California pension fund beats earnings target for first time in three years

California’s main public pension fund beat its official investment forecast over the past 12 months, ending a two-year stretch of disappointing earnings.

The California Public Employees’ Retirement System rode a strong year in the stock market and private equity investments to earn a return rate of 11.2 percent for the fiscal year that ended June 30, the pension fund announced Friday morning.

That’s about double what CalPERS had expected to earn this year.

It’s also a marked improvement over the previous year, when CalPERS’ investment return rate was .61 percent. In the budget year that ended in June 2015, CalPERS’ investment return rate was 2.4 percent.

This year’s high returns were celebrated by lawmakers and labor groups who have been pressured to answer for CalPERS’ steep unfunded liability.

CalPERS, which manages about $323 billion in assets, now has about 68 percent of the funds it would need if it had to pay all of the benefits it owes to retirees and public workers.

“Stronger than anticipated returns from CalPERS show that smart investing and strong oversight are a successful approach. While the system is not fully funded, these returns will have a positive impact over the long-term status of the system,” said Assemblyman Freddie Rodriguez, D-Chino, chairman of a committee that oversees CalPERS.

His counterpart in the Senate, Democrat Richard Pan of Sacramento, said he was “certainly happy to see the return for this year, but it’s not a year-to-year thing.”

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