Pa. Auditor General says retirement system’s Wall Street fees are too high |

Pa. Auditor General says retirement system’s Wall Street fees are too high

Pennsylvania's State Employee Retirement System has cut fees paid to investment managers by hundreds of millions of dollars since 2007, but it still spent $167 million in 2016 on Wall Street advisers — an amount Auditor General Eugene DePasquale says is too high.

“I am pleased that SERS is working to reduce the fees paid to Wall Street,” DePasquale said Thursday during a live-streamed news conference about an audit of the $27.5 pension fund . “I commend SERS for achieving considerable cost savings so far. Nonetheless, my audit found that SERS can still save more by taking every opportunity to negotiate lower fees and by competitively bidding every contract, every time.”

In 2007, SERS paid investment managers $345 million, meaning it has dropped $178 million in nine years, in part by shifting assets to a passive investment fund that mimics the composition of an index like the S&P 500 and doesn't require an outside manager to create a customized mix of investments.

The pension fund covers about 127,000 active state employees as well as more than 105,000 retirees. It has an unfunded liability of about $19.5 billion , DePasquale's office reported.

Auditors found that the pension fund followed its procedures, but “did not adequately pursue competitive offers and failed to document fee negotiations.”

In a response letter, SERS Executive Director David E. Durbin said the system would consider options to reduce fees by relying on internal investment managers rather than third-party managers.

TribLIVE commenting policy

You are solely responsible for your comments and by using you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.