Date
Witness
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258
580% Growth
In Employer Participation From
Inception to FY 2024-25
The California Employers’
Pension Prefunding Trust
Prefund future pension costs with a CalPERS trust fund
The CEPPT is designed to give public agencies who offer defined benefit pensions the opportunity to save money by investing now for their future pension contributions.
102
Participating Employers
$312.6 million
Assets Under Management
Choice of Asset Allocation Strategies
- Expected Rate
of Return | Standard Deviation | Risk LevelLess Conservative g More Conservative Strategy 1 5.4% | 8.4% |
Strategy 2 4.9% | 5.9% |
Figures as of June 30, 2025
The CEPPT program gives us
a powerful tool to help ensure the
stabilization and sustainability of our
long-term retirement benefits. With its
low fees, flexibility, risk diversification, and
professional staff, it is the perfect program
to save money for our agency and the
ratepayers we serve.
– Robert Housley, General Manager
Midway City Sanitary District, Orange
“
”
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Consistent Growth of CEPPT Fund Assets Since Inception
Portfolio Managed by CalPERS
• Fiduciary responsibility assumed
by the CalPERS Board
• Investment management by experts at
CalPERS and internationally renowned
consultants
• Two investment strategy options with
varying risk levels
• All public market securities
Learn more at www.calpers.ca.gov/ceppt
Contact us at [email protected]
Call us at (916) 795-8454
Figures as of June 30, 2025
How can you use the CEPPT?
• Prefund normal cost contributions and
unfunded liability payments
• Make additional discretionary payments
• As a contingency fund for future volatility
Advantages of Participating in CEPPT
The CEPPT is designed to save you money and stabilize
your budget by offering:
• CalPERS investment management
• Low total participation costs
• Efficient and effective customer outreach and support • Simple and streamlined account transactions
August 2025
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California Employers' Pension Prefunding Trust (CEPPT)
CEPPT Strategy 1
August 31, 2025
Asset Class Target
Allocation
Target
Range Benchmark
Global Equity 37% ± 5% MSCI All Country World
Index IMI (Net)
Fixed Income 44% ± 5% Bloomberg US Aggregate
Bond Index
Treasury Inflation-Protected
Securities ("TIPS") 5% ± 3% Bloomberg US TIPS Index,
Series L
Real Estate Investment
Trusts ("REITs") 14% ± 5% FTSE EPRA/NAREIT
Developed Index (Net)
Cash - + 2% ICE BofA US 3-Month
Treasury Bill Index
Assets Under Management
As of the specified reporting month-end:
CEPPT Strategy 1 Annual Expense Ratio
$243,667,593 0.25%
CEPPT Strategy 1 Performance as of August 31, 2025
SKHD Since Inception*
1 Month 3 Months Fiscal YTD 1 Year 3 Years* 5 Years* 10 Years* (October 1, 2019) Gross Return 1,3 2.24% 5.14% 2.48% 7.87% 8.66% 4.98% - 5.72% Net Return 2,3 2.22% 5.08% 2.44% 7.63% 8.41% 4.74% - 5.48% Benchmark Return 2.22% 5.08% 2.45% 7.65% 8.48% 4.79% - 5.60% Standard Deviation 4 - - - - 10.34% 10.16% - 10.42%
* Returns for periods greater than one year are annualized. 1 Gross returns are net of State Street Investment Management operating expenses. 2 Net returns are net of State Street Investment Management operating expenses, investment management, administrative and recordkeeping fees. 3 Expenses are described in more detail on page 2 of this document. 4 Standard deviation is based on gross returns and is reported for periods greater than 3 years.
Objective
The CEPPT Strategy 1 portfolio seeks to provide capital appreciation and income consistent with its strategic asset allocation. There is no guarantee that the portfolio will achieve its investment objective.
Strategy
The CEPPT Strategy 1 portfolio is invested in various asset classes that are passively managed to an index. CalPERS periodically adjusts the composition of the portfolio in order to match the target allocations. Generally, equities are intended to help build the value of the employer's portfolio over the long term while bonds are intended to help provide income and stability of principal. Also, strategies invested in a higher percentage of equities seek higher investment returns (but assume more risk) compared with strategies invested in a higher percentage of bonds.
Compared with CEPPT Strategy 2, this portfolio has a higher allocation to equities than bonds. Historically, equities have displayed greater price volatility and, therefore, this portfolio may experience greater fluctuation of value. Employers that seek higher investment returns, and are able to accept greater risk and tolerate more fluctuation in returns, may wish to consider this portfolio.
CalPERS Board may change the list of approved asset
classes in composition as well as targeted allocation
percentages and ranges at any time.
Composition
Asset Class Allocations and Benchmarks
The CEPPT Strategy 1 portfolio consists of the following asset classes and corresponding benchmarks:
Portfolio Benchmark
The CEPPT Strategy 1 benchmark is a composite of underlying asset class market indices, each assigned the target weight for the asset class it represents.
Target vs. Actual Asset Class Allocations
The following chart shows policy target allocations compared with actual asset allocations as of the specified reporting month-end. CalPERS may temporarily deviate from the target allocation for a particular asset class based on market, economic, or other considerations.
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California Employers' Pension Prefunding Trust (CEPPT)
CEPPT Strategy 1
August 31, 2025
Asset Class Target Allocations Strategy 1 Strategy 2
Global Equity 37% 21%
Fixed Income 44% 61%
Treasury-Inflation Protected Securities 5% 9%
Real Estate Investment Trusts 14% 9%
General Information
Information Accessibility
The CEPPT Strategy 1 portfolio consists of assets managed internally by CalPERS and/or by external managers. Since it is not a mutual fund, a prospectus is not available and daily holdings are not published. CalPERS provides a quarterly statement of the employer's account and other information about the CEPPT. For total market value, detailed asset allocation, investment policy and performance information, please visit our website at www.calpers.ca.gov.
Portfolio Manager Information
The CalPERS Board, through its Investment Committee, directs the CEPPT investment strategy based on policies approved by the Board of Administration. State Street Investment Management manages all underlying investments for CEPPT, which include: Global Equity, Fixed Income, Real Estate Investment Trusts, and Treasury Inflation-Protected Securities.
Custodian and Record Keeper
State Street Bank serves as custodian for the CEPPT. Northeast Retirement Services serves as recordkeeper.
Expenses
CEPPT is a self-funded trust in which participating employers pay for all administrative and investment expenses. Expenses reduce the gross investment return by the fee amount. The larger the expenses, the greater reduction of investment return. Currently, CEPPT expense ratios are 0.25%.
This equates to $2.50 per $1,000 invested. The expenses consist of administrative expenses borne by CalPERS to administer and oversee the Trust assets, investment management and administrative fees paid to State Street Investment Management to manage all asset classes, and recordkeeping fees paid to Northeast Retirement Services to administer individual employer accounts. The expenses described herein are reflected in the net asset value per unit. The expense ratio is subject to change at any time and without prior notification due to factors such as changes to average fund assets or market conditions. CalPERS reviews the operating expenses annually and changes may be made as appropriate. Even if the portfolio loses money during a period, the expenses will still be charged.
What Employers Own
Each employer invested in CEPPT Strategy 1 owns units of this portfolio, which invests in pooled asset classes managed by CalPERS and/or external advisors. Employers do not have direct ownership of the securities in the portfolio.
Price
The value of the portfolio changes daily based upon the market value of the underlying securities. Just as prices of individual securities fluctuate, the portfolio's value also changes with market conditions.
Principal Risks of the Portfolio
The CEPPT fund is a trust fund dedicated to prefunding employer contributions to defined benefit pension plans for eligible state and local agencies. CEPPT is not, however, a defined benefit plan. There is no guarantee that the portfolio will achieve its investment objectives or provide sufficient funding to meet employer obligations.
An investment in the portfolio is not a bank deposit, nor is it insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC), CalPERS, the State of California or any other government agency.
There are risks associated with investing, including possible loss of principal. The portfolio's risk depends in part on the portfolio's asset class allocations and the selection, weighting and risks of the underlying investments. For more information about investment risks, please see the document entitled "CEPPT Principal Investment Risks" located at www.calpers.ca.gov.
Fund Performance
Performance data shown on page 1 represents past performance and is no guarantee of future results. The investment return and principal value of an investment will fluctuate so that an employer's units, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than historical performance data shown. For current performance information, please visit www.calpers.ca.gov and follow the links to California Employers' Pension Prefunding Trust.
CEPPT Strategy Risk Levels
CalPERS offers employers the choice of one of two investment strategies. Projected risk levels among risk strategies vary, depending upon the target asset class allocations. Generally, equities carry more risk than fixed income securities.
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California Employers' Pension Prefunding Trust (CEPPT)
CEPPT Strategy 2
August 31, 2025
Asset Class Target
Allocation
Target
Range Benchmark
Global Equity 21% ± 5% MSCI All Country World
Index IMI (Net)
Fixed Income 61% ± 5% Bloomberg US Aggregate
Bond Index
Treasury Inflation-Protected
Securities ("TIPS") 9% ± 3% Bloomberg US TIPS Index,
Series L
Real Estate Investment
Trusts ("REITs") 9% ± 5% FTSE EPRA/NAREIT
Developed Index (Net)
Cash - + 2% ICE BofA US 3-Month
Treasury Bill Index
Assets Under Management
As of the specified reporting month-end:
CEPPT Strategy 2 Annual Expense Ratio
$78,433,870 0.25%
CEPPT Strategy 2 Performance as of August 31, 2025
SKHE Since Inception*
1 Month 3 Months Fiscal YTD 1 Year 3 Years* 5 Years* 10 Years* (January 1, 2020) Gross Return 1,3 1.85% 4.03% 1.88% 6.01% 6.34% 2.46% - 3.14% Net Return 2,3 1.83% 3.97% 1.84% 5.77% 6.09% 2.23% - 2.91% Benchmark Return 1.83% 3.98% 1.86% 5.81% 6.23% 2.33% - 3.02% Standard Deviation 4 - - - - 8.63% 8.03% - 7.95%
* Returns for periods greater than one year are annualized. 1 Gross returns are net of State Street Investment Management operating expenses. 2 Net returns are net of State Street Investment Manaagement operating expenses, investment management, administrative and recordkeeping fees. 3 Expenses are described in more detail on page 2 of this document. 4 Standard deviation is based on gross returns and is reported for periods greater than 3 years.
Objective
The CEPPT Strategy 2 portfolio seeks to provide capital appreciation and income consistent with its strategic asset allocation. There is no guarantee that the portfolio will achieve its investment objective.
Strategy
The CEPPT Strategy 2 portfolio is invested in various asset classes that are passively managed to an index. CalPERS periodically adjusts the composition of the portfolio in order to match the target allocations. Generally, equities are intended to help build the value of the employer's portfolio over the long term while bonds are intended to help provide income and stability of principal. Also, strategies invested in a higher percentage of equities seek higher investment returns (but assume more risk) compared with strategies invested in a higher percentage of bonds.
Compared with CEPPT Strategy 1, this portfolio has a lower allocation to equities and a higher allocation to bonds. Historically, funds with a lower percentage of equities have displayed less price volatility and, therefore, this portfolio may experience comparatively less fluctuation of value. Employers that seek greater stability of value, in exchange for possible lower investment returns, may wish to consider this portfolio.
CalPERS Board may change the list of approved asset classes in composition as well as targeted allocation percentages and ranges at any time.
Composition
Asset Class Allocations and Benchmarks
The CEPPT Strategy 2 portfolio consists of the following asset classes and corresponding benchmarks:
Portfolio Benchmark
The CEPPT Strategy 2 benchmark is a composite of underlying asset class market indices, each assigned the target weight for the asset class it represents.
Target vs. Actual Asset Class Allocations
The following chart shows policy target allocations compared with actual asset allocations as of the specified reporting month-end. CalPERS may temporarily deviate from the target allocation for a particular asset class based on market, economic, or other considerations.
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California Employers' Pension Prefunding Trust (CEPPT)
CEPPT Strategy 2
August 31, 2025
Asset Class Target Allocations Strategy 1 Strategy 2
Global Equity 37% 21%
Fixed Income 44% 61%
Treasury-Inflation Protected Securities 5% 9%
Real Estate Investment Trusts 14% 9%
General Information
Information Accessibility
The CEPPT Strategy 2 portfolio consists of assets managed internally by CalPERS and/or by external managers. Since it is not a mutual fund, a prospectus is not available and daily holdings are not published. CalPERS provides a quarterly statement of the employer's account and other information about the CEPPT. For total market value, detailed asset allocation, investment policy and performance information, please visit our website at www.calpers.ca.gov.
Portfolio Manager Information
The CalPERS Board, through its Investment Committee, directs the CEPPT investment strategy based on policies approved by the Board of Administration. State Street Investment Management manages all underlying investments for CEPPT, which include: Global Equity, Fixed Income, Real Estate Investment Trusts, and Treasury Inflation-Protected Securities.
Custodian and Record Keeper
State Street Bank serves as custodian for the CEPPT. Northeast Retirement Services serves as recordkeeper.
Expenses
CEPPT is a self-funded trust in which participating employers pay for all administrative and investment expenses. Expenses reduce the gross investment return by the fee amount. The larger the expenses, the greater reduction of investment return. Currently, CEPPT expense ratios are
0.25%. This equates to $2.50 per $1,000 invested. The expenses consist of administrative expenses borne by CalPERS to administer and oversee the Trust assets, investment management and administrative fees paid to State Street Investment Management to manage all asset classes, and recordkeeping fees paid to Northeast Retirement Services to administer individual employer accounts. The expenses described herein are reflected in the net asset value per unit. The expense ratio is subject to change at any time and without prior notification due to factors such as changes to average fund assets or market conditions. CalPERS reviews the operating expenses annually and changes may be made as appropriate. Even if the portfolio loses money during a period, the expenses will still be charged.
What Employers Own
Each employer invested in CEPPT Strategy 2 owns units of this portfolio, which invests in pooled asset classes managed by CalPERS and/or external advisors. Employers do not have direct ownership of the securities in the portfolio.
Price
The value of the portfolio changes daily based upon the market value of the underlying securities. Just as prices of individual securities fluctuate, the portfolio's value also changes with market conditions.
Principal Risks of the Portfolio
The CEPPT fund is a trust fund dedicated to prefunding employer contributions to defined benefit pension plans for eligible state and local agencies. CEPPT is not, however, a defined benefit plan. There is no guarantee that the portfolio will achieve its investment objectives or provide sufficient funding to meet employer obligations.
An investment in the portfolio is not a bank deposit, nor is it insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC), CalPERS, the State of California or any other government agency.
There are risks associated with investing, including possible loss of principal. The portfolio's risk depends in part on the portfolio's asset class allocations and the selection, weighting and risks of the underlying investments. For more information about investment risks, please see the document entitled "CEPPT Principal Investment Risks" located at www.calpers.ca.gov.
Fund Performance
Performance data shown on page 1 represents past performance and is no guarantee of future results. The investment return and principal value of an investment will fluctuate so that an employer's units, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than historical performance data shown. For current performance information, please visit www.calpers.ca.gov and follow the links to California Employers' Pension Prefunding Trust.
CEPPT Strategy Risk Levels
CalPERS offers employers the choice of one of two investment strategies. Projected risk levels among risk strategies vary, depending upon the target asset class allocations. Generally, equities carry more risk than fixed income securities.
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CalPERS Investment Policy for the California
Employers’ Pension Prefunding Trust
Effective Date
This policy is effective as of October 1, 2022.
Contents
Introduction 2
Strategic Objective 2
Responsibilities 2
Investment Approach & Parameter 2
Investment Constraints/ Limitations 3
Glossary of CalPERS Specific Terms 3
Policy Document History 3
Appendices 3
Appendix 1: Reporting to the Investment Committee ............................................................... 3 Appendix 2: Investment Responsibilities .................................................................................... 4 Appendix 3: Investment Constraints/Limitations ....................................................................... 5 Appendix 4: Policy Document History ........................................................................................ 6 PGCC 11-19-2025
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October 1, 2022 Page 2 of 6
Introduction
The California Public Employees’ Retirement System (CalPERS) Total Fund Investment Policy, adopted by the CalPERS Investment Committee (Committee), sets forth CalPERS’ overarching investment beliefs, purposes, and objectives with respect to all its investment programs.
This document sets forth the investment policy (Policy) for the policy portfolios (Portfolios) of the California Employers’ Pension Prefunding Trust Fund (CEPPT or Fund). The design of this Policy ensures that investors, managers, consultants, and other participants selected by CalPERS take prudent and careful action while managing the Portfolios. Additionally, use of this Policy ensures sufficient flexibility in managing investment risks and returns associated with the Fund.
The Fund was established January 1, 2019 for public employers to prefund their required pension contributions. There are two separate Portfolios (Strategy 1 and Strategy 2) for the Fund, that provide employers a choice of asset allocation strategies.
This Policy should be read in conjunction with and is subject to applicable conditions contained within the CalPERS Total Fund Investment Policy. This Policy shall also be managed to comply with all applicable Investment Office policies.
Strategic Objective
The Fund seeks to offer to employers distinct investment alternatives given their specific liabilities and cash flow needs.
Responsibilities
Details regarding various levels of responsibility for this Fund are provided in Appendix 1, Reporting to the Investment Committee, and Appendix 2, Investment Responsibilities.
Investment Approach & Parameter
A. Performance Objective and Benchmark
The benchmark for the Portfolios is specified in the CalPERS Total Fund Investment Policy benchmark appendix.
B. Strategic Asset Allocation Process
A comprehensive Asset Allocation Strategy analysis shall be completed periodically that follows the schedule and process as described in the CalPERS Total Fund Investment Policy, Asset Allocation Strategy Section, and Reporting to the Investment Committee appendix. As further described in the Asset Allocation Strategy Section, the schedule may be altered to accommodate pending Board actions.
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California Employers’ Pension Prefunding Trust Policy
October 1, 2022 Page 3 of 6
C. Restrictions, Prohibitions and Authorized Securities Restrictions, Prohibitions and Authorized Securities of the Fund are governed by the CalPERS Total Fund Investment Policy for internal funds and defined in each Manager’s contract with CalPERS for external funds.
All transactions involving derivatives are governed by the CalPERS Total Fund Investment Policy, Global Derivatives and Counterparty Risk Section.
Investment Constraints/ Limitations
See Appendix 3 for Fund investment constraints/limitations.
Glossary of CalPERS Specific Terms
Bold italicized terms appearing in the Policy are CalPERS specific in nature and are defined in the CalPERS Specific Glossary of Terms.
Policy Document History
See Appendix 4 for historical details of Investment Committee adoption and revisions of this Policy.
Appendices
Appendix 1: Reporting to the Investment Committee
The following tables provide details regarding reporting to the Investment Committee:
1. Investment Office Staff
2. General Pension Consultant
Table 1: Investment Office Staff Reporting Responsibilities Ref # Report Content Frequency
1. Staff shall provide a review that will include, but is not limited to, asset class allocations compared to Policy targets and ranges (as applicable), current market value,
performance, and risk metrics.
No less than annually
2. Staff shall report concerns, problems, material changes, and all violations of the Policy. These reports shall include explanations of any violations and appropriate
recommendations for corrective action
At the next
Committee meeting,
or sooner if deemed
necessary
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Table 2: General Pension Consultant Reporting Responsibilities Ref # Report Content Frequency
1. The Consultant shall monitor, evaluate, and report on the performance of the Fund relative to the benchmarks and this Policy and other applicable CalPERS Policies.
No less than annually
Appendix 2: Investment Responsibilities
The following sections provide details regarding investment related responsibilities for the:
• Investment Committee
• Investment Office Staff
• General Pension Consultant
• External Manager
Investment Committee Responsibilities
1. Approve asset classes for investment and set a policy target allocation, permissible range, and benchmark for each asset class.
Investment Office Staff Responsibilities
1. All aspects of portfolio management, including monitoring, trading, analyzing, evaluating performance relative to the appropriate benchmark, and selecting and contracting with managers.
2. Provide individualized asset allocation strategy recommendations to the Committee, including selection of asset class benchmarks, and Policy targets and ranges.
3. Manage the asset class allocations of the Fund within Policy ranges approved by the Committee, in accordance with Policy guidelines.
4. Monitor internal and external managers in the implementation of, and compliance with, the Policy.
5. Develop and maintain investment procedures, program guidelines, and sub-program guidelines.
General Pension Consultant Responsibilities
1. Provide independent perspective and counsel to the Committee, to include routine communication with the Investment Office Staff and periodic reviews of processes and procedures.
External Manager Responsibilities
1. Manage the Fund in accordance with each manager’s contract with CalPERS and the Policy.
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2. Communicate and cooperate with Investment Office Staff and authorized third parties regarding the management of the Fund.
Appendix 3: Investment Constraints/Limitations
Portfolio Asset Class Allocation Targets & Ranges
The following tables provide details regarding the asset allocation targets and ranges for each CEPPT strategy. Upon adoption of significant policy changes, Staff will implement the changes within a reasonable time period.
Table 3.1: Allocation Targets and Ranges – Strategy 1, Effective October 1, 2022 Asset Class Policy Target Policy Range
Relative to Target
Global Equity 37% +/- 5%
Fixed Income 44% +/- 5%
Treasury Inflation-Protected Securities
(TIPS) 5% +/- 3%
Real Estate Investment Trusts (REITs) 14% +/- 5%
Liquidity* 0% + 2%
Total 100%
*The Liquidity asset class is constrained to frictional/operational cash flows Table 3.2: Allocation Targets and Ranges – Strategy 2, Effective October 1, 2022 Asset Class Policy Target Policy Range
Relative to Target
Global Equity 21% +/- 5%
Fixed Income 61% +/- 5%
Treasury Inflation-Protected Securities
(TIPS) 9% +/- 3%
Real Estate Investment Trusts (REITs) 9% +/- 5%
Liquidity* 0% + 2%
Total 100%
*The Liquidity asset class is constrained to frictional/operational cash flows.
Target Tracking Error
The Portfolios will be managed in a manner that minimizes any tracking error.
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Appendix 4: Policy Document History
Table 4: CEPPT Fund Policy History
Date Detail
2019-06-18 Approved by the Investment Committee.
2022-10-01 Administrative changes to the strategic asset allocation targets and ranges as approved by the Committee on March 14, 2022 (agenda item 7b).
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State of California
California Public Employees’ Retirement System
California Employers’ Pension Prefunding Trust (CEPPT)
400 Q Street, Sacramento, CA 95811
www.calpers.ca.gov
California Employers’ Pension Prefunding Trust (CEPPT)
CERTIFICATION OF FUNDING POLICY
EMPLOYER NAME: ________________________________________________________________ SECTION I: CEPPT Asset Allocation Strategy Selection
As the employer, I certify that my agency chooses the following CEPPT asset allocation strategy (select one):
CEPPT Asset Allocation 10 Year Expected Expected Volatility Strategy Rate of Return (Standard Deviation)
Strategy 1 5.4% 8.4%
Strategy 2 4.9% 5.9%
Concurrent - -
Enrollment
SECTION II: Contributions and Reimbursements
As the employer, I certify that we intend to make CEPPT contributions and request eligible reimbursements in the following manner:
Contributions:
We intend to make an initial contribution of $___________________ on or around _____________. (MM/YYYY)
For fiscal year ending June 30, _ we intend to contribute the estimated following amount(s) in:
(YYYY)
Strategy 1: $______________________
_____
and/or
Strategy 2: $______________________
For fiscal year ending June 30, ______ we intend to contribute the estimated following amount(s) in:
(YYYY)
Strategy 1: $______________________ and/or
Strategy 2: $______________________
CEPPT-03 (Revised 06/2024) Page 1 of 4
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State of California
California Public Employees’ Retirement System
California Employers’ Pension Prefunding Trust (CEPPT)
400 Q Street, Sacramento, CA 95811
www.calpers.ca.gov
California Employers’ Pension Prefunding Trust (CEPPT)
CERTIFICATION OF FUNDING POLICY
Reimbursements:
During the two years period identified above, do you intend to seek a reimbursement? Yes
No
If you answered yes:
For fiscal year ending June 30, _______ we intend to seek an approximate reimbursement of $_________________. (YYYY)
For fiscal year ending June 30, _______ we intend to seek an approximate reimbursement of $_________________. (YYYY)
COMMENTS:
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We understand we will be asked to provide information to CalPERS as required to facilitate compliance with Governmental Accounting Standards Board (GASB) reporting requirements and we agree to provide this information to CalPERS on a timely basis.
We understand that CEPPT will be reported in aggregate as a fiduciary fund for CalPERS reporting.
CEPPT assets will not be reported under GASB 67/68.
We understand that the cash flow information provided in Section II are estimated amounts and is being used for CEPPT asset management purposes. There is no implied commitment to contribute or reimburse.
Employer Name
Printed Name of Person Signing the Form
Title of Person Signing the Form
Signature Date
Designated Employer Contact Name
State of California
California Public Employees’ Retirement System
California Employers’ Pension Prefunding Trust (CEPPT)
400 Q Street, Sacramento, CA 95811
www.calpers.ca.gov
California Employers’ Pension Prefunding Trust (CEPPT)
CERTIFICATION OF FUNDING POLICY
Title of Designated Employer Contact
Phone # Email Address
CEPPT-03 (Revised 06/2024) Page 3 or 4
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State of California
California Public Employees’ Retirement System
California Employers’ Pension Prefunding Trust (CEPPT)
400 Q Street, Sacramento, CA 95811
www.calpers.ca.gov
California Employers’ Pension Prefunding Trust (CEPPT)
CERTIFICATION OF FUNDING POLICY
This page provides instructions to complete each section of the Certification of Pension Funding Policy.
SECTION I: CEPPT Asset Allocation Strategy Selection
Your CEPPT assets will be invested using the asset allocation strategy checked here. Each strategy has a different assumed 10 year expected rate of return and risk profile.
SECTION II: Contributions and Reimbursements
Here we ask you to indicate how you expect to make contributions to, and seek reimbursement from, the trust. All contributions are voluntary and never required. This section is for informational purpose.
There is no implied commitment to contribute or reimburse. Information provided is intended for investment forecast and asset management purposes.
CEPPT-03 (Revised 06/2024) Page 4 of 4
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CALIFORNIA EMPLOYERS’ PENSION PREFUNDING TRUST PROGRAM
AGREEMENT AND ELECTION
OF
(NAME OF EMPLOYER)
to Prefund Employer Contributions to a Defined Benefit
Pension Plan
WHEREAS (1) Government Code (GC) Section 21711(a) establishes in the State Treasury the California Employers’ Pension Prefunding Trust Fund (CEPPT), a special trust fund for the purpose of allowing eligible employers to prefund their required pension contributions to a defined benefit pension plan (each an Employer Pension Plan) by receiving and holding in the CEPPT amounts that are intended to be contributed to an Employer Pension Plan at a later date; and WHEREAS (2) GC Section 21711(b) provides that the California Public Employees' Retirement System (CalPERS) Board of Administration (Board) has sole and exclusive control of the administration and investment of the CEPPT, the purposes of which include, but are not limited to (i) receiving contributions from participating employers; (ii) investing contributed amounts and income thereon, if any, in order to receive yield on the funds; and (iii) disbursing contributed amounts and income thereon, if any, to pay for costs of administration of the CEPPT and to deposit employer contributions into Employer Pension Plans in accordance with their terms; and WHEREAS (3) _____________________________________________________ (NAME OF EMPLOYER)
(Employer) desires to participate in the CEPPT upon the terms and conditions set by the Board and as set forth herein; and
WHEREAS (4) Employer may participate in the CEPPT upon (i) approval by the Board and (ii) filing a duly adopted and executed Agreement and Election to Prefund Employer Contributions to a Defined Benefit Pension Plan (Agreement) as provided in the terms and conditions of the Agreement; and
WHEREAS (5) The CEPPT is a trust fund that is intended to perform an essential governmental function (that is, the investment of funds by a State, political subdivision or 115 entity) within the meaning of Internal Revenue Code (Code) Section 115 and Internal Revenue Service Revenue Ruling 77-261, and as an Investment Trust Fund, as defined in Governmental Accounting Standards Board (GASB) Statement No. 84, Paragraph 16, for accounting and financial reporting of fiduciary activities from the PGCC 11-19-2025
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external portion of investment pools and individual investment accounts that are held in a trust that meets the criteria in Paragraph 11c(1).
WHEREAS (6) The CEPPT is not a Code Section 401(a) qualified trust and the assets held in the CEPPT are not assets of any Employer Pension Plan or any plan qualified under Code Section 401(a).
NOW, THEREFORE, BE IT RESOLVED THAT EMPLOYER HEREBY MAKES THE
FOLLOWING REPRESENTATION AND WARRANTY AND THAT THE BOARD AND EMPLOYER AGREE TO THE FOLLOWING TERMS AND CONDITIONS:
A. Employer Representation and Warranty
Employer hereby represents and warrants that it is the State of California or a political subdivision thereof, or an entity whose income is excluded from gross income under Code Section 115(1).
B. Adoption and Approval of the Agreement; Effective Date; Amendment (1) Employer's governing body shall elect to participate in the CEPPT by adopting this Agreement and filing with the Board a true and correct original or certified copy of this Agreement as follows:
Filing by mail, send to: CalPERS
CEPPT
P.O. Box 1494
Sacramento, CA 95812-1494
Filing in person, deliver to: CalPERS Mailroom
CEPPT
400 Q Street
Sacramento, CA 95811
(2) Upon receipt of the executed Agreement, and after approval by the Board, the Board shall fix an effective date and shall promptly notify Employer of the effective date of the Agreement. Employer shall provide the Board such other documents as the Board may request, including, but not limited to a certified copy of the resolution(s) of the governing body of Employer authorizing the adoption of the Agreement and documentation naming Employer’s successor entity in the event that Employer ceases to exist prior to termination of this Agreement.
(3) The terms of this Agreement may be amended only in writing upon the agreement of both the Board and Employer, except as otherwise provided herein. Any such amendment or modification to this Agreement shall be adopted and executed in the same manner as required for the Agreement. Upon receipt of the executed amendment or modification, the Board shall fix the effective date of the amendment or modification.
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(4) The Board shall institute such procedures and processes as it deems necessary to administer the CEPPT, to carry out the purposes of this Agreement, and to maintain the tax-exempt status of the CEPPT. Employer agrees to follow such procedures and processes.
C. Employer Reports Provided for the Board’s Use in Trust Administration and Financial Reporting and Employer Contributions
(1) Employer shall provide to the Board a defined benefit pension plan cost report on the basis of the actuarial assumptions and methods prescribed by Actuarial Standards of Practice (ASOP) or prescribed by GASB. Such report shall be for the Board’s use in trust administration and financial reporting and shall be prepared at least as often as the minimum frequency required by applicable GASB Standards. This defined benefit pension plan cost report may be prepared as an actuarial valuation report or as a GASB compliant financial report. Such report shall be:
1) prepared and signed by a Fellow or Associate of the Society of Actuaries who is also a Member of the American Academy of Actuaries or a person with equivalent qualifications acceptable to the Board;
2) prepared in accordance with ASOP or with GASB; and
3) provided to the Board prior to the Board's acceptance of contributions for the reporting period or as otherwise required by the Board. (2) In the event that the Board determines, in its sole discretion, that Employer’s cost report is not suitable for the Board’s purposes and use or if Employer fails to provide a required report, the Board may obtain, at Employer's expense, a report that meets the Board’s trust administration and financial reporting needs. At the Board’s option, the Board may recover the costs of obtaining the report either by billing and collecting such amount from Employer or through a deduction from Employer's Prefunding Account (as defined in Paragraph D(2) below).
(3) Employer shall notify the Board in writing of the amount and timing of contributions to the CEPPT, which contributions shall be made in the manner established by the Board and in accordance with the terms of this Agreement and any procedures adopted by the Board.
(4) The Board may limit Employer’s contributions to the CEPPT to the amount necessary to fully fund the actuarial present value of total projected benefit payments not otherwise prefunded through the applicable Employer Pension Plan (Unfunded PVFB), as set forth in Employer’s cost report for the applicable period. If Employer’s contribution would cause the assets in Employer’s Prefunding Account to exceed the Unfunded PVFB, the Board may refuse to accept the contribution. If Employer’s cost report for the applicable period does not set forth the Unfunded PVFB, the Board may PGCC 11-19-2025
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refuse to accept a contribution from Employer if the contribution would cause the assets in Employer’s Prefunding Account to exceed Employer’s total pension liability, as set forth in Employer’s cost report.
(5) No contributions are required. Contributions can be made at any time following the effective date of this Agreement if Employer has first complied with the requirements of this Agreement, including Paragraph C.
(6) Employer acknowledges and agrees that assets held in the CEPPT are not assets of any Employer Pension Plan or any plan qualified under Code Section 401(a), and will not become assets of such a plan unless and until such time as they are distributed from the CEPPT and deposited into an Employer Pension Plan.
D. Administration of Accounts; Investments; Allocation of Income (1) The Board has established the CEPPT as a trust fund consisting of an aggregation of separate single-employer accounts, with pooled administrative and investment functions.
(2) All Employer contributions and assets attributable to Employer contributions shall be separately accounted for in the CEPPT (Employer’s Prefunding Account). Assets in Employer’s Prefunding Account will be held for the exclusive purpose of funding Employer’s contributions to its Employer Pension Plan(s) and defraying the administrative expenses of the CEPPT.
(3) The assets in Employer’s Prefunding Account may be aggregated with the assets of other participating employers and may be co-invested by the Board in any asset classes appropriate for a Code Section 115 trust, subject to any additional requirements set forth in applicable law, including, but not limited to, subdivision (d) of GC Section 21711.
Employer shall select between available investment strategies in accordance with applicable Board procedures.
(4) The Board may deduct the costs of administration of the CEPPT from the investment income of the CEPPT or from Employer’s Prefunding Account in a manner determined by the Board.
(5) Investment income earned shall be allocated among participating employers and posted to Employer’s Prefunding Account daily Monday through Friday, except on holidays, when the allocation will be posted the following business day. (6) If, at the Board’s sole discretion and in compliance with accounting and legal requirements applicable to an Investment Trust Fund and to a Code Section 115 compliant trust, the Board determines to its satisfaction that all obligations to pay defined benefit pension plan benefits in accordance with the applicable Employer Pension Plan terms have been satisfied by payment or by defeasance with no remaining risk regarding the amounts to be paid or the value of assets held in the PGCC 11-19-2025
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CEPPT, then the residual Employer assets held in Employer’s Prefunding Account may be returned to Employer.
E. Reports and Statements
(1) Employer shall submit with each contribution a contribution report in the form and containing the information prescribed by the Board.
(2) The Board, at its discretion but at least annually, shall prepare and provide a statement of Employer’s Prefunding Account reflecting the balance in Employer's Prefunding Account, contributions made during the period covered by the statement, investment income allocated during such period, and such other information as the Board may determine.
F. Disbursements
(1) Employer may receive disbursements from the CEPPT not to exceed, on an annual basis, the amount of the total annual Employer contributions to Employer’s Pension Plan for such year.
(2) Employer shall notify the Board in writing in the manner specified by the Board of the persons authorized to request disbursements from the CEPPT on behalf of Employer.
(3) Employer's request for disbursement shall be in writing signed by Employer's authorized representative, in accordance with procedures established by the Board, and the Board may rely conclusively upon such writing. The Board may, but is not required to, require that Employer certify or otherwise demonstrate that amounts disbursed from Employer’s Prefunding Account will be used solely for the purposes of the CEPPT.
However, in no event shall the Board have any responsibility regarding the application of distributions from Employer’s Prefunding Account.
(4) No disbursement shall be made from the CEPPT which exceeds the balance in Employer’s Prefunding Account.
(5) Requests for disbursements that satisfy the above requirements will be processed on at least a monthly basis.
(6) The Board shall not be liable for amounts disbursed in error if it has acted upon the written instruction of an individual authorized by Employer to request disbursements, and is under no duty to make any investigation or inquiry about the correctness of such instruction. In the event of any other erroneous disbursement, the extent of the Board’s liability shall be the actual dollar amount of the disbursement, plus interest at the actual earnings rate but not less than zero.
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G. Costs of Administration
Employer shall pay its share of the costs of administration of the CEPPT, as determined by the Board and in accordance with Paragraph D.
H. Termination of Employer’s Participation in the CEPPT (1) The Board may terminate Employer’s participation in the CEPPT if:
(a) Employer’s governing body gives written notice to the Board of its election to terminate; or
(b) The Board determines, in its sole discretion, that Employer has failed to satisfy the terms and conditions of applicable law, this Agreement or the Board's rules, regulations or procedures.
(2) If Employer’s participation in the CEPPT terminates for either of the foregoing reasons, all assets in Employer’s Prefunding Account shall remain in the CEPPT, except as otherwise provided below, and shall continue to be invested and accrue income as provided in Paragraph D, and Employer shall remain subject to the terms of this Agreement with respect to such assets.
(3) After Employer’s participation in the CEPPT terminates, Employer may not make further contributions to the CEPPT.
(4) After Employer’s participation in the CEPPT terminates, disbursements from Employer’s Prefunding Account may continue upon Employer’s instruction or otherwise in accordance with the terms of this Agreement.
(5) After Employer’s participation in the CEPPT terminates, the governing body of Employer may request either:
(a) A trustee to trustee transfer of the assets in Employer’s Prefunding Account to a trust dedicated to prefunding Employer’s required pension contributions; provided that the Board shall have no obligation to make such transfer unless the Board determines that the transfer will satisfy applicable requirements of the Code, other law and accounting standards, and the Board’s fiduciary duties. If the Board determines that the transfer will satisfy these requirements, the Board shall then have one hundred fifty (150) days from the date of such determination to effect the transfer. The amount to be transferred shall be the amount in Employer's Prefunding Account as of the date of the transfer (the “transfer date”) and shall include investment earnings up to an investment earnings allocation date preceding the transfer date. In no event shall the investment earnings allocation date precede the transfer date by more than 150 days.
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(b) A disbursement of the assets in Employer’s Prefunding Account; provided that the Board shall have no obligation to make such disbursement unless the Board determines that, in compliance with the Code, other law and accounting standards, and the Board’s fiduciary duties, all of Employer's obligations for payment of defined benefit pension plan benefits and reasonable administrative costs of the Board have been satisfied. If the Board determines that the disbursement will satisfy these requirements, the Board shall then have one hundred fifty (150) days from the date of such determination to effect the disbursement. The amount to be disbursed shall be the amount in Employer’s Prefunding Account as of the date of the disbursement (the “disbursement date”) and shall include investment earnings up to an investment earnings allocation date preceding the disbursement date. In no event shall the investment earnings allocation date precede the disbursement date by more than 150 days.
(6) After Employer’s participation in the CEPPT terminates and at such time that no assets remain in Employer’s Prefunding Account, this Agreement shall terminate. To the extent that assets remain in Employer’s Prefunding Account, this Agreement shall remain in full force and effect.
(7) If, for any reason, the Board terminates the CEPPT, the assets in Employer’s Prefunding Account shall be paid to Employer to the extent permitted by law and Code Section 115 after retention of (i) an amount sufficient to pay the Unfunded PVFB as set forth in a current defined benefit pension plan(s) cost report prepared in compliance with ASOP and the requirements of Paragraph C(1), and (ii) amounts sufficient to pay reasonable administrative costs of the Board. Amounts retained by the Board to pay the Unfunded PVFB shall be transferred to (i) another Code Section 115 trust dedicated to prefunding Employer’s required pension contributions, subject to the Board’s determination that such transfer will satisfy applicable requirements of the Code, other law and accounting standards, and the Board’s fiduciary duties or (ii) Employer’s Pension Plan, subject to acceptance by Employer’s Pension Plan. (8) If Employer ceases to exist but Employer’s Prefunding Account continues to exist, and if no provision has been made to the Board’s satisfaction by Employer with respect to Employer’s Prefunding Account, the Board shall be permitted to identify and appoint a successor to Employer under this Agreement, provided that the Board first determines, in its sole discretion, that there is a reasonable basis upon which to identify and appoint such a successor and provided further that such successor agrees in writing to be bound by the terms of this Agreement. If the Board is unable to identify or appoint a successor as provided in the preceding sentence, then the Board is authorized to appoint a third-party administrator or other successor to act on behalf of Employer under this Agreement and to otherwise carry out the intent of this Agreement with respect to Employer’s Prefunding Account. Any and all costs associated with such appointment shall be paid from the assets attributable to Employer’s Prefunding Account. At the Board’s option, and subject to acceptance by Employer’s Pension Plan, PGCC 11-19-2025
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the Board may instead transfer the assets in Employer’s Prefunding Account to Employer’s Pension Plan and terminate this Agreement.
(9) If the Board determines, in its sole discretion, that Employer has breached the representation and warranty set forth in Paragraph A., the Board shall take whatever action it deems necessary to preserve the tax-exempt status of the CEPPT.
I. Indemnification
Employer shall indemnify, defend, and hold harmless CalPERS, the Board, the CEPPT, and all of the officers, trustees, agents and employees of the foregoing from and against any loss, liability, claims, causes of action, suits, or expense (including reasonable attorneys’ fees and defense costs, lien fees, judgments, fines, penalties, expert witness fees, appeals, and claims for damages of any nature whatsoever) not charged to the CEPPT and imposed as a result of, arising out of, related to or in connection with (1) the performance of the Board’s duties or responsibilities under this Agreement, except to the extent that such loss, liability, suit or expense results or arises from the Board's own gross negligence, willful misconduct or material breach of this Agreement, or (2) without limiting the scope of Paragraph F(6) of this Agreement, any acts taken or transactions effected in accordance with written directions from Employer or any of its authorized representatives or any failure of the Board to act in the absence of such written directions to the extent the Board is authorized to act only at the direction of Employer.
J. General Provisions
(1) Books and Records
Employer shall keep accurate books and records connected with the performance of this Agreement. Such books and records shall be kept in a secure location at Employer's office(s) and shall be available for inspection and copying by the Board and its representatives.
(2) Notice
(a) Any notice or other written communication pursuant to this Agreement will be deemed effective immediately upon personal delivery, or if mailed, three (3) days after the date of mailing, or if delivered by express mail or e-mail, immediately upon the date of confirmed delivery, to the following:
For the Board:
Filing by mail, send to:
CalPERS
CEPPT
P.O. Box 1494
Sacramento, CA 95812-1494
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Filing in person, deliver to:
CalPERS Mailroom
CEPPT
400 Q Street
Sacramento, CA 95811
For Employer:
(b) Either party to this Agreement may, from time to time by notice in writing served upon the other, designate a different mailing address to which, or a different person to whom, all such notices thereafter are to be addressed. (3) Survival
All representations, warranties, and covenants contained in this Agreement, or in any instrument, certificate, exhibit, or other writing intended by the parties to be a part of this Agreement shall survive the termination of this Agreement. (4) Waiver
No waiver of a breach, failure of any condition, or any right or remedy contained in or granted by the provisions of this Agreement shall be effective unless it is in writing and signed by the party waiving the breach, failure, right, or remedy. No waiver of any breach, failure, right, or remedy shall be deemed a waiver of any other breach, failure, right, or remedy, whether or not similar, nor shall any waiver constitute a continuing waiver unless the writing so specifies.
(5) Necessary Acts; Further Assurances
The parties shall at their own cost and expense execute and deliver such further documents and instruments and shall take such other actions as may be reasonably required or appropriate to evidence or carry out the intent and purposes of this Agreement.
(6) Incorporation of Amendments to Applicable Laws and Accounting Standards Any references to sections of federal or state statutes or regulations or accounting standards shall be deemed to include a reference to any amendments thereof and any successor provisions thereto.
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(7) Days
Wherever in this Agreement a set number of days is stated or allowed for a particular event to occur, the days are understood to include all calendar days, including weekends and holidays, unless otherwise stated.
(8) No Third Party Beneficiaries
Except as expressly provided herein, this Agreement is for the sole benefit of the parties hereto and their permitted successors and assignees, and nothing herein, expressed or implied, will give or be construed to give any other person any legal or equitable rights hereunder. Notwithstanding the foregoing, CalPERS, the CEPPT, and all of the officers, trustees, agents and employees of CalPERS, the CEPPT and the Board shall be considered third party beneficiaries of this Agreement with respect to Paragraph I above.
(9) Counterparts
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
A majority vote of Employer’s Governing Body at a public meeting held on the ______ day of the month of __________________ in the year _________, authorized entering into this Agreement.
Signature of the Presiding Officer: ________________________________________ Printed Name of the Presiding Officer: _____________________________________ Name of Governing Body: ______________________________________________ Name of Employer: ___________________________________________________ Date: _______________________________
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BOARD OF ADMINISTRATION
CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM
BY_____________________________________
MELODY BENAVIDES
DIVISION CHIEF, PENSION CONTRACTS AND PREFUNDING PROGRAMS CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM
To be completed by CalPERS
The effective date of this Agreement is: _________________________ PGCC 11-19-2025
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