If you have a government pension, congratulations: you are an AI investor. You never clicked a button. Your fund clicked it for you.
The good news first, because it is genuinely good. According to the Equable Institute, a research group that tracks pensions, government pension plans are now 85% funded. Funded means the money set aside versus the benefits promised — and 85 cents on the dollar is the healthiest ratio since 2007. Before the financial crisis. Before the iPhone had an app store.
What got them there was not accounting magic. It was the market, and specifically the AI corner of it. By Equable’s count, roughly 8% to 10% of pension assets sit in a basket of 51 AI-linked stocks.
That basket has been the whole party. The Nasdaq is up 21% in a year and 71% over five.
Put it in kitchen-table terms: the strongest tailwind public pensions have felt in nearly two decades came from one theme. Not from higher contributions. Not from benefit cuts. From a rally.
And the AI trade has spread far past the chipmakers. GE Vernova (GEV), which sells the turbines that power data centers, is up 49%. Caterpillar (CAT) — yes, the yellow-machine company — is up 89%, because someone has to move the earth those data centers sit on. When the earthmover company becomes an AI stock, the theme has officially left the building.
Why this is your business
An 85% funding ratio sounds like accounting trivia. It is actually a tax story.
Taxpayers cover about 68% of public-pension bills. Government employers now put in 31.8 cents for every dollar of payroll toward pensions — roughly triple what they paid in 2001. Every point the funding ratio climbs takes pressure off future contributions. That means calmer future taxes and fewer benefit fights.
So a well-funded pension is not just a comfort to the retiree. It is a quieter school-board meeting.
The warning label: the same politics fueling the boom could cut it short. Proposals for robot taxes and data-center bans are circulating, and a pension system that rode AI up would feel it on the way down. Nobody rings a bell at the top.
What to actually do
This is the retirement pick of the edition, so here is the practical part. Many of our clients are California teachers and public employees with CalSTRS or CalPERS pensions. If that is you, understand what you already own.
Your pension is, in plain terms, a big steady-paycheck promise with a meaningful AI engine behind it. That engine just delivered the system’s best health in nearly two decades. Good. But it means your retirement security already has AI exposure baked in — sized by professionals, without you lifting a finger.
The mistake to avoid is doubling the bet: piling personal savings into the same AI names your pension already leans on. If the theme stumbles, you take the hit twice — once in the pension fund, once in your own account.
Concretely: if your 403(b) or IRA is loaded with the same handful of technology names everyone can recite, you have concentration you did not plan. Your personal money should complement the pension, not photocopy it — diversified stocks, real income, short high-quality bonds.
None of this predicts that AI stumbles. We hold AI-linked names in the Capital Wealth Growth Portfolio and expect to keep holding them. The point is narrower: exposure you did not choose still counts as exposure.
And if you are within five years of retirement, one more discipline earns its keep. A market drop in your first retirement years does damage that later rallies cannot fully repair, because you are withdrawing money on the way down. The defense is unglamorous: an income floor — safe money covering the first years of spending — so no bad market ever forces a sale at a bad time.
The boom made your pension healthier. Say thank you. Then build the rest of your money like the boom owes you nothing.