CalPERS

Market Volatility and CalPERS Contributions

03-28-2020 |

Chart and available modeling tool to estimate impact

Impact of Investment Losses on Future CalPERS Contributions

Many California public agencies are wondering what impact recent stock market losses will have on future CalPERS contributions.  This table illustrates:

  • Timing and magnitude of required contribution increases due to an investment loss
  • Impact on plans at 3 asset levels for 3 average 2019/20 fiscal year CalPERS return scenarios.

 

Please contact your Bartel Associates actuary or info@bartel-associates.com for a modeling tool you can use to estimate the cost impact for your agency.

Important notes: 

  • Asset losses depend on total value of assets for your CalPERS plans, not unfunded actuarial accrued liability.Asset values at June 30, 2018 are on page 5 of each CalPERS actuarial valuation report.
  • Asset loss is the difference between CalPERS 7% assumed rate of return and estimated FY 2019/20 return.For example, -10% asset returns mean a 17% (7% + 10%) loss of the projected 6/30/19 asset value.
  • FY 2019/20 asset loss is increased with 2 years' interest to FY 2022/23 and amortized over 20 years as a level dollar payment with a ramp-up in the first 5 years.
  • CalPERS maintains a diversified investment portfolio.The target asset allocation as of 6/30/2019, as reported in the CAFR, was:

 

Asset Class            Target Allocation
Public Equity                      50.0%
Private Equity                       8.0%
Income                               28.0%
Real Assets                        13.0%
Liquidity                                1.0%
Total                                  100.0%

 

Disclaimer:  Bartel Associates provides this information solely for California public agencies to approximate the future contribution impact of CalPERS returns. Projections assume no changes to CalPERS future actuarial assumptions or methods. These results are estimates and any use should be carefully considered.

BA Website 2020-03-27 Impact of Investment Losses on Future CalPERS Contributions

 

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