By admin 
An independent forensic investigator hired by a group of retired state employees alleged California’s largest pension fund has systemic “governance failures,” which has resulted in a retirement system underfunded by hundreds of billions of dollars.
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In a 255-page report, longtime pension writer and financial investigator Ted Siedle accused the California Public Employees’ Retirement System of misrepresenting the amount paid to Wall Street managers and withholding records about the fund’s investments.
The investigation was commissioned by the Retired Public Employees Association of California, leaders of which have frequently called for more oversight of CalPERS. Siedle’s report advised the state to establish an inspector general to oversee the massive pension fund.
Siedle has produced similar reports in other states and has maintained that public pensions’ increased reliance on private equity investments has coincided with a lack of transparency. In the case of CalPERS, those investments are hiding underperformance of the portfolio’s investments, he stated.
“These funds are not being run to produce sole and exclusive benefits for their participants, they’re being run to satisfy a lot of people’s objectives, including elected officials, Wall Street people and private interest groups,” he said.
CalPERS CEO Marcie Frost strongly pushed back against the report.
“This report is not based on fact,” she said in a statement. “It is an opinion piece full of baseless assertions and breathless language designed to make our members needlessly fear for the stability of their pensions.”
Frost noted that since 2016, the retirement system’s funded status has steadily increased, and by the end of 2025 CalPERS had 84% of the money to cover its financial obligations. She added that in recent years the massive pension fund has ranked in the top 5% of large pension funds in the country in terms of performance. Much of that success has been driven by the fund’s private equity portfolio, Frost noted.
Siedle has a different assessment. CalPERS’ underfunded status is a result of investments in non-public assets, and particularly because the fund pays excessive fees to external managers, his report claims.
Frost pointed out that CalPERS has worked to decrease those fees by 35% since 2024 through targeted private equity investments and co-investments.
Report recommends inspector general
Because CalPERS’ board of administration is not comprised of investment experts, Siedle recommended that California establish an inspector general’s office to oversee the $625 billion fund. The retiree group that paid for Siedle’s work has previously introduced legislation to create an inspector general for CalPERS, which has failed to pass.
“Having an inspector general look at this and produce a report on these elements, wouldn’t that be a good idea?” Siedle asked.
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Margaret Brown, RPEA’s president, said that an inspector general would provide necessary oversight that she feels is currently lacking from the board of administration.
“They’ve delegated almost all the decisions to the staff, and they don’t ask any questions,” Brown said of CalPERS’ board.
Brown pointed to the resignation of CalPERS’ chief investment officer, Yu Ben Meng, in 2020 over allegations that he had approved a $1 billion deal with a firm in which he’s a shareholder as evidence that more oversight is needed.
“That never would have happened if there was an independent inspector general inside CalPERS’ offices,” she said.
Frost maintained that CalPERS is one of the most transparent retirement systems in the country and, as required by California law, the fund reports fees and fund performance to the public and the Legislature. She noted that private equity performance is reported after all fees have been subtracted.
A campaign for transparency
According to the online campaign, RPEA has raised over $245,000 from 350 donations for the investigation. The majority of that sum was contributed by the organization.
The report was part of a broader campaign to scrutinize CalPERS’ private equity investments. Last week, the Senate Appropriations Committee effectively killed a bill that would have required private equity firms with partnerships to California public pension funds to report their assets’ identity, location and the number of workers employed at those companies. RPEA and labor groups were supportive of that bill, but local government groups and CalPERS’ staff opposed.
Earlier this week, RPEA hosted a screening of a documentary about the growth of private equity in public pensions that featured Brown and other former CalPERS board members who alleged they were pushed out of their positions after raising concerns about these alternative investments.
In the report, Siedle notes that he has “publicly invited the FBI, SEC and any CalPERS whistleblowers to assist” with the investigation. He declined to elaborate when asked whether he had been in further contact with law enforcement authorities.
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