trending Market Intelligence /marketintelligence/en/news-insights/trending/wJw5S7NhhcuZmpArhRKtxg2 content esgSubNav
In This List

CalSTRS board to lower investment return assumptions


Insight Weekly: Bank oversight steps up; auto insurers’ dismal year; VC investment slumps


Banking Essentials Newsletter: 3rd May Edition


Banking Essentials Newsletter: 19th April Edition


According to Market Intelligence, April 2023

CalSTRS board to lower investment return assumptions

The board of the California State Teachers' Retirement System is lowering its assumptions for investment returns after conducting a multiyear study with Milliman, its actuarial consultant.

The last time the pension changed its annual return assumptions was in 2012, when it lowered the projected return to 7.50% from 7.75% per year.

The odds of that return assumption being met over the long term are less than 50%, the board noted.

The lowered assumptions will go into effect over a two-year period. The first phase, which lowers the investment return expectation to annual returns of 7.25% from 7.50%, is for the June 30, 2016, actuarial valuation and will be presented at the April 2017 board meeting. The second phase, which lowers the return projection to 7.00% from 7.25%, is for the June 20, 2017, valuation and will be presented at the April/May 2018 board meeting.

The pension fund also adopted a revised mortality methodology that reflects new life expectancy data. Early career members of the retirement system are expected to live two-to-three years longer than those who retire today, according to the board.

The board also revised its economic assumptions, dropping its wage growth expectations to 3.50% from 3.75% and inflation growth expectations to 2.75% from 3.00%.