CalPERS Suggests No Changes to Discount Rate at Asset Liability Management Webinar 

On July 18, 2025, CalPERS hosted a webinar to update stakeholders on their Asset Liability Management (ALM) process. They assured stakeholders that the 6.8% discount rate will remain unchanged despite achieving an impressive 11.6% return in the 2024-25 fiscal year, surpassing the Public Employees’ Retirement Fund’s (PERF) benchmark by 1.7%. If CalPERS continues to meet a minimum return of 6.8%, stakeholders can anticipate contributions to gradually decline as CalPERS pays off their unfunded liability.  

The webinar also referenced the Funding Risk Mitigation Policy (FRMP) adopted by the CalPERS board in 2015, which triggered an automatic discount rate reduction when returns exceeded the discount rate by more than 2%. The FRMP was implemented to lower the discount rate during years of positive investment returns, aiming to reduce the volatility in employer contributions. However, in April 2024, the policy was changed to require the board to take formal action when investment returns warrant a change in discount rate. Although the returns far exceeded the original trigger, there is no evidence that the Board plans to lower the discount rate from 6.8%.  

The first reading of the proposed rates will occur at the September 2025 Board meeting, and then a second reading and potential adoption of policies will occur in November 2025. Stakeholders are encouraged to provide public comment in writing or at the meeting. More information on registration to come.  

In the meantime, CalPERS encourages employers to utilize the Pension Outlook tool to estimate future pension costs. While the 2024 data will be available within a month, the 2023 results are currently accessible, allowing users to make estimates for their agency.  

A recording of the webinar can be found here.