CalPERS Adopts the GIPS standards
It was recently announced that the California Public Employees’ Retirement System (CalPERS) adopted the GIPS standards. Adhering to the GIPS standards is a voluntary commitment and considered industry best practice for investment performance calculation and presentation. As one of the largest pension plans in the U.S., CalPERS saw benefit in applying the GIPS standards to their own performance reporting processes despite not having the marketing incentives that often drive traditional investment managers to claim compliance. Though pension plans like CalPERS do not have clients in the traditional sense, they do have stakeholders that they report investment performance to. By adopting the GIPS standards, CalPERS is making a commitment to provide those stakeholders with performance information that adheres to industry accepted standards. The GIPS requirements for asset owners include documenting policies and procedures that establish how the GIPS standards are applied and compliance is maintained, including policies on performance calculation, treatment of fees, valuation principles, error correction and performance presentation. It is anticipated that by CalPERS taking on this initiative that other asset owners will follow as will advisers who manage pension plan assets.