Every four years, we conduct a strategic planning process called the Asset Liability Management (ALM) cycle. This process evaluates various factors, such as how long members work and collect retirement benefits. It also involves analyzing potential investment strategies, carefully assessing their risks and long-term potential returns.
The ALM cycle is a cornerstone of CalPERS’ long-term planning, designed to ensure you receive your lifetime retirement benefits. It helps us balance the expected cost of future pension payments with anticipated investment returns.
This year’s review brought several updates to demographic assumptions, reflecting changes in retiree behavior and workforce trends from 2000 to 2023.
The CalPERS Board of Administration will consider adopting our investment strategies and actuarial assumptions at its November 17-19 board meetings.
If Adopted, How Will I Be Impacted?
If the board adopts the proposed actuarial assumption changes at the November board meeting, they will take effect after the meeting concludes — on November 20.
- Retirement Benefit Amounts: The good news is most members will not be impacted. However, if your employer’s contract includes a 3%, 4%, or 5% cost-of-living adjustment (COLA), and you choose a payment option at retirement that provides a benefit for a spouse or beneficiary, and you retire on or after November 20, you may see a slightly decreased retirement benefit amount. Members who select the unmodified benefit allowance will not experience any changes to their benefit payment amounts if they are retiring on or after November 20.
- Service Credit Purchases: The cost of purchasing certain types of service credit may increase for some members due to the updated actuarial assumptions.
If Adopted, How Will PEPRA Members Be Impacted?
If the CalPERS board adopts these changes at the November board meeting, some active Public Employees’ Pension Reform Act (PEPRA) member rates will change beginning with their July 2027 paycheck.
- More than 60% of public agency safety members will see an increase to their PEPRA member rates, while a handful will see a decrease. Most public agency miscellaneous plans will not see an increase to their PEPRA member rate.
- No changes are expected to state or school PEPRA member rates, except for the state peace officer and firefighter members under the 2.7% at 57 benefit formula.
PEPRA law states that PEPRA members must pay half of the projected cost of their pension in the future, known as the plan’s total normal cost rate. The total normal cost rate is determined by looking at the annual cost of providing benefits to active PEPRA members for the upcoming fiscal year. Decreases or increases to the PEPRA member contribution rate occur if the current total normal cost rate changes more than 1% from the base total normal cost rate (the rate used to set the current PEPRA member contribution rate).
For public agency members, you can always find your PEPRA member contribution rates on our webpage. You can watch this webpage for updates when the new 2027-28 fiscal year employee rates become available.
Looking Ahead
By the end of 2025, the board must provide clear guidance to our investment team, ensuring we’re prepared to meet the challenges ahead. By proactively addressing these complex issues, we’re building a framework that prioritizes financial security for members like you, sustainability for employers, and trust in the system.
We’ll provide you with another update in December about the board decisions.