Ongoing corruption probes and concerns over perceptions of favoritism are leading to new policies limiting public pension plan investment officials from accepting luxury travel, meals and gifts from investment managers.
Oregon, on Aug. 1, became the latest state to address the issue. Oregon State Treasurer Ted Wheeler ordered a ban on first-class air travel by treasury department employees — including pension fund staff — as well as on the practice of allowing investment officers to claim per diem reimbursements for meals they were provided for free at conferences and meetings with outside investment managers.
Other public systems that have been subject to new regulations include the California Public Employees' Retirement System, Sacramento; all municipal pension funds in Pennsylvania; the North Carolina Retirement Systems, Raleigh and the Missouri Public School and Education Employee Retirement Systems, Jefferson City.
The new regulations are part of the fallout from the pay-to-play scandals plaguing some public pension funds across the U.S.
The National Association of State Retirement Administrators called for public funds to put ethics codes in place in 1999, although some had requirements before then, said Keith Brainard, the association's research director.
“These ethics codes were developed in good faith with a sincere effort in ensuring appropriate behavior,” Mr. Brainard said. “Sometimes people find ways to get around the system so the standards have to be tweaked and improved.”
Mr. Brainard said growing allocations by public pension plans to private equity and hedge funds are also causing plans to rework ethics rules because of specialized situations created by those investments.
Oregon officials put in place new travel guidelines for investment staff after media disclosures that staffers had luxury travel paid for by private equity firms.
State memos examined by Pensions & Investments show staff had stays at top resorts, including The Ledge at Pebble Beach, Calif., and the Pierre Hotel in New York.
James Sinks, spokesman for Mr. Wheeler, said Oregon Public Employees Retirement Fund, Salem, investment staffers still will attend conferences and meetings of the $51.5 billion fund's private equity firms that are prepaid as part of contracts with the groups.
“It is important for our staff to monitor the state's investments,” he said.
He said, however, that investment staffers cannot be housed in accommodations more luxurious than the standard offering reserved for other attendees. Mr. Sinks said the new policy should alleviate concerns that investment personnel are receiving special treatment.
The new policy is also fair to investment staff. “They don't have to stay in a broom closet,” he said.