Internal PSERS documents show how Pa’s biggest pension fund got key financial calculation wrong

Link: https://www.inquirer.com/business/psers-pension-error-mistake-teachers-fbi-20210530.html

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After Pennsylvania’s biggest pension plan botched a crucial financial calculation, the FBI launched an investigation, the fund’s board began its own probe, and 100,000 public school employees suddenly faced paying more into the retirement system.

Now The Inquirer and Spotlight PA have obtained new internal fund documents that shed light on that consequential mistake. The material traces the error to “data corruption” in just one month — April 2015 — over the near-decade-long period reviewed for the calculation.

The error was small. It falsely boosted the $64 billion PSERS fund’s performance by only about a third of a percentage point over a financial quarter. Even so, it was just enough to wrongly lift the fund’s financial returns over a key state-mandated hurdle used to gauge performance.

The documents reveal that a fund consultant, Aon, blamed the mistake on its clerical staff for inputting bad data. The material also shows that even though the fund hired a consultant, the ACA Compliance Group, to check the calculations, the consultant made only limited checks, and skipped over the month with the critical errors.

Author(s): Joseph N. DiStefano, Craig R. McCoy, Angela Couloumbis

Publication Date: 30 May 2021

Publication Site: Philadelphia Inquirer

PSERS and its troubles: A guide to the woes facing Pa.’s biggest pension plan

Link: https://www.inquirer.com/business/psers-sers-pension-fbi-scandal-investigaton-teachers-20210411.html

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The board in December found that PSERS yearly investment returns had averaged 6.38% over the last nine years — just above the 6.36% threshold needed to avoid an increase in pension payments from 100,000 school employees hired since 2011.

In 2010, the state adopted a so-called “risk sharing” mandate that requires school staff to pay more, as taxpayers do, when PSERS investments underperform. The law mandated that the review in 2020 look at average returns over the past nine years.

Author(s): Joseph N. DiStefano, Craig R. McCoy

Publication Date: 11 April 2021

Publication Site: Philadelphia Inquirer

From Hong Kong to Sydney, San Francisco to Zurich, the staff at Pennsylvania’s largest pension fund have run up big travel bills

Link: https://www.inquirer.com/business/psers-pension-teachers-travel-expenses-sers-public-school-trips-cost-20210403.html

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The bills are high because PSERS for years has operated under a system in which it often never knew the true costs of travel. The fund repeatedly left the job of booking tickets, hotels, and meals to the outside money managers who invest the fund’s money. The charges were later buried in overall travel bills that the managers submitted to the fund to be paid by taxpayers and teachers.

In recent years, the fund has been roundly criticized for its lagging investment performance, especially given that the plan, underfunded by many governors and legislatures, is $44 billion short of the money to pay all future retirees

Author(s): Craig R. McCoy

Publication Date: 3 April 2021

Publication Site: The Philadelphia Inquirer