New CIO for $50B Pennsylvania Pension

(March 17, 2014) — The Pennsylvania Public School Employees’ Retirement System (PSERS) has hired James Grossman Jr. as its new CIO.

Grossman, 47, had been serving as acting CIO of the $50 billion fund since June 2013 when its former CIO Alan Van Noord announced his retirement.

“I am truly honored to serve as CIO for PSERS,” Grossman said. “We will work hard every day to prudently manage the retirement assets of the hundreds of thousands of active and retired members who rely on those assets for a secure retirement.”

According to the Harrisburg-based retirement system, Grossman was chosen after an “extensive national search” launched in February of last year.

“He submitted his qualifications and took part in the interview process just as the other candidates did,” Evelyn Tatkovski, PSERS press secretary, told aiCIO.

The board Chairman Melva Vogler said the decision to promote from in-house talent was largely based on Grossman’s commendable performance as acting CIO, particularly as the system was facing funding difficulties.

“We are very confident in Jim’s knowledge of PSERS investments and his ability to head PSERS’ investment operations,” said the chairman. “He performed admirably in the role of acting CIO over the past year. The system is facing funding challenges, which puts increased pressure on PSERS investment operations. The system will benefit greatly from Jim’s history with PSERS and extensive knowledge of the system’s investment operations. We look forward to working with him.”

According to the fund’s reports, PSERS was 66.4% funded as of June 30, 2012. It posted returns of 7.96% for fiscal year 2013 and added $4 billion in net investment income to its assets. It also saw returns of 10.36% for the 3-year, 2.5% for the 5-year, and 7.72% for the 10-year period.

“Significant cash outflows from PSERS continued in 2013 as total pension benefit payments exceeded incoming employee and employer contributions by $3.6 billion,” said Grossman in September 2013. “The impact of the systematic underfunding and significant cash outflows on PSERS’ ability to earn increased investment income is becoming more evident over time. Not only does PSERS have fewer dollars to invest, it has also led to a more conservative investment risk profile, including reduced exposure to public equities which were a top performing asset class during the past fiscal year.”

Grossman said he looks forward to amending these problems as CIO serving almost half a billion employees and retirees.

“I look forward to working with the board as the system continues to face cash flow and funding challenges,” he said. “It will be a priority of mine to continue the collaborative partnership with the board fostered by my predecessor and mentor Alan Van Noord.”

Grossman joined PSERS in 1997 as the compliance and risk officer and was promoted to managing director in 2003 and deputy CIO in 2011. Prior to his role at the pension fund, he worked at KPMG after graduating from Elizabethtown College.

PSERS revealed Grossman will be paid $293,537 in annual salary with no bonuses or incentive compensation.

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