May 16, 2012
External Affairs Branch
Robert Udall Glazier, Deputy Executive Officer
Brad Pacheco, Chief, Office of Public Affairs
Contact: Amy Norris, Information Officer
CalPERS Board Approves State and School Contribution Rates
SACRAMENTO, CA – The State of California will pay approximately $3.7 billion next fiscal year for State employee pensions, up from $3.5 billion in Fiscal Year 2011-12. However, this amount is lower than the $3.9 billion the State paid in Fiscal Year 2010-11. In addition, employer contribution amounts for classified School members will drop by $29 million to $1.2 billion. The CalPERS Board of Administration approved the new rates that will go into effect July 1, 2012.
The largest factor in the $213 million increase is the change in economic assumptions approved by the CalPERS Board in March 2012. Lowering the discount rate from 7.75 to 7.5 percent would have had an even greater impact, but the Board adopted a phase-in to allow employers to transition to the higher contribution rates.
“We recognize that these contribution increases, though a very small part of the State’s General Fund, are a challenge in this economic environment,” said Board President Rob Feckner. “The phase-in will allow all employers to gradually transition to higher rates.”
CalPERS adjusts employer contribution rates every year. In 2012-13, the State will pay 19.7 percent of payroll toward the pension cost of Tier 1 Miscellaneous employees, up from 18.2 percent last year. Without
phase-in, the State would pay 20.5 percent of payroll.
“Due to the fiscal crisis, employer rates are increasing,” said Priya Mathur, Pension and Health Benefits Committee Chair, “but increased member contributions agreed to in the last two years are keeping costs lower than they were in Fiscal Year 2010-11 when the State paid $3.9 billion for pensions.”
The Board also approved new rates for the Legislators’ Retirement System (LRS) and Judges’ Retirement System II (JRS II). For the first time in over a decade, there will be an employer contribution rate for the LRS, resulting in member contributions being reinstated. The employer contribution rate for JRS II has dropped due to a larger than expected increase in the total payroll and no salary increases for current members in the plans. Details are available online in the agenda items for CalPERS Pension and Health Benefits Committee.
The 2012-13 rates for Public Agencies have already been set, and valuation reports containing those rates for each contracting agency are available in the Forms and Publications Center on CalPERS website at www.calpers.ca.gov.
CalPERS, with assets of approximately $232 billion, is the largest public pension fund in the U.S. It administers retirement benefits for more than 1.6 million California State, local government, and public school employees, retirees, and their families on behalf of more than 3,000 public employers, and health benefits for more than 1.3 million enrollees. The average CalPERS pension benefit is $2,332 per month. The average benefit for those who retired in the most recent fiscal year that ended June 30, 2011, is $3,065 per month.