WARWICK, R.I. -- Two years after the state reduced its assumed rate of return on pension fund investments from 8.25 percent to 7.5 percent, a new audit recommends that the State Retirement Board consider another reduction.
The audit, done for the board by Cheiron, paints a positive picture of the work by the fund's actuary, and it calls the 7.5-percent assumption reasonable, but it also notes a national trend toward lower assumed rates of return. It cites a study that suggests there is a 60-percent chance the fund will not meet the 7.5 percent assumption over a 20-year period.
State General Treasurer Gina Raimondo, chairwoman of the board, said the 7.5-percent assumption will be reviewed along with other assumptions next year and will be adjusted, if the numbers indicate a change is needed.
The last reduction, in April 2011, increased the system's projected liabilities and the required annual contributions by hundreds of millions of dollars.