US - The US$5bn national credit enhancement program of the California Public Employees' Retirement System (CalPERS) has been awarded a ‘AAA' rating by Moody's.
The ratings agency based the decision on the US$180bn system’s investment performance, growth and ability to meet and pay promised retirement benefits, CalPERS said.
Commenting on the rating, Mark Anson (pictured), chief investment officer, said: “This rating validates that CalPERS is a healthy, strong retirement system and a great investment for California.”
According to the fund, the rating was based on several factors including: the system’s investment results and liquidity profile; a strong funded status relative to other public pension funds; contracts with more than 1400 local governments that contribute to the financial viability of the fund; and the system’ ability and willingness to meet obligations.
“While funding ratios vary from plan to plan, CalPERS average funded ration is 88%, strong relative to other public pension plans,” the fund said.
“Moody’s also said the actuarially determined assets to liabilities is expected to revert to levels at or near fully funded status over time, and that CalPERS 10-year average rate of return of 8.5% further supports its actuarial assumptions.”
The fund’s credit enhancement program was approved by the Board in 2003 and is designed to assist municipalities nationwide to access the bond market more efficiently by getting backing from CalPERS. In turn, the fund charges a fee for lending its balance sheet.
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In this week's Pensions Buzz, we want to know if you believe there is ever a case for combining retirement savings products with other savings products, and if the PPF levy for sponsorless schemes is appropriate for DB consolidators.