Our economy is experiencing extraordinary conditions that are affecting all investors and markets. The impact is global in scope. While we know that these conditions can be unnerving, here are some important points to keep in mind:
We’re meeting our obligations today, and will meet them tomorrow.
We continue to issue benefit checks of $10 billion dollars a year to over 400,000 retirees without interruption. We have never missed a benefit payment, and we recently received the highest rating by Standard & Poor’s for our ability to meet our obligations. It is important to remember that your retirement benefits are protected by law.
The impact to CalPERS has been largely a fluctuation of market value of assets.
The impact of the markets on CalPERS has in large part been a fluctuation of the market value of our assets. This is expected to continue until the private sector credit markets become unfrozen. Meanwhile, we’re staying on course with short-term tactics and long-term strategies. In real estate, we began taking actions in 2007 to calculate realistic value, analyze the capital structure, restructure debt, and reduce leverage. In private equity, we sold off a portfolio of funds at the peak of the market. We are seeking good buying opportunities for when the time is right. And our new asset inflation-linked asset class (commodities, infrastructure, forestland, inflation-linked bonds) further diversifies our portfolio. The market value of our investment portfolio has varied, but we are a buy-and-hold, long-term investor.
CalPERS has a proven capability and track record. We are resilient.
We began in the depth of the Great Depression. Our record for the past 25 years includes 20 positive years with an average return of 15 percent versus four down years with an average return of -5 percent. We are diversified, disciplined and focused on minimizing employer contributions. We weathered other market storms of 1987, the savings and loan crisis of 1989, the dotcom bust of the late 1990s, and the 2000-2002 recession. We also have the right people and the right tools, augmented by top external money managers and independent investment consultants.
No one can predict when a market recovery could occur, but going forward, we are going to use our full range of resources and talents to protect your financial interests today and into the future.
View Frequently Asked Questions
View More Information on How Pension Funds Cope with Market Crises (PDF, 40 KB)