August 14, 2019

Communications & Stakeholder Relations
Contact: Amy Morgan, Office of Public Affairs
(916) 795-3991 - newsroom@calpers.ca.gov

SACRAMENTO, Calif. – CalPERS has implemented a new trust fund that allows public employers to prefund their future pension costs. The new program, known as the California Employers’ Pension Prefunding Trust (CEPPT), provides the state and public agencies an additional investment vehicle to accumulate assets over time to help manage long-term costs.

"This new fund gives public agencies an opportunity to save and plan ahead," said Marcie Frost, CalPERS CEO. "Prefunding is a smart and efficient approach for employers to mitigate rate increases and temper contribution volatility. Benefits are only as secure as our employers’ ability to pay them.”

Established by Senate Bill 1413, participation in the fund is voluntary and mirrors the functions of CalPERS California Employers’ Retiree Benefit Trust (CERBT) Fund by providing employers flexibility to determine the amount of their investment contribution, risk tolerance, and time horizon. The fund also offers employers:

• Two diversified strategic asset allocations with low and moderate risk levels that are expected to have a net rate of investment return of 4 and 5 percent.
•  Low investment management fees with an annual fee of 0.25 percent (25 basis points).
•  Improved financial security for active employees and retirees.

“We are excited to partner with local agencies and give them a tool they requested,” said Michael Cohen, CalPERS chief financial officer. “The trust will help local agencies reduce future obligations, reduce risk on their balance sheets, and address their future costs.”

The fund is administered by CalPERS and is identified as a Section 115 trust under the Internal Revenue Code. Any state and local public agency that offers a defined benefit plan to their employees can participate. They don’t have to contract with CalPERS for their pension plan to participate in this program.

The CERBT is a post-employment benefit (OPEB) program that public agencies can use to prefund future retiree health benefits such as health, vision, dental, and life insurance.

View the Asset Allocation Review for the CEPPT Board Agenda (PDF) and Presentation (PDF) for more information.

Public agencies interested in participating can contact the CEPPT program at 916-795-9071 or by email.

The ending value of the CalPERS fund is based on several factors and not investment performance alone. Contributions made to CalPERS from employers and employees, monthly payments made to retirees, and the performance of its investments, among other factors, all influence the ending total value of the Fund.

About CalPERS

For more than eight decades, CalPERS has built retirement and health security for state, school, and public agency members who invest their lifework in public service. Our pension fund serves more than 1.9 million members in the CalPERS retirement system and the Public Employee Retirement Fund market value currently stands at approximately $376 billion making us the largest defined-benefit public pension in the U.S. Additionally, we administer benefits for more than 1.5 million members and their families in our health program. For more information, visit www.calpers.ca.gov.