The chief investment officer of the largest pension fund in the US has endorsed the private equity industry at a Senate hearing, as lawmakers question whether they should tax earnings at buyout firms.

Russell Read of the California Public Employees' Retirement System testified yesterday during a hearing of the Senate Finance Committee that Calpers depends heavily, and will continue to depend, on private equity returns. He said Calpers had invested $17bn in private equity, which totals 7% of the fund's allocation.