Latest / The Fiscal Policy Podcast with Fexingo: Government Budgets, Stimulus, and Public Spending
How Government Pension Funds Are Sitting on Billions in Unrealized Gains
Episode 71 of The Fiscal Policy Podcast: Government pension funds hold trillions in assets, but a little-known accounting rule lets them report gains that don't exist yet. Lucas breaks down how the California Public Employees' Retirement System (CalPERS) reported a 21% return in 2024 while actually collecting just 6% in cash. Luna digs into why this matters: when funds spend based on paper gains, taxpayers cover the gap when markets dip. The episode uses CalPERS as a case study, walks through the accounting mechanism—known as the 'smoothing' rule—and contrasts it with…
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