This week, the state House passed legislation sponsored by Rep. Brett Miller (R-East Hempfield) to give the public greater access to details of how Pennsylvania's pension systems steward billions of beneficiary and taxpayer dollars.
House Bill 1671
would require more transparent management fee reporting standards from Pennsylvania’s two state employee retirement systems, the Pennsylvania State Employees' Retirement System (SERS) and the Public School Employees' Retirement System (PSERS).
Most public retirement systems pay performance-based fees and expenses to external investment managers as part of their compensation, but these fees, particularly those associated with alternative investments such as private equity, real estate, and hedge funds, often go unreported or under-reported.
“These hidden fees can amount to hundreds of millions, even billions of dollars which ultimately take away from pension fund balances needed to pay pension obligations,” Miller noted.
Since plan participants rely on these funds, and since taxpayers must pay for them, both have a right to know the full extent of plan expenses. Adopting these standards will ensure maximum transparency and openness to the public and will play a significant role in achieving the projected actuarial savings of billions of dollars in public pension costs.
“I believe that Pennsylvania should have a pension system that is transparent, accountable, and one that is financially strong,” Miller said. “We want to ensure the financial health and solvency of the funds by exposing potentially high and unnecessary management fees and ensuring that the management fees are appropriate and reasonable. We want a pension system that puts the needs of the public and the pension plan beneficiaries first. HB 1671, through requiring the nationally recognized fee reporting standards and transparency measures, will help accomplish this.”
The bill passed in the state House by a vote of 195-7, signifying very strong bipartisan support, and now moves to the state Senate for consideration.
Rep. Brett Miller
41st Legislative District
Pennsylvania House of Representatives