The CalPERS board on Monday will weigh two plans designed to make its investment portfolio less risky. Both plans, according to a board staff report, could increase the contributions required from public employers over time.
A presentation from CalPERS staff says it could become one of the first public defined-benefit retirement funds to embrace a risk-reduction plan.
CalPERS’ estimates its funded status – the ratio of how much it has to how much the actuaries say it needs – is 77 percent. During the 2008 financial crisis The fund is still recovering from the 2008 financial crisis, during which the funded status plummeted to the low 60s. The agency says that fact, along with the state’s rapidly aging workforce – a 2013 CalHR study reported about 40 percent of state workers are eligible to retire – has left it looking for ways to make the system more sustainable.
By getting out of riskier investments when the portfolio is performing well, CalPERS would be betting that less volatility in the future is worth smaller returns.
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While a CalPERS survey of employers found many understand the need to lower risk, it noted a number of public employers, especially those in more dire financial straits with regard to pension obligations, were worried about paying more, according to the report.
The two plans would have similar effects on the way the fund is run. After today’s meeting, board members will indicate which of them they want to push along the regulatory process. Final approval would not come until November, according to CalPERS spokesman Joe DeAnda.
THEY’RE BACK: Lawmakers are back and so is the public. Two groups will be on Capitol grounds for demonstrations Monday – proponents of an effort to free Corky, a Sea World whale, and the opponents of the law ending the personal belief exemption for vaccines, who will continue with their silent vigil asking for its repeal.
BILLS TO WATCH: The Senate Appropriations Committee will take up a long list of bills today at 10 a.m. in room 4203. Among them: Assembly Bill 56, a bill to restrict law enforcement use of aerial drones for surveillance without a warrant and Assembly Bill 80, creating a state interagency task force for boys and men of color.
The Senate Business, Professions and Economic Development Committee, along with the Revenue and Taxation and Utilities and Commerce committees in the Assembly, will also meet.