California state legislators want a formalized process to have more say in CalPERS' investment decisions and want to know about the $229.8 billion pension fund's investment projects in their districts, according to a draft report by management consultant Booz Allen Hamilton released on Tuesday.
The CalPERS Stakeholder Engagement Report surveyed various groups connected to the California Public Employees' Retirement System, Sacramento, and is being used to develop a strategic plan for CalPERS for the next five years.
No specifics about the legislators' request were provided in the stakeholder report, but top CalPERS officials were quick to downplay any suggestions that legislators could influence the pension fund's investments decisions.
CalPERS Chief Investment Officer Joseph Dear said CalPERS' officials have the fiduciary responsibility for the pension fund's investments and would not let another entity influence their investment decisions.
At a CalPERS retreat meeting in Petaluma, Calif., on Tuesday, Chief Operating Investment Officer Janine Guillot stressed the strategic plan was still being developed and would not include all ideas proposed by stakeholders — retirees, local government entities, state administration officials, CalPERS executive staff and board, CalPERS staff and federal officals.
The actual plan is scheduled to be released by CalPERS at its Aug. 13-15 meetings.
The report gives a snapshot of what the various stakeholders feel is the direction CalPERS should take over the next five years.
While CalPERS staff and board members in public have staunchly defended keeping the CalPERS defined benefit plan in its current form, the report factors in the possibility that some form of California Gov. Jerry Brown's plan to reduce benefits will be enacted.
A key theme expressed in the report by CalPERS board members and executive staff was defending defined benefit plans for CalPERS members while also preparing to administer a hybrid plan.
Mr. Brown's plan, which is expected to be considered by the Legislature later this summer, offers a hybrid plan with elements of DB and defined contribution plans to new state employees.
According to the report, the executive staff and the board also said continued innovation in CalPERS' investment process was necessary to balance risks and returns. The report also expressed concern by CalPERS staff and administration that the risk of a significant system drawdown could impact funding levels permanently.