California Pension System Downgrades Earnings Target

SACRAMENTO, Calif. (AP) – California’s largest pension system is downgrading its expectations for investment earnings, meaning government agencies will likely have to contribute more tax dollars to retirement benefits for public employees. Wednesday’s decision by the California Public Employees’ Retirement System board is a reaction to long-term financial pressures and lower projected returns on global investments over the next decade. Over three years, CalPERS will lower its assumed earnings rate from 7.5 percent to 7 percent. Money it doesn’t expect to earn from investments will have to come from other sources, such as government agencies and their workers. CalPERS pays more each month in retirement benefits than it takes in from taxpayers, workers and investment earnings. It has about $300 billion in assets, enough to cover only about 68 percent of promised benefits.

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