TRS reports $113 billion in assets; lawmakers press on assumed returns, ADEC and COLA funding

At a joint meeting of the Georgia General Assembly’s House and Senate retirement committees, representatives for the Teachers Retirement System and the Employees’ Retirement System gave an overview of their funds’ finances and fielded questions about assumed investment returns and pension funding.

Buster Evans, representing the Teachers Retirement System (TRS), told lawmakers the system serves "over 500,000 active, retired, and inactive members" and that TRS managed about $106 billion in assets as of June 30 and about $113 billion "as of this morning." He said TRS’s fiscal-year returns had been strong recently — "last year's return on investments were 14 and a half percent" — and that the board reduced the assumed rate of return to 6.9% from 7.25% to adopt a more conservative outlook.

The assumed rate change drew sustained attention from committee members. Rep. Chuck Martin, chairman of the House retirement committee, warned that small changes in the assumed return can materially affect the actuarially determined employer contribution (ADEC). He noted, for example, that lowering the assumed rate from about 7.25% to 6.9% increased the funding need by billions of dollars and cited a figure discussed in the meeting that a few basis points can translate into roughly $4 billion on the plan’s liability.

Why it matters: The assumed return and the ADEC affect how much state and local employers must contribute and influence the system’s ability to pay or…