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Assumptions

Economic

In the valuation process, assumptions are required for four economic variables:

▪ Expected rate of investment return.

▪ Inflation.

▪ Salary growth.

▪ Membership growth.

Economic assumptions affect expectations regarding the accumulation of assets and the growth of projected pension benefits.  

The assumptions used in valuing the retirement systems are adopted by the Pension Funding Council (PFC).  The PFC adopted a new salary growth assumption in July 2008, which is subject to change by the Legislature.  All other rates in current use were prescribed by the Legislature in 2001.

 

All Systems

Assumptions

Rate

Annual Rate of Investment Return

8.00%

Inflation

3.50%

Salary Growth

4.25%1

Membership Growth

1.25% 2

1 LEOFF Plan 2 salary growth is assumed to be 4.50%.
2 Membership growth in TRS is assumed to be 0.9%.
 
 
 

Last Reviewed: 8/1/2008
Last Updated: 8/7/2008