Wednesday, December 21, 2016

CalPERS cuts earnings forecast; school districts to pay more for pensions | EdSource

CalPERS cuts earnings forecast; school districts to pay more for pensions | EdSource:

CalPERS cuts earnings forecast; school districts to pay more for pensions


School districts, already bracing for record pension contributions for school employees, will face additional costs they hadn’t expected as a result of a decision Wednesday by the California Public Employees’ Retirement System.
The CalPERS board voted to lower the expected rate of return on its investments from 7.5 to 7 percent. That action will force local governments, school districts and the state to make up the difference by annually paying billions of dollars more into CalPERS to keep the nation’s largest public employee pension fund afloat.
The board acted because the pension fund remains underfunded and vulnerable to further erosion without more money. Since investments aren’t generating what the board had counted on and the board isn’t planning to revise its investment strategy for two years, it’s turning to employers and, to an extent, employees for larger contributions.
The decision puts the earnings forecast closer to what financial advisers say CalPERS can realistically expect over the next three decades. It will also put pressure on the board of the California State Teachers’ Retirement System to follow the lead and consider reducing its identical 7.5 percent earnings forecast on investments when its board of directors meets this spring.CalPERS cuts earnings forecast; school districts to pay more for pensions | EdSource:

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