Public pensions are owning up to a painful truth about their private-equity bets: They never totaled the bill.
For years, officials who oversee retirements for teachers, firefighters and other government workers said they failed to either ask or disclose how much private-equity firms kept in performance fees, the biggest source of profits for outside money managers.
Now, pension funds from New York to California are doing those calculations and revealing much bigger sums than they had ever made public. The size of the expenses could mean tougher scrutiny of private-equity investments and more pressure to cut back those holdings or negotiate lower fees.
The California Public Employees’ Retirement System is expected to announce this week that it paid private-equity firms billions of dollars more over the past 17 years than it had previously disclosed, according to people familiar with the situation.
Similar assessments made public recently by retirement systems in New Mexico, South Carolina, Kentucky and New Jersey showed total costs were as much as 100% higher than originally disclosed.
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