The nation’s largest pension fund is edging closer to financial disaster by investing in progressive-oriented companies instead of more-profitable ones according to a new report from the American Council for Capital Formation.
The California Public Employees Retirement System, or CalPERS, has reportedly pressured companies to focus on climate change and has dedicated a significant portion of its portfolio to environmental and social causes to advance its progressive agenda. ACCF analyzed CalPERS’ weakest private-equity investments, and discovered that four of its nine lowest-performing funds were related to renewable and clean energy.
“Rather than focusing on getting the fund back on firm financial footing, CalPERS’s management is making questionable investments of pensioners’ money into social and political causes that are not yielding acceptable returns. And even more troubling, because of how big the fund is and how much influence it wields, it’s actually now forcing other large investors and proxy advisory firms with which it does business to follow suit,” said Tim Doyle, ACCF’s Vice President of Policy and General Counsel.
ACCF’s report found that over the past 10 years, the fund has squandered its $3 billion pension surplus and now faces a deficit of nearly $140 billion. Part of its problem is that it uses its influence to pressure companies into supporting its liberal causes instead of building value.
In its current state, CalPERS only has enough assets to pay for two-thirds of the money it owes to California public workers and retirees. Although the pensions of 1.8 million California public workers and retirees are at stake, CalPERS refuses to change its unsustainable course.
“We stand by our efforts,” said CalPERS spokesman Wayne Davis.
Its leadership ultimately doesn’t care about the quality of its investments. If the fund fails, they know they can count on California taxpayers to foot the bill.
While its leadership is stubborn about how it invests the funds on behalf of its beneficiaries, its top executives and board members apparently aren’t so eco-conscious in their own personal investments. Financial disclosure forms revealed that its Chief Investment Officer and one of its Board of Administration members had no green energy investments in their respective portfolios.
CalPERS’s efforts to influence corporate America and play politics with their pensioners’ funds will only accelerate its inevitable crash, dragging the state’s taxpayers down with it.
Brendan Pringle (@BrendanPringle) is a contributor to the Washington Examiner's Beltway Confidential blog. He is a freelance journalist in California.
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