I really don't mean to be difficult, but this is a subject I have keen interest in. While your source says what IT says, this source says otherwise:
Public pension funds to face calls to set realistic targets | Reuters
You can obviously see what happens when the projected return is too high . . . it initially looks like pension funding will be $1 million ("Hey, we can afford that!") when in reality, because rosy projections are used, the actual funding ends up at $2 million. (Or whatever...poor example, but I think you get it.)
Expected returns during the recession and beyond have been volatile. Just look at places like MN. They can go way down or way up. Actuaries look at trends.
Looking at my state:
Historical trends in the market show that average investment returns had been at or above 8.25 percent over the past several decades. In the 25 years leading up to 2009, the average return was 9.7 percent. Some have argued that the economy has fundamentally changed and that investment returns in the upcoming decades will not reflect historical trends. Others reject the idea that there have been fundamental changes that will lead to dramatically lower investment returns in coming years. The Special Commission to Study the Massachusetts Contributory Retirement Systems reported that an 8 percent investment return assumption represents the expected cost for the state to provide benefits. But even if the returns in the upcoming few years are not expected to be 8.25 percent, and if the rate should be lowered (PERAC suggests that over time an investment return assumption between 7 to 7.75 percent may become the standard), the change, according to PERAC, should not occur at once.10 Instead, the rate should be lowered incrementally over a number of years in order to gradually increase the state's yearly obligation, rather than a sudden one-time change.
Demystifying the State Pension System - MassBudget
But naturally, each state needs to assess the health of its funds.
Just for fun here is something I found from RI since they are looking to change their plan:
Rhode Island
The shortfall in Rhode Island’s pension plan for public employees is largely due not to overly generous benefits, but to the failure of state and local government employers to pay their required share of pensions’ cost.
The savings from the Rhode Island Retirement Security Act (RIRSA) of 2011 are due to its higher retirement age and lowering or suspending the cost-of-living adjustment.
RIRSA also cut the defined benefit (DB) pension accrual rate and introduced a new defined contribution (DC) plan. The new DC plan doesn’t save the state money, but will cost retirees.
RIRSA will result in an average benefit cut of 14 percent for future full-career employees. Furthermore, due to the market risk introduced by the DC plan, many future employees will likely do even worse than this average: For the quarter of future employees who are in the lowest quartile of investment returns on their DC plan, the cuts will be 22 percent or higher.
These cuts to retiree incomes stemming from the hybrid DB+DC plan are not projected to translate into savings for the state, and will do little, if anything, to improve the health of Rhode Island’s pension funds. The changes will actually increase the average annual cost for taxpayers.
Rhode Island can and should make its pension funds solvent without exposing future retirees to the risks and higher costs of DC plans.
