A federal investigation has been launched into the Harrisburg-based Pennsylvania Public School Employees' Retirement System after the board discovered an error in its reported investment performance figures.
The $64.2 billion PennPSERS board issued a statement Thursday that it "has been served with a grand jury subpoena for documents and is cooperating fully with the request by the U.S. Attorney's Office in the Eastern District of Pennsylvania." The fund has retained the law firm of Pillsbury Winthrop Shaw Pittman to represent the board during this investigation.
PennPSERS "is confident that if any issues are identified that require correction, they will be resolved, and appropriate action will be taken," the statement added.
The fund said in March that the board had discovered an error in its reported investment performance figures. On Dec. 3, PennPSERS said it had accepted results of an actuarial valuation report prepared by Buck Consultants. Per the report, PennPSERS posted a net return of 1.11% for the fiscal year ended June 30, and a net annualized return of 6.38% for the nine years ended June 30, as calculated by Aon, the pension fund's investment consultant.
Following the report, PennPSERS announced that it had increased its annual employer contribution rate to 34.94% for the fiscal year ended June 30, 2022, up from the current rate of 34.51%.
The board announced on March 19 that it selected law firm Womble Bond Dickinson to conduct a special investigation into the error, and the law firm Morgan Lewis to serve as special counsel to assist the board in assessing any federal tax qualification issues involved with the shared-risk calculation, and to advise on how to recertify the member shared-risk contribution rate.
"Buck's work does not include calculating investment return statistics, which are provided by a third party employed by (PennPSERS)," a Buck spokesman said in an emailed statement. "If a third-party error has occurred, it may be necessary for us to revise our reporting accordingly."
An Aon spokeswoman declined to comment.