Friday, May 29, 2015

Pa. pension: Above average not enough; deficit rising

Pennsylvania State Employees' Retirement System finished 2011 with just 61% of the $40 billion-plus it would need to pay future retirees.

Pa. pension: Above average not enough; deficit rising

The Pennsylvania State Employees' Retirement System, close to "fully funded" in the early 2000s, is falling farther behind balancing its current assets with its expected future liabilities as it pays pensions to lawmakers, judges, state troopers, social workers and other public employees faster than payroll deductions, investment profits and tax revenues can fill the gap.

SERS assets totalled $24.9 billion in market value at Dec. 31, down $1 billion during the year despite what SERS managers say was above-average performance by the highly-compensated buyout fund managers (Mitt Romney's rivals) who manage a large chunk of its total investments.

That total is just 61% of the $40.6 billion in actuarial accrued liability SERS faced at Dec. 31. The ratio is down from 66% a year earlier.  Taxpayers will make up the difference through bigger payments into the public pension system, unless investment values turn around fast.

The board, still chaired (after 20 years) by former State Rep. Nicholas J. Maiale and dominated by appointments of Gov. Corbett and his legislative allies, continues to invest in non-public investment funds in hopes they'll provide better profits than stocks and bonds. In December, for example, they invested $250 million with veteran hedge fund manager Julian Robertson's Tiger Management LLC.

About this blog

PhillyDeals posts drafts, transcripts and updates of Joseph N. DiStefano's columns and stories about Philly-area business, which he's been writing since 1989.

DiStefano studied economics, history and a little engineering at Penn and taught writing at St. Joseph's. He has written thousands of columns and articles for the Inquirer, Bloomberg and other media, wrote the book Comcasted, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com, distefano251@gmail.com, 215.854.5194 or 302.652.2004.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano