Tuesday, July 16, 2019

Falling Short

At the upcoming Regents meeting, there will be a proposal to cut the expected earnings of the UC pension plan to 7%. As we have noted in the past, the folks who handle investments for UC actually believe that long-term earnings will be in the 6-7% range, i.e., below the proposed rate.

CalPERS is reporting earnings below 7% for the past fiscal year. (See below.) We will see soon what is reported for UCRP.

Blog readers are reminded that making an assumption about earnings is not the same thing as what earnings over the long term will actually turn out to be. Changing the assumed rate will, by itself, change estimated unfunded liabilities. But true unfunded liabilities depend on what the rate turns out to be.

CalPERS Falls Short Of Investment Goals


The California Public Employees’ Retirement System earned a 6.7% return on its investments during the last fiscal year, missing its annual goal of 7%. If that continues, it would force public agencies to contribute more to retirement programs.

The largest return was in fixed income investments (9.6%), followed by private equity (7.7%). Stocks saw a return of 6.1%, while the real estate portfolio had a return of 3.7%.

CalPERS Chief Investment Officer Yu Ben Meng downplayed the significance of the latest figures.

“This was a very volatile year for financial markets, but I’m pleased with how we focused on the performance of the total fund,” he said. 

“While we did not achieve our 7 percent actuarial return target this fiscal year, I can’t stress strongly enough that we are long-term investors,” Meng added. “We make decisions based on an investment horizon that stretches across years and even decades. That’s our focus, and we will continue to analyze all aspects of our portfolio to see how we can generate higher risk-adjusted total returns for our members.”...

Full story at

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