The California Public Employees' Retirement System (CalPERS)
provides pension fund
, healthcare and other retirement services for approximately 1.5 million California public employees. As of October 2007
, it owns $254.8 billion worth of stock, bonds, funds, private equity and real estate. It is the largest pension fund in the United States. CalPERS provides benefits to all state government employees and, by contract, to local agency and school employees. Many California counties and large cities have their own retirement system. California teachers are covered under CalSTRS
(California State Teacher Retirement System), with funds in excess of $179.6 billion.
CalPERS shareholder proposals
Being one of the largest owners in the world (and the third largest purchaser of employee health benefits in the nation), CalPERS has attempted to use this power to change the way certain things are done in business. For example:
- Demanding companies disclosed their Y2k readiness
- Calling on companies which operate in offshore havens to repatriate to the United States
- Calling for reform in executive compensation, especially Golden Parachutes
- Suing the NYSE over allegations that their specialists (floor workers) engage in practices which hurt investors
- Banning investment of its funds in nine companies that do business in Sudan until the government of that country halts ongoing genocide
Praise and criticism
CalPERS has been both praised and criticized by some for its shareholder activism. Many feel that the organization has well represented the will of the employees whose pensions it manages by pushing for a wide array of causes, ranging from greater fiscal responsibility to social justice. Some others argue that this unduly interferes with business, is backed by a political agenda (citing the dominance of Democrats
on CalPERS' board), and further encourages the belief that California is "anti-business." A recent president of CalPERS, Sean Harrigan, was removed from his position in December 2004, amid criticism for his activism on matters of corporate governance. He claimed his removal was politically motivated.
CalPERS has been criticized for being foolish to invest in CDOs before the July 2007 mortgage meltdown, and for not publicly addressing the issue, and more recently for having invested in the failed LandSource deal at the height of the housing bubble.
CalPERS Member Home Loan Program
CalPERS offers to its member a program called the CalPERS Member Home Loan Program. This program assists members in buying or refinancing homes to be used as a primary residence. The program is open to members of the following: CalPERS, Legislators' Retirement System, Judges' Retirement System, and Judges' Retirement System II. The program offers reduced rates and fees while providing a program that is also beneficial to the members' retirement program. CalPERS certifies independent companies, like to assist the borrower through the loan process. Members are also allowed to borrow against their retirement for the purpose of buying a home.