Sacramento, CA — Governor Jerry Brown and California Treasurer John Chiang have both given thumbs up to the vote to lower the earning rate for CalPERS pension fund.
The move by the state’s largest pension system to downgrade its expectations for investment earnings means government agencies and their workers will likely have to contribute more tax dollars to retirement benefits for public employees. On Wednesday the California Public Employees’ Retirement System board voted to lower its assumed earnings rate from 7.5 percent to 7 percent over three years. It is a reaction to long-term financial pressures and lower projected returns on global investments over the next decade.
Governor Jerry Brown had this reaction, “Today’s action by the CalPERS Board is more reflective of the financial returns they can expect in the future. This will make for a more sustainable system.”
State Treasurer John Chiang noted, “With nearly half of all California workers on track to retire with incomes below 200% of the federal poverty level, the preservation and rapid expansion of retirement security for all Americans must be the call of our generation. He went on to state, “Today’s vote goes a long way toward ensuring a dignified retirement remains within reach for millions of current and future Californians. By creating a more fiscally stable system, we aim to keep our promise to public servants in a manner which saves taxpayers money in the long run.”
CalPERS has about $300 billion in assets. It is enough to cover only about 68 percent of promised benefits as it pays more each month in retirement benefits than it takes in from taxpayers, workers and investment earnings.