Calpers Pension Fund Reviewing Fees Paid to Manager


The nation's largest pension fund, the California Public Employees' Retirement System, said it is investigating fees paid to an outside manager that directed the fund's investments.

Women and Retirement

Calpers said late Wednesday it is reviewing payments of $50 million over a five-year period to Arvco Financial Ventures, which is headed by former Calpers board member Al Villalobos.

The review comes after Calpers adopted a policy in May to ensure transparency in the fund's investment decisions. When the policy was adopted the Board of Administration told Calpers to request placement agent information from funds that previously received capital. That request led to the information that prompted the investigation.

Both the Securities and Exchange Commission and the California Attorney General's Office are aware of the review, Calpers said. The pension fund, which has about $200 billion in market assets, said it plans to work with the SEC and the attorney general's office as it looks into the situation.

Calpers said independent advisers, including Steptoe & Johnson, will oversee the review to make sure that a "full and fair examination" is performed.

The announcement of the investigation comes on the heels of legislation signed earlier this week by Gov. Arnold Schwarzenegger that mandates all of the state's public pension funds disclose information on placement agent fees.

New York officials have been investigating similar managers that they claim received kickbacks for funneling pension fund investments to certain firms.

Like many pension funds, Calpers was hammered during the recent market downturn. Those losses could force California taxpayers to cover shortfalls in pension payments to retired state workers.