---
title: "CalPERS posts best return in over a decade, lifting funded status to 85%"
description: "The nation's largest public pension fund earned 14.8% on its investments last fiscal year, its strongest showing since 2014 outside the pandemic rebound. The gain eases pressure on the state and local budgets that back the retirements of more than two million California public workers."
category: "Los Angeles"
category_url: https://herald.la/category/los-angeles
author: "Camila Reyes"
published: 2026-07-14T09:52:00.000Z
updated: 2026-07-14T09:52:00.000Z
canonical: https://herald.la/article/calpers-posts-best-return-in-over-a-decade-lifting-funded-status-to-85
tags: ["calpers", "pensions", "california budget", "public employees", "investments"]
---
# CalPERS posts best return in over a decade, lifting funded status to 85%

The nation's largest public pension fund earned 14.8% on its investments last fiscal year, its strongest showing since 2014 outside the pandemic rebound. The gain eases pressure on the state and local budgets that back the retirements of more than two million California public workers.

The California Public Employees' Retirement System, the country's largest public pension fund, closed its 2025-26 fiscal year with a 14.8% investment return, [more than double the 6.8% it needs to hit each year to keep its promises to retirees](https://calmatters.org/politics/2026/07/calpers-investment-return/). Chief Executive Marcie Frost called it the fund's best year since 2014, setting aside the sharp 2021 rebound from the pandemic downturn.

The gains pushed the fund's assets to about $637.1 billion and, more consequentially for California's budget math, lifted its funded status to 85% of what it owes current and future retirees, [up from roughly 79% a year earlier](https://calmatters.org/politics/2026/07/calpers-investment-return/).

## Why the number matters to taxpayers

CalPERS is not an abstraction for California's cities, counties and school districts. When its investments fall short of the 6.8% target, the state and hundreds of local governments must make up the difference with larger contributions, money that would otherwise pay for services. A strong year works in the other direction, [easing the pressure on public employers to divert cash into pension payments](https://laist.com/news/politics/calpers-just-had-one-of-its-best-years-in-a-decade-why-it-matters-to-taxpayers).

The fund covers the retirements of more than two million public workers and their families, from clerks and firefighters to university staff. Its health shapes how much room Sacramento and city halls across the state have to spend on everything else.

## A second straight strong year

The result marks back-to-back double-digit returns for the fund, which [reported an 11.6% gain the previous fiscal year](https://laist.com/news/politics/calpers-just-had-one-of-its-best-years-in-a-decade-why-it-matters-to-taxpayers). Public stock holdings did much of the work this time, a reflection of buoyant global equity markets over the year.

## The debate over what comes next

Good years also revive an old argument. Public-sector unions have pressed lawmakers to enhance retirement benefits, and a run of strong returns tends to strengthen their hand. Fiscal watchdogs counter that a single year, however good, does not resolve the fund's long-run gap: at 85% funded, CalPERS still holds less than the full amount actuaries say it should to cover its obligations, and market returns are not guaranteed to repeat.

For now, the figure gives California's public employers a measure of breathing room, and a reminder of how closely the state's finances are tied to the performance of a single, very large investment portfolio.

## Sources

- [CalPERS just had one of its best years in a decade. Why it matters to taxpayers](https://laist.com/news/politics/calpers-just-had-one-of-its-best-years-in-a-decade-why-it-matters-to-taxpayers)
- [How much did CalPERS make? Pension fund beats its target](https://calmatters.org/politics/2026/07/calpers-investment-return/)