Calpers, the biggest U.S. public pension fund, will review its assumed actuarial rate of return of 7.75 percent and will make a recommendation to its board whether to lower it in December, a spokesman said on Sunday.

Calpers, the $200 billion California Public Employees' Retirement Fund, is considering whether to revise the long-standing rate in light of steep losses after financial markets tumbled and the uncertainty over their recovery.

Given the market conditions over the last year we feel it's prudent to review our assumptions, fund spokesman Brad Pacheco said in an email to Reuters.

A revision to the rate will be taken up after an asset allocation workshop in the fall and a recommendation will follow in December, Pacheco said.

The board of Calpers was told last July by the chief executive of asset manager BlackRock Inc, Laurence Fink, that the assumed rate of return on its investment was unrealistic and it should expect smaller gains.

Three-quarters of Calpers' resources for paying obligations to members come from its investment returns, so less-than-expected gains could force a greater share of the cost of benefits onto members and public agencies using the fund.

Governor Arnold Schwarzenegger has already proposed state employees pick up an additional 5 percent contribution toward their retirement accounts to ease the state's financial woes, centered on a state budget gap of more than $20 billion.

(Reporting by Jim Christie; Editing by Leslie Adler)