Oregon Treasury reducing public pension investments in private equity

The proportion of Oregon’s public employee retirement fund invested in private equity funds is shrinking after mounting criticism that it ballooned in recent years.

In a public letter shared earlier this month with the four governor-appointed members of the Oregon Investment Council, state Treasurer Elizabeth Steiner said treasury staff were reducing the proportion of the $97 billion retirement fund parked in private equity funds. Such funds are made up of pooled investments in non-publicly traded companies that fund managers buy and sell for profit with little public accountability and transparency standards.

Steiner, who is also a member of the council, noted in the letter that the proportion of the Public Employee Retirement System, or PERS, made up of private equity investments would go from a recent high of 28% to 25% by the end of 2025 and eventually make up no more than 20% of the portfolio. Roughly $26 billion of the pension fund is parked in private equity investments.

She said staff reduced the proportion of private equity investment in the fund to 26%. This was done by selling off some private equity investments, slowing overall investment in private equity funds and moving profits from private equity investments into other investment classes, according to Sybil Ackerman-Munson, Steiner’s chief of staff.

The shift away from private equity coincides with the council’s every-four-years review of the state’s asset allocation strategy.

It also comes in the wake of ongoing criticism from PERS watchdogs and the coalition of nonprofit environmental justice groups Divest Oregon, who raised alarms as the proportion of the pension fund parked in private equity grew from nearly 21% of the portfolio in 2014 to about 28% earlier this year. That’s well beyond the 20% target the Oregon Investment Council set in 2013 and did not enforce, and about double the national average among other state pension funds, according to Public Plans Data, a nonprofit research consortium housed at the Center for Retirement Research at Boston College.

Recent reports from The Oregonian and the Oregon Journalism Project detail how Treasury officials overallocated private equity investments for years, ignoring the advice of consultants, and possibly saddling the fund with underperforming or losing private investments in the years to come.

Steiner in her letter further outlined four strategies she would pursue as a member of the council that she believes will help mitigate risks and encourage growth during “a time of profound change.” Those changes include the rise of artificial intelligence, impacts to markets from climate change, increased protectionism under the Trump administration, persistent inflation and a weak job market.

The four strategies include maintaining a diversified portfolio, investing based on “market conditions of today and the future, not yesterday,” which includes more investment in the clean energy sector, and growing engagement with PERS beneficiaries.

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