CalPERS Dismal 1% Return Could Prompt Pension System Overhaul

Photo of Trey Thoelcke
By Trey Thoelcke Published
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Monday, the California Public Employees’ Retirement System (CalPERS) reported a 1% return on investments for the 12 months that ended June 30. Its assets totaled more than $233 billion at the end of the fiscal year.

The Sacramento Bee suggested that these results would likely catch the state legislature’s attention. “Gov. Jerry Brown and Republican lawmakers have been pushing to overhaul the public pension system to reduce costs.” The governor’s office has vowed to push some reforms through the legislature this year.

CalPERS attributed the small gain to improved performance of CalPERS real estate investments, particularly those in income-generating properties like office, industrial and retail assets, where the return was more than 15%.

However, investments in equities dragged down overall results. Joe Dear, the CalPERS chief investment officer, said: “The last twelve months were a challenging period for all investors as the ongoing European debt crisis and slowing global economic growth increased market volatility and reduced equity returns.”

CalPERS 1% return fell short of its benchmark that returned 1.7%, and it is below the fund’s discount rate of 7.5%. The fund’s board lowered that rate in March from 7.75% on concerns about the potential financial strain that it would impose on cash-strapped state agencies and local governments.

Photo of Trey Thoelcke
About the Author Trey Thoelcke →

Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.

Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community. He previously oversaw the 24/7 Climate Insights site, managing editorial operations and content strategy, and currently oversees and creates content for My Investing News.

Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.

Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, overseeing a long-running critique group and moderating workshop sessions at regional conventions. He lives with his family in an old house in the Midwest.

Continue Reading

Top Gaining Stocks

CBOE Vol: 1,568,143
PSKY Vol: 12,285,993
STX Vol: 7,378,346
ORCL Vol: 26,317,675
DDOG Vol: 6,247,779

Top Losing Stocks

LKQ
LKQ Vol: 4,367,433
CLX Vol: 13,260,523
SYK Vol: 4,519,455
MHK Vol: 1,859,865
AMGN Vol: 3,818,618