Calpers

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Bloomberg Business

Alison Vekshin
November 24, 2015 — 8:17 AM PST
Updated on November 24, 2015 — 9:15 AM PST

Private-equity firms reaped $3.4 billion in profit sharing for investing on behalf of the California Public Employees’ Retirement System since 1990, the sort of gains that have led to debate over why Wall Street pays lower taxes than most American workers.

The $295 billion pension fund Tuesday disclosed for the first time data on carried interest earned from buying and selling companies. That money is taxed as capital gains rather than income, which faces higher levies. Calpers shares the proceeds with managers of more than 700 private-equity funds, including those run by Carlyle Group LP, Blackstone Group LP and Apollo Global Management LLC.

Calpers invests 9.6 percent of its money in private equity, or about $28.9 billion. The pension said it earned $24.2 billion from such investments since 1990.

The disclosure by the nation’s largest public retirement fund could spur similar revelations from pensions nationwide as Wall Street’s favorable treatment has drawn scorn from presidential candidates of both parties. President Barack Obama wants to tax carried interest as ordinary income at rates up to 43.4 percent, instead of as capital gains at 23.8 percent. Democrat Hillary Clinton and Republicans Donald Trump and Jeb Bush have said they would rein in the discount.

“Private equity has the highest net returns in our portfolio,” Ted Eliopoulos, Calpers’ chief investment officer, said in a statement. “As a long-term investor, it is an important piece of our investment strategy and our mission to provide pension benefits for generations to come.”

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