We recently penned a post on the sustainability of public DB plans given the escalating cost to fund them.  Here is another example, presented to us through a P&I article, highlighting the contribution to CalPERS that will rise by $524 million next year

According to P&I, California will contribute $5.3 billion to CalPERS for the fiscal year starting July 1, up 11% from the current fiscal year, shows a proposed budget by Gov. Edmund G. Brown Jr.  Furthermore, it appears that the annual contribution will continue to grow substantially at least until 2019, nearing almost $10 billion a year at that point.

We are huge proponents of DB plans, but the continuing focus on the ROA and the subsequent volatility that comes with a traditional asset allocation and investment structure have the potential to drive contribution costs even higher.  We need to get DB plans on a derisking course in order to help stabilize the funded status and annual contributions.

Ryan ALM and KCS have developed a six-step process to become more liability aware.  Let us help you!