Make us your home page

Today’s top headlines delivered to you daily.

(View our Privacy Policy)

Success of Florida's pension plan measured against moving target

When Florida's pension managers announce they have beaten their performance benchmarks, they often get a pat on the back from the boss.

Last year, the fund said it had the "greatest return over benchmark'' in 25 years. And in March, as consultants described how the fund had outperformed its benchmarks steadily over time, Gov. Rick Scott chimed in: "That's great.''

In public pension world, a benchmark is the standard that governors and taxpayers use to measure the fund's performance. They also use benchmarks to decide pay packages and bonuses.

The term comes from the marks surveyors chiseled in stone to show the exact latitude and longitude of a location.

But the benchmarks for Florida's pension fund are not etched in stone.

Florida's governor and other elected officials who oversee the pension fund have changed benchmarks more than 25 times since 1985.

Pension consultants say they review benchmarks for various types of investments every few years for "continued appropriateness.''

But critics say benchmark switching can also be a sign that the State Board of Administration, which manages pension investments, is trying to make mediocre returns look better than they are.

"Ambiguity in benchmarking is a common method for covering up underperformance,'' said Rick Ferri, founder of Portfolio Solutions in Troy, Mich. "If a plan keeps changing their benchmarks, or uses complicated and confusing benchmarks, then perhaps those who are questioning performance will go away scratching their heads.''

Mark Hebner, president of Index Fund Advisors in Irvine, Calif., says he thinks Florida's benchmarks are too easy.

"When managers beat easy benchmarks everybody looks good,'' he said.

Sydney P. Freedberg, Times staff writer

Success of Florida's pension plan measured against moving target 07/30/11 [Last modified: Saturday, July 30, 2011 8:17pm]
Photo reprints | Article reprints

© 2017 Tampa Bay Times


Join the discussion: Click to view comments, add yours

  1. On the Camino de Santiago, Day 18: Despite feeling ill, this pilgrim passes the midpoint in her 500-mile journey on foot


    Day 18: Lédigos to El Burgo Ranero: 34.3 km, 12.25 hours (Total for Days 1-18 = 428 km (266 miles)

    Today was a struggle.

  2. Former Rays/current Cubs manager Joe Maddon featured on NBC Sunday news show


    Former Rays and current Cubs manager Joe Maddon will be featured on this week's "Sunday Night with Megyn Kelly" show at 7 p.m. on NBC, the Harry Smith interview covering not just Maddon's on-field accomplishments but his extensive efforts to help his hometown of Hazleton, Pa.

    "Here's what's so …

    Joe Maddon talking with NBC News' Harry Smith.
  3. For starters: Souza returns to lineup



  4. Actor John Heard dies at age 72


    John Heard, who played so many roles in the '80s but was probably best known as the dad in the Home Alone movies, has died, according to media reports. He was 72.

  5. Linkin Park cancel tour, including Tampa concert, after death of singer Chester Bennington


    This news is not a surprise, but it is now official: Linkin Park has canceled their upcoming North American tour following this week's death of singer Chester Bennington.

    Linkin Park's Chester Bennington