Preliminary Assessment of CalPERS’ Investment Returns on Employers
Impact of CalPERS Investment Returns on Employers
The California Public Employees’ Retirement System’s (CalPERS) 2021-22 fiscal year investment returns will impact employer contribution rates for contracting counties, cities, and special districts beginning in fiscal year 2024-25. On August 10, 2022, CalPERS hosted a webinar to discuss the impact of its recently announced negative 6.1 percent return on investment for employers. A recording of this webinar is anticipated to be posted on CalPERS’ website by the end of this week.
With the caveat that these are preliminary estimates, CalPERS reported that beginning in fiscal year 2024-25, the negative investment return will result in the following increased contributions for contracting counties compared with the rates that will paid in fiscal year 2023-24:
- Approximately a 2 to 4 percent increase for miscellaneous plans.
- Roughly a 4 to 6 percent increase for safety plans.
Due to the previous fiscal year’s investment gains, contribution rates for most counties will be lower in 2023-24, and the rate increases for 2024-25 are anticipated to increase rates to approximately the same level as 2022-23, depending on individual funded status.
As reported previously, CalPERS attributes the impact on returns to volatile global financial markets, geopolitical instability, domestic interest rate hikes, and inflation. The CalPERS Board of Administration’s Investment Committee will discuss the returns at its September 19, 2022, meeting. CSAC will keep counties informed of any new developments and actions.