Tag: PSERS

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

Mary Pat Campbell

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

Excerpt:

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

Pennsylvania pension system officials disclose federal probe

Mary Pat Campbell
Pennsylvania pension system officials disclose federal probe

Excerpt:

Officials atop Pennsylvania’s largest public pension system have received subpoenas from federal investigators, although the $64 billion Public School Employees’ Retirement System has yet to publicly discuss the nature or scope of the newly disclosed inquiry.

In addition to giving few details, pension system officials and board members — which includes state lawmakers, two members of Gov. Tom Wolf’s Cabinet and state Treasurer Stacy Garrity — have declined to answer questions publicly about what information federal investigators are seeking.

Garrity told lawmakers at a Senate Appropriations Committee hearing Tuesday that “federal subpoenas have been served on several PSERS management officials.”

Author(s): Marc Levy, Associated Press

Publication Date: 8 April 2021

Publication Site: WHYY PBS

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

Mary Pat Campbell

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

Graphic:

Excerpt:

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

FBI Investigating Reporting Fraud at $62 Billion Pennsylvania Public Pension Fund, PSERS; Returns Allegedly Falsified to Avoid Increased Worker Contributions

Mary Pat Campbell
FBI Investigating Reporting Fraud at $62 Billion Pennsylvania Public Pension Fund, PSERS; Returns Allegedly Falsified to Avoid Increased Worker Contributions

Excerpt:

PSERS is trying to depict the performance overstatement as an error but its body language says otherwise. It has launched an investigation of its three top staff members and has gone from denying that PSERS has any information that anything criminal had taken place to ducking the question.

The Inquirer described how three of PSERS’ 15 board members voted against a staff effort to say the return numbers were fine after some sort of not fully disclosed brouhaha with an outside consultant.

…..

The “impact on PSERS tax exempt status” is alarming, and it’s frustrating that the article does not probe what the issue might be.

Needless to say, expect more shoes to drop as the FBI keeps digging. A friend who was the DA for Bridgeport, the most corrupt city in Connecticut, said the FBI aren’t the brightest bulbs but are relentless and as a result generally take down their targets.

Author(s): Yves Smith

Publication Date: 6 April 2021

Publication Site: naked capitalism

Error or Craft?

Mary Pat Campbell
Error or Craft?

Excerpt:

Since I can’t find where they define time-weighting the best I can do is assume that the 3.04% rate of return for June 30, 2015 was mistakenly augmented to 3.41% which was enough to drop the rate of return below the 6.36% barrier.

If anyone has anything else, please share.

Author(s): John Bury

Publication Date: 30 March 2021

Publication Site: Burypensions

PSERS hires two outside law firms to investigate $25 million error

Mary Pat Campbell

Link: https://www.pennlive.com/news/2021/03/psers-hires-two-outside-law-firms-to-investigate-25-million-error.html

Excerpt:

In December, consulting actuary Buck reported that PSERS had reached a 6.38 percent average annual rate of return across the prior nine years, just barely above the minimum threshold of 6.36 percent and thus averting a rate increase.

Those calculations were called into question at the time and, more recently, PSERS admitted that they may have been incorrect.

On Friday night, after a nearly 2-hour-long executive session with no public discussion, PSERS’ audit committee approved hiring two law firms to investigate the error and offer recommendations.

Author(s): Wallace McKelvey

Publication Date: 19 March 2021

Publication Site: PennLive

Pa.’s largest pension plan hires lawyers to probe its mistake

Mary Pat Campbell

Link: https://www.mcall.com/news/pennsylvania/mc-nws-pa-pension-plan-mistake-20210320-stmldhnvkzhrblhdy5wizltiay-htmlstory.html

Excerpt:

The board of the $62 billion Pennsylvania public school pension system on Friday hired a pair of law firms to look into what the fund is now calling a “misstatement” in its profit reporting.

The Anglo-American law firm Womble Bond Dickinson will investigate what the board had previously called an “error,” while Philadelphia-based Morgan Lewis will check the math and tax issues.

The mistake may have wrongly spared teachers a potential hike in their pension payments while simultaneously passing that burden onto taxpayers.

Author(s): JOSEPH N. DISTEFANO

Publication Date: 20 March 2021

Publication Site: The Morning Call

Pennsylvania’s largest pension system investigates possible $25 million error

Mary Pat Campbell

Link: https://www.pennlive.com/news/2021/03/pennsylvanias-largest-pension-system-investigates-possible-25-million-error.html

Excerpt:

In December, PSERS consulting actuary Buck reported that the system’s investments had netted a 6.38 percent average annual rate of return over the nine previous fiscal years between 2011 and 2020. That meant employees were spared a contribution rate increase by slimmest of margins. The investment benchmark was a 6.36 percent rate of return.

The risk mandate, of course, was a response to the system’s chronic underfunding. According to the most recent estimates, which themselves are fungible, the system reported an unfunded pension liability of at least $44 billion. That means it has just over 59 percent of the money necessary to meet current pension obligations.

On Friday night, the system’s board of trustees announced an audit, including the possible hiring of an outside firm to investigate, after it was “made aware of an error regarding the reporting of investment performance numbers.”

Author(s): Wallace McKelvey

Publication Date: 13 March 2021

Publication Site: PennLive

Gov. Wolf puts critic back on $60 billion pension board

Mary Pat Campbell

Link: https://www.inquirer.com/news/torsella-psers-garrity-muth-20210225.html

Excerpt:

In November, Democrat Joseph Torsella lost his position as an overseer of Pennsylvania’s $60 billion school pension fund when he lost reelection as state treasurer. But on Thursday, Gov. Tom Wolf tapped Torsella to return to the PSERS board as his representative.

The appointment, which requires majority approval by the State Senate, would restore Torsella to a growing reform bloc on the 15-member board for PSERS. That stands for Public Schools Employees’ Retirement System, which sends checks to about 250,000 retired teachers and other former school workers.

During his single four-year term as treasurer, Torsella, by dint of his position, served on the PSERS board and that of its smaller, $30 billion sister fund for state employees, known as SERS.

Author(s): Joseph N. DiStefano

Publication Date: 25 February 2021

Publication Site: Inquirer

Pa. Treasurer Joe Torsella tried to reform the state’s biggest pension funds. Then he lost his job.

Mary Pat Campbell

Link: https://www.inquirer.com/business/joe-torsella-treasurer-pa-pennsylvania-psers-pensions-teachers-lost-harrisburg-20210220.html

Graphic:

Excerpt:

As treasurer, Torsella automatically got a board seat on Pennsylvania’s two massive pension plans, the $60 billion PSERS for public school employees and the $30 billion SERS for state workers. (The letters stand for the Public School Employees’ Retirement System and the State Employees’ Retirement System.)

Everything about them is supersized. Together, they serve more than 700,000 retired and working Pennsylvanians. Taxpayers pay $7 billion into the funds annually, up from near zero in the early 2000s, and five times what employees contribute. Despite that, the plans are hugely underfunded — collectively short $65 billion.

Their health is heavily dependent on their investments. Once on board, Torsella asked to see investment contracts and fee deals with outside money managers — and was told they were not public. It was as if they were somehow more confidential than a town paving contract or a sanitation worker’s salary.

Author(s): Joseph N. DiStefano

Publication Date: 19 February 2021

Publication Site: Philadelphia Inquirer