Tampa (Fla.) General Employees' Pension Fund will lower its rate of return assumption to 7.5% from 8% over the next five years, according to recently released board meeting minutes.
The $695 million pension fund will reduce its assumed rate of return to 7.9% effective Jan. 1 and reduce it by an additional 10 basis points per year for the next five years until it reaches 7.5%.
The board voted at its Aug. 15 meeting for the phased-down approach rather than reducing the assumption to 7.5% immediately because "increased contributions in the upcoming years would be difficult years for the city from a budgetary standpoint," according to the minutes. The current funding ratio for the pension fund is 89%, and the action was taken to ensure the pension plan's funding ratio remains high.
The pension fund's target allocation is 30% fixed income, 25% domestic large-cap equities, 20% international developed markets equities, 10% domestic small-cap equities, 7% core real estate, 5% emerging markets equities and 3% opportunistic real estate.
As of June 30, the actual allocation was 27.7% fixed income, 25% domestic large-cap equities, 21.3% international developed markets equities, 11.5% domestic small-cap equities, 5.9% core real estate, 5.4% emerging markets equities, 2.9% opportunistic real estate, and the rest in cash and cash equivalents.
Natasha Wiederholt, pension plan supervisor, could not be immediately reached to provide further information.