Money managers looking for business from the $234.7 billion California Public Employees' Retirement System should disclose if they've supported groups critical of government pensions, one of the fund's board members said.
Money managers trying to win investment business from CalPERS should report contributions to groups advocating for dismantling public worker pension plans that guarantee benefit levels regardless of investment returns, said J.J. Jelincic, board member and a former head of one of California's largest state worker unions.
“We obviously have an interest in defending defined benefits, and we have an interest in defending public employees,” Mr. Jelincic said in an interview at the fund's Sacramento headquarters. “If the people we are paying a lot of money to are working against us, we ought to at least be aware of it and have a conversation about it.”
Mr. Jelincic is past president of the California State Employees Association, a union for 140,000 state workers. Mr. Jelincic said he'd like to know, for example, if any of CalPERS' fund managers have contributed to the California Foundation for Fiscal Responsibility, a group that advocates for less-generous pension benefits.
Investment banks and money managers earned a combined $1.1 billion in fiscal 2010 handling CalPERS assets, the fund said.
“If they provide a really good service then I don't think it becomes the decision-maker, but we need to have the conversation,” Mr. Jelincic said.
Mr. Jelincic made the suggestion for more disclosure to other board members during discussions on Monday. He hasn’t introduced a formal proposal to the full board. CalPERS spokesman Brad Pacheco said the fund’s staff wasn’t given any direction to take Mr. Jelincic’s idea further.
Republican lawmakers in California and at least one non-profit group are pushing to replace traditional public-employee pensions in the state with 401(k)-style accounts, where workers bear more investment risk.
In February, a trustee for the $23.1 billion New York City Police Pension Fund proposed that the fund's board be able to dismiss future managers who disparage a public pension plan. Byron Wien, Blackstone Group's chief strategist, strained relations with New York unions last year when he said benefits are “too generous.”
CalPERS' top lawyer, Peter Mixon, said grading money managers based in part on support of a political position must take into consideration constitutional free-speech protections.
“Disclosure is one thing, but grading potential contractors or investment managers based on their First Amendment speech is something we would have to take a very close look at,” Mr. Mixon said at the meeting Monday.
California Gov. Jerry Brown this month said he is exploring whether to offer future government workers the choice of a traditional public pension plan or a hybrid including elements of a 401(k)-style account. He's also pushing legislation prohibiting employees from “spiking” pensions by manipulating overtime, unused vacation and special compensation to inflate future benefits.