Harrisburg – The Board of Trustees of the Pennsylvania Public School Employees’ Retirement System adopted an updated Investment Policy Statement and related Investment Policies.
The vote came at Friday’s public meeting, where trustees also approved three private market investments and heard a 2020-21 budget update.
The IPS is the governing document the Board, internal investment team and external consultants use to ensure assets are managed over time “in accordance with PSERS’ unique liability stream, funding sources, cash flows, and portfolio size” to meet the retirement benefit obligations of nearly 500,000 active and retired school employees. The integrated policies explain how each asset is invested within their respective ranges and within the entire Fund.
“These updated documents refine and enhance our fiduciary oversight of the investing, benchmark and risk protocols PSERS uses within its investment portfolio,” said Board Chairman Christopher SantaMaria. “These policies better protect school employees’ retirement benefits from uncontrollable market forces, such as the stock market volatility investors are currently experiencing over the coronavirus fears. Just as markets change, so can these policies. They will be reviewed and updated annually or more often depending on market conditions, changing investing strategy and the Board’s discretion.”
Added PSERS Senior Risk Manager Joseph Sheva: “Putting the IPS and policies into separate documents gives policymakers and the public a more organized roadmap for understanding how we measure performance and manage risks when investing assets.”
A board majority also approved the following investments: up to $175 million for New Mountain Partners VI; up to $100 million in Hg Saturn 2 A L.P.; and up to €100 million in Hg Genesis 9 A L.P. The commitments are contingent on successful contract negotiations and legal reviews.
In other matters, Chief Financial Officer Brian Carl informed the Board that PSERS’ Budget Book and Budget highlight report have been delivered to the General Assembly and Gov. Tom Wolf. “The documents, which include details about PSERS’ $52.3 million administrative budget, investment operations and cost-studies of proposed pension legislation, are posted to PSERS’ website,” Carl said.
Additionally, Carl updated the Board about how Gov. Tom Wolf’s proposed 2020-21 state budget affects PSERS. “The governor, for a fifth straight year, proposed paying the state’s full actuarial share of the employers’ contribution ($2.7 billion) for PSERS retirement obligations,” he said. “A strong commitment to annual funding, coupled with solid investment returns, is helping PSERS improve its funded status and reduce its unfunded pension liability.”
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 December 31, 2019, PSERS had net assets of approximately $60.5 billion and a membership of about 256,000 active and 237,000 retired school employees.