As Shortfalls Grow, Public-Pension Funds Roll the Dice

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Struggling to meet return targets, funds across the nation have upped the amount of risk in their portfolios.

NRPLUS MEMBER ARTICLE T he California Public Employees’ Retirement System (CalPERS) is in trouble. For the second consecutive year, the public-pension fund has failed to hit its 7 percent return target. As it faces a funding shortfall of more than $150 billion, CalPERS’s recent bout of underperformance raises concerns about California’s solvency at a time when state and local budgets are already stretched.

CalPERS chief investment officer Ben Meng has a solution: more risk. He announced Monday that the fund would increase its allocations to alternative investments, such as private equity and private credit, while leveraging its portfolio to enhance returns. Facing the headwinds of


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