HARRISBURG, PA – The Board of Trustees of the Public School Employees’ Retirement System (PSERS) voted Friday to approve the 2023-24 fiscal year audited financial statements, adjust the asset allocation, and make a new investment commitment.
The unmodified independent auditor’s report affirmed that the financial statements “present fairly, in all material respects, the fiduciary net position of PSERS.” The statements show that between FY2023-24 and FY2022-23:
- The net position increased 6.2% to $77.4 billion.
- The market value funded ratio increased 4.5% to 64.6%.
- The long-term market value of the net pension liability decreased nearly 6% to about $42 billion.
“These financial results were powered largely by nearly $5.8 billion in net investment income and the ongoing budgetary support we receive from the General Assembly, Governor, and employers to contribute the full actuarially determined employer costs,” said PSERS Chief Financial Officer Brian Lyman. “This support is imperative to pay down the unfunded liability.”
During the public meeting this week, the board also approved strategic asset allocation changes, added a new investment commitment, and discussed the recent sale of private markets assets.
The asset allocation changes increased the fund’s public equity target allocation by two percentage points to 32% and decreased the public commodities and private real estate allocations by one percentage point each, to 4% and 6%, respectively. Slight adjustments were made within fixed income, and the fund’s tail risk mitigation strategy was eliminated. All changes are expected to be completed by Dec. 1, 2024, and remain in effect for up to three years.
“The PSERS Board of Trustees takes its fiduciary obligations to periodically review and update the asset allocation very seriously,” said Investment Committee Chairman Jason Davis. “These changes are a step toward aligning the fund’s investment posture with our most recent market assumptions, liquidity profile, and risk appetite.”
The Board approved a new investment commitment not to exceed $250 million to Brookfield Infrastructure Structured Solutions, L.P.
PSERS’ Investment Office staff also provided an update regarding the sale of 13 private equity funds on the industry’s secondary market. The aggregate net asset value of the sale, which closed Sept. 30, 2024, was $822 million.
“PSERS periodically assesses market conditions,” Chief Investment Officer Ben Cotton said. “This specific transaction was well priced from our perspective and facilitates adjustments to exposures within our private markets holdings.”
In other business, the board approved the PSERS Classification and Compensation Plan Policy (formerly the Policy Manual for Investment Professionals).
Lastly, the board recently published the 2025 monthly premium rates for PSERS Health Options Program (HOP) in accordance with federal Medicare Advantage and Medicare Prescription Drug Benefit rules. Per CMS’ notification requirements, HOP participants will receive information about the changes that will take effect on Jan. 1, 2025.
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About the Pennsylvania Public School Employees' Retirement System
PSERS, founded in 1917, began operations in 1919 to oversee a statewide defined benefit pension plan for public school employees. PSERS' role expanded upon the passage of Act 5 of 2017 to include oversight of two new benefit options consisting of defined benefit and defined contribution (DC) components and a stand-alone DC plan. As of June 30, 2024, PSERS had total net position of $77.4 billion and a membership of about 251,000 active, 250,000 retired school employees, and 27,000 vested inactive members.