Indiana Public Retirement System, Indianapolis, on Friday will consider changing the date when the $28.3 billion retirement system will adjust the assumed rate of return of its $5.5 billion annuity savings account for new retirees.
INPRS had planned to make the change effective for participants who retire after July 1, 2014, but the retirement system's board is considering pushing that date back to Aug. 1 or later, said spokesman Jeff Hutson. He said the new date would be before the end of 2014. The change would not affect the accounts of current retirees.
The assumed rate of return for the annuity accounts, now managed internally by INPRS, is 7.5%. System officials are looking to outsource management of the ASA with a reduced assumed rate.
An RFP for life annuity providers issued earlier this year was withdrawn because “the board thought there might be more options we could explore,” including finding “the best rate of return we could get for our members,” Mr. Hutson said.
Mr. Hutson said the board probably would not decide at its regular meeting Friday's when to reissue the RFP.
Steve Russo, INPRS executive director, in August told the state Legislature's Pension Management Oversight Commission that the retirement system's board was concerned about INPRS' long-term ability to maintain an annualized 7.5% return rate on retirees' accounts since the overall pension fund's expected annual rate of return is 6.75%.
Mr. Russo told the panel that, as an example, the new rate of return could equal the 10-year Treasury note rates plus another 1.5 percentage points. Based on the Wednesday 10-year Treasury yield of 2.95%, the new return rate would be 4.45%.
More than half of participants in the two pension funds overseen by INPRS — the public employees and state teachers plans — annuitize their ASA assets.
