The State Worker

New assessment shows California retired teachers’ account only 63.7 percent funded

Retired teachers are living longer and CalSTRS is earning a lower investment returns, driving a new assessment of the teacher pension fund.
Retired teachers are living longer and CalSTRS is earning a lower investment returns, driving a new assessment of the teacher pension fund. The Sacramento Bee file

The pension fund for California teachers is about $97 billion short of the assets it would need to pay all of the benefits it owes to its members today, according to a new valuation from the California State Teachers’ Retirement System.

CalSTRS released the new accounting ahead of its monthly meeting, which is scheduled for next week.

The $202 billion fund has about 63.7 percent of the assets it needs to pay the benefits it owes. That reflects a 4.8 percent decrease in CalSTRS’ funded ratio from its most recent assessment.

The new number is based on more conservative assumptions that the CalSTRS board has adopted recently. In February, the board voted to drop CalSTRS’ anticipated investment return rate by .5 percent to 7 percent, a shift that eventually will lead to an increase in employer contributions to the fund.

Also, CalSTRS projects that its retirees live about three years longer than it previously assumed, meaning teachers are now expected to collect about 30 years of retirement benefits.

The board is meeting on April 6 to consider whether to accept the valuation. A staff report describing the valuation says that CalSTRS is on track on its plan to reach a fully funded status by 2046.

Adam Ashton: 916-321-1063, @Adam_Ashton. Sign up for state worker news alerts at sacbee.com/newsletters.

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