CalPERS Funding Woes: Don't Blame the Stock Market

Posted: 29 Apr 2013

Date Written: April 29, 2013


Public-sector pension plans administered by CalPERS face scrutiny because of large unfunded liabilities. The current underfunding is usually blamed on investment losses that occurred during the recent economic downturn. This paper finds that the true culprit is inaccurate actuarial forecasting, not investment performance. The paper looks specifically at the history of the City of Sunnyvale's pension plans over the past seventeen years. It finds that the normal rate of contribution was too small to keep up with the growth in liabilities, even under the assumption that investments earn their anticipated return.

Keywords: CalPERS, pension, normal cost, unfunded liability, underfunding

JEL Classification: H55, H70, H72, H74, G18, E62

Suggested Citation

Sabin, Michael J., CalPERS Funding Woes: Don't Blame the Stock Market (April 29, 2013). Available at SSRN: or

Michael J. Sabin (Contact Author)

Independent ( email )

Sunnyvale, CA 94087

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