The California Public Employees’ Retirement System (CalPERS) is looking to set the record straight following multiple media reports suggesting that the pension plan will no longer require its private equity portfolio to beat the stock market by 300 basis points.
The $300 billion retirement system published two “For the Record” press releases this week in response to what the pension described as “inaccurate” and “misleading” media coverage of its private equity programme in local news outlets.
At its investment committee meeting on Monday, CalPERS’ board considered removing language from its private equity investment policies that the board deemed “duplicative” and “aspirational.”
Specifically, CalPERS planned to cut language describing the private equity programme’s strategic objective as “to maximise risk-adjusted rates of return” suggesting instead to simply describe the objective as “to enhance the equity return to the Fund.”
The proposal received backlash from local media outlets including The Sacramento Bee, which suggested that the proposed changes would impact the private equity program benchmark, and The Los Angeles Times, which stated that the revisions would have eliminated the requirement for staff to meet a benchmark in private equity at all.
The CalPERS media team described The Sacramento Bee op-ed as “simply inaccurate” and described the LA Times article saying: “This is wrong, and worse yet, the headline is misleading.”
Ultimately, the board voted to retain the private equity policy’s current language, “to ensure the investments maximize risk-adjusted returns and enhance the equity return of the Fund,” according to a CalPERS press release.
CalPERS uses a blended benchmark weighted towards a US market index plus 300 basis points for its private programme. “Regardless of the proposed and adopted policy changes yesterday, it remains that,” the statement said.
The pension has been the focus of much media attention of late, especially since revealing last month that it had shared a total of $3.4 billion in carried interest profits with managers since the inception of its private equity program in 1990.