“The Real Story” on Pension Rates of Return

State Treasurer Nancy Kopp wrote an article on the rate of return for the State Retirement Agency’s January issue of Retiree News and Notes.  The article, “Assumed rate of return: the real story,” describes how the Maryland State Retirement and Pension System assumed rate of return, currently set for 7.75% is set each year by the Pension Board of Trustees based on a long-term prediction of what the system expects to earn.  According to the State Treasurer,

As a real measure, the system has done very well in meeting or exceeding its assumed rate of 7.75% over the long term.  The system has earned 7.85% on average over the past 25 years as of June 30, 2012.

The recent State Retirement & Pension System Funding Study 2012 included estimates of lowering the assumed rate of return from 7.75% to 7.55% by 2016.  For more discussion of rates of return, see the Treasurer’s full article.

Past related posts:

Modernizing Public Pension Myths

The Financial Health of the Maryland State Pension System

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