This is BIG!---CalPERS Goes All-In On Pension Accounting Scam; Boosts Stock Allocation To 50% | Zero Hedge

CalPERS Goes All-In On Pension Accounting Scam; Boosts Stock Allocation To 50% | Zero Hedge
"Starting July 1, 2018 stock markets around the world are going to get yet another artificial boost courtesy of a decision by the $350 billion California Public Employees' Retirement System (CalPERS) to allocate another $15 billion in capital to already bubbly equities.  
Of course, if this decision doesn't make sense to you that's because it's not really meant to make sense. 

As Pensions & Investments notes, CalPERS' decision to hike their equity allocation had absolutely nothing to do with their opinion of relative value between assets classes and nothing to do with traditional valuation metrics that a rational investor might like to see before buying a stake in a business but rather had everything to do with gaming pension accounting rules to make their insolvent fund look a bit better.  

You see, making the rational decision to lower their exposure to the massive equity bubble could have resulted in CalPERS having to also lower their discount rate for future liabilities...a move which would require more contributions from cities, towns, school districts, etc. and could bring the whole ponzi crashing down. 

The new allocation, which goes into effect July 1, 2018, supports CalPERS' 7% annualized assumed rate of return. The investment committee was considering four options, including one that lowered the rate of return to 6.5% by slashing equity exposure and another that increased it to 7.25% by increasing the exposure to almost 60% of the portfolio.

The lower the rate of rate means more contributions from cities, towns and school districts to CalPERS. Those governmental units are already facing large contribution increases — and have complained loudly at CalPERS meetings — because a decision by the $345.1 billion pension fund's board in December 2016 to lower the rate of return over three years to 7% from 7.5% by July, 1, 2019.

Meanwhile, there was only one dissenting vote on the decision to hike the fund's equity exposure.  
Ironically, the dissent did not come from a rational investor looking to preserve the fund's assets, but rather from a board member named J.J. Jelincic who wanted to go all-in on the pension accounting scam and hike the fund's equity allocations to 60% so that discount rates could be raised even higher than the current 7%..."
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