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HARRISBURG, Pa. – A more than seven hour hearing at the State Capitol gives insight on Pennsylvania’s pension systems. Testimony given shows billions of dollars in private equity fees that have not always been reported to pension funds.
Internal analysis done by an Oxford University professor gives an estimate of more than $3 billion in fees were unreported to Pennsylvania’s Public School Employee’s Retirement System and the State Employee’s Retirement System in the last ten years. Although the analysis shows the actual amount could be about $6 billion.
“There are going to be fees to manage money, I don’t think any of us are saying this is inappropriate,” said Pennsylvania Treasurer Joe Torsella. “But the issue is whether we can do better given what we’ve heard this morning, I think the answer is yes we can and we have to.”
The professors working on this analysis told the Public Pension Management and Asset Investment Review Commission, the state’s pension systems were unnecessarily difficult to work with and they could not easily access to data.
“That’s just unacceptable and I hope, we heard at the last hearing, transparency is key to making this system work for it’s beneficiaries and tax payers,” said Torsella. “And I hope by the end of our time we’ll be able to rectify that.’
Going somewhat hand in hand with the problem of the state’s pension systems is the state being about $60 billion in debt right now.
“So every dollar that we’re paying back that is going to the retirees of the Commonwealth of Pennsylvania is not going into other dollars,” said Rep. Mike Tobach, (r) Dauphin and Schuylkill Counties. “We struggle with budgets as a result of the massive pension debt we’ve gotten ourself into. So, it not only make sense that this commission has been formed to make sure the cost are not exorbitant and the costs are fair.”
While things may seem bad, the commission doesn’t see it all as gloom and doom. They are confident that once all the information and analysis is presented they will be able to find a way to reach their goal of saving a total of $3 billion between the two pension systems over 30 years.
“It’s Pennsylvanians money,” said Torsella. “And we ought to be clear about how it’s being spent and that will accrue to the benefits of the pensioners.”
The commission will eventually make recommendations to the legislature and governor on ways to make the pension systems more transparent.