WEST SACRAMENTO, Calif. – The California State Teachers’ Retirement System today announced its endorsement of the Institutional Limited Partners Association’s recently-launched fee reporting template for private equity general partners.
When you think of groundbreaking breast cancer research you might expect to find a group of skilled medical experts and a wealth of scientific analysis. What you might not expect to find is the invaluable role the nation’s largest educator-only defined benefit pension plan played in a gold-standard study such as this.
Every four years, the Teachers’ Retirement Board’s Investment Committee undertakes an asset allocation study. In November, the conclusion of CalSTRS’ 2015 Asset Allocation Study is set to take place pending a final decision from the Teachers’ Retirement Board. The board holds exclusive control over the investment and administration of the Teachers’ Retirement Fund.
By creating the illusion of a catastrophic pension crisis, pension critics would have you believe that the only way to create a sound and sustainable retirement savings program is to move away from a defined benefit pension, preferably replaced with a defined contribution plan or perhaps none at all. Many recent studies, media articles and now a new ballot initiative are based on the same flawed logic.
No doubt the introduction of proposed legislation included in Senate Bill 185, the Public Divestiture of Thermal Coal Companies Act, turns up the heat in the discussion on how investors might approach de-carbonization of their portfolios in response to climate change issues. If passed, this bill would require the CalSTRS and CalPERS boards to engage with thermal coal companies and, if consistent with their fiduciary duties, to divest from those thermal coal companies that are not transitioning to clean energy generation.
Conflicts of interest in the investment advice to workers who roll over their retirement savings from employer-sponsored defined contribution plans into Individual Retirement Accounts add new concern for middle class families coping with dwindling retirement savings. New findings from a report released by the President’s Council of Economic Advisers indicate that conflicted advice adds large and economically meaningful costs to Americans who are saving for retirement.
The CalSTRS board meeting on Friday, February 6, 2015, featured a prominent environmental activist who sounded the alarm on climate change and how to counteract it, Chairman of Generation Investment Management, and U.S. Vice President from 1992 – 2000, Al Gore, and Senior Partner of Generation Investment Management, David Blood.
As we end this year and look forward to the next, we are able to do so with a renewed confidence. In June, consensus recognition of the need to stabilize CalSTRS’ funding emerged with the enactment of the funding solution detailed in Assembly Bill 1469. The shared-responsibility plan gradually increases contributions from all plan contributors by an amount that is projected to fully fund the Defined Benefit Program in roughly 32 years.
Global leaders gathered at the United Nations Climate Summit 2014 in New York this September in a show of solidarity for climate change policy. CalSTRS was among the more than 800 organizations to contribute to what many hope is the beginning of a comprehensive global agreement on climate change anticipated to take place in Paris in December of 2015.
The importance of a plan that fully funds the Defined Benefit Program cannot be overstated. It took years of overcoming budgetary constraints, educating numerous policymakers and stakeholders, and an overall perseverance to see a funding plan come to fruition.
Recently, CalSTRS sat down with a few individuals who were a part of this tremendous effort and they shared some of the challenges and highlights. This video captures the key moments that led to a funding plan.
For more information about contribution rate increases and other provisions of Assembly Bill 1469, visit the CalSTRS 2014 Funding Plan.
When we talk about CalSTRS we’re talking about a financial institution that dates back to 1913. Through the years, the fund has endured many difficult times and changes. This last decade has been particularly turbulent for CalSTRS, but we have never lost sight of our mission to provide a secure retirement to California’s educators.
Since the release of the Governor’s revised budget proposal, considerable discussion on a potential funding plan for CalSTRS fills social media and news networks. The possibility of a funding plan comes as welcome news.
Several developments suggest a funding plan for CalSTRS is a top priority for the Governor and Legislature this year. In addition to Governor Brown’s call for development of a funding plan in his budget proposal, the Legislature has begun the process of crafting a permanent funding solution for the Defined Benefit Program. As this process takes shape many significant issues will be examined. The importance of staying focused on funding issues relevant to CalSTRS is paramount.
2013 was an especially significant year to CalSTRS as we celebrated 100 years of service to California’s educators. Last year kicked off with a newly designed website and a video that highlighted accomplishments of the past century.
As CalSTRS begins to emerge from the worst economic downturn since the Great Depression, renewed focus on the sustainability of the defined benefit pension has surfaced, with some calling for the elimination of a plan that has provided a secure retirement to California’s educators for the last 100 years.
Every now and again, an article filters through the pop culture clutter of the online and print community and examines an unpopular and often contentious topic. It gets attention because it asks difficult questions that may lead to unpleasant answers.
A movement to divest from fossil fuel companies stirs the emotions of many. The urgency behind such requests reflects increasing concern about global warming. While there is no doubt about the underlying devastating risks of climate change driving this advocacy, the question of divestment versus engagement as an effective strategy warrants exploration.
In the last three years, CalSTRS has experienced significant market volatility. In fiscal year 2011, CalSTRS catapulted to a 23.1 percent investment return high. The following fiscal year investment returns plummeted to 1.8 percent and then rebounded up to this year’s 13.8 percent. The good news that we’ve significantly exceeded our 7.5 percent investment assumption for three years still does not change current projections of depleting our assets in roughly 30 years.
If anyone knew the answer to that precisely, they may well be both clairvoyant and very wealthy. In reality, financial experts do seek to understand how the macroeconomic forces underlying our economy will change and how that change affects future market returns.
Every April the Teachers’ Retirement Board adopts the latest actuarial valuation. The actuarial valuation is a snapshot of the CalSTRS fund’s assets and liabilities as of June 30, 2012.
The new valuation shows an increase in the unfunded actuarial obligation or unfunded liability from $64 billion to $70 billion. This increase holds consistent with projections reported in all actuarial valuations since 2003.
Each new year brings the promise of a fresh start. For CalSTRS, 2013 marks an especially significant year for the fund when we celebrate 100 years of service to California’s educators and their families. CalSTRS began in 1913 with 16,020 active and retired members, and has grown to presently include 862,000 members with a portfolio value of more than $157 billion. One hundred years of service is an accomplishment to be proud of, and wonderful, time-honoring events are in store to commemorate this special occasion.
Electronic privacy is crucial for the ongoing success of the Internet as a convenient means to provide customer service. Your personal information will be used only to conduct CalSTRS-related business.
The California State Teachers’ Retirement System website has been developed in compliance with California Government Code §11135, which requires that all electronic and information technology developed or purchased by the State of California is accessible to people with disabilities. There are various types of physical disabilities that impact user interaction on the web. Vision loss, hearing loss, limited manual dexterity, and cognitive disabilities are examples, with each having different means by which to access electronic information effectively.