CalPERS reports big annual return on investments

Buoyed by private investment and stock market gains, CalPERS announced Monday a return of 21.3% on investments for the fiscal year that ended June 30. That return is triple the 7% annual targeted rate of return currently built into CalPERS’ financial assumptions and marks a sharp recovery from an initial drop in stock market values from the impact of Covid-19.

The California Public Employees’ Retirement System is the nation’s largest public employee pension system, serving more than 2 million employees and retirees, including classified school employees, such as bus drivers, kitchen workers and teacher’s aides. Teachers and school administrators are members of CalSTRS, which will report its yearly financial results toward the end of July.

CalPERS’ investment portfolio rose $80 billion by the end of June to a record value of $469 billion.

CalPERS has struggled since the Great Recession to be in a position to pay its long-term financial obligations to retirees, notwithstanding sharp rate increases imposed on public employers since 2013 legislation. The latest return on investments raises the percentage of assets needed to fully fund obligations from 71% last year to 82%, CalPERS reported.

Theresa Taylor, chair of the CalPERS Investment Committee, cautioned not to expect similar rates of return every year. “But as pleased as we are with these great returns, let me emphasize that we don’t count on this kind of investing environment every year. We know markets go up and down.”