Bonuses Slashed at Missouri's Government Pension System

(January 22, 2010) — Missouri’s main government pension system will cease providing its staffers with bonuses, sparking concern as to whether the public fund’s top-tier managers will seek higher-paying opportunities elsewhere.

According to the St. Louis Post-Dispatch, even as the system’s portfolio lost $1.8 billion in 2008, the system’s 72 employees received about $460,000 in bonuses and incentive pay performance, based on how well the plan’s investments did over five years, compared to similar portfolios. Chief Investment Officer Rick Dahl received $114,000, the largest payment and a figure equal to half his salary.

Gary Findlay, executive director of the Missouri State Employees Retirement System (MOSERS), initially defended the payments when controversy about bonuses arose last year, but recently he changed his side on the issue. This week, he said that even though he believes incentives are an important tool to improve performance and retain talented staff, anything that can be termed a bonus is ‘poison’ and hurts the image of the retirement system, according to the St. Louis Post-Dispatch.

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The MOSERS board of directors voted 8-1 in favor of ditching bonuses and automatic cost-of-living raises.

MOSERS administers retirement, life insurance, and long-term disability benefits, covering about 55,000 state employees and 30,000 retirees. Pensions are funded solely from investment income and taxpayer money.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

From “Investment Outlook” by Bill Gross, January 2010

“Conceived with the vision of liberty and justice for all, we have descended in the clutches of corporate and other special interest to a second-world state defined by K Street instead of Independence Square. Our government doesn’t work anymore or, perhaps more accurately, when it does, it works for special interests and not for the American people. Washington consistently stoops to legislate 10,000 page perversions of health care, regulatory reform, defense and budgetary mandates overflowing with earmarks that serve a monied minority as opposed to an all-too-silent majority…what most politicians apparently are working for is to perpetuate their power—first via district gerrymandering and then, second, by around-the-clock campaigning financed by special interest groups. If, by chance, they’re ever voted out of office, they have a home just down the street—at K Street—with six-figure incomes as a starting wage.”

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What’s unusual is not what is said, but who is saying it: the head of a trillion-dollar bond house. Remember when Bill Clinton said, I thought the President ran the country, then I found the bond market runs the country?

Will the term “K Street” become as iconic as “Wall Street?”

To be sure to catch the start of Adam Smith’s Interrogation, available in ai5000 Magazine after February 3, click here.

aiCIO Editorial Staff