Table:
|  |  | Years Ended September 30, |  |
| --- | --- | --- | --- |
|  | 2019 | 2018 | 2017 |
| Weighted-average assumptions used to determine benefit obligation at September 30: |  |  |  |
| Discount rate | 2.5% | 3.6% | 3.3% |
| Rate of compensation increase | 3.1% | 3.3% | 3.2% |
| Weighted-average assumptions used to determine net periodic benefit cost for the years ended September 30: |  |  |  |
| Discount rate | 3.6% | 3.3% | 3.0% |
| Expected return on plan assets | 5.7% | 6.8% | 6.8% |
| Rate of compensation increase | 3.3% | 3.2% | 3.1% |
Paragraphs:
The long-term rate of return assumption represents the expected average rate of earnings on the funds invested or to be invested to provide for the benefits included in the benefit obligations. That assumption is determined based on a number of factors, including historical market index returns, the anticipated long-term asset allocation of the plans, historical plan return data, plan expenses, and the potential to outperform market index returns.
We have the responsibility to formulate the investment policies and strategies for the plans’ assets. Our overall policies and strategies include: maintain the highest possible return commensurate with the level of assumed risk, and preserve benefit security for the plans’ participants.
We do not direct the day-to-day operations and selection process of individual securities and investments and, accordingly, we have retained the professional services of investment management organizations to fulfill those tasks. The investment management organizations have investment discretion over the assets placed under their management. We provide each investment manager with specific investment guidelines by asset class.
Question:
What does the long-term rate of return assumption represent?
Answer: the expected average rate of earnings on the funds invested or to be invested to provide for the benefits included in the benefit obligations