What happens if my asset returns are more or less than the expected long-term asset return selected for the plan (generally 6%)?
An annual return of less than 6% will increase your future contributions, since the shortfall in the return would need to be made up in the future by increased contributions to meet the projected target plan benefit. Similarly, a return of greater than 6% will decrease your future contributions. The impact of investment performance—higher or lower than expected—increases over time as your assets grow and you get closer to retirement. Therefore, it is very important to take asset performance volatility into account when selecting suitable investments.
