Pennsylvania PSERS Reports Preliminary 3.54% Return for 2023

The Pennsylvania Public School Employees’ Retirement System had a busy October, as it reported preliminary investment returns for fiscal 2023, launched a new strategic plan, hired an external derivatives manager and named a vice chair to its board of trustees.

For the fiscal year that ended June 30, the pension fund returned 3.54% and reported a preliminary 10-year annualized return of 7.46% to raise its asset value to $72.8 billion. The pension fund has a long-term assumed rate of return of 7.00%. Full performance details will be released later in the year.

At Pennsylvania PSERS’ investment committee meeting on October 19, CIO Ben Cotton reported that the retirement system’s assets increased 23% between fiscal year 2020 and 2023 and that its external investment expenses were reduced by 30 basis points during that time. He said this represents future estimated annualized savings of $215 million.

“We understand investment strategies, which can consistently deliver excess performance over time, warrant relatively higher fees,” Cotton said at the meeting. “However, we challenge all our partners to be more efficient with the investment dollars entrusted to them.”

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Earlier in the month, the pension fund also unveiled its first new strategic plan in more than a decade, covering 2023 through 2026. Under the plan, the pension fund’s board cited six strategic priorities supported by 25 initiatives, many of which were identified as already under way or set to begin soon. The six priorities are:

Enhance member satisfaction;
Enhance comprehensive and transparent financial reporting and forecasting;
Develop organizational culture and staff/leadership competencies;
Implement a robust enterprise risk management program;
Enhance communication, collaboration and the education of all critical stakeholders; and
Align all organizational units and functions with PSERS’ strategic priorities.

“We also recognize that while this is our plan today, changes to our operating environment require us to be more agile than ever,” PSERS Executive Director Terrill Sanchez wrote in the introduction to the plan. “As such, we intend for this to be a living document.”

The pension fund also hired NISA Investment Advisors as an external derivatives manager for up to $10 billion in liquid markets exposure and named Richard Vague as vice chair of its board of trustees. Vague, appointed by Governor Josh Shapiro, is a Philadelphia businessman, philanthropist and author who was previously secretary of the Pennsylvania Department of Banking and Securities.