The California Public Employees' Retirement System (CalPERS) is pushing its investment allocation in private equity and private credit up to 17%, according to an analysis by CalMatters. CEO Marcie Frost defends this strategy as a necessary turning point, but critics point out numerous serious issues: the valuation of private assets conducted by the fund managers themselves — not the market — creates an illusion of stable returns. CalPERS is currently only 79% funded and carries a 179 billion USD shortfall, according to CalMatters. The fund is also lobbying to kill Senate Bill 1319 — the Private Capital Transparency Act — arguing that disclosing information would cause billions of dollars in damages. Meanwhile, contracts regarding management fees remain hidden from both the board of directors and the public.
When your pension fund manager refuses to show you the contract, that's not 'private' investing — that's lack of accountability.
Analysis
CalPERS manages pension funds for over 2 million California public employees and retirees — a number large enough that any major mishap becomes a public financial crisis. The 179 billion USD shortfall that CalMatters reports is not an abstract figure: it is direct pressure on the state budget, and ultimately on taxpayers.
The core issue here is asymmetric information structure. When private assets are valued by the managers themselves — not by actual market transactions — reported returns can lag reality by 3 to 9 months, according to CalMatters. Frost can claim "outperformance" while actually just benefiting from statistical delays.
A troubling precedent: many major American public pension funds — including some state funds — pursued similar private equity strategies during the 2000s and had to cut benefits after the 2008 crisis. CalPERS is not immune to that cycle.
CalPERS's opposition to Senate Bill 1319 is the most striking detail in the entire story. A fund truly confident in its investment portfolio would not need to fear transparency. When transparency is blocked, the question is no longer whether risk exists — but how much risk is being hidden.
Diaspora Impact
Two groups of Vietnamese people in California face direct impacts from CalPERS risk.
First, Vietnamese-origin healthcare workers — nurses, technicians, hospital administrative staff — working in the public healthcare system in Southern California and the Bay Area are largely covered by CalPERS. If the fund continues to run deficits and is forced to increase employee contribution rates, the take-home pay of this group drops immediately — while many are sending remittances to Vietnam every month.
Second, Vietnamese-origin federal and state government employees in Orange County and the Little Saigon area — one of the largest communities of Vietnamese-origin civil servants in the country. If CalPERS must cut pension benefits over the next 10 to 15 years when this generation retires, the long-term financial plans of entire families are directly affected.