The Connecticut Teachers' Retirement Board on Wednesday approved recommendation by the plan's actuary to reduce the investment return assumption from 8.5% to 8%.
"This is a very positive move by the TRB, and I am pleased that they have taken this action," said Benjamin Barnes, secretary of the Office of Policy and Management. By lowering this rate to 8%, said Barnes, the board is reducing risks to Connecticut taxpayers while assuring the pensions of public school teachers.
The national average is 7.7%.
Barnes said the move will take effect for the plan's valuation as of June 30, 2016, and will affect pension contributions from the state budget in the fiscal year ending June 30, 2018. The plan actuary estimated that additional contribution at $180 million.
Gov. Dannel Malloy's budget office plans to release a study of pension funding practices in the coming weeks that will include recommendations to strengthen both the Teachers' system and the State Employee Retirement System.
That study by the Center for Retirement Research at Boston College identifies lowering the investment assumptions of both plans as key funding enhancements that will help reduce unfunded pension liabilities.
