[{"_1":2,"_88":-5,"_89":-5},"loaderData",{"_3":4,"_26":27},"root",{"_5":6,"_17":10,"_18":19,"_20":21,"_22":10,"_23":-5,"_24":-5,"_25":10},"user",{"_7":8,"_9":10,"_11":10,"_12":-5,"_13":-5,"_14":15,"_16":-5},"roles",[],"isAuthenticated",false,"isPremium","planName","subscriptionStatus","featureFlags",{},"insightsBudget","isDevelopmentHost","userPreferences",{},"recaptchaSiteKey","6LcvOJcUAAAAAHsB-gPGfGktcRlKpH7OTIU_dMTD","isImpersonating","impersonation","affiliateStatus","isFreedomPortal","routes/v2/article/layout",{"_28":29,"_30":31},"notFound",true,"relatedArticles",[32,76],{"_33":34,"_35":36,"_37":38,"_39":40,"_41":42,"_43":44,"_45":46,"_47":48,"_49":50,"_51":52,"_53":54,"_55":56,"_57":58,"_59":60,"_61":62,"_63":64,"_65":66,"_67":68,"_69":70,"_71":72,"_73":74,"_75":74},"mediaId",6161961,"mediaKeyId","5440364-11b05da928e01cca1f0fee26c9f9bb81","parentId",5440364,"title","CalPERS proposes 'total portfolio' approach in ALM; board to set reference portfolio and active risk limits","audioSeconds",1682,"startMs",106000,"endMs",1788000,"viewUrl","/Search/View?dp=1&key=5440364-11b05da928e01cca1f0fee26c9f9bb81&start=106&end=1788","thumbnailUrl","https://assets.pipeline.soar.com/5440364-11b05da928e01cca1f0fee26c9f9bb81/thumbnail_106000.jpg","articleUrl","/articles/6161961/California/CalPERS-proposes-total-portfolio-approach-in-ALM-board-to-set-reference-portfolio-and-active-risk-limits","mediaUrl","https://secure.pipeline.soar.com/6161961-26e6bb81c3ae1550960ca3afa494418c/orig.mp4?Expires=1775309057&Signature=UVWB6aNucnARuxYK20grdOFVTYyJX5hITjLK8LCgVkwX3JyGbyVtexD-VO3-ZXuD4QEsiQFHiHnFCuyASN9zSYzs3NJtS7sA3sMfAQ17y-yi2nf138Z6v7JQaM34e3Swe6TZxjXgKHTO7HlEH8F9VFpFkFBypqB-GCQQng5OYNkhN8unLuhGox2J4kL55o6eiIyUW9tFnPIZNKztUrb9M~CJNnMKBxR9PHsYsXUynGgJf3u3aQyROKhBaE1H0vDv9F86-dnuEzRtqFj9RukvC8BC-a-KZGRYArMCBsDtRqA1xMc07uTOgpYWh05ud0pKIDcSHERIVTWGWOEHhzNmhw__&Key-Pair-Id=KUT5TJCACFTXG","author","California Public Employees Retirement System","date","2025-07-22T18:27:01Z","article","CalPERS executives outlined a planned change in the system's asset-liability management (ALM) process on a stakeholder webinar, saying they will propose replacing the current strategic asset-allocation framing with a \"total portfolio\" approach that centers a public-markets reference portfolio and an explicit active-risk limit.

The total portfolio approach would set a passive reference portfolio (for example, a 70/30 equities-to-bonds mix) as the baseline and report all deviations from that passive baseline as the investment office's active risk. Michael Cohen, CalPERS chief operating investment officer, told attendees the change is primarily a terminology and reporting shift that repackages discretion the board already gives staff into a single framework the board can use to hold the investment office accountable.

CalPERS said the shift is intended to make portfolio risk and where the fund is taking bets more transparent. Under the proposed framework, the board would approve a reference portfolio and then set an active-risk limit — Cohen said staff anticipates recommending a range of about 250 to 350 basis points (2.5'3.5 percent) of deviation from the reference portfolio as a starting point for board deliberation. If approved, the total portfolio approach would show every decision that departs from the passive benchmark as active risk, including private markets allocations that today are reported by asset class.

Cohen said the change is not a request for new discretion from the board but a reorganization of how existing discretion is measured and reported. \"All we're doing is converting discretion that the board has already given us and rearranging it into a slightly different terminology,\" he said. \"We think because of the rearrangement, we're going to be much better able to actually utilize it and encourage our team to take risks where we're going to get paid off.\" (Michael Cohen, Chief Operating Investment Officer)

Cohen also described the reference portfolio's projected long-term return (about 6.2 percent on the slide shown at the webinar) and staff's view that adding value from private markets and other active decisions could raise expected long-term returns to roughly the fund's discount rate of 6.8 percent. He said that, at present, CalPERS sees no momentum to change the discount rate from 6.8 percent. \"I do not expect nor have I seen any evidence, to date that would suggest that the discount rate's gonna change,\" Cohen said when asked during the webinar.

Speakers emphasized reporting changes that would accompany a TPA shift. Annual reports to the board would move from separate asset-class reviews to strategy-based reporting that ties together how sub-strategies across asset classes deviate from the reference portfolio. CalPERS said existing standards for reporting net returns (GIPS) and audit information will remain unchanged.

Timeline and next steps: CalPERS staff said the investment committee and the finance and administration committee will receive first readings of the ALM recommendation in September; the board is expected to consider second readings and possible action in November. Staff also invited stakeholders to a returns webinar in September and an ALM webinar in December to review board decisions and impacts.

Participant questions at the webinar probed how private-market investments can be treated as \"same risk\" as public markets and whether greater non-public disclosure of certain strategy components would reduce transparency. Cohen said staff will continue to provide the same public-level asset-class mix and that some components of individual strategies may not be disclosed if disclosure would harm investment returns. \"You'll still have the same level of disclosure in terms of where the funds are,\" he said.

Why it matters: CalPERS manages retirement benefits for public employees and their employers across California. Staff said the shift aims to make it easier to evaluate whether the investment office is adding value compared with a simple passive benchmark and to show more clearly where the fund is taking risk. That, in turn, is intended to improve accountability to the board and ultimately help the fund hit its long-term return objectives and reduce employer costs as unfunded liabilities decline.

Ending: CalPERS invited public comment for both the September committee sessions and the November board meeting. Stakeholders were directed to the ALM web page and the stakeholder relations mailbox for documents and follow-up questions.","mediaType","Video","parentTitle","Asset Liability Management Webinar | July 18, 2025","oneSentenceSummary","CalPERS executives outlined a planned change in the system's asset-liability management process, proposing a \"total portfolio\" approach that would measure all deviations from a public-markets reference portfolio as the fund's active risk.","taxTitle","California Public Employees Retirement System, Agencies under Office of the Governor, Executive, California","taxId",70079,"location","California","headline","","shortSummary",{"_33":77,"_35":36,"_37":38,"_39":78,"_41":79,"_43":80,"_45":81,"_47":82,"_49":83,"_51":84,"_53":85,"_55":56,"_57":58,"_59":86,"_61":62,"_63":64,"_65":87,"_67":68,"_69":70,"_71":72,"_73":74,"_75":74},6161956,"CalPERS actuarial office reports modest assumption changes; 11.6% return's valuation impact will surface in 2026 results",1229,1254000,2483000,"/Search/View?dp=1&key=5440364-11b05da928e01cca1f0fee26c9f9bb81&start=1254&end=2483","https://assets.pipeline.soar.com/5440364-11b05da928e01cca1f0fee26c9f9bb81/thumbnail_1254000.jpg","/articles/6161956/California/CalPERS-actuarial-office-reports-modest-assumption-changes-116-returns-valuation-impact-will-surface-in-2026-results","https://secure.pipeline.soar.com/6161956-3503aea5e3df88b70958a1d32fbf10b0/orig.mp4?Expires=1775309058&Signature=SyA4aZHENO~jMF7jjrOc5TAxRZ5ayDin~f4-a9MaTa7RifrbmLhkwL-VVk2UaGIWrljsuwtoBBP0XPjV6FJsG4uLcNIt1UvpeVAuc6hs6096ajjyiEd9lL1pIpJhX5tsRyKQWyWwZsEfToUWoz387KDWGxnImU9jySNg2sh1T1GOjtj1Y-SFJ5WdWTsNUjkXspE6uy7C4zNKlydjgC6WxfC2c~~2wJ-oUu7Q5HwU6tXCo4oTLQjYLaRKE53F1badp-~SrXg9eDd~Lq2m3N9cY8~yoEpjc7l--ErdHZmz~X45BfKjbrb3yQ9UXA6IYkyT-RtKncFciBgekCCTTBD0yw__&Key-Pair-Id=KUT5TJCACFTXG","CalPERS's actuarial office presented the system's experience study and the expected timing of valuation updates on the webinar, saying proposed assumption changes would have modest overall impacts on funded status and employer contribution rates.

Scott Turando, CalPERS chief actuary, said the experience study separates economic assumptions (discount rate, inflation, investment return) from non-economic assumptions (retirement timing, termination rates, mortality). Economic assumptions generally have the larger effect on liabilities and employer contribution rates, Turando said, and the actuarial office is proposing revisions it will present to the board for review in September.

Turando described the likely magnitude of the changes: for most miscellaneous plans, normal-cost impacts are \"definitely less than a half a percent or so;\" for safety plans the median impact on normal cost is closer to about 1 percentage point. For the system's funded status, he said proposed assumption changes are expected to change the funded ratio by generally less than half a percent on aggregate. \"We're seeing impacts generally for the whole system of less than a half percent on the funded status,\" Turando said.

Turando said CalPERS had sent the proposed assumptions to a third-party actuarial firm for peer review and that staff is finalizing the estimated quantitative impacts alongside the 2024 valuation work. He cautioned that the 11.6 percent investment return announced earlier in the week is a measurement as of June 30, 2025, and will not be reflected in member agencies' 2024 valuations until the 2025 valuation cycle is processed and published in 2026. \"Those actual numbers and updates, it won't be reflected in your valuation until the '25 valuation, which comes out in '26,\" Turando said.

Turando recommended stakeholders use CalPERS' Pension Outlook tool for quick, early estimates, but noted that Pension Outlook will be updated only after staff processes and releases the formal valuation results (typically in August or September). The actuarial office also plans to present more detailed results to the finance and administration committee in the September meetings as a first reading.

Why it matters: Changes to actuarial assumptions translate into changes in employer contribution rates and funded status metrics that local governments and other public employers use to budget for retirement costs. Even modest assumption changes can alter long-range funding projections, especially for safety plans that have earlier retirement patterns and larger benefit formulas.

Ending: CalPERS said the proposed assumptions will be part of committee briefings in September and could be presented again in November; staff encouraged employers and stakeholders to attend committee meetings and to use available web resources for updates.","CalPERS's chief actuary summarized proposed experience-study assumption changes and their projected impacts: small increases in liabilities and contribution rates for most plans, slightly larger effects for safety plans. The fund's reported 11.6% investment return will be reflected in the 2025 valuation results published in 2026, staff said.","actionData","errors"]

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CalPERS proposes 'total portfolio' approach in ALM; board to set reference portfolio and active risk limits

CalPERS actuarial office reports modest assumption changes; 11.6% return's valuation impact will surface in 2026 results