CalPERS to Market Retirement Mutual Funds

January 24, 2007 ( - Local government employees in California already in a state retirement plan will be able to choose to invest in new tax-deferred fund options managed by the nation's largest public pension program.

The California Public Employees Retirement System (CalPERS) announced that the Golden State public workers would have the option of putting retirement money in funds it would manage that would be tied to CalPERS $225 billion in assets, according to a Reuters news report.  

The 22,600 city, county, school and other municipal employees now have about a dozen traditional mutual fund choices through outside financial services firms. The change is expected to take effect in June.

According to the news report, if the program proves successful, CalPERS may open it to the general public. However, such a move is at best a few years away because the pension fund’s board does not want to endanger the retirement system’s nonprofit status and because legislation would be required.

Individual investors may find the products interesting beause of CalPERS’ broad holdings, clout in financial markets and solid returns. For example, CalPERS posted a 12.3% return in its 2005-06 fiscal year that ended June 30, marking its third consecutive year of double-digit returns.

CalPERS officials are interested in opening the pension fund’s services to the public because it would generate revenue from management fees, CalPERS officials say. The fee revenue would help hold down required payments to CalPERS from local government agencies that contract with the pension fund to manage retirement accounts, according to the news report.