CalPERS lost around 2% of its funds in 2015/16. The fund assumes a bonkers 7.5% return.
Stanford Professor Joe Nation thinks unfunded liabilities have surged $150bn from $93bn in two years. Nation believes that at a more realistic 4% rate of return CalPERS has an unfunded liability of $412bn (or the equivalent of 3 years worth of budgets). California collects $138bn in taxes annually in a $2.3 trillion economy (around the size of Italy). All liabilities aren’t due at once but the scale is frightening – solved by higher taxes or lower pension payouts both which will piss off the public. It is unlikely to come through market outperformance.
Close your eyes.Yet more evidence the elections in November are more about addressing haves and have nots rather than political parties