Do you know how your CalSTRS pension is made? There’s more involved than you might guess.
Pension Sense blog | December 11, 2023 | Thomas Lawrence
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Ever notice that little box on your pay stub that says “retirement?” Well, that’s your contribution to the Teachers’ Retirement Fund, which, along with regular contributions from school districts and the state of California, help keep public educators’ money secure. But those contributions only account for approximately 40 cents of every pension dollar you’ll make. So, where do the other 60 cents come from?
That other 60 cents comes from the hard work done by CalSTRS’ investment pros who invest your money on your behalf. We have an approximately $300 billion portfolio that’s highly diversified, meaning we invest in several areas—such as public companies, apartment buildings and government bonds.
Diversifying your money puts you in the best position possible because when one kind of investment struggles for one reason or another, other types of investments improve. In addition to growing your money, we protect it. One key way we keep it safe is by avoiding as many risks as possible. Simple? Not always…
To keep your home safe, you might lock the doors, keep the windows closed or install an alarm system. You might even climb a ladder and install a security camera above the garage and on your front porch. We’re just as thorough about caring for your retirement money. It’s all about recognizing and addressing risk today, tomorrow and decades into the future.
We consider risk in every investment decision we make. That’s why we look at each aspect of the companies we invest in. You may hear the phrase “ESG” in the news, which stands for risks that fall into environmental, social and governance areas. Don’t worry about memorizing the acronym. Instead, here’s a simple breakdown of what that means.
“E” is for Environment
An environmental risk may be the proximity of a shopping mall to a coastline where the sea level is rising.
“S” is for Social
A social risk may be how a company’s executives treat their employees.
“G” is for Governance
A governance risk may be evaluating whether a company’s board of directors has the right skill sets among its members to oversee the company’s executives, such as the CEO.
Mostly, monitoring ESG issues means we evaluate all of the long-term risks to your pensions to ensure we can pay your benefits in full and on time. Just like you leave no stone unturned in watching over your home.
For information on how to reach CalSTRS, visit the contact us webpage.