relied on their authority to refinance the system’s unfunded liability in a bid to stabilize public employer contribution rates during a period in which investment earnings were expected to shrink. The KPERS board simultaneously cut the porfolio’s investment return assumption to 7% from 7.75%, which had been the highest among the nation’s large public pensions. The decision to lower the portfolio’s annual earning estimate added $1.8 billion to the system’s unfunded liability, but had no influence on retiree benefits. The board in May also committed to reamortization, a process of refinancing billions of dollars in unfunded liability held by KPERS. Amortization is a financial tool comparable to refinancing a home mortgage, because it spread KPERS’ liability over a period of decades.
Source: Kansas Reflector
