At CalPERS, our mission is to deliver retirement benefits to our members, ensuring that the pensions they’ve earned are protected today and throughout their lifetimes. We are committed to fulfilling this promise for generations to come by maintaining a strong and sustainable pension fund.
One way we assess the health of our pension fund — the primary source for paying our members’ pensions — is through a measure called “funded status.” This metric reflects how well-positioned we are to meet our obligations to provide retirement benefits, both now and for future generations.
Defining Funded Status and Why It Matters
Simply put, funded status is the ratio of a pension fund’s assets measured against its liabilities.
At CalPERS, funded status compares the money we’ve set aside and invested to grow the Public Employees’ Retirement Fund (PERF) — which supports paying our members’ retirement benefits — against the benefits we owe to current and future retirees.
Funded status is influenced by many factors, but the key drivers typically include:
- Investment returns
- Employer and employee contributions
- Assumptions we make about future costs
- Benchmarks we set to hold ourselves accountable
Ideally, a pension fund would be 100% funded, meaning it has enough assets to fully cover all its obligations. However, this is rarely the case for public pension funds, including ours.
How CalPERS Compares to Its Peers
According to the National Association of State Retirement Administrators, the Center for Retirement Research at Boston College (PDF), and other organizations that track public pension health nationwide, U.S. public pension systems are, on average, funded at around 75% to 80%.
It’s important to remember that fluctuations in funded status are normal for public pension funds over time. These changes are often driven by factors such as economic conditions, global events, and government policies — many of which are beyond the control of any individual pension system.
CalPERS is no exception to this. However, we focus on maximizing the factors within our control and strive to achieve outstanding results that move us closer to our goals.
Maintaining a high funded status is essential to fulfilling our fiduciary duty to provide benefits to California’s public servants. It serves as our guiding principle, steering everything we do.
CalPERS’ Funded Status: Where We Stand Today
At the close of fiscal year 2024-25 on June 30, our funded status stood at 79% following a strong yearly investment return of 11.6%.
That compares with 74% last fiscal year, and just above 71% the year before that. After spending an extended period between 60% and 70% following the 2008 Global Financial Crisis, we’re now seeing meaningful progress toward reaching the next milestone.
What This Means in Real Terms
CalPERS’ funded status of an estimated 79% means the system currently has 79% of the assets needed today to meet the long-term pension obligations promised to our members. Importantly, this does not indicate that benefits are at risk or that the system is facing financial trouble.
Pension systems like CalPERS are designed to operate over decades, gradually paying benefits to members throughout their retirement lifespans — not all at once.
In reality, we will never face a situation where all obligations are due at the same time. Additionally, the fund is continuously replenished through steady contributions from employers and employees, as well as growth from our investment portfolio.
Members Are at the Forefront of Our Plans
The recent improvement to our funded status reflects the collective efforts of multiple CalPERS teams, including the professionals in our Investment Office and Actuarial Office, who are dedicated to strengthening the pension fund. Our executive leadership has also prioritized funded status, ensuring that personnel decisions and strategies align with our commitment to steady growth.
Is a funded status of just under 80% ideal? Not yet. But it does signal meaningful headway and a realistic path toward achieving 100%. Our track record aligns with our long-term vision and strategy, which we continually refine to meet the goal of full funding — ensuring that our members and their beneficiaries receive the security they deserve.