Calpers Down 20%, Plans to Hike Contributions

The Wall Street Journal is reporting that the California Public Employees' Retirement System has seen a decline of more than 20% in its assets.  The nation's largest public pension fund may begin to ask for an increase in employer contributions to the fund of 2% to 4% starting in July 2010 and July 2011.  Back in April, I noted that it was highly suspicious that three top money managers at Calpers had left the fund within days of each other.  Media reports claimed their departures were related to boardroom disagreements, while I speculated that it was more likely due to poor performance of the fund, as Calpers had a tendency to invest in alternative assets (such as land deals with homebuilders.)  Needless to say, it seems clear now that the managers who left Calpers in April did so to avoid having to face the music when angry California employees need someone to blame for losing their retirement funds.

On the bright side, angry California employees are probably much better off than anyone who hoped to have a pension in Argentina.  Argentina's government seized the private pension system in order to "protect investors from losses."  The surprise move caused the markets in Argentina to plummet 15%, thereby causing losses for investors.  According to the Wall Street Journal story, "While no one knows for sure what the government would do with the private system, economists said nationalization would let the government raid new pension contributions to cover short-term debts due in coming years."  So the government has seized private retirement assets to pay the public debt.  Now that is depressing.  Argentina, can we cry for you now?