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What’s New at NASRA: Public Pension Plan Investment Return Assumptions
NASRA’s 2026 update on public pension investment return assumptions finds that assumed rates have largely stabilized following more than a decade of steady reductions. Every one of the 132 plans in NASRA’s dataset has lowered its investment return assumption at least once since FY 2009, bringing the average assumption down from 7.94 percent in FY 2009 to 6.91 percent in FY 2025.
The assumption is especially important because investment earnings provide most of the long-term revenue used to fund public pension benefits. Over the 30 years ending in 2024, investment earnings accounted for nearly 59 percent of public pension fund revenues. While annual investment results can vary widely, longer-term performance has generally met or exceeded current assumptions: median annualized returns for the five-, 10-, 20- and 30-year periods ending in 2025 were all above the current 7.0 percent median assumption. The updated brief explains how plans establish and review return assumptions and why inflation, projected asset-class returns, and a long-term investment horizon are central to that process.
The assumption is especially important because investment earnings provide most of the long-term revenue used to fund public pension benefits. Over the 30 years ending in 2024, investment earnings accounted for nearly 59 percent of public pension fund revenues. While annual investment results can vary widely, longer-term performance has generally met or exceeded current assumptions: median annualized returns for the five-, 10-, 20- and 30-year periods ending in 2025 were all above the current 7.0 percent median assumption. The updated brief explains how plans establish and review return assumptions and why inflation, projected asset-class returns, and a long-term investment horizon are central to that process.