Sacramento, CA — Governor Jerry Brown is taking issue with a decision made by the CalPERS board of directors, which oversees the state’s largest pension fund.
The CalPERS board voted 7-3 to gradually reduce the amount that the fund expects to receive from its investments. CalPERS current rate of investment returns is 7.5%, and the expectation for returns will gradually be reduced, over the next 21 years, to 6.5%. Governor Brown had been pushing for the reduction to come much quicker, rather than spanning two decades.
Governor Brown has issued a statement reading, “I am deeply disappointed that the CalPERS Board reversed course and adopted an irresponsible plan that will only keep the system dependent on unrealistic investment returns. This approach will expose the fund to an unacceptable level of risk in the coming years.”
Reuters reports that CalPERS made $18-billion in pension benefit payments last fiscal year, but had only $13-billion in contributions.