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California pension system sees funding level climb to 77%

By Michael B. Marois, Bloomberg

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(Bloomberg) — The California Public Employees’ Retirement System, the largest U.S. state pension, saw its funding level rise 7 percentage points last year as investment returns beat assumptions.

The $293 billion system, known as Calpers, said its estimated funding level rose to 77 percent of assets needed to cover promised benefits as the fiscal year ended June 30. That’s up from 69.8 percent a year earlier.

Pensions across the U.S. are short more than an estimated $915 billion needed to cover benefits promised to government workers, according to the Pew Charitable Trust. Taxpayers have been asked to make up the shortfall.

Calpers posted an 18.4 percent gain on investments last year as global stock indexes rose to records. It assumes it will earn 7.5 percent annually to cover the cost of pension benefits promised to state and local government workers.

The fund’s value reached $300 billion for the first time on July 3, at the time making it bigger than all but two companies on the Dow Jones Industrial Average. Calpers in 2013 passed its pre-recession high of $260.6 billion.