Officials of the California Public Employees' Retirement System, Sacramento, said Thursday that the fund for the first time will be reporting performance fees it pays to private equity firms, ending a mystery of just how costly it is for the nation's largest defined benefit plan to work with general partners.
The disclosure comes after top administrators of the $304.5 billion fund disclosed in April they did not know much in carried interest fees or profits they were paying to private equity firms. They said they were developing a new computer system that would track the data once it was provided.
“This is a major milestone and accomplishment, something we have been collectively focused on for the past three years," said Ted Eliopoulos, chief investment officer, in a news release. "We are pleased that we can provide transparency and detail around the carried interest going forward."
CalPERS paid more than $1.6 billion to all its external managers in the year ended June 30, 2014, but board member J.J. Jelincic said fees could have totaled as much as $2.5 billion once the profit-sharing fees CalPERS pays are calculated.
In the same statement Thursday, CalPERS says it now will be able to provide the carried interest information for the fiscal year ended June 30, 2015.
It also disclosed that 94% of the system's general partners provided the fund with information for calendar 2015 on partner-level carried interest amounts deducted from the gross returns with each cash distribution.
“Approximately 6% (of private equity partners) have declined to provide the necessary information to date, and CalPERS continues to follow up with these partners,” the statement said.
CalPERS spokesman Joe DeAnda said in an e-mail that the data will be released in the fall as part of the system's comprehensive financial statement. He said the problems collecting carried interest data were not unique to CalPERS.
Mr. Eliopoulos in the statement said the system had also asked private equity firms to provide the data since their funds' inceptions.
“Historically, fees and carried interest in the private equity industry have not been consistently reported by private equity managers,” said Mr. Eliopoulos. “A complex portfolio like CalPERS with a wide variety of economic terms and agreements that span a decade or more requires a comprehensive solution for accounting, tracking and reporting of fees and carried interest."
Mr. Jelincic, who has been critical of the CalPERS executives because of the lack of private equity carried interest data, said he was encouraged by the new development. “I still don't know why it took so long,” he said.