Courtesy of Mish.
The California Public Employees’ Retirement System (CalPERS) manages pension and health benefits for more than 1.6 million California public employees, retirees, and their families. Its pension plan assumes 7.5% annual growth.
For fiscal year ending 2012 CalPERS Reports Preliminary Performance of 1 Percent.
How Underfunded is CalPERS?
Bear in mind that CalPERS was massively underfunded before this report. How underfunded?
Good question. Please consider CalPERS Lies About Equity Returns
CalPERS is both corrupt and incompetent. If it were a private firm, the lies about return on investments would send executives to jail and billions in lawsuits filed.
“The California Public Employees’ Retirement System (CalPERS) is the biggest public pension in the country. It is also deeply underfunded. Depending on the measure used, they have just 55-75% of money needed for future expenses while 80% is considered the minimum to be safe. Their return is currently less than 99% of big pension funds.
On March 12, CalPERS voted to lower their expected return from 7.75% to 7.5%, ignoring the advice of their own chief actuary that it should be 7.25%. More than a few investment professionals consider a projected rate of 7.75% to be unrealistically high in these times and question whether 7.25% is realistic.”
Now we know that CalPERS is in the lowest 1% of all pension funds—what else would you expect from a California government agency?
“What If” Charts at Various Compounded Rates
Let’s pretend that CalPERS is 100% funded. Already that is one hell of a pretend job, but assuming so, what will CalPERS underfunding look like at various compound plan performance rates?
CalPERS currently has $233 billion in assets.
CalPERS assumes 7.5% annual growth.
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