How Public Employee Pensions Are Funded

Some people believe that taxpayers fund the total cost of public pensions. This is untrue.

The largest contribution comes from CalPERS investment dollars, with additional funding from employer and employee contributions. Workers currently contribute up to 15.25 percent of their paychecks to help fund their own pensions.

The CalPERS Pension Buck illustrates the sources of income that fund public employee pensions.

Based on data over the past 20 years ending June 30, 2018, for every dollar CalPERS pays in pensions:

  • 59 cents comes from investment earnings
  • 28 cents from employer contributions
  • 13 cents from employee contributions

In other words, 72 cents out of every public employee pension dollar is funded by CalPERS' own investment earnings and member contributions. In the fiscal year ended June 2018, CalPERS paid out nearly $23 billion in pension benefits.

CalPERS also invests in California. Of our roughly $323.7 billion portfolio in June 2017, we invested $30 billion in California-based companies and projects, generating a ripple effect of economic activity across the state.

CalPERS' investments in California* support:  

  • More than 266,200 jobs in private markets
  • Generation of $26.2 billion in total economic activity across the state
  • Local jobs, infrastructure for communities, and commerce
  • Business expansion and related economic activity

*CalPERS for California 2017 report (PDF)

The CalPERS Pension Buck: 59 cents comes from CalPERS investment earnings, 28 cents comes from CalPERS employers, and 13 cents comes from CalPERS members