Governor Wolf Endorses Recommendations to Save Nearly $10 Billion by Cutting Wall Street Pension Fees

December 20, 2018

Harrisburg, PA – Improving transparency and reducing Wall Street fees and other recommendations to save nearly $10 billion in public pension costs are part of a bipartisan report received today by Governor Tom Wolf. The governor was joined at a Capitol news conference by state Representative Mike Tobash and state Treasurer Joe Torsella to endorse the findings.

“These bipartisan recommendations give us a roadmap to continue the tremendous progress we’ve made on pensions,” said Governor Wolf. “These are commonsense reforms that will rein in excessive fees, increase transparency and keep billions of dollars in Pennsylvania rather than going into the pockets of Wall Street bankers.”

The historic pension reform law signed by Governor Wolf last year called for the creation of the Public Pension Management and Asset Investment Review Commission. The commission conducted the first independent review of the Pennsylvania Public Employees’ Retirement System (PSERS) and the State Employees’ Retirement System (SERS).
The report recommends an estimated $9.9 billion in actuarial savings over 30 years calculated at the 7.25% assumed rate of return for both retirement systems. Those recommendations include:

  • Maintaining full payment of the annual actuarially determined contribution amount;
  • Establishing a Central Investment Office;
  • Enacting legislation mandating annual stress testing;
  • Increasing transparency of investment cost, performance and benchmarks;
  • Enacting legislation mandating increased public reporting of all investment expenses;
  • Moving to fully index all public market investments in both public equities and fixed income;
  • Adopting measures to reduce risk.

Today’s report and recommendations follow the commission’s seven-month review of the state’s pension systems for state employees and public school employees. The commission conducted three public hearings and heard testimony from investment and academic experts, state pension fund managers, and SERS and PSERS.

Rep. Tobash served as the commission’s chairman and Treasurer Torsella was vice-chair. Other commission members include James Bloom, Bernie Gallagher, and Michael Torbert.

“I thank Treasurer Torsella and Rep. Tobash for their leadership and all members of the entire commission for their diligent and dedicated work. The efforts of this commission will help Pennsylvania to save billions of dollars in the coming decades,” said Governor Wolf. “I look forward to working with the pension systems and the legislature to put these recommendations into action.”

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