PORTLAND – The Maine State Retirement System is lessening the chance for high returns in exchange for less risk in its pension fund by shifting all of its bond holdings into conservative government securities.

The pension fund last fall changed all its bond holdings, which make up one-third of the fund, to treasury inflation-protection securities, or TIPs.

In so doing, the fund’s managers are attempting to more closely synchronize the fund’s investment returns to the fund’s payouts to retirees, a strategy known as matching.

Richard M. Ennis, the retirement system’s investment consultant, said retirees’ pension benefits go up each year in tandem with the consumer price index. The returns on TIPs, he said, also go up with the inflation rate.

The retirement system, he added, also extended the maturity dates of its bond holdings from five years to 10 years.

“It’s a better balance to have your bond portfolio essentially have financial characteristics similar to the financial characteristics of your liabilities,” said Ennis of Ennis, Knupp and Associates in Chicago. “It’s a fundamental change, and one that many pundits say is how you ought to do things.”

Rex Holsapple, the chief investment officer of Maine’s pension fund system, told The New York Times that he knows of no other U.S. pension fund doing what Maine is doing. He said retirement system officials think the more conservative approach better serves Maine retirees and taxpayers.

“It’s a source of puzzlement to me that so few people have come to the same conclusion,” he said.

The Maine State Retirement System administers retirement plans for state employees, public school teachers, municipal employees and other public workers. At the end of fiscal 2003, it had pension assets of nearly $7 billion.

Like most pension funds, Maine’s goal was to earn the highest possible return on its investments, with little thought given to what its liabilities, or future payouts, would be.

When Holsapple was hired in 2002 as the first chief investment officer for the state’s pension fund, he suggested using the matching strategy. The approach would lessen the chance for high-flying returns, but also lessen risk of an underfunded plan.

Holsapple said good personal financial planners don’t urge clients to shoot for big investment returns for their own sake. Rather, they determine what their clients are saving for and when they’ll need the money, and then tailor an investment plan to meet those goals.

The matching strategy for pension funds incorporates the same principle of determining how much money is needed and when for future payouts.

The fund still has room for growth, given that two-thirds of its investments are in stocks. It is assumed the stocks will grow faster than the TIPs over time, which would allow the state to make up for its pension shortfall.