The
California Public Employees’ Retirement System
, CalPERS, announced a preliminary investment return of 11.6% for the 2024-2025 fiscal year.
The system has not yet released the financial report for the fiscal year that ended June 30, but it did announce a preliminary net return rate. The 11.6% investment return would bring assets managed by the California Public Employees’ Retirement Fund to an estimated value of $556.2 billion, three years after the fund hit its lowest level following the pandemic.
Almost all CalPERS retirement benefits are paid out of the retirement trust fund. The fund provides benefits for the state of California, school district and other employees of California public agencies that are members. Roughly two million Californians rely on it.
Following the pandemic, the CalPERS’ retirement fund experienced its first net loss since 2009. The fund fared well amidst early-stage pandemic shutdowns and hardships, but felt the aftershocks of the pandemic during the 2021-2022 fiscal year.
With a negative return rate of 6.1%, the fund sank $37.9 billion that year. It sat at $477.3 billion for the 2020-2021 fiscal year, and dropped to $439.4 billion by June 30, 2022.
However, 2022 and on have brought on a recovery. Returns have increased every year and strengthened CalPERS’ funded status. The funded status refers to the number of people the fund can cover if it had to pay out all its benefits at once. Currently, the estimated funded status of the retirement fund sits at 79%.
“In just two years, our investment returns have helped CalPERS increase the funded status to nearly 80% and rebound from the economic effects of the pandemic,” said Chief Executive Officer Marcie Frost in a press release. “Although there is more work to be done, I am proud to say that CalPERS is delivering for its members and employers.”
The funded status increased roughly eight percentage points in two years, going from 71% percent to 79%. Return rates also have increased year to year. Fiscal year 2022-2023’s return rate was 5.8%, and the following year’s return was 9.3%.
California state treasurer Fiona Ma, a member of CalPERS’ board, expressed pride over the increased return rate, but said she’ll also focus on what’s next for the retirement system.
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“With global markets evolving and growing pressure on public systems, we must continue to make smart, forward-looking investment decisions. I remain committed to working with the board and investment team to strengthen retirement security for our members and ensure the long-term sustainability of the fund,” she said in a statement.
The final numbers for the report, including the amount in the retirement fund and other return rates, will be released later in the year after review from CalPERS’ staff and outside experts. The report will include further detail on investment returns, and return rates for public equity, fixed income, private equity and more.
