IPERS weighs cut in pension investment target

Iowa's largest public employees' pension fund is looking at lowering a key investment target, which could lead to higher pension contribution costs for public employees and increased pressure on state and local government budgets.

The Iowa Public Employees' Retirement System has asked its actuary, Cavanaugh MacDonald, to conduct a study of economic assumptions that will be presented in June, said IPERS' spokeswoman Judy Akre. The report will include consideration of assumptions for inflation, salary growth and investment returns.

The California Public Employees' Retirement System, the nation's largest public pension fund with about $300 billion in assets, decided last week to lower its assumed rate of investment return from 7.5 percent annually to 7.0 percent over the next three years. The change was approved amid concerns that investment returns will cover less of the cost of retirees' pensions than in the past. The California system, known as CalPERS, is considered a bellwether for public pension funds nationwide.

IPERS, which has 350,000 members, has about $28 billion in assets. It currently assumes a return on investment averaging 7.5 percent annually, although some IPERS' Board members have expressed concerns the target is too optimistic. Akre said the IPERS' Investment Board, which is responsible for setting the investment return assumption, requested the actuary's study in September.

Read more: http://www.desmoinesregister.com/story/news/politics/2016/12/29/ipers-weighs-cut-pension-investment-target/95952774/