(AP) - California's massive teacher pension system is downgrading its investment earnings forecast, a move that will raise retirement costs for the state and for some educators.
The California State Teachers' Retirement System board voted Wednesday to adopt a 7 percent earnings assumption, down from 7.5 percent.
The decision reflects expectations for lower expected returns on global investments in the coming decades. Financial consultants say there's less than a 50 percent probability that CalSTRS will hit its current 7.5 percent annual earnings target.
The change means about 80,000 teachers hired since 2013 will see their pension contributions increase by about 1 percent of their wages. It will be phased in over two years.
Gov. Jerry Brown's budget proposal set aside an additional $153 million to cover the state's share of higher costs.
CapRadio provides a trusted source of news because of you. As a nonprofit organization, donations from people like you sustain the journalism that allows us to discover stories that are important to our audience. If you believe in what we do and support our mission, please donate today.