CalPERS’ Administrative Costs Outpace Similar U.S. Pension Funds

CalPERS had nearly double the administrative costs as four comparable U.S. pension funds in 2012-2013, according to a comparison report by Cost Effective Measurement Benchmarking in Canada, the Sacramento Business Journal reports.

The analysis measured CalPERS against:

• The California State Teachers' Retirement System;
• The Florida Retirement System;
• The New York State and Local Employee Retirement System; and
• The Teachers Retirement System of Texas.

Findings

The comparison found that CalPERS' administrative costs were $215 per member, compared with an average of $108 per member among all five groups examined.

In addition, CalPERS had the highest "complexity" among 75 pension funds in CEM Benchmarking's database, mostly because it offers five cost-of-living adjustment options and allows employers to change contribution rates for new workers. Such offerings require CalPERS to retain more administrative staff, according to CEM Benchmarking.

Meanwhile, CalPERS' service score was 63 -- similar to the average score of 66 among the five groups.

Reaction

According to the Business Journal, some observers believe the findings are somewhat outdated since the report was conducted during a time when CalPERS had just implemented a new computer system and pension reforms were costing additional time and money.

CalPERS believes its costs have decreased since the report period and that service scores likely have increased, according to the Business Journal (Young, Sacramento Business Journal, 10/20).