CalPERS trustees are developing contingency plans to find replacements for Chief Investment Officer Joseph Dear, CEO Anne Stausboll and other top staffers in the event they can no longer serve in their roles.
The succession planning began 18 months ago in closed sessions, before board members for the $282.8 billion California Public Employees' Retirement System, Sacramento, knew about Mr. Dear's illness, said Rob Feckner, board chairman in an interview with Pensions & Investments.
Mr. Dear, who is being treated for prostate cancer, began his second indefinite medical leave in less than a year on Jan. 6.
This is the first time officials at CalPERS, the nation's largest defined benefit plan, have discussed publicly their efforts to develop a succession plan.
Although most public pension funds have interim plans to replace top management, not all have done long-term succession planning, said one expert on pension administration, who asked not to be identified.
CalPERS' plan involves not only finding potential internal replacements for Ms. Stausboll, Mr. Dear and others, but also giving those candidates more training, if necessary, to enhance their skills to fill the positions.
Mr. Feckner said the idea is to “grow and nurture staff from within.”
He said an external recruiter would still do a national search were a permanent replacement needed, “but at the same time we'd have a better understanding of our internal candidates.”
The source with knowledge of pension administration said long-term succession planning, done at most corporations, runs counter to the open-recruitment concept — in which outsiders have an equal chance — advocated by officials at most U.S. public pension plans.
“Long-term succession planning is not part of their (public pension fund) culture,” he said.
A CalPERS source said officials prefer, when possible, to promote someone who knows the fund.