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CalPERS rings warning bell for $3.6 trillion of pensions

If all of these funds were to reduce their return assumptions by a mere half percentage point, as CalPERS is doing, it would likely require employees to offset the difference by billions of dollars a year.

By Lisa Abramowicz | Updated on December 30, 2016
Ringing the warning bell for pensions, CalPERS' exec recommends that it lower its annual assumed rate of return to 7%. (Photo:AP)

(Bloomberg Gadfly) — It’s increasingly clear that pensions can’t rely on investment returns to pad their coffers the way they used to.

The biggest U.S. pension fund appears to recognize this. The chief investment officer of the $303 billion California Public Employees’ Retirement System just recommended that it lower its annual assumed rate of return to 7 percent from 7.5 percent, which will require workers to contribute more money to the plan.

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