Much like their Wall Street brethren, investment
managers at some of the country's largest public pension
funds receive incentive bonuses when fund performance
exceeds established benchmarks.
When public funds experienced significant investment
gains on assets, bonus payments flew under the radar.
Amidst the last year of fund losses, however, those bonus
payments are drawing howls of criticism.
In Missouri, Governor Jay Nixon called $300,000 in bonus
payments to the 14-member staff of the Missouri State
Employees' Retirement System (MOSERS) "unconscionable."
MOSERS' performance last year exceeded that of its
peers, but the Missouri pension fund still lost close to
$1.8 billion㬓.9% of its value.
To show its disapproval, the Missouri Senate Appropriations
Committee cut the state's contribution to MOSERS by
Chairman of the committee, Senator Gary Nodler (R), says
bonus payments are inappropriate in years when there is no
There are sound reasons for paying bonuses in today's
economic environment, even if a pension fund has lost money
for the year, says Keith Brainard, the Research Director
for the National Association of State Retirement
Administrators in Georgetown, Texas.
"If a ship's captain encounters a hurricane at sea
and navigates it successfully but with some damage to the
vessel, does the company he works for praise him for saving
the ship or blame him for the hurricane?" asks Gary
Findlay, the Executive Director of MOSERS.