Assumed rate of return is the single most important assumption that pension systems make to ensure they have enough funding to pay benefits promised. To determine the amount of required contributions, a pension fund and its actuaries make educated guesses about how much they think they can earn by investing those contributions. That educated guess is called the assumed rate of return. The higher the assumed rate of return, the fewer contributions teachers and their employers have to make. The lower the assumed rate of return, the higher contributions need to be in order to pay for the benefits promised. Read more about this important investment assumption in our Pension Basics series.

The table below provides the current assumed rate of return used by major public sector retirement plans, as well as information about who is responsible for setting the investment assumption. (Last update: November 14, 2019)

Current Assumed Rate of Return for Public Pensions

Source: Public plan actuarial valuations, CAFRs, and GASB reports. Information about who sets the rate is supplemented with information gathered by NASRA.