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Ohio Teachers' System Adopts Performance-based Bonus Program
According to an announcement, the Program includes a provision for no incentives being awarded if the STRS Ohio total investment fund has a negative absolute return for the fiscal year (July 1, 2009-June 30, 2010). The board also adopted a motion that said in future years, when the total investment fund returns are negative, no investment staff will receive PBIs, effective with fiscal year 2011 going forward.
In addition, the announcement said if the STRS Ohio total
fund earns a positive absolute return but the total
market value of investment assets is less than $65
billion by the end of the fiscal year (June 30, 2010),
then incentive awards will be reduced by 3% for every $1
billion (and fraction thereof) of the shortfall from $65
billion. For example, if assets on June 30, 2010,
are $55 billion, earned PBIs will be reduced by 30%. As
of April 30, 2009, total fund assets were approximately
$51 billion.
Earned PBIs will be enhanced when the absolute and
relative performances are high.
Citing “extraordinary times”, in January the board of the
Ohio State Teachers Retirement System announced it voted
to suspend bonuses for the system’s investment officers
from February through June. After that, the announcement
said bonuses will be cut in bad economic times, but
enhanced when pension investments do well (see
STRS Reneges on Investment Staff
Bonuses
).
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