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2019 YTD return--January is good!

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16 hours ago, whyme said:

Steve, if you are curious about why and how Calstrs makes its investment decisions, this podcast features a long interview with the guy in charge of them: https://capitalallocatorspodcast.com/2019/02/10/ailman/

I love my pension plan and grateful that I have one when millions of Americans do not.

But when it comes to their investment decisions, no, I am not interested in anything the chief investment officer, Ailman or Calstrs does! My fight is with the 403(b). I have no control over anything that CalSTRS does. What can anybody do when CalSTRS screwed up so badly in 2008, losing 26%!? Besides, the teacher's unions all over the state send dozens of reps to their monthly meetings, and all they talk about is the same issue over and over again, decreasing the liability gap. Do you know its only funded by 62%? It's frightening. They never ever talk about one of the great 403(b)s that CalSTRS runs Pension2, and while they want educators to take more responsibility for their retirements such as using the 403b or the 457b plans, CalSTRS does very little to promote our cause here to educate teachers. When we report so-called advisers (insurance agents) claiming to be CalSTRS pension experts to them, CalSTRS does very little or nothing. 

Its one of the primary reasons why 403b reform is so difficult. CalSTRS, Securities, and Exchange Commission and the State Insurance Commissioners office are all governmental agencies and their job is to keep the status quo. They are not in the advocacy business. Yet they acknowledge there is a problem with our state teachers are not protected from the 403b sharks that are everywhere. 

Thanks for the question,

Keep up the fight,


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The US stock market dropped 37% in 2008 so I don’t think you’ve provided enough information (a 26% loss in 2008) to support the notion that they really screwed up.

I have no idea how they run things, but that figure isn’t enough to make me think they’re doing it poorly. 

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Fair enough, Steve, if you want to keep your focus squarely on 403b issues rather than investment policy. 

I'm not a fan of everything CalStrs does, but I think you are being a bit rough on their investment record... down 3.2% in 2018 is better than I did, and even your very conservative portfolio was down 2%, if I recall correctly.  And January more-or-less erased those drops.  They need market returns to fund pensions for decades or even centuries into the future (they plan based on an annual gain of 7%/year), so they need to have more exposure to market risk than an individual retiree with a much shorter time horizon.

The state (led on this by Jerry Brown) has taken significant steps to keep the pensions funded and address that "liability gap," notably by increasing the participant contributions (I now pay 10.3% of gross pay, before tax) and district contributions (that is ramping up to something like 20% of salary, which is a big argument our district uses to cut health benefits and suppress pay raises, but I digress) and reducing the benefits a bit for newly hired folks (instead of getting the maximum "age factor" multiple at 63, new hires will have to work to 65).  There are a couple of states with pension plans that are seriously underfunded and could flame out (Illinois is one, I think), but California looks pretty solid to me, though of course nothing is ever truly guaranteed.


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