US – Calpers, the world’s second largest pension fund, admits that it could be underfunded by the end of fiscal 2003, if it suffers one more year of negative returns.

A spokesman at the state pension fund for Californian employees told IPE: “The fund is fully funded per se, but one more year of negative returns could lead to an underfunded status for some employers.”

Calpers has three types of member – state employers; schools (excluding teachers); and local public agencies.

The exact forecasts, which will reveal how much employers need to pay, and returns needed to avoid being underfunded, will be known in the spring, said Calpers.

Calpers has suffered losses the last two fiscal years – the year ending June 2001 the fund lost 7.2%, and the year ending June 2002 saw the fund lose 5.9%. Between June 2000 and the end of October 2002, Calpers assets fell from 172 billion dollars to 132.6 billion dollars.