CalPERS assets under management

[joesxm3]

I was just noodling around on X and came across info that the California Public Employees Retirement System has over $500 billion assets under management. Half a trillion. That blows my mind.

 

[Out-to-Lunch]

Wisconsin's equivalent had $140 billion. With 6x fewer people!

 

[Koolau]

IIRC Megacrop has something like 20 Billion in its retirement system.

 

[audreyh1]

I was just noodling around on X and came across info that the California Public Employees Retirement System has over $500 billion assets under management. Half a trillion. That blows my mind.

It’s huge and very aggressive with investing. IMO they use too many exotic investments but what do I know.

 

[Luvtoride]

Why is anyone surprised by these large amounts of assets of some of the largest Pension systems in the country? My wife is a NYC retiree and although I don’t know the assets of NYCers, I know that her pension payment arrives each month on the last day of the month, without fail. Thank goodness for the size and security of these public pension systems.

 

[frank05]

They also cover safety workers who typically can retire early and collect for a long time.

 

[joesxm3]

But still. We are worrying about $2T overspending for the whole country and one pension plan is 25% of that amount. But I guess if you compare to some MAG7 market caps it might make sense.

 

[MichaelB]

It’s huge and very aggressive with investing. IMO they use too many exotic investments but what do I know.

+1 The pension plans are major investors in hedge funds and private equity, both of which have sky high fees and are very illiquid. Private equity also has fuzzy accounting.

 

[AudiDudi]

But still. We are worrying about $2T overspending for the whole country and one pension plan is 25% of that amount. But I guess if you compare to some MAG7 market caps it might make sense.

Take a look at the Pension Benefit Guraanty Corporation.

Pension Benefit Guaranty Corporation - Wikipedia

en.wikipedia.org

And see how much the California pension plan is under funded.

Public Pensions in California

State and local governments face large and growing pension obligations. This fact sheet provides a snapshot of California’s public pensions and liabilities, their impact on local budgets, and policy changes that aim to tackle rising costs.

www.ppic.org

 

[Irishgirlyc58]

The unfunded liability and impact on local government cries really irks me. I worked for local government in California. Back in the aughts CalPERs was what they referred to as super funded. Therefore the local government share of the calpers contribution was zero-they paid nothing for several years.
So, what did several local governments do? They raised their CalPERs benefits. For example, instead of a 2% at 55 formula they increased it to2.7% at 55. I thought it was a bad idea at the time but I'm sure the County Administrator or City Manager recommended approving this increase to the governing body. Of course who benefitted from this? The CAO or CM-and others of course.

 

[Koolau]

Why is anyone surprised by these large amounts of assets of some of the largest Pension systems in the country? My wife is a NYC retiree and although I don’t know the assets of NYCers, I know that her pension payment arrives each month on the last day of the month, without fail. Thank goodness for the size and security of these public pension systems.

You're right, of course. Megacorps with tens of thousands of w*rkers (and, therefore, retirees) have huge funds with the sole purpose of funding pensions and retirement benefits in general. It adds up!

Most of the larger pension plans have statutory requirements. They must adhere to certain minimums in terms of funding and they must report to empl*yees and gummint as well. That's a very good thing for those receiving (and those hoping to receive) pensions.

 

[dickoncapecod]

Why is anyone surprised by these large amounts of assets of some of the largest Pension systems in the country? My wife is a NYC retiree and although I don’t know the assets of NYCers, I know that her pension payment arrives each month on the last day of the month, without fail. Thank goodness for the size and security of these public pension systems.

Indeed. One reason CAL is so large is because it's better funded.
Regards, Dick

 

[ychuck46]

Why is anyone surprised by these large amounts of assets of some of the largest Pension systems in the country? My wife is a NYC retiree and although I don’t know the assets of NYCers

At the end of June 2024 the NYS Retirement System had $145B in assets. My wife is also collecting in that system.

 

[zippy2020]

As longtime union/CalPERS members, a couple of clarifications:

1) Unlike most states, participation in CalPERS is voluntary. All public agencies are eligible to join, but many do not. San Francisco City/County, for example, self-funds; they are not and never have been, CalPERS members.

2) Retirement benefits and healthcare benefits are separate under CalPERS. IOW, a public agency may decide to self-fund retirement but participate in CalPERS healthcare.

3) At least 3x in the past 30 years the CA State Legislature has [legally, unfortunately] "raided" the CalPERS fund to balance the state budget. It justifies doing so, in their eyes, any time the CalPERS fund goes above 100% - rather than leaving the excess to make up for the years when ROI is below expectations.

4) EVERY agency has its own different formulas and eligibility criteria for retirement benefits. The formula my Spouse retired under, was different than his BART police friend or even his manager.

5) It is up to the INDIVIDUAL agency to fund retirement health benefits, IF they have signed a union agreement to provide them (most do not). The majority who have promised, are like most public pension funds: they push it off and only fund current claims. We were surprised, actually, when during one contract year, Spouse's union got management to agree to assessing workers and management a monthly fee to set up a separate funding for retirement healthcare. The fee has gone up over the years, but thanks to starting it several decades prior, it remains a reasonable charge spread across all employees, whether current or retired, who signed up for the retirement healthcare option.

CalPERS pensions are not as big (on average) as most people think they are. This is because many people are not agency "lifers", i.e.; they have worked in private industry or at other agencies in different states, before joining a public agency that participates in CalPERS. They will retire usually with 10-15 yrs of a CalPERS pension. Assuming the usual average of 2% per year of service, the pension would be 20%-30% of salary, as determined by the agency's union contract. It might be based on the last three or five years, or based on the highest salary in any three years, or any other contractual limitation.

Below are the official pension averages. You notice they make the same mistake most make; they lump CalPERS and CalSTRS together. School districts can join CalPERS; but well over 90% of them do not.

The reason is simple: CalPERS charges a higher premium to administer an agency or district. CalSTRS is cheaper, which is also why it is in more financial difficulty:

"The average CalPERS pension benefit for all service retirees is $42,516 annually, or roughly $3,500 per month. This is a general average, and individual benefits vary based on factors like years of service, salary history, and retirement plan chosen. For example, state retirees (CalPERS) average $4,133 monthly, while school retirees (CalSTRS) receive $2,038 monthly on average. "

Note that CalSTRS has more serious underfunding than CalPERS. That has been true as long as my Spouse was working, and he retired 15 yrs ago with 42 yrs of service.

 

[zippy2020]

Re CalPERS: a more detailed read for financial wonks:

CalPERS Investment Fund Values: latest quarterly report

 

[MrMikeCT]

In 2023, we were in London and flew out of Gatwick to return home. I noticed a plaque on one of the walls and it was to recognize CALPES as a major investor in the airport. I thought it was quite interesting at the time.

 

[sparky08]

I just watched a YT video saying that public pensions are heavily invested in office park real estate.

People are worried that leases are up in the next few years and many are partially filled, even with Return-to-Work.

I wonder if that is causing some sleepless nights?

 

[dickoncapecod]

I just watched a YT video saying that public pensions are heavily invested in office park real estate.

People are worried that leases are up in the next few years and many are partially filled, even with Return-to-Work.

I wonder if that is causing some sleepless nights?

Not just "people" but investment managers. The difference I'd that managers can examine leases, perform serious population/workfirce analytics and determine if the NOW ALREADY discounted investment vehicles funded by such leases are worthwhile. Investors don't just worry about asset quality, they PRICE it.