CalPERS OPEB Trust Earns 25% in FY2011

August 4, 2011 ( - The California Public Employees’ Retirement System (CalPERS) announced that the trust fund for prefunding public employee retiree health benefits and other post-employment benefits (OPEB) earned a 25% return on investments in the fiscal year that ended June 30, 2011.

CalPERS created the California Employers’ Retiree Benefit Trust (CERBT) in 2007 to provide California public employers with a low-cost, high-value investment vehicle for prefunding future OPEB costs (see CalPERS Retiree Health Care Pre-funding Plan Opened to All CA Public Agencies). OPEB mainly includes retiree health benefits but also can include any employer-paid benefit other than pension, such as dental or vision care.  

As of June 30, 2011, the CERBT had 306 participating public agencies and more than $1.8 billion under management. Trust fund assets are invested in a diversified portfolio that includes U.S. and international stocks, bonds, and real estate investment trusts (REITS), and is managed by CalPERS professional investment staff.  

In March, the CalPERS Investment Committee approved  an new asset allocation model for the trust (see CalPERS Announces New Asset Allocation for OPEB Funding).  

“These investment earnings on the voluntary contributions of participating public employers can mean significant future savings in their payments for retiree health benefits that otherwise would be funded entirely by taxpayer dollars,” said CalPERS Chief Actuary Alan Milligan, in the announcement.