Mr. Arnold, Your Facts are Wrong
June 6, 2014
While you are correct that many pension systems need reform, your understanding of pensions in California and at CalPERS is inaccurate. CalPERS has taken numerous steps, above and beyond the political reform of 2012, to ensure the sustainability of the System for generations to come.
We recently adopted updated demographic assumptions that take into account public employees living longer and spending more years in retirement. These new assumptions will raise employer pension costs but they more accurately reflect the costs of running the System.
While some employers will have their rate increases phased in over several years, it gives already cash-strapped cities and local districts still recovering from the Great Recession the breathing room they need to make the payments while responsibly addressing the need for additional funding.
At the same time, CalPERS also adopted a new investment portfolio asset allocation mix that lowers the risk in the portfolio, while still enabling the System to achieve its targeted long-term rate of return, currently 7.5 percent annually.
CalPERS investment return for the recent fiscal year is 13.2 percent, while it has returned 9.4 percent for the three-year period, 13 percent for the five-year period and 8.2 percent over the last 20 years.
These actions will stabilize pension costs over time and keep CalPERS on a path to meet the pension obligations promised to current and future public employees who have retired after a career of public service.
We stand behind the work we do to protect the integrity of the System, the sustainability of the fund and the retirement security of California’s public workers for this and for future generations.