CA Teacher Pension Fund Shortfall Grows To $56 Billion

SACRAMENTO (AP) — The pension fund for California’s teachers is facing a $56 billion shortfall, even as its investments are doing better than expected.

The drop reported Thursday is enough to trigger an automatic increase in the amount the state must pay into the nation’s second largest public pension fund. Payments from California’s general fund will increase by 20 percent in the coming fiscal year, to $688 million.

The shortfall grew by more than $15 billion in one year. The fund now has enough assets to cover just 71 percent of what it will owe retirees over the next 30 years.

That’s mainly because it suffered huge losses during 2008 and 2009. Even though investments have been rising faster than expected for the past 18 months, it’s not enough to offset the losses.

(©2011 CBS Local Media, a division of CBS Radio Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. Wire services contributed to this report.)

  • vw

    The problem is people who put in $100,000 on their retirement end up taking out $250,000. Simple logic will tell you that any fund collected this way will always have a short fall. People handling these funds are hoping to offset the short fall by investing the money on something that will HOPEFULLY earn enough to cover the deficit. In a perfect world this is possible. but in the REAL world full of unpredictables, this is a huge risk. They need to get the teachers to put in more on their retirement funds and the retirement pension amounts should be reduced. I know this is not a popular option but for the pension plan to survive, they need to do something drastic or else this retirement fund will be crippled by a titanic deficit. Got money?

    • sms

      Are you implying that people should only get $100,000 if they put in $100,000? If you want a drastic situation just make a significant decrease in the estimated amount that teachers have expected to retire on. Older teachers work longer, fewer jobs for younger teachers, teaching becomes a less attractive as a profession etc. Also keep in mind that retirement benefits are taxable- so less in taxes.

      • vw

        I am fully aware that retirement money is taxable. I have worked with the school district before and so I know that retirees are pulling out more money than they put it. Am I implying that if you put in $100,000, you should get only $100,000? No, what I am saying is if you I contribute $100k on my retirement account, you are entitle to receive your contribution plus interest. But, if you are expecting to have an interest of $150k on your $100K contribution, then this is not reasonable. Contributors should realize that they need to put a lot of cookies in the cookie jar for them to pull out enough cookies when it is time to retire. The problem is, there are too many hands in the cookie jar but there are not enough cookies. That is how the cookie crumbles!

  • Really

    You probably have to look no further than the people running the pension fund. How long have they been lining their pockets and the pockets of political friends’ campaigns?

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  • null

    I’ve been reading about government pension losses like this since I was a little kid long long ago. They always think they are so smart. When will they learn to only buy treasury bills.

  • Rusty

    While the fund suffered losses over the last two years, it’s up an average of 4.5% per year over the last 10 years. The problem is that the benefits the state promised went up 2,000% over that same time period. The Dow would have to be at 25,000 to cover those entirely unreasonable increases, but the politicians did it to ensure votes from the public employee union members. Anyone who claims that the problem is due entirely to the market is ignoring the political bribery that went on in the last decade.

  • John Pelligrini

    I also lost more than half of my retirement investments, my problem is just that , TO Bad, the tax payers aren’t picking up my shortfall. and I don’t expect it.

  • b ruce

    ok tax payers
    time to bend over AGAIN

    just pretend it’s all about helping the kidds

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