CalSTRS experiments with new opportunities in a tough market
Thu May 3, 2012
Global macro strategies take centre stage within innovation portfolio to reduce risk
By Susan Barreto
Earlier this year, the governing board of the California State
Teachers' Retirement System made a difficult decision faced
with a $56 billion funding shortfall. Trustees adopted a new
set of actuarial assumptions that included lowering the
investment return assumption from 7.75% to 7.5%. That shortfall
has since grown to $64.5 billion.
The change may seem minor, but in reality it is a key
admission that the $152 billion retirement system is not immune
from the market forces that have forced many pension boards to
bring their investment expectations even lower given the
long-term prospects for financial health.
While trustees hope that any funding the legislature and
administration sets aside would reflect the more realistic
market expectations, the reality is that CalSTRS cannot set its
own contribution rates and that means there is much less known
about the future fiscal condition of...
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