Minnesota pension changes get pushed off to next year
The rejected legislation also included a small but significant provision to lower the level of investment returns that the teachers’ pension fund projects it will earn each year.
Following national concern about public pension plans’ overly optimistic assumptions about how much they can make on Wall Street, legislators voted to drop that figure from 8.5 to 8 percent.
Actuaries advising the state have suggested it be dropped as low as 7 percent.
This spring, the Hoover Institution reported that such commonly high assumptions essentially allowed governments to mask the amount of debt they owed workers.
“Even Warren Buffett only assumes a 7 percent return,” said Sen. Eric Pratt, R-Prior Lake. “I don’t think our fund managers are as smart as Buffett.” Pratt said he was the only member of the Senate to vote against the proposal, saying he wanted to lower the projected returns even further.
States like New Jersey, California and Illinois are grappling with how to shore up massively underfunded government pension plans. Minnesota’s retirement systems are still relatively flush compared to many of their peers.Comment: Image source