CalPERS Explores Lowering Investment Return Assumption
Posted on Tue, Dec 21, 2010
The California Public Employees Retirement System (CalPERS) has taken steps to decrease the return assumption on its pension fund investments. The CalPERS investment committee has approved moving the assumed rate of return on its $215 billion dollar fund from 7.75% to down to 7.38%.
The move would have major implications, plagued by losses in the private equity sector the fund is already significantly underfunded. Lowering the return assumption would require additional increases in pension contributions from a state already facing major budget shortfalls.
The change is still subject to review by the plans actuary, and according to Pension and Investments, CalPERS sources have said it's likely the final rate will be set at 7.5%. A final decision is expected from the board by the end of the first quarter.
