The California Public Employees’ Retirement System reached a market value of $260.8 billion in assets, surpassing the high set before the global financial crisis wiped out more than a third of its wealth.
The largest U.S. pension, with half of its money in equities, passed its pre-recession high of $260.6 billion on Oct. 31, 2007, according to a posting today on its website. The fund returned 13 percent in 2012, about the same gain as the Standard & Poor’s 500-stock index.
“The fund is stabilizing and the lessons we’ve applied from the past are paying off,” Chief Investment Officer Joe Dear said by e-mail. “But as remarkable as this number is, we are long-term investors and try to not get too excited when things are good or too discouraged when things are bad.”
Calpers isn’t alone in seeing gains. The 100 largest public pensions in the U.S. had $2.9 trillion in assets in the fourth quarter of 2007, according to U.S. Census Bureau data. That dropped to $2 trillion in 2009 and rebounded to almost $2.8 trillion as of Sept. 30.
Even with its gains, the Sacramento-based pension is still short $87 billion, or about 26 percent, of meeting its long-term commitments, and has had to ask the state and struggling cities to contribute more.
Calpers’s value was already in decline when Lehman Brothers Holdings Inc. went bankrupt in September 2008, leading to a panic that wiped out more than $6 trillion in U.S. stock-market value in about six months. By 2009, Calpers’s value had plummeted to $164.7 billion.
Since then, the pension fund has benefited from the stock market’s recovery after the S&P 500 Index touched a 12-year low in March 2009. The benchmark gauge of U.S. equities climbed more than 13 percent last year and has more than doubled since its low.
Apart from stocks, Calpers invested about 16 percent of its money in bonds as of Jan. 31, 13 percent in private equity, 8 percent in real estate, 4 percent in cash-equivalents, 4 percent in inflation-linked holdings such as commodities and 1 percent in forest land and infrastructure such as airports and power plants.
The state and local governments paid $7.8 billion to the fund in the last fiscal year, almost four times more than a decade earlier.