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Ontario Teachers’ Pension Buys Chain of Animal Hospitals for $440 Million

The Ontario Teachers’ Pension Plan has bought PetVet, a chain of veterinary practices, from private equity firm Catterton.

The deal was worth $440 million, according to the Wall Street Journal.

More details from the WSJ:

The sale is the latest in a string of transactions in the pet-care and pet-products market, where increased consumer spending has paved the way for premium deal prices.

Betting that there is still growth ahead for PetVet, a Westport, Conn., business first backed by Catterton in 2012, the firm is rolling $40 million of the proceeds from the sale into the transaction alongside OTPP, according to the memorandum.

Similar to a physician or dental network, PetVet’s business model focuses on buying veterinary practices and then providing back-office services such as payroll, marketing, accounting and human resources.

The $440 million price tag translates into roughly 11 times PetVet’s earnings before interest, taxes, depreciation and amortization, a hefty multiple even by 2014’s standards and an indication of the value investors see in the pet market.

[…]

PetSmart, PetVet and National Veterinary Associates have been the beneficiaries of a sharp increase in the amount of money spent on pets in the U.S., a figure which has tripled in the past two decades, increasing annually even through the global economic downturn.

In 2014, Americans spent an estimated $58.51 billion on their pets, with more than a quarter of that cost going toward veterinary services, according to the American Pet Products Association, a trade group.

Spending on vet care increased roughly 6% to $15.25 billion in 2014 from $14.37 billion a year earlier, according to the association’s estimates.

The Ontario Teachers’ Pension Plan manages $140 billion in assets.

Photo credit: “Canada blank map” by Lokal_Profil image cut to remove USA by Paul Robinson – Vector map BlankMap-USA-states-Canada-provinces.svg.Modified by Lokal_Profil. Licensed under CC BY-SA 2.5 via Wikimedia Commons – http://commons.wikimedia.org/wiki/File:Canada_blank_map.svg#mediaviewer/File:Canada_blank_map.svg

Pension Boost Could Be In Cards For New York Police

Some New York budget watchdogs are reading between the lines of the feud between Mayor Bill de Blasio and the city’s police force.

What they’re seeing is the emerging possibility that de Blasio may try to smooth over his relations with the police force by boosting pension benefits.

From Crain’s New York:

On Monday, Police Commissioner Bill Bratton noted that some of the issues plaguing cops, in addition to recent shootings and tension with Mayor Bill de Blasio, involve pensions. That worried budget watchdogs that the administration might agree to sweeten pensions.

“Almost a majority of my officers are now in a retirement plan that offers significantly less benefits than their predecessors received,” Mr. Bratton said during a press conference at 1 Police Plaza, noting that then-Gov. David Paterson’s veto of a pension sweetener for cops in 2009 “is having profound implications on officers who were injured in the line of duty.”

[…]

With the crisis between cops and City Hall reaching a boiling point, budget watchdogs fear the city is softening its opposition to more generous pensions.

“The police commissioner is out there talking about what the roots of this tension are between the rank-and-file and the mayor’s office, and he’s citing that as something that’s part of the problem that they could potentially be fixing,” said Maria Doulis, director of city studies for the Citizens Budget Commission. “So for us this is signaling change in their position.”

If de Blasio wanted to raise benefits, a bill already exists that would do so. It has been proposed and vetoed several times since 2009, but it could make rounds again. From Crain’s:

A bill was introduced in the state Senate and Assembly last year that would increase disability pensions for police hired after July 2009. It has been introduced annually in response to Mr. Paterson’s veto of a bill to move newly hired officers to the more generous Tier II pension from Tier III.

Members of Tier III work for 22 years, instead of 20, to collect full-service pensions. Their disability benefits are 44% of their last three years of salary with an offset for Social Security benefits, instead of 75% of the final year’s salary with no offset.

Mr. de Blasio said last year that he opposed the bill to bolster pensions for those newer cops. Officials said it could cost $35 million in its first year. But now his office is silent on the issue.

A representative for the mayor did not respond to a question about whether he still opposes the bill.

Read the text of the bill here.

Chicago Teachers’ Pension Embraces Manger Diversity As One-Third of Assets With Minority Firms

The Chicago Teachers’ Pension Fund (CTPF) released data on Tuesday revealing the fund’s sizeable investments with MWDBE (Minority, Women and Disadvantaged Business Enterprise) investment firms.

The fund has invested $3.6 billion, or 33.4 percent of its total assets, with such firms.

CalSTRS Set To Receive Last $15 Million Payment from Congress

CalSTRS has received $315 million from the U.S. Congress since 1999.

In 2015, the pension fund will receive one final payment from Congress totaling $15.6 million.

What’s the purpose of the payment, and why are they stopping?

The Daily Journal News explains:

The California State Teachers’ Retirement System (CalSTRS) will receive its final $15.6 million payment of compensation from the 1997 sale of the Elk Hills Naval Petroleum Reserve as part of the $1.1 trillion budget appropriation bill passed by Congress Saturday.

[…]

The federal government began making payments to CalSTRS under a settlement agreement two years after the Elk Hills land was sold to Occidental Petroleum in 1997. The annual payments, each of which was subject to an annual Congressional appropriation, compensated CalSTRS for its interest in the state school lands that were part of the Elk Hills Reserve.

The petroleum reserve sits on 47,000 acres near Bakersfield, and the two tracts of state school lands in it were dedicated to California’s schools by the federal government upon statehood in 1850. It became a Naval Petroleum Reserve shortly before World War I, about the same time as California established the Teachers’ Retirement System in 1913.

[…]

“This final payment is welcome support to California’s retired educators, the oldest of whom greatly benefit from these proceeds, which support efforts to safeguard retiree pensions from the erosive effects of inflation,” said CalSTRS Chief Executive Officer Jack Ehnes. “State law directs any proceeds from state schools lands, on which the petroleum reserve sat, to support retired teachers’ pensions when they fall below 85 percent of their original purchasing power.”

CalSTRS manages $190 billion in assets.

Photo by Stephen Curtin

Jacksonville Council President Latest to Support State Investigation of Public Safety Pension System

Florida Rep. Janet Adkins last month sent a letter to Gov. Rick Scott calling for an investigation into “impropriety…questionable practices and possible mismanagement” of Jacksonville’s Police and Fire Pension fund.

Specifically, Adkins wanted an investigation into how the fund administered its DROP accounts, and whether they ignored regulations and city auditors.

Shortly thereafter, city Councilman Bill Gulliford sent a letter supporting the idea of an investigation.

On Tuesday, council President Clay Yarborough threw his support behind the investigation.

From the Florida Times-Union:

Jacksonville City Council President Clay Yarborough sent a letter on Tuesday to Gov. Rick Scott supporting a state investigation into the Jacksonville Police and Fire Pension Fund.

In his letter, Yarborough said he stands with state Rep. Janet Adkins, who asked Scott in December for the state’s chief inspector general and the Florida Department of Law Enforcement to conduct a “review and investigation” of the pension fund.

“The Jacksonville City Council recognizes and appreciates the sacrifice and dedication of all public safety personnel,” Yarborough said. “That withstanding, Representative Adkins prudently identified … that restoration of public confidence in the management of the pensions is imperative. This is in the best interest of taxpayers and employees alike.”

The focus of the potential investigation:

The city’s attorneys and the pension fund have disagreed in recent years over several issues, including the creation of a special pension plan for senior staff members, including its longtime executive director, John Keane.

Despite city attorneys saying the pension fund lacked the authority to create the special pension plan, the fund’s own attorneys said they disagreed. As of now, Keane’s special pension plan is fully funded and is set to pay him benefits when he retires.

Adkins, R-Fernandina Beach, has asked Scott to investigate the special pension plan, as well as determine whether state rules and laws were followed in regard to the creation, management and regulation of Deferred Retirement Option Program accounts.

In October, the Times-Union reported how the pension fund ignored findings by the City Council Auditor’s Office and city lawyers that the pension fund incorrectly applied regulations for participation in DROP. The paper found that three individuals who entered DROP will collectively receive about $1.8 million more than they would have under strict interpretation of the code.

The Governor’s Office has remained mum on whether it will begin an investigation.

Photo by TaxRebate.org.uk

Japan Pension CIO Gets 60 Percent Pay Raise

Japan’s Government Pension Investment Fund (GPIF) has already indicated they will increase salaries for their money managers in a bid to attract more talent.

But the fund’s chief investment officer is getting a raise, as well. Hiromichi Mizuno, the fund’s CIO, will get a 64 percent pay bump this year.

The GPIF hopes the gesture will demonstrate their willingness to shell out cash for talent.

From Bloomberg:

Japan’s Government Pension Investment Fund will increase total annual compensation of its president to about 31 million yen ($260,000), including salary, bonuses and allowances, according to calculations by Shinichiro Mori, a director at the fund’s planning section. That compares with 18.9 million yen previously slated for the year ending March 31, Mori said by phone. The pay increase is effective this month, he said.

Boosting pay may help the pension fund hire more money managers from the private sector as it shifts more of its $1.1 trillion from bonds to riskier assets. Even after the increase, the GPIF’s top official will be paid almost 40 percent less than the chief executive officer at the California Public Employees’ Retirement System, the largest U.S. public pension.

“Compared with global standards and given the responsibility as the top asset manager, the amount still isn’t that big,” said Tetsuya Sakabe, managing director at recruitment adviser Kanae Associates Ltd. in Tokyo. “But it’s positive to see that they’ve improved the compensation structure and the amount is reasonable enough to avoid incurring criticism from the public.”

[…]

GPIF won flexibility from the health ministry last March to pay higher salaries.

“GPIF decided the president’s new pay standard after a comprehensive review taking into account consistency with other public organizations,” including the central bank, Mori said in the phone interview on Jan. 6. For the CIO, “we took into account the trend at private financial firms in order to secure highly professional human resources, without exceeding the pay level for the president.”

The GPIF manages $1.1 trillion in assets and is the largest pension fund in the world.

Photo by Ville Miettinen

Virginia Retirement System Director Steps Down After 10 Years

Robert P. Schultze, longtime director of the Virginia Retirement System, said Tuesday that he will be stepping down from the job to take a new position as the president and CEO of a national retirement company.

VRS will begin searching for a new director this week.

From DailyProgress.com:

Virginia is losing the leader of the retirement system it operates for more than 600,000 state and local government employees.

Schultze, 64, has led VRS since 2005, guiding it through an economic recession that slashed its financial assets by $16 billion and a series of political reforms that reshaped pension benefits for most newly hired state and local government employees, including teachers.

“Bob has been a strong hand at the tiller,” said R. Ronald Jordan, executive director of the Virginia Governmental Employees Association, representing more than 100,000 state workers and retirees. “State employees will miss him as a friend.”

The board of trustees of the $66 billion retirement system will begin a national search for a successor to Schultze this week. His annual salary is $175,709, and he is eligible for a $50,000 performance bonus, which would be paid into a deferred compensation plan.

[…]

Schultze will become president and chief executive officer of ICMA-Retirement Corp., which manages and administers more than 9,000 retirement plans, including the hybrid retirement plan that took effect Jan. 1, 2014, in Virginia as a result of sweeping pension system reforms in 2012.

VRS chose ICMA to manage the hybrid plan — combining traditional defined pension benefits and 401(k)-type contributions — and the system’s deferred compensation plan two years ago. A year later, the company’s president and CEO, Joan McCallen, announced her retirement, creating an opening that Schultze was chosen to fill.

“It’s kind of an opportunity that I thought would never come around for me,” Schultze said. “So when it landed in my lap, I decided I’d better pursue it.”

The Virginia Retirement System manages $66 billion in assets for 600,000 public employees.

Photo credit: “Flag of Virginia”. Licensed under Public Domain via Wikimedia Commons – http://commons.wikimedia.org/wiki/File:Flag_of_Virginia.svg#mediaviewer/File:Flag_of_Virginia.svg

Pension Board Changes Might Be “Deal Killer” For Jacksonville Reform

On Monday, the Jacksonville Police and Fire Pension board made several changes to the city’s pending pension reform measure and sent it back to city council for approval.

But the changes could be a “deal killer”, according to one council member.

One major change was the length of time the measure would be in effect. The council wanted three years, but the board changed it to ten.

Reported by the Jacksonville Daily Record:

“If it’s not at least 10 years, I’m not voting for any of it,” said Lt. Richard Tuten III, the firefighter’s representative on the board.

Police representative Chief Larry Schmitt and fifth member Nat Glover also were leaning that way — a majority.

That vote would mean the meat of council’s decisions had been undone, a move board Chair Walt Bussells said might doom reform and leave it for a judge to decide.

So, he asked members to reconsider the benefit components. The board did and approved rates that weren’t what council passed, but did eliminate fixed guarantees.

It didn’t budge on the length of the deal, though. And that could be a “deal killer,” said council member Lori Boyer.

“If that’s the case, then that’s a real big problem for me,” she said.

Boyer maintains state law says such deals can’t extend beyond three years. And like the police and firefighters who uphold the law on a daily basis, she says she took an oath to do the same.

“We can’t start putting politics above the law,” she said.

She said she possibly could handle changes to the benefits side, but without the three-year term it’s a non-issue.

Council member Bill Gulliford authored the amendments to those benefit changes on cost-of-living adjustments and DROP. He said if the only issue had been the former, he probably could have lived with it. But all the tweaks?

“I can’t buy the changes, I’m sorry,” he said.

After council passed what he thinks was the best offer, he said he thought the board’s decisions rendered the deal “dead.”

“I think council pretty much spoke,” he said, referring to the 16-3 vote in December that passed the deal the pension board weighed in recent weeks.

Both the council and the pension board must approve the measure before it is passed into law.

Photo by pshab via Flickr CC License

Pension Funding May Be First Fight of 2015 for New Jersey Lawmakers

At some point in 2015, pension reform will become a hot topic in the New Jersey Legislature. The only question is when the battle will heat up.

From the looks of things, the fight over pension reform could begin sooner than later.

From New Jersey 101.5:

Funding New Jersey’s public employees’ pension system could be the first major fight in 2015 and it will likely pit long-time allies against one another. Gov. Chris Christie is calling for new reform, but state Sen. President Steve Sweeney (D-West Deptford) has drawn a line in the sand and said he will support further reform.

“He (Christie) has to fund it. We actually did the things that were necessary to fix it. He needs to fund the pension fund,” Sweeney said. “No matter what changes you make to a pension system, if you don’t meet the financial needs of it at the same time – no fix will work.”

The law required the state to contribute $1.6 billion into the pension system last fiscal year, but Christie paid in only $696 million. He signed an executive order to enable the lesser payment. The payment for this fiscal year was to be $2.25 billion, but the governor said he’ll contribute $681 million.

The governor must make the full $2.25 billion payment this year, according to Sweeney, who acknowledged it will be difficult.

“It’s going to put a lot of pressure on the budget, but we knew it. The big picture here is the lack of growth in the economy and he’s been the governor for five years now so he can’t point fingers at others,” Sweeney said.

[…]

Last fall, Christie began making his case for pension reform. He said it is an important, long-term project.

“It’s something that we can’t ignore because it will first crowd out any other type of investments the state wants to make in important projects around the state, and it will then ultimately bankrupt the state,” Christie said.

Gov. Christie has made it clear that reforms would likely mean further benefit cuts.

Sweeney, on the other hand, is pushing for a funding solution that involves more state money going to the pension system.

Photo By Walter Burns [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons

Maryland Gov.-Elect Pulls Plug on Retirement Savings Panel

Maryland Gov.-elect Larry Hogan says he is pulling the plug on a retirement savings task force set up under his predecessor, Gov. O’Malley.

The panel’s purpose was to study and issue findings on how to get middle-class residents to save more for retirement.

Politics may have played a role in Hogan’s decision to shut the panel down.