November 15, 2021

Communications & Stakeholder Relations
Contact: Megan White, Information Officer
(916) 795-3991 -

Sacramento, Calif.  – The CalPERS Board of Administration today selected a new asset allocation mix that will guide the fund’s investment portfolio for the next four years, while at the same time retaining the current 6.8% target it assumes those investments will earn over the long term. The board also approved adding 5% leverage to increase diversification.

The decision concludes a nearly yearlong comprehensive review of the pension system’s investment portfolio and actuarial liabilities. Known as the Asset Liability Management process (ALM), the board conducts the evaluation every four years.

“The actions we’ve taken today provide the framework for the long-term success of the CalPERS fund,” said Theresa Taylor, chair of the Investment Committee. “The portfolio we’ve selected incorporates a diverse mix of assets to help us achieve our investment return target of 6.8%. And by adding 5% leverage over time, we’ll better diversify the fund to protect against the impact of a serious drawdown during economic downturns.

“We’ve heard from stakeholders, public agency leaders, and investment experts throughout this year, and I’m proud of the work we did together on behalf of California’s public employees.”

As part of the ALM process, led by CalPERS’ investment, actuarial, and financial offices, the board examined different investment portfolios and their potential impact to the CalPERS fund. Each portfolio presented a different mix of assets and corresponding rate of expected return and risk volatility. Ultimately, the board selected the portfolio with expected volatility of 12.1% and a return of 6.8%. The discount rate has been at 6.8% since July, when a strong double-digit fiscal year investment return automatically triggered a reduction under the Funding Risk Mitigation Policy.

New Asset Mix   Current Asset Mix
42% Global Equity 50%
30% Fixed Income 28%
15% Real Assets 13%
13% Private Equity 8%
5% Private Debt* 0%
0% Liquidity 1%

The portfolio includes a 5% allocation to leverage. The new asset allocation takes effect July 1, 2022.

Notable changes for employers include a decrease in median total employer contribution rates, which includes both normal and unfunded actuarial liability costs, from less than 1% in miscellaneous plans to a decrease of more than 2% in some safety plans.

Employees hired on or after January 1, 2013, following the implementation of the Public Employees’ Pension Reform Act (PEPRA), also will be affected. Most PEPRA employees will see median increases ranging from 1.2% in miscellaneous plans to 1.5% in safety plans in their total normal cost.

Contribution changes will take effect in fiscal year 2022-23 for state and schools plans, and FY 2023-24 for public agencies.

"We understand that the law will affect the contributions that PEPRA employees pay, and we’ll make sure we’re accurately communicating that information so they fully understand the change,” said Marcie Frost, CalPERS CEO. “And we know that even the smallest change to our portfolio can have an effect on employers’ bottom line, especially as they recover from a global health and economic crisis. “We’re committed to working with our employer partners to make sure they have the resources necessary to plan their budgets and prepare for the future.”

The ALM process included a review of demographic assumptions, including life expectancy, retirement and disability rates, and potential changes in job growth and salaries. The most recent findings show that life expectancies of healthy members at age 55 increased slightly from the last study in 2017.

Specifically, the study showed that men are expected to live roughly eight months longer and women approximately five months longer since the previous study. The study also projected higher rates of retirement for certain member groups, including the California Highway Patrol and other safety members, while some miscellaneous members experienced fewer.

For members, these actuarial changes impact two key areas: an increased retirement benefit amount of a few dollars for every $1,000 of retirement allowance if they chose the option that provides a benefit for a spouse or beneficiary, and increased cost of service credit purchases for some types of service credit.

For additional information and FAQs, including how this decision impacts employers and members, visit our ALM webpage.

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 2 million members in the CalPERS retirement system and administers benefits for more than 1.5 million members and their families in our health program, making us the largest defined-benefit public pension in the U.S. CalPERS' total fund market value currently stands at approximately $495 billion. For more information, visit

*The asset allocation chart was updated on 11/16/21.