CalPERS is going to look again at adjusting its investment forecast, a move that could increase taxpayer contributions while ramping up the political heat on public pension funds in California.
Just a year ago, the board of the California Public Employees' Retirement System ignored recommendations from senior staff to cut its forecast a quarter-point, to 7.5 percent.
Yet on Tuesday, senior actuary Alan Milligan said CalPERS staff will make another recommendation to the board next month.
He didn't say what the recommendation will be. But other big public pension funds have been cutting their forecasts in recent years to reflect a tougher investment climate.
The California State Teachers' Retirement System, or CalSTRS, lowered its forecast a quarter-point to 7.5 percent in early February. It was CalSTRS' second forecast cut in a little over a year.
CalPERS earned just 1.1 percent on its investments in calendar 2011, well below the 7.75 percent forecast. Despite a strong January, chief investment officer Joseph Dear warned earlier this week that the markets remain tumultuous.
Investment forecasts are crucial tools used in determining how much money a pension fund needs to pay its bills.
The forecasts rarely change; CalPERS' current forecast of 7.75 percent has held steady since 2003.
The lower the forecast, the more money the pension funds need from taxpayers and employees. CalSTRS believes its latest reduction means the teachers' pension fund needs an additional $500 million a year in contributions.
Currently, CalPERS gets a combined $11 billion a year from employees and state and local taxpayers.
Unlike the teachers' fund, CalPERS has the power to impose higher contributions on state and local governments without the Legislature's permission.
But a big rate increase could provide more ammunition to Gov. Jerry Brown and legislative Republicans, who want to overhaul the pension system to curtail costs.