The California Public Employees' Retirement System (CalPERS), the largest public pension fund with assets totaling US$207 billion, said it would review the pension's forecasts of capital market returns at the upcoming workshop on May 17. Results of the review would be adopted in December asset allocation plan for the next three calendar years.

In a statement, CalPERS said the workshop would set the stage for adoption in February 2011 of the Pension Fund's assumed rate of return, currently set at 7.75 percent.

"Our discussion of market trends will help us set realistic three-year investment targets and ranges for stocks, private equity, fixed income, real estate and inflation-linked assets," said George Diehr, investment committee chair. "We'll make no immediate decisions but test assumptions for investment earnings. Are they too aggressive, too pessimistic or just about right? What adjustments might we need to make?"

Earlier this year, the CalPERS Board reviewed the role of the pension fund's five asset classes and alternative ways of classifying them. In July, the Board will discuss major risk factors and new approaches to asset allocation. It will hold a final review of market assumptions in September and an Asset/Liability Management Workshop November 3-4. The Board will adopt an asset allocation plan as early as the December 13 Investment Committee meeting.

"We have an ambitious plan to thoroughly explore our asset allocations," said Chief Investment Officer Joseph Dear. "We want to be as open and transparent as we can to challenge our assumptions and hear opposing views. We will realistically review sound research, engage in robust debate and use sound judgment to arrive at a well-considered decision."