CalPERS’s Glass House

Dear Legislators,

As a shareholder, CalPERS has been pressing corporations for better disclosure of environmental sustainability risks, yet CalPERS has been a leader in not disclosing financial sustainability risks, as I explained a decade ago in Dow 28,000,000. The consequences have been terrible, especially for our state’s most vulnerable residents whose programs get crowded out whenever governments have to make up for CalPERS’s failures. Here’s what that looks like:

The good news is that CalPERS has a new CFO who recently admitted that CalPERS has been overstating the share of pension costs likely to be covered by investment earnings and who I hope we can count on to argue for an honest investment return assumption (presently CalPERS assumes it will earn nearly 10 percent more than even Warren Buffett expects from his pension funds). We should all hope so. Future funding for students, courts, public health and other programs depends on honest disclosure from CalPERS.