October 11, 2011
External Affairs Branch
Robert Udall Glazier, Deputy Executive Officer
Brad Pacheco, Chief, Office of Public Affairs
Pension Legislation Signed by Governor Set to Strengthen CalPERS Financial Integrity and Ethics
SACRAMENTO, CA – The California Public Employees' Retirement System (CalPERS) today praised Governor Jerry Brown for signing key legislation in recent days that will help reinforce financial integrity, accountability and ethics at CalPERS and other California pension funds.
The legislation, which becomes law on January 1, 2012, paves the way for CalPERS to establish a Chief Financial Officer position responsible for managing the financial processes for the pension fund to ensure that a high level of transparency and internal controls is maintained.
Other bills signed by the Governor prohibit former Board Members and executive employees from representing entities before CalPERS for business, place significant limits on accepting compensation as a placement agent, and enforce stronger financial and reporting requirements.
"These new laws allow CalPERS to continue to apply newer and higher standards of accountability, integrity, and openness to ensure public trust in our institution," said Anne Stausboll, CalPERS Chief Executive Officer. "In the increasingly complex world of finance and investment, trust is critical. We have faced many issues squarely over the last few years to demonstrate that we are worthy of the trust that all Californians have placed in us. Our experiences will serve as a reminder that ethics and core values are mere words unless translated into consistent ethical conduct as we go about our important work."
Pension legislation signed by the Governor includes:
AB 1042 (Allen) – Provides authority to the CalPERS Board to set compensation for a Chief Financial Officer CFO who would be responsible for CalPERS functions of budgeting, accounting, cash management, financial planning and analysis, and enterprise risk management, including compliance and the system's ethics helpline.
AB 873 (Furutani) – Sponsored by California's State Controller John Chiang; prohibits CalPERS and CalSTRS Board Members and executive employees from representing another entity before the pension funds to influence specified actions for a period of four years after leaving service. Prohibits those individuals from aiding, advising, consulting with, or assisting a business entity, for a period of two years after leaving service, in obtaining the award of, or in negotiating, a contract or contract amendment with CalPERS or CalSTRS. Prohibits those individuals from accepting compensation for providing services as a placement agent, for a period of ten years after leaving service.
AB 1247 (Fletcher) – Modifies CalPERS reporting requirements to instead require CalPERS to produce an annual report describing the investment return assumptions, discount rates, and amortization periods used to calculate contribution rates for State employee retirement plans.
AB 782 (Brownley) – Allows CalPERS to recover additional administrative expenses to complete an employer audit that exceeds estimates provided to the employer.
SB 751 (Gaines) – Prohibits contracts between licensed health care facilities and health plans or insurers from including nondisclosure clauses that restrict the release of information on the cost of medical procedures and quality of care to members of the plan or insurer. Requires a plan or insurer to annually provide a hospital or facility the opportunity to review and validate data provided to subscribers or enrollees of the plan or to policyholders or insureds of the insurer.
A complete list of CalPERS-sponsored legislation and legislative positions can be found at www.calpers.ca.gov, "Facts at a Glance: Legislation."
CalPERS is the nation's largest public pension fund with approximately $218 billion in market assets. It administers retirement benefits for 1.6 million active and retired State, public school, and local public agency employees and their families and health benefits for more than 1.3 million members. The average CalPERS pension is $2,220 per month. For more information on CalPERS, visit www.calpers.ca.gov.