Publication

This transcript is CEPR Dean Baker's statement before the Joint session of the Labor and Education Committees, New Mexico State Legislature on the issue of return assumptions used by the state pension plans in assessing their funding situation. He argues that the assumption of a 7.75 percent annual return on pension fund assets is a modest assumption, there is very little downside risk to this projection and that there is a real cost to making return assumptions that are markedly lower than the expected return on the fund’s assets. He concludes that given the relative risks, New Mexico’s pension funds are using good judgment in their assumptions on the returns of the assets in their funds.