Dan Walters: California’s big pension fund sees better return, but not out of the woods

The California Public Employees Retirement System has been hammered by poor investment earnings in recent years, but got some good news last month.

CalPERS reported an 11.2 percent gain on its investment portfolio in the fiscal year that ended June 30, following a couple of years of near-zero earnings that sharply boosted its pension debt, known as “unfunded liability.”

So does that mean that CalPERS and the nearly two million retirees and current state and local government employees that look to the nation’s largest pension trust fund for their post-employment income have pulled back from the abyss of insolvency?

Only by inches.

CalPERS still has scarcely two-thirds of the money it needs to meet its pension obligations – even assuming a 7 percent annual earnings target that many independent authorities and even its own staff believe is unattainable.

“We welcome this fiscal year’s strong returns, but we also remain about 68 percent funded and vulnerable to a downturn in stock markets,” CalPERS’ chief executive, Marcie Frost, warned in a statement.

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