State Employer Projected Contribution Rates for Fiscal Year 2025-26
December 4, 2025
Circular Letter: 200-049-25
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 11.6% CalPERS preliminary investment return for fiscal year (FY) 2024-25 (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 2025-26 and the projected rates for the next five fiscal years can be found in the table in the Projected Employer Contribution Rates section below. The actual state employer contribution rates for FY 2026-27 will not be known until audited assets and demographic changes as of June 30, 2025, are measured as part of the next actuarial valuation. The actual FY 2026-27 state employer contribution rates will be presented to the CalPERS Board of Administration in April 2026 and will differ from the estimate shown below.
Projected Employer Contribution Rates
The table shows the required and projected employer contribution rates for FY 2025-26 and the next five fiscal years. Projected results reflect an investment gain for FY 2024-25 based on preliminary investment return information released by the CalPERS Investment Office. Further, projected rates reflect that the normal cost rate is expected to continue to decline over time as new employees are hired into lower cost benefit tiers.
It is 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 below and in the attachment do not reflect any potential future change to the discount rate or assumption changes related to the 2025 Experience Study.
Projections, by their nature, are not a guarantee of future results. Future contribution requirements may differ, perhaps significantly, from those shown. 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.
Actual & Projected Employer Contribution Rates by Fiscal Year
| Plan | Actual | Projected | ||||
|---|---|---|---|---|---|---|
| 2025-26 | 2026-27 | 2027-28 | 2028-29 | 2029-30 | 2030-31 | |
| State Miscellaneous | 31.32% | 30.6% | 31.4% | 30.3% | 29.3% | 28.6% |
| State Industrial | 20.54% | 19.8% | 20.5% | 19.5% | 18.5% | 17.8% |
| State Safety | 21.67% | 20.9% | 21.5% | 20.5% | 19.5% | 18.8% |
| Peace Officers & Firefighters | 49.36% | 47.7% | 48.8% | 46.7% | 44.6% | 43.1% |
| California Highway Patrol | 69.29% | 65.8% | 66.8% | 64.4% | 64.1% | 60.4% |
Rates do not include budget act adjustments. For actual rates that include budget act adjustments, refer to Circular Letter 200-025-25.
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 fiscal 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, access 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
Attachment: Future Investment Return Scenarios (PDF)