CalPERS investments have earned an average 7.6 percent annual return over the past 20 years and 9.4 percent over the past 30 years.
CalPERS investments earned 13.2 percent in Fiscal Year 2012-13.
CalPERS assumed rate of investment return is a long-term (20 years or more) average. Any given year is likely to be higher or lower than the assumed rate.
This covers a period of time during which we’ve seen two massive bubbles and subsequent crashes, plus a recession that was steeper than any other recession since the Great Depression.
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They are trying to be conservative since the Federal Reserve seems unlikely to allow interest rates to “normalize” for some time to come.
Additionally, some of this money will come from public employers, some from public employees (reductions in pay, benefits, etc…as we’ve already seen since 2008), and some from other special interest groups and private contractors.
