Massachusetts Treasurer Deborah Goldberg told board members of the state’s pension system this week that they should consider lowering the fund’s assumed rate of return on investments.
The assumed rate currently sits at 8 percent. Goldberg suggested 7.75 as a starting point for changing the rate.
From WWLP:
With some instability in the global economy, Treasurer Deborah Goldberg suggested the fund might lower its expectation.
“People are trying to work their way down to 7.5, and I felt we should start looking at 7 and 3 quarters,” Goldberg told members of the Pension Reserves Investment Management (PRIM) board’s investment committee on Tuesday.
[…]
A majority of the Pension Reserves Investment Trust (PRIT) fund is invested in equity, or ownership interests such as stocks that carry significant risks compared to other investments, such as fixed income.
As of the end of November, PRIT had 43 percent of its assets allocated in global equity and another 11 percent in private equity, tying the fund to economic growth.
[…]
In calendar year 2014 PRIT had an 8.2 percent return and in fiscal year 2014 the fund had a 17.6 percent return, both of which beat investing benchmarks, according to PRIM.
PRIM last lowered its assumed ROR two years ago. At that time, it stood at 8.25 percent.
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