Investment Policy & Governance

The strength of SCERS rests not only on its investment returns, but also on the policies and governance practices that guide every decision. Managing a multi-billion-dollar pension fund requires clear rules, disciplined oversight, and transparency to members and the public.

Fiduciary Responsibility

Under Article XVI, Section 17 of the California Constitution, the SCERS Board of Retirement has “plenary authority and fiduciary responsibility for investment of monies and administration of the system.” This means the Board’s first duty is to act solely in the interest of members and beneficiaries. Every investment decision—whether selecting managers, allocating assets, or managing risks—is made with the exclusive purpose of securing promised retirement benefits.

The Master Investment Policy Statement

SCERS’ investment program is governed by the Master Investment Policy Statement (Master IPS), a document that sets forth the principles, objectives, and standards that guide the management of trust assets. The Master IPS outlines the Board’s overall philosophy:

• To achieve returns that are sufficient to meet long-term obligations.
• To maintain a well-diversified portfolio across asset classes.
• To manage risk carefully, avoiding overexposure to any single sector or strategy.
• To monitor and evaluate investment managers regularly.

The Master IPS also establishes performance benchmarks and provides the framework for regular reporting to ensure accountability. The full policy is available to the public and is updated periodically to reflect best practices and changing market conditions. (Master Investment Policy Statement)

Strategic Asset Allocation

One of the most important decisions the Board makes is the strategic asset allocation—the mix of stocks, bonds, real estate, and alternative investments in the portfolio. This allocation is designed to strike a balance between generating sufficient returns and protecting against the risk of losses. Diversification is key: no single asset class should determine the system’s success or failure.

By reviewing and adjusting the allocation as needed, the Board ensures that the investment program remains aligned with SCERS’ obligations and long-term funding objectives.

Oversight and Accountability

Investment governance is not a one-time exercise. The Board of Retirement reviews investment performance on a regular basis at meetings, supported by staff and independent consultants. Quarterly and annual reports provide updates on results, risks, and fees. Independent audits and actuarial reviews add additional layers of oversight.

This structure ensures that the system is not only well-managed, but also accountable to the members whose futures it secures.

Why It Matters

For members, investment policy and governance may seem distant from day-to-day retirement planning. These frameworks are what ensure your pension will be there when you need it—today, tomorrow, and for decades to come. Strong governance, clear policies, and fiduciary discipline give SCERS the foundation to navigate market cycles while keeping its promises to members.