Many public employee retirement systems, even some of those active in corporate governance reform, should reform themselves in terms of timely disclosure of details of their own pension fund operations. Their websites should be a splendid way, swift and economical, to convey meaningful information to participants and taxpayers. But too often they aren't.
For example, when Patricia J. Gerrick, former chief investment officer of the Indiana Public Employees Retirement Fund, Indianapolis, left in the fall, nothing was posted on the fund's website. As one of the two most important positions at the fund, her departure is significant. The fund owed it to the public to post a notice, rather than allowing participants and others get the news through the media.
Ms. Gerrick's departure was unexpected. As she noted, "My performance was very good. I was the first CIO. I built the first investment staff. When I joined, the fund was in the bottom quartile (in performance) and now it is in the top quartile. It was not performance related. There was nothing I did illegal or improper. I didn't do anything wrong."
Her departure apparently was the result of Craig E. Hartzer, executive director, preferring to bring in his own people. "Craig has been building a team," said Patrick Lane, communications director. "Pat was pretty much the last of the former team."
In fact, when Mr. Hartzer's predecessor, E. William Butler, resigned amid a scandal concerning revelations of a key fund employee with a previous criminal background, Indiana PERF also posted nothing on its website. The fund did post a notice when Mr. Hartzer was hired about four months later, although without mentioning Mr. Butler.
Indiana PERF still has nothing posted under "employment opportunities" about a search for a replacement for Ms. Gerrick.
And in Wisconsin, when Patricia Lipton announced in late November her retirement as executive director of the State of Wisconsin Investment Board, Madison, nothing was posted on its website for more than two weeks, until it noted the appointment of David C. Mills as her replacement. SWIB doesn't call Mr. Mills interim or acting, even though the board announced it will conduct a national search for Ms. Lipton's replacement. Despite the search, the position isn't listed among job openings that the board posts.
Among other shortcomings in disclosure, SWIB's website lists assets as of Dec. 31, 2002, nearly a year out of date.
But in other ways the Wisconsin board has been in the vanguard in disclosure. Last July, it started posting online its corporate proxy votes, one of the very few pension funds to do so, joining the California Public Employees' Retirement System, Sacramento, and the Ontario Teachers Pension Plan, Toronto, which have done so for a number of years. Unlike CalPERS and Ontario Teachers, which post their votes in advance of shareholder meetings, the Wisconsin board posts its votes immediately following each meeting. All three funds deserve praise for such disclosure.
The long wait for annual reports is another problem at many funds, regardless of website posting.
Indiana PERF's latest annual report posted is for the period ended June 30, 2002, almost 18 months ago.
The latest annual report for the Iowa Public Employees' Retirement System, Des Moines, is also for the period ended June 30, 2002. But Iowa PERS posts on its website total fund returns for both the fiscal year, ended June 30, 2003, and a quarterly update, ended Sept. 30. That's at least an improvement.
There may be no single sponsor to serve as a model. But the Alaska Permanent Fund Corp., Juneau, is one of the best. It produces a daily report, showing total assets in each of its major asset classes, and a monthly report with more detail on investments. Among other disclosures, it lists its managers by investment style and its consultants, and gives a five-year projection on contributions and range of investment returns.
It's no wonder the Alaska fund's website pages feature the heading, "Accountability to Alaskans." Public funds in the other states ought to take their accountability to the public as seriously.