Pension health: PSERS investments up
The Public School Employees' Retirement System, or PSERS, continues to be underfunded, but investment returns of nearly 8 percent for the fiscal year that ended June 30 could limit the projected increase in the system's unfunded liability.
PSERS, which assumes a 7.5 percent rate of return, added more than $4 billion in net investment income over the year.
“This year’s fiscal year investment performance should have a slightly positive impact on that projection,” said Evelyn Tatkovski, a PSERS spokeswoman.
The current unfunded liability is $29.5 billion. That was projected to increase to about $33 billion in 2013.
“The exact impact won’t be known until December,” she said, which is when the system’s actuarial evaluation is done. “Other actuarial factors impact that number, too.”
The actual valuation document is released in January.
The employer contribution rate for the 2013-14 fiscal year, which began July 1, is 16.93 percent. A PSERS projection has that jumping to 21.31 percent next fiscal year, which would cost state and local school taxpayers $3 billion as opposesd to the current $2.3 billion.
Members of the pension fund are contributing an average of 7.43 percent of their salary to help funded retirement benefits in 2013-14, according to PSERS.
The plan has about $49.3 billion in assets.
Meanwhile, the State Employees’ Retirement System, or SERS, has an unfunded liability of nearly $17.8 billion, as of Dec. 31. SERS achieved a 12 percent rate of return in 2012. The $25.4 billion system also assumed 7.5 percent.
Pension reform has been a perennial priority for the Republican-led General Assembly and Gov. Tom Corbett. It is one of the big three issues in Harrisburg along with transportation infrastructure and liquor store privatization.
Prior to a passage of the state budget, the focus on public-sector pension reform was about moving new hires to a defined-contribution, or 401(k)-style, plan beginning in 2015.