CalPERS Unfunded Liability: Factual Context for California Members

Editorial note: This page is educational and is not legal, tax, or financial advice. CalPERS actuarial figures are set by the CalPERS Board of Administration and by California statute. Confirm your specific facts with your CalPERS account and consult a California licensed CPA or attorney before acting on any figure shown here.

Last updated: August 13, 2026 · By Gold California Editorial

This page explains what the CalPERS unfunded actuarial liability is, how the funded ratio is measured, and where the current figures come from. It cites the CalPERS annual audited financial report (ACFR), the CalPERS Facts at a Glance publications, and the California Supreme Court cases that establish the vested rights doctrine.

The tone is factual. This page does not predict future returns, funded ratios, or benefit changes. It states what CalPERS itself has published, and it names the legal framework under which member benefits are treated as contract rights.

What is the CalPERS unfunded actuarial liability

The unfunded actuarial liability, or UAL, is the dollar gap between what CalPERS owes to current and future retirees and what the plan holds in assets to pay those benefits. CalPERS uses the accrued liability figure from its annual actuarial valuation for the numerator, and the market value of plan assets for the denominator.

A pension plan is fully funded when assets equal the accrued liability, which produces a 100 percent funded ratio. Any gap is either a surplus (assets above liabilities) or a UAL (liabilities above assets). CalPERS has run a UAL for many years, in line with most large US public pension plans.

The UAL is not a bill that comes due at once. CalPERS amortizes it over decades under its Funding Risk Mitigation Policy and Board of Administration policies. The section on amortization below explains how.

How the CalPERS funded ratio is calculated

The funded ratio for a defined benefit plan equals the actuarial value of assets divided by the actuarial accrued liability, expressed as a percentage. CalPERS also publishes a market value funded ratio using the market value of assets, which moves more with each fiscal year's investment return.

The actuarial accrued liability is the present value of benefits already earned by current members and retirees. The calculation uses the plan's demographic assumptions (mortality, retirement age, salary growth) and the discount rate. Each of those inputs is set by the CalPERS Board of Administration.

Changing any input changes the accrued liability. A lower discount rate makes the accrued liability larger. New mortality tables that show longer lives also make the accrued liability larger. The Board reviews these assumptions in the periodic Experience Study, most recently the 2025 Experience Study and Review of Actuarial Assumptions.

The current CalPERS UAL and funded ratio

As of June 30, 2024, CalPERS reported market value assets of $506.4 billion, an actuarial accrued liability of $685.0 billion, and a UAL of $178.6 billion. The market value funded ratio was 73.9 percent. These figures are the final actuarial numbers published in the CalPERS Facts at a Glance for funding, FY 2024-25.

The same publication provides an estimate for June 30, 2025: $563.0 billion in assets, $716.0 billion in liability, roughly $153 billion in UAL, and a 78.6 percent funded ratio. CalPERS labels this figure as an estimate pending the final actuarial valuation, which typically lags one fiscal year.

Source: CalPERS Facts at a Glance, Funding and Investments, FY 2024-25, checked August 2026 at calpers.ca.gov/documents/facts-funding and calpers.ca.gov/documents/facts-investments.

The funded ratio moves each year with two forces. Investment returns above the discount rate push it higher; returns below the discount rate push it lower. Changes in the plan's assumptions (discount rate, mortality, salary growth) can also shift the accrued liability up or down, sometimes materially.

The 6.8 percent discount rate assumption

The CalPERS discount rate is the assumed long-term average investment return used to value liabilities. It is currently 6.8 percent, in force from June 30, 2021 through June 30, 2024, per CalPERS Facts at a Glance for investments. CalPERS lowered the rate from 7.0 percent to 6.8 percent following the 2021 asset liability management review.

A lower discount rate raises the present value of future benefits, which raises the accrued liability. The trade off is that a lower assumed return is easier to earn without disappointing the actuarial model. CalPERS has published this trade off in Board materials and in the annual valuation.

The discount rate is a policy assumption set by the CalPERS Board of Administration, not a market interest rate. It applies uniformly to state, schools, and public agency plans in the CalPERS system.

How CalPERS amortizes the UAL

CalPERS does not require the UAL to be repaid in a single year. Each new source of UAL (an investment loss, an assumption change, a benefit change) is assigned an amortization schedule under the Board's funding policy. The employer contribution rate includes both the normal cost of new benefits and an amortization payment on prior UAL layers.

Since fiscal year 2021, CalPERS has used a 20-year fixed period, level percent of payroll, no ramps, to amortize new investment gains and losses. Assumption changes carry a 20-year schedule; benefit changes for active members carry the average future service period. Non-active benefit changes are amortized over the applicable inactive expected working lifetime under the funding policy.

This is why the UAL falls or rises each year even without any change in benefits. Investment performance versus the 6.8 percent target creates gains or losses that layer into the amortization. Employer contribution rates reflect those layers over the assigned periods.

The California vested rights doctrine

California treats public employee pension benefits as contract rights. Once an employee begins service under a specific pension formula, that formula is deemed part of the employment contract, subject to the rules the courts have set for modifications.

The foundational case is Allen v. City of Long Beach (1955) 45 Cal.2d 128. The California Supreme Court held that pension rights of public employees are protected by the contract clauses of the California and United States Constitutions. Modifications adverse to the employee must be reasonable and must be accompanied by comparable new advantages.

Later cases refined the framework. Betts v. Board of Administration (1978) 21 Cal.3d 859 confirmed the Allen framework in the CalPERS context. Marin Assn. of Public Employees v. Marin County Employees' Retirement Assn. (2016) 2 Cal.App.5th 674, and Alameda County Deputy Sheriffs' Assn. v. Alameda County Employees' Retirement Assn. (2020) 9 Cal.5th 1032, addressed changes made under the Public Employees' Pension Reform Act (PEPRA).

In the Alameda case, the California Supreme Court upheld the PEPRA changes to what could be included in pensionable compensation. The court did not overturn the Allen framework; it applied it. Members retained the core defined benefit; the categories of compensation that could be added to that benefit were narrowed for the future.

Source: published California Supreme Court and Court of Appeal opinions listed above, cross-referenced with the California Courts opinion archive. Checked August 2026. Citations are provided for factual context, not as legal advice.

None of these cases removes the CalPERS UAL. They set the framework under which pension benefits can be modified. A California CalPERS member's earned benefit under the formula in force at hire remains a contract right protected by these decisions.

How to read the CalPERS ACFR and valuation reports

The steps below outline how a California retiree or active member can read the primary CalPERS documents that describe funded status. They describe the general navigation; consult a licensed CPA or attorney for a reader-specific interpretation.

1. Open the CalPERS financial reports page. Go to calpers.ca.gov/investments/about-investment-office/investment-financial-reports. Download the most recent CalPERS ACFR (the annual audited financial report).
2. Find the Financial Highlights section. The ACFR contains a summary of the year's investment return, the fund's assets under management, and a discussion of funded status. It also contains the audited financial statements.
3. Open Facts at a Glance for funding. The one-page summary at calpers.ca.gov/documents/facts-funding shows the funded ratio, the UAL, and the amortization policy. It is updated with the fiscal year cycle.
4. Open Facts at a Glance for investments. The one-page summary at calpers.ca.gov/documents/facts-investments shows the discount rate, the investment strategy targets, and the fund's return history over 1, 3, 5, 10, 20, and 30 year windows.
5. Open the actuarial valuation for your plan. The state valuation is at calpers.ca.gov/employers/actuarial-services/valuation-reports. The schools valuation is on the same page. Public agency valuations are searchable by employer at calpers.ca.gov/employers/actuarial-resources/public-agency-actuarial-valuation-reports.
6. Cross-reference with the Government Code. The Public Employees' Retirement Law sits in California Government Code Title 2, Division 5. The COLA and PPPA sections are the same ones cited on the sibling CalPERS COLA and PPPA page.

None of these steps replaces professional advice. A California CPA or a fiduciary financial planner can help interpret how these numbers apply to your specific retirement plan and pension formula.

What this page does not cover

This page describes CalPERS funded status and the vested rights doctrine at a high level. Several adjacent topics are worth flagging so a reader does not draw the wrong conclusion from what is here.

• CalSTRS funded status. The California State Teachers' Retirement System runs a separate valuation and separate reports. See the sibling CalSTRS pages. CalSTRS uses different actuarial assumptions and a different discount rate.
• UC Retirement Plan funded status. The University of California pension plan follows UC Regents rules and reports separately. Its funded ratio and discount rate are set by UC governance, not by the CalPERS Board.
• 1937 Act county systems. The 20 California county retirement systems governed by the County Employees Retirement Law of 1937 (LACERA, OCERS, SBCERA, and others) publish their own actuarial valuations. Each county board sets its own funding policy and discount rate.
• Employer contribution rates. Individual employer contribution rates depend on the specific plan year, the plan's own UAL layers, and the employer's paid pool. Consult your employer's CalPERS-provided rate letter for figures that apply to your paycheck.
• Predictions or forecasts. This page does not predict future investment returns, future funded ratios, or future benefit changes. CalPERS actuarial reports contain long-range assumptions used for present-value math; those are assumptions, not forecasts.

Confirm your specific facts with your CalPERS account and a California licensed CPA or attorney before acting on any figure shown here.

CalPERS unfunded liability, answered

What is the CalPERS unfunded liability today?

The most recent final figure is $178.6 billion as of June 30, 2024, with a 73.9 percent funded ratio, per CalPERS Facts at a Glance for funding, FY 2024-25. CalPERS also publishes a preliminary estimate for June 30, 2025 of roughly $153 billion in UAL and a 78.6 percent funded ratio. The 2025 figures will be revised when the actuarial valuation is finalized.

How is the CalPERS funded ratio calculated?

The funded ratio equals plan assets divided by the actuarial accrued liability, expressed as a percentage. CalPERS reports both a market value funded ratio and an actuarial value funded ratio. The market value moves more with each fiscal year's investment return, while the actuarial value smooths results over time.

What discount rate does CalPERS use to value liabilities?

The current discount rate is 6.8 percent, per CalPERS Facts at a Glance for investments. This rate has been in force from June 30, 2021 through June 30, 2024 and was set following the 2021 asset liability management review. It applies uniformly to state, schools, and public agency plans in the CalPERS system.

Can California cut CalPERS benefits already earned by members?

California courts have held that pension benefits already earned are contract rights, per Allen v. City of Long Beach (1955) 45 Cal.2d 128 and later cases. Under the framework the courts apply, adverse modifications must be reasonable and must be paired with comparable new advantages. This page does not offer legal advice; consult a California attorney for a case-specific reading.

Does the CalPERS UAL mean my pension check is at risk?

The CalPERS UAL is an actuarial gap, not an operational cash shortfall. CalPERS pays monthly benefits from a combination of investment income, employer contributions, and employee contributions. The system has paid benefits every year since inception, per the ACFR series. This page does not predict future events.

What was the CalPERS fiscal year 2024-25 investment return?

CalPERS reported a preliminary time-weighted return of 11.6 percent, net of fees, for the fiscal year that ended June 30, 2025, per CalPERS Facts at a Glance for investments. This was above the plan's 6.8 percent discount rate assumption for that year and contributed to the higher preliminary funded ratio.

How many members and employers does CalPERS cover?

As of June 30, 2025, CalPERS reported 2,385,177 members in the retirement system and roughly 2,906 employer plans, per CalPERS Facts at a Glance for retirement plan members. Membership breaks into active (983,262), retired (714,696), inactive (576,516), and beneficiaries and survivors (110,703), per the same publication.

Where do I find the CalPERS actuarial valuation for my employer?

State and schools valuations are on the CalPERS actuarial reports page at calpers.ca.gov/employers/actuarial-services/valuation-reports. Public agency valuations are searchable by employer at calpers.ca.gov/employers/actuarial-resources/public-agency-actuarial-valuation-reports. Each report includes the plan's own funded ratio, UAL layers, and employer contribution rate for the year.