January 29, 2010 / 10:11 AM / 10 years ago

California Teachers pension gap up 90% at $43 bln

Jan 29 (Reuters) - The pensions funding shortfall facing the United States’ second biggest public pension fund soared 90 percent to $42.6 billion in the year to June 2009.

California State Teachers’ Retirement System (Calstrs) said it recorded a $42.6 billion shortfall, hurt by investment losses and up from $22.5 billion a year earlier.

Calstrs posted the funding strategy report of its flagship Defined Benefit Program, to be presented by chief executive Jack Ehnes on Feb. 5, on its website.

“Given the 25 percent loss in investments in 2008-09, however, the funding situation has gotten much worse,” Calstrs said in the report.

The funding shortfall would reduce the Defined Benefit Program’s funded ratio to about 77 percent, according to the report.

If all the losses from 2008-09 were recognized, the shortfall would increase further to about $78 billion and would reduce the funded ratio to 58 percent, the fund said in the report.

The fund will need to seek increases in contributions to offset the impact of the investment losses, it said.

To fully fund the Defined Benefit Program in 30 years after the 2008-09 losses would require a contribution rate increase of about 14 percent, Calstrs said.

In December, Moody’s said it sees a worsening trend in expected funding shortfalls of both the California Public Employees’ Retirement System, or Calpers, and the California State Teachers’ Retirement System. [ID:nN10138869] (Reporting by Sakthi Prasad in Bangalore; Editing by Andrew Callus)

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