March 30, 2016

The recent article by The OC Register's editorial board, "$1.2 trillion reasons to reform pensions," makes a series of conclusions based on an unpublished study whose methods are inconsistent with current accounting standards. Under this non-compliant method, CalPERS' unfunded liabilities would grow.

We report our financial statements consistent with accounting standards; our funded status is approximately 76 percent and our unfunded liabilities are less than one-third of the inflated value reported by the editorial board - only $93 billion. To ensure transparency and accuracy, we publish our Comprehensive Annual Financial Report (PDF) online whose calculations are audited by an independent auditor.

Further, contrary to what the editorial board says, we do not use an unrealistic assumed rate of return. In fact, over the periods of 3, 5, and 20 years, we have exceeded our 7.5 percent assumed rate of return. And CalPERS' case isn't unique - according to a recent survey (PDF) by the National Association of State Retirement Administrators, public pension funds are exceeding their assumed rate of return despite three economic recessions and four years of negative returns.

CalPERS remains committed to a measured and balanced approach to become a fully funded, sustainable pension system regardless of these one-sided reports.

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