Pennsylvania school pension system lost money in 2015

Posted: March 13, 2016

The $52-billion-asset Pennsylvania Public School Employees' Retirement System lost money last year, trailing the performance of the Pennsylvania and New Jersey state worker pension investment returns for 2015, according to a report the system released Friday.

PSERS reported losing 1.8 percent for the 12 months ended Dec. 31. SERS, the Pennsylvania state workers' fund, last month reported a gain of 0.5 percent for 2015. NJDI, the New Jersey Division of Investment, reported a gain of 0.6 percent.

All three trailed far behind the 7 percent to 8 percent annual fund targets as stock and commodity values plunged.

PSERS's extra losses reflected its unusually large bets on commodity fund managers. The system posted a 33 percent loss for funds invested in "Master Limited Partnerships" (typically oil and gas investments), an 18 percent loss for commodities investments, and an 8 percent loss in "risk parity" investments, which can look a lot like hedge fund strategies.

To keep PSERS solvent and involved in hundreds of investments, Pennsylvania taxpayers pay a surcharge of 30 cents a year on every dollar that is paid school employees. The cost is split between state taxpayers and local school district property-tax payers. Rapid increases in the subsidy for retired school employees has squeezed school budgets across the commonwealth.

PSERS wasn't the only big pension fund to lose money in 2015. The City of Philadelphia pension system, which is even more underfunded than PSERS, lost 3.1 percent.

As a result of poor performance, Philadelphia's pension directors recently fired four of the hedge fund managers and ordered three others to negotiate fee cuts.

PSERS appears satisfied with its performance, at least by one measure: The system said Thursday that its board had unanimously reelected Melva S. Vogler, a retired Wallanpaupack Area High School teacher, who lives in Hawley, Wayne County, as its chairwoman for the ninth straight year.

Montgomery County, which two years ago fired all of its private money managers and put 90 percent of its funds in low-fee Vanguard Group index funds, reported a gain of 0.3 percent for its pension investments last year, far ahead of PSERS.

Gov. Wolf has said SERS and PSERS would do better to imitate Montgomery County, firing private managers and buying low-fee index funds, although SERS did a little better than Montco.

WebLinc, an e-commerce platform based in Philadelphia and run by Darren Hill, says it has bought Orderbot Software Inc., a Vancouver, British Columbia-based retail order-management system, from founders Marianne Zakhour and Steve Izen for an undisclosed price in cash and stock.

Izen and Zakhour and all 20 Orderbot employees will stay with WebLinc, and the Vancouver office will be integrated into the company, says WebLinc spokesman John Forberger.

WebLinc, which raised $6 million from investors led by Wayne-based Safeguard Scientifics in 2014, employs 150 at three historically renovated buildings in Old City and at offices in New York, Los Angeles, and Toronto. The company says it runs e-commerce sites for Urban Outfitters Inc.'s Terrain and BHLDN brands and other "high- growth retailers," including Sanrio/Hello Kitty, U.S. Polo Association, Stila Cosmetics, and Jeffers Pet.

The company also owns the National Mechanics and Lucha Cartel bars.

JoeD@phillynews.com

215-854-5194

@PhillyJoeD

www.inquirer.com/phillydeals

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