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Attention PSERS Retirees:
January 12, 2010

Each year the Internal Revenue Service (IRS) changes the federal tax withholding tables. As a result, if you have federal tax withheld from your PSERS pension, you may notice a difference in your net monthly pension check/direct deposit beginning in January 2010. If the change in your federal tax withholding amount results in an increase/decrease to your monthly check/direct deposit that is less than $20, you will not receive a separate letter specifically identifying this change. We encourage you to seek advice from your tax consultant or the IRS for further information.

If you do not receive a monthly check/direct deposit from PSERS, please disregard this notice.

Tax Notes for PSERS Retirees
January 8, 2010

If you are a resident of Pennsylvania and you receive a retirement benefit from PSERS, please keep in mind when filing your Pennsylvania state and local taxes that your PSERS payment is not subject to Pennsylvania state and local taxes.

Your federal withholding amount may have changed slightly with your January 2010 benefit payment.  This change occurred due to a change in the Internal Revenue Service (IRS) tax tables.  This did not affect all PSERS retirees.  No written notices were mailed, so those with an electronic transfer of their benefit should check their bank statement for the new net payment amount.

Press Release

For Immediate Release                                 

December 11, 2009
                                   

PUBLIC SCHOOL EMPLOYEES’ RETIREMENT SYSTEM ANNOUNCES POSITIVE INVESTMENT EARNINGS OF OVER $3.7 BILLION  

Pension fund earns a positive 9.18 percent for the quarter ended September 30, 2009; Fund also certifies employer contribution rate of 8.22 percent for next fiscal year beginning July 1, 2010

HARRISBURG, PA - The Public School Employees’ Retirement Systems’ (PSERS’) Board of Trustees met today in Harrisburg and announced positive quarterly investment performance for the quarter ended September 30, 2009. PSERS earned a positive 9.18 percent return for the quarter ended September 30, 2009 which added over $3.7 billion to the System.   

PSERS Chief Investment Officer Alan Van Noord commented on the Fund’s current investment performance.  “PSERS had a very strong quarter ended September 30, 2009, earning 9.18 percent, which was driven by a continued rally in risk assets, including U.S. and non-U.S. equities.  The Fed’s loose monetary policy and quantitative easing measures significantly relieved tight liquidity conditions prevalent in early 2009 and low returns on cash motivated investors to purchase higher risk, higher return assets which propelled these investment markets forward.  In addition, government stimulus efforts generated positive GDP during the quarter.” 

“Looking forward, our primary concern is the very large debt levels of the U.S. consumer and the federal government, and the fading effects of various government stimulus packages.  These debt levels may inhibit economic growth for the next few years as consumers pay down their outstanding debt,” Van Noord said.  “Slow growth may keep the U.S. unemployment rate higher than we have seen with past recessions.  For these and other reasons, we remain cautious on the market outlook for the remainder of this year and 2010.  Our investment strategy is to remain fairly close to our long-term allocation targets.” 

“All asset classes, except real estate, generated positive returns during the quarter ended September 30, 2009.  The strongest performing asset classes were U.S. and non-U.S. equities which were up 16.07 percent and 19.43 percent, respectively.  Real estate has continued to struggle during this period and posted a negative 4.22 percent return.  We expect real estate to continue to struggle for the foreseeable future due to excess leverage, increasing vacancies, and declining asset values,” Van Noord said. 

Additional detailed investment performance on individual asset classes as of September 30, 2009 is available on PSERS’ website at: http://www.psers.state.pa.us/invest/invest.htm. 

 During the meeting, PSERS’ Board also certified the annual employer contribution rate of 8.22 percent for the next fiscal year, which begins July 1, 2010.  The 8.22 percent employer contribution rate is composed of 0.64 percent for health insurance premium assistance and a pension rate of 7.58 percent. 

 The employer contribution rate is an actuarially determined rate that is the percentage of payroll the school employers are required to pay into the pension fund to accumulate assets to pay retirement benefits for its members when due.  The Commonwealth reimburses the school employers for not less than 50 percent of the employer contribution rate.  

The pension fund is also funded through investment earnings and mandatory member contributions. Members of the pension fund currently contribute an average of 7.34 percent ($992 million) of their salary annually to help fund their retirement benefits. Member contributions of $992 million are expected in FY 2009/2010.

 PSERS Chair Melva Vogler cautioned “Even though the Fund reported positive investment performance today and the investment markets appear to be slowly improving, school employers and the Commonwealth should continue to prepare for the dramatic employer contribution rate increase forecast in coming years. While it is difficult, especially during a recession, school employers that have begun to build a reserve in anticipation of the large rate increase projected in FY 2012/2013 should continue to fund that reserve. At this point, the Fund cannot realistically earn its way out of the projected rate spike. ”

Revised long-term employer contribution rate projections provided by the fund’s actuaries, Buck Consultants, show an increase in the projected FY 2012/2013 rate spike from last year’s rate of 20.16 percent to 29.22 percent.

PSERS Executive Director Jeffrey B. Clay also announced the creation of a page on PSERS’ website dedicated to providing educational resources on the funding issue. Clay reported “Over the last few years, I have traveled across the state meeting with school employers, active and retired member organizations, and legislators, making sure everyone is aware of the projected dramatic increase in the employer contribution rate.  It is a very complex topic. PSERS has created a web page of resources to provide educational materials and official rate projections. School employers, the Legislature, PSERS members, the media, and general public can all use this information to gain a better understanding of the funding issue.”

Information on the funding issue and employer contribution rate projections is available on PSERS’ website at www.psers.state.pa.us/press/pension_funding_issues/index.html.

About the Pennsylvania Public School Employees’ Retirement System

PSERS is the 12th largest state-sponsored defined benefit pension fund in the nation.  As of September 30, 2009, PSERS had total plan net assets of $46 billion and a membership of over 279,000 active members and over 177,000 annuitants and beneficiaries receiving benefits.   

As of September 30, 2009 PSERS had 18.5 percent of its assets in non-U.S. equities; 12.4 percent in U.S. equities; 22.8 percent in U.S. and global fixed income investments; 17.3 percent in private markets; 10.1 percent in real estate, 4.2 percent in commodities, 7.6 percent in absolute return strategies, and 7.1 percent in cash and cash equivalents.

PSBA/PASA Conference Presentation

PRESS RELEASE

For Immediate Release                   For More Information Contact:

September 11, 2009                               Evelyn Tatkovski

                                                            Press Secretary

                                                            Public School Employees’ Retirement System

                                                            Phone: 717-720-4734

                                                            e-mail:  etatkovski@state.pa.us

PSERS POSTS UPDATED INVESTMENT PERFORMANCE

Fund reports investment performance for the period ended June 30, 2009

HARRISBURG, PA – The Public School Employees’ Retirement System (PSERS) today posted investment performance for the fiscal year ended June 30, 2009. The fund reported a -26.54 percent return for the one-year period ended June 30, 2009.   

PSERS Chief Investment Officer Alan Van Noord commented on the difficulties the fund faced during the past fiscal year. “We have closed the books on one of the most challenging fiscal years in the history of the pension fund.  PSERS faced a historic worldwide economic decline rivaled only by the Great Depression of the 1930s.  This environment impacted most asset classes during the past year,” Van Noord said.  “The equity, real estate, and commodity markets were hit particularly hard, driven by a flight to safety and liquidity pressures during the fiscal year.  PSERS’ global equities were down 26.90 percent, private market investments were down 27.23 percent, real estate was down 42.68 percent, and commodities were down 45.09 percent.” 

Signs of a recovery were also noted, as PSERS posted positive quarterly investment returns and added over $2.5 billion in total assets since March 2009.

 Van Noord continued, “We have seen the equity and commodity markets rebound sharply since the middle of March as worldwide government efforts to stabilize the markets have taken hold.  PSERS earned a positive 9.11 percent return for the quarter ended June 30, 2009.  This return was driven by PSERS’ global equities, which were up 25.02 percent during the quarter, and commodities, which were up 15.96 percent.  We are seeing signs that PSERS’ private market investments are starting to stabilize but believe that more time is needed for the real estate markets to stabilize.”  

 In addition, the long term investment returns for the fund remain positive.  For the past five-year and 10-year periods ended June 30, 2009 PSERS returned 2.68 percent and 3.28 percent, respectively, outperforming the fund’s policy benchmarks.  Over the past 25 years the fund earned an annualized rate of return of 9.23 percent which remains above the fund’s current assumed actuarial rate of return of 8.00 percent.

 “While signs of a recovery in the markets have begun to appear, PSERS remains guardedly optimistic.  The economy faces stiff headwinds of high unemployment, high debt levels for consumers and the government, and a massive loss of consumer net worth estimated to be about $14 trillion.  In this uncertain environment, PSERS has made some strategic changes to its asset allocation, reducing global equities and creating a larger cash reserve.  These allocation changes have allowed PSERS to reduce portfolio risk while providing ample liquidity to meet current and future commitments without untimely asset sales,” concluded Van Noord.

 Additional detailed investment performance as of June 30, 2009 is available on PSERS’ website at: http://www.psers.state.pa.us/invest/invest.htm.

 About the Pennsylvania Public School Employees’ Retirement System

 PSERS is the 12th largest state-sponsored defined benefit pension fund in the nation.  As of June 30, 2009, PSERS had total assets of $43.2 billion and a membership of nearly 273,000 active school employees and 177,000 retirees.  For more information visit PSERS’ website at www.psers.state.pa.us.

 As of June 30, 2009 PSERS had 19.3 percent of its assets in non-U.S. equities; 11.2 percent in U.S. equities; 22.1 percent in U.S. and global fixed income investments; 16.9 percent in private markets; 11.2 percent in real estate, 4.0 percent in commodities, 7.4% in absolute return strategies, and 7.9 percent in cash and cash equivalents.

  PDF Version

Attention School Districts: Please Distribute This Message To Your Superintendent, Business Manager and Accountant Immediately

Posted June 18, 2009

PSERS has been informed that Treasury will make the Commonwealth of PA employer contributions reimbursement payments to school entities on June 25. This payment date replaces the initially scheduled date of June 16. This reimbursement payment relates to employer contributions due from school payrolls paid January 1 to March 31, 2009.

Accordingly, the date that school entities are due to pay PSERS employer contributions for the January to March, 2009 payrolls is July 2, which is 5 business days after the June 25 reimbursement date.

Questions concerning this message can be directed by phone or email to Bill Dudley; Manager, General Accounting Division, 717-720-4639 or Dominic Pugliese; Supervisor of Employer Accounting, 717-720-4630.

PRESS RELEASE

Posted 06/11/09

For Immediate Release
June 11, 2009

For More Information Contact:
Evelyn Tatkovski
Press Secretary
Public School Employees’ Retirement System
Phone: 717-720-4734
e-mail:  etatkovski@state.pa.us

PSERS HOLDS BOARD MEETING IN HARRISBURG

Fund reports performance for quarter ended March 31, 2009, and announces award for financial reporting

 HARRISBURG, PA – The Board of the Pennsylvania Public School Employees Retirement System (PSERS) met this afternoon in Harrisburg and received an update on the Fund’s investment performance for the quarter ended March 31, 2009.   The sharp downturn in the investment markets continued to impact PSERS investment performance for the quarter ended March 31, 2009. 

PSERS Chief Investment Officer Alan Van Noord reported to the Board that “the first quarter of 2009 proved to be a very difficult quarter as worldwide equity markets generally fell 11% or more. Unlike the prior two quarters, U.S. treasuries also lost ground, meaning virtually every asset class was under pressure. PSERS portfolio was no exception. For the quarter ended March 31, 2009, PSERS produced investment performance of negative 9.63%.”  

Van Noord reported “Besides U.S. and Non-U.S. stocks, other investment areas that were hit particularly hard were the Fund’s private markets and real estate holdings. According to industry standards, private markets and real estate performance is lagged one quarter due to the time needed to calculate the market valuations of the holdings. Thus, we are now seeing the impact of the steep economic decline on PSERS private markets and real estate holdings in the first quarter performance numbers. For the quarter ended March 31, 2009, PSERS real estate holdings declined 25.40% and private markets declined 15.36%. In particular, these holdings are marked to market and are reflecting the downturn in the markets. It is important to remember that these are long-term investments that still produce cash flow. While these investments show decreases in their market valuation in the short term, we expect these assets to eventually be marked up and improve when the economy recovers.”  

The fund also reported that its long term investment performance remains positive and continues to be above policy benchmarks. For the five-year, seven-year, and 10-year periods ended March 31, 2009, PSERS returned 1.02%, 2.96%, and 2.96% respectively.  Over the past 25 years the Fund earned 8.81% which is above the Fund’s actuarial rate of return for the same period.   PSERS Chief Investment Officer also reported on signs that an economic recovery has begun.  The investment markets have rallied in the second quarter.  The fund is up approximately 10% for the quarter to date which has offset the losses reported for the quarter ended in March. As a result, PSERS net asset value, which fell to nearly $40 billion in March, has increased to an estimated $44 billion in early June.   

Van Noord cautioned while there are signs of a recovery, the markets remain volatile as PSERS nears its June 30 fiscal year end. “The recent market rally has allowed PSERS to build a larger cash allocation to maintain liquidity and help protect the fund in the event of further market declines,” Van Noord said. “PSERS is continuing to make asset allocation adjustments that will help PSERS benefit from an economic recovery.”  

PSERS also reported that the Government Finance Officers Association of the United States and Canada (GFOA) recently awarded PSERS a Certificate of Achievement for Excellence in Financial Reporting for the retirement system’s Comprehensive Annual Financial Report (CAFR) ended June 30, 2008.  

PSERS’ Executive Director Jeffrey B. Clay commented on receiving the award; “PSERS is committed to maintaining a high level of transparency and accountability. PSERS will continue to post reports, like the CAFR, to our website and increase the availability of Fund information to the public. I am proud of PSERS’ Office of Financial Management and investment staff for successfully completing this report and their efforts have helped PSERS earn this prestigious award for the past 26 consecutive years.”  

The GFOA Certificate of Achievement, a national award established in 1945, recognized conformance with the highest standards for preparation of state and local government financial reports.  PSERS’ CAFR was judged by an impartial panel to meet the high standards of the program including demonstrating a constructive “spirit of full disclosure” to clearly communicate its financial story and motivate potential users and groups to read the report.  The report must also satisfy both generally accepted accounting principles and applicable legal requirements.  

Copies of the CAFR are available on PSERS’ website at: https://www.psers.state.pa.us/publications/cafr/index.htm.  

About the Pennsylvania Public School Employees’ Retirement System  

PSERS is the 12th largest state-sponsored defined benefit pension fund in the nation.  As of March 31, 2009, PSERS had an investment portfolio of approximately $40 billion and a membership of nearly 273,000 active school employees and 175,000 retirees.  For more information visit PSERS’ website at www.psers.state.pa.us.  

As of March 31, 2009 PSERS had 21.2 percent of its assets in non-U.S. equities; 16.7 percent in U.S. equities; 24.6 percent in U.S. and global fixed income investments; 18.1 percent in private markets; 11.9 percent in real estate, 3.4 percent in commodities, 0.8% in absolute return strategies, and 3.3 percent in cash and cash equivalents.  

If you know a veteran of Desert Storm and Desert Shield, we encourage you to share this important information with them…

Posted 02/04/09

On April 24, 2006, Governor Edward Rendell Signed House Bill 1820 into law as Act 29 of 2006. This bill establishes the Persian Gulf Conflict Veterans’ Benefit Act. The program allows compensation to be paid to eligible service members as well as certain surviving relatives of deceased veterans. 

The Department of Military and Veterans Affairs is accepting applications for the Persian Gulf Conflict Veterans’ Benefit Program. Any individual who served in the U.S. Armed Forces, Reserve component, or the Pennsylvania National Guard in the Persian Gulf Conflict during the period from August 2, 1990, through August 31, 1991, may be eligible.

Eligible veterans qualify for payment of $75 per month (maximum of $525) for each month of active service in theater. A benefit of $5,000 may be awarded to a prisoner of war or certain family members of a veteran who died in active service or as a result of service-connected injury or disease. 

The deadline for applying for this benefit is August 31, 2015. Details of the program are available on the DMVA website or by calling the program’s toll-free number 1-866-458-9182 (TTY 1-866-835-8983 for the hearing impaired.)

Statement to PSERS Members from PSERS Executive Director Concerning Payment of Incentive Compensation to PSERS Investment Staff 

By now you have probably seen articles or heard comments about PSERS paying incentive compensation to its investment staff for performance that was earned during the past fiscal year ended June 30^, 2008. For the past fiscal year, twenty-one PSERS’ investment professionals earned incentive payments of approximately $854,000.  

These payments are not bonuses. The incentive plan, part of the overall compensation package of the investment staff for over 14 years, is outlined in a policy that is reviewed and approved by the Board on an annual basis. Rather than paying more in base salary, PSERS incentive plan makes the investment staff earn part of their pay through the incentive policy.  

PSERS saved school employers and Commonwealth taxpayers millions of dollars by having its investment staff manage nearly 30 percent of the Fund’s assets in-house. While PSERS paid out an incentive for FY 2007/2008,  PSERS investment staff added $1.3 billion in value by outperforming the median public pension plan return of -4.56 percent. 

For the past three-and five years, PSERS added $9.3 billion and $14.8 billion, respectively, versus the returns posted by the median public pension plan. A large portion of the current year’s incentive is tied to longer-term performance which remains positive.  For the three- and five-year periods ended June 30, 2008, PSERS was up 13.21% and 11.25%, respectively. 

By producing returns above the median public pension plan, PSERS investment staff created significant savings for Pennsylvania school employers and Commonwealth taxpayers. 

If PSERS were to eliminate its investment staff, PSERS’ school employers and Commonwealth taxpayers would pay significantly higher fees to external investment managers to similarly invest the funds. 

PSERS understands there are concerns about paying these incentives during the current economic crisis. The incentives currently being paid, however, are based on a policy that was approved by the Board over a year ago, in August 2007, for the fiscal year ending June 30, 2008.  PSERS is legally and contractually obligated to pay the incentives earned for the past fiscal year. PSERS cannot change the compensation package for its investment staff for their past investment performance.  

While PSERS is obligated to pay the incentives for the past fiscal year, PSERS Board on December 12, 2008 terminated the incentive compensation plan policy for the current fiscal year as of December 31, 2008.  

Click here to view the fact sheet that provides more details on the incentive compensation plan policy.