Pension system probing mistake in calculation

HARRISBURG, PA. >> The board of Pennsylvania’s largest public pension system, the Public School Employees’ Retirement System, said it is investigating a consultant’s calculation about the fund’s investment performance last year that is apparently wrong.

The calculation — 6.38% growth over the nine years ending last June 30 — was slightly above a 6.36% growth threshold, thus protecting nearly 100,000 active school employees who are retirement system members from seeing a higher risk-sharing contribution rate kick in next July 1.

On March 12, the board of the $64 billion PSERS system issued a brief statement saying it had been made aware of an error in the calculation and that an outside consultant was studying the data.

It also hired two law firms, including one to provide guidance on whether and how to recertify the member shared risk contribution rate and another to “conduct a special investigation surrounding the circumstances of the misstatement” of the nine-year investment performance calculation.

On Friday, it said it was “investigating the circumstances regarding the consultant’s calculation as well as the actions taken by PSERS’ staff and the consultant after the consultant’s disclosure.”

PSERS did not name the consultant.

It said it had made no personnel changes, and

pledged to cooperate with “any governmental inquiries,” but PSERS officials declined to comment beyond that brief statement.

PSERS on Dec. 31 reported

net assets of $64.2 billion and a membership of about 256,000 active, 240,000 retired school employees and 26,000 vested inactive members. It is one of the nation’s largest pension systems.

Of those 256,000 active members, about 94,000 — all hired in 2011 or after —

would see their contribution rise if the nine-year growth rate is determined to be below the 6.36% growth rate, a calculation made under the guidelines of a 2010 pension law.

Most of those 94,000 school employees would

see their contribution rate rise by 0.5% of their salary, while a smaller number of them would see their contribution rate rise by 0.75% of their salary.

Otherwise, the state government and school districts pay the tab.