Employee Relations 11/05/2010
CalPERS to Hold Asset Allocation Workshop
The California Public Employees’ Retirement System (CalPERS)
Investment Committee will be conducting an Asset Liability
Management Workshop on November 8th and 9th in
CalPERS announced in March of this year that it would conduct a top to bottom review of how its five asset classes (real estate, global fixed income, inflation-linked, global equity and alternative investment management), are allocated as well as the liability of the fund. In May, the Committee began the review, which included an analysis of major risk factors, capital market assumptions and new approaches to asset allocation. The analysis concluded that the current asset classification structure doesn’t show underlying fundamental risks and, subsequently, an alternative asset classification was created by CalPERS staff. The alternative asset classification was presented to the Committee in September.
Next week’s Asset Liability Management Workshop will include:
- A discussion regarding the current asset classification versus the alternative.
- How portfolio choice impacts contribution rates and the status of the fund, and the variability of asset returns in different economic scenarios.
- A review of portfolio candidates and Committee selection of a portfolio.
Formal action is expected next month. This work will culminate in
the consideration of a change to the assumed investment rate of
return or discount rate in February 2011.
This decision is critical for counties. Employers and employees may contribute to pension funds, but the vast majority of the funds are made up of investment returns. If CalPERS decreases the investment rate of return, increased contributions will be required to meet the benefits guaranteed to retirees and current employees. CSAC will keep you apprised of these efforts as it may be necessary to weigh in on behalf of the 38 counties contracting with CalPERS for retirement benefits.
FPPC Proposes Further Compensation Disclosure
The Fair Political Practices Commission (FPPC) last Thursday
proposed including an option for government officials to disclose
their compensation on their annual Statements of Economic
Interest (Form 700). Unlike the State Controller’s new
compensation reporting requirements, the FPPC optional disclosure
would include state officials and the form would include
stipends, car allowances, loans for mortgages, bonuses and
cashed-out sick leave.
FPPC will hold a hearing on the proposal next month. A spokesperson for the FPPC commented that although the disclosure would be optional, the organization will be working next year with the Legislature to make it a requirement.