FAQ Category: Investments & Financials

No. Once the contributions and investment earnings come into the retirement system, they are held in trust by SCERS for the exclusive benefit of SCERS Members and their Beneficiaries. SCERS has a fiduciary responsibility to safeguard these assets in order to provide benefits.

The SCERS Board of Retirement is responsible for investment decisions under the California Constitution. The Board sets policies and approves the strategic asset allocation, while SCERS staff and independent investment consultants implement those policies and monitor performance.

SCERS benefits are funded from three main sources: contributions from members, contributions from employers, and investment earnings. Historically, investment earnings have provided the majority of funding, which is why a strong investment strategy is so important.

Alternative assets provide diversification and potential for higher long-term returns. They also behave differently than traditional stocks and bonds, which helps stabilize the portfolio. Because these investments can be complex, SCERS has strict policies in place to ensure managers are held to high fiduciary standards.

Strategic asset allocation is the long-term plan for how SCERS divides its assets across different categories such as stocks, bonds, real estate, and alternatives. This mix is designed to balance risk and return, ensuring the system can meet its long-term obligations while protecting against market downturns.

SCERS follows a comprehensive Master Investment Policy Statement that sets standards for risk management, diversification, and oversight. Independent consultants provide analysis, performance is reviewed quarterly, and reports are shared publicly. In addition, external audits and actuarial reviews add further layers of accountability.

Like all investors, SCERS is impacted by market volatility. However, the system’s diversified portfolio and long-term focus help smooth out short-term fluctuations. SCERS also uses portfolio analytic systems, risk assessment reports, and stress tests to plan for different scenarios and keep the system resilient.

Members and the public can access quarterly investment reports, the Investment Year in Review and Annual Plan, the Annual Comprehensive Financial Report (ACFR), and other documents directly on scers.gov. These reports show performance results, funding progress, and investment costs in a transparent way.

Funded status measures the ratio of assets to liabilities—essentially, how much of the benefits earned by members are covered by assets on hand. A higher funded status means the plan is in a stronger position to meet its long-term obligations.