The San Jose Federated City Employees’ Retirement System provides defined benefit pension benefits to non-safety employees of the City of San Jose, California. Managing approximately $4 billion in assets, the fund serves active and retired city workers including administrative, maintenance, and professional staff. The system is governed by a Board of Administration and is separate from San Jose’s Police & Fire retirement system.
Investment Strategy
The Federated system maintains a diversified investment portfolio across domestic and international equities, fixed income, real estate, and alternative investments. The Board of Administration sets asset allocation policy based on actuarial studies and capital market assumptions, with guidance from external investment consultants. The fund’s investment objective is to generate long-term returns sufficient to meet pension obligations while managing risk and maintaining liquidity. The portfolio is implemented primarily through external investment managers selected through competitive search processes. The system has undergone significant pension reform in recent years, which has influenced its liability profile and investment approach.
Private Markets Approach
The Federated system allocates approximately 10% of its portfolio to alternative investments, including private equity and real estate. The private equity program includes commitments to diversified buyout and growth equity funds managed by established institutional managers. Given the fund’s moderate scale, the alternatives program is focused on a select number of high-quality manager relationships. The real estate allocation includes investments in commingled funds spanning core and value-add strategies. The system approaches its private markets program with attention to diversification across vintage years and strategies, fee management, and alignment of interest with investment partners. The Board of Administration conducts due diligence on prospective managers with support from its investment consultant.
Frequently Asked Questions
What is the San Jose Federated City Employees' Retirement System?
The San Jose Federated City Employees' Retirement System provides defined benefit pension benefits to non-safety city employees of San Jose, California. The fund manages approximately $4 billion in assets.
How does the San Jose Federated system invest?
The system invests across a diversified portfolio of equities, fixed income, real estate, and alternatives. Approximately 10% of assets are in alternative investments including private equity. The Board of Administration sets investment policy with guidance from external consultants.
What is the difference between the Federated and Police & Fire retirement systems in San Jose?
San Jose operates two separate retirement systems. The Federated system covers general city employees while the Police & Fire system covers sworn police officers and firefighters. Each has its own board, investment policy, and asset allocation.
