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CalSTRS Funding: Important Changes and Considerations for School Districts
Meet the Teachers’ Retirement Board
Teachers’ Retirement Board (12 Members)
Dana Dillon Director of Finance Michael Cohen
State Treasurer John Chiang
Sharon Hendricks
Joy Higa
State Controller Betty Yee
Paul Rosenstiel
Harry M. Keiley
Superintendent Tom Torlakson
Thomas Unterman Nora Vargas Retiree Representative
CalSTRS Member Snapshot
CalSTRS Members by the Numbers As of June 30, 2016
CalSTRS Members by the Numbers As of June 30, 2016
CalSTRS Distribution of Annual Benefit* of All Recipients As of June 30, 2016
*Annual retirement benefit excluding DBS and SBMA benefits. Includes all types of retirement.
The average benefit recipient receives about $46,608 on an annual basis.
CalSTRS Distribution of Annual Benefit* of All Recipients As of June 30, 2016
*Annual retirement benefit excluding DBS and SBMA benefits. Includes all types of retirement.
72%
CalSTRS Distribution of Annual Benefit* of All Recipients As of June 30, 2016
*Annual retirement benefit excluding DBS and SBMA benefits. Includes all types of retirement.
4%
Ratio: CalSTRS Active to Retired Members
22 yrs in retirement? 8 years
Life expectancy
Average retirement age
19 years
Full Social Security eligibility
Source: Center for Retirement Research at Boston College, 2006 and U.S. Social Security Administration, 2009.
Retirement Now Lasts Nearly 20 Years…
Life Expectancy Rates: CalSTRS, CalPERS and Social Security For a member retiring at age 62
Retirement Security 2017: American’s Views of the Retirement Crisis
Updated March 1, 2017
Updated March 1, 2017
Updated March 1, 2017
Updated March 1, 2017
Federal Legislative Outlook
• New President, New Congress, Big Questions…
• California’s Secure Choice Retirement Savings Program debate in U.S. House and Senate.
• Recent Orders by President Trump:
– Rollback of Dodd-Frank Wall Street Reform and the Consumer Protection Act.
– Dept. of Labor Review of the Fiduciary Rule.
State Legislative Outlook
• Senate Bill 32: Post-PEPRA Pension Reform. Introduced by Senator John Moorlach (R-Orange County).
• Senate Bill 560: Climate Risk of pension investments by Senator Ben Allen (D-Los Angeles)
• Assembly Bill 1597: Divestment from Turkish investments by Assembly Member Nazarian (D – San Fernando Valley)
• Assembly Bill 20: Divestment from Dakota Access Pipeline Project. Introduced by Assembly Member Ash Kalra (D-San Jose).
• Assembly Bill 946: Divestment from border wall construction companies. Introduced by Assembly Members Tiing (D-San Francisco) and Gonzalez-Fletcher (D-San Diego)
Public pensions in the courtroom – “California Rule” Marin case appealed to the California Supreme Court.
Delivering on Our Promise
Your Voice Matters! Trust in Financial Industry Declining
72% of Our Members Trust CalSTRS
Source: 2015 Annual Member Satisfaction Survey
CalSTRS Investments Overview
-30%
-20%
-10%
0%
10%
20%
30%
20-Year Performance of CalSTRS Investment Returns
Actual Return Assumed Rate of Return
CalSTRS Top 10 Portfolio Holdings As of June 30, 2016
Security Name Shares Market Value ($)
1,147,047 $820,849,774
25,081,657 $789,570,562
17,981,754 $776,991,590
5,241.110 $758,860,317
6,621,511 $756,706,277
Security Name Shares Market Value ($)
15,221,475 $1,455,173,010
1,687,897 $1,178,261,801
20,965,031 $1,072,780,636
11,397,213 $1,068,374,747
8,163,447 $990,226,121
An Investments Leader: CalSTRS Closely Monitors Asset Class Fees in Cost Disclosure
2011 2012 2013 2014 2015CalSTRS 51.7 48.1 41.7 41.9 42.5Peer Avg. 48.3 48.7 46.1 48.4 46.6U.S. Avg. 58.1 57.6 56.2 64.5 63.2
0
10
20
30
40
50
60
70
Bas
is P
oint
s
Trend in Investment Costs (Excluding transaction costs and carried interest)
CalSTRS Peer Avg. U.S. Avg.
CalSTRS Costs Rank Below Investment Peer Average
CalSTRS is a low
cost plan.
CalSTRS Funding Status: Important Board Discussions
• Experience Study Assumptions (Adopted February 1, 2017)
• Actuarial Valuation Report (Presentation on April 6, 2017)
CalSTRS Funding Plan Implementation
Long-term, shared responsibility: • CalSTRS members; • Employers; and • The State of California.
(32-Year Funding Plan, Assembly Bill 1469, Enacted July 2014)
The Retirement Big Picture in the U.S.:
Are individuals financially prepared?
You Decide…Fake News or Not?? “…80 percent of our human subjects were entirely incapable of
looking beyond their next meal or that night’s television programming…”
Chipmunk’s Plan For Future Better Crafted Than That Of 8 Out Of 10 Americans
How Much Money Do You Think You Will Need for Retirement?
Amount of Retirement Savings Americans Think They Need
Source: EBRI, 2015 Retirement Confidence Survey
And Reality Hits … Average 401(k) Balances
Source: Vanguard, How America Saves 2016
Women in Retirement
• Women aged 75−79 are three times as likely to live in poverty, compared to men.
• Women 80% more likely to face financial hardship in retirement.
• Women in education, health care and public service have higher incomes and lower rates of poverty, due to DB pensions.
47
Published October 21, 2016
Be Aware of Investment Fees: The $10,000 Difference from Paying 1% Less
Account balance with 0.50% annual fee
Account balance with 1.50% annual fee
Paying 1% less in fees could mean $10,000 more in your account in 30 years.
For both accounts: You invest $10,000 for 30 years, make no contributions and
earn an average of 5 percent.
$37K
$27K
Compare products and fees online 403bCompare.com
Visit www.CalSTRS.com/Pension2
• Defined Contribution savings plan (Participation is voluntary).
• Low cost and flexible 403(b), Roth 403(b), 457(b) options.
• Tax-deferred now, or tax-free income later…
Stay Connected with CalSTRS
CalSTRS on Social Media
• Facebook • Twitter • Instagram • Pinterest • YouTube • LinkedIn • Google+
Thank You! Any Questions?
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