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Are CalPERS' hands clean?
It's not yet clear whether the California Public Employees' Retirement System, better known as CalPERS, has engaged in the same kind of pay-to-play activities that have rocked New York state's pension systems, resulted in charges of corruption and cronyism, sparked a nationwide probe by the Securities and Exchange Commission and undermined confidence in the integrity of retirement funds and the people who manage them.

But there have been enough troubling signs in recent months to spur an internal CalPERS review and to prompt changes at some local pension agencies, including the two serving retirees in the city of Los Angeles. And last month, Gov. Arnold Schwarzenegger signed legislation requiring expanded disclosure and restricting the ability of public pension employees to lobby or participate in self-serving deals.

The review is welcome, as are the reforms, but they may be insufficient. Especially in this time of economic distress, CalPERS owes it to the 1.6 million workers and retirees who depend on it to show not only that the fund remains viable, but that its investment decisions result from careful study rather than kickbacks or political pressure. The same is true of local pension systems.

CalPERS also owes it to taxpayers, who pick up the bill when investment returns fall short and public pension funds are unable to meet their obligations on their own. The pension fund already has notified the state that it will need an increased contribution next year because of its steep losses, which are even greater, by percentage, than those of other large funds across the country....