Disponible también en formato electrónico.

Resumen.

In June 2020, the California Public Employees’ Retirement System publicized a plan to invest in more illiquid and perhaps riskier assets while increasing the leverage or borrowings of its investment portfolio. The goal of this strategy is to generate greater returns and more diversification for the plan and to contain risk in
hopes of more reliably meeting its 7 percent per year return target. This article reviews the plan’s underfunded financial position in comparison to other large public pension plans. The article also
focuses on the possible merits of leveraging large public pension plan assets, how doing so could succeed and, as important, how leveraging could fail. Failure would affect employees, employers such as California state and local government agencies and public schools, as well as California taxpayers. All of these interested parties might have to share in increasing contributions to the pension plan to make up for potential large losses and to keep the plan closer to full funding relative to liabilities. Even now, to bring this
and one other large, public California pension plan, “CalSTERS,” to full funding could require incremental contributions comparable to more than 13 percent of the state’s annual budget.