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Investors - JULY 21, 2017

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Maryland State Retirement reduces actuarial assumed rate of return

by Jody Barhanovich

The $43 billion Maryland State Retirement and Pension System has voted to reduce incrementally the pension fund’s actuarial assumed rate of return on its investments over the next two years from 7.55 percent to 7.45 percent. The pension fund approved the change at its Tuesday meeting and decided to reevaluate the rate in two years to determine if additional reductions will be necessary.

“The action taken by the Board is part of its overall strategy to increase the probability of achieving investment returns required to improve the health of the retirement System and meet its obligations to its members,” said state treasurer Nancy Kopp, chair of the MSRPS board of trustees. “Recognizing that both the inflation experience and expectations for future inflation remain lower than the rate currently assumed, the Board felt it reasonable to reduce the expected return accordingly.”

To develop its expectations for inflation, the pension fund considered market pricing

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