Nation’s largest pension fund faces external investigation
California’s $530 billion private pension fund now faces an investigation from the very group of people who rely on it. A group of retirees has hired a forensic pension investigator to get more information on the nation’s largest fund of its kind.
Private investigation
The investigation will look at investments, high fees to Wall Street firms and the lagging performance of the California Public Employees’ Retirement System, or CalPERS.
“Our members who are paying attention to what’s going on at CalPERS are concerned about the investment decisions,” Margaret Brown, president of the Retired Public Employees’ Association of California, told NBC News.
The report shows CalPERS investments returned 6.6% on average each of the last five years, below the 7.15% the average public fund gained.
The most recent annual financial report from CalPERS shows a roughly 5% increase in private investments. That comes as other large institutional investors continue to dump private equity investments over waning performance, according to S&P Global.
CalPERS tells Straight Arrow News that with the fiscal year ending Monday, June 30, they will release the next round of investment returns on July 14.
Brown, who also served as a board member for CalPERS, told NBC it’s a major worry CalPERS continues to put more money into private equity while others pull out.
“CalPERS remains committed to private equity (PE) because it has been our best-performing asset class over the last 20 years,” James Scullary, interim division chief for CalPERS Office of Public Affairs, tells Straight Arrow News.
Previously, the group of retirees wanted an outside audit of the fund and tried to persuade legislators to install an inspector general to monitor its operations. Neither attempt was successful.
Hiring of Edward Siedle
Following those attempts, the group decided to hire former Securities and Exchange Commission attorney Edward Siedle to investigate the fund.
“A successful outcome is a better run pension,” Siedle tells Straight Arrow News. “A better run pension will produce significantly greater wealth. That’s the goal, a better run pension going forward through an examination of past activity and potentially to recover money from anyone who may have looted the pension.”
“CalPERS is recognized as one of the most transparent pension systems in the world,” Scullary said. “The Global Pension Transparency Benchmark ranked CalPERS #1 in the United States and #3 globally in 2024 when it comes to transparency and the quality of public disclosures.”
Siedle has conducted similar inquiries before and recently published a 113-page report, calling the Minnesota state retirement system’s books “blatantly cooked.”
He said it’s unclear when the investigation will begin, as the group of retirees works to raise the necessary funds to support the investigation. According to their GoFundMe page, the group has raised about $2,600 of their $350,000 goal.
Upcoming documentary
Siedle also tells Straight Arrow News he plans to document this investigation with a filmmaker.
“The pension revolution will be televised,” Siedle said. “This is a really unprecedented situation where participants in a pension fund, which ordinarily have no rights in how their pension is managed, are taking control.”
He says once the investigation gets underway, it will take around six months.
One thing both Siedle and Scullary seemed to agree on is that CalPERS is considered the gold standard of public pension plans.
“CalPERS is unwavering in its commitment to serving the best interests of its members, ensuring their financial security and well-being both now and in the future,” Scullary said. “We uphold the highest standards of integrity, transparency, and fiduciary responsibility, working tirelessly to deliver sustainable retirement and health benefits for over 2 million public employees, retirees, and their families.”
“Public pension plans in America, they have $6.5 trillion in them, look to CalPERS for best practices, etcetera,” Siedle said. “What CalPERS does moves the industry, that’s why this is so important.”
Ella Rae Greene, Editor In Chief
