Private consultants still raking in public pension fund fees

Sept. 11, 2013 — Not only do most have public pension funds pay external management fees, they also pay for outside investment consultants who advise them on how to allocate their assets.

How much do those investment consultants get? Well, for the California Public Employees’ Retirement System (CALPERS) in 2012, total consultant fees totaled more than $33 million (that actually represents a significant decrease from 2011).

This data visualization allows you to see just how much several large pension funds have been paying to outside investment consultants each year from 2009 to 2012. You can sort alphabetically, by net assets (CALPERS is the highest with almost $237 billion in net assets), or by how consultant fees compare to the salaries and wages a fund pays to its own employees (the amount paid to outside consultants by the Pennsylvania State Employees Retirement System in 2012 is equal to 36 percent of the salaries and wages it paid to its own employees).

In using the viz, first select the year you wish to view, then choose how you would like to sort the list, then click on the fund you would like to view. The consultants who received the most in fees from a fund are delineated individually.

Please note that you need to imagine salaries and wages as constituting the entire pie. The reason that you don’t see only a brown pie is that the consultant fees are superimposed on the pie to show their relation to that whole.

Also note that the Indiana Public Employee Retirement Systems and the Indiana Teachers Retirement System merged in 2012. Therefore, they are shown separately when you select 2009, 2010, or 2011. When you select 2012, however, only the combined fund — called the Indiana Public Retirement System — is displayed.

Finally, while we have data on the aggregate consultant fees for the Michigan Public School Employees’ Retirement System, that fund has declined to provide consultant-specific information for 2009 to 2012. Similarly, the Michigan State Employees Retirement System has declined to provide consultant-specific information for 2012.

For more information on methodology and sources, see the accompanying notes on the data.

Research assistance from Michelle Mayer.