The Connecticut Teachers’ Retirement Board, which oversees approximately $16 billion in investment assets, voted Wednesday to lower the plan’s assumed investment return.
Following the recommendation of its actuarial consultant, the TRB lowered its assumed future investment return from 8.5 percent to 8 percent.
Though the move will mean an extra $180 million contribution from the state budget in fiscal year 2018, Ben Barnes, secretary of the Office of Policy Management, praised the move, saying it’s more realistic. The state employees’ retirement fund already assumes an 8 percent return.
The Connecticut Mirror reported last month that Malloy is concerned that the state’s pension costs could spike to unsustainable levels by 2030 if government doesn’t take action soon.
The TRB plan had an unfunded actuarial liability of $10.8 billion as of June 30, 2014, and was 59 percent funded, according to financial documents posted on its website.
The TRB’s move comes as Gov. Dannel P. Malloy wrangles with the state’s pension liability. He has proposed splitting the state retiree system in two, which would effectively shift the unfunded liability for the most expensive retirees to a pay-as-you-go system.
The state has hired Boston College economists to study the state’s pension funding practices and recommend ways to strengthen its plans. That report is expected in the coming weeks, OPM said.
