CalPERS’ market value reached $400 billion Thursday, reaching a new landmark and reflecting a doubling of the fund’s portfolio from 10 years ago.

Despite the big number, the nation’s second-largest pension fund remains about $165 billion short of what it would need to pay all its current and future obligations to public workers and retirees, leaving the system about 70 percent funded, according to state financial reports.

The fund’s market value has grown by $27 billion in the last six months. That’s more than it grew in the entire fiscal year that ended June 30, 2019, when it gained $18 billion in value.

With its long-term outlook, the system sees little significance in the mid-January figure.

“While we’re pleased we’ve reached $400 billion, it’s a snapshot in time … as a long-term investor we don’t place any significant value in tracking performance from day-to-day or even quarter-to quarter,” CalPERS spokesman Joe DeAnda said in an email.

The system aims for a 7 percent return on investment each year, and measures annual returns at the end of each fiscal year. If it doesn’t make that goal, the public agencies that pay into the system might have to pay more money to fund retirement promises.

Last year around this time, in the middle of the fiscal year, the fund’s returns were well below that goal. But then markets rebounded and the system finished out the fiscal year with a 6.7 percent return rate, just short of its target The fund’s 10-year return rate was 9.1 percent.

The system’s investments cover a broad range of asset classes. When it comes to stocks, the fund uses index funds and generally is invested in public companies with the most market shares at the highest values, a measure known as market capitalization.

Major indexes around the world grew through 2019. The S&P 500 has grown by about 27 percent over the last year.

CalPERS also invests in private equity, bonds, real estate and other investment classes.

While the fund’s market value is rising, so are its obligations to retirees, who are living longer than in the past.

The system paid $24.2 billion in benefits to retirees in the last fiscal year, up $1.6 billion from the year before, according to its annual financial report.

Public workers’ contributions to the system have been increasing, too.

Over the last 20 years, contributions from public workers accounted for about 13 percent of the system’s benefit payments, while contributions from the state made up about 29 percent. The remaining payments have come from CalPERS’ investment earnings.

In recent years, state workers have been moving closer to a 50/50 split in contributing to their pensions along with their employers. The state’s estimated contribution for the present fiscal year is about $5.9 billion, according to Gov. Gavin Newsom’s recent budget proposal.

Contributions by public agencies around the state, such as cities and counties, are on the rise. A recent CalPERS report showed public employers paid $20 billion toward the system for the year ending June 30, 2018, up from $12 billion the prior year, while contributions from employees overall decreased slightly.

CalPERS’ total market value has doubled since 2010, when it stood at $200 billion.

The only larger pension system in the U.S. is the Federal Employees’ Retirement System, which was projected to reach $931 billion at the end of the last fiscal year.

The average public pension fund is about 70 percent funded, Von Hughes, a consultant from PAAMCO Prisma, told the CalPERS board in December.

This story was originally published January 17, 2020 at 6:15 AM.