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

▪ Expected investment rate of return.

▪ Inflation.

▪ General Salary growth.

▪ Membership growth.

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

The Pension Funding Council (PFC) adopts economic assumptions for all plans/systems except LEOFF 2.  The LEOFF 2 Board adopts economic assumptions for LEOFF 2.  All economic assumptions are then subject to revision by the Legislature.  The PFC and LEOFF 2 Board adopted lower economic assumptions in 2011.  In 2012, the Legislature enacted a schedule to decrease the investment rate of return assumption for all plans except LEOFF 2, as follows.

Assumed Investment Rate of Return Schedule
Biennium Rate 
2013-15 7.90%
2015-17 7.80%
2017-19 7.70%

Below is a table of the economic assumptions used in the 2013 Actuarial Valuation Report (AVR).

All Systems 
Assumptions  Rate 
Investment Rate of Return  7.90%1
Inflation  3.00%
Salary Growth  3.75%
Membership Growth  0.95%2 
1 The LEOFF 2 Board adopted a 7.50% assumed investment rate of return.
2 Membership growth in TRS is assumed to be 0.80%.  Membership growth in LEOFF is assumed to be 1.25%.

Please see the Report on Long-Term Economic Assumptions for further information.


LLast Reviewed: 9/29/2014
Last Updated: 9/29/2014

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