Is the pension fund for Pennsylvania teachers in trouble?

On Behalf of | Jun 4, 2021 | Education Law |

In early April of this year, the state treasurer confirmed that the Pennsylvania School Employees Retirement System (PSERS) is being investigated by federal authorities for improprieties.

The Federal Bureau of Investigation (FBI) is reportedly looking into the way the $62 billion in pension funds have been managed following an investment report made in December that was found to be inaccurate.

Why did a mistaken report trigger an investigation?

There are both external investigations (being run by the federal authorities) and internal investigations (being run by the PSERS managers) into the errors in the report that were uncovered.

The report was certified as accurate by the PSERS board members, including its executive director, investment chief and chief financial officer, over the raised objections or questions from others. However, it overstated the fund’s investment performance. The report indicated that the fund had grown just enough to avoid the legal requirement to ask employees of the school system to contribute more to their pensions.

The funds actually underperformed, which means that state taxpayers shouldered an unfair burden even as teachers avoided a hike in their obligations. Further, the error may have cost the plan some of its federal tax exemption status — which could end up hurting the school system’s employees in the end. Now authorities are reviewing investment results from the entire last decade.

When pension plans are mismanaged, real people get hurt

It remains to be seen how this issue shakes out, but there’s no question that poor investment choices and poor quality controls can lead to financial problems for those who rely on PSERS for their retirement. More than likely, some of those employees may need to consider the need for civil action to recover their losses in the future. Staying abreast of the news about this situation can help you understand more about your options.

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