Connecticut Teachers' Retirement Board voted to reduce its investment return assumption to 8% from 8.5%, but state Treasurer Denise L. Nappier said it should be cut further.
Ms. Nappier, principal fiduciary of the $29.6 billion Hartford-based Connecticut Retirement Plans & Trust Funds — which includes the $15.8 billion teachers' fund — said in a statement Friday she believes the return assumption should be even lower.
“Wednesday's action by the Teachers' Retirement Board to lower the investment return assumption to 8% is a start, but not enough in my view,” Ms. Nappier said. “The Treasury's analysis suggests that an investment return assumption of 7.5% or below would be more in line with what we can reasonably achieve.”
Ms. Nappier added: “It stands to reason that setting return assumptions at levels more likely to be attained will strengthen the financial health of the funds over the long term.”
This follows a proposal last month by Gov. Dannel P. Malloy to split the $10.4 billion State Employees Retirement System into two plans in order to make the pension fund more affordable.
Ms. Nappier noted that although she finds the governor's plan to restructure one of the state's largest pension funds “bold” and “a useful first step” toward addressing the interests of plan participants and taxpayers, there are “a myriad of investment, legal, actuarial and tax issues” regarding his plan “with which the state must contend.”
David Bednarz, spokesman for the governor's office, could not be reached by press time.