The California Public Employee Retirement System, CalPers, is the largest public pension fund in the nation. During the financial crisis, the fund took a big hit. Joseph Dear, chief investment officer for CalPERS, tells Linda Wertheimer that recently the fund has had double-digit returns.
Copyright ? 2011 National Public Radio?. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.
LINDA WERTHEIMER, host:
Short-term price flings shouldn't rattle investors like Joseph Dear. Dear is the chief investment officer of the California Public Employees Retirement System, CalPERS as its called. Its the country's biggest public pension fund. More than a million and a half firefighters, policemen and other public workers in the state depend on CalPERS for their health and retirement benefits.
As chief investment officer, Dear is responsible for getting the best returns possible. We reached him to talk about CalPERS prospects.
Mr. Dear, welcome.
Mr. JOSEPH DEAR (Chief investment officer, CalPERS): Good morning.
WERTHEIMER: First of all, CalPERS took a big hit, as did every big financial fund during the crisis. Your stocks, other investments lost considerable value. Has CalPERS recovered?
Mr. DEAR: Weve come a long way back. Our loss in fiscal 2009 was 24 percent, which is a huge hit to take and our assets bottomed $165 billion. We're closing on $240 billion now, and for the past two years we've had double-digit returns.
WERTHEIMER: Do you think that's going to be sustainable for public employees to get richer pensions than private sector workers are able to get in this kind of economy?
Mr. DEAR: The shift around the public policy debate on pension benefits in the public sector is dramatic and it's a lively issue in California and around the country. I'm an investor; I'm supposed to meet the financial obligations of the fund against obligations, promises, liabilities that already exist. When the policymakers make decisions about the benefits then we'll adjust the portfolios to them. I think it's important for public sector plants to think more broadly. I also think it's important to have a realistic debate about the economic realities of these programs and the economic benefits they provide.
WERTHEIMER: You have to be thinking that some of the states are looking at various kinds of changes in their retirement programs and that cannot help but hit California as well, so you must have to plan.
Mr. DEAR: Well, we have to plan in terms of understanding the liabilities. And if there were fundamental changes in the character of the benefit program it would change the liabilities. But it wouldn't change the overall investment philosophy, which is how to get the best return at a reasonable level of risk, how to look forward; do a better job of risk management. Those challenges of an estimate management will exist regardless of the relative level of benefits.
The debate in the United States really ought to center around what is retirement security so that all Americans can have a time of leisure after a life of work, where they can enjoy the fruits of their labor. And we are not accumulating enough in the U.S. now, to make that promise a reality for all Americans, and that's a significant social issue.
WERTHEIMER: CalPERS has been known for thinking globally, pulling investments out of South Africa early on, putting pressure on the apartheid government of South Africa. In the past, in the sort of boomy(ph) years, maybe investments in which you demanded things of the companies to change their ways in some sort of way. Do you think that that is something you can continue to do? Can you afford that kind of activism now?
Mr. DEAR: We have to. It's even more important. I mean one of the contributors to the financial crisis was poor governance of American corporations, so weve stepped up our corporate governance activity and we were active in the debate that led to the passage of Dodd-Frank, the financial reform legislation, and were watching the regulatory agencies that are implementing that act.
If you are a long-term holder of company stock, you don't have the traditional exit of, you don't like the company you sell the stock. We are a permanent owner, and that creates an obligation on our part to be actively engaged in the management of these companies. We've expanded that perspective into issues like the environment, through programs to invest in clean technologies and focus on our home state of California through initiates to help business formation and regional economical development, the California initiative, and through real estate investments here. They're a lot of things that a long-term patience strategic investor can do to earn a good return, but also produce other additional consequential benefits.
WERTHEIMER: Mr. Dear, thank you very much.
Mr. DEAR: Youre welcome, Linda. Thank you.
Copyright ? 2011 National Public Radio?. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to National Public Radio. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.
NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.
alice in wonderland titus young flu new england patriots clarence house
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.