Key Takeaways
- • The Arkansas Teacher Retirement System's trustees kept the target investment return at 7.25% a year after a motion to cut it to 7.20% failed on a 7-7 vote, with Trustee Jason Brady abstaining on the final motion.
- • The system manages more than $25 billion in investments for more than 120,000 working and retired members, making it the state government's largest retirement system.
- • Actuary Gabriel Roeder Smith & Co recommended a target return between 6.75% and 7.25%, with the current rate at the top of that range.
- • Aon Investments reported that public pension targets average about 6.9% and the median is about 7%, while ATRS long-term returns have been well above peers.
- • Fiscal 2026 investment performance figures are not yet final; the consultant report is typically presented at the September meeting, with the next trustee meeting scheduled for Sept. 28.
Summary
The Arkansas Teacher Retirement System's board of trustees decided Tuesday to keep the system's target investment return at 7.25% a year. A motion by Trustee Jason Brady to reduce the rate to 7.20% failed on a 7-7 vote. Brady described his proposal as a compromise for trustees who wanted a deeper cut, and he acknowledged it would not satisfy those members. Trustee Danny Knight then moved to keep the rate at 7.25%, and the board approved it with Brady abstaining, according to the Arkansas Democrat-Gazette.
Judith Kerman of actuarial firm Gabriel Roeder Smith & Co told trustees the firm recommends a target return between 6.75% and 7.25% a year, placing the current rate at the top of that range. She said the firm was "not overly concerned about 7.25%" but would always recommend less risk if possible, and that the system would be adequately funded under each of the options under consideration.
P.J. Kelly of Aon Investments, the system's investment consultant, said the average target return for public pension systems is about 6.9% a year and the median is about 7%. He noted that ATRS returns have been well above average compared with other public funds over the long run, and said Aon was comfortable with the 7.25% rate. Brady cited an average of about 6.99% for public pension systems in arguing for a cut.
System Director Mark White said he was comfortable with the current 7.25% target and would also accept 7.20% without significant negative impact. He said the system's long-term investment return exceeds 8% a year over more than 40 years. Knight, who voted for earlier reductions from 8% to 7.5% in 2017 and from 7.5% to 7.25% in 2021, said he saw no reason to lower the rate while the system was on track, and he referenced the 25-year period to pay off unfunded liabilities.
Final fiscal 2026 investment performance figures, covering July 1, 2025 through June 30, 2026, have not been completed. The investment consultant's annual report is typically presented at the trustees' September meeting, and the board is scheduled to meet again on Sept. 28.
Judith Kerman of actuarial firm Gabriel Roeder Smith & Co told trustees the firm recommends a target return between 6.75% and 7.25% a year, placing the current rate at the top of that range. She said the firm was "not overly concerned about 7.25%" but would always recommend less risk if possible, and that the system would be adequately funded under each of the options under consideration.
P.J. Kelly of Aon Investments, the system's investment consultant, said the average target return for public pension systems is about 6.9% a year and the median is about 7%. He noted that ATRS returns have been well above average compared with other public funds over the long run, and said Aon was comfortable with the 7.25% rate. Brady cited an average of about 6.99% for public pension systems in arguing for a cut.
System Director Mark White said he was comfortable with the current 7.25% target and would also accept 7.20% without significant negative impact. He said the system's long-term investment return exceeds 8% a year over more than 40 years. Knight, who voted for earlier reductions from 8% to 7.5% in 2017 and from 7.5% to 7.25% in 2021, said he saw no reason to lower the rate while the system was on track, and he referenced the 25-year period to pay off unfunded liabilities.
Final fiscal 2026 investment performance figures, covering July 1, 2025 through June 30, 2026, have not been completed. The investment consultant's annual report is typically presented at the trustees' September meeting, and the board is scheduled to meet again on Sept. 28.
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