Pension Fund

The nation's second biggest public pension fund, which provides retirement benefits for almost half a million California teachers, faces a projected $64.5-billion shortfall over the next three decades. On Tuesday, Ed Derman, deputy chief executive of the California State Teachers' Retirement System, told reporters Tuesday that the $152-billion pension has only 69% of the funds it needs to meet future obligations. Pension experts say that asset value equal to 80% of future obligations is the minimum conservative funding level for a program such as CalSTRS.

SACRAMENTO — The California State Teachers' Retirement System will cast its 5.3 million shares of Wal-Mart Stores Inc. against the reelection of the company's board after allegations of bribery in the retailer's Mexican operations. Citing "a breakdown of corporate governance and lack of oversight," Jack Ehnes, chief executive of CalSTRS, made the announcement Tuesday "CalSTRS believes former and current Wal-Mart executives and board members breached their fiduciary responsibilities," Ehnes said.

Tens of thousands of California state workers are taking advantage of a perk that pays them pension benefits for years they don't actually work, and reformers looking for places to cut have put it at the top of the list. State law allows the employees to increase their retirement benefits by tacking up to five fictitious years ? known as "air time" ? onto their public service. Although they pay a fee for the privilege and officials say it is high enough to cover the eventual payouts, critics of air time note that the boost can cost taxpayers millions when the state pension system's investment income falls short, as it has in recent years.

The California State Teachers' Retirement System is suing Wal-Mart Stores Inc. executives and board members, accusing them of using bribery and corruption to gain approval from Mexican government officials to build new stores. Late Thursday, the board of CalSTRS, the country's second-largest public pension fund, filed the so-called derivative lawsuit seeking changes in the corporate governance of the world's biggest retailer. "CalSTRS is seeking to remedy the damages sustained by Wal-Mart as a result of alleged gross misconduct by Wal-Mart's executive officers and directors," CalSTRS Chief Executive Jack Ehnes said.

Los Angeles officials alleged in a lawsuit this week that they were misled by a longtime investment bank trying to protect its own financial interests, resulting in more than $95 million in losses to a city employee pension fund. City Atty. Carmen A. Trutanich said the Northern Trust Corp. shifted city money into more risky real estate and other investments without fully disclosing the danger to pension managers. The lawsuit also targets Pension Consulting Alliance Inc., a company that was contracted by the Los Angeles City Employees' Retirement System to serve as its own investment consultant.

Los Angeles venture capitalist and philanthropist Elliott Broidy pleaded guilty Thursday to charges that he paid $1 million in gifts to New York public pension officials to win $250 million in investment capital for his private equity fund. Broidy, 52, faces a possible prison sentence of up to four years at his sentencing, scheduled for June 10. New York Atty. Gen. Andrew Cuomo characterized Broidy's actions as bribery, saying he sent a top state official and relatives on luxury trips to Israel and Italy and paid the rent and hospital bills of a bureaucrat's girlfriend to get the investment money for his Century City firm, Markstone Capital Partners.

The nation's largest public pension fund, the California Public Employees' Retirement System, posted a 1.1% return on its investment portfolio in 2011, Chief Investment Officer Joseph Dear told his board. The 2011 performance was well below the estimated average annual return of 7.75% that the fund's actuaries say is needed to meet current and future obligations to its members. The $229.5-billion CalPERS provides retirement and other benefits for 1.6 million state and local government employees and their families.

The California State Teachers' Retirement System is suing Wal-Mart Stores Inc. executives and board members, accusing them of using bribery and corruption to gain approval from Mexican government officials to build new stores. Late Thursday, the board of CalSTRS, the country's second-largest public pension fund, filed the so-called derivative lawsuit seeking changes in the corporate governance of the world's biggest retailer. "CalSTRS is seeking to remedy the damages sustained by Wal-Mart as a result of alleged gross misconduct by Wal-Mart's executive officers and directors," CalSTRS Chief Executive Jack Ehnes said.

Taxpayers probably are going to be paying more for state government and school district employee pensions beginning in July. A committee of the California Public Employees' Retirement System board voted 6 to 2 on Tuesday to cut the assumed annual rate of return on investments that it uses to calculate the contributions that need to be collected from the state and some 2,000 other public agencies. The committee set the new benchmark at 7.5%, down from a two-decade-old rate of 7.75% but higher than the 7.25% recommended by its own chief actuary, Alan Milligan.

Bowing to the realities of a volatile stock market and a weak investment climate, the nation's largest public pension fund lowered its benchmark assumed rate of return. The board of the California Public Employees' Retirement System voted 9 to 1 to reduce its expected, average annual return on its investments to 7.5% from 7.75%. That was a quarter of a percentage point higher than what had been recommended by CalPERS' chief actuary, Alan Milligan. In addition to lowering the assumed rate of return, which had been previously approved by a CalPERS committee, the board also agreed to reduce its assumed average annual inflation rate to 2.75% from 3%. The changes, which kick in for the state government and school districts July 1, will cost the state general fund $167 million in higher pension costs in the next budget year.

The nation's second biggest public pension fund, which provides retirement benefits for almost half a million California teachers, faces a projected $64.5-billion shortfall over the next three decades. On Tuesday, Ed Derman, deputy chief executive of the California State Teachers' Retirement System, told reporters Tuesday that the $152-billion pension has only 69% of the funds it needs to meet future obligations. Pension experts say that asset value equal to 80% of future obligations is the minimum conservative funding level for a program such as CalSTRS.

NEW YORK Struggling to pay employee pensions, local governments are increasingly borrowing money to cover their obligations - exploiting a loophole in federal law that allows them to issue taxable bonds without seeking voter approval. Oakland took a bet on its pension fund that ended up costing the city an estimated $245 million - nearly a quarter of its annual budget. That hasn't stopped the city from looking to try its luck one more time. The bets are being made using an exotic but increasingly popular financial instrument known as a pension obligation bond.

Medco Health Solutions has agreed to pay $2.75 million and change its internal procedures to settle claims that it paid millions in bribes to win a contract to provide prescription drugs to members of the California Public Employees' Retirement System. The settlement was the latest development in a case that began in 2004 and involved allegations of dealings between the then-head of CalPERS, Federico Buenrostro Jr., and a paid Medco consultant and former CalPERS board member, Alfred J.R. Villalobos, who helped secure the $26-million contract in 2006.

Bowing to the realities of a volatile stock market and a weak investment climate, the nation's largest public pension fund lowered its benchmark assumed rate of return. The board of the California Public Employees' Retirement System voted 9 to 1 to reduce its expected, average annual return on its investments to 7.5% from 7.75%. That was a quarter of a percentage point higher than what had been recommended by CalPERS' chief actuary, Alan Milligan. In addition to lowering the assumed rate of return, which had been previously approved by a CalPERS committee, the board also agreed to reduce its assumed average annual inflation rate to 2.75% from 3%. The changes, which kick in for the state government and school districts July 1, will cost the state general fund $167 million in higher pension costs in the next budget year.

Taxpayers probably are going to be paying more for state government and school district employee pensions beginning in July. A committee of the California Public Employees' Retirement System board voted 6 to 2 on Tuesday to cut the assumed annual rate of return on investments that it uses to calculate the contributions that need to be collected from the state and some 2,000 other public agencies. The committee set the new benchmark at 7.5%, down from a two-decade-old rate of 7.75% but higher than the 7.25% recommended by its own chief actuary, Alan Milligan.

Directors of the California Public Employees' Retirement System are expected to vote next week on a staff recommendation to cut its target for investment returns, raising the prospect that state and local governments may have to boost their contributions to the pension fund. In a memo to the CalPERS board, actuary Alan W. Milligan suggested lowering the assumed annual rate of return to 7.25% from 7.75%, a decade-old benchmark, as the state continues to grapple with the slow recovery from the Great Recession.

After a yearlong scandal involving alleged influence peddling and corruption, Gov. Arnold Schwarzenegger on Thursday signed a bill that will regulate the activities of outside deal-makers who help investment managers secure government pension fund money. The pension bill, backed by the board of the California Public Employees' Retirement System as well as the state treasurer and controller, requires that so-called placement agents register as lobbyists before they can pitch investment proposals to the $200-billion pension fund's staff and board members.

Less than a week after filing its initial public offering, Facebook Inc. is facing complaints from a powerful California pension fund about the makeup of its all-male board of directors. The California State Teachers' Retirement System sent a letter to Facebook Chief Executive Mark Zuckerberg, raising concerns that the board named in the company's IPO filing does not have a wide spectrum of corporate experience, and is lacking gender and racial diversity. “We want them to be cognizant of the fact the board is rather homogenous,” CalSTRS spokesman Ricardo Duran said Tuesday.

The chief actuary of California's biggest public pension fund is recommending that it cut its assumed-rate-of-return target by half a percentage point. The change, if adopted by the board of the California Public Employees' Retirement System next Wednesday, could boost retirement costs by millions of dollars for the state government and more than 3,000 local agencies that participate in CalPERS. Actuary Alan Milligan in a memo suggests lowering the assumed annual rate of return from 7.75%, where it's been for the last decade, to 7.25%.