CG Carlyle Group Inc

The largest U.S. pension fund said it has paid $3.4 billion in performance fees to private-equity managers since 1990, doling out $700 million in the past year alone.

The California Public Employees' Retirement System, known by its abbreviation Calpers, disclosed the performance-related expenses for the first time Tuesday. Calpers said those performance fees were based on returns of $24.2 billion since 1990 and $4.1 billion for the year ended June 30.

Pension funds across the country for years have failed to either ask or disclose how much private-equity firms kept in performance fees, which are the biggest source of profits for outside money managers.

Scrutiny to provide such detail on private-equity costs has escalated in recent months, as Calpers and other public pension funds look to reduce the number of outside managers they partner with and the investment profits they have to share with them. The Sacramento, Calif.-based Calpers has assets of around $295 billion, according to its most-recent disclosure.

Private-equity firms buy companies using money from pension funds and other investors, hoping to earn more in a sale or public offering later on. They typically charge clients a management fee of 1% to 2% of assets and a performance fee of about 20% of the gains when they sell companies for a profit.

Calpers has about 10% of its portfolio, or $28.7 billion, invested with private-equity firms. Calpers has investments with more than 700 private-equity funds and works with some of the biggest names in the industry, including Blackstone Group LP and Carlyle Group LP.

Private equity is Calpers' top-performing asset, producing returns of 11.9% over the past decade, the pension fund said.

"Private equity is a complicated asset class and the Board and investment office staff will now have even more insight into our program," said Henry Jones, Calpers investment committee chair, in a statement.

Write to Timothy W. Martin at timothy.martin@wsj.com

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(END) Dow Jones Newswires

November 24, 2015 12:55 ET (17:55 GMT)

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