Top Pension Fund Faces Fresh Scrutiny After Independent Probe Alleges Secrecy, Weak Returns And Oversight Gaps
The California Public Employees’ Retirement System (CalPERS), the nation’s largest public pension fund, has been hampered by secrecy, chronic underperformance, understated investment costs and potential conflicts of interest.
The report, released Thursday, was commissioned by the Retired Public Employees Association of California, a nonprofit advocacy group whose members include beneficiaries of the roughly $630 billion pension fund. The organization hired former Securities and Exchange Commission attorney and forensic pension investigator Edward Siedle after unsuccessful efforts to persuade California lawmakers to authorize an audit of CalPERS and establish an independent inspector general to oversee the system, according to NBC News.
CalPERS serves approximately 2.4 million current and retired public employees and is widely viewed as one of the most influential institutional investors in the world. Its investment decisions are closely watched across the pension industry because public retirement systems nationwide oversee about $6 trillion in assets and provide benefits to more than 36 million Americans.
Among the report’s findings was that CalPERS ranked in the bottom 15% of 230 U.S. public pension funds over both five-year and 10-year periods. The investigation also found that about 9% of the fund’s assets were invested in aging private equity partnerships, commonly known as “zombie funds,” which continue collecting management fees while generating little or no returns for investors.
The report further criticized compensation levels at the pension system, stating that four executives earn more than $1 million annually, four others receive more than $900,000, and 26 employees are paid between $500,000 and $900,000 despite what investigators described as disappointing long-term performance.
Margaret Brown, president of the Retired Public Employees Association of California and a former CalPERS board member, told NBC News that the findings underscored the need for independent oversight. Brown argued that an inspector general with subpoena authority would be able to obtain records and conduct investigations independently.
CalPERS strongly rejected the report’s conclusions. Chief Executive Officer Marcie Frost described the investigation as an opinion piece containing unsupported claims and said recent performance trends tell a different story. Frost said the fund’s private equity portfolio helped improve returns over the past several years and noted that investment fees have been reduced by 35% since 2024.
Frost also said CalPERS ranked among the top-performing large U.S. pension funds during the last two years. Separately, CalPERS has publicly stated that private equity remains one of its strongest-performing asset classes, reporting a 14.3% return for the 12-month period ending June 30, 2025, according to information published by CalPERS.
Transparency emerged as a central issue in the investigation. Siedle’s report said CalPERS provided only limited documentation and declined requests for other records, making it difficult to independently verify valuations of private equity and private debt investments. The report noted that CalPERS cited public-interest concerns in refusing some disclosure requests.
CalPERS has maintained that it operates transparently and publishes extensive information related to governance, executive compensation, travel expenses and financial disclosures on its public website. The pension system says these measures are intended to ensure its business is conducted openly and impartially.
Questions about oversight of public pension systems are not unique to California. Independent monitoring of the New York State Common Retirement Fund was strengthened after a pay-to-play scandal that drew federal and state investigations in the late 2000s. Reporting by ProPublica detailed allegations that investment firms seeking pension business paid intermediaries to secure access to decision-makers at the fund.
Siedle’s report also raised concerns about CalPERS’ longstanding relationship with investment consultant Wilshire Associates, arguing that ownership ties involving private equity investors could create conflicts of interest. Wilshire has disclosed in regulatory filings that it is committed to appropriately managing conflicts of interest.
