CalPERS investment returns fall below 1 percent

July 25, 2016

CalPERSCalPERS earned a return on its investments of just .6 percent in the last fiscal year, marking the state retirement fund’s worst performance since 2009. The pension system must average a yearly return of at least 7.5 percent to meet its actuarial assumptions. [Bloomberg]

Lowering the return expectation forces government agencies to pay more into the system. Local governments have been attempting to stall further decreases.

In fiscal year 2016, CalPERS’ stock portfolio declined in value by 3.4 percent. Stocks comprise about 52 percent of the pension system’s assets, which totalled $295 billion as of June 30.

The retirement fund’s forestland assets declined 9.6 percent over the last fiscal year. CalPERS’ fixed income holdings, which include bonds, gained 9.3 percent, and infrastructure investments rose by 9 percent.

Total CalPERS returns have averaged 6.9 percent over the last three years, 5.1 percent over the last 10 years and 7 percent over the last 20 years. The pension system lowered its return expectation from 7.75 percent to 7.5 percent in 2012 and is now considering lowering it to 7.25 percent.

In 2009, CalPERS lost a quarter of its value. The retirement fund has since been plagued by market volatility.

CalPERS received a record return of 20.7 percent in fiscal year 2011 and then fell to 1 percent the following year. In 2015, CalPERS earned a return of 2.4 percent.



  1. oneinthesame says:

    Hope this helps clear up any confusion:

    Employees of San Luis Obispo County have their pensions through SLOCPT not CalPERS.
    Unlike CalPERS, SLOCPT is fully funded.

    Here is how County Employee Pensions are paid out (for non-safety employees):

    Hired before 2011:
    Minimum payout at age 50 – 1.426% x PTSC x Highest 12-month pay (monthly average)
    Medium payout at age 55 – 2.000% x PTSC x Highest 36-month pay (monthly average)
    Maximum payout at age 65 – 3.16% x PTCS x Highest 12-month pay (monthly average)
    80%, 90% or 100% of final compensation cap depending on Bargaining Unit.
    30 year employee gets: 43% of pay at 50, 60% of pay at 55, and 95% of pay at 65*

    Hired between 2011 & 2012 (SLO enacted pension reform before the State):
    Minimum payout at age 50 – 1.092% x PTSC x Highest 36-month pay (monthly average)
    Medium payout at age 60 – 2.000% x PTSC x Highest 36-month pay (monthly average)
    Maximum payout at age 65 – 2.50% x PTCS x Highest 36-month pay (monthly average)
    90% of final compensation cap
    30 year employee gets: 33% of pay at 50, 60% of pay at 60, and 75% of pay at 65*

    Hired 2013+:
    Minimum payout at age 52 – 1.000% x PTSC x Highest 36-month pay (monthly average)
    Medium payout at age 62 – 2.000% x PTSC x Highest 36-month pay (monthly average)
    Maximum payout at age 67 – 2.50% x PTCS x Highest 36-month pay (monthly average)
    Compensation limit – about $117k
    30 year employee gets: 30% of pay at 52, 60% of pay at 62, and 75% of pay at 67*

    PTCS = Years of full time service (Years of part time service = 1/2 PTCS each)
    * Based upon reaching 30 years of employment at the listed ages.

    (0) 2 Total Votes - 1 up - 1 down
    • CentralcoastRN says:

      This is accurate, but 90% of the readers here are too stubborn to read it.

      You know, my generation will probably be the first to have paid into Social Security for the entirety of our lives, and yet not be able to receive our promised monies. Those people who are in CALPERS, which SLO County is NOT as mentioned above, why should we begrudge them the money THEY PAID INTO AND EARNED??? I truly don’t get that. I don’t begrudge people who paid all their lives into social security THEIR money…

      Pensions are part of a benefit package. Oftentimes, rank and file government workers take less hourly pay in lieu of the pension and the job security that comes with it. When the economy was booming, government employees made FAR less than private industries. Choosing “safety” in job selection should not be scoffed at when times turn down.

      Why is this so hard to understand?

      (0) 0 Total Votes - 0 up - 0 down
  2. Ugluk says:

    Give ’em a 401k, and let them deal with the vagaries of the market like the rest of us.

    (8) 14 Total Votes - 11 up - 3 down
  3. standup says:

    Stupid program. All the public employees have no risk like the rest of us do with our iras etc. if the market goes down, so does our retirement. Sadly, our local governments are to scared to put a stop to it as they are afraid of the unions. Well, screw the unions. Cut the benefits so those tax dollars are used for roads, parks, etc.

    (6) 18 Total Votes - 12 up - 6 down
  4. shelworth says:

    I don’t begrudge them their retirement, it’s the ones that get to cash in their sick time, vacation time, holidays, etc., at the end to bump up the final year salary so they actually make more in retirement than they did at their job. That is a scam!

    (6) 8 Total Votes - 7 up - 1 down
    • kayaknut says:

      Let’s not also forget the ones that retire and then are hired back, as a consultant, interim, temporary or whatever and collect a pension and salary at the same time, another scam.

      (6) 10 Total Votes - 8 up - 2 down
  5. Paso_citizen says:

    I, too, must ask – Just what brilliant, overpaid “financial experts” are managing the CALPERS
    investment portfolio? If I, or the ones I get advice from, couldn’t do better than this – they would be fired.

    But the answer is so, so obvious – they don’t have to be financial experts (or anywhere close). For they know that no matter what – they will still get their salary and bonuses.
    And if the return on investments are not much better than an interest drawing checking account – so what! Just get the tax-paying citizens to pay more. Such a simple solution.

    (16) 24 Total Votes - 20 up - 4 down
  6. Kaiser Bill says:

    CALPERS will go up and down with the market as all pensions and retirement schemes do.

    The main problem with CALPERS and the Teachers Retirement System are Administrators receiving bloated $100K plus pensions every year for the rest of their life. There has to be reform that caps the total annual payout of a CALPERS/STRS pension at something reasonable like $75K a year. For people making more money, they would be given the option of investing the rest of their earnings in schemes like a 401K.

    (19) 29 Total Votes - 24 up - 5 down

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