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CalPERS Achieves Strong Investment Returns, District Rates Will Still Be Affected

By Vanessa Gonzales posted 07-19-2021 02:56 PM

  

CalPERS Achieves Strong Investment Returns, District Rates Will Still Be Affected

 Last week, CalPERS announced the investment returns for fiscal year 2020-21 of 21.3 percent which also had the effect of increasing the overall funded status of the Public Employees’ Retirement Fund (PERF) to approximately 82 percent. The significant returns were driven by Private Equity and Public Equity, with net returns of 43.8 percent and 36.3 percent, respectively.

 

It is important to note that the high returns have triggered the Funding Risk Mitigation Policy, which uses some of these plus-performance returns to reduce expected risk in the portfolio, while stabilizing volatility in employer contribution rates. The Policy reduces the discount rate from 7 percent to 6.8 percent which will result in increased annual contribution rates for employers and PEPRA employees.  

 

CalPERS has put together the attached FAQ to help address some questions they’ve received from stakeholders.

 

Additionally, CalPERS hosted a Zoom webinar with their CFO and Chief Actuary to discuss these returns, how the Risk Mitigation Policy works, what it will mean for future employer and employee contributions, and how it fits into their on-going Asset Liability Management review. A recording of the webinar can be viewed here. Please feel free to share the link to the recording with anyone in your organization you think would be benefit from this information.

 


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