Highly-Paid Pension Chief May Not Be Worth It

Dec 14 2012 | 10:24am ET

America's public pension funds may be paying for more than they're getting from their top managers.

According to Bloomberg News, there's something of an inverse correlation between the pay grade of a pension's top executives and that pension's performance. In states, like Texas, where the people at the top rake it in, performance lags behind state, like Ohio and New Jersey, who pay less.

Teacher Retirement System of Texas chief investment officer Britt Harris, a former Bridgewater Associates CEO, comes in for the most heat: He made more than $1 million last year, the most of any public pension employee in the 12 largest U.S. state. Four other employees of the $112.4 billion system made at least $500,000, but in Harris' six years at the helm, the Texas pension has fallen further behind in its long-term obligations.

Better-performing funds include the New Jersey Division of Investment, whose director makes made $185,000 last year, and the Ohio Police & Fire Pension Fund, whose highest-paid executive made $231,614.

Harris said it isn't fair to blame him for poor returns before 2009, when his strategy was at last put fully in place. He says the pay rates his system offers are necessary to attract and retain the talent the pension needs.

"You get a better car, then you've got to have a good driver," Harris told Bloomberg. "This who structure has been like a magnet to all these investors from around the country to kind of come home to momma, come home and serve the teachers."

"It's crazy to think about the fact that the way the world works is the largest, most important funds are expected to compensate people the worst."

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