PA PUBLIC SCHOOL EMPLOYEES’ RETIREMENT SYSTEM BOARD OF TRUSTEES HOLDS BOARD MEETING; SETS ASSET ALLOCATION
Announces re-election of two Board Members; Reports RFP 2018-2 results for General Investment Consultant; Adopts a long-term plan to reduce investment management fees
HARRISBURG, PA – The PA Public School Employees’ Retirement System (PSERS) Board of Trustees met last Friday and set the Fund’s asset allocation. The Board made minor adjustments to the current asset allocation that slightly increased the allocation to fixed income and cash by slightly decreasing allocations to public equities, leverage, risk parity, and real estate to reduce the Fund’s risk profile and better protect the Fund’s assets in the event of a market correction. The adjustments provide the Fund additional financial flexibility through increased liquidity.
PSERS Executive Director Glen R. Grell commented on the changes to the asset allocation. “The actions the Board took today are minor adjustments focused on risk reduction, to better protect our member’s assets should the markets correct from the recent highs. If the market correction occurs, we will be better prepared and these minor changes to the asset allocation will help to limit the negative impact to the Fund.”
In addition, the Board announced the results of PSERS RFP 2018-2 for investment consulting services. AON Hewitt Investment Consulting (AHIC) was awarded a 5 year contract to provide investment consulting services for PSERS Defined Benefit and Defined Contribution Plans pending successful contract negotiations. AHIC is PSERS current general investment consultant.
During the Board meeting, the Board re-elected Susan C. Lemmo and Deborah J. Beck to their Board seats as no other candidates were nominated by the membership. Ms. Lemmo and Ms. Beck, therefore, were elected by acclamation. Ms. Lemmo represents the active certified members of the System. She has served on PSERS’ Board since 2014. She has been an art teacher at Curwensville Area School District since 1990. She has a Bachelor’s of Fine Arts from Indiana University of Pennsylvania and a Master’s of Fine Arts from Penn State University. Ms. Beck was elected to represent the active non-certified members of PSERS. She began her term on PSERS’ Board in 2013. Ms. Beck is a high school principal purchasing secretary at Upper Darby High School in Delaware County. She has a bachelor’s degree in Early Childhood Education from Ohio Wesleyan University.
In other business, PSERS Chief Investment Officer James H. Grossman Jr. presented an internal report prepared in response to PSERS Board Resolution 2017-41, which was advanced by Treasurer Joseph Torsella last year. This resolution tasked PSERS Investment Professionals and Investment Consultants to develop a long-term plan to reduce investment management fees over a three year period and address the wide disparity in fee reporting among public pension plans.
PSERS Investment Professionals and consultants worked over the past eight months in response to the resolution to develop the long-term plan which focuses on renegotiating management fee arrangements to create a better alignment of interest between PSERS and each investment manager and expanding PSERS internal management. The projected compounded savings of the plan are $2.49 billion over the next 30 years and build upon PSERS ongoing efforts to reduce base management fees and improve efficiencies. PSERS Investment Professionals will continue to look for opportunities to further reduce base fees and improve the alignment of interests with the investment manager.
PSERS Chief Investment Officer James H. Grossman Jr., commented, “PSERS worked diligently over the past few years to increase efficiencies and lower base management fees while carefully managing any change in investment risk that resulted. We have a fiduciary duty to our members to operate the system in their best interests and we take this duty very seriously. This plan builds upon PSERS hard work to reduce base fees and manage risk.”
“We are aware the Public Pension Management and Asset Review Commission (PPMAIRC), created under Act 5 of 2017, is developing recommendations for possible additional fee savings and efficiencies for the Fund. We look forward to reviewing their recommendations later this year. These actions taken today by the Board to accept the long-term plan developed from Board Resolution 2017-41 do not prevent us from considering further action on any PPMAIRC recommendations later this year.”
About the Pennsylvania Public School Employees’ Retirement System
PSERS is the 15th largest state-sponsored defined benefit public pension fund in the nation. As of March 31, 2018, PSERS had net assets of approximately $56 billion and a membership of nearly 256,000 active school employees and over 230,000 retirees.