CalPERS doubles employee bonuses as losses recouped

100112 dear
Joe Dear

CalPERS doubled bonuses to its staff as the $278.3 billion fund recouped losses suffered in the recession.

California Public Employees' Retirement System, Sacramento, said it paid 130 employees and executives a combined $7.7 million in bonuses last year, more than twice the $3.6 million in the previous year. Chief Investment Officer Joe Dear got $321,750 in addition to his half-million-dollar base pay. Three investment officers were paid more than $200,000 each in bonuses, according to data provided by the fund.

The bonuses, based on three-year investment returns, signal that public pension funds are recovering from the 18-month recession that ended in June 2009, which wiped out a third of CalPERS' value. Still, the crisis left U.S. pensions short more than an estimated $1 trillion needed to cover benefits promised to government workers. Taxpayers have been asked to make up the shortfall.

The pension fund says it must grant bonuses to help compete with the pay that employees could make if they went to work on Wall Street. CalPERS' investment returns for the past three years exceeded its benchmark by 0.43%, the first time since the financial crisis began in 2007, said Brad Pacheco, a spokesman.

Three executives outside the investment office were paid a total of $221,805 in bonuses last year, the pension fund said. CEO Anne Stausboll was paid a $99,547 bonus. Alan Milligan, chief actuary, earned $75,198 and Cheryl Eason, chief financial officer, was paid $47,060.

Mr. Pacheco said spending money on in-house investment management saves about $100 million a year that otherwise would be paid to Wall Street in fees. CalPERS spent $44 million last year on compensation and benefits for investment staff, compared with $1.2 billion on external managers.

Gov. Jerry Brown signed a law in 2012 overhauling public pension funds and reducing costs by an estimated $55 billion over 30 years.

The $171.9 billion California State Teachers' Retirement System, West Sacramento, paid CEO Jack Ehnes a $134,400 bonus, about 43% of what was allowed, according to a compensation committee document. CIO Christopher Ailman earned a $133,773 bonus, or about 37% of what was allowed.

CalSTRS, which paid a total of $1.9 million in bonuses, earned 13.8% on its investments in the fiscal year ended June 30.