Plan Funding News
Since 2006, CalSTRS has communicated a projected funding shortfall or unfunded actuarial obligation.
The shortfall is based on an actuarial valuation, which is a snapshot of the fund’s assets and liabilities.
CalSTRS assets must balance with cost of future benefits over the long term to pay the pension promise to all generations of teachers. Currently, CalSTRS has assets to pay benefits through 2045.
Historically, investment returns contribute about 60% of the retirement benefit. The 2008 economic turmoil and 2001 the dot com bust created lower than expected investment returns.
How the Unfunded Actuarial Obligations Affects Members
Benefits and contribution rates are unchanged as educators, school employers, the California Legislature and CalSTRS develop a plan to deal with the funding challenges.
Working together, the funding shortfall is solvable. CalSTRS believes gradual, predictable increases in contribution rates can be achieved.