State Employee Pensions to Cost California $3.7 Billion
California will pay about $3.7 billion for state employees’ pension in its next fiscal year, more than it now pays but less than the state set aside for retirement-related expenses in the prior fiscal year, the state’s pension fund said on Wednesday.
The California Public Employees’ Retirement System, best known as Calpers, is receiving $3.5 billion from the state government, down from $3.9 billion in the prior fiscal year.
The anticipated $213 million increase in the state’s contribution for the next fiscal year reflects a change in the pension fund’s economic assumptions and a decision by its board in March to lower the fund’s assumed rate of return to 7.5 percent from 7.75 percent.
As the assumed rate of return drops, state agencies and local government employers using Calpers must pay more to the fund to manage retirement benefits for their employees.