CalPERS adopts new demographic assumptions

The California Public Employees’ Retirement System (CalPERS) board of administration has approved new demographic assumptions, which it says are designed to ensure greater sustainability and soundness of the pension fund.

The new assumptions take into account public employees living longer based on a recent study of CalPERS membership.

Findings show that men are expected to live two more years and women a year and a half longer. The study also shows higher rates of retirement for certain member groups, including police officers and firefighters. These new assumptions will raise employer pension costs in the future.

The board also adopted an asset allocation mix that lowers CalPERS’ investment risk but largely keeps its investment strategy unchanged, holding the fund’s long-term assumed rate of return at 7.5%.

While the actions will result in higher pension costs for the state and CalPERS contracting employers, the fund says it helps to stabilize pension costs over time and puts CalPERS on a path to meet the pension obligations promised to current and future public employees.

“These are important decisions,” said Rob Feckner, president of the CalPERS board. “We have spent the better part of two years making changes that will continue CalPERS on an even stronger solid footing, and that helps everyone who has a vested interest in our fund.”

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