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California teachers' pension fund posts double-digit returns

February 08, 2013|By Marc Lifsher
  • The headquarters of the California State Teachers' Retirement System in West Sacramento.
The headquarters of the California State Teachers' Retirement System… (CalSTRS )

SACRAMENTO -- The California State Teachers’ Retirement System, the second-biggest public pension fund in the nation, reported a return on investments of 13.5% for the just-ended calendar year.

The $158-billion fund, known as CalSTRS, said it missed an overall target of 15.4% in asset growth. But it posted strong results of 16% for U.S. stocks, 17.2% for international equities, 14.6% for private equity, 6.1% for bonds and 13.5% for real estate.

CalSTRS' returns were in line with last month's report of 13.3% growth during 2012 at its larger sibling, the California Public Employees' Retirement System. CalPERS' investments are worth about $251 billion.

Both funds are struggling to recoup severe losses from the 2007-09 recession and face billions of dollars in unfunded retirement benefit liabilities despite the recent uptick in portfolio values.

CalPERS recently reported that it needs to boost annual contributions paid by its more than 3,000 member government agencies by $200 million to $4 billion beginning in July.

CalPERS last year faced an unfunded liability of $38.5 billion in the amount needed to meet current and future pension obligations over the next three decades. That financial gap, though, is starting to be whittled down after the state Legislature passed a law overhauling state pension funds last year and the market for stocks, bonds and real estate improved.

CalSTRS faces similar challenges. A study released last week said the pension fund needs $4.5 billion a year in new additional contributions to be fully funded over the next 30 years.

But to get that money or any portion of it, CalSTRS must ask the Legislature, a dicey request during a period of fiscal prudence in state government.

CalPERS, however, can raise its member agency contributions without first getting permission from the Legislature.

ALSO:

Teachers' pension fund votes to sell holdings in firearms

CalSTRS lobbies for gradual increase to underfunded pension

CalPERS nears a record $260 billion in assets

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