CalPERS Chief Of Investments Resigns

California Public Employees’ Retirement System Investment Chief Ben Meng has resigned after about a year and a half in the position at the nation’s largest pension fund, according to the fund.

When And Why?

It marks an abrupt exit for the investment chief, who set out to implement a reform agenda at the giant pension. Mr. Meng cut ties with a real-estate developer on a high-profile hometown property project, fired underperforming stock pickers, and pushed staffers to take a closer look at private asset valuations. 

The resignation was effective Wednesday. Dan Bienvenue, deputy chief investment officer, will serve as interim chief investment officer.

The fund didn’t give a reason for Mr. Meng’s resignation. He had been scheduled to have at least one group call with staff on Thursday, a person familiar with the matter said.

More About California Public Emplyees’ Retirement

Discussion about providing for the retirement of California state employees began in 1921, but only in 1930 did California voters approve an amendment to the State Constitution to allow pensions to be paid to state workers, and only in 1931 was state law passed to establish a state worker retirement plan.

In 1932, the “State Employees’ Retirement System” (SERS) began operation. The California State Employees Association, established in 1931, began a close relationship with SERS that continues to this day.

The California Public Employees’ Retirement System is an agency in the California executive branch that “manages pension and health benefits for more than 1.6 million California public employees, retirees, and their families”.

In fiscal year 2012–13, CalPERS paid over $12.7 billion in retirement benefits, and in fiscal year 2013 it is estimated that CalPERS will pay over $7.5 billion in health benefits.

As of June 30, 2014, CalPERS managed the largest public pension fund in the United States, with $300.3 billion in assets. CalPERS is known for its shareholder activism; stocks placed on its “Focus List” may perform better than other stocks, which has given rise to the term “CalPERS effect”. Outside the U.S., CalPERS has been called “a recognized global leader in the investment industry”, and “one of America’s most powerful shareholder bodies”.

As of 2018, the agency has $360 billion in assets, and is underfunded by an estimated $150 billion, with current assets below 70% of necessary to provide for liabilities. In an effort to reduce this shortfall, at the end of 2016 the board lowered their expected annual rate of return on investments from 7.5% to 7.0%, increasing the costs California cities must pay toward their workers’ pensions.

Who’s Next?

The nation’s largest public pension fund, which manages pension and health benefits for more than 1.6 million California public employees, retirees and their families, said in a statement it will begin an immediate search for a permanent successor.

The statement did not disclose a reason for Meng’s departure and CalPERS declined to comment. (source:Reuters)