Dennis Leone to Mike Nehf and STRS Board re: A growing list of bonus freezes

From Dennis Leone, April 3, 2009
Subject: And here is another one............

Let’s see, that’s Pennsylvania, Texas, Wisconsin, Massachusetts, Colorado, Sweden…………the list is growing and growing. What was the vote on the suspension of bonuses at STRS? Wasn’t it 6-3-1? And who on the board said: “There is only one state, Pennsylvania, that is doing anything like this.” Wasn’t it Myers? Hmmmm, please see the third paragraph from the bottom, about the Texas STRS investment chief.

http://globalpensions.com/showPage.html?page=gp_display_news&tempPageId=850367

Colorado PERA freezes bonuses

by Raquel Pichardo-Allison
2 April 2009

US – The Colorado Public Employees Retirement System has announced it will not pay bonuses to staff for 2008 results.

The pension fund said: “Colorado PERA is sensitive to the issue of employee compensation and we realize that these are difficult economic times for our members, retirees, employers, and taxpayers of the state of Colorado.”

The pension fund paid over US$1.3m to employees in 2006 and 2007. Bonuses are paid over two years and ranged from $2,888 to a high of $66,371.

In-house investment staff manages 60% of the PERA’s $40bn portfolio.

PERA is not the only pension to take action over incentive pay. Globally there has been increased scrutiny on bonus payments are pension funds generally post record losses.

Chief investment officer at the Teachers’ Retirement System of Texas T. Britton Harris in February announced he forfeited his bonus estimated at $167,838 after the pension fund lost 27%. (Global Pensions; 16 February 2009)

In Sweden, the government recently banned bonus payments at all government-owned entities, including the pension buffer funds. (Global Pensions; 25 March 2009)

Also yesterday, Colorado governor Bill Ritter signed a bill to consolidate the state’s defined contribution plans – the State of Colorado Public Officials and Employees’ Plan and the State of Colorado 457 Plan. The merger will be effective on 1 July 2009.