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Pennsylvania PSERS Reports 2.95% Return in Q1

The $74.6 billion Pennsylvania pension saw strong returns from U.S. equities.
By Matt Toledo



The Pennsylvania Public School Employees’ Retirement System announced Monday it achieved a 2.95% return in the year’s first quarter, as well as an 8.10% return for the one-year period ending March 31.

Pennsylvania PSERS CIO Ben Cotton noted in a statement that the fund’s preliminary one-year return was slightly more than 8%. Over the past three, five, 10, 15 and 20 years, PSERS has reported annualized returns of 6.59%, 4.94%, 7.10%, 9.07% and 7%, respectively, for annual periods ending March 31.

The Pennsylvania PSERS portfolio is 62.9% public market assets and 36.7% private market assets. Public equities comprise of 27.2% of the pension fund’s assets, with public fixed income making up another 22.7%. The fund allocates 16.5% to private equity, 12.8% to public real assets, 10.9% to private real assets, 7.4% to private fixed income, 1.9% to absolute return strategies, 0.4% to tail risk mitigation strategies and 0.3% to cash.

For the quarter, public equities returned 8.41%, boosted by U.S. equities, which returned 10.31%, while non-U.S. equities returned 6.38%. Private equity returned 2.12% on a one-quarter lag. Public fixed income returned negative 0.64%. Only credit-related fixed-income assets had positive returns. In its public fixed-income portfolio, credit-related assets returned 3.59%, while PSERS’ private credit portfolio returned 1.8%.

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Pennsylvania PSERS’ real assets portfolio returned 1.67% in the quarter, of which public real assets returned 3.16% and public real estate returned negative 0.19%. Public infrastructure returned 2.49%, and public commodities returned 5.19%. Private real assets lost 0.02%. Within private real assets, the fund’s private real estate composite allocation lost 1.53%, while private infrastructure returned 2.8%, and private commodities returned 0.5% in the first quarter.

The pension fund saw its assets increase by $2.3 billion to $74.6 billion by the end of the first quarter. Pennsylvania PSERS has more than 500,000 beneficiaries, consisting of 251,000 active members, 250,000 retired school employees and 27,000 vested inactive members.

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Home > News > Pensions > TPR ‘Evolving’ to Shift Focus to Defined Contribution Master Trusts
Pensions

TPR ‘Evolving’ to Shift Focus to Defined Contribution Master Trusts

The pension watchdog’s CEO says a ‘radical evolution is taking place’ among U.K. pensions.
By Michael Katz

The Pensions Regulator, the U.K.’s pension watchdog, announced it is “evolving” to focus its supervision on defined contribution master trusts, particularly regarding their “investments, data quality and standards, and innovation at retirement.” 

A defined contribution master trust is a multiple-employer workplace pension plan in the U.K.  

“In pensions, a radical evolution is taking place, shifting the make-up of the market towards fewer, larger schemes,” said TPR Chief Executive Nausicaa Delfas in a speech at the regulator’s Master Trust Conference on July 8. “In less than six years, over three-quarters of trust-based DC members could be in schemes of over 50 billion pounds” ($65 billion).  

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Delfas told the conference that the regulator will not tell master trusts how or where to invest, “but we will be challenging you to make sure you have the skills and experience to consider a range of diverse assets if they have the potential to deliver value for the saver over a long-time horizon.” 

She also said TPR will make sure that master trusts’ consideration of environmental, social and governance issues “is not just tick-box compliance, but the genuine product of strategic decisionmaking with the long-term interests of savers at its heart.”  

As part of the regulator’s change in focus, it has appointed Neil Bull as its executive director for market oversight to head a new division at TPR. Bull, who joined TPR in 2017, leads the TPR investment team, which advises defined benefit and defined contribution plans on investment. He previously was an investment consultant and fixed-income portfolio manager at IBM Retirement Funds EMEA.  

“As many master trusts start their evolution towards becoming systemically important entities and reflecting the volume of savers now within DC, we are rebalancing our focus,” Bull said in a speech at the conference. “If the challenge of the last decade was getting people saving into high-quality pension schemes. The challenge of the next is to ensure value.”  

Bull said that master trusts should expect TPR to look more broadly at their investment governance practices and investment decisionmaking.  

“For example,” he said, TPR will be “seeking to understand if climate reporting disclosures are really the product of your strategic decisionmaking and protecting savers now and in the future or something you view as a burden that just needs to be complied with.”  

Related Stories: 

UK Tribunal Upholds TPR’s Pension Contribution Notice Powers 

Fixed Income Helps Master Trusts Weather Rough First Quarter 

Charles Counsell to Step Down as TPR CEO 

 

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