CalPERS reports preliminary net investment return of -6.1% for fiscal year 2021-22
The California Public Employees' Retirement System (CalPERS) recently announced a preliminary -6.1% net return on investments for the 12-month period ending on June 30, 2022. This is CalPERS’ first loss since the global financial crisis of 2009, which was also driven by tumultuous global markets.
The negative return, combined with CalPERS’ 6.8% discount rate, led to a roughly 9% drop in the pension fund’s estimated overall funded status, which now stands at 72%. As a result, employer contributions are expected to increase in the coming years.
CalPERS remains focused on the long-term performance of the fund. The total fund annualized returns for the five-year period ending June 30 stood at 6.7%, the 10-year period at 7.7%, the 20-year period at 6.9%, and the 30-year period at 7.7%. This year’s returns are based on the investment portfolio that was in place before November’s new asset allocation.
Individual CalPERS members will not see an increase in rates, but CalPERS employers will. Employers, including contracting cities, will feel the negative returns through their employer contribution rates into 2024-25.
Rates will initially go down after last year’s strong return of 21% before going back up to current rates or higher in the fiscal year that follows. Cities can expect employer rates for their miscellaneous plans to increase about 2-4% in fiscal year 2024-25. Safety plan employer rates may increase between 4 and 6%.
City-specific information is available through CalPERS’ Pension Outlook tool, which can be used to plan and budget pension costs. Officials can also use the Public Agency Required Employer Contributions search tool to find an agency's required contributions, or view the List of Public Agency Required Employer Contributions.More information about upcoming public agency contribution requirements in general, including how they are determined, can be found in Public Agency Actuarial Valuation Reports, as well as a recent CalPERS webinar and slides.