June 15, 2021
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Public School Employees' Retirement System
Preliminarily Performance hits highest quarter close
in over a decade
PSERS HOP prescription drug costs could fall for retirees
HARRISBURG – The Pennsylvania Public School Employees’ Retirement System (PSERS) is on track to generate its highest total net-of-fee investment performance in over a decade, according to information released at recent public meetings of the Board of Trustees.
Trustees held public committee and board meetings on June 10, 2021 and June 11, 2021. They were the first public meetings in which most trustees and some media gathered at the PSERS Harrisburg headquarters for in-person meetings since the COVID-19 pandemic began over a year ago. Other trustees, as well as public press, attended the meetings online.
During those meetings, trustees learned the fund’s preliminary net-of-fees investment performance was 3.5%, which is higher than the board’s internal policy benchmark, as of the March 31, 2021, quarter end. That pushed PSERS’ preliminary fiscal-year net performance to nearly 16%, adding a $7.8 billion to the fund. Those additional funds were projected to raise PSERS total net asset value to $65.9 billion at the quarter-end, which is the highest level in over a decade.
The March 31 quarter returns remain in preliminary status because investment financial data is still being gathered and audited. Data suggests performance should remain strong barring any possible major market disruptions before the fiscal year ends on June 30, 2021.
PSERS preliminary total fund performance as of March 31, 2021 for the following timeframes is: 15.9% FYD; 22.6% for 1 year; 8.5% for 3 years; 9.4% for 5 years; and 7.5% for 10 years. PSERS annual long-term investment target is 7.25%, however, that rate could change in the future based on the results of the Board’s ongoing five-year experience review of membership demographic and market economic assumptions, among other actuarial topics. The Board is scheduled to hold additional public meetings this summer on the experience review.
In other business on June 11, 2021, the Board approved an $80 million investment Capstone Investment Advisors for the system’s tail-risk hedging program.
The board also approved several resolutions that will keep monthly medical premium health care costs flat in 2022 for Medicare-eligible beneficiaries, 65 or older, who opt into PSERS self-funded Health Options Program (HOP), which offers comprehensive supplemental medical coverage for beneficiaries, their dependents and survivors. Another resolution could reduce HOP participants’ monthly prescription drug premium rates by up to $6 depending on Rx plan option and federal Medicare and Medicaid Services funding levels.
About the Pennsylvania Public School Employees' Retirement System
PSERS, founded in 1917, began operations in 1919 to oversee a statewide defined benefit pension plan for public school employees. PSERS' role expanded upon the passage of Act 5 of 2017 to include oversight of two new hybrid options consisting of defined benefit and defined contribution (DC) components and a stand-alone DC plan. As of March 31, 2021, PSERS had net assets of $65.9 billion and a membership of about 256,000 active, 240,000 retired school employees and 26,000 vested inactive members.