Board members and executive staff at the two large public pension systems in California will have to shelve plans to work as placement agents after they finish their public sector careers.
California Governor Jerry Brown signed into law a provision that bans board and senior-level staff members of the $218 billion California Public Employees’ Retirement System and the $161 billion California State Teachers’ Retirement System from accepting compensation for providing services as a placement agent for a period of 10 years after leaving the pensions.
The law, which Brown signed on 7 October, also prohibits employees of the pensions from working as an advisor or consultant for two years after leaving the pension funds.
The bill ends the ability of fund managers to exert improper influence on CalPERS or CalSTRS employees by offering them future high-paying jobs, according to a spokesperson for Brown’s officer.
The bill, AB 873, was sponsored by John Chiang, California’s state controller, and will become law 1 January 2012.
CalPERS praised the legislation.
“These new laws allow CalPERS to continue to apply newer and higher standards of accountability, integrity, and openness to ensure public trust in our institution,” said Anne Stausboll, CalPERS chief executive, in a statement. “In the increasingly complex world of finance and investment, trust is critical. We have faced many issues squarely over the last few years to demonstrate that we are worthy of the trust that all Californians have placed in us.”
Meanwhile, Brown vetoed popular legislation that would have lowered the annual limit on gifts that CalPERS and CalSTRS board members and executives could accept.
The bill, SB 439, bars pension fund board members and staff from accepting $50 or more in gifts from entities engaged in business with CalPERS or CalSTRS. The law sets the limit at $420 per year, although CalPERS has banned its employees from taking any gifts.
Lawmakers in the state Senate and Assembly passed SB 439 by a 118-0 vote.
Brown said in a statement that the bill would “create a special set of rules that will apply exclusively to CalPERS and CalSTRS” and further complicate an already complex state reporting system without advancing government transparency very much.
In September, 14 CalPERS officials faced fines for not properly reporting gifts received from investment firms.
The Fair Political Practices Commission (FPPC), California’s watchdog, proposed the fines, which were for not disclosing gifts including free meals, bottles of wine, clothing and tickets for concerts and sporting events.