HARRISBURG, PA – The Pennsylvania Public School Employees’ Retirement System (PSERS) continued to report financial improvements, with its net position reaching $90.9 billion, its funded ratio improving, and its investment fees decreasing.
PSERS’ Board of Trustees during its meeting on Thursday, Oct. 22, 2026, approved the system’s audited financial statements for the fiscal year ended June 30, 2026, and received an update on investment management fee savings for fiscal year 2026.
The audited financial statements showed the following changes between fiscal year 2024-25 and 2025-26:
- The fund’s net position increased by 10% to $90.9 billion.
- The fair value funded ratio increased from 68.04% to 73.60%.
- The employer net pension liability decreased 16% to $32.6 billion. The liability represents the difference between pension obligations attributed to participating employers and the assets available to pay those benefits.
The statements provide a separate measure of PSERS’ financial position from the annual actuarial valuation reported earlier this year.
"These results reinforce the solid foundation PSERS is building to support the long-term retirement security of its members,” said PSERS Chairman Richard Vague. “We will continue to focus on strengthening the system’s financial position and advancing these efforts in the years to come.”
On the investment side, PSERS has continued its efforts to improve efficiency and reduce the costs associated with managing the system’s portfolio.
“Our investment team remains focused on making sound investment decisions while finding ways to manage the system’s assets more efficiently,” said PSERS Chief Investment Officer Ben Cotton. “This work is another important part of the broader effort to strengthen PSERS’ financial position.”
For the investment management fees, PSERS realized more than $197 million in savings in fiscal year 2025-26, achieving 563% of the $35 million annual savings goal established by the board in 2017.
The cost of managing the portfolio has fallen from approximately 92 basis points, or 0.92% of assets under management in 2017, to approximately 39 basis points, or 0.39% in fiscal year 2026, cutting the fee rate by more than half.
“Reducing investment fees has been an ongoing priority for PSERS since the board adopted its fee-reduction resolution in 2017,” said PSERS Vice Chair Susan Lemmo. “These results demonstrate the success of our continued efforts to lower investment costs and make the most of the system’s assets. Every dollar saved on fees is a dollar that remains in the system to help support the retirement benefits our members have earned.”
The trustees also approved the system’s operating budget request for 2027-28, representing a 1.12% increase over the previous year.
The proposed budget provides for normal cost-to-carry contractual and personnel requirements while supporting enhancements to member services; expanded compliance, risk management and fraud prevention efforts; and continued investments in technology infrastructure.
“The budget that the board approved for submission to the General Assembly as part of the governor’s proposed budget is the result of significant work by the executive team to identify cross-functional opportunities and operational needs and priorities that align with the PSERS strategic plan,” said PSERS Executive Director Uri Monson. “We undertook a careful review of prior year actual spend versus budgeted numbers, shifted existing complement where appropriate, and repurposed existing funds.”
In other business, the board approved new investment commitments not to exceed $200 million to CD&R Fund XIII L.P., $100 million to Kennedy Lewis Capital Partners Master Fund IV L.P., $100 million to Newmarket Structured Credit Solutions Fund V L.P. and $125 million to Sterling United Properties I L.P.
The board also received a report from CEM on PSERS’ Defined Contribution Plan. The benchmark report provided statistics on the DC Plan’s performance and showed that the average investment return over three years was 17.3%, which is above the U.S. median return of 15.7%. This shows that DC Plan participants’ investments are outperforming the national median.
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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 benefit options consisting of defined benefit and defined contribution (DC) components and a stand-alone DC plan. As of June 30, 2025, PSERS had a total net position of about $83.7 billion and a membership of about 262,000 active, 255,000 annuitants and beneficiaries, and 26,000 vested inactive members.
About the Board of Trustees
The 15-member Board of Trustees is an independent administrative board of the Commonwealth. The Board stands in a fiduciary relationship to PSERS’ members regarding investments and disbursements of the system’s funds. The Board’s other functions outlined in the Public School Employees’ Retirement Code include certifying contribution rates, authorizing the system’s actuarial valuation and independent audit, publishing an annual financial statement, and overseeing the operational activities performed by the system’s executive director and chief investment officer.