Over the last 30 years, it’s been 8.1 percent – and, remember, that 30-year period includes the disastrous financial meltdown of 2008, during which the S&P 500 fell by 44 percent over two years.įor critics to try to sound an alarm about the stability of pension funds based on one or two months of data is not just foolish, it’s irresponsible. Over the last 10 years, CalPERS’ annual returns have averaged 9.1 percent. Unlike personal accounts in which short-term timing is everything, what matters for pension funds is the long term. ![]() But the expectation that investments will experience times of negative returns is inherently built into fund planning. Especially given the uncertainty about the ultimate course of this pandemic and its effect on the economy, it is far too soon to tell how deep and long-lasting the effects on markets will be. It is true that public-employee pension funds, including CalPERS and CalSTRS in California, have seen the point-in-time value of their investments decline. Instead, what we’ve seen so far is a new round of alarmist attacks on public sector pensions. ![]() In the wake of this latest market spiral, one might expect to see renewed public discourse about our national failing to address retirement security. Regrettably, fewer than 5 percent of private-sector workers today are able to participate in a pension fund. Those who receive benefits during boom times receive no bonus. Those who receive pension benefits during down times receive no less income. They are built to withstand the extremes of economic cycles. They’re called pensions – collective retirement savings systems into which workers of all ages and their employers contribute and which have professionally managed, diversified investments. But under a retirement-security system that relies upon individual accounts – 401(k)s – many of those whose retirement coincides with a down cycle will not be around long enough for their savings to fully recover. History tells us that the markets will recover and that cycles of ups and downs are inevitable. For them, the steep drop in the investment markets caused by the coronavirus pandemic came at just the wrong moment. Our decision to sell will ultimately help Sacramento achieve its downtown goals, provide a lasting benefit to the region, and respect CalPERS’ responsibility to public employees.For most Americans these days, timing is everything when it comes to retirement.Īt the moment, it looks like those who recently retired or who are on the cusp of retirement may have picked a bad time to be born. The real estate market has changed because of COVID-19, an increase in telework, and new economic realities. Unfortunately, despite this investment of time, expertise, and resources, it became clear the best solution was selling the property to a developer who didn’t have to meet our fiduciary requirements. Our whole organization wanted it to succeed, because Sacramento is our home and where CalPERS is headquartered. I was proud to meet with The Sacramento Bee to promote this vision as we worked to identify an anchor tenant. ![]() We were fully invested in the transformation of the capital city and its downtown core. The Bee column regarding CalPERS’ decision to sell its 301 Capitol Mall property is misinformed and misguided. The author wants the site to be developed yet criticizes a decision that will achieve that goal.įor more than a decade, CalPERS and two prominent commercial real estate development companies worked to create a project to benefit Sacramento and meet CalPERS’ financial duty to maximize investment returns that deliver retirement security to two million members. CalPERS Responds to Sacramento Bee Editorial Over Sale of Capital Mall PropertyĬalPERS CEO Marcie Frost sent the following letter to the Sacramento Bee editor:
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