Calpers to cut external money managers by half

The California Public Employees’ Retirement System intends to cut ties with roughly half of the firms handling its money to reduce fees paid to investment managers, the Wall Street Journal reported.

Calpers, the largest pension fund in the United States, will tell its investment board on June 15 that it plans to cut the number of direct relationships it has with private equity, real estate and other external funds to about 100 from 212, the newspaper reported. (on.wsj.com/1JxYH3R)

The pullback, which would take place over the next five years, is expected to save Calpers hundreds of millions of dollars in management fees, the newspaper said.

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CalPERS has interim agreement in San Bernardino bankruptcy case

CalPERS and bankrupt San Bernardino have reached an “interim agreement” that could head off a major legal battle over bankruptcy debts and the ironclad status of public pensions, the city reported.

In a filing late Tuesday in U.S. Bankruptcy Court in Riverside, lawyers for the city said CalPERS and San Bernardino “reached an interim agreement regarding various items that will help form the basis for a plan of adjustment.”

The filing didn’t go into detail on the agreement.

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Legislature delivers financial rescue for CalSTRS; state, schools, teachers to contribute more

The cost of public pensions is going up again in California, this time to rescue the state’s troubled teachers’ retirement system.

The Legislature voted Sunday to pump billions of additional dollars into the California State Teachers’ Retirement System, which had been warning for years that it would run out of cash by mid-century.

Under AB 1469, approved by lawmakers as part of a package of budget bills, CalSTRS will get increased contributions from school districts, the state and teachers themselves. The plan, which kicks in July 1, is designed to gradually erase a $74 billion gap between CalSTRS’ assets and its long-term obligations.

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Judge hands CalPERS 1st-round loss in long-term care lawsuit

CalPERS can be sued for allegedly mishandling its privately-funded long-term care insurance program, a Los Angeles court has tentatively ruled, clearing the way for a trial.

Judge Jane Johnson turned aside CalPERS request to throw out the case, which contends that the fund’s board members violated their personal duty to watch out for members’ best interests. The fund also breeched policy contracts and dealt unfairly with policyholders, according the the lawsuit.

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San Diego Unified Teachers Offered Early Retirement

The San Diego Unified School District Board of Education Tuesday evening approved an agreement with the teachers union to implement a supplemental early retirement program intended to help balance its budget.

The board unanimously approved the amendment to the memorandum of understanding with the San Diego Education Association, the union representing the district’s teachers, allowing for the retirement incentive plan for eligible teachers.

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CalPERS, energy exec spar over who repays pension overpayment

The letter that landed in Bill Carnahan’s mailbox this week demanded he pay a six-figure debt he thought had been settled.

“Please send a personal check or money order, in the amount of $508,985.44,” the letter said, “made payable to CalPERS to satisfy the overpayment.”

It was the latest twist in an unusual double-dipping case that has put CalPERS at odds with a small Southern California power agency over who must reimburse the massive pension fund for wrongly paid retirement benefits.

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Column Extra: More detail on public pension rollbacks

Our State Worker column this week highlights a new report that concludes public employees brought in under last year’s cheaper pension formulas must work up to five years longer or save thousands of dollars each year to have the same retirement income as workers under older, more generous pension plans.

Here’s the CalPERS report that underpinned the column and a companion report that concludes lower pension benefits for new hires will pressure employers to offer better pay to recruit future workers.

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The State Worker: New pension plans differ greatly from ‘classic’ models

California became a dual-class public employee state last year when a sweeping law lowered pension benefits for state and local government workers hired in 2013 and later.

What that means for the state, for taxpayers, for employers, has been known for a while. But now a new CalPERS report uses a few examples to illustrate the law’s impact on individuals. It concludes that new members must set aside hundreds of dollars per month or extend their careers for years to achieve the same retirement income as counterparts under older, more generous formulas.

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California state employee retirements plummet in 2014

The number of state workers who filed pension papers dropped sharply during the first quarter of this year compared with 2013, according to new CalPERS data, while March extended a record-setting string of months that retirement rates have declined.

The numbers suggest that government work has become more attractive to the kind of long-time employees who just a few years ago were exiting en masse, chased by furloughs, higher pension contribution rates and many years of stagnant pay. In mid-2013, however, furloughs ended at the same time raises kicked in for senior employees.

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Credit firm says California pension measure’s demise bad f or local governments’ credit

A Wall Street firm cautioned Thursday that the failure to put a pension measure before California voters has negative implications for local governments facing higher retirement benefit bills.

Moody’s Investors Service said Mayor Chuck Reed’s decision to suspend his pension-change campaign is a “credit negative” for California agencies facing rapidly growing retirement benefit costs “with few tools to address them.” Moody’s declaration calls out pensions as one of many factors affecting agencies’ creditworthiness, but it’s not a ratings downgrade or change in the firm’s outlook.

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