CalPERS’ value drops dramatically in 2008-09 fiscal year

The market value of the assets of the California Public Employees’ Retirement System declined by nearly a fourth during the 2008-09 fiscal year, the most dramatic annual drop ever reported by the huge pension fund.

CalPERS said the 23.4 percent decline was caused largely by losses in international financial markets stemming from the worldwide recession.

As of June 30, CalPERS’ assets totaled $180.9 billion, down from $237.1 billion in June 2008. In the three weeks since the beginning of the new fiscal year, the value of CalPERS’ assets has risen to $186.2 billion.

 CalPERS provides benefits for about 1.6 million government workers, retirees and their families.

CalPERS, which has experienced volatile market swings in the past, notes that it has long-term investment strategies.

“The good news is we have the opportunity to capture future returns because of our long-term investment horizon,” he said in a statement. The system has more than enough cash through contributions and income from investments to meet present liabilities,” Chief Investment Officer Joe Dear said in a statement.

The fund’s 20-year investment posture remained positive at 7.75 percent, CalPERS noted. Economists also noted that as dismal as CalPERS’ year was, the fund still outperformed the general market, which saw a 29.3 percent drop.

 According to published reports, cash returns increased by 1.4 percent, and global fixed income earned 0.6 percent. But public stocks tumbled 28.5 percent year-over-year and inflation-linked assets like commodities and certain bonds fell 20.9 percent.

Real estate and private equity asset values plunged the most, by 35.8 percent and 31.4 percent, respectively. Those values are for the 12 month-period ended March 31.

As a result of billions in losses it has incurred over the past year, the CalPERS board recently demanded higher contributions from local governments. The board adopted a 30-year fixed contribution schedule method for local governments that will cover the funds needed and won’t rely on the variable of future investment returns.