The Sacramento Bee reports that CalPERS’ bill for the fiscal year that began July 1 is $2.67 billion, almost $240 million more than the previous year and $2.5 billion more than the all-time low six years ago.
According to the news report, a May staff report to a CalPERS committee broke down the reasons for the $240 million increase:
- About $72 million came from pay raises that were higher than expected. The formula that determines state workers’ retirement allowance is based in part on the highest salary. When workers are paid more, it is reflected in pension costs.
- Another $46 million of the contribution the state needed this year is a result of a rate of retirements among state workers, which was 50% higher than expected. A CalPERS survey found no particular reason for the spike in the number of retirements, Pat Macht, a CalPERS spokeswoman, told the Bee. People said they were retiring for the same reasons they always do – completing 30 years of employment, suffering health problems or needing to attend to family.
- 800 fewer-than-expected deaths among retirees was another factor in the increase.
Macht said the retirement fund is also seeing the effects of “smoothing” – a policy where investment gains are set aside to offset losses in other years.
CalPERS declined to call this year’s situation a pattern without data from more than one year.