California Public Employees' Retirement System (CalPERS)

California Public Employees' Retirement System (CalPERS) is a public pension fund that provides retirement benefits to public employees in the state of California, including employees of the State of California, California State Legislature, California State University, and University of California systems, as well as local government employees, such as those working for Los Angeles County, San Francisco County, and San Diego County. CalPERS is one of the largest pension funds in the world, with assets totaling over $440 billion, and is a significant investor in the global economy, with investments in companies such as Apple Inc., Microsoft, and Johnson & Johnson. The system is governed by a board of directors that includes representatives from the California State Teachers' Retirement System (CalSTRS), Service Employees International Union (SEIU), and the California Department of Human Resources.

● History

The history of CalPERS dates back to 1932, when it was established by the California State Legislature to provide retirement benefits to state employees, including those working for the California Department of Transportation and the California Department of Corrections and Rehabilitation. Over the years, the system has undergone significant changes, including the addition of new members, such as employees of the California State University system, and the introduction of new investment strategies, such as investments in private equity firms like Kohlberg Kravis Roberts (KKR) and The Blackstone Group. CalPERS has also been involved in various high-profile investments, including a $500 million investment in the Dubai World project, and has partnered with other investors, such as the Canada Pension Plan Investment Board (CPPIB) and the AustralianSuper fund. The system has also been recognized for its leadership in environmental, social, and governance (ESG) investing, and has been a member of the United Nations-supported Principles for Responsible Investment (PRI) since 2009, along with other investors like Vanguard Group and BlackRock.

● Organization

CalPERS is headquartered in Sacramento, California, and is organized into several divisions, including the Investment Office, which is responsible for managing the system's investments, and the Benefits and Program Administration division, which is responsible for administering retirement benefits to members, including employees of the California Department of Education and the California Department of Health Care Services. The system is led by a chief executive officer (CEO), who is appointed by the board of directors, and has a staff of over 2,700 employees, including investment professionals, benefits administrators, and customer service representatives. CalPERS also has a number of partnerships with other organizations, including the National Association of State Retirement Administrators (NASRA), the National Conference on Public Employee Retirement Systems (NCPERS), and the International Foundation of Employee Benefit Plans (IFEBP), which provide training and education to CalPERS staff, as well as opportunities for collaboration and knowledge-sharing with other pension funds, such as the New York State and Local Retirement System (NYSLRS) and the Florida Retirement System (FRS).

● Investments

CalPERS has a diverse investment portfolio, with assets invested in a range of asset classes, including public equities, private equities, real estate, and fixed income securities, such as bonds issued by companies like General Electric and Coca-Cola. The system's investment portfolio is managed by a team of investment professionals, who work with external managers, such as BlackRock, Vanguard Group, and State Street Global Advisors, to invest in companies like Amazon, Alphabet Inc., and Facebook, Inc.. CalPERS has also been a leader in sustainable investing, and has made significant investments in companies that prioritize environmental, social, and governance (ESG) factors, such as renewable energy companies like Vestas and SunPower, and has partnered with other investors, such as the Norwegian Government Pension Fund Global (GPFG) and the Dutch pension fund ABP, to promote sustainable investing practices. The system has also been recognized for its leadership in corporate governance, and has been a member of the Council of Institutional Investors (CII) since 1990, along with other investors like T. Rowe Price and Fidelity Investments.

● Benefits

CalPERS provides a range of benefits to its members, including retirement benefits, disability benefits, and survivor benefits, which are administered by the Benefits and Program Administration division. The system's retirement benefits are based on a defined benefit formula, which takes into account an employee's salary and years of service, and provides a guaranteed benefit amount in retirement, similar to the benefits provided by other pension funds, such as the Federal Employees Retirement System (FERS) and the Thrift Savings Plan (TSP). CalPERS also offers a range of health benefits to its members, including medical, dental, and vision coverage, which are provided through partnerships with health insurance companies like Kaiser Permanente and Blue Shield of California. The system's benefits are funded through a combination of employer contributions, employee contributions, and investment earnings, and are managed by a team of benefits administrators, who work with external partners, such as Aon Hewitt and Mercer, to provide high-quality benefits to CalPERS members, including employees of the City of Los Angeles and the County of San Diego.

● Criticisms_and_controversies

CalPERS has faced a number of criticisms and controversies over the years, including concerns about the system's funding status, which has been impacted by factors such as investment losses and demographic changes, similar to the challenges faced by other pension funds, such as the Illinois State Retirement System (ISRS) and the New Jersey Pension Fund. The system has also faced criticism for its investment fees, which have been higher than those of some other pension funds, such as the Wisconsin Retirement System (WRS) and the Minnesota State Retirement System (MSRS). Additionally, CalPERS has faced controversy over its divestment policies, which have included divestment from companies that do business in Sudan and Iran, and has been criticized by some for its lack of transparency in its investment decisions, similar to the criticisms faced by other investors, such as the Harvard University endowment and the Yale University endowment. The system has also been the subject of several lawsuits, including a lawsuit filed by the California State Teachers' Retirement System (CalSTRS) over the system's investment strategies, and has been investigated by the Securities and Exchange Commission (SEC) over its disclosure practices, similar to the investigations faced by other investors, such as the New York State Common Retirement Fund (CRF) and the Ohio Public Employees Retirement System (OPERS).

● Governance_and_management

CalPERS is governed by a board of directors, which is responsible for overseeing the system's investments, benefits, and operations, and is composed of representatives from the California State Legislature, the California State Teachers' Retirement System (CalSTRS), and the Service Employees International Union (SEIU), as well as other stakeholders, such as the California Department of Finance and the California State Controller's Office. The board is led by a president, who is elected by the board members, and has a number of committees, including the Investment Committee and the Benefits and Program Administration Committee, which are responsible for overseeing specific aspects of the system's operations, such as investments in companies like Procter & Gamble and 3M. The system is also subject to oversight by the California State Legislature, which has the authority to make changes to the system's governance structure and investment policies, similar to the oversight provided by the United States Congress over the Federal Retirement Thrift Investment Board (FRTIB) and the Pension Benefit Guaranty Corporation (PBGC). CalPERS is also a member of several professional organizations, including the National Association of State Retirement Administrators (NASRA) and the International Foundation of Employee Benefit Plans (IFEBP), which provide training and education to CalPERS staff, as well as opportunities for collaboration and knowledge-sharing with other pension funds, such as the Ontario Teachers' Pension Plan (OTPP) and the British Columbia Investment Management Corporation (BCIMC).