The number of CalPERS employers with fully funded plans has increased tenfold over the past 10 years and is expected to keep rising.
Of the more than 2,100 CalPERS employer plans, as of June 30, 2026:
- 293 CalPERS plans have an estimated funded status more than 100%, up from 28 plans 10 years ago.
- 539 CalPERS plans are 90% to 100% funded, compared with just 13 plans 10 years ago.
- Another 932 plans are funded at 80% to 90%, up from 123 plans over that same period.
A fully funded CalPERS employer generally means the employer’s pension plan has enough assets set aside to cover all benefits already earned by employees.
“We have reached a tipping point… where many of our employers will now see decreases to their annual contributions over the next several years,” CEO Marcie Frost said at the September CalPERS Board of Administration meeting.
She noted that employer contributions are projected to decline from $27 billion annually to roughly $22 billion by fiscal year 2032-33 — the result of solid investment gains, a shift in the workforce composition to more Public Employees’ Pension Reform Act (PEPRA) members, and increased employer contributions since CalPERS lowered its discount rate (or assumed rate of return) shortly after Frost arrived in 2016.
“These are real gains based on solid assumptions about how the market will perform over time, and how much employers and workers need to contribute to their pension fund,” Frost said.
Maintaining the Discount Rate
CalPERS has maintained the 6.8% discount rate for five years after reducing it from 7.5%.
The discount rate is a prediction of what the CalPERS fund will earn on its investments over the long term. The figure plays a significant role in determining how much employers and PEPRA members pay into the system. Generally, the lower the expected investment return, the more they must pay.
The fund has also seen strong investment gains over the last three years, which have exceeded the discount rate. CalPERS’ most recent 14.8% preliminary return for fiscal year 2025-26 is the best performance in five years, marking the fourth consecutive year of continued improvement in its returns.
Despite CalPERS’ success in beating the discount rate in recent years, holding it at 6.8% remains a sound strategy for the long-term, given that the 20-year return is exactly 6.8%, Frost said.
“Over time, this is what we think the fund can sustain, regardless of the ups and downs of any particular year,” she said.