The California Public Employees’ Retirement System for state employees lost 71% of its $468 million investment in a clean energy and technology private equity fund, state records show, but CalPERS won’t explain how.
These losses are a major problem for California taxpayers, who at least for now are the backstop for underfunded state pensions, but also for state employees who trust CalPERS to responsibly manage their retirement plans.
CalPERS says its pension benefits are only 79% funded, leaving the state, and its taxpayers, on the hook for the other 21%. According to a recent report from Reason Foundation, CalPERS’ pension shortfall is approximately $180 billion.
CalPERS’ overall returns for the 2024-2025 fiscal year were 11.6%. While its private equity returns were 14.3%, its public equity investments were 16.8%.
“Returns were similar … so why go through all the trouble — if you can get these kinds of returns on the public markets, why bother with all the complexities and the illiquidity involved in private equity?” asked Marc Joffe, a public finance expert and visiting fellow at the California Policy Center, in an interview with The Center Square regarding the performance of CalPERS’ private and public equity investments.
CalPERS committed $465 million to the private equity CalPERS Clean Energy & Technology Fund (CETF) in 2007, ultimately paying in $468,423,814.
Since then, the cash out and remaining investment value of the investment fund has declined to $138,045,373, as of March 31,2025.
That’s a loss of 71%, or more than $330 million, for which private equity firms were paid at least $22 million in fees and costs.
CETF losses show “the combined dangers of private equity and ESG investment — you have a very opaque investment choice that appears to have been chosen because of its green credentials, and yet it’s now generated a huge loss for taxpayers and retirees,” said Joffe with regards to CETF’s losses and focus on “clean” energy and technology. “CalPERs would be better off focusing on a diverse portfolio of publicly-traded equities to get better long-term returns.”
In response to an inquiry by The Center Square, CalPERS defended its private equity strategy and shifted blame for CETF’s performance on prior management.
Assemblyman James Gallagher stated “This is a story that needs a whole lot more attention. CalPERS lost big making really bad investments in clean energy, and taxpayers are on the hook.”
