The former head of the largest US pension fund has admitted he took bribes, including hundreds of thousands of dollars stuffed in paper bags and a shoe box, and helped an associate collect millions of dollars in a fraudulent investment scheme.

Fred Buenrostro Jr pleaded guilty in the San Francisco federal court to fraud and bribery charges stemming from his time as chief executive of the California Public Employees’ Retirement System (CalPERS) from 2002 to 2008.

In his plea agreement, Buenrostro said that in exchange for his help Alfred Villalobos, a former CalPERS board member, took him on a round-the-world trip, gave him casino chips and paid for his wedding.

Villalobos denied the allegations through his lawyer on Friday.

Buenrostro’s guilty plea arises from a years-long investigation into the role of money management firm middlemen, called placement agents, in helping clients win investment business from a California pension system that controls $US300 billion ($A324.59 billion).

CalPERS said the investigation had prompted it to take “aggressive steps to implement policies and reforms that strengthen accountability and ensure full transparency”.

Buenrostro said in his plea that he started taking bribes in 2005 for using his influence with CalPERS to make investment decisions to help Villalobos’s clients.

He also said he gave access to confidential investment information to Villalobos, a CalPERS board member in the mid-1990s.

The 64-year-old former executive said he forged letters allowing firms connected with Villalobos to collect $US14 million in commissions on $US3 billion pension fund investments.

He said he started writing bogus investor disclosure letters after CalPERS legal and investment officials declined to authorise them.

Buenrostro said after he left CalPERS to work for Villalobos he also accepted $US50,000 to lie to federal investigators in 2010 about their relationship.

Buenrostro faces five years in prison and a $US250,000 fine when he is sentenced in January. In exchange for a lesser sentence, Buenrostro lawyer William Portonova said his client had agreed to co-operate with the continuing investigation of Villalobos.