Joe Dear is giving a pep talk to more than two dozen colleagues at the California Public Employees’ Retirement System. As Dear paces before his people on this July afternoon in Sacramento, he implores them to shake off the funk of the pension fund’s recent troubles.
The California Public Employees’ Retirement System, the largest U.S. public pension, earned a 12.5 percent return in 2010, led by gains in private equity and U.S. stocks, Chief Investment Officer Joe Dear said.
The tax rate paid by private equity managers on much of their income, less than half that for ordinary wage earners, is an “indefensible” tax break, the chief investment officer of the California Public Employees’ Retirement System said.
Legislation being debated in the U.S. Congress to overhaul Wall Street regulation is essential to restoring investor confidence in capital markets, said the top investment officer of the largest U.S. public pension fund.
The California Public Employees’ Retirement System is poised to top a record $260 billion in assets, the market value it held before the global financial crisis wiped out more than a third of its wealth, by sticking with a strategy of buy-and-hold.
The California Public Employees’ Retirement System will be hard-pressed to return 7.75 percent this year as Europe’s debt crisis and the weak U.S. recovery continue to weigh on global stocks, its investment chief said.
The California Public Employees’ Retirement System, the largest pension in the U.S., reduced bonuses 12 percent for investment officers after stocks dragged down returns. Most also went without pay raises.