Capitol Alert

California pension funds saw $100 billion gain in 2013-14

Joseph John Jelincic Jr. wears two different hats at CalPERS. He's an investment officer for Global Real Estate and also a Board Member for the Board of Administration. Photo was taken on April 27, 2011
Joseph John Jelincic Jr. wears two different hats at CalPERS. He's an investment officer for Global Real Estate and also a Board Member for the Board of Administration. Photo was taken on April 27, 2011 acruz@sacbee.com

California’s state and local government pension systems saw their assets climb by more than $100 billion during the 2013-14 fiscal year, outpacing the national trend by several percentage points, according to a new Census Bureau report.

Although payouts from the systems to retirees rose by $3 billion, additional contributions from government employers and their employees and a sharp increase in investment earnings contributed to the asset gain.

By the close of the fiscal year, California fund assets had risen to $751.8 billion, a gain of 15.5 percent from the previous year, the Census Bureau reported. Nationwide, state and local pension funds saw a 12.8 percent increase.

The major reason for the gain was a 46.3 percent increase in earnings to $115.8 billion. Another $30.1 billion in contributions – 70 percent of it from employers – added to the total revenue stream, offset by $46.1 billion in payouts to 1.2 million retirees.

State pension funds, led by the California Public Employees Retirement System, held 72.4 percent of total assets, with the remainder scattered among local pension systems.

But the state funds’ $544.8 billion in assets fell short of their reported $661.2 billion in calculated pension obligations, with the gap constituting an “unfunded liability.”

Overall, the state’s funds had 82 percent of what they needed to cover obligations, up from 77 percent the previous year. CalPERS has pegged its level most recently at 77 percent. The Census Bureau report did not delve into local pension funds’ unfunded liabilities.

Generally, pension fund analysts believe that they need to have at least 80 percent of liabilities covered by current assets to be considered healthy.

Despite the 2013-14 earnings increase, it’s likely that the next annual report will show more modest pension fund gains. CalPERS recently reported that its 2014-15 earnings were just 2.4 percent, less than a third of its 7.5 percent assumption, and other pension funds have reported less-than-stellar investment gains as well.

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