Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Innovation Investing Conference
    • 2022 Defined Contribution East Conference
    • 2022 ESG Investing Conference
    • 2022 DC Investment Lineup Conference
    • 2022 Alternatives Investing Conference
Breadcrumb
  1. Home
  2. PENSION FUNDS
September 24, 2018 01:00 AM

Pennsylvania commission report finds state pension plans failed to report billions in fees

James Comtois
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Ludovic Phalippou

    At an informal hearing held last week to examine how to improve Pennsylvania's two statewide pension systems, University of Oxford professor Ludovic Phalippou said the plans have spent more than $12 billion on private equity fees over the course of their existences, much of which he said has gone unreported.

    The Public Pension Management and Asset Investment Review Commission held the informal hearing to examine the need for improvements in transparency around investment expenses and returns of the $54.8 billion Pennsylvania Public School Employees' Retirement System and the $29.8 billion Pennsylvania State Employees' Retirement System, both in Harrisburg.

    Mr. Phalippou, who conducted an internal analysis of the fees and performance of the private equity funds held by the two plans, added that the two state plans have reported $2.2 billion in fees over the past 10 years, but estimates that $6 billion was spent with $3.8 billion in what he described as "unreported fees."

    Mr. Phalippou was hired by the state treasurer's office to conduct the analysis.

    In response to Mr. Phalippou's testimony, PennSERS spokeswoman Pamela Hile said in an email that the pension system publishes "all manager investment fees and expenses by manager" each year, "including fees that are netted from distributions rather than billed directly."

    And although PennSERS does not track and report carried interest, Ms. Hile noted that the board passed a motion earlier this year "directing staff to request that the general partners/investment managers of private equity funds and real estate funds adopt and complete the Institutional Limited Partners Association fee disclosure template."

    Meanwhile, PennPSERS spokeswoman Evelyn Williams said the unreported fees the professor was referring to was carried interest, which "is not something that has been typically tracked/reported by public pension funds across the country," and added that "there is no industry consensus on reporting carried interest as a 'fee.' "

    That said, Ms. Williams noted that PennPSERS has "begun to compile carried interest data and the first report will be available after our October board meeting."

    Beyond that, PennPSERS "reports fees in our budget every year," said Ms. Williams. "You can find them on our website."

    The commission was established in 2017 to review the investment management practices of PennSERS and PennPSERS. Its goals are to recommend improvements to the two plans' stress testing and fee reporting transparency; analyze the plans' assets, investment strategies, investment performance, fees, costs and procedures against established benchmarks; and develop a plan to identify $1.5 billion in cost savings over 30 years for each of the two systems.

    In August, PennPSERS passed a resolution to reduce fees by $2.5 billion over the next 30 years.

    This was the second hearing the commission held. The first was held in July, and the next is scheduled for Oct. 25.

    The commission plans to complete its review, report its findings and make its recommendations to Gov. Tom Wolf and the state's General Assembly sometime in November, but does not yet have a presentation date, said Heidi Havens, spokeswoman for state Treasurer Joe Torsella, who heads the commission.

    Related Articles
    Pennsylvania Public School Employees returns 10.14% for fiscal year
    PennSERS commits to real estate fund, names executive director
    PennSERS ups focus on alternatives in new target asset allocation
    PennPSERS approves plan to reduce fees by $2.5 billion over 30 years
    Commentary: FASB changes to defined benefit plan disclosure requirements
    Pennsylvania Public School Employees posts 9.3% return for fiscal year
    PennSERS approves allocating $660 million
    PennPSERS issues first report on carried interest
    Commentary: A better split for pension funds
    Pennsylvania can save $10 billion in public pension costs, commission says
    Recommended for You
    Connecticut-Flag_i.jpg
    Connecticut directing additional $3.6 billion to pension funds
    Andrew Junkin
    Virginia picks Rhode Island CIO to lead $105 billion pension plan
    Michael Kreps
    Multiemployer plans await final PBGC aid rules
    OCIO, Anchor in Rough Seas
    Sponsored Content: OCIO, Anchor in Rough Seas

    Reader Poll

    May 23, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Crossroads: Politics, Inflation, & Bonds
    Credit Indices: Closing the Fixed Income Evolutionary Gap
    Forever in Style: Benchmarking with the Morningstar® Broad Style Indexes℠
    Q2 2022 Credit Outlook: Carry On
    Leverage does not equal risk
    Is there a mid-cap gap in your DC plan?
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    May 23, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Innovation Investing Conference
      • 2022 Defined Contribution East Conference
      • 2022 ESG Investing Conference
      • 2022 DC Investment Lineup Conference
      • 2022 Alternatives Investing Conference