CalPERS Disability Retirement Attorney Blog

CalPERS Pension Fund Takes Big Hit During COVID-19

The California Public Employees Retirement System – “CalPERS” – is the nation’s largest pension trust. It was doing great early in 2020 due to the run-up in stocks and investments during the last few years. In January CalPERS funds topped $400 billion.

In fact, it looked like CalPERS was finally going to bounce back from its $100 billion decline in its investment portfolio value after the “Great Recession” of the previous decade.  But COVID-19 has changed all that – just as it has impacted so many aspects of the economy.

Just when CalPERS was digging its way out of its financial hole, the coronavirus hit –  pushing the U.S. and global economies into a tailspin. The stock market is CalPERS’ biggest investment sector. And, almost overnight, the CalPERS fund’s value dropped a whopping  $69 billion hit as the stock market tanked.

The stock market is slowly recovering, but unfortunately the CalPERS fund is still down about $13 billion from its highest point earlier in the year before the  pandemic struck.

CalPERS Controversial Move to Borrow Funds

CalPERS desperately needs to remedy this rapid plunge in value. But many experts believe that its escape plan of borrowing billions of dollars — as much as $80 billion — is fraught with danger.

Cal PERS chief investment officer, Ben Meng, wrote in the Wall Street Journal that “Leverage allows CalPERS to take advantage of low interest rates by borrowing and using those funds to acquire assets with potentially higher returns.”

But others are afraid that this plan could go seriously wrong. The VC Star is a chief opponent of CalPERS plan to go up to its eyeballs in debt.  In an op-ed, they claim that “The new [borrowing] scheme is an implicit admission that CalPERS can’t meet its 7% mark without increasing its exposure to the vagaries of the market. “

CalPERS, like other public pension systems, typically use higher earnings projections – because they need them to pay for expensive pension responsibilities. And, historically, when they fall short they turn to employers — i.e. taxpayers — to close the gap. But the tax option is now completely maxed out.

So, CalPERS is turning to what many believe is a high-risk “borrow-and-invest” approach.

The CalPERS Deficit Solution

Many experts are calling for the California Legislature to step in. They contend that California government’s “hands-off” policy toward CalPERS needs to be set aside – so that a comprehensive and independent examination can be conducted.

In this way, the CalPERS system’s assets, liabilities and long-term ability to meet its pension obligations to members can be evaluated – and hopefully safeguarded.

If you are a Teacher, Police Officer, Firefighter, Corrections Officer, Administrator or other Public Employee in the CalPERS system, and you have worked tirelessly for years to secure the retirement, disability retirement and other CalPERS benefits that you deserve. CalPERS funds need to be monitored and protected at all costs to ensure that you, and California Public Employees for generations to come, receive their hard-earned retirement benefits.

CalPERS Retirement Disability Attorneys

Our Long Beach attorneys will diligently follow the progress of the CalPERS fund deficit situation. And the attorneys at Cantrell Green will always be a voice for injured workers in California, whenever and wherever necessary.

If you are injured on the job close to the time you intend to retire, we would also be happy to help you determine your eligibility for disability retirement under the CalPERs system.

CalPERs Attorney Consultation: 562-622-4800

This article applies to members of  California Public Employees’ Retirement System (CalPERS); and does not reflect the rules, laws or regulations governing how other public retirement systems are administered. If you have question about another public employee retirement system, find your system, below – or call our attorneys at: 562-622-4800