The 8.5% dilemma

December 15, 2011 at 4:41 pm

Minnesota’s current 8.5% annual assumed rate of return on pension fund investments in the highest in the nation, according to a public fund survey conducted by the National Association of State Retirement Administrators. Last fall the Minnesota Pension Commission heard extensive testimony on whether the current 8.5% is too optimistic and what the implications would be if this assumption was lowered.

How big of a deal would this be?

MSRS: Minnesota State Retirement System
PERA: Public Employees’ Retirement Association
TRA: Teachers’ Retirement Association

“It is only in pension finance that the discount rate for a liability is based on the expected return. Not in banking, not in investment banking, not in project finance, not in home mortgages of consumer finance—and not in government finance. No one else; nowhere else; nothing else.”
–M Barton Waring, Pension Finance: Putting the Risks and Costs of Defined Benefit Plans Back Under Your Control

Read more from the Minnesota Taxpayers Association on page three of their Fiscal Focus, November-December 2011, Volume XXXVII No. 6

Entry filed under: Featured Articles.

New Laws Effective January 1, 2012 For NAIOP Members who have asked for clarification on the new Medicare tax on “unearned” net investment income

For more information about NAIOP Minnesota, visit

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