Human Resources & Workforce Diversity
Fixed vs. Variable returns
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From 1975 to 1999, the Fixed Fund averaged 10.7% per year. The Variable Fund averaged 16.9%
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The Fixed Fund had a “smoothing mechanism.” High returns raised the Fixed rate by a relatively small amount each year for several years; a bad year lowered it by a small amount over several years
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Act 11 retains a smoothing mechanism, but it is less powerful than before
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The Variable Fund has no smoothing mechanism: participants get the full effect of market performance each year
