Pension agency chief resigns

Under Lee, retirement fund has prospered, moved beyond scandals


Thomas K. Lee, who brought the state employees' pension system from a period of scandal and turmoil to an era of relative stability, said yesterday that he is leaving Maryland at the end of the month for a similar job with an out-of-state pension system.

Lee, 42, said he was sought by recruiters and was offered a position that was too attractive to refuse. According to state Treasurer Nancy K. Kopp, Lee will manage the New York state teachers' retirement system - one of the largest public pension systems in the country.

In his three years as executive director of the State Retirement Agency, Lee has largely achieved his stated goal of making a pension plan that was once in the headlines a "boring" system again.

FOR THE RECORD - An article in the Maryland section yesterday mischaracterized the job Thomas K. Lee, the departing executive director of the State Retirement Agency, will take with the New York state teachers' pension system. Lee will become deputy executive director of the New York system.
The Sun regrets the error.

Before Lee took over in 2003, the state retirement system was frequently in the news as a result of internal board turmoil, heavy stock market losses and an investment fraud scheme involving money manager Nathan A. Chapman Jr. Chapman was convicted in 2004 on federal charges of defrauding the fund.

Under Lee's watch, the once-laggard retirement fund has posted respectable investment returns the past three years and has grown from $26 billion in assets to $34 billion. The system recently reported a 10.4 percent return on investments for the budget year that ended June 30, beating its target of 7.75 percent.

Under Lee's predecessor, Peter Vaughn, many of the day-to-day decisions of running the pension system were made by then-Treasurer Richard N. Dixon, who served as chairman of the board of trustees from 1998 to 2002.

Lee was hired in 2003 after working as deputy state budget director to two governors, Democrat Parris N. Glendening and Republican Robert L. Ehrlich Jr. Dixon's successor as chairman, Comptroller William Donald Schaefer, said he and the board have given Lee free rein to run the agency.

Schaefer said Lee has done "a great job" and that Maryland has been lucky to keep him as long as it has in the face of competing offers.

"He gets along with the board perfectly, he cooperates with them, he doesn't try to be the board, he takes advice from everyone," Schaefer said.

Kopp, the board's vice chairwoman, said Lee had done a "wonderful" job in restoring the system's credibility with lawmakers, the media and board members.

In recent years, the system's performance has rebounded from the lowest levels of the Wilshire Associates index investment fund performance and has ranked in the middle. Figures released yesterday show last year's performance in the 58th percentile, with 1 as the highest and 100 as the lowest. Many pension managers say they prefer scores near the middle because they signal less exposure to the risk of market fluctuations.

Kopp said that while the board seeks a new executive director, it will also have to consider whether it is paying enough. Lee said he is paid $134,000.

"We have to be able to compete in the marketplace for the chief executive officer and chief investment officer," Kopp said.

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