Board members of the Pennsylvania State Employees’ Retirement System hope to consider a plan to reduce investment fees before year’s end.
The board directed its staff to work alongside investment consulting firm RVK to study how best to cut costs over a three-year period and come up with ideas for the board’s consideration later this year.
Board members also ordered two other studies during their monthly meeting last week: one to look into ways SERS could cut costs by consolidating certain operations with the Public School Employees’ Retirement System, resulting in a plan for the board to consider in the next six months; and one to find ways to increase participation in the state’s deferred compensation program, resulting in a plan for the board to consider in the next three months.
The studies are a continuation of calls state officials have made over the past several months to reduce the amount of money flowing out of state coffers and into the pockets of investment advisers.
Gov. Tom Wolf and Treasurer Joe Torsella sent a letter to the boards of SERS and PSERS in April urging them to significantly reduce investment fees and certain administrative costs in an effort to make at least a small dent in both systems’ large unfunded liabilities. The studies SERS now plans to conduct look specifically into the three recommendations Wolf and Torsella made in that letter.
Wolf believes that if both funds adopt these suggestions, they could cut their collective funding gap by 10 percent. He and Torsella, who sits on the boards of SERS and PSERS, both praised the SERS board’s decision to look into their recommendations.
State officials are meanwhile sorting through the details of more comprehensive reforms that were signed into law in June. Officials say these changes will not solve Pennsylvania’s current pension liability issues but could help the state save money in the long run.