The California State Teachers’ Retirement System is one of the best run, well-managed pension funds in the nation. But despite
excellent money management, the pension system has a projected funding shortfall.
This gap, or unfunded actuarial obligation, is the dollar amount CalSTRS will need in the future to pay benefits due to current members.
Much like a home mortgage, there isn’t a need to have all the money today, but there should be a plan in place to handle the debt.
As of June 30, 2006:
- Projected shortfall of $19.6 billion
- System 87 percent funded
Lower than expected returns helped create the shortfall, but positive investments alone cannot be expected to solve the problem.
CalSTRS has taken action to address the funding gap. Those actions include,
- Moving to a higher risk, higher return investment mix in 2006
- Engaging all parties affected: members, employers and state government
- Building stakeholder understanding of the issue
- Providing supplemental retirement savings plans to teachers
More Information
CalSTRS Presentation, Post-Employment Benefits Commission Meeting, July 27, 2007
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