A group of retirees has tapped a seasoned financial investigator to dig into California’s largest pension system’s returns, which its members believe to be lackluster, putting stakeholders’ benefits at risk.

The investigation is the latest in a series of attempts to scrutinize the California Public Employees Retirement System by the Retired Public Employees Association of California and its current leader. Margaret Brown, RPEA’s president, has been demanding more oversight of the half-a-trillion-dollar pension fund for years, which she claims lacks internal controls.

But CalPERS and close observers of the pension system said the fund is meeting its fiduciary duty to its members — even if the retirement system isn’t completely funded. As of Thursday, the fund’s value was $556 billion, which is enough to cover roughly three quarters of the pension system’s financial obligations.

“This is politics masquerading as policy,” Dane Hutchings, CEO of the California Public Policy Group, a firm that lobbies on behalf of public agencies, said of the investigation.

Brown, who hopes to crowdfund $350,000 for the project, said an investigation is necessary given the size of the pension’s unfunded liability and what she sees as a troubling lack of transparency. The audit would be conducted by Ted Siedle, a prolific writer and observer of state pensions, who has conducted several similar investigations of retirement systems in other states.

CalPERS spokesperson James Scullary maintained that the pension fund upholds the highest standards of transparency and fiduciary responsibility to deliver retirement and health benefits for more than 2 million public employees, retirees and their families.

Scullary added that CalPERS will release its annual investment returns Monday and “we expect to have a compelling story that will show that our strategy is delivering for CalPERS pensioners.”

Funding concerns

Both Siedle and Brown have concerns that CalPERS is failing its fiduciary responsibility to its members by producing subpar investment results.

In a ranking of the funded status of 245 pension plans, CalPERS stood as the 167th-least-funded plan, according to a January report released by the nonprofit Equable Institute.

The National Conference on Public Employee Retirement Systems reported the average funded status in the U.S., a measure of financial health, is 83%. CalPERS reported it had 75% of the money needed to meet its financial obligations last year — which was up three points from 2022 when the pension fund reported a 6% loss as a result of tumultuous global markets.

“Yes, we would like it more funded, but that’s not the reality of the market,” said Rocco Paternoster, the executive director of California State Retirees, another group that represents retired public employees with over 44,000 members.

Paternoster said his organization closely follows Cal- PERS investments to ensure members’ benefits are not at risk. When he’s met with the board and staff, they’ve been forthcoming about the fund’s operations, Paternoster said.

Siedle and Brown, whose retiree group represents more than 22,000 members, believes the pension system has grown more opaque in recent years.

“The reason they’ve gotten less transparent is because they’ve increasingly migrated into alternative investments or private investments and they have refused to show these prospectuses and investment documents to the public,” Siedle said.

In fiscal 2024, 16% of CalPERS’ $508 billion in assets was invested in private equity, according to a recent financial report. CalPERS noted that private equity — investments in private companies and assets not available on public stock exchanges — has been its best performing asset class over the last 20 years.

Compared to other, similarly sized companies, the pension fund doesn’t have an outsized amount invested in private equity. Nearly 30% of Canada Pension Plan’s assets are invested in private equity, according to the fund’s 2025 annual report.

“We’re looking to private markets for opportunities where we can get better returns, better diversification for the overall portfolio over the long term to beat that 6.8% discount rate,” Anton Orlich, CalPERS’ managing investment director for private equity, said.

Last year, CalPERS reported a 9.3% return on investment, which exceeded its 6.8% discount rate, or the level of returns needed for the pension fund to meet its obligations.

This isn’t the first time Brown has been critical of investment priorities.

While on the CalPERS board from 2018 to 2022, Brown raised the alarm about CalPERS’ increased reliance on private investments.

“CalPERS keeps investing more into private equity,” Brown said. “While it does give you greater returns, it is super risky.”

During her time on the board, she was disciplined multiple times for political activity, including allegations that Brown used the pension’s name and logo for campaign purposes, which board members are not allowed to do. She sued the board in 2020 over retaliation. A year later, a Sacramento County Superior Court judge dismissed the lawsuit.

Hutchings, with the California Public Policy Group, said private equity is less transparent because it doesn’t host earning calls or report returns quarterly like public companies do. But that’s not a bug, he said; it’s a feature that helps “drive performance.”

“Transparency feels good, but returns pay the benefits,” Hutchings said.

Not the first attempt

Siedle’s effort to dig into CalPERS’ investments stretches back a decade. After a senior investment officer revealed that the pension fund did not know how much CalPERS paid some of its Wall Street managers in 2015, Siedle told The New York Times he intended to find out.

He similarly opted to use crowdfunding to finance the investigation. He hoped to raise $750,000 for the project. While that campaign didn’t reach its financial goal, he has successfully raised money to investigate public pension funds in other states.

Siedle has investigated pensions in Rhode Island, North Carolina, Ohio and Minnesota. In every case, Siedle said, he uncovered “really shocking findings.”

His most recent audit of the Minnesota Teachers Retirement Association pension fund, which he published last year, found that the fund had failed to disclose billions of dollars in private investment fees in the past decade. Siedle said following his report, the fund increased its fee disclosures.

RPEA has also sought independent oversight of the pension fund through various means.

In 2022, the retiree group asked lawmakers to request a management audit of CalPERS by the state auditor. The Legislature did not approve an audit.

Last year, state Sen. Roger Niello, R-Fair Oaks, introduced legislation that would have created an independent Office of Inspector General over CalPERS. The bill was later overhauled to instead focus on the California High-Speed Rail Authority. The publication Pensions & Investments reported that RPEA backed the effort to establish the oversight office over CalPERS at the time.

The lack of legislative progress prompted the RPEA board to unanimously vote in support of the crowdfunding campaign, Brown said.

Brown set the goal of raising $350,000, the total cost of a forensic audit by Siedle.

As of Thursday, the online campaign, which was launched in late June, has raised over $7,000.