TIME.com explains how a hike in anticipated investment returns has reduced the cutbacks in benefits for Detroit city workers. The city has increased projected return on one fund from 6.25 percent to 6.75 percent and on another from 6.5 percent to 6.75 percent.
TIME adds:
The most important accounting change was the assumed rate of return on investments held in the city’s two big retirement funds. Previously, the annual rate of return was estimated at 6.25% and 6.5% on the two funds. Now the city is assuming a rate of return of 6.75% on both funds. Why the bump? In part, anyway, the city seems to be taking heart in the stock market’s big gain last year, when after lackluster returns the past decade or so the S&P 500 rebounded with a glowing 32% total return.
Read the New York Times article linked in the paragraph above for a fuller discussion of the projections.
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