FAQ: 2022 Asset Liability Management (ALM) Decision for Judges' Retirement System (JRS) & JRS II Members
At the April 19, 2022, board meeting, the CalPERS Board of Administration voted to change the discount rate to 6% and adopted new actuarial assumptions for JRS and JRS II.
The decision concludes a nearly yearlong comprehensive review of the pension system’s investment portfolio and actuarial liabilities, known as the ALM process that the board conducts every four years.
The discount rate is the long-term interest rate used to fund future pension benefits. It’s one of the key components of the ALM cycle that we use to balance assets with future pension obligations. The discount rate is also known as the assumed rate of return because it's what we expect our investments to earn during the fiscal year.
We use actuarial assumptions in the actuarial valuations that set the annual required employer contribution rates. They include projected age at retirement, life expectancy, salary inflation, and the assumed rate of return on investments. These same assumptions are also used in member calculations, such as service credit purchases and retirement payment options, that provide a benefit to a spouse. These new assumptions will apply to all JRS plans.
The primary changes involved a shift to generational life expectancies for retirees and beneficiaries and later than previously expected retirement ages.
Members of JRS or JRS II retiring on or after April 21, 2022, are impacted. Those who retired before that date aren't impacted. There is no impact on an active employees’ take-home pay.
There are no changes since the contribution rates are set by statute.
For members of JRS or JRS II retiring on or after April 21, 2022, retirement benefit options will be calculated using the discount rate of 6% with the new actuarial assumptions. This affects all monthly retirement benefits.
There will be no impacts to the Monetary Credit (lump-sum benefit).
Contact JRS directly at (916)795-3688 for assistance.