Take a hint, STRS...do like Pennsylvania's STRS did....eliminate bonuses for investments people... even though they ALSO did better than their peers!
From John Curry, December 17, 2008
Dear STRS Board,
I respectfully ask that you read the following from your counterpart in our neighboring state.
John Curry Gov. Ed Rendell sent a letter to system officials in November in which he advised against awarding the bonuses.
"Given the fund's recent performance and the serious financial challenges now facing the commonwealth as a whole, the payment of large bonuses to PSERS employees would be inappropriate and indefensible," Rendell wrote.
Pa. school pension fund staff bonuses ending
PoconoRecord.com, December 16, 2008
HARRISBURG (AP) — Twenty-one investment staffers at Pennsylvania's public school pension fund received more than $854,000 in bonuses for the 2007-08 fiscal year, even though the fund's investments experienced a $1.8 billion net loss, a newspaper reported Tuesday.
HARRISBURG (AP) — Twenty-one investment staffers at Pennsylvania's public school pension fund received more than $854,000 in bonuses for the 2007-08 fiscal year, even though the fund's investments experienced a $1.8 billion net loss, a newspaper reported Tuesday.
The Public School Employees' Retirement System board plans to end the practice at the end of the month, however, citing market conditions and other factors.
"There was some concern given the unprecedented markets at this point," PSERS executive director Jeffrey Clay told The Patriot-News of Harrisburg. "Across the country, there are issues raised with respect to incentive compensation for investment professionals in this market."
Bonuses for the fiscal year ended June 30 ranged from $9,720 to $106,223. The fund's investment staff receive base salaries between $63,179 and $251,542.
Gov. Ed Rendell sent a letter to system officials in November in which he advised against awarding the bonuses.
"Given the fund's recent performance and the serious financial challenges now facing the commonwealth as a whole, the payment of large bonuses to PSERS employees would be inappropriate and indefensible," Rendell wrote.
But the system's lawyers concluded that it was contractually obligated to award the bonuses because the board's policy already authorized the payments, system officials told the newspaper.
Despite the investment losses, the system's in-house investors outperformed their peers nationally, system officials said.
The investment staff's base salaries are lower than the going rate for professional investors, system officials said. The board might consider increasing the salaries in the future to keep them competitive or seek other suggestions from an outside consultant, Clay said.
Investors at Pennsylvania's other state pension fund, the State Employees' Retirement System, will not likely receive bonuses this year, given the fund's losses for the 2008 calendar year, spokesman Robert Gentzel said. The fund's investments fell 14.4 percent from January through September.
SERS investment employees are eligible for bonuses if they achieve at least an 8.5 percent rate of return.
Pennsylvania is among a minority of states that offer bonuses to the investment staff of its state pension funds, said Keith Brainard, research director for the National Association of State Retirement Administrators.
"I think the fact that more don't do it has more to do with the politics of the issue rather than the merits of it," Brainard said.
Pennsylvania Auditor General Jack Wagner said his agency was considering a possible audit of PSERS' contracts to determine why the system could not legally forgo the bonuses when its investments were losing money. Last year, Wagner released an audit criticizing Pennsylvania's student-loan agency for awarding $7.5 million in employee bonuses over a three-year period.
posted by Kathie Bracy at 2:11 PM
<< Home