Every three years, KCERA’s consulting actuary, the Segal Group, reviews the Plan’s recent experience and compares it with the assumptions used to estimate future costs and funding needs. This includes factors such as salary growth, the types of benefits that will be paid, when members retire, and other demographic and economic trends.

If Segal’s previous assumptions differed from the Plan's experience, the actuary may recommend updating the assumptions to help ensure KCERA’s projections and funding decisions are based on the most current information available.

The assumptions adopted by the Board help determine how much money is needed to properly fund the retirement system and pay promised benefits over the long term.

For active members, some of the proposed changes to assumptions may result in increases in employee contribution rates starting in July 2027. The actual impact can vary depending on factors such as a member’s retirement tier, age at entry, and other applicable provisions.

The changes could also affect employer contribution rates paid by Kern County and KCERA’s other Plan Sponsors. Employer rates are separate from the contributions deducted from an employee’s paycheck.

For retired members, the Experience Study does not reduce or change benefits already earned. Regularly reviewing KCERA’s assumptions is an important part of maintaining the retirement system's financial health and ensuring adequate funding for current and future pension obligations.

One of the key recommended changes from this study is to lower KCERA’s assumed investment rate of return to 6.75%. This would bring KCERA closer to the rates already adopted by most other California county retirement systems.

If adopted, the change to 6.75% would reflect a more conservative assumption about the investment returns KCERA expects to earn over the long term. While lowering the assumed rate can increase the amount that employees and employers are required to contribute toward the Plan, it also reduces KCERA’s reliance on future investment earnings to fund promised benefits. Using realistic, long-term assumptions is an important part of maintaining the financial health and stability of the retirement system.

KCERA has reduced its assumed rate of return on investments several times over the years to respond to differences between its experience and its assumptions.  Most recently, KCERA reduced the assumed rated from 7.5% to 7.25% in 2017 and further lowered it to 7% in 2023 to better align with future financial market expectations. Adopting a lower rate-of-return assumption strengthens the plan’s financial sustainability by reducing the risk of future earnings shortfalls.

It is important to note that employee and employer contribution rates are expected to increase starting in July 2027 even if KCERA’s assumed rate of return remains at 7%. The increase is primarily due to salary growth during the study period being higher than previously assumed, along with statutory requirements that determine how certain pension costs are shared between employees and employers.

Accurate actuarial assumptions help KCERA determine the true cost of providing retirement benefits. The Experience Study is an important part of KCERA’s responsibility to fund the Plan and protect the long-term security of members’ retirement benefits.

Because the Board’s decision may affect future employee and employer contribution rates, members are encouraged to learn about the proposed changes and participate in the public process.

The KCERA Board of Retirement will consider the Finance Committee’s recommendation on September 9, 2026.

The meeting agenda, supporting materials, and instructions for in-person or virtual participation will be posted here before the meeting. Members are encouraged to review the materials, attend or watch the meeting, and provide public comment.

KCERA’s commitment to fiscal responsibility and prudent investment strategies ensures that KCERA is on a solid path toward long-term health, benefiting both current retirees and active members.