In July, the California Public Employees’ Retirement System
(CalPERS) announced an investment return rate of
5.8% for the 2022-23 fiscal year. While this is less than the
6.8% forecasted return rate, it is an improvement over the
disappointing negative 6.1% rate of return in 2021-22.
Overall, the Public Employee’s Retirement Fund has an estimated
funded status of 72% as of June 2023.
In September, CalPERS announced the impact of the 5.8% investment
return on public employers. For counties that contract with
CalPERS, the 2022-23 investment return will impact employer
contribution rates in 2025-26. The 1% investment loss between the
forecasted 6.8% and the actual return of 5.8% will be amortized
over 20 years, with employer contribution payments beginning in
2025-26. Member contribution rates will not be impacted by the
2022-23 investment return.
For miscellaneous plans, the impact of the investment return loss
of 1% in 2022-23 results in an increase in employer contribution
rates by approximately 0.2% to 1.6% percent of payroll beginning
in 2025-26. The precise impact depends on the plan size and the
funded status. For safety plans, the impact is an increase in
employer contribution rates of approximately 0.3% to 2.7%.
On Monday, September 18, the CalPERS Board of Administration’s
Investment Committee
reported in detail on investment strategies and performance.
Additionally, during a webinar on September 11, CalPERS
emphasized their dedication to maintaining a long-term investment
perspective and strategy, citing the average 30-year investment
return rate of 7.5%. CalPERS also encourages public employers to
use their
Pension Outlook Tool to project their plan’s contribution
rate. Overall, the webinar also reported on the pension fund’s
investment performance, impacts to employer contribution rates,
and the outlook for the financial markets. A recording of the
webinar is available here.
CSAC will continue to keep counties informed on the health and
sustainability of the nation’s largest public pension fund.
