Counties, other local employers, public employees, and retirees
had a rare opportunity to meet with and ask questions of the
CalPERS board members and executive team this week at what was
billed as the first CalPERS Stakeholder Forum. Among the more
intriguing topics: forecasting lower returns over the next
decade, possible small changes to the discount rate, and a
continued focus on enforcing rules related to temporary employees
and pensionable compensation, all of which will be of interest to
the many counties that provide retirement and health benefits
through CalPERS.
CalPERS executive staff made presentations and board members were
present and engaged in candid dialogue during the sessions.
Over the next 10 years, CalPERS CIO Ben Meng said that he expects
investment returns to likely be lower than for the previous 10,
for several reasons, including slowing economic growth and
increased efficiency of financial markets. The system will be
increasing its investments in private equity to try to increase
returns, but Riverside Supervisor Jeff Hewitt asked why the
assumed rate of return remains at seven percent. CalPERS
board president Henry Jones responded that the board agrees that
it should be lower, but that any action has to be measured
because it would increase agency contributions.
Even without changing the discount rate, employer contributions
are expected to rise by two to three percent by 2024, to an
average of 29.1 percent for miscellaneous employees and 55.9
percent for safety employees, then declining slowly after that.
Anne Simpson gave a presentation on another risk to the system,
climate change. CalPERS submitted
a report on the risks climate change poses to the Legislature
on the issue last month pursuant to
SB 964. Among other efforts, the report outlines CalPERS’
efforts to advocate changes at the corporate and global
governance levels, as an alternative to divestment, so that all
investors and companies are subject to the same rules and
limitations.
Finally, a presentation on pension administration issues
highlighted CalPERS’ continuing interest in making sure that
employees are classified correctly, especially temporary
employees, and that retirees receive the pension they are
entitled to and no more. The issue of pensionable compensation
came up most recently in the form of
SB 266, which CSAC opposes.
