CalSTRS announced that the state’s pension fund outperformed, ending the year with $341.4B

William Melhado
·2 min read

The California State Teachers’ Retirement System announced Tuesday that the state’s pension fund outperformed anticipated returns, ending the year with a total value of $341.4 billion.

CalSTRS said the past year’s return on investments reached 8.4%, exceeding the benchmark for the 2023-24 fiscal year by 1%. The pension fund outperformed expectations despite uncertainties such as inflation, rising interest rates and geopolitics, the teacher retirement system said in a Tuesday statement.

The pension fund prioritizes long-term investing, which has proven effective given CalSTRS’ returns are consistently above the 7% benchmark, said Chief Investment Officer Scott Chan in a statement. The retirement system has reported return on investments greater than 7.5% in the last 30 years.

“A year of strong performance in the global public markets underscores the importance of our highly diversified portfolio,” Chan said. “While the 8.4% return over the past year is commendable, our true commitment lies in fostering consistent, long-term growth for our members’ pensions.”

CalSTRS assumes a 7% return to meet pension obligations, which funds retirement, disability and survivor benefits for more than a million public school educators and beneficiaries in the state. The pension fund reported it would be fully funded earlier than initially anticipated in 2046. A fully funded pension plan has enough assets to pay for the benefits of current and future retirees.

Currently, the retirement system has more than 75% of the assets to meet the current and predicted financial obligations. Since 2017, the funded status has increased 13%, CalSTRS reported. The last fiscal year was the sixth consecutive year that assets outpaced total liabilities for the retirement fund.

CalSTRS attributed the successful year to in part to the strength of “Public Equity’‘ assets, such as publicly traded companies, which make up over 40% of the pension funds’ total holdings. Real estate, which comprised nearly 14% of the fund’s holdings, reported a negative return. Despite that, CalSTRS said real estate holdings still exceeded its benchmark in the past fiscal year, which ended June 30.

“This is another important step in protecting the more than 1 million California public educators and beneficiaries who rely on us to help secure their future,” Chief Executive Officer Cassandra Lichnock said.