"We haven’t reviewed the lawsuit and can’t comment directly on the case. However, CalPERS has an outstanding record of transparency in investment matters and specifically private equity investments. State law protects disclosure of information that is critical to protecting our ability to generate returns for the pension fund so that taxpayers won’t have to pay higher contributions toward public employee pensions.
CalPERS has the greatest transparency of any public pension fund in the world when it comes to investing dollars into the private equity arena. Specifically, CalPERS discloses the total private equity fees in its annual report, publishes rates of returns for each of its private equity partners on a quarterly basis, publishes staff reports to the Board on private equity portfolio, and has the industry’s most expansive website devoted to each of our private equity partners, which is updated regularly.
According to a press release issued by the California First Amendment Coalition, the heart of this lawsuit will be the question of whether CalPERS must publicly release fees paid to individual private equity partners. Current state law says public pension plans, including CalPERS, may withhold information if public dissemination of that information would harm CalPERS ability to maximize its investment returns for the public.
As a buyer on the private equity market, CalPERS must negotiate terms and conditions with private equity partnerships in order to participate. If this information is publicly disclosed, we believe CalPERS will be shut out of top-tier investment funds. In addition, CalPERS may be forced to withdraw prematurely from funds. CalPERS also may not be able to negotiate favorable terms if this information is disclosed. Finally, disclosure may result in existing funds refusing to provide the information that is required to effectively evaluate performance of these funds.
CalPERS has generated over $6 billion in cash returns through its private equity program, and future returns of this magnitude would be seriously threatened if this information is disclosed. The public’s overriding interest is to obtain high returns from CalPERS investments. Disclosure of this information would have a chilling effect on public pension funds’ ability to generate substantial private equity returns. And the billions of dollars that pension funds cannot generate would be billions that taxpayers would have to pay toward public pensions."
