How Public Employee Pensions Are Funded

Some people believe that taxpayers fund the total cost of public pensions. This isn’t true.

The largest contribution comes from CalPERS' investments, with additional funding from employer and employee contributions. Some workers currently contribute up to 16.5% 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 a 20-year average ending June 30, 2023, for every dollar CalPERS pays in pensions:

  • 56 cents comes from investment earnings
  • 33 cents from employer contributions
  • 11 cents from employee contributions

In other words, 67 cents out of every public employee pension dollar is funded by CalPERS' own investment earnings and member contributions. In the fiscal year ended June 2023, CalPERS paid out more than $ 31 billion in pension benefits.

The CalPERS Pension Buck: 56 cents comes from CalPERS investment earnings, 33 cents comes from CalPERS employers, and 11 cents comes from CalPERS members

Pension Payments Contribute to Local Economies

As CalPERS retirees spent their monthly pension benefit payments in FY 2020-21, they supported California's economy, generating $27.7 billion in economic activity, which:

  • Supported 144,463 jobs
  • Generated $1.7 billion in tax revenue for local industries
  • Supported local community growth

Source: Economic Impacts of CalPERS Pensions in California, FY 2020-21