How much did CalPERS make in 2025? The pension fund exceeded its goal

from Adam AshtonCalMatters

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Largest audience in California pension fund just had a banner year, riding a surge in the stock market to record its second straight double-digit annual return.

The California Public Employees’ Retirement System announced Monday that it earned 14.8 percent on its investment portfolio in the 2025-26 fiscal year, more than doubling its target of 6.8 percent.

CalPERS CEO Marcy Frost, in remarks to the board, described the return as the fund’s best year since 2014. except for 2021 when the markets recovered from the crash caused by the COVID-19 pandemic in 2020.

“Our team has maintained a disciplined approach to building the health of the pension system, and our improved capital status shows that this effort is paying off for our 2.4 million members,” she said in a written statement.

CalPERS ended the budget year with a a portfolio valued at $637.1 billion — about $80 billion more than a year ago.

Return on investment is an important number for California government agencies because they have to shell out more money to cover losses when CalPERS falls short.

CalPERS is considered underfunded because its assets are worth less than what it owes in total to the people who earn and receive benefits through it. Its assets are now valued at 85% of what is owed to members.

That number is also a milestone for CalPERS’ recovery from your losses during the Great Recession. CalPERS’ assets were worth about 68 percent of what it owed members a decade ago, before it began a series of policy changes that effectively required state agencies and public employees to pay more for their pensions.

The earnings report comes as public safety unions are urging lawmakers to do so increasing pension income for police and firefighters for the first time since former Gov. Jerry Brown slashed retirement benefits in a 2012 law. The big numbers could make lawmakers more confident to say yes to unions and change Brown’s pension reform law.

Some groups are pushing CalPERS to simplify its investment strategies in the interest of making more money faster, which would ease pressure on state agencies and taxpayers. That criticism came up in last year’s CalPERS election, where several unsuccessful candidates characterizes the fund as an underperformer.

Two former CalPERS board members who are now involved in an organization called the Retired Public Employees Association — Margaret Brown and JJ Jelincic — have focused on pension funds equity stakesinvestments that sometimes involve high fees and uncertain values. They backed a failed bill in the Legislature this year that would have forced CalPERS to disclose more information about those investments.

“These are very good results, but you have to think about how you got there,” Jelincic told the CalPERS board. “You’ve expanded high-risk private equity and moved into higher-risk segments of that asset class.”

Last year, the CalPERS board adopted the so-called total portfolio approach which empowers Chief Investment Officer Stephen Gilmore to make decisions more quickly and in the interest of the entire fund, rather than specific asset classes – such as private equity or real estate. The policy directs CalPERS to keep 75% of its portfolio in stocks and 25% in bonds.

Frost and Gilmore see private equity as an important segment in the portfolio. The pension fund officially opposed the legislation this would require more transparency about private equity, which the fund predicts have cost him billions dollars in missed opportunities.

“Investing in the private markets gives us the potential to earn higher returns while diversifying our risk from the often volatile public stock market,” Frost told the board.

CalPERS earned a 17% return on its private equity investments last year and a 24% return on its equity investments. The S&P 500 is up 21% over that time period.

This article was originally published on CalMatters and is republished under Creative Commons Attribution-NonCommercial-No Derivatives license.