Missouri State Employees Retirement System Executive Director Gary Findlay said in an e-mail to retirement system board members that his employees had earned bonuses under a complex incentive pay program. But he said it would be “virtually impossible” to defend the payments because of the media’s “gross mischaracterizations” of the incentive plan, according to the AP.
While bonuses paid to public sector investment staff have been under fire in the wake of negative fund returns in several systems (see STRS Reneges on Investment Staff Bonuses,CalPERS, CalSTRS Continue Money Manager Bonuses , PERA Drops 2008 Money Manager Incentive Pay , MO Governor Unhappy about Retirement System Bonuses ), the bonuses put on hold for now are those of the operations staff – including Accounting, Records Management, Benefits, Communications, IT, and General Admin – which receive them in June if employees and the agency meet certain customer-service goals, according to the St. Louis Post-Dispatch. Operations staffers can receive up to 10% of their salaries as bonuses, according to the report.
According to the Associated Press, fifty-seven staffers had been on track to receive the payments on June 29.
Findlay said he made the decision after Governor Jay Nixon’s announcement that he was cutting or suspending $430 million in state spending to cope with plummeting tax collections, according to the Post-Dispatch.
A spokesman for Nixon, who has been a vocal critic of bonuses paid to the investment staff (see MO Governor Unhappy about Retirement System Bonuses ), told the AP that halting the June bonuses was “an appropriate first step to reform a process that has gotten out of control.”
MOSERS, which was recognized as PLANSPONSOR’s Public Plan Sponsor of the Year in 2008 (see Public Plan Sponsor of the Year: State of Missouri: “Show Me” State ), was acknowledged for measuring “just about everything it does in its customer service for participants and retirees.” Its focus on customer service has led the fund to rank first nationwide in a peer group of about a dozen similar size public funds in an analysis by Toronto-based CEM Benchmarking Inc. (see MOSERS Customer Service ).
In April, Findlay noted that the investments incentive compensation policy was based on a five-year period ending December 31, 2008, and that "during that period, the fund has grown in value by $1.2 billion despite the one-year market losses of 2008. Of that growth, $597 million is a direct result of the skill of MOSERS' internal investment staff. The incentive payments made to the investment staff is 1/20th of 1% of that," Findlay noted.
"While short-term results should not be the focus of the MOSERS retirement investments or any other retirement account, they are drawing significant attention due to the serious global economic recession. At a time when the global equity markets decreased in value by more than 40%, MOSERS' well-diversified investment portfolio decreased in value by 23.9%."
Findlay's April note also noted that "At MOSERS, our investment professionals strive to deliver the best returns possible for state employees and the taxpayers when economic conditions are favorable and to lose as little as possible when economic conditions are unfavorable. We have accomplished both."
As for the bonuses currently on hold, the Post-Dispatch notes that the MOSERS board has been studying the agency's overall compensation plan, and that board members decided last week to submit questions to Findlay and review the answers at their September meeting. A decision on the postponed bonuses is likely to be made then, according to the report. While the bonuses are in limbo, MOSERS employees will still receive 3% cost-of-living raises this month.
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