Pennsylvania's Public School Employees' Retirement System is under investigation by the FBI due to a 2020 miscalculation.
PSERS admitted in a statement on March 12, that an outside consultant's calculation about the fund's investment performance last year was incorrect.
The calculation showed a growth of 6.38% over nine years ending June 30, 2020, this would be about the 6.36% threshold meaning 100,000 active PSERS members who are still school employees would be protected from a higher risk-sharing contribution rate scheduled to start July 1 of this year.
On March 12, the board held a closed-door meeting of the 14 board members for 3.5 hours where they unanimous voted that they had erred at the Dec. meeting and concluded that the fund had just barely met its financial target for investments.
In Dec. 31 it reported net assets of $64.2 billion and a membership of about 256,000 active, 240,000 retired school employees and 26,000 vested inactive members.
Of the active PSERS members, 94,000 are current school employees hired after 2011. Those members would see their contribution rate rise by would see their contribution rise if the nine-year growth rate is determined to be below the 6.36% growth rate, a calculation made under the guidelines of a 2010 pension law. This breaks down to 0.5% of their salary, while a smaller number of them would see their contribution rate rise by 0.75% of their salary.
The way the fund is setup, the state government and school districts pay the remainder of the contribution.The board of PSERS has hired two law firms; One law firm will provided guidance on how to recertify member risk contribution “conduct a special investigation surrounding the circumstances of the misstatement” of the nine-year investment performance calculation according to a statement from the board made on Friday.
On Friday in the same statement the board also told the Associated Press that it is, “investigating the circumstances regarding the consultant’s calculation as well as the actions taken by PSERS’ staff and the consultant after the consultant’s disclosure.”
PSERS did not name the consultant.
In regards to the FBI investigation, the board pledged to cooperate with “any governmental inquiries,” but PSERS officials declined to comment beyond that brief statement.
PSERS is one of the largest pension funds in the country.
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