A retired state employee seeks retirement advice at California Public Employees' Retirement System (CalPERS) headquarters in Sacramento, California, U.S. February 14, 2017. REUTERS/Max Whittaker

(Reuters) - CalPERS, the largest pension fund in the United States, is considering changes in how it invests in private equity that could slash payments to fund managers, according to a report by the Wall Street Journal.

The internal review is an attempt by the California Public Employees’ Retirement System to reconsider some of its pricier investments as it faces a funding shortfall and weaker-than-expected estimates of its future investment earnings.

It is considering moves that would give it greater latitude in selecting and managing its private equity investments in an attempt to reduce costs, the Journal reported.

Some of the options under consideration include buying a private equity firm or creating a private equity fund outside of CalPERS, the Journal said, or it could also choose to act as sole investor in more customized accounts with outside managers.

CalPERS has even considered asking its staff members to make private equity investments directly, the Journal added.

Although some hedge funds and mutual funds have reported outflows in recent years from endowments and pensions, private equity firms have generally drawn considerable demand because of strong performance.

The Journal said it did not know whether the issues under consideration would affect CalPERS’ total private equity allocation.