The board of the Pennsylvania Public School Employees’ Retirement System, Harrisburg, approved a $7 million legal settlement with former investment consultant Aon Investments USA regarding claims alleged in a lawsuit the $76.5 billion pension fund filed last year.
“On behalf of the Board of Trustees, I am pleased to see this matter resolved amicably so that the board and staff may continue to focus on the important work ahead of us,” Board Chairman Richard Vague said in an Aug. 16 news release. “This resolution is a clear reminder that we take our stewardship of the assets and resources entrusted to PSERS seriously, and that we always strive to effectively and prudently serve our members’ retirement needs.”
An Aon spokesperson declined to comment.
The lawsuit, filed on July 31, 2023, in the Court of Common Pleas of Philadelphia County said that in the course of providing investment performance reporting and other services to the plaintiffs over the years, “Aon made an error. Perhaps it was a series of errors.”
In March 2021, PennPSERS commissioned a report from law firm Womble Bond Dickinson after its board was notified that the investment reporting figures used for an annual employer contribution rate increase contained a calculation error. According to that report, Aon Investments USA took responsibility for the error, which involved incorrect public markets investment returns in April 2015 that was only discovered by PennPSERS staff in 2020 following Aon's release of nine-year investment return data.
The pension fund in its complaint said "the impact of Aon's errors on plaintiffs was, and continues to be, substantial. Aon's errors were widely reported in the press. Those errors adversely affected plaintiffs' reputation and have caused plaintiffs millions of dollars in damages."
The fallout from the investment error resulted in the pension fund's board in November 2021 voting for the retirements of James H. Grossman Jr., chief investment officer, and Glen R. Grell, executive director. They have since been replaced by Benjamin Cotton and Terrill J. Sanchez, respectively.
