CalPERS

  

CalPERS is California's government-worker-pension-and-benefits distribution entity. Massive numbers of bureaucrats are employed by this behemoth which is the nation's largest pension fund. But it is run under government strictures so it is allowed to pay only a small fraction of what the equivalent Wall Street "best of breed" money managers earn...so as a result CalPERS is famously populated by mediocre-at-best money management people and practices and as a result has produced miserable bottom tier investing results, costing the state literally billions of dollars in lost investment returns.

For some reason, taxpayers in California haven't focused on this issue which has been arguably the most expensive financial debacle at the state level in American history. The name "CalPERS" by the way stands for "California Public Employees' Retirement System."

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Finance: What is a Pension?31 Views

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finance a la shmoop. what is a pension? well it rhymes with tension, and likely

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for good reason. if you're a teachers pension or a fireman's pension or [person wearing dark glasses writes something down]

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another state employees pension that's backed up by a state that's going

00:16

bankrupt. Hi, California, Hi Illinois. well we're looking at you. all right people

00:21

well a pension is another term for a retirement fund. but what's special about

00:26

a pension is that the employer essentially forces you to put away money

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for your retirement and then they invested for you.

00:35

how nice. or at least be sure you invest it well on a salary of 75 grand a state [gambling table shown]

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employed ditch-digger might get a contribution of say 10 grand a year into

00:42

her pension, and that's each year 10 grand of forced savings for as long as

00:47

she you know digs ditches for the state. and in some states where the unions are

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strong in the governing financial knowledge is weak the government

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guarantees a minimum financial return on the pension investment made on behalf of

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the employees. that is in California for example the state guarantees a 10% per

01:06

year return on their invested pension savings. if the invested return like [equation]

01:11

investing it in Wall Street and stocks and bonds and private equity funds and

01:15

all that stuff well if that invested return is less than that number less

01:19

than that 10%, then the state rights to the pinch and a check to cover the

01:23

incremental difference. yeah it's a huge Delta and it's well pretty much why you

01:28

a Californian Illinois you're going bankrupt remember. Jesus Saves

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but Moses invests. [ Moses, holding stone tablets glares and demands interest]

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