Board of Trustees Adjusts System’s Return Assumption

The Board of Trustees for the Texas County & District Retirement System (TCDRS) adjusted the long-term investment return assumption to 7.5% from 8%.

TCDRS’ long-term outlook anticipates rates and returns remain below historical norms. Expectations of returns have decreased across all asset classes. This is largely due to rate cuts and unprecedented stimulus resulting from the pandemic.

Synchronizing the assumption with TCDRS’ expectations keeps employer retirement plans sound and strong for the future. The investment return assumption determines how much benefit funding is anticipated to come from investment earnings versus employer contributions.

Adopting a lower investment return assumption will result in increased employer contribution rates. TCDRS is using tools, such as reserves, to help smooth the impact of this adjustment on employer rates.

Employers also have the flexibility and local control to annually adjust their benefits to meet their workforce needs and budgets.

Supporting employers through this transition and helping them make informed plan decisions is TCDRS’ most important investment.

The board made this decision at their March 11, 2021 meeting based on the recommendation of their outside consulting actuaries, investment consultants and staff, as well as analysis of long-term market trends.

Governance Investments & Finance