CalSTRS & CalPERS Returns Beat Targets

Both CalSTRS and CalPERS had strong investment returns for the 2016-17 fiscal year. CalSTRS closed the year with a return of 13.4%, while CalPERS earned a return of 11.2%. Unfortunately, the strong returns will have no immediate impact on school employer pension contribution rates. CalSTRS’ rates are set in statute through 2020-21 and its board cannot make any reduction until that time. On the other hand, CalPERS anticipates a reduction in its employer rates, but the reduction will be a fraction of a percent and will not take effect for several years. Both systems have an assumed investment return rate of 7%, and project reaching full funding by 2046 should they average the 7% return. Over the past five years, CalSTRS has an average return rate of 8.1%, while CalPERS has averaged 9.16%. Respectively, the pension systems have a ten-year average of 6.81% and 6.45%.

Should you have any questions, please contact ACSA Legislative Advocate Iván Carrillo.