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CalPERS chief actuary tells lawmakers funding improved but warns market volatility could raise costs
Summary
CalPERS’ chief actuary told a joint Assembly–Senate hearing that CalPERS’ funded status has strengthened in recent years but that market volatility and key assumptions — a 6.8% discount rate and a 20‑year amortization — could push up employer contribution rates if returns fall. Lawmakers pressed CalPERS on data timing, audits and AI risks.
Scott Turandau, CalPERS’ chief actuary, told a joint hearing of the California State Assembly and Senate committees on pensions that the system’s funded status has improved materially in the past decade but that investment volatility and actuarial assumptions remain central to future contribution costs.
Turandau said the independent California Actuarial Advisory Panel (CAP) and CalPERS follow statutory disclosure rules under Government Code Section 20,229 requiring CalPERS to show sensitivity of liabilities and contribution rates to a plus‑and‑minus 2 percentage‑point change in the discount rate. He reiterated that CalPERS’ current long‑term discount rate used in the valuation is 6.8% and explained how that assumption affects the present value of liabilities and required contributions.
"The investment return assumption plays a central role because it determines the present value of liabilities," Turandau said. He explained that if returns run lower than assumed, unfunded…
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