Kentucky Pension Reports Spike in Fees After Change in Reporting Policy


The Kentucky Retirement Systems is in the midst of opening its books a bit more to the public in a bid to become more transparent.

As part of that initiative, the System revealed last week a 75 percent spike in reported investment fees from last fiscal year to this year. The jump comes as a result of an internal policy change requiring more transparent accounting.

Plan officials said the heightened fees don’t change the any years’ investment return; all performance figures remain the same.

Reported by the Kentucky Center for Investigative Reporting:

In its audited financial report for fiscal 2014, KRS showed total investment expenses of $62.4 million. Following reports by the Kentucky Center for Investigative Reporting and the Lexington Herald-Leader last year about undisclosed fee payments, KRS changed its policy to provide greater disclosure. For fiscal 2015, it estimates having spent $108.3 million — a 75 percent increase — almost entirely from newly disclosed fees paid to private equity firms.


Trustees were also given copies of a consultant’s report showing that KRS’ investment costs were 9.2 percent higher than the benchmark of similarly sized public pension plans in 2014.

The recently released consultant’s report, by CEM Benchmarking of Toronto, states that KRS’ higher-than-average investment expense ratio was “driven mainly” by its fund-of-funds holdings. Because the fund’s five-year net investment return was lower than the median return of public pension plans in its peer group, KRS fell into the “negative value-added, high-cost” quadrant in a CEM graphic of plans.

Read the consultant’s report here.


Photo credit: “Ky With HP Background” by Original uploader was HiB2Bornot2B at en.wikipedia – Transferred from en.wikipedia; transfer was stated to be made by User:Vini 175.. Licensed under CC BY-SA 2.5 via Wikimedia Commons –

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