The pension fund has assumed an annual return of 7.5% and this past year the fund actually lost $34M as the return was a negative 1.3%.
"I don't think we have a more important fiduciary duty," said board of trustees member Philip Hatchett, as he asked the board to review the return assumption.
Hatchett said he expected the review would conclude the number needs to come down.
"The rate assumption is a very big deal," said College of William and Mary accounting professor Marc Picconi.
If it goes down, pension plans have to make up for the slack somehow.
There are two ways: asking employers or employees to contribute more, or slowing down or even canceling increases in benefits.
Georgetown has to face the reality that investment returns for the pension fund is going to be lower in the future and they need to take action to compensate for those lower returns before it becomes a crisis.
No comments:
Post a Comment