Missouri retirement board takes small step on staff bonus issue
JEFFERSON CITY — Investment staff at the state retirement system would not get bonuses in years when the system’s investments lost money under a plan that tentatively advanced today.
The board of the Missouri State Employees Retirement System voted to develop a new policy reflecting that bottom line. The structure of the incentives also would be revised. The new incentive policy will be voted on at the next board meeeting.
The system took some heat earlier this year after the Post-Dispatch reported that the 14-member investment staff got $300,000 in bonuses when the portfolio nosedived by $1.8 billion. The bonuses were granted under an incentive plan that considers how well the system’s investments did over the last five years, compared to similar portfolios.
The issue was contentious. Board members said the investment team, led by Chief Investment Officer Rick Dahl, does a great job, producing better returns than any other statewide public pension system the last five years.
After 2 1/2 hours of debate, board member David Steelman proposed that staff work out the details on a new incentive policy aimed at barring bonuses in losing years. The new plan also will take into account how the system’s overall asset allocation plan fared. The motion passed 6-4, with one absention.
This is a typical overraction to negative reaction from a public, and from politicians, fanned by the media, none of whom understand the issue. If the managers of my pension fund presided over a 5% loss for 2008, as an example, the know-nothings are screaming that they should not, under any circumstances, get any kind of a bonus. But if most other pension funds lost 15% - 25% in 2008, doesn’t than make my mangers geniuses? They should get a bonus. MOSERS had it right under their original policy, in which bonuses were based on performance over several years. Looking only at the percentage return of today, ignoring the long-term, is most of what is wrong with both the government and the private sector today.