CalPERS reduced fees paid to external managers by $217 million in the fiscal year ended June 30, but lower investment returns contributed to its funded status falling 3 percentage points to 73.3%, said the pension fund’s recently released annual report.The $292.3 billion California Public Employees’ Retirement System, Sacramento, earned a 2.4% return in the fiscal year ended June 30, 510 basis points below its 7.5% assumed rate of return.The report details efforts by the pension fund to reduce fees paid to external managers. CalPERS saved $217 million by eliminating its hedge fund program and receiving fee concessions from managers. Overall, the pension fund paid $834.4 million in fees to investment managers in the fiscal year.The report, however, does not contain information on private equity carry fees. CalPERS disclosed in November that it paid around $700 million in carried interest to private equity managers in the fiscal year ended June 30. CalPERS had not previously disclosed that information.In a letter contained in the annual report, CalPERS Chief Investment Officer Ted Eliopoulos focused on the positive, looking past the retirement system’s latest one-year returns. Mr. Eliopoulos said the pension fund returned an annualized 10.9% and 10.7%, respectively, over the three- and five-year periods ended June 30.Mr. Eliopoulos said for the first time since 2007, CalPERS’ three- and five-year returns exceeded the custom policy benchmark, by 59 basis points and 34 basis points, respectively.
Cut to the chase.
In the five large states, the unions agglomerate at the state level and the localities bear the pension liability. The market is dominated by the eight or nine large union funds. So the pension funds have to hold their position in the market, otherwise they implode. State and local guvs have to ht the debt market suddenly on a down turn. None of the locals in Ca have saved cash during the boom, in fact they are more stressed with other wage costs rising. Still not end well.
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