California Professional Firefighters

CalPERS Erases Losses From 2008 Economic Meltdown

On Friday, the Sacramento Bee and Reuters reported the news that CalPERS investments hit a record high Friday, erasing every penny of the investment losses it suffered in the market crash last decade.

Says the Bee: “America's largest public pension fund has erased the nearly $97 billion worth of investment losses it suffered in the market crash. Its portfolio swelled to a record $261.7 billion Friday, surpassing the pre-crash high in 2007.

This financial milestone, coupled with measured moves by CalPERS to smooth its investments and boost the amount it has to pay future pensions, is putting CalPERS well on the road to a robust funding level.

"This news underscores the reality that public employee pensions are not the root of California’s fiscal problems," said CPF President Lou Paulson. 

California’s public retirement systems are better off than they were during Gov. Jerry Brown’s first term in office. CalPERS was about 55 percent funded In the early 1980s, the final years of Gov. Brown’s first term and following another severe recession. As the economy rebounded, so did CalPERS funding status. By 2000, the system was 130 percent funded. A pension plan's funded status or unfunded liability is a snapshot in time that can change significantly over the course of a few years, depending on the economy and financial markets.

The report also reinforces a recent study by the Center for Retirement Research at Boston College, which indicated that pension “reforms” made at the state and local level will restore the state’s public pension funds to pre-financial crisis levels. “Whether it has been at the bargaining table in more than 300 jurisdictions or at the state level, public employees have been part of the solution to ensure public pension systems are financially sound,” wrote the study’s authors. Researchers also found “in most cases, reforms fully offset or more than offset the impact of the financial crisis.” 

READ: The full story at Reuters

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