Indiana Public Retirement System, Indianapolis, on Friday rescheduled to Oct. 1, 2014, the date it plans to move the rate of return of its $5.5 billion annuity savings account to a market-based rate for new retirees, spokesman Jeff Hutson said.
Officials at the $28.3 billion pension fund had planned to make the change effective for participants who retire after July 1, 2014. The change would not affect the accounts of current retirees.
The rate of return for the annuity accounts, now managed internally by INPRS, is a fixed 7.5%. Retirement system officials are looking to outsource management of the ASA with a fluctuating rate based on the market.
An RFP for life annuity providers issued earlier this year was withdrawn because “the board thought there might be more options we could explore,” including finding “the best rate of return we could get for our members,” Mr.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. He said the RFP will likely be reissued by December.
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. That would equate to about 4.5% at current rates.
All participants in the two pension funds overseen by INPRS — the public employees and state teachers plans — also have ASA accounts; more than half of them annuitize their assets upon retirement, while the remainder take lump sums.
