CalPERS Responds To Stanford Pension Study
At the risk of ripping off the scab that has been trying to form on this open wound here in Costa Mesa, today I present to you - without editorial comment - the response CalPERS issued yesterday to a recent Stanford Institute for Economic Policy Research study. According to news reports HERE and HERE, this study, released yesterday, studied California's three largest pension systems - CalPERS, the state teachers' retirement system and the University of California retirement system - and concluded that the funds cannot earn enough to cover growing pension obligations. According to the real media, Treasurer Bill Lockyer was so upset by the Stanford report that he resigned from the advisory panel in protest.
CalPERS Issues Response to Stanford Pension Study
Below is the statement which CalPERS issued today in response to the
Stanford Pension Study. It can also be found on our CalPERS Responds
CalPERS today responded to the Stanford Institute for Economic Policy
Research (SIEPR) report examining CalPERS, the California State Teachers'
Retirement System (Casts) and the University of California Retirement Plan
"The study is written from a perspective that is intended to exaggerate
perceived costs and the instability of pension systems," said Ann Boynton,
Deputy Executive Officer of CalPERS Benefit Programs Policy and Planning.
"The report's findings were based on low discount rates to artificially
magnify unfunded liabilities. It is important to remember that CalPERS
invests in a highly diversified portfolio that includes stocks, real estate,
and other assets that have historically earned significantly higher returns
than the rates assumed in the study."
The health of the CalPERS fund has improved in the last two fiscal years as
Over the past 20 years through June 30, 2011, CalPERS has earned an
average annual investment return of 8.4 percent in excess of the pension
fund's actuarial rate of return assumption of 7.75 percent needed to pay
long-term benefits. The Fund has achieved this rate by investing in a
diversified portfolio with an acceptable level of risk. This historical
average includes steep losses experienced in 2008-09.
As of the most recent fiscal year end, the Fund earned a 21.7 rate of
return and gained back $60.8 billion from the recent 2009 low of $181
billion. CalPERS assets currently stand at more than $224 billion.
CalPERS has maintained good levels of funding and delivered promised
benefits for 80 years. Currently we are near a 75 percent funded status,
with an unfunded liability of $85-90 billion.
For every dollar paid in pension benefits over the last 20 years the vast
majority came from investments:
Investment earnings 66 cents
Employer contributions 21 cents
Member contributions 13 cents
More information on CalPERS pensions is available in our Guide to CalPERS
For additional CalPERS news and information, visit our Press Room at:
NUMBERS MAKES YOU DIZZY
And so, round and round we go, looking for the truth about the pension situation in our state and, by extension, in our city. There's nothing like more conversation about unfunded liabilities to get you out of the old Christmas spirit.
Labels: Pension Reform