Asset Liability Management Study

Asset Liability Management Study

Overview

The Teachers’ Retirement Board oversees the second-largest public pension fund in the U.S. Setting the asset allocation is the responsibility of the Investment Committee—it is one of their most important functions.

The strategy behind the asset allocation directs how CalSTRS investment staff “allocate” or invest CalSTRS assets. For example, how much to invest in the U.S. stock and bond markets.

The process is comprehensive. It weighs the Fund’s pension liabilities and the assets needed to fund CalSTRS members’ pensions over the long term. Every four years an Asset Liability Management Study is conducted to help the committee adopt an asset allocation that meets the Fund’s pension liabilities over the long term.

The study ensures responsible investment practices and strategies are used in recommending investment allocations.

The last study, conducted in 2015, is in effect until a new study is complete. In 2019, for the first time, the ALM Study timeline is aligned with the review of the Fund’s actuarial experience study and valuations.

This change means the ALM Study is using the same assumptions for both assets and liabilities and has the latest financial and demographic assumptions. The year-long process is a thorough collaboration between internal investment and actuarial staff and the board’s external consultants.

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Inside CalSTRS Investments

A series of short conversations to help you understand how member contributions are invested to create a secure retirement for California’s educators.

  • Asset Class Study [Video] (February 2019)
    CalSTRS Chief Investment Officer Christopher J. Ailman discusses the Asset Liability Management study.
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Investments Basics

An explanation of investment terms in easy-to-understand short videos. A perfect way to learn and understand what’s written in the agenda items. Described to you by CalSTRS investment staff.