The CalPERS Board met in-person for its annual off-site Monday, July 17, through Wednesday, July 19, held this year in Monterey, California.
A recording of all the public meetings is posted on the CalPERS YouTube channel. Here are some highlights from this month’s meetings.
Monday’s Meeting
PBI Data Breach Update
Chief Executive Officer Marcie Frost opened the board off-site meeting with an update on CalPERS’ response to the Third-Party Breach of Retiree Information. CalPERS is one of hundreds of organizations affected by the breach, which impacted more than 20 million people worldwide. The incident impacted the personal information of approximately 769,000 CalPERS members. “We know what an unsettling experience this has been for our retirees, so I want to address what we’re doing to make the recovery process as smooth as possible for them,” said Frost.
We’ve managed to cut the average wait time for Experian callers to about 45 seconds. The Experian call center reports more than 33,000 calls through late last week. We’ve received nearly 4,000 calls to our customer contact center, with an average wait time of about 1 minute. And we’ve fielded additional questions by email and from retirees visiting our regional offices. So far, we have more than 117,000 members who have signed up for Experian’s credit monitoring service. Members and retirees can visit PBI Data Breach for more information and send questions to PBI Questions, at PBIquestions@calpers.ca.gov, or call (833) 919-4735 for help.
Sustainable Investments
Chief Investment Officer Nicole Musicco led a discussion, along with Managing Investment Director Peter Cashion, on incorporating sustainable investments and the implications to institutional investors (PDF). In order to generate portfolio alpha, as part of our Sustainable Investments 2030 Strategy (PDF), we aim to position the portfolio and investments in the transition to a low carbon economy, which includes climate solutions, brown-to-green transition assets, and investing in emerging and diverse managers. We’ve also begun to work toward implementing an ambitious Net Zero plan through investments, engagement, and advocacy.
Cashion gave insight to the board that for every CalPERS dollar invested in fossil fuel investments, $3.75 is invested in renewable or transition investments. However, when not including transition investment, CalPERS’ ratio of clean energy to fossil fuel investment is 2.5-to-1. Cashion added, “We do intend to continue to grow the numbers in terms of renewable investments and, in particular, transition investments.” CalPERS aims to integrate climate into its portfolio to deliver the highest return per unit risk and align the portfolio with positive real-world impacts.
Watch the CalPERS Board Meeting YouTube video to learn more.
Diversity, Equity, and Inclusion in the Investment Industry
Chief Diversity, Equity, and Inclusion Officer Marlene Timberlake D’Adamo opened a discussion with the board on diversity, equity, and inclusion (DEI) innovations in the investment industry (PDF). Leading investment institutions, who’ve found success in increasing and retaining diverse talent, join Marlene to share their best practices and advice. They include BlackRock, AltFinance, and Oaktree Capital Management, who have all developed DEI policies and programs that became critical to their business model, in developing world-class talent and delivering results for clients. Some of the practices they shared included investing and expanding internal DEI programs, prioritizing leadership advocacy, making goals public, engaging with communities, tracking progress and providing data, creating a direct pipeline of diverse talent with universities and community organizations, and more.
View the CalPERS Board Meeting YouTube video to watch the session.
Tuesday’s Meeting
2024 Health Plan Premiums
The CalPERS Board of Administration approved health plan premiums for calendar year 2024, at an overall premium increase of 10.77%. Basic (non-Medicare) plans will increase 10.95% overall. Members enrolled in CalPERS’ Basic Health Maintenance Organization plans will have an average premium increase of 10.50%. Preferred Provider Organization Basic plans will have an overall increase of 12.17%. Medicare plan premiums will rise 9.55% overall. These premiums take effect on January 1, 2024.
“We recognize these premium increases are too high, but they will not deter our continued focus in providing access to high-quality, equitable care that improves health outcomes for our members,” said Pension and Health Benefits Committee Chair Ramón Rubalcava. CalPERS is providing members with more options to choose from as the board approved health plan expansions for 2024. In addition, members can shop for health plans and make changes during Open Enrollment, beginning September 18.
Improving Health Outcomes and Equity
Dr. Julia Logan and Dr. Lisa Albers presented a comprehensive look at the health of our member population (PDF) and talked about our work to improve health outcomes while enhancing behavioral health services. CalPERS’ strategic health goals include ensuring members receive high-quality, equitable, and affordable health care when and where they need it. In order to reach our goals, we asked our members to share their demographic information through the Health Demographic Profile. With this information, we’ll be able to find gaps in care and build strategies targeted toward specific populations and their unique needs.
Watch the CalPERS Board Meeting YouTube video for a summary of our findings and to hear more from Dr. Logan and Dr. Albers.
Wednesday’s Meeting
Preliminary Investment Returns
CalPERS reported a preliminary net return of 5.8% on its investments for the 12-month period ending June 30, 2023. Assets as of that date were valued at $462.8 billion. “Even with the economic challenges that still confront institutional investors, we have been able to maintain our focus on meeting the long-term retirement promises made to our members and their families,” said Frost.
While a single year’s investment returns are an important marker, long-term return rates provide a more comprehensive look at efforts to secure the future needs of public sector retirees. Total fund annualized returns for the five-year period ending June 30, 2023, stood at 6.1%, the 10-year period at 7.1%, the 20-year period at 7%, and the 30-year period at 7.5%. The preliminary net return is an early snapshot of the CalPERS portfolio. The official Total Fund performance will undergo additional review over the next few months by outside experts, as well as by CalPERS investment and finance officials.
To learn more, read the news release.
Annual Stakeholder Perception Survey Results
The board received the results of the Annual Stakeholder Perception Survey (PDF) from Deputy Executive Officer Brad Pacheco. This survey helps CalPERS monitor and assess our reputation with five key stakeholder sectors: active members, retired members, employer senior leaders, employers at the operational level, and stakeholder association leaders. The survey showed the general perception of CalPERS is positive, with more “yes” responses than “no” in yes/no questions like, “Is customer service being managed well?” Retired members showed the highest favorability toward CalPERS while employer senior leaders continued to have the least favorable impressions.
In open-ended questions, most responses revolved around themes like ESG and politics in investments, customer service, pre-retirement education, website navigation, and health care costs. Pacheco provided opportunities to address the survey comments, such as enhancing communication and educational tools, partnering with the health program to promote health equity and affordability, and demonstrating thought-leadership through ESG education.
Next Board Meeting
The board will meet again September 18-20, 2023. View the Board Meetings Calendar for the full schedule.