What's super-gigantic and almost totally ineffective at making money?

Insert your federal government joke here. But the same can be said, sadly, for the nation's largest public employee retirement system, which managed to eke out a rather awful 0.14-percent net return on its investments in the 2011-2012 fiscal year.

The Orange County Register reports that the California Public Employees' Retirement System, which expects a healthy 7.5 percent on its investments to keep its $200-plus-billion in assets afloat, did not do so.

Reports earlier this year suggested the return rate might be about 1 percent, but when the final figures came in, the fund averaged just 0.14 percent overall. It ended the fiscal year with $237 billion in the bank, down from $241 billion the previous year.

CalPERS' Comprehensive Annual Financial Report said that public equities lost approximately 7 percent but other investments, such as real estate, did well enough to offset a complete loss.

Administrators blamed the lousy performance on the European debt crisis, increased market volatility and bad investments in troubled spots including Russia, Brazil and Turkey.

Critics, such as Dan Pellissier of California Pension Reform, suggest the fund might have earned better returns if it had made investments in home-grown entities, especially the S&P 500, though even it is now widely predicted to take a big plunge in the coming months.

"They spend a lot of money trying to beat the market, and it's not going to happen," he told the Register. "When you're CalPERS, you have to invest in the losers, too, because you're just too big."

Pension fund officials suggested that the low returns are just part of the current market conditions and do not represent a total loss for the organization.

“It’s important to remember that CalPERS is a long-term investor and one year of performance should not be interpreted as a signal about our ability to achieve our investment goals over the long term,” said Henry Jones, Chair of CalPERS Investment Committee, back in July.

A CalPERS spokesperson admitted last week that the fund's investments are doing somewhat better, especially considering the massive losses suffered after the 2008 crash.

“We’re all dependent on the economy and the markets, but our fiscal performance to date is about 7 percent,” said Brad Pacheco, to the Register. “But I don’t want to sugarcoat it, because those years of downturn did raise costs for employers and taxpayers.”

CalPERS lowered its overall expectations of return to 7.5 percent from 7.75 percent last year, although critics continue to say the figure is too high.

The losses may provide some insight into the pension fund's unusually vocal and litigious battles against several California cities who are hoping to shake their pension obligations as part of their bankruptcy proceedings.

Instant Insights /

California pension fund earns 0.14 percent return

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