Expert testimony sees path to achieve actuarial savings of $6.5 billion
Harrisburg, PA – State Representative Mike Tobash, Chair, and Pennsylvania Treasurer Joe Torsella, Vice-Chair, of the Public Pension Management and Asset Investment Review Commission (PPMAIRC) today convened the last of three informational hearings in Harrisburg to examine the need for improvements in transparency around investment expenses and returns of Pennsylvania’s two statewide pension systems. Today’s hearing identified cost savings opportunities for the pension boards.
“The testimony received has provided the Commission with a full view of the scope of the pension issue. This work is about one thing: making the pension system stronger so that we can keep our promises to our nurses, teachers, and thousands of others that have spent a life of hard work in service to Pennsylvanians. The Commission will now prepare a report of its findings and recommendations, so that we can do better for our beneficiaries, for our taxpayers, and for the Commonwealth as a whole.”
Pennsylvania Treasurer, Joe Torsella
The Commission heard testimony from Dr. Marcel Staub, Founding Partner and CEO, Novarca Group — an independent, cost specialist manager for institutional investors focusing exclusively on the analysis, negotiation, and management of all commissions and fees. Dr. Staub shared the results from a costs and fee analysis along with a presentation on best-practice recommendations in order to achieve cost reductions while keeping the existing risk/return exposure.
“Testimony from these hearings proves that changes to the system are needed to ensure workers — past, present and future — enjoy a competitive retirement benefit without overburdening taxpayers. Unaddressed, this has a negative impact on the Commonwealth's business growth. Job creators need to have confidence that taxes will remain consistent and stable and the Commonwealth will be able to continue to provide core services to businesses and their employees.”
A Senior Vice President at Trillium, Jonas Kron
The Commission was established in 2017 under the broader pension reforms of Act 5 to conduct a comprehensive review of PSERS and SERS investment management. As part of its evaluation, the Commission will:
- Recommend improvements to SERS and PSERS stress testing and fee reporting transparency;
- Analyze SERS and PSERS assets, investment strategies, investment performance, fees, costs, and procedures against established benchmarks; and
- Develop a plan to identify at least $1.5 billion in cost savings over 30 years for each of the two systems.
Today, Commission members also heard from investment consultant, Dr. Charley Ellis, along with Dr. Ashby Monk of Stanford University, and representatives from SERS and PSERS.
The Commission will now complete its review of PSERS and SERS, and report findings and recommendations to the Governor and the General Assembly.