| California pension plans take big risks |
California's public pension systems, including CalPERS and CalSTRS, are taking on significant risks while yielding poor investment returns, according to the Reason Foundation's 2025 Public Pension Solvency and Performance Report. With over $265bn in unfunded liabilities, California has the highest public pension debt in the U.S., translating to over $6,000 per resident. CalPERS and CalSTRS have shifted towards high-risk investment strategies, increasing their allocation to alternative investments from 11% in 2001 to 37% in 2024. Despite these changes, their average returns remain below the national average, with CalPERS achieving only 6.8% over the past 20 years. Zachary Christensen, managing director of the Pension Integrity Project, emphasized the need for cautious investment strategies to protect taxpayers and retirees, noting: "Taxpayers at the state and local level would see more money siphoned away from infrastructure, education, and public safety to make up for investment losses."