PA Pensions to Halt Investment Staff Bonuses

An Associated Press news report said the 21 investment employees received a total of more than $864,000 in bonuses for the 2007-2008 fiscal year. Bonuses for the fiscal year ended June 30 ranged from $9,720 to $106,223 and the fund’s investment staff receive base salaries between $63,179 and $251,542, according to media reports.

PSERS executive director Jeffrey Clay told The Patriot-News of Harrisburg that the investment staff’s base salaries are lower than the current norms for professional investors and that the board might consider increasing the salaries to keep them competitive. Also the system’s investment staff outperformed their peers nationally, system officials said.

“There was some concern given the unprecedented markets at this point,” Clay told the newspaper. “Across the country, there are issues raised with respect to incentive compensation for investment professionals in this market.”

Pennsylvania Governor Ed Rendell told system officials in a November letter that he opposed 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, according to the news reports.

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.

Investors at Pennsylvania’s other state pension fund, the State Employees’ Retirement System, will also not likely receive bonuses this year.