January 19, 2015

Sal Rodriguez's assertion in the Orange County Register (OC Register) that CalPERS has mismanaged the state pension fund through "inadequate forecasting and planning" is unfounded. The Board takes very seriously its fiduciary responsibility to its members, and recently took a bold leadership step to reduce risk and volatility in the Pension Fund to help ensure the long-term sustainability of the System.

The Board considered several risk mitigation strategies, and based on recommendations by external pension and investment consultants, CalPERS staff, and input from stakeholders representing our members and employers, we adopted a policy to address the risk in our system.

The adopted policy is a measured and balanced approach that takes into account 18 months of expert analysis. It incrementally lowers the discount rate in years of good investment returns, helps pay down the Pension Fund's unfunded liability, and provides greater predictability and less volatility in contribution rates for employers. A more rapid reduction of our discount rate would have caused financial strain on many of California's local municipalities that are still recovering from the financial crisis.

(This response was printed as a Letter to the Editor to the OC Register.)

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