December 19, 2016

Communications & Stakeholder Relations
(916) 795-3991
Brad W. Pacheco, Deputy Executive Officer
Wayne Davis, Chief, Office of Public Affairs
Contact: Megan White, Information Officer

SACRAMENTO, CA - The Investment Committee for the California Public Employees' Retirement System (CalPERS) today voted to remain divested from tobacco-related securities with respect to the internally managed public equity and debt portfolios of the Public Employees' Retirement Fund (PERF).

In addition, the Committee has now broadened the tobacco investment restrictions to include the PERF's externally managed portfolios of publicly traded assets and the Affiliate Fund portfolios.

Today's action was taken after a comprehensive review of the existing tobacco investment restrictions. The analysis included a review of the impact of the restrictions on the PERF, extensive stakeholder outreach, and reports from industry experts.

"CalPERS has a fiduciary duty to conduct a periodic review of all of our active investment restrictions to ensure that they remain appropriate," said Henry Jones, chair of the Investment Committee. "There is no doubt that divestment as an investment strategy presents challenges. However, after careful consideration of all the benefits and risks, the Committee has decided not only to maintain our current policy regarding tobacco divestment, but to extend the restrictions."

The CalPERS tobacco restrictions date back to 2000, when concerns over ongoing litigation and regulatory risks facing the tobacco industry prompted the Committee to take action. Analysis performed in 2015 by Wilshire Associates, the Board's investment consultant, indicated that the CalPERS tobacco restrictions reduced portfolio returns by approximately $3 billion between 2001 and 2014. The Committee decided in April 2016 to request a review of the current tobacco restrictions. The resulting staff review examined the tobacco restrictions through multiple lenses encompassing a wide range of differing perspectives.

"We appreciate the Committee's willingness to review this sensitive topic," said Ted Eliopoulos, CalPERS chief investment officer. "We understand their concerns and will maintain the current tobacco exclusions while working to extend the tobacco divestment to our external portfolios."

As part of the action, CalPERS staff will study the appropriate timing and implementation.

CalPERS' Affiliate Funds include the Judges' Retirement System Fund, the Judges' Retirement System II Fund, the Legislators' Retirement System Fund, the Public Employees' Health Care Fund, Supplemental Income Plans, the Public Employees' Long-Term Care Fund, and the California Employers' Retiree Benefit Trust Fund.

For more than eight decades, CalPERS has built retirement and health security for state, school, and public agency members who invest their lifework in public service. Our pension fund serves more than 1.8 million members in the CalPERS retirement system and administers benefits for more than 1.4 million members and their families in our health program, making us the largest defined-benefit public pension in the U.S. CalPERS' total fund market value currently stands at approximately $303 billion. For more information, visit