A skeptical reader published the following response to my essay:
Seems disingenuous to compare assets and liabilities over a “randomly selected”? twenty year period without even mentioning that, somewhere in that period the ‘greatest recession since the great depression’ eviscerated said fund by nearly half.
Of course, the answer is that CalPERS’s 7.8% compound annual growth rate over that 20-year period includes the effects of the Great Recession.
To learn more about growth rates over periods including depressions, recessions, expansions and everything in between, see here.
PS: If still not convinced, consider a period not including the Great Recession. E.g., for the ten year period from 1996 to 2006, liabilities rose 135% (from $97 billion to $228 billion), unfunded liabilities rose 1015% (from $2.6 billion to $29 billion), and the Funded Ratio fell from 97% to 87%.