CalPERS Outlines Plan for Financial Markets Principles
September 17, 2014
External Affairs Branch
Robert Udall Glazier, Deputy Executive Officer
Brad Pacheco, Chief, Office of Public Affairs
Contact: Joe DeAnda, Information Officer
Guided by Beliefs, System will focus on risk, governance, and transparency
SACRAMENTO, CA - The California Public Employees' Retirement System (CalPERS) has outlined plans to engage in policy discussions around derivatives, housing finance, and credit rating agencies as part of its renewed focus on risk, governance, and transparency in the financial markets.
"CalPERS advocacy work needs to be focused and relevant to our current market environment," said Ted Eliopoulos, CalPERS Interim Chief Investment Officer. "Refreshing our Financial Market Principles will allow the System to more efficiently apply its resources and be more impactful to the issues we engage on."
Derivatives, housing finance, and credit ratings were identified as priority issues by CalPERS for their role in the 2008 financial crisis and their continued ability to impact global financial markets. Federal and state law enforcement authorities have recently announced that CalPERS is in line to potentially receive more than $500 million in settlements for losses the Pension Fund sustained on investments in mortgage backed securities tied to the 2008 crisis.
"The world is still feeling the impact of the financial crisis," said Anne Simpson, CalPERS Senior Portfolio Manager and Director of Global Governance. "CalPERS must do what it can to ensure that the mistakes that led to the crisis aren't made again. These Principles will guide our work in the areas we feel are most important to protect our investments - and that’s what matters to our members and California taxpayers."
CalPERS is called to action in this arena by its recently adopted Investment Beliefs. The second belief states that “a long time investment horizon is a responsibility and an advantage.” The belief expands by noting that CalPERS can take action by advocating “for public policies that promote fair, orderly and effectively regulated capital markets.” The formation of the Principles is also an action item in the CalPERS 2014-16 Business Plan.
The revised Financial Markets Principles will refocus the work CalPERS and other U.S. pension funds completed in 2009 by adopting the Principles of Financial Regulation Reform, which were aimed at restoring trust in financial markets following the global financial crisis.
CalPERS’ advocacy will promote full disclosure so that the market provides incentives that price risk and opportunity. It will foster alignment of interests, protect investor rights, and the independence of regulators. And it will seek earlier identification by regulators of issues that give rise to overall market risks that threaten global markets and foster action that mitigates those risks.
CalPERS is the largest public pension fund in the U.S., with approximately $300 billion in assets. CalPERS administers health and retirement benefits on behalf of 3,090 public school, local agency, and state employers. There are more than 1.6 million members in the CalPERS retirement system and more than 1.3 million in its health plans. For more information about CalPERS, visit www.calpers.ca.gov.