CalPERS Perspective: Focus on the Future Marcie Frost, CalPERS CEO Michael Cohen, CalPERS CFO Fritzie Archuleta, CalPERS Deputy Chief Actuary

California Society of Municipal Finance Officers Annual Conference | January 9, 2019

68.0%

Funded Status June 30, 2017

71.0%

Funded Status June 30, 2018

7.5%

7%

Lower Discount Rate Lowered the discount rate from

7.5% to 7% over three years (assumed rate of return)

30 yrs. 20 yrs. =

significant long-term savings

Shorter Amortization Shortened the amortization period

for employers to pay their unfunded liability

New Asset Allocation Adopted new strategic asset

allocation effective July 1, 2018

Michael Cohen Chief Financial Officer

Ben Meng Chief Investment Officer

of Public Agencies are current on their pension obligations as of December 2018

98%

7

Options for Accelerating the Funding of the Plan

Ad Hoc Additional Discretionary

Payments (ADPs)

Fresh Start Full or partial

IRS Section 115

Trusts

Sample City $11m Additional Payment

$0

$2

$4

$6

$8

$10

$12

2019 2022 2025 2028 2031 2034 2037 2040 2043 2046

Mill

ions

Safety Plans

Safety Police

Safety Fire (Before Additional Payment)

Safety Fire (After Additional Payment)

$27 billion invested Private Equity

16.1% 2017-18 fiscal-year return

10.5% 20-year return

As of June 30, 2018

Innovation Late stage venture capital investments in bio-tech, life sciences & health care

Horizon Long-term investments in core economy established companies

Proposed Private Equity Investment Models

11

Focus on Total Fund Return

Engagement vs. Divestment

Partnerships Funding Tools Investments