Situtation CALPERS finds itself in due to the insane ZIRP which has been in place going on 10 years now:
The pension fund is more than $139 billion in the red and just reported another awful year of investment returns.
Unlike your 401(k) that might increase or decrease in value with the stock market, public sector pension benefits are locked in place. If investment returns fall, the retirees' benefits aren't at risk because taxpayers are obligated to make up the difference. Most state pension funds are deep in debt, but CalPERS is among the worst in the nation.
Things are only getting worse, since the fund reported in July that it had achieved just a 0.61 percent rate of return in the past 12 months. The system is based on the assumption—a bad one, according to people who study this sort of thing, like the Society of Actuaries—that it will earn 7.5 percent every year. Anything less than that only adds to what taxpayers already owe in the form of future pension promises.
California’s Six Figure Pension Club Has More Than 20,000 Members https://t.co/9CPdsTdVRB— reason (@reason) August 9, 2016