State Employer Contribution Rates for Fiscal Year 2026-27 and Five Year Projection

October 22, 2026
Circular Letter: 200-043-26
Topic: Actuarial

To: State Employers, Agricultural Districts, and State Colleges and Universities

Purpose

The purpose of this Circular Letter (CL) is to provide updated projections of the employer contribution rates that reflect the 14.8% CalPERS preliminary investment return for fiscal year (FY) 2025-26 (without reduction for administrative expenses). This CL also projects contribution rates under different investment returns in future years known as a “scenario test”.

Employer Contribution Rates

The state employer contribution rates for FY 2026-27 and the projected rates for the next five fiscal years can be found in the Actual & Projected Employer Contribution Rates by Fiscal Year table. The actual state employer contribution rates for FY 2027-28 will not be known until audited assets and demographic changes as of June 30, 2026, are measured as part of the next actuarial valuation. The actual FY 2027-28 state employer contribution rates will be presented to the California Public Employees' Retirement System (CalPERS) Board of Administration in April 2027 and will differ from the estimate to follow.

Projected Employer Contribution Rates

The following table includes the required employer contribution rates for the current fiscal year and projected contribution rates for the next five fiscal years. Projected results reflect an investment gain for FY 2025-26 based on preliminary investment return information released by the CalPERS Investment Office. Further, projected rates reflect the anticipated decrease in normal cost due to new hires entering the Public Employees’ Pension Reform Act (PEPRA) benefit tier.

It’s assumed that all actuarial assumptions will be realized and that no further changes to assumptions, contributions, benefits, or funding will occur during the projection period. The projections in this CL and its attachment do not reflect any potential future change to the discount rate.

Projections, by their nature, are not a guarantee of future results. Future contribution requirements may differ, perhaps significantly, from those projected. The actual long-term cost of the plans will depend on the actual benefits and expenses paid and the actual investment experience of the fund.

Note: Rates do not include Budget Act Adjustments.

Actual & Projected Employer Contribution Rates by Fiscal Year

For Actual Rates that include Budget Act Adjustments, refer to Circular Letter 200-022-26.

Under the CalPERS amortization policy, changes in the Unfunded Accrued Liability (UAL) due to investment gains or losses (actual return relative to assumed return for the year) are amortized using a five-year ramp up. This method attempts to mitigate employer cost volatility from year to year by phasing in the impact of investment experience over a five-year period. As a result of this methodology, dramatic changes in the required employer contributions in any one year are less likely. However, required contributions can change gradually and significantly over the next five years. In fiscal years with poor investment returns, the relatively small amortization payments during the ramp-up period could result in a funded ratio that is projected to decrease initially while the contribution impact of the investment loss is phased in. For more information, review the CalPERS Actuarial Amortization Policy (PDF).

Questions

If you have questions, call our CalPERS Customer Contact Center at 888 CalPERS (or 888-225-7377888-225-7377).

Scott Terando, Chief Actuary
Actuarial Office