Indiana Pension Drops Return Assumption to 6.75%

August 2, 2012 ( - The Indiana Public Retirement System (INPRS) adopted what may be the most conservative public pension investment return assumption in the nation.

In June, the system’s board reduced the rate to 6.75% from 7%. INPRS is now the lowest among the 126 public systems monitored by the annual Public Fund Survey (see “Public Pensions Are Solidly Funded”). It is the only one below 7%.    

“This is a prudent move by our board to recognize potential long-term global market realities,” said INPRS Executive Director Steve Russo. “The risks and consequences of assuming a too high rate of return justify a conservative approach to this and other actuarial assumptions.”   

Since 2008, 45 public pension plans have reduced their return assumptions, including the two largest in the nation (see “CalPERS Lowers Return Assumption” and “CalSTRS Further Lowers Investment Return Assumption”) and Ohio’s teachers system (see “STRS Ohio Changes Actuarial Assumptions”).